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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________________ to _____________________
Commission File Number: 0-26001
HUDSON CITY BANCORP, INC.
-------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3640393
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
West 80 Century Road
Paramus, New Jersey 07652
------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(201)967-1900
-------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
As of May 7, 2003, the registrant had 191,922,522 shares of common stock,
$0.01 par value, outstanding. Of such shares outstanding, 122,576,600 shares
were held by Hudson City, MHC, the registrant's mutual holding company, and
69,345,922 shares were held by the public and directors, officers and employees
of the registrant.
Hudson City Bancorp, Inc.
Form 10-Q
Contents of Report
Page
Number
------
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
Consolidated Statements of Financial Condition -
March 31, 2003 (Unaudited) and December 31, 2002 .............................. 3
Consolidated Statements of Income (Unaudited) - For the three months ended
March 31, 2003 and 2002 ....................................................... 4
Consolidated Statements of Cash Flows (Unaudited) - For the three months
ended March 31, 2003 and 2002 ................................................. 5
Notes to Consolidated Financial Statements .................................... 6
Item 2. - Management's Discussion and Analysis of Financial Condition and Results of
Operations ......................................................................... 10
Item 3. - Quantitative and Qualitative Disclosures About Market Risk ............... 22
Item 4. - Controls and Procedures .................................................. 25
PART II - OTHER INFORMATION
Item 1. - Legal Proceedings ........................................................ 25
Item 2. - Changes in Securities and Use of Proceeds ................................ 25
Item 3. - Defaults Upon Senior Securities .......................................... 25
Item 4. - Submission of Matters to a Vote of Security Holders ...................... 25
Item 5. - Other Information ........................................................ 25
Item 6. - Exhibits and Reports on Form 8-K ......................................... 26
SIGNATURES ............................................................................... 27
CERTIFICATION OF DISCLOSURE OF RONALD E. HERMANCE, JR .................................... 28
CERTIFICATION OF DISCLOSURE OF DENIS J. SALAMONE ......................................... 29
EXHIBIT
Explanatory Note: This Form 10-Q contains certain "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, and
may be identified by the use of such words as "believe," "expect," "anticipate,"
"should," "planned," "estimated" and "potential." Examples of forward looking
statements include, but are not limited to, estimates with respect to the
financial condition, results of operations and business of Hudson City Bancorp,
Inc. that are subject to various factors which could cause actual results to
differ materially from these estimates. These factors include: changes in
general, economic and market conditions, legislative and regulatory conditions,
or the development of an interest rate environment that adversely affects Hudson
City Bancorp's interest rate spread or other income anticipated from operations
and investments. As used in this Form 10-Q, "we" and "us" and "our" refer to
Hudson City Bancorp, Inc. and its consolidated subsidiary Hudson City Savings
Bank, depending on the context.
Page 2
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
HUDSON CITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
MARCH 31, DECEMBER 31,
2003 2002
------------ ------------
(UNAUDITED)
(IN THOUSANDS)
ASSETS
Cash and due from banks ........................................................ $ 148,595 $ 153,096
Federal funds sold ............................................................. 123,700 87,700
------------ ------------
Total cash and cash equivalents ................................ 272,295 240,796
Investment securities held to maturity, market value of $1,493 at
March 31, 2003 and $1,497 at December 31, 2002 .......................... 1,406 1,406
Investment securities available for sale, at market value ...................... 1,520,558 560,932
Federal Home Loan Bank of New York stock ....................................... 150,000 137,500
Mortgage-backed securities held to maturity, market value of $4,845,453
at March 31, 2003 and $4,828,939 at December 31, 2002 ................... 4,773,705 4,734,266
Mortgage-backed securities available for sale, at market value ................. 1,189,850 1,391,895
Loans .......................................................................... 6,906,237 6,970,900
Less:
Deferred loan fees .................................................. 13,515 13,508
Allowance for loan losses ........................................... 25,724 25,501
------------ ------------
Net loans ...................................................... 6,866,998 6,931,891
Foreclosed real estate, net .................................................... 2,226 1,276
Accrued income receivable ...................................................... 68,547 69,248
Banking premises and equipment, net ............................................ 30,465 32,732
Other assets ................................................................... 37,455 42,662
------------ ------------
Total Assets ................................................... $ 14,913,505 $ 14,144,604
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest-bearing ........................................................ $ 9,216,178 $ 8,750,164
Noninterest-bearing ..................................................... 395,505 388,465
------------ ------------
Total deposits ................................................. 9,611,683 9,138,629
Borrowed funds ................................................................. 3,850,000 3,600,000
Accrued expenses and other liabilities ......................................... 118,430 89,892
------------ ------------
Total liabilities .............................................. 13,580,113 12,828,521
------------ ------------
Common stock, $0.01 par value, 800,000,000 shares authorized; 231,276,600 shares
issued, 191,839,122 shares outstanding at March 31, 2003,
191,973,258 shares outstanding at December 31, 2002 ..................... 2,313 2,313
Additional paid-in capital ..................................................... 531,301 530,496
Retained earnings .............................................................. 1,320,000 1,291,960
Treasury stock, at cost; 39,437,478 shares at March 31, 2003 and
39,303,342 shares at December 31, 2002 .................................. (473,455) (465,249)
Unallocated common stock held by the employee stock ownership plan ............. (50,984) (51,474)
Unearned common stock held by the recognition and retention plan ............... (14,568) (16,253)
Accumulated other comprehensive income, net of tax ............................. 18,785 24,290
------------ ------------
Total stockholders' equity ..................................... 1,333,392 1,316,083
------------ ------------
Total Liabilities and Stockholders' Equity ..................... $ 14,913,505 $ 14,144,604
============ ============
See accompanying notes to consolidated financial statements.
Page 3
HUDSON CITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------------------
2003 2002
------------ ------------
(IN THOUSANDS, EXCEPT SHARE DATA)
Interest and Dividend Income:
Interest and fees on first mortgage loans ............... $ 106,709 $ 105,557
Interest and fees on consumer and other loans ........... 2,125 2,608
Interest on mortgage-backed securities held to maturity . 61,075 68,995
Interest on mortgage-backed securities available for sale 14,399 7,446
Interest on investment securities held to maturity:
Taxable ............................................ 17 17
Exempt from federal taxes .......................... 5 6
Interest and dividends on investment securities available
for sale-taxable ................................... 11,690 2,571
Dividends on Federal Home Loan Bank of New York stock ... 1,990 909
Interest on federal funds sold .......................... 526 480
------------ ------------
Total interest and dividend income ............. 198,536 188,589
------------ ------------
Interest Expense:
Interest on deposits .................................... 55,684 67,538
Interest on borrowed funds .............................. 40,270 29,660
------------ ------------
Total interest expense ......................... 95,954 97,198
------------ ------------
Net interest income ........................ 102,582 91,391
Provision for Loan Losses ...................................... 225 525
------------ ------------
Net interest income after provision for loan
losses...................................... 102,357 90,866
------------ ------------
Non-Interest Income:
Service charges and other income ........................ 1,302 1,172
Gains on securities transactions, net ................... 4,171 --
------------ ------------
Total non-interest income ...................... 5,473 1,172
------------ ------------
Non-Interest Expense:
Compensation and employee benefits ...................... 16,916 16,186
Net occupancy expense ................................... 3,863 3,573
Federal deposit insurance assessment .................... 378 342
Computer and related services ........................... 335 310
Other expenses .......................................... 4,030 3,758
------------ ------------
Total non-interest expense ..................... 25,522 24,169
------------ ------------
Income before income tax expense ........... 82,308 67,869
Income Tax Expense ............................................. 30,107 24,283
------------ ------------
Net income ................................. $ 52,201 $ 43,586
============ ============
Basic Earnings Per Share ....................................... $ 0.29 $ 0.23
============ ============
Diluted Earnings Per Share ..................................... $ 0.28 $ 0.23
============ ============
Weighted Average Number of Common Shares Outstanding:
Basic ...................................... 182,764,282 187,119,312
Diluted .................................... 187,557,530 191,955,218
See accompanying notes to consolidated financial statements.
Page 4
HUDSON CITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31,
-------------------------------
2003 2002
----------- -----------
(IN THOUSANDS)
Cash Flows from Operating Activities:
Net income .............................................................. $ 52,201 $ 43,586
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, accretion and amortization expense .................. 9,952 2,542
Provision for loan losses ......................................... 225 525
Gains on securities transactions, net ............................. (4,171) --
Allocation of stock for employee benefit plans .................... 2,980 3,104
Net proceeds from sale of foreclosed real estate .................. 221 (26)
Decrease (increase) in accrued interest receivable ................ 701 (2,212)
Decrease (increase) in other assets ............................... 7,973 (3,609)
Increase in accrued expenses and other liabilities ................ 28,538 22,264
----------- -----------
Net Cash Provided by Operating Activities ...................................... 98,620 66,174
----------- -----------
Cash Flows from Investing Activities:
Originations of loans ................................................... (405,288) (561,334)
Purchases of loans ...................................................... (418,033) (443,254)
Payments on loans ....................................................... 884,417 555,666
Principal collection of mortgage-backed securities held to maturity ..... 840,582 454,390
Purchases of mortgage-backed securities held to maturity ................ (884,988) (577,949)
Principal collection of mortgage-backed securities available for sale ... 116,388 32,618
Proceeds from sales of mortgage-backed securities available for sale .... 196,467 --
Purchases of mortgage-backed securities available for sale .............. (116,379) (247,009)
Proceeds from maturities and calls of investment securities available for
sale..................................................................... 134,200 25,000
Purchases of investment securities available for sale ................... (1,093,208) (51,514)
Purchases of Federal Home Loan Bank of New York stock ................... (12,500) (8,851)
Sales (purchases) of premises and equipment, net ........................ 1,386 (3,890)
----------- -----------
Net Cash Used in Investment Activities ......................................... (756,956) (826,127)
----------- -----------
Cash Flows from Financing Activities:
Net increase in deposits ................................................ 473,054 338,618
Proceeds from borrowed funds ............................................ 250,000 500,000
Dividends paid .......................................................... (21,168) (14,230)
Purchases of treasury stock ............................................. (17,514) (22,758)
Exercise of stock options ............................................... 5,463 2,038
----------- -----------
Net Cash Provided by Financing Activities ...................................... 689,835 803,668
----------- -----------
Net Increase in Cash and Cash Equivalents ...................................... 31,499 43,715
Cash and Cash Equivalents at Beginning of Period ............................... 240,796 101,814
----------- -----------
Cash and Cash Equivalents at End of Period ..................................... $ 272,295 $ 145,529
=========== ===========
Supplemental Disclosures:
Interest paid ........................................................... $ 96,106 $ 94,865
=========== ===========
Income taxes paid ....................................................... $ -- $ 3,094
=========== ===========
See accompanying notes to consolidated financial statements.
Page 5
Hudson City Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
1. - BASIS OF PRESENTATION
Hudson City Bancorp, Inc. is a Delaware corporation organized in 1999 by Hudson
City Savings Bank in connection with the conversion and reorganization of Hudson
City Savings from a New Jersey mutual savings bank into a two-tiered mutual
savings bank holding company structure.
In our opinion, all the adjustments (consisting of normal and recurring
adjustments) necessary for a fair presentation of the consolidated financial
condition and consolidated results of operations for the unaudited periods
presented have been included. The results of operations and other data presented
for the three-month period ended March 31, 2003 are not necessarily indicative
of the results of operations that may be expected for the year ending December
31, 2003.
Certain information and note disclosures usually included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission for the
preparation of the Form 10-Q. The consolidated financial statements presented
should be read in conjunction with Hudson City Bancorp's audited consolidated
financial statements and notes to consolidated financial statements included in
Hudson City Bancorp's December 31, 2002 Annual Report on Form 10-K.
STATEMENTS OF CASH FLOW. For the purposes of reporting cash flows, cash and cash
equivalents includes cash on hand, amounts due from banks and federal funds
sold. Transfers of loans to foreclosed real estate of $1,171,000 and $290,000
for the three month periods ended March 31, 2003 and 2002, respectively, did not
result in cash receipts or cash payments.
STOCK OPTION PLANS' FAIR VALUE DISCLOSURE. The Hudson City stock option plans
and the recognition and retention plans ("RRP") are accounted for in accordance
with the provisions of APB Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"), and related Interpretations. Accordingly, no compensation
expense has been recognized for the stock option plans. Expense for the RRP in
the amount of the fair value of the common stock at the date of grant is
recognized ratably over the vesting period.
Page 6
Hudson City Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Had expense for Hudson City's stock option plans been determined based on the
fair value at the grant date for our stock options consistent with the method of
SFAS No. 123, our net income and earnings per share for all expenses related to
stock options and stocks granted in our recognition and retention plans would
have been reduced to the pro forma amounts that follow.
FOR THE THREE MONTHS
ENDED MARCH 31,
------------------------------------
2003 2002
-------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net income, as reported ......................... $ 52,201 $ 43,586
Add: expense recognized for the recognition and
retention plans, net of related tax effect 1,006 1,283
Less: total stock option and recognition and
retention plans expense, determined under
the fair value method, net of
related tax effect ....................... (1,613) (1,847)
-------- --------
Pro forma net income ............................ $ 51,594 $ 43,022
======== ========
Basic earnings per share: As reported .... 0.29 0.23
Pro forma ...... 0.28 0.23
Diluted earnings per share: As reported 0.28 0.23
Pro forma ...... 0.28 0.22
The fair value of the option grants was estimated on the date of grant using the
Black-Sholes option-pricing model with the following weighted average
assumptions:
FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------------
2003 2002
------ ------
Expected dividend yield 2.24% 1.48%
Expected volatility ... 24.71 20.54
Risk-free interest rate 2.98 4.23
Expected option life .. 5 years 5 years
Page 7
Hudson City Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
2. - COMPREHENSIVE INCOME
Comprehensive income is comprised of net income and other comprehensive income.
Other comprehensive income includes unrealized holding gains and losses on
securities available for sale, net of tax. Total comprehensive income during the
periods indicated is as follows.
FOR THE THREE MONTHS
ENDED MARCH 31,
-------------------------
2003 2002
-------- --------
(IN THOUSANDS)
Net income ............................... $ 52,201 $ 43,586
Other comprehensive income:
Unrealized holding loss on securities
available for sale (net of tax of
$(2,098) for 2003 and $(2,398)
for 2002) ....................... (3,038) (3,913)
Reclassification adjustment for gains
in net income (net of tax of
$(1,704)) ....................... (2,467) --
-------- --------
Total comprehensive income ............... $ 46,696 $ 39,673
======== ========
3. - EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations.
FOR THE THREE MONTHS ENDED MARCH 31,
-----------------------------------------------------------------------------------------
2003 2002
---------------------------------------- --------------------------------------------
PER PER
SHARE SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
-------- ------- -------- -------- ------- ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net income ................. $ 52,201 $ 43,586
======== ========
Basic earnings per share:
Income available to
common stockholders . $ 52,201 182,764 $ 0.29 $ 43,586 187,119 $ 0.23
======== ======
Effect of dilutive common
stock equivalents ... -- 4,794 -- 4,836
-------- ------- -------- -------
Diluted earnings per share:
Income available to
common stockholders . $ 52,201 187,558 $ 0.28 $ 43,586 191,955 $ 0.23
======== ======= ======== ======== ======= ======
Page 8
Hudson City Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
4. - SUBSEQUENT EVENT
On April 15, 2003, the Board of Directors of Hudson City Bancorp declared a
quarterly cash dividend of twelve cents ($0.12) per common share outstanding.
The dividend is payable on June 2, 2003 to stockholders of record at the close
of business on May 9, 2003.
5. - RECENT ACCOUNTING PRONOUNCEMENTS
In December, 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation, Transition and Disclosure." SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. SFAS No. 148 also requires
that disclosures of the pro forma effect of using the fair value method of
accounting for stock-based employee compensation be displayed more prominently
and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the
pro forma effect in interim financial statements. The additional disclosure
requirements of SFAS No. 148 are effective for fiscal years ended after December
15, 2002. We have adopted the expanded disclosure provisions of this statement
effective December 31, 2002 and have included the pro forma disclosures
provisions in this quarterly report on Form 10-Q.
In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirement of Guarantees, Including Indirect
Guarantees of Indebtedness of Others". FIN 45 addresses disclosures to be made
by a guarantor in its financial statements about its obligations under
guarantees. The interpretation also requires the recognition, at estimated fair
value, of a liability by the guarantor at the inception of certain guarantees
issued or modified after December 31, 2002. This interpretation is not expected
to have a material impact on our consolidated financial statements.
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities". The interpretation provides guidance on the
identification of entities controlled through means other than voting rights.
The Interpretation specifies how a business enterprise should evaluate its
interests in a variable interest entity to determine whether or not to
consolidate that entity. A variable interest entity must be consolidated by its
primary beneficiary if the entity does not effectively disperse risks among the
parties involved. This interpretation is not expected to have a material impact
on our consolidated financial statements.
Page 9
Hudson City Bancorp, Inc.
Form 10-Q
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2003 AND DECEMBER 31, 2002
During the three-month period ended March 31, 2003, we grew our operating
subsidiary, Hudson City Savings Bank, primarily through purchases of investment
securities available for sale. The high level of prepayment activity on our
mortgage-related assets, due to the historically low levels of interest rates,
resulted in a decrease in our core investments of residential mortgage loans and
mortgage-backed securities. The increase in assets, consistent with our growth
strategies, was funded by customer deposits and borrowed funds. As a result, our
total assets increased $768.9 million, or 5.4%, to $14.91 billion at March 31,
2003 from $14.14 billion at December 31, 2002.
Loans decreased $64.7 million, or 0.9%, to $6.91 billion at March 31, 2003 from
$6.97 billion at December 31, 2002. For the three-month period ended March 31,
2003, we originated first mortgage loans of $387.6 million and purchased first
mortgage loans of $418.0 million, compared with originations of $546.6 million
and purchases of $443.3 million for the corresponding 2002 period. These first
mortgage loan originations and purchases were exclusively in one-to four-family
mortgage loans and were primarily fixed-rate loans. At March 31, 2003,
fixed-rate mortgage loans accounted for 88.2% of our first mortgage loan
portfolio compared with 86.5% at December 31, 2002. This percentage of
fixed-rate loans to total loans may have an adverse impact on our earnings in a
rising rate environment as the interest rate on these loans would not reprice as
would adjustable-rate loans. The decrease in loans reflected the high level of
prepayment activity experienced during the first three months of 2003. The
decrease in loan originations and loan purchases was due, in part, to the
investing of certain of the proceeds from loan prepayments into investment
securities available for sale in order to shorten the overall duration of our
assets. In addition, certain of our customers took advantage of our loan
modification program. These modifications were not reflected in loan
origination totals.
The loan purchases were made pursuant to our wholesale loan purchase program
established to supplement our retail loan originations. The purchasing
agreements, as established with each seller/servicer, contain parameters as to
the loans that can be included in each package. These parameters, such as
maximum loan size and maximum loan-to-value ratio, conform to parameters
generally utilized by us to originate mortgage loans. Purchased loan packages
are subject to internal due diligence procedures that may include review of
individual loan files. This review subjects the purchased loan file to
substantially the same underwriting standards used in our own loan origination
process. Loan packages purchased include mortgage loans secured by properties
located primarily in the east coast corridor states between Massachusetts and
Washington D.C., and in Michigan and Illinois.
During the first quarter of 2003, due to the low long-term interest rate
environment, $137.1 million of our loan originations were the result of
refinancing of our existing mortgage loans. The amount of refinancing of
existing loans was included in total loan originations. We allow certain
customers to modify, for a fee, their existing mortgage loans with the intent of
maintaining customer relationships in periods of extensive refinancing due to
low long-term interest rates. In general, all terms and conditions of the
existing mortgage loan remain the same except the adjustment of the interest
rate to the currently offered fixed-rate product with a similar term to maturity
or to a reduced term at the request of the borrower. Modifications of our
existing mortgage loans during the first quarter of 2003 were approximately
$371.2 million.
Page 10
Hudson City Bancorp, Inc.
Form 10-Q
Mortgage-backed securities decreased $162.6 million, or 2.7%, to $5.96 billion
at March 31, 2003 from $6.13 billion at December 31, 2002. This decrease
reflected the high levels of prepayment activity on our mortgage-backed
securities during the first quarter of 2003 due to the low long-term interest
rate environment. The decrease also reflected the sales of approximately $192.3
million of available for sale mortgage-backed securities during the first three
months of 2003. Investment securities available for sale increased $959.6
million, or 171.1%, to $1.52 billion at March 31, 2003 from $560.9 million at
December 31, 2002. The increase in investment securities available for sale
reflected the investment of the proceeds from the high level of prepayment
activity on our mortgage-related assets into investment securities. The increase
in investment securities also reflected our decision to shorten the overall
duration of our assets by investing in callable government-sponsored agency
securities with final maturities of five to seven years.
Federal funds sold increased $36.0 million, or 41.0%, to $123.7 million at March
31, 2003 from $87.7 million at December 31, 2002. This increase in federal funds
sold was primarily due to increased levels of cash flows received late in the
period having been temporarily invested in federal funds sold. Federal Home Loan
Bank ("FHLB") stock increased $12.5 million, or 9.1%, to $150.0 million at March
31, 2003, which was the amount of stock we were required by the FHLB to hold.
Total liabilities increased $751.6 million, or 5.9%, to $13.58 billion at March
31, 2003 compared with $12.83 billion at December 31, 2002. Total deposits
increased $473.1 million, or 5.2%, to $9.61 billion at March 31, 2003 from $9.14
billion at December 31, 2002. Interest-bearing deposits increased $466.0
million, or 5.3%, to $9.22 billion at March 31, 2003 from $8.75 billion at
December 31, 2002. The increase in interest-bearing deposits was primarily due
to an increase in interest-bearing demand accounts of $500.1 million, or 48.1%,
to $1.54 billion at March 31, 2003. This increase was due to growth in our High
Value Checking account. In April 2002, we introduced our interest-bearing High
Value Checking account, which we view as an attractive alternative to cash
management accounts offered by brokerage firms. This account offers unlimited
checking, on-line banking and debit card availability as part of the product,
and pays an interest rate generally above competitive market rates. The balance
in the High Value Checking account at March 31, 2003 was $1.44 billion compared
with $943.2 million at December 31, 2002.
The growth in interest-bearing deposits was also due to a $25.5 million, or
2.9%, increase in regular savings deposits to $918.2 million at March 31, 2003.
These increases in interest-bearing deposits were partially offset by a $58.9
million, or 1.0%, decrease in time deposits to $6.13 billion at March 31, 2003.
Non-interest bearing deposits increased $7.0 million, or 1.8%, to $395.5 million
at March 31, 2003 from $388.5 million at December 31, 2002. The increase in
total deposits was primarily used to fund our planned asset growth. We believe
the increase in interest-bearing deposits was due primarily to our consistent
offering of competitive rates on our deposit products, primarily on our
interest-bearing High Value Checking account.
Borrowed funds increased $250.0 million, or 6.9%, to $3.85 billion at March 31,
2003 from $3.60 billion at December 31, 2002. The additional borrowed funds were
primarily used to fund asset growth consistent with our capital management
strategy. Borrowed funds were comprised of $2.05 billion of securities sold
under agreements to repurchase and $1.80 billion of FHLB advances. Securities
pledged as collateral against our securities sold under agreements to repurchase
had a market value at March 31, 2003 of approximately $2.03 billion. Advances
from the FHLB utilize our mortgage portfolio as collateral. The increase in
borrowed funds consisted of fixed maturities of three months or initial
quarterly call options of three months from the date of borrowing. These
short-term borrowed funds complement the $3.60 billion of previously existing
long-term borrowings. During the first three months
Page 11
Hudson City Bancorp, Inc.
Form 10-Q
of 2003, we also restructured certain of our borrowed funds, which resulted in
the extension of the weighted-average maturity and lowered the contract interest
rate.
Accrued expenses and other liabilities increased $28.5 million, or 31.7%, to
$118.4 million at March 31, 2003 from $89.9 million at December 31, 2002
primarily due to an increase in accrued income tax payable caused by the timing
of tax payments.
Total stockholders' equity increased $17.3 million, or 1.3%, to $1.33 billion at
March 31, 2003 from $1.32 billion at December 31, 2002. The increase was
primarily the result of net income for the three-month period ended March 31,
2003 of $52.2 million, an increase of $5.5 million due to the exercise of
783,464 stock options, and an increase of $3.0 million due to the allocation of
stock-related employee benefit plans. Partially offsetting these increases in
stockholders' equity were repurchases of 917,600 shares of our common stock at
an aggregate cost of $17.5 million, cash dividends declared and paid to common
stockholders of $21.2 million and a decrease in accumulated other comprehensive
income of $5.5 million. The decrease in accumulated other comprehensive income
was primarily due to the decrease in the overall market value of our
mortgage-backed securities available for sale.
During the first quarter of 2003, the Board of Directors approved our fifth
stock repurchase program. This program authorized the repurchase of up to
9,525,000 shares of common stock. As of March 31, 2003, there remained
10,416,196 shares authorized to be purchased under our previously existing
program and this fifth stock repurchase program.
At March 31, 2003, the ratio of total stockholders' equity to total assets was
8.94% compared with 9.30% at December 31, 2002. For the three-month period ended
March 31, 2003, the ratio of average stockholders' equity to average assets was
9.20% compared with 10.12% for the year ended December 31, 2002. The decrease in
these ratios was primarily due to our capital management strategy of planned
internal asset growth, and a slower percentage growth in stockholders' equity as
compared to the percentage growth in assets due to payment of cash dividends and
stock repurchases. Stockholders' equity per common share was $7.31 at March 31,
2003 compared with $7.22 at December 31, 2002.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND
2002
AVERAGE BALANCE SHEETS. The table on the following page presents certain
information regarding Hudson City Bancorp's financial condition and net interest
income for the three-month periods ended March 31, 2003 and 2002. The tables
present the annualized average yield on interest-earning assets and the
annualized average cost of interest-bearing liabilities. We derived the yields
and costs by dividing annualized income or expense by the average balance of
interest-earnings assets and interest-bearing liabilities, respectively, for the
periods shown. We derived average balances from daily balances over the periods
indicated. Interest income includes fees that we considered adjustments to
yields. Yields on tax-exempt obligations were not computed on a tax equivalent
basis.
Page 12
Hudson City Bancorp, Inc.
Form 10-Q
FOR THE THREE MONTHS ENDED MARCH 31,
-------------------------------------------------------------------
2003 2002
-------------------------------- --------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
----------- -------- ------- ----------- -------- -------
(DOLLARS IN THOUSANDS)
ASSETS:
Interest-earnings assets:
First mortgage loans, net (1)........... $ 6,729,310 $106,709 6.34% $ 5,996,018 $105,557 7.04%
Consumer and other loans................ 126,172 2,125 6.74 144,704 2,608 7.21
Federal funds sold...................... 185,053 526 1.15 125,141 480 1.56
Mortgage-backed securities at amortized
cost................................... 6,104,615 75,474 4.95 5,138,997 76,441 5.95
Federal Home Loan Bank stock............ 141,639 1,990 5.62 82,841 909 4.39
Investment securities at amortized cost. 880,963 11,712 5.32 174,255 2,594 5.95
----------- -------- ----------- --------
Total interest-earning assets........ 14,167,752 198,536 5.61 11,661,956 188,589 6.47
-------- --------
Noninterest-earnings assets................. 318,520 238,200
----------- -----------
Total Assets......................... $14,486,272 $11,900,156
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
Savings accounts........................ $ 905,571 3,229 1.45 $ 832,464 4,257 2.07
Interest-bearing demand accounts........ 1,301,176 8,182 2.55 101,499 347 1.39
Money market accounts................... 624,200 2,107 1.37 546,823 2,857 2.12
Time deposits........................... 6,140,805 42,166 2.78 6,250,378 60,077 3.90
----------- -------- ----------- --------
Total interest-bearing deposits...... 8,971,752 55,684 2.52 7,731,164 67,538 3.54
Borrowed funds.......................... 3,682,778 40,270 4.43 2,396,666 29,660 5.02
----------- -------- ----------- --------
Total interest-bearing liabilities... 12,654,530 95,954 3.08 10,127,830 97,198 3.89
----------- -------- ----------- --------
Noninterest-bearing liabilities:
Noninterest-bearing deposits............ 386,924 382,210
Other noninterest-bearing liabilities... 111,640 97,044
----------- -----------
Total noninterest-bearing liabilities 498,564 479,254
----------- -----------
Total liabilities....................... 13,153,094 10,607,084
Stockholders' equity.................... 1,333,178 1,293,072
----------- -----------
Total Liabilities and Stockholders'
Equity.............................. $14,486,272 $11,900,156
=========== ===========
Net interest income/net interest rate
spread (2)................................. $102,582 2.53% $ 91,391 2.58%
======== ========
Net interest-earning assets/net interest
margin (3)................................. $ 1,513,222 2.86% $ 1,534,126 3.09%
=========== ===========
Ratio of interest-earning assets to
Interest-bearing liabilities............ 1.12x 1.15x
- ----------
(1) Amount is net of deferred loan fees and allowance for loan losses and
includes non-performing loans.
(2) Determined by subtracting the annualized weighted average cost of total
interest-bearing liabilities from the annualized weighted average yield on
total interest-earning assets.
(3) Determined by dividing annualized net interest income by total average
interest-earning assets.
Page 13
Hudson City Bancorp, Inc.
Form 10-Q
GENERAL. Net income was $52.2 million for the three-month period ended March 31,
2003, an increase of $8.6 million, or 19.7%, compared with net income of $43.6
million for the three-month period ended March 31, 2002. Basic and diluted
earnings per common share were $0.29 and $0.28, respectively, for the first
quarter of 2003 compared with basic and diluted earnings per share of $0.23 for
the first quarter of 2002. For the three-month period ended March 31, 2003 our
return on average stockholders' equity was 15.66% compared with 13.48% for the
corresponding period in 2002. The increase in the return on average
stockholders' equity was primarily due to the growth of our net income and a
slower percentage growth in stockholders' equity as compared to the percentage
growth in assets due to payment of cash dividends and stock repurchases. Our
return on average assets for the three-month period ended March 31, 2003 was
1.44% compared with 1.47% for the corresponding period in 2002.
During the first three months of 2003, long-term interest rates generally
declined, while short-term interest rates remained relatively stable, thus
flattening the yield curve. A flatter yield curve occurs when the spread between
long-term interest rates and short-term interest rate decreases. The rates on
our interest-earning assets are generally based upon long-term interest rates
whereas the rates paid on our interest-bearing liabilities are generally based
upon short-term rates. The low long-term interest rate environment has caused an
acceleration of mortgage-related asset prepayment activity, which accelerated
the amortization of the net premium on these mortgage-related assets.
INTEREST AND DIVIDEND INCOME. Total interest and dividend income increased $9.9
million, or 5.2%, to $198.5 million for the three-month period ended March 31,
2003 compared with $188.6 million for the three-month period ended March 31,
2002. The increase in total interest income was primarily due to the average
balance of total interest-earning assets increasing $2.51 billion, or 21.5%, to
$14.17 billion for the three-month period ended March 31, 2003 compared with
$11.66 billion for the corresponding period in 2002. This increase was due in
part to a $733.3 million, or 12.2%, increase in the average balance of first
mortgage loans, net to $6.73 billion for the three-month period ended March 31,
2003 compared with $6.00 billion for the corresponding period in 2002. The
average balance of mortgage-backed securities increased $965.6 million, or
18.8%, to $6.10 billion for the first three months of 2003 compared with $5.14
billion for the first three months of 2002. The increase was also due in part to
an increase in the average balance of investment securities of $706.7 million to
$881.0 million for the first quarter of 2003 compared with $174.3 million for
the corresponding quarter in 2002. The increase in the average balance of FHLB
stock of $58.8 million reflected the increase in the amount of FHLB stock
required to be held by us.
The above increases in the average balances of first mortgage loans and
mortgage-backed securities reflected internal growth that was consistent with
our capital management strategy to originate and purchase first mortgage loans
as our primary growth strategy, while purchasing mortgage-backed securities to
supplement loan originations and purchases, and assist in the management of
interest rate risk. Although the increase in the average balance of loans was
less than the increase in the average balance of mortgage-backed securities, the
impact of the loan growth was more significant in terms of interest income
because our first mortgage loans are generally higher yielding assets than our
mortgage-backed securities. The growth in the average balance of investment
securities reflected the investment of cash flows in the first quarter of 2003
into investment securities.
The impact on interest income due to the growth in the average balance of
interest-earning assets was partially offset by an 86 basis point decrease in
the annualized average yield on interest-earning assets to 5.61% for the
three-month period ended March 31, 2003 from 6.47% for the three-month period
ended March 31, 2002. The annualized average yield on first mortgage loans, net,
decreased 70 basis points to
Page 14
Hudson City Bancorp, Inc.
Form 10-Q
6.34% for the first quarter of 2003 from 7.04% for the first quarter of 2002.
The annualized average yield on mortgage-backed securities decreased 100 basis
points to 4.95% for the first three months of 2003 from 5.95% for the
corresponding period in 2002. The annualized average yield on investment
securities decreased 63 basis points to 5.32% for the three-month period ended
March 31, 2003 from 5.95% for the corresponding period in 2002.
The decrease in the annualized average yield on first mortgage loans reflected
the large volume of loan originations, purchases and modifications during the
low long-term interest rate environment of 2002 and the first three months of
2003. The decrease in the annualized average yield on mortgage-backed securities
reflected the large volume of purchases and the downward repricing of our
adjustable-rate securities during the low interest rate environment of 2002 and
the first three months of 2003. The larger decrease in the average yield on
mortgage-backed securities compared with mortgage loans was due to the larger
increase in the average balance of mortgage-backed securities in this low rate
environment and the greater percentage of adjustable-rate securities in the
mortgage-backed security portfolio as compared to our mortgage loan portfolio.
The decrease in the annualized average yield on our mortgage-related assets also
reflected a $4 million acceleration of the amortization of the net premium on
these assets due to the high level of prepayment activity. If market interest
rates remain low, the yield on our mortgage-backed securities may continue to
adjust downward due to annual rate change limits that are part of the terms of
the security, which have limited the extent our adjustable-rate securities may
have adjusted in prior periods. The decrease in the annualized average yield on
our investment securities reflected the large volume purchases made during the
low interest rate environment of the first quarter of 2003.
INTEREST EXPENSE. Total interest expense, comprised of interest on deposits and
interest on borrowed funds, decreased $1.2 million, or 1.2%, to $96.0 million
for the three-month period ended March 31, 2003 from $97.2 million for the
three-month period ended March 31, 2002, notwithstanding an overall increase in
interest-bearing liabilities. Interest expense on borrowed funds increased $10.6
million, or 35.7%, to $40.3 million for the three-month period ended March 31,
2003 from $29.7 million for the corresponding period in 2002. Interest expense
on deposits decreased $11.8 million, or 17.5%, to $55.7 million for the first
quarter of 2003 from $67.5 million for the first quarter of 2002. The decrease
in total interest expense reflected the impact of an 81 basis point decrease in
the annualized average cost of interest-bearing liabilities to 3.08% for the
three-month period ended March 31, 2003 from 3.89% for the three-month period
ended March 31, 2002. The decrease in interest expense was offset, in part, by
an increase in the average balance of interest-bearing liabilities of $2.52
billion, or 24.9%, to $12.65 billion for the three-month period ended March 31,
2003 from $10.13 billion for the corresponding period in 2002.
The increase in interest expense on borrowed funds was primarily due to a $1.28
billion, or 53.3%, increase in the average balance of borrowed funds to $3.68
billion for the first quarter of 2003 from $2.40 billion for the first quarter
of 2002. The impact on interest expense on borrowed funds due to the increase in
the average balance of borrowed funds was offset, in part, by a 59 basis point
decrease in the annualized average cost of borrowed funds to 4.43% for the first
three months of 2003 from 5.02% for the first three months 2002.
The growth of borrowed funds has been used to fund internal asset growth
consistent with our capital management and growth strategies. The funds borrowed
during the first three months of 2003 were short-term in nature, consisting of
fixed maturities of three months or initial quarterly call options of three
months from the date of borrowing. These short-term borrowed funds complement
the $3.60 billion of existing long-term borrowings. The decrease in the
annualized average cost of borrowed funds reflected the continued growth of our
borrowed funds in the low interest rate environment that existed during 2002
Page 15
Hudson City Bancorp, Inc.
Form 10-Q
and the first three months of 2003. The decrease in the annualized average cost
of borrowed funds also reflected the restructuring of certain of our borrowed
funds during the first quarter of 2003, which resulted in the extension of the
weighted-average maturity and lowered the contract rate.
The $11.8 million decrease in interest expense on deposits was primarily due to
a 102 basis point decrease in the annualized average cost of interest-bearing
deposits to 2.52% for the three-month period ended March 31, 2003 from 3.54% for
the corresponding period in 2002. The decrease in the annualized average cost of
interest-bearing deposits was primarily due to a 112 basis point decrease in the
annualized average cost of our time deposits to 2.78% for the first quarter of
2003 from 3.90% for the first quarter of 2002. The annualized average cost of
regular savings accounts decreased 62 basis points to 1.45% for the first three
months of 2003. The annualized average cost of money market deposits decreased
75 basis points to 1.37% for the first quarter of 2003. Partially offsetting
these decreases, the annualized average cost of interest-bearing demand accounts
increased 116 basis points to 2.55% for the three-month period ended March 31,
2003 from 1.39% for the corresponding period in 2002, due to the introduction
during the second quarter of 2002 of our High Value Checking account. The
decrease in the annualized average cost of interest-bearing deposits reflected
the low interest rate environment experienced during 2002 and the first three
months of 2003. The impact on the average cost of interest-bearing liabilities
due to possible further decreases in market interest rates may not be as
favorable in future periods as short-term market rates are currently at
historically low levels.
The impact on interest expense on deposits due to the decrease in the annualized
average cost of interest-bearing deposits was offset, in part, by a $1.24
billion, or 16.0%, increase in the average balance of interest-bearing deposits
to $8.97 billion for the three-month period ended March 31, 2003 from $7.73
billion for the three-month period ended March 31, 2002. The average balance of
interest-bearing demand accounts increased $1.20 billion to $1.30 billion for
the first quarter of 2003 from $101.5 million for the corresponding period in
2002. The average balance of time deposits decreased $109.6 million, or 1.8%, to
$6.14 billion for the first quarter of 2003 from $6.25 billion for the first
quarter of 2002. We believe the increase in interest-bearing deposits was due
primarily to our consistent offering of competitive rates on our deposit
products, primarily on our interest-bearing High Value Checking account.
NET INTEREST INCOME. Net interest income increased $11.2 million, or 12.3%, to
$102.6 million for the three-month period ended March 31, 2003 compared with
$91.4 million for the three-month period ended March 31, 2002. This increase
primarily reflected our planned balance sheet growth, which resulted in
increases in the average balance of both interest-earning assets and
interest-bearing liabilities, and the net interest rate spread earned on this
growth. Our net interest rate spread, the difference between the annualized
average yield on total interest-earning assets and the annualized average cost
of total interest-bearing liabilities, decreased 5 basis points to 2.53% for the
first quarter of 2003 from 2.58% for the first quarter of 2002. Our net interest
margin, represented by annualized net interest income divided by average total
interest-earning assets, decreased 23 basis points to 2.86% for the first
quarter of 2003 from 3.09% for the first quarter of 2002.
These decreases reflected the larger decrease in our annualized yield on
interest-earning assets compared with the decrease in the annualized cost of
interest-bearing liabilities due to the continued decline in long-term market
interest rates during 2002 and the first quarter of 2003. The decrease also
reflected the increased amortization of the net premium on our mortgage loans
and mortgage-backed securities due to the high level of prepayment activity on
these mortgage-related assets. The larger decrease in our net
Page 16
Hudson City Bancorp, Inc.
Form 10-Q
interest margin compared with the decrease in our net interest rate spread
reflected the use of investable funds to purchase treasury stock.
PROVISION FOR LOAN LOSSES. Our provision for loan losses for the three-month
period ended March 31, 2003 was $225,000, a decrease of $300,000, or 57.1%,
compared with $525,000 for the three-month period ended March 31, 2002. Net
charge-offs were $2,000 for the first quarter of 2003 and 2002. The decrease in
the provision reflected our recent low charge-off history given the relative
stability of the housing market. The allowance for loan losses increased $0.2
million, or 0.8%, to $25.7 million at March 31, 2003 from $25.5 million at
December 31, 2002.
Non-performing loans, defined as non-accruing loans and accruing loans
delinquent 90 days or more, decreased $0.1 million, or 0.5%, to $20.1 million at
March 31, 2003 from $20.2 million at December 31, 2002. The ratio of
non-performing loans to total loans was 0.29% at March 31, 2003 and December 31,
2002. The ratio of the allowance for loan losses to non-performing loans was
127.85% at March 31, 2002 compared with 126.27% at December 31, 2002. The ratio
of the allowance for loan losses to total loans was 0.37% at March 31, 2003 and
December 31, 2002.
Although we believe that we have established and maintained the allowance for
loan losses at adequate levels, additions may be necessary if future economic
and other conditions differ substantially from the current operating
environment. Although we use the best information available, the level of the
allowance for loan losses remains an estimate that is subject to significant
judgment and short-term change. See "Critical Accounting Policies."
NON-INTEREST INCOME. Total non-interest income increased $4.3 million to $5.5
million for the first quarter of 2003 from $1.2 million for the first quarter of
2002. Service charges and other income, which generally consist of service
charges and fees on deposit accounts, were $1.3 million for the first three
months of 2003 compared with $1.2 million for the corresponding period in 2002.
The $4.2 million gain on securities transactions, net, in the first quarter of
2003, resulted from an opportunity to realize gains from the sale of certain
available for sale mortgage-backed securities prior to an interest rate change
which could have had an adverse impact on their fair market value. The cash flow
of $196.5 million from the sale of the securities was reinvested in higher
yielding fixed rate investment securities.
NON-INTEREST EXPENSE. Total non-interest expense increased $1.3 million, or
5.4%, to $25.5 million for the three-month period ended March 31, 2003 from
$24.2 million for the three-month period ended March 31, 2002. The increase was
primarily due to an increase in compensation and employee benefits of $0.7
million, or 4.3%, to $16.9 million for the first quarter of 2003 from $16.2
million for the first quarter of 2002. The increase in compensation and employee
benefits reflected routine salary increases, increases in stock-related
compensation expense and increases in pension expense. The increases experienced
in the average market price of our common stock have resulted in an increase in
our stock-related compensation expense.
Our efficiency ratio, determined by dividing non-interest expense by the sum of
net interest income and non-interest income was 23.62% for the three-month
period ended March 31, 2003 compared with 26.11% for the corresponding period in
2002. Our ratio of annualized non-interest expense to average assets for the
first quarter of 2003 was 0.70% compared with 0.81% for the first quarter of
2002.
Page 17
Hudson City Bancorp, Inc.
Form 10-Q
INCOME TAXES. Income tax expense increased $5.8 million, or 23.9%, to $30.1
million for the first three months of 2003 from $24.3 million for the first
three months of 2002. This increase was primarily due to the $14.4 million, or
21.2%, increase in income before income tax expense and changes to the New
Jersey corporate business tax code passed in July 2002, retroactive to January
2002. Our effective tax rate for the first quarter of 2003 was 36.58% compared
with 35.78% for the first quarter of 2002.
LIQUIDITY AND CAPITAL RESOURCES
The term "liquidity" refers to our ability to generate adequate amounts of cash
to fund loan originations, loan purchases, deposit withdrawals and operating
expenses. Our primary sources of funds are scheduled amortization and
prepayments of loan principal and mortgage-backed securities, deposits, borrowed
funds, maturities and calls of investment securities and funds provided by our
operations. Our membership in the FHLB provides us access to additional sources
of borrowed funds, which is generally limited to twenty times the amount of FHLB
stock owned.
Scheduled loan repayments and maturing investment securities are a relatively
predictable source of funds. However, deposit flows, calls of investment
securities and borrowed funds, and prepayments of loans and mortgage-backed
securities are strongly influenced by interest rates, general and local economic
conditions and competition in the marketplace. These factors reduce the
predictability of the timing of these sources of funds. As mortgage interest
rates decline, customer-prepayment activity tends to accelerate causing an
increase in cash flow from both our mortgage loan and mortgage-backed security
portfolios. If our pricing is competitive, the demand for mortgage originations
also accelerates. When mortgage rates increase, the opposite effect tends to
occur and our loan origination and purchase activity becomes increasingly
dependent on the strength of our residential real estate market, home purchase
and new construction activity.
Principal repayments on loans were $884.4 million during the three-month period
ended March 31, 2003 compared with $555.7 million for three-month period ended
March 31, 2002. Principal payments received on mortgage-backed securities
totaled $957.0 million during the first quarter of 2003 compared to $487.0
million during the first quarter of 2002. The increase in payments on loans and
mortgage-backed securities reflected the low market interest rate environment
during 2002 and the first quarter of 2003, which caused an increase in
prepayment activity during the first quarter of 2003 when compared with the
corresponding 2002 period. Maturities and calls of investment securities totaled
$134.2 million during the first three months of 2003 compared with maturities
and calls of $25.0 million during the first three months of 2002. The higher
amount of calls during 2003 was due to the continuing declining interest rate
environment experienced during the first quarter of 2003 and the larger balance
of callable investment securities held at the beginning of 2003 compared with
the amount of callable investment securities held at the beginning of 2002.
For the three-month period ended March 31, 2003, we borrowed $250.0 million
compared with $500.0 million during the three-month period ended March 31, 2002.
The decrease in new borrowings was due to the larger growth of our
interest-bearing deposits in the first quarter of 2003 than in the prior period.
There were no principal payments on borrowed funds during the first quarter of
2003 or the first quarter of 2002. The funds borrowed during the first three
months of 2003 were short-term in nature, consisting of fixed maturities of
three months or initial quarterly call options of three months from the date of
borrowing. At March 31, 2003, there were $100.0 million of borrowed funds
scheduled to mature within one year.
Page 18
Hudson City Bancorp, Inc.
Form 10-Q
Total deposits increased $473.1 million during the first three months of 2003
compared with an increase of $338.6 million during the first three months of
2002. Deposit flows are affected by the level of market interest rates, the
interest rates and products offered by competitors, the volatility of equity
markets, and other factors. We believe the increase in interest-bearing deposits
was due primarily to our consistent offering of competitive rates on our deposit
products, primarily on our interest-bearing High Value Checking account. Time
deposit accounts scheduled to mature within one year were $5.00 billion at March
31, 2003. Based on our deposit retention experience and current pricing
strategy, we anticipate that a significant portion of these time deposits will
remain with Hudson City Savings. We are committed to maintaining a strong
liquidity position; therefore, we monitor our liquidity position on a daily
basis. We anticipate that we will have sufficient funds to meet our current
funding commitments.
Our primary investing activities are the origination and purchase of one-to
four-family real estate loans and consumer and other loans, the purchase of
mortgage-backed securities, and the purchase of investment securities. We
originated total loans of $405.3 million during the first quarter of 2003
compared with $561.3 during the first quarter of 2002. We purchased total loans
of $418.0 million during the first three months of 2003 compared with $443.3
million during the first three months of 2002. The decrease in loan originations
and loans purchases was due, in part, to the investing of certain of the
proceeds from loan prepayments into investment securities available for sale in
order to shorten the overall duration of our assets.
Purchases of mortgage-backed securities during the first quarter of 2003 were
$1.00 billion compared with $825.0 million during the first quarter of 2002. Of
the mortgage-backed securities purchased in the first quarter of 2003, $353.8
million were real estate mortgage investment conduits ("REMIC"). The REMIC
purchases in the first quarter of 2003 had fixed interest rates and generally
had shorter average lives compared with alternate mortgage-backed security
investments available at the time of purchase. The increase in purchases of
mortgage-backed securities was related to the increase in prepayment activity
due to the low market interest rate environment experienced during 2002 and the
first quarter of 2003.
During the first quarter of 2003 we purchased $1.09 billion of investment
securities compared with purchases of $51.5 million during the first quarter of
2002. These purchases were made with cash flows from payments on our
mortgage-related assets to shorten the overall duration of our assets. As part
of the membership requirements of the FHLB, we are required to purchase a
certain dollar amount of FHLB common stock. During the first quarter of 2003, we
purchased $12.5 million of FHLB common stock compared with purchases of $8.9
million during the first quarter of 2002. The purchases during the first quarter
of 2003 bring our total investment in FHLB stock to $150.0 million, the amount
we are currently required to hold.
Under our stock repurchase programs, shares of Hudson City Bancorp common stock
may be purchased in the open market and through other privately negotiated
transactions, from time-to-time, depending on market conditions. The repurchased
shares are held as treasury stock for general corporate use. During the first
three months of 2003, we purchased 917,600 shares of our common stock at an
aggregate cost of $17.5 million. During the first three months of 2002, we
purchased 1,527,000 shares of our common stock at an aggregate cost of $22.8
million. At March 31, 2003, there were 10,416,916 shares remaining to be
repurchased under the existing stock repurchase programs.
Page 19
Hudson City Bancorp, Inc.
Form 10-Q
At March 31, 2003, Hudson City Savings had outstanding loan commitments to
borrowers of approximately $294.8 million, commitments to purchase loans of
approximately $175.3 million, commitments to purchase mortgage-backed securities
of $505.4 million and available home equity and overdraft lines of credit of
approximately $85.9 million. We anticipate we will have sufficient funds
available to meet our current commitments in the normal course of business.
Cash dividends declared and paid during the first quarter of 2003 were $21.2
million compared with $14.2 million during the first quarter of 2002. The
dividend pay-out ratio for the first quarter of 2003 was 37.93% compared with
32.61% for the first quarter of 2002. On April 15, 2003, the Board of Directors
declared a quarterly cash dividend of twelve cents ($0.12) per common share. The
dividend is payable on June 2, 2003 to stockholders of record at the close of
business on May 9, 2003.
At March 31, 2003, we exceeded each of the applicable regulatory capital
requirements of the Federal Reserve Bank and the Federal Deposit Insurance
Corporation. The following table presents the regulatory ratios of Hudson City
Savings Bank and Hudson City Bancorp.
REGULATORY REQUIREMENTS
--------------------------------------
ACTUAL AT MINIMUM CAPITAL CLASSIFICATION AS
MARCH 31, 2003 ADEQUACY WELL-CAPITALIZED
-------------------- ------------------ ------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
---------- ------- -------- ------- -------- -------
(DOLLARS IN THOUSANDS)
Bank
Leverage (Tier 1)
Capital....... $1,212,049 8.38% $578,451 4.00% $723,064 5.00%
Risk-based
capital:
Tier 1........ 1,212,049 25.32 191,515 4.00 287,272 6.00
Total......... 1,237,773 25.85 383,029 8.00 478,787 10.00
Bancorp
Leverage (Tier 1)
Capital....... $1,314,724 9.09% $578,482 4.00% $723,102 5.00%
Risk-based
capital:
Tier 1........ 1,314,724 27.46 191,518 4.00 287,276 6.00
Total......... 1,340,448 28.00 383,035 8.00 478,794 10.00
CRITICAL ACCOUNTING POLICIES
Note 1 to our Audited Consolidated Financial Statements for the year ended
December 31, 2002 of our Annual Report on Form 10-K for the year ended December
31, 2002, contains a summary of our significant accounting policies. We believe
our policies with respect to the methodology for our determination of the
allowance for loan losses and asset impairment judgments, including other than
temporary declines in the value of our securities, involve a higher degree of
complexity and require management to make difficult and subjective judgments
which often require assumptions or estimates about highly uncertain matters.
Changes in these judgments, assumptions or estimates could cause reported
results to differ materially. These critical policies and their application are
periodically reviewed with the Audit Committee and our Board of Directors.
ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses has been determined in
accordance with accounting principles generally accepted in the United States of
America, under which we are required to
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Hudson City Bancorp, Inc.
Form 10-Q
maintain adequate allowances for loan losses. We are responsible for the timely
and periodic determination of the amount of the allowance required. We believe
that our allowance for loan losses is adequate to cover specifically
identifiable loan losses, as well as estimated losses inherent in our portfolio
for which certain losses are probable but not specifically identifiable.
As part of our evaluation of the adequacy of our allowance for loan losses, each
month we prepare a worksheet. This worksheet categorizes the entire loan
portfolio by certain risk characteristics such as loan type (one- to
four-family, multi-family, etc.) and payment status (i.e., current or number of
days delinquent). Loans with known potential losses are categorized separately.
We assign potential loss factors to the payment status categories on the basis
of our assessment of the potential risk inherent in each loan type. We use this
worksheet, together with loan portfolio balances and delinquency reports, to
evaluate the adequacy of the allowance for loan losses. Other key factors we
consider in this process are current real estate market conditions, changes in
the trend of non-performing loans, the current state of the local and national
economy and loan portfolio growth.
We maintain the allowance for loan losses through provisions for loan losses
that we charge to income. We charge losses on loans against the allowance for
loan losses when we believe the collection of loan principal is unlikely. We
establish the provision for loan losses after considering the results of our
review of delinquency and charge-off trends, the allowance for loan loss
worksheet, the amount of the allowance for loan losses in relation to the total
loan balance, loan portfolio growth, accounting principles generally accepted in
the United States of America and regulatory guidance. We have applied this
process consistently and we have made minimal changes in the estimation methods
and assumptions that we have used.
Our primary lending emphasis is the origination of one- to four-family first
mortgage loans on residential properties and, to a lesser extent, second
mortgage loans on one- to four-family residential properties. As a result of our
lending emphasis, we had a loan concentration in residential first mortgage
loans at March 31, 2003, the majority of which are secured by real property
located in New Jersey.
Based on the composition of our loan portfolio and the growth in our loan
portfolio, we believe the primary risks inherent in our portfolio are possible
increases in interest rates, a further decline in the economy, generally, and a
possible decline in real estate market values. Any one or a combination of these
events may adversely affect our loan portfolio resulting in increased
delinquencies, loan losses and future levels of provisions. We have maintained
our provision for loan losses at the current level to primarily address the
actual growth in our loan portfolio.
Although we believe that we have established and maintained the allowance for
loan losses at adequate levels, additions may be necessary if future economic
and other conditions differ substantially from the current operating
environment. Although management uses the best information available, the level
of the allowance for loan losses remains an estimate that is subject to
significant judgment and short-term change.
ASSET IMPAIRMENT JUDGMENTS. Certain of our assets are carried in our
consolidated statements of financial condition at fair value or at the lower of
cost or fair value. Valuation allowances are established when necessary to
recognize impairment of such assets. We periodically perform analyses to test
for impairment of various assets. In addition to our impairment analyses related
to loans discussed above, another significant impairment analysis relates to the
value of other than temporary declines in the value of our securities.
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Hudson City Bancorp, Inc.
Form 10-Q
Our available for sale portfolio is carried at estimated fair value, with any
unrealized gains and losses, net of taxes, reported as accumulated other
comprehensive income in stockholders' equity. The securities which we have the
positive intent and ability to hold to maturity are classified as held to
maturity and are carried at amortized cost. We conduct a periodic review and
evaluation of the securities portfolio to determine if the value of any security
has declined below its carrying value and whether such decline is other than
temporary. If such decline is deemed other than temporary, we would adjust the
carrying amount of the security through a valuation allowance. The market values
of our securities are significantly affected by changes in interest rates. In
general, as interest rates rise, the market value of fixed-rate securities will
decrease; as interest rates fall, the market value of fixed-rate securities will
increase. Estimated fair values for securities are based on published or
securities dealers' market values.
ITEM 3. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and qualitative disclosure about market risk is presented as of
December 31, 2002 in Hudson City Bancorp's Annual Report on Form 10-K. The
following is an update of the discussion provided therein.
GENERAL. As a financial institution, our primary component of market risk is
interest rate volatility. Due to the nature of our operations, we are not
subject to foreign currency exchange or commodity price risk. Our real estate
loan portfolio, substantially located in New Jersey, is subject to risks
associated with the local economy. We do not own any trading assets. We did not
engage in any hedging transactions that use derivative instruments (such as
interest rate swaps and caps) during the first three months of 2003 and did not
have any such hedging transactions in place at March 31, 2003. In the future, we
may, with approval of our Board of Directors, engage in hedging transactions
utilizing derivative instruments.
The lower long-term interest rate environment, the flatter yield curve, the
increased prepayment activity on our mortgage-related assets and the growth of
our fixed-rate investments may continue to have a negative impact on our net
interest income, net interest rate spread and net interest margin in future
periods.
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Hudson City Bancorp, Inc.
Form 10-Q
INTEREST RATE RISK COMPLIANCE. Hudson City Bancorp continues to monitor the
impact of interest rate volatility upon the present value of equity in the same
manner as at December 31, 2002. The following table presents the estimated
present value of equity over a range of interest rate change scenarios at March
31, 2003. The present value ratio shown in the table is the present value of
equity as a percent of the present value of total assets in each of the
different rate environments.
PRESENT VALUE OF EQUITY
AS PERCENT OF PRESENT
PRESENT VALUE OF EQUITY VALUE OF ASSETS
------------------------------------ -----------------------
CHANGE IN DOLLAR DOLLAR PERCENT PRESENT PERCENT
INTEREST RATES AMOUNT CHANGE CHANGE VALUE RATIO CHANGE
- ------------------- ---------- ---------- -------- ----------- --------
(BASIS POINTS) (DOLLARS IN THOUSANDS)
200 $ 861,892 $ (467,863) (35.18)% 6.11% (30.33)%
150 1,048,154 (281,601) (21.18) 7.26 (17.22)
100 1,199,745 (130,010) (9.78) 8.16 (6.96)
50 1,291,420 (38,335) (2.88) 8.64 (1.48)
0 1,329,755 -- -- 8.77 --
(50) 1,266,736 (63,019) (4.74) 8.29 (5.47)
(100) 1,157,734 (172,021) (12.94) 7.54 (14.03)
The percent change in the present value of equity in the 200 basis point
increase scenario was negative 35.18% at March 31, 2003 compared with negative
20.93% at December 31, 2002. This increase in the negative percent change in the
present value of equity, and the overall decrease in the present value of equity
and the percent change in the present value of equity in the increasing rate
scenarios was primarily due to the growth of our fixed-rate mortgage loan and
mortgage-backed security portfolios. The percent change in the present value of
equity in the 100 basis point decrease was negative 12.94% at March 31, 2003
compared with negative 12.64% at December 31, 2002. The overall decrease in the
present value of equity and the percent change in the present value of equity in
the decreasing rate scenarios was primarily due to the amount of our long-term
fixed rate borrowed funds. Our current policy sets a maximum percent change in
the present value of equity at 55% from the current, or zero basis point
scenario, present value of equity, given an instantaneous and parallel increase
or decrease of 200 basis points. We believe the 150 and 200 basis point decrease
scenarios are not meaningful given the prevailing low market interest rate
environment and accordingly are not presented in the table.
GAP ANALYSIS. The table on the following page presents the amounts of our
interest-earning assets and interest-bearing liabilities outstanding at March
31, 2003, which we anticipate to reprice or mature in each of the future time
periods shown. We have excluded non-accrual loans of $4,621,000 from the table.
The cumulative one-year gap as a percent of total assets was negative 0.85% at
March 31, 2003 compared with negative 0.11% at December 31, 2002.
Page 23
Hudson City Bancorp, Inc.
Form 10-Q
AT MARCH 31, 2003
--------------------------------------------------------------------------------------------
MORE THAN MORE THAN
MORE THAN MORE THAN TWO YEARS THREE YEARS
SIX MONTHS SIX MONTHS ONE YEAR TO TO THREE TO FIVE MORE THAN
OR LESS TO ONE YEAR TWO YEARS YEARS YEARS FIVE YEARS TOTAL
----------- ----------- ---------- ---------- ---------- ---------- -----------
(DOLLARS IN THOUSANDS)
Interest-earning assets:
First mortgage loans ............ $ 1,083,405 $ 1,075,508 $1,409,599 $ 990,246 $ 812,699 $1,406,918 $ 6,778,375
Consumer and other loans ........ 32,083 535 2,372 2,333 13,775 72,143 123,241
Federal funds sold .............. 123,700 -- -- -- -- -- 123,700
Mortgage-backed securities ...... 1,550,964 1,625,480 917,184 561,718 402,139 906,070 5,963,555
FHLB stock ..................... 150,000 -- -- -- -- -- 150,000
Investment securities ........... 11,719 -- 100 130 108 1,509,907 1,521,964
----------- ----------- ---------- ---------- ---------- ---------- -----------
Total interest-earning
assets ...................... 2,951,871 2,701,523 2,329,255 1,554,427 1,228,721 3,895,038 14,660,835
----------- ----------- ---------- ---------- ---------- ---------- -----------
Interest-bearing liabilities:
Savings accounts ................ 22,884 25,722 228,842 274,610 183,073 183,073 918,204
Interest-bearing demand
accounts ....................... 183,008 183,011 385,182 389,972 380,392 19,160 1,540,725
Money market accounts ........... 134,587 134,587 157,072 162,069 19,988 19,987 628,290
Time deposits ................... 3,764,305 1,231,453 929,494 93,575 110,132 -- 6,128,959
Borrowed funds .................. 100,000 -- 50,000 250,000 -- 3,450,000 3,850,000
----------- ----------- ---------- ---------- ---------- ---------- -----------
Total interest-bearing
liabilities ................. 4,204,784 1,574,773 1,750,590 1,170,226 693,585 3,672,220 13,066,178
----------- ----------- ---------- ---------- ---------- ---------- -----------
Interest rate sensitivity gap .... $(1,252,913) $ 1,126,750 $ 578,665 $ 384,201 $ 535,136 $ 222,818 $ 1,594,657
=========== =========== ========== ========== ========== ========== ===========
Cumulative interest rate
sensitivity Gap ............ $(1,252,913) $ (126,163) $ 452,502 $ 836,703 $1,371,839 $1,594,657
=========== =========== ========== ========== ========== ==========
Cumulative interest rate
sensitivity gap as a
percent of total assets .... (8.40)% (0.85)% 3.03% 5.61% 9.20% 10.69%
Cumulative interest-earning
assets as a percent of
interest-bearing liabilities 70.20% 97.82% 106.01% 109.62% 114.60% 112.20%
Page 24
Hudson City Bancorp, Inc.
Form 10-Q
ITEM 4. - CONTROLS AND PROCEDURES
Ronald E. Hermance, Jr., our President and Chief Executive Officer, and Denis J
Salamone, our Senior Executive Vice President and Chief Operating Officer,
conducted an evaluation of the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of
1934, as amended) as of April 15, 2003. Based upon their evaluation, they each
found that our disclosure controls and procedures were adequate to ensure that
information required to be disclosed in the reports that we file and submit
under the Exchange Act is recorded, processed, summarized and reported as and
when required.
There were no significant changes in our disclosure controls and procedures or
internal controls for financial reporting or other factors that could
significantly affect those controls subsequent to April 15, 2003, and we
identified no significant deficiencies or material weaknesses requiring
corrective action with respect to those controls.
PART II - OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS
We are not involved in any pending legal proceedings other than routine legal
proceedings occurring in the ordinary course of business. We believe that these
routine legal proceedings, in the aggregate, are immaterial to our financial
condition and results of operations.
ITEM 2. - CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. - DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the quarter ended March 31, 2003 to a vote of
security holders of Hudson City Bancorp through the solicitation of proxies or
otherwise.
ITEM 5. - OTHER INFORMATION
Not applicable.
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Hudson City Bancorp, Inc.
Form 10-Q
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 99.1: Statement furnished pursuant to Section 906 of Sarbanes-Oxley
Act of 2002, 18 U.S.C. Section 1350
(b) Hudson City Bancorp, Inc. filed two Current Reports on Form 8-K during the
quarter ended March 31, 2003 detailed as follows.
1. On January 27, 2003, a Form 8-K was filed to announce the adoption of
the amended and restated bylaws of Hudson City Bancorp, Inc. A copy of
the amended and restated bylaws was filed as an exhibit.
2. On March 17, 2003, a Form 8-K was filed to announce the appointment of
William G. Bardel to the Board of Directors to each of Hudson City
Bancorp, Inc., its principal operating subsidiary Hudson City Savings
Bank, and its holding company Hudson City, MHC. The appointment was
effective March 6, 2003.
Page 26
Hudson City Bancorp, Inc.
Form 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hudson City Bancorp, Inc.
Date: May 12, 2003 By: /s/ Ronald E. Hermance, Jr.
-------------------------------------
Ronald E. Hermance, Jr.
President and Chief Executive Officer
(principal executive officer)
Date: May 12, 2003 By: /s/ Denis J. Salamone
-------------------------------------
Denis J. Salamone
Senior Executive Vice President and
Chief Operating Officer
(principal financial and accounting
officer)
Page 27
Hudson City Bancorp, Inc.
Form 10-Q
CERTIFICATION OF DISCLOSURE
I, Ronald E. Hermance, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Hudson City
Bancorp, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in the Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiary, is made known to us by
others within those entities, particularly during the period
in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 12, 2003 By: /s/ Ronald E. Hermance, Jr.
-------------------------------------
Ronald E. Hermance, Jr.
President and Chief Executive Officer
Page 28
Hudson City Bancorp, Inc.
Form 10-Q
CERTIFICATION OF DISCLOSURE
I, Denis J. Salamone, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Hudson City
Bancorp, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in the Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiary, is made known to us by
others within those entities, particularly during the period
in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 12, 2003 By: /s/ Denis J. Salamone
--------------------------------
Denis J. Salamone
Senior Executive Vice President
and Chief Operating Officer
Page 29