HUDSON CITY BANCORP INC - 10-Q Quarterly Report

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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: JUNE 30, 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 August 6, 2003, the registrant had 191,358,522 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 68,781,922 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
PART I - FINANCIAL INFORMATION Number
------

Item 1. - Financial Statements

Consolidated Statements of Financial Condition -
June 30, 2003 (Unaudited) and December 31, 2002 ........................... 3

Consolidated Statements of Income (Unaudited) - For the three and six
months ended June 30, 2003 and 2002 ....................................... 4

Consolidated Statements of Cash Flows (Unaudited) - For the six months
ended June 30, 2003 and 2002 .............................................. 5

Notes to Consolidated Financial Statements ................................ 6

Item 2. - Management's Discussion and Analysis of Financial Condition and Results of
Operations ......................................................................... 11

Item 3. - Quantitative and Qualitative Disclosures About Market Risk ............... 29

Item 4. - Controls and Procedures .................................................. 32

PART II - OTHER INFORMATION

Item 1. - Legal Proceedings ........................................................ 32

Item 2. - Changes in Securities and Use of Proceeds ................................ 32

Item 3. - Defaults Upon Senior Securities .......................................... 32

Item 4. - Submission of Matters to a Vote of Security Holders ...................... 32

Item 5. - Other Information ........................................................ 33

Item 6. - Exhibits and Reports on Form 8-K ......................................... 34

SIGNATURES ............................................................................. 35

CERTIFICATION OF DISCLOSURE OF RONALD E. HERMANCE, JR .................................. 36

CERTIFICATION OF DISCLOSURE OF DENIS J. SALAMONE ....................................... 37

EXHIBIT 32.1 ........................................................................... 38

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

JUNE 30, DECEMBER 31,
2003 2002
------------ ------------
(UNAUDITED)
(IN THOUSANDS)

ASSETS
Cash and due from banks ........................................................ $ 173,115 $ 153,096
Federal funds sold ............................................................. 43,800 87,700
------------ ------------
Total cash and cash equivalents ................................ 216,915 240,796
Investment securities held to maturity, market value of $1,470 at
June 30, 2003 and $1,497 at December 31, 2002 ........................... 1,371 1,406
Investment securities available for sale, at market value ...................... 1,923,965 560,932
Federal Home Loan Bank of New York stock ....................................... 160,000 137,500
Mortgage-backed securities held to maturity, market value of $4,827,004
at June 30, 2003 and $4,828,939 at December 31, 2002 .................... 4,763,019 4,734,266
Mortgage-backed securities available for sale, at market value ................. 1,415,399 1,391,895
Loans .......................................................................... 6,872,206 6,970,900
Less:
Deferred loan fees .................................................. 16,949 13,508
Allowance for loan losses ........................................... 25,920 25,501
------------ ------------
Net loans ...................................................... 6,829,337 6,931,891
Foreclosed real estate, net .................................................... 2,833 1,276
Accrued interest receivable .................................................... 77,613 69,248
Banking premises and equipment, net ............................................ 30,752 32,732
Other assets ................................................................... 35,127 42,662
------------ ------------
Total Assets ................................................... $ 15,456,331 $ 14,144,604
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest-bearing ........................................................ $ 9,540,244 $ 8,750,164
Noninterest-bearing ..................................................... 425,900 388,465
------------ ------------
Total deposits ................................................. 9,966,144 9,138,629
Borrowed funds ................................................................. 4,050,000 3,600,000
Accrued expenses and other liabilities ......................................... 85,648 89,892
------------ ------------
Total liabilities .............................................. 14,101,792 12,828,521
------------ ------------
Common stock, $0.01 par value, 800,000,000 shares authorized; 231,276,600 shares
issued, 191,449,772 shares outstanding at June 30, 2003,
191,973,258 shares outstanding at December 31, 2002 ..................... 2,313 2,313
Additional paid-in capital ..................................................... 532,464 530,496
Retained earnings .............................................................. 1,348,189 1,291,960
Treasury stock, at cost; 39,826,828 shares at June 30, 2003 and
39,303,342 shares at December 31, 2002 .................................. (487,569) (465,249)
Unallocated common stock held by the employee stock ownership plan ............. (50,494) (51,474)
Unearned common stock held by the recognition and retention plan ............... (12,866) (16,253)
Accumulated other comprehensive income, net of tax ............................. 22,502 24,290
------------ ------------
Total stockholders' equity ..................................... 1,354,539 1,316,083
------------ ------------
Total Liabilities and Stockholders' Equity ..................... $ 15,456,331 $ 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 FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------------- -----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SHARE DATA)

Interest and Dividend Income:
Interest and fees on first mortgage loans ........... $ 100,818 $ 111,237 $ 207,527 $ 216,794
Interest and fees on consumer and other loans ....... 2,087 2,559 4,212 5,167
Interest on mortgage-backed securities held to
maturity ............................................ 54,723 68,410 115,798 137,405
Interest on mortgage-backed securities available for
sale ................................................ 11,625 9,842 26,024 17,288
Interest on investment securities held to maturity:
Taxable ......................................... 17 17 34 34
Exempt from federal taxes ....................... 5 5 10 11
Interest and dividend income on investment securities
available for sale-taxable ..................... 20,755 3,024 32,445 5,595
Dividends on Federal Home Loan Bank
of New York stock .............................. 2,069 962 4,059 1,871
Interest on federal funds sold ...................... 557 431 1,083 911
------------ ------------ ------------ ------------
Total interest and dividend income ........... 192,656 196,487 391,192 385,076
------------ ------------ ------------ ------------
Interest Expense:
Interest on deposits ................................ 53,676 64,678 109,360 132,216
Interest on borrowed funds .......................... 40,916 34,437 81,186 64,097
------------ ------------ ------------ ------------
Total interest expense ....................... 94,592 99,115 190,546 196,313
------------ ------------ ------------ ------------
Net interest income ....................... 98,064 97,372 200,646 188,763
Provision for Loan Losses ................................. 225 525 450 1,050
------------ ------------ ------------ ------------
Net interest income after provision
for loan losses ...................... 97,839 96,847 200,196 187,713
------------ ------------ ------------ ------------
Non-Interest Income:
Service charges and other income .................... 1,309 1,256 2,611 2,428
Gains on securities transactions, net ............... 8,628 -- 12,799 --
------------ ------------ ------------ ------------
Total non-interest income .................... 9,937 1,256 15,410 2,428
------------ ------------ ------------ ------------
Non-Interest Expense:
Compensation and employee benefits .................. 16,281 14,996 33,197 31,182
Net occupancy expense ............................... 3,580 3,419 7,443 6,992
Federal deposit insurance assessment ................ 385 352 763 694
Computer and related services ....................... 346 297 681 607
Other expense ....................................... 4,320 4,005 8,350 7,763
------------ ------------ ------------ ------------
Total non-interest expense ................... 24,912 23,069 50,434 47,238
------------ ------------ ------------ ------------
Income before income tax expense .......... 82,864 75,034 165,172 142,903
Income Tax Expense ........................................ 30,318 26,860 60,425 51,143
------------ ------------ ------------ ------------
Net income ................................ $ 52,546 $ 48,174 $ 104,747 $ 91,760
============ ============ ============ ============
Basic Earnings Per Share .................................. $ 0.29 $ 0.26 $ 0.57 $ 0.49
============ ============ ============ ============
Diluted Earnings Per Share ................................ $ 0.28 $ 0.25 $ 0.56 $ 0.48
============ ============ ============ ============

Weighted Average Number of Common Shares Outstanding:
Basic ..................................... 182,660,915 186,085,877 182,712,314 186,599,740
Diluted ................................... 187,810,046 191,585,334 187,623,655 191,559,145

See accompanying notes to consolidated financial statements.

Page 4

HUDSON CITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

FOR THE SIX MONTHS
ENDED JUNE 30,
----------------------------
2003 2002
----------- -----------
(IN THOUSANDS)

Cash Flows from Operating Activities:
Net income ................................................................. $ 104,747 $ 91,760
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, accretion and amortization expense ..................... 23,720 6,036
Provision for loan losses ............................................ 450 1,050
Gains on securities transactions, net ................................ (12,799) --
Allocation of stock for employee benefit plans ....................... 6,335 6,112
Deferred tax benefit ................................................. -- (1,141)
Net proceeds from sale of foreclosed real estate ..................... 954 59
Increase in accrued interest receivable .............................. (8,365) (7,087)
Decrease in other assets ............................................. 8,662 456
(Decrease) increase in accrued expenses and other liabilities ........ (4,244) 6,896
----------- -----------
Net Cash Provided by Operating Activities ......................................... 119,460 104,141
----------- -----------
Cash Flows from Investing Activities:
Originations of loans ...................................................... (987,854) (1,007,523)
Purchases of loans ......................................................... (851,388) (677,452)
Payments on loans .......................................................... 1,934,639 947,033
Principal collection of mortgage-backed securities held to maturity ........ 1,850,827 815,261
Purchases of mortgage-backed securities held to maturity ................... (1,893,818) (917,009)
Principal collection of mortgage-backed securities available for sale ...... 237,582 77,962
Proceeds from sales of mortgage-backed securities available for sale ....... 604,113 --
Purchases of mortgage-backed securities available for sale ................. (857,878) (488,419)
Proceeds from maturities and calls of investment securities held to maturity 35 35
Proceeds from maturities and calls of investment securities available for
sale ....................................................................... 838,485 25,651
Purchases of investment securities available for sale ...................... (2,200,725) (122,390)
Purchases of Federal Home Loan Bank of New York stock ...................... (22,500) (23,851)
Sales (purchases) of premises and equipment, net ........................... 244 (4,447)
----------- -----------
Net Cash Used in Investment Activities ............................................ (1,348,238) (1,375,149)
----------- -----------
Cash Flows from Financing Activities:
Net increase in deposits ................................................... 827,515 624,522
Proceeds from borrowed funds ............................................... 550,000 800,000
Principal payments on borrowed funds ....................................... (100,000) --
Dividends paid ............................................................. (44,199) (30,588)
Purchases of stock by the RRP .............................................. -- (1,854)
Purchases of treasury stock ................................................ (36,937) (89,281)
Exercise of stock options .................................................. 8,518 4,562
----------- -----------
Net Cash Provided by Financing Activities ......................................... 1,204,897 1,307,361
----------- -----------
Net (Decrease) Increase in Cash and Cash Equivalents .............................. (23,881) 36,353
Cash and Cash Equivalents at Beginning of Period .................................. 240,796 101,814
----------- -----------
Cash and Cash Equivalents at End of Period ........................................ $ 216,915 $ 138,167
=========== ===========
Supplemental Disclosures:
Interest paid .............................................................. $ 190,871 $ 190,719
=========== ===========
Income taxes paid .......................................................... $ 66,721 $ 50,449
=========== ===========

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- and six-month periods ended June 30, 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 $2,596,000 and $847,000
for the six month periods ended June 30, 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 would have been reduced to
the pro forma amounts that follow.

FOR THE THREE MONTHS
ENDED JUNE 30,
--------------------------
2003 2002
---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Net income, as reported ......................... $ 52,546 $ 48,174
Add: expense recognized for the recognition and
retention plans, net of related tax effect 1,033 1,051
Less: total stock option and recognition and
retention plans expense, determined under
the fair value method, net of
related tax effect ....................... (1,640) (1,643)
---------- ----------

Pro forma net income ............................ $ 51,939 $ 47,582
========== ==========

Basic earnings per share: As reported ........ $ 0.29 $ 0.26
Pro forma .......... 0.28 0.26

Diluted earnings per share: As reported ........ $ 0.28 $ 0.25
Pro forma .......... 0.28 0.25

FOR THE SIX MONTHS
ENDED JUNE 30,
---------------------
2003 2002
---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Net income, as reported.............................. $104,747 $ 91,760
Add: expense recognized for the recognition and
retention plans, net of related tax effect.... 2,040 2,334
Less: total stock option and recognition and
retention plans expense, determined under
the fair value method, net of
related tax effect............................ (3,253) (3,517)
-------- --------
Pro forma net income................................. $103,534 $ 90,577
======== ========
Basic earnings per share: As reported............. $ 0.57 $ 0.49
Pro forma............... 0.57 0.49

Diluted earnings per share: As reported............. $ 0.56 $ 0.48
Pro forma............... 0.55 0.47

Page 7

Hudson City Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements

The fair value of the option grants, for those grants issued during the
following periods, was estimated on the date of grant using the Black-Sholes
option-pricing model with the following weighted average assumptions:

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
-------------------------------------------
2003 2002
------- -------

Expected dividend yield .................. 2.24% 1.34%
Expected volatility ...................... 24.71 17.94
Risk-free interest rate .................. 2.98 4.40
Expected option life ..................... 5 years 5 years

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 JUNE 30,
------------------
2003 2002
---- ----
(IN THOUSANDS)

Net income .......................................... $ 52,546 $ 48,174
Other comprehensive income:
Unrealized holding gain on securities
available for sale, net of tax of $6,091
for 2003 and $3,967 for 2002 ............... 8,820 6,337
Reclassification adjustment for gains
in net income, net of tax of ($3,525) ...... (5,103) --
-------- --------

Total comprehensive income .......................... $ 56,263 $ 54,511
======== ========

FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------
2003 2002
---- ----
(IN THOUSANDS)

Net income ........................................ $ 104,747 $ 91,760
Other comprehensive income:
Unrealized holding gain on securities
available for sale, net of tax of $3,994
for 2003 and $1,517 for 2002 ............. 5,783 2,424
Reclassification adjustment for gains
in net income, net of tax of ($5,228) .... (7,571) --
--------- ---------

Total comprehensive income ........................ $ 102,959 $ 94,184
========= =========

Page 8

Hudson City Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements

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 JUNE 30,
--------------------------------------------------------------------
2003 2002
------------------------------- -------------------------------
PER PER
SHARE SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
------ ------ ------ ------ ------ ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Net income ................. $ 52,546 $ 48,174
======== =========

Basic earnings per share:
Income available to
common stockholders . $ 52,546 182,661 $0.29 $ 48,174 186,086 $ 0.26
===== ======
Effect of dilutive common
stock equivalents ... -- 5,149 -- 5,499
-------- -------- -------- --------
Diluted earnings per share:
Income available to
common stockholders . $ 52,546 187,810 $0.28 $ 48,174 191,585 $ 0.25
======== ======== ===== ======== ======== ======

FOR THE SIX MONTHS ENDED JUNE 30,
--------------------------------------------------------------------
2003 2002
------------------------------- -------------------------------
PER PER
SHARE SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
------ ------ ------ ------ ------ ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Net income..................... $104,747 $ 91,760
======== =========
Basic earnings per share:
Income available to
common stockholders.. $104,747 182,712 $0.57 $ 91,760 186,600 $0.49
===== ======
Effect of dilutive common
stock equivalents........ -- 4,912 -- 4,959
-------- -------- -------- --------

Diluted earnings per share:
Income available to
common stockholders.. $104,747 187,624 $0.56 $ 91,760 191,559 $ 0.48
======== ======== ===== ======== ======== ======

4. - SUBSEQUENT EVENT

On July 15, 2003, the Board of Directors of Hudson City Bancorp declared a
quarterly cash dividend of fourteen cents ($0.14) per common share outstanding.
The dividend is payable on September 2, 2003 to stockholders of record at the
close of business on August 8, 2003.

Page 9

Hudson City Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements

5. - RECENT ACCOUNTING PRONOUNCEMENTS

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. The disclosure requirements of FIN
45 were effective for financial statements of interim or annual periods ending
after December 15, 2002. The recognition and measurement provisions are
applicable prospectively to guarantees issued or modified after December 31,
2002. This interpretation is not expected to have a material impact on our
consolidated financial statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities," which amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities
under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 149 is generally effective for contracts entered into or
modified after June 30, 2003, and for hedging relationships designated after
June 30, 2003, and should generally be applied prospectively. The provisions of
SFAS No. 149 that relate to SFAS No. 33 Implementation Issues that have been
effective for fiscal quarters that began prior to June 15, 2003, should continue
to be applied in accordance with their respective effective dates. In addition,
the provisions of SFAS No. 149 which relate to forward purchases or sales of
when-issued securities or other securities that do not yet exist, should be
applied to both existing contracts and new contracts entered into after June 30,
2003. The adoption of SFAS No. 149 did not have a material impact on our
financial condition or results of operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity," which requires
issuers of certain financial instruments, falling within the scope of SFAS No.
150, with characteristics of both liabilities and equity to be classified and
measured as liabilities. SFAS No. 150 is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. For
financial instruments created before the issuance date of SFAS No. 150 and still
existing at the beginning of the interim period of adoption, SFAS No. 150 is to
be implemented by reporting the cumulative effect of a change in an accounting
principle. Restatement is not permitted. The adoption of SFAS No. 150 did not
have a material impact on our financial condition or results of operations.

Page 10

Hudson City Bancorp, Inc.
Form 10-Q

ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

During the first six months of 2003 we have continued to experience the low
market interest rate environment that began in 2002. The market yield curve
flattened during this period, as long-term interest rates generally declined,
while short-term interest rates remained relatively stable, despite the 25 basis
point decrease in the federal funds target rate that occurred late in the second
quarter of 2003. A flatter yield curve occurs when the spread between long-term
interest rates and short-term interest rates decreases. The flattening of the
yield curve has had an adverse impact on our earnings as the rates on our
interest-earning assets are generally based upon long-term interest rates while
the rates paid on our interest-bearing liabilities are generally based upon
short-term rates. During July 2003, there was an increase in the long-term
interest rates, which caused a steepening of the yield curve. An increase in
long-term market rates and a steepening of the yield curve could have a positive
impact on our earnings in future periods as the prepayment activity on our
mortgage-related assets should slow.

The low long-term interest rate environment has caused an acceleration of
prepayments on our mortgage-backed securities, and an acceleration of
prepayments, loan refinancings and modifications on our mortgage loans during
the first six months of 2003. This acceleration of the prepayment activity has
caused an acceleration of the amortization of the net premium on these
mortgage-related assets. The reinvestment of the proceeds from the accelerated
prepayment activity at the current lower interest rates, the reset of the
contract interest rate caused by loan refinancings and modifications, and the
acceleration of the amortization of the net premium have resulted in the
narrowing of our interest rate spread and net interest margin, and a reduction
in the growth of our net interest income.

This same low interest rate environment has also afforded us the opportunity to
realize gains on certain of our mortgage-backed securities available for sale.
The low market interest rates caused increases in the fair market value of the
variable-rate portion of our mortgage-backed securities portfolio, as these
variable-rate securities had annual rate change limits. We sold certain of these
securities prior to interest rate changes, such as the long-term rate increase
seen in July 2003, which have adversely affected their fair market value. The
cash flows from the sales of these securities were reinvested in fixed-rate
securities with shorter maturities.

In this interest rate environment, we continued to grow our balance sheet
consistent with the capital management and growth strategies we have employed
during recent periods. We have been able to continue to report strong earnings
due to our long-term investment objectives and the relatively low cost financing
available. Our balance sheet growth, primarily reflected in the growth of
fixed-rate callable government-sponsored agency securities, was funded primarily
by customer deposits and, to a lesser extent, by borrowed funds, despite the
high level of prepayment activity on our mortgage-related assets, which was due
to the historically low levels of interest rates. Our core investments of
residential mortgage loans and mortgage-backed securities were relatively stable
during the first six months of 2003, due to our continued strong levels of loan
originations, loan purchases, and purchases of mortgage-backed securities.

Page 11

Hudson City Bancorp, Inc.
Form 10-Q

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2003 AND DECEMBER 31, 2002

During the six-month period ended June 30, 2003, we grew our operating
subsidiary, Hudson City Savings Bank, primarily through purchases of fixed-rate
callable government-sponsored agency securities, which we classified as
available for sale. The increase in assets, which was consistent with our growth
strategies, was funded by customer deposits and borrowed funds. As a result, our
total assets increased $1.32 billion, or 9.3%, to $15.46 billion at June 30,
2003 from $14.14 billion at December 31, 2002.

Loans decreased $98.7 million, or 1.4%, to $6.87 billion at June 30, 2003 from
$6.97 billion at December 31, 2002. For the six-month period ended June 30,
2003, we originated first mortgage loans of $940.9 million and purchased first
mortgage loans of $851.4 million, compared with originations of $974.3 million
and purchases of $677.5 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 June 30, 2003, fixed-rate
mortgage loans accounted for 89.6% 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 six months of 2003. The decrease in loan
originations was due, in part, to certain of our customers taking advantage of
our loan modification program. These loan modifications were not reflected in
loan origination totals.

During the first six months of 2003, due to the low long-term interest rate
environment, $255.7 million of our loan originations were the result of
refinancing of our existing mortgage loans. The amount of refinancing of
existing mortgage 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 six months of 2003 were approximately
$878.8 million.

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.

Mortgage-backed securities increased $52.3 million, or 0.9%, to $6.18 billion at
June 30, 2003 from $6.13 billion at December 31, 2002. This slight increase was
in spite of the high levels of prepayment activity and sales of approximately
$591.3 million on our mortgage-backed securities during the first six months of
2003. Investment securities available for sale increased $1.36 billion to $1.92
billion at June 30, 2003 from $560.9 million at December 31, 2002. The increase
in investment securities available for sale primarily reflected the investment
of part of the proceeds from the high level of prepayment activity on

Page 12

Hudson City Bancorp, Inc.
Form 10-Q

our mortgage-related assets into investment securities. The increase in
investment securities also reflected our decision to shorten the overall
weighted-average life of our assets by investing in callable
government-sponsored agency securities with initial call dates of three months
to one year. Federal Home Loan Bank ("FHLB") stock increased $22.5 million, or
16.4%, to $160.0 million at June 30, 2003, which was the amount of stock we were
required by the FHLB to hold.

Total liabilities increased $1.27 billion, or 9.9%, to $14.10 billion at June
30, 2003 compared with $12.83 billion at December 31, 2002. Total deposits
increased $827.5 million, or 9.1%, to $9.97 billion at June 30, 2003 from $9.14
billion at December 31, 2002. Interest-bearing deposits increased $790.1
million, or 9.0%, to $9.54 billion at June 30, 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 $915.2 million, or 88.0%,
to $1.96 billion at June 30, 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 June 30, 2003 was $1.86 billion compared
with $943.2 million at December 31, 2002.

The growth in interest-bearing deposits was also due to a $39.4 million, or
4.4%, increase in regular savings deposits to $932.1 million at June 30, 2003.
These increases in interest-bearing deposits were partially offset by a $158.3
million, or 2.6%, decrease in time deposits to $6.03 billion at June 30, 2003.
Non-interest bearing deposits increased $37.4 million, or 9.6%, to $425.9
million at June 30, 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 $450.0 million, or 12.5%, to $4.05 billion at June 30,
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 $2.30 billion of securities sold
under agreements to repurchase and $1.75 billion of FHLB advances. Securities
pledged as collateral against our securities sold under agreements to repurchase
had a market value at June 30, 2003 of approximately $2.18 billion. Advances
from the FHLB utilize our mortgage portfolio as collateral. The $550.0 million
in new borrowings had initial call dates of three months to two years from the
date of borrowing. These short- and intermediate-term borrowed funds complement
the $3.60 billion of previously existing long-term borrowings. During the first
six months 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.

Total stockholders' equity increased $38.5 million, or 2.9%, to $1.35 billion at
June 30, 2003 from $1.32 billion at December 31, 2002. The increase was
primarily the result of net income for the six-month period ended June 30, 2003
of $104.7 million, an increase of $8.5 million due to the exercise of
approximately 1.2 million stock options, and an increase of $6.3 million due to
the allocation of stock-related employee benefit plans. Partially offsetting
these increases in stockholders' equity were repurchases of approximately 1.7
million shares of our common stock at an aggregate cost of $36.9 million, cash
dividends declared and paid to common stockholders of $44.2 million and a
decrease in accumulated other comprehensive income of $1.8 million. The decrease
in accumulated other

Page 13

Hudson City Bancorp, Inc.
Form 10-Q

comprehensive income was primarily due to the decrease in the overall market
value of our mortgage-backed securities available for sale, primarily due to
sales of these securities.

At June 30, 2003, the ratio of total stockholders' equity to total assets was
8.76% compared with 9.30% at December 31, 2002. For the six-month period ended
June 30, 2003, the ratio of average stockholders' equity to average assets was
9.03% 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
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 $7.43 at June 30, 2003
compared with $7.22 at December 31, 2002.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND
2002

AVERAGE BALANCE SHEETS. The tables on the following pages present certain
information regarding Hudson City Bancorp's financial condition and net interest
income for the three- and six-month periods ended June 30, 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-earning 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 14

Hudson City Bancorp, Inc.
Form 10-Q

FOR THE THREE MONTHS ENDED JUNE 30,
----------------------------------------------------------------------------
2003 2002
--------------------------------- ------------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
------- -------- ---- ------- -------- ----
(DOLLARS IN THOUSANDS)

ASSETS:
Interest-earning assets:
First mortgage loans, net (1) ................ $ 6,655,193 $ 100,818 6.06% $ 6,365,109 $ 111,237 6.99%
Consumer and other loans ..................... 125,952 2,087 6.63 141,714 2,559 7.22
Federal funds sold ........................... 192,270 557 1.16 104,744 431 1.65
Mortgage-backed securities at amortized cost . 6,013,907 66,348 4.41 5,392,992 78,252 5.80
Federal Home Loan Bank of New York stock ..... 154,286 2,069 5.36 96,429 962 3.99
Investment securities at amortized cost ...... 1,729,827 20,777 4.80 204,279 3,046 5.96
----------- ----------- ----------- -----------
Total interest-earning assets ............ 14,871,435 192,656 5.18 12,305,267 196,487 6.39
----------- -----------
Noninterest-earning assets ........................ 319,918 238,597
----------- -----------
Total Assets ............................. $15,191,353 $12,543,864
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
Savings accounts ............................. $ 926,094 2,749 1.19 $ 873,548 4,517 2.07
Interest-bearing demand accounts ............. 1,761,527 10,027 2.28 160,584 795 1.99
Money market accounts ........................ 622,462 1,755 1.13 592,340 3,098 2.10
Time deposits ................................ 6,081,111 39,145 2.58 6,347,142 56,268 3.56
----------- ----------- ----------- -----------
Total interest-bearing deposits .......... 9,391,194 53,676 2.29 7,973,614 64,678 3.25
Borrowed funds ............................... 3,928,846 40,916 4.18 2,778,571 34,437 4.97
----------- ----------- ----------- -----------
Total interest-bearing liabilities ....... 13,320,040 94,592 2.85 10,752,185 99,115 3.70
----------- ----------- ----------- -----------
Noninterest-bearing liabilities:
Noninterest-bearing deposits ................. 408,359 390,988
Other noninterest-bearing liabilities ........ 117,187 101,597
----------- -----------
Total noninterest-bearing liabilities .... 525,546 492,585
----------- -----------
Total liabilities ............................ 13,845,586 11,244,770
Stockholders' equity ......................... 1,345,767 1,299,094
----------- -----------
Total Liabilities and Stockholders' Equity $15,191,353 $12,543,864
=========== ===========

Net interest income/net interest rate spread (2) .. $ 98,064 2.33% $ 97,372 2.69%
=========== ===========
Net interest-earning assets/net interest margin (3) $ 1,551,395 2.63% $ 1,553,082 3.16%
=========== ===========
Ratio of interest-earning assets to
interest-bearing liabilities ................. 1.12x 1.14x

- -------------------

(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 15

Hudson City Bancorp, Inc.
Form 10-Q

FOR THE SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------
2003 2002
--------------------------------- -------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
------- -------- ---- ------- -------- ----
(DOLLARS IN THOUSANDS)

ASSETS:
Interest-earning assets:
First mortgage loans, net (1) ................ $ 6,692,047 $ 207,527 6.20% $ 6,181,584 $ 216,794 7.01%
Consumer and other loans ..................... 126,062 4,212 6.68 143,201 5,167 7.22
Federal funds sold ........................... 188,682 1,083 1.16 114,886 911 1.60
Mortgage-backed securities at amortized cost . 6,059,010 141,822 4.68 5,266,696 154,693 5.87
Federal Home Loan Bank of New York stock ..... 147,997 4,059 5.49 89,672 1,871 4.17
Investment securities at amortized cost ...... 1,307,739 32,489 4.97 189,350 5,640 5.96
----------- ----------- ----------- -----------
Total interest-earning assets ............ 14,521,537 391,192 5.39 11,985,389 385,076 6.43
----------- -----------
Noninterest-earning assets ........................ 319,223 238,400
----------- -----------
Total Assets ............................. $14,840,760 $12,223,789
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
Savings accounts ............................. $ 915,890 5,978 1.32 $ 853,119 8,774 2.07
Interest-bearing demand accounts ............. 1,532,623 18,209 2.40 131,205 1,142 1.76
Money market accounts ........................ 623,325 3,862 1.25 569,708 5,955 2.11
Time deposits ................................ 6,110,793 81,311 2.68 6,299,028 116,345 3.72
----------- ----------- ----------- -----------
Total interest-bearing deposits .......... 9,182,631 109,360 2.40 7,853,060 132,216 3.40
Borrowed funds ............................... 3,806,491 81,186 4.30 2,588,674 64,097 4.99
----------- ----------- ----------- -----------
Total interest-bearing liabilities ....... 12,989,122 190,546 2.96 10,441,734 196,313 3.79
----------- ----------- ----------- -----------
Noninterest-bearing liabilities:
Noninterest-bearing deposits ................. 397,701 386,623
Other noninterest-bearing liabilities ........ 114,429 99,332
----------- -----------
Total noninterest-bearing liabilities .... 512,130 485,955
----------- -----------
Total liabilities ............................ 13,501,252 10,927,689
Stockholders' equity ......................... 1,339,508 1,296,100
----------- -----------
Total Liabilities and Stockholders' Equity $14,840,760 $12,223,789
=========== ===========

Net interest income/net interest rate spread (2) .. $ 200,646 2.43% $ 188,763 2.64%
=========== ===========

Net interest-earning assets/net interest margin (3) $ 1,532,415 2.74% $ 1,543,655 3.12%
=========== ===========
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 loss 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 16

Hudson City Bancorp, Inc.
Form 10-Q

GENERAL. Net income was $52.5 million for the three-month period ended June 30,
2003, an increase of $4.3 million, or 8.9%, compared with net income of $48.2
million for the three-month period ended June 30, 2002. Basic and diluted
earnings per common share were $0.29 and $0.28, respectively, for the second
quarter of 2003 compared with basic and diluted earnings per share of $0.26 and
$0.25, respectively, for the second quarter of 2002. For the three-month period
ended June 30, 2003 our annualized return on average stockholders' equity was
15.62% compared with 14.83% 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 annualized return on average assets for the three-month
period ended June 30, 2003 was 1.38% compared with 1.54% for the corresponding
period in 2002. The decrease in the return on average assets was primarily due
to the lower net interest margin due to the low interest rate environment.

INTEREST AND DIVIDEND INCOME. Total interest and dividend income decreased $3.8
million, or 1.9%, to $192.7 million for the three-month period ended June 30,
2003 compared with $196.5 million for the three-month period ended June 30,
2002. The decrease in total interest and dividend income was primarily due a 121
basis point decrease in the annualized average yield on interest-earning assets
to 5.18% for the three-month period ended June 30, 2003 from 6.39% for the
three-month period ended June 30, 2002, reflecting yield declines to varying
degrees in all asset categories.

The 93 basis point 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 six months of 2003. The 139 basis point 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 six 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 the acceleration of the amortization
of the net premium on these assets. 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 116 basis point decrease in the annualized average yield on our
investment securities reflected the large volume of purchases made during the
low interest rate environment of the first six months of 2003.

The impact on interest and dividend income from the above decreases in the
annualized weighted-average yield on our interest-earning assets were partially
off-set by an increase in the average balance of total interest-earning assets
of $2.56 billion, or 20.8%, to $14.87 billion for the three-month period ended
June 30, 2003 compared with $12.31 billion for the corresponding period in 2002.
This increase was due in part to a $290.1 million, or 4.6%, increase in the
average balance of first mortgage loans, net to $6.66 billion for the
three-month period ended June 30, 2003 compared with $6.37 billion for the
corresponding period in 2002. The average balance of mortgage-backed securities
increased $620.9 million, or 11.5%, to $6.01 billion for the second quarter of
2003 compared with $5.39 billion for the second quarter of 2002. The increase in
interest-earning assets was also due to an increase in the average balance of
investment securities of $1.53 billion to $1.73 billion for the second quarter
of 2003 compared with $204.3 million for the corresponding quarter in 2002. The
increase in the average balance of FHLB stock of $57.9 million reflected the
increase in the amount of FHLB stock required to be held by us.

Page 17

Hudson City Bancorp, Inc.
Form 10-Q

The growth in the average balance of investment securities reflected the
decision to shorten the overall weighted-average life of our assets by investing
in callable securities with initial call dates of three months to one year. The
increase 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.

INTEREST EXPENSE. Total interest expense, comprised of interest on deposits and
interest on borrowed funds, decreased $4.5 million, or 4.5%, to $94.6 million
for the three-month period ended June 30, 2003 from $99.1 million for the
three-month period ended June 30, 2002, notwithstanding an overall increase in
interest-bearing liabilities. Interest expense on borrowed funds increased $6.5
million, or 18.9%, to $40.9 million for the three-month period ended June 30,
2003 from $34.4 million for the corresponding period in 2002. Interest expense
on deposits decreased $11.0 million, or 17.0%, to $53.7 million for the second
quarter of 2003 from $64.7 million for the second quarter of 2002. The decrease
in total interest expense reflected the impact of an 85 basis point decrease in
the annualized average cost of total interest-bearing liabilities to 2.85% for
the three-month period ended June 30, 2003 from 3.70% for the three-month period
ended June 30, 2002. The decrease in interest expense was offset, in part, by an
increase in the average balance of total interest-bearing liabilities of $2.57
billion, or 23.9%, to $13.32 billion for the three-month period ended June 30,
2003 from $10.75 billion for the corresponding period in 2002.

The increase in interest expense on borrowed funds was primarily due to a $1.15
billion, or 41.4%, increase in the average balance of borrowed funds to $3.93
billion for the second quarter of 2003 from $2.78 billion for the second 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 79 basis point
decrease in the annualized average cost of borrowed funds to 4.18% for the
second quarter of 2003 from 4.97% for the second quarter of 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 six months of 2003 had initial reprice dates of three months to
two years from the date of borrowing. These short- and intermediate-term
borrowed funds complement the $3.60 billion of previously 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 and the first six 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 six months of
2003, which resulted in the extension of the weighted-average maturity and
lowered the contract rates.

The $11.0 million decrease in interest expense on deposits was primarily due to
a 96 basis point decrease in the annualized average cost of interest-bearing
deposits to 2.29% for the three-month period ended June 30, 2003 from 3.25% for
the corresponding period in 2002. The decrease in the annualized average cost of
interest-bearing deposits was primarily due to a 98 basis point decrease in the
annualized average cost of our time deposits to 2.58% for the second quarter of
2003 from 3.56% for the second quarter of 2002. The annualized average cost of
regular savings accounts decreased 88 basis points to 1.19% for the

Page 18

Hudson City Bancorp, Inc.
Form 10-Q

second quarter of 2003. The annualized average cost of money market deposits
decreased 97 basis points to 1.13% for the second quarter of 2003. Partially
offsetting these decreases, the annualized average cost of interest-bearing
demand accounts increased 29 basis points to 2.28% for the three-month period
ended June 30, 2003 from 1.99% 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 six 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 since 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 $1.42
billion, or 17.8%, increase in the average balance of interest-bearing deposits
to $9.39 billion for the three-month period ended June 30, 2003 from $7.97
billion for the three-month period ended June 30, 2002. The average balance of
interest-bearing demand accounts increased $1.60 billion to $1.76 billion for
the second quarter of 2003 from $160.6 million for the corresponding period in
2002. The average balance of time deposits decreased $266.0 million, or 4.2%, to
$6.08 billion for the second quarter of 2003 from $6.35 billion for the second
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 $0.7 million, or 0.7%, to
$98.1 million for the three-month period ended June 30, 2003 compared with $97.4
million for the three-month period ended June 30, 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 36 basis points to 2.33% for the second
quarter of 2003 from 2.69% for the second quarter of 2002. Our net interest
margin, represented by annualized net interest income divided by average total
interest-earning assets, decreased 53 basis points to 2.63% for the second
quarter of 2003 from 3.16% for the second 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 six months 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 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 June 30, 2003 was $225,000, a decrease of $300,000, or 57.1%,
compared with $525,000 for the three-month period ended June 30, 2002. Net
charge-offs were $31,000 for the first six months of 2003 compared with net
charge-offs of $5,000 for the first six months of 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 $0.4
million, or 1.6%, to $25.9 million at June 30, 2003 from $25.5 million at
December 31, 2002.

Page 19

Hudson City Bancorp, Inc.
Form 10-Q

Non-performing loans, defined as non-accruing loans and accruing loans
delinquent 90 days or more, increased $2.6 million, or 12.9%, to $22.8 million
at June 30, 2003 from $20.2 million at December 31, 2002. This increase was
primarily reflected in our purchased conventional loan portfolio. The ratio of
non-performing loans to total loans was 0.33% at June 30, 2003 compared with
0.29% at December 31, 2002. The ratio of the allowance for loan losses to total
non-performing loans was 113.49% at June 30, 2003 compared with 126.27% at
December 31, 2002. The ratio of the allowance for loan losses to total loans was
0.38% at June 30, 2003 compared with 0.37% at 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 $8.6 million to $9.9
million for the second quarter of 2003 from $1.3 million for the second 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 second quarter
of 2003 and 2002.

The $8.6 million gain on securities transactions, net, in the second 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 would have had an adverse impact on their fair market value, as interest
rates have since increased. The cash flow of $407.6 million from the sale of the
securities was reinvested in fixed-rate investment securities with shorter
maturities.

NON-INTEREST EXPENSE. Total non-interest expense increased $1.8 million, or
7.8%, to $24.9 million for the three-month period ended June 30, 2003 from $23.1
million for the three-month period ended June 30, 2002. The increase was
primarily due to an increase in compensation and employee benefits of $1.3
million, or 8.7%, to $16.3 million for the second quarter of 2003 from $15.0
million for the second 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 total non-interest expense by the
sum of net interest income and non-interest income was 23.07% for the
three-month period ended June 30, 2003 compared with 23.39% for the
corresponding period in 2002. Our ratio of annualized non-interest expense to
total average assets for the second quarter of 2003 was 0.66% compared with
0.74% for the second quarter of 2002.

INCOME TAXES. Income tax expense increased $3.4 million, or 12.6%, to $30.3
million for the second quarter of 2003 from $26.9 million for the second quarter
of 2002. This increase was primarily due to the $7.9 million, or 10.5%, 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 second quarter of 2003 was 36.59% compared with
35.80% for the second quarter of 2002.

Page 20

Hudson City Bancorp, Inc.
Form 10-Q

COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

GENERAL. Net income was $104.7 million for the six-month period ended June 30,
2003, an increase of $12.9 million, or 14.1%, compared with net income of $91.8
million for the six-month period ended June 30, 2002. Basic and diluted earnings
per common share were $0.57 and $0.56, respectively, for the first six months of
2003 compared with basic and diluted earnings per share of $0.49 and $0.48,
respectively, for the first six months of 2002. For the six-month period ended
June 30, 2003 our annualized return on average stockholders' equity was 15.64%
compared with 14.16% 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 annualized return on average assets for the six-month period
ended June 30, 2003 was 1.41% compared with 1.50% for the corresponding period
in 2002. The decrease in the return on average assets was primarily due to the
lower net interest margin due to the low interest rate environment.

INTEREST AND DIVIDEND INCOME. Total interest and dividend income increased $6.1
million, or 1.6%, to $391.2 million for the six-month period ended June 30, 2003
compared with $385.1 million for the six-month period ended June 30, 2002. The
increase in total interest and dividend income was primarily due to the average
balance of total interest-earning assets increasing $2.53 billion, or 21.1%, to
$14.52 billion for the six-month period ended June 30, 2003 compared with $11.99
billion for the corresponding period in 2002. This increase was due in part to a
$510.5 million, or 8.3%, increase in the average balance of first mortgage
loans, net to $6.69 billion for the six-month period ended June 30, 2003
compared with $6.18 billion for the corresponding period in 2002. The average
balance of mortgage-backed securities increased $792.3 million, or 15.0%, to
$6.06 billion for the first six months of 2003 compared with $5.27 billion for
the first six months of 2002. The increase in interest-earning assets was also
due in part to an increase in the average balance of investment securities of
$1.12 billion to $1.31 billion for the first six months of 2003 compared with
$189.4 million for the corresponding quarter in 2002. The increase in the
average balance of FHLB stock of $58.3 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 six months 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 a 104 basis point decrease in
the annualized weighted-average yield on interest-earning assets to 5.39% for
the six-month period ended June 30, 2003 from 6.43% for the six-month period
ended June 30, 2002, reflecting yield decreases to varying degrees in all asset
categories. The 81 basis point 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 six months of 2003. The 119 basis point decrease in the annualized average
yield on mortgage-backed securities reflected the large volume of purchases and
the downward repricing of our adjustable-

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Hudson City Bancorp, Inc.
Form 10-Q

rate securities during the low interest rate environment of 2002 and the first
six 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 interest 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 the 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 99 basis point 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 six months of 2003.

INTEREST EXPENSE. Total interest expense, comprised of interest on deposits and
interest on borrowed funds, decreased $5.8 million, or 3.0%, to $190.5 million
for the six-month period ended June 30, 2003 from $196.3 million for the
six-month period ended June 30, 2002, notwithstanding an overall increase in
average interest-bearing liabilities. Interest expense on borrowed funds
increased $17.1 million, or 26.7%, to $81.2 million for the six-month period
ended June 30, 2003 from $64.1 million for the corresponding period in 2002.
Interest expense on deposits decreased $22.8 million, or 17.2%, to $109.4
million for the first six months of 2003 from $132.2 million for the first six
months of 2002. The decrease in total interest expense reflected the impact of
an 83 basis point decrease in the annualized average cost of total
interest-bearing liabilities to 2.96% for the six-month period ended June 30,
2003 from 3.79% for the six-month period ended June 30, 2002. The decrease in
interest expense due to the lower annualized cost was offset, in part, by an
increase in the average balance of total interest-bearing liabilities of $2.55
billion, or 24.4%, to $12.99 billion for the six-month period ended June 30,
2003 from $10.44 billion for the corresponding period in 2002.

The increase in interest expense on borrowed funds was primarily due to a $1.22
billion, or 47.1%, increase in the average balance of borrowed funds to $3.81
billion for the first six months of 2003 from $2.59 billion for the first six
months 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 69
basis point decrease in the annualized average cost of borrowed funds to 4.30%
for the first six months of 2003 from 4.99% for the first six 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 six months of 2003 had initial reprice dates of three months to
two years from the date of borrowing. These short- and intermediate-term
borrowed funds complement the $3.60 billion of previously 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 and the first six 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 six months of
2003, which resulted in the extension of the weighted-average maturity and
lowered the contract rates.

The $22.8 million decrease in interest expense on deposits was primarily due to
a 100 basis point decrease in the annualized average cost of interest-bearing
deposits to 2.40% for the six-month period ended June 30, 2003 from 3.40% for
the corresponding period in 2002. The decrease in the annualized average cost
of interest-bearing deposits was primarily due to a 104 basis point decrease in
the annualized average cost

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Hudson City Bancorp, Inc.
Form 10-Q

of our time deposits to 2.68% for the first six months of 2003 from 3.72% for
the first six months of 2002. The annualized average cost of regular savings
accounts decreased 75 basis points to 1.32% for the first six months of 2003.
The annualized average cost of money market deposits decreased 86 basis points
to 1.25% for the first six months of 2003. Partially offsetting these decreases,
the annualized average cost of interest-bearing demand accounts increased 64
basis points to 2.40% for the six-month period ended June 30, 2003 from 1.76%
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 six 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 $1.33
billion, or 16.9%, increase in the average balance of interest-bearing deposits
to $9.18 billion for the six-month period ended June 30, 2003 from $7.85 billion
for the six-month period ended June 30, 2002. The average balance of
interest-bearing demand accounts increased $1.40 billion to $1.53 billion for
the first six months of 2003 from $131.2 million for the corresponding period in
2002. The average balance of time deposits decreased $188.2 million, or 3.0%, to
$6.11 billion for the first six months of 2003 from $6.30 billion for the first
six months 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 $11.8 million, or 6.2%, to
$200.6 million for the six-month period ended June 30, 2003 compared with $188.8
million for the six-month period ended June 30, 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 21 basis points to 2.43% for the first
six months of 2003 from 2.64% for the first six months of 2002. Our net interest
margin, represented by annualized net interest income divided by average total
interest-earning assets, decreased 38 basis points to 2.74% for the first six
months of 2003 from 3.12% for the first six months 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 six months 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 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 six-month
period ended June 30, 2003 was $450,000, a decrease of $600,000, or 57.1%,
compared with $1.05 million for the six-month period ended June 30, 2002. The
decrease in the provision reflected our recent low charge-off history given the
relative stability of the housing market.

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Hudson City Bancorp, Inc.
Form 10-Q

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 $13.0 million to $15.4
million for the first six months of 2003 from $2.4 million for the first six
months of 2002. Service charges and other income, which generally consist of
service charges and fees on deposit accounts, were $2.6 million for the first
six months of 2003 compared with $2.4 million for the corresponding period in
2002.

The $12.8 million gain on securities transactions, net, in the first six months
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 would have had an adverse impact on their fair market value, as interest
rates have since increased. The cash flow of $604.1 million from the sale of the
securities was reinvested in fixed-rate investment securities with shorter
maturities.

NON-INTEREST EXPENSE. Total non-interest expense increased $3.2 million, or
6.8%, to $50.4 million for the six-month period ended June 30, 2003 from $47.2
million for the six-month period ended June 30, 2002. The increase was primarily
due to an increase in compensation and employee benefits of $2.0 million, or
6.4%, to $33.2 million for the first six months of 2003 from $31.2 million for
the first six months 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 total non-interest expense by the
sum of net interest income and non-interest income was 23.34% for the six-month
period ended June 30, 2003 compared with 24.71% for the corresponding period in
2002. Our ratio of annualized non-interest expense to average total assets for
the first six months of 2003 was 0.68% compared with 0.77% for the first six
months of 2002.

INCOME TAXES. Income tax expense increased $9.3 million, or 18.2%, to $60.4
million for the first six months of 2003 from $51.1 million for the first six
months of 2002. This increase was primarily due to the $22.3 million, or 15.6%,
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 six months of 2003 was 36.58% compared with
35.79% for the first six months 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.

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Hudson City Bancorp, Inc.
Form 10-Q

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 $1.93 billion during the six-month period
ended June 30, 2003 compared with $947.0 million for six-month period ended June
30, 2002. Principal payments received on mortgage-backed securities totaled
$2.09 billion during the first six months of 2003 compared to $893.2 million
during the first six months of 2002. The increase in payments on loans and
mortgage-backed securities reflected the low market interest rate environment
during 2002 and the first six months of 2003, which caused an increase in
prepayment activity. Maturities and calls of investment securities totaled
$838.5 million during the first six months of 2003 compared with maturities and
calls of $25.7 million during the first six months of 2002. The higher amount of
calls during 2003 was due to the continuing declining interest rate environment
experienced during the first six months 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.

Total deposits increased $827.5 million during the first six months of 2003
compared with an increase of $624.5 million during the first six 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 $4.85 billion at June
30, 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.

For the six-month period ended June 30, 2003, we borrowed $550.0 million
compared with $800.0 million during the six-month period ended June 30, 2002.
The decrease in new borrowings was due to the larger growth of our
interest-bearing deposits in the first six months of 2003 than in the prior
period. Principal payments on borrowed funds during the first six months of 2003
were $100.0 million. There were no principal payments on borrowed funds during
the first six months of 2002. The funds borrowed during the first six months of
2003 had initial call dates of three months to two years from the date of
borrowing. These short- and intermediate-term borrowed funds complement the
$3.60 billion of previously existing long-term borrowings. At June 30, 2003,
there were $50.0 million of borrowed funds scheduled to mature within one year.

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 $987.9 million during the first six months of 2003
compared with $1.01 billion during the first six months of 2002. We purchased
total loans of $851.4 million during the first six months of 2003 compared with
$677.5 million during the first six months of

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Hudson City Bancorp, Inc.
Form 10-Q

2002. The decrease in loan originations was due, in part, to certain of our
customers taking advantage of our loan modification program. These loan
modifications were not reflected in loan origination totals.

Purchases of mortgage-backed securities during the first six months of 2003 were
$2.75 billion compared with $1.41 billion during the first six months of 2002.
Of the mortgage-backed securities purchased in the first six months of 2003,
$1.38 billion were real estate mortgage investment conduits ("REMIC"). The REMIC
purchases in the first six months 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. Of the mortgage-backed securities
purchased in the first six months of 2003, $857.9 million were classified as
available for sale. Of these available for sale purchases, $741.5 million had
fixed interest rates. 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 six months of
2003.

During the first six months of 2003 we purchased $2.20 billion of investment
securities compared with purchases of $122.4 million during the first six months
of 2002. These purchases were made with cash flows from payments on our
mortgage-related assets to shorten the overall weighted-average life 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 six
months of 2003, we purchased $22.5 million of FHLB common stock compared with
purchases of $23.9 million during the first six months of 2002. The purchases
during the first six months of 2003 bring our total investment in FHLB stock to
$160.0 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
six months of 2003, we purchased 1,746,500 shares of our common stock at an
aggregate cost of $36.9 million. During the first six months of 2002, we
purchased 4,940,772 shares of our common stock at an aggregate cost of $89.3
million. 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. At June 30, 2003, there were 9,587,296 shares
remaining to be repurchased under the existing stock repurchase programs.

At June 30, 2003, Hudson City Savings had outstanding loan commitments to
borrowers of approximately $265.2 million, commitments to purchase loans of
approximately $476.1 million, commitments to purchase mortgage-backed securities
of $294.3 million and available home equity and overdraft lines of credit of
approximately $88.4 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 six months of 2003 were $44.2
million compared with $30.6 million during the first six months of 2002. The
dividend pay-out ratio for the first six months of 2003 was 40.35% compared with
31.63% for the first six months of 2002. On July 15, 2003, the Board of
Directors declared a quarterly cash dividend of fourteen cents ($0.14) per
common share. The dividend is payable on September 2, 2003 to stockholders of
record at the close of business on August 8, 2003.

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Hudson City Bancorp, Inc.
Form 10-Q

At June 30, 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
JUNE 30, 2003 ADEQUACY WELL-CAPITALIZED
------------------- ------------------- ------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ------ -----
(DOLLARS IN THOUSANDS)

Bank
Leverage (Tier 1)
Capital .... $1,216,891 8.02% $ 606,868 4.00% $ 758,585 5.00%
Risk-based capital:
Tier 1 ..... 1,216,891 24.20 201,102 4.00 301,653 6.00
Total ...... 1,242,811 24.72 402,204 8.00 502,755 10.00

Bancorp
Leverage (Tier 1)
Capital .... $1,332,154 8.78% $ 606,901 4.00% $ 758,626 5.00%
Risk-based capital:
Tier 1 ..... 1,332,154 26.50 201,105 4.00 301,658 6.00
Total ...... 1,358,074 27.01 402,210 8.00 502,763 10.00

CRITICAL ACCOUNTING POLICIES

Note 1 to our Audited Consolidated Financial Statements for the year ended
December 31, 2002 in 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 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

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Hudson City Bancorp, Inc.
Form 10-Q

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 June 30, 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.

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.

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.

Page 28

Hudson City Bancorp, Inc.
Form 10-Q

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 six months of 2003 and did not
have any such hedging transactions in place at June 30, 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.

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 June
30, 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 $ 815,971 $(500,391) (38.01)% 5.59% (33.29)%
150 1,023,626 (292,736) (22.24) 6.87 (18.02)
100 1,138,471 (177,891) (13.51) 7.50 (10.50)
50 1,281,507 (34,855) (2.65) 8.26 (1.43)
0 1,316,362 - - 8.38 -
(50) 1,207,323 (109,039) (8.28) 7.64 (8.83)
(100) 1,081,085 (235,277) (17.87) 6.81 (18.74)

The percent change in the present value of equity in the 200 basis point
increase scenario was negative 38.01% at June 30, 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 loans, the
growth of our fixed-rate securities, and the callable borrowings made in this
current low market interest rate environment. The percent change in the present
value of equity in the 100 basis point decrease was negative 17.87% at June 30,
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

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Hudson City Bancorp, Inc.
Form 10-Q

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 June 30,
2003, which we anticipate to reprice or mature in each of the future time
periods shown. The prepayment speeds on our mortgage loans and mortgage-backed
securities, and the decay rates applied to our non-maturity deposits are the
same as those reported in our Annual Report on Form 10-K for the year ended
December 31, 2002. At June 30, 2003, we have reported no callable bonds or
callable borrowings at their call date. We have excluded non-accrual loans of
$6,205,000 from the table.

The cumulative one-year gap as a percent of total assets was negative 2.57% at
June 30, 2003 compared with negative 0.11% at December 31, 2002. This increase
in the negative cumulative one-year gap primarily reflects the reporting, at
their maturity date, of the $1.36 billion growth of our callable investment
securities.

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Hudson City Bancorp, Inc.
Form 10-Q

AT JUNE 30, 2003
--------------------------------------------------------------------------------------------
MORE THAN MORE THAN
MORE THAN MORE THAN TWO YEARS THREE YEARS
SIX MONTHS SIX MONTHS ONE YEAR TO TO THREE TO MORE THAN
OR LESS TO ONE YEAR TWO YEARS YEARS FIVE YEARS FIVE YEARS TOTAL
------- ----------- --------- ----- ---------- ---------- -----
(DOLLARS IN THOUSANDS)
Interest-earning assets:

First mortgage loans ....... $ 1,073,188 $ 1,065,754 $ 1,395,978 $ 985,234 $ 801,783 $ 1,415,883 $ 6,737,820
Consumer and other loans ... 31,275 512 2,019 2,253 14,613 77,509 128,181
Federal funds sold ......... 43,800 -- -- -- -- -- 43,800
Mortgage-backed securities . 1,428,896 1,466,336 985,273 690,175 495,114 1,112,624 6,178,418
FHLB stock ................ 160,000 -- -- -- -- -- 160,000
Investment securities ...... 10,615 -- 195 -- 110 1,914,416 1,925,336
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total interest-
earning assets ........ 2,747,774 2,532,602 2,383,465 1,677,662 1,311,620 4,520,432 15,173,555
----------- ----------- ----------- ----------- ----------- ----------- -----------

Interest-bearing liabilities:
Savings accounts ........... 23,459 27,474 231,893 278,272 185,515 185,515 932,128
Interest-bearing demand
accounts ................. 234,750 234,752 488,943 493,802 484,083 19,439 1,955,769
Money market accounts ...... 130,479 130,480 155,710 161,318 22,427 22,427 622,841
Time deposits .............. 3,413,425 1,433,007 925,344 119,300 138,430 -- 6,029,506
Borrowed funds ............. -- 50,000 -- 450,000 -- 3,550,000 4,050,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total interest-bearing .. 3,802,113 1,875,713 1,801,890 1,502,692 830,455 3,777,381 13,590,244
liabilities ----------- ----------- ----------- ----------- ----------- ----------- -----------

Interest rate sensitivity gap .... $(1,054,339) $ 656,889 $ 581,575 $ 174,970 $ 481,165 $ 743,051 $ 1,583,311
=========== =========== =========== =========== =========== =========== ===========

Cumulative interest rate
sensitivity Gap ............... $(1,054,339) $ (397,450) $ 184,125 $ 359,095 $ 840,260 $ 1,583,311
=========== =========== =========== =========== =========== ===========

Cumulative interest rate
sensitivity gap
as a percent of
total assets ............... (6.82)% (2.57)% 1.19% 2.32% 5.44% 10.24%

Cumulative interest-earning
assets as a percent
of interest-bearing
liabilities ................ 72.27% 93.00% 102.46% 104.00% 108.56% 111.65%

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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-15(e)) under the Securities Exchange Act of
1934, as amended) as of June 30, 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 changes in our internal control over financial reporting that
occurred during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.

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

On May 2, 2003, the annual meeting of stockholders of Hudson City Bancorp, Inc.
was held to consider and vote on certain matters. The results are indicated
below.

Proposal 1 - Election of five directors for terms of three years each.

Votes cast for Michael W. Azzara:

For: 179,399,921
Withheld: 1,437,139

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Hudson City Bancorp, Inc.
Form 10-Q

Votes cast for John D. Birchby:

For: 179,458,174
Withheld: 1,378,886

Votes cast for Victoria H. Bruni:

For: 179,420,115
Withheld: 1,416,945

Votes cast for Andrew J. Egner, Jr.:

For: 180,299,028
Withheld: 538,032

Votes cast for Leonard S. Gudelski:

For: 180,406,675
Withheld: 430,385

Proposal 2 - Ratification of the appointment of KPMG LLP as Hudson City
Bancorp's independent auditors for the year ending December 31, 2003.

For: 179,303,972
Against: 1,095,922
Abstain: 437,166

There were no broker held non-voted shares represented at the meeting with
respect to the above matters.

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) Exhibits

Exhibit Number Exhibit
-------------- -------

31.1 Certifications of Chief Executive Officer

31.2 Certifications of Chief Financial Officer

32.1 Written Statement of Chief Executive Officer and
Chief Financial Officer furnished pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350. *

- -------------------------------------------------------------------------------
* Pursuant to SEC rules, this exhibit will not be deemed filed for purposes
of Section 18 of the Exchange Act or otherwise subject to the liability of
that section.

(b) Hudson City Bancorp, Inc. filed two Current Reports on Form 8-K during the
quarter ended June 30, 2003 detailed as follows.

1. On April 17, 2003, a Form 8-K was filed following the issuance of a
press release announcing first quarter financial results for the
period ended March 31, 2003. A copy of the press release was filed
as an exhibit.

2. On May 6, 2003, a Form 8-K was filed regarding the "State of the
Company" presentation that was made during the Annual Meeting of
Shareholders of Hudson City Bancorp. The filing contained, as an
exhibit, the text of the slides used during this presentation.

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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: August 12, 2003 By: /s/ Ronald E. Hermance, Jr.
----------------------------------------
Ronald E. Hermance, Jr.
President and Chief Executive Officer
(principal executive officer)

Date: August 12, 2003 By: /s/ Denis J. Salamone
----------------------------------------
Denis J. Salamone
Senior Executive Vice President and
Chief Operating Officer
(principal financial and accounting
officer)

Page 35