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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q (Mark One) þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 March 31, 2005
 o     Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 
 Commission File Number: 0-26001 Hudson City Bancorp, Inc.   Delaware
    
    22-3640393(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)West 80 Century RoadParamus, 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 þ No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). Yes þ No o As of May 2, 2005, the registrant had 186,413,293 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 63,836,693 shares were held by the public and directors,
officers and employees of the registrant.




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Hudson City Bancorp, Inc.
Form 10-Q Contents of Report PageNumberPART I  FINANCIAL INFORMATIONItem 1.  Financial StatementsConsolidated
Statements of
Financial Condition
 March 31, 2005
(Unaudited) and
December 31,
2004
    
    
    4Consolidated
Statements of
Income (Unaudited)
 For the three
months ended March
31, 2005 and
2004
    
    
    5Consolidated
Statements of Cash
Flows (Unaudited) 
For the three
months ended March
31, 2005 and
2004
    
    
    6Notes to
Consolidated
Financial
Statements
    
    
    7Item 2.  Managements Discussion and
Analysis of Financial Condition and
Results of Operations
    
    
    13Item 3.  Quantitative and Qualitative
Disclosures About Market Risk
    
    
    26Item 4.  Controls and
Procedures
    
    
    30PART II  OTHER INFORMATIONItem 1.  Legal
Proceedings
    
    
    30Item 2.  Unregistered Sales of Equity
Securities and Use of Proceeds
    
    
    30Item 3.  Defaults Upon Senior
Securities
    
    
    30Item 4.  Submission of Matters to a
Vote of Security Holders
    
    
    30Item 5.  Other
Information
    
    
    31Item 6. 
Exhibits
    
    
    31SIGNATURES
    
    
    32EX-31.1 CERTIFICATIONEX-31.2 CERTIFICATIONEX-32.1 CERTIFICATION
  Page 2




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Hudson City Bancorp, Inc.
Form 10-Q This Report on Form 10-Q contains forward-looking statements, which may be identified by the use
of such words as may, believe, expect, anticipate, should, plan, estimate, predict,
continue and potential or the negative of these terms or other comparable terminology.
Examples of forward-looking statements include, but are not limited to, estimates with respect to
our financial condition, results of operations and business that are subject to various factors
which could cause actual results to differ materially from these estimates. These factors include,
but are not limited to:  
    the timing and occurrence or non-occurrence of events may be subject to
circumstances beyond our control;
    there may be increases in competitive pressure among financial institutions or
from non-financial institutions;
    changes in the interest rate environment may reduce interest margins or affect
the value of our investments;
    changes in deposit flows, loan demand or real estate values may adversely affect
our business;
    changes in accounting principles, policies or guidelines may cause our financial
condition to be perceived differently;
    general economic conditions, either nationally or locally in some or all of the
areas in which we do business, or conditions in the securities markets or the
banking industry may be less favorable than we currently anticipate;
    legislative or regulatory changes may adversely affect our business;
    applicable technological changes may be more difficult or expensive than we anticipate;
    success or consummation of new business initiatives may be more difficult or
expensive than we anticipate; or
    litigation or matters before regulatory agencies, whether currently existing or
commencing in the future, may delay the occurrence or non-occurrence of events
longer than we anticipate. Any or all of our forward-looking statements in this Report on Form 10-Q and in any other
public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions
we might make or by known or unknown risks and uncertainties. Consequently, no forward-looking
statement can be guaranteed. We do not intend to update any of the forward-looking statements
after the date of this Report on Form 10-Q or to conform these statements to actual results. Page 3




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##### Table of Contents



PART I  FINANCIAL INFORMATION 
 Item 1.  Financial Statements
 Hudson City Bancorp, Inc. and Subsidiary 
 Consolidated Statements of Financial Condition
 March 31,
    
    
    December 31,2005
    
    
    2004(Unaudited)(In thousands)AssetsCash and due from banks
    
    $
    107,102
    
    
    $
    122,483Federal funds sold
    
    
    23,100
    
    
    
    45,700Total cash and cash equivalents
    
    
    130,202
    
    
    
    168,183Investment securities held to
maturity, market value of $1,492,166 at
March 31, 2005 and $1,326,336 at December 31, 2004
    
    
    1,509,274
    
    
    
    1,334,249Investment securities available for sale, at market value
    
    
    1,460,932
    
    
    
    1,594,639Federal Home Loan Bank of New York stock
    
    
    145,000
    
    
    
    140,000Mortgage-backed securities held to maturity, market value of $3,838,674
at March 31, 2005 and $3,721,029 at December 31, 2004
    
    
    3,925,469
    
    
    
    3,755,921Mortgage-backed securities available for sale, at market value
    
    
    1,779,502
    
    
    
    1,620,708Loans
    
    
    11,983,809
    
    
    
    11,363,039Less:Deferred loan fees
    
    
    6,422
    
    
    
    8,073Allowance for loan losses
    
    
    27,388
    
    
    
    27,319Net loans
    
    
    11,949,999
    
    
    
    11,327,647Foreclosed real estate, net
    
    
    998
    
    
    
    878Accrued interest receivable
    
    
    101,272
    
    
    
    97,490Banking premises and equipment, net
    
    
    40,028
    
    
    
    36,399Other assets
    
    
    88,540
    
    
    
    69,867Total Assets
    
    $
    21,131,216
    
    
    $
    20,145,981Liabilities and Stockholders EquityDeposits:Interest-bearing
    
    $
    11,250,228
    
    
    $
    11,059,798Noninterest-bearing
    
    
    445,929
    
    
    
    417,502Total deposits
    
    
    11,696,157
    
    
    
    11,477,300Borrowed funds
    
    
    7,850,000
    
    
    
    7,150,000Accrued expenses and other liabilities
    
    
    144,971
    
    
    
    115,797Total liabilities
    
    
    19,691,128
    
    
    
    18,743,097Common stock, $0.01 par value, 800,000,000 shares authorized; 231,276,600
shares issued 186,406,693 shares outstanding at March 31, 2005,
and 186,145,995 shares outstanding at December 31, 2004
    
    
    2,313
    
    
    
    2,313Additional paid-in capital
    
    
    575,699
    
    
    
    570,505Retained earnings
    
    
    1,637,218
    
    
    
    1,588,792Treasury stock, at cost; 44,869,907 shares at March 31, 2005 and
45,130,605 shares at December 31, 2004
    
    
    (692,786
    )
    
    
    (696,812
    )Unallocated common stock held by the employee stock ownership plan
    
    
    (47,062
    )
    
    
    (47,552
    )Unearned common stock held by the recognition and retention plan
    
    
    (4,062
    )
    
    
    (5,267
    )Accumulated other comprehensive loss, net of tax
    
    
    (31,232
    )
    
    
    (9,095
    )Total stockholders equity
    
    
    1,440,088
    
    
    
    1,402,884Total Liabilities and Stockholders Equity
    
    $
    21,131,216
    
    
    $
    20,145,981
 See accompanying notes to consolidated financial statements. Page 4




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Hudson City Bancorp, Inc. and Subsidiary 
 Consolidated Statements of Income
(Unaudited)
 For the Three MonthsEnded March 31,2005
    
    
    2004(In thousands, except per share data)Interest and Dividend Income:Interest and fees on first mortgage loans
    
    $
    156,098
    
    
    $
    123,087Interest and fees on consumer and other loans
    
    
    2,301
    
    
    
    2,049Interest on mortgage-backed securities held to maturity
    
    
    43,044
    
    
    
    45,851Interest on mortgage-backed securities available for sale
    
    
    17,130
    
    
    
    15,796Interest on investment securities held to maturity
    
    
    17,027
    
    
    
    1,331Interest and dividends on investment securities available for sale
    
    
    16,020
    
    
    
    23,937Dividends on Federal Home Loan Bank of New York stock
    
    
    1,176
    
    
    
    659Interest on federal funds sold
    
    
    823
    
    
    
    317Total interest and dividend income
    
    
    253,619
    
    
    
    213,027Interest Expense:Interest on deposits
    
    
    62,915
    
    
    
    49,769Interest on borrowed funds
    
    
    64,818
    
    
    
    47,719Total interest expense
    
    
    127,733
    
    
    
    97,488Net interest income
    
    
    125,886
    
    
    
    115,539Provision for Loan Losses
    
    
    65
    
    
    
    225Net interest income after
provision for loan losses
    
    
    125,821
    
    
    
    115,314Non-Interest Income:Service charges and other income
    
    
    1,136
    
    
    
    1,194Gains on securities available for sale, net
    
    
    2,737
    
    
    
    2,437Total non-interest income
    
    
    3,873
    
    
    
    3,631Non-Interest Expense:Compensation and employee benefits
    
    
    19,930
    
    
    
    19,684Net occupancy expense
    
    
    4,556
    
    
    
    3,940Federal deposit insurance assessment
    
    
    408
    
    
    
    417Computer and related services
    
    
    592
    
    
    
    539Other expense
    
    
    5,279
    
    
    
    4,473Total non-interest expense
    
    
    30,765
    
    
    
    29,053Income before income tax expense
    
    
    98,929
    
    
    
    89,892Income Tax Expense
    
    
    37,000
    
    
    
    33,663Net income
    
    $
    61,929
    
    
    $
    56,229Basic Earnings Per Share
    
    $
    0.35
    
    
    $
    0.31Diluted Earnings Per Share
    
    $
    0.34
    
    
    $
    0.30Weighted Average Number of Common Shares Outstanding:Basic
    
    
    179,112,928
    
    
    
    181,523,963Diluted
    
    
    183,544,140
    
    
    
    187,040,989
 See accompanying notes to consolidated financial statements. Page 5




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Hudson City Bancorp, Inc. and Subsidiary 
 Consolidated Statements of Cash 
(Unaudited
 For the Three MonthsEnded March 31,2005
    
    
    2004(In thousands)Cash Flows from Operating Activities:Net income
    
    $
    61,929
    
    
    $
    56,229Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation, accretion and amortization expense
    
    
    6,371
    
    
    
    7,515Provision for loan losses
    
    
    65
    
    
    
    225Gains on securities available for sale, net
    
    
    (2,737
    )
    
    
    (2,437
    )Allocation of stock for employee benefit plans
    
    
    4,307
    
    
    
    4,630Deferred tax
expense
    
    
    
    
    
    
    415Net proceeds from sale of foreclosed real estate
    
    
    332
    
    
    
    828(Increase) decrease in accrued interest receivable
    
    
    (3,782
    )
    
    
    1,127Increase in other assets
    
    
    (3,384
    )
    
    
    (50,843
    )Increase in accrued expenses and other liabilities
    
    
    29,174
    
    
    
    20,800Tax benefit from stock plans
    
    
    3,872
    
    
    
    12,705Net Cash Provided by Operating Activities
    
    
    96,147
    
    
    
    51,194Cash Flows from Investing Activities:Originations of loans
    
    
    (341,384
    )
    
    
    (265,875
    )Purchases of loans
    
    
    (785,590
    )
    
    
    (761,050
    )Payments on loans
    
    
    502,277
    
    
    
    376,966Principal collection of mortgage-backed securities held to maturity
    
    
    209,820
    
    
    
    286,619Purchases of mortgage-backed securities held to maturity
    
    
    (381,481
    )
    
    
    (4,093
    )Principal collection of mortgage-backed securities available for sale
    
    
    73,666
    
    
    
    49,626Proceeds from sales of mortgage-backed securities available for sale
    
    
    225,253
    
    
    
    126,421Purchases of mortgage-backed securities available for sale
    
    
    (470,020
    )
    
    
    (581,912
    )Proceeds from maturities and calls of investment securities held to maturity
    
    
    74,978
    
    
    
    Purchases of investment securities held to maturity
    
    
    (250,000
    )
    
    
    (562,475
    )Proceeds from maturities and calls of investment securities available for sale
    
    
    100,022
    
    
    
    826,335Proceeds from sales of investment securities available for sale
    
    
    9,980
    
    
    
    Purchases of investment securities available for sale
    
    
    
    
    
    
    (337,306
    )Purchases of Federal Home Loan Bank of New York stock
    
    
    (5,000
    )
    
    
    Redemption of Federal Home Loan Bank of New York stock
    
    
    
    
    
    
    4,850Purchases of premises and equipment, net
    
    
    (4,739
    )
    
    
    (2,008
    )Net Cash Used in Investment Activities
    
    
    (1,042,218
    )
    
    
    (843,902
    )Cash Flows from Financing Activities:Net increase in deposits
    
    
    218,857
    
    
    
    306,235Proceeds from borrowed funds
    
    
    700,000
    
    
    
    650,000Principal payments on borrowed funds
    
    
    
    
    
    
    (150,000
    )Dividends paid
    
    
    (11,343
    )
    
    
    (9,604
    )Purchases of stock by the recognition and retention plan
    
    
    (1,290
    )
    
    
    (3,891
    )Purchases of treasury stock
    
    
    
    
    
    
    (27,406
    )Exercise of stock options
    
    
    1,866
    
    
    
    3,292Net Cash Provided by Financing Activities
    
    
    908,090
    
    
    
    768,626Net Decrease in Cash and Cash Equivalents
    
    
    (37,981
    )
    
    
    (24,082
    )Cash and Cash Equivalents at Beginning of Period
    
    
    168,183
    
    
    
    254,584Cash and Cash Equivalents at End of Period
    
    $
    130,202
    
    
    $
    230,502Supplemental Disclosures:Interest paid
    
    $
    126,137
    
    
    $
    96,460Income taxes paid
    
    $
    4,865
    
    
    $
    
 See accompanying notes to consolidated financial statements. Page 6




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Hudson City Bancorp, Inc. and Subsidiary 
  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 mutual savings
bank into a two-tiered mutual savings bank holding company structure. In our opinion, all the adjustments (consisting of normal and recurring adjustments) necessary for
a fair presentation of the consolidated financial condition and consolidated results of operations
for the unaudited periods presented have been included. The results of operations and other data
presented for the three-month period ended March 31, 2005 are not necessarily indicative of the
results of operations that may be expected for the year ending December 31, 2005. 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, 2004
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 $452,000 and $892,000 for the three month periods ended March 31, 2005
and 2004, 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 7




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##### Table of Contents



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 MonthsEnded March 31,2005
    
    
    2004(In thousands, except per share data)Net income, as reported
    
    $
    61,929
    
    
    $
    56,229Add: expense recognized for the recognition and
retention plans, net of related tax effect
    
    
    1,070
    
    
    
    1,160Less: total stock option and recognition and
retention plans expense, determined under
the fair value method, net of
related tax effect
    
    
    (1,444
    )
    
    
    (1,962
    )Pro forma net income
    
    $
    61,555
    
    
    $
    55,427Basic
earnings per share:    As reported
    
    $
    0.35
    
    
    $
    0.31Pro forma
    
    
    0.34
    
    
    
    0.31Diluted
earnings per share: As reported
    
    $
    0.34
    
    
    $
    0.30Pro forma
    
    
    0.34
    
    
    
    0.30
 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-Scholes option-pricing model with the following
weighted average assumptions: For the Three MonthsEnded March 31,2005
    
    
    2004Expected dividend yield
    
    
    2.23
    %
    
    
    1.64
    %Expected volatility
    
    
    21.57
    
    
    
    19.68Risk-free interest rate
    
    
    3.64
    
    
    
    2.99Expected option life
    5
    years



    5
    years
 2. Plan of Conversion and Reorganization On December 16, 2004 the Boards of Directors of Hudson City Bancorp, Hudson City Savings and Hudson
City, MHC unanimously adopted a Plan of Conversion and Reorganization and related amendments. Under
the terms of the Plan of Conversion and Reorganization, Hudson City Savings will reorganize from
its current two-tier mutual holding company structure to a stock holding company structure and
Hudson City Bancorp will undertake a second-step stock offering of new shares of common stock.
Hudson City, MHC, which owns 65.76% of the outstanding common stock of Hudson City Bancorp as of
March 31, 2005, will be merged into Hudson City Bancorp as part of the reorganization. On April 5,
2005, Hudson City Bancorp announced that it had received conditional approval from the Office of
Thrift Supervision to commence the second-step
transaction and that the registration statement related to the transaction was declared effective by the Securities and
Exchange Commission. The transactions contemplated by the Plan of Conversion and Reorganization are
still subject to the approval of Hudson City Savings depositors and Hudson City Bancorps
shareholders Page 8




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Hudson City Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements (other than Hudson City, MHC), final regulatory approval from the Office of Thrift Supervision and
the sale of at least 361.3 million shares of Hudson City Bancorp common stock. Meetings of Hudson
City Savings depositors and Hudson City Bancorps shareholders have been scheduled for May 27,
2005. Proxy materials for each meeting have been mailed. If approved, Hudson City Bancorp
anticipates that the transactions will be completed in the second quarter of 2005. 3.  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. Comprehensive income during the periods indicated is as follows. For the Three MonthsEnded March 31,2005
    
    
    2004(In thousands)Net income
    
    $
    61,929
    
    
    $
    56,229Other
comprehensive income (loss):Unrealized holding (loss) gain on securities
available for sale, net of (benefit) tax of
$(14,170) for 2005 and $17,294 for 2004
    
    
    (20,518
    )
    
    
    25,040Reclassification adjustment for gains
in net income, net of (benefit) tax of
$(1,118) for 2005 and $(996) for 2004
    
    
    (1,619
    )
    
    
    (1,441
    )Comprehensive
income
    
    $
    39,792
    
    
    $
    79,828
 4.  Earnings Per Share The following is a reconciliation of the numerators and denominators of the basic and diluted
earnings per share computations. For the Three Months Ended March 31,2005
    
    
    2004Per
    
    
    
    
    
    
    
    
    
    
    PerShare
    
    
    
    
    
    
    
    
    
    
    ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount(In thousands, except per share data)Net income
    
    $
    61,929
    
    
    
    
    
    
    
    
    
    
    $
    56,229Basic earnings per share:Income available to
common stockholders
    
    $
    61,929
    
    
    
    179,113
    
    
    $
    0.35
    
    
    $
    56,229
    
    
    
    181,524
    
    
    $
    0.31Effect of dilutive common
stock equivalents
    
    
    
    
    
    
    4,431
    
    
    
    
    
    
    
    
    
    
    
    5,517Diluted earnings per share:Income available to
common stockholders
    
    $
    61,929
    
    
    
    183,544
    
    
    $
    0.34
    
    
    $
    56,229
    
    
    
    187,041
    
    
    $
    0.30
 Page 9




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Hudson City Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements 5.  Fair Value and Unrealized Losses of Securities The following table summarizes the fair value and unrealized losses of those investment and
mortgage-backed securities that reported an unrealized loss at March 31, 2005 and 2004, and whether
the unrealized loss position was continuous for the twelve months prior to those dates. Less Than 12 Months
    
    
    12 Months or Longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(In thousands)2005United States government agencies
    
    $
    2,708,941
    
    
    $
    45,397
    
    
    $
    212,884
    
    
    $
    8,496
    
    
    $
    2,921,825
    
    
    $
    53,893GNMA pass-through certificates
    
    $
    602,215
    
    
    $
    3,219
    
    
    $
    40,872
    
    
    $
    390
    
    
    $
    643,087
    
    
    $
    3,609FNMA pass-through certificates
    
    
    2,264,554
    
    
    
    38,948
    
    
    
    189,157
    
    
    
    8,329
    
    
    
    2,453,711
    
    
    
    47,277FHLMC pass-through certificates
    
    
    659,992
    
    
    
    8,943
    
    
    
    232,089
    
    
    
    11,275
    
    
    
    892,081
    
    
    
    20,218FHLMC and FNMA REMICs
    
    
    18,832
    
    
    
    226
    
    
    
    621,731
    
    
    
    41,528
    
    
    
    640,563
    
    
    
    41,754Total mortgage-backed securities
    
    $
    3,545,593
    
    
    $
    51,336
    
    
    $
    1,083,849
    
    
    $
    61,522
    
    
    $
    4,629,442
    
    
    $
    112,8582004United States government agencies
    
    $
    220,512
    
    
    $
    908
    
    
    $
    
    
    
    $
    
    
    
    $
    220,512
    
    
    $
    908Corporate bonds
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    1
    
    
    
    49
    
    
    
    1Total investment securities
    
    $
    220,512
    
    
    $
    908
    
    
    $
    49
    
    
    $
    1
    
    
    $
    220,561
    
    
    $
    909GNMA pass-through certificates
    
    $
    76,805
    
    
    $
    312
    
    
    $
    
    
    
    $
    
    
    
    $
    76,805
    
    
    $
    312FNMA pass-through certificates
    
    
    223,088
    
    
    
    1,216
    
    
    
    
    
    
    
    
    
    
    
    223,088
    
    
    
    1,216FHLMC pass-through certificates
    
    
    271,231
    
    
    
    2,098
    
    
    
    
    
    
    
    
    
    
    
    271,231
    
    
    
    2,098FHLMC, FNMA and GNMA -
REMICs
    
    
    1,337,670
    
    
    
    32,089
    
    
    
    
    
    
    
    
    
    
    
    1,337,670
    
    
    
    32,089Total mortgage-backed securities
    
    $
    1,908,794
    
    
    $
    35,715
    
    
    $
    
    
    
    $
    
    
    
    $
    1,908,794
    
    
    $
    35,715
 The unrealized losses are primarily due to the changes in interest rates. We have not
classified these items as impaired as the coupon payments for the investment securities and the
scheduled principal and interest payments have been made in accordance with the terms of the
agreements. We also anticipate collecting the entire principal balance as scheduled, we believe the
price variation is temporary in nature and we have the intent and ability to hold these securities
to maturity or for a sufficient amount of time to recover the
recorded investment. 6.  Stockholders Equity 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 three-month period ended March 31, 2005, we did not purchase any shares of our common
stock, as we suspended our stock repurchase program pending the completion of the second-step
conversion. At March 31, 2005, there were 3,076,221 shares remaining to be repurchased under the
existing stock repurchase program. Page 10




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Hudson City Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements In the first quarter of 2005, Hudson City, MHC applied for and received regulatory approval from
the Office of Thrift Supervision to waive receipt of dividend payments on the Hudson City Bancorp
stock it
owns. This waiver applies to any dividend declared during 2005. The additional operating capital
remaining at Hudson City Bancorp will be used for general corporate purposes. 7.  Net Periodic Benefit Plans Expenses Non-contributory retirement and post-retirement plans are maintained to cover all employees,
including retired employees, who have met the eligibility requirements of the plans. Benefits
under the qualified and non-qualified defined benefit retirement plans are based primarily on years
of service and compensation. Funding of the qualified retirement plan is actuarially determined on
an annual basis. It is our policy to fund the qualified retirement plan sufficiently to meet the
minimum requirements set forth in the Employee Retirement Income Security Act of 1974. The
non-qualified retirement plan, which is maintained for certain executive officers, is unfunded. Net periodic benefit cost included the following components: For the Three Months Ended March 31,Retirement Plans
    
    
    Other Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)Service cost
    
    $
    806
    
    
    $
    726
    
    
    $
    598
    
    
    $
    552Interest cost
    
    
    1,172
    
    
    
    1,134
    
    
    
    657
    
    
    
    638Expected return on assets
    
    
    (1,693
    )
    
    
    (1,643
    )
    
    
    
    
    
    
    Amortization of:Net loss (gain).
    
    
    86
    
    
    
    12
    
    
    
    (3
    )
    
    
    1Unrecognized prior service cost
    
    
    (4
    )
    
    
    (4
    )
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    367
    
    
    $
    225
    
    
    $
    1,252
    
    
    $
    1,191
 Due to the funded status of our qualified retirement plan, we do not plan to make a
contribution to the plan for 2005. Effective July 1, 2004, we adopted FASB Staff Position 106-2, which requires companies to recognize
the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Medicare
Act). The effect of the Medicare Act reduced the accumulated postretirement benefit obligation by
$5,399,000 as of January 1, 2004. Had we adopted FASB Staff Position 106-2 at January 1, 2004, net
periodic benefit cost would have been reduced by $171,000 for the three-month period ended March
31, 2004. 8.  Subsequent Event On April 14, 2005, the Board of Directors of Hudson City Bancorp declared a quarterly cash dividend
of twenty-one cents ($0.21) per common share outstanding. The dividend is payable on June 1, 2005
to stockholders of record at the close of business on May 6, 2005. The Board of Directors of Hudson
City, MHC waived receipt of this dividend consistent with the approval received from the Office of
Thrift Supervision during the first quarter of 2005. Page 11




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Hudson City Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements 9.  Recent Accounting Pronouncements On September 30, 2004, the FASB issued Staff Position Emerging Issues Task Force (EITF) Issue No.
03-01, Effective Date of Paragraphs 10-20 of EITF Issue No. 03-01, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments, which delays the
effective date for the measurement and recognition guidance contained in EITF Issue No. 03-01.
EITF Issue No. 03-01 provides guidance for evaluating whether an investment is
other-than-temporarily impaired and was originally effective for
other-than-temporary impairment
evaluations made in reporting periods beginning after June 15, 2004. The delay in the effective
date for the measurement and recognition guidance contained in paragraphs 10 through 20 of EITF
Issue No. 03-01 does not suspend the requirement to recognize other-than-temporary impairments as
required by existing authoritative literature. The disclosure guidance in paragraphs 21 and 22 of
EITF Issue No. 03-01 remains effective. The delay will be superseded concurrent with the final
issuance of EITF Issue No. 03-01a, which is expected to provide implementation guidance on matters
such as impairment evaluations for declines in value caused by increases in interest rates and/or
sector spreads. In December 2004, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 153,
Exchanges of Nonmonetary Assets, which amends APB Opinion No. 29, Accounting for Nonmonetary
Transactions. SFAS No. 153 eliminates the exception from fair value measurement for nonmonetary
exchanges of similar productive assets in Opinion No. 29 and replaces it with an exception for
exchanges that do not have commercial substance. SFAS No. 153 specifies that a nonmonetary exchange
has commercial substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. SFAS No. 153 is effective for nonmonetary exchanges
occurring in fiscal periods beginning after June 15, 2005. We do not expect the adoption of SFAS
No. 153 will have a material impact on our financial condition or results of operations. In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment. This
Statement is a revision of SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes
APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related guidance. SFAS No.
123 (revised 2004) established standards for the accounting for transactions in which an entity
exchanges its equity instruments for goods or services. This Statement requires that the cost
resulting from all share-based payment transactions be recognized in the financial statements. This
Statement establishes fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value-based measurement method in accounting
for share-based payment transactions with employees, except for equity instruments held by employee
share ownership plans. This Statement was initially effective for public entities that do not file
as small business issuers as of the beginning of the first interim or annual reporting period that
begins after June 15, 2005. Effective April 15, 2005, the Securities and Exchange Commission issued
final rule No. 33-8568, which amended the date for compliance with SFAS No. 123 (revised 2004) for
registrants that do not file as small business issuers to the first annual reporting
period beginning on or after June 15, 2005, which for us is
January 1, 2006. We do not expect the adoption of SFAS No. 123 (revised 2004) will have a material
impact on our financial condition or results of operations. Page 12




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Hudson City Bancorp, Inc.
Form 10-Q 
 Item 2.  Managements Discussion and Analysis of Financial Condition and Results of
Operations Executive Summary Our results of operations depend primarily on net interest income, which, in part, is a direct
result of the market interest rate environment. Net interest income is the difference between the
interest income we earn on our interest-earning assets, primarily mortgage loans, mortgage-backed
securities and investment securities, and the interest we pay on our interest-bearing liabilities,
primarily time deposits, interest-bearing demand deposits and borrowed funds. Net interest income
is affected by the shape of the market yield curve, which continued
to flatten during the first quarter of
2005, the timing of the placement of interest-earning assets and interest-bearing liabilities on
our balance sheet, and the prepayment rate on our mortgage-related assets, which was relatively
flat when comparing the first quarter of 2005 to the first quarter of 2004, notwithstanding an
increase in the actual amounts received due to the growth of our mortgage-related asset portfolios.
Our results of operations may also be affected significantly by general and local economic and
competitive conditions, particularly those with respect to changes in market interest rates,
government policies and actions of regulatory authorities. Our results are also affected by the
price of our stock, as the expense of certain of our employee stock compensation plans is related
to the current price of our common stock. Our net income for the first three months of 2005 increased $5.7 million to $61.9 million. Basic
and diluted earnings per share for the first quarter of 2005 were $0.35 and $0.34, respectively,
compared with $0.31 and $0.30, respectively, for the first quarter of 2004. The increase in net
income was primarily the result of the $3.11 billion growth of our average assets when comparing
the first quarter of 2005 with the first quarter of 2004. Our return on average assets for the
first quarter of 2005 was 1.21%. Total stockholders equity increased $37.2 million during the
first three months of 2005. Our return on average stockholders equity was 17.21% for the first
quarter of 2005. During the first three months of 2005, we continued to grow our balance sheet consistent with our
traditional thrift business model and the growth initiatives we have employed during recent
periods. Our balance sheet growth was primarily due to a $620.8 million increase in total loans and
a $328.3 million increase in total mortgage-backed securities and was funded principally by
borrowed funds and customer deposits. The growth in our core investment of residential first
mortgage loans was due to our continued strong levels of loan purchases that allowed us to grow and
geographically diversify our mortgage loan portfolio at a reatively low overhead cost while
maintaining our traditional thrift business model. The $700.0 million increase in borrowed funds was used to meet the goals of our growth initiatives,
to take advantage of the still relatively low interest rate environment and to extend the overall
maturity of our liabilities. The $218.9 million growth in customer deposits was primarily the
result of a $139.3 million increase in time deposit accounts. Our ability to grow our business with
relatively low cost interest-bearing liabilities, notwithstanding the general increase in
short-term interest rates, resulted in the increase in our net interest income for the first
quarter of 2005. Short-term market interest rates generally increased during the first quarter of 2005 following
increases during the entirety of 2004. The Federal Open Market Committee of the Federal Reserve
Board increased the overnight lending rate 25 basis points at each of the regularly scheduled
meetings beginning in June 2004 to the current rate of 3.00%. Long-term market interest rates also
increased in the first quarter of 2005, but at a slower pace than short-term interest rates. Hence,
the market yield curve continued to Page 13




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Hudson City Bancorp, Inc.
Form 10-Q flatten during the first quarter of 2005. Accordingly, our net interest margin decreased 24 basis
points for the first three months of 2005 compared with the same period in 2004. We anticipate that both short-term and long-term market interest rates will continue to increase in
2005, but short-term interest rates will continue to increase at a faster pace than long-term
interest rates. The result of this potential market interest rate scenario would be a further
flattening of the market yield curve, which would cause the spread between long-term interest rates
and short-term interest rates to decrease. If this occurs, the resulting interest rate environment
is expected to have an adverse impact on our results of operations and our net interest margin as
our interest-earning assets, both loans and securities, generally price off long-term interest
rates, while our interest-bearing liabilities, both deposits and borrowed funds, generally price
off short-term interest rates. If both short- and long-term interest rates increase by the same
amount, and the shape of the yield curve does not change, the resulting environment is also likely
to have a short-term adverse impact on our results of operations, as our interest-bearing
liabilities will reset to the current market interest rates faster than our interest-earning
assets. We expect to continue to grow our assets primarily through the origination and purchase of mortgage
loans, while purchasing investment and mortgage-backed securities as a supplement to our mortgage
loans. In addition to the expected funds which may be received in connection with the second-step
conversion, the funding for our asset growth is expected to come from customer deposits and
borrowed funds. We plan that approximately half of these originations and purchases will be
variable-rate in nature, in order to assist in the management of our interest rate risk. Included
in variable-rate loans are loans with a contractual annual rate adjustment after their initial
fixed-rate periods of either three, five or ten years. We plan that the funds borrowed will have initial non-call periods of three to five years and final
maturities of ten years in order to extend the maturity of our liabilities and assist in the
management of our interest rate risk. We intend to grow customer deposits by continuing to offer
desirable products at competitive rates and by opening new branch offices. We opened one branch
office in Suffolk County, NY during April of 2005. We have received regulatory approval to open
three additional branch offices in New Jersey, three additional branch offices in Suffolk County
and two branch offices in Richmond County (Staten Island), NY, all of which we plan to open during
2005. We will continue to explore branch expansion opportunities in market areas that present
significant opportunities for our traditional thrift business model and intend to open ten to
fifteen branches in each of the next three years. Although new branching activity results in
additional expenses, overall we have continued to control our operating expenses and maintained an
efficiency ratio of 23.70% during the first quarter of 2005. Comparison of Financial Condition at March 31, 2005 and December 31, 2004 During the first three months of 2005, our total assets increased $985.2 million, or 4.9%, to
$21.13 billion at March 31, 2005 from $20.15 billion at December 31, 2004. Loans increased $620.8
million, or 5.5%, to $11.98 billion at March 31, 2005 from $11.36 billion at December 31, 2004.
The increase in loans reflected our continued loan purchase activity as well as our focus on the
origination of one- to four-family first mortgage loans, primarily in New Jersey and the New York
metropolitan area. For the first three months of 2005, we purchased first mortgage loans of $785.6
million and originated first mortgage loans of $322.7 million, compared with purchases of $761.1
million and originations of $247.3 million for the first three months of 2004. The larger volume
of purchased mortgage loans in the first three months of 2005, when compared to the volume of loan
originations, allowed us to grow and geographically diversify our mortgage loan portfolio at a
relatively low overhead cost while maintaining our traditional Page 14




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Hudson City Bancorp, Inc.
Form 10-Q thrift business model. We will continue to purchase mortgage loans to grow and diversify our
portfolio, as opportunities and funding are available. These first mortgage loan originations and purchases were exclusively in one-to four-family
mortgage loans. Approximately 40.5% of the loan purchases and originations were variable-rate
loans, which we consider to be any loan with a contractual annual rate adjustment after an initial
fixed-rate period of three, five or ten years. At March 31, 2005, fixed-rate mortgage loans
accounted for 89.3% of our first mortgage loan portfolio compared with 92.5% at December 31, 2004.
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 to current market
interest rates, while our interest-bearing deposits and callable borrowed funds would reprice, from
time to time, to the higher market interest rates. Total mortgage-backed securities increased $328.3 million to $5.70 billion at March 31, 2005 from
$5.38 billion at December 31, 2004. This increase in total mortgage-backed securities resulted from
a $169.5 million increase in mortgage-backed securities held to maturity, primarily reflecting
purchases of variable-rate instruments with initial fixed-rate periods of five to seven years, and
a $158.8 million increase in mortgage-backed securities available for sale, reflecting purchases of
variable-rate instruments with initial fixed-rate periods of one to three years. These
variable-rate purchases accounted for 98.2% of all mortgage-backed security purchases resulting in
our variable-rate securities held at March 31, 2005 accounting for 35.9% of our total portfolio. We
intend to continue to purchase variable-rate securities, as well as originate and purchase
variable-rate mortgage loans, as part of our strategy to assist in the management of our interest
rate risk. Overall, the aggregate balance of the investment securities portfolio remained relatively stable at
$2.97 billion at March 31, 2005 compared with $2.93 billion at December 31, 2004. Accrued interest
receivable increased $3.8 million, primarily due to increased balances in loans and investments.
The $3.6 million increase in banking premises and equipment, net, reflected
additional expenditures related to
our branch expansion
strategy. The $18.6 million increase in other assets reflected the increase in the deferred tax
asset on our available for sale investment and mortgage-backed securities. Total liabilities increased $948.0 million, or 5.1%, to $19.69 billion at March 31, 2005 compared
with $18.74 billion at December 31, 2004. Borrowed funds increased $700.0 million, or 9.8%, to
$7.85 billion at March 31, 2005 from $7.15 billion at December 31, 2004. The additional borrowed
funds were primarily used to fund our asset growth. Borrowed funds were comprised of $5.90 billion
of securities sold under agreements to repurchase and $1.95 billion of Federal Home Loan Bank
advances. The $700.0 million in new borrowings primarily have initial non-call periods ranging from
three to five years and final maturities of ten years. Total deposits increased $218.9 million, or 1.9%, to $11.70 billion at March 31, 2005 from $11.48
billion at December 31, 2004. The increase in total deposits was primarily used to fund our growth
initiatives. Interest-bearing deposits increased $190.4 million primarily due to a $139.3 million
increase in our time deposit accounts and a $53.5 million increase in our interest-bearing High
Value Checking account product. We believe the increase in time deposits was due primarily to our
offering of competitive rates on desirable short-term deposit products. It is also possible that
the announcement of our second-step conversion transaction was partly responsible for the
increase in deposits. We expect a portion of our deposits will be used to subscribe for stock in
connection with the second-step conversion and may result in a decrease in our deposits. The
balance in the High Value Checking account at March 31, 2005 was $4.24 billion compared with $4.19
billion at December 31, 2004. The $29.2 million increase in other Page 15




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Hudson City Bancorp, Inc.
Form 10-Q liabilities was due to an increase in accrued tax expense due to the timing of the first quarter
estimated tax payment. Total stockholders equity increased $37.2 million, or 2.7%, to $1.44 billion at March 31, 2005
from $1.40 billion at December 31, 2004. The increase in stockholders equity was primarily due to
net income of $61.9 million for the first three months of 2005, a $1.9 million increase due to the
exercise of 260,698 stock options, a $3.9 million permanent tax benefit due to the exercise of
stock options and the vesting of awards under our employee stock benefit plans, and a $4.3 million
increase due to the commitment of shares for our employee stock benefit plans. These increases to
stockholders equity were partially offset by cash dividends declared and paid to common
stockholders of $11.3 million, purchases of 36,134 shares of common stock for our recognition and
retention plan at an aggregate cost of $1.3 million and a $22.1 million increase in accumulated
other comprehensive loss primarily due to a decrease in the fair value of our available for sale
investment portfolio due to increasing market interest rates. Our registration statement on Form
S-3, on file at the Securities and Exchange Commission, sets forth the pro forma impact of the
second-step conversion under the captions Capitalization and Pro Forma Data. As of March 31, 2005 there remained 3,076,221 shares authorized to be purchased under our current
stock repurchase program. We have suspended our stock repurchase program pending the completion of
the second-step conversion. At March 31, 2005, the ratio of total stockholders equity to total
assets was 6.81% compared with 6.96% at December 31, 2004. For the three-month period ended March
31, 2005, the ratio of average stockholders equity to average assets was 7.01% compared with 7.29%
for the year ended December 31, 2004. 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 more rapid percentage growth in assets. Stockholders
equity per common share was $8.04 at March 31, 2005 compared with $7.85 at December 31, 2004. Average Balance Sheets for the Three Months Ended March 31, 2005 and 2004 The tables on the following pages present certain information regarding Hudson City Bancorps
financial condition and net interest income for the three-month periods ended March 31, 2005 and
2004. 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 16




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##### Table of Contents



Hudson City Bancorp, Inc.
Form 10-Q For the Three Months Ended March 31,2005
    
    
    2004Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost (4)
    
    
    Balance
    
    
    Interest
    
    
    Cost(Dollars in thousands)(Unaudited)Assets:Interest-earning assets:First mortgage loans, net (1)
    
    $
    11,371,846
    
    
    
    156,098
    
    
    
    5.49
    %
    
    $
    8,836,842
    
    
    
    123,087
    
    
    
    5.57
    %Consumer and other loans
    
    
    159,430
    
    
    
    2,301
    
    
    
    5.77
    
    
    
    135,302
    
    
    
    2,049
    
    
    
    6.06Federal funds sold
    
    
    138,997
    
    
    
    823
    
    
    
    2.40
    
    
    
    139,674
    
    
    
    317
    
    
    
    0.91Mortgage-backed securities at amortized cost
    
    
    5,455,509
    
    
    
    60,174
    
    
    
    4.41
    
    
    
    5,540,780
    
    
    
    61,647
    
    
    
    4.45Federal Home Loan Bank of New York stock
    
    
    140,500
    
    
    
    1,176
    
    
    
    3.35
    
    
    
    160,213
    
    
    
    659
    
    
    
    1.65Investment securities at amortized cost
    
    
    2,961,077
    
    
    
    33,047
    
    
    
    4.46
    
    
    
    2,301,503
    
    
    
    25,268
    
    
    
    4.39Total interest-earning assets
    
    
    20,227,359
    
    
    
    253,619
    
    
    
    5.02
    
    
    
    17,114,314
    
    
    
    213,027
    
    
    
    4.98Noninterest-earning assets
    
    
    313,892
    
    
    
    
    
    
    
    
    
    
    
    319,175Total Assets
    
    $
    20,541,251
    
    
    
    
    
    
    
    
    
    
    $
    17,433,489Liabilities and Stockholders Equity:Interest-bearing liabilities:Savings accounts
    
    $
    919,453
    
    
    
    2,245
    
    
    
    0.99
    
    
    $
    943,526
    
    
    
    2,331
    
    
    
    0.99Interest-bearing demand accounts
    
    
    4,320,858
    
    
    
    27,298
    
    
    
    2.56
    
    
    
    2,992,267
    
    
    
    15,626
    
    
    
    2.10Money market accounts
    
    
    568,706
    
    
    
    1,441
    
    
    
    1.03
    
    
    
    618,330
    
    
    
    1,472
    
    
    
    0.96Time deposits
    
    
    5,325,551
    
    
    
    31,931
    
    
    
    2.43
    
    
    
    5,642,579
    
    
    
    30,340
    
    
    
    2.16Total interest-bearing deposits
    
    
    11,134,568
    
    
    
    62,915
    
    
    
    2.29
    
    
    
    10,196,702
    
    
    
    49,769
    
    
    
    1.96Borrowed funds
    
    
    7,402,222
    
    
    
    64,818
    
    
    
    3.55
    
    
    
    5,376,374
    
    
    
    47,719
    
    
    
    3.57Total interest-bearing liabilities
    
    
    18,536,790
    
    
    
    127,733
    
    
    
    2.79
    
    
    
    15,573,076
    
    
    
    97,488
    
    
    
    2.52Noninterest-bearing liabilities:Noninterest-bearing deposits
    
    
    418,585
    
    
    
    
    
    
    
    
    
    
    
    394,167Other noninterest-bearing liabilities
    
    
    146,423
    
    
    
    
    
    
    
    
    
    
    
    123,683Total noninterest-bearing liabilities
    
    
    565,008
    
    
    
    
    
    
    
    
    
    
    
    517,850Total liabilities
    
    
    19,101,798
    
    
    
    
    
    
    
    
    
    
    
    16,090,926Stockholders equity
    
    
    1,439,453
    
    
    
    
    
    
    
    
    
    
    
    1,342,563Total Liabilities and Stockholders Equity
    
    $
    20,541,251
    
    
    
    
    
    
    
    
    
    
    $
    17,433,489Net interest income/net interest rate spread (2)
    
    
    
    
    
    $
    125,886
    
    
    
    2.23
    %
    
    
    
    
    
    $
    115,539
    
    
    
    2.46
    %Net interest-earning assets/net interest margin (3)
    
    $
    1,690,569
    
    
    
    
    
    
    
    2.45
    %
    
    $
    1,541,238
    
    
    
    
    
    
    
    2.69
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    1.09
    x
    
    
    
    
    
    
    
    
    
    
    1.10
    x
   (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.(4)
    
    At March 31, 2005, the weighted-average rate on our outstanding interest-earning assets, other than our
FHLB stock, was as follows: first mortgage loans, 5.67%, consumer and other loans, 5.84%, federal funds
sold, 2.75%, mortgage-backed securities, 4.71%, investment securities, 4.48%. At March 31, 2005, the
weighted-average rate on our outstanding interest-bearing liabilities was as follows: savings accounts,
0.98%, interest-bearing demand accounts, 2.91%, money market accounts, 1.12%, time deposits, 2.52%,
borrowed funds, 3.52%. Page 17




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Hudson City Bancorp, Inc.
Form 10-Q Comparison of Operating Results for the Three Months Ended March 31, 2005 and 2004 General.Net income was $61.9 million for the three months ended March 31, 2005, an increase of
$5.7 million, or 10.1%, compared with net income of $56.2 million for the three months ended March
31, 2004. Basic and diluted earnings per common share were $0.35 and $0.34, respectively, for the
first quarter of 2005 compared with basic and diluted earnings per share of $0.31 and $0.30,
respectively, for the first quarter of 2004. For the first quarter of 2005 our return on average
stockholders equity was 17.21% compared with 16.75% for the first quarter of 2004. The increase in
the return on average stockholders equity was primarily due to the growth of our net income and a
lower percentage growth in stockholders equity due to payment of cash dividends and stock
repurchases. Our return on average assets for the three-month period ended March 31, 2005 was 1.21%
compared with 1.29% for the three-month period ended March 30, 2004. The decrease in the return on
average assets was primarily due to our overall balance sheet growth during a period of narrowing
net interest margins and a flattening market yield curve. Interest and Dividend Income.Total interest and dividend income increased $40.6 million, or
19.1%, to $253.6 million for the quarter ended March 31, 2005 compared with $213.0 million for the
quarter ended March 31, 2004. The increase in total interest and dividend income was primarily due
to a $3.12 billion, or 18.2%, increase in the average balance of total interest-earning assets to
$20.23 billion for the first quarter of 2005 compared with $17.11 billion for the first quarter of
2004. The growth in the average balance of total interest-earning assets was consistent with the
growth initiatives employed by us during recent periods. The increase in interest and dividend
income was also the result of a four basis point increase in the annualized average yield on total
interest-earning assets to 5.02% for the first quarter of 2005 from 4.98% for the first quarter of
2004, reflecting yield increases in investment securities and a shift in our interest-earning asset
mix to a higher percentage of first mortgage loans, which earn a higher yield than most of our
other interest-earning assets. The $33.0 million increase in interest and fee income on first mortgage loans was primarily due to
a $2.53 billion increase in the average balance of first mortgage loans, which reflected our
continued emphasis on balance sheet growth in our core investment in first mortgage loans. The
increase in mortgage loan income due to the increase in the average balance was partially offset by
an eight basis point decrease in the annualized average yield, which reflected the large volume of
loan origination and purchase activity during the prevailing interest rate environment of 2004 and
the first quarter of 2005, and the larger volume of originations and purchases of variable-rate
loans, which generally initially yield less than fixed-rate loans. The $7.7 million increase in interest and dividends on total investment securities was primarily
due to an increase in the average balance of total investment securities of $659.6 million, which
reflected the investment of certain of the cash flows from the prepayment activity on our
mortgage-related assets in 2004 into investment securities. The increase in income on total
investment securities was also due to a seven basis point increase in the annualized average yield
on our investment securities, due, in part, to the purchase of agency step-up bonds, which have
higher interest rates than similar agency securities. The $1.4 million decrease in interest income on total mortgage-backed securities was due to an
$85.3 million decrease in the average balance of total mortgage-backed securities, which primarily
reflected the subsequent investment of the 2004 prepayment and sales activity on our
mortgage-backed securities into investment securities and first mortgage loans. The decrease also
reflected a four basis point decrease in Page 18




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Hudson City Bancorp, Inc.
Form 10-Q the annualized weighted-average yield of mortgage-backed
securities that reflected the prevailing long-term interest rate environment of 2004, and the
larger volume of purchases of variable-rate securities, which generally initially yield less than
fixed-rate securities. Interest Expense.Total interest expense, comprised of interest on deposits and interest on
borrowed funds, increased $30.2 million, or 31.0%, to $127.7 million for the quarter ended March
31, 2005 from $97.5 million for the quarter ended March 31, 2004. This increase was primarily due
to a $2.97 billion, or 19.1%, increase in the average balance of total interest-bearing liabilities
to $18.54 billion for the first quarter of 2005 compared with $15.57 billion for the first quarter
of 2004. The increase in total interest expense was also due to a 27 basis point increase in the
annualized weighted-average cost of total interest-bearing liabilities to 2.79% for the three-month
period ended March 31, 2005 compared with 2.52% for the three-month period ended March 31, 2004,
which reflected the growth of our interest-bearing liabilities during the rising short-term
interest rate environment experienced during 2004 and the first quarter of 2005 and the larger
growth in our borrowed funds, which have higher costs than our interest-bearing deposits. Interest expense on borrowed funds increased $17.1 million primarily due to a $2.02 billion
increase in the average balance of borrowed funds, the impact of which was partially offset by a
two basis point decrease in the annualized average cost of borrowed funds. The increase in the
average balance of borrowed funds was used to fund asset growth and extend the overall maturity of
our liabilities. The decrease in the average cost of borrowed funds reflected the continued growth
of our borrowed funds in the prevailing long-term interest rate environment that existed during
2004 and the first quarter of 2005. The new borrowings added in the first quarter of 2005 primarily
have initial non-call periods of three to five years and final maturities of ten years. The $13.1 million increase in interest expense on interest-bearing deposits for the three months
ended March 31, 2005 was due to a $937.9 million increase in the average balance of
interest-bearing deposits and a 33 basis point increase in the annualized weighted-average cost of
interest-bearing deposits. The growth in the average balance of interest-bearing deposits was
primarily used to fund our growth initiatives. The increase in the annualized weighted-average cost
of interest-bearing deposits, experienced principally in interest-bearing demand accounts and time
deposits, reflected the rising short-term market interest rate environment experienced during 2004
and the first quarter of 2005 and the need to increase rates on these deposit products in the
highly competitive deposit market of the New York metropolitan area. The $11.7 million increase in interest expense on our interest-bearing demand accounts reflected an
increase in the average balance of interest-bearing demand accounts of $1.33 billion, primarily due
to the growth of our High Value Checking account product, and a 46 basis point increase in the
weighted-average cost due to the rising short-term market interest rate environment. We intend to
continue to fund future asset growth using customer deposits as our primary source of funds, by
continuing to pay competitive rates and by opening new branch offices, while supplementing the
deposit growth with borrowed funds. Net Interest Income.Net interest income increased $10.4 million, or 9.0%, to $125.9 million
for the quarter ended March 31, 2005 compared with $115.5 million for the quarter ended March 31,
2004. This increase primarily reflected our growth initiatives that resulted in increases in the
average balance of both interest-earning assets and interest-bearing liabilities. Our net interest
rate spread, determined by subtracting the annualized weighted-average cost of total
interest-bearing liabilities from the annualized Page 19




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Hudson City Bancorp, Inc.
Form 10-Q weighted-average yield on total interest-earning
assets, was 2.23% for the first quarter of 2005 compared with 2.46% for the corresponding period in
2004. For the first quarter of 2005, our net interest margin, determined by dividing annualized net
interest income by total average interest-earning assets, was 2.45% compared with 2.69% for the
corresponding 2004 period. The decrease in these ratios was primarily due to the larger increases
in short-term market interest rates, when compared to long-term market interest rates, and the fact
that our interest-bearing liabilities generally reflect changes in short-term interest rates while
our interest-earning assets generally reflect changes in long-term interest rates. Provision for Loan Losses.Our provision for loan losses was $65,000 for the three-month period
ended March 31, 2005 compared to $225,000 for the three-month period ended March 31, 2004. Net
recoveries for the first quarter of 2005 were $4,000 compared with net charge-offs of $7,000 for
the first quarter of 2004. The allowance for loan losses increased $69,000 to $27.4 million at
March 31, 2005 from $27.3 million at December 31, 2004. Non-performing loans, defined as non-accruing loans and accruing loans delinquent 90 days or more,
increased $2.9 million to $24.5 million at March 31, 2005 from $21.6 million at December 31, 2004,
reflecting increases in our non-performing purchased loan portfolio. The ratio of non-performing
loans to total loans was 0.20% at March 31, 2005 compared with 0.19% at December 31, 2004. The
ratio of the allowance for loan losses to non-performing loans was 111.83% at March 31, 2005
compared with 126.44% at December 31, 2004. The ratio of the allowance for loan losses to total
loans was 0.23% at March 31, 2005 compared with 0.24% at December 31, 2004. During the first quarter of 2005, we lowered the loss
factors used in our analysis on our first
mortgage loans to reflect the seasoning of the
purchased loan
portfolio and the recent favorable charge-off experience.
Notwithstanding such decrease, we recorded a  minimal provision for loan losses in the
first quarter of 2005 to reflect probable losses resulting from the actual growth in our loan
portfolio. We consider the ratio of allowance for loan losses to total loans at March 31, 2005,
given our primary lending emphasis and current market conditions, to be at an acceptable level.
Furthermore, the allowance for loan losses and provision
reflected the growth in the loan portfolio, the low levels of loan charge-offs, the stability in
the real estate market and the resulting stability in our overall loan quality. 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 $242,000 to $3.9 million for the
quarter ended March 31, 2005 from $3.6 million for the quarter ended March 31, 2004. The increase
in non-interest income primarily reflected a $300,000 increase in gains on securities transactions,
net to $2.7 million for the first quarter of 2005 from $2.4 million for the first quarter of 2004.
The total cash flows from the sales of these securities of $225.3 million were primarily reinvested
in first mortgage loans. Non-Interest Expense.Total non-interest expense increased $1.7 million, or 5.8%, to $30.8
million for the quarter ended March 31, 2005 from $29.1 million for the quarter ended March 31,
2004. The increase primarily reflected increases in net occupancy expense and advertising expenses
(a component of other expenses) due to our branch expansion program. The increase in advertising
expense also reflected Page 20




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Hudson City Bancorp, Inc.
Form 10-Q increases in deposit advertising due to heightened competition for deposits
in the New York metropolitan area. Our efficiency ratio, determined by dividing total non-interest expense by the sum of net interest
income and non-interest income, was 23.70% for the first quarter of 2005 compared with 24.38% for
the first quarter of 2004. Our ratio of annualized non-interest expense to average total assets for
the first quarter of 2005 was 0.60% compared with 0.67% for the first quarter of 2004. The
decrease in these ratios reflected our ability to leverage our existing infrastructure to support
continuing asset growth while controlling operating expenses, as our average assets grew in excess
of 17.0% when comparing the first quarter of 2005 to the same period in 2004. Income Taxes.Income tax expense increased $3.3 million, or 9.8%, to $37.0 million for the
quarter ended March 31, 2005 from $33.7 million for the quarter ended March 31, 2004, primarily due
to the 10.0% increase in income before income tax expense. Our effective tax rate for the quarters
ended March 31, 2005 and 2004 was 37.40% and 37.45%, respectively. 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. 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 on prepayment
activity tends to occur and our loan origination and purchase activity becomes increasingly
dependent on the strength of our residential real estate market and the volume of home purchases
and new construction activity in the markets we serve. Principal repayments on loans were $502.3 million during the three-month period ended March 31,
2005 compared with $377.0 million for the three-month period ended March 31, 2004. The increase in
principal payments on loans reflected the overall growth in our loans outstanding, notwithstanding
a relatively flat prepayment rate. Principal payments received on mortgage-backed securities
totaled $283.5 million during the first three months of 2005 compared with $336.2 million during
the first three months of 2004. The decrease in payments on mortgage-backed securities reflected
the decline in the aggregate balance of mortgage-backed securities during 2004, notwithstanding a
relatively flat prepayment rate. Maturities and calls of investment securities totaled $175.0
million during the three-month period ended March 30, 2005 compared with maturities and calls of
$826.3 million during the corresponding period in 2004. The
decrease in maturities and calls reflected the relatively stable long-term interest rate
environment during 2004 and the first quarter of 2005. Page 21




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Hudson City Bancorp, Inc.
Form 10-Q Total deposits increased $218.9 million during the three-month period ended March 31, 2005 compared
with an increase of $306.2 million during the three-month period ended March 31, 2004. 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 during
the first quarter of 2005 in interest-bearing deposits was due primarily to our consistent offering
of competitive rates on our deposit products. It is also possible that the announcement of our
second-step conversion transaction was partly responsible for the increase in deposits. We expect
a portion of our deposits will be used to subscribe for stock in connection with the second-step
conversion and may result in a decrease in our deposits. Time deposit accounts scheduled to mature
within one year were $3.92 billion at March 31, 2005. We anticipate that we will have sufficient
resources to meet this current funding commitment. Based on our deposit retention experience and
current pricing strategy, we anticipate that a significant portion of these time deposits will
remain with us as renewed time deposits or transfers to other deposit products, primarily our High
Value Checking account product. We are committed to maintaining a strong liquidity position;
therefore we monitor our liquidity position on a daily basis. For the three-month period ended March 31, 2005 we borrowed an additional $700.0 million compared
with new borrowings of $650.0 million for the three-month period ended March 31, 2004. There were
no principal payments on borrowed funds during the first three months of 2005 compared with $150.0
million for the corresponding period in 2004. The funds borrowed during the first quarter of 2005
have initial non-call periods ranging from three to five years and final maturities of ten years,
and were primarily used to fund our asset growth. At March 31, 2005, no borrowed funds are
scheduled to mature within one year, however, $2.18 billion in borrowed funds have the potential to
be called within one year. We anticipate we will have sufficient resources to meet either funding
commitment by borrowing new funds at the prevailing market interest rate, or paying-off the
borrowed funds, as they mature or are called. 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 $341.4 million during the three-month period
ended March 31, 2005 compared with $265.9 million during the three-month period ended March 31,
2004. Of the loan originations during the first quarter of 2005, 48.9% were variable-rate loans.
During the first three months of 2005 we purchased total loans of $785.6 million compared with
$761.1 million during the first three months of 2004. Of the loan purchases during the first
quarter of 2005, 36.1% were variable-rate loans. The continued larger volume of purchased mortgage
loans in the first three months of 2005, when compared to originated loans, allowed us to grow and
geographically diversify our mortgage loan portfolio at a relatively low overhead cost while
maintaining our traditional thrift business model. The increase in loan purchases also reflected
the asset growth strategies we have employed during recent periods, using customer deposits and
borrowed funds as our funding sources. We will continue to purchase mortgage loans to grow and
diversify our portfolio, as opportunities and funding are available. Purchases of mortgage-backed securities during the three-month period ended March 31, 2005 were
$851.5 million compared with $586.0 million during the three-month period ended March 31, 2004. The
increase in purchases of mortgage-backed securities reflected the shift of security purchases to
variable-rate mortgage-backed securities to assist in our management of interest rate risk. Of the
mortgage-backed securities purchased during the first quarter of 2005, 98.2% were variable-rate
securities. During the three-month period ended March 31, 2005, we purchased $250.0 million of
investment securities
compared with purchases of $899.8 million during the three-month period ended March 31, 2004. This
decrease in purchases of investment securities reflected the lower amount of investable cash flows
in 2005 Page 22




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Hudson City Bancorp, Inc.
Form 10-Q caused by lower amount of calls of investment securities and the shift of security
purchases to variable-rate mortgage-backed securities. As part of the membership requirements of the FHLB, we are required to hold a certain dollar amount
of FHLB common stock based on our asset size or our borrowings from the FHLB. During the first
three months of 2005, we purchased $5.0 million of FHLB common stock from the FHLB due to increases
in our amount of outstanding borrowings with the FHLB. During the first three months of 2004, we
redeemed $4.9 million of FHLB stock due to our declining balance of borrowed funds at the FHLB. The
purchase made during 2005 brought our total investment in FHLB stock to $145.0 million, the amount
we are currently required to hold. Our second-step conversion is expected to raise at least $3.50 billion in additional capital at
the minimum of the offering range. Our registration statement on Form S-3, on file at the
Securities and Exchange Commission, sets forth the pro forma impact of the second-step conversion
under the captions Capitalization and Pro Forma Data. 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 three-month period ended March 31, 2005, we suspended our stock repurchase program
pending the completion of the second-step conversion. During the first three months of 2004, we
purchased 700,000 shares at an aggregate cost of $27.4 million. At March 31, 2005, there were
3,076,221 shares remaining to be repurchased under the existing stock repurchase program. During
the first three months of 2005, the trustee of our recognition and retention plan purchased 36,134
shares of common stock for our recognition and retention plan at an aggregate cost of $1.3 million
due to awards to employees made during the period. Cash dividends declared and paid during the first three months of 2005 were $11.3 million compared
with $9.6 million during the first three months of 2004. In both the first quarter of 2005 and
2004, Hudson City, MHC applied for and was granted approval from the OTS to waive receipt of
dividends declared by Hudson City Bancorp during both years. These dividend waivers provide
additional operating capital and liquidity at Hudson City Bancorp. The dividend pay-out ratio using
amount per share information, which does not reflect the dividend waiver by Hudson City, MHC, for
the first three months of 2005 was 57.14% compared with 51.61% for the first three months of 2004.
On April 14, 2005, the Board of Directors declared a quarterly cash dividend of twenty-one cents
($0.21) per common share. The dividend is payable on June 1, 2005 to stockholders of record at the
close of business on May 6, 2005. At March 31, 2005, Hudson City Savings exceeded all regulatory capital requirements. Hudson City
Savings tangible capital ratio, leverage (core) capital ratio and total risk-based capital ratio
were 6.10%, 6.10% and 16.90%, respectively. The primary source of liquidity for Hudson City Bancorp, the holding company of Hudson City
Savings, is capital distributions from the banking subsidiary. During the first three months of
2005, Hudson City Bancorp received $61.9 million in dividend payments from Hudson City Savings,
which amounted to approximately 100.0% of Hudson City Savings net income for that period. The
primary use of these funds is the payment of dividends to our shareholders and the repurchase of
our common stock, although
our repurchase program has been suspended pending the completion of our second-step conversion.
Hudson City Bancorps ability to continue these activities is solely dependent upon capital
distributions Page 23




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Hudson City Bancorp, Inc.
Form 10-Q from Hudson City Savings. Applicable federal law may limit the amount of capital
distributions Hudson City Savings may make. Off-Balance Sheet Arrangements and Contractual Obligations Hudson City is a party to certain off-balance sheet arrangements, which occur in the normal course
of our business, to meet the credit needs of our customers and the growth initiatives of the Bank.
These arrangements are primarily commitments to originate and purchase mortgage loans, and to
purchase securities. We did not engage in any hedging transactions that use derivative instruments
(such as interest rate swaps and caps) during the first three months of 2005 and did not have any
such hedging transactions in place at March 31, 2005. The following table reports the amounts of contractual obligations for Hudson City as of March 31,
2005. Payments Due By PeriodLess Than
    
    
    1 Year to
    
    

    3 Years to
    
    
    More ThanContractual Obligation
    
    Total
    
    
    1 Year
    
    
    3 Years
    
    
    5 Years
    
    
    5 Years(In thousands)First mortgage loans originations
    
    $
    270,789
    
    
    $
    270,789
    
    
    $
    
    
    
    $
    
    
    
    $
    Mortgage loan purchases
    
    
    1,192,576
    
    
    
    1,192,576
    
    
    
    
    
    
    
    
    
    
    
    Mortgage-backed security
purchases
    
    
    553,500
    
    
    
    553,500
    
    
    
    
    
    
    
    
    
    
    
    Operating leases
    
    
    77,196
    
    
    
    4,630
    
    
    
    9,755
    
    
    
    9,322
    
    
    
    53,489Total
    
    $
    2,094,061
    
    
    $
    2,021,495
    
    
    $
    9,755
    
    
    $
    9,322
    
    
    $
    53,489
 Commitments to extend credit are agreements to lend money to a customer as long as there is no
violation of any condition established in the contract. Commitments to fund first mortgage loans
generally have fixed expiration dates of approximately 90 days and other termination clauses. Since
some commitments are expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements. Hudson City Savings evaluates each customers
credit-worthiness on a case-by-case basis. Additionally, we have available home equity and
overdraft lines of credit, which do not have fixed expiration dates, of approximately $81.4
million. We are not obligated to advance further amounts on credit lines if the customer is
delinquent, or otherwise in violation of the agreement. The commitments to purchase first mortgage
loans and mortgage-backed securities had a normal period from trade date to settlement date of
approximately 60 days. All commitments to purchase loans and securities are expected to settle on a
gross basis. Critical Accounting Policies Note 1 to our Audited Consolidated Financial Statements of our Annual Report on Form 10-K for the
year ended December 31, 2004, 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. Page 24




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Hudson City Bancorp, Inc.
Form 10-Q 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 an allowance for loan losses based on probable and estimable losses at March
31, 2005. 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. Our primary lending emphasis is the origination and purchase 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 resulting in a loan concentration in residential first mortgage
loans at March 31, 2005. As a result of our lending practices, we also have a concentration of
loans 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 increases in interest rates, a decline in the economy, generally, and a decline in
real estate market values. Any one or a combination of these events may adversely affect our loan
portfolio resulting in increased delinquencies, loan losses and future levels of provisions. We
consider it important to maintain the ratio of our allowance for loan losses to total loans at a
level of probable and estimable losses given current economic conditions, interest rates and the
composition of our portfolio. Due to the nature of our loan portfolio, our evaluation of our allowance for loan losses is
performed each month on a pooled basis. Each month we prepare a worksheet which categorizes the
entire loan portfolio by certain risk characteristics such as loan type (one- to four-family,
multi-family, etc.), loan source (originated or purchased) 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. These factors are periodically reviewed for
appropriateness giving consideration to charge-off history and delinquency trends and if the loss
factor cover probable and estimable losses inherent in the portfolio. We use this worksheet, as a
tool, together with principal balances and delinquency reports, to evaluate the adequacy of the
allowance for loan losses. Other key factors we consider in this process are current real estate
market conditions in geographic areas where our loans are located, 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. During the first quarter of 2005 we lowered the loss
factors used in our analysis on our first
mortgage loans to reflect the seasoning of the purchased loan
portfolio and the recent favorable charge-off
experience. Notwithstanding such decrease, we recorded a  minimal provision for loan losses
during the first quarter of 2005 to reflect probable and estimable losses resulting from the actual
growth in our loan portfolio. At March 31, 2005, the allowance for loan losses as a percentage of
total loans was 0.23%,
which, given the primary emphasis of our lending practices and the current market conditions, we Page 25




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Hudson City Bancorp, Inc.
Form 10-Q consider to be at a level to cover probable and
estimable losses. Furthermore, the
allowance for loan losses and provision reflected the growth in the loan
portfolio, the low levels of loan charge-offs, the stability in the real estate market and the
resulting stability in our overall loan quality. 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, that is other than temporary, 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 or loss 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 by writing down the security to fair
market value through a charge to current period operations. 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. Conversely, as interest rates fall, the market
value of fixed-rate securities will increase. With significant changes in interest rates, we
evaluate our intent and ability to hold the security to maturity or for a sufficient time to
recover the recorded principal balance. Estimated fair values for securities are based on
published or securities dealers market values. 
 Item 3.  Quantitative and Qualitative Disclosures About Market Risk Quantitative and qualitative disclosure about market risk is presented as of December 31, 2004 in
Hudson City Bancorps Annual Report on Form 10-K. The following is an update of the discussion
provided therein. The information provided regarding our interest rate risk does not make allowance
for any expected funds received from the second-step conversion. General. As a financial institution, our primary component of market risk is interest rate volatility. Net
interest income is the primary component of our net income, and fluctuations in interest rates will
ultimately impact the level of both income and expense recorded on a large portion of our assets
and liabilities. Fluctuations in interest rates will also affect the market value of all
interest-earning assets, other than those that possess a short term to maturity. During the first
quarter of 2005 short-term interest rates generally increased. Long-term interest rates also
increased, but at a slower pace than short-term interest
rates causing a further flattening of the market yield curve. This interest rate environment had an
adverse Page 26




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Hudson City Bancorp, Inc.
Form 10-Q impact on our net interest income as our interest-bearing liabilities generally reflect
movements in short-term interest rates, while our interest-earning assets, a majority of which have
initial terms to maturity or repricing greater than one year, generally reflect movements in
long-term interest rates. Due to the nature of our operations, we are not subject to foreign currency exchange or commodity
price risk. Our real estate loan portfolio, the majority of which is located in New Jersey, is
subject to risks associated with the local economy. We do not own any trading assets. We did not
engage in any hedging transactions that use derivative instruments (such as interest rate swaps and
caps) during the first three months of 2005 and did not have any such hedging transactions in place
at March 31, 2005. In the future, we may, with approval of our Board of Directors, engage in
hedging transactions utilizing derivative instruments, but have no current plans to do so. During the first quarter of 2005, we began originating a larger percentage of variable-rate assets
in order to better manage our interest rate risk. Included in variable-rate loans and securities
are loans or securities with a contractual annual rate adjustment after an initial fixed-rate
period of three, five or ten years. Variable-rate loans or securities constituted 48.9% of loan
originations, 36.1% of loan purchases and 98.2% of mortgage-backed security purchases made during
the first quarter of 2005. This strategy to originate and purchase a larger percentage of
variable-rate assets has lowered our percentage of fixed-rate interest-earning assets to total
interest-earning assets to 80.4% at March 31, 2005 from 85.2% at December 31, 2004. We intend to
originate and purchase similar percentages of variable-rate mortgage-related assets during the
remainder of 2005. Interest Rate Risk Analysis.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, 2004. The
following table presents the estimated present value of equity over a range of interest rate change
scenarios at March 31, 2005. 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. We believe the 200 basis point decrease scenario is not meaningful given the
prevailing low market interest rate environment and accordingly is not presented in the table. Our current policy sets a minimum ratio of the present value of equity to the fair value of assets
in the current interest rate environment (no rate shock) of 8.00% and in the plus 200 basis point
interest rate shock scenario of 6.50%. This change was made in March 2005 from the minimum ratios
of 7.50% and 5.50%, respectively, in effect at December 31, 2004, in order to conform to our
primary regulators interest rate risk policy requirements. Present Value of EquityAs Percent of PresentPresent Value of Equity
    
    
    Value of AssetsChange in

    
    Dollar
    
    
    Dollar
    
    
    Percent
    
    
    Present
    
    
    PercentInterest Rates

    
    Amount
    
    
    Change
    
    
    Change
    
    
    Value Ratio
    
    
    Change(Basis points)

    
    
    
    
    
    (Dollars in thousands)200
    
    
    $
    1,502,707
    
    
    $
    (962,156
    )
    
    
    (39.03
    )%
    
    
    7.82
    %
    
    
    (33.05
    )%100
    
    
    
    2,008,358
    
    
    
    (456,505
    )
    
    
    (18.52
    )
    
    
    9.96
    
    
    
    (14.73
    )50
    
    
    
    2,245,743
    
    
    
    (219,120
    )
    
    
    (8.89
    )
    
    
    10.89
    
    
    
    (6.76
    )0
    
    
    
    2,464,863
    
    
    
    
    
    
    
    
    
    
    
    11.68
    
    
    
    (50
    )
    
    
    2,470,940
    
    
    
    6,077
    
    
    
    0.25
    
    
    
    11.55
    
    
    
    (1.11
    )(100
    )
    
    
    2,274,115
    
    
    
    (190,748
    )
    
    
    (7.74
    )
    
    
    10.57
    
    
    
    (10.57
    )
 Page 27




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Hudson City Bancorp, Inc.
Form 10-Q The percent change in the present value of equity in the 200 basis point increase scenario was
negative 39.03% at March 31, 2005 compared with negative 30.87% at December 31, 2004. The decreases
in the present value of equity and the percent change in the present value of equity in the
increasing rate scenarios, anld the decrease in the percent change in the present value of equity
from December 31, 2004, were primarily due to the extent to which our interest-earning assets are
comprised of fixed-rate investment securities, mortgage-backed securities and mortgage loans,
notwithstanding the overall decrease in the percentage of fixed-rate investments in our
interest-earning asset portfolio. At March 31, 2005, fixed-rate interest earning-assets were 80.4%
of total interest-earning assets. This percentage of fixed-rate interest-earning assets to total
interest-earning assets may have an adverse impact on our earnings in a rising rate environment as
the interest rate on these interest-earning assets would not reprice, while our interest-bearing
deposits and callable borrowed funds would reprice, from time to time, to the higher market
interest rates. The percent change in the present value of equity in the 100 basis point decrease
was negative 7.74% at March 31, 2005 compared with negative 10.41% at December 31, 2004. In addition to the impact on the present value of equity, we also monitor the impact of interest
rate changes on our net interest income over the next twelve-month period. This model does not
purport to provide estimates of net interest income over the next twelve-month period, but attempts
to assess the impact of a simultaneous and parallel interest rate change on our net interest
income. Assumptions for this model are the same as those used for our present value of equity
analysis. Change in

    
    Percent Change inInterest Rates

    
    Net Interest Income(Basis points)200
    
    
    
    (8.85
    )%100
    
    
    
    (3.57
    )50
    
    
    
    (1.42
    )0
    
    
    
    (50
    )
    
    
    (0.05
    )(100
    )
    
    
    (3.17
    )
 At December 31, 2004, the percent change in net interest income was negative 6.80% in the 200
basis point increase scenario and negative 5.81% in the 100 basis point decrease scenario. GAP Analysis.The table on the following page presents the amounts of our interest-earning
assets and interest-bearing liabilities outstanding at March 31, 2005, which we anticipate to
reprice or mature in each of the future time periods shown. 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, 2004. The prepayment rate applied to our mortgage loans and mortgage-backed
securities for the March 31, 2005 analysis was 15% and 20%, respectively, the same percentages used
for the December 31, 2004 analysis. At March 31, 2005, we have reported no callable bonds at their
call date, but have reported $1.08 billion of callable borrowings at their call date based on the
interest rate and option characteristics of the borrowed funds that could be called within the next
twelve-month period. The government-sponsored agency securities with step-up features purchased
during 2005 are reported at their next interest rate adjustment. We have excluded non-accrual loans
of $5,480,000 from the table. The cumulative one-year gap as a percent of total assets was negative 5.86% at March 31, 2005
compared with negative 5.27% at December 31, 2004. This change in the negative cumulative one-year
gap
primarily reflected increases in the amounts of time deposits scheduled to mature, and borrowed
funds anticipated to be called, over the next twelve-month period. Page 28




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Hudson City Bancorp, Inc.
Form 10-Q At March 31, 2005More than
    
    
    More thanMore than
    
    
    More than
    
    
    two years
    
    
    three yearsSix months
    
    
    six months
    
    
    one year to
    
    
    to three
    
    
    to five
    
    
    More thanor less
    
    
    to one year
    
    
    two years
    
    
    years
    
    
    years
    
    
    five years
    
    
    Total(Dollars in thousands)Interest-earning assets:First mortgage loans
    
    $
    933,354
    
    
    $
    930,672
    
    
    $
    1,502,526
    
    
    $
    1,296,875
    
    
    $
    1,645,668
    
    
    $
    5,507,968
    
    
    $
    11,817,063Consumer and other loans
    
    
    27,509
    
    
    
    261
    
    
    
    1,299
    
    
    
    2,538
    
    
    
    15,642
    
    
    
    114,017
    
    
    
    161,266Federal funds sold
    
    
    23,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,100Mortgage-backed securities
    
    
    859,766
    
    
    
    1,126,410
    
    
    
    853,104
    
    
    
    600,231
    
    
    
    655,411
    
    
    
    1,610,049
    
    
    
    5,704,971FHLB stock
    
    
    145,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145,000Investment securities
    
    
    282
    
    
    
    
    
    
    
    8
    
    
    
    76
    
    
    
    1,159,238
    
    
    
    1,810,602
    
    
    
    2,970,206Total interest-earning assets
    
    
    1,989,011
    
    
    
    2,057,343
    
    
    
    2,356,937
    
    
    
    1,899,720
    
    
    
    3,475,959
    
    
    
    9,042,636
    
    
    
    20,821,606Interest-bearing liabilities:Savings accounts
    
    
    25,578
    
    
    
    22,907
    
    
    
    45,793
    
    
    
    45,793
    
    
    
    91,587
    
    
    
    686,899
    
    
    
    918,557Interest-bearing demand accounts
    
    
    108,591
    
    
    
    108,591
    
    
    
    434,364
    
    
    
    434,364
    
    
    
    868,728
    
    
    
    2,389,004
    
    
    
    4,434,642Money market accounts
    
    
    14,388
    
    
    
    14,388
    
    
    
    57,550
    
    
    
    57,550
    
    
    
    115,097
    
    
    
    316,515
    
    
    
    575,488Time deposits
    
    
    2,480,127
    
    
    
    1,435,037
    
    
    
    834,664
    
    
    
    341,323
    
    
    
    321,390
    
    
    
    
    
    
    
    5,412,541Borrowed funds
    
    
    200,000
    
    
    
    875,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,775,000
    
    
    
    7,850,000Total interest-bearing
liabilities
    
    
    2,828,684
    
    
    
    2,455,923
    
    
    
    1,372,371
    
    
    
    879,030
    
    
    
    1,396,802
    
    
    
    10,167,418
    
    
    
    19,100,228Interest rate sensitivity gap
    
    $
    (839,673
    )
    
    $
    (398,580
    )
    
    $
    984,566
    
    
    $
    1,020,690
    
    
    $
    2,079,157
    
    
    $
    (1,124,782
    )
    
    $
    1,721,378Cumulative interest rate sensitivity gap
    
    $
    (839,673
    )
    
    $
    (1,238,253
    )
    
    $
    (253,687
    )
    
    $
    767,003
    
    
    $
    2,846,160
    
    
    $
    1,721,378Cumulative interest rate sensitivity gap
as a percent of total assets
    
    
    (3.97
    )%
    
    
    (5.86
    )%
    
    
    (1.20
    )%
    
    
    3.63
    %
    
    
    13.47
    %
    
    
    8.15
    %Cumulative interest-earning assets
as a percent of interest-bearing
liabilities
    
    
    70.32
    %
    
    
    76.57
    %
    
    
    96.19
    %
    
    
    110.18
    %
    
    
    131.86
    %
    
    
    109.01
    %
 Page 29




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Hudson City Bancorp, Inc.
Form 10-Q 
 Item 4.  Controls and Procedures Ronald E. Hermance, Jr., our Chairman, 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 March 31, 2005. Based upon their
evaluation, they each found that our disclosure controls and procedures were effective to ensure
that information required to be disclosed in the reports that we file and submit under the Exchange
Act was recorded, processed, summarized and reported as and when required and that such information
was accumulated and communicated to our management as appropriate to allow timely decisions
regarding required disclosures. There was no change 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.  Unregistered Sales of Equity Securities and Use of Proceeds Not applicable. 
 Item 3.  Defaults Upon Senior Securities Not applicable. 
 Item 4.  Submission of Matters to a Vote of Security Holders No matter was submitted during the quarter ended March 31, 2005 to a vote of security holders of
Hudson City Bancorp through the solicitation of proxies or otherwise. Page 30




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##### Table of Contents



Hudson City Bancorp, Inc.
Form 10-Q 
 Item 5.  Other Information Not applicable. 
 Item 6.  Exhibits Exhibit Number
    
    Exhibit31.1
    
    Certification of Chief Executive Officer31.2
    
    Certification of Chief Financial Officer32.1
    
    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. Page 31




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##### Table of Contents



Hudson City Bancorp, Inc.
Form 10-Q 
 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Hudson City Bancorp, Inc. Date: May 9, 2005
    By:
    /s/ Ronald E. Hermance, Jr.Ronald E. Hermance, Jr.Chairman, President and Chief Executive Officer
(principal executive officer) Date: May 9, 2005
    By:
    /s/ Denis J. SalamoneDenis J. SalamoneSenior Executive Vice President and
Chief Operating Officer
(principal financial and accounting officer) Page 32