##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended: September 30, 2008
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from

to
 Commission File Number: 0-26001
 Hudson City Bancorp, Inc.
  Delaware
    
    22-3640393(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)West 80 Century RoadParamus, New Jersey
    
    07652(Address of Principal Executive Offices)
    
    (Zip Code)
  
 
  þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
  o þ




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##### 



PageNumberPART I  FINANCIAL INFORMATIONItem 1.  Financial StatementsConsolidated Statements of
Financial Condition 
September 30, 2008 (Unaudited)
and December 31,
2007
    
    
    4Consolidated Statements of
Income (Unaudited)  For the
three and nine months ended
September 30, 2008 and
2007
    
    
    5Consolidated Statements of
Changes in Shareholders
Equity (Unaudited)  For the
nine months ended September
30, 2008 and
2007
    
    
    6Consolidated Statements of
Cash Flows (Unaudited)  For
the nine months ended
September 30, 2008 and
2007
    
    
    7Notes to Unaudited
Consolidated Financial
Statements
    
    
    8Item 2.  Managements Discussion and Analysis of
Financial Condition and Results of
Operations
    
    
    18Item 3.  Quantitative and Qualitative Disclosures
About Market Risk
    
    
    41Item 4.  Controls and Procedures
    
    
    45PART II  OTHER INFORMATIONItem 1.  Legal Proceedings
    
    
    46Item 1A.  Risk Factors
    
    
    46Item 2.  Unregistered Sales of Equity Securities
and Use of Proceeds
    
    
    47Item 3.  Defaults Upon Senior
Securities
    
    
    47Item 4.  Submission of Matters to a Vote of
Security Holders
    
    
    47Item 5.  Other Information
    
    
    47Item 6.  Exhibits
    
    
    48SIGNATURES
    
    
    49EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATION
  Page 2




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##### Table of Contents



Forward-Looking Statements
  
    
    the timing and occurrence or non-occurrence of events may be subject to circumstances
beyond our control;
    
    increases in competitive pressure among the 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;
    
    litigation or matters before regulatory agencies, whether currently existing or
commencing in the future, may be determined adverse to us or delay the occurrence or
non-occurrence of events longer than we anticipate;
    
    the risks associated with continued diversification of assets and adverse changes to
credit quality;
    
    difficulties associated with achieving expected future financial results; and
    
    the risk of an economic slowdown that would adversely affect credit quality and loan
originations.
  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
 September 30,
    
    
    December 31,2008
    
    
    2007(In thousands, except share and per share amounts)
    
    (unaudited)Assets:Cash and due from banks
    
    $
    166,614
    
    
    $
    111,245Federal funds sold
    
    
    218,358
    
    
    
    106,299Total cash and cash equivalents
    
    
    384,972
    
    
    
    217,544Securities available for sale:Mortgage-backed securities
    
    
    8,404,667
    
    
    
    5,005,409Investment securities
    
    
    3,258,594
    
    
    
    2,765,491Securities held to maturity:Mortgage-backed securities (fair value of $9,695,571 at September 30, 2008
and $9,566,312 at December 31, 2007)
    
    
    9,669,841
    
    
    
    9,565,526Investment securities (fair value of $50,278 at September 30, 2008 and
$1,410,246 at December 31, 2007)
    
    
    50,086
    
    
    
    1,408,501Total securities
    
    
    21,383,188
    
    
    
    18,744,927Loans
    
    
    28,498,201
    
    
    
    24,192,281Deferred loan costs
    
    
    64,234
    
    
    
    40,598Allowance for loan losses
    
    
    (42,628
    )
    
    
    (34,741
    )Net loans
    
    
    28,519,807
    
    
    
    24,198,138Federal Home Loan Bank of New York stock
    
    
    831,820
    
    
    
    695,351Foreclosed real estate, net
    
    
    9,462
    
    
    
    4,055Accrued interest receivable
    
    
    281,570
    
    
    
    245,113Banking premises and equipment, net
    
    
    74,266
    
    
    
    75,094Goodwill
    
    
    152,109
    
    
    
    152,109Other assets
    
    
    137,524
    
    
    
    91,640Total Assets
    
    $
    51,774,718
    
    
    $
    44,423,971Liabilities and Shareholders Equity:Deposits:Interest-bearing
    
    $
    16,728,732
    
    
    $
    14,635,412Noninterest-bearing
    
    
    558,731
    
    
    
    517,970Total deposits
    
    
    17,287,463
    
    
    
    15,153,382Repurchase agreements
    
    
    14,850,000
    
    
    
    12,016,000Federal Home Loan Bank of New York advances
    
    
    14,425,000
    
    
    
    12,125,000Total borrowed funds
    
    
    29,275,000
    
    
    
    24,141,000Due to brokers
    
    
    158,601
    
    
    
    281,853Accrued expenses and other liabilities
    
    
    267,522
    
    
    
    236,429Total liabilities
    
    
    46,988,586
    
    
    
    39,812,664Common stock, $0.01 par value, 3,200,000,000 shares authorized;
741,466,555 shares issued; 520,862,291 and 518,569,602
shares outstanding at September 30, 2008 and December 31, 2007
    
    
    7,415
    
    
    
    7,415Additional paid-in capital
    
    
    4,613,018
    
    
    
    4,578,578Retained earnings
    
    
    2,156,649
    
    
    
    2,002,049Treasury stock, at cost; 220,604,264 and 222,896,953 shares at
September 30, 2008 and December 31, 2007
    
    
    (1,754,688
    )
    
    
    (1,771,106
    )Unallocated common stock held by the employee stock ownership plan
    
    
    (217,745
    )
    
    
    (222,251
    )Accumulated other comprehensive (loss) income, net of tax
    
    
    (18,517
    )
    
    
    16,622Total shareholders equity
    
    
    4,786,132
    
    
    
    4,611,307Total Liabilities and Shareholders Equity
    
    $
    51,774,718
    
    
    $
    44,423,971
  Page 4




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Hudson City Bancorp, Inc. and Subsidiary
 
 Consolidated Statements of Income
 (Unaudited)
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands, except per share data)Interest and Dividend Income:First mortgage loans
    
    $
    394,748
    
    
    $
    313,943
    
    
    $
    1,110,121
    
    
    $
    873,397Consumer and other loans
    
    
    6,245
    
    
    
    7,107
    
    
    
    19,978
    
    
    
    21,077Mortgage-backed securities held to maturity
    
    
    123,890
    
    
    
    124,524
    
    
    
    372,354
    
    
    
    329,604Mortgage-backed securities available for sale
    
    
    101,410
    
    
    
    26,620
    
    
    
    259,872
    
    
    
    81,716Investment securities held to maturity
    
    
    874
    
    
    
    18,620
    
    
    
    12,764
    
    
    
    55,863Investment securities available for sale
    
    
    40,825
    
    
    
    43,391
    
    
    
    121,354
    
    
    
    142,577Dividends on Federal Home Loan Bank of New York stock
    
    
    12,510
    
    
    
    10,616
    
    
    
    40,729
    
    
    
    26,835Federal funds sold
    
    
    815
    
    
    
    3,382
    
    
    
    4,093
    
    
    
    8,275Total interest and dividend income
    
    
    681,317
    
    
    
    548,203
    
    
    
    1,941,265
    
    
    
    1,539,344Interest Expense:Deposits
    
    
    133,983
    
    
    
    155,055
    
    
    
    433,398
    
    
    
    443,450Borrowed funds
    
    
    292,256
    
    
    
    230,932
    
    
    
    826,342
    
    
    
    619,566Total interest expense
    
    
    426,239
    
    
    
    385,987
    
    
    
    1,259,740
    
    
    
    1,063,016Net interest income
    
    
    255,078
    
    
    
    162,216
    
    
    
    681,525
    
    
    
    476,328Provision for Loan Losses
    
    
    5,000
    
    
    
    2,000
    
    
    
    10,500
    
    
    
    2,800Net interest income after provision for loan losses
    
    
    250,078
    
    
    
    160,216
    
    
    
    671,025
    
    
    
    473,528Non-Interest Income:Service charges and other income
    
    
    2,181
    
    
    
    2,049
    
    
    
    6,490
    
    
    
    5,422Non-Interest Expense:Compensation and employee benefits
    
    
    32,052
    
    
    
    26,554
    
    
    
    94,896
    
    
    
    78,114Net occupancy expense
    
    
    7,633
    
    
    
    7,718
    
    
    
    22,437
    
    
    
    21,997Federal deposit insurance assessment
    
    
    945
    
    
    
    405
    
    
    
    1,784
    
    
    
    1,293Computer and related services
    
    
    657
    
    
    
    633
    
    
    
    2,044
    
    
    
    2,014Other expense
    
    
    8,136
    
    
    
    5,878
    
    
    
    24,651
    
    
    
    19,734Total non-interest expense
    
    
    49,423
    
    
    
    41,188
    
    
    
    145,812
    
    
    
    123,152Income before income tax expense
    
    
    202,836
    
    
    
    121,077
    
    
    
    531,703
    
    
    
    355,798Income Tax Expense
    
    
    80,928
    
    
    
    46,634
    
    
    
    210,423
    
    
    
    137,448Net income
    
    $
    121,908
    
    
    $
    74,443
    
    
    $
    321,280
    
    
    $
    218,350Basic Earnings Per Share
    
    $
    0.25
    
    
    $
    0.15
    
    
    $
    0.66
    
    
    $
    0.43Diluted Earnings Per Share
    
    $
    0.25
    
    
    $
    0.15
    
    
    $
    0.65
    
    
    $
    0.42Weighted Average Number of Common Shares Outstanding:Basic
    
    
    484,759,567
    
    
    
    491,331,210
    
    
    
    483,915,018
    
    
    
    504,784,333Diluted
    
    
    495,715,998
    
    
    
    500,861,222
    
    
    
    495,298,081
    
    
    
    514,734,542
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Hudson City Bancorp, Inc. and Subsidiary
 
 Consolidated Statements of Changes in Shareholders Equity
(Unaudited)
 For the Nine MonthsEnded September 30,2008
    
    
    2007(In thousands, except per share data)Common Stock
    
    $
    7,415
    
    
    $
    7,415Additional paid-in capital:Balance at beginning of year
    
    
    4,578,578
    
    
    
    4,553,614Stock option plan expense
    
    
    11,338
    
    
    
    9,258Tax benefit from stock plans
    
    
    14,066
    
    
    
    3,250Commitment of ESOP stock to be allocated
    
    
    8,006
    
    
    
    5,183Vesting of RRP stock
    
    
    1,030
    
    
    
    1,277Balance at end of period
    
    
    4,613,018
    
    
    
    4,572,582Retained Earnings:Balance at beginning of year
    
    
    2,002,049
    
    
    
    1,877,840Net Income
    
    
    321,280
    
    
    
    218,350Dividends paid on common stock ($0.32 and $0.245 per share, respectively)
    
    
    (154,809
    )
    
    
    (124,259
    )Exercise of stock options
    
    
    (11,871
    )
    
    
    (5,764
    )Balance at end of period
    
    
    2,156,649
    
    
    
    1,966,167Treasury Stock:Balance at beginning of year
    
    
    (1,771,106
    )
    
    
    (1,230,793
    )Purchase of common stock
    
    
    (3,600
    )
    
    
    (491,275
    )Exercise of stock options
    
    
    20,018
    
    
    
    9,154Balance at end of period
    
    
    (1,754,688
    )
    
    
    (1,712,914
    )Unallocated common stock held by the ESOP:Balance at beginning of year
    
    
    (222,251
    )
    
    
    (228,257
    )Commitment of ESOP stock to be allocated
    
    
    4,506
    
    
    
    4,505Balance at end of period
    
    
    (217,745
    )
    
    
    (223,752
    )Accumulated other comprehensive (loss) income:Balance at beginning of year
    
    
    16,622
    
    
    
    (49,563
    )Unrealized holding (losses) gains arising during period, net of
tax (benefit)
expense of $(24,160) and $20,598 in 2008 and 2007, respectively
    
    
    (34,983
    )
    
    
    29,827Pension and other postretirement benefits adjustment, net of tax
benefit of
$108 and $174 for 2008 and 2007, respectively
    
    
    (156
    )
    
    
    (252
    )Balance at end of period
    
    
    (18,517
    )
    
    
    (19,988
    )Total Shareholders Equity
    
    $
    4,786,132
    
    
    $
    4,589,510Summary of comprehensive incomeNet income
    
    $
    321,280
    
    
    $
    218,350Other comprehensive (loss) income, net of tax
    
    
    (35,139
    )
    
    
    29,575Total comprehensive income
    
    $
    286,141
    
    
    $
    247,925
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##### Table of Contents



Hudson City Bancorp, Inc. and Subsidiary
 
 Consolidated Statements of Cash Flows
(Unaudited)
 For the Nine MonthsEnded September 30,2008
    
    
    2007(In thousands)Cash Flows from Operating Activities:Net income
    
    $
    321,280
    
    
    $
    218,350Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation, accretion and amortization expense
    
    
    20,061
    
    
    
    17,600Provision for loan losses
    
    
    10,500
    
    
    
    2,800Share-based compensation, including committed ESOP shares
    
    
    24,880
    
    
    
    20,223Deferred tax benefit
    
    
    (15,757
    )
    
    
    (3,426
    )Increase in accrued interest receivable
    
    
    (36,457
    )
    
    
    (58,970
    )(Increase) decrease in other assets
    
    
    (7,590
    )
    
    
    9,966Increase in accrued expenses and other liabilities
    
    
    30,937
    
    
    
    22,568Net Cash Provided by Operating Activities
    
    
    347,854
    
    
    
    229,111Cash Flows from Investing Activities:Originations of loans
    
    
    (4,008,755
    )
    
    
    (2,645,435
    )Purchases of loans
    
    
    (2,553,897
    )
    
    
    (3,057,075
    )Principal payments on loans
    
    
    2,218,412
    
    
    
    1,734,448Principal collection of mortgage-backed securities held to maturity
    
    
    1,076,247
    
    
    
    930,105Purchases of mortgage-backed securities held to maturity
    
    
    (1,185,106
    )
    
    
    (3,846,976
    )Principal collection of mortgage-backed securities available for sale
    
    
    750,785
    
    
    
    535,415Purchases of mortgage-backed securities available for sale
    
    
    (4,279,939
    )
    
    
    (803,352
    )Proceeds from maturities and calls of investment securities held to maturity
    
    
    1,358,485
    
    
    
    Proceeds from maturities and calls of investment securities available for sale
    
    
    1,349,902
    
    
    
    1,650,054Purchases of investment securities available for sale
    
    
    (1,900,000
    )
    
    
    (898,705
    )Purchases of Federal Home Loan Bank of New York stock
    
    
    (137,189
    )
    
    
    (221,410
    )Redemption of Federal Home Loan Bank of New York stock
    
    
    720
    
    
    
    9,315Purchases of premises and equipment, net
    
    
    (6,546
    )
    
    
    (9,955
    )Net proceeds from sale of foreclosed real estate
    
    
    4,570
    
    
    
    3,320Net Cash Used in Investment Activities
    
    
    (7,312,311
    )
    
    
    (6,620,251
    )Cash Flows from Financing Activities:Net increase in deposits
    
    
    2,134,081
    
    
    
    1,210,139Proceeds from borrowed funds
    
    
    5,500,000
    
    
    
    9,025,000Principal payments on borrowed funds
    
    
    (366,000
    )
    
    
    (3,107,000
    )Dividends paid
    
    
    (154,809
    )
    
    
    (124,259
    )Purchases of treasury stock
    
    
    (3,600
    )
    
    
    (491,275
    )Exercise of stock options
    
    
    8,147
    
    
    
    3,390Tax benefit from stock plans
    
    
    14,066
    
    
    
    3,250Net Cash Provided by Financing Activities
    
    
    7,131,885
    
    
    
    6,519,245Net Increase in Cash and Cash Equivalents
    
    
    167,428
    
    
    
    128,105Cash and Cash Equivalents at Beginning of Year
    
    
    217,544
    
    
    
    182,246Cash and Cash Equivalents at End of Period
    
    $
    384,972
    
    
    $
    310,351Supplemental Disclosures:Interest paid
    
    $
    1,242,876
    
    
    $
    1,032,914Loans transferred to foreclosed real estate
    
    $
    11,129
    
    
    $
    3,667Income tax payments
    
    $
    208,741
    
    
    $
    123,841
  Page 7




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##### Table of Contents



1. Organization
  2. Basis of Presentation
   Page 8




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##### Table of Contents



3. Earnings Per Share
  For the Three Months Ended September 30,2008
    
    
    2007Per
    
    
    
    
    
    
    
    
    
    
    PerAverage
    
    
    Share
    
    
    
    
    
    
    Average
    
    
    ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount(In thousands, except per share data)Net income
    
    $
    121,908
    
    
    
    
    
    
    
    
    
    
    $
    74,443Basic earnings per share:Income available to
common stockholders
    
    $
    121,908
    
    
    
    484,760
    
    
    $
    0.25
    
    
    $
    74,443
    
    
    
    491,331
    
    
    $
    0.15Effect of dilutive common
stock equivalents
    
    
    
    
    
    
    10,956
    
    
    
    
    
    
    
    
    
    
    
    9,530Diluted earnings per share:Income available to
common stockholders
    
    $
    121,908
    
    
    
    495,716
    
    
    $
    0.25
    
    
    $
    74,443
    
    
    
    500,861
    
    
    $
    0.15
 For the Nine Months Ended September 30,2008
    
    
    2007Per
    
    
    
    
    
    
    
    
    
    
    PerShare
    
    
    
    
    
    
    
    
    
    
    ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount(In thousands, except per share data)Net income
    
    $
    321,280
    
    
    
    
    
    
    
    
    
    
    $
    218,350Basic earnings per share:Income available to
common stockholders
    
    $
    321,280
    
    
    
    483,915
    
    
    $
    0.66
    
    
    $
    218,350
    
    
    
    504,784
    
    
    $
    0.43Effect of dilutive common
stock equivalents
    
    
    
    
    
    
    11,383
    
    
    
    
    
    
    
    
    
    
    
    9,951Diluted earnings per share:Income available to
common stockholders
    
    $
    321,280
    
    
    
    495,298
    
    
    $
    0.65
    
    
    $
    218,350
    
    
    
    514,735
    
    
    $
    0.42
 4. Stock Repurchase Programs
  Page 9




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##### Table of Contents



5. Fair Value Measurements
     
    
    Level 1  Valuation is based upon quoted prices for identical instruments traded in active
markets.
    
    Level 2  Valuation is based upon quoted prices for similar instruments in active markets,
quoted prices for identical or similar instruments in markets that are not active and model-based
valuation techniques for which all significant assumptions are observable in the market.
    
    Level 3  Valuation is generated from model-based techniques that use significant assumptions
not observable in the market. These unobservable assumptions reflect our own estimates of
assumptions that market participants would use in pricing the asset or liability. Valuation
techniques include the use of option pricing models, discounted cash flow models and similar
techniques. The results cannot be determined with precision and may not be realized in an actual
sale or immediate settlement of the asset or liability.
   Page 10




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Fair Value Measurements at September 30, 2008Quoted Prices in Active
    
    
    Significant Other
    
    
    SignificantCarrying
    
    
    Markets for Identical
    
    
    Observable Inputs
    
    
    Unobservable InputsDescription
    
    Value
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(In thousands)Available for sale:Mortgage-backed securities
    
    $
    8,404,667
    
    
    $
    
    
    
    $
    8,404,667
    
    
    $
    Investment securities
    
    
    3,258,594
    
    
    
    7,227
    
    
    
    3,251,367
    
    
    
    Total available for sale
    
    $
    11,663,261
    
    
    $
    7,227
    
    
    $
    11,656,034
    
    
    $
    
    Fair Value Measurements at September 30, 2008Quoted Prices in Active
    
    Significant Other
    
    SignificantMarkets for Identical
    
    Observable Inputs
    
    Unobservable InputsDescription
    
    Assets (Level 1)
    
    (Level 2)
    
    (Level 3)(In thousands)Impaired loans
    
    $
    
    
    
    $
    
    
    
    $
    6,689Foreclosed real estate
    
    
    
    
    
    
    
    
    
    
    9,462
 Page 11




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6. Post-retirement Plans
    For the Three Months Ended September 30,Retirement Plans
    
    
    Other Benefits2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Service cost
    
    $
    881
    
    
    $
    810
    
    
    $
    253
    
    
    $
    268Interest cost
    
    
    1,682
    
    
    
    1,569
    
    
    
    544
    
    
    
    525Expected return on assets
    
    
    (2,135
    )
    
    
    (2,034
    )
    
    
    
    
    
    
    Amortization of:Net loss
    
    
    81
    
    
    
    37
    
    
    
    141
    
    
    
    144Unrecognized prior service cost
    
    
    82
    
    
    
    69
    
    
    
    (391
    )
    
    
    (391
    )Net periodic benefit cost
    
    $
    591
    
    
    $
    451
    
    
    $
    547
    
    
    $
    546
 For the Nine Months Ended September 30,Retirement Plans
    
    
    Other Benefits2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Service cost
    
    $
    2,643
    
    
    $
    2,430
    
    
    $
    759
    
    
    $
    804Interest cost
    
    
    5,046
    
    
    
    4,707
    
    
    
    1,632
    
    
    
    1,575Expected return on assets
    
    
    (6,405
    )
    
    
    (6,102
    )
    
    
    
    
    
    
    Amortization of:Net loss
    
    
    243
    
    
    
    111
    
    
    
    423
    
    
    
    432Unrecognized prior service cost
    
    
    246
    
    
    
    207
    
    
    
    (1,173
    )
    
    
    (1,173
    )Net periodic benefit cost
    
    $
    1,773
    
    
    $
    1,353
    
    
    $
    1,641
    
    
    $
    1,638
  Page 12




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7. Stock Option Plans
  Nine Months Ended September 30,2008
    
    
    2007Number of
    
    
    Weighted
    
    
    Number of
    
    
    WeightedStock
    
    
    Average
    
    
    Stock
    
    
    AverageOptions
    
    
    Exercise Price
    
    
    Options
    
    
    Exercise PriceOutstanding at beginning of period
    
    
    29,080,114
    
    
    $
    7.91
    
    
    
    26,979,989
    
    
    $
    6.89Granted
    
    
    4,025,000
    
    
    
    15.96
    
    
    
    3,527,500
    
    
    
    13.74Exercised
    
    
    (2,516,951
    )
    
    
    3.26
    
    
    
    (1,266,222
    )
    
    
    2.68Forfeited
    
    
    (48,784
    )
    
    
    13.21
    
    
    
    (66,740
    )
    
    
    10.03Outstanding at end of period
    
    
    30,539,379
    
    
    
    9.35
    
    
    
    29,174,527
    
    
    
    7.71
    2008Expected dividend yield
    
    
    2.30
    %Expected volatility
    
    
    20.61
    %Risk-free interest rate
    
    
    2.82
    %Expected option life
    
    
    5.3 years
  Page 13




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8. Recent Accounting Pronouncements
      Page 14




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purchase method
 Page 15




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Page 16




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Page 17




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Item 2. 
Managements Discussion and Analysis of Financial Condition and Results of Operations
 Executive Summary
     Page 18




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de minimis
    Page 19




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Page 20




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Comparison of Financial Condition at September 30, 2008 and December 31, 2007
       Page 21




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Page 22




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Page 23




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Comparison of Operating Results for the Three Months Ended September 30, 2008 and 2007
 Average Balance Sheet.
 For the Three Months Ended September 30,2008
    
    
    2007Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost(Dollars in thousands)Assets:Interest-earnings assets:First mortgage loans, net (1)
    
    $
    27,431,258
    
    
    $
    394,748
    
    
    
    5.76
    %
    
    $
    21,990,493
    
    
    $
    313,943
    
    
    
    5.71
    %Consumer and other loans
    
    
    418,760
    
    
    
    6,245
    
    
    
    5.97
    
    
    
    432,061
    
    
    
    7,107
    
    
    
    6.58Federal funds sold
    
    
    181,122
    
    
    
    815
    
    
    
    1.79
    
    
    
    271,404
    
    
    
    3,382
    
    
    
    4.94Mortgage-backed securities at amortized cost
    
    
    17,288,478
    
    
    
    225,300
    
    
    
    5.21
    
    
    
    11,617,722
    
    
    
    151,144
    
    
    
    5.20Federal Home Loan Bank stock
    
    
    827,393
    
    
    
    12,510
    
    
    
    6.05
    
    
    
    623,693
    
    
    
    10,616
    
    
    
    6.81Investment securities, at amortized cost
    
    
    3,373,018
    
    
    
    41,699
    
    
    
    4.95
    
    
    
    5,179,482
    
    
    
    62,011
    
    
    
    4.79Total interest-earning assets
    
    
    49,520,029
    
    
    
    681,317
    
    
    
    5.50
    
    
    
    40,114,855
    
    
    
    548,203
    
    
    
    5.47Noninterest-earnings assets
    
    
    769,038
    
    
    
    
    
    
    
    
    
    
    
    617,794Total Assets
    
    $
    50,289,067
    
    
    
    
    
    
    
    
    
    
    $
    40,732,649Liabilities and Shareholders Equity:Interest-bearing liabilities:Savings accounts
    
    $
    727,060
    
    
    
    1,378
    
    
    
    0.75
    
    
    $
    766,928
    
    
    
    1,457
    
    
    
    0.75Interest-bearing transaction accounts
    
    
    1,609,380
    
    
    
    12,248
    
    
    
    3.03
    
    
    
    1,715,934
    
    
    
    14,538
    
    
    
    3.36Money market accounts
    
    
    2,484,464
    
    
    
    20,112
    
    
    
    3.22
    
    
    
    1,264,556
    
    
    
    13,436
    
    
    
    4.22Time deposits
    
    
    11,435,317
    
    
    
    100,245
    
    
    
    3.49
    
    
    
    10,099,706
    
    
    
    125,624
    
    
    
    4.93Total interest-bearing deposits
    
    
    16,256,221
    
    
    
    133,983
    
    
    
    3.28
    
    
    
    13,847,124
    
    
    
    155,055
    
    
    
    4.44Repurchase agreements
    
    
    14,046,628
    
    
    
    144,769
    
    
    
    4.10
    
    
    
    10,948,609
    
    
    
    116,888
    
    
    
    4.24Federal Home Loan Bank of New York advances
    
    
    14,326,630
    
    
    
    147,487
    
    
    
    4.10
    
    
    
    10,547,826
    
    
    
    114,044
    
    
    
    4.29Total borrowed funds
    
    
    28,373,258
    
    
    
    292,256
    
    
    
    4.10
    
    
    
    21,496,435
    
    
    
    230,932
    
    
    
    4.26Total interest-bearing liabilities
    
    
    44,629,479
    
    
    
    426,239
    
    
    
    3.80
    
    
    
    35,343,559
    
    
    
    385,987
    
    
    
    4.33Noninterest-bearing liabilities:Noninterest-bearing deposits
    
    
    587,553
    
    
    
    
    
    
    
    
    
    
    
    529,775Other noninterest-bearing liabilities
    
    
    284,512
    
    
    
    
    
    
    
    
    
    
    
    214,543Total noninterest-bearing liabilities
    
    
    872,065
    
    
    
    
    
    
    
    
    
    
    
    744,318Total liabilities
    
    
    45,501,544
    
    
    
    
    
    
    
    
    
    
    
    36,087,877Shareholders equity
    
    
    4,787,523
    
    
    
    
    
    
    
    
    
    
    
    4,644,772Total Liabilities and Shareholders Equity
    
    $
    50,289,067
    
    
    
    
    
    
    
    
    
    
    $
    40,732,649Net interest income/net interest rate spread (2)
    
    
    
    
    
    $
    255,078
    
    
    
    1.70
    
    
    
    
    
    
    $
    162,216
    
    
    
    1.14Net interest-earning assets/net interest margin (3)
    
    $
    4,890,550
    
    
    
    
    
    
    
    2.08
    %
    
    $
    4,771,296
    
    
    
    
    
    
    
    1.65
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    1.11
    x
    
    
    
    
    
    
    
    
    
    
    1.13
    x
 
 (1)
    
    Amount includes deferred loan costs and non-performing loans and is net of the allowance for loan losses.(2)
    
    Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities from the annualized weighted average yield on total interest-earning assets.(3)
    
    Determined by dividing annualized net interest income by total average interest-earning assets. Page 24




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General.
 Interest and Dividend Income.
      Page 25




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Interest Expense.
    Page 26




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Net Interest Income.
  Provision for Loan Losses.
  Page 27




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Page 28




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Non-Interest Income.
 Non-Interest Expense.
  Page 29




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Income Taxes.
 Page 30




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Comparison of Operating Results for the Nine Months Ended September 30, 2008 and 2007
 Average Balance Sheet.
 For the Nine Months Ended September 30,2008
    
    
    2007Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost(Dollars in thousands)Assets:Interest-earnings assets:First mortgage loans, net (1)
    
    $
    25,742,402
    
    
    $
    1,110,121
    
    
    
    5.75
    %
    
    $
    20,492,465
    
    
    $
    873,397
    
    
    
    5.68
    %Consumer and other loans
    
    
    426,864
    
    
    
    19,978
    
    
    
    6.24
    
    
    
    428,054
    
    
    
    21,077
    
    
    
    6.57Federal funds sold
    
    
    236,479
    
    
    
    4,093
    
    
    
    2.31
    
    
    
    215,706
    
    
    
    8,275
    
    
    
    5.13Mortgage-backed securities at amortized cost
    
    
    16,105,296
    
    
    
    632,226
    
    
    
    5.23
    
    
    
    10,704,116
    
    
    
    411,320
    
    
    
    5.12Federal Home Loan Bank stock
    
    
    774,729
    
    
    
    40,729
    
    
    
    7.01
    
    
    
    555,343
    
    
    
    26,835
    
    
    
    6.44Investment securities, at amortized cost
    
    
    3,681,122
    
    
    
    134,118
    
    
    
    4.86
    
    
    
    5,567,410
    
    
    
    198,440
    
    
    
    4.75Total interest-earning assets
    
    
    46,966,892
    
    
    
    1,941,265
    
    
    
    5.51
    
    
    
    37,963,094
    
    
    
    1,539,344
    
    
    
    5.41Noninterest-earnings assets
    
    
    775,956
    
    
    
    
    
    
    
    
    
    
    
    603,535Total Assets
    
    $
    47,742,848
    
    
    
    
    
    
    
    
    
    
    $
    38,566,629Liabilities and Shareholders Equity:Interest-bearing liabilities:Savings accounts
    
    $
    731,732
    
    
    
    4,132
    
    
    
    0.75
    
    
    $
    785,015
    
    
    
    4,925
    
    
    
    0.84Interest-bearing transaction accounts
    
    
    1,590,125
    
    
    
    36,937
    
    
    
    3.10
    
    
    
    1,868,032
    
    
    
    47,054
    
    
    
    3.37Money market accounts
    
    
    2,107,569
    
    
    
    52,577
    
    
    
    3.33
    
    
    
    1,074,245
    
    
    
    31,428
    
    
    
    3.91Time deposits
    
    
    11,270,239
    
    
    
    339,752
    
    
    
    4.03
    
    
    
    9,758,275
    
    
    
    360,043
    
    
    
    4.93Total interest-bearing deposits
    
    
    15,699,665
    
    
    
    433,398
    
    
    
    3.69
    
    
    
    13,485,567
    
    
    
    443,450
    
    
    
    4.40Repurchase agreements
    
    
    12,986,768
    
    
    
    407,630
    
    
    
    4.19
    
    
    
    9,758,275
    
    
    
    304,505
    
    
    
    4.17Federal Home Loan Bank of New York advances
    
    
    13,468,861
    
    
    
    418,712
    
    
    
    4.15
    
    
    
    9,811,172
    
    
    
    315,061
    
    
    
    4.29Total borrowed funds
    
    
    26,455,629
    
    
    
    826,342
    
    
    
    4.17
    
    
    
    19,569,447
    
    
    
    619,566
    
    
    
    4.23Total interest-bearing liabilities
    
    
    42,155,294
    
    
    
    1,259,740
    
    
    
    3.99
    
    
    
    33,055,014
    
    
    
    1,063,016
    
    
    
    4.30Noninterest-bearing liabilities:Noninterest-bearing deposits
    
    
    562,141
    
    
    
    
    
    
    
    
    
    
    
    514,903Other noninterest-bearing liabilities
    
    
    281,212
    
    
    
    
    
    
    
    
    
    
    
    213,546Total noninterest-bearing liabilities
    
    
    843,353
    
    
    
    
    
    
    
    
    
    
    
    728,449Total liabilities
    
    
    42,998,647
    
    
    
    
    
    
    
    
    
    
    
    33,783,463Shareholders equity
    
    
    4,744,201
    
    
    
    
    
    
    
    
    
    
    
    4,783,166Total Liabilities and Shareholders Equity
    
    $
    47,742,848
    
    
    
    
    
    
    
    
    
    
    $
    38,566,629Net interest income/net interest rate spread (2)
    
    
    
    
    
    $
    681,525
    
    
    
    1.52
    
    
    
    
    
    
    $
    476,328
    
    
    
    1.11Net interest-earning assets/net interest margin (3)
    
    $
    4,811,598
    
    
    
    
    
    
    
    1.93
    %
    
    $
    4,908,080
    
    
    
    
    
    
    
    1.66
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    1.11
    x
    
    
    
    
    
    
    
    
    
    
    1.15
    x
 
 (1)
    
    Amount includes deferred loan costs and non-performing loans and is
net of the allowance for loan losses.(2)
    
    Determined by subtracting the annualized weighted average cost of
total interest-bearing liabilities from the annualized weighted
average yield on total interest-earning assets.(3)
    
    Determined by dividing annualized net interest income by total average
interest-earning assets. Page 31




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General.
 Interest and Dividend Income.
     Page 32




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Interest Expense.
   Page 33




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Net Interest Income.
  Provision for Loan Losses. .
 Non-Interest Income.
 Non-Interest Expense.
 Page 34




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Income Taxes.
 Liquidity and Capital Resources
   Page 35




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Off-Balance Sheet Arrangements and Contractual Obligations
   Payments Due By PeriodLess Than
    
    
    1 Year to
    
    
    3 Years to
    
    
    More ThanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    3 Years
    
    
    5 Years
    
    
    5 Years(In thousands)First mortgage loan originations
    
    $
    348,498
    
    
    $
    348,498
    
    
    $
    
    
    
    $
    
    
    
    $
    Mortgage loan purchases
    
    
    279,871
    
    
    
    279,871
    
    
    
    
    
    
    
    
    
    
    
    Mortgage-backed security purchases
    
    
    655,500
    
    
    
    655,500
    
    
    
    
    
    
    
    
    
    
    
    Operating leases
    
    
    148,817
    
    
    
    8,302
    
    
    
    16,805
    
    
    
    16,211
    
    
    
    107,499Total
    
    $
    1,432,686
    
    
    $
    1,292,171
    
    
    $
    16,805
    
    
    $
    16,211
    
    
    $
    107,499
  Page 37




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Critical Accounting Policies
  Allowance for Loan Losses
    Page 38




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Stock-Based Compensation
   Page 39




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Pension
and Other Post-retirement Benefit Assumptions
     Page 40




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Item 3.  Quantitative and Qualitative Disclosures About Market Risk
  General
      Page 41




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Simulation Models.
 Net Interest Income.
 Page 42




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Change in
    
    
    
    Percent Change inInterest Rates
    
    
    
    Net Interest Income(Basis points)200
    
    
    
    
    
    (14.40)
    %100
    
    
    
    
    
    (3.36
    )
    
    
    
    
    
    (100
    )
    
    
    
    
    (1.42
    )
   Present Value of Equity.
  Present Value of EquityAs Percent of PresentValue of AssetsChange in
    
    
    
    Present
    
    Basis PointInterest Rates
    
    
    
    Value Ratio
    
    Change(Basis points)200
    
    
    
    
    
    4.31
    %
    
    
    (347
    )100
    
    
    
    
    
    6.56
    
    
    
    (122
    )0
    
    
    
    
    
    7.78
    
    
    
    (100
    )
    
    
    
    
    6.75
    
    
    
    (103
    )
 Page 43




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GAP Analysis.
 At September 30, 2008More 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
    
    $
    1,510,113
    
    
    $
    1,582,278
    
    
    $
    3,221,165
    
    
    $
    2,670,615
    
    
    $
    3,446,932
    
    
    $
    15,543,433
    
    
    $
    27,974,536Consumer and other loans
    
    
    99,717
    
    
    
    3,373
    
    
    
    19,040
    
    
    
    4,292
    
    
    
    13,768
    
    
    
    245,950
    
    
    
    386,140Federal funds sold
    
    
    218,358
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    218,358Mortgage-backed securities
    
    
    1,432,718
    
    
    
    1,706,972
    
    
    
    2,760,493
    
    
    
    4,131,983
    
    
    
    5,095,253
    
    
    
    2,947,089
    
    
    
    18,074,508FHLB stock
    
    
    831,820
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    831,820Investment securities
    
    
    57,227
    
    
    
    50,000
    
    
    
    2,200,105
    
    
    
    0
    
    
    
    946,927
    
    
    
    54,421
    
    
    
    3,308,680Total interest-earning assets
    
    
    4,149,953
    
    
    
    3,342,623
    
    
    
    8,200,803
    
    
    
    6,806,890
    
    
    
    9,502,880
    
    
    
    18,790,893
    
    
    
    50,794,042Interest-bearing liabilities:Savings accounts
    
    
    53,557
    
    
    
    53,557
    
    
    
    71,410
    
    
    
    71,410
    
    
    
    178,525
    
    
    
    285,639
    
    
    
    714,098Interest-bearing demand accounts
    
    
    154,344
    
    
    
    154,344
    
    
    
    229,851
    
    
    
    229,851
    
    
    
    394,190
    
    
    
    414,180
    
    
    
    1,576,760Money market accounts
    
    
    253,266
    
    
    
    253,266
    
    
    
    506,531
    
    
    
    506,531
    
    
    
    886,430
    
    
    
    126,633
    
    
    
    2,532,657Time deposits
    
    
    9,966,050
    
    
    
    1,416,794
    
    
    
    438,072
    
    
    
    46,529
    
    
    
    37,772
    
    
    
    
    
    
    
    11,905,217Borrowed funds
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    400,000
    
    
    
    350,000
    
    
    
    28,375,000
    
    
    
    29,275,000Total interest-bearing liabilities
    
    
    10,427,217
    
    
    
    1,877,961
    
    
    
    1,395,864
    
    
    
    1,254,321
    
    
    
    1,846,917
    
    
    
    29,201,452
    
    
    
    46,003,732Interest rate sensitivity gap
    
    $
    (6,277,264
    )
    
    $
    1,464,662
    
    
    $
    6,804,939
    
    
    $
    5,552,569
    
    
    $
    7,655,963
    
    
    $
    (10,410,559
    )
    
    $
    4,790,310Cumulative interest rate sensitivity gap
    
    $
    (6,277,264
    )
    
    $
    (4,812,602
    )
    
    $
    1,992,337
    
    
    $
    7,544,906
    
    
    $
    15,200,869
    
    
    $
    4,790,310Cumulative interest rate sensitivity gap
as a percent of total assets
    
    
    (12.12
    )%
    
    
    (9.30
    )%
    
    
    3.85
    %
    
    
    14.57
    %
    
    
    29.36
    %
    
    
    9.25
    %Cumulative interest-earning assets
as a percent of interest-bearing
liabilities
    
    
    39.80
    %
    
    
    60.89
    %
    
    
    114.54
    %
    
    
    150.45
    %
    
    
    190.47
    %
    
    
    110.41
    %
  
 Item 4.  Controls and Procedures
  Page 45




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1.  Legal Proceedings
  
 Item 1A.  Risk Factors
  The FDICs Proposed Increase in Deposit Insurance Premiums is Expected to Cause a Significant
Increase in our Non-Interest Expense.




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##### Table of Contents



Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
  MaximumTotal Number of
    
    
    Number of SharesTotal
    
    
    
    
    
    
    Shares Purchased
    
    
    that May Yet BeNumber of
    
    
    Average
    
    
    as Part of Publicly
    
    
    Purchased UnderShares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    the Plans orPeriod
    
    Purchased
    
    
    per Share
    
    
    or Programs
    
    
    Programs (1)July 1-July 31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    54,973,550August 1-August 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,973,550September 1-September 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,973,550Total
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    On June 20, 2006, Hudson City Bancorp announced the adoption of its seventh Stock Repurchase Program, which authorized the repurchase of up to
56,975,000 shares of common stock. This program has no expiration date and has 3,573,550 shares yet to be purchased as of September 30, 2008.
On July 25, 2007, Hudson City Bancorp announced the adoption of its eighth Stock Repurchase Program, which authorized the repurchase
of up to 51,400,000 shares of common stock. This program has no expiration date and no shares have been purchased pursuant to this program. 
 Item 3.  Defaults Upon Senior Securities
  
 Item 4.  Submission of Matters to a Vote of Security Holders
  
 Item 5.  Other Information




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##### Table of Contents



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.




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##### Table of Contents



SIGNATURES
  Hudson City Bancorp, Inc.Date:        November 7, 2008
    By:
    /s/ Ronald E. Hermance, Jr.Ronald E. Hermance, Jr.Chairman, President and Chief
Executive Officer
(Principal Executive Officer)Date:        November 7, 2008
    By:
    /s/ James C. KranzJames C. KranzExecutive Vice President and Chief Financial Officer
(Principal Financial Officer)