##### 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: March 31, 2006
 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
    
    (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
  þ o
  þ o o
  o þ




---



##### 



PageNumberPART I  FINANCIAL INFORMATIONItem 1.  Financial StatementsConsolidated
Statements of
Financial Condition
 March 31, 2006
(Unaudited) and
December 31, 2005
    
    
    5Consolidated
Statements of
Income (Unaudited)
 For the three
ended March 31,
2006 and 2005
    
    
    6Consolidated
Statements of Cash
Flows (Unaudited) 
For the three
months ended March
31, 2006 and 2005
    
    
    7Notes to Unaudited
Consolidated
Financial
Statements
    
    
    8Item 2.  Managements Discussion and
Analysis of Financial Condition and Results
of Operations
    
    
    16Item 3.  Quantitative and Qualitative
Disclosures About Market Risk
    
    
    32Item 4.  Controls and
Procedures
    
    
    36PART II  OTHER INFORMATIONItem 1.  Legal
Proceedings
    
    
    36Item 1A.  Risk Factors
    
    
    36Item 2.  Unregistered Sales of Equity
Securities and Use of Proceeds
    
    
    37Item 3.  Defaults Upon Senior
Securities
    
    
    37Item 4.  Submission of Matters to a Vote of
Security Holders
    
    
    37Item 5.  Other
Information
    
    
    37Item 6.  Exhibits
    
    
    38SIGNATURES
    
    
    39EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONS
  Page 2




---



##### Table of Contents




    
    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 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 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;
    
    the risk of an economic slowdown that would adversely affect credit quality and loan
originations;
 Page 3




---



##### Table of Contents




    
    our business and Sound Federals business may not be combined successfully, or such
combination may take longer to accomplish than expected;
    
    the cost savings from the merger may not be fully realized or may take longer to realize
than expected;
    
    operating costs, customer loss and business disruption following the merger, including
adverse effects on relationships with employees, may be greater than expected;
    
    governmental approvals of the merger may not be obtained, or adverse regulatory
conditions may be imposed in connection with governmental approvals of the merger; or
    
    the stockholders of Sound Federal may fail to approve the merger.
  Page 4




---



##### 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 31,2006
    
    
    2005(Unaudited)(In thousands)AssetsCash and due from banks
    
    $
    90,932
    
    
    $
    97,672Federal funds sold
    
    
    14,170
    
    
    
    4,587Total cash and cash equivalents
    
    
    105,102
    
    
    
    102,259Investment securities held to maturity, market value of $1,488,532 at
March 31, 2006 and $1,508,055 at December 31, 2005
    
    
    1,534,218
    
    
    
    1,534,216Investment securities available for sale, at market value
    
    
    3,992,021
    
    
    
    3,962,511Federal Home Loan Bank of New York stock
    
    
    274,212
    
    
    
    226,962Mortgage-backed securities held to maturity, market value of $4,644,025
at March 31, 2006 and $4,288,772 at December 31, 2005
    
    
    4,800,674
    
    
    
    4,389,864Mortgage-backed securities available for sale, at market value
    
    
    2,623,320
    
    
    
    2,520,633Loans
    
    
    16,033,843
    
    
    
    15,062,449Deferred loan costs
    
    
    5,784
    
    
    
    1,653Allowance for loan losses
    
    
    (27,393
    )
    
    
    (27,393
    )Net loans
    
    
    16,012,234
    
    
    
    15,036,709Foreclosed real estate, net
    
    
    1,000
    
    
    
    1,040Accrued interest receivable
    
    
    153,935
    
    
    
    140,723Banking premises and equipment, net
    
    
    51,464
    
    
    
    49,132Other assets
    
    
    127,396
    
    
    
    111,304Total Assets
    
    $
    29,675,576
    
    
    $
    28,075,353Liabilities and Stockholders EquityDeposits:Interest-bearing
    
    $
    11,051,360
    
    
    $
    10,941,258Noninterest-bearing
    
    
    470,348
    
    
    
    442,042Total deposits
    
    
    11,521,708
    
    
    
    11,383,300Repurchase agreements
    
    
    8,300,000
    
    
    
    7,900,000Federal Home Loan Bank of New York advances
    
    
    4,550,000
    
    
    
    3,450,000Total borrowed
funds
    
    
    12,850,000
    
    
    
    11,350,000Accrued expenses and other liabilities
    
    
    191,429
    
    
    
    140,577Total liabilities
    
    
    24,563,137
    
    
    
    22,873,877Common stock, $0.01 par value, 3,200,000,000 shares authorized;
741,466,555 shares issued; 581,199,754 shares outstanding
at March 31, 2006; 588,905,543 shares outstanding
at December 31, 2005
    
    
    7,415
    
    
    
    7,415Additional paid-in capital
    
    
    4,537,339
    
    
    
    4,533,329Retained earnings
    
    
    1,788,914
    
    
    
    1,759,492Treasury stock, at cost; 160,266,801 shares at March 31, 2006 and
152,561,012 shares at December 31, 2005
    
    
    (908,564
    )
    
    
    (798,232
    )Unallocated common stock held by the employee stock ownership plan
    
    
    (232,762
    )
    
    
    (234,264
    )Unearned common stock held by the recognition and retention plan
    
    
    
    
    
    
    (2,815
    )Accumulated other comprehensive loss, net of tax
    
    
    (79,903
    )
    
    
    (63,449
    )Total stockholders equity
    
    
    5,112,439
    
    
    
    5,201,476Total Liabilities and Stockholders Equity
    
    $
    29,675,576
    
    
    $
    28,075,353
  Page 5




---



##### Table of Contents



Hudson City Bancorp, Inc. and Subsidiary
 
 Consolidated Statements of Income
 (Unaudited)
 For the Three MonthsEnded March 31,2006
    
    
    2005(In thousands, except per share data)Interest and Dividend Income:Interest and fees on first mortgage loans
    
    $
    209,187
    
    
    $
    156,098Interest and fees on consumer and other loans
    
    
    3,514
    
    
    
    2,301Interest on mortgage-backed securities held to maturity
    
    
    53,622
    
    
    
    43,044Interest on mortgage-backed securities available for sale
    
    
    28,161
    
    
    
    17,130Interest on investment securities held to maturity
    
    
    18,631
    
    
    
    17,027Interest and dividends on investment securities available for sale
    
    
    42,557
    
    
    
    16,020Dividends on Federal Home Loan Bank of New York stock
    
    
    2,508
    
    
    
    1,176Interest on federal funds sold
    
    
    1,508
    
    
    
    823Total interest and dividend income
    
    
    359,688
    
    
    
    253,619Interest Expense:Interest on deposits
    
    
    89,364
    
    
    
    62,915Interest on borrowed funds
    
    
    112,645
    
    
    
    64,818Total interest expense
    
    
    202,009
    
    
    
    127,733Net interest income
    
    
    157,679
    
    
    
    125,886Provision for Loan Losses
    
    
    
    
    
    
    65Net interest income after provision for loan losses
    
    
    157,679
    
    
    
    125,821Non-Interest Income:Service charges and other income
    
    
    1,264
    
    
    
    1,136Gains on securities transactions, net
    
    
    
    
    
    
    2,737Total non-interest income
    
    
    1,264
    
    
    
    3,873Non-Interest Expense:Compensation and employee benefits
    
    
    26,352
    
    
    
    19,930Net occupancy expense
    
    
    5,512
    
    
    
    4,556Federal deposit insurance assessment
    
    
    424
    
    
    
    408Computer and related services
    
    
    597
    
    
    
    592Other expense
    
    
    5,400
    
    
    
    5,279Total non-interest expense
    
    
    38,285
    
    
    
    30,765Income before income tax expense
    
    
    120,658
    
    
    
    98,929Income Tax Expense
    
    
    45,430
    
    
    
    37,000Net income
    
    $
    75,228
    
    
    $
    61,929Basic Earnings Per Share
    
    $
    0.14
    
    
    $
    0.11Diluted Earnings Per Share
    
    $
    0.13
    
    
    $
    0.11Weighted Average Number of Common Shares Outstanding:Basic
    
    
    548,957,071
    
    
    
    574,236,047Diluted
    
    
    561,308,749
    
    
    
    588,442,513
  Page 6




---



##### Table of Contents



Hudson City Bancorp, Inc. and Subsidiary
 
 Consolidated Statements of Cash Flows
 (Unaudited
 For the three MonthsEnded March 31,2006
    
    
    2005(In thousands)Cash Flows from Operating Activities:Net income
    
    $
    75,228
    
    
    $
    61,929Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation, accretion and amortization expense
    
    
    4,522
    
    
    
    6,371Provision for loan losses
    
    
    
    
    
    
    65Gains on securities transactions, net
    
    
    
    
    
    
    (2,737
    )Share-based compensation, including committed ESOP shares
    
    
    4,220
    
    
    
    4,307Deferred tax benefit
    
    
    (7,256
    )
    
    
    Net proceeds from sale of foreclosed real estate
    
    
    743
    
    
    
    332Increase in accrued interest receivable
    
    
    (13,212
    )
    
    
    (3,782
    )Decrease (increase) in other assets
    
    
    2,521
    
    
    
    (3,384
    )Increase in accrued expenses and other liabilities
    
    
    50,852
    
    
    
    29,174Tax benefit from stock plans
    
    
    
    
    
    
    3,872Net Cash Provided by Operating Activities
    
    
    117,618
    
    
    
    96,147Cash Flows from Investing Activities:Originations of loans
    
    
    (547,469
    )
    
    
    (341,384
    )Purchases of loans
    
    
    (811,192
    )
    
    
    (785,590
    )Payments on loans
    
    
    382,281
    
    
    
    502,277Principal collection of mortgage-backed securities held to maturity
    
    
    154,864
    
    
    
    209,820Purchases of mortgage-backed securities held to maturity
    
    
    (567,021
    )
    
    
    (381,481
    )Principal collection of mortgage-backed securities available for sale
    
    
    144,129
    
    
    
    73,666Proceeds from sales of mortgage-backed securities available for sale
    
    
    
    
    
    
    225,253Purchases of mortgage-backed securities available for sale
    
    
    (255,483
    )
    
    
    (470,020
    )Proceeds from maturities and calls of investment securities held to maturity
    
    
    
    
    
    
    74,978Purchases of investment securities held to maturity
    
    
    
    
    
    
    (250,000
    )Proceeds from maturities and calls of investment securities available for sale
    
    
    
    
    
    
    100,022Proceeds from sales of investment securities available for sale
    
    
    
    
    
    
    9,980Purchases of investment securities available for sale
    
    
    (50,000
    )
    
    
    Purchases of Federal Home Loan Bank of New York stock
    
    
    (47,250
    )
    
    
    (5,000
    )Purchases of premises and equipment, net
    
    
    (4,011
    )
    
    
    (4,739
    )Net Cash Used in Investment Activities
    
    
    (1,601,152
    )
    
    
    (1,042,218
    )Cash Flows from Financing Activities:Net increase in deposits
    
    
    138,408
    
    
    
    218,857Proceeds from borrowed funds
    
    
    1,750,000
    
    
    
    700,000Principal payments on borrowed funds
    
    
    (250,000
    )
    
    
    Dividends paid
    
    
    (41,373
    )
    
    
    (11,343
    )Purchases of stock by the recognition and retention plan
    
    
    
    
    
    
    (1,290
    )Purchases of treasury stock
    
    
    (118,993
    )
    
    
    Exercise of stock options
    
    
    4,228
    
    
    
    1,866Tax benefit from stock plans
    
    
    4,107
    
    
    
    Net Cash Provided by Financing Activities
    
    
    1,486,377
    
    
    
    908,090Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    2,843
    
    
    
    (37,981
    )Cash and Cash Equivalents at Beginning of Period
    
    
    102,259
    
    
    
    168,183Cash and Cash Equivalents at End of Period
    
    $
    105,102
    
    
    $
    130,202Supplemental Disclosures:Interest paid
    
    $
    197,326
    
    
    $
    126,137Income taxes paid
    
    $
    2,034
    
    
    $
    4,865
  Page 7




---



##### Table of Contents



1.  Basis of Presentation
    Statements of Cash Flow.
 2.  Comprehensive Income
  For the Three MonthsEnded March 31,2006
    
    
    2005(In thousands)Net income
    
    $
    75,228
    
    
    
    61,929Other comprehensive loss:Unrealized holding loss on securities
available for sale, net of tax benefit of
($11,357) for 2006 and ($14,170)
for 2005
    
    
    (16,454
    )
    
    
    (20,518
    )Reclassification adjustment for gains in
net income, net of tax of ($1,118)
for 2005
    
    
    
    
    
    
    (1,619
    )Total comprehensive income
    
    $
    58,774
    
    
    $
    39,792
 Page 8




---



##### Table of Contents



3.  Earnings Per Share
 For the Three Months Ended March 31,2006
    
    
    2005Per
    
    
    
    
    
    
    
    
    
    
    PerShare
    
    
    
    
    
    
    
    
    
    
    ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount(In thousands, except per share data)Net income
    
    $
    75,228
    
    
    
    
    
    
    
    
    
    
    $
    61,929Basic earnings per share:Income available to
common stockholders
    
    $
    75,228
    
    
    
    548,957
    
    
    $
    0.14
    
    
    $
    61,929
    
    
    
    574,236
    
    
    $
    0.11Effect of dilutive common
stock equivalents
    
    
    
    
    
    
    12,352
    
    
    
    
    
    
    
    
    
    
    
    14,207Diluted earnings per share:Income available to
common stockholders
    
    $
    75,228
    
    
    
    561,309
    
    
    $
    0.13
    
    
    $
    61,929
    
    
    
    588,443
    
    
    $
    0.11
 4.  Fair Value and Unrealized Losses of Securities
  Less Than 12 Months
    
    
    12 Months or Longer
    
    
    TotalFair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses(In thousands)2006Held to maturity:Investment securities
    
    $
    1,198,667
    
    
    $
    34,385
    
    
    $
    288,683
    
    
    $
    11,317
    
    
    $
    1,487,350
    
    
    $
    45,702Mortgage-backed securities
    
    
    2,325,427
    
    
    
    44,524
    
    
    
    1,996,931
    
    
    
    105,812
    
    
    
    4,322,358
    
    
    
    150,336Total held to maturity
    
    
    3,524,094
    
    
    
    78,909
    
    
    
    2,285,614
    
    
    
    117,129
    
    
    
    5,809,708
    
    
    
    196,038Available for sale:Investment securities
    
    
    2,781,300
    
    
    
    25,574
    
    
    
    1,210,395
    
    
    
    55,043
    
    
    
    3,991,695
    
    
    
    80,617Mortgage-backed securities
    
    
    1,604,698
    
    
    
    25,545
    
    
    
    860,169
    
    
    
    27,880
    
    
    
    2,464,867
    
    
    
    53,425Total available for sale
    
    
    4,385,998
    
    
    
    51,119
    
    
    
    2,070,564
    
    
    
    82,923
    
    
    
    6,456,562
    
    
    
    134,042Total
    
    $
    7,910,092
    
    
    $
    130,028
    
    
    $
    4,356,178
    
    
    $
    200,052
    
    
    $
    12,266,270
    
    
    $
    330,0802005Held to maturity:Investment securities
    
    $
    1,490,897
    
    
    $
    17,146
    
    
    $
    
    
    
    $
    
    
    
    $
    1,490,897
    
    
    $
    17,146Mortgage-backed securities
    
    
    2,122,992
    
    
    
    31,007
    
    
    
    1,043,062
    
    
    
    61,133
    
    
    
    3,166,054
    
    
    
    92,140Total held to maturity
    
    
    3,613,889
    
    
    
    48,153
    
    
    
    1,043,062
    
    
    
    61,133
    
    
    
    4,656,951
    
    
    
    109,286Available for sale:Investment securities
    
    
    1,218,044
    
    
    
    28,251
    
    
    
    212,884
    
    
    
    8,496
    
    
    
    1,430,928
    
    
    
    36,747Mortgage-backed securities
    
    
    1,422,601
    
    
    
    20,329
    
    
    
    40,787
    
    
    
    389
    
    
    
    1,463,388
    
    
    
    20,718Total available for sale
    
    
    2,640,645
    
    
    
    48,580
    
    
    
    253,671
    
    
    
    8,885
    
    
    
    2,894,316
    
    
    
    57,465Total
    
    $
    6,254,534
    
    
    $
    96,733
    
    
    $
    1,296,733
    
    
    $
    70,018
    
    
    $
    7,551,267
    
    
    $
    166,751
 Page 9




---



##### Table of Contents



5.  Stockholders Equity
  6.  Net Periodic Benefit Plans Expenses
   For the Three Months Ended March 31,Retirement Plans
    
    
    Other Benefits2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Service cost
    
    $
    802
    
    
    $
    762
    
    
    $
    269
    
    
    $
    480Interest cost
    
    
    1,269
    
    
    
    1,196
    
    
    
    510
    
    
    
    623Expected return on assets
    
    
    (1,718
    )
    
    
    (1,694
    )
    
    
    
    
    
    
    Amortization of:Net loss
    
    
    130
    
    
    
    109
    
    
    
    167
    
    
    
    155Unrecognized prior service cost
    
    
    35
    
    
    
    6
    
    
    
    (391
    )
    
    
    (245
    )Net periodic benefit cost
    
    $
    518
    
    
    $
    379
    
    
    $
    555
    
    
    $
    1,013
   Page 10




---



##### Table of Contents



7.  Stock Based Compensation
   For the ThreeMonths EndedMarch 31,2005(In thousands,except pershare data)Net income, as reported
    
    $
    61,929Add: expense recognized for the recognition
and retention plans, net of related tax
effect of $639
    
    
    1,070Less: total stock option and recognition and
retention plans expense, determined
under the fair value method, net of
related tax effect of ($862)
    
    
    (1,444
    )Pro forma net income
    
    $
    61,555Basic earnings per share: As reported
    
    $
    0.11Pro forma
    
    
    0.11Diluted earnings per share: As reported
    
    $
    0.11Pro forma
    
    
    0.11
 Page 11




---



##### Table of Contents



2005Expected dividend yield
    
    
    2.23
    %Expected volatility
    
    
    21.57Risk-free interest rate
    
    
    3.64Expected option life
    
    5 years
 Recognition and Retention Plans.
   Three-Months Ended March 31,2006
    
    
    2005Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageNumber of Shares
    
    
    Fair Value
    
    
    
    
    
    
    Number of Shares
    
    
    Fair ValueOutstanding at beginning of period
    
    
    951,761
    
    
    
    
    
    
    $
    9.70
    
    
    
    2,973,759
    
    
    $
    4.66Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,682
    
    
    
    11.17Outstanding at end of period
    
    
    951,761
    
    
    
    
    
    
    
    9.70
    
    
    
    3,124,441
    
    
    
    4.97
 Stock Option Plans.
 Page 12




---



##### Table of Contents



Three-Months Ended March 31,2006
    
    
    2005Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Average
    
    
    Number of
    
    
    AverageStock Options
    
    
    Exercise Price
    
    
    Stock Options
    
    
    Exercise PriceOutstanding at beginning
of period
    
    
    21,659,869
    
    
    $
    4.21
    
    
    
    22,425,161
    
    
    $
    3.95Granted
    
    
    
    
    
    
    
    
    
    
    496,930
    
    
    
    11.17Exercised
    
    
    (1,531,211
    )
    
    
    2.76
    
    
    
    (835,815
    )
    
    
    2.23Forfeited
    
    
    (6,412
    )
    
    
    4.21
    
    
    
    (3,847
    )
    
    
    2.16Outstanding at end of period
    
    
    20,122,246
    
    
    
    4.32
    
    
    
    22,082,429
    
    
    
    4.18
   Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber
    
    Remaining
    
    
    Average
    
    
    Number
    
    
    AverageOf Options
    
    Contractual
    
    
    Exercise
    
    
    Of Options
    
    
    ExerciseOutstanding
    
    Life
    
    
    Price
    
    
    Exercisable
    
    
    Price13,342,868
    
    3.75 years
    
    $
    2.16
    
    
    
    13,342,868
    
    
    $
    2.16253,619
    
    4.75 years
    
    
    3.09
    
    
    
    253,619
    
    
    
    3.09411,801
    
    4.75 years
    
    
    3.40
    
    
    
    411,801
    
    
    
    3.40820,736
    
    4.75 years
    
    
    3.59
    
    
    
    820,736
    
    
    
    3.59355,223
    
    5.75 years
    
    
    4.20
    
    
    
    263,534
    
    
    
    4.20689,440
    
    5.75 years
    
    
    5.53
    
    
    
    689,440
    
    
    
    5.53259,504
    
    6.75 years
    
    
    5.96
    
    
    
    145,368
    
    
    
    5.96206,480
    
    6.75 years
    
    
    6.35
    
    
    
    206,480
    
    
    
    6.35448,840
    
    7.75 years
    
    
    10.33
    
    
    
    179,536
    
    
    
    10.33485,389
    
    8.75 years
    
    
    11.17
    
    
    
    95,543
    
    
    
    11.17371,890
    
    7.75 years
    
    
    11.91
    
    
    
    148,745
    
    
    
    11.912,476,456
    
    7.75 years
    
    
    12.22
    
    
    
    591,344
    
    
    
    12.2220,122,246
    
    
    
    
    
    
    4.32
    
    
    
    17,149,014
    
    
    
    3.09
  Page 13




---



##### Table of Contents



8.  Subsequent Event
  9.  Recent Accounting Pronouncements
     Page 14




---



##### Table of Contents



10. - Acquisition
 
 Page 15




---



##### Table of Contents



Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 Executive Summary
      Page 16




---



##### Table of Contents



Page 17




---



##### Table of Contents



Comparison of Financial Condition at March 31, 2006 and December 31, 2005
   Page 18




---



##### Table of Contents



Page 19




---



##### Table of Contents



Analysis of Net Interest Income
  Average Balance Sheet.
 Page 20




---



##### Table of Contents



For the Three Months Ended March 31,2006
    
    
    2005Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost(Dollars in thousands)Assets:Interest-earnings assets:First mortgage loans, net (1)
    
    $
    15,162,365
    
    
    $
    209,187
    
    
    
    5.52
    %
    
    $
    11,371,846
    
    
    $
    156,098
    
    
    
    5.49
    %Consumer and other loans
    
    
    242,588
    
    
    
    3,514
    
    
    
    5.79
    
    
    
    159,430
    
    
    
    2,301
    
    
    
    5.77Federal funds sold
    
    
    140,093
    
    
    
    1,508
    
    
    
    4.37
    
    
    
    138,997
    
    
    
    823
    
    
    
    2.40Mortgage-backed securities at amortized cost
    
    
    7,157,847
    
    
    
    81,783
    
    
    
    4.57
    
    
    
    5,455,509
    
    
    
    60,174
    
    
    
    4.41Federal Home Loan Bank of New York stock
    
    
    247,920
    
    
    
    2,508
    
    
    
    4.05
    
    
    
    140,500
    
    
    
    1,176
    
    
    
    3.35Investment securities at amortized cost
    
    
    5,592,877
    
    
    
    61,188
    
    
    
    4.38
    
    
    
    2,961,077
    
    
    
    33,047
    
    
    
    4.46Total interest-earning assets
    
    
    28,543,690
    
    
    
    359,688
    
    
    
    5.04
    
    
    
    20,227,359
    
    
    
    253,619
    
    
    
    5.02Noninterest-earnings assets
    
    
    307,306
    
    
    
    
    
    
    
    
    
    
    
    313,892Total Assets
    
    $
    28,850,996
    
    
    
    
    
    
    
    
    
    
    $
    20,541,251Liabilities and Stockholders Equity:Interest-bearing liabilities:Savings accounts
    
    $
    796,279
    
    
    
    1,943
    
    
    
    0.99
    
    
    $
    919,453
    
    
    
    2,245
    
    
    
    0.99Interest-bearing transaction accounts
    
    
    3,404,928
    
    
    
    28,081
    
    
    
    3.34
    
    
    
    4,320,858
    
    
    
    27,298
    
    
    
    2.56Money market accounts
    
    
    426,629
    
    
    
    1,993
    
    
    
    1.89
    
    
    
    568,706
    
    
    
    1,441
    
    
    
    1.03Time deposits
    
    
    6,344,647
    
    
    
    57,347
    
    
    
    3.67
    
    
    
    5,325,551
    
    
    
    31,931
    
    
    
    2.43Total interest-bearing deposits
    
    
    10,972,483
    
    
    
    89,364
    
    
    
    3.30
    
    
    
    11,134,568
    
    
    
    62,915
    
    
    
    2.29Repurchase agreements
    
    
    8,149,444
    
    
    
    73,828
    
    
    
    3.67
    
    
    
    5,542,222
    
    
    
    47,106
    
    
    
    3.45Federal Home Loan Bank of New York advances
    
    
    3,922,389
    
    
    
    38,817
    
    
    
    4.01
    
    
    
    1,860,000
    
    
    
    17,712
    
    
    
    3.86Total interest-bearing liabilities
    
    
    23,044,316
    
    
    
    202,009
    
    
    
    3.56
    
    
    
    18,536,790
    
    
    
    127,733
    
    
    
    2.79Noninterest-bearing liabilities:Noninterest-bearing deposits
    
    
    438,190
    
    
    
    
    
    
    
    
    
    
    
    418,585Other noninterest-bearing liabilities
    
    
    179,056
    
    
    
    
    
    
    
    
    
    
    
    146,423Total noninterest-bearing liabilities
    
    
    617,246
    
    
    
    
    
    
    
    
    
    
    
    565,008Total liabilities
    
    
    23,661,562
    
    
    
    
    
    
    
    
    
    
    
    19,101,798Stockholders equity
    
    
    5,189,434
    
    
    
    
    
    
    
    
    
    
    
    1,439,453Total Liabilities and Stockholders Equity
    
    $
    28,850,996
    
    
    
    
    
    
    
    
    
    
    $
    20,541,251Net interest income/net interest rate spread (2)
    
    
    
    
    
    $
    157,679
    
    
    
    1.48
    %
    
    
    
    
    
    $
    125,886
    
    
    
    2.23
    %Net interest-earning assets/net interest margin (3)
    
    $
    5,499,374
    
    
    
    
    
    
    
    2.17
    %
    
    $
    1,690,569
    
    
    
    
    
    
    
    2.45
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    1.24
    x
    
    
    
    
    
    
    
    
    
    
    1.09
    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, 2006, 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, 5.88%,
federal funds sold, 4.75%, mortgage-backed securities, 4.82%, investment securities, 4.38%. At
March 31, 2006, the weighted-average rate on our outstanding interest-bearing liabilities was as
follows: savings accounts, 0.98%, interest-bearing transaction accounts, 3.42%, money market
accounts, 2.57%, time deposits, 3.85%, borrowed funds, 3.76%. Page 21




---



##### Table of Contents



Comparison of Operating Results for the Three-Month Periods Ended March 31, 2006 and 2005
 General.
 Interest and Dividend Income.
    Page 22




---



##### Table of Contents



Interest Expense.
    Net Interest Income.
 Page 23




---



##### Table of Contents



Provision for Loan Losses.
    Non-Interest Income.
 Page 24




---



##### Table of Contents



Non-Interest Expense.
 Income Taxes.
 Liquidity and Capital Resources
     Page 25




---



##### Table of Contents



Page 26




---



##### Table of Contents



Page 27




---



##### Table of Contents



Off-Balance Sheet Arrangements and Contractual Obligations
   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 loan originations
    
    $
    292,952
    
    
    $
    292,952
    
    
    $
    
    
    
    $
    
    
    
    $
    Mortgage loan purchases
    
    
    575,000
    
    
    
    575,000
    
    
    
    
    
    
    
    
    
    
    
    Mortgage-backed security
Purchases
    
    
    591,850
    
    
    
    591,850
    
    
    
    
    
    
    
    
    
    
    
    Operating leases
    
    
    100,674
    
    
    
    5,590
    
    
    
    11,710
    
    
    
    11,038
    
    
    
    72,336Total
    
    $
    1,560,476
    
    
    $
    1,465,392
    
    
    $
    11,710
    
    
    $
    11,038
    
    
    $
    72,336
  Critical Accounting Policies
  Allowance for Loan Losses.
 Page 28




---



##### Table of Contents



Page 29




---



##### Table of Contents



Asset Impairment Judgments.
   Pension and Other Postretirement Benefit Assumptions.
   Page 30




---



##### Table of Contents



Page 31




---



##### Table of Contents



Item 3.  Quantitative and Qualitative Disclosures About Market Risk
  General.
     Page 32




---



##### Table of Contents



Simulation Model.
 Change in
    
    Percent Change inInterest Rates
    
    Net Interest Income(Basis points)200
    
    
    
    (11.29
    )%100
    
    
    
    (5.23
    )50
    
    
    
    (2.45
    )0
    
    
    
    (50
    )
    
    
    2.43(100
    )
    
    
    1.55(200
    )
    
    
    (7.80
    )
   Present Value of EquityAs Percent of PresentPresent Value of Equity
    
    Value of AssetsBasisChange in
    
    Dollar
    
    Dollar
    
    Percent
    
    Present
    
    PointsInterest Rates
    
    Amount
    
    Change
    
    Change
    
    Value Ratio
    
    Change(Basis points)
    
    (Dollars in thousands)200
    
    $
    4,384,330
    
    
    $
    (1,413,704
    )
    
    
    (24.38
    )%
    
    
    16.19
    %
    
    
    (356
    )100
    
    
    5,113,997
    
    
    
    (684,037
    )
    
    
    (11.80
    )
    
    
    18.12
    
    
    
    (163
    )50
    
    
    5,480,929
    
    
    
    (317,105
    )
    
    
    (5.47
    )
    
    
    19.02
    
    
    
    (73
    )0
    
    
    5,798,034
    
    
    
    
    
    
    
    
    
    
    
    19.75
    
    
    (50)
    
    
    6,038,096
    
    
    
    240,062
    
    
    
    4.14
    
    
    
    20.24
    
    
    
    49(100)
    
    
    5,951,654
    
    
    
    153,620
    
    
    
    2.65
    
    
    
    19.81
    
    
    
    6(200)
    
    
    5,144,251
    
    
    
    (653,783
    )
    
    
    (11.28
    )
    
    
    17.08
    
    
    
    (267
    )
 Page 33




---



##### Table of Contents



GAP Analysis.
  Page 34




---



##### Table of Contents



At March 31, 2006More 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
    
    $
    1,142,792
    
    
    $
    1,139,564
    
    
    $
    1,953,479
    
    
    $
    1,788,265
    
    
    $
    2,614,567
    
    
    $
    7,138,561
    
    
    $
    15,777,228Consumer and other loans
    
    
    29,151
    
    
    
    271
    
    
    
    1,415
    
    
    
    4,042
    
    
    
    18,552
    
    
    
    198,904
    
    
    
    252,335Federal funds sold
    
    
    14,170
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,170Mortgage-backed securities
    
    
    1,476,858
    
    
    
    1,245,934
    
    
    
    915,200
    
    
    
    1,021,052
    
    
    
    1,847,679
    
    
    
    917,271
    
    
    
    7,423,994FHLB stock
    
    
    274,212
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    274,212Investment securities
    
    
    849,154
    
    
    
    1,119,613
    
    
    
    591,140
    
    
    
    750,927
    
    
    
    1,363,303
    
    
    
    852,102
    
    
    
    5,526,239Total interest-earning assets
    
    
    3,786,337
    
    
    
    3,505,382
    
    
    
    3,461,234
    
    
    
    3,564,286
    
    
    
    5,844,101
    
    
    
    9,106,838
    
    
    
    29,268,178Interest-bearing liabilities:Savings accounts
    
    
    41,860
    
    
    
    40,177
    
    
    
    39,288
    
    
    
    39,288
    
    
    
    78,576
    
    
    
    550,032
    
    
    
    789,221Interest-bearing demand accounts
    
    
    155,502
    
    
    
    155,502
    
    
    
    315,725
    
    
    
    315,725
    
    
    
    631,449
    
    
    
    1,583,341
    
    
    
    3,157,244Money market accounts
    
    
    14,579
    
    
    
    14,579
    
    
    
    58,314
    
    
    
    58,314
    
    
    
    116,628
    
    
    
    320,727
    
    
    
    583,141Time deposits
    
    
    4,236,299
    
    
    
    1,192,770
    
    
    
    678,675
    
    
    
    193,792
    
    
    
    220,218
    
    
    
    
    
    
    
    6,521,754Borrowed funds
    
    
    1,350,000
    
    
    
    3,225,000
    
    
    
    
    
    
    
    
    
    
    
    400,000
    
    
    
    7,875,000
    
    
    
    12,850,000Total interest-bearing liabilities
    
    
    5,798,240
    
    
    
    4,628,028
    
    
    
    1,092,002
    
    
    
    607,119
    
    
    
    1,446,871
    
    
    
    10,329,100
    
    
    
    23,901,360Interest rate sensitivity gap
    
    $
    (2,011,903
    )
    
    $
    (1,122,646
    )
    
    $
    2,369,232
    
    
    $
    2,957,167
    
    
    $
    4,397,230
    
    
    $
    (1,222,262
    )
    
    $
    5,366,818Cumulative interest rate sensitivity gap
    
    $
    (2,011,903
    )
    
    $
    (3,134,549
    )
    
    $
    (765,317
    )
    
    $
    2,191,850
    
    
    $
    6,589,080
    
    
    $
    5,366,818Cumulative interest rate sensitivity gap
as a percent of total assets
    
    
    (6.78
    )%
    
    
    (10.56
    )%
    
    
    (2.58
    )%
    
    
    7.39
    %
    
    
    22.20
    %
    
    
    18.08
    %Cumulative interest-earning assets
as a percent of interest-bearing
liabilities
    
    
    65.30
    %
    
    
    69.94
    %
    
    
    93.36
    %
    
    
    118.08
    %
    
    
    148.55
    %
    
    
    122.45
    %
 Page 35




---



##### Table of Contents



Item 4.  Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1.  Legal Proceedings
  
 Item 1A.  Risk Factors
  Page 36




---



##### 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 (3)
    
    per Share
    
    or Programs
    
    Programs (1) (2)January 1-January 31, 2006
    
    
    875,000
    
    
    $
    12.40
    
    
    
    875,000
    
    
    
    20,142,000February 1-February 28, 2006
    
    
    3,026,000
    
    
    
    12.40
    
    
    
    3,026,000
    
    
    
    17,116,000March 1-March 31, 2006
    
    
    5,336,000
    
    
    
    13.23
    
    
    
    5,336,000
    
    
    
    11,780,000Total
    
    
    9,237,000
    
    
    
    12.88
    
    
    
    9,237,000
 
 (1)
    
    On October 18, 2005, Hudson City Bancorp announced the adoption of its sixth Stock Repurchase Program, which authorized the
purchase of up to 29,880,000 shares of common stock. This program has no expiration date and has 11,780,000 shares yet to be purchased as of March 31, 2006.(2)
    
    No repurchase plan or program has expired or been terminated during the quarter.(3)
    
    Amounts do not reflect purchases of common stock by the trustee of the recognition and retention plan. 
 Item 3.  Defaults Upon Senior Securities
  
 Item 4.  Submission of Matters to a Vote of Security Holders
  
 Item 5.  Other Information
  Page 37




---



##### 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. Page 38




---



##### Table of Contents



SIGNATURES
   Date: May 9, 2006
    
    By:
    
    /s/ Ronald E. Hermance, Jr.Ronald E. Hermance, Jr.Chairman, President and Chief Executive Officer(principal executive officer)Date: May 9, 2006
    
    By:
    
    /s/ Denis J. SalamoneDenis J. SalamoneSenior Executive Vice President and Chief Operating Officer(principal financial and accounting officer)
 Page 39