HCBK Writes Off a Year (NASDAQ: HCBK) (NYSE: MTB)

NEW YORK - HCBK one of the 20 largest banks in the country, which has recently fallen on hard times announced a restructuring of its balance sheet on March 28.

Ron Hermance the CEO of HCBK said: " recent market events and the unprecedented involvement of the United States government in both the mortgage markets, through the government-sponsored enterprises (the “GSEs”), and the maintenance of low market interest rates, have resulted in an environment that has caused our balance sheet to be less responsive to current market conditions... Accordingly, we undertook this balance sheet restructuring at a time when market interest rates are beginning to increase with the intent on preserving our shareholders’ equity as much as reasonably possible and yet executing a trade that looks to increase our forward earnings potential."

The company repurchased $12.5 billion of debt and sold $8.5 billion of mortgage backed securities in the transaction and the company sold $5 billion of new debt issued at 0.66%. The company will realize a $644 million loss from the transaction. The company made $537 million of profit last year, hence the company wiped out over a year of profit.

Now, Buffalo based M&T Bank is the only bank to not decrease their dividend and remain profitable in every quarter since the financial crisis. Will a dividend cut for HCBK follow?

Next Stop Hudson City (NASDAQ:HCBK)

Hudson City Bancorp finished the day up 0.25%, the stock is trading near its 52 week low and well below its 52 week high of $14.75. HCBK appears to be a liquidity play as investors flee the stock and put their money into better performers. HCBK reports earnings on October 20th. Allan Edwards the CEO of The Markets Are Open is expecting earnings to come in at 27 cents a share. Edwards said that HCBK will have trouble generated returns on its Mortgage Backed Security Portfolio, but that its loan portfolio will perform strongly. Edwards expects non performing loans to drop from the previous quarter and provisions of 50 million.

Hudson City Bancorp Finishes September with Top Performance

Shares of Hudson City Bancorp (HCBK) finished the month up 7.53% which is better than most of its peers. However over the last year HCBK stock has stalled, as investors have feared the companies exposure to New York real estate market. Allan Edwards CEO of The Markets Are Open said that even if you take a 30% discount on their New York loans, their non performing loans are so low, that the bank is not only in a supreme financial situation, but they stock is not priced correctly.

Edwards noted that HCBK has a interesting business model, which is different than most banks, as it borrows more on average as a % of deposits and uses this money to invest in mortgage backed securities. Edwards said "while I wish this segment of the business was eliminated its loan business is very profitable."

To see Edwards full report Click Here