Hudson City Bancorp (HCBK) Extinguished $4.3 Billion of Structured Borrowings; Sees Q4 Charge
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Hudson City Bancorp, Inc. (NASDAQ: HCBK) has extinguished $4.3 billion of structured putable borrowings that had a weighted-average cost of 4.21%. The extinguishments were funded by the Company's existing cash position.
The Bank's Tier I leverage capital ratio was substantially unaffected by the extinguishments and Hudson City will continue to have a significant cushion above the regulatory requirements to be considered well capitalized. The extinguishment of high-cost borrowings is expected to increase the Company's net interest margin and net interest income compared to what we otherwise would have experienced. The Company does not expect the loss for the fourth quarter to affect its dividend strategy in light of the improved earnings position.
This action will result in an after-tax charge of approximately $440.7 million or $0.89 per share in in the fourth quarter of 2011. This charge will offset the net income otherwise expected for the quarter and, as a result, the Company expects to report a net loss for the fourth quarter of 2011.
The Bank's Tier I leverage capital ratio was substantially unaffected by the extinguishments and Hudson City will continue to have a significant cushion above the regulatory requirements to be considered well capitalized. The extinguishment of high-cost borrowings is expected to increase the Company's net interest margin and net interest income compared to what we otherwise would have experienced. The Company does not expect the loss for the fourth quarter to affect its dividend strategy in light of the improved earnings position.
This action will result in an after-tax charge of approximately $440.7 million or $0.89 per share in in the fourth quarter of 2011. This charge will offset the net income otherwise expected for the quarter and, as a result, the Company expects to report a net loss for the fourth quarter of 2011.
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