Hudson City Bancorp Inc.'s third-quarter earnings rose 11% as the New Jersey-based bank's results topped analysts' expectations amid a higher net interest margin.
Shares were up 2.1% to $13.39 in premarket trading. As of Tuesday's close, the stock is down about 18% this year.
The company - which has branch locations in New Jersey, New York and Connecticut - has stuck to its core business of writing conservative loans to borrowers mostly in the New York metropolitan area and, as a result, largely avoided the sky-high rates of defaults that have plagued its competitors.
Still, Hudson City hasn't been completely immune to the banking industry's struggles as it again reported higher loan-loss provisions, net charge-offs and nonperforming assets.
Hudson City reported earnings of $135.1 million, or 27 cents a share, up from $121.9 million, or 25 cents a share, a year earlier. Analysts polled by Thomson Reuters expected 26 cents.
Net interest margin widened to 2.3% from 2.17% in the prior quarter and 2.08% a year earlier.
Deposits improved 25% so far this year, while net loans increased 5.8%.
Loan-loss provisions grew to $40 million in the latest quarter from $32.5 million in the second quarter and $5 million a year earlier amid an increase in nonperforming loans and rising levels of unemployment during the year. Net charge-offs rose to $13.2 million from $9.6 million and $1.4 million, respectively. Nonperforming assets grew to 0.9% from 0.77% and 0.29%.
The company's Tier 1 capital leverage ratio, a key measure of financial strength, decreased to 7.66% from 7.73% in the second quarter and 8.16% a year ago.
Hudson City, which didn't participate in the federal government's Troubled Asset Relief Program, was the best-performing bank in the Standard & Poor's 500 index last year, rising 7.7% as most other banks' shares were plummeting.