Hudson City Bancorp Inc.'s second-quarter earnings rose 11% absent a prior-year charge and as the New Jersey regional bank reported higher revenue.

The result beat analysts' expectations and shares were up 2% at $12.95 in premarket trading. The stock through Wednesday's close is down 7.5% this year.

Chairman and Chief Executive Ronald E. Hermance Jr. said, "Our non-performing assets are growing at a slower pace and we believe the real estate markets are stabilizing." He reiterated that, despite signs of stabilization in the housing sector, loan losses and charge-offs could continue to rise given the high jobless levels and economic weakness.

The company avoided the worst of the defaults seen last year thanks to sticking with its core business of writing conservative loans to borrowers mostly in the New York metropolitan area.

Hudson City reported a profit of $142.6 million, or 29 cents a share, up from $127.9 million, or 26 cents, a year earlier. The prior year included $21.1 million for a Federal Deposit Insurance Corp. special assessment. Revenue increased 6.6% to $350.7 million.

Analysts polled by Thomson Reuters most recently forecast earnings of 28 cents on revenue of $337 million.

Loan-loss provisions rose 56% to $50 million from $32.5 million a year earlier and were flat with the first quarter. Net charge-offs, or loans banks don't expect to collect increased to $22.8 million from $9.6 million on year but fell from $24.2 million sequentially. Nonperforming loans, or loans expected to go bad, rose to 2.46% from 1.4% and 2.32%, respectively.

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