Hudson City Bancorp Inc.'s third-quarter profit declined more than 32% from the same period last year as historically low interest rates battered its investment portfolio.

The Paramus, N.J., thrift company said it earned $84.2 million, or 17 cents per share, in the quarter, a penny shy of consensus analysts' estimates, according to Thomson Reuters.

Hudson City Chairman and Chief Executive Ronald Hermance said in a news release Wednesday that $2 billion of the thrift's investment securities were called during the quarter, partly as a result of a rate drop for 10-year Treasury notes. The calls produced a $3.26 billion cash balance, which Hermance said will be deployed in the fourth quarter.

Total nonperforming assets rose 12.8%, to $989.7, million from a year ago, or 1.95% of total assets. However, the rate of charge-offs fell 30.3% to $18.6 million, which allowed the company to lower its provision for loan losses by 50% from a year earlier, to $25 million. "We believe that our nonperforming assets are at manageable levels," Hermance said.

The $50.9 billion-asset Hudson City restructured its balance sheet in March after it was pressured by regulators to reduce its exposure to interest rate risk. In April, Hudson City cut its quarterly dividend to 8 cents per share from 15 cents, to save about $138 million yearly. On Wednesday, Hudson City said that it will hold its quarterly dividend at eight cents.

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