Hudson City Bancorp's (HCBK) profits fell in the third quarter as the $39 billion-asset company saw declines in revenue from first mortgages and other loans.

Hudson City, based in Paramus, N.J., earned $42.7 million — a 24% decline from the same period a year ago. However, its earnings per share of 9 cents were a penny better than consensus estimates of analysts polled by Bloomberg.

The company's net interest income dropped 31%, to $139.4 million, reflecting a 17% decrease in first mortgage loans and a 25% decrease in consumer and other loans. Low interest rates and falling income from securities also contributed to the decline. Hudson City's net interest margin fell 54 basis points, to 1.48%.

Noninterest income more than tripled to $13.5 million, buoyed by a $10.6 million gain on the sale of mortgage-backed securities. Service fees and charges on deposit and loan accounts made up the bulk of the rest of the revenue.

Noninterest expenses declined, 16% to $78.5 million, thanks largely to an $11.4 million decrease in deposit insurance fees.

The company slashed its loan-loss provision by 80%, to $4 million. The lower provision reflects decreases in delinquent loans and total loans. Net chargeoffs totaled $10.3 million, a 37% decrease from the same period a year ago.

Hudson City's pending sale to M&T Bank (MTB) was postponed this spring when regulators ordered M&T to bolster its compliance with anti-money-laundering and other Bank Secrecy Act rules. The deal is expected to close by Jan. 31, but both Hudson City and M&T have said there are no assurances that the merger will be completed by that date.

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