MAHWAH, N.J. - Hudson United Bancorp said Thursday that it would unload $2 billion worth of mortgage-related securities and incur a loss of $42 million in the second quarter from the sale.

Excluding the one-time charge relating to the sale, the company expects to earn about $32 million in the second quarter.

The $9.3 billion-asset company said it would restructure its balance sheet to reduce its sensitivity to rising interest rates. Proceeds from the sale of the lower-yielding assets will be used to pay down short-term debt, the company said in a press release.

"Considering the risk of additional increases in market interest rates and our depressed stock price, we believe this is a prudent time to execute this strategy," Kenneth T. Neilson, the company's chairman, president, and chief executive, said in the statement.

Hudson said it had planned to sell the mortgage-related securities earlier but delayed the sale because of its deal to merge with Dime Bancorp, which fell through in April.

By selling a large chunk of its securities portfolio, the company's increased capital ratios would enable it to buy back its stock, the statement said. Hudson United plans to repurchase up to 20% of its outstanding shares. The company's stock closed at $24.25 Thursday, down from a 52-week high of $34 last July.

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