Acquired by M&T Bank in November 2015, Hudson City Bancorp was a holding company of its only subsidiary, Hudson City Savings Bank. Hudson City Savings was a federally chartered stock savings bank conducting operations throughout the State of New Jersey.
A company creates wealth for its long-term shareholders in 2 main ways - through dividend payments and through the accumulation of retained earnings. This graph shows the accumulation of per-share equity of long-term shareholders (green bars), which consists of the retained earnings plus all capital invested in the company, and the cumulative dividends the company has paid over time per share of its stock (blue bars).
In the words of Warren Buffett: "We're looking for... businesses earning good returns on equity while employing little or no debt."
Return on equity is a key metric of financial performance, indicating a company's ability to generate earnings using shareholder capital. Over time, ROE is one of the major determinants of the rate at which a company creates shareholder wealth. The average ROE for large U.S. companies is 12%, and many investors use it as a threshold for attractive investments.
Companies can boost ROE by increasing leverage, which reduces the safety of the investment. Therefore, it is useful to look at the return on assets (ROA), which measures a company's earning power regardless of its capital structure. A widening gap between ROE and ROA may be a warning sign that should be thoroughly investigated.
Earnings per share is a popular metric used to value a company (using P/E ratio); growth in EPS is often used to judge company growth potential. However, many investors believe that EPS is an inferior metric to ROE, because it ignores the amount of capital the company used to generate earnings.
Free cash flow shows how much cash a company generates from operations, above and beyond what is required to maintain or expand its productive assets. This cash can be returned to investors, or spent by management on growing the company or paying back its debts.
Balance sheets of many companies contain intangible assets such as goodwill, trademarks, patents, etc. Many investors consider intangibles more difficult to value than physical assets. If intangible assets had been valued incorrectly, they must be impaired, resulting in a loss charged against shareholder equity. This chart demonstrates the potential loss to shareholder equity from such impairments.
Hudson City Bancorp, Inc. is a financial company. Financial companies, by their nature, typically have high debt to equity leverage, which is not a meaningful analytical metric. We suggest you use the equity to assets ratio instead.
This chart shows shareholder equity as a percentage of total assets, allowing investors to judge the overall leverage. Companies with a higher proportion of equity can be viewed as safer investments. This metric is particularly important for highly leveraged institutions, such as banks, where it must be at least 4% according to government regulations.
This chart shows the cumulative dilution of investor ownership in a company over time. Dilution reduces an investor's participation in the future earnings. Dilution increases when a company issues new shares, and decreases when a company buys its shares back. Many investors avoid companies with large chronic dilution.
The dividend payout ratio tells investors what percentage of earnings a company returns to shareholders, and what percentage it retains and reinvests. This ratio represents a major capital allocation decision by the company, and can be used to judge management rationality. Rational management should pay out all earnings that cannot be productively reinvested. Therefore, a low dividend payout ratio for a profitable company with a low growth potential may be a warning sign.
Many investors use the P/B ratio as a quick way of judging company valuation. Value investors - followers of Graham and Dodd - specifically seek out companies with low P/B ratios. However, investors should be careful not to make investment decisions on this metric alone, without considering a company's earning and growth potential, since a low P/B ratio can be a sign of a bleak future for the business.
P/E ratio is a popular way of making a quick judgment of a company valuation. Value investors - followers of Graham and Dodd - often seek solid companies with low P/E ratios as investment opportunities. However, P/E ratio represents an oversimplified approach to business valuation, and can often lead to incorrect investment decisions.
Hudson City Bancorp is a Delaware corporation organized in March 1999 by Hudson City Savings in connection with the conversion and reorganization of Hudson City Savings from a New Jersey mutual savings bank into a two-tiered mutual savings bank holding company structure, referred to as the Reorganization. Prior to July 13, 1999, Hudson City Bancorp had not issued any stock, had no assets and no liabilities and had not conducted any business other than of an organizational nature. Accordingly, the financial statements and notes to the financial statements presented for periods prior to July 13, 1999 are solely for Hudson City Savings.
During the first quarter of 2001, we purchased 7,429,100 shares of common stock at a cost of $149.2 million.
Under our stock repurchase programs, shares of Hudson City Bancorp common stock may be purchased in the open market and through other privately negotiated transactions, from time-to-time, depending on market conditions. The repurchased shares are held as treasury stock for general corporate use. During the first three months of 2002, we purchased 1,527,000 dividend-adjusted shares of our common stock at an aggregate cost of $22.8 million. During the first three months of 2001, we purchased 14.8 million dividend-adjusted shares of our common stock at an aggregate cost of $149.2 million. At March 31, 2002, there were approximately 8.0 million dividend-adjusted shares remaining to be repurchased under the existing stock repurchase program.
On June 7, 2005, Hudson City Bancorp, Hudson City Savings and Hudson City, MHC completed a second-step conversion and stock offering in accordance with the Plan of Conversion and Reorganization. Under the terms of the Plan of Conversion and Reorganization, Hudson City Savings reorganized from a two-tier mutual holding company structure to a stock holding company structure. Hudson City, MHC, which owned 65.77% of the outstanding common stock of Hudson City Bancorp as of June 6, 2005, merged into Hudson City Bancorp as part of the reorganization and the shares of Hudson City Bancorp common stock owned by Hudson City, MHC were cancelled. Hudson City Bancorp sold 392,980,580 shares of common stock at a price of $10.00 per share raising approximately $3.93 billion. After related expenses of $125.0 million, net proceeds from the stock offering amounted to $3.80 billion. We also effected a stock split pursuant to which each share of common stock outstanding before completion of the offering was split into 3.206 shares, including those shares held as treasury stock. Hudson City Bancorp contributed $3.0 billion of the net proceeds from the offering to Hudson City Savings Bank.
M&T Bank Corporation announced that it completed its acquisition of Hudson City Bancorp, Inc. M&T acquired Hudson City for stock and cash, with 60% of the outstanding Hudson City shares being converted into the right to receive 0.08403 of a share of M&T common stock and the remaining Hudson City shares being converted into the right to receive $10.062172 per share in cash. Shareholders who made stock elections receive 89.233675% of their Hudson City stock in M&T common stock and the remaining 10.766325% in cash.