Hudson City Bancorp’s (HCBK) third quarter 2009 operating earnings came in at 27 cents per share, a penny ahead of the Zacks Consensus Estimate's 26 cents per share. This was an increase over 25 cents last year. The company continued to experience strong lending revenue, even though provisions for losses increased and other credit quality metrics worsened. Net income increased 10.8% to $135.1 million as compared to $121.9 million in the prior-year quarter. This increase occurred in the face of significantly higher deposit insurance fees, including an across-the-industry special assessment as well as a significantly higher provision for loan losses. Net interest income increased 27.6% to $325.5 million as compared to $255.1 million last year. The increase was due to a steeper yield curve, which allowed reduction in deposit costs faster than the decrease in mortgage yields. The provision for loan losses amounted to $40.0 ...

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While we remain negative over all, we would note our outlook has begun to improve a bit around the edges given the comparatively limited downside potential remaining for certain entities.

The financial markets and financial stocks in particular have experienced a significant percentage-point lift following the pending modification to the mark-to-market accounting rules (an artificial adjustment to capital) and the announcement for the Public Private Investment Partnership (PPIP) -- though we would point out that there is nothing of note to what was proposed approximately two months ago, we will soon find out if the issues with the securities in question were based on the buyers or sellers being out of whack, or a question of valuation or solvency.

Since the Troubled-Asset Relief Program (TARP) is effectively out of money -- more than $665 billion out of $700 billion has already been used -- we would currently expect nearly $2.0 trillion needed

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Highlighted stocks include Huntington Bancshares Inc. (HBAN), MGIC Investment Corporation (MTG) and MBIA Inc. (MBI). While we remain negative over all, we would note our outlook has begun to improve a bit around the edges given the comparatively limited downside potential remaining for certain entities.The financial markets and financial stocks in particular have experienced a significant percentage-point lift following the pending modification to the mark-to-market accounting rules (an artificial adjustment to capital) and the announcement for the Public Private Investment Partnership (PPIP) -- though we would point out that there is nothing of note to what was proposed approximately two months ago, we will soon find out if the issues with the securities in question were based on the buyers or sellers being out of whack, or a question of valuation or solvency.Since the Troubled-Asset Relief Program (TARP) is effectively ...

While the financial markets and financial institutions in particular have received a lift in recent days, until there is a quality plan to get the financial institutions back on the lending track, this may amount to a bit of irrational exuberance.

Our banking system remains in a fairly frozen state. Financial institutions remain afraid of the potential for additional losses, continue their anaconda grip on lending only exacerbates the problem.

A financial institution's true willingness to lend remains only to "qualified" home buyers. Clearly, the definition of "qualified" has changed dramatically over the past year to mean "pristine credit," or a FICO credit score of 750 or better out of a 300-850 range.

As credit score requirements continue to be ratcheted higher, additional hurdles have been added, though the credit scoring agencies continue to have excessive errors in their data. More times than not, these errors can only be addressed by paying for

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New York-based Hudson City Bancorp, Inc. (HCBK) is now the largest thrift in the nation, based on either assets (>$50 billion) or market capitalization (>$8.0 billion).HCBK's 3Q08 earnings of $0.25 per share were in line with our expectations. Results again experienced strong lending revenues from enhanced net interest margin, even though provisioning levels increased and other credit quality metrics expanded.Despite positive EPS trends, we remain concerned as to the relationship of provisions and non-performing assets as well as the adverse trends with respect to credit quality metrics and regulatory capital ratios.Thus, we continue to retain our Sell rating on the shares of this company. Our new six-month price target is $13.55 per share.Read the full analyst report on HCBK "HCBK" Free Stock Analysis: Buy? Sell? Hold?Zacks Investment Research

FBR Mutual Fund’s Chief Investment Officer David Ellison is putting money into financials — solid, insured, American banks.

Track his picks at:

http://trackthepros.com/stocks/category/1732

“I’m primarily investing in the American insured depository institutions,” he told CNBC.  “Those are going to be the big winners here.”

Recommendations:

So who’s on his list?

“You look at a Wells Fargo cnbc_comboQuoteMove(’popup_WFC_ID0ERC15839609′);, you look at US B (US Bancorp) you look at Wachovia you look at Hudson City (Bancorp) cnbc_comboQuoteMove(’popup_HCBK_ID0ESJAC15839609′); you look at Astoria (Financial) he said.

      

FBR Mutual Fund’s Chief Investment Officer David Ellison is putting money into financials — solid, insured, American banks.

Track his picks at:

http://trackthepros.com/stocks/category/1732

“I’m primarily investing in the American insured depository institutions,” he told CNBC.  “Those are going to be the big winners here.”

Recommendations:

So who’s on his list?

“You look at a Wells Fargo cnbc_comboQuoteMove(’popup_WFC_ID0ERC15839609′);, you look at US B (US Bancorp) you look at Wachovia you look at Hudson City (Bancorp) cnbc_comboQuoteMove(’popup_HCBK_ID0ESJAC15839609′); you look at Astoria (Financial) he said.