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Hudson City Bancorp, Inc. Announces Disposition Of $112.1M Of Non-Performing Loans

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Hudson City Bancorp, Inc. (NASDAQ: HCBK) (the "Company"), the holding company for Hudson City Savings Bank (the "Bank"), announced today that it sold a pool of $112.1 million of residential mortgage loans guaranteed by the Federal Housing Administration ("FHA"), all of which were nonperforming at June 30, 2014, back to the financial institution that originally sold the loans to the Bank. The sale of the non-performing loan pool back to the financial institution was in accordance with the repurchase right that the financial institution exercised pursuant to the terms of the original sale and servicing agreement between the Bank and the financial institution. The financial institution provided notice to the Bank in August 2014 that it would be exercising the repurchase right. As consideration for the sale of the non-performing loans, the Bank received from the financial institution an amount equal to 100% of the outstanding unpaid principal balance of the loans, plus all accrued and unpaid interest on the loans. The Bank may sell additional loans to the financial institution in the future, in the event the financial institution exercises its repurchase right with respect to any additional FHA loans.
As a result of the sale transaction, the Company expects to experience a charge to the allowance for loan losses of approximately $2.9 million, resulting from the write-off of unamortized premiums on the purchased loans. In addition, due to the decline in our non-performing loans as a result of this sale transaction, in connection with our quarterly review of the adequacy of the allowance for loan losses, we may experience a decline in the allowance for loan losses through a small release of our loan loss reserves, assuming we experience no other changes to credit quality during the quarter.

 

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