10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: June 30, 2007

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission File Number: 0-26001

Hudson City Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Delaware	22-3640393
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
West 80 Century Road
Paramus, New Jersey	07652
(Address of Principal Executive Offices)	(Zip Code)

(201) 967-1900
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ      No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ       Accelerated filer o       Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o       No þ

As of August 7, 2007, the registrant had 528,979,695 shares of common stock, $0.01 par value, outstanding.

Table of Contents

	Page
	Number
PART I — FINANCIAL INFORMATION
Item 1. – Financial Statements
Consolidated Statements of Financial Condition – June 30, 2007 (Unaudited) and December 31, 2006		4
Consolidated Statements of Income (Unaudited) – For the three and six months ended June 30, 2007 and 2006		5
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – For the six months ended June 30, 2007 and 2006		6
Consolidated Statements of Cash Flows (Unaudited) – For the six months ended June 30, 2007 and 2006		7
Notes to Unaudited Consolidated Financial Statements		8
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3. – Quantitative and Qualitative Disclosures About Market Risk		34
Item 4. – Controls and Procedures		37
PART II – OTHER INFORMATION
Item 1. – Legal Proceedings		38
Item 1A. – Risk Factors		38
Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds		38
Item 3. – Defaults Upon Senior Securities		38
Item 4. – Submission of Matters to a Vote of Security Holders		39
Item 5. – Other Information		39
Item 6. – Exhibits		39
SIGNATURES		41
EX-3.1: AMENDED BYLAWS
EX-10.1: AGREEMENT BETWEEN HUDSON CITY BANCORP, INC. AND JOHN M. TASSILLO
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION

Page 2

Forward-Looking Statements

This Quarterly Report on Form 10-Q may contain certain “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “should,” “plan,” “estimate,” “predict,” “continue,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to estimates with respect to the financial condition, results of operations and business of Hudson City Bancorp, Inc. These factors include, but are not limited to:

• the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control;

• increases in competitive pressure among the financial institutions or from non-financial institutions;

• changes in the interest rate environment may reduce interest margins or affect the value of our investments;

• changes in deposit flows, loan demand or real estate values may adversely affect our business;

• changes in accounting principles, policies or guidelines may cause our financial condition to be perceived differently;

• general economic conditions, either nationally or locally in some or all of the areas in which we do business, or conditions in the securities markets or the banking industry may be less favorable than we currently anticipate;

• legislative or regulatory changes that may adversely affect our business;

• applicable technological changes that may be more difficult or expensive than we anticipate;

• success or consummation of new business initiatives that may be more difficult or expensive than we anticipate;

• litigation or matters before regulatory agencies, whether currently existing or commencing in the future, that may delay the occurrence or non-occurrence of events longer than we anticipate;

• the risks associated with continued diversification of assets and adverse changes to credit quality;

• difficulties associated with achieving expected future financial results; and

• the risk of an economic slowdown that would adversely affect credit quality and loan originations.

Our ability to predict results or the actual effects of our plans or strategies is inherently uncertain. As such, forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this filing. We do not intend to update any of the forward-looking statements after the date of this Form 10-Q or to conform these statements to actual events.

Page 3

PART I — FINANCIAL INFORMATION

Item 1. — Financial Statements

Hudson City Bancorp, Inc. and Subsidiary

Consolidated Statements of Financial Condition

	June 30,			December 31,
	2007			2006
(In thousands, except share and per share amounts)	(Unaudited)
Assets:
Cash and due from banks	$	119,530		$	125,630
Federal funds sold		84,077			56,616
Total cash and cash equivalents		203,607			182,246
Securities available for sale:
Mortgage-backed securities		2,071,133			2,404,421
Investment securities		3,782,151			4,379,615
Securities held to maturity:
Mortgage-backed securities (fair value of $8,802,134 at June 30, 2007 and $6,804,598 at December 31, 2006)		9,028,614			6,925,210
Investment securities (fair value of $1,501,054 at June 30, 2007 and $1,502,934 at December 31, 2006)		1,533,978			1,533,969
Total securities		16,415,876			15,243,215
Loans		21,894,961			19,083,617
Deferred loan costs		24,622			16,159
Allowance for loan losses		(31,457	)		(30,625	)
Net loans		21,888,126			19,069,151
Federal Home Loan Bank of New York stock		601,976			445,006
Foreclosed real estate, net		3,699			3,161
Accrued interest receivable		222,480			194,229
Banking premises and equipment, net		76,209			73,929
Goodwill		151,972			150,831
Other assets		127,490			144,813
Total Assets	$	39,691,435		$	35,506,581
Liabilities and Stockholders’ Equity:
Deposits:
Interest-bearing	$	13,609,629		$	12,917,286
Noninterest-bearing		580,881			498,301
Total deposits		14,190,510			13,415,587
Repurchase agreements		10,516,000			8,923,000
Federal Home Loan Bank of New York advances		10,150,000			8,050,000
Total borrowed funds		20,666,000			16,973,000
Accrued expenses and other liabilities		181,778			187,738
Total liabilities		35,038,288			30,576,325
Common stock, $0.01 par value, 3,200,000,000 shares authorized; 741,466,555 shares issued; 531,829,695 shares outstanding at June 30, 2007 and 557,787,921 shares outstanding at December 31, 2006		7,415			7,415
Additional paid-in capital		4,566,324			4,553,614
Retained earnings		1,935,611			1,877,840
Treasury stock, at cost; 209,636,860 shares at June 30, 2007 and 183,678,634 shares at December 31, 2006		(1,582,271	)		(1,230,793	)
Unallocated common stock held by the employee stock ownership plan		(225,254	)		(228,257	)
Accumulated other comprehensive loss, net of tax		(48,678	)		(49,563	)
Total stockholders’ equity		4,653,147			4,930,256
Total Liabilities and Stockholders’ Equity	$	39,691,435		$	35,506,581

See accompanying notes to unaudited consolidated financial statements.

Page 4

Hudson City Bancorp, Inc. and Subsidiary

Consolidated Statements of Income

(Unaudited)

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2007		2006		2007		2006
	(In thousands, except per share data)
Interest and Dividend Income:
First mortgage loans	$	289,772	$	223,632	$	559,454	$	432,819
Consumer and other loans		7,078		3,883		13,970		7,397
Mortgage-backed securities held to maturity		109,563		60,163		205,080		113,785
Mortgage-backed securities available for sale		26,805		30,255		55,096		58,416
Investment securities held to maturity		18,630		18,632		37,243		37,263
Investment securities available for sale		48,351		42,841		99,186		85,398
Dividends on Federal Home Loan Bank of New York stock		8,747		3,209		16,219		5,717
Federal funds sold		2,548		1,525		4,893		3,033
Total interest and dividend income		511,494		384,140		991,141		743,828
Interest Expense:
Deposits		146,432		98,408		288,395		187,772
Borrowed funds		207,404		132,143		388,634		244,788
Total interest expense		353,836		230,551		677,029		432,560
Net interest income		157,658		153,589		314,112		311,268
Provision for Loan Losses		500		—		800		—
Net interest income after provision for loan losses		157,158		153,589		313,312		311,268
Non-Interest Income:
Service charges and other income		1,823		1,451		3,373		2,715
Gains on securities transactions, net		—		4		—		4
Total non-interest income		1,823		1,455		3,373		2,719
Non-Interest Expense:
Compensation and employee benefits		25,812		25,391		51,560		51,743
Net occupancy expense		7,070		5,598		14,279		11,110
Federal deposit insurance assessment		447		402		888		826
Computer and related services		715		702		1,381		1,299
Other expense		6,823		6,422		13,856		11,822
Total non-interest expense		40,867		38,515		81,964		76,800
Income before income tax expense		118,114		116,529		234,721		237,187
Income Tax Expense		45,450		43,361		90,814		88,791
Net income	$	72,664	$	73,168	$	143,907	$	148,396
Basic Earnings Per Share	$	0.14	$	0.14	$	0.28	$	0.27
Diluted Earnings Per Share	$	0.14	$	0.13	$	0.28	$	0.27
Weighted Average Number of Common Shares Outstanding:
Basic		504,902,448		539,678,609		511,622,385		544,292,209
Diluted		514,998,167		552,077,216		522,157,901		556,622,424

See accompanying notes to unaudited consolidated financial statements.

Page 5

Hudson City Bancorp, Inc. and Subsidiary

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

	For the Six Months Ended June 30,
	2007			2006
	(In thousands, except per share data)
Common Stock	$	7,415		$	7,415
Additional paid-in capital:
Balance at beginning of year		4,553,614			4,533,329
Unvested RRP awards reclassified as additonal paid-in-capital		—			(2,815	)
Stock option plan expense		6,275			919
Tax benefit from stock plans		2,057			6,412
Allocation of ESOP stock		3,471			3,289
Vesting of RRP stock		907			1,168
Balance at end of period		4,566,324			4,542,302
Retained Earnings:
Balance at beginning of year		1,877,840			1,759,492
Net Income		143,907			148,396
Dividends paid on common stock ($0.16 and $0.15 per share, respectively)		(82,414	)		(81,989	)
Exercise of stock options		(3,722	)		(6,039	)
Balance at end of period		1,935,611			1,819,860
Treasury Stock:
Balance at beginning of year		(1,230,793	)		(798,232	)
Purchase of common stock		(357,577	)		(255,930	)
Exercise of stock options		6,099			11,236
Balance at end of period		(1,582,271	)		(1,042,926	)
Unallocated common stock held by the ESOP:
Balance at beginning of year		(228,257	)		(234,264	)
Allocation of ESOP stock		3,003			3,003
Balance at end of period		(225,254	)		(231,261	)
Unallocated common stock held by the RRP:
Balance at beginning of year		—			(2,815	)
Unvested RRP awards reclassified as additonal paid-in-capital		—			2,815
Balance at end of period		—			—
Accumulated other comprehensive loss:
Balance at beginning of year		(49,563	)		(63,449	)
Unrealized holding gains(losses) arising during period, net of tax expense (benefit) of $727 and ($22,971) in 2007 and 2006, respectively		1,053			(33,286	)
Pension and other postretirement benefits adjustment		(168	)		—
Balance at end of period		(48,678	)		(96,735	)
Total Stockholders’ Equity	$	4,653,147		$	4,998,655
Summary of comprehensive income
Net income	$	143,907		$	148,396
Other comprehensive income(loss), net of tax		885			(33,286	)
Total comprehensive income	$	144,792		$	115,110

See accompanying notes to unaudited consolidated financial statements.

Page 6

Hudson City Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows

(Unaudited)

	For the Six Months
	Ended June 30,
	2007			2006
	(In thousands)
Cash Flows from Operating Activities:
Net income	$	143,907		$	148,396
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, accretion and amortization expense		11,227			8,925
Provision for loan losses		800			—
Gains on securities transactions, net		—			(4	)
Share-based compensation, including committed ESOP shares		13,656			8,379
Deferred tax benefit (expense)		3,787			(11,122	)
Increase in accrued interest receivable		(28,251	)		(17,225	)
Decrease (increase) in other assets		10,301			(98,986	)
(Decrease) increase in accrued expenses and other liabilities		(6,243	)		26,240
Net Cash Provided by Operating Activities		149,184			64,603
Cash Flows from Investing Activities:
Originations of loans		(1,598,789	)		(1,245,606	)
Purchases of loans		(2,369,034	)		(1,494,597	)
Principal payments on loans		1,146,056			821,498
Principal collection of mortgage-backed securities held to maturity		596,980			338,119
Purchases of mortgage-backed securities held to maturity		(2,703,101	)		(1,191,893	)
Principal collection of mortgage-backed securities available for sale		368,108			343,610
Purchases of mortgage-backed securities available for sale		(38,261	)		(552,007	)
Proceeds from maturities and calls of investment securities held to maturity		—			251
Proceeds from maturities and calls of investment securities available for sale		1,100,054			100,004
Purchases of investment securities available for sale		(500,000	)		(150,000	)
Purchases of Federal Home Loan Bank of New York stock		(166,285	)		(129,736	)
Redemption of Federal Home Loan Bank of New York stock		9,315			—
Purchases of premises and equipment, net		(7,327	)		(9,045	)
Net proceeds from sale of foreclosed real estate		2,095			745
Net Cash Used in Investment Activities		(4,160,189	)		(3,168,657	)
Cash Flows from Financing Activities:
Net increase in deposits		774,923			230,529
Proceeds from borrowed funds		6,000,000			4,100,000
Principal payments on borrowed funds		(2,307,000	)		(900,000	)
Dividends paid		(82,414	)		(81,989	)
Purchases of treasury stock		(357,577	)		(255,930	)
Exercise of stock options		2,377			5,197
Tax benefit from stock plans		2,057			6,412
Net Cash Provided by Financing Activities		4,032,366			3,104,219
Net Increase in Cash and Cash Equivalents		21,361			165
Cash and Cash Equivalents at Beginning of Year		182,246			102,259
Cash and Cash Equivalents at End of Period	$	203,607		$	102,424
Supplemental Disclosures:
Interest paid	$	658,500		$	442,722
Loans transferred to foreclosed real estate	$	2,633		$	1,390
Income tax payments	$	83,720		$	90,194

See accompanying notes to unaudited consolidated financial statements.

Page 7

Hudson City Bancorp, Inc.

Notes to Unaudited Consolidated Financial Statements

1. Organization

Hudson City Bancorp, Inc. (“Hudson City Bancorp”) is a Delaware corporation organized in March 1999 by Hudson City Savings Bank (“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. Prior to June 7, 2005, a majority of Hudson City Bancorp’s common stock was owned by Hudson City, MHC, a mutual holding company.

Plan of Conversion and Reorganization

On June 7, 2005, Hudson City Bancorp, Hudson City Savings and Hudson City, MHC reorganized from a two-tier mutual holding company structure to a stock holding company structure, and Hudson City Bancorp completed a stock offering, all in accordance with a Plan of Conversion and Reorganization (the “Plan”). Under the terms of the Plan, Hudson City, MHC merged into Hudson City Bancorp and the shares of Hudson City Bancorp common stock owned by Hudson City, MHC were cancelled. Shares of common stock representing the ownership interest of the Hudson City, MHC were sold in the stock offering. In accordance with the Plan, we also affected a stock split pursuant to which shares were converted into the right to receive new shares of Hudson City Bancorp common stock determined pursuant to an exchange ratio.

Acquisition of Sound Federal

On July 14, 2006, we completed the acquisition of Sound Federal Bancorp (the “Acquisition”), for $20.75 per share in cash, representing an aggregate transaction value of approximately $265 million. As a result of the Acquisition, we added $1.21 billion in assets with a fair value of approximately $1.18 billion, and $1.06 billion in deposits with a fair value of approximately $1.05 billion. The Acquisition was accounted for using the purchase method of accounting and, accordingly, the assets acquired and liabilities assumed were recorded at their fair values at the consummation date. Related operating results are included in our consolidated financial statements for periods after the consummation date. As a result of the acquisition, the allowance for loan losses recorded by Sound Federal Bancorp was analyzed and, in accordance with Statement of Position (“SOP”) No. 03-3, “Accounting for Certain Loans or Debt Securities Acquired in a Transfer”, the allowance for loan losses was transferred to Hudson City as part of our purchase accounting adjustments.

The excess of the total acquisition cost over the fair value of the net assets acquired, or “goodwill”, totaled $152.0 million and was recognized as an intangible asset. Also as a result of the Acquisition, we recorded a core deposit intangible of $13.7 million. The unamortized balance of the core deposit intangible was $11.4 million at June 30, 2007 and is included in the line item “Other Assets” in the Statement of Financial Condition.

2. Basis of Presentation

In our opinion, all the adjustments (consisting of normal and recurring adjustments) necessary for a fair presentation of the consolidated financial condition and consolidated results of operations for the unaudited periods presented have been included. The results of operations and other data presented for the three and six month periods ended June 30, 2007 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2007. In preparing the consolidated financial statements,

Page 8

Hudson City Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements

management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and the results of operations for the period. Actual results could differ from these estimates.

Certain information and note disclosures usually included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission for the preparation of the Form 10-Q. The consolidated financial statements presented should be read in conjunction with Hudson City Bancorp’s audited consolidated financial statements and notes to consolidated financial statements included in Hudson City Bancorp’s December 31, 2006 Annual Report on Form 10-K.

3. Earnings Per Share

The following is a summary of our earnings per share calculations and reconciliation of basic to diluted earnings per share.

	For the Three Months Ended June 30,
	2007						2006
					Per						Per
			Average		Share				Average		Share
	Income		Shares		Amount		Income		Shares		Amount
	(In thousands, except per share data)
Net income	$	72,664					$	73,168
Basic earnings per share:
Income available to common stockholders	$	72,664		504,902	$	0.14	$	73,168		539,679	$	0.14
Effect of dilutive common stock equivalents		—		10,096				—		12,398
Diluted earnings per share:
Income available to common stockholders	$	72,664		514,998	$	0.14	$	73,168		552,077	$	0.13

	For the Six Months Ended June 30,
	2007						2006
					Per						Per
					Share						Share
	Income		Shares		Amount		Income		Shares		Amount
	(In thousands, except per share data)
Net income	$	143,907					$	148,396
Basic earnings per share:
Income available to common stockholders	$	143,907		511,622	$	0.28	$	148,396		544,292	$	0.27
Effect of dilutive common stock equivalents		—		10,536				—		12,330
Diluted earnings per share:
Income available to common stockholders	$	143,907		522,158	$	0.28	$	148,396		556,622	$	0.27

Page 9

Hudson City Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements

4. Stock Repurchase Programs

Under our previously announced stock repurchase programs, shares of Hudson City Bancorp common stock may be purchased in the open market and through other privately negotiated transactions, depending on market conditions. The repurchased shares are held as treasury stock, which may be reissued for general corporate use. During the six months ended June 30, 2007, we purchased 26,828,954 shares of our common stock at an aggregate cost of $357.6 million. As of June 30, 2007, there remained 17,523,550 shares to be purchased under the existing stock repurchase programs.

On July 24, 2007, our Board of Directors approved the additional repurchase of up to 51,400,000 shares, or approximately 10% of the common stock outstanding, under a new repurchase program.

5. Postretirement Plans

The Company maintains non-contributory retirement and post-retirement plans to cover employees hired prior to August 1, 2005, including retired employees, who have met the eligibility requirements of the plans. Benefits under the qualified and non-qualified defined benefit retirement plans are based primarily on years of service and compensation. Funding of the qualified retirement plan is actuarially determined on an annual basis. It is our policy to fund the qualified retirement plan sufficiently to meet the minimum requirements set forth in the Employee Retirement Income Security Act of 1974. The non-qualified retirement plan, which is maintained for certain employees, is unfunded.

In 2005, we limited participation in the non-contributory retirement plan and the post-retirement benefit plan to those employees hired on or before July 31, 2005. We also placed a cap on paid medical expenses at the 2007 rate, beginning in 2008, for those eligible employees who retire after December 31, 2005. Participation in the Sound Federal retirement plans and the accrual of benefits for such plans were frozen as of the acquisition date.

Page 10

Hudson City Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements

The components of the net periodic expense for the plans were as follows:

	For the Three Months Ended June 30,
	Retirement Plans						Other Benefits
	2007			2006			2007			2006
	(In thousands)
Service cost	$	810		$	802		$	268		$	269
Interest cost		1,569			1,269			525			510
Expected return on assets		(2,034	)		(1,718	)		—			—
Amortization of:
Net loss		37			130			144			167
Unrecognized prior service cost		69			35			(391	)		(391	)
Net periodic benefit cost	$	451		$	518		$	546		$	555

	For the Six Months Ended June 30,
	Retirement Plans						Other Benefits
	2007			2006			2007			2006
	(In thousands)
Service cost		1,620			1,604			536			538
Interest cost		3,138			2,538			1,050			1,020
Expected return on assets		(4,068	)		(3,436	)		—			—
Amortization of:
Net loss		74			260			288			333
Unrecognized prior service cost		138			70			(782	)		(783	)
Net periodic benefit cost		902			1,036			1,092			1,108

During the six months ended June 30, 2007, we made contributions of $2.1 million to the pension plans. We made no contributions to the pension plans during the same period in 2006.

6. Stock Option Plans

A summary of the changes in outstanding stock options is as follows:

	For the Six Months Ended June 30,
	2007					2006
	Number of			Weighted		Number of			Weighted
	Stock			Average		Stock			Average
	Options			Exercise Price		Options			Exercise Price
Outstanding at beginning of period		26,979,989		$	6.89		21,659,869		$	4.21
Granted		3,477,500			13.74		—			—
Exercised		(870,728	)		2.73		(1,952,644	)		2.66
Forfeited		(66,740	)		10.03		(8,336	)		4.21
Outstanding at end of period		29,520,021			7.65		19,698,889			4.36

Page 11

Hudson City Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements

In June 2006, our shareholders approved the Hudson City Bancorp, Inc. 2006 Stock Incentive Plan (the “SIP Plan”) authorizing us to grant up to 30,000,000 shares of common stock. In July 2006, the Compensation Committee of the Board of Directors of Hudson City Bancorp, Inc. (the “Committee”), authorized grants to each non-employee director, executive officers and other employees to purchase shares of the Company’s common stock, pursuant to the SIP Plan. Initial grants (the “2006 grants”) were made in July 2006 pursuant to the SIP Plan for 7,960,000 options at an exercise price equal to the fair value of our common stock on the grant date, based on quoted market prices. Of these options, 4,400,000 have vesting periods ranging from one to five years and an expiration period of ten years. The remaining 3,560,000 shares have vesting periods ranging from two to three years if certain financial performance measures are met. We have determined it is probable these performance measures will be met and have therefore recorded compensation expense for the 2006 grants.

During the six months ended June 30, 2007, the Committee authorized stock option grants pursuant to the SIP Plan for 3,477,500 options at an exercise price equal to the fair value of our common stock on the grant date, based on quoted market prices. Of these options, 2,992,500 will vest in January 2010 if certain financial performance measures are met. The remaining 485,000 options will vest between January and April 2008. The 2007 grants have an expiration period of ten years. We have determined it is probable these performance measures will be met and have therefore recorded compensation expense for the 2007 grants.

The fair value of the 2007 grants was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions. The per share weighted-average fair value of the options granted during the six months ended June 30, 2007 was $2.77.

	2007
Expected dividend yield		2.32	%
Expected volatility		19.11	%
Risk-free interest rate		4.87	%
Expected option life	5.2 years

Compensation expense related to our outstanding stock options amounted to $3.2 million and $396,000 for the three months ended June 30, 2007 and 2006, respectively, and $6.3 million and $919,000, for the six months ended June 30, 2007 and 2006, respectively.

7. Income Taxes

The Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” on January 1, 2007. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As of January 1, 2007 (the date of adoption), the Company had unrecognized tax benefits of $1.7 million as a result of tax positions taken during prior periods, all of which would affect the Company’s effective tax rate if recognized. As of June 30, 2007, the Company had a total of $2.2 million of unrecognized tax benefits. Accrued estimated penalties and interest on these tax positions were approximately $227,000 at January 1, 2007. Estimated penalties and interest are included in income tax expense. The Company’s tax returns for the years 2002 through 2006 are subject to examination by

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Hudson City Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements

various tax jurisdictions. The adoption of FASB Interpretation No. 48 did not result in any adjustments to retained earnings at January 1, 2007.

8. Recent Accounting Pronouncements

In June 2007, the FASB issued Emerging Issues Task Force (“EITF”) Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards”. EITF Issue No. 06-11 addresses a company’s recognition of an income tax benefit received on dividends that are (a) paid to employees holding equity-classified non-vested shares, equity-classified non-vested share units, or equity-classified outstanding share options and (b) charged to retained earnings under SFAS No. 123(R). The EITF reached a consensus that a realized income tax benefit from dividends or dividend equivalents that are charged to retained earnings and are paid to employees for equity classified nonvested equity shares, nonvested equity share units, and outstanding equity share options should be recognized as an increase to additional paid-in capital. The amount recognized in additional paid-in capital for the realized income tax benefit from dividends on those awards should be included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards. Unrealized income tax benefits from dividends on equity-classified employee share-based payment awards should be excluded from the pool of excess tax benefits available to absorb potential future tax deficiencies. The accounting treatment of the income tax benefits from these dividends would be applied on a prospective basis. EITF Issue No. 06-11 is effective for fiscal years beginning after September 15, 2007. We do not expect that EITF Issue No. 06-11 will have a material impact on our financial condition or results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 155”, which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. At the effective date, an entity may elect the fair value option for eligible items that exist at that date and report the effect of the first remeasurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings. Subsequent to the effective date, unrealized gains and losses on items for which the fair value option has been elected are to be reported in earnings. If the fair value option is elected for any available-for-sale or held-to-maturity securities at the effective date, cumulative unrealized gains and losses at that date are included in the cumulative-effect adjustment and those securities are to be reported as trading securities under SFAS No. 115, but the accounting for a transfer to the trading category under SFAS No. 115 does not apply. Electing the fair value option for an existing held-to-maturity security will not call into question the intent of an entity to hold other debt securities to maturity in the future. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that chose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value and does not eliminate disclosure requirements included in other accounting standards. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity (1) also adopts all of the requirements of SFAS No. 157, “Fair Value Measurements,” (2) has not yet issued financial statements for any interim period for the fiscal year of adoption, and (3) chooses early adoption within 120 days of the beginning of the fiscal year of adoption. We did not early adopt SFAS No.159 as of January 1, 2007 and,

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Hudson City Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements

therefore, will adopt the standard as of January 1, 2008. The impact of our adoption of SFAS No. 159 on our financial condition and results of operations is not presently determinable.

In September 2006, the FASB issued SFAS No. 157 which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 applies only to fair value measurements already required or permitted by other accounting standards and does not impose requirements for additional fair value measures. SFAS No. 157 was issued to increase consistency and comparability in reporting fair values. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The provisions are to be applied prospectively as of the beginning of the fiscal year in which the statement is initially applied, with certain exceptions. A transition adjustment, measured as the difference between the carrying amounts and the fair values of certain specific financial instruments at the date SFAS No. 157 is initially applied, is to be recognized as a cumulative–effect adjustment to the opening balance of retained earnings for the fiscal year in which SFAS No. 157 is initially applied. We do not expect our adoption of SFAS No. 157 to have a material impact on our financial condition or results of operations.

Page 14

Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

We continue focus on our traditional thrift business model by growing our franchise through the origination and purchase of one- to four-family mortgage loans and funding this loan production with increased borrowings and growth in deposit accounts.

Net income amounted to $72.7 million for the second quarter of 2007, as compared to $73.2 million for the second quarter of 2006. For the six months ended June 30, 2007, net income amounted to $143.9 million as compared to $148.4 million for the 2006 period. Our efficiency ratio, determined by dividing total non-interest expense by the sum of net interest income and total non-interest income, was 25.62% for the second quarter of 2007 and 25.82% for the first six months of 2007. For the three months ended June 30, 2007, our annualized return on average stockholders’ equity was 6.06%, compared with 5.76% for the second quarter of 2006. For the six months ended June 30, 2007, our annualized return on average stockholders’ equity was 5.93%, compared with 5.78% for the first six months of 2006. The increases in the annualized returns on average equity are due primarily to decreases in average stockholders’ equity due primarily to our stock repurchase program. Our annualized return on average assets for the second quarter of 2007 was 0.75% as compared to 0.96% for the second quarter of 2006. Our annualized return on average assets for the first six months of 2007 was 0.77% as compared to 1.00% for the first six months of 2006. The decreases in the annualized return on average assets reflected our balance sheet growth during a period of narrowing net interest rate spreads reflecting a market yield curve that was alternately flat or inverted.

Our results of operations depend primarily on net interest income, which, in part, is a direct result of the market interest rate environment. Net interest income is the difference between the interest income we earn on our interest-earning assets, primarily mortgage loans, mortgage-backed securities and investment securities, and the interest we pay on our interest-bearing liabilities, primarily time deposits, interest-bearing transaction accounts and borrowed funds. Net interest income is affected by the shape of the market yield curve, the timing of the placement and repricing of interest-earning assets and interest-bearing liabilities on our balance sheet, and the prepayment rate on our mortgage-related assets. Our results of operations may also be affected significantly by general and local economic and competitive conditions, particularly those with respect to changes in market interest rates, government policies and actions of regulatory authorities. Our results are also affected by the market price of our stock, as the expense of our employee stock ownership plan is related to the current price of our common stock.

Net interest income increased 2.7% to $157.7 million for the second quarter of 2007 and 0.9% to $314.1 million for the six months ended June 30, 2007. Our net interest rate margin and net interest rate spread were 1.65% and 1.10%, respectively, for the second quarter of 2007 and 1.67% and 1.10%, respectively, for the first six months of 2007.

The decrease in our net interest rate margin and net interest rate spread was primarily due to the larger increase in the annualized weighted-average cost of interest-bearing liabilities compared with the increase in the annualized weighted-average yield on interest-earning assets. Changes in market interest rates during the second quarter of 2007 resulted in a return to a slightly positively-sloped yield curve. However, competitive pricing pressures continued to affect deposit pricing and increase our cost of funds and the increase in longer-term interest rates have increased the cost of our borrowings, which were primarily used to fund our interest-earning assets. In addition, the shift within our deposits to higher costing short-term time deposits has contributed to the increase in the average cost of deposits. The average yields

Page 15

earned on our interest-earning assets have also increased, but at a slower pace than the increase in the cost of interest-bearing liabilities.

We have been able to grow our assets by 11.8% to $39.69 billion at June 30, 2007 from $35.51 billion at December 31, 2006, while maintaining strong credit quality. Loans increased $2.82 billion to $21.89 billion at June 30, 2007 from $19.07 billion at December 31, 2006. The increase is a result of our continued origination and purchase of residential mortgages loans. We originated $1.60 billion of loans and purchased $2.37 billion of loans during the six months ended June 30, 2007.

The provision for loan losses amounted to $500,000 in the second quarter of 2007 as compared to no provision in the second quarter of 2006. The 2007 second quarter provision reflects the risks inherent in our loan portfolio due to softening in real estate values in certain of our lending markets, the increase in non-performing loans and the overall growth in our loan portfolio. We continued to experience very low charge-offs through June 30, 2007 due to conservative underwriting, including low loan to value ratios resulting in the borrowers maintaining substantial equity in the underlying properties.

Total securities increased $1.18 million to $16.42 billion at June 30, 2007 from $15.24 billion at December 31, 2006. The increase in securities was primarily due to purchases of mortgage-backed securities of $2.74 billion, partially offset by principal collections on mortgage-backed securities of $965.1 million.

Deposits increased $774.9 million to $14.19 billion at June 30, 2007 from $13.42 billion at December 31, 2006. The increase in deposits was attributable to growth in our time deposits and money market accounts. The increase in these accounts was a result of our competitive pricing strategies that focused on attracting these types of deposits as well as customer preferences for time deposits rather than other types of deposit accounts.

Borrowed funds increased $3.70 billion to $20.67 billion at June 30, 2007 from $16.97 billion at December 31, 2006. The increase in borrowed funds was the result of $6.00 billion of new borrowings at a weighted-average rate of 4.36%, partially offset by repayments of $2.31 billion with an average rate of 3.78%.

Comparison of Financial Condition at June 30, 2007 and December 31, 2006

During the first six months of 2007, our total assets increased $4.18 billion, or 11.8%, to $39.69 billion at June 30, 2007 from $35.51 billion at December 31, 2006. Loans increased $2.82 billion, or 14.8%, to $21.89 billion at June 30, 2007 from $19.07 billion at December 31, 2006 due to continued loan purchase activity as well as our focus on the origination of one-to-four family first mortgage loans in New Jersey, New York and Connecticut. For the first six months of 2007, we purchased first mortgage loans of $2.37 billion and originated first mortgage loans of $1.52 billion, compared with purchases of $1.49 billion and originations of $1.18 billion for the comparable period in 2006. The larger volume of purchases of mortgage loans during the first six months of 2007 allowed us to continue to grow and geographically diversify our mortgage loan portfolio at a relatively low overhead cost while maintaining our traditional thrift business model.

Our first mortgage loan originations and purchases were substantially in one-to four-family mortgage loans. Approximately 37.0% of mortgage loan originations were variable-rate loans. Substantially all purchased mortgage loans were fixed-rate loans since variable-rate loans available for purchase are typically outside of our defined geographic parameters and include features, such as option ARM’s, that do not meet our underwriting standards. At June 30, 2007, fixed-rate mortgage loans accounted for

Page 16

82.1% of our first mortgage loan portfolio compared with 81.0% at December 31, 2006. We do not originate or purchase sub-prime loans, loans with high loan-to-value ratios without obtaining private mortgage insurance, negative amortization loans or option ARM loans.

Total mortgage-backed securities increased $1.77 billion to $11.10 billion at June 30, 2007 from $9.33 billion at December 31, 2006. This increase in total mortgage-backed securities resulted from $2.74 billion in purchases of securities, all of which are issued by a U.S. government agency or U.S. government-sponsored enterprise. Of these purchases, approximately 98% were variable-rate instruments (adjustable annually) or hybrid instruments (adjustable annually after fixed periods of three to seven years). At June 30, 2007, variable-rate mortgage-backed securities accounted for 75.4% of our portfolio compared with 69.6% at December 31, 2006. The purchase of variable-rate mortgage-backed securities is a component of our interest rate risk management strategy. Since our primary lending activities are the origination and purchase of fixed-rate mortgage loans, the purchase of variable-rate mortgage-backed securities provides us with an asset that reduces our exposure to interest rate fluctuations while providing a source of cash flow from monthly principal and interest payments.

Accrued interest receivable increased by $28.3 million from December 31, 2006 to June 30, 2007, primarily due to increased balances in loans and investments. The $17.3 million decrease in other assets was primarily due to a decrease of $10.3 million in deferred tax assets.

Total liabilities increased $4.46 billion, or 14.6%, to $35.04 billion at June 30, 2007 compared with $30.58 billion at December 31, 2006. Borrowed funds increased $3.70 billion, or 21.7%, to $20.67 billion at June 30, 2007 from $16.97 billion at December 31, 2006. The increase in borrowed funds was the result of $6.00 billion of new borrowings at a weighted-average rate of 4.36%, partially offset by repayments of $2.31 billion with a weighted average rate of 3.78%. The new borrowings have final maturities of ten years and initial reprice dates ranging from one to three years. The additional borrowed funds were used primarily to fund our asset growth. Borrowed funds at June 30, 2007 were comprised of $10.52 billion of securities sold under agreements to repurchase and $10.15 billion of Federal Home Loan Bank advances.

Total deposits increased $774.9 million, or 5.8%, during the first six months of 2007, due primarily to a $794.5 million increase in total time deposits, and a $224.5 million increase in our money market accounts. These increases were partially offset by a $305.1 million decrease in our interest-bearing transaction accounts, due primarily to customers shifting deposits to short-term time deposits. We continued to experience increased competitive pressure during the first six months of 2007 with respect to the pricing of short-term deposits in the New York metropolitan area. The increase in time deposits reflects our competitive pricing of these deposits and customer preference for short-term time deposits.

Other liabilities decreased to $181.8 million at June 30, 2007 as compared to $187.7 million at December 31, 2006. The decrease is the result of a decrease in accrued expenses of $25.2 million partially offset by an increase in accrued interest payable on borrowings of $19.8 million.

Total stockholders’ equity decreased $277.1 million to $4.65 billion at June 30, 2007 from $4.93 billion at December 31, 2006. The decrease was primarily due to repurchases of 26,828,954 shares of our outstanding common stock at an aggregate cost of $357.6 million and cash dividends paid to common stockholders of $82.4 million. These decreases to stockholders’ equity were partially offset by net income of $143.9 million for the six months ended June 30, 2007.

The accumulated other comprehensive loss of $48.7 million at June 30, 2007 includes a $47.5 million after-tax net unrealized loss on securities available for sale ($80.3 million pre-tax). The Company invests

Page 17

primarily in mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, as well as U.S. Government and Agency securities. These securities account for 99.95% of total securities. The Company does not purchase unrated or private label mortgage-backed securities or other higher risk securities such as those backed by sub-prime loans. The unrealized losses in the available for sale and held to maturity portfolios at June 30, 2007 were caused by increases in market yields subsequent to purchase and are not attributable to credit quality concerns. There were no debt securities past due or securities for which the Company currently believes it is not probable that it will collect all amounts due according to the contractual terms of the security. Because the Company has the intent and the ability to hold securities with unrealized losses until a market price recovery (which, for debt securities may be until maturity), the Company did not consider these securities to be other-than-temporarily impaired at June 30, 2007. The accumulated other comprehensive loss of $48.7 million at June 30, 2007 represented a modest improvement from $49.6 million at December 31, 2006 reflecting a lower unrealized loss on securities available for sale as a result of slightly lower market interest rates.

As of June 30, 2007, 17,523,550 shares were available for repurchase under our existing stock repurchase program. At June 30, 2007, our stockholders’ equity to asset ratio was 11.72% compared with 13.89% at December 31, 2006. For the first six months of 2007, the ratio of average stockholders’ equity to average assets was 12.95% compared with 16.00% for the year 2006. The decrease reflected our strategy to grow assets, repurchase our common stock and pay dividends. Our book value per share, using the period-end number of outstanding shares, less purchased but unallocated employee stock ownership plan shares and less purchased but unvested recognition and retention plan shares, was $9.39 at June 30, 2007 and $9.45 at December 31, 2006. Our tangible book value per share, calculated by deducting goodwill and the core deposit intangible from stockholders’ equity, was $9.06 as of June 30, 2007 and $9.13 at December 31, 2006.

Page 18

Comparison of Operating Results for the Three Months Ended June 30, 2007 and 2006

Average Balance Sheet. The following table presents the average balance sheets, average yields and costs and certain other information for the three months ended June 30, 2007 and 2006. The table presents the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing annualized income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the periods indicated. Interest income includes fees that we considered to be adjustments to yields. Yields on tax-exempt obligations were not computed on a tax equivalent basis. Nonaccrual loans were included in the computation of average balances and therefore have a zero yield. The yields set forth below include the effect of deferred loan origination fees and costs, and purchase discounts and premiums that are amortized or accreted to interest income.

	For the Three Months Ended June 30,
	2007							2006
					Average							Average
	Average				Yield/			Average				Yield/
	Balance		Interest		Cost			Balance		Interest		Cost
	(Dollars in thousands)
Assets:
Interest-earnings assets:
First mortgage loans, net (1)	$	20,437,687	$	289,772		5.67	%	$	16,120,819	$	223,632		5.55	%
Consumer and other loans		428,474		7,078		6.61			261,948		3,883		5.93
Federal funds sold		195,085		2,548		5.24			129,132		1,525		4.74
Mortgage-backed securities at amortized cost		10,673,572		136,368		5.11			7,764,976		90,418		4.66
Federal Home Loan Bank stock		567,694		8,747		6.16			320,724		3,209		4.00
Investment securities, at amortized cost		5,615,664		66,981		4.77			5,602,907		61,473		4.39
Total interest-earning assets		37,918,176		511,494		5.40			30,200,506		384,140		5.09
Noninterest-earnings assets		607,385							309,918
Total Assets	$	38,525,561						$	30,510,424
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Savings accounts	$	790,499		1,639		0.83		$	768,446		1,894		0.99
Interest-bearing transaction accounts		1,878,714		15,799		3.37			2,908,015		24,363		3.36
Money market accounts		1,019,661		9,836		3.87			637,811		4,458		2.80
Time deposits		9,736,187		119,158		4.91			6,789,930		67,693		4.00
Total interest-bearing deposits		13,425,061		146,432		4.37			11,104,202		98,408		3.55
Repurchase agreements		9,383,033		98,186		4.20			8,259,341		76,574		3.72
Federal Home Loan Bank of New York advances		10,191,209		109,218		4.30			5,414,286		55,569		4.12
Total borrowed funds		19,574,242		207,404		4.25			13,673,627		132,143		3.88
Total interest-bearing liabilities		32,999,303		353,836		4.30			24,777,829		230,551		3.73
Noninterest-bearing liabilities:
Noninterest-bearing deposits		527,819							458,355
Other noninterest-bearing liabilities		205,159							190,545
Total noninterest-bearing liabilities		732,978							648,900
Total liabilities		33,732,281							25,426,729
Stockholders’ equity		4,793,280							5,083,695
Total Liabilities and Stockholders’ Equity	$	38,525,561						$	30,510,424
Net interest income/net interest rate spread (2)			$	157,658		1.10	%			$	153,589		1.36	%
Net interest-earning assets/net interest margin (3)	$	4,918,873				1.65	%	$	5,422,677				2.03	%
Ratio of interest-earning assets to interest-bearing liabilities						1.15	x						1.22	x

(1)	Average balance includes deferred loan costs and non-performing loans and is net of the allowance for loan losses.
(2)	Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities from the annualized weighted average yield on total interest-earning assets.
(3)	Determined by dividing annualized net interest income by total average interest-earning assets.

Page 19

General. Net income was $72.7 million for the second quarter of 2007, a decrease of $504,000, or 0.7%, compared with net income of $73.2 million for the second quarter of 2006. Basic and diluted earnings per common share were both $0.14 for the second quarter of 2007 compared to $0.14 and $0.13, respectively, for the second quarter of 2006. For the three months ended June 30, 2007, our annualized return on average stockholders’ equity was 6.06%, compared with 5.76% for the second quarter of 2006. Our annualized return on average assets for the second quarter of 2007 was 0.75% as compared to 0.96% for the second quarter of 2006. The decrease in the annualized return on average assets reflected our balance sheet growth during a period of narrowing net interest rate spreads and reflecting a market yield curve that was alternately flat or inverted. The increase in the annualized return on average equity is due primarily to a $290.4 million decrease in average stockholders’ equity due primarily to an increase in treasury stock as a result of our stock repurchase program.

Interest and Dividend Income. Total interest and dividend income increased $127.4 million, or 33.2%, to $511.5 million for the second quarter of 2007 as compared to $384.1 million for the second quarter of 2006. The increase in total interest and dividend income was primarily due to a $7.72 billion, or 25.6%, increase in the average balance of total interest-earning assets to $37.92 billion for the second quarter of 2007 compared with $30.20 billion for the second quarter of 2006. The increase in interest and dividend income was also partially due to an increase of 31 basis points in the annualized weighted-average yield on total interest-earning assets to 5.40% for the second quarter of 2007 from 5.09% for the same quarter in 2006.

Interest and fees on first mortgage loans increased $66.2 million to $289.8 million for the three months ended June 30, 2007 as compared to the same period in 2006, primarily due to a $4.32 billion increase in the average balance of first mortgage loans, which reflected our continued emphasis on the growth of our mortgage loan portfolio. The increase in mortgage loan income was also due to a 12 basis point increase in the annualized weighted-average yield to 5.67%, reflecting the origination and purchase of mortgage loans during the period of slightly rising intermediate and long term market interest rates in 2007.

Interest income on consumer and other loans increased $3.2 million to $7.1 million for the three months ended June 30, 2007 as compared to the same period in 2006, primarily due to a $166.6 million increase in the average balance of consumer and other loans to $428.5 million and an increase of 68 basis points in the average yield to 6.61%.

Interest income on mortgage-backed securities increased $46.0 million to $136.4 million for the three months ended June 30, 2007 as compared to $90.4 million for the same period in 2006. This increase was due to a $2.91 billion increase in the average balance of total mortgage-backed securities, due primarily to the purchase of variable-rate securities to complement our purchases of fixed-rate mortgage loans. The increase in income was also due to a 45 basis point increase in the annualized weighted-average yield to 5.11% for the three months ended June 30, 2007 as compared to 4.66% for the same period in 2006. The increase in the average yield is due primarily to the purchase of mortgage-backed securities during the second half of 2006 and 2007 at a higher yield than the yields earned on our existing mortgage-backed portfolio as a result of higher market interest rates. In addition, our variable-rate mortgage-backed securities repriced to higher interest rates based on the higher short-term market interest rates that have prevailed over the past 12 months.

Dividends on Federal Home Loan Bank (“FHLB”) stock increased $5.5 million to $8.7 million for the three months ended June 30, 2007 as compared to $3.2 million for the same period in 2006. This increase was due to a $247.0 million increase in the average balance of FHLB stock to $567.7 million and a 216 basis point increase in the average dividend yield to 6.16% for the three months ended June 30, 2007 as compared to the same period in 2006.

Page 20

Interest on investment securities increased $5.5 million to $67.0 million during the second quarter of 2007 as compared to $61.5 million for the second quarter of 2006. This increase was due primarily to a 38 basis point increase in the annualized weighted-average yield to 4.77%, reflecting purchases of securities during this period of rising interest rates. The increase in interest on investment securities was also due to a $12.8 million increase in the average balance of investment securities to $5.62 billion.

Interest Expense. Total interest expense increased $123.2 million, or 53.4%, to $353.8 million for the second quarter of 2007 from $230.6 million for the second quarter of 2006. This increase was due to an $8.22 billion, or 33.2%, increase in the average balance of total interest-bearing liabilities to $33.00 billion for the second quarter of 2007 compared with $24.78 billion for the second quarter of 2006. This increase in total interest-bearing liabilities was used primarily to fund asset growth. The increase in total interest expense was also due to a 57 basis point increase in the annualized weighted-average cost of total interest-bearing liabilities to 4.30% for the three months ended June 30, 2007 as compared to 3.73% for the three months ended June 30, 2006. The increase in the average cost reflected the growth and re-pricing of our interest-bearing liabilities during the higher short-term interest rate environment experienced during the second half of 2006. The increase in the cost of our interest-bearing liabilities reflected this higher short-term interest rate environment, a very competitive environment for deposits and the shift within our deposits to higher costing short-term time deposits. Time deposits accounted for 72.5% of the average balance of interest-bearing deposits compared to 61.2% for the second quarter of 2006. In addition, we have experienced significant growth as well as repricing of our borrowed funds over the past 12 months, a period during which market interest rates have been higher than the market rates that affected our average balance sheet in the comparable period of 2006.

Interest expense on our time deposit accounts increased $51.5 million to $119.2 million for the second quarter of 2007 as compared to $67.7 million for the second quarter of 2006. This increase was due to a 91 basis point increase in the annualized weighted-average cost to 4.91% and a $2.95 billion increase in the average balance of time deposit accounts to $9.74 billion. Interest expense on money market accounts increased $5.4 million due to a 107 basis point increase in the annualized weighted-average cost, reflecting a higher interest rate environment and the competitive pricing of this product, and a $381.9 million increase in the average balance to $1.02 billion. Interest expense on our interest-bearing transaction accounts decreased $8.6 million to $15.8 million primarily due to a $1.03 billion decrease in the average balance to $1.88 billion, reflecting customer preferences for short-term time deposit products.

Interest expense on borrowed funds increased $75.3 million to $207.4 million primarily due to a $5.90 billion increase in the average balance of borrowed funds and a 37 basis point increase in the annualized weighted-average cost of borrowed funds to 4.25%. The increase in borrowed funds was the result of $6.00 billion of new borrowings at a weighted-average rate of 4.36%, partially offset by repayments of $2.31 billion with a weighted-average rate of 3.78%. The new borrowings have final maturities of ten years and initial reprice dates ranging from one to three years. Borrowed funds were used primarily to fund the growth in interest-earning assets.

Net Interest Income. Net interest income increased $4.1 million, or 2.7%, to $157.7 million for the second quarter of 2007 as compared to $153.6 million for the second quarter of 2006. Our net interest rate spread decreased 26 basis points to 1.10% for the second quarter of 2007 from 1.36% for the comparable period in 2006. Our net interest margin decreased 38 basis points to 1.65% for the second quarter of 2007 from 2.03% for the comparable period in 2006.

The increase in the cost of our interest-bearing liabilities reflected the higher interest rate environment affecting our deposits and borrowed funds, the competitive pricing pressures of operating in the New

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York Metropolitan area, the shift within our deposits to higher costing short-term deposits and the increase in interest rates due to the call and subsequent re-borrowing of borrowed funds. While changes in market interest rates during the second quarter of 2007 resulted in a return to a slightly positively-sloped yield curve, competitive pricing pressures continued to affect deposit pricing. The average yields earned on our interest-earning assets have also increased, but at a slower pace than the increase in the cost of interest-bearing liabilities also reflecting competitive pricing pressures for loans in the marketplace.

Provision for Loan Losses. The provision for loan losses amounted to $500,000 for the quarter ended June 30, 2007 compared to no provision for loan losses for the quarter ended June 30, 2006. The allowance for loan losses amounted to $31.5 million and $30.6 million at June 30, 2007 and December 31, 2006, respectively. We recorded a provision for loan losses in the second quarter of 2007 based on our allowance for loan losses methodology that considers a number of quantitative and qualitative factors. Due to the nature of our homogenous loan portfolio, our evaluation of the adequacy of our allowance for loan losses is performed substantially on a pooled basis. A component of our methodology includes assigning potential loss factors to the payment status of multiple residential loan categories with the objective of assessing the potential risk inherent in each loan type. These factors are periodically reviewed for appropriateness giving consideration to charge-off history, delinquency trends and market conditions. We use this systematic methodology, as a tool, together with qualitative analysis performed by our Asset Quality Committee to estimate the allowance for loan losses. Other key factors we consider in this process are current real estate market conditions in geographic areas where our loans are located, changes in the trend of non-performing loans, the current state of the local and national economy, changes in interest rates and loan portfolio growth. Any one or a combination of these events may adversely affect our loan portfolio resulting in increased delinquencies, loan losses and future levels of provisions.

We consider growth in the loan portfolio in our determination of the allowance for loan losses. The allowance for loan losses as a percent of total loans was 0.14% at June 30, 2007 compared with 0.16% at December 31, 2006. Although we have experienced continued significant growth in our loan portfolio, absent other factors indicating a greater potential for future losses, the increase in the loan portfolio itself would not necessitate a change in the provision for loan losses.

Our primary lending emphasis is the origination and purchase of one- to four-family first mortgage loans on residential properties and, to a lesser extent, second mortgage loans on one- to four-family residential properties. Our loan growth was primarily concentrated in one to four-family mortgage loans with loan to value ratios of less than 80%. The value of the property used as collateral for our loans is dependent upon local market conditions. As part of our estimation of the allowance for loan losses, we monitor changes in the values of homes in each market using indices published by various organizations. Based on our analysis of the data for the first half of 2007, we concluded that while home values in most of our market areas, particularly the New York metropolitan area and surrounding regions, continued to remain stable, the real estate market has slowed considerably in some parts of our lending area, particularly the mid-western region of the country where we have had modest purchased loan activity. We considered these trends in market conditions in determining the provision for loan losses for the second quarter of 2007 also taking into account the continued growth of our loan portfolio. These factors were somewhat offset by the continuation of our very low loan loss history, strength of underwriting criteria and structure of our loan products.

At June 30, 2007, first mortgage loans secured by one-to four family properties accounted for 97.7% of total loans. Fixed-rate mortgage loans represent 82.1% of our first mortgage loans. Fixed-rate loans possess less inherent credit risk since loan payments do not change in response to changes in interest rates. In addition, we do not originate or purchase loans with payment options, negative amortization loans or sub-prime loans.

Non-performing loans amounted to $38.5 million at June 30, 2007 as compared to $30.0 million at December 31, 2006. Non-performing loans at June 30, 2007 includes $34.7 million of one to four family first mortgage loans compared to $24.6 million at December 31, 2006. The ratio of non-performing loans to total loans was 0.18% at June 30, 2007 compared with 0.16% at December 31, 2006. The ratio of the

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allowance for loan losses to non-performing loans was 81.81% at June 30, 2007 compared with 102.09% at December 31, 2006. While we have experienced an increase in non-performing loans, our charge-off history has been very low and we do not expect any significant near-term adverse change in our charge-off experience. Charge-offs amounted to $36,000 for the second quarter of 2007 as compared to net recoveries of $2,000 for the second quarter of 2006. For the year ended December 31, 2006, charge-offs amounted to $76,000. Charge-offs have been at very low levels as a result of our lending practices and the concentration of one to four family first mortgage loans in our portfolio. As a result of our underwriting policies, our borrowers typically have a significant amount of equity in the underlying real estate that we use as collateral for our loans. When a loan becomes delinquent, the borrower will usually sell the property to satisfy the loan rather than go to foreclosure. Since substantially all of our non-performing loans are secured by residential real estate with adequate collateral, we determined that the ratio of the allowance to non-performing loans was appropriate.

Non-performing loans at June 30, 2007 and December 31, 2006 included $3.0 million and $3.1 million, respectively of non-residential mortgage loans. These loans were evaluated for impairment in accordance with SFAS No. 114, “Accounting by Creditors for Impairment of a Loan”. Based on this evaluation, we had no loans classified as impaired at June 30, 2007 and December 31, 2006.

Although we believe that we have established and maintained the allowance for loan losses at adequate levels, additions may be necessary if future economic and other conditions differ substantially from the current operating environment. Although we use the best information available, the level of the allowance for loan losses remains an estimate that is subject to significant judgment and short-term change. See “Critical Accounting Policies.”

Non-Interest Income. Total non-interest income was $1.8 million for the second quarter of 2007 compared with $1.5 million for the second quarter of 2006. The increase in non-interest income is primarily due to an increase in service charges on deposits as a result of deposit account growth.

Non-Interest Expense. Total non-interest expense increased $2.4 million, or 6.2%, to $40.9 million for the second quarter of 2007 from $38.5 million for the second quarter of 2006. The increase is primarily due to a $1.5 million increase in net occupancy expense, a $421,000 increase in compensation and benefits and a $401,000 increase in other non-interest expense. The increase in net occupancy expense and other non-interest expense is primarily the result of our branch expansion, including the addition of 14 branches from the Sound Federal acquisition in July 2006 as well as the addition of 7 de novo branch offices. The increase in compensation and benefits is primarily due to a $1.9 million increase reflecting normal salary increases as well as our branch expansion, and a $2.3 million increase in expense related to stock option grants, partially offset by a $3.9 million decrease in expense related to the ESOP Restoration Plan. The decrease in expense related to the ESOP Restoration Plan was a result of the retirement of a former executive officer and the election of a participant to receive a cash payment in lieu of participating in the plan. Our efficiency ratio was 25.62% for the second quarter of 2007 as compared to 24.84% for the second quarter of 2006. Our ratio of non-interest expense to average total assets for the second quarter of 2007 was 0.42% as compared to 0.50% for the second quarter of 2006.

Income Taxes. Income tax expense amounted to $45.5 million for the three months ended June 30, 2007, compared with $43.4 million for the corresponding period in 2006. Our effective tax rate for the second quarter of 2007 was 38.48% compared with 37.21% for the second quarter of 2006. The increase in the effective tax rate was due primarily to a change in the New Jersey tax code that eliminated the dividends received deduction for dividends paid by our real estate investment trust subsidiary to its parent company.

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Comparison of Operating Results for the Six Months Ended June 30, 2007 and 2006

Average Balance Sheet. The following table presents the average balance sheets, average yields and costs and certain other information for the six months ended June 30, 2007 and 2006. This table is prepared on the same basis as the Average Balance Sheet for the three-month periods presented on page 19.

	For the Six Months Ended June 30,
	2007							2006
					Average							Average
	Average				Yield/			Average				Yield/
	Balance		Interest		Cost			Balance		Interest		Cost
	(Dollars in thousands)
Assets:
Interest-earnings assets:
First mortgage loans, net (1)	$	19,731,035	$	559,454		5.67	%	$	15,644,241	$	432,819		5.53	%
Consumer and other loans		426,018		13,970		6.56			252,321		7,397		5.86
Federal funds sold		187,396		4,893		5.27			134,582		3,033		4.54
Mortgage-backed securities at amortized cost		10,239,739		260,176		5.08			7,463,089		172,201		4.61
Federal Home Loan Bank stock		520,601		16,219		6.23			284,523		5,717		4.02
Investment securities, at amortized cost		5,764,587		136,429		4.73			5,597,919		122,661		4.38
Total interest-earning assets		36,869,376		991,141		5.38			29,376,675		743,828		5.06
Noninterest-earnings assets		596,273							308,618
Total Assets	$	37,465,649						$	29,685,293
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Savings accounts	$	794,209		3,468		0.88		$	782,286		3,837		0.99
Interest-bearing transaction accounts		1,945,341		32,516		3.37			3,155,099		52,444		3.35
Money market accounts		977,515		17,992		3.71			532,804		6,451		2.44
Time deposits		9,584,729		234,419		4.93			6,568,518		125,040		3.84
Total interest-bearing deposits		13,301,794		288,395		4.37			11,038,707		187,772		3.43
Repurchase agreements		9,153,243		187,617		4.13			8,204,696		150,402		3.70
Federal Home Loan Bank of New York advances		9,436,740		201,017		4.30			4,672,459		94,386		4.07
Total borrowed funds		18,589,983		388,634		4.22			12,877,155		244,788		3.83
Total interest-bearing liabilities		31,891,777		677,029		4.28			23,915,862		432,560		3.65
Noninterest-bearing liabilities:
Noninterest-bearing deposits		507,294							448,328
Other noninterest-bearing liabilities		213,065							184,831
Total noninterest-bearing liabilities		720,359							633,159
Total liabilities		32,612,136							24,549,021
Stockholders’ equity		4,853,513							5,136,272
Total Liabilities and Stockholders’ Equity	$	37,465,649						$	29,685,293
Net interest income/net interest rate spread (2)			$	314,112		1.10	%			$	311,268		1.41	%
Net interest-earning assets/net interest margin (3)	$	4,977,599				1.67	%	$	5,460,813				2.09	%
Ratio of interest-earning assets to interest-bearing liabilities						1.16	x						1.23	x

(1)	Average balance includes deferred loan costs and non-performing loans and is net of the allowance for loan losses.
(2)	Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities from the annualized weighted average yield on total interest-earning assets.
(3)	Determined by dividing annualized net interest income by total average interest-earning assets.

General. Net income was $143.9 million for the first six months of 2007, a decrease of $4.5 million, or 3.0%, compared with net income of $148.4 million for the first six months of 2006. Basic and diluted earnings per common share were both $0.28 for the first six months of 2007 compared with $0.27 for the same period in 2006. For the six months ended June 30, 2007, our annualized return on average stockholders’ equity was 5.93%, compared with 5.78% for the first six months of 2006. Our annualized

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return on average assets for the first six months of 2007 was 0.77% as compared to 1.00% for the first six months of 2006. The decrease in the annualized return on average assets reflected our balance sheet growth during a period of narrowing net interest rate spreads reflecting a market yield curve that was alternately flat or inverted. The increase in the annualized return on average equity is due primarily to a $282.8 million decrease in average stockholders’ equity due primarily to an increase in treasury stock as a result of our stock repurchase program.

Interest and Dividend Income. Total interest and dividend income increased $247.3 million, or 33.2%, to $991.1 million for the first six months of 2007 as compared to $743.8 million for the first six months of 2006. The increase in total interest and dividend income was primarily due to a $7.49 billion, or 25.5%, increase in the average balance of total interest-earning assets to $36.87 billion for the six months ended June 30, 2007 as compared to $29.38 billion for the six months ended June 30, 2006. The increase in interest and dividend income was also partially due to an increase of 32 basis points in the annualized weighted-average yield on total interest-earning assets to 5.38% for the first six months of 2007 from 5.06% for the comparable period in 2006.

Interest and fees on first mortgage loans increased $126.7 million to $559.5 million for the six months ended June 30, 2007 as compared to $432.8 million for the same period in 2006, primarily due to a $4.09 billion increase in the average balance of first mortgage loans, which reflected our continued emphasis on the growth of our mortgage loan portfolio. The increase in mortgage loan income was also due to a 14 basis point increase in the annualized weighted-average yield to 5.67%, reflecting the origination and purchase of mortgage loans during the period of slightly rising intermediate and long term market interest rates in 2007.

Interest income on consumer and other loans increased $6.6 million to $14.0 million for the six months ended June 30, 2007 as compared to the same period in 2006, primarily due to a $173.7 million increase in the average balance of consumer and other loans to $426.0 million and an increase of 70 basis points in the average yield to 6.56%.

Interest income on mortgage-backed securities increased $88.0 million to $260.2 million for the six months ended June 30, 2007 as compared to $172.2 million for the same period in 2006. This increase was due primarily to a $2.78 billion increase in the average balance of total mortgage-backed securities, due primarily to the purchase of variable-rate securities to complement our purchases of fixed-rate mortgage loans. The increase in income was also due to a 47 basis point increase in the annualized weighted-average yield to 5.08% for the six months ended June 30, 2007 as compared to the same period in 2006. The increase in the average yield is due primarily to the purchase of mortgage-backed securities during 2006 and 2007 at a higher yield than the yields earned on our existing mortgage-backed portfolio due to higher market interest rates. In addition, our variable-rate mortgage-backed securities repriced to higher interest rates based on the higher short-term market interest rates that have prevailed over the past 12 months and the scheduled interest rate adjustments of our predominantly variable-rate portfolio.

Dividends on Federal Home Loan Bank (“FHLB”) stock increased $10.5 million to $16.2 million for the six months ended June 30, 2007 as compared to $5.7 million for the same period in 2006. This increase was due to a $236.1 million increase in the average balance of FHLB stock to $520.6 million and a 221 basis point increase in the average dividend yield to 6.23% for the six months ended June 30, 2007 as compared to the same period in 2006.

Interest on investment securities increased $13.7 million to $136.4 million during the first six months of 2007 as compared to $122.7 million for the first six months of 2006. This increase was due primarily to a

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$166.7 million increase in the average balance of investment securities to $5.76 billion. The increase in interest on investment securities was also due to a 35 basis point increase in the annualized weighted-average yield to 4.73%, reflecting purchases of securities during this period of rising interest rates.

Interest Expense. Total interest expense increased $244.4 million, or 56.5%, to $677.0 million for the six months ended June 30, 2007 from $432.6 million for the same period in 2006. This increase was due primarily to a $7.97 billion, or 33.4%, increase in the average balance of total interest-bearing liabilities to $31.89 billion for the first six months of 2007 compared with $23.92 billion for the first six months of 2006. This increase in total interest-bearing liabilities was used to fund asset growth. The increase in total interest expense was also due to a 63 basis point increase in the annualized weighted-average cost of total interest-bearing liabilities to 4.28% for the six months ended June 30, 2007 as compared to 3.65% for the six months ended June 30, 2006. The increase in the average cost reflected the growth and re-pricing of our interest-bearing liabilities during the higher short-term interest rate environment experienced during the second half of 2006. The increase in the cost of our interest-bearing liabilities reflected this higher short-term interest rate environment, a very competitive environment for deposits and the shift within our deposits to higher costing short-term time deposits. Time deposits accounted for 72.1% of the average balance of interest-bearing deposits for the six months ended June 30, 2007 as compared to 59.5% for the same period in 2006. In addition, we have experienced significant growth as well as repricing of our borrowed funds over the past 12 months, a period during which market interest rates have been higher than the market rates that affected our average balance sheet in the comparable period of 2006.

Interest expense on our time deposit accounts increased $109.4 million to $234.4 million for the six months ended June 30, 2007 as compared to $125.0 million for the same period in 2006. This increase was due to a 109 basis point increase in the annualized weighted-average cost to 4.93% and a $3.02 billion increase in the average balance of time deposit accounts to $9.58 billion. Interest expense on money market accounts increased $11.5 million due to a 127 basis point increase in the annualized weighted-average cost, reflecting increases in short-term interest rates and the competitive pricing of this product, and a $444.7 million increase in the average balance to $977.5 million. The increases in the average balance of time deposits and money market accounts reflects our growth strategy and includes deposits from the 21 branches added to our branch network during 2006 as well as deposit growth in existing branches. Interest expense on our interest-bearing transaction accounts decreased $19.9 million to $32.5 million primarily due to a $1.21 billion decrease in the average balance to $1.95 billion, reflecting customer preferences for short-term time deposit products.

Interest expense on borrowed funds increased $143.8 million to $388.6 million primarily due to a $5.71 billion increase in the average balance of borrowed funds and a 39 basis point increase in the annualized weighted-average cost of borrowed funds to 4.22%. The increase in borrowed funds was used to fund asset growth. The increase in the annualized average cost of borrowed funds reflected the continued growth of our borrowed funds in this increasing interest rate environment and the call, during the first six months of 2007, of $2.30 billion of borrowed funds by various lenders and subsequent re-borrowing of these funds at a higher interest rate.

Net Interest Income. Net interest income increased $2.8 million, or 0.9%, to $314.1 million for the first six months of 2007 compared with $311.3 million for the first six months of 2006. Our net interest rate spread decreased 31 basis points to 1.10% for the six months ended June 30, 2007 from 1.41% for the comparable period in 2006. Our net interest margin decreased 42 basis points to 1.67% from 2.09% for the same respective periods.

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The decrease in our net interest rate margin and net interest rate spread was primarily due to the larger increase in the annualized weighted-average cost of interest-bearing liabilities compared with the increase in the annualized weighted-average yield on interest-earning assets. Changes in market interest rates during the second quarter of 2007 resulted in a return to a slightly positively-sloped yield curve. However, competitive pricing pressures continued to affect deposit pricing and the increase in longer-term interest rates have increased the cost of our borrowings, which were primarily used to fund our interest-earning assets. In addition, the shift within our deposits to higher costing short-term time deposits has contributed to the increase in the average cost of deposits. The average yields earned on our interest-earning assets have also increased, but at a slower pace than the increase in the cost of interest-bearing liabilities.

Provision for Loan Losses. The provision for loan losses amounted to $800,000 for the six months ended June 30, 2007. We did not record a provision for loan losses for the same period in 2006. The allowance for loan losses amounted to $31.5 million and $30.6 million at June 30, 2007 and December 31, 2006, respectively. The provision for loan losses during the six months ended June 30, 2007 reflects the risks inherent in our loan portfolio due to weakening real estate markets, the increase in non-performing loans and the overall growth of the loan portfolio. We recorded a provision for loan losses based on our determination of the allowance for loan losses that considers a number of quantitative and qualitative factors. See “Comparison of Operating Results for the Three Months Ended June 30, 2007 and 2006 – Provision for Loan Losses”.

Non-Interest Income. Total non-interest income was $3.4 million for the six months ended June 30, 2007 compared with $2.7 million for the six months ended June 30, 2006. The increase in non-interest income is primarily due to an increase in service charges on deposits as a result of deposit account growth.

Non-Interest Expense. Total non-interest expense increased $5.2 million, or 6.8%, to $82.0 million for the six months ended June 30, 2007 from $76.8 million for the six months ended June 30, 2006. The increase is primarily due to a $3.2 million increase in net occupancy expense and a $2.1 million increase in other non-interest expense partially offset by a $183,000 decrease in compensation and benefits. The increase in net occupancy expense and other non-interest expense is primarily the result of our branch expansion, including the addition of 14 branches from the Sound Federal acquisition in July 2006 as well as growth in the existing franchise. The decrease in compensation and benefits was due primarily to a $6.7 million decrease in expense related to the ESOP Restoration Plan, partially offset by a $4.6 million increase in expense related to stock option grants and a $3.8 million increase in payroll costs reflecting normal salary increases as well as our branch expansion. Our efficiency ratio was 25.82% for the first six months of 2007 as compared to 24.46% for the first six months of 2006. Our ratio of non-interest expense to average total assets for the first six months of 2007 was 0.44% as compared to 0.52% for the first six months of 2006.

Income Taxes. Income tax expense increased $2.0 million to $90.8 million for the six months ended June 30, 2007, from $88.8 million for the first six months of 2006. Our effective tax rate for the first six months of 2007 was 38.69% compared with 37.44% for the first six months of 2006. The increase in the effective tax rate was due primarily to a change in the New Jersey tax code that eliminated the dividends received deduction for dividends paid by our real estate investment trust subsidiary to its parent company.

Liquidity and Capital Resources

The term “liquidity” refers to our ability to generate adequate amounts of cash to fund loan originations, loan and security purchases, deposit withdrawals, repayment of borrowings and operating expenses. Our primary sources of funds are deposits, borrowings, the proceeds from principal and interest payments on loans and mortgage-backed securities, the maturities and calls of investment securities and funds provided by our operations. Deposit flows, calls of investment securities and borrowed funds, and prepayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and local economic

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conditions and competition in the marketplace. These factors reduce the predictability of the receipt of these sources of funds. Our membership in the FHLB provides us with access to additional sources of borrowed funds, which is generally limited to approximately twenty times the amount of FHLB stock owned. We also have the ability to access the capital markets from time to time, depending on market conditions.

Our investment policy provides that we shall maintain a primary liquidity ratio, which consists of investments in cash, cash in banks, Federal funds sold, securities with remaining maturities of less than five years and adjustable-rate mortgage-backed securities repricing within one year, in an amount equal to at least 4% of total deposits and short-term borrowings. At June 30, 2007, our primary liquidity ratio was 28.5% compared with 39.0% at December 31, 2006.

Our primary investing activities are the origination and purchase of one-to four-family real estate loans and consumer and other loans, the purchase of mortgage-backed securities, and the purchase of investment securities. These activities are funded primarily by borrowings, deposit growth and principal and interest payments on loans, mortgage-backed securities and investment securities. We originated $1.60 billion and purchased $2.37 billion of loans during the first six months of 2007 as compared to $1.25 billion and $1.49 billion during the first six months of 2006. Purchases of mortgage-backed securities during the first six months of 2007 were $2.74 billion as compared to $1.74 billion during the first six months of 2006. The increase in mortgage loan purchases and originations and the purchases of mortgage-backed securities reflected the growth initiatives we have employed in recent periods.

During the six months ended June 30, 2007, principal repayments on loans totaled $1.15 billion as compared to $821.5 million for the six months ended June 30, 2006. Principal payments on mortgage-backed securities amounted to $965.1 million and $681.7 million for those same respective periods. These increases in principal repayments were due primarily to the growth of the loan and mortgage-backed securities portfolios as well as slightly higher prepayment rates on variable-rate mortgage assets as customers refinanced to fixed-rate instruments. Maturities and calls of investment securities amounted to $1.10 billion during the first six months of 2007 compared with maturities and calls totaling $100.3 million during the first six months of 2006. The increase in the maturities and calls of investment securities reflected slightly lower short- and intermediate-term market interest rates during the second quarter of 2007 that resulted in an increase in call activity.

As part of the membership requirements of the FHLB, we are required to hold a certain dollar amount of FHLB common stock based on our asset size or our borrowings from the FHLB. During the first six months of 2007, we purchased a net additional $157.0 million of FHLB common stock compared with purchases of $129.7 million during the first six months of 2006.

Our primary financing activities consist of gathering deposits, engaging in wholesale borrowings, repurchases of our common stock and the payment of dividends.

Total deposits increased $774.9 million during the first six months of 2007 as compared to $230.5 million for the first six months of 2006. This increase reflects our growth strategy including 14 branch offices added as part of the Sound Federal acquisition and 7 de-novo branches. Deposit flows are typically affected by the level of market interest rates, the interest rates and products offered by competitors, the volatility of equity markets, and other factors. Time deposits scheduled to mature within one year were $9.32 billion at June 30, 2007. We anticipate that we will have sufficient resources to meet this current funding commitment. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of these time deposits will remain with us as renewed time deposits or transfers to other deposit products at the prevailing interest rate.

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We also used wholesale borrowings to fund our investing and financing activities. New borrowings totaled $6.00 billion, partially offset by $2.31 billion in principal repayments of borrowed funds. At June 30, 2007, we had $12.74 billion of borrowed funds, with a weighted-average rate of 4.20%, which have call dates within one year. We anticipate that $6.99 billion of these borrowings are likely to be called based on current market interest rates. We anticipate we will have sufficient resources to meet this funding commitment by borrowing new funds at the prevailing market interest rate, or using funds generated by deposit growth.

Cash dividends paid during the first six months of 2007 were $82.4 million. During the first six months of 2007, we purchased 26,828,954 shares of our common stock at an aggregate cost of $357.6 million. At June 30, 2007, there remained 17,523,550 shares to be purchased under existing stock repurchase programs.

The primary source of liquidity for Hudson City Bancorp, the holding company of Hudson City Savings, is capital distributions from Hudson City Savings. During the first six months of 2007, Hudson City Bancorp received $135.2 million in dividend payments from Hudson City Savings, substantially all of Hudson City Savings’ net income for that period. The primary use of these funds is the payment of dividends to our shareholders and the repurchase of our outstanding common stock. Hudson City Bancorp’s ability to continue these activities is dependent upon capital distributions from Hudson City Savings. Applicable federal law may limit the amount of capital distributions Hudson City Savings may make.

At June 30, 2007, Hudson City Savings exceeded all regulatory capital requirements. Hudson City Savings’ tangible capital ratio, leverage (core) capital ratio and total risk-based capital ratio were 10.2%, 10.2% and 27.5%, respectively.

Off-Balance Sheet Arrangements and Contractual Obligations

Hudson City is a party to certain off-balance sheet arrangements, which occur in the normal course of our business, to meet the credit needs of our customers and the growth initiatives of the Bank. These arrangements are primarily commitments to originate and purchase mortgage loans, and to purchase securities. We did not engage in any hedging transactions that use derivative instruments (such as interest rate swaps or caps) during the six months ended June 30, 2007 and did not have any such hedging transactions in place at June 30, 2007. We are also obligated under a number of non-cancelable operating leases.

The following table reports the amounts of contractual obligations for Hudson City as of June 30, 2007.

	Payments Due By Period
			Less Than		1 Year to		3 Years to		More Than
Contractual Obligation	Total		1 Year		3 Years		5 Years		5 Years
	(In thousands)
First mortgage loan originations	$	405,892	$	405,892		—		—		—
Mortgage loan purchases		575,808		575,808		—		—		—
Mortgage-backed security purchases		850,300		850,300		—		—		—
Operating leases		123,289		7,155		14,468		13,623		88,043
Total	$	1,955,289	$	1,839,155	$	14,468	$	13,623	$	88,043

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Commitments to extend credit are agreements to lend money to a customer as long as there is no violation of any condition established in the contract. Commitments to fund first mortgage loans generally have fixed expiration dates of approximately 90 days and other termination clauses. Since some commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Hudson City Savings evaluates each customer’s credit-worthiness on a case-by-case basis. Additionally, we have available home equity, commercial lines of credit, and overdraft lines of credit, which do not have fixed expiration dates, of approximately $178.5 million. We are not obligated to advance further amounts on credit lines if the customer is delinquent, or otherwise in violation of the agreement. The commitments to purchase first mortgage loans and mortgage-backed securities had a normal period from trade date to settlement date of approximately 90 days and 60 days, respectively.

Critical Accounting Policies

Note 2 to our Audited Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2006, contains a summary of our significant accounting policies. We believe our policies with respect to the methodology for our determination of the allowance for loan losses, asset impairment judgments, including other than temporary declines in the value of our securities, stock-based compensation, and the calculation of our employee post-retirement benefit expenses involve a higher degree of complexity and require management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. Changes in these judgments, assumptions or estimates could cause reported results to differ materially. These critical policies and their application are periodically reviewed with the Audit Committee and our Board of Directors.

Allowance for Loan Losses

The allowance for loan losses has been determined in accordance with U.S. generally accepted accounting principles, under which we are required to maintain an adequate allowance for loan losses at June 30, 2007. We are responsible for the timely and periodic determination of the amount of the allowance required. We believe that our allowance for loan losses is adequate to cover specifically identifiable loan losses, as well as estimated losses inherent in our portfolio for which certain losses are probable but not specifically identifiable.

Our primary lending emphasis is the origination and purchase of one- to four-family first mortgage loans on residential properties and, to a lesser extent, second mortgage loans on one- to four-family residential properties resulting in a loan concentration in residential first mortgage loans at June 30, 2007. As a result of our lending practices, we also have a concentration of loans secured by real property located primarily in New Jersey, New York and Connecticut. Based on the composition of our loan portfolio and the growth in our loan portfolio, we believe the primary risks inherent in our portfolio are increases in interest rates, a decline in the economy, generally, and a decline in real estate market values. Any one or a combination of these events may adversely affect our loan portfolio resulting in increased delinquencies, loan losses and future levels of provisions. We consider it important to maintain the ratio of our allowance for loan losses to total loans at a level of probable and estimable losses given current economic conditions, interest rates and the composition of our portfolio.

Due to the nature of our loan portfolio, our evaluation of the adequacy of our allowance for loan losses is performed each month on a “pooled” basis. Each month we categorize the entire loan portfolio by certain risk characteristics such as loan type (one- to four-family, multi-family, commercial, etc.), loan source (originated or purchased) and payment status (i.e., current or number of days delinquent). Loans with known potential losses are categorized separately. We assign potential loss factors to the payment status

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categories on the basis of our assessment of the potential risk inherent in each loan type. These factors are periodically reviewed for appropriateness giving consideration to charge-off history, delinquency trends, portfolio growth and the status of the regional economy and housing market, in order to ascertain that the loss factors cover probable and estimable losses inherent in the portfolio. We use this analysis, as a tool, together with principal balances and delinquency reports, to evaluate the adequacy of the allowance for loan losses. Other key factors we consider in this process are current real estate market conditions in geographic areas where our loans are located, changes in the trend of non-performing loans, the current state of the local and national economy and loan portfolio growth.

We maintain the allowance for loan losses through provisions for loan losses that we charge to income. We charge losses on loans against the allowance for loan losses when we believe the collection of loan principal is unlikely. We establish the provision for loan losses after considering the results of our review of delinquency and charge-off trends, the allowance for loan loss analysis, the amount of the allowance for loan losses in relation to the total loan balance, loan portfolio growth, U.S. generally accepted accounting principles and regulatory guidance. We apply this process and methodology in a consistent manner and we reassess and modify the estimation methods and assumptions used in response to changing conditions.

Hudson City defines the population of potential impaired loans to be all non-accrual commercial real estate and multi-family loans. Impaired loans are individually assessed to determine that the loan’s carrying value is not in excess of the fair value of the collateral or the present value of the loan’s expected future cash flows. Smaller balance homogeneous loans that are collectively evaluated for impairment, such as residential mortgage loans and consumer loans, are specifically excluded from the impaired loan portfolio.

We believe that we have established and maintained the allowance for loan losses at adequate levels. Additions may be necessary if future economic and other conditions differ substantially from the current operating environment. Although management uses the best information available, the level of the allowance for loan losses remains an estimate that is subject to significant judgment and short-term change.

Asset Impairment Judgments

Certain assets are carried in our consolidated statements of financial condition at fair value or at the lower of cost or fair value. Valuation allowances are established when necessary to recognize impairment of such assets that is other than temporary. We periodically perform analyses to test for impairment of various assets. In addition to our impairment analyses related to loans discussed above, another significant impairment analysis relates to the value of other than temporary declines in the value of our securities.

Our available for sale portfolios are carried at estimated fair value, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income or loss in stockholders’ equity. The securities that we have the positive intent and ability to hold to maturity are classified as held to maturity and are carried at amortized cost. We conduct a periodic review and evaluation of the securities portfolio to determine if the value of any security has declined below its carrying value and whether such decline is other than temporary.

If such decline is deemed other than temporary, we would adjust the carrying amount of the security by writing down the security to fair market value through a charge to current period operations. The market values of our securities are significantly affected by changes in interest rates. In general, as interest rates

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rise, the market value of fixed-rate securities will decrease; as interest rates fall, the market value of fixed-rate securities will increase. With significant changes in interest rates, we evaluate our intent and ability to hold the security to maturity or for a sufficient time to recover the recorded principal balance.

The unrealized losses in the available for sale and held to maturity portfolios at June 30, 2007 were caused by increases in market yields subsequent to purchase and are not attributable to credit quality concerns. There were no debt securities past due or securities for which the Company currently believes it is not probable that it will collect all amounts due according to the contractual terms of the security. Because the Company has the intent and the ability to hold securities with unrealized losses until a market price recovery (which, for debt securities may be until maturity), the Company did not consider these securities to be other-than-temporarily impaired at June 30, 2007.

Estimated fair values for securities are based on published or securities dealers’ market values.

Stock-Based Compensation

We recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards for all awards granted, modified, repurchased or cancelled after January 1, 2006 in accordance with SFAS No. 123(R). For the portion of outstanding awards for which the requisite service was not rendered as of January 1, 2006, the recognition of the cost of employee services is based on the grant-date fair value of those awards calculated under SFAS No. 123 for pro forma disclosures. We granted performance-based stock options in 2006 and 2007 that vest if certain financial performance measures are met. In accordance with SFAS No. 123(R), we assess the probability of achieving these financial performance measures and recognize the cost of these performance-based grants if it is probable that the financial performance measures will be met. This probability assessment is subjective in nature and may change over the assessment period for the performance measures.

We estimate the per share fair value of option grants on the date of grant using the Black-Scholes option pricing model using assumptions for the expected dividend yield, expected stock price volatility, risk-free interest rate and expected option term. These assumptions are based on our analysis of our historical option exercise experience and our judgments regarding future option exercise experience and market conditions. These assumptions are subjective in nature, involve uncertainties and, therefore, cannot be determined with precision. The Black-Scholes option pricing model also contains certain inherent limitations when applied to options that are not traded on public markets.

The per share fair value of options is highly sensitive to changes in assumptions. In general, the per share fair value of options will move in the same direction as changes in the expected stock price volatility, risk-free interest rate and expected option term, and in the opposite direction of changes in the expected dividend yield. For example, the per share fair value of options will generally increase as expected stock price volatility increases, risk-free interest rate increases, expected option term increases and expected dividend yield decreases. The use of different assumptions or different option pricing models could result in materially different per share fair values of options.

Goodwill

Goodwill is presumed to have an indefinite useful life and is tested, at least annually, for impairment at the reporting unit level. Impairment exists when the carrying amount of goodwill exceeds its implied fair value. At June 30, 2007, the carrying amount of our goodwill totaled $152.0 million. When performing

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the impairment test, if the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired.

Based on the results of our annual goodwill impairment test, we determined the fair value of our reporting unit to be in excess of its carrying amount. Accordingly, as of our annual impairment test date, there was no indication of goodwill impairment. We would test our goodwill for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of our reporting unit below its carrying amount. No events have occurred and no circumstances have changed since our annual impairment test date that would more likely than not reduce the fair value of our reporting unit below its carrying amount. The identification of additional reporting units or the use of other valuation techniques could result in materially different evaluations of impairment.

Pension and Other Postretirement Benefit Assumptions

Non-contributory retirement and post-retirement defined benefit plans are maintained for certain employees, including retired employees hired on or before July 31, 2005 who have met other eligibility requirements of the plans. We adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — An Amendment of FASB Statements No. 87, 88, 106, and 132R” as of December 31, 2006. This statement requires an employer to: (a) recognize in its statement of financial condition an asset for a plan’s overfunded status or a liability for a plan’s underfunded status; (b) measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year; and (c) recognize, in comprehensive income, changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for the Company as of December 31, 2008. The Company’s measurement date will not change at this effective date.

We provide our actuary with certain rate assumptions used in measuring our benefit obligation. The most significant of these is the discount rate used to calculate the period-end present value of the benefit obligations, and the expense to be included in the following year’s financial statements. A lower discount rate will result in a higher benefit obligation and expense, while a higher discount rate will result in a lower benefit obligation and expense. The discount rate assumption was determined based on a cash flow-yield curve model specific to our pension and post-retirement plans. We compare this rate to certain market indices, such as long-term treasury bonds, or the Moody’s or Merrill Lynch bond indices, for reasonableness. A discount rate of 6.00% was selected for the December 31, 2006 measurement date and the 2007 expense calculation.

For our pension plan, we also assumed a rate of salary increase of 4.25% for future periods. This rate is comparable to actual salary increases experienced over prior years. We assumed a return on plan assets of 8.75% for future periods. We actuarially determine the return on plan assets based on actual plan experience over the previous ten years. The actual return on plan assets was 11.47% for 2006.

For our post-retirement benefit plan, the assumed health care cost trend rate used to measure the expected cost of other benefits for 2006 was 9.25%. The rate was assumed to decrease gradually to 4.75% for 2013 and remain at that level thereafter. Changes to the assumed health care cost trend rate are expected to have an immaterial impact as we capped our obligations to contribute to the premium cost of coverage to the post-retirement health benefit plan at the 2007 premium level. We monitor these rates in relation to the current market interest rate environment and intend to update our actuarial analysis during 2007.

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Item 3. – Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosure about market risk is presented as of December 31, 2006 in Hudson City Bancorp’s Annual Report on Form 10-K. The following is an update of the discussion provided therein.

General

As a financial institution, our primary component of market risk is interest rate volatility. Our net income is primarily based on net interest income, and fluctuations in interest rates will ultimately impact the level of both income and expense recorded on a large portion of our assets and liabilities. Fluctuations in interest rates will also affect the market value of all interest-earning assets, other than those that possess a short term to maturity. During the second quarter of 2007, short-term market interest rates decreased slightly while intermediate- and long-term interest rates increased slightly, thus causing the market yield curve to become more positively sloped, but still remain relatively flat. This market rate environment followed a period of an inverted market yield curve, which had an adverse impact on our net interest income and our net interest margin, as our interest-bearing liabilities generally reflect movements in short-term rates, while our interest-earning assets, a majority of which have initial terms to maturity or repricing greater than one year, generally reflect movements in intermediate- and long-term interest rates.

Due to the nature of our operations, we are not subject to foreign currency exchange or commodity price risk. Our real estate loan portfolio is subject to risks associated with the national and local economies. We do not own any trading account assets. We did not engage in any hedging transactions that use derivative instruments (such as interest rate swaps and caps) during the first six months of 2007 and did not have any such hedging transactions in place at June 30, 2007.

During the past several years we have been originating and purchasing a larger percentage of variable-rate assets in order to better manage our interest rate risk. Included in variable-rate loans and securities are loans or securities with a contractual annual rate adjustment after an initial fixed-rate period of one to ten years. During the first six months of 2007, variable-rate products constituted 13.7% of the combined total mortgage loan originations and purchases and 98.1% of mortgage-backed security purchases. In aggregate, 49.5% of our mortgage-related asset originations and purchases had variable rates.

The strategy to originate and purchase a larger percentage of variable-rate assets has lowered our percentage of fixed-rate interest-earning assets to total interest-earning assets to 57.3% at June 30, 2007 from 60.8% at December 31, 2006. Notwithstanding the decrease in the percentage of fixed-rate interest-earning assets to total interest-earning assets, fixed-rate interest earning assets may have an adverse impact on our earnings in a rising interest rate environment as the interest rate on these interest-earning assets would not reprice to current market interest rates as fast as the interest rates on our interest-bearing deposits and callable borrowed funds. The strategy to originate a higher percentage of variable-rate instruments may also have an adverse impact on our net interest income and net interest margin as variable-rate interest-earning assets generally have initial interest rates lower than fixed-rate interest-earning assets.

We have funded our asset growth by borrowing funds and taking customer deposits. The funds we borrowed during the first six months of 2007 have ten-year maturities and are callable quarterly after an initial non-call period of one to three years. In a decreasing interest rate environment, these borrowings would tend to remain outstanding until their maturity date and thus have an adverse impact on our net interest expense and net interest margin as this expense would not reprice to the lower market interest rate

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environment. These callable borrowings would also have an adverse impact on our net income in a rising interest rate environment as these borrowings would likely be called and we would borrow new funds at the higher market interest rate. Our deposit growth has been primarily due to increases in our short-term time deposits, primarily due to customer preferences and competitive pricing. Of our $9.89 billion of time deposits outstanding as of June 30, 2007, $9.32 billion, with a weighted-average rate of 5.00%, are scheduled to mature within one year.

Simulation Model. Hudson City Bancorp continues to monitor the impact of interest rate volatility in the same manner as at December 31, 2006, primarily analyzing the impact of interest rate changes on our net interest income over the next twelve-month period assuming a simultaneous and parallel shift in the yield curve. This model does not purport to provide estimates of net interest income over the next twelve-month period, but attempts to assess the impact of a simultaneous and parallel interest rate change on our net interest income.

Change in			Percent Change in
Interest Rates			Net Interest Income
(Basis points)
	200			(17.42	)%
	100			(8.29	)
	50			(3.97	)
	—			—
	(50	)		2.65
	(100	)		2.99
	(200	)		(3.35	)

The above table indicates that at June 30, 2007, in the event of a 200 basis point increase in interest rates, we would expect to experience a 17.42% decrease in net interest income as compared to an 11.76% decrease at December 31, 2006. The negative change to net interest income in the positive rate change scenarios was primarily due to the anticipated calls of borrowed funds and the increased expense of our short-term time deposits in the increasing interest rate environment scenario. The larger decrease from the December 31, 2006 analysis reflects the larger amount of borrowed funds held and the higher long-term interest rate environment at June 30, 2007, which would cause a larger amount of borrowing to be called.

The above table also indicates that at June 30, 2007, in the event of a 200 basis point decrease in interest rates, we would expect to experience a 3.35% decrease in net interest income as compared to a 10.09% decrease at December 31, 2006. The negative change to net interest income in the minus 200 basis point rate change scenario was primarily due to an increase in prepayment speeds on mortgage-related assets as well as an increase in the calls of investment securities. The model assumes that these cash flows would be reinvested at the lower market interest rates. The lower decrease from the December 31, 2006 analysis is a result of the higher long-term interest rate environment at June 30, 2007, thus causing slower changes to the prepayment speeds.

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We also monitor interest rate risk by analyzing the change to the estimated present value of equity over a range of interest rate change scenarios. The present value ratio shown in the table is the present value of equity as a percent of the present value of total assets in each of the different rate environments.

			Present Value of Equity								Value of Assets
														Basis
Change in			Dollar		Dollar			Percent			Present			Points
Interest Rates			Amount		Change			Change			Value Ratio			Change
(Basis points)			(Dollars in thousands)
	200		$	2,668,186	$	(2,100,913	)		(44.05	)%		7.38	%		(483	)
	100			3,730,721		(1,038,378	)		(21.77	)		9.92			(229	)
	50			4,276,396		(492,703	)		(10.33	)		11.15			(106	)
	—			4,769,099		—			—			12.21			—
	(50	)		4,917,546		148,447			3.11			12.38			17
	(100	)		4,554,628		(214,471	)		(4.50	)		11.35			(86	)
	(200	)		2,921,991		(1,847,108	)		(38.73	)		7.25			(496	)

In the 200 basis point increase scenario, the change in the present value of equity was negative 44.05% at June 30, 2007 as compared to negative 28.97% at December 31, 2006. The change in the present value ratio was negative 483 basis points at June 30, 2007 as compared to a negative 364 basis points at December 31, 2006. The increase in the negative values in the present value of equity and the present value ratio in the positive rate change scenarios was primarily due to the extent to which our interest-earning assets at June 30, 2007 were comprised of fixed-rate investment securities, mortgage-backed securities and mortgage loans.

In the 200 basis point decrease scenario, the change in the present value of equity was negative 38.73% at June 30, 2007 as compared to negative 41.30% at December 31, 2006. The change in the present value ratio was negative 496 basis points at June 30, 2007 as compared to a negative 650 basis points at December 31, 2006. The decrease in the present value of equity and the present value ratio in the negative rate change scenarios was primarily due to the change in value of our borrowed funds, which in a decreasing rate environment, would not be called and thus extend to their maturity date.

The methods we used in simulation modeling are inherently imprecise. This type of modeling requires that we make assumptions that may not reflect the manner in which actual yields and costs respond to changes in market interest rates. For example, we assume the composition of the interest rate-sensitive assets and liabilities will remain constant over the period being measured and that all interest rate shocks will be uniformly reflected across the yield curve, regardless of the duration to maturity or repricing. The table assumes that we will take no action in response to the changes in interest rates. In addition, prepayment estimates and other assumptions within the model are subjective in nature, involve uncertainties, and, therefore, cannot be determined with precision. Accordingly, although the previous two tables may provide an estimate of our interest rate risk at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in interest rates on our net interest income or present value of equity.

GAP Analysis. The following table presents the amounts of our interest-earning assets and interest-bearing liabilities outstanding at June 30, 2007, which we anticipate to reprice or mature in each of the future time periods shown. The mortgage-related asset prepayment rate assumptions and non-maturity

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deposit account decay rate assumptions are the same as used in the December 31, 2006 analysis. At June 30, 2007, we have reported no investment securities at their call date, but have reported $6.98 billion of callable borrowings at their call date based on the interest rate and option characteristics of the borrowed funds that could be called within the next twelve-month period. At December 31, 2006, we anticipated calls of borrowed funds of $3.55 billion. The $1.57 billion of government-sponsored agency securities with step-up features are reported at their next interest rate adjustment. We have excluded non-accrual mortgage loans of $35.1 million and non-accrual other loans of $724,000 from the table.

	June 30, 2007
										More than			More than
				More than			More than			two years			three years
	Six months			six months			one year to			to three			to five			More than
	or less			to one year			two years			years			years			five years			Total
	(Dollars in thousands)
Interest-earning assets:
First mortgage loans	$	1,324,287		$	1,425,449		$	2,411,838		$	2,736,448		$	2,661,270		$	10,909,191		$	21,468,483
Consumer and other loans		100,277			805			9,473			4,283			16,984			258,824			390,646
Federal funds sold		84,077			0			0			0			0			0			84,077
Mortgage-backed securities		1,430,757			1,363,674			1,500,917			1,673,641			3,372,151			1,758,607			11,099,747
FHLB stock		601,976			0			0			0			0			0			601,976
Investment securities		731,377			300,008			2,073,973			519,445			1,457,978			233,348			5,316,129
Total interest-earning assets		4,272,751			3,089,936			5,996,201			4,933,817			7,508,383			13,159,970			38,961,058
Interest-bearing liabilities:
Savings accounts		43,657			39,233			38,937			38,937			77,874			545,114			783,752
Interest-bearing demand accounts		168,565			168,565			261,600			261,600			440,667			489,680			1,790,677
Money market accounts		28,576			28,576			114,304			114,304			228,608			628,670			1,143,038
Time deposits		8,391,974			926,482			385,943			138,405			49,358			—			9,892,162
Borrowed funds		2,525,000			4,466,000			—			—			550,000			13,125,000			20,666,000
Total interest-bearing liabilities		11,157,772			5,628,856			800,784			553,246			1,346,507			14,788,464			34,275,629
Interest rate sensitivity gap	$	(6,885,021	)	$	(2,538,920	)	$	5,195,417		$	4,380,571		$	6,161,876		$	(1,628,494	)	$	4,685,429
Cumulative interest rate sensitivity gap	$	(6,885,021	)	$	(9,423,941	)	$	(4,228,524	)	$	152,047		$	6,313,923		$	4,685,429
Cumulative interest rate sensitivity gap as a percent of total assets		(17.35)	%		(23.74)	%		(10.65)	%		0.38	%		15.91	%		11.80	%
Cumulative interest-earning assets as a percent of interest-bearing liabilities		38.29	%		43.86	%		75.96	%		100.84	%		132.40	%		113.67	%

The cumulative one-year gap as a percent of total assets was negative 23.74% at June 30, 2007 compared with negative 14.16% at December 31, 2006. The higher negative cumulative one-year gap primarily reflects the increase in the amounts of borrowed funds we anticipate to be called within the next twelve months.

Item 4. — Controls and Procedures

Ronald E. Hermance, Jr., our Chairman, President and Chief Executive Officer, and James C. Kranz, our Senior Vice President and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2007. Based upon their evaluation, they each found that our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file and submit under the Exchange Act was recorded, processed, summarized and reported as and when required and that such information was accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosures.

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There was no change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. – Legal Proceedings

We are not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business. We believe that these routine legal proceedings, in the aggregate, are immaterial to our financial condition and results of operations.

Item 1A. – Risk Factors

For a summary of risk factors relevant to our operations, please see Part I, Item 1A in our 2006 Annual Report on Form 10-K. There has been no material change in risk factors since December 31, 2006.

Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds

The following table reports information regarding repurchases of our common stock during the second quarter of 2007 and the stock repurchase plans approved by our Board of Directors.

							Maximum
					Total Number of		Number of Shares
	Total				Shares Purchased		that May Yet Be
	Number of		Average		as Part of Publicly		Purchased Under
	Shares		Price Paid		Announced Plans		the Plans or
Period	Purchased		per Share		or Programs		Programs (1)
April 1-April 30, 2007		1,425,000	$	13.69		1,425,000		31,620,700
May 1-May 31, 2007		6,238,504		13.35		6,200,000		25,420,700
June 1-June 30, 2007		7,897,150		12.87		7,897,150		17,523,550
Total		15,560,654		13.14		15,522,150

(1) On June 20, 2006, Hudson City Bancorp announced the adoption of its seventh Stock Repurchase Program, which authorized the repurchase of up to 56,975,000 shares of common stock. This program has no expiration date and has 17,523,550 shares yet to be purchased as of June 30, 2007. On July 25, 2007, Hudson City Bancorp announced the adoption of its eighth Stock repurchase Program, which authorized the repurchase of up to 51,400,000 shares of common stock. This program has no expiration date and no shares have been purchased pursuant to this program.

Item 3. – Defaults Upon Senior Securities

Not applicable.

Page 38

Item 4. – Submission of Matters to a Vote of Security Holders

On April 24, 2007, the annual meeting of stockholders of Hudson City Bancorp, Inc. was held to consider and vote on certain matters.

     Proposal 1 – The election of three directors for terms of three years each.

     Votes cast for William J. Cosgrove:

For:	476,397,305
Withheld:	12,927,358

     Votes cast for Donald O. Quest:

For:	477,829,237
Withheld:	11,495,426

     Votes cast for Joseph G. Sponholz:

For:	479,244,063
Withheld:	10,080,600

There were no broker held non-voted shares represented at the meeting with respect to this matter.

Proposal 2 – The ratification of the appointment of KPMG LLP as Hudson City Bancorp’s independent registered public accounting firm for the fiscal year ending December 31, 2007.

For:	478,822,640
Against:	7,110,084
Abstain:	3,391,940

There were no broker held non-voted shares represented at the meeting with respect to this matter.

Item 5. – Other Information

Not applicable.

Item 6. – Exhibits

Exhibit Number	Exhibit
3.1	Amended bylaws of Hudson City Bancorp, Inc.
10.1	Agreement between Hudson City Bancorp, Inc. and John M. Tassillo, Executive Vice-President and Treasurer
31.1	Certification of Chief Executive Officer

Page 39

Exhibit Number	Exhibit
31.2	Certification of Chief Financial Officer
32.1	Written Statement of Chief Executive Officer and Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.*

* Pursuant to SEC rules, this exhibit will not be deemed filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section.

Page 40

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Hudson City Bancorp, Inc.
Date: August 8, 2007	By:	/s/ Ronald E. Hermance, Jr.
		Ronald E. Hermance, Jr.
		Chairman, President and Chief Executive Officer (Principal Executive Officer)
Date: August 8, 2007	By:	/s/ James C. Kranz
		James C. Kranz Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Page 41

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED BYLAWS

OF

HUDSON CITY BANCORP, INC.

AMENDED AND RESTATED AS OF July 24, 2007

TABLE OF CONTENTS

	PAGE
ARTICLE I
OFFICES
Section 1. Registered Office		1
Section 2. Additional Offices		1
ARTICLE II
SHAREHOLDERS
Section 1. Place of Meetings		1
Section 2. Annual Meetings		1
Section 3. Special Meetings		1
Section 4. Notice of Meetings		1
Section 5. Waiver of Notice		2
Section 6. Fixing of Record Date		2
Section 7. Quorum		2
Section 8. Conduct of Meetings		2
Section 9. Voting; Voting of Shares in the Name of Two or More Persons		3
Section 10. Proxies		3
Section 11. Inspectors of Election		4
Section 12. Procedure for Nominations		4
Section 13. Substitution of Nominees		5
Section 14. New Business		5
ARTICLE III
CAPITAL STOCK
Section 1. Certificates of Stock		7
Section 2. Transfer Agent and Registrar		7
Section 3. Lost, Destroyed and Mutilated Certificates		8
Section 4. Holder of Record		8
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Responsibilities; Number of Directors		8
Section 2. Qualifications		8
Section 3. Age Limitation of Directors		9
Section 4. Regular and Annual Meetings		9
Section 5. Special MeetingS		9
Section 6. Meetings of Independent Directors		9
Section 7. Notice of Meetings; Waiver of Notice		9
Section 8. Conduct of Meetings		9
Section 9. Quorum and Voting Requirements		10
Section 10. Informal Action By Directors		10

	PAGE
Section 11. Resignation		10
Section 12. Vacancies		10
Section 13. Compensation		10
Section 14. Amendments Concerning the Board		10
ARTICLE V
COMMITTEES
Section 1. Standing Committees		11
Section 2. Executive Committee		11
Section 3. Audit Committee		12
Section 4. Compensation Committee		12
Section 5. Nominating and Governance Committee		13
Section 6. Other Committees		13
ARTICLE VI
OFFICERS
Section 1. Designation of Executive Officers		13
Section 2. Term of Office and Removal		14
Section 3. Chairman of the Board		14
Section 4. Chief Executive Officer		14
Section 5. President		15
Section 6. Chief Operating Officer		15
Section 7. Vice Presidents		15
Section 8. Secretary		15
Section 9. Treasurer		15
Section 10. Comptroller		15
Section 11. Other Officers		16
Section 12. Compensation Of Officers		16
ARTICLE VII
DIVIDENDS
ARTICLE VIII
AMENDMENTS

ii

BYLAWS

OF

HUDSON CITY BANCORP, INC.

ARTICLE I

OFFICES

     Section 1. Registered Office. The registered office of HUDSON CITY BANCORP, INC. (the “Corporation”) in the State of Delaware shall be in the City of Wilmington, County of New Castle.

     Section 2. Additional Offices. The Corporation may also have offices and places of business at such other places, within or without the State of Delaware, as the Board of Directors (the “Board”) may from time to time designate or the business of the Corporation may require.

ARTICLE II

SHAREHOLDERS

     Section 1. Place of Meetings. Meetings of shareholders of the Corporation shall be held at such place, within or without the State of Delaware, as may be fixed by the Board and designated in the notice of meeting. If no place is so fixed, such meetings shall be held at the principal administrative office of the Corporation.

     Section 2. Annual Meetings. The annual meeting of shareholders of the Corporation for the election of directors and the transaction of any other business which may properly come before such meeting shall be held each year on a date and at a time to be designated by the Board.

     Section 3. Special Meetings. Special meetings of shareholders, for any purpose or purposes, may be called at any time only by the Chief Executive Officer or by resolution of at least three-fourths of the directors then in office. Special meetings shall be held on the date and at the time and place as may be designated by the Board. At a special meeting, no business shall be transacted and no corporate action shall be taken other than that stated in the notice of meeting.

     Section 4. Notice of Meetings. Except as otherwise required by law, written notice stating the place, date and hour of any meeting of shareholders and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered to each shareholder of record entitled to vote at such meeting, either personally or by mail not less than ten (10) nor more than sixty (60) days before the date of such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the U.S. mail, with postage thereon prepaid, addressed to the shareholder at his or her address as it appears on the stock transfer books or records of the Corporation as of the record date prescribed in Section 6 of this Article II, or at such other address as the shareholder shall have furnished in writing to the Secretary. Notice of any special meeting shall indicate that the notice is being issued by or at the direction of the

person or persons calling such meeting. When any meeting of shareholders, either annual or special, is adjourned to another time or place, no notice of the adjourned meeting need be given, other than an announcement at the meeting at which such adjournment is taken giving the time and place to which the meeting is adjourned; provided, however, that if the adjournment is for more than thirty (30) days, or, if after adjournment, the Board fixes a new record date for the adjourned meeting, notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.

     Section 5. Waiver of Notice. Notice of any annual or special meeting need not be given to any shareholder who submits a signed waiver of notice of any meeting, in person or by proxy or by his or her duly authorized attorney-in-fact, whether before or after the meeting. The attendance of any shareholder at a meeting, in person or by proxy, shall constitute a waiver of notice by such shareholder, except where a shareholder attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

     Section 6. Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend or other distribution or the allotment of any rights, or in order to make a determination of shareholders for any other proper purpose, the Board shall fix a date as the record date for any such determination of shareholders, which date shall not precede the date upon which the resolution fixing the record date is adopted by the Board. Such date in any case shall be not more than sixty (60) days and, in the case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section 6, such determination shall, unless otherwise provided by the Board, also apply to any adjournment thereof. If no record date is fixed, the record date for determining shareholders entitled to notice of or vote at a meeting of shareholders shall be at the close of business on the day next preceding the day on which the notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and (b) the record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

     Section 7. Quorum. The holders of record of a majority of the total number of votes eligible to be cast in the election of directors, represented in person or by proxy, shall constitute a quorum for the transaction of business at a meeting of shareholders, except as otherwise provided by law, these Bylaws or the Certificate of Incorporation. If less than a majority of such total number of votes is represented at a meeting, a majority of the number of votes so represented may adjourn the meeting from time to time without further notice, provided, that if such adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. At such adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally called. When a quorum is once present to organize a meeting of shareholders, such quorum is not broken by the subsequent withdrawal of any shareholders.

     Section 8. Conduct of Meetings. The Chairman shall serve as chairman at all meetings of the shareholders or, if the Chairman is absent or otherwise unable to so serve, the President shall serve as chairman. If the President is absent or otherwise unable to so serve, such

2

other person as shall be appointed by a majority of the entire Board shall serve as chairman at any meeting of shareholders. The Secretary or, in his or her absence, such other person as the chairman of the meeting shall appoint, shall serve as secretary of the meeting. The chairman of the meeting shall conduct all meetings of the shareholders in accordance with the best interests of the Corporation and shall have the authority and discretion to establish reasonable procedural rules for the conduct of such meetings, including such regulation of the manner of voting and the conduct of discussion as he or she shall deem appropriate. The chairman of the meeting shall also have the authority to adjourn the meeting from time to time and from place to place as he or she may deem necessary and in the best interests of the Corporation.

     Section 9. Voting; Voting of Shares in the Name of Two or More Persons. Except for the election of directors or as otherwise provided by applicable law or regulation, the Certificate of Incorporation or these Bylaws, at all meetings of shareholders, all matters shall be determined by a vote of the holders of a majority of the number of votes eligible to be cast by the holders of the outstanding shares of capital stock of the Corporation present and entitled to vote thereat. Directors shall, except as otherwise required by law, these Bylaws or the Certificate of Incorporation, be elected by a plurality of the votes cast by each class of shares entitled to vote at a meeting of shareholders, present and entitled to vote in the election.

     If ownership of a share of voting stock of the Corporation stands in the name of two or more persons, in the absence of written directions to the Corporation to the contrary, any one or more of such shareholders may cast, in person or by proxy, all votes to which such ownership is entitled. If an attempt is made to cast conflicting votes by the several persons in whose names shares of stock stand, the vote or votes to which those persons are entitled shall be cast as directed by a majority of those holding such stock and present, in person or by proxy, at such meeting. If such conflicting votes are evenly split on any particular matter, each faction may vote the securities in question proportionally, or any person voting the shares, or a beneficiary, if any, may apply to the Court of Chancery of Delaware or such other court as may have jurisdiction to appoint an additional person to act with the persons so voting the shares, which shall then be voted as determined by a majority of such persons and the person appointed by the Court.

     Section 10. Proxies. Each shareholder entitled to vote at any meeting may vote either in person or by proxy. Unless otherwise specified in the Certificate of Incorporation or in a resolution, or resolutions, of the Board providing for the issuance of preferred stock, each shareholder entitled to vote shall be entitled to one vote for each share of capital stock registered in his or her name on the transfer books or records of the Corporation. Each shareholder entitled to vote may authorize another person or persons to act for him or her by proxy. All proxies shall be by written instrument, signed by the shareholder or by his or her attorney-in-fact, or by electronic transmission as permitted by law; provided, that such electronic transmission either sets forth or is submitted with information from which it can be determined that such electronic transmission was authorized by such shareholder. All proxies shall be filed with the Secretary before being voted. No proxy shall be valid after three (3) years from the date of its execution unless otherwise provided in the proxy. The attendance at any meeting by a shareholder who shall have previously given a proxy applicable thereto shall not, as such, have the effect of revoking the proxy. The Corporation may treat any duly executed proxy as not revoked and in full force and effect until it receives a duly executed instrument revoking it, or a duly executed proxy bearing a later date.

3

     Section 11. Inspectors of Election. In advance of any meeting of shareholders, the Board shall, to the extent required by applicable law, appoint one or more persons, other than officers, directors or nominees for office, as inspectors of election to act at such meeting or any adjournment thereof. Such appointment shall not be altered at the meeting. If inspectors of election are not so appointed, the chairman of the meeting shall make such appointment at the meeting. If any person appointed as inspector fails to appear or fails or refuses to act at the meeting, the vacancy so created may be filled by appointment by the Board in advance of the meeting or at the meeting by the chairman of the meeting. The duties of the inspectors of election shall include determining the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, receiving votes, ballots or consents, hearing and deciding all challenges and questions arising in connection with the right to vote, counting and tabulating all votes, ballots or consents, determining the results and doing such acts as are proper to the conduct of the election or the vote with fairness to all shareholders. Any report or certificate made by them shall be PRIMA FACIE evidence of the facts stated and of the vote as certified by them. Each inspector shall be entitled to a reasonable compensation for his or her services, to be paid by the Corporation.

     Section 12. Procedure for Nominations. Subject to the provisions hereof, the Nominating and Governance Committee shall select, and recommend to the Board for its approval, nominees for election as directors. Except in the case of a nominee substituted as a result of the death, incapacity, withdrawal or other inability to serve of a nominee, the Nominating and Governance Committee shall, upon the approval of the Board, deliver written nominations to the Secretary at least ninety (90) days prior to the date of the annual meeting. Provided the Nominating and Governance Committee makes such nominations, no nominations for directors except those made by the Nominating and Governance Committee and approved by the Board shall be voted upon at the annual meeting of shareholders unless other nominations by shareholders are made in accordance with the provisions of this Section 12. Nominations of individuals for election to the Board at an annual meeting of shareholders may be made by any shareholder of record of the Corporation entitled to vote for the election of directors at such meeting who provides timely notice in writing to the Secretary as set forth in this Section 12. To be timely, a shareholder’s notice must be delivered to or received by the Secretary not later than the following dates: (i) with respect to an election of directors to be held at an annual meeting of shareholders, ninety (90) days in advance of the anniversary of the previous year’s annual meeting if the current year’s meeting is to be held within 30 days prior to, on the anniversary date of, or after the anniversary of the previous year’s annual meeting; and (ii) with respect to an election to be held at an annual meeting of shareholders held at a time other than within the time periods set forth in the immediately preceding clause (i), or at a special meeting of shareholders for the election of directors, the close of business on the tenth (10th) day following the date on which notice of such meeting is first given to shareholders. For purposes of this Section 12, notice shall be deemed to first be given to shareholders when disclosure of such date of the meeting of shareholders is first made in a press release reported to Dow Jones News Services, Associated Press or comparable national news service, or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended. Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) such person’s written consent to serve as a director, if elected, and (iv) all such other information regarding each nominee proposed by

4

such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission (whether or not the Corporation is then subject to such rules); and (b) as to the shareholder giving the notice (i) the name, business address and residence address of such shareholder, (ii) the class and number of shares of the Corporation which are owned of record by such shareholder and the dates upon which he or she acquired such shares, (iii) a description of all arrangements or understandings between the shareholder and nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the shareholder, (iv) the identification of any person employed, retained or to be compensated by the shareholder submitting the nomination or by the person nominated, or any person acting on his or her behalf to make solicitations or recommendations to shareholders for the purpose of assisting in the election of such director, and a brief description of the terms of such employment, retainer or arrangement for compensation, (v) a representation that the shareholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination and (vi) a representation whether the shareholder intends or is part of a group which intends to (1) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect the nominee and/or (2) otherwise solicit proxies from shareholders in support of such nomination. At the request of the Secretary , any person nominated by the Nominating and Governance Committee for election as a director shall furnish to the Secretary that information required to be set forth in a shareholder’s notice of nomination which pertains to the nominee together with the required written consent. The Corporation may also require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation. No person shall be elected as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 12.

     The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not properly brought before the meeting in accordance with the provisions hereof, and, if he should so determine, shall declare to the meeting that such nomination was not properly brought before the meeting and shall not be considered.

     Section 13. Substitution of Nominees. In the event that a person is validly designated as a nominee in accordance with Section 12 of this Article II and shall thereafter become unwilling or unable to stand for election to the Board, the Board, upon recommendation by the Nominating and Governance Committee, may designate a substitute nominee upon delivery, not fewer than five (5) days prior to the date of the meeting for the election of such nominee, of a written notice to the Secretary setting forth such information regarding such substitute nominee as would have been required to be delivered to the Secretary pursuant to Section 12 of this Article II had such substitute nominee been initially proposed as a nominee. Such notice shall include a signed consent to serve as a director of the Corporation, if elected, of each such substituted nominee.

     Section 14. New Business. Any new business to be taken up at the annual meeting at the request of the Chief Executive Officer or by resolution of at least three-fourths of the directors then in office shall be stated in writing and filed with the Secretary at least fifteen (15) days before the date of the annual meeting, and all business so stated, proposed and filed shall be considered at the annual meeting, but, except as provided in this Section 14, no other proposal shall be acted upon at the annual meeting. Any proposal offered by any shareholder, may be

5

made at the annual meeting and the same may be discussed and considered, but unless properly brought before the meeting such proposal shall not be acted upon at the meeting. For a proposal to be properly brought before an annual meeting by a shareholder, the shareholder must be a shareholder of record and have given timely notice thereof in writing to the Secretary. To be timely, a shareholder’s notice must be delivered to or received by the Secretary not later than the following dates: (i) with respect to an annual meeting of shareholders, ninety (90) days in advance of the anniversary of the previous year’s annual meeting if current year’s meeting is to be held within 30 days prior to, on the anniversary date of, or after the anniversary of the previous year’s annual meeting; and (ii) with respect to an annual meeting of shareholders held at a time other than within the time periods set forth in the immediately preceding clause (i), the close of business on the tenth (10th) day following the date on which notice of such meeting is first given to shareholders. For purposes of this Section 14, notice shall be deemed to first be given to shareholders when disclosure of such date of the meeting of shareholders is first made in a press release reported to Dow Jones News Services, Associated Press or comparable national news service, or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended. A shareholder’s notice to the Secretary shall set forth as to the matter the shareholder proposes to bring before the annual meeting (a) a brief description of the proposal desired to be brought before the annual meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; (b) the name and address of the shareholder proposing such business; (c) the class and number of shares of the Corporation which are owned of record by the shareholder and the dates upon which he or she acquired such shares; (d) the identification of any person employed, retained, or to be compensated by the shareholder submitting the proposal, or any person acting on his or her behalf, to make solicitations or recommendations to shareholders for the purpose of assisting in the passage of such proposal, and a brief description of the terms of such employment, retainer or arrangement for compensation; (e) a representation that the shareholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such new business; (f) a representation whether the shareholder intends or is part of a group which intends to (1) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal and/or (2) otherwise solicit proxies from shareholders in support of such proposal; and (g) all such other information regarding such proposal as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission or required to be delivered to the Corporation pursuant to the proxy rules of the Securities and Exchange Commission (whether or not the Corporation is then subject to such rules). This provision shall not prevent the consideration and approval or disapproval at an annual meeting of reports of officers, directors and committees of the Board or the management of the Corporation, but in connection with such reports, no new business shall be acted upon at such annual meeting unless stated and filed as herein provided. This provision shall not constitute a waiver of any right of the Corporation under the proxy rules of the Securities and Exchange Commission or any other rule or regulation to omit a shareholder’s proposal from the Corporation’s proxy materials.

     The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that any new business was not properly brought before the meeting in accordance with the provisions hereof, and, if the chairman should so determine, the chairman shall declare to the

6

meeting that such new business was not properly brought before the meeting and shall not be considered.

ARTICLE III

CAPITAL STOCK

     Section 1. Certificates of Stock. The shares of the Corporation’s stock may be certificated or uncertificated, as provided under the Delaware General Corporation Law. Any certificates representing shares of stock shall be in such form as shall be determined by the Board. Each certificate shall state that the Corporation will furnish to any shareholder upon request and without charge a statement of the powers, designations, preferences and relative, participating, optional or other special rights of the shares of each class or series of stock and the qualifications or restrictions of such preferences and/or rights, or shall set forth such statement on the certificate itself. The certificates shall be numbered in the order of their issue and entered in the books of the Corporation or its transfer agent or agents as they are issued. Each certificate shall state the registered holder’s name and the number and class of shares and shall be signed by the Chairman or the President and the Secretary or any Assistant Secretary, and may, but need not, bear the seal of the Corporation or a facsimile thereof. Any or all of the signatures on the certificates may be facsimiles. In case any officer or officers who shall have signed any such certificate shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate shall have been delivered by the Corporation, such certificate may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates had not ceased to be such officer or officers of the Corporation.

     Within a reasonable time after the issuance or transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to the Delaware General Corporation Law or a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

     Section 2. Transfer Agent and Registrar. The Board shall have the power to appoint one or more Transfer Agents and Registrars and may require that all stock certificates, certificates representing any rights or options, and any written notices or statements relative to uncertificated stock be countersigned and registered by one or more of such Transfer Agents and Registrars.

     Section 3. Registration and Transfer of Shares. Subject to the provisions of the Certificate of Incorporation of the Corporation, the name of each person owning a share of the capital stock of the Corporation shall be entered on the books of the Corporation together with the number of shares held by him or her, the numbers of the certificates, if certificated, covering such shares and the dates of issue of such certificates. Subject to the provisions of the Certificate of Incorporation of the Corporation, the shares of stock of the Corporation shall be transferable on the books of the Corporation by the holders thereof in person, or by their duly authorized attorneys or legal representatives, on surrender and cancellation of certificates for a like number of shares, accompanied by an assignment or power of transfer endorsed thereon or attached

7

thereto, duly executed, with such guarantee or proof of the authenticity of the signature as the Corporation or its agents may reasonably require and with proper evidence of payment of any applicable transfer taxes. Subject to the provisions of the Certificate of Incorporation of the Corporation, a record shall be made of each transfer.

     Upon the receipt of proper transfer instructions from the registered owner of uncertificated shares, such uncertificated shares shall be cancelled, issuance of new equivalent uncertificated shares or certificated shares shall be made to the shareholder entitled thereto and the transaction shall be recorded upon the books of the Corporation. If the Corporation has a transfer agent or registrar acting on its behalf, the signature of any officer or representative thereof may be in facsimile.

     Section 4. Lost, Destroyed and Mutilated Certificates. The holder of any shares of stock of the Corporation shall immediately notify the Corporation of any loss, theft, destruction or mutilation of the certificates therefor. The Corporation may issue, or cause to be issued, (i) a new certificate or certificates of stock or (ii) uncertificated shares in place of any certificate or certificates theretofore issued by it alleged to have been lost, stolen or destroyed upon evidence satisfactory to the Corporation of the loss, theft or destruction of the certificate and, in the case of mutilation, the surrender of the mutilated certificate. The Corporation may, in its discretion, require the owner of the lost, stolen or destroyed certificate, or his or her legal representatives, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft, destruction or mutilation of any such certificate and the issuance of such new certificate, or may refer such owner to such remedy or remedies as he or she may have under the laws of the State of Delaware.

     Section 5. Holder of Record. Subject to the provisions of the Certificate of Incorporation of the Corporation, the Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder thereof in fact and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law.

ARTICLE IV

BOARD OF DIRECTORS

     Section 1. Responsibilities; Number of Directors. The business and affairs of the Corporation shall be under the direction of the Board. The Board shall consist of not less than five (5) nor more than twenty-one (21) directors (other than directors elected by the holders of shares of any series of preferred stock). Within the foregoing limits, the number of directors shall be determined only by resolution of the Board. A majority of the entire board, and, in any event not less than three (3) directors, shall be Independent Directors. For these Bylaws, Independent Director shall mean a person who meets the criteria for independence established by the rules and regulations of the stock exchange on which the Corporation’s shares are listed and who the Board has affirmatively determined does not have a material relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

     Section 2. Qualifications. Each director shall be at least eighteen (18) years of age. No director shall serve on the board of directors of a Insured Depository Institution, bank holding

8

company, financial holding company or thrift holding company, other than the Corporation, its affiliated entities or the Federal Home Loan Bank of New York, while a member of the Board.

     Section 3. Age Limitation of Directors. Beginning on January 1, 2004, no member of the Board who has reached the age of 75 shall be eligible for re-election. No person shall be eligible for initial election as a director who is seventy years of age or more.

     Section 4. Regular and Annual Meetings. An annual meeting of the Board for the election of officers shall be held, without notice other than these Bylaws, immediately after, and at the same place as, the annual meeting of the shareholders, or at such other time or place as the Board may fix by resolution. The Board may provide, by resolution, the time and place, within or without the State of Delaware, for the holding of regular meetings of the Board without notice other than such resolution.

     Section 5. Special Meetings. Special meetings of the Board may be called for any purpose at any time by or at the request of the Chairman or the President. Special meetings of the Board shall also be called by the Secretary upon the written request, stating the purpose or purposes of the meeting, of at least sixty percent (60%) of the directors then in office, but in any event not less than five (5) directors. The persons authorized to call special meetings of the Board shall give notice of such meetings in the manner prescribed by these Bylaws and may fix any place, within or without the Corporation’s regular business area, as the place for holding any special meeting of the Board called by such persons. No business shall be conducted at a special meeting other than that specified in the notice of meeting.

     Section 6. Meetings of Independent Directors. Meetings of the Independent Directors in executive session shall be held at least quarterly. The Independent Directors shall designate a lead Independent Director to preside at meetings of the Independent Directors.

     Section 7. Notice of Meetings; Waiver of Notice. Except as otherwise provided in Section 4 of this Article IV, notice of each meeting shall be mailed or otherwise given to each director at least two (2) business days before the day of the meeting to his or her address shown in the records of the Corporation, except in the case of an emergency, in the discretion of the Chairman or the President, shorter oral notice may be given. The purpose of any special meeting shall be stated in the notice. Such notice shall be deemed given when sent or given to any mail or courier service or company providing electronic transmission service. Any director may waive notice of any meeting by submitting a signed waiver of notice with the Secretary, whether before or after the meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

     Section 8. Conduct of Meetings. Meetings of the Board shall be presided over by the Chairman or such other director or officer as the Chairman shall designate. If the Chairman is absent or otherwise unable to preside over the meeting, the presiding officer shall be the President. If the President is absent or otherwise unable to preside over the meeting, the presiding officer shall be such other person as shall be appointed by a majority of the Board. The Secretary or, in his absence, a person appointed by the Chairman (or other presiding person), shall act as secretary of the meeting. The Chairman (or other person presiding) shall conduct all meetings of the Board in accordance with the best interests of the Corporation and shall have the

9

authority and discretion to establish reasonable procedural rules for the conduct of Board meetings. Any one or more directors may participate in a meeting of the Board or a committee of the Board by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at any such meeting.

     Section 9. Quorum and Voting Requirements. A quorum at any meeting of the Board shall consist of not less than a majority of the directors then in office or such greater number as shall be required by law, these Bylaws or the Certificate of Incorporation, but not less than one-third (1/3) of the total number. If less than a required quorum is present, the majority of those directors present shall adjourn the meeting to another time and place without further notice. At such adjourned meeting at which a quorum shall be represented, any business may be transacted that might have been transacted at the meeting as originally noticed. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, a majority vote of the directors present at a meeting, if a quorum is present, shall constitute an act of the Board.

     Section 10. Informal Action By Directors. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or such committee.

     Section 11. Resignation. Any director may resign at any time by sending a written notice of such resignation to the principal office of the Corporation addressed to the Secretary. Unless otherwise specified therein, such resignation shall take effect upon receipt thereof.

     Section 12. Vacancies. To the extent not inconsistent with the Certificate of Incorporation and subject to the limitations prescribed by law and the rights of holders of Preferred Stock, vacancies in the office of director, including vacancies created by newly created directorships resulting from an increase in the number of directors, shall be filled only by a vote of a majority of the directors then holding office, whether or not a quorum, at any regular or special meeting of the Board called for that purpose. Subject to the rights of holders of Preferred Stock, no person shall be so elected a director unless nominated by the Nominating and Governance Committee. Subject to the rights of holders of Preferred Stock, any director so elected shall serve for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until his or her successor shall be elected and qualified.

     Section 13. Compensation. From time to time, as the Compensation Committee and the Board deem necessary, the Board shall fix the compensation of directors and officers of the Corporation in such one or more forms as the Board may determine.

     Section 14. Amendments Concerning the Board. The number and other restrictions and qualifications for directors of the Corporation as set forth in these Bylaws may be altered only by a vote, in addition to any vote required by law, of two-thirds of the entire Board or by the affirmative vote of the holders of record of not less than eighty percent (80%) of the total votes eligible to be cast by holders of all outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors at a meeting of the shareholders called for that purpose.

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ARTICLE V

COMMITTEES

     Section 1. Standing Committees. The Board of Directors shall designate from their own number, by resolution, the following committees:

(a)	Executive Committee
(b)	Audit Committee
(c)	Compensation Committee
(d)	Nominating and Governance Committee

which shall be standing committees of the Board. The Nominating and Governance Committee shall recommend to the Board for its approval the directors to serve as members of each committee, except that the Nominating and Governance Committee shall not make recommendations as to its own members. The Board, upon the recommendation of the Nominating and Governance Committee, shall appoint a director to fill any vacancy on any committee of the Board. Notwithstanding the foregoing, the Board shall fill vacancies on the Nominating and Governance Committee, with recommendation by the Nominating and Governance Committee. The members of the committees shall serve at the pleasure of the Board.

     Section 2. Executive Committee. There shall be an Executive Committee of the Board, consisting of at least five (5) members, as shall be appointed by Board resolution or these Bylaws. The Chairman the Chief Executive Officer, the President and the Chief Operating Officer shall be ex-officio members of the Executive Committee, with power to vote on all matters so long as they are also directors of the Corporation. A majority of the members of the Executive Committee, and, in any event not less than three (3) members, shall be non-officer directors. A quorum shall consist of at least four (4) members of the Executive Committee, a majority of whom must be non-officer directors, or such other number of members as the Board may establish by resolution. The vote of a majority of members present at any meeting at which a quorum exists including the presiding member, who shall be eligible to vote, shall constitute the action of the Executive Committee.

     The Chairman, the President, or such other director or officer as the Board shall designate, shall serve as chairman of the Executive Committee. If the office of the Chairman is vacant, the President shall serve as chairman of the Executive Committee. In the absence of the chairman of the Executive Committee, the committee shall designate, from among its membership present, a person to preside at any meeting held in such absence. The Executive Committee shall designate, from its membership or otherwise, a secretary who shall report to the Board at its next regular meeting all proceedings and actions taken by the Executive Committee. The Executive Committee shall meet as necessary at the call of the Chairman, the Chief Executive Officer or at the call of a majority of the members of the Executive Committee.

     The Executive Committee shall, to the extent not inconsistent with law, these Bylaws, the Certificate of Incorporation or resolutions adopted by the Board, exercise all the powers and

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authority of the Board in the management of the business and affairs of the Corporation in the intervals between the meetings of the Board.

     Section 3. Audit Committee. The Audit Committee shall consist of at least three (3) members whose background and experience are financial and/or business management related, none of whom shall be an officer or employee of the Corporation or receive a fee or other compensation from the Corporation (other than for board service) and each of whom must be an Independent Director. At least one member of the Audit Committee must be a financial expert, as determined by the Board, consistent with the applicable rules and regulations of the Securities and Exchange Commission and the applicable rules and regulations of the stock exchange on which the Corporation’s shares are listed. . At any regular meeting of the Board, any director who is otherwise eligible to serve on the Audit Committee may be elected to fill a vacancy that has occurred on the Audit Committee. The Board shall, upon recommendation by the Nominating and Governance Committee, designate one member of the committee to serve as chairman of the committee. The Audit Committee shall meet at least quarterly, at the call of the chairman of the committee and may hold such additional meetings as the chairman of the committee may deem necessary, to examine, or cause to be examined, the records and affairs of the Corporation to determine its true financial condition, and shall present a report of examination to the Board at the Board’s next regular meeting following the meeting of the Audit Committee. The committee shall appoint, from its membership or otherwise, a secretary who shall cause to be kept written minutes of all meetings of the committee. The Audit Committee shall make, or cause to be made, such other examinations as it may deem advisable or whenever so directed by the Board and shall report thereon in writing at a regular meeting of the Board. The Audit Committee shall have the sole authority to appoint or replace the independent auditors, subject to shareholder ratification, and shall approve all audit engagement fees and terms and non-audit engagements with the independent auditors in accordance with current regulations and the committee’s charter. The Audit Committee shall review and approve all related-party transactions. The Audit Committee shall arrange for such legal or other assistance as it may deem necessary or desirable. The Audit Committee shall prepare a committee charter which shall be reviewed annually by the committee and approved and adopted by the committee and the Board. The Audit Committee shall review and evaluate the procedures and performance of the Corporation’s independent auditors and internal auditing staff. The Audit Committee shall perform all duties otherwise set forth in its charter. A quorum shall consist of at least one-third of the members of the committee, and in no event less than two (2) members of the committee. The vote of a majority of members present at any meeting at which a quorum exists including the presiding member, who shall be eligible to vote, shall constitute the action of the Audit Committee.

     Section 4. Compensation Committee. The Compensation Committee shall consist of at least three (3) members, each of whom shall be an Independent Director. The Board, upon recommendation by the Nominating and Governance Committee, shall designate one member of the committee to serve as chairman of the Compensation Committee, who shall have the authority to adopt and establish procedural rules for the conduct of all meetings of the committee.

     The Compensation Committee shall meet at least annually at the call of the chairman of the committee, and may hold such additional meetings as the chairman may deem necessary. A quorum shall consist of at least one-third of the voting members of the Compensation

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Committee, and in no event less than two (2) voting members of the committee. The vote of a majority of the voting members present at any meeting at which a quorum exists, including the chairman of the committee who shall be eligible to vote, shall constitute the action of the Compensation Committee. The committee shall appoint, from its membership or otherwise, a secretary who shall cause to be kept written minutes of all meetings of the committee. The Compensation Committee shall prepare a committee charter which shall be reviewed annually by the committee and approved and adopted by the committee and the Board.

     The Compensation Committee shall be responsible for recommending to the Board the compensation, employment arrangements and benefit programs for officers of the Corporation and its subsidiaries.

     Section 5. Nominating and Governance Committee. The Nominating and Governance Committee shall consist of at least three (3) members, each of whom shall be an Independent Director. Notwithstanding the foregoing, no director shall serve on the Nominating and Governance Committee in any capacity in any year during which such director’s term as a director is scheduled to expire. The Nominating and Governance Committee shall review qualifications of and interview candidates for the Board and shall make recommendations to the Board for nominations for election of board members in accordance with the provisions of these Bylaws . The Nominating and Governance Committee shall recommend to the Board for its approval directors to serve as members of each committee of the Board and recommend a chairman thereof in accordance with the provisions of these Bylaws. Notwithstanding the foregoing, the members and chair of the Nominating and Governance Committee shall be appointed by the Board, without recommendation by the committee. The Nominating and Governance Committee shall develop and recommend to the Board for approval, corporate governance guidelines which set forth policies and procedures which are to be followed by the Board in matters of corporate governance. A quorum shall consist of at least one-third of the members of the committee, and in no event less than two (2) members of the committee. The vote of a majority of members present at any meeting at which a quorum exists including the presiding member, who shall be eligible to vote, shall constitute the action of the Nominating and Governance Committee. The Nominating and Governance Committee shall prepare a committee charter which shall be reviewed annually by the committee and approved and adopted by the committee and the Board.

     Section 6. Other Committees. The Board may by resolution authorize such other committees as from time to time it may deem necessary or appropriate for the conduct of the business of the Corporation. The members of each committee so authorized shall be appointed by the Board from members of the Board, upon recommendation by the Nominating and Governance Committee. In addition, the Chairman and the President may be ex-officio members of each such committee. Each such committee shall exercise such powers as may be assigned by the Board to the extent not inconsistent with law, these Bylaws, the Certificate of Incorporation or resolutions adopted by the Board.

ARTICLE VI

OFFICERS

     Section 1. Designation of Executive Officers. The Board shall, at each annual meeting, elect a President and a Secretary, and may elect a Chairman and such other officers as

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the Board from time to time may deem necessary or the business of the Corporation may require. The Nominating and Governance Committee shall recommend, and the Board shall designate, either the Chairman or the President as the Chief Executive Officer, and the Nominating and Governance Committee may recommend, and the Board may designate, the President or an Executive Vice President to be the Chief Operating Officer. Any number of offices may be held by the same person except that no person may simultaneously hold the offices of President and Secretary.

     The election of all officers shall be made only by a vote of a majority of the entire Board. If such election is not held at the meeting held annually for the election of officers, such officers may be so elected at any subsequent regular meeting or at a special meeting called for that purpose, in the same manner above provided. Each person elected shall have such authority, bear such title and perform such duties as provided in these Bylaws and as the Board may prescribe from time to time. All officers elected or appointed by the Board shall assume their duties immediately upon their election and shall hold office at the pleasure of the Board. Whenever a vacancy occurs among the officers, it may be filled at any regular or special meeting called for that purpose, in the same manner as above provided.

     Section 2. Term of Office and Removal. Each officer shall serve until his or her successor is elected and duly qualified, the office is abolished or he or she is removed. Any officer may be removed at any regular or special meeting of the Board called for that purpose, with or without cause, by an affirmative vote of a majority of the entire Board.

     Section 3. Chairman of the Board. The Chairman of the Board shall perform such duties as the Board may from time to time assign to him or her, including, but not limited to, presiding at all meetings of the shareholders, the Board and the Executive Committee. The Chairman of the Board also shall have such powers and duties as are generally incident to the position of Chairman.

     Section 4. Chief Executive Officer. The Chief Executive Officer shall be so designated by the Board and may also hold the title of Chairman of the Board, and/or President. The Chief Executive Officer of the Corporation, subject to the direction of the Board, shall be responsible for assuring that the policy decisions of the Board are implemented as formulated. The Chief Executive Officer shall be responsible, in consultation with such officers and members of the Board as he or she deems appropriate, for planning the growth of the Corporation. The Chief Executive Officer shall be responsible for shareholder relations, relations with investments bankers, other similar financial institutions and financial advisors, and shall be empowered to designate officers of the Corporation and its subsidiaries to assist in such activities. The Chief Executive Officer shall be principally responsible for exploring opportunities for mergers, acquisitions and new business. The Chief Executive Officer shall have the general supervision and direction of all of the Corporations officers, subject to and consistent with policies enunciated by the Board. The Chief Executive Officer shall be authorized to sign instruments in the name of the Corporation. The Chief Executive Officer shall have such other powers as may be assigned to such officer by the Board or its committees. The Chief Executive Officer shall be a member ex-officio, with power to vote on all matters, of all committees of the Board, except the Audit Committee, the Compensation Committee and the Nominating and Governance Committee, subject to the limitations prescribed by law and applicable stock exchange listing requirements.

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     Section 5. President. The President shall be the Chief Executive Officer or the Chief Operating Officer of the Corporation, as determined by the Board, and shall be subject to the direction of the Board. The President shall perform such duties as from time to time may be assigned to him by these Bylaws, the Board or the Chairman. The President shall be a member ex-officio, with power to vote on all matters, of all committees of the Board, except the Audit Committee, the Compensation Committee and the Nominating and Governance Committee, subject to the limitations prescribed by law and applicable stock exchange listing requirements.

     In the absence of or disability of the Chairman, or if the office of the Chairman is vacant by reason of death, resignation, failure of the Board to elect a Chairman or otherwise, the President or such other person who the Board shall designate, shall exercise the powers and perform the duties which otherwise would fall upon the Chairman.

     Section 6. Chief Operating Officer. The Chief Operating Officer shall have the general supervision and direction of all of the Corporation’s operations and personnel, subject to and consistent with policies enunciated by the Board and the direction of the Chief Executive Officer. The Chief Operating Officer shall, under authority given to him or her, sign instruments in the name of the Corporation. The Chief Operating Officer shall have such other powers and duties as may be assigned to him by the Board, its committees or the Chief Executive Officer.

     Section 7. Vice Presidents. Executive Vice Presidents, Senior Vice Presidents, First Vice Presidents and Vice Presidents may be appointed by the Board to perform such duties as may be prescribed by these Bylaws, the Board or the Chief Executive Officer and the Chief Operating Officer as permitted by the Board.

     Section 8. Secretary. The Secretary shall attend all meetings of the Board and of the shareholders and shall record, or cause to be recorded, all votes and minutes of all proceedings of the Board and of the shareholders in a book or books to be kept for that purpose. The Secretary shall perform such executive and administrative duties as may be assigned by the Board, any committee of the Board, the lead Independent Director, the Chairman, the Chief Executive Officer, the President or the Chief Operating Officer. The Secretary shall have charge of the seal of the Corporation, shall submit such reports and statements as may be required by law or by the Board, shall conduct all correspondence relating to the Board and its proceedings, shall provide support to the Board in connection with corporate governance matters and shall have such other powers and duties as are generally incident to the office of Secretary and as may be assigned to him or her by the Board, any committee of the Board, the lead Independent Director, the Chairman, the Chief Executive Officer, the President or the Chief Operating Officer.

     Section 9. Treasurer. The Treasurer shall perform all acts and duties as are generally incident to the office of the Treasurer.

     Section 10. Comptroller. The Comptroller shall be responsible for the maintenance of adequate internal systems and records. The Comptroller shall maintain the general books of the Corporation relating to all assets, liabilities, receipts, disbursements and other financial transactions, and shall see that all expenditures are made in accordance with procedures duly established from time to time. The Comptroller shall prepare or cause to be prepared all reports pertinent to his office as may be required by the Board or regulatory authorities.

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     Section 11. Other Officers. Other officers appointed by the Board shall have such authority and shall perform such duties as may be assigned to them, from time to time, by the Board or the Chief Executive Officer.

     Section 12. Compensation Of Officers. The compensation of all officers shall be fixed from time to time by the Board, upon the recommendation of the Compensation Committee.

ARTICLE VII

DIVIDENDS

     The Board shall have the power, subject to the provisions of law and the requirements of the Certificate of Incorporation, to declare and pay dividends out of surplus (or, if no surplus exists, out of net profits of the Corporation, for the fiscal year in which the dividend is declared and/or the preceding fiscal year, except where there is an impairment of capital stock), to pay such dividends to the shareholders in cash, in property or in shares of the capital stock of the Corporation and to fix the date or dates for the payment of such dividends.

ARTICLE VIII

AMENDMENTS

     These Bylaws, except as provided by applicable law or the Certificate of Incorporation, or as otherwise set forth in these Bylaws, may be amended or repealed at any regular or special meeting of the entire Board by the vote of two-thirds of the members of the entire Board; provided, however, that a notice specifying the change or amendment shall have been given at a previous regular meeting and entered in the minutes of the Board; (b) a written statement describing the change or amendment shall be made in the notice delivered to the directors of the meeting at which the change or amendment shall be acted upon; and (c) any Bylaw made by the Board may be altered, amended, rescinded or repealed by the holders of shares of capital stock entitled to vote thereon at any annual meeting or at any special meeting called for that purpose in accordance with the percentage requirements set forth in the Certificate of Incorporation and/or these Bylaws. Notwithstanding the foregoing, any provision of these Bylaws that contains a supermajority voting requirement shall only be altered, amended, rescinded or repealed by a vote of the Board or holders of capital stock entitled to vote thereon that is not less than the supermajority specified in such provision.

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EX-10.1

Exhibit 10.1
Agreement between Hudson City Bancorp, Inc. and John M. Tassillo, Executive Vice-President and
Treasurer

June 5, 2007

Mr. Ronald E. Hermance, Jr.
Chairman and Chief Executive Officer
Hudson City Bancorp, Inc.
West 80 Century Road
Paramus, New Jersey

Dear Ron:

     This letter (the “Letter Agreement”) will confirm the discussions that we have had concerning the beginning of transition in my status as an executive officer of Hudson City Savings Bank (the “Bank”) and Hudson City Bancorp, Inc. (the “Company”) in contemplation of my eventual retirement.

     1. Resignation as Executive Officer. I hereby resign from my position as Executive Vice President and Treasurer of the Bank and the Company, and from all other positions which I hold as an officer of the Bank or the Company, effective at the close of business on June 8, 2007 (the “Effective Date”). From and after the Effective Date, I will not have or exercise any of the power, authority or discretion conferred on an officer of the Company or the Bank, including but not limited to the power to sign documents and instruments or make policy decisions and the authority to direct the activities of other personnel of the Bank or the Company.

     2. Transition Services. Following the Effective Time, I will continue as a non-officer employee of the Company and the Bank. Effective beginning on the day after the Effective Date, I will serve in the position of Senior Advisor to the Chief Executive Officer and will report to the Chief Executive Officer. In this capacity, I will assist in an orderly transition to my successors of my duties as Executive Vice President and Treasurer and will advise senior management on strategic and operational matters concerning the Bank and the Company and their respective businesses as the Chief Executive Officer or his designees may request.

     3. Effect on Employment Agreement. Section 3(a) the Employment Agreement between me and the Bank made and entered into on June 7, 2005 (the “Bank Agreement”) and section 3(a) of the Employment Agreement between me and the Company made and entered into on June 7, 2005 (the “Company Agreement”) are each hereby amended, effective as of the Effective Date, to substitute the title “Senior Advisor to the Chief Executive Officer” for the title “Executive Vice President and Treasurer” therein. We agree that such amendments and the change in duties and responsibilities resulting from the change in my title and position shall not constitute a breach of the Bank Agreement by the Bank or the Company Agreement by the Company or otherwise constitute grounds for me to resign with good reason pursuant to section 13 of the Bank Agreement or the Company Agreement. We further agree that the Employment Period provided under the Bank Agreement and the Company Agreement shall not be extended beyond their current expiration dates, with the effect that Employment Period under the Bank Agreement will

expire on June 7, 2009 and the Employment Period under the Company Agreement will expire on the day before third anniversary of the Effective Date (as defined herein). With the exception of the amendments set forth in this letter, the Bank Agreement and the Company Agreement (including, but not limited to, those provisions relating to directors’ and officers’ insurance coverage, indemnification rights and attorney fee reimbursement and the survival of such items following the expiration of the applicable Employment Period) remain in full force and effect notwithstanding the change in my status from that of executive officer to that of a non-officer employee. We agree that this Letter Agreement constitutes the written instrument required to amend the Bank Agreement and the Company Agreement and the written notice required to discontinue automatic extensions of the Employment Period under the Company Agreement.

     If this Letter Agreement accurately reflects our discussions, kindly so indicate by countersigning in the space provided below.

Very truly yours,

/s/ John M. Tassillo

John M. Tassillo

Accepted and Agreed to:

Hudson City Savings Bank
By:	/s/ Ronald E. Hermance, Jr. Ronald E. Hermance, Jr.
	Chairman, President & Chief Executive Officer
Hudson City Bancorp, Inc.
By:	/s/ Ronald E. Hermance, Jr. Ronald E. Hermance, Jr.
	Chairman, President & Chief Executive Officer

EX-31.1

EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Ronald E. Hermance, Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Hudson City Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-l5(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2007	By:	/s/ Ronald E. Hermance, Jr.
		Ronald E. Hermance, Jr.
		Chairman, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, James C. Kranz, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Hudson City Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-l5(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2007	By:	/s/ James C. Kranz
		James C. Kranz
		Senior Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

STATEMENT FURNISHED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350

The undersigned, Ronald E. Hermance, Jr., is the chief executive officer of Hudson City Bancorp, Inc. (the “Company”), and James C. Kranz, is the principal financial officer of the Company.

This statement is being furnished in connection with the filing by the Company of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (the “Report”).

By execution of this statement, we certify that:

1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)), and
2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

Date: August 8, 2007	By:	/s/ Ronald E. Hermance, Jr.
		Ronald E. Hermance, Jr.
		Chairman, President and Chief Executive Officer
Date: August 8, 2007	By:	/s/ James C. Kranz
		James C. Kranz
		Senior Vice President and Chief Financial Officer