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Hudson City’s 2Q earnings drop

Hudson City Bancorp reported second-quarter net income of $35.7 million, down 9 percent from $39.2 million a year ago.

The New Jersey-based bank reported diluted earnings of 7 cents per share, down from 8 cents a year ago. Buffalo-based M&T plans to acquire Hudson City, a deal that was announced in 2012 but is awaiting federal regulatory approval.

Hudson City’s net interest income declined 52 percent from a year ago, to $56.5 million, while its non-interest income from sources such as fees soared to $68.6 million from $21.2 million a year ago. That increase was fueled by gains in the sale of mortgage-backed securities.

Hudson City during the first quarter had suspended sales of securities, anticipating the closing of the M&T deal on May 1. But when the merger deadline was delayed, the bank resumed the of securities in the second quarter.

Hudson City said for the past several quarters it has managed its balance sheet on a “dual-track strategy,” including implementing its strategic plan initiatives and preparing for the M&T merger.

“The operational core of the strategic plan includes the expansion of our loan and deposit product offerings over time and the diversification of our revenue sources,” the bank said.

The merger deadline, after which either party could walk away without a financial penalty, is Oct. 31. The banks have said the Federal Reserve intends to act on their merger application by Sept. 30.