88 billion for the fourth quarter of 2007

The increase in mortgage loanincome was also due to a 5 basis point increase in the weighted-average yieldto 5.79.Notwithstanding the decrease in long-term market interest ratesnoted above, mortgage rates have maintained a wider credit spread resulting inhigher yields on mortgage loans relative to U.S. The decrease in theyield during the quarter is a result of the decrease in market rates.Interest on mortgage-backed securities increased $287.1 million to $875.0million for the year ended December 31, 2008 as compared to $587.9 million forthe year ended December 31, 2007.This increase was due primarily to a $5.30billion increase in the average balance of mortgage-backed securities to$16.69 billion during 2008 as compared to $11.39 billion for 2007, and an 8basis point increase in the weighted-average yield to 5.24.The increases in the average balances of mortgage-backed securities were dueto purchases of variable-rate mortgage-backed securities as part of ourinterest rate risk management strategy.Since a substantial portion of ourloan production consists of fixed-rate mortgage loans, the purchase ofvariable-rate mortgage-backed securities provides us with an asset thatreduces our exposure to interest rate fluctuations while providing a source ofcash flow from monthly principal and interest payments.The increase in theweighted average yields for 2008 on mortgage-backed securities is a result ofthe purchase of new securities during the second half of 2007 and the firsthalf of 2008 when market interest rates were higher than the yield earned onthe existing portfolio.Dividends on FHLB stock decreased $5.4 million or 42.5 to $7.3 million forthe fourth quarter of 2008 as compared to $12.7 million for the fourth quarterof 2007.This decrease was due to a 408 basis point decrease in the averageyield earned to 3.45 as compared to 7.53 for the fourth quarter of 2007. The decrease in the average yield earned was partially offset by a $173.2million increase in the average balance to $845.1 million for the fourthquarter of 2008 as compared to $671.9 million for the same quarter in 2007. For the year ended December 31, 2008, dividends on FHLB stock increased $8.5million or 21.5 to $48.0 million as compared to $39.5 million for 2007.Thisincrease was due to a $204.3 million increase in the average balance to $790.3million for 2008 as compared to $586.0 million for 2007.This increase waspartially offset by a 67 basis point decrease in the average yield earned to6.07 as compared to 6.74 for 2007.Total interest expense for the three months ended December 31, 2008 increased$34.2 million, or 8.2, to $451.5 million as compared to $417.3 million forthe three months ended December 31, 2007.This increase was primarily due toa $9.21 billion, or 24.3, increase in the average balance of totalinterest-bearing liabilities to $47.09 billion for the quarter ended December31, 2008 compared with $37.88 billion for the fourth quarter of 2007.

Thisincrease in interest-bearing liabilities was primarily used to fund assetgrowth. The increase in the average balance of total interest-bearingliabilities was partially offset by a 56 basis point decrease in theweighted-average cost of total interest-bearing liabilities to 3.81 for thequarter ended December 31, 2008 compared with 4.37 for the quarter endedDecember 31, 2007.Total interest expense for the year ended December 31, 2008 increased $230.9million, or 15.6, to $1.71 billion as compared to $1.48 billion for the yearended December 31, 2007.This increase was primarily due to an $8.92 billion,or 26.0, increase in the average balance of total interest-bearingliabilities to $43.28 billion for the year ended December 31, 2008 comparedwith $34.36 billion for the corresponding period in 2007. This decrease was partially offset by a $2.93 billionincrease in the average balance of interest-bearing deposits to $17.37 billionduring the fourth quarter of 2008 as compared to $14.44 billion for thecomparable period in 2007.For the year ended December 31, 2008, interest expense on deposits decreased$25.5 million to $581.4 million as compared to $606.9 million for the yearended December 31, 2007.This decrease is due primarily to a 79 basis pointdecrease in the average cost of deposits to 3.62 for the year ended December31, 2008 as compared to 4.41 for the comparable period in 2007. This decreasewas partially offset by a $2.32 billion increase in the average balance ofinterest-bearing deposits to $16.08 billion for the year ended December 31,2008 as compared to $13.76 billion for 2007.The increases in the average balance of interest-bearing deposits reflect ourgrowth strategy.In addition, we believe the turmoil in the credit and equitymarkets have made deposit products in strong financial institutions desirablefor many customers. The decrease in the average cost of deposits for thethree- and twelve-month periods reflected lower market interest rates.AtDecember 31, 2008, time deposits scheduled to mature within one year totaled$12.48 billion with an average cost of 3.61.Interest expense on borrowed funds increased $49.7 million to $303.5 millionfor the fourth quarter of 2008 as compared to $253.8 million for the fourthquarter of 2007 primarily due to a $6.27 billion increase in the averagebalance of borrowed funds to $29.71 billion as compared to $23.44 billion forthe fourth quarter of 2007.The weighted average cost of borrowed fundsdecreased 24 basis points to 4.06 for the fourth quarter of 2008 as comparedto 4.30 for the fourth quarter of 2007.Interest expense on borrowed funds increased $256.5 million to $1.13 billionfor the year ended December 31, 2008 as compared to $873.4 million for theyear ended December 31, 2007 primarily due to a $6.61 billion increase in theaverage balance of borrowed funds to $27.20 billion as compared to $20.59billion in 2007.The weighted average cost of borrowed funds decreased 9basis points to 4.15 for the year ended December 31, 2008 as compared to4.24 for 2007.Borrowed funds were used to fund a significant portion of the growth ininterest-earning assets.The decrease in the average cost of borrowings forthe three- and twelve-month periods reflected new borrowings in 2008, whenmarket interest rates were lower than existing borrowings and borrowings thatwere called.Substantially all of our borrowings are callable quarterly atthe discretion of the lender after an initial non-call period of one to fiveyears with a final maturity of ten years.We anticipate that none of theborrowings will be called in 2009 assuming that market interest rates remainat current levels.The provision for loan losses amounted to $9.0 million for the quarter endedDecember 31, 2008 as compared to $2.0 million for the quarter ended December31, 2007 and amounted to $19.5 million for the year ended December 31, 2008 ascompared to $4.8 million for the year ended December 31, 2007. The increasein the provision for loan losses was due primarily to an increase innon-performing loans and growth in the loan portfolio.Non-performing loans,defined as non-accruing loans and accruing loans delinquent 90 days or more,amounted to $217.6 million at December 31, 2008 and $79.4 million at December31, 2007. The ratio of non-performing loans to total loans was 0.74 atDecember 31, 2008 compared with 0.33 at December 31, 2007.

The allowancefor loan losses amounted to $49.8 million and $34.7 million at December 31,2008 and December 31, 2007 respectively. The allowance for loan losses as apercent of total loans and non-performing loans was 0.17 and 22.89,respectively at December 31, 2008, as compared to 0.14 and 43.75,respectively at December 31, 2007.We recorded net charge-offs of $1.8million for the three months ended December 31, 2008 as compared to netcharge-offs of $109,000 for the same period in 2007. For the year endedDecember 31, 2008, net charge-offs amounted to $4.4 million as compared to netcharge-offs of $684,000 for 2007.The increase in charge-offs was relatedprimarily to non-performing residential mortgage loans for which appraisedvalues indicated declines in the value of the underlying collateral.Total non-interest income was $2.0 million for the fourth quarter of 2008compared with $1.9 million for the fourth quarter of 2007. The increase in non-interest income is primarily due toan increase in service charges on deposits as a result of deposit accountgrowth.Total non-interest expense increased $7.5 million, or 16.7, to $52.3 millionfor the fourth quarter of 2008 from $44.8 million for the fourth quarter of2007. The increase is primarily due to a $3.8 million increase in compensationand employee benefits expense, a $2.1 million increase in Federal depositinsurance expense and a $945,000 increase in other non-interest expense.Theincrease in compensation and employee benefits expense included a $1.6 millionincrease in compensation costs, due primarily to normal increases in salaryand additional full time employees for our new branches, and a $601,000increase in stock option plan expense.At December 31, 2008, we had 1,451full-time equivalent employees as compared to 1,307 at December 31, 2007.Theincrease in the Federal deposit insurance expense is the result of anassessment credit that was used to offset our 2007 deposit insuranceassessment.Included in other non-interest expense for the fourth quarter of2008 were write downs on foreclosed real estate and net losses from the saleof foreclosed real estate of $218,000 as compared to $157,000 for the fourthquarter of 2007.Total non-interest expense increased $30.2 million, or 18.0, for the yearended December 31, 2008 to $198.1 million compared with $167.9 million during2007.

The increase is primarily due to a $20.6 million increase incompensation and employee benefits expense, a $2.6 million increase in Federaldeposit insurance expense and a $5.9 million increase in other non-interestexpense.The increase in compensation and employee benefits expense includedan $8.4 million increase in expense related to our employee stock ownershipplan primarily as a result of increases in our stock price and a $6.3 millionincrease in compensation costs, due primarily to normal increases in salaryand additional full time employees for our new branches, and a $2.3 millionincrease in stock option plan expense. The increase in the Federal depositinsurance expense is the result of an assessment credit that was used tooffset 100 of our 2007 deposit insurance assessment of $7.3 million.AtJanuary 1, 2008, we had a remaining assessment credit of $3.3 million whichwas used to offset a portion of our 2008 deposit insurance.Included in othernon-interest expense for the year ended December 31, 2008 were write-downs onforeclosed real estate and net losses on the sale of foreclosed real estate,of $1.3 million as compared to $112,000 for 2007.Our efficiency ratio was 19.91 for the three months ended December 31, 2008as compared to 25.92 for the three months ended December 31, 2007. Our ratioof non-interest expense to average total assets for the fourth quarter of 2008was 0.40 as compared to 0.41 for the fourth quarter of 2007. Our efficiencyratio for the year ended December 31, 2008 was 20.84 compared with 25.66 for2007.Our ratio of non-interest expense to average total assets for the yearended December 31, 2008 was 0.41 compared with 0.42 for 2007.Income tax expense amounted to $76.9 million for the three months endedDecember 31, 2008 as compared to $48.4 million for the corresponding period in2007.Our effective tax rate for the three months ended December 31, 2008 was38.23 as compared to 38.46 for the corresponding period in 2007.Income taxexpense for the year ended December 31, 2008 was $287.3 million as compared to$185.9 million for 2007.Our effective tax rate for the year ended December31, 2008 was 39.21 as compared to 38.59 for the year ended December 31,2007.Hudson City Bancorp maintains its corporate offices in Paramus, New Jersey.Hudson City Savings Bank, a well-established community financial institutionserving its customers since 1868, is ranked in the top twenty-five U.S.financial institutions by asset size and is the largest thrift institutionheadquartered in New Jersey.In addition, Hudson City Bancorp is ranked inthe top ten bank and thrift holding companies by residential mortgageportfolio.Hudson City Savings currently operates a total of 127 branchoffices in the New York metropolitan area.Forward-Looking StatementsThis release may contain certain "forward looking statements" within themeaning of the Private Securities Litigation Reform Act of 1995, and may beidentified 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.