M&T Bank Corporation Receives Approval for Hudson City Bancorp Merger

30 Sep 2015 | Author: | No comments yet »

Fed oks M&T deal for Paramus-based Hudson City.

M&T Bank Corp. of Buffalo moved a step closer to merging with Paramus-based Hudson City Bancorp Inc. after the Federal Reserve approved the deal Wednesday. The regulator had told the lenders it would reach a decision on the proposed deal by the end of this month, Paramus, New Jersey-based Hudson City said in April. The long wait means Buffalo, N.Y.-based M&T is now set to pay more for less: The value of the stock-and-cash deal has grown as M&T shares have risen, while Hudson City’s deposits and loans have both shrunk since the initial announcement. “We are fully committed to this merger, because we continue to believe strongly that it remains an extremely beneficial opportunity for both companies, including the shareholders, customers and communities we serve,” M&T Chief Executive Robert Wilmers said in an April news release.

But the Fed’s approval removes a major hurdle for a merger that has at times been valued at more than $5 billion, but held up over concerns about M&T’s compliance with the Bank Secrecy Act and its anti-money-laundering compliance programs. The delay, which analysts have called one of the longest in U.S. banking history, has served as a cautionary tale for other lenders seeking to get larger through acquisitions and has exacerbated a slowdown in deal-making. Paramus, N.J.-based Hudson City and M&T first reached a merger agreement in August 2012 for a stock-and-cash deal, but the two companies have extended the deadline several times. Last week, Hudson City, which has 97 New Jersey branches, entered into a $32.75 million settlement involving a mortgage-lending discrimination investigation by the U.S.

It is the largest pending bank deal in the U.S. and would create the 14th-largest U.S. commercial bank, with combined assets of about $132 billion, according to Bloomberg Business. Salamone, Hudson City’s chairman and CEO, said in a prepared statement Wednesday. “When M&T approached us about a potential merger, we quickly realized that they had the business model we aspired to and that M&T could deploy it much more quickly for the benefit of our customers and the community. “We also found their integrity and care for their customers was very similar to Hudson City’s values and culture. We believed it then and feel as strongly about it now.” The news comes after Hudson City agreed last week to pay nearly $33 million to settle allegations about discriminatory lending practices in black and Hispanic neighborhoods.

M&T Chief Financial Officer René Jones said on an earnings call in July that the bank had reached a number of “milestones” in the revamp of its anti-money-laundering program. The bank denied the allegations by the Department of Justice and the Consumer Financial Protection Bureau, but said it wanted to avoid litigation so it could focus on “continuing to provide fair credit services to its customers and working to complete its pending merger with M&T Bank.” Hudson City operates 135 branches, including 97 in New Jersey, the news release said. As a thrift, Hudson City focused primarily on deposits and mortgages.” He added that he was gratified by the commitment of M&T employees “to strengthening and sustaining our risk and regulatory compliance programs as we position M&T for future growth.

Other buyers awaiting regulatory approval for deals include Winston-Salem, North Carolina-based BB&T Corp., which agreed in August to acquire National Penn Bancshares Inc. for $1.8 billion of cash and stock.

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