M&T Bank Completes Hudson City Branches Conversion

On Tuesday, expanding its footprint in the New Jersey-New York City-Connecticut area, Buffalo-based M&T Bank Corporation MTB completed the conversion of Hudson City Savings Bank branches, which it acquired in November 2015. Moreover, 121 Hudson City ATMs were reopened as M&T Bank ATMs.

Notably, M&T Bank now has 177 branches in total with deposits worth more than $24 billion and 1,965 employees in the tri-state area.

"Converting these offices into M&T Bank branches gives us a platform to expand our community banking model and significantly increase our lending in New Jersey and Connecticut. We look forward to deepening our relationships with our existing clients, and building strong relationships with our new customers, who will find many of the same friendly faces serving them at these branches," said M&T Area Executive Paula Mandell.

"At M&T, we are deeply committed to the success of the customers and communities we serve, and we look forward to the opportunity to bring that strong commitment into our new markets," said Robert G. Wilmers, M&T Chairman and CEO. "M&T will create a full-service, community-focused banking franchise providing a full range of services for consumers and business of all sizes, as well as our renowned wealth management and corporate trust solutions through Wilmington Trust."

Merger Detail

Reportedly, the cash-and-stock deal was valued at $5.3 billion, considerably higher than the estimated value of $3.7 billion when the deal was initially inked in August 2012.

On acquisition, 60% of Hudson City shares were being converted to the right to receive 0.08403 share of M&T Bank common stock for each Hudson City share, while the remaining shareholders got the right to receive $10.06 per share in cash.

Notably, 67.44% of Hudson City shareholders were elected to receive M&T common stock, while the remaining took the option to receive cash or made no election.

Further, as part of the merger, Denis J. Salamone, Chief Executive Officer and Chairman at Hudson, has joined M&T Bank’s board of directors.

Conclusion

Given M&T Bank’s willingness to complete this challenging merger, we remained optimistic about this deal, which has expanded the company’s retail branch network in eastern U.S. Notably, the company has gained access to 135 Hudson branches, situated primarily in New Jersey. Further, product and balance-sheet diversification, stemming from the acquisition, will likely support the company’s top line.

While long-term outcome of the merger is difficult to predict, we anticipate integration-related expenses to pose a major headwind in the next few quarters. Notably, escalating expenses, which limit operational efficiency, are already a major hindrance for M&T Bank’s earnings.

Currently, M&T Bank carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the finance space include Independent Bank Corporation IBCP, Chemical Financial Corporation CHFC and PrivateBancorp, Inc. PVTB. All three stocks sport a Zacks Rank #1 (Strong Buy).

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