Although M&T Bank Corp. (NYSE:MTB) has had commercial bankers in the New York City area, it has never had a branch presence there.
That’s about to change with its acquisition of Paramus, N.J.–based Hudson City Bancorp, Inc. (NASDAQ: HCBK).
“We’ve always believed that a strong branch presence is a key component of commercial banking,” M&T Chairman and CEO Robert Wilmers said during a conference call in August on the deal. “And Hudson City’s branch network should enable us to take our efforts in the greater New York metropolitan area to a higher level.”
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The $3.7 billion deal will bring Buffalo–based M&T $25 billion in deposits and $28 billion in loans. Most of Hudson City’s 135 branches are in New Jersey, where M&T said it will have the fourth largest deposit share following the acquisition’s closing.
Hudson City has other branches in downstate New York and Connecticut.
Buffalo–based M&T is the leading bank in the Syracuse–area deposit market with 30 branch offices, more than $2.2 billion in deposits, and a market share of more than 21.2 percent. It is number two in the Utica–Rome market with 13 branches, more than
$615 million in deposits, and a market share of about 16.8 percent.
M&T also leads the Binghamton–area market with a deposit market share of 48.7 percent, 16 branches, and more than $1.2 billion in deposits, according to the latest statistics from the Federal Deposit Insurance Corp.
The bank has $80.8 billion in total assets and more than 780 branches in New York, Pennsylvania, Maryland, Virginia, West Virginia, Delaware, and Washington, D.C.
Hudson City’s branch footprint is adjacent to M&T’s and there is little overlap, according to M&T. Hudson City currently has $43.6 billion in assets.
Hudson City leaders first began examining the bank’s future prospects during the recession, Hudson City Chairman and CEO Ronald Hermance said during the conference call. The bank lost $736 million in 2011.
Bank leaders knew their customers would want the types of broad services M&T offers and they were prepared to pursue that type of expansion on their own, Hermance added. But the acquisition will bring customers those services faster.
Hudson City’s main business currently focuses on deposits and residential mortgage loans, according to M&T.
The deal brings M&T significant commercial-lending opportunities with more than 7,500 mid-market customers and 300,000 small businesses in the new markets, M&T Executive Vice President and CFO Rene Jones said during the conference call. He also noted that M&T is funded by deposits in all the markets where it makes commercial loans except the New York City area.
The new markets also bring desirable, affluent households as potential new M&T customers, he added. Growing the retail branch presence in Hudson City’s markets will be important even after the acquisition is complete, Jones said.
Even though the deal involves minimal branch overlap, M&T expects to generate cost savings of 24 percent, Jones said. Most of that will come from reducing redundant outsourced data processing and servicing agreements.
The deal is expected to close in the second quarter of 2013. It must be approved by regulators and shareholders from both banks.
Contact Tampone at ktampone@cnybj.com
