The 2012 agreement for Hudson City Bancorp of Paramus to be acquired by Buffalo, N.Y.-based M&T Bank Corporation is being delayed again.
The deal, put on hold in April while bank regulators examined M&T's bank secrecy and anti-money-laundering compliance, on Tuesday was further extended to Dec. 31, 2014. The terms of the deal remain the same.
In the meantime, Hudson City Chief Executive Ronald E. Hermance Jr. said his bank will move forward with a strategic plan to diversify the bank's business model into second mortgages, commercial real estate lending, small business products and a more robust suite of consumer banking products.
In a joint announcement, the banks said additional time is required for regulatory review, so they will extend the time to complete their merger until Dec. 31, 2014. This is the second extension of the deal; in April the bank's extended the deal to Jan. 31, 2014.
Now the banks have agreed to extend until Dec. 31, 2014, the date after which either party may elect to terminate the merger agreement if the merger has not yet been completed.
"We continue to believe strongly that a merger with Hudson City is beneficial to both institutions, their shareholders and the communities we serve," Rene F. Jones, chief financial officer of M&T, said in a statement. "We could not have asked for a better partner than Hudson City as we continue to work towards a successful outcome."
The statement said M&T has received no assurance from the Federal Reserve as to whether or when the Federal Reserve will approve the merger.
"However, M&T and Hudson City believe that the earliest time the merger could be completed is in the latter half of 2014," Jones said.
Hermance said Hudson City is still eager for the deal.
M&T and Hudson City announce extension of the merger agreement : http://t.co/6zQIceVQ1E— M&T Bank (@MandT_Bank) December 17, 2013
"While all parties are disappointed that the transaction is delayed further, we are gratified that M&T continues to see the value in the Hudson City franchise," he said in the statement. "Our board of directors continues to believe that the M&T transaction is ultimately in the best interest of the company and our shareholders, but is also committed to diversifying our business model by continuing to pursue our strategic plan."
Prior to the merger announcement, Hudson City had retained an outside consultant to help the bank develop a strategic plan, which envisions expanding the bank's loan and deposit product offerings over time to create more balanced sources of revenue and funding.
"We believe that the markets in which we operate provide significant opportunities for the Hudson City brand to capture market share in products and services that we have not actively pursued previously," Hermance said.
Those products and services include secondary mortgage market operations, commercial real estate lending, the introduction of small business banking products and developing a more robust suite of consumer banking products.
The banks said given the further delay in closing the transaction, Hudson City should proceed with its strategic plan and start rolling out its new initiatives during 2014.
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