Hudson City Bancorp Inc., one of the largest residential lenders in the mid-Atlantic area, on Friday pulled the plug on a plan to move to a commercial bank from a thrift holding company.
The Paramus, N.J., company said Hudson City Savings Bank has withdrawn its application with the Office of the Comptroller of the Currency to convert to a federal savings bank charter. The company had filed its request in March.
Ronald Hermance Jr., the president and chief executive of Hudson City, said the company made the decision because there was "no more uncertainty" over the future of the thrift charter, which will survive once the Office of Thrift Supervision merges with the OCC.
On July 21, 2011, authority over thrift holding companies will go to the Federal Reserve Board and the OCC will become the regulator for all federal thrifts. The OTS dissolves 90 days later.
A thrift charter is "compatible" with Hudson City's business plan of originating and purchasing residential mortgages and attracting deposits, Hermance said.
Hermance added that as a thrift Hudson City would be subject to the supervision of the OCC's midsize bank group, which would have been its regulator even if it had converted to a national bank.
The parent company will become subject to the regulation and supervision of the Fed once the OTS and the OCC are merged.
Mark Fitzgibbon, an analyst at Sandler O'Neill & Partners LP, questioned the move.
"Although we have no way of knowing for sure, we have heard anecdotally in the past that the OCC is particularly tough when it comes to evaluating interest rate risk," Fitzgibbon wrote in a Friday note to clients.
"And, Hudson City's balance sheet does contain a fair bit of interest rate risk," added Fitzgibbon, who has a "hold" rating on the company's stock.
Among residential lenders, Hudson City ranks 27th nationwide, according to figures compiled by National Mortgage News and the Quarterly Data Report.
Separately, the $60.6 billion-asset company said it had promoted Denis J. Salamone as its new president. Hermance had been the company's president.
Salamone, who was previously Hudson City's chief operating officer, joined the company in 2001. Before that, he had been a partner and a financial services leader at PriceWaterhouseCoopers.