Robert Wilmers' marathon acquisition continues to get longer.

Wilmers, chairman and chief executive of M&T Bank, wrote in his latest annual letter to shareholders that his company's planned purchase of Hudson City Bancorp in Paramus, N.J., was "more of a marathon than a sprint" as M&T struggled to get the Federal Reserve Board's blessing.

Hudson City, for its part, thought it could see the finish line, taking steps in recent weeks to prepare for a May 1 closing. Hudson City said that a call from M&T late Friday providing notice of another Fed delay doused its optimism, prompting the company's board to seek time to weigh its options before granting what would be a fourth extension to the deal's termination deadline.

The $37 billion-asset Hudson City seems to be in a better position — compared to the prior extension in December — to mull its future. The Office of the Comptroller of the Currency recently released the company from a three-year-old memorandum of understanding. Hudson City has right-sized its balance sheet, and its capital levels have strengthened.

The latest delay does not automatically doom the transaction, but it certainly raises new questions about Hudson City's future and the Fed's internal machinations.

"The board … needs more time to understand the nature and timing of the delay and its potential impact on the transaction before the board can determine its course of action," Dennis Salamone, who became Hudson City's chief executive after the September death of Ron Hermance, said in a brief press release Monday. Hermance is largely credited for helping orchestrate the sale to M&T.

Hudson City can still opt to pursue a merger with the $97 billion-asset M&T. But backing out is also an option, and it seems as though Hudson City's board plans to take some time to evaluate that possibility, industry observers said.

Representatives for M&T and the Fed declined to comment. Efforts to reach Hudson City were unsuccessful.

M&T, which is based in Buffalo, N.Y., will likely maintain its resolve to complete the deal, said Gerard Cassidy, an analyst at RBC Capital Markets. "I don't expect them to throw in the towel at all," he said.

M&T, which has built up a significant portfolio of commercial loans in New Jersey, covets the consumer business and deposits at Hudson City, Cassidy added.

Hudson City, for its part, characterized the latest delay as unexpected. Just two weeks ago, the banks had started taking steps toward completing the merger, notifying Hudson City's investors of the election deadline for the deal consideration and declaring a blackout period for certain stock-based plans. (The blackout period, originally set to run from April 21 to the week of May 10, has been suspended.)

"You'd think they would not have done that without talking to regulators," Cassidy said.

It is difficult to ascertain the nature of the regulatory bottleneck. Each company is markedly healthier than they were in 2012.

Hudson City's nonperforming assets are down 23% from the end of 2012, to $932 million, while its ratio of shareholder equity to total assets has risen to 13.08% from 11.58% over that time. M&T has experienced similar trends in the last two years; it nonperforming assets are also down 23%, to $863 million, and its ratio of shareholder equity to assets strengthened to 12.76% from 12.29%.

M&T also passed its most recent Comprehensive Capital Analysis and Review with a projected Tier 1 capital ratio of 6.9%.

Prior delays were attributed to the Fed's concerns about M&T's Bank Secrecy Act and anti-money-laundering controls. Since June 2013, the company has been operating under a memorandum of understanding with the Fed, but it has been working actively to address its problems.

M&T spent $151 million last year on BSA and anti-money-laundering enhancements, Wilmers wrote in his recent letter, noting that 630 employees had been working on the issue.

"When the [deal] was first rejected, M&T had to address Bank Secrecy Act and anti-money-laundering concerns. It's our belief it has done so satisfactorily," Cassidy said. "M&T has done everything it's been asked."

It is possible that the issues might have less to do with bank operations than conflicts among regulators, Cassidy said. "I'm wondering if it is more an internal issue with" the Fed, he said.

The ongoing delay may be indicative of a move by the Fed to rein in the system's 12 district banks. "Washington believes the New York [Fed], in particular, is too close to the institutions it regulates," Cassidy suggested.

Most analysts who have commented on the delay believe the deal will close — eventually. In a note Monday, Keefe Bruyette & Woods analyst Brian Klock predicted that Hudson City's board would agree to another extension. "There is no guarantee that a deal with a new buyer could close before the M&T deal would," Klock wrote.

Hudson City's board still seems to be leaning toward M&T, even as it mulls other options.

"We continue to believe the strategic and economic fundamentals of the merger of Hudson City and M&T are attractive to Hudson City's shareholders, customers and the communities we serve," Salamone said in Monday's release.

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