Continuing its rapid growth in the Northeast, M&T Bank in Buffalo, N.Y., announced early Monday that it is buying Hudson City Bancorp in Paramus, N.J., for $3.7 billion in cash and stock.
The deal for the $44 billion-asset Hudson City, which would be the largest in M&T's history, would add 135 branches in markets of New York, New Jersey and Connecticut, where the $80.8 billion-asset M&T has little presence. With the acquisition M&T would have roughly 870 branches stretching from Connecticut to Virginia.
The announcement of the deal comes a little more than a year after M&T substantially bulked up in the Middle Atlantic region with its acquisition of the Wilmington Trust in Delaware. In the last three years, M&T has also acquired three banks in the Baltimore area, including the $6 billion-asset Provident Bank of Maryland.
Historically a single-family lender, Hudson City has been revamping its balance sheet over the last two years to be less reliant on home loans and mortgage-backed securities. Just a few weeks ago, it announced plans to ramp up its commercial lending and sell more of its home loans on the secondary market.
In a news release Monday, Hudson City Chairman and Chief Executive Ronald Hermance said that the deal with M&T would accelerate its transformation and allow its shareholders to "participate in the growth of one of the nation's strongest and most successful banking franchises."
Hermance, the longtime face of Hudson City, is expected to join the boards of M&T and its bank subsidiary.
M&T said that once the deal is completed it intends to repay roughly $13 billion of Hudson City's long-term borrowings by liquidating its comparably sized investment portfolio. After shrinking that portion of Hudson City's balance sheet, M&T would retain Hudson City's $28 billion loan portfolio and $25 billion of deposits.