In what is becoming a familiar story for Western New York, another regional bank in the Mid-Atlantic has agreed to be acquired by one of Buffalo’s growing financial giants, resulting in more profits, prestige and payroll for their hometown.
M&T Bank Corp. said Monday that it would pay $3.7 billion in cash and stock to buy Paramus, N.J.-based Hudson City Bancorp, parent of Hudson City Savings Bank.
The deal, expected to close next year if regulators and shareholders approve, gives M&T an additional 135 branches in three states and the No.?4 retail market share in New Jersey. And it catapults M&T over $100 billion in assets for the first time, moving it closer to the ranks of the nation’s Top 10 banks.
The purchase of Hudson City – largely a traditional savings bank that makes mortgages and takes consumer deposits – gives M&T an opportunity to leverage the other bank’s branch network to tap New Jersey’s vast business market for commercial loans and deposits. In turn, that’s a source of revenue and profit growth for years to come, even as M&T also uses the deal to boost its capital levels to appease investors and strengthen its position.
“There are geographies that are attractive to us, that we’re always thinking about and talking to people in those geographies,” M&T President Mark J. Czarnecki said. “New Jersey was a gap for us, and it made sense.”
It also will be a boon for the local job market. M&T’s mortgage business, which is based in Buffalo, has already been “growing very strongly in the last couple of years” because of the financial crisis and “opportunities that have come our way,” Czarnecki said. So the bank has added about 170 mortgage jobs since August 2011, and that trend is likely to continue.
The bank expects to add more than 200 jobs in Western New York, for a total of over 400 new jobs locally in the last few years.
“The acquisition of Hudson City Bancorp expands on the wide array of private sector investment opportunities that bolster Western New York as a world class hub for commerce and economic activity,” Gov. Andrew M. Cuomo said Monday in a news release. “This acquisition is a sign that a key industry cluster in Western New York – financial services – is strong and continues to grow and that major financial institutions can come to Western New York to thrive.”
As a result of the growth, the bank also leased another building on John Glenn Drive in Amherst, connected to its data center being relocated to the former HSBC Bank USA data center on Park Club Lane. So the jobs will be “scattered between downtown and the suburbs,” Czarnecki said.
“As in M&T’s prior mergers and acquisitions, it seems to have reinforced the employment here, and the significance of the people who are here,” Andrew J. Rudnick, president and CEO of the Buffalo Niagara Partnership. “It hasn’t done anything but continue to make this the corporate headquarters with all the jobs that are associated with it.”
It’s the latest example of M&T or cross-town rival First Niagara Financial Group buying a large bank outside New York on their march up the industry’s ranks.
“It reinforces this metro as a location for an expanding financial services center,” Rudnick said.
Since 2000, M&T has acquired eight banks or branch clusters in the Mid-Atlantic region, gaining a substantial business in Pennsylvania, Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
During the last four years, First Niagara has made three purchases to give it major operations in western and eastern Pennsylvania, Connecticut and Massachusetts. And that doesn’t count other acquisitions by both banks within the borders of New York, including First Niagara’s purchases of Greater Buffalo Savings Bank and HSBC Bank USA’s upstate New York branch network, as well as M&T’s acquisitions of Citibank’s Buffalo and Rochester branches and a bank in Utica.
All this while the rest of the country was struggling through the financial crisis and recession, and other banks were licking their wounds.
“To me, it’s interesting,” Rudnick said. “The banks like M&T that stayed close to their core competencies are the banks that are not only surviving well, but growing.”
Both banks will now be busy with digestion – M&T with Wilmington Trust and now Hudson City, and First Niagara with HSBC. But while First Niagara has reassured investors that it’s taking a break from deals, Czarnecki wouldn’t give any guarantee that M&T is out of the merger game.
”We don’t ever characterize ourselves as in or out,” he said. “We’re just going to be quite busy for a while.”