Sound Federal's Reasons for Selling to Hudson City Bancorp (HCBK)

Who could have predicted yesterday’s announcement that Hudson City Bancorp (HCBK) planned to acquire Sound Federal (SFFS)? Well, maybe not the acquirer. But the fact that Sound Federal was shopping itself around became very apparent when it filed this 8-K where the words “change in control” appeared a whopping 95 times. That was on Dec. 14.

While it’s still too early to figure out exactly what the bank’s top two executives will walk away with, an earlier filing indicates that it will be nearly $1 million for the CEO and over $700K for the CFO. That’s just the cash severance. Also included are benefits through age 70, which considering that the CFO is only 45, is not an inconsiderable amount of money.

But what was particularly interesting was this article in my local paper this morning. It seems Sound Federal had to sell because Sarbanes-Oxley costs were killing the bank. For a bank with over $1 billion in assets, it had to pony up $500K to cover SOX. Uh-huh.That’s what sent the bank over the edge. Anyone want to let out a communal groan? As my grandfather used to say, my piles are bleeding for them.