Hudson City Bancorp: Counting Chickens And Eggs
Ashleigh Rogers • 12 Comments
Ashleigh Rogers • 12 Comments
Jul. 22, 2014, 5:30 PM
May 14, 2014, 10:17 AM
- Among those started at Buy is M&T Bank (MTB -0.9%), with analyst Bill Carcache noting the usually strong performer has lagged over the past 16 months amid regulatory issues and the delay of the Hudson City Bancorp (HCBK -1%) acquisition. Carcache expects approval this year, along with meaningful operating efficiency improvements. "We believe MTB shares are trading at a significant discount to their intrinsic value and expect to see meaningful share price appreciation through 2015."
- Also a Buy is Wells Fargo (WFC -0.8%), with Carcache seeing the bank as well-positioned if the economic recovery remains muted thanks to a combination of fee income and expense control.
- Started at Reduce with $40 price target is Comerica (CMA -1.7%), with Carcache saying the stock price has gotten ahead of itself.
- See also: More on Nomura's wide-ranging new bank coverage
May 12, 2014, 9:53 AM| May 12, 2014, 9:53 AM
Apr. 29, 2014, 8:24 AM
- Net income of $42.5M or $0.09 per share vs. $47.9M and $0.10 one year ago. Quarterly dividend is $0.04.
- Net interest income falls 25.4% Y/Y to $132.3M, with net interest margin of 1.41% from1.8%. Bank is also pulling back its horns a bit amid worry about higher rates at the long end. "We continue to carry an elevated and increasing level of overnight funds since we do not want to invest in longer duration assets at these low interest rates."
- Noninterest income of $17.8M up from $2.5M thanks to a big gain-on-sale of MBS. Noninterest expense of $79.7M falls from $81.3M.
- Tangible book value per share of $9.29 up from $9.21 at end of 2013. Tier 1 leverage ratio of 11.03% up from 10.82%.
- Previously: Hudson City Bancorp beats by $0.02
- HCBK no trades premarket
Apr. 29, 2014, 8:06 AM
- Hudson City Bancorp (HCBK): Q1 EPS of $0.09 beats by $0.02.
Apr. 28, 2014, 5:30 PM
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Apr. 24, 2014, 7:15 AM
Feb. 19, 2014, 7:12 AM
Feb. 3, 2014, 1:40 PM
- M&T's (MTB -1.4%) purchase of Hudson City Bancorp (HCBK -1.2%) - first announced in August 2012 - has been stuck in a regulatory morass, with D.C. insisting M&T beef up its money-laundering compliance before approval is granted.
- The numbers that day in August assumed an 18% IRR on the purchase for M&T, but updating his team's model, Citi's Keith Horowitz calculates it to be closer to 20% thanks to the increase in M&T's stock price and Hudson City's better position today - its quarterly expense run rate in 13% lower, the balance sheet is 11% smaller which offsets the higher deal cost by improving the capital ratio. Horowitz expects the deal to add 3% to M&T's EPS, improving to 7% within a couple of years.
- Horowitz, however, rates M&T at just a Neutral given the risks to the stock due to its premium valuation - it trades at 4.1x tangible book vs. a "normal" of 2.5x.
Jan. 29, 2014, 10:08 AM
- "We believe market interest rates still remain too low to compel us to pursue any balance sheet growth in the near-term," says Hudson City Bancorp (HCBK +0.9%) CEO Ronald Hermance in the company's Q4 earnings release. The good news is declining net interest margins may have run their course - falling just one basis point during the Q to 1.47%; they were 1.97% a year ago.
- The shrinking balance sheet - assets fell $1.99B during 2013 - boosted Tier 1 capital leverage to 10.82%.
- Management is considering a number of plans to cut interest rate risk this year, with something likely to be in place by H2 and forcing quarterly results into the red.
Jan. 29, 2014, 8:06 AM
- Hudson City Banc (HCBK): Q4 EPS of $0.09 beats by $0.02. (PR)
Jan. 21, 2014, 9:58 AM
- M&T Bank (MTB -1%) and Hudson City Bancorp (HCBK -1.1%) are again the laggards in a nicely green regional bank sector (KRE +1.9%) as Raymond James pulls its Buy rating on M&T following last week's earnings report.
- At issue with the results are the high costs M&T is experiencing to upgrade its infrastructure to comply with the Bank Secrecy Act and anti-money laundering laws. The immediate need for all the work is to please regulators currently holding up the Hudson City takeover, but management insists it's something which would need to be done anyway.
Jan. 17, 2014, 3:16 PM
- "You can't give a measure of completion because it's a dynamic process, so we work with our teams to build out a process, we go through that, we have those processes validated by outside parties," says M&T (MTB -2.8%) CFO Rene Jones on the earnings call to analysts who mostly just wanted to hear about progress the Bank Secrecy Act and anti-money laundering compliance - and when the Hudson City takeover (HCBK -2.7%) might close.
- CC transcript
- Previous earnings coverage
- Management expects expenses on upgrading the bank infrastructure to begin declining in size by Q4. Jones does say both banks have reviewed the economics of the deal and remain very committed to it.
- Sterne Agee's Todd Hagerman: "It seems as almost the agreement is becoming ... an agreement in principle, such that when the stars align sometime in the future, the boards will revisit the transaction and determine whether or not it makes sense."
- Rene Jones: "Put Hudson City aside for a minute ... We tend to think long-term. So regardless of any specific merger transaction, we think in order to survive and be around, you've got to have a pretty strong infrastructure ... These investments that we're making, particularly in risk management, don't relate to any one particular transaction."
Jan. 17, 2014, 1:19 PM
- The big losers in a largely green regional bank sector (KRE +0.4%) today are M&T Bank (MTB -3.3%) and Hudson City Bancorp (HCBK -3.2%). M&T's excuse is a big earnings miss as the bank was unable to cut expenses the way some of its competitors had. At issue is the cost to come into compliance with the Bank Secrecy Act and anti-money laundering programs in order to win the favor of regulators for the Hudson City takeover.
- It's possible a negative development was mentioned in the earnings call, or - maybe more likely - since the deal is set to be an all-stock one, the decline in M&T is being felt by Hudson City.
Dec. 17, 2013, 9:11 AM
- Hudson City Bancorp (HCBK) and M&T Bank (MTB) agree to extend the time to complete their merger until December 31, 2014.
- To review, M&T agreed to buy Hudson City in August 2012, but regulators - displeased with M&T's money laundering policies - put the deal on ice, chilling not just this transaction, but a lot of other possible regional bank M&A.
- "M&T has received no assurance from the Federal Reserve as to whether or when the Federal Reserve will approve the merger. However, M&T and Hudson City believe that the earliest time the merger could be completed is in the latter half of 2014."
- Hudson City CEO Ronald Hermance: "While all parties are disappointed that the transaction is delayed further, we are gratified that M&T continues to see the value in the Hudson City franchise. Our Board of Directors continues to believe that the M&T transaction is ultimately in the best interest of the company and our shareholders, but is also committed to diversifying our business model by continuing to pursue our Strategic Plan."
- HCBK -1.2% premarket
Nov. 12, 2013, 11:43 AM
- At issue are investigations by the SEC and DOJ of Wilmington Trust's financial reports prior to M&T Bank (MTB -1%) buying the business in 2011. The SEC sent a Wells notice on August 5, according to M&T's latest 10-Q, and Wilmington responded on September 20.
- Wilmington Trust also faces suit by heirs to the Mennen fortune for losses they suffered.
- There continues to be no progress to report on regulatory approval of M&T's takeover of Hudson City Bancorp (HCBK -1.1%).
Hudson City Bancorp Inc serves as the holding company for Hudson City Savings Bank. It is a community and consumer-oriented retail savings bank offering traditional deposit products, residential real estate mortgage loans and consumer loans.
Industry: Savings & Loans
Country: United States
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