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M&T Bank Executes Layoffs in Hudson City to Cut Costs

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Following the completion of the much delayed merger with Hudson City Bancorp, M&T Bank CorporationMTB is conducting layoffs, primarily in the headquarters of Hudson City at Paramus. The news first reported by The Record , stated that the move, which is mainly affecting the back office positions is aimed at reducing costs.

According to The Record 's report, the Buffalo-based company commenced the termination process on Monday, Nov 2, after the official announcement of the completion of the deal. However, the number of employees being laid off is not yet clear.

M&T Bank's area executive for New Jersey and the lower Hudson Valley, Paula Mandell mentioned, "Some folks are staying to work through the transition and conversion and there are others who have not stayed." The bank is likely to provide details about the job cuts after notifying the concerned employees.

Notably, in 2013, M&T said in connection to the merger deal, that it expects around 360 layoffs in Hudson City. However, several employees of Hudson City departed voluntarily during the regulatory review of the merger. As of Jun 30, 2015, Hudson City had 1,466 full-time employees as compared to 1,514 at Jun 30, 2014.

Three years since the announcement of the deal, M&T Bank finally managed to complete the acquisition of Hudson City on Nov 1. The acquisition expanded the company's retail branch network in eastern U.S. with gaining access to 135 Hudson City branches, situated primarily in New Jersey. The company managed to enhance its balance sheet with deposits and loans worth $20 billion and $19 billion, respectively. Further, product and balance-sheet diversification stemming from the acquisition, will likely support the company's top line.

M&T Bank, during its third-quarter conference call, highlighted the potential impact from the merger with Hudson City. The merger is expected to result in mid-single digit accretion in net operating earnings in 2016. Also, immediate accretion to tangible book value per share is expected. Additionally, management expects accretion to the regulatory capital ratios in the range of 50-70 bps. Estimated internal rate of return from the transaction remained unchanged at 18%.

Management also noted that during the announcement of the merger deal, it projected cost savings from the merger of around 24% of Hudson City's pre-merger expense base, net of hiring staff required to set up commercial banking capabilities within the Hudson City footprint. However, as M&T Bank has expanded its presence in New Jersey, management now expects to surpass its projection.

Separately, M&T Bank has released the final merger consideration election results from its acquisition of Hudson City. The company acquired Hudson City for stock and cash, with 60% of the outstanding shares of Hudson City being converted into the right to receive 0.08403 of a share of M&T common stock. The remaining shares of Hudson City were converted into the right to receive $10.062172 per share in cash. Notably, holders of 67.44% of the outstanding shares of Hudson City elected to receive M&T common stock, while the remaining opted to receive cash or made no election.

M&T Bank currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the finance space include E*TRADE Financial Corporation ETFC , Civista Bancshares, Inc. CIVB and Enterprise Financial Services Corp. EFSC . All three stocks sport a Zacks Rank #1(Strong Buy).

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M&T BANK CORP (MTB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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