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MAY 1, 2013 11:38am ET

Hudson City Profit Drops as Sale to M&T Awaits Regulators’ OK

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Hudson City Bancorp in Paramus, N.J., reported a 34% decline in quarterly profit as it waits for regulators to approve its sale to M&T Bank.

The $40.3-billion-asset company said Tuesday it earned $47.9 million in the first quarter, down from $73 million in the same period in 2012.

Net interest income fell by $56.7 million, or 24%, to $177.4 million, as net interest margin tightened by 37 basis points, to 1.78%. Average interest-earning assets fell 10%, to $39.2 billion, primarily because of mortgage repayments resulting from low interest rates.

Noninterest income dipped 9%, to $2.5 million, as service fees and charges on deposit accounts fell. Noninterest expense fell 11%, to $81.3 million, primarily from a $12 million decrease in deposit insurance costs attributable to Hudson City's shrinking balance sheet.

Provision for loan losses fell 20%, to $20 million, and net chargeoffs rose 18%, to $21.3 million.

Last month, M&T in Buffalo, N.Y., said the deadline for closing its purchase of Hudson City would be pushed back to Jan. 31 so that M&T can address regulators' concerns over its compliance with anti-money-laundering laws. M&T agreed in August 2012 to pay $3.7 billion in cash and stock for Hudson City.

M&T chief financial officer Rene Jones has said he’s “optimistic” that the bank can satisfy regulators and complete the acquisition.

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