The companies said Tuesday that they have extended the deadline for their merger until Dec. 31, 2014, after determining that they could not receive regulatory approval by the previous deadline of Jan. 31. Either company will be able to terminate the merger if the new deadline passes.
The Federal Reserve Board is unlikely to approve the merger before June 30, M&T said.
The companies initially pushed back the closing deadline last April, after the Fed identified problems in M&T's anti-money laundering and Bank Secrecy Act compliance. A June written agreement detailed the fixes M&T needed to make to satisfy the Fed, which include improving its risk-management program and establishing processes for identifying and reporting suspicious transactions.
The $84 billion-asset M&T said Tuesday that it has "devoting substantial resources" toward addressing the Fed's concerns and "believes that it is making significant progress."
"We continue to believe strongly that a merger with Hudson City is beneficial to both institutions, their shareholders and the communities we serve," M&T Chief Financial Officer Rene Jones said in a press release. "We could not have asked for a better partner than Hudson City as we continue to work towards a successful outcome."
The companies said they also agreed to amend the merger deal to allow Hudson City, based in Paramus, N.J., to introduce new products as part of a new strategic plan. Under that plan, Hudson City said it will focus on its secondary mortgage operations, expand commercial real estate lending and introduce new small-business and consumer-banking products, it said. The $39 billion-asset Hudson City plans to start introducing new products next year.
"Our board... 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," Hudson City Chief Executive Ronald Hermance said in a press release.
In August 2012, M&T agreed to pay about $3.7 billion in cash and stock for Hudson City. Analysts have speculated that, if the deal falls through, companies such as New York Community Bancorp and TD Bank might be good fits to acquire Hudson City.