Investors Flee Hudson City After Merger Delay

Hudson City Bancorp ended Friday as the biggest decliner among Mortgage Industry Equity Composite stocks after the announcement before the market opened that its merger with M&T Bank Corp. was on hold because of concerns the Federal Reserve has over M&T's procedures, systems and processes relating to Bank Secrecy Act and anti-money-laundering compliance program.

M&T and Hudson City intend to extend the date after which either party may elect to terminate the merger agreement if the merger has not yet been completed from Aug. 27 to Jan. 31, 2014, but they added there can be no assurances that the merger will be completed by that date.

As a result, Hudson City fell by 5.47% from its Thursday close and it was the most traded stock (except for Bank of America) in the MIEC.

There were 12 MIEC stocks in the red for the day, including MGIC Investment Corp, down 1.9%, and PennyMac, down 1.78%.

Ellie Mae led the gainers, up 4.22% with three other stocks also finishing ahead for the day and one breaking even.