Hudson City Bancorp Inc., one of the largest residential lenders in the mid-Atlantic area, on Friday pulled the plug on its move from a thrift holding company to a commercial bank.
The Paramus, N.J.-based company said its subsidiary, Hudson City Savings Bank, has withdrawn its application at the Office of the Comptroller of the Currency to convert to a federal savings bank charter. (It filed in March.)
Ronald Hermance Jr., president and CEO of Hudson City, said the lender made the decision because there is "no more uncertainty" over the future of the thrift charter, which will survive once the Office of Thrift Supervision merges with the OCC next year.
A thrift charter is "compatible" with Hudson City's business plan of originating and purchasing residential mortgages and attracting deposits, he said.
Hermance noted that as a thrift Hudson City would be subject to the supervision of OCC's mid-size bank group, which would have been its regulator if it had converted to a national bank. (The parent company will become subject to the regulation and supervision of the Federal Reserve Board once OTS and OCC are merged.)
But an analyst report from Sandler O'Neill questions the move. "Although we have no way of knowing for sure, we have heard anecdotally in the past that the OCC is particularly tough when it comes to evaluating interest rate risk. And, Hudson City's balance sheet does contain a fair bit of interest rate risk."
Among all residential lenders, Hudson City ranks 27th nationwide, according to figures compiled by National Mortgage News and the Quarterly Data Report.
Sandler has a "hold" rating on the stock.
