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Announcement:

Moody's reviews M&T for downgrade (A3 senior) following acquisition announcement

Global Credit Research - 27 Aug 2012

New York, August 27, 2012 -- Moody's Investors Service placed the ratings of M&T Bank Corporation (M&T) and its subsidiaries on review for downgrade. The holding company is rated A3 for senior debt and its lead bank, Manufacturers & Traders Trust Company, has a standalone bank financial strength rating (BFSR)/baseline credit assessment (BCA) of C+/a2 and deposit ratings of A2/Prime-1.

RATINGS RATIONALE

The rating review follows the announcement that M&T has entered into a definitive agreement to acquire New Jersey-based Hudson City Bancorp, Inc. (Hudson City) in a 60% stock/40% cash transaction valued at approximately $3.7 billion. The transaction is expected to close in Q2 2013.

Moody's said the review will primarily focus on the credit profile of Hudson City, an unrated thrift holding company, and the integration challenges that it presents. This is a large acquisition in a market in which M&T has a relatively modest deposit market position. At $44 billion in reported assets, Hudson City represents approximately 55% of M&T's total assets at June 30, 2012. Although M&T has a successful track record of acquiring and integrating banks, Moody's noted that this acquisition is the largest that M&T has announced to date.

Additionally, the acquisition of Hudson City will substantially heighten M&T's exposure to residential mortgages through the addition of its $28 billion portfolio. During the review, Moody's will analyze the acquired residential mortgage portfolio for potential losses versus M&T's estimated credit mark of 1.5% and its overall capital position.

Moody's will also consider M&T's capital management plans post-acquisition. M&T's capital position has traditionally been managed to lower levels than similarly-rated peers. In Moody's view, this has been a credit challenge especially considering M&T's sizable concentration in commercial real estate.

M&T's current ratings are supported by its diversified regional consumer and commercial banking businesses in the Northeast and Mid-Atlantic states and its strong underlying operating efficiency. This, combined with the bank's comparatively strong asset quality performance, enabled M&T to remain profitable and demonstrate lower earnings volatility than many of its large US regional bank peers throughout the recent crisis.

The principal methodology used in this rating was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

M&T Bank Corporation is headquartered in Buffalo, New York and reported assets of $81 billion at June 30, 2012.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Joseph Pucella
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Robert Franklyn Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's reviews M&T for downgrade (A3 senior) following acquisition announcement
No Related Data.

 

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