Once again, the downsizing of Bank of America (NYSE:BAC) has resulted in gains for another bank. Just as the shedding of branch locations has been a boon to several smaller banks looking to expand their own footprints, the recent news that B of A will be closing a mortgage servicing center in western New York state has attracted another bank's interest, saving nearly half of the office's jobs in the process.
Bank of America is looking to reduce its sprawl, as well as some of its mortgage-servicing business -- and M&T Bank (NYSE:MTB) is looking to increase its presence in that very area. Not only is M&T a local bank based in Buffalo, but it is also expanding its own mortgage-servicing business.
A growing concern
M&T will assume B of A's lease on the current location, as well as employ up to half of the 1300 people employed there, 100 of whom will stay with Bank of America. M&T will be taking on more than workers, however. The bank will also get to service the loans formerly under B of A's care, although it won't own the actual servicing rights to the loans -- it will function as Bank of America did, as a servicing contractor. M&T has a burgeoning business in mortgage servicing and is well-regarded for its ability to deal with problem loans.
M&T has been growing by leaps and bounds over the past year, as evidenced by its acquisition of Hudson City Bancorp (UNKNOWN:HCBK.DL) -- whose 135 branch locations will certainly help in spreading the M&T brand around the region, and as far south as Virginia. The acquisition is expected to close sometime around the end of the second quarter.
Win-win for all involved
For Bank of America, the move is likely more of the slimming and trimming that it has been undergoing for the past year or more. Although a spokesperson stated that the bank is closing the facility because of a reduction in delinquent loans, this seems unlikely. As I mentioned yesterday, B of A services the largest chunk of the nation's foreclosures -- nearly 13% of the total. This fact doesn't seem to jibe with the bank's assertion that there are many fewer homeowners requiring assistance with troubled loans.
At any rate, both banks are getting what they need, and at least half of the affected employees will be absorbed into the new operation, with M&T pledging to help all workers find other jobs, as well -- making it a win-win all the way around.