NEW YORK (TheStreet) -- Shares of Hudson City Bancorp (HCBK) were falling 3.8% to $9.78 with heavy trading volume on Thursday after the Federal Reserve approved M&T Bank's (MTB) - Get Report acquisition of the bank after several years.

The U.S. central bank approved the merger of the two banks exactly 1,129 days after the $3.7 billion deal was announced, according to the Wall Street Journal. The three-year wait was the longest delay for a U.S. deal valued at more than $1 billion.

The Fed included a disclaimer in its 40-page approval for the deal that reflected compliance issues at M&T, according to the Journal.

"The Board took the highly unusual step of permitting the case to pend while M&T addressed its weaknesses," the Fed said in the approval. "The Board does not expect to take such action in future cases."

In the future, the Fed will expect banks with compliance issues to withdraw merger applications until they can be resolved.

About 10.5 million shares of Hudson City Bancorp were traded by 12:36 p.m. Thursday, well above the company's average trading volume of about 3.5 million shares a day.

TheStreet Ratings team rates HUDSON CITY BANCORP INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

We rate HUDSON CITY BANCORP INC (HCBK) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its expanding profit margins over time. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.2%. Since the same quarter one year prior, revenues slightly dropped by 6.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 41.74% is the gross profit margin for HUDSON CITY BANCORP INC which we consider to be strong. Regardless of HCBK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HCBK's net profit margin of 11.89% is significantly lower than the industry average.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Thrifts & Mortgage Finance industry average. The net income has decreased by 9.0% when compared to the same quarter one year ago, dropping from $39.18 million to $35.66 million.
  • After a year of stock price fluctuations, the net result is that HCBK's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
  • HUDSON CITY BANCORP INC's earnings per share declined by 12.5% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, HUDSON CITY BANCORP INC reported lower earnings of $0.32 versus $0.38 in the prior year. For the next year, the market is expecting a contraction of 81.6% in earnings ($0.06 versus $0.32).
  • You can view the full analysis from the report here: HCBK