Taking a look at Hudson City's credit quality, since Moody's is questioning "M&T's estimated credit mark of 1.5%" on the acquired mortgage loans, Hudson City's June numbers make the case that M&T is being conservative in its loss estimate. Hudson City reported $1.1 billion in total nonperforming loans as of June 30, or 3.88% of total loans. While that would appear to be a high number on the surface, Hudson City has had a very low rate of annualized net charge-offs (loan losses less recoveries) to average loans, ranging from 0.25% to 0.30% over the past five quarters. That is a key figure, and quite a low loss rate. Another thing to keep in mind is that Hudson City's New Jersey and New York market footprint was less affected by the real estate bubble and collapse than other areas of the country. Considering Hudson City's low loss track record and the much smaller home price collapse in its market footprint, it would appear that M&T would have to really mess up Hudson City's loss mitigation efforts in order to see a 1.5% loss rate on the acquired mortgages. Besides, the Office of the Comptroller of the Currency -- now the primary regulator of Hudson City's main subsidiary, Hudson City Savings Bank, after taking over from the old Office of Thrift Supervision -- is known for taking a particularly strict view on identifying problem credits and recognizing loan losses. Moody's also said it would "consider M&T's capital management plans post-acquisition," as the acquiring bank's "capital position has traditionally been managed to lower levels than similarly-rated peers," which "has been a credit challenge especially considering M&T's sizable concentration in commercial real estate." That's an interesting position for Moody's to take, because M&T said on Monday that the merger would be "accretive to the combined company's capital ratios, capital generation and tangible book value per share, as well as its GAAP and operating earnings per share." During a conference call with analysts, M&T CFO Rene Jones said that for the combined companies "the pro forma tier 1 common ratio is estimated to improve by roughly 30 to 40 basis points compared to M&T's stand-alone levels that we would have experienced had we not announced the transaction with an estimated range of 8.25% to 8.50% at closing. This is some 115 to 135 basis points above the level in existence at the end of the most recent quarter ended the 6-30-2012."