Does it make a difference to Western New Yorkers that branches of People’s United Financial in New England will be converted early next year into branches of M&T Bank? It should because the merger announced Monday between the two banks strengthens M&T, one of our region’s major employers and philanthropic-minded companies.
If approved by federal regulators, the deal will turn M&T into the 11th largest U.S.-based commercial bank.
M&T’s stock price closed at $150.77 on Friday, a slight increase from its close of $149.97 on Feb. 19, the last trading day before the merger announcement. A week of active trading of the stock ended with an increase of .77% in the company’s market capitalization – a measure of its perceived total value on Wall Street – which makes M&T a stronger institution that is less likely to be taken over by a larger bank.
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There is an “eat or be eaten” climate in banking these days. Institutions are under pressure to gobble up smaller competitors and avoid becoming takeover targets themselves. Standing pat means falling behind. The desire to grow is why M&T has completed 23 deals over 30 years to buy other banks or collections of branches.
The bank hit a speed bump nine years ago while trying to purchase Hudson City Bancorp in Paramus, N.J. It took more than three years for the deal to go through as Federal Reserve regulators found that M&T had insufficient anti-money laundering controls.
M&T’s founder, the late Robert Wilmers, worked in finance in New York City before coming to Buffalo, where in 1983 he became chairman and CEO of First Empire State Corp. and its banking subsidiary, M&T Bank. The bank experienced great growth under Wilmers, who made a strong commitment to Buffalo. Wilmers died in 2017.
M&T has always valued stable markets, sometimes unsexy ones, which are not prone to developing economic bubbles that pop when conditions change.
The current leadership, including Chairman and CEO René Jones, President Richard Gold and Vice Chairman Kevin Pearson, has kept the company on that quiet but steady path to growth.
Regional banks, like much of the business world, have taken a hit during the Covid-19 pandemic. Low interest rates and lackluster loan activity limit the institutions’ growth potential, making mergers and acquisitions more urgent.
There is also intense competition these days from nonbank lenders and financial technology companies such as Quicken Loans, entities that were not around back when banks gave away toasters to new depositors. Mid-tier banks need the economies of scale made possible by mergers to stay competitive.
People’s United, based in Bridgeport, Conn., has strong business units in equipment financing and mortgage warehouse lending that will serve M&T well, in addition to an affluent customer base that brings new opportunities for M&T’s wealth management division.
M&T employs some 7,900 people in Buffalo Niagara and Rochester. Its investment of millions in new technology, including its tech hub in Seneca One tower, will help it remain a buyer as banks consolidate. The tech hub is expected to employ up to 1,500.
The company is also a major benefactor in our region. It’s hard to find a cultural institution in Western New York that doesn’t have M&T’s name high up its list of donors.
In 2002, M&T acquired Allfirst Financial in Baltimore, launching M&T into that market. Wilmers told a reporter for the Baltimore Sun why giving back to the community, whether in Buffalo or Baltimore, was important to him.
“I do very much find as a community bank it is incumbent on us to be involved in all the communities we serve,” Wilmers said. “You can’t be a community bank just having the best rates in town.”
If steady progress wins the race in commercial banking, M&T will be a strong competitor well into the future.
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