M&T Bank CFO discusses merger strategy, plans

M&T Bank Corp. (NYSE: MTB) chief financial officer (CFO) Darren King says the Buffalo–based banking company, which ranks No. 1 in deposit market share in the 16-county Central New York region, is always looking for acquisitions where it can make a return but is finding fewer opportunities at this time.

“What seems to be the case in banking right now is everyone wants to be a buyer and no one wants to be a seller,” King said on a July 18 earnings conference call with investors and analysts. “So, I think there’s a lots of interest in partnerships, but I think everyone’s thinking that they’re the buyer, not the seller. I think that’s why you’re seeing some slower activity than you might expect given some of the changes that have come out recently with the regulations.”

King said that M&T’s approach to mergers hasn’t altered since Rene Jones succeeded the late Robert Wilmers as CEO and chairman in late December of last year.

“Rene is at the helm now, but was certainly an architect of a lot of the acquisitions we’ve done in the past. I’m pretty positive that his thought process didn’t change as his title changed. But our thoughts on acquisitions haven’t really changed,” King explained. “We always start with the returns…We think about returns when we’re investing in loans, when we’re investing in technology, when we’re investing in other institutions. That’s really the primary driver. If we think there’s a combination that makes sense where we can create value for those sets of shareholders and we’ve got a willing seller, then we’re interested in talking to those folks.”

M&T Bank completed its last acquisition in late 2015 when it finally received the green light from regulators to purchase Hudson City Bancorp of New Jersey after a more than three-year delay due to problems with M&T’s money laundering compliance program. But M&T was restricted by the Federal Reserve from pursuing further acquisitions until mid-2017.

On the conference call, King also discussed M&T Bank’s second-quarter earnings results. M&T generated net income of $493 million this quarter, up 29 percent from $381 million in the year-ago period. Its net income available to common shareholders totaled $473 million in the second quarter, up 31 percent from $361 million a year prior. The banking company produced earnings per share of $3.26 in the latest quarter, up 39 percent from $2.35 in the second quarter of 2017.

“M&T’s results for the second quarter represent a continuation of the trends we’ve been seeing for the past several quarters,” King told analysts and investors. “These include continued growth in net interest income, which was up nearly 8 percent compared with last year’s second quarter, expenses that remain well-controlled, notwithstanding the steps we’re taking to redirect savings from the lower tax rate into higher compensation for certain employees, a credit environment that remains stable with further declines in non-accrual loans, and a net charge off ratio at just 16 basis points for the quarter.”

M&T Bank posted net operating earnings per common share of $3.29 in the second quarter, up from $2.38 in the second quarter of 2017. That beat the consensus analyst’s estimate of $3.17, according to Zacks Equity Research. M&T’s net operating income for the second quarter of 2018 was $498 million, up from $386 million in the year-earlier period.

M&T Bank operates branches in New York, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia, and the District of Columbia. Trust-related services are provided by M&T’s Wilmington Trust-affiliated companies and by M&T Bank. 

M&T had total assets of $118.4 billion as of June 30, 2018.