M&T Bank Corporation (MTB)

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M&T Bank (MTB)

Q1 2013 Earnings Call

April 15, 2013 10:30 am ET


Donald J. MacLeod - Vice President and Assistant Secretary

René F. Jones - Chief Financial Officer, Executive Vice President, Chief Financial Officer of M & T Bank and Executive Vice President of M & T Bank


Brian Klock - Keefe, Bruyette, & Woods, Inc., Research Division

Craig Siegenthaler - Crédit Suisse AG, Research Division

Bob Ramsey - FBR Capital Markets & Co., Research Division

Ken A. Zerbe - Morgan Stanley, Research Division

Kenneth M. Usdin - Jefferies & Company, Inc., Research Division

Brian Foran - Autonomous Research LLP

Michael Turner - Compass Point Research & Trading, LLC, Research Division

Marty Mosby - Guggenheim Securities, LLC, Research Division

Ebrahim H. Poonawala - BofA Merrill Lynch, Research Division

Adam Chaim - Deutsche Bank AG, Research Division

Gary Lu



Good morning, my name is Jackie, and I will be your conference operator today. At this time, I would like to welcome everyone to the M&T Bank First Quarter 2013 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Don MacLeod, Director of Investor Relations. Mr. MacLeod, please go ahead.

Donald J. MacLeod

Thank you, Jackie, and good morning. This is Don MacLeod. I’d like to thank everybody for participating in M&T's first quarter 2013 earnings conference call, both by telephone and through the webcast.

If you have not read the earnings release we issued this morning, you may access it, along with the financial tables and schedules, from our website, www.mtb.com, and by clicking on the Investor Relations link.

Also, before we start, I'd like to mention that comments made during this call might contain forward-looking statements relating to the banking industry and to M&T Bank Corporation. M&T encourages participants to refer to our SEC filings, including those found on Forms 8-K, 10-K and 10-Q, for a complete discussion of forward-looking statements.

Now I’d like to introduce our Chief Financial Officer, René Jones.

René F. Jones

Thank you, Don, and good morning, everyone. Thank you for joining us on the call today. Before I get into the discussion of M&T's results for the first quarter, let me say a few words about the announcement we made on Friday regarding the pending Hudson City merger.

I believe this is the first time since current management came to M&T that we have had to publicly disclose a matter arising from a discussion with our regulators. However, in this case, because it has an impact on the pending merger, we are able to make a limited statement.

As you may recall, we announced the merger in August of last year. Apart from any issues specific to M&T, in terms of context, the industry is already in a regulatory environment that seems clearly heightened in at least 2 relevant ways. First, if you look at recent merger activity in the banking sector, the trend seems to be that it's taking notably longer to get regulatory approvals. Said another way, we don't take regulatory approval for granted. Second, industry as a whole is subject to a heightened regulatory environment and expectations, including bank's -- the Bank Secrecy Act and anti-money laundering compliance programs. So that's the context in which our Hudson City deal is taking place.

During the 7 months we've been working on the Hudson City merger, we, of course, were also involved in our normal ongoing discussions with our regulators as part of the continuous supervisory process. In addition, we have been continuously working on scaling up and strengthening the overall risk management infrastructure of our growing bank, along with planned improvements to the BSA/AML process.

We recently were made aware of the fact that certain deficiencies in our BSA/AML compliance program rose to a level of significance such that they would impact our ability to close the merger with Hudson City in the near term and that we would have to implement the plan for improvement and demonstrate its efficacy [ph] to satisfaction of M&T management, our board and the regulators prior to obtaining regulatory approvals for the merger. Our ongoing investment includes bolstering internal staff and hiring an outside consultant to help us evaluate and improve our governance, people, processes, controls and systems. Fortunately, these efforts are already under way.

Of course, we then talked things over with Hudson City. Both companies remain strongly committed to this merger as it is a highly beneficial transaction for each of us for all the reasons we've discussed previously. So we mutually decided that we would proceed with our shareholder meetings on the merger and would also allow more time under our agreement, an additional 5 months, while M&T works hard to resolve these issues. We definitely appreciate the fact that Hudson City has been a totally supportive and steadfast partner in this.

So what are the regulatory issues? As you know, we have obligations to keep supervisory information confidential. So there is a limit to how expansive we can be today. And we can only talk about what we know as we sit here today. While we don't anticipate any other material issues cropping up as we get into this, of course that can never be completely ruled out. We have no reason to believe that the issues involve any wrongdoing or illegal conduct by anyone in M&T work or any identifiable instances of actual money laundering activity using our bank.

Independent of the merger, we are fully committed to resolving the BSA/AML compliance concerns and to carry out any further requirements our regulators may ask of us that we are not aware of today. It is important to note that these things take time.

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