M&T Bank Corporation’s (MTB) Chief Financial Officer Rene Jones made it clear at the beginning of his presentation at the 33rd annual BancAnalysts Association of Boston Conference: There were some questions he could not answer in regards the bank’s merger and regulatory issues. Instead he focused on how the company is adhering to changes in the banking industry.
Earlier this year, a U.S. District Court Judge ordered a forfeiture of $560,000 in alleged drug proceeds laundered through M&T’s Perry Hall, Maryland branch, according to a press release from Department of Justice. That bank branch did not report its conversion of cash into larger bills, and also did not file a Currency Transaction Report, a violation of the Bank Secrecy Act of 1970, which requires that all transactions over $10,000 be reported to the IRS.
That issue, as well as other regulatory concerns, has held up M&T Bank’s acquisition of Hudson City Bancorp, a deal pending for two years. That deal has been on hold after regulators discovered problems with M&T’s anti-money-laundering procedures, which M&T has since improved, hiring additional staff and revamping its methods, according to the bank’s 10-Q filings. Regulators still need to review and approve the changes, and the Hudson Bank deal still needs regulatory approval.
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Despite the inability to talk about those issues, Jones gave an upbeat assessment of M&T Bank, which is the 16th largest U.S.-based commercial bank holding company, with 696 branches in seven states. M&T Bank has $81 billion in assets under management.
Jones focused his talk on the changes in the banking industry, where higher regulatory expectations, a slow-growth economy and stronger competition are creating higher pressure on returns. He noted that M&T has a strong franchise, but is rethinking its processes to prepare for the future, particularly in infrastructure and data quality. Jones said the company was going to work on what he termed its “financial plumbing,” noting that a “lot of investments continue to be made.”
M&T’s 2014 capital plan is approved by the Federal Reserve through the CCAR process, Jones said. Its goals are to maintain its common dividend at $2.80 per year, make contractual payments on all regulatory capital instrument, and redeem a $50 million subordinated debt issue.
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