At this point in our program, I traditionally speak about the performance of the bank; the success and progress we achieved for our shareholders, and for all our stakeholders, and about the direction in which we are moving, our strategies and plans for achieving success in the coming year and beyond.
This is both our report card and our roadmap.
Like last year, we’ve had to gather remotely, to help keep people safe and healthy, and to do our part to stop the spread of the coronavirus.
The video with which we opened the program this morning was intended to welcome you visually to our traditional meeting place here in our headquarters building at One M&T Plaza in downtown Buffalo.
But as I watched the camera zoom across the city, along the downtown corridor and into M&T, it reminded me of the important role that our organization plays in our community. We’re not just a collection of buildings on the city skyline. We are a collection of people—unified in our struggle to overcome challenges, realize opportunities and achieve goals.
We see ourselves as an integral part of the fabric of this community—and every community we serve—so while I talk about our recent results, I will do so in the context of our mission and purpose, which above all is to support and strengthen our communities—to make a difference in peoples’ lives, especially in challenging times like these.
In the face of unprecedented conditions caused by the pandemic, net income for 2020 amounted to $1.35 billion, compared with $1.93 billion in 2019.
The decrease was principally the result of an $800 million addition to reserves to address widespread and deep economic uncertainty that was present during the outset of the pandemic.
Notably, we remained profitable in every quarter, as we have for 179 consecutive quarters, dating back to 1976.
In fact, in 2020, M&T grew its balance sheet by 19 percent, and distributed $943 million to our shareholders in the form of dividends and share repurchases, all while tangible book value per share grew by seven percent.
Our operating return on Tangible Common Equity of 12.8% exceeded our investors’ cost of capital, a key measure of value creation for our shareholders, as it has every year for at least three decades.
In fact, over the past two decades, only two other institutions among the top 20 largest U.S. banks have achieved that distinction.
Yesterday, we reported results for the first quarter of this year. Net income was $447 million, up 66% from last year’s first quarter, reflecting a reversal of the prior year’s uncertainty, and we achieved a return on average tangible common shareholders’ equity of over 17%.
Not explicit in our financial performance in 2020, but underlying those results, were improving trends in overall customer growth, customer experience, customer satisfaction and employee and community engagement—measures that are part of our balanced scorecard for the year.
Our retail customer satisfaction rating—which measures the likelihood of customers to recommend M&T to a friend or colleague—increased by six percentage points to 44%, and our customer satisfaction score in Baltimore increased by 26 percentage points over the last two years, and now sits at 58%.
Internally, employee engagement increased by four percentage points to 88%, despite the year’s hardships, exceeding the seventy-fifth percentile across all industries for the first time since we began measuring 20 years ago.
Moreover, we continued to expand the diversity of our senior leadership team, and our Board of Directors, while embarking on programs that will ensure our colleagues can be their authentic selves at work and enable us to be the bank of choice for diverse customers in every community we serve.
We touched over 2,800 nonprofit organizations in our communities, providing $34.9 million in grants, while our dedicated employees generously gave more than 50,000 hours in volunteer service to others.
We originated $1.6 billion in community development loans in low- and moderate-income areas in 2020.
We underwrote an additional $11.3 billion in new commercial loans and leases.
Although we operate in just seven states and the District of Columbia, we became America’s fifth-largest issuer of Small Business Administration 7(a) loans.
We’re also the number one issuer of these S.B.A. loans in Baltimore, Buffalo, Delaware, Philadelphia and Washington D.C., and the second-largest lender in New Jersey, New York City and West Virginia.
And, we delivered $7.0 billion in emergency P.P.P. funding to 35,000 local businesses, and, through them, we helped protect more than 765,000 jobs.
We’ve also worked to launch and support several initiatives to help our communities respond to, and recover from, this unprecedented crisis—from Open4, which connects Women and Minority-Owned small businesses and nonprofits with resources, guidance and support; to the Southwest Strong program, providing micro-grants to small businesses in Philadelphia; to the Women’s Housing & Economic Development program providing relief to working mothers in the Bronx.
Not only did our commercial and small business banking teams receive a record 25 national and regional Greenwich Excellence awards, but the Greenwich Crisis Response Index also identified M&T as a “Standout” in its support of small businesses during the pandemic.
For all this and more, I am deeply proud of our colleagues, and deeply grateful for our team of “economic first responders.”
We didn’t just do our jobs. We went above and beyond; we acted with care and concern; with empathy and compassion.
This is what M&T is all about. This is what makes it possible for us to achieve exemplary financial results, while fulfilling our purpose—to make a difference in peoples’ lives. It’s our colleagues’ heart-felt care and commitment to each other, to our customers and to our communities, combined with their dogged determination to do whatever it takes, to never give up.
We understand that families are still suffering, businesses are still struggling, so our efforts will continue to reach every neighbor in every neighborhood, seeking with our community partners to give strength and support wherever we can.
Looking forward, as we emerge from the pandemic, we also remain focused on creating sustainable and equitable engines for economic growth—especially in and around the small and mid-tier cities that we predominately serve.
The formula for regional economic success started changing before COVID struck, influenced by the digital revolution, which has been accelerating through the pandemic.
In the decade after the Financial Crisis, 70% of our country’s population growth, and 80% of job growth, accrued in the biggest U.S. cities, mainly on the East and West coasts.
Now, however, a number of mid-tier cities are starting to buck that trend by successfully growing tech and innovation ecosystems that attract modern “Creative Class” talent; cities like Boulder, Columbus, Detroit, Omaha, Pittsburgh and others.
In today’s digital economy, economic development and prosperity is about building a community—an “ecosystem,” if you will—that attracts, retains, develops and engages modern talent; talent whose economic function is to create new ideas and solutions.
We’re competing in a “Race for Relevance,” and the communities that are leading the race are likely to gain an insurmountable advantage.
The cities that are leading the race are doing so by adopting new paradigms and constructs around convening and decision-making, and abandoning top-down, command-and-control ways of thinking and working.
Such ecosystems are inclusive, diverse and transparent. Decisions and directions are not set in a vacuum by a select few, but made collectively and collaboratively, with all stakeholders invested in the process. All must be invited to participate and expected to contribute.
They practice a “give first” approach, giving three times before expecting anything return.
And the entrepreneurs—the problem-solvers, the idea-makers, the risk-takers—must be at the center, for they are the engines of economic growth, identifying new problems, new solutions and new opportunities, and founding new companies.
These kinds of ecosystems are magnets for modern talent, and our new Tech Hub at Seneca One will be a significant addition to our emerging ecosystem in Buffalo.
Yes, the Tech Hub is for us. It’s where our customer-facing bankers will work side-by-side with technologists, customer experience engineers, data scientists, coders and programmers together in new ways that are focused intensely on what our customers need, on mapping their journeys and identifying the moments that matter.
But the real purpose of the Tech Hub is to serve as a community asset that creates a sense of place for the problem-solvers in our community—the creators, innovators and entrepreneurs who will help us grow and compete.
Creative talent doesn’t so much care if they are solving problems in banking or health care; daycare or barbershops; used car sales, electric vehicle battery chargers or even green-powered excavation equipment, as long as they are working together to eliminate pain and friction from people’s lives, to make peoples’ lives simpler and richer.
The Tech Hub and the larger ecosystem around it will become a place where “creative collisions” occur; where people from different companies interact, share problems, collaborate on solutions, develop ideas and ultimately, turn those ideas into new companies.
It will enable us to attract new talent—and leverage that talent to its full power and potential.
It’s already building momentum, with 43North, our startup competition and accelerator program, along with its portfolio of startup companies and other tech firms like Odoo, Serendipity Labs and Lighthouse Tech Services.
With ACV Auctions, Buffalo’s first billion-dollar startup, along with other startups like SparkCharge and Squire, and companies of all shapes and sizes, it’s already stretching beyond Seneca One.
As bankers, our role is to support the entrepreneurs and risk-takers; to help them achieve their ideas and dreams.
That’s why we were founded. That’s what we’ve always done, and what we’ll always do—in Buffalo, and in each of the communities and ecosystems that we serve and support.
Further success will require our universities, middle-schools and high-schools; bootcamps, coding clubs and scholarships; and, joint recruiting campaigns; all of which are beginning to emerge.
At M&T, we have long recognized the importance of quality education.
This is especially true as it relates to lifting up children and families, breaking the cycle of poverty and providing everyone with opportunities to participate fully and fairly in the workforce, in the economy and in society as a whole, regardless of race or background.
That’s why we’re working with a number of public- and private-sector partners to expand inclusivity through our Tech Academy, which will be an important part of our effort to attract, develop and retain diverse talent, and those who have the aptitude but may not have had the opportunity to pursue a career in tech.
Our Western New York Tech Skills Initiative is now underway, providing in-demand tech skills to people affected by persistent unemployment and underemployment, exacerbated by the pandemic. Over 300 people are already enrolled and our hope is for over 3,000.
We also launched the Z Development Program, which will expand opportunities for candidates from non-traditional backgrounds and underserved communities. In fact, we just hired the first class of ten mainframe apprentices into the two-year program.
This is in addition to our broader Technology Development Program, designed much like our long-standing Management Development Programs, but with a tech track.
In Delaware, we’re partnering with ZIP CODE Wilmington to connect technologists from M&T with students during a 12-week training and mentorship program, after which they can interview for full time jobs.
Across our footprint, we’ve supported startup business plan competitions for entrepreneurs, sponsored “Women in Agile” professional networking groups, and even run “Coder Clubs” to help develop skills in STEM and computer science among middle-school students.
We must also do more to reach into black and brown communities… to reach communities of women.
I must admit that this work is not easy. We at M&T know this from experience.
In 1993, we began our unique partnership with the Westminster Community Charter School.
Since then, we’ve invested more than $17.8 million dollars to help provide training for teachers and summer programming for kids, nutrition and health, technology and physical plant.
We’ve helped improve educational outcomes for thousands of children on Buffalo’s East Side, a neighborhood where investment and involvement have been lacking and outcomes and opportunities have been hard to come by.
A number of our graduates went on to attend the best private high schools in the city, supported by Buffalo Promise Scholarships—and among those, many have, are or will attend top colleges.
That’s not to say, however, that we achieved complete success. Students were not always reaching their full potential. Our overall test scores—while better than those at other schools serving impoverished neighborhoods and families—were not measuring up district-wide.
Recently, the School Board voted not to renew Westminster’s charter, and to revert it back to District control.
That action by the School Board surprised us, it saddened us, and to be candid, it frustrated us—not because of the loss of our charter, but because it was arrived at through the kinds of old processes and behaviors that we need to change, that are inconsistent with modern inclusive ecosystems: ecosystems that thrive on inclusion and transparency, and coming out from behind closed doors, in which the people who are involved in the work and the outcomes have a voice in the decisions, and that puts the talent—in this case, the students—first.
We are not discouraged, however, nor are we deterred.
We will continue working to create a new framework for setting directions and decisions in our community.
We will continue working for students and families; to improve access to pre-school programs, scholarships, Wi-Fi and broadband access, support services for disadvantaged families; to improve educational outcomes and opportunities. And, we will work to make our modern economy and ecosystem accessible to everyone.
Indeed, we are more convinced than ever that new forms of partnership between the public and private sectors will be required to achieve successful results in our communities—especially in those that are most challenged.
Our C.I.O. has often told me that the best time to invest in tech was 10 years ago, but the second-best time is today. I believe the same holds true for people.
Bob Wilmers—who would have turned 87 years old today—understood this. This is the reason he was planting new grapes at his vineyard when he was 78 years old—investing for future generations to enjoy.
It’s the same reason he started and emphasized our talent development programs… and our partnership at Westminster.
And it’s the same today—whether we’re investing in the Tech Hub, the ecosystem or education; whether we’re working with Westminster or Highgate Heights in Buffalo; the Baltimore Leadership School for Young Women; or the Bridge Boston Charter School in Roxbury, Massachusetts—we’re investing in people; we’re investing for the future.
As you know, acquisitions have historically served as the primary vehicle for expanding our unique brand of banking to new communities.
We’ve often been asked about our plans to acquire, but the truth is that, more often than not, our merger partners select us, with the expectation that our brand of banking will be in the best long-term interests of their shareholders.
This is certainly the case in our partnership with Peoples’ United, which we announced just a few months ago.
Our merger will create the 11th-largest U.S.-based commercial bank holding company, and the dominant regional banking network in the Northeast and Mid-Atlantic states that account for over one-quarter of the U.S. economy.
Think of a company that believes in the power of friendly, caring people working together to bring solutions to customers; people who value ongoing relationships that span generations; people who take pride in being leaders in their communities.
It is an organization with a history of strong returns to shareholders, sound risk management and asset quality and a leading customer deposit share in its main markets.
All this might sound like a description of M&T, but those are the words that Peoples’ United use to describe their company and culture.
They chose us because we share a sense of purpose, and we see this partnership as an opportunity to expand and extend our shared commitment to the customers and communities we will both serve.
Together, we will bring the very same approach to banking for communities that we practice in Buffalo and Baltimore, Paterson and Pottsville, and Wilmington and Washington, to the cities and towns now served by Peoples’ United, from Bridgeport to Boston to Bangor; Montpelier to Manchester.
So, for all these reasons, my colleagues and I are proud of our accomplishments, we’re excited about our prospects, and we’re engaged in the work.
The future is bright, and we go forward together confidently.
René F. Jones
Chairman of the Board and Chief Executive Officer