M&T Bank Corp. would like to get back into the acquisition game.
But first, it has to take care of some regulatory housekeeping.
M&T has nearly finished the last step of a required review of the risk level of its customer base. Once regulators decide if they are satisfied with M&T's work, they will lift a "letter of agreement" in place since 2013 that bars M&T from making acquisitions. The agreement was related to regulators' concerns about M&T's Bank Secrecy Act and anti-money laundering programs.
"We have to get ourselves into a position where we have the option to use acquisition as part of our growth strategy," said Darren King, M&T's chief financial officer. "Absent that, we've been doing a decent job growing organically," including in markets impacted by KeyCorp's deal for First Niagara Financial Group.
"Acquisition is an important complement to organic growth that we've always had at the bank, and we look forward to when that will be another part of our growth strategy," King said.
M&T expects to complete its review of information about customers determined "low risk," based on their transaction patterns, by the end of this quarter or in the early second quarter. M&T has already conducted a similar review of its "high risk" and "moderate risk" customers.
The Federal Reserve Bank of New York will determine if the last piece of the bank's work passes muster. The final say will come from the Federal Reserve in Washington, D.C.
"We've been getting feedback all the way along in how we've been doing in satisfying the terms of that agreement," King said."Everything's been going great. We think we're well on track with that."
Buffalo-based M&T in the fourth quarter recorded net income of $331 million, up 22 percent from $271 million a year ago. The bank recorded diluted earnings per share of $1.98, up from $1.65 a year ago.
M&T in the third quarter of 2016 recorded a strong gain in new customer acquisition, amid the market disruption caused by Key acquiring First Niagara. Its new customer acquisition in the fourth quarter wasn't as strong, but was still above the level of the fourth quarter of 2015, King said.
"The third quarter for [customer] growth was out of this world, but in the fourth quarter it's come down, which was pretty typical with these things," he said. "They're very much in the moment."
How did the customer gains for M&T compare to the effect of First Niagara buying HSBC Bank USA's upstate branch network? King said M&T is still finalizing that comparison.
"We're pleased with the results, they're just different," he said. "This time, we probably had a little more bump on the consumer part of the franchise because of some of the changes that happened. Last time, it was a bigger impact on our commercial part of the bank."