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A traditional bank for the average customer


In an industry known for blockbuster mergers and jazzy technological innovations, the mention of Buffalo, N.Y.-based M&T; Bank Corp. is likely to elicit yawns, despite the fame of its biggest investor, billionaire Warren Buffett.

Though it is one of the 30 biggest banks in the nation and among the most profitable, M&T; is hardly known outside of its home state of New York, where it has a strong reputation for corporate philanthropy under the direction of Chief Executive Officer Robert G. Wilmers.

Analysts who follow the company call it one of the best-run banks in the country, known for steadfastly sticking to its core market and avoiding the sort of lending gimmicks and distractions that have landed many of its larger competitors in dire financial straits in recent years.

It was founded in 1856, and its reputation was built on old-fashioned community banking aimed at average consumers.

"They're pretty much a plain-vanilla bank," said Thomas D'Auria, who helps manage $140 billion at HSBC Asset Management in New York. "Your Joe Lunchbox consumer banks there with his $5,000 account."

Moving up to 18th

M&T;'s $3.1 billion deal with Baltimore-based Allfirst Financial Inc. would make it the 18th-largest bank in the United States, with $49 billion in assets and 713 branches. The deal would be M&T;'s largest since taking over East New York Savings Bank in 1987, which touched off a decade of steady growth through acquisitions for the bank.

Much of that growth has come since the arrival of Wilmers, who became chief executive in 1983 and has come to define the bank's corporate culture.

A New York native, Wilmers, 68, graduated from Harvard Business School and began his banking career as a loan officer with Bankers Trust Co. He started an investment company in 1980 and subsequently began purchasing shares of First Empire State Corp., which became M&T; Bank Corp.

When he took the helm three years later, M&T; was a troubled $2 billion institution that had strayed into international loans and risky real estate lending. The bank even had a branch office in Paris, recalled Michael Piemonte, senior vice president of corporate finance.

Wilmers refocused the bank, cleaned house and hired new management, which analysts say is now one of its strengths.

"Their management team is thought to be one of the best in the industry," said Harry Terris, manager of bank merger and acquisition research for SNL Financial in Charlottesville, Va. "They are sort of similar to no-frills banks. They're just a well-run traditional bank."

S&L; acquisitions

M&T; benefited tremendously from the shakeout in the savings and loan industry in the early 1990s. The bank purchased Goldome and Empire of America - two failed savings and loans in Buffalo. The deals moved M&T; from fourth to first place in the Buffalo market in terms of deposits.

It also introduced the bank to Buffett. With too little capital to finance the savings and loan purchases, M&T; turned to Buffett's Berkshire Hathaway Inc. for a $40 million cash infusion. The deal was negotiated over two days, Piemonte said. Today, Buffett's stake is worth about $500 million.

"It's a bank that has shown that it does the kind of things that Buffett likes to see done," said Richard McCaffery, a bank analyst with Morningstar Inc. "It knows how to spend its money wisely."

M&T; continued to make acquisitions throughout the 1990s, expanding throughout western New York. In 2000, the bank crossed into Pennsylvania, Maryland and West Virginia with its acquisition of Keystone Financial Inc. for a little more than $1 billion.

The bank's earnings have consistently outperformed the industry, making it a darling among stockholders and analysts who follow the company. Net income has increased in each of the past five years. It was up 32 percent to $378.1 million last year.

The bank spends about 49 cents for each dollar it earns, making it among the most efficient banks in its class. Its return on average assets was 1.41 percent in the past 12 months. That compares favorably with the average return of 0.96 percent among its peers, said Terris, the SNL researcher.

Analysts say the company is shareholder-friendly, in part because its management and directors own about 20 percent of the company.

The company dominates Buffalo's political and civic scene, contributing cash and hundreds of volunteers to schools, zoos, museums and hospital boards. Wilmers has offered up to $4 million of his personal money to match contributions to the Buffalo Zoo.

He personally funded a national search for a new head for the zoo.

He also pledged $1 million to restore the Darwin Martin House, a landmark designed by Frank Lloyd Wright.

"He very much wanted to see the cultural resources of Buffalo reinvigorated because it can be an economic force in a community," said Donna Fernandes, president and chief executive officer of the Buffalo Zoo.

Wilmers has made community philanthropy and activism part of the job description at M&T;, friends and observers say.

"If you talked to 50 people on the street and asked who is the most powerful, influential person in the community, 48 of them would say Bob Wilmers," said Andrew Rudnick, president of the Buffalo Niagara Partnership and a friend of Wilmers since the 1960s.

CEO often speaks out

The plain-spoken chief executive is known to speak out on political issues during annual meetings, sometimes to the consternation of local civic leaders. Wilmers has used his bully pulpit to advocate for smaller government and business-friendly policies.

"He's entitled to do that," said Buffalo Mayor Anthony M. Masiello, who said he doesn't always agree with Wilmers' positions. "He's a very big employer and a very big corporate and civic citizen."

Analysts said M&T; would probably make its corporate culture felt in Baltimore. But the company is not generally known for making big changes when it comes into a community through an acquisition.

"I'm not saying there won't be any kind of displacement [of employees] - the world is not a perfect place - but it's not a bank that has become successful by just going in and slashing and burning," said McCaffery, the Morningstar analyst.

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