M&T, awaiting Fed’s approval of merger, unveils reinvestment plan

M&T Bank pledged billions of dollars Monday to low- and moderate-income neighborhoods as part of a reinvestment plan tied to its pending acquisition of People’s United Financial.

The Buffalo, New York-based company said it will provide $43 billion in loans, investments and other financial support to communities in need throughout its footprint, including new markets that it expects to enter by buying People’s United, which is based in Bridgeport, Connecticut.

The five-year plan, negotiated with the National Community Reinvestment Coalition, aims to increase the flow of private capital into underserved areas. It is the first of its kind for M&T, which has not completed an acquisition since 2015.

Bloomberg

The plan includes $23 billion in loans for home purchases, home equity and small businesses and $20 billion for community development initiatives such as affordable housing and financial access, the bank said.

M&T did not say how the total amount will be distributed, dollars- or percentage-wise, throughout its footprint. M&T currently serves retail customers in New York, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia and Washington, D.C.

The pending acquisition would add Maine, New Hampshire, Vermont and Massachusetts to the list.

In addition to “a deep commitment to serve our communities and make a difference in people’s lives,” the company is “also committed to taking action to help address inequities that have existed for years,” M&T Chairman and CEO René Jones said in a press release. “This plan is another step in our journey to orient ourselves around what our communities need the most.”

M&T, which has $151.9 billion of assets, is awaiting the Federal Reserve’s approval to close the $7.6 billion deal. Last week, M&T secured the thumbs-up from the New York State Department of Financial Services and the Connecticut Department of Banking.

This summer, there was some agitation over the deal after M&T disclosed post-acquisition layoffs plans that would largely affect employees in Bridgeport. M&T has since stated that it will retain about 80% of People’s United workforce and employ at least 1,000 people in Bridgeport within a year after the systems conversion, which is scheduled for February, pending the deal’s approval.

If the Fed signs off, M&T is positioned to become a $200 billion-asset company.

In recent years, community reinvestment plans have become almost a routine part of large U.S. bank acquisitions. KeyCorp’s $16.5 billion pledge — which was developed with NCRC as part of KeyCorp’s acquisition of First Niagara Financial Group in Buffalo — was the largest of its kind in 2016, but since then several other banks have made even bigger commitments.

In 2019, BB&T in Winston-Salem, North Carolina, and SunTrust Banks in Atlanta announced a three-year $60 billion plan as part of the formation of Truist Financial. Six months ago, PNC Financial Services Group agreed to the largest plan to date — an $88 billion commitment to be spread out over four years — in conjunction with its purchase of the U.S. banking arm of BBVA.

Also this year, First Citizens BancShares in Raleigh, North Carolina, said it would spend $16 billion on low- and moderate-income communities as part of its pending purchase of CIT Group in New York.

All three of those deals were negotiated with the National Community Reinvestment Coalition.

Since 2016, the community reinvestment group has worked with 16 banks to develop reinvestment plans worth a combined $384 billion, the NCRC said Monday in its own press release announcing M&T’s pledge.

The commitments can be a way for large and regional banks to avoid potential roadblocks in getting regulatory approval for acquisitions. M&T and members of the NCRC from 11 states and Washington, D.C., have been meeting since March to identify capital needs in the bank’s markets and to figure out how M&T can increase capital in underserved areas, the community reinvestment group said.

“M&T’s plan provides a unique opportunity to help improve the lives of people living and working in historically disadvantaged communities,” NCRC Chief Executive Jesse Van Tol said in the press release.

M&T said that it will keep working with the NCRC, other community groups and public officials to talk about current and evolving capital needs in the markets it serves.