M&T Q2 profit dips; bank expects no further merger expenses

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M&T Bank Corp. (NYSE: MTB) earned $233 million in the second quarter, down 28 percent from the same period in 2011. Last year’s second-quarter results included $67 million in gains from investment sales as M&T repositioned its balance sheet after its May 2011 acquisition of Wilmington Trust Corp. The second quarter of 2011 also included […]

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M&T Bank Corp. (NYSE: MTB) earned $233 million in the second quarter, down 28 percent from the same period in 2011.

Last year’s second-quarter results included $67 million in gains from investment sales as M&T repositioned its balance sheet after its May 2011 acquisition of Wilmington Trust Corp. The second quarter of 2011 also included another $42 million gain related to the acquisition.

Earnings per share for 2012’s second quarter totaled $1.71, down from $2.42 a year earlier.

The bank expects no further expenses related to the Wilmington deal, M&T CFO Rene Jones said during a July 17 conference call on the company’s second-quarter results. In fact, M&T is expecting savings as a result of the merger in the second half of 2012.

The $351 million deal brought 55 new branches and $10.7 billion in new assets. Wilmington also offered strong corporate trust and wealth-advisory businesses, according to M&T.

Buffalo–based M&T is the leading bank in the Syracuse–area deposit market with 30 branch offices, more than $2.2 billion in deposits, and a market share of more than 21.2 percent. It is number two in the Utica–Rome market with 13 branches, more than

$615 million in deposits, and a market share of about 16.8 percent.

M&T also leads the Binghamton–area market with a deposit market share of 48.7 percent, 16 branches, and more than

$1.2 billion in deposits, according to the latest statistics from the Federal Deposit Insurance Corp.

The bank has $80.8 billion in total assets and more than 780 branches in New York, Pennsylvania, Maryland, Virginia, West Virginia, Delaware, and Washington, D.C.

Net interest income for the second quarter totaled $655 million at M&T, up 10 percent from the same period in 2011. Noninterest income was $392 million, down from $502 million a year earlier.

Noninterest income in the second quarter last year included $84 million in gains from investment securities, compared with a loss of $17 million this year, according to M&T.

Noninterest expenses for the period totaled $627 million, compared with $577 million in the second quarter of 2011.

Loans and leases rose 7 percent from a year earlier to $62.9 billion as of June 30. The bank saw increases in commercial and industrial loans, commercial real-estate loans, and residential real-estate loans, Jones said.

Consumer loans dipped in the face of fewer auto loans, home equity loans, and lines of credit, he added.

M&T continued to benefit from some customer upheaval in the wake of First Niagara Bank’s acquisition in May of 195 HSBC locations in upstate New York, Westchester County, and Connecticut, Jones said. Loans in M&T’s Western New York region rose 8 percent on an annualized basis from the first quarter, he said.

Deposits in the region increased by an annualized rate of 15 percent from the previous quarter, he added.

Total deposits at M&T increased 6 percent from a year earlier to $62.5 billion as of June 30.

M&T’s loan-loss provision was $60 million in the second quarter, down from $63 million a year earlier. Net charge-offs for the period totaled $52 million, down from $59 million in the second quarter of 2011.

Nonaccruing loans totaled $968 million as of June 30, down from $1.12 billion a year earlier.

KeyBank plans to shutter up to 5 percent of its branches

Banks & Credit Unions, Construction, Design & Real Estate, Subscriber Only

SYRACUSE — KeyBank’s plan to close as much as 5 percent of its nationwide branch network over the next 18 months isn’t likely to hit Central New York too hard, the bank’s local leader says. The branch closings will probably have an “incremental” impact locally, says Stephen Fournier, president of KeyBank’s Central New York district.

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SYRACUSE — KeyBank’s plan to close as much as 5 percent of its nationwide branch network over the next 18 months isn’t likely to hit Central New York too hard, the bank’s local leader says.

The branch closings will probably have an “incremental” impact locally, says Stephen Fournier, president of KeyBank’s Central New York district. He notes the bank has worked steadily to keep its area branches in line with business conditions.

Key closed a location in Dannemora (near Plattsburgh) earlier this year, for example. Based in Cleveland, Ohio, Key has more than 1,000 branches in 14 states and assets of more than $87 billion.

The bank has looked to invest in Central New York in the past and will continue to do so, Fournier says. KeyBank is currently adding a new branch office in Manlius and has relocated branches in Cazenovia and Fayetteville to new sites in recent years.

Fournier declined to discuss any specific details of local branch closings or job cuts. When branches do close, the bank tries to find positions for affected employees elsewhere within Key, he says.

Closing some locations will help Key reposition its network to better fit where customer traffic and population trends are headed, Fournier adds.

“We’re pretty pleased as far as where we are,” he says of Key’s Central New York business. “We’re pretty bullish in light of demand and what’s going on nationally.”

The bank has continued to see loan growth and improving credit quality, he says.

The branch closures are part of a broader effort at KeyCorp (NYSE: KEY) to save the banking company $150 million to

$200 million in expenses by the end of 2013. The company announced the initiative when it released its second-quarter earnings on July 19.

The cost-cutting moves will also include a focus on organizational design and strategic sourcing, according to Key.

“This is a proactive and purposeful response to the changes that continue to take place in our industry,” Key Chairwoman and CEO Beth Mooney said during a conference call on the company’s second-quarter results.

The effort will help Key become more efficient and allow the bank to respond more quickly to changes in its markets, she added.

“In the face of the present environment, we recognize the need to rationalize branches while repositioning them in a way that allows us to provide convenience for customers where they are,” William Koehler, president of Key’s community bank operations, said during the conference call.

The bank will continue to invest in priority markets, he added. Key has already taken steps to close 17 branches as part of the cost-cutting effort, he said.

KeyBank is number two in the Syracuse–area deposit market with 28 branch offices, more than $1.7 billion in deposits, and a market share of more than 16 percent. In the Utica–Rome area, Key has two branches, more than $64.4 million in deposits, and a deposit market share of more than 1.7 percent, according to the latest statistics from the Federal Deposit Insurance Corp.

For the second quarter, Key generated net income from continuing operations attributable to common shareholders of

$221 million in the second quarter, down from $243 million a year earlier.

Earnings per share for the period totaled 23 cents, down from 26 cents in the second quarter of 2011.

During the quarter, Key completed an acquisition of 37 HSBC locations in the Buffalo and Rochester markets.

Community Bank Q2 profit rises on loan growth

Banks & Credit Unions, Subscriber Only

DeWITT — Loan growth helped push profit up more than 17 percent in the second quarter at DeWitt–based Community Bank System, Inc. (NYSE: CBU) Net income at the banking company totaled $21.1 million, or 53 cents a share, for the period, up from $18 million, or 49 cents a share, a year earlier. Total loans

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DeWITT — Loan growth helped push profit up more than 17 percent in the second quarter at DeWitt–based Community Bank System, Inc. (NYSE: CBU)

Net income at the banking company totaled $21.1 million, or 53 cents a share, for the period, up from $18 million, or 49 cents a share, a year earlier. Total loans increased $100.9 million from the first quarter to $3.56 billion.

Loans totaled $3.48 billion at the end of the second quarter in 2011.

Loans increased in all categories, Community Bank CFO Scott Kingsley said during a July 25 conference call on the bank’s second-quarter results.

Consumers were the main spark for the loan growth, President and CEO Mark Tryniski added. Only about $16 million of the loan increase was related to business lending and much of that was driven by enterprise-level customers, he said.

The bank has yet to see much demand for credit from small businesses, Tryniski said. He also said Community expects strong loan growth in the months ahead.

“The consumer opportunities in our markets are strong,” he said. “We expect a continuation of solid mortgage growth into the third quarter.”

The bank’s pipeline of new commercial loans is strong as well, he noted. The loan growth in the second quarter included a mix of business from existing customers and new relationships, Tryniski said.

Community Bank has $7.5 billion in assets and 190 branches in upstate New York and northeastern Pennsylvania. The company also operates subsidiaries in employee benefits, insurance, investment management and advising, and wealth management.

Net interest income for the second quarter rose 6.6 percent from a year earlier to $57.8 million. Noninterest income was $23.7 million, up from $22.8 million in the second quarter of 2011. That increase was helped by last year’s acquisition of CAI Benefits, based in the New York City area, by Community’s employee-benefits subsidiary.

The acquisition contributed to a 10.3 percent increase in employee-benefits revenue.

Noninterest income was also helped by an increase of 11.5 percent in wealth-management fees, driven by gains in trust services and asset management, according to Community.

Also during the second quarter, Community Bank closed an acquisition of 16 HSBC branches across Western, Central, and Northern New York. The bank will pick up three more First Niagara Bank branches in Geneva and Canandaigua in September.

Total deposits increased to $4.91 billion at the end of the quarter, up from $4.76 billion a year earlier.

Operating expenses for the second quarter totaled $49.4 million, down from $51.1 million a year earlier. Last year’s second quarter included more than $3.6 million in acquisition costs, compared with $164,000 this year.

Net charge-offs in the second quarter totaled $2.1 million, up from $2 million in the first quarter this year and $700,000 a year earlier. The provision for loan losses was $2.2 million, up $500,000 from the first quarter and $1.1 million higher than the second quarter of 2011.

Nonperforming loans totaled $32 million at the end of the second quarter, down from $34 million in the first quarter and up from $20.3 million a year earlier.

Dereszynski returns to lead Brown & Brown Empire State

Insurance & Financial Services

SYRACUSE — Brown & Brown Empire State reintroduced Nick Dereszynski as its president this morning, marking his return after a year in Seattle. Dereszynski, who

Income moves higher at Community Bank System

Banks & Credit Unions

DeWITT — Profit jumped more than 17 percent in the second quarter at DeWitt–based Community Bank System, Inc. (NYSE: CBU). Net income at the banking

Community Bank completes acquisition of HSBC locations

Banks & Credit Unions

DeWITT — Community Bank has completed its acquisition of 16 HSBC branches across Western, Central, and Northern New York. The locations opened today as Community

Somebody Else Built My Business

Opinion, Subscriber Only

It was years ago when my wife and I were having dinner with cousin Shelly. At some point, the conversation turned to the economy and the role of business. Shelly informed me that America was built on the back of government and the faithful bureaucrats who toil in anonymity, those who taught our children and

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I can’t remember what I was eating, but I must have swallowed it whole. There was total silence. I then asked Shelly if I had understood her correctly. She confirmed that my auditory receptors were functioning properly. Those intrepid risk-takers we call entrepreneurs are not critical in growing the economy and creating jobs; rather, the government was the fount of any economic success.

I tried to explain the fundamental role of government was to provide security, a system of laws that were fair and enforced, an educated citizenry, and infrastructure. This ensures all Americans with the level playing field that allows each of us to apply our God-given talents in the pursuit of our individual happiness. I cited inventors like Eli Whitney, Samuel F. B. Morse, Henry Ford, the Wright brothers, Steve Jobs, Bill Gates, all to no avail.

Shelly was unconvinced by my argument. For her there were no heroes, no American genius. There was just a collective effort.

Last year, Elizabeth Warren made the same argument as cousin Shelly. Warren is currently running for a U.S. Senate seat in Massachusetts. “There is nobody in this country who got rich on his own,” she contends. If you are a factory owner, you moved your goods to market on the roads “… the rest of us paid for … You hired workers the rest of us paid to educate. You were safe in your factory because of police and fire forces that the rest of us paid for….” I didn’t invite Ms. Warren to dinner to explain that the hypothetical factory owner undoubtedly paid substantial taxes to support all of the functions she mentioned in her collectivist rationale.

Flash forward to July 13 — President Barack Obama is in Roanoke, Va. on the campaign trail without his teleprompter. The 5,000-word message: “If you’ve got a business, you didn’t build that. Somebody else made that happen.” Total silence on my part. Cousin Shelly, Elizabeth Warren, and now the president of the United States.

Finally, I understand. I didn’t contribute to my business success. The thousands of owners and entrepreneurs we interviewed at The Business Journal didn’t contribute to their business success. All success is due to society’s collectivist efforts. All businesses are indebted to government agencies like the Energy Department, the Environmental Protection Agency, and the Food & Drug Administration, which gave us the foundation to prosper. Government is the ultimate risk-taker and provider of sustenance.

Mr. President, I wish you had told me sooner that my success would be a result of someone else’s efforts or gifts. I could have avoided those decades of 75-hour weeks while I tried to build the business. Now, I find out there was no need to max out my credit cards, invade my savings, or remortgage the house to raise funds for the business. All the concern I had about meeting payroll was unnecessary or the nights I lay awake wondering how to grow the business. And if I failed, the government would surely be there to rescue me.

How foolish of me. I could have joined the president for over 100 rounds of golf in the last three-and-a-half years rather than work at my business, since all success flows from others.

Soon, I will instruct my editorial staff to review the 17,000 business stories in our archives and strike the words “entrepreneur,” “free enterprise,” and “risk-taker.” Going forward, we will attribute business success only to the government and its minions and denigrate all those phony dreamers who think they are instrumental in creating success. I shall also recommend to my board of directors that we change the name of our corporate entity to the George Orwell Business Journal.

Thank you Cousin Shelly, Ms. Warren, and President Obama for explaining how to build a business. Since somebody else built my business, my only request is that you introduce me to them so I can thank them for my success.

Norman Poltenson is the publisher of The Central New York Business Journal. Contact him at npoltenson@cnybj.com

Profit slips at Alliance Financial in Q2

Banks & Credit Unions

SYRACUSE — The ongoing low interest rate environment pushed profit lower at Alliance Financial Corp. (NASDAQ: ALNC) in the second quarter, despite growth in the

M&T profit dips 28 percent

Banks & Credit Unions

M&T Bank Corp. (NYSE: MTB) earned $233 million in the second quarter, down 28 percent from the same period in 2011. Last year’s second quarter

Don’t suffer in silence on tax, financial-planning issues

Business Mentors, Subscriber Only

For many people, summer means a slower pace and trips to the shore, the lake, or maybe even a “staycation.” Perhaps, those summer-trip plans should also include discussing income tax and financial planning. While this may sound a bit off beat, consider the following. Many planning strategies take time to implement, and summer may present the

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Many planning strategies take time to implement, and summer may present the perfect time to give serious consideration to a serious topic. The mere fact that a tax filing or calendar year-end is not facing us can generally provide for more lucid evaluation of the situation at hand. Couple this with the unique opportunity to actually see loved ones face-to-face (i.e., family trip), in a relaxed setting and finally, important conversations can be held.

Many baby boomers, believe it or not, have been secretly (or perhaps not so secretly) hoping for an inheritance from aging relatives to patch the gaps in their retirement planning. What used to be seen as a nice gift when Great Aunt Loretta passed on is fast becoming a component of retirement planning — and a risky one. Even those who stand to benefit from trusts that have been long established will be reminded that essentially everyone has suffered major investment losses in recent years — even those family trusts.

A combination of longer life spans, market conditions, lower interest rates, and the rising costs for health and long-term care is proving a challenge to an alarming number of families. Those of us in the “middle” find that not only children and college are requiring more cash, but also aging parents. Parents? Yes, parents.

Medical statistics show us that a 65-year-old male has a 60 percent chance of living to age 80 and a 40 percent chance of living to age 85. Women have a slightly better set of odds. The result is that the 85 and older age bracket has become the fastest growing segment of the population. As this group continues to increase, more cash is spent, leaving less wealth for transfer to the next generation.

Research conducted by Northwestern Mutual Life, Merrill Lynch, and the Center for the Study of Aging at Rand Corp. reflects concerns plaguing our aging population and their families. For individuals with “substantial wealth,” preserving inheritances is a top concern for 41 percent of the group, down from 54 percent just three years earlier.

These same individuals expect to transfer nearly 20 percent less when benchmarked in 2008 and then 2009. Beyond the thought of leaving a financial legacy, our parents are concerned about the present. One in three surveyed adults over age 60 indicated they did not feel financially prepared to live to age 85.

Are families discussing these issues? For the most part, no. Many parents are uncomfortable in starting the dialogue about finances with children. Most children do not want to appear greedy and in turn also avoid the conversation. Parents don’t want to disappoint children or cause anxiety by discussing mortality. Children share many of the same feelings and often feel uncomfortable prioritizing their own situation when mom and dad may be facing significant care expenses.

While the topic may not be initially comfortable, the effort is certainly worthwhile. Discussions need not begin on a nitty-gritty level, but with the goal of establishing realistic expectations and perhaps an action plan. If you learn there are concerns or confusion, a bit of fact-finding is in order to get the ball rolling. While these conversations can feel odd, don’t be deterred. From firsthand experience, I can tell you that understanding your parents’ situation, plan, and wishes makes all the difference in the world.

How do you get started? Gain an understanding of what resources are available and the costs of current living. Take a look at budgets and investments. Consider health-care needs and decide how the plan will be managed. Notice, I did not say “decide how to maintain inheritance.” Personally, I consider that to be secondary to the health and comfort of mom and dad.

I find a useful segue into the conversation is one that focuses on mom and dad. “I know many of my friends’ parents are struggling to make sense of the economy and retirement savings; how do you feel about it? Things have changed so much in the last few years that it may be a good idea to look at everything again.” Like so many things in life, getting started is the most difficult step but so worthwhile.

As an aside, it is always easier to encourage or outright ask someone to take on a task if you yourself have already done so. In term of steps you can take now, consider the following:

Review your portfolio for under-performing stocks and other investments. Sometimes adjusting your holdings makes sense and you can often deduct losses against gains. The rules continue to change, making conversation with your advisers imperative.

Retirement-plan contributions are usually only thought about when it is time to file a tax return. By taking a few minutes to assess your cash flow and savings habits you may find you can contribute, or increase your contributions now. This strategy will allow you to begin earning tax-deferred interest sooner with the added benefit of dollar-cost averaging when you utilize a monthly deposit approach. Obviously, you should always strive to maximize company 401(k) deferrals.

Review your budget (or set one up) and be sure to spend some time honestly considering need versus want. Living within your means now is a key step to working toward a stable future.

The best way to determine which of these strategies will work for you is by consulting your CPA or financial planner. He or she will be able to assess your current situation and guide you through the myriad rules, options, and limitations. Don’t suffer in silence as you worry about your personal financial situation, or that of your parents. Begin the conversation today. You will thank yourself tomorrow.

Gail Kinsella is a partner in the accounting firm of Testone, Marshall & Discenza, LLP, and serves as the president of the New York State Society of Certified Public Accountants. Contact Kinsella at gkinsella@tmdcpas.com

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