The Secrets Behind M&T’s Lending Might
Fleet of foot, with a concentration on maintaining its focus on community banking and an ownership mentality, M&T Bank’s performance during the financial crisis might give competitors pause. Now, with May 2011’s acquisition of Wilmington Trust, the bank is branching out, providing high-wealth owners of real estate in New York and elsewhere with wealth management and services.
In New York, the bank’s real estate portfolio has grown significantly over the past few years. Executives cited, between 2009 and 2011, an increase of $1.1 billion—up to $5.6 billion.
To get some insight into the bank’s success, The Mortgage Observer met with some of its top executives who gave an unfettered glimpse into the approach that has helped keep the bank a lending powerhouse.
“We really started out here as a multifamily lender but it’s really evolved into a much broader set of commercial real estate products and it’s really across the board,” Gino Martocci, the bank’s regional president for New York City and Long Island, said in his office recently. “In fact our largest concentration is in retail.” He added that after retail comes office, multifamily, “other” and hotel.
“As a subset of ‘other’ we’ll do construction and transition real estate as well—transition defined as it needs leasing or needs to be repositioned somehow.”
Mr. Martocci described the bank’s approach as “pretty conservative,” but was quick to add that it doesn’t shy away from deals that contain “an appropriate level of risk.” Asked what that might include, he pointed back to the transitional real estate deals that it put together several years ago, as the financial crisis gripped many lending institutions.
“We were one of the few lenders out there willing to do an asset that required repositioning during 2010, even 2011,” he said. “It’s changing to some degree now, but we made a good many loans. Or construction loans in 2011—we were one of the more active construction lenders for the right sponsors, for the right people that we’ve done business with for a very long time.”
Recurrent themes in its lending strategy seem to include the familiarity that Mr. Martocci mentioned, as well as the maintenance of a healthy balance sheet. In some ways both have helped it to maintain calm in the midst of chaos. Peter D’Arcy, a group vice president at the bank and a senior group manager in the Commercial Real Estate division, pointed out that top players rely on it for both.
“The last four or five years—we were so clean because the competition was so broken,” Mr. D’Arcy said. “The top names in the marketplace needed flexibility but they also needed a company with a balance sheet and we made so many acquisitions that—we sort of came into our own from a size standpoint, where our capabilities of what we could do for the top tier of New York City as a bank really wasn’t different from a hold standpoint or an underwriting ability than many of the big money center banks.”
The company is smaller, yet less bureaucratic—conservative, yet opportunistic.
“I think the point is that we’ve always been conservative and the consistency is what some of these bigger clients like,” added Jason Lipiec, a group vice president in Commercial and Private Banking at M&T. “In good times we’re not the most aggressive but they know if we give them the deal, the deal’s going to close. And in bad times no one else is out there and because of the safety of our balance sheet and the fact that we didn’t get ahead of ourselves, we were able to be there for them.”