What can still go right for M&T Bank in Connecticut after early stumble

Photo of Paul Schott

BRIDGEPORT AND BUFFALO, N.Y. — In the second-largest city in New York, the logo of a corporate mainstay tops the lakefront metropolis' tallest building. In Connecticut's largest city, about 400 miles southeast on another coast, the logo of the most-prominent corporate arrival in many years was recently installed at the pinnacle of the city's highest edifice.

This is no coincidence. M&T Bank is stamping its imprint on Bridgeport, like it has done for many years in its home city of Buffalo. But amid its recently launched expansion into the Nutmeg State, there remains a crucial question: Can one of the largest banks in the country emulate in Connecticut its impact in New York?

Eight months after M&T completed its $8.3 billion acquisition of Bridgeport-based People’s United Bank, significant doubts persist in Connecticut about this bank with the green brand color. Ask many customers, and they will fume about their recent struggles to access accounts and pay bills because of technological problems resulting from the banks' combination. Sharing that anger, some of the state's top elected officials assert that it was inexcusable for a company of M&T's size and resources to put customers in such a predicament.

At the same time, hundreds of layoffs that M&T is making have reinforced fears in some quarters that the latest merger in a continuously consolidating industry spells trouble for Connecticut's economy, which has long struggled to maintain and create jobs in cities such as Bridgeport and sectors such as financial services.

M&T officials, including the bank's chief executive officer, see the company's arrival in Connecticut much differently. They accept the criticism of the account troubles and the layoffs, but they argue that the bank should not be judged solely by the controversies of the past few months. They cite new hires and ambitious community initiatives as proof that M&T will invest for the long term in Connecticut, just as it has done in New York. 

And they acknowledge that it will take time to gain the trust of customers and elected officials in Connecticut — confidence that will be crucial if M&T is to fulfill its ambitious statewide plan.      

“These are generational investments,” René Jones, CEO and chairman of M&T, said in an interview at the bank's headquarters at M&T Plaza in downtown Buffalo. “We’re not saying we’re going to go to Connecticut for the next five years. When we make that choice, we’re going there permanently.” 

‘Trying to maintain that local feel’

M&T's acquisition of People's United Bank reflects the long, unrelenting consolidation within the banking industry. Driven by a proliferation of mergers and acquisitions, as well as other factors such as bank failures during financial crises, the number of commercial banks in the U.S., has plunged about 70 percent from a post-1940 peak of about 14,500 in the mid-1980s to approximately 4,200 in 2021, according to data from the Federal Deposit Insurance Corp. 

People's United's own growth in recent years had been fueled by mergers and by a conversion to a stock corporation from its roots as a deposit-owned mutual savings bank. Its acquisition of Farmington Bank in 2018 and purchase of UnitedBank in 2019 comprised two of the approximately 80 mergers and acquisitions involving Connecticut-based banks between 2001 and 2022. 

At the end of 2020, People's had consolidated assets of about $63 billion, ranking No. 1 among Connecticut-headquartered banks and No. 39 nationally. No. 2 in the state and No. 62 nationally at that point, with assets of about $33 billion, was Webster Bank, which earlier this year completed a $10 billion merger with Pearl River, N.Y.-based Sterling National Bank.   

For customers, one bank acquiring or merging with another often entails much more than seeing new signs at their local branch or logging onto a different website to check their accounts and pay bills.  

“The rapid consolidation of the U.S. banking sector is concerning because bank mergers can hurt consumers and the broader economy in several ways,” Jeremy Kress, a business law professor at the University of Michigan and a former Federal Reserve attorney, wrote in a July 2021 piece for The Conversation. “For example, bank mergers increase the cost and reduce the availability of consumer financial services. Bank mergers often lead to branch closures, inconveniencing customers. The negative effects of bank consolidation are especially pronounced in poorer neighborhoods, where high-fee check-cashing companies and other predatory financial service providers proliferate following bank mergers.” 

Jones is more sanguine about his industry's trajectory, arguing that M&T has conscientiously examined the impact of its deals and used them as tools to improve customer service. M&T's previous transactions included the acquisition in 2003 of Baltimore-based Allfirst, the deal through which it expanded into Maryland and Virginia.  

“You need some scale so that you can afford the investments to make customer service better and have it be a decent experience,”  Jones said. “At the same time, you’re trying to maintain that local feel.”

‘Bridgeport fits the mold’

M&T's selection of Bridgeport as a regional headquarters was no accident.

For one, it had a ready-made hub in the People's headquarters in the downtown Bridgeport Center, which is a 16-story complex, at 850 Main St., that overlooks Long Island Sound.    

As the most-populous city in Connecticut, with about 148,000 people in 2021, Bridgeport also appealed to M&T because its economy and demographics were similar to those of other cities in which it operates, such as Buffalo and Baltimore. The median household income from 2017 to 2021, in 2021 dollars, of $42,186 in Buffalo compared with a total of $50,597 in Bridgeport. (Bridgeport's total, however, belies its location within one of the wealthiest counties in the U.S. During the same span, the median household income in Fairfield County was $101,194.) 

Among other parallels, Black residents comprise, respectively, 33 percent and 35 percent of the population in Buffalo and Bridgeport. M&T has a leader who reflects those cities' diversity in Jones, one of the few Black CEOs of the largest U.S. corporations. 

At the same time, M&T officials were well-aware of the longstanding struggles of Bridgeport, one of the state's economically and financially “distressed municipalities.” Job creation represents one of the city's greatest challenges, with its unemployment rate chronically running above the state level.  

“Predominantly, we service these small towns and cities in America that really actually need economic development,” Jones said. “It’s no coincidence that once we decided to go to New England that we decided to make Bridgeport our headquarters because it needs a bank.”

In Buffalo, local elected officials see M&T — which was founded in 1856 and originally called Manufacturers and Traders Bank — as a key force in the city's revitalization in recent years. Located at the eastern end of Lake Erie and western terminus of the Erie Canal, and adjacent to Ontario, Canada, the city is a shipping-and-transportation nexus and also became a hub for manufacturing such as steelmaking. But, like Bridgeport and other rust-belt cities, Buffalo suffered acutely from the effects of deindustrialization in the latter decades of the 20th century. 

Census Bureau numbers highlight the rebound of the second-most-populous city in New York. From 2010 to 2020, Buffalo's population increased 6.5 percent to about 278,000 — growing for the first time in 70 years

“In 2006, when I became mayor and first met René Jones, Buffalo was a much different place,” Buffalo Mayor Byron Brown said during a Nov. 1 ceremony at the University at Buffalo, as he presented Jones with the award for 2022 Buffalo Niagara Executive of the Year, according to a transcript of his speech. “Businesses had left the city, taking with them the jobs our people depended on. Young people were leaving, vowing to never return. Taxes were at historic highs, and the city’s finances were under a state-imposed control board. The city’s outlook was bleak.” 

Brown added that, “no one expected that Buffalo would see a resurgence. But René, and many of you in this room, believed there was so much more that we could achieve and that together we could overcome any perceived limitations. And we have.”  

Indignation over layoffs

Making Bridgeport a regional headquarters signaled that M&T would retain many People's employees. But a notice filed in July 2021 with the state Department of Labor revealed that the local workforce would not emerge unscathed from the banks' combination. In that notice, M&T announced that it would lay off about 750 employees in Connecticut. Most of the job cuts would affect Bridgeport-based positions.  

Many elected leaders reacted angrily to the announcement. Bridgeport Mayor Joe Ganim responded by declaring that the city would pull $30 million worth of accounts that it had with People’s. 

“We are taking our money because we don’t trust them, and they have not shown themselves to be responsible,” Ganim said at the time, with his office later confirming those accounts were closed. “We met with them when the merger was first announced, and they did not leave us with the impression that anything like this would happen. This is going to have a huge impact on our community, and it makes no sense.” 

The actual number of layoffs will end up being somewhat lower, M&T disclosed in a September 2022 letter to Connecticut Attorney General William Tong. It said then that it had laid off 325 employees in Connecticut related to the acquisition, while it was planning to eliminate another 333 positions. 

“These numbers are disappointing,” Tong said in a responding statement. “Commitments were made to our state and to M&T’s Connecticut workforce, and I don’t believe these numbers live up to that promise, both with regards to total workers retained, and the salaries and positions they have been able to retain.”

Sen. Richard Blumenthal, D-Connecticut, also criticized the bank.

“Latest layoffs from M&T seem inconsistent with M&T’s commitments in its People's takeover,” he said in an Oct. 3 tweet that included a link to a Hearst Connecticut Media Group article on the layoffs. “It owes an explanation — real, reliable facts about other jobs available, other possible layoffs, & more. Trust & credibility are evaporating.” 

Jones responded that M&T had properly communicated with state officials about the layoffs. 

“When we put the information out (to the Department of Labor) based on the WARN (Worker Adjustment and Retraining Notification) Act, some people asked us, ‘why did you do it when you did it?’” Jones said. “Because if there’s going to be a disruption or a loss of a job, people deserve to know way in advance. Why do they need to know way in advance? So they can prepare and so that we might be able to help them find another job in the community or find another that’s not a duplication of efforts at M&T.”

At the same time, M&T officials assert that the bank's expansion to Connecticut will ultimately boost the state's labor market. The letter to Tong noted that M&T was hiring for about 350 positions, with the bank having held several in-person and virtual job fairs in the past few months. 

Continual warning signs about a potential recession have not diminished M&T officials' bullishness about their recruitment in Connecticut. 

“We’ve learned a lot more that we’re really excited about in terms of the talent pool, particularly in Bridgeport and Connecticut,” Jones said. “We’re finding out it was a really great decision to call Bridgeport our headquarters and home in New England because we think there’s a lot of talent that’s untapped in that space.” 

M&T employs about 2,400 people across Connecticut, with 1,117 “based out of Bridgeport, including at Bridgeport Center and our branches,” according to the letter to Tong. M&T said that it is the largest non-hospital employer in Bridgeport. 

New hires would help to tackle Connecticut's longstanding struggle to create jobs in financial services. The state had 116,900 positions in its financial activities sector in October, down 19 percent from 144,500 during the state’s all-time employment peak in March 2008, according to the Department of Labor. 

“I don’t feel as though we’re at a loss with M&T,” state Sen. Marilyn Moore, D-Bridgeport, said in an interview. “I think this could turn out to be a winning situation for us in the way of business growth, hiring and for minorities getting loans to grow their businesses.”  

M&T is also recruiting in large numbers elsewhere, including its home city, where about 8,000 of its approximately 22,000 employees are based. During the next three to five years, it is planning to hire more than 1,000 technologists. They will be based in the tech hub that M&T opened last year in the Seneca One complex. Located down the street from M&T's headquarters building, the tech hub spans 13 levels in the 38-story Seneca One, which is the tallest privately owned building in the state outside New York City and an anchor of Buffalo’s “innovation corridor.” 

‘They blew it’

When they announced their agreement on the acquisition in February 2021, M&T and People's officials — like all corporations announcing mergers — touted the union of their companies as an ideal blend of cultures. 

They also promised many benefits for People's customers — a contingent that included more than 500,000 in Connecticut, as well as a total of about 500,000 across New York, Massachusetts, Vermont, New Hampshire and Maine. 

Much of the potential was predicated on M&T's size, which far surpassed the scope of People's. At the end of 2020, M&T's consolidated assets totaled approximately $142 billion, ranking No. 23 nationwide. Based on its annual revenues, M&T has ranked on the Fortune 500 list of the largest U.S. corporations a number of times in the past few years. This year, it ranked No. 519.   

“The merger extends our reach by providing customers access to a larger banking network and an expanded array of services,” People's CEO Jack Barnes said in a statement in February 2021. 

The deal was completed 14 months later. The critical test of the groundwork arrived in early September 2022 when the People’s customer accounts were converted to M&T accounts. Almost immediately, it became clear that, for a significant number of customers, the changeover had not gone according to plan.

With many of them fretting about their finances amid the COVID-19 pandemic and surging inflation, customers were in no mood for more hassles. They inundated M&T with calls, branch visits and social media posts to vent about a range of troubles including their difficulty or inability to access accounts, make bill payments or get adequate assistance from customer-service representatives.

Elected officials would receive many complaints as well — and they expressed outrage. In a letter sent in mid-September to the bank, Tong expressed his dissatisfaction with a “serious lack of preparation.” Around the same time, Blumenthal sent a letter calling on the Federal Reserve and Consumer Financial Protection Bureau to investigate the account problems. State legislators also admonished M&T.   

“They blew it,” Tong said in an interview. “I haven’t heard a single customer say, ‘You know, William, you’re being too hard on M&T. You should back off.’”

As of Dec. 9, Tong’s office had received a total of 363 complaints from M&T customers since the account conversions, including several submitted in the past month.  

“Since Attorney General Tong has been in office, I am aware of no other company where we have received such a high volume of complaints in such a short period of time,” said Elizabeth Benton, a spokeswoman for Tong. 

‘Things have calmed’ 

M&T officials said they responded quickly through measures such as extending call center hours and allocating additional staff to branches requiring support. They also maintained that the account problems affected a small percentage of customers.

Of the approximately 1 million “onboarded” new customers, with more than 1.7 million accounts, “complaints we have received directly from our customers, or otherwise, represent approximately 0.6 percent of the converted customer base as of today,” Jones said in a letter sent in late September to Blumenthal and his Senate colleagues from Massachusetts and Vermont. 

A soft-spoken figure, Jones did not get rattled when asked by Hearst Connecticut Media Group why, despite M&T’s preparations, the account conversions had caused so many problems. M&T had been trying to alleviate the inconveniences, he said. He noted, for instance, that the bank did not want customers to need new user IDs and passwords or have to set up all their bill payments again. 

“That is one of the most-painful periods for an M&T employee,” Jones said. “Our purpose is to make a difference in people’s lives, and we start off in those first three weeks (after the accounts were converted) actually making their lives a little bit more challenged. It’s hard to express how much that affects us and our mood. All that we wanted to do at that moment was to jump in and try to resolve the problems as fast as we could because we knew we had, sort of, let a number of our customer base down over those first several weeks.”  

He added that, “I'm really proud of the team and how they were able to respond in the face of the adversity that we had in that phase. Things have calmed, and we're, sort of, much more on the other side of engaging with clients, understanding what their needs are, in a more normal fashion.”  

In the short term, M&T did not appear to suffer financially at the corporate level as a result of the account problems. To the contrary, it reported in October a quarterly profit of $647 million, compared with $495 million in the same period in 2021. 

During the past couple of months, the company's stock price has decreased significantly —from about $190 in mid-October to around $150 on Dec. 9. But that change appears to reflect broader factors, as outlined in a Dec. 6 research note published by investment analysts at Keefe, Bruyette & Woods that downgraded M&T's stock from “outperform” to “market perform.” 

M&T, in fact, has outperformed the KBW Bank Index by 29 percent year-to-date.  But the research note said that continuing that trend “may be challenging.”

Fighting to keep customers

Looking long term, it remains to be seen whether and how much the account issues will affect the size of M&T's customer base. The bank said that, in total, it has “millions of customers” across its 12-state footprint, but it declined to provide a specific number. 

The bank mollified some customers and elected officials by announcing in late September that it would reimburse those who incurred late fees for transactions such as credit card and utility payments. It also said then that it would temporarily waive consumer checking and savings fees and not assess late fees for consumer and mortgage loan payments.  

At the same time, the relationships that many customers have built through the years with employees of People's who have stayed on with M&T is a powerful source of loyalty.  

“We are accessing our accounts normally now,” Adrienne Farrar Houël, chief executive officer and president of the nonprofit Greater Bridgeport Community Enterprises, said in an interview. “I am staying with M&T. The people who service our accounts are the ones who’ve been with me for more than a decade. I’m very confident in the service they provide.” 

But other customers said that they are taking their business elsewhere. 

“While I am filling out paperwork to move our business to another bank, the current issue (one of many) we are experiencing is entirely unacceptable,” one person, who said that they run a “second-generation business,” wrote in a complaint submitted last month to Tong's office. 

Other banks have noticed the disaffected customers. 

“If you’re tired of big bank mergers, you’re not alone,” said the narrator of an ad for Stamford-based First County Bank on Spotify that has run this fall as part of a multi-channel campaign.   

M&T has been conducting its own advertising blitz on digital services such as Spotify, as well as broadcast, print and physical platforms. Along Interstate 95, in Bridgeport and Fairfield, motorists will see several of the company's billboards, with messages such as “moving forward & giving back” and “your goals & our experience.”  

As of June 30, M&T held about $25 billion in deposits in Connecticut, ranking No. 3 in the state, according to FDIC data. Bank of America ranked No. 1, with about $45 billion in deposits, followed by Webster Bank, with about $26 billion in deposits.

A model for Connecticut in New York?

M&T officials argue that, in addition to improved customer service and new hires, Connecticut will reap the dividends of the acquisition through its share of the bank’s community investments across its footprint. 

In October 2021, the company announced a five-year Community Growth Plan to provide $43 billion in loans, investments and other financial support to expand economic opportunities for low-to-moderate income families and neighborhoods, as well as people and communities of color. 

Additionally, the company announced last May the launch of a $25 million Amplify Fund to support lower-income communities and underrepresented groups — with most of the funds set to be disbursed to Connecticut-based organizations. Among the Amplify recipients was Greater Bridgeport Community Enterprises, which was awarded a $100,000 grant to support its clean-energy planning efforts. 

“They have a lot of strong community members who work for them and have been in Bridgeport a long time, and are part of the community fabric,” Farrar Houël said. “As they are free now to move among the different nonprofit organizations prominent here in Bridgeport, I think M&T will benefit from their experience and become a good corporate citizen.”  

The company is also a prolific sponsor. It serves, for instance, as the official bank of the NFL’s Buffalo Bills. (It has a similar relationship with the Baltimore Ravens, with the Ravens playing at M&T Bank Stadium.) 

At the University at Buffalo, one of the State University of New York’s flagship campuses, M&T has naming rights for an auditorium and atrium in the Jacobs School of Medicine and Biomedical Sciences and a sponsorship for a program for women and minority entrepreneurs.

Among higher-education partnerships in Connecticut, M&T has become the official bank for Quinnipiac University and sponsors the university's Innovation and Entrepreneurship and Women and Business centers. In addition, it joined forces with the University of Bridgeport to launch a Multicultural Small Business Innovation Lab to support local entrepreneurs. 

“We have no real desire to be a large national bank across the country,” Jones said. “We’re actually much more focused on how do we lean into the particular communities that we serve and go deeper.”  

‘We have to work with them to be successful’

M&T still has a long road to replicating in Connecticut the trust it enjoys among elected officials in western New York. 

“What remains a continued disappointment is the lack of communication from M&T,” Ganim said in a statement. “I have written multiple letters based on constituent complaints and concerns and offered assistance from my office.  As of today, I still have not had a return call or correspondence. This level of ‘commitment’ falls short for Bridgeport.”  

In a responding statement, M&T said that Ganim's staff, “has represented the mayor during meetings we’ve had with Bridgeport community leaders, and we have been working with his office to schedule a meeting directly with Mayor Ganim. We look forward to forging a strong relationship with the mayor.” 

Jones said that he did not resent elected officials' criticism, which he said has not prompted M&T to rethink any of its plans in Connecticut. Among the meetings with local and state leaders since M&T announced that it would acquire People's, Jones met with Gov. Ned Lamont on Oct. 4 in Lamont's office at the state Capitol in Hartford. After the meeting, Lamont pledged to hold businesses, such as M&T, accountable.

“I welcome the engagement. I think it’s part of the process,” Jones said. “But I do think that there’s a getting to know us — and who we are, and what we believe in, and how committed we are — that really has to take place. And that just only takes place over time.” 

It will likely take many more meetings, and countless more hours of behind-the-scenes work, for M&T to overcome the doubts and prove that its acquisition of People's will be beneficial for customers and Connecticut's economy.   

“It’s like a good relationship. We’re constantly talking, tweaking, finding out what doesn’t work, what does work and listening,” said Moore, the state senator. “We have to work with them to be successful — because when they’re successful, we’re successful.”   

pschott@stamfordadvocate.com; twitter: @paulschott