Thursday, April 10, 2008 - 1:02 PM EDT
Wilmers says M&T learned its lessonBusiness First of Buffalo - by Thomas Hartley Business First
Legendary New York City Mayor Fiorello LaGuardia does not often get mentioned in a Buffalo company's annual report.
But M&T Bank Corp. Chairman and CEO Robert Wilmers does it in summarizing the company's problems in 2007.
"When I make a mistake, it's a beaut!" LaGuardia was quoted as saying, and Wilmers took a leaf out of his book by admitting that two major mistakes which involved the less-than-prime mortgage market led to M&T's worst performance in 13 years.
But lessons have been learned, Wilmers said, as he sought to assure shareholders in the company's annual report, which will be delivered at the meeting April 15.
"We have, without doubt, learned that it's a bad idea to outsource our underwriting standards - as in the case of collateralized debt obligations (CDOs)," he said.
"We've been reminded, as well, that putting a lot of high-risk loans in one bucket does not magically make them low-risk," he said, "and that to stray from what we know best and do best - our core mission - can be a serious strategic error."
Wilmers blamed an unwise pursuit of higher investment gains for a 19 percent decline in profit which broke a 13-year unbroken chain of double-digit rates of increase for operating earnings per share.
Having to write off a large amount of bad debt as a result of mortgage lending in 2007 resulted in a $78 million reduction in earnings, he said.
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