Good morning. My name is Jackie, and I will be your conference operator today. At this time, I would like to welcome everyone to the M&T Bank's Fourth Quarter 2013 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Don MacLeod, Director of Investor Relations. Please go ahead.

Thank you, Jackie, and good morning. This is Don MacLeod. I'd like to thank everyone for participating in M&T's Fourth Quarter 2013 Earnings Conference Call, both by telephone and through the webcast. If you have not read the earnings release we issued this morning, you may access it, along with the financial tables and schedules, from our website at www.mtb.com and by clicking on the Investor Relations link. Also, before we start, I'd like to mention that comments made during this call might contain forward-looking statements relating to the banking industry and to M&T Bank Corporation. M&T encourages participants to refer to our SEC filings, including those found on Forms 8-K, 10-K and 10-Q, for a complete discussion of forward-looking statements. Now I'd like to introduce our Chief Financial Officer, René Jones.

Thank you, Don, and good morning, everyone. Thank you for joining us on the call today. As we noted in the press release, M&T's results for the fourth quarter included an elevated level of professional services expense, reflecting our continued focus on building out our regulatory, risk management and technology infrastructure, including our BSA/AML compliance program. This represents our second quarter in a row where our costs are above what we would consider the natural level required to operate the bank, even in what was we might refer to as the new banking environment. More positive elements in the recent quarter's results included higher fee revenue and continued improvement in our credit, capital and liquidity measures. I'll review a few highlights from both the quarter and the past year, after which, Don and I will be happy to take your questions. Turning to the specific numbers. Diluted GAAP earnings per common share were $1.74 during the period, compared with $2.11 in last year's third quarter and $2.16 in 2012's fourth quarter. Net income for the recent quarter was $246 million, compared with $294 million in the prior quarter. Net income was $296 million in the fourth quarter of 2012. Recall that M&T's results for the third quarter of 2013 included gains in connection with our securitization of FHA loans to Ginnie Mae securities, which we retained in our investment portfolio, and our securitization of indirect auto loans, which were not retained. These transactions contributed $34 million to net income for that quarter, or $0.26 per common share. Since 1998, M&T has consistently provided supplemental reporting of its results on a net operating or tangible basis, from which we exclude the after-tax effect of amortization of intangible assets, as well as expenses and gains associated with mergers and acquisitions when they…

[Operator Instructions] Our first question comes from the line of Ken Usdin with Jefferies.

René, just on the expense side. Understanding your point that it's tough to predict what consulting is going to look like. But if we take your comment that the delta has been about, I guess, $40 million of excess consulting, just -- would you expect that we would be ending next year expenses kind of more towards this quarter minus that benefit? Like do you think you'll get through all of the excess consulting by the end of next year?

Well, it's a good question, Ken, thanks. So the first thing I would point out is that the $42 million, as you mentioned, was this quarter. We saw a very similar increase last quarter. So we are very helpless -- we're well above our normal run rate on professional services expense. I think, as we look at the expense base in the fourth quarter, in some ways it appears to be a high, and we would expect that as we kind of move into the next year, that they'll remain elevated and then taper off, kind of what you're saying. But the question is, how fast will it come down. So I think we should see meaningfully lower expenses by the time we get to the fourth quarter, but I also think that expenses will likely be able to come down further from there, all right? The one thing I would point out is that, as we begin to think about the work we have to do over the course of, let's say, the next 3 quarters on BSA/AML and some of the initiatives that we have, to the extent that we think we need to go faster, we'll just ramp that up and that would sort of mean that expenses would be higher than we thought. But I don't think the total investment is really going to change at all. So that's why I'd say it's a bit hard to predict because we're sort of making sure that we stay on track with our progress. And if that means the timing of the expenses changes, so be it.

That's fair. And just one other question about the fee guidance. When you're talking about mid-single digit, I'm wondering just against what base you're comparing it to. And then also a little color on what you think will drive stronger fee growth next year.

I think -- I'll go backwards. I think it will go across the board. We've seen nice growth, 5%, 5-plus percent each of the last 2 years in the trust business. We've seen okay growth in deposit service charges. And then, again, as we look at what we're doing with the mortgage servicing, you should get some lift from that coming late in half of the year. So there's no one particular category. One of the things I'm curious about is that commercial banking fees were somewhat light this year, and I think that's a reflection of lower activity, but as the economy picks up, that would be another space that I would expect to see maybe recover a bit from what we saw this year.

Okay. Last quick one. Can you just give us an update of where the Basel III ratio approximated?

Yes. It's -- this quarter, fully-phased, and we believe it is 9.01%.

Our next question comes from the line of Brian Klock with Keefe, Bruyette, & Woods.

So, again, I guess another question on the expense side. I guess, thinking about the BSA/AML investment and the milestones you talked about, you know that you guys have set for this year, obviously, to hit those, and then get ready for that resolution and then onto the Hudson City merger. I guess, when you're think about the total investment, can you give us an idea of maybe expected percentage of completion, if you will, by the first quarter, second quarter, third quarter next year that you would be 50% through, or 75% through? Is there any other way to think about how we should be thinking about, maybe how quickly that investment may taper off as we go through next year?

Well, I don't know if I can give a better answer than I just gave on the pace of the expenses. But I think the way to think about it, Brian, is that you can't give a measure of completions because it's a dynamic process. So we work with our teams to build out a process. We go through that, we have those processes validated by outside parties. To the extent that there's more to work to be done, we go in and we fix that and it's iterative, it's an iterative process. We draw leads at some point in the process where we feel that we'll be ready and confident that we can have the regulators come in and take a look and have the time to do what they need to do. So in my mind, it doesn't work like that in terms of percentage of completion. But having said that, we think that our expenses will probably remain elevated for the next 2 or 3 quarters. And I wouldn't see -- I would see after that, that much of the sort of outside expense should be behind it. The thing to think about is, we've also added a lot of folks, I didn't give the numbers here, but we've added a lot of folks over the course of the year. And the reason that we've done that is to sort of build our permanent infrastructure. So as we sort of get through the project phase, we will not be dependent upon all of those professional services. So as you look at where that was, I think we spent maybe $134 million on professional services in this quarter, and I don't have the number for last quarter, but maybe it was $80 million or something. All right, so you can get a sense, if you look back at those numbers over time, how much they've ramped up and what likely a normal run rate would be without them with all other projects.

Got it. That's helpful. And I guess, thinking -- you said that $25 million of the linked-quarter increase this quarter, there was also -- not only just BSA/AML, but there is some CCAR-related -- I mean, I guess in the $25 million, I guess, the CCAR, we'd start to see that drop off as we get past the first quarter of '14, right? So is there a way to kind of parse out how much of that CCAR may go away as we look into the sequential quarters?

I kind of look at it almost on the same time line as the BSA/AML, because don't think about submissions. Think about building of -- so, Brian, think about banks and their asset liability process, which they can run very routinely every month or as frequently as they want. We're in the process of building the infrastructure to stabilize that. So it's not about the submission as much as it is about building a sustainable, repeatable process that has as much integrity as your ALM, which, of course, has been around for decades, right? So I think that'll -- we'll continue to spend and invest there probably on the same path as what you're seeing on the BSA/AML. But then again, that should taper off, particularly in the professional services side.

Okay, great. I guess just one quick one, and I'll get back in the queue. With the accretable yield that was in the NII this quarter?

Yes. That number, I think, was $64 million or something, down from $70 million.

$71-ish million.

$71-ish million, that's the number I was going to say.

Got you. And again, Mike Pinto has always been a good friend and a mentor for me and so our prayers are with him and his family.

Our next question comes from the line of Keith Murray with ISI.

Just go along with me for a minute here. Let's assume, for argument's sake, that in 2014 you hit all your targets on BSA/AML, you get the CCAR system where you want it. When you get to 2015, and let's put Hudson City aside, what's either an expense dollar run rate level or sort of an efficiency ratio target that you think you can run M&T at for 2015?

Yes, that's a good way to ask a question, Keith. I mean, I just think in terms of the efficiency ratio because we're always either expanding businesses or in some cases adding regions. So you saw we are at 56.2%, both this year, full year and last year, and that really is a reflection of sort of a new regulatory environment and the building of our infrastructure after the sort of growth spurt that we've had. Like -- I think we did something like 4, 5 acquisitions recently. So we've always felt that operating the efficiency ratio below that level was something that was very doable. We've actually run 50% to 55%, somewhere in that range, for a long period of time. I don't see any reason why we shouldn't be back in those levels, but it's going to get there not necessarily by just saying that you're going to cut some expenses, because you do have a new infrastructure. But think of, for example, as we achieved, whatever time period, what we're doing with the BSA/AML and building out the system, that's a process that's almost pure 100% leverageable, right, as we bring in new accounts, new volume and so forth. So one of the reasons why we are so confident in making a lot of these investments across the board and the data centers and all the other technology initiatives is, we think, over time, these are very leverageable and they'll position us well to sort of get back to the same space in the low-50s that we've always operated the institution at. I feel pretty confident that, that's very doable.

Okay. And then just on capital allocation, in the past, if you went through a patch of slow loan growth or where the risk reward on loans wasn't so great, you could go and buy back your stock, sort of at will. Given where we are in the regulatory world right now, when you're in a situation like that, what's the new default position of what to do with capital? And as you think about the return ROTE potential for M&T, how much has it changed from where you are in the environment?

Yes, yes. Over many, many years that was always the governor, right, you could just sort of simply be very disciplined and say, "Okay, well, I don't have use for it because things are very frothy and I'll give back the capital." So I think you're right. I think in fact, I think that's one of the reasons why you see that the loan pricing and, now, loan structures are so competitive because there's not really an alternative use. It's also one of the reasons which makes us very comfortable to sort of make these correct investments, right? But there is no answer to your question. I mean, you -- I think if we can utilize that capital well and put it in the right places over the course of like last year, this year, I think that will be one set. And then, pass then, our capital ratio is now 9.25%, they're kind of getting up there again. So down the road in the future, we'll have to see how that changes. But one thing is for certain, I mean, you may see us -- if the loan growth is actually maybe X-minus because we're not really interested in sort of chasing some of the stuff that we see out there today, particularly in terms of structure.

Our next question comes from the line of Bob Ramsey with FBR.

René, I just was hoping you could talk maybe a little bit about the loan growth outlook. I know you guys said low- to mid-single digits and that seems a little slower than some of the other banks are talking about. I think you also mentioned in your introductory comments that you've seen some of the commercial real estate lending in New York become more competitive. I'm curious what you mean by that and how you're thinking about the loan growth outlook.

Yes. I'm pretty optimistic on the commercial side. There's nothing that we've seen, at least from an industry standpoint that suggest that commercial loan growth is slowing. In fact, it's the opposite. So we've had healthy C&I growth. I would expect that to continue and easily could be a little bit higher. We saw some pay-downs in CRE. So the normal trend to me would suggest continued growth. And in fact, if you kind of look at our numbers by category and in total relative to the industry, I think we're -- we've been higher than the industry in C&I, we've been maybe a little lower in CRE, we've been -- actually had less runoff in home equity, right? So we're probably positioned well relative to the industry. The thing that does bug us a little bit is in some places, pockets, you just see behavior that, quite frankly, the loan pricing didn't make sense that -- it wouldn't have made sense back in 2005 before we had the higher capital, before we had the higher liquidity. And in many cases in some of our markets, you see it in some of the smaller firms who were not necessarily accounting for those types of things. So I think that's one factor that could dampen the growth a bit. But in New York, it was interesting. I mean, if you go back maybe a year ago, maybe 1.5 years ago, all that during that period, it was the one place where pricing was very, very rational. There were actually only a few players and the behavior seemed to be maybe the most rational in all of our footprint. Now you're seeing, again, the conduits are resurging. You're seeing insurance companies come in. And in the past quarter, it was a space where there were a lot of examples of just longer structures, 7 years plus, and very, very thin pricing. So I mean, we report what we see and we kind of monitor it. I felt pretty good actually about the fact that it was a little slow. We actually, because of that, we saw some pay-downs, right? There were some things we're sort of refinancing out during the quarter in New York City. So that's what we know.

Our next question comes from the line of Erika Najarian with Bank of America.

I just had one follow-up question. René, if I understood you correctly, your guidance for less NIM compression this year than last does not include the liquidity build that you have to do it to be LCR-compliant based on the current proposal?

That's correct. And we did it that way because when we think of what we have to do to meet the liquidity coverage ratio and we look at the income impact, they're very -- there's very little, if any, income impact. So really, what you're doing is sort of putting on a leverage with no impact on interest income, sort of take down your printed net interest margin.

Okay. And just as we think through it, how -- is it going to be a gradual building your securities book throughout the year or is it something you might front-load towards the beginning of the year?

Right, that will frontline. It will be in the market. You'll see it every quarter where it'll be relatively steady and consistent.

And just as a follow-up question to Keith, you mentioned a 56% efficiency ratio or something that is achievable near-term. Is it unreasonable for us to say that M&T can get -- M&T standalone will operate at 56% for full year 2015?

I mean, is it unreasonable? I don't -- I mean, we tend to think longer-term, 2015 is a long way away. I don't know. Normal efficiency ratios for us would be low -- in the mid-levels. But as we're done with our work and we start to leverage that structure and the new infrastructure, I'd be surprised if we weren't below 55%. Below that, 50% to 55%, somewhere in that range. It's where we've always been. And as you think about it, and particularly, depending on what type of institution that we have, one of the things you're going to see, again, because of liquidity coverage ratio, if we were at 56% and if you think of all these things that we've got to do with liquidity, that ratio, I'm not so sure that, that just doesn't come down because structurally right, we're a different institution. So -- but I think we've got a long way to go. We have a good track record, and you kind of see it. If I were looking at it, I'd go back in history and look at where we've been, and that's what I'd probably use as my benchmark.

Our next question comes from the line of Jennifer Thompson with Portales Partners.

Just a couple of questions on C&I. If you could give us the line utilization rates or the trend you're seeing there. And was there anything discernible in terms of the growth in C&I through the quarter? In other words, was there ramp-up at the end of the year or was it pretty consistent throughout the quarter?

Yes, great. I'll go in reverse again. There definitely was ramp-up towards the end of the year. I think most of our loan growth was accounted for in the month of December. From November 30 to December 31, we had about $700 million of growth in C&I. And then when we look at sort of -- that's on the balance sheet. And when we look at sort of the pipeline, loan growth -- loan production, so new loans that went through our senior loan committee were lower than a year ago, but a year ago, it was abnormal and they were above average and consistent with any fourth quarter we've -- any of the better fourth quarters we've seen in the past. So I think that kind of speaks to the idea that I wouldn't expect a slowing of commercial loan growth. In terms of utilization, we are somewhere 57%, 58%. That has been rising fairly consistently over the course of 2013. So in fact, if you look at that trend, it's an upward trend, it's a straight line. So again, it gives you some sense that the idea that you would expect C&I to start slowing at this point probably doesn't make much sense.

And that 57%, 58% that you're running, has it been -- I mean, what's kind of the pace -- what was it last quarter? Is it going up a percentage or so every quarter or what?

It's gone up a very little bit, but very slowly. So if you go back a year ago, maybe that number was -- if it's 58% now, maybe that was 55%. If you go back a year before that, it might have been in the low-50s, 50%. Fairly steady, slow pace, yes.

Our next question comes from the line of Brian Foran with Autonomous Research.

I guess, as I think about BSA/AML, I mean, I think as analysts, yes, we've talked about it like we know what we're talking about. But like, what does a BSA/AML best-in-class system actually entail? Is it mostly about technology or is it adding people? Like you get the consulting to build it upfront, but when you're done, do you end up with a tech system or is it more people? And is there any benefit beyond compliance? Is it really just compliance or is there some other things from a business perspective that it helps you with or lets you do?

So, Brian, again, it's a good -- great question, the way you phrase it. Let me do my best. So first of all, it's not just technology, it's people, heavily people incentive and training people and training people to know the customer. So if you think about it, what we're doing -- one of the first -- one of the most fundamental things is we're building a risk rating system that allows us to be very sensitive and knowledgeable about when patterns change, and that might indicate that someone's engaging in some illicit activity or money-laundering. And to do that equally across all of our footprints and actually through each of the channels in which we interact with our customers. So to do that, on the system side, there's a fair amount of just data capture. And capturing that information is not necessarily just standard information, you're trying to make sure that you have access to information that allows you to do a great job of being predictive. So it's not a onetime thing. Predicting customer behavior is sort of changing all the time and so these models are relatively complex. So in order to do that, what you've got to do is you've got to identify the information you need, you've got to train your customer-facing employees on exactly what that information is and how to go about capturing it. And then you've got to interact with all of your customers, both the existing customers and the new ones through the account opening process to begin to capture that information. But remember, you've got to capture that information in a very accurate, consistent way. So you're not only -- you're not sitting in some back-office somewhere building a computer. It's touching every aspect of our business and particularly, the aspects that address our customers. And so, we've seen this happen before. We've seen places that have done it in a way where there's been a lot of disruption in the markets to their customers. We're trying to balance all that, and at the same time, we're trying to sort of aggressively be sort of best-in-class in terms of having predictive models that will allow us to monitor for illicit behavior. So if you think about it, it's pretty complex. If you are really, really good at systems, that would be one thing. And not good with people, I think you'd have a problem. So the quality of your people, the quality of your sales force, as well as the technology and the data are all key elements.

Our next question comes from the line of Gerard Cassidy with RBC.

René, on your LCR ratio that you talked about, and you may have mentioned it and I kind of overlooked it, what's the dollar amount do you think you need to buy in terms of liquid securities to get you up to the level that you need to get to?

Yes, we haven't disclosed that yet, Gerard. And I think over the course of this year, you saw in some of the moves we made, particularly in the second quarter and then in the third, and I think those began to get us in a good range to be able to kind of meet the requirements. I think it's fair to say that we still have a fair amount to do at the sort of manageable amount that we would do through the course of the year. But we really haven't talked about the amount. In part, we're not talking about the amount because remember that the rules of the NPR is sort of not final. And one of the things that happen in the fall, in my opinion, was that maybe it seems that it came out to be a little bit more stringent than we were thinking. So as it stands as it is, we have more work to do. But I think you'll see it, you'll get a feel for it as we get to the -- through the end of the first quarter.

Okay. And stepping back from the BSA/AML, the revamping of your systems that you're doing, how much did your acquisition strategy over the years -- obviously, you've done a number of acquisitions very successfully, how much did that kind of complicate the situation versus if you were just a legacy M&T Bank, the legacy bank in Buffalo?

Yes. I mean, I think, one of the -- let me put it this way, one of the things that has positioned us extremely well is this philosophy that we've had for many, many years that when we do an acquisition, our preference would be to do it a simultaneous close and integration, right? And when doing that, we end up putting everything on M&T's system. And so from a systems and information standpoint, that's helped us very well as you kind of go through the years and think of the transactions that we've done. Wilmington was a little different in part because we, the bank part, which was really quite frankly the smaller part, was smooth and easily integrated in a very short time period, I think that same summer that we did the close. Whereas, if you think of the trust business, the wealth and institutional services, we were really taking a lot of the quality and attributes that were already existing at Wilmington and bringing the M&T piece into the fold. So that was relatively new. So I think, you've seen that. That's taken us longer on the Wilmington side to sort of get to what we would call a steady state. Having said that, particularly over the last 6 months, we feel really good. We feel really good about the work we've done on the control environment and how we've stabilized that. So if you think of that as 2013, we announced that deal in 2010. So typically, that's longer. But aside from Wilmington, I think the way we've been able to do things to keep them simple, to have not duplicate systems probably has allowed us to make these investments and have them be much more productive than not. So we're not consolidating processing centers. We're not -- if you remember, a bunch of us in 2004 and 2005, when we were complaining about the revenue growth, that's actually what we were doing. We were looking at all the capture centers and we were doing all that kind of work. This is the third time that we've gone through an experience like this. One was after the 1991, '92 -- when I joined the bank, we were ramping up all the systems, we called it future solutions, we spent tremendous amount of money there. We also did the same with the projects I just mentioned to you in 2004 and 2005, and now, we're doing it again. So I think this is what you've got to do every period, after you go through a period of growth. If you don't do it, things could get out of control.

No doubt, no doubt. Regarding your agreement with the regulators, do you think, I mean, after -- when you finish all your BSA/AML stuff, do you think that for you to complete the Hudson City acquisition that, that agreement has to be lifted?

I think we've got to make progress on getting consumer to that best practice BSA/AML system. And we've got to allow the regulators to have enough time to be able to say that we've got an adequate system. Lifting of orders and all that, we have no control over that. And there's a history that says those things take much longer. So I think we're just really very -- our thinking is really it's about BSA/AML.

Okay. And then finally coming back to capital, excess capital. Obviously, M&T has demonstrated over the years as being a very good steward on taking care of excess capital and delivering it to shareholders. Assuming that the regional banks like your own are required to carry the 7% Tier 1 common ratio, maybe there's a domestic buffer of 25 or 50 basis points, and I would assume that you guys want to keep another buffer on top of that. Do you think that after you use your money for growth, what's left over will -- you will maintain that philosophy or the board will maintain the philosophy that you've had in the past in giving that excess capital back to shareholders?

Yes, I think at some point, that's right. I mean, I think -- and keep in mind, our situation, we've got to where we are in an efficient manner, right? We're 9.25. And you can see that other institutions are all giving back capital and doing appropriate levels of repurchases and those things. So it's not as if that has been eliminated from the banking industry. I think as I think about it, right, if you think of all the things that we've -- that have been part of our value proposition, acknowledging that we sell commodities and making sure that we have a low-cost, controlled environment, keeping everything relatively simple. To me, now that everybody has to carry more equity, those things are even more important to be able to carry that through. And then at some point in time, as you get excess capital, yes, the only choice you really have is to give it back in some efficient form.

Our next question comes from the line of Todd Hagerman with Sterne Agee.

René, I just wanted to go back to the Hudson City just for a moment. As you mentioned, the board has again met in December, put out a statement, including a comment that it was, I believe, unlikely the transaction, I believe, would close by the end of the second quarter. I'm just wondering in terms of -- you're very focused on developing or building out kind of a best-in-class enterpriser's management system. And I'm just kind of thinking -- I'm trying to think about whether or not -- are the companies on a dual track system such that they're very much still moving forward in terms of wanting to complete the deal, but by the same token, you're continuing to move forward in terms of your risk management process? I'm just trying to figure out if -- basically, it seems as almost the agreement is becoming -- it has become an agreement in principle, such that when the stars align sometime in the future, the boards will revisit the transaction and determine whether or not it makes sense.

I thought I had you, Todd, in the beginning, but then I think I lost you at the end. So I'll go with the one from the beginning. I think, look, put Hudson City aside for a minute. We are among the smallest of the banks that are above $50 billion. We tend to think long-term. So regardless of any specific merger transaction, we think in order to survive and be around, you've got to have a pretty strong infrastructure. And we also think that as we move forward further and further along, what's really happening is that there are a lot of barriers to entries being set up. So in our mind, these investments that we're making, particularly in risk management, don't relate to any one particular transaction. So the second part of that would be that once we complete that, it's not that we're sort of running to -- I see what you mean by dual tracks now. From a risk management perspective, it would plug into Hudson City and there's no incremental, whatsoever, associated with it. The dual tracking is sort of -- I mean, at the end of the day, the environment's uncertain and it makes sense for them to go down a path to make sure that they have alternatives in the event that we can't sort of do the partnership that we want to do. So I think that's all that they were saying. And under the sort of regulatory regime and their particular regulators, they've got to continue to make progress to be safe and sound if for some reason that they have to go on their own. But as we complete the merger, yes, I mean, there's no incremental cost to run Hudson City given what its portfolio and mix are. And that's what -- why you get a lot of leverage out of these investments we're making.

No, I can appreciate that. That's helpful. I'm just wondering whether or not, again, you think about the period of time that's elapsed since the deal was initially announced, the time where the initial due diligence was completed. And it just seems like at some point we can get back to a situation where we have to revisit with shareholders and think about the economics of the transaction and whether or not it really makes sense at some point in time.

We reviewed all the economics of it. We're economic animals. Really, we reviewed all the economics of the deal and I'm absolutely positive that Hudson City did the same. And it just makes sense, it didn't make sense for 1 quarter, it made sense. So putting those 2 institutions together, that -- all that value is there. Nothing has changed at all. And both parties kind of weighed that out and are very committed to the transaction.

Our next question comes from the line of Sachin Shah with Albert Fried.

My question is about Hudson, in fact, again. So I know you're trying to set the foundation here on this AML, you reiterated in various ways. But -- so from that perspective, before you can move on and even have the regulators look at the Hudson bank situation and actually approve it and allow it to move forward, is there any specific timing on this now, relative to the previous statement that you guys put out on extending the termination date, et cetera?

The only thing that's out there that is public is our written agreement and it kind of lays out everything that we've got to do. And we've sort of talked about the progress we want to make in terms of this year and we've talked about the spending patterns. So with all that together, you can get a good sense. I mean, sending it down to a specific day is not, really, how we think about it.

So -- but the timing is you're -- sometime in the second quarter of this year that you're expecting maybe some progress?

I don't think I can add anything beyond I've already noted through the course of the call.

Okay. And as far as Hudson bank, so just to reiterate that the commitment is there on both boards to continue, as outlined, the merger agreement and the amendment of that to basically merge? Is that -- I just want to solidify those comments.

No, I mean, I think just go back and read the press release because we're all very enthusiastic about doing the transaction, each of us individually and together. There's sort of no question in our minds and I think that was evident in the actions that both boards took. So we are very enthusiastic about -- once we get all our work done, continuing on with that process.

Okay. Just one follow-up question. And so, aside from this AML situation, is there any -- so if you resolve this, when you resolve this, it's more of a when you resolve it situation. Because as you said early on, you're thinking more long term about the bank, M&T, which makes sense. But when you resolve that, when you resolve that, do you believe there is any other -- there are reasons why the regulators, especially the fed, would say, "You resolved this, but now you still can't do this transaction."

If you spend any time around these processes, I mean, really, what happens is that you do your best to have both partners have the right intent, which we have here. We think we've got a transaction that creates a lot of value and then you have your application process go through. We don't influence the application process. We don't influence future events. We don't influence the state of the economy, as that will happen going forward. All we know is that the 2 management teams are really committed to producing a strong bank in New Jersey, right? That's all we know.

Our next question comes from the line of Adam Rupert with CIBC Asset Management.

René, through the acquisition of Wilmington Trust, you guys are required a number of investor managers, including a couple of equity stakes and some smaller boutique managers, such as Roxbury Capital and Cramer Rosenthal McGlynn. Can you comment on M&T's strategic vision for the investment management arm of the bank in general and maybe these 2 assets specifically?

Well, I mean, other than -- they are great partners and we're very pleased with every aspect of the Wilmington transaction and the partnership we've got. But other than that, there's really nothing to talk about there.

Is growing boutique investment managers underneath the umbrella of Wilmington Trust, something that would be in the strategic plan for the future?

I don't think that, that's necessarily the way we think about the growth in the Wilmington business is in platforms. I think that on the ICS and trust business, that's a whole different ballgame in the types of clients and services that we're providing. And then on the Wilmington side, really, our leverage is all about introducing the strong and talented team that's there to our customers. So we're not sort of focused on the idea that we would need to have more of those types of relationships in order to sort of provide good customer value.

Our next question comes from the line of Robert Herz with the OppenheimerFunds.

René, I was wondering if you could talk about the trust preferreds and how you have a $350 million one at 8.5% that I think you were approved to replace with other capital? And then there's like $367 million of other trust preferreds, which are currently callable, they just became callable this month.

Yes, so on the $350 million that you mentioned, now, when we submitted our capital plan last year, we got approval to replace those through -- that approval lasts through the end of the first quarter here. So it is our intention to do that, and we'll probably use that piece as a replacement with a full preferred. And then the rest of the stuff, it depends -- and we've talked about this a little bit, some of it is actually closed at very low rates and so it will probably end up...

Right, I excluded the low-rate stuff. I just gave the things that are all over 8% because there are all those floating rate things.

Yes, so that's -- the remaining amount that, probably not in the near term but down the road as our capital structure firms up, we would then obviously look to do something. But we're not looking to do anything with that sort of sub set that you just talked about in the near term.

Our final question is a follow-up from the line of Brian Klock with Keefe, Bruyette, Woods.

René, just a quick follow-up. So I guess one, congratulations on your promotion, but to me, I'm just wondering if you can let us know, I guess, what -- with all the additional responsibilities you're taking on now as the Vice Chairman at M&T and now running the wealth management Wilmington Trust lines of business, I guess just talk about your expectations and what we can expect to -- how that will impact you going forward.

Well, in near term, I don't expect that you'll notice any changes. I think that with regard to the whole announcement, I hope you would see with Mark and Kevin and some of the other names that you have heard or will continue to hear, that we've got a really, really deep bench. And with respect to Wilmington, as I said, that team is very, very strong. It's got strong leadership. And now, we've sort of gotten to a place where we've gotten to a very stable environment. And so, I think our forward-looking view of the Wilmington businesses is that, we should be able now to sort of kind of go full steam ahead and integrate that into all the opportunities that we have across our core footprint on the wealth side and maybe beyond that with respect to the institutional businesses. So my job is to help out in any capacity that I can, and I'm sure you'll probably hear more about that as we kind of move forward.

And that was our final question, and I'd like to turn the floor back over to Don MacLeod for any additional or closing remarks.

Again, thank you, all, for participating today. And as always, if clarification of any of the items on the call or news release is necessary, please contact our Investor Relations Department at area code (716) 842-5138.

Thank you. This concludes today's conference call. You may now disconnect.