M&T Bank Corp. Chairman and CEO Robert G. Wilmers said he believes the bank’s planned acquisition of Hudson City Bancorp will be its “next shining success story” but is determined to resolve regulatory issues first.

“Hudson City is quite simply a great complement to our existing operations – one that equals and in some ways exceeds the potential we’ve seen in our existing markets,” Wilmers said in remarks to shareholders Tuesday at the Buffalo-based bank’s annual meeting.

M&T announced a $3.7 billion deal for New Jersey-based Hudson City in August 2012, but the acquisition has been delayed as M&T works to satisfy Federal Reserve concerns about its Bank Secrecy Act and anti-money-laundering program. The two banks are aiming to complete the deal by the end of this year.

Wilmers said there are “a lot of good reasons why, even in the face of challenges and disappointments,” M&T has stuck with the Hudson City deal.

He said New Jersey has a “relatively affluent and growing population” of 8.4 million people – more than live in upstate New York, Maryland or Delaware, which are three other M&T markets. “New Jersey also has a high concentration of valuable commercial and small-business prospects – also more than in those three other markets.”

Wilmers said banks are operating in a challenging economic and regulatory climate.

“Too many banks are competing for too few loans in an economy that continues to be characterized by slow and uneven growth,” he said.

More-comprehensive regulations have led M&T to bolster its spending on regulatory, compliance and risk-related infrastructure, Wilmers said. M&T’s spending on those areas last year amounted to $265 million, equal to 10.3 percent of the bank’s total operating expense, he said. That total was also more than double what it spent in 2012 and was nearly four times as much as in 2007.

“To put that in perspective, M&T spent more on regulatory requirements last year than we did on personnel costs for our entire network of 721 branches,” he said.

In light of the economy, increased regulatory costs and higher mandatory capital requirements, “it will be harder than ever for banks to generate returns at the level at which shareholders have been accustomed,” Wilmers said.

But he also said he is “optimistic about our future and confident that we will continue to be able to outperform our peers in the banking industry, because I believe that our business model is more relevant, and our core values more important, than ever before.”

Wilmers praised M&T’s performance in Maryland and Delaware, and said the bank “has been growing strongly in Buffalo.” In the six-year period since the financial crisis, he said, M&T’s deposits in Western New York have grown by $2.67 billion, or 52 percent, and its loans in the region have increased by $735 million, or 22 percent.

Along with being a prominent player in U.S. banking, M&T is also a major local employer. As of the end of 2013, M&T had 6,181 employees in Western New York, up 28 percent from 2007. In the period since the financial crisis, M&T has contributed $27.2 million to local nonprofits, he said.

About 270 people attended the meeting, but only one of them, shareholder Paul Durnan, of Burlington, Ont., asked Wilmers a question during the allotted time. Durnan asked that with so many small banks in New Jersey, whether by acquiring Hudson City, M&T intended to “nibble at several of those small banks to make a much bigger Hudson City.”

Wilmers said the bank’s priority is securing regulators’ approval of its upgraded Bank Secrecy Act/anti-money-laundering program so that the Hudson City deal can go forward. “I think it would be audacious of us to think about doing anything more than working on getting that approval,” he said.

Following the meeting, Wilmers commented on M&T’s decision to stop providing banking services to the Cuban Interests Section in the United States. The issue attracted some national media attention when Cuba suspended consular services in the United States this year, unable to find a replacement for M&T. The section handles diplomatic matters like visas and passports for its citizens and visitors.

Wilmers said the “know your customer” provisions tied to the Bank Secrecy Act and anti-money laundering practices were daunting.

“We were the Cubans’ only account in the Untied States, and we had 6,000 items a week, 300,00 items a year to process,” Wilmers said. “We had to know the people behind every one of those. It was a very costly process.”

“We told the Cuban Interests Section about two years before that we would like them to find another bank,” he said. “Even with the assistance of the State Department, they were not able to find another bank. And after two years, we felt we just couldn’t continue; it was too expensive.”

Wilmers weighed in on some other topics:

• The economy: “My projection is the economy is getting better. It’s getting better very slowly. I think you can see that from any kind of indicators. I guess the one I look at most is our loan demand and the industry’s loan demand. From there, we look at what’s going on in housing, and that is another great indicator. And that’s been doing better, too.”

• Whether the process to meet the Federal Reserve’s regulatory requirements is taking longer than he expected: “It’s more complicated than I would have thought.”