M&T Bank Corporation ("M&T")
GAAP Results of Operations. Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") for the second quarter of 2010 rose 306% to $1.46 from $.36 in the second quarter of 2009 and were 27% higher than $1.15 in the initial 2010 quarter. GAAP-basis net income in the recent quarter aggregated $189 million, up from $51 million and $151 million in the second quarter of 2009 and the first quarter of 2010, respectively. GAAP-basis net income for the second quarter of 2010 expressed as an annualized rate of return on average assets and average common stockholders' equity was 1.11% and 9.67%, respectively, improved from .31% and 2.53%, respectively, in the year-earlier quarter and .89% and 7.86%, respectively, in the first quarter of 2010.
The recent quarter's earnings as compared with the second quarter of 2009 reflects a significant rise in net interest income, resulting from a widening of the net interest margin, and a lower provision for credit losses. Also contributing to the improved performance as compared with the year-earlier quarter were lower assessments by the Federal Deposit Insurance Corporation ("FDIC") and acquisition-related expenses incurred in 2009's second quarter associated with M&T's acquisition of Provident Bankshares Corporation ("Provident") on May 23, 2009 related to systems conversions and other costs of integrating operations and introducing Provident's former customers to M&T's products and services. Such costs aggregated $40 million, after applicable tax effect, or $.35 of diluted earnings per common share, in the second quarter of 2009. Increases in net interest income, service charges on deposit accounts and mortgage banking revenues combined with declines in the provision for credit losses and personnel costs contributed to the rise in net income as compared with the initial 2010 quarter.
Reflecting on M&T's second quarter performance, Rene F. Jones, Executive Vice President and Chief Financial Officer, noted, "This quarter's results were strong in every respect. Performance metrics including net interest margin, the efficiency ratio, credit costs and our capital position all improved during the quarter. Of note, the net interest margin continued to widen, up six basis points to 3.84% from 3.78% in the first quarter, while average core deposits grew an annualized 4%. At the same time, we strengthened our tangible common equity ratio to 5.75% at June 30, 2010 from 5.43% at March 31, 2010."
Supplemental Reporting of Non-GAAP Results of Operations. M&T consistently provides supplemental reporting of its results on a "net operating" or "tangible" basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and expenses and gains associated with merging acquired operations into M&T, since such items are considered by management to be "nonoperating" in nature. Although "net operating income" as defined by M&T is not a GAAP measure, M&T's management believes that this information helps investors understand the effect of acquisition activity in reported results. Reconciliations of GAAP to non-GAAP measures are provided in the financial tables included herein.
Diluted net operating earnings per common share, which exclude the impact of amortization of core deposit and other intangible assets and merger-related expenses and gains, increased for the fifth consecutive quarter, totaling $1.53 in the recent quarter, up from $.79 and $1.23 in the second quarter of 2009 and the first quarter of 2010, respectively. Net operating income during the second quarter of 2010 was $198 million, compared with $101 million and $161 million in the second quarter of 2009 and the first quarter of 2010, respectively. Expressed as an annualized rate of return on average tangible assets and average tangible common stockholders' equity, net operating income was 1.23% and 20.36%, respectively, in the recently completed quarter, compared with .64% and 12.08% in the second quarter of 2009 and 1.00% and 17.34% in the initial 2010 quarter.
Taxable-equivalent Net Interest Income. Taxable-equivalent net interest income totaled $573 million in the second quarter of 2010, up 13% from $507 million in the year-earlier period and 2% higher than $562 million in the first quarter of 2010. The significant improvement from the second quarter of 2009 was predominantly the result of a 41 basis point widening of the net interest margin to 3.84% in the recent quarter from 3.43% in the year-earlier quarter. The increase in taxable-equivalent net interest income from the initial 2010 quarter was due to a six basis point widening of the net interest margin, partially offset by a 1% decline in average earning assets.
Provision for Credit Losses/Asset Quality. The provision for credit losses was $85 million in the recent quarter, improved from $147 million in the second quarter of 2009 and $105 million in the initial quarter of 2010. Net charge-offs of loans totaled $82 million during the second 2010 quarter, down from $138 million and $95 million in the second quarter of 2009 and the first quarter of 2010, respectively. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .64% and 1.09% in the second quarter of 2010 and 2009, respectively, and .74% in the first quarter of 2010.
Loans classified as nonaccrual aggregated $1.09 billion, or 2.13% of total loans at June 30, 2010, compared with $1.11 billion or 2.11% a year earlier and $1.34 billion or 2.60% at March 31, 2010. Assets taken in foreclosure of defaulted loans were $193 million at June 30, 2010, up from $90 million at June 30, 2009 and $95 million at March 31, 2010. The increase in such assets at the recent quarter-end resulted from the transfer of collateral related to a commercial real estate loan that was placed in nonaccrual status during the fourth quarter of 2009. The ratio of nonperforming assets to total loans plus real estate and other foreclosed assets was 2.50% at June 30, 2010, improved from 2.78% at March 31, 2010. That ratio was 2.28% at June 30, 2009.
Loans past due 90 days or more and accruing interest totaled $203 million at the end of the recent quarter, including loans guaranteed by government-related entities of $188 million. Such past due loans were $155 million and $203 million at June 30, 2009 and March 31, 2010, respectively, including $144 million and $195 million of government guaranteed loans at those respective dates.
Allowance for Credit Losses. M&T regularly performs detailed analyses of individual borrowers and portfolios for purposes of assessing the adequacy of the allowance for credit losses. Reflecting those analyses, the allowance totaled $895 million at June 30, 2010, compared with $855 million and $891 million at June 30, 2009 and March 31, 2010, respectively. Beginning in 2009, GAAP requires that expected credit losses associated with loans obtained in an acquisition be reflected in the estimation of loan fair value as of each respective acquisition date and prohibits any carry-over of the acquired entity's allowance for credit losses. Excluding amounts related to loans obtained in 2009 acquisition transactions, the allowance-to-legacy loan ratio was 1.86% at the two most recent quarter-ends, compared with 1.76% at June 30, 2009.
Noninterest Income and Expense. Noninterest income totaled $274 million in the second 2010 quarter, compared with $272 million and $258 million in the second quarter of 2009 and the first quarter of 2010, respectively. Reflected in those amounts were losses from investment securities of $22 million, $24 million and $26 million, each predominantly due to other-than-temporary impairment charges. During the recent quarter, such charges related to a $12 million write-down of American Depositary Shares of Allied Irish Banks, p.l.c., which were obtained in M&T's acquisition of Allfirst Financial Inc. in 2003 and certain of M&T's holdings of privately issued collateralized mortgage obligations and collateralized debt obligations backed by pooled trust preferred securities, aggregating $10 million. The impairment charges in the second quarter of 2009 and in the initial 2010 quarter related to privately issued collateralized mortgage obligations. Because the impaired investment securities were previously reflected at fair value on the consolidated balance sheet, the impairment charges did not reduce stockholders' equity. Excluding gains and losses from investment securities, noninterest income in the second quarter of 2010 aggregated $296 million, equal to the year-earlier quarter but up 4% from $284 million in the initial quarter of 2010. Higher service charges on deposit accounts during the recent quarter as compared with the second quarter of 2009, largely due to the impact of the 2009 acquisitions, were offset by declines in mortgage banking revenues, trading account and foreign exchange gains, and losses at Bayview Lending Group. As compared with the first quarter of 2010, the recent quarter's improvement resulted from higher service charges on deposit accounts and mortgage banking revenues.
Noninterest expense in the second quarter of 2010 aggregated $476 million, compared with $564 million in the year-earlier quarter and $489 million in the first quarter of 2010. Included in such amounts are expenses considered to be nonoperating in nature consisting of amortization of core deposit and other intangible assets and merger-related expenses. Exclusive of those expenses, noninterest operating expenses were $461 million in the recent quarter, compared with $482 million in the second quarter of 2009 and $473 million in 2010's initial quarter. The decline in such expenses from the year-earlier period was largely attributable to a special assessment levied on insured financial institutions by the FDIC in the second quarter of 2009, which in M&T's case amounted to approximately $33 million, partially offset by a $13 million reduction of the allowance for impairment of capitalized residential mortgage servicing rights in the second quarter of 2009. In comparison, a $2 million addition to the impairment allowance was recognized during the recent quarter. After excluding the impact of the FDIC special assessment and the change in the allowance for impairment of capitalized residential mortgage servicing rights, noninterest operating expenses in the recent quarter were $3 million lower than in the year-earlier quarter. The lower level of noninterest operating expenses in the recent quarter as compared with 2010's initial quarter was largely the result of a decline in personnel costs from seasonally higher first quarter stock-based compensation, payroll-related taxes and contributions for retirement savings plan benefits associated with incentive compensation payments.
The efficiency ratio, or noninterest operating expenses divided by the sum of taxable-equivalent net interest income and noninterest income (exclusive of gains and losses associated with bank investment securities and merger-related expenses and gains), measures the relationship of operating expenses to revenues. M&T's efficiency ratio improved to 53.1% in the second quarter of 2010 from 60.0% in the year-earlier period (56.0% excluding the FDIC special assessment) and 55.9% in the first quarter of 2010.
Balance Sheet. M&T had total assets of $68.2 billion at June 30, 2010, compared with $69.9 billion at June 30, 2009. Loans and leases, net of unearned discount, were $51.1 billion at the recent quarter-end, compared with $52.7 billion a year earlier. Total deposits rose to $47.5 billion at June 30, 2010 from $46.8 billion at June 30, 2009. Reflecting a $1.6 billion or 13% rise in noninterest-bearing deposits, domestic office deposits increased $1.3 billion, or 3%, to $47.0 billion at the most recent quarter-end from $45.7 billion at June 30, 2009.
Total stockholders' equity increased to $8.1 billion at June 30, 2010 from $7.4 billion a year earlier, representing 11.89% of total assets at the recent quarter-end and 10.58% a year earlier. Common stockholders' equity was $7.4 billion, or $61.77 per share, at June 30, 2010, compared with $6.7 billion, or $56.51 per share, at June 30, 2009. Tangible equity per common share rose to $31.15 at the recent quarter-end from $25.17 a year earlier. In the calculation of tangible equity per common share, common stockholders' equity is reduced by the carrying values of goodwill and core deposit and other intangible assets, net of applicable deferred tax balances, which aggregated $3.7 billion at each of June 30, 2010 and 2009. M&T's tangible common equity to tangible assets ratio was 5.75% at June 30, 2010, compared with 4.49% and 5.43% at June 30, 2009 and March 31, 2010, respectively.
Conference Call. Investors will have an opportunity to listen to M&T's conference call to discuss second quarter financial results today at 10:30 a.m. Eastern Time. Those wishing to participate in the call may dial (877)780-2276. International participants, using any applicable international calling codes, may dial (973)582-2700. Callers should reference M&T Bank Corporation or the conference ID# 87561125. The conference call will be webcast live through M&T's website at http://ir.mandtbank.com/conference.cfm. A replay of the call will be available until Friday, July 23, 2010 by calling (800)642-1687, or (706)645-9291 for international participants, and by making reference to ID# 87561125. The event will also be archived and available by 6:00 p.m. today on M&T's website at http://ir.mandtbank.com/conference.cfm.
M&T is a bank holding company whose banking subsidiaries, M&T Bank and M&T Bank, National Association, operate branch offices in New York, Pennsylvania, Maryland, Virginia, West Virginia, Delaware, New Jersey and the District of Columbia.
Forward-Looking Statements. This news release contains forward-looking statements that are based on current expectations, estimates and projections about M&T's business, management's beliefs and assumptions made by management. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Future Factors") which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.
Future Factors include changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; common shares outstanding; common stock price volatility; fair value of and number of stock-based compensation awards to be issued in future periods; legislation affecting the financial services industry as a whole, and M&T and its subsidiaries individually or collectively, including tax legislation; regulatory supervision and oversight, including monetary policy and capital requirements; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies; increasing price and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of pending and future litigation and governmental proceedings, including tax-related examinations and other matters; continued availability of financing; financial resources in the amounts, at the times and on the terms required to support M&T and its subsidiaries' future businesses; and material differences in the actual financial results of merger, acquisition and investment activities compared with M&T's initial expectations, including the full realization of anticipated cost savings and revenue enhancements.
These are representative of the Future Factors that could affect the outcome of the forward-looking statements. In addition, such statements could be affected by general industry and market conditions and growth rates, general economic and political conditions, either nationally or in the states in which M&T and its subsidiaries do business, including interest rate and currency exchange rate fluctuations, changes and trends in the securities markets, and other Future Factors.
INVESTOR
CONTACT: Donald J. MacLeod
(716) 842-5138
MEDIA CONTACT: C. Michael Zabel
(716) 842-5385
M&T BANK CORPORATION
Financial Highlights
Three months ended
Amounts in thousands, June 30
-------
except per share 2010 2009 Change
---- ---- ------
Performance
-----------
Net income $188,749 51,188 269%
Net income available to common
equity 176,088 40,964 330
Per common share:
Basic earnings $1.47 .36 308%
Diluted earnings 1.46 .36 306
Cash dividends $.70 .70
Common shares outstanding:
Average - diluted (1) 118,878 113,521 5%
Period end (2) 119,161 118,012 1
Return on (annualized):
Average total assets 1.11% .31%
Average common stockholders' equity 9.67% 2.53%
Taxable-equivalent net interest
income $573,332 506,781 13%
Yield on average earning assets 4.63% 4.62%
Cost of interest-bearing
liabilities 1.04% 1.47%
Net interest spread 3.59% 3.15%
Contribution of interest-free funds .25% .28%
Net interest margin 3.84% 3.43%
Net charge-offs to average total
net loans (annualized) .64% 1.09%
Net operating results (3)
-------------------------
Net operating income $197,752 100,805 96%
Diluted net operating earnings per
common share 1.53 .79 94
Return on (annualized):
Average tangible assets 1.23% .64%
Average tangible common equity 20.36% 12.08%
Efficiency ratio 53.06% 60.03%
Six months ended
Amounts in thousands, June 30
-------
except per share 2010 2009 Change
---- ---- ------
Performance
-----------
Net income $339,704 115,409 194%
Net income available to common
equity 314,429 96,286 227
Per common share:
Basic earnings $2.63 .85 209%
Diluted earnings 2.61 .85 207
Cash dividends $1.40 1.40
Common shares outstanding:
Average - diluted (1) 118,569 111,988 6%
Period end (2) 119,161 118,012 1
Return on (annualized):
Average total assets 1.00% .35%
Average common stockholders' equity 8.78% 3.06%
Taxable-equivalent net interest
income $1,135,589 959,521 18%
Yield on average earning assets 4.61% 4.63%
Cost of interest-bearing
liabilities 1.04% 1.61%
Net interest spread 3.57% 3.02%
Contribution of interest-free funds .24% .29%
Net interest margin 3.81% 3.31%
Net charge-offs to average total
net loans (annualized) .69% .96%
Net operating results (3)
-------------------------
Net operating income $358,705 175,839 104%
Diluted net operating earnings per
common share 2.77 1.39 99
Return on (annualized):
Average tangible assets 1.11% 0.57%
Average tangible common equity 18.89% 10.76%
Efficiency ratio 54.45% 59.39%
At June 30
----------
Loan quality 2010 2009 Change
------------ ---- ---- ------
Nonaccrual loans $1,090,135 1,111,423 -2%
Real estate and other foreclosed
assets 192,631 90,461 113%
Total nonperforming assets $1,282,766 1,201,884 7%
========== =========
Accruing loans past due 90 days or
more $203,081 155,125 31%
Renegotiated loans $228,847 170,950 34%
Government guaranteed loans
included in totals
above:
Nonaccrual loans $40,271 38,075 6%
Accruing loans past due 90 days or
more 187,682 143,886 30%
Purchased impaired loans (4):
Outstanding customer balance $130,808 170,400 -23%
Carrying amount 61,524 97,730 -37%
Nonaccrual loans to total net loans 2.13% 2.11%
Allowance for credit losses to:
Legacy loans 1.86% 1.76%
Total loans 1.75% 1.62%
(1) Includes common stock equivalents.
(2) Includes common stock issuable under deferred compensation plans.
(3) Excludes amortization and balances related to goodwill and core
deposit and other intangible assets and merger-related gains and
expenses which, except in the calculation of the efficiency ratio,
are net of applicable income tax effects.
Reconciliations of net income with net operating income appear
herein.
(4) Accruing loans that were impaired at acquisition date and
recorded at fair value.
M&T BANK CORPORATION
Financial Highlights, Five Quarter Trend
Three months ended
------------------
Amounts in thousands, June 30, March 31,
except per share 2010 2010
---- ----
Performance
-----------
Net income $188,749 150,955
Net income available to common
equity 176,088 138,341
Per common share:
Basic earnings $1.47 1.16
Diluted earnings 1.46 1.15
Cash dividends $.70 .70
Common shares outstanding:
Average - diluted (1) 118,878 118,256
Period end (2) 119,161 118,823
Return on (annualized):
Average total assets 1.11% .89%
Average common stockholders' equity 9.67% 7.86%
Taxable-equivalent net interest
income $573,332 562,257
Yield on average earning assets 4.63% 4.59%
Cost of interest-bearing liabilities 1.04% 1.04%
Net interest spread 3.59% 3.55%
Contribution of interest-free funds .25% .23%
Net interest margin 3.84% 3.78%
Net charge-offs to average total
net loans (annualized) .64% .74%
Net operating results (3)
-------------------------
Net operating income $197,752 160,953
Diluted net operating earnings per
common share 1.53 1.23
Return on (annualized):
Average tangible assets 1.23% 1.00%
Average tangible common equity 20.36% 17.34%
Efficiency ratio 53.06% 55.88%
June 30, March 31,
Loan quality 2010 2010
------------ ---- ----
Nonaccrual loans $1,090,135 1,339,992
Real estate and other foreclosed
assets 192,631 95,362
Total nonperforming assets $1,282,766 1,435,354
========== =========
Accruing loans past due 90 days or
more $203,081 203,443
Renegotiated loans $228,847 220,885
Government guaranteed loans included
in totals
above:
Nonaccrual loans $40,271 37,048
Accruing loans past due 90 days or
more 187,682 194,523
Purchased impaired loans (4):
Outstanding customer balance $130,808 148,686
Carrying amount 61,524 73,890
Nonaccrual loans to total net loans 2.13% 2.60%
Allowance for credit losses to:
Legacy loans 1.86% 1.86%
Total loans 1.75% 1.73%
Three months ended
------------------
December September
Amounts in thousands, 31, 30, June 30,
except per share 2009 2009 2009
---- ---- ----
Performance
-----------
Net income 136,818 127,664 51,188
Net income available
to common equity 124,251 115,143 40,964
Per common share:
Basic earnings 1.05 .97 .36
Diluted earnings 1.04 .97 .36
Cash dividends .70 .70 .70
Common shares
outstanding:
Average -diluted (1) 117,672 117,547 113,521
Period end (2) 118,298 118,156 118,012
Return on
(annualized):
Average total assets .79% .73% .31%
Average common
stockholders' equity 7.09% 6.72% 2.53%
Taxable-equivalent
net interest income 564,606 553,450 506,781
Yield on average
earning assets 4.58% 4.60% 4.62%
Cost of interest-
bearing liabilities 1.13% 1.26% 1.47%
Net interest spread 3.45% 3.34% 3.15%
Contribution of
interest-free funds .26% .27% .28%
Net interest margin 3.71% 3.61% 3.43%
Net charge-offs to
average total
net loans (annualized) 1.03% 1.07% 1.09%
Net operating results
(3)
---------------------
Net operating income 150,776 128,761 100,805
Diluted net operating
earnings per common
share 1.16 .98 .79
Return on
(annualized):
Average tangible
assets .92% .78% .64%
Average tangible
common equity 16.73% 14.87% 12.08%
Efficiency ratio 52.69% 55.21% 60.03%
December September
31, 30, June 30,
Loan quality 2009 2009 2009
------------ ---- ---- ----
Nonaccrual loans 1,331,702 1,228,341 1,111,423
Real estate and other
foreclosed assets 94,604 84,676 90,461
Total nonperforming
assets 1,426,306 1,313,017 1,201,884
========= ========= =========
Accruing loans past
due 90 days or more 208,080 182,750 155,125
Renegotiated loans 212,548 190,917 170,950
Government guaranteed
loans included in
totals
above:
Nonaccrual loans 38,579 38,590 38,075
Accruing loans past
due 90 days or more 193,495 172,701 143,886
Purchased impaired
loans (4):
Outstanding customer
balance 172,772 209,138 170,400
Carrying amount 88,170 108,058 97,730
Nonaccrual loans to
total net loans 2.56% 2.35% 2.11%
Allowance for credit
losses to:
Legacy loans 1.83% 1.81% 1.76%
Total loans 1.69% 1.66% 1.62%
(1) Includes common stock equivalents.
(2) Includes common stock issuable under deferred compensation plans.
(3) Excludes amortization and balances related to goodwill and core
deposit and other intangible assets and merger-related gains and
expenses which, except in the calculation of the efficiency ratio,
are net of applicable income tax effects. Reconciliations of net
income with net operating income appear herein.
(4) Accruing loans that were impaired at acquisition date and
recorded at fair value.
M&T BANK CORPORATION
Condensed Consolidated Statement of Income
Three months
ended
June 30
-------
Dollars in thousands 2010 2009 Change
-- -- ------
Interest income $684,784 677,423 1%
Interest expense 117,557 175,856 -33
------- -------
Net interest income 567,227 501,567 13
Provision for credit losses 85,000 147,000 -42
------ -------
Net interest income after
provision for credit losses 482,227 354,567 36
Other income
Mortgage banking revenues 47,084 52,983 -11
Service charges on deposit accounts 128,976 112,479 15
Trust income 30,169 32,442 -7
Brokerage services income 12,788 13,493 -5
Trading account and foreign exchange
gains 3,797 7,543 -50
Gain on bank investment securities 10 292 -
Other-than-temporary impairment losses
recognized in earnings (22,380) (24,769) -
Equity in earnings of Bayview Lending
Group LLC (6,179) (207) -
Other revenues from operations 79,292 77,393 2
------ ------
Total other income 273,557 271,649 1
Other expense
Salaries and employee benefits 245,861 249,952 -2
Equipment and net occupancy 55,431 51,321 8
Printing, postage and supplies 8,549 11,554 -26
Amortization of core deposit and other
intangible assets 14,833 15,231 -3
FDIC assessments 21,608 49,637 -56
Other costs of operations 129,786 186,015 -30
------- -------
Total other expense 476,068 563,710 -16
Income before income taxes 279,716 62,506 348
Applicable income taxes 90,967 11,318 704
------ ------
Net income $188,749 51,188 269%
======== ======
Six months ended
June 30
-------
Dollars in thousands 2010 2009 Change
-- -- ------
Interest income $1,361,170 1,331,935 2%
Interest expense 237,609 382,561 -38
------- -------
Net interest income 1,123,561 949,374 18
Provision for credit losses 190,000 305,000 -38
------- -------
Net interest income after
provision for credit losses 933,561 644,374 45
Other income
Mortgage banking revenues 88,560 109,216 -19
Service charges on deposit
accounts 249,271 213,508 17
Trust income 61,097 67,322 -9
Brokerage services income 25,894 28,886 -10
Trading account and foreign
exchange gains 8,496 8,978 -5
Gain on bank investment
securities 469 867 -
Other-than-temporary
impairment losses
recognized in earnings (49,182) (56,968) -
Equity in earnings of Bayview
Lending Group LLC (11,893) (4,351) -
Other revenues from operations 158,551 136,532 16
------- -------
Total other income 531,263 503,990 5
Other expense
Salaries and employee benefits 509,907 499,344 2
Equipment and net occupancy 110,832 99,493 11
Printing, postage and supplies 17,592 20,649 -15
Amortization of core deposit and
other
intangible assets 31,308 30,601 2
FDIC assessments 42,956 55,493 -23
Other costs of operations 252,835 296,476 -15
------- -------
Total other expense 965,430 1,002,056 -4
Income before income taxes 499,394 146,308 241
Applicable income taxes 159,690 30,899 417
------- ------
Net income $339,704 115,409 194%
======== =======
M&T BANK CORPORATION
Condensed Consolidated Statement of Income, Five Quarter Trend
Three months ended
------------------
December
June 30, March 31, 31,
Dollars in thousands 2010 2010 2009
-- ---- ----
Interest income $684,784 676,386 692,669
Interest expense 117,557 120,052 133,950
------- ------- -------
Net interest income 567,227 556,334 558,719
Provision for credit losses 85,000 105,000 145,000
------ ------- -------
Net interest income after
provision for credit losses 482,227 451,334 413,719
Other income
Mortgage banking revenues 47,084 41,476 50,176
Service charges on deposit
accounts 128,976 120,295 127,185
Trust income 30,169 30,928 29,660
Brokerage services income 12,788 13,106 14,396
Trading account and foreign
exchange gains 3,797 4,699 6,669
Gain (loss) on bank
investment securities 10 459 354
Other-than-temporary
impairment losses
recognized in earnings (22,380) (26,802) (34,296)
Equity in earnings of
Bayview Lending Group LLC (6,179) (5,714) (10,635)
Other revenues from
operations 79,292 79,259 82,381
------ ------ ------
Total other income 273,557 257,706 265,890
Other expense
Salaries and employee
benefits 245,861 264,046 247,080
Equipment and net occupancy 55,431 55,401 53,703
Printing, postage and
supplies 8,549 9,043 9,338
Amortization of core
deposit and other
intangible assets 14,833 16,475 16,730
FDIC assessments 21,608 21,348 19,902
Other costs of operations 129,786 123,049 131,698
------- ------- -------
Total other expense 476,068 489,362 478,451
Income before income taxes 279,716 219,678 201,158
Applicable income taxes 90,967 68,723 64,340
------ ------ ------
Net income $188,749 150,955 136,818
======== ======= =======
Three months ended
------------------
September June
30, 30,
Dollars in thousands 2009 2009
---- ----
Interest income 700,593 677,423
Interest expense 152,938 175,856
------- -------
Net interest income 547,655 501,567
Provision for credit losses 154,000 147,000
------- -------
Net interest income after
provision for credit losses 393,655 354,567
Other income
Mortgage banking revenues 48,169 52,983
Service charges on deposit
accounts 128,502 112,479
Trust income 31,586 32,442
Brokerage services income 14,329 13,493
Trading account and foreign
exchange gains 7,478 7,543
Gain (loss) on bank investment
securities (56) 292
Other-than-temporary impairment
losses
recognized in earnings (47,033) (24,769)
Equity in earnings of Bayview
Lending Group LLC (10,912) (207)
Other revenues from operations 106,163 77,393
------- ------
Total other income 278,226 271,649
Other expense
Salaries and employee benefits 255,449 249,952
Equipment and net occupancy 58,195 51,321
Printing, postage and supplies 8,229 11,554
Amortization of core deposit and
other
intangible assets 16,924 15,231
FDIC assessments 21,124 49,637
Other costs of operations 140,135 186,015
------- -------
Total other expense 500,056 563,710
Income before income taxes 171,825 62,506
Applicable income taxes 44,161 11,318
------ ------
Net income 127,664 51,188
======= ======
M&T BANK CORPORATION
Condensed Consolidated Balance Sheet
June 30
-------
Dollars in thousands 2010 2009 Change
-- -- ------
ASSETS
Cash and due from banks $1,045,886 1,148,428 -9%
Interest-bearing
deposits at banks 117,826 59,950 97
Federal funds sold and
agreements
to resell securities 10,000 2,300 335
Trading account assets 487,692 495,324 -2
Investment securities 8,097,572 8,155,434 -1
Loans and leases:
Commercial, financial,
etc 13,017,598 14,180,609 -8
Real estate -commercial 20,612,905 20,787,198 -1
Real estate -consumer 5,729,126 5,471,775 5
Consumer 11,701,657 12,275,062 -5
---------- ----------
Total loans and leases,
net of unearned
discount 51,061,286 52,714,644 -3
Less: allowance for
credit losses 894,667 855,365 5
------- -------
Net loans and leases 50,166,619 51,859,279 -3
Goodwill 3,524,625 3,524,625 -
Core deposit and other
intangible assets 152,712 216,072 -29
Other assets 4,550,684 4,451,805 2
--------- ---------
Total assets $68,153,616 69,913,217 -3%
=========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Noninterest-bearing
deposits at U.S.
offices $13,960,723 12,403,999 13%
Other deposits at U.S.
offices 33,010,520 33,265,704 -1
Deposits at foreign
office 551,428 1,085,004 -49
------- ---------
Total deposits 47,522,671 46,754,707 2
Short-term borrowings 2,158,957 2,951,149 -27
Accrued interest and
other liabilities 1,114,615 1,238,959 -10
Long-term borrowings 9,255,529 11,568,238 -20
--------- ----------
Total liabilities 60,051,772 62,513,053 -4
Stockholders' equity:
Preferred 735,350 725,472 1
Common (1) 7,366,494 6,674,692 10
--------- ---------
Total stockholders'
equity 8,101,844 7,400,164 9
--------- ---------
Total liabilities and
stockholders' equity $68,153,616 69,913,217 -3%
=========== ==========
(1) Reflects accumulated other comprehensive loss, net of applicable
income tax effect, of $197.2 million
at June 30, 2010 and $580.8 million at June 30, 2009.
M&T BANK CORPORATION
Condensed Consolidated Balance Sheet, Five Quarter Trend
June 30, March 31, December 31,
Dollars in
thousands 2010 2010 2009
---- ---- ----
ASSETS
Cash and due from
banks $1,045,886 1,033,269 1,226,223
Interest-bearing
deposits at banks 117,826 121,305 133,335
Federal funds sold
and agreements
to resell
securities 10,000 10,400 20,119
Trading account
assets 487,692 403,476 386,984
Investment
securities 8,097,572 8,104,646 7,780,609
Loans and leases:
Commercial,
financial, etc 13,017,598 13,220,181 13,479,447
Real estate -
commercial 20,612,905 20,724,118 20,949,931
Real estate -
consumer 5,729,126 5,664,159 5,463,463
Consumer 11,701,657 11,835,583 12,043,845
---------- ---------- ----------
Total loans and
leases, net of
unearned discount 51,061,286 51,444,041 51,936,686
Less: allowance
for credit losses 894,667 891,265 878,022
------- ------- -------
Net loans and
leases 50,166,619 50,552,776 51,058,664
Goodwill 3,524,625 3,524,625 3,524,625
Core deposit and
other intangible
assets 152,712 167,545 182,418
Other assets 4,550,684 4,521,180 4,567,422
--------- --------- ---------
Total assets $68,153,616 68,439,222 68,880,399
=========== ========== ==========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Noninterest-
bearing deposits
at U.S. offices $13,960,723 13,622,819 13,794,636
Other deposits at
U.S. office 33,010,520 33,125,761 32,604,764
Deposits at
foreign offices 551,428 789,825 1,050,438
------- ------- ---------
Total deposits 47,522,671 47,538,405 47,449,838
Short-term
borrowings 2,158,957 1,870,763 2,442,582
Accrued interest
and other
liabilities 1,114,615 1,048,473 995,056
Long-term
borrowings 9,255,529 10,065,894 10,240,016
--------- ---------- ----------
Total liabilities 60,051,772 60,523,535 61,127,492
Stockholders'
equity:
Preferred 735,350 732,769 730,235
Common (1) 7,366,494 7,182,918 7,022,672
--------- --------- ---------
Total
stockholders'
equity 8,101,844 7,915,687 7,752,907
--------- --------- ---------
Total liabilities
and stockholders'
equity $68,153,616 68,439,222 68,880,399
=========== ========== ==========
September
30, June 30,
Dollars in thousands 2009 2009
---- ----
ASSETS
Cash and due from banks 1,356,508 1,148,428
Interest-bearing deposits at
banks 54,443 59,950
Federal funds sold and agreements
to resell securities 17,206 2,300
Trading account assets 497,064 495,324
Investment securities 7,634,262 8,155,434
Loans and leases:
Commercial, financial, etc 13,517,538 14,180,609
Real estate - commercial 21,007,376 20,787,198
Real estate - consumer 5,427,260 5,471,775
Consumer 12,251,598 12,275,062
---------- ----------
Total loans and leases, net of
unearned discount 52,203,772 52,714,644
Less: allowance for credit losses 867,874 855,365
-
Net loans and leases 51,335,898 51,859,279
Goodwill 3,524,625 3,524,625
Core deposit and other intangible
assets 199,148 216,072
Other assets 4,378,296 4,451,805
--------- ---------
Total assets 68,997,450 69,913,217
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Noninterest-bearing deposits at
U.S. offices 12,730,083 12,403,999
Other deposits at U.S. offices 32,813,698 33,265,704
Deposits at foreign office 1,318,070 1,085,004
--------- ---------
Total deposits 46,861,851 46,754,707
Short-term borrowings 2,927,268 2,951,149
Accrued interest and other
liabilities 1,241,576 1,238,959
Long-term borrowings 10,354,392 11,568,238
---------- ----------
Total liabilities 61,385,087 62,513,053
Stockholders' equity:
Preferred 727,748 725,472
Common (1) 6,884,615 6,674,692
--------- ---------
Total stockholders' equity 7,612,363 7,400,164
--------- ---------
Total liabilities and
stockholders' equity 68,997,450 69,913,217
========== ==========
(1) Reflects accumulated other comprehensive loss, net of applicable
income tax effect, of $197.2 million at June 30, 2010, $255.2
million at March 31, 2010, $336.0 million at December 31, 2009, $419.3
million at September 30 2009 and $580.8 million at June 30, 2009.
M&T BANK CORPORATION
Condensed Consolidated Average Balance Sheet
and Annualized Taxable-equivalent Rates
Three months ended
------------------
June 30, June 30, March 31,
Dollars in millions 2010 2009 2010
---- ---- ----
Balance Rate Balance Rate Balance Rate
------- ---- ------- ---- ------- ----
ASSETS
Interest-bearing
deposits at banks $81 .02% 42 .05% 127 .02%
Federal funds sold
and agreements
to resell
securities 10 .41 73 .23 24 .22
Trading account
assets 66 .96 120 .77 60 .80
Investment
securities 8,376 4.27 8,508 4.90 8,172 4.44
Loans and leases,
net of unearned
discount
Commercial,
financial, etc 13,096 4.03 14,067 3.76 13,408 3.88
Real estate -
commercial 20,759 4.64 19,719 4.46 20,867 4.48
Real estate -
consumer 5,653 5.35 5,262 5.40 5,742 5.31
Consumer 11,770 5.24 11,506 5.42 11,931 5.26
Total loans and
leases, net 51,278 4.71 50,554 4.59 51,948 4.63
------ ------ ------
Total earning
assets 59,811 4.63 59,297 4.62 60,331 4.59
Goodwill 3,525 3,326 3,525
Core deposit and
other intangible
assets 160 188 176
Other assets 4,838 4,173 4,851
----- ----- -----
Total assets $68,334 66,984 68,883
======= ====== ======
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Interest-bearing
deposits
NOW accounts $619 .14 515 .19 585 .14
Savings deposits 25,942 .33 22,480 .47 25,068 .33
Time deposits 6,789 1.55 8,858 2.52 7,210 1.66
Deposits at foreign
office 972 .16 1,460 .16 1,237 .11
Total interest-
bearing deposits 34,322 .56 33,313 1.00 34,100 .60
------ ------ ------
Short-term
borrowings 1,763 .17 3,211 .25 2,367 .15
Long-term
borrowings 9,454 2.91 11,482 3.18 10,160 2.74
----- ------ ------
Total interest-
bearing
liabilities 45,539 1.04 48,006 1.47 46,627 1.04
Noninterest-
bearing deposits 13,610 10,533 13,294
Other liabilities 1,149 1,318 1,094
----- ----- -----
Total liabilities 60,298 59,857 61,015
Stockholders'
equity 8,036 7,127 7,868
----- ----- -----
Total liabilities
and stockholders'
equity $68,334 66,984 68,883
======= ====== ======
Net interest spread 3.59 3.15 3.55
Contribution of
interest-free
funds .25 .28 .23
Net interest margin 3.84% 3.43% 3.78%
Change in balance
June 30, 2010 from
------------------
Dollars in millions June 30, March 31,
2009 2010
---- ----
ASSETS
Interest-bearing deposits at
banks 94% -36%
Federal funds sold and
agreements
to resell securities -86 -58
Trading account assets -45 11
Investment securities -2 2
Loans and leases, net of
unearned discount
Commercial, financial, etc -7 -2
Real estate - commercial 5 -1
Real estate - consumer 7 -2
Consumer 2 -1
Total loans and leases, net 1 -1
Total earning assets 1 -1
Goodwill 6 -
Core deposit and other
intangible assets -15 -9
Other assets 16 -
Total assets 2% -1%
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing deposits
NOW accounts 20% 6%
Savings deposits 15 3
Time deposits -23 -6
Deposits at foreign office -33 -21
Total interest-bearing
deposits 3 1
Short-term borrowings -45 -26
Long-term borrowings -18 -7
Total interest-bearing
liabilities -5 -2
Noninterest-bearing deposits 29 2
Other liabilities -13 5
Total liabilities 1 -1
Stockholders' equity 13 2
Total liabilities and
stockholders' equity 2% -1%
Net interest spread
Contribution of interest-free
funds
Net interest margin
Six months ended
June 30
-------
Change
Dollars in millions 2010 2009 in
Balance Rate Balance Rate balance
------- ---- ------- ---- -------
ASSETS
Interest-bearing
deposits at banks $104 .02% 31 .08% 236%
Federal funds sold
and agreements
to resell
securities 17 .28 87 .23 -81
Trading account
assets 63 .88 97 .73 -35
Investment
securities 8,274 4.35 8,499 4.86 -3
Loans and leases,
net of unearned
discount
Commercial,
financial, etc 13,251 3.95 14,049 3.75 -6
Real estate -
commercial 20,813 4.56 19,260 4.43 8
Real estate -
consumer 5,697 5.33 5,148 5.49 11
Consumer 11,850 5.25 11,237 5.52 5
Total loans and
leases, net 51,611 4.67 49,694 4.61 4
------ ------
Total earning
assets 60,069 4.61 58,408 4.63 3
Goodwill 3,525 3,259 8
Core deposit and
other intangible
assets 168 182 -8
Other assets 4,845 4,032 20
----- -----
Total assets $68,607 65,881 4%
======= ======
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Interest-bearing
deposits
NOW accounts $602 .14 525 .22 15%
Savings deposits 25,508 .33 21,845 .63 17
Time deposits 6,998 1.60 8,789 2.66 -20
Deposits at foreign
office 1,104 .13 1,964 .16 -44
Total interest-
bearing deposits 34,212 .58 33,123 1.14 3
------ ------
Short-term
borrowings 2,063 .16 3,344 .26 -38
Long-term
borrowings 9,805 2.82 11,562 3.34 -15
----- ------
Total interest-
bearing
liabilities 46,080 1.04 48,029 1.61 -4
Noninterest-
bearing deposits 13,453 9,549 41
Other liabilities 1,121 1,349 -17
----- -----
Total liabilities 60,654 58,927 3
Stockholders'
equity 7,953 6,954 14
----- -----
Total liabilities
and stockholders'
equity $68,607 65,881 4%
======= ======
Net interest spread 3.57 3.02
Contribution of
interest-free
funds .24 .29
Net interest margin 3.81% 3.31%
M&T BANK CORPORATION
Reconciliation of Quarterly GAAP to Non-GAAP Measures
Three months ended
June 30
-------
2010 2009
---- ----
Income statement data
---------------------
In thousands, except per share
Net income
Net income $188,749 51,188
Amortization of core deposit and
other
intangible assets (1) 9,003 9,247
Merger-related expenses (1) - 40,370
Net operating income $197,752 100,805
======== =======
Earnings per common share
Diluted earnings per common share $1.46 .36
Amortization of core deposit and
other
intangible assets (1) .07 .08
Merger-related expenses (1) - .35
Diluted net operating earnings per
common share $1.53 .79
===== ===
Other expense
Other expense $476,068 563,710
Amortization of core deposit and
other
intangible assets (14,833) (15,231)
Merger-related expenses - (66,457)
Noninterest operating expense $461,235 482,022
======== =======
Merger-related expenses
Salaries and employee benefits $ - 8,768
Equipment and net occupancy - 581
Printing, postage and supplies - 2,514
Other costs of operations - 54,594
Total $ - 66,457
=== ======
Balance sheet data
------------------
In millions
Average assets
Average assets $68,334 66,984
Goodwill (3,525) (3,326)
Core deposit and other intangible
assets (160) (188)
Deferred taxes 30 30
--- ---
Average tangible assets $64,679 63,500
======= ======
Average common equity
Average total equity $8,036 7,127
Preferred stock (734) (636)
Average common equity 7,302 6,491
Goodwill (3,525) (3,326)
Core deposit and other intangible
assets (160) (188)
Deferred taxes 30 30
--- ---
Average tangible common equity $3,647 3,007
====== =====
At end of quarter
Total assets
Total assets $68,154 69,913
Goodwill (3,525) (3,525)
Core deposit and other intangible
assets (152) (216)
Deferred taxes 28 43
Total tangible assets $64,505 66,215
======= ======
Total common equity
Total equity $8,102 7,400
Preferred stock (735) (725)
Undeclared dividends -preferred
stock (7) (6)
Common equity, net of undeclared
preferred dividends 7,360 6,669
Goodwill (3,525) (3,525)
Core deposit and other intangible
assets (152) (216)
Deferred taxes 28 43
Total tangible common equity $3,711 2,971
====== =====
Six months ended
June 30
-------
2010 2009
---- ----
Income statement data
---------------------
In thousands, except per share
Net income
Net income $339,704 115,409
Amortization of core deposit and
other
intangible assets (1) 19,001 18,584
Merger-related expenses (1) - 41,846
Net operating income $358,705 175,839
======== =======
Earnings per common share
Diluted earnings per common share $2.61 .85
Amortization of core deposit and
other
intangible assets (1) .16 .17
Merger-related expenses (1) - .37
Diluted net operating earnings per
common share $2.77 1.39
===== ====
Other expense
Other expense $965,430 1,002,056
Amortization of core deposit and
other
intangible assets (31,308) (30,601)
Merger-related expenses - (68,883)
Noninterest operating expense $934,122 902,572
======== =======
Merger-related expenses
Salaries and employee benefits $ - 8,779
Equipment and net occupancy - 585
Printing, postage and supplies - 2,815
Other costs of operations - 56,704
Total $ - 68,883
=== ======
Balance sheet data
------------------
In millions
Average assets
Average assets $68,607 65,881
Goodwill (3,525) (3,259)
Core deposit and other intangible
assets (168) (182)
Deferred taxes 32 26
--- ---
Average tangible assets $64,946 62,466
======= ======
Average common equity
Average total equity $7,953 6,954
Preferred stock (733) (602)
Average common equity 7,220 6,352
Goodwill (3,525) (3,259)
Core deposit and other intangible
assets (168) (182)
Deferred taxes 32 26
--- ---
Average tangible common equity $3,559 2,937
====== =====
At end of quarter
Total assets
Total assets $68,154 69,913
Goodwill (3,525) (3,525)
Core deposit and other intangible
assets (152) (216)
Deferred taxes 28 43
Total tangible assets $64,505 66,215
======= ======
Total common equity
Total equity $8,102 7,400
Preferred stock (735) (725)
Undeclared dividends -preferred
stock (7) (6)
Common equity, net of undeclared
preferred dividends 7,360 6,669
Goodwill (3,525) (3,525)
Core deposit and other intangible
assets (152) (216)
Deferred taxes 28 43
Total tangible common equity $3,711 2,971
====== =====
(1) After any related tax effect.
M&T BANK CORPORATION
Reconciliation of Quarterly GAAP to Non-GAAP Measures, Five Quarter Trend
Three months ended
------------------
June March December September June
30, 31, 31, 30, 30,
2010 2010 2009 2009 2009
---- ---- ---- ---- ----
Income statement
data
----------------
In thousands,
except per share
Net income
Net income $188,749 150,955 136,818 127,664 51,188
Amortization of
core deposit and
other
intangible assets
(1) 9,003 9,998 10,152 10,270 9,247
Merger-related
gain (1) - - - (17,684) -
Merger-related
expenses (1) - - 3,806 8,511 40,370
Net operating
income $197,752 160,953 150,776 128,761 100,805
======== ======= ======= ======= =======
Earnings per common
share
Diluted earnings
per common share $1.46 1.15 1.04 .97 .36
Amortization of
core deposit and
other
intangible assets
(1) .07 .08 .09 .09 .08
Merger-related
gain (1) - - - (.15) -
Merger-related
expenses (1) - - .03 .07 .35
Diluted net
operating earnings
per common share $1.53 1.23 1.16 .98 .79
===== ==== ==== === ===
Other expense
Other expense $476,068 489,362 478,451 500,056 563,710
Amortization of
core deposit and
other
intangible assets (14,833) (16,475) (16,730) (16,924) (15,231)
Merger-related
expenses - - (6,264) (14,010) (66,457)
Noninterest
operating expense $461,235 472,887 455,457 469,122 482,022
======== ======= ======= ======= =======
Merger-related
expenses
Salaries and
employee benefits $ - - 381 870 8,768
Equipment and net
occupancy - - 545 1,845 581
Printing, postage
and supplies - - 233 629 2,514
Other costs of
operations - - 5,105 10,666 54,594
Total $ - - 6,264 14,010 66,457
=== === ===== ====== ======
Balance sheet data
------------------
In millions
Average assets
Average assets $68,334 68,883 68,919 69,154 66,984
Goodwill (3,525) (3,525) (3,525) (3,525) (3,326)
Core deposit and
other intangible
assets (160) (176) (191) (208) (188)
Deferred taxes 30 34 37 41 30
--- --- --- ---
Average tangible
assets $64,679 65,216 65,240 65,462 63,500
======= ====== ====== ====== ======
Average common
equity
Average total
equity $8,036 7,868 7,686 7,521 7,127
Preferred stock (734) (732) (729) (727) (636)
Average common
equity 7,302 7,136 6,957 6,794 6,491
Goodwill (3,525) (3,525) (3,525) (3,525) (3,326)
Core deposit and
other intangible
assets (160) (176) (191) (208) (188)
Deferred taxes 30 34 37 41 30
--- --- --- ---
Average tangible
common equity $3,647 3,469 3,278 3,102 3,007
====== ===== ===== ===== =====
At end of quarter
Total assets
Total assets $68,154 68,439 68,880 68,997 69,913
Goodwill (3,525) (3,525) (3,525) (3,525) (3,525)
Core deposit and
other intangible
assets (152) (167) (182) (199) (216)
Deferred taxes 28 31 35 39 43
Total tangible
assets $64,505 64,778 65,208 65,312 66,215
======= ====== ====== ====== ======
Total common equity
Total equity $8,102 7,916 7,753 7,612 7,400
Preferred stock (735) (733) (730) (728) (725)
Undeclared
dividends -
preferred stock (7) (6) (6) (5) (6)
--- --- --- --- ---
Common equity, net
of undeclared
preferred dividends 7,360 7,177 7,017 6,879 6,669
Goodwill (3,525) (3,525) (3,525) (3,525) (3,525)
Core deposit and
other intangible
assets (152) (167) (182) (199) (216)
Deferred taxes 28 31 35 39 43
Total tangible
common equity $3,711 3,516 3,345 3,194 2,971
====== ===== ===== ===== =====
(1) After any related tax effect.
Contact Investors:
Donald J. MacLeod
+1-716-842-5138
Media: C. Michael Zabel
+1-716-842-5385
Web Site: http://www.mandtbank.com/