BUFFALO, N.Y., July 17, 2013 -- M&T Bank Corporation ("M&T")(NYSE: MTB) today reported its results of operations for the quarter ended June 30, 2013.

GAAP Results of Operations.  Diluted  earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") for the second quarter of 2013 were $2.55, up 49% from $1.71 in the year-earlier quarter and 29% higher than $1.98 in the initial 2013 quarter.  GAAP-basis net income in the recent quarter totaled $348 million, 49% higher than $233 million in the second quarter of 2012 and 27% above $274 million in the first quarter of 2013.  GAAP-basis net income for the second quarter of 2013 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.68% and 13.78%, respectively, improved from 1.17% and 10.12%, respectively, in the second quarter of 2012 and from 1.36% and 11.10%, respectively, in the initial 2013 quarter.

Reflected in the recent quarter's results were certain noteworthy items.  M&T sold substantially all of its privately issued collateralized mortgage obligations that were in the available-for-sale investment securities portfolio for an after-tax loss of $28 million, or $.22 per diluted common share.  In addition, M&T's holdings of Visa and MasterCard shares were sold for an after-tax gain of $62 million, or $.48 per diluted common share.  Finally, during the recent quarter M&T reversed an accrual for a contingent compensation obligation assumed in the May 2011 acquisition of Wilmington Trust, resulting in a reduction of expenses having an after-tax impact of $15 million, or $.12 of diluted earnings per common share.

Reflecting on the recent quarter's performance, Rene F. Jones, Executive Vice President and Chief Financial Officer, commented, "Earnings quality in the second quarter continued to be supported by improved net interest income and strong mortgage banking revenues.  These factors combined with above average credit quality.  During the quarter, we took advantage of market conditions to reduce our exposure to private label mortgage-backed securities in favor of more liquid Ginnie Mae securities and we also liquidated our positions in Visa and MasterCard stock, for which the value had risen significantly.  These actions combined with strong earnings resulted in a 62 basis point increase on our Tier 1 common ratio from March 31, while improving M&T's liquidity profile.  All in all, we are quite pleased with our second quarter results."

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 gains and expenses 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 gains and expenses, but include the effect of securities gains and losses, were $2.65 in the recent quarter, compared with $1.82 and $2.06 in the second quarter of 2012 and the first quarter of 2013, respectively.  Net operating income during the second quarter of 2013 was $361 million, compared with $247 million in the year-earlier quarter and $285 million in the initial 2013 quarter.  Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income in the recently completed quarter was 1.81% and 22.72%, respectively, compared with 1.30% and 18.54% in the second quarter of 2012 and 1.48% and 18.71% in the first quarter of 2013.

Taxable-equivalent Net Interest Income.  Taxable-equivalent net interest income totaled $684 million in the second quarter of 2013, up 3% from $663 million in the immediately preceding quarter.  The net interest margin was 3.71% in each of the two most recent quarters.  The recent quarter's net interest margin reflects an additional $13 million of interest income which resulted from an improvement in estimated cash flows expected to be collected on acquired loans.  Stabilizing economic conditions and better than previously expected repayments led to a reduction in estimated expected credit losses on acquired loans of $130 million, resulting in a 2% increase in projected cash flows that will be recognized as interest income over the remaining terms of those loans.  Taxable-equivalent net interest income in the recent quarter was up 4% from $655 million in the second quarter of 2012.  That improvement reflects a $3.5 billion increase in average earning assets, including a $4.2 billion or 7% rise in average loans outstanding, partially offset by a 3 basis point decline in the net interest margin.

 

Provision for Credit Losses/Asset Quality.  The provision for credit losses was $57 million in the recent quarter, compared with $60 million in the year-earlier quarter and $38 million in the initial 2013 quarter.  Net charge-offs of loans were $57 million during the recent quarter, compared with $52 million and $37 million in the second quarter of 2012 and the first quarter of 2013, respectively.  Expressed as an annualized percentage of average loans outstanding, net charge-offs were .35% and .34% in the second quarters of 2013 and 2012, respectively, and .23% in the initial quarter of 2013.

Loans classified as nonaccrual declined to $965 million, or 1.46% of total loans outstanding at June 30, 2013, improved from $968 million or 1.54% a year earlier and $1.05 billion or 1.60% at March 31, 2013.  Assets taken in foreclosure of defaulted loans declined to $82 million at June 30, 2013, improved from $116 million at June 30, 2012 and $96 million at March 31, 2013.

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.  As a result of those analyses, the allowance totaled $927 million at each of March 31 and June 30, 2013, compared with $917 million at June 30, 2012.  The allowance expressed as a percentage of outstanding loans was 1.41% at the two most recent quarter-ends, compared with 1.46% at June 30, 2012. 

Noninterest Income and Expense.  Noninterest income totaled $509 million in the second quarter of 2013, compared with $392 million and $433 million in the year-earlier quarter and the first quarter of 2013, respectively.  Reflected in those amounts were net pre-tax gains from investment securities of $56 million in the second quarter of 2013 and net pre-tax losses on investment securities of $17 million and $10 million in the second quarter of 2012 and the first quarter of 2013, respectively.  The net securities gains in the recent quarter resulted from $103 million of gains realized on the sale of M&T's holdings of shares of Visa and MasterCard, offset in part by $46 million of losses recognized from the sale of M&T's privately issued collateralized mortgage obligations that had been held in its available-for-sale investment securities portfolio.  The investment securities were sold as a result of favorable market conditions, thereby enhancing M&T's liquidity and capital.  The net securities losses in 2012's second quarter and in the initial 2013 quarter were predominantly due to other-than-temporary impairment charges related to a subset of those same privately issued collateralized mortgage obligations. 

Excluding gains and losses from investment securities in all periods, noninterest income in the second quarter of 2013 aggregated $452 million, up from $408 million in the year-earlier quarter and $443 million in the initial quarter of 2013.  The most significant factor in the recent quarter's improvement as compared with the year-earlier quarter was higher mortgage banking revenues. Relative to 2013's first quarter, declines in residential mortgage banking revenues due to lower gain on sale margins were largely offset by higher commercial mortgage banking revenues.

Noninterest expense in the second quarter of 2013 totaled $599 million, down from $627 million in the year-earlier quarter and $636 million in the first quarter of 2013.  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 $578 million in the recent quarter, compared with $604 million in the second quarter of 2012 and $618 million in 2013's initial quarter.  Factors contributing to the lower level of operating expenses in the recent quarter as compared with the year-earlier quarter were the reversal of an accrual for a contingent compensation obligation assumed in the May 2011 acquisition of Wilmington Trust and declines in FDIC assessments and expenses related to foreclosed assets, partially offset by higher costs for professional services.  As compared with the first quarter of 2013, the recent quarter's lower level of operating expenses was due, in large part, to a decline in salaries and employee benefits, including stock-based compensation, and the favorable resolution of the Wilmington Trust-related compensation contingency, partially offset by higher costs for professional services and advertising and promotion. 

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 from bank investment securities), measures the relationship of operating expenses to revenues.  M&T's efficiency ratio was 50.9% in the second quarter of 2013, compared with 56.9% in the year-earlier period and 55.9% in the first quarter of 2013. 

Balance Sheet.  M&T had total assets of $83.2 billion at June 30, 2013, compared with $80.8 billion at June 30, 2012.  Loans and leases, net of unearned discount, increased $3.1 billion or 5% to $66.0 billion at the recent quarter-end, from $62.9 billion a year earlier.  Total deposits rose 5% to $65.7 billion at June 30, 2013 from $62.5 billion at June 30, 2012.

Total shareholders' equity increased 11% to $10.7 billion at June 30, 2013 from $9.6 billion a year earlier, representing 12.88% and 11.92%, respectively, of total assets.  Common shareholders' equity was $9.8 billion, or $75.98 per share, at June 30, 2013, compared with $8.8 billion, or $69.15 per share, at June 30, 2012.  Tangible equity per common share rose 19% to $48.26 at the recent quarter-end from $40.52 a year earlier.  Common shareholders' equity per share and tangible equity per common share were $73.99 and $46.11, respectively, at March 31, 2013.  In the calculation of tangible equity per common share, common shareholders' equity is reduced by the carrying values of goodwill and core deposit and other intangible assets, net of applicable deferred tax balances.  M&T's tangible common equity to tangible assets ratio was 7.85% at June 30, 2013, improved from 6.65% and 7.51% at June 30, 2012 and March 31, 2013, respectively. M&T's estimated Tier 1 common ratio, a regulatory capital measure, was 8.55% at June 30, 2013, improved from 7.15% and 7.93% at June 30, 2012 and March 31, 2013, respectively.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss second quarter financial results today at 11:00 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# 12309206. The conference call will be webcast live through M&T's website at http://ir.mandtbank.com/events.cfm.  A replay of the call will be available through Saturday, July 20, 2013 by calling (800)585-8367, or (404)537-3406 for international participants, and by making reference to ID# 12309206.  The event will also be archived and available by 7:00 p.m. today on M&T's website at http://ir.mandtbank.com/events.cfm.  

M&T is a financial holding company headquartered in Buffalo, New York.  M&T's principal banking subsidiary, M&T Bank, operates banking offices in New York, Pennsylvania, Maryland, Virginia, West Virginia, Delaware and the District of Columbia.  Trust-related services are provided by M&T's Wilmington Trust-affiliated companies and by M&T Bank.

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; the impact of changes in market values on trust-related revenues; 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