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M&T Bank Corporation Announces First Quarter Results
PR Newswire
BUFFALO, N.Y.

BUFFALO, N.Y., April 16, 2018 -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for quarter ended March 31, 2018.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") for the initial quarter of 2018 were $2.23, up from $2.12 in the similar 2017 quarter and $2.01 in the fourth quarter of 2017.  GAAP-basis net income in the recent quarter aggregated $353 million, compared with $349 million in the first quarter of 2017 and $322 million recorded in the final 2017 quarter. GAAP-basis net income for the first quarter of 2018 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.22% and 9.15%, respectively, compared with 1.15% and 8.89%, respectively, in the year-earlier quarter and 1.06% and 8.03%, respectively, in the fourth quarter of 2017.

During the recent quarter, M&T increased its reserve for litigation matters by $135 million to reflect the status of pre-existing litigation. That increase, on an after-tax basis, reduced net income by $102 million, or $.68 of diluted earnings per common share. In addition, income tax expense in the first quarter of 2018 reflects the reduction of the corporate Federal income tax rate from 35% to 21% by the Tax Cuts and Jobs Act ("the Tax Act") that was enacted on December 22, 2017. Incremental income tax expense recorded in the fourth quarter of 2017 related to provisions of the Tax Act was $85 million, representing $.56 of diluted earnings per common share.

Darren J. King, Executive Vice President and Chief Financial Officer, commented on M&T's financial performance, "M&T's results for the first quarter reflected several positive factors – a continued widening of the net interest margin, favorable credit results, and limited core expense growth. We continued with our capital plan by repurchasing $721 million of common stock during the quarter, while maintaining our regulatory capital levels far in excess of minimum requirements. M&T is off to a good start in 2018."

Earnings Highlights

 
                                         
                           

Change 1Q18 vs.

 

($ in millions, except per share data)

 

1Q18

   

1Q17

   

4Q17

   

1Q17

   

4Q17

 
                                         

Net income

 

$

353

   

$

349

   

$

322

     

1

%

   

9

%

Net income available to common shareholders - diluted

 

$

333

   

$

329

   

$

302

     

1

%

   

10

%

Diluted earnings per common share

 

$

2.23

   

$

2.12

   

$

2.01

     

5

%

   

11

%

Annualized return on average assets

   

1.22

%

   

1.15

%

   

1.06

%

               

Annualized return on average common equity

   

9.15

%

   

8.89

%

   

8.03

%

               
                                         

 

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 associated with merging acquired operations into M&T, since such items are considered by management to be "nonoperating" in nature.  The amounts of such "nonoperating" expenses are presented in the tables that accompany this release.  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.

Diluted net operating earnings per common share were $2.26 in the first quarter of 2018, $2.15 in the year-earlier quarter and $2.04 in the fourth quarter of 2017.  Net operating income for the first three months of 2018 was $357 million, compared with $354 million in the year-earlier period and $327 million in the final quarter of 2017. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income was 1.28% and 13.51%, respectively, in the recent quarter, compared with 1.21% and 13.05%, respectively, in the initial quarter of  2017 and 1.12% and 11.77%, respectively, in the fourth quarter of 2017.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis aggregated $980 million in the first quarter of 2018, up 6% from $922 million in the first three months of 2017. That growth resulted from a widening of the net interest margin to 3.71% in the recent quarter from 3.34% in the initial 2017 quarter. The widening was offset, in part, by lower average earning assets of $4.8 billion, including a decline in average loans and leases of $2.0 billion, as compared with the year-earlier quarter.  Taxable-equivalent net interest income in the fourth quarter of 2017 was also $980 million. A 15 basis point widening of the net interest margin in the recent quarter was offset by a decline in average earning assets of $2.2 billion as compared with the final 2017 quarter. Average loans and leases in the recent quarter were little changed from the fourth quarter of 2017.

                                         

Taxable-equivalent Net Interest Income

 
                                         
                           

Change 1Q18 vs.

 

($ in millions)

 

1Q18

   

1Q17

   

4Q17

   

1Q17

   

4Q17

 
                                         

Average earning assets

 

$

107,231

   

$

112,008

   

$

109,412

     

-4

%

   

-2

%

Net interest income - taxable-equivalent

 

$

980

   

$

922

   

$

980

     

6

%

   

 

Net interest margin

   

3.71

%

   

3.34

%

   

3.56

%

               

Provision for Credit Losses/Asset Quality.  The provision for credit losses was $43 million in the initial 2018 quarter, compared with $55 million in the corresponding 2017 quarter and $31 million in 2017's fourth quarter. Net charge-offs of loans were $41 million during the recent quarter, compared with $43 million and $27 million in the first and fourth quarters of 2017, respectively.  Expressed as an annualized percentage of average loans outstanding, net charge-offs were .19% in each of the first quarters of 2018 and 2017 and .12% in the fourth quarter of 2017.

Loans classified as nonaccrual totaled $865 million or .99% of total loans outstanding at March 31, 2018, improved from $927 million or 1.04% a year earlier and $883 million or 1.00% at December 31, 2017. Assets taken in foreclosure of defaulted loans were $101 million at March 31, 2018, compared with $119 million at March 31, 2017 and $112 million at December 31, 2017.

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 for credit losses totaled $1.02 billion or 1.16% of loans outstanding at each of March 31, 2018 and December 31, 2017, compared with $1.00 billion or 1.12% at March 31, 2017.

Asset Quality Metrics

 
                                         
                           

Change 1Q18 vs.

 

($ in millions)

 

1Q18

   

1Q17

   

4Q17

   

1Q17

   

4Q17

 
                                         

At end of quarter

                                       

Nonaccrual loans

 

$

865

   

$

927

   

$

883

     

-7

%

   

-2

%

Real estate and other foreclosed assets

 

$

101

   

$

119

   

$

112

     

-15

%

   

-9

%

Total nonperforming assets

 

$

966

   

$

1,046

   

$

995

     

-8

%

   

-3

%

Accruing loans past due 90 days or more (1)

 

$

235

   

$

280

   

$

244

     

-16

%

   

-4

%

Nonaccrual loans as % of loans outstanding

   

.99

%

   

1.04

%

   

1.00

%

               
                                         

Allowance for credit losses

 

$

1,020

   

$

1,001

   

$

1,017

     

2

%

   

 

Allowance for credit losses as % of loans outstanding

   

1.16

%

   

1.12

%

   

1.16

%

               
                                         

For the period

                                       

Provision for credit losses

 

$

43

   

$

55

   

$

31

     

-22

%

   

39

%

Net charge-offs

 

$

41

   

$

43

   

$

27

     

-5

%

   

49

%

Net charge-offs as % of average loans (annualized)

   

.19

%

   

.19

%

   

.12

%

               
 

_______________

(1)      Excludes loans acquired at a discount.  Predominantly residential real estate loans.

 

Noninterest Income and Expense.  Noninterest income totaled $459 million in the recent quarter, compared with $447 million in the first quarter of 2017 and $484 million in the final quarter of 2017.  The recent quarter's improvement as compared with the initial 2017 quarter reflects higher trust income and a $23 million distribution from Bayview Lending Group LLC ("BLG"), partially offset by unrealized losses on investments in equity securities that, beginning in 2018, are reflected in the income statement. As compared with the fourth quarter of 2017, the recent quarter's distribution from BLG was more than offset by a decline in mortgage banking revenues and gains realized from the sale of investment securities in 2017.

Noninterest Income

 
                                         
                           

Change 1Q18 vs.

 

($ in millions)

 

1Q18

   

1Q17

   

4Q17

   

1Q17

   

4Q17

 
                                         

Mortgage banking revenues

 

$

87

   

$

85

   

$

96

     

3

%

   

-9

%

Service charges on deposit accounts

   

105

     

104

     

108

     

1

%

   

-2

%

Trust income

   

131

     

120

     

130

     

9

%

   

1

%

Brokerage services income

   

13

     

17

     

13

     

-23

%

   

5

%

Trading account and foreign exchange gains

   

5

     

10

     

10

     

-52

%

   

-56

%

Gain (loss) on bank investment securities

   

(9)

     

     

21

     

     

 

Other revenues from operations

   

127

     

111

     

106

     

14

%

   

19

%

Total other income

 

$

459

   

$

447

   

$

484

     

3

%

   

-5

%

Noninterest expense totaled $933 million in the first quarter of 2018, $788 million in the year-earlier quarter and $796 million in the fourth quarter of 2017.  Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets, noninterest operating expenses were $927 million in the recent quarter, $779 million in the year-earlier period and $789 million in 2017's final quarter. The most significant factor associated with the rise in noninterest operating expenses in the recent quarter as compared with the earlier quarters was a $135 million increase in the reserve for litigation matters. The increase in noninterest operating expenses from the fourth quarter of 2017 also reflected seasonally higher stock-based compensation and employee benefits expenses, partially offset by a decrease in contributions to The M&T Charitable Foundation.

 

Noninterest Expense

 
                                         
                           

Change 1Q18 vs.

 

($ in millions)

 

1Q18

   

1Q17

   

4Q17

   

1Q17

   

4Q17

 
                                         

Salaries and employee benefits

 

$

463

   

$

450

   

$

403

     

3

%

   

15

%

Equipment and net occupancy

   

75

     

74

     

71

     

1

%

   

5

%

Outside data processing and software

   

49

     

44

     

50

     

9

%

   

-3

%

FDIC assessments

   

20

     

29

     

24

     

-30

%

   

-15

%

Advertising and marketing

   

16

     

16

     

19

     

1

%

   

-16

%

Printing, postage and supplies

   

9

     

10

     

9

     

-4

%

   

9

%

Amortization of core deposit and other intangible assets

   

7

     

9

     

7

     

-21

%

   

-6

%

Other costs of operations

   

294

     

156

     

213

     

88

%

   

38

%

Total other expense

 

$

933

   

$

788

   

$

796

     

18

%

   

17

%

                                         

 

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 64.0% in the first quarter of 2018, 56.9% in the year-earlier quarter and 54.7% in the fourth quarter of 2017.

Balance Sheet.  M&T had total assets of $118.6 billion at March 31, 2018, compared with $123.2 billion at March 31, 2017. Loans and leases, net of unearned discount, were $87.7 billion at March 31, 2018 and $89.3 billion a year earlier. That decrease reflects the continuing repayment of acquired residential mortgage loans. Loans and leases outstanding at December 31, 2017 were $88.0 billion. The decline from the 2017 year-end to March 31, 2018 reflected acquired residential mortgage loan repayments, partially offset by growth in commercial real estate loans. Total deposits were $90.9 billion at the recent quarter-end, compared with $97.0 billion at March 31, 2017, largely the result of lower time and trust-related deposits. Deposits outstanding at December 31, 2017 totaled $92.4 billion.

Total shareholders' equity was $15.7 billion at March 31, 2018 and $16.2 billion a year earlier, representing 13.24% and 13.16%, respectively, of total assets.  Common shareholders' equity was $14.5 billion, or $98.60 per share, at March 31, 2018, compared with $15.0 billion, or $97.40 per share, a year-earlier.  Tangible equity per common share was $66.99 at March 31, 2018, compared with $67.16 at March 31, 2017.  Common shareholders' equity per share and tangible equity per common share were $100.03 and $69.08, respectively, at December 31, 2017.  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 estimates that the ratio of Common Equity Tier 1 to risk-weighted assets under regulatory capital rules was approximately 10.59% at March 31, 2018.

In accordance with its capital plan, M&T repurchased 3,783,282 shares of its common stock during the initial 2018 quarter at a total cost of $721 million.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss first 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 #4268699.  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 Friday, April 27, 2018 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #4268699.  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, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia 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 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.

 

 

Financial Highlights

                 
   

Three months ended

           
   

March 31

           

Amounts in thousands, except per share

 

2018

   

2017

   

Change

   

Performance

                         

Net income

 

$

352,610

     

348,927

     

1

%

 

Net income available to common shareholders

   

332,749

     

328,567

     

1

%

 

Per common share:

                         

Basic earnings                                 

 

$

2.24

     

2.13

     

5

%

 

Diluted earnings

   

2.23

     

2.12

     

5

%

 

Cash dividends

 

$

.75

     

.75

     

   

Common shares outstanding:

                         

Average - diluted (1)

   

148,905

     

154,949

     

-4

%

 

Period end (2)

   

146,799

     

153,781

     

-5

%

 

Return on (annualized):

                         

Average total assets

   

1.22

%

   

1.15

%

         

Average common shareholders' equity

   

9.15

%

   

8.89

%

         

Taxable-equivalent net interest income

 

$

980,326

     

922,259

     

6

%

 

Yield on average earning assets

   

4.11

%

   

3.67

%

         

Cost of interest-bearing liabilities

   

.64

%

   

.52

%

         

Net interest spread

   

3.47

%

   

3.15

%

         

Contribution of interest-free funds

   

.24

%

   

.19

%

         

Net interest margin

   

3.71

%

   

3.34

%

         

Net charge-offs to average total net loans (annualized)

   

.19

%

   

.19

%

         

Net operating results (3)

                         

Net operating income

 

$

357,498

     

354,035

     

1

%

 

Diluted net operating earnings per common share

   

2.26

     

2.15

     

5

%

 

Return on (annualized):

                         

Average tangible assets

   

1.28

%

   

1.21

%

         

Average tangible common equity

   

13.51

%

   

13.05

%

         

Efficiency ratio

   

63.98

%

   

56.93

%

         
                           
   

At March 31

       

Loan quality

 

2018

   

2017

   

Change

   

Nonaccrual loans

 

$

864,671

     

926,675

     

-7

%

 

Real estate and other foreclosed assets

   

101,514

     

119,155

     

-15

%

 

Total nonperforming assets

 

$

966,185

     

1,045,830

     

-8

%

 

Accruing loans past due 90 days or more (4)

 

$

235,325

     

280,019

     

-16

%

 
                           

Government guaranteed loans included in totals above:

                         

Nonaccrual loans

 

$

36,618

     

39,610

     

-8

%

 

Accruing loans past due 90 days or more

   

223,611

     

252,552

     

-11

%

 
                           

Renegotiated loans

 

$

226,829

     

191,343

     

19

%

 

Accruing loans acquired at a discount past due 90 days or more (5)

 

$

49,349

     

63,732

     

-23

%

 
                           

Purchased impaired loans (6):

                         

Outstanding customer balance

 

$

643,124

     

890,431

     

-28

%

 

Carrying amount

   

378,000

     

552,935

     

-32

%

 

Nonaccrual loans to total net loans

   

.99

%

   

1.04

%

         

Allowance for credit losses to total loans

   

1.16

%

   

1.12

%

         
         

(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 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)

Excludes loans acquired at a discount.  Predominantly residential real estate loans.

(5)

Loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately.

(6)

Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.

 

 

Financial Highlights, Five Quarter Trend

 
   

Three months ended

 
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 

Amounts in thousands, except per share

 

2018

   

2017

   

2017

   

2017

   

2017

 

Performance

                                       

Net income

 

$

352,610

     

322,403

     

355,923

     

381,053

     

348,927

 

Net income available to common shareholders

   

332,749

     

302,486

     

335,804

     

360,662

     

328,567

 

Per common share:

                                       

Basic earnings

 

$

2.24

     

2.01

     

2.22

     

2.36

     

2.13

 

Diluted earnings

   

2.23

     

2.01

     

2.21

     

2.35

     

2.12

 

Cash dividends

 

$

.75

     

.75

     

.75

     

.75

     

.75

 

Common shares outstanding:

                                       

Average - diluted (1)

   

148,905

     

150,348

     

151,691

     

153,276

     

154,949

 

Period end (2)

   

146,799

     

150,112

     

151,291

     

152,539

     

153,781

 

Return on (annualized):

                                       

Average total assets

   

1.22

%

   

1.06

%

   

1.18

%

   

1.27

%

   

1.15

%

Average common shareholders' equity

   

9.15

%

   

8.03

%

   

8.89

%

   

9.67

%

   

8.89

%

Taxable-equivalent net interest income

 

$

980,326

     

980,457

     

965,962

     

946,936

     

922,259

 

Yield on average earning assets

   

4.11

%

   

3.93

%

   

3.89

%

   

3.79

%

   

3.67

%

Cost of interest-bearing liabilities

   

.64

%

   

.59

%

   

.57

%

   

.52

%

   

.52

%

Net interest spread

   

3.47

%

   

3.34

%

   

3.32

%

   

3.27

%

   

3.15

%

Contribution of interest-free funds

   

.24

%

   

.22

%

   

.21

%

   

.18

%

   

.19

%

Net interest margin

   

3.71

%

   

3.56

%

   

3.53

%

   

3.45

%

   

3.34

%

Net charge-offs to average total net loans (annualized)

   

.19

%

   

.12

%

   

.11

%

   

.20

%

   

.19

%

Net operating results (3)

                                       

Net operating income

 

$

357,498

     

326,664

     

360,658

     

385,974

     

354,035

 

Diluted net operating earnings per common share

   

2.26

     

2.04

     

2.24

     

2.38

     

2.15

 

Return on (annualized):

                                       

Average tangible assets

   

1.28

%

   

1.12

%

   

1.25

%

   

1.33

%

   

1.21

%

Average tangible common equity

   

13.51

%

   

11.77

%

   

13.03

%

   

14.18

%

   

13.05

%

Efficiency ratio

   

63.98

%

   

54.65

%

   

56.00

%

   

52.74

%

   

56.93

%

                                         
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 

Loan quality

 

2018

   

2017

   

2017

   

2017

   

2017

 

Nonaccrual loans

 

$

864,671

     

882,598

     

869,362

     

872,374

     

926,675

 

Real estate and other foreclosed assets

   

101,514

     

111,910

     

110,515

     

104,424

     

119,155

 

Total nonperforming assets

 

$

966,185

     

994,508

     

979,877

     

976,798

     

1,045,830

 

Accruing loans past due 90 days or more (4)

 

$

235,325

     

244,405

     

261,288

     

265,461

     

280,019

 

Government guaranteed loans included in totals above:

                                       

Nonaccrual loans

 

$

36,618

     

35,677

     

34,687

     

39,296

     

39,610

 

Accruing loans past due 90 days or more

   

223,611

     

235,489

     

252,072

     

235,227

     

252,552

 

Renegotiated loans

 

$

226,829

     

221,513

     

226,672

     

221,892

     

191,343

 

Accruing loans acquired at a discount past due 90 days or

     more (5)

 

$

49,349

     

47,418

     

56,225

     

57,498

     

63,732

 

Purchased impaired loans (6):

                                       

Outstanding customer balance

 

$

643,124

     

688,091

     

779,340

     

838,476

     

890,431

 

Carrying amount

   

378,000

     

410,015

     

466,943

     

512,393

     

552,935

 

Nonaccrual loans to total net loans

   

.99

%

   

1.00

%

   

.99

%

   

.98

%

   

1.04

%

Allowance for credit losses to total loans

   

1.16

%

   

1.16

%

   

1.15

%

   

1.13

%

   

1.12

%

         

(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 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)

Excludes loans acquired at a discount.  Predominantly residential real estate loans.

(5)

Loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately.

(6)

Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value. 

 

 

Condensed Consolidated Statement of Income

 
   

Three months ended

           
   

March 31

           

Dollars in thousands

 

2018

   

2017

   

Change

   

Interest income

 

$

1,082,150

     

1,006,033

     

8

%

 

Interest expense

   

106,633

     

91,773

     

16

   

Net interest income

   

975,517

     

914,260

     

7

   

Provision for credit losses

   

43,000

     

55,000

     

-22

   

Net interest income after provision for credit losses

   

932,517

     

859,260

     

9

   

Other income

                         

Mortgage banking revenues

   

87,306

     

84,692

     

3

   

Service charges on deposit accounts

   

105,115

     

104,176

     

1

   

Trust income

   

131,375

     

120,015

     

9

   

Brokerage services income

   

13,392

     

17,384

     

-23

   

Trading account and foreign exchange gains

   

4,637

     

9,691

     

-52

   

Gain (loss) on bank investment securities

   

(9,431)

     

     

   

Other revenues from operations

   

126,302

     

110,887

     

14

   

Total other income

   

458,696

     

446,845

     

3

   

Other expense

                         

Salaries and employee benefits

   

463,428

     

449,741

     

3

   

Equipment and net occupancy

   

74,797

     

74,366

     

1

   

Outside data processing and software

   

48,429

     

44,301

     

9

   

FDIC assessments

   

20,280

     

28,827

     

-30

   

Advertising and marketing

   

16,248

     

16,110

     

1

   

Printing, postage and supplies

   

9,319

     

9,708

     

-4

   

Amortization of core deposit and other intangible assets

   

6,632

     

8,420

     

-21

   

Other costs of operations

   

294,211

     

156,379

     

88

   

Total other expense

   

933,344

     

787,852

     

18

   

Income before income taxes

   

457,869

     

518,253

     

-12

   

Applicable income taxes

   

105,259

     

169,326

     

-38

   

Net income

 

$

352,610

     

348,927

     

1

%

 

 

 

Condensed Consolidated Statement of Income, Five Quarter Trend

 
   

Three months ended

 
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 

Dollars in thousands

 

2018

   

2017

   

2017

   

2017

   

2017

 

Interest income

 

$

1,082,150

     

1,074,139

     

1,057,210

     

1,030,413

     

1,006,033

 

Interest expense

   

106,633

     

102,689

     

100,076

     

92,213

     

91,773

 

Net interest income

   

975,517

     

971,450

     

957,134

     

938,200

     

914,260

 

Provision for credit losses

   

43,000

     

31,000

     

30,000

     

52,000

     

55,000

 

Net interest income after provision for credit losses

   

932,517

     

940,450

     

927,134

     

886,200

     

859,260

 

Other income

                                       

Mortgage banking revenues

   

87,306

     

96,235

     

96,737

     

86,163

     

84,692

 

Service charges on deposit accounts

   

105,115

     

107,783

     

109,356

     

106,057

     

104,176

 

Trust income

   

131,375

     

129,669

     

124,900

     

126,797

     

120,015

 

Brokerage services income

   

13,392

     

12,768

     

14,676

     

16,617

     

17,384

 

Trading account and foreign exchange gains

   

4,637

     

10,468

     

7,058

     

8,084

     

9,691

 

Gain (loss) on bank investment securities

   

(9,431)

     

21,296

     

     

(17)

     

 

Other revenues from operations

   

126,302

     

105,834

     

106,702

     

117,115

     

110,887

 

Total other income

   

458,696

     

484,053

     

459,429

     

460,816

     

446,845

 

Other expense

                                       

Salaries and employee benefits

   

463,428

     

402,394

     

398,605

     

398,054

     

449,741

 

Equipment and net occupancy

   

74,797

     

71,363

     

75,558

     

73,797

     

74,366

 

Outside data processing and software

   

48,429

     

50,033

     

45,761

     

44,575

     

44,301

 

FDIC assessments

   

20,280

     

23,722

     

23,969

     

25,353

     

28,827

 

Advertising and marketing

   

16,248

     

19,366

     

17,403

     

16,324

     

16,110

 

Printing, postage and supplies

   

9,319

     

8,563

     

8,732

     

8,957

     

9,708

 

Amortization of core deposit and other 
     
intangible assets

   

6,632

     

7,025

     

7,808

     

8,113

     

8,420

 

Other costs of operations

   

294,211

     

213,347

     

228,189

     

175,462

     

156,379

 

Total other expense

   

933,344

     

795,813

     

806,025

     

750,635

     

787,852

 

Income before income taxes

   

457,869

     

628,690

     

580,538

     

596,381

     

518,253

 

Applicable income taxes

   

105,259

     

306,287

     

224,615

     

215,328

     

169,326

 

Net income

 

$

352,610

     

322,403

     

355,923

     

381,053

     

348,927

 

 

 

Condensed Consolidated Balance Sheet

 
   

March 31

           

Dollars in thousands

 

2018

   

2017

   

Change

   

ASSETS

                         

Cash and due from banks

 

$

1,291,664

     

1,286,962

     

 

%

Interest-bearing deposits at banks

   

6,135,434

     

6,945,149

     

-12

   

Federal funds sold

   

1,000

     

     

   

Trading account

   

141,134

     

174,854

     

-19

   

Investment securities

   

14,066,564

     

15,968,415

     

-12

   

Loans and leases:

                         

Commercial, financial, etc.

   

21,697,522

     

22,295,376

     

-3

   

Real estate - commercial

   

33,753,506

     

33,071,654

     

2

   

Real estate - consumer

   

18,960,946

     

21,724,491

     

-13

   

Consumer

   

13,298,775

     

12,221,481

     

9

   

Total loans and leases, net of unearned discount

   

87,710,749

     

89,313,002

     

-2

   

Less: allowance for credit losses

   

1,019,671

     

1,001,430

     

2

   

Net loans and leases

   

86,691,078

     

88,311,572

     

-2

   

Goodwill

   

4,593,112

     

4,593,112

     

   

Core deposit and other intangible assets

   

64,957

     

94,535

     

-31

   

Other assets

   

5,637,881

     

5,848,652

     

-4

   

Total assets

 

$

118,622,824

     

123,223,251

     

-4

 

%

                           

LIABILITIES AND SHAREHOLDERS' EQUITY

                         

Noninterest-bearing deposits

 

$

31,817,516

     

34,279,591

     

-7

 

%

Interest-bearing deposits

   

58,851,050

     

62,570,167

     

-6

   

Deposits at Cayman Islands office

   

278,064

     

192,763

     

44

   

Total deposits

   

90,946,630

     

97,042,521

     

-6

   

Short-term borrowings

   

1,626,129

     

185,102

     

   

Accrued interest and other liabilities

   

1,749,320

     

1,694,905

     

3

   

Long-term borrowings

   

8,591,051

     

8,087,619

     

6

   

Total liabilities

   

102,913,130

     

107,010,147

     

-4

   

Shareholders' equity:

                         

Preferred

   

1,231,500

     

1,231,500

     

   

Common

   

14,478,194

     

14,981,604

     

-3

   

Total shareholders' equity

   

15,709,694

     

16,213,104

     

-3

   

Total liabilities and shareholders' equity

 

$

118,622,824

     

123,223,251

     

-4

 

%

 

 

Condensed Consolidated Balance Sheet, Five Quarter Trend

 
       
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 

Dollars in thousands

 

2018

   

2017

   

2017

   

2017

   

2017

 

ASSETS

                                       

Cash and due from banks

 

$

1,291,664

     

1,420,888

     

1,368,252

     

1,344,478

     

1,286,962

 

Interest-bearing deposits at banks

   

6,135,434

     

5,078,903

     

6,306,484

     

5,023,829

     

6,945,149

 

Federal funds sold

   

1,000

     

     

     

1,000

     

 

Trading account

   

141,134

     

132,909

     

170,516

     

174,646

     

174,854

 

Investment securities

   

14,066,564

     

14,664,525

     

15,073,926

     

15,816,060

     

15,968,415

 

Loans and leases:

                                       

Commercial, financial, etc.

   

21,697,522

     

21,742,651

     

21,743,251

     

22,191,051

     

22,295,376

 

Real estate - commercial

   

33,753,506

     

33,366,373

     

32,914,288

     

33,348,991

     

33,071,654

 

Real estate - consumer

   

18,960,946

     

19,613,344

     

20,265,162

     

20,960,171

     

21,724,491

 

Consumer

   

13,298,775

     

13,266,615

     

13,002,433

     

12,580,342

     

12,221,481

 

Total loans and leases, net of unearned discount

   

87,710,749

     

87,988,983

     

87,925,134

     

89,080,555

     

89,313,002

 

Less: allowance for credit losses

   

1,019,671

     

1,017,198

     

1,013,326

     

1,008,225

     

1,001,430

 

Net loans and leases

   

86,691,078

     

86,971,785

     

86,911,808

     

88,072,330

     

88,311,572

 

Goodwill

   

4,593,112

     

4,593,112

     

4,593,112

     

4,593,112

     

4,593,112

 

Core deposit and other intangible assets

   

64,957

     

71,589

     

78,614

     

86,422

     

94,535

 

Other assets

   

5,637,881

     

5,659,776

     

5,899,092

     

5,784,690

     

5,848,652

 

Total assets

 

$

118,622,824

     

118,593,487

     

120,401,804

     

120,896,567

     

123,223,251

 
                                         

LIABILITIES AND SHAREHOLDERS' EQUITY

                                       

Noninterest-bearing deposits

 

$

31,817,516

     

33,975,180

     

33,111,246

     

32,366,426

     

34,279,591

 

Interest-bearing deposits

   

58,851,050

     

58,278,970

     

60,170,133

     

60,978,895

     

62,570,167

 

Deposits at Cayman Islands office

   

278,064

     

177,996

     

232,014

     

195,617

     

192,763

 

Total deposits

   

90,946,630

     

92,432,146

     

93,513,393

     

93,540,938

     

97,042,521

 

Short-term borrowings

   

1,626,129

     

175,099

     

200,768

     

1,695,453

     

185,102

 

Accrued interest and other liabilities

   

1,749,320

     

1,593,993

     

1,791,946

     

1,727,059

     

1,694,905

 

Long-term borrowings

   

8,591,051

     

8,141,430

     

8,577,645

     

7,649,580

     

8,087,619

 

Total liabilities

   

102,913,130

     

102,342,668

     

104,083,752

     

104,613,030

     

107,010,147

 

Shareholders' equity:

                                       

Preferred

   

1,231,500

     

1,231,500

     

1,231,500

     

1,231,500

     

1,231,500

 

Common

   

14,478,194

     

15,019,319

     

15,086,552

     

15,052,037

     

14,981,604

 

Total shareholders' equity

   

15,709,694

     

16,250,819

     

16,318,052

     

16,283,537

     

16,213,104

 

Total liabilities and shareholders' equity

 

$

118,622,824

     

118,593,487

     

120,401,804

     

120,896,567

     

123,223,251

 

 

 

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates

 
   

Three months ended

   

Change in balance

     
   

March 31,

   

March 31,

   

December 31,

   

March 31, 2018 from

     

Dollars in millions

 

2018

   

2017

   

2017

   

March 31,

   

December 31,

     
   

Balance

   

Rate

   

Balance

   

Rate

   

Balance

   

Rate

   

2017

   

2017

     

ASSETS

                                                                   

Interest-bearing deposits at banks

 

$

4,941

     

1.53

 

%

 

6,152

     

.80

 

%

 

6,680

     

1.31

 

%

 

-20

 

%

 

-26

 

%

 

Federal funds sold

   

3

     

1.85

     

     

     

     

     

     

     

Trading account

   

54

     

3.00

     

60

     

2.20

     

87

     

1.31

     

-10

     

-38

     

Investment securities

   

14,467

     

2.33

     

15,999

     

2.43

     

14,808

     

2.30

     

-10

     

-2

     

Loans and leases, net of unearned discount

                                                                   

Commercial, financial, etc.

   

21,547

     

4.28

     

22,290

     

3.66

     

21,562

     

4.06

     

-3

     

     

Real estate - commercial

   

33,652

     

4.73

     

33,175

     

4.18

     

33,138

     

4.61

     

1

     

2

     

Real estate - consumer

   

19,274

     

4.06

     

22,179

     

3.92

     

19,974

     

4.03

     

-13

     

-4

     

Consumer

   

13,293

     

5.00

     

12,153

     

4.68

     

13,163

     

4.91

     

9

     

1

     

Total loans and leases, net

   

87,766

     

4.55

     

89,797

     

4.09

     

87,837

     

4.40

     

-2

     

     

Total earning assets

   

107,231

     

4.11

     

112,008

     

3.67

     

109,412

     

3.93

     

-4

     

-2

     

Goodwill

   

4,593

             

4,593

             

4,593

             

     

     

Core deposit and other intangible assets

   

68

             

98

             

75

             

-31

     

-9

     

Other assets

   

5,792

             

6,279

             

6,146

             

-8

     

-6

     

Total assets

 

$

117,684

             

122,978

             

120,226

             

-4

 

%

 

-2

 

%

 
                                                                     

LIABILITIES AND SHAREHOLDERS' EQUITY

                                                                   

Interest-bearing deposits

                                                                   

Savings and interest-checking deposits

 

$

52,504

     

.31

     

53,260

     

.20

     

53,436

     

.29

     

-1

 

%

 

-2

 

%

 

Time deposits

   

6,320

     

.70

     

9,561

     

.81

     

6,888

     

.70

     

-34

     

-8

     

Deposits at Cayman Islands office

   

248

     

.62

     

192

     

.56

     

215

     

.61

     

29

     

15

     

Total interest-bearing deposits

   

59,072

     

.36

     

63,013

     

.29

     

60,539

     

.34

     

-6

     

-2

     

Short-term borrowings

   

280

     

1.28

     

184

     

.48

     

178

     

.81

     

52

     

58

     

Long-term borrowings

   

8,606

     

2.54

     

8,423

     

2.25

     

8,464

     

2.37

     

2

     

2

     

Total interest-bearing liabilities

   

67,958

     

.64

     

71,620

     

.52

     

69,181

     

.59

     

-5

     

-2

     

Noninterest-bearing deposits

   

32,047

             

33,287

             

32,930

             

-4

     

-3

     

Other liabilities

   

1,620

             

1,748

             

1,844

             

-7

     

-12

     

Total liabilities

   

101,625

             

106,655

             

103,955

             

-5

     

-2

     

Shareholders' equity

   

16,059

             

16,323

             

16,271

             

-2

     

-1

     

Total liabilities and shareholders' equity

 

$

117,684

             

122,978

             

120,226

             

-4

 

%

 

-2

 

%

 
                                                                     

Net interest spread

           

3.47

             

3.15

             

3.34

                     

Contribution of interest-free funds

           

.24

             

.19

             

.22

                     

Net interest margin

           

3.71

 

%

         

3.34

 

%

         

3.56

 

%

                 

 

 

Reconciliation of GAAP to Non-GAAP Measures

 
   

Three months ended

   
   

March 31

   
   

2018

   

2017

   

Income statement data

                 

In thousands, except per share

                 

Net income

                 

Net income

 

$

352,610

     

348,927

   

Amortization of core deposit and other intangible assets (1)

   

4,888

     

5,108

   

Net operating income

 

$

357,498

     

354,035

   
                   

Earnings per common share

                 

Diluted earnings per common share

 

$

2.23

     

2.12

   

Amortization of core deposit and other intangible assets (1)

   

.03

     

.03

   

Diluted net operating earnings per common share

 

$

2.26

     

2.15

   
                   

Other expense

                 

Other expense

 

$

933,344

     

787,852

   

Amortization of core deposit and other intangible assets

   

(6,632)

     

(8,420)

   

Noninterest operating expense

 

$

926,712

     

779,432

   
                   

Efficiency ratio

                 

Noninterest operating expense (numerator)

 

$

926,712

     

779,432

   

Taxable-equivalent net interest income

   

980,326

     

922,259

   

Other income

   

458,696

     

446,845

   

Less:  Gain (loss) on bank investment securities

   

(9,431)

     

   

Denominator

 

$

1,448,453

     

1,369,104

   

Efficiency ratio

   

63.98

%

   

56.93

%

 

Balance sheet data

                 

In millions

                 

Average assets

                 

Average assets

 

$

117,684

     

122,978

   

Goodwill

   

(4,593)

     

(4,593)

   

Core deposit and other intangible assets

   

(68)

     

(98)

   

Deferred taxes

   

18

     

39

   

Average tangible assets

 

$

113,041

     

118,326

   

Average common equity

                 

Average total equity

 

$

16,059

     

16,323

   

Preferred stock

   

(1,232)

     

(1,232)

   

Average common equity

   

14,827

     

15,091

   

Goodwill

   

(4,593)

     

(4,593)

   

Core deposit and other intangible assets

   

(68)

     

(98)

   

Deferred taxes

   

18

     

39

   

Average tangible common equity

 

$

10,184

     

10,439

   
                   

At end of quarter

                 

Total assets

                 

Total assets

 

$

118,623

     

123,223

   

Goodwill

   

(4,593)

     

(4,593)

   

Core deposit and other intangible assets

   

(65)

     

(95)

   

Deferred taxes

   

17

     

38

   

Total tangible assets

 

$

113,982

     

118,573

   

Total common equity

                 

Total equity

 

$

15,710

     

16,213

   

Preferred stock

   

(1,232)

     

(1,232)

   

Undeclared dividends - cumulative preferred stock

   

(3)

     

(3)

   

Common equity, net of undeclared cumulative preferred dividends

   

14,475

     

14,978

   

Goodwill

   

(4,593)

     

(4,593)

   

Core deposit and other intangible assets

   

(65)

     

(95)

   

Deferred taxes

   

17

     

38

   

Total tangible common equity

 

$

9,834

     

10,328

   
     

(1)

After any related tax effect.

 

 

 

Reconciliation of Quarterly GAAP to Non-GAAP Measures, Five Quarter Trend

 
   

Three months ended

 
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 
   

2018

   

2017

   

2017

   

2017

   

2017

 

Income statement data

                                       

In thousands, except per share

                                       

Net income

                                       

Net income

 

$

352,610

     

322,403

     

355,923

     

381,053

     

348,927

 

Amortization of core deposit and other intangible assets (1)

   

4,888

     

4,261

     

4,735

     

4,921

     

5,108

 

Net operating income

 

$

357,498

     

326,664

     

360,658

     

385,974

     

354,035

 
                                         

Earnings per common share

                                       

Diluted earnings per common share

 

$

2.23

     

2.01

     

2.21

     

2.35

     

2.12

 

Amortization of core deposit and other intangible assets (1)

   

.03

     

.03

     

.03

     

.03

     

.03

 

Diluted net operating earnings per common share

 

$

2.26

     

2.04

     

2.24

     

2.38

     

2.15

 
                                         

Other expense

                                       

Other expense

 

$

933,344

     

795,813

     

806,025

     

750,635

     

787,852

 

Amortization of core deposit and other intangible assets

   

(6,632)

     

(7,025)

     

(7,808)

     

(8,113)

     

(8,420)

 

Noninterest operating expense

 

$

926,712

     

788,788

     

798,217

     

742,522

     

779,432

 
                                         

Efficiency ratio

                                       

Noninterest operating expense (numerator)

 

$

926,712

     

788,788

     

798,217

     

742,522

     

779,432

 

Taxable-equivalent net interest income

   

980,326

     

980,457

     

965,962

     

946,936

     

922,259

 

Other income

   

458,696

     

484,053

     

459,429

     

460,816

     

446,845

 

Less:  Gain (loss) on bank investment securities

   

(9,431)

     

21,296

     

     

(17)

     

 

Denominator

 

$

1,448,453

     

1,443,214

     

1,425,391

     

1,407,769

     

1,369,104

 

Efficiency ratio

   

63.98

%

   

54.65

%

   

56.00

%

   

52.74

%

   

56.93

%

                                         

Balance sheet data

                                       

In millions

                                       

Average assets

                                       

Average assets

 

$

117,684

     

120,226

     

119,515

     

120,765

     

122,978

 

Goodwill

   

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

 

Core deposit and other intangible assets

   

(68)

     

(75)

     

(82)

     

(90)

     

(98)

 

Deferred taxes

   

18

     

26

     

32

     

35

     

39

 

Average tangible assets

 

$

113,041

     

115,584

     

114,872

     

116,117

     

118,326

 
                                         

Average common equity

                                       

Average total equity

 

$

16,059

     

16,271

     

16,301

     

16,285

     

16,323

 

Preferred stock

   

(1,232)

     

(1,232)

     

(1,232)

     

(1,232)

     

(1,232)

 

Average common equity

   

14,827

     

15,039

     

15,069

     

15,053

     

15,091

 

Goodwill

   

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

 

Core deposit and other intangible assets

   

(68)

     

(75)

     

(82)

     

(90)

     

(98)

 

Deferred taxes

   

18

     

26

     

32

     

35

     

39

 

Average tangible common equity

 

$

10,184

     

10,397

     

10,426

     

10,405

     

10,439

 
                                         

At end of quarter

                                       

Total assets

                                       

Total assets

 

$

118,623

     

118,593

     

120,402

     

120,897

     

123,223

 

Goodwill

   

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

 

Core deposit and other intangible assets

   

(65)

     

(72)

     

(79)

     

(86)

     

(95)

 

Deferred taxes

   

17

     

19

     

31

     

33

     

38

 

Total tangible assets

 

$

113,982

     

113,947

     

115,761

     

116,251

     

118,573

 
                                         

Total common equity

                                       

Total equity

 

$

15,710

     

16,251

     

16,318

     

16,284

     

16,213

 

Preferred stock

   

(1,232)

     

(1,232)

     

(1,232)

     

(1,232)

     

(1,232)

 

Undeclared dividends - cumulative preferred stock

   

(3)

     

(3)

     

(3)

     

(3)

     

(3)

 

Common equity, net of undeclared cumulative preferred dividends

   

14,475

     

15,016

     

15,083

     

15,049

     

14,978

 

Goodwill

   

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

 

Core deposit and other intangible assets

   

(65)

     

(72)

     

(79)

     

(86)

     

(95)

 

Deferred taxes

   

17

     

19

     

31

     

33

     

38

 

Total tangible common equity

 

$

9,834

     

10,370

     

10,442

     

10,403

     

10,328

 
     

(1)

After any related tax effect.

 

 

 

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