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M&T Bank Corporation Announces First Quarter Results

BUFFALO, N.Y., April 15, 2019 -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for the quarter ended March 31, 2019.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $3.35 in the initial 2019 quarter, 50% higher than $2.23 in the year-earlier quarter.  GAAP-basis net income in the recent quarter was $483 million, up from $353 million in the first quarter of 2018. Diluted earnings per share and GAAP-basis net income were $3.76 and $546 million, respectively, in the fourth quarter of 2018. GAAP-basis net income for the first quarter of 2019 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.68% and 13.14%, respectively, compared with 1.22% and 9.15%, respectively, in the corresponding 2018 period and 1.84% and 14.80%, respectively, in the fourth quarter of 2018.

Darren J. King, Executive Vice President and Chief Financial Officer of M&T, commented on the recent quarter's results, "M&T's performance during the first three months of 2019 was strong. We were particularly pleased with the growth experienced in our commercial loan portfolios, which rose 3% from the fourth quarter. During the recent quarter, M&T purchased servicing rights for over $13 billion of residential real estate loans, boosting mortgage banking revenues by $8 million. Credit results continued to be solid, with net charge-offs representing an annualized .10% of average loans. Overall, it was a good start to 2019."

Earnings Highlights

 
                                         
                               
                     

Change 1Q19 vs.

 

($ in millions, except per share data)

 

1Q19

   

1Q18

   

4Q18

   

1Q18

   

4Q18

 
                                         

Net income

 

$

483

   

$

353

   

$

546

     

37

%

   

-12

%

Net income available to common shareholders  ̶  diluted

 

$

462

   

$

333

   

$

525

     

39

%

   

-12

%

Diluted earnings per common share

 

$

3.35

   

$

2.23

   

$

3.76

     

50

%

   

-11

%

Annualized return on average assets

   

1.68

%

   

1.22

%

   

1.84

%

               

Annualized return on average common equity

   

13.14

%

   

9.15

%

   

14.80

%

               

During the first quarter of 2019, M&T increased its reserve for legal matters by $50 million in conjunction with matters associated with a subsidiary's role as trustee of Employee Stock Ownership Plans in its Institutional Client Services business. That increase, on an after-tax basis, reduced net income in the recent quarter by $37 million, or $.27 of diluted earnings per common share. Litigation-related accruals in last year's first quarter reduced net income by $102 million, or $.68 of diluted earnings per common share. Also during the recent quarter, M&T realized $37 million of distributed income from Bayview Lending Group LLC ("BLG"), increasing net income in the quarter by $28 million, or $.20 of diluted earnings per common share. Similar income in the year-earlier quarter increased M&T's net income in that period by $17 million, or $.11 of diluted earnings per common share.

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 $3.38 in the first quarter of 2019, compared with $2.26 in the first quarter of 2018 and $3.79 in the fourth quarter of 2018.  Net operating income for the recent quarter was $486 million, compared with $357 million in the year-earlier period and $550 million in 2018's fourth quarter. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income in the recent quarter was 1.76% and 19.56%, respectively, compared with 1.28% and 13.51%, respectively, in the similar 2018 quarter and 1.93% and 22.16%, respectively, in the final quarter of 2018.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $1.06 billion in the initial 2019 quarter, up 8% from $980 million in the first quarter of 2018, due to a widening of the net interest margin in the recent quarter to 4.04% from 3.71% in the first three months of 2018. The favorable impact from that widening was partially offset by a decline in average earning assets in the recent quarter to $106.1 billion from $107.2 billion in the year-earlier period, reflecting reduced holdings of mortgage-backed securities and residential mortgage loans. Taxable-equivalent net interest income in the first quarter of 2019 was down one percent from the fourth quarter of 2018. A 12 basis point widening of the net interest margin from 3.92% in the final 2018 quarter was offset by a $2.8 billion decrease in average interest-bearing deposit balances held at the Federal Reserve Bank of New York.

                                         

Taxable-equivalent Net Interest Income

 
                                         
                           

Change 1Q19 vs.

 

($ in millions)

 

1Q19

   

1Q18

   

4Q18

   

1Q18

   

4Q18

 
                                         

Average earning assets

 

$

106,096

   

$

107,231

   

$

107,785

     

-1

%

   

-2

%

Net interest income  ̶  taxable-equivalent

 

$

1,056

   

$

980

   

$

1,065

     

8

%

   

-1

%

Net interest margin

   

4.04

%

   

3.71

%

   

3.92

%

               

Provision for Credit Losses/Asset Quality.  The provision for credit losses was $22 million in the first quarter of 2019, compared with $43 million in the year-earlier quarter and $38 million in 2018's final quarter. Net loan charge-offs were $22 million during the recent quarter, improved from $41 million in the first quarter of 2018 and $38 million in the fourth quarter of 2018. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .10% and .19% in the first three months of 2019 and 2018, respectively, and .17% in the fourth quarter of 2018.

Loans classified as nonaccrual totaled $882 million or .99% of total loans outstanding at March 31, 2019, compared with $865 million or .99% a year earlier and $894 million or 1.01% at December 31, 2018. Assets taken in foreclosure of defaulted loans were $81 million at March 31, 2019, compared with $101 million at March 31, 2018 and $78 million at December 31, 2018.

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 at each of March 31, 2019, March 31, 2018 and December 31, 2018. As a percentage of loans outstanding, the allowance was 1.15% at each of March 31, 2019 and December 31, 2018 and 1.16% at March 31, 2018.

Asset Quality Metrics

 
                                         
                           

Change 1Q19 vs.

 

($ in millions)

 

1Q19

   

1Q18

   

4Q18

   

1Q18

   

4Q18

 
                                         

At end of quarter

                                       

Nonaccrual loans

 

$

882

   

$

865

   

$

894

     

2

%

   

-1

%

Real estate and other foreclosed assets

 

$

81

   

$

101

   

$

78

     

-20

%

   

4

%

Total nonperforming assets

 

$

963

   

$

966

   

$

972

     

     

-1

%

Accruing loans past due 90 days or more (1)

 

$

244

   

$

235

   

$

223

     

4

%

   

10

%

Nonaccrual loans as % of loans outstanding

   

.99

%

   

.99

%

   

1.01

%

               
                                         

Allowance for credit losses

 

$

1,019

   

$

1,020

   

$

1,019

     

     

 

Allowance for credit losses as % of loans outstanding

   

1.15

%

   

1.16

%

   

1.15

%

               
                                         

For the period

                                       

Provision for credit losses

 

$

22

   

$

43

   

$

38

     

-49

%

   

-42

%

Net charge-offs

 

$

22

   

$

41

   

$

38

     

-45

%

   

-42

%

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

   

.10

%

   

.19

%

   

.17

%

               
             
               

(1)

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

Noninterest Income and Expense. Noninterest income totaled $501 million in the recent quarter, up 9% from $459 million in the year-earlier quarter and 4% higher than $481 million in the fourth quarter of 2018. The increases are reflective of higher mortgage banking revenues, valuation gains on equity securities and distributions from BLG.

Noninterest Income

 
                                         
                           

Change 1Q19 vs.

 

($ in millions)

 

1Q19

   

1Q18

   

4Q18

   

1Q18

   

4Q18

 
                                         

Mortgage banking revenues

 

$

95

   

$

87

   

$

92

     

9

%

   

3

%

Service charges on deposit accounts

   

103

     

105

     

109

     

-2

%

   

-5

%

Trust income

   

133

     

131

     

135

     

1

%

   

-2

%

Brokerage services income

   

12

     

13

     

13

     

-7

%

   

-2

%

Trading account and foreign exchange gains

   

11

     

5

     

17

     

133

%

   

-35

%

Gain (loss) on bank investment securities

   

12

     

(9)

     

4

     

     

 

Other revenues from operations

   

135

     

127

     

111

     

6

%

   

21

%

Total

 

$

501

   

$

459

   

$

481

     

9

%

   

4

%

Noninterest expense aggregated $894 million in the first quarter of 2019, $933 million in the year-earlier quarter and $802 million in the fourth quarter of 2018.  Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets, noninterest operating expenses were $889 million in the recent quarter, $927 million in the first quarter of 2018 and $797 million in the final 2018 quarter. The decrease in noninterest expense from the first quarter of 2018 was largely attributable to lower accruals for legal matters and FDIC assessments offset, in part, by higher costs for salaries and employee benefits. The higher noninterest expenses in the recent quarter as compared with the fourth quarter of 2018 reflected seasonally higher stock-based compensation and employee benefits expenses and the addition to the reserve for legal matters that were partially offset by lower charitable contributions.

Noninterest Expense

 
                                         
                           

Change 1Q19 vs.

 

($ in millions)

 

1Q19

   

1Q18

   

4Q18

   

1Q18

   

4Q18

 
                                         

Salaries and employee benefits

 

$

499

   

$

463

   

$

439

     

8

%

   

14

%

Equipment and net occupancy

   

79

     

75

     

74

     

6

%

   

8

%

Outside data processing and software

   

52

     

49

     

50

     

8

%

   

4

%

FDIC assessments

   

10

     

20

     

10

     

-54

%

   

-4

%

Advertising and marketing

   

20

     

16

     

26

     

25

%

   

-22

%

Printing, postage and supplies

   

10

     

9

     

9

     

6

%

   

12

%

Amortization of core deposit and other intangible assets

   

5

     

7

     

5

     

-24

%

   

-6

%

Other costs of operations

   

219

     

294

     

189

     

-26

%

   

15

%

Total

 

$

894

   

$

933

   

$

802

     

-4

%

   

11

%

                                         

 

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 57.6% in the first quarter of 2019, 64.0% in the year-earlier quarter and 51.7% in the final three months of 2018.

Balance Sheet.  M&T had total assets of $120.0 billion at March 31, 2019, compared with $118.6 billion and $120.1 billion at March 31, 2018 and December 31, 2018, respectively. Loans and leases, net of unearned discount, were $88.6 billion at March 31, 2019, $87.7 billion at March 31, 2018 and $88.5 billion at December 31, 2018. Total deposits were $90.5 billion at the recent quarter-end, compared with $90.9 billion at March 31, 2018 and $90.2 billion at December 31, 2018.

Total shareholders' equity was $15.6 billion at March 31, 2019 and $15.7 billion a year earlier, representing 12.99% and 13.24%, respectively, of total assets. Total shareholders' equity was $15.5 billion, or 12.87% of total assets at December 31, 2018. Common shareholders' equity was $14.4 billion, or $105.04 per share, at March 31, 2019, compared with $14.5 billion, or $98.60 per share, a year-earlier and $14.2 billion, or $102.69 per share, at December 31, 2018.  Tangible equity per common share was $71.19 at March 31, 2019, compared with $66.99 at March 31, 2018 and $69.28 at December 31, 2018. 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 10.05% at March 31, 2019.

In accordance with its capital plan, M&T repurchased 2,150,000 shares of its common stock during the recent quarter at an average cost per share of $170.06, for a total cost of $366 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 #2869493.  The conference call will be webcast live through M&T's website at https://ir.mtb.com/events-presentations. A replay of the call will be available through Monday, April 22, 2019 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #2869493.  The event will also be archived and available by 3:00 p.m. today on M&T's website at https://ir.mtb.com/events-presentations.

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

 

2019

   

2018

   

Change

   

Performance

                         

Net income

 

$

482,742

     

352,610

     

37

%

 

Net income available to common shareholders

   

462,086

     

332,749

     

39

%

 

Per common share:

                         

Basic earnings

 

$

3.35

     

2.24

     

50

%

 

Diluted earnings

   

3.35

     

2.23

     

50

%

 

Cash dividends

 

$

1.00

     

.75

     

33

%

 

Common shares outstanding:

                         

Average - diluted (1)

   

137,920

     

148,905

     

-7

%

 

Period end (2)

   

136,637

     

146,799

     

-7

%

 

Return on (annualized):

                         

Average total assets

   

1.68

%

   

1.22

%

         

Average common shareholders' equity

   

13.14

%

   

9.15

%

         

Taxable-equivalent net interest income

 

$

1,056,027

     

980,326

     

8

%

 

Yield on average earning assets

   

4.71

%

   

4.11

%

         

Cost of interest-bearing liabilities

   

1.04

%

   

.64

%

         

Net interest spread

   

3.67

%

   

3.47

%

         

Contribution of interest-free funds

   

.37

%

   

.24

%

         

Net interest margin

   

4.04

%

   

3.71

%

         

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

   

.10

%

   

.19

%

         

Net operating results (3)

                         

Net operating income

 

$

486,440

     

357,498

     

36

%

 

Diluted net operating earnings per common share

   

3.38

     

2.26

     

50

%

 

Return on (annualized):

                         

Average tangible assets

   

1.76

%

   

1.28

%

         

Average tangible common equity

   

19.56

%

   

13.51

%

         

Efficiency ratio

   

57.56

%

   

63.98

%

         
                           
   

At March 31

       

Loan quality

 

2019

   

2018

   

Change

   

Nonaccrual loans

 

$

881,611

     

864,671

     

2

%

 

Real estate and other foreclosed assets

   

81,335

     

101,514

     

-20

%

 

Total nonperforming assets

 

$

962,946

     

966,185

     

   

Accruing loans past due 90 days or more (4)

 

$

244,257

     

235,325

     

4

%

 

Government guaranteed loans included in totals above:

                         

Nonaccrual loans

 

$

35,481

     

36,618

     

-3

%

 

Accruing loans past due 90 days or more

   

194,510

     

223,611

     

-13

%

 

Renegotiated loans

 

$

267,952

     

226,829

     

18

%

 

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

 

$

43,995

     

49,349

     

-11

%

 

Purchased impaired loans (6):

                         

Outstanding customer balance

 

$

495,163

     

643,124

     

-23

%

 

Carrying amount

   

278,783

     

378,000

     

-26

%

 

Nonaccrual loans to total net loans

   

.99

%

   

.99

%

         

Allowance for credit losses to total loans

   

1.15

%

   

1.16

%

         
   

(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

 

2019

   

2018

   

2018

   

2018

   

2018

 

Performance

                                       

Net income

 

$

482,742

     

546,219

     

526,091

     

493,160

     

352,610

 

Net income available to common shareholders

   

462,086

     

525,328

     

505,365

     

472,600

     

332,749

 

Per common share:

                                       

Basic earnings

 

$

3.35

     

3.76

     

3.54

     

3.26

     

2.24

 

Diluted earnings

   

3.35

     

3.76

     

3.53

     

3.26

     

2.23

 

Cash dividends

 

$

1.00

     

1.00

     

1.00

     

.80

     

.75

 

Common shares outstanding:

                                       

Average - diluted (1)

   

137,920

     

139,838

     

142,976

     

144,998

     

148,905

 

Period end (2)

   

136,637

     

138,534

     

141,479

     

144,261

     

146,799

 

Return on (annualized):

                                       

Average total assets

   

1.68

%

   

1.84

%

   

1.80

%

   

1.70

%

   

1.22

%

Average common shareholders' equity

   

13.14

%

   

14.80

%

   

14.08

%

   

13.32

%

   

9.15

%

Taxable-equivalent net interest income

 

$

1,056,027

     

1,064,918

     

1,034,771

     

1,014,184

     

980,326

 

Yield on average earning assets

   

4.71

%

   

4.51

%

   

4.40

%

   

4.28

%

   

4.11

%

Cost of interest-bearing liabilities

   

1.04

%

   

.94

%

   

.82

%

   

.71

%

   

.64

%

Net interest spread

   

3.67

%

   

3.57

%

   

3.58

%

   

3.57

%

   

3.47

%

Contribution of interest-free funds

   

.37

%

   

.35

%

   

.30

%

   

.26

%

   

.24

%

Net interest margin

   

4.04

%

   

3.92

%

   

3.88

%

   

3.83

%

   

3.71

%

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

   

.10

%

   

.17

%

   

.07

%

   

.16

%

   

.19

%

Net operating results (3)

                                       

Net operating income

 

$

486,440

     

550,169

     

530,619

     

497,869

     

357,498

 

Diluted net operating earnings per common share

   

3.38

     

3.79

     

3.56

     

3.29

     

2.26

 

Return on (annualized):

                                       

Average tangible assets

   

1.76

%

   

1.93

%

   

1.89

%

   

1.79

%

   

1.28

%

Average tangible common equity

   

19.56

%

   

22.16

%

   

21.00

%

   

19.91

%

   

13.51

%

Efficiency ratio

   

57.56

%

   

51.70

%

   

51.41

%

   

52.42

%

   

63.98

%

                                         
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 

Loan quality

 

2019

   

2018

   

2018

   

2018

   

2018

 

Nonaccrual loans

 

$

881,611

     

893,608

     

870,832

     

819,984

     

864,671

 

Real estate and other foreclosed assets

   

81,335

     

78,375

     

87,333

     

98,062

     

101,514

 

Total nonperforming assets

 

$

962,946

     

971,983

     

958,165

     

918,046

     

966,185

 

Accruing loans past due 90 days or more (4)

 

$

244,257

     

222,527

     

254,360

     

223,026

     

235,325

 

Government guaranteed loans included in totals above:

                                       

Nonaccrual loans

 

$

35,481

     

34,667

     

33,570

     

34,870

     

36,618

 

Accruing loans past due 90 days or more

   

194,510

     

192,443

     

195,450

     

202,394

     

223,611

 

Renegotiated loans

 

$

267,952

     

245,367

     

242,892

     

242,528

     

226,829

 

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

 

$

43,995

     

39,750

     

44,223

     

47,405

     

49,349

 

Purchased impaired loans (6):

                                       

Outstanding customer balance

 

$

495,163

     

529,520

     

572,979

     

606,683

     

643,124

 

Carrying amount

   

278,783

     

303,305

     

325,980

     

352,465

     

378,000

 

Nonaccrual loans to total net loans

   

.99

%

   

1.01

%

   

1.00

%

   

.93

%

   

.99

%

Allowance for credit losses to total loans

   

1.15

%

   

1.15

%

   

1.18

%

   

1.16

%

   

1.16

%

               

(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

 

2019

   

2018

   

Change

   

Interest income

 

$

1,226,309

     

1,082,150

     

13

%

 

Interest expense

   

176,249

     

106,633

     

65

   

Net interest income

   

1,050,060

     

975,517

     

8

   

Provision for credit losses

   

22,000

     

43,000

     

-49

   

Net interest income after provision for credit losses

   

1,028,060

     

932,517

     

10

   

Other income

                         

Mortgage banking revenues

   

95,311

     

87,306

     

9

   

Service charges on deposit accounts

   

103,112

     

105,115

     

-2

   

Trust income

   

132,786

     

131,375

     

1

   

Brokerage services income

   

12,476

     

13,392

     

-7

   

Trading account and foreign exchange gains

   

10,802

     

4,637

     

133

   

Gain (loss) on bank investment securities

   

11,841

     

(9,431)

     

   

Other revenues from operations

   

134,437

     

126,302

     

6

   

Total other income

   

500,765

     

458,696

     

9

   

Other expense

                         

Salaries and employee benefits

   

499,200

     

463,428

     

8

   

Equipment and net occupancy

   

79,347

     

74,797

     

6

   

Outside data processing and software

   

52,417

     

48,429

     

8

   

FDIC assessments

   

9,426

     

20,280

     

-54

   

Advertising and marketing

   

20,275

     

16,248

     

25

   

Printing, postage and supplies

   

9,855

     

9,319

     

6

   

Amortization of core deposit and other 
     intangible assets

   

5,020

     

6,632

     

-24

   

Other costs of operations

   

218,808

     

294,211

     

-26

   

Total other expense

   

894,348

     

933,344

     

-4

   

Income before income taxes

   

634,477

     

457,869

     

39

   

Applicable income taxes

   

151,735

     

105,259

     

44

   

Net income

 

$

482,742

     

352,610

     

37

%

 

 

 

Condensed Consolidated Statement of Income, Five Quarter Trend

 
   

Three months ended

 
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 

Dollars in thousands

 

2019

   

2018

   

2018

   

2018

   

2018

 

Interest income

 

$

1,226,309

     

1,220,281

     

1,167,375

     

1,128,905

     

1,082,150

 

Interest expense

   

176,249

     

161,321

     

138,337

     

120,118

     

106,633

 

Net interest income

   

1,050,060

     

1,058,960

     

1,029,038

     

1,008,787

     

975,517

 

Provision for credit losses

   

22,000

     

38,000

     

16,000

     

35,000

     

43,000

 

Net interest income after provision for credit losses

   

1,028,060

     

1,020,960

     

1,013,038

     

973,787

     

932,517

 

Other income

                                       

Mortgage banking revenues

   

95,311

     

92,229

     

88,408

     

92,499

     

87,306

 

Service charges on deposit accounts

   

103,112

     

108,791

     

108,647

     

106,784

     

105,115

 

Trust income

   

132,786

     

135,024

     

133,545

     

137,641

     

131,375

 

Brokerage services income

   

12,476

     

12,781

     

12,267

     

12,629

     

13,392

 

Trading account and foreign exchange gains

   

10,802

     

16,582

     

6,073

     

5,255

     

4,637

 

Gain (loss) on bank investment securities

   

11,841

     

4,219

     

(3,415)

     

2,326

     

(9,431)

 

Other revenues from operations

   

134,437

     

110,970

     

113,769

     

100,280

     

126,302

 

Total other income

   

500,765

     

480,596

     

459,294

     

457,414

     

458,696

 

Other expense

                                       

Salaries and employee benefits

   

499,200

     

438,928

     

431,371

     

418,537

     

463,428

 

Equipment and net occupancy

   

79,347

     

73,519

     

77,481

     

73,031

     

74,797

 

Outside data processing and software

   

52,417

     

50,206

     

50,678

     

49,712

     

48,429

 

FDIC assessments

   

9,426

     

9,837

     

18,849

     

19,560

     

20,280

 

Advertising and marketing

   

20,275

     

25,910

     

21,784

     

21,768

     

16,248

 

Printing, postage and supplies

   

9,855

     

8,777

     

8,843

     

8,719

     

9,319

 

Amortization of core deposit and other
     intangible assets

   

5,020

     

5,359

     

6,143

     

6,388

     

6,632

 

Other costs of operations

   

218,808

     

189,626

     

160,830

     

178,862

     

294,211

 

Total other expense

   

894,348

     

802,162

     

775,979

     

776,577

     

933,344

 

Income before income taxes

   

634,477

     

699,394

     

696,353

     

654,624

     

457,869

 

Applicable income taxes

   

151,735

     

153,175

     

170,262

     

161,464

     

105,259

 

Net income

 

$

482,742

     

546,219

     

526,091

     

493,160

     

352,610

 

 

 

Condensed Consolidated Balance Sheet

 
   

March 31

           

Dollars in thousands

 

2019

   

2018

   

Change

   

ASSETS

                         

Cash and due from banks

 

$

1,267,260

     

1,291,664

     

-2

%

 

Interest-bearing deposits at banks

   

7,602,897

     

6,135,434

     

24

   

Federal funds sold

   

     

1,000

     

   

Trading account

   

276,322

     

141,134

     

96

   

Investment securities

   

12,536,840

     

14,066,564

     

-11

   

Loans and leases:

                         

Commercial, financial, etc.

   

23,090,204

     

21,697,522

     

6

   

Real estate - commercial

   

34,690,930

     

33,753,506

     

3

   

Real estate - consumer

   

16,769,933

     

18,960,946

     

-12

   

Consumer

   

14,088,816

     

13,298,775

     

6

   

Total loans and leases, net of unearned discount

   

88,639,883

     

87,710,749

     

1

   

Less: allowance for credit losses

   

1,019,337

     

1,019,671

     

   

Net loans and leases

   

87,620,546

     

86,691,078

     

1

   

Goodwill

   

4,593,112

     

4,593,112

     

   

Core deposit and other intangible assets

   

43,947

     

64,957

     

-32

   

Other assets

   

6,084,281

     

5,637,881

     

8

   

Total assets

 

$

120,025,205

     

118,622,824

     

1

%

 
                           

LIABILITIES AND SHAREHOLDERS' EQUITY

                         

Noninterest-bearing deposits

 

$

29,966,753

     

31,817,516

     

-6

%

 

Interest-bearing deposits

   

59,433,806

     

58,851,050

     

1

   

Deposits at Cayman Islands office

   

1,069,191

     

278,064

     

285

   

Total deposits

   

90,469,750

     

90,946,630

     

-1

   

Short-term borrowings

   

3,602,566

     

1,626,129

     

122

   

Accrued interest and other liabilities

   

1,889,336

     

1,749,320

     

8

   

Long-term borrowings

   

8,476,024

     

8,591,051

     

-1

   

Total liabilities

   

104,437,676

     

102,913,130

     

1

   

Shareholders' equity:

                         

Preferred

   

1,231,500

     

1,231,500

     

   

Common

   

14,356,029

     

14,478,194

     

-1

   

Total shareholders' equity

   

15,587,529

     

15,709,694

     

-1

   

Total liabilities and shareholders' equity

 

$

120,025,205

     

118,622,824

     

1

%

 

 

 

Condensed Consolidated Balance Sheet, Five Quarter Trend

       
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 

Dollars in thousands

 

2019

   

2018

   

2018

   

2018

   

2018

 

ASSETS

                                       

Cash and due from banks

 

$

1,267,260

     

1,605,439

     

1,311,611

     

1,367,594

     

1,291,664

 

Interest-bearing deposits at banks

   

7,602,897

     

8,105,197

     

6,523,746

     

6,669,985

     

6,135,434

 

Federal funds sold

   

     

     

     

1,500

     

1,000

 

Trading account

   

276,322

     

185,584

     

125,038

     

148,303

     

141,134

 

Investment securities

   

12,536,840

     

12,692,813

     

13,073,881

     

13,283,002

     

14,066,564

 

Loans and leases:

                                       

Commercial, financial, etc.

   

23,090,204

     

22,977,976

     

21,635,394

     

21,894,857

     

21,697,522

 

Real estate - commercial

   

34,690,930

     

34,363,556

     

33,518,375

     

34,137,937

     

33,753,506

 

Real estate - consumer

   

16,769,933

     

17,154,446

     

17,721,399

     

18,310,712

     

18,960,946

 

Consumer

   

14,088,816

     

13,970,499

     

13,805,317

     

13,453,944

     

13,298,775

 

Total loans and leases, net of unearned discount

   

88,639,883

     

88,466,477

     

86,680,485

     

87,797,450

     

87,710,749

 

Less: allowance for credit losses

   

1,019,337

     

1,019,444

     

1,019,488

     

1,019,248

     

1,019,671

 

Net loans and leases

   

87,620,546

     

87,447,033

     

85,660,997

     

86,778,202

     

86,691,078

 

Goodwill

   

4,593,112

     

4,593,112

     

4,593,112

     

4,593,112

     

4,593,112

 

Core deposit and other intangible assets

   

43,947

     

47,067

     

52,426

     

58,569

     

64,957

 

Other assets

   

6,084,281

     

5,421,158

     

5,486,826

     

5,525,786

     

5,637,881

 

Total assets

 

$

120,025,205

     

120,097,403

     

116,827,637

     

118,426,053

     

118,622,824

 
                                         

LIABILITIES AND SHAREHOLDERS' EQUITY

                                       

Noninterest-bearing deposits

 

$

29,966,753

     

32,256,668

     

31,773,560

     

32,086,191

     

31,817,516

 

Interest-bearing deposits

   

59,433,806

     

57,087,998

     

56,919,549

     

56,924,970

     

58,851,050

 

Deposits at Cayman Islands office

   

1,069,191

     

811,906

     

447,287

     

261,427

     

278,064

 

Total deposits

   

90,469,750

     

90,156,572

     

89,140,396

     

89,272,588

     

90,946,630

 

Short-term borrowings

   

3,602,566

     

4,398,378

     

1,310,110

     

3,239,416

     

1,626,129

 

Accrued interest and other liabilities

   

1,889,336

     

1,637,348

     

1,800,778

     

1,953,848

     

1,749,320

 

Long-term borrowings

   

8,476,024

     

8,444,914

     

9,140,268

     

8,382,316

     

8,591,051

 

Total liabilities

   

104,437,676

     

104,637,212

     

101,391,552

     

102,848,168

     

102,913,130

 

Shareholders' equity:

                                       

Preferred

   

1,231,500

     

1,231,500

     

1,231,500

     

1,231,500

     

1,231,500

 

Common

   

14,356,029

     

14,228,691

     

14,204,585

     

14,346,385

     

14,478,194

 

Total shareholders' equity

   

15,587,529

     

15,460,191

     

15,436,085

     

15,577,885

     

15,709,694

 

Total liabilities and shareholders' equity

 

$

120,025,205

     

120,097,403

     

116,827,637

     

118,426,053

     

118,622,824

 

 

 

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates

 
   

Three months ended

   

Change in balance

     
   

March 31,

   

March 31,

   

December 31,

   

March 31, 2019 from

     

Dollars in millions

 

2019

   

2018

   

2018

   

March 31,

   

December 31,

     
   

Balance

   

Rate

   

Balance

   

Rate

   

Balance

   

Rate

   

2018

   

2018

     

ASSETS

                                                                   

Interest-bearing deposits at banks

 

$

4,605

     

2.41

%

   

4,941

     

1.53

%

   

7,394

     

2.23

%

   

-7

%

   

-38

%

   

Federal funds sold

   

     

     

3

     

1.85

     

     

     

     

     

Trading account

   

65

     

3.40

     

54

     

3.00

     

56

     

2.65

     

21

     

17

     

Investment securities

   

12,949

     

2.52

     

14,467

     

2.33

     

13,034

     

2.41

     

-10

     

-1

     

Loans and leases, net of unearned discount

                                                                   

Commercial, financial, etc.

   

23,010

     

5.07

     

21,547

     

4.28

     

22,376

     

4.92

     

7

     

3

     

Real estate - commercial

   

34,524

     

5.34

     

33,652

     

4.73

     

33,586

     

5.27

     

3

     

3

     

Real estate - consumer

   

16,939

     

4.37

     

19,274

     

4.06

     

17,421

     

4.31

     

-12

     

-3

     

Consumer

   

14,004

     

5.51

     

13,293

     

5.00

     

13,918

     

5.35

     

5

     

1

     

Total loans and leases, net

   

88,477

     

5.15

     

87,766

     

4.55

     

87,301

     

5.02

     

1

     

1

     

Total earning assets

   

106,096

     

4.71

     

107,231

     

4.11

     

107,785

     

4.51

     

-1

     

-2

     

Goodwill

   

4,593

             

4,593

             

4,593

             

     

     

Core deposit and other intangible assets

   

45

             

68

             

50

             

-34

     

-9

     

Other assets

   

6,105

             

5,792

             

5,371

             

5

     

14

     

Total assets

 

$

116,839

             

117,684

             

117,799

             

-1

%

   

-1

%

   
                                                                     

LIABILITIES AND SHAREHOLDERS' EQUITY

                                                                   

Interest-bearing deposits

                                                                   

Savings and interest-checking deposits

 

$

52,095

     

.59

     

52,504

     

.31

     

51,820

     

.54

     

-1

%

   

1

%

   

Time deposits

   

6,351

     

1.35

     

6,320

     

.70

     

5,960

     

1.07

     

     

7

     

Deposits at Cayman Islands office

   

972

     

1.98

     

248

     

.62

     

693

     

1.81

     

293

     

40

     

Total interest-bearing deposits

   

59,418

     

.70

     

59,072

     

.36

     

58,473

     

.61

     

1

     

2

     

Short-term borrowings

   

1,091

     

2.49

     

280

     

1.28

     

315

     

1.91

     

290

     

247

     

Long-term borrowings

   

8,494

     

3.23

     

8,606

     

2.54

     

9,239

     

3.03

     

-1

     

-8

     

Total interest-bearing liabilities

   

69,003

     

1.04

     

67,958

     

.64

     

68,027

     

.94

     

2

     

1

     

Noninterest-bearing deposits

   

30,315

             

32,047

             

32,631

             

-5

     

-7

     

Other liabilities

   

1,952

             

1,620

             

1,752

             

20

     

11

     

Total liabilities

   

101,270

             

101,625

             

102,410

             

     

-1

     

Shareholders' equity

   

15,569

             

16,059

             

15,389

             

-3

     

1

     

Total liabilities and shareholders' equity

 

$

116,839

             

117,684

             

117,799

             

-1

%

   

-1

%

   
                                                                     

Net interest spread

           

3.67

             

3.47

             

3.57

                     

Contribution of interest-free funds

           

.37

             

.24

             

.35

                     

Net interest margin

           

4.04

%

           

3.71

%

           

3.92

%

                   

 

 

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

 
   

Three months ended

 
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 
   

2019

   

2018

   

2018

   

2018

   

2018

 

Income statement data

                                       

In thousands, except per share

                                       

Net income

                                       

Net income

 

$

482,742

     

546,219

     

526,091

     

493,160

     

352,610

 

Amortization of core deposit and other intangible assets (1)

   

3,698

     

3,950

     

4,528

     

4,709

     

4,888

 

Net operating income

 

$

486,440

     

550,169

     

530,619

     

497,869

     

357,498

 
                                         

Earnings per common share

                                       

Diluted earnings per common share

 

$

3.35

     

3.76

     

3.53

     

3.26

     

2.23

 

Amortization of core deposit and other intangible assets (1)

   

.03

     

.03

     

.03

     

.03

     

.03

 

Diluted net operating earnings per common share

 

$

3.38

     

3.79

     

3.56

     

3.29

     

2.26

 
                                         

Other expense

                                       

Other expense

 

$

894,348

     

802,162

     

775,979

     

776,577

     

933,344

 

Amortization of core deposit and other intangible assets

   

(5,020)

     

(5,359)

     

(6,143)

     

(6,388)

     

(6,632)

 

Noninterest operating expense

 

$

889,328

     

796,803

     

769,836

     

770,189

     

926,712

 

Efficiency ratio

                                       

Noninterest operating expense (numerator)

 

$

889,328

     

796,803

     

769,836

     

770,189

     

926,712

 

Taxable-equivalent net interest income

   

1,056,027

     

1,064,918

     

1,034,771

     

1,014,184

     

980,326

 

Other income

   

500,765

     

480,596

     

459,294

     

457,414

     

458,696

 

Less:  Gain (loss) on bank investment securities

   

11,841

     

4,219

     

(3,415)

     

2,326

     

(9,431)

 

Denominator

 

$

1,544,951

     

1,541,295

     

1,497,480

     

1,469,272

     

1,448,453

 

Efficiency ratio

   

57.56

%

   

51.70

%

   

51.41

%

   

52.42

%

   

63.98

%

Balance sheet data

                                       

In millions

                                       

Average assets

                                       

Average assets

 

$

116,839

     

117,799

     

115,997

     

116,413

     

117,684

 

Goodwill

   

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

 

Core deposit and other intangible assets

   

(45)

     

(50)

     

(55)

     

(62)

     

(68)

 

Deferred taxes

   

12

     

13

     

14

     

17

     

18

 

Average tangible assets

 

$

112,213

     

113,169

     

111,363

     

111,775

     

113,041

 

Average common equity

                                       

Average total equity

 

$

15,569

     

15,389

     

15,549

     

15,533

     

16,059

 

Preferred stock

   

(1,232)

     

(1,232)

     

(1,232)

     

(1,232)

     

(1,232)

 

Average common equity

   

14,337

     

14,157

     

14,317

     

14,301

     

14,827

 

Goodwill

   

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

 

Core deposit and other intangible assets

   

(45)

     

(50)

     

(55)

     

(62)

     

(68)

 

Deferred taxes

   

12

     

13

     

14

     

17

     

18

 

Average tangible common equity

 

$

9,711

     

9,527

     

9,683

     

9,663

     

10,184

 

At end of quarter

                                       

Total assets

                                       

Total assets

 

$

120,025

     

120,097

     

116,828

     

118,426

     

118,623

 

Goodwill

   

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

 

Core deposit and other intangible assets

   

(44)

     

(47)

     

(52)

     

(59)

     

(65)

 

Deferred taxes

   

12

     

13

     

14

     

16

     

17

 

Total tangible assets

 

$

115,400

     

115,470

     

112,197

     

113,790

     

113,982

 

Total common equity

                                       

Total equity

 

$

15,588

     

15,460

     

15,436

     

15,578

     

15,710

 

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

   

14,353

     

14,225

     

14,201

     

14,343

     

14,475

 

Goodwill

   

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

     

(4,593)

 

Core deposit and other intangible assets

   

(44)

     

(47)

     

(52)

     

(59)

     

(65)

 

Deferred taxes

   

12

     

13

     

14

     

16

     

17

 

Total tangible common equity

 

$

9,728

     

9,598

     

9,570

     

9,707

     

9,834

 
         

(1)

      After any related tax effect.

 

INVESTOR CONTACT:  

Donald J. MacLeod 

 

(716) 842-5138

MEDIA CONTACT:  

C. Michael Zabel

 

(716) 842-5385

 

M&T Bank Corporation