BUFFALO, N.Y., July 18, 2019 -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for the quarter ended June 30, 2019.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $3.34 in the second quarter of 2019, up 2% from $3.26 in the year-earlier quarter. GAAP-basis net income in the recent quarter was $473 million, compared with $493 million in the second quarter of 2018. GAAP-basis diluted earnings per common share and net income for the initial 2019 quarter were $3.35 and $483 million, respectively. GAAP-basis net income for the second quarter of 2019 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.60% and 12.68%, respectively, compared with 1.70% and 13.32%, respectively, in the similar 2018 quarter and 1.68% and 13.14%, respectively, in the first quarter of 2019.

In July 2019, M&T agreed to sell its interest in an asset manager obtained in the 2011 acquisition of Wilmington Trust Corporation that is accounted for using the equity method of accounting and, as a result, as of June 30, 2019 recorded a $48 million charge (reflected in "other costs of operations") to reduce the carrying value of the investment to its estimated net realizable value. The after-tax impact of the charge was a reduction in net income of $36 million, or $.27 of diluted earnings per common share.

Commenting on M&T's second quarter results, Darren J. King, Executive Vice President and Chief Financial Officer, noted, "Financial results for the second quarter reflect healthy growth in mortgage banking revenues and trust income over 2019's initial quarter. Overall credit quality remains solid, with credit costs in the recent quarter at a level consistent with what we have experienced over the last several years. During the quarter, M&T continued to return capital to our common shareholders through $402 million of stock repurchases and $135 million of dividends while maintaining strong regulatory capital levels."

For the six-month period ended June 30, 2019, diluted earnings per common share were $6.69, up 22% from $5.48 in the year-earlier period. GAAP-basis net income for the first six months of 2019 totaled $956 million, 13% higher than $846 million in the corresponding 2018 period. Expressed as an annualized rate of return on average assets and average common shareholders' equity, GAAP-basis net income in the six-month period ended June 30, 2019 was 1.64% and 12.91%, respectively, improved from 1.46% and 11.21%, respectively, in the similar 2018 period.

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 $3.37 in the recent quarter, compared with $3.29 in the second quarter of 2018 and $3.38 in the first quarter of 2019.  Net operating income for the second quarter of 2019 was $477 million, compared with $498 million in the year-earlier period and $486 million in 2019's initial 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 1.68% and 18.83%, respectively, compared with 1.79% and 19.91%, respectively, in the similar 2018 quarter and 1.76% and 19.56%, respectively, in the first quarter of 2019.

Diluted net operating earnings per common share in the first six months of 2019 rose 22% to $6.74 from $5.54 in the first half of 2018. Net operating income during the six-month period ended June 30, 2019 was $963 million, up 13% from $855 million in the year-earlier period. Net operating income expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity was 1.72% and 19.19%, respectively, in the first half of 2019, compared with 1.53% and 16.65%, respectively, in the first six months of 2018.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $1.05 billion in 2019's second quarter, up 3% from $1.01 billion in the year-earlier quarter. That increase resulted predominantly from a widening of the net interest margin in the recent quarter to 3.91% from 3.83% in the second quarter of 2018. Also contributing to the higher net interest income was growth in average earning assets, which rose to $107.5 billion in the second quarter of 2019 from $106.2 billion in the year-earlier quarter. Taxable-equivalent net interest income in the recent quarter was little changed from $1.06 billion in the first quarter of 2019 when the net interest margin was 4.04% and average earning assets were $106.1 billion.

Provision for Credit Losses/Asset Quality.  The provision for credit losses was $55 million in the second quarter of 2019, compared with $35 million in the year-earlier quarter and $22 million in 2019's first quarter. Net loan charge-offs were $44 million during the recent quarter, compared with $35 million in the second quarter of 2018 and $22 million in the first quarter of 2019. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .20% and .16% in the second quarters of 2019 and 2018, respectively, and .10% in the first quarter of 2019.

Loans classified as nonaccrual totaled $865 million or .96% of total loans outstanding at June 30, 2019, compared with $820 million or .93% a year earlier and $882 million or .99% at March 31, 2019. Assets taken in foreclosure of defaulted loans were $73 million at June 30, 2019, compared with $98 million and $81 million at June 30, 2018 and March 31, 2019, respectively.

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 $1.03 billion at June 30, 2019, compared with $1.02 billion at each of June 30, 2018 and March 31, 2019. As a percentage of loans outstanding, the allowance was 1.15% at each of June 30, 2019 and March 31, 2019 and 1.16% at June 30, 2018.

Noninterest Income and Expense.  Noninterest income totaled $512 million in the recent quarter, up 12% from $457 million in the year-earlier quarter and 2% higher than $501 million in the first quarter of 2019. The recent quarter's improvement as compared with the second quarter of 2018 and the first quarter of 2019 reflects higher mortgage banking revenues, trading account and foreign exchange gains, and trust income. The initial 2019 quarter included $37 million of income from Bayview Lending Group LLC.

Noninterest expense aggregated $873 million in the second quarter of 2019, $777 million in the year-earlier quarter and $894 million in the first quarter of 2019.  Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets, noninterest operating expenses were $868 million in the recent quarter, $770 million in the second quarter of 2018 and $889 million in the initial 2019 quarter. The most significant factors contributing to the higher level of noninterest expenses in the recent quarter as compared with the second quarter of 2018 were the $48 million charge associated with an equity investment in an asset manager recorded in the recent quarter, increased costs for salaries and employee benefits, and a $9 million valuation allowance associated with the impact of lower interest rates on mortgage servicing rights.  The higher noninterest operating expenses in the initial 2019 quarter reflected a $50 million increase in the accrual for legal matters and seasonally higher stock-based compensation and employee benefits expenses, partially offset by recent quarter charges associated with the asset manager investment, professional services and mortgage servicing rights.

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 56.0% in the second quarter of 2019, 52.4% in the year-earlier quarter and 57.6% in the first quarter of 2019.

Balance Sheet.  M&T had total assets of $121.6 billion at June 30, 2019, compared with $118.4 billion and $120.0 billion at June 30, 2018 and March 31, 2019, respectively. Loans and leases, net of unearned discount, were $89.9 billion at the recent quarter-end, $87.8 billion at June 30, 2018 and $88.6 billion at March 31, 2019. Total deposits were $91.7 billion at June 30, 2019, compared with $89.3 billion a year earlier and $90.5 billion at March 31, 2019.

Total shareholders' equity was $15.7 billion at June 30, 2019 and $15.6 billion at June 30, 2018, representing 12.91% and 13.15%, respectively, of total assets. Total shareholders' equity was $15.6 billion, or 12.99% of total assets at March 31, 2019. Common shareholders' equity was $14.5 billion, or $107.73 per share, at June 30, 2019, compared with $14.3 billion, or $99.43 per share, a year-earlier and $14.4 billion, or $105.04 per share, at March 31, 2019.  Tangible equity per common share was $73.29 at June 30, 2019, compared with $67.29 at June 30, 2018 and $71.19 at March 31, 2019. 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 9.84% at June 30, 2019.

In accordance with its capital plan, M&T repurchased 2,450,000 shares of its common stock during the recent quarter at an average cost per share of $164.08, for a total cost of $402 million. In the aggregate, during the first six months of 2019, M&T repurchased 4,600,000 shares of common stock at a total cost of $768 million.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss second quarter financial results today at 10:00 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 #1491035.  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 Thursday, July 25, 2019 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #1491035.  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

 

 

Financial Highlights, Five Quarter Trend

 

Condensed Consolidated Statement of Income

 

Condensed Consolidated Statement of Income, Five Quarter Trend

 

Condensed Consolidated Balance Sheet

 

Condensed Consolidated Balance Sheet, Five Quarter Trend

 

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates

 

Reconciliation of Quarterly GAAP to Non-GAAP Measures

 

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