BUFFALO, N.Y., Jan. 23, 2020 M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for 2019.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $3.60 in the fourth quarter of 2019, compared with $3.76 in the year-earlier quarter and $3.47 in the third quarter of 2019. GAAP-basis net income in the recent quarter was $493 million, compared with $546 million in the final quarter of 2018 and $480 million in the third 2019 quarter. GAAP-basis net income for the fourth quarter of 2019 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.60% and 12.95%, respectively, compared with 1.84% and 14.80%, respectively, in the similar 2018 quarter and 1.58% and 12.73%, respectively, in the third quarter of 2019.

 

Darren J. King, Executive Vice President and Chief Financial Officer, commented on M&T's performance, "M&T's results reflect a year of strong performance. Earnings per common share for 2019 rose 8%, combined net interest income and other income increased over 4%, and net charge-offs as a percentage of loans remained at a historically low level. Strong growth in income from the mortgage banking and trust businesses led the revenue improvement."

For the year ended December 31, 2019, diluted earnings per common share were $13.75, up 8% from $12.74 in 2018. GAAP-basis net income in 2019 aggregated $1.93 billion, up from $1.92 billion in 2018. Expressed as a rate of return on average assets and average common shareholders' equity, GAAP-basis net income for 2019 was 1.61% and 12.87%, respectively, compared with 1.64% and 12.82%, respectively, in 2018.

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 $3.62 in the fourth quarter of 2019, compared with $3.79 in the final 2018 quarter and $3.50 in the third quarter of 2019.  Net operating income in the recent quarter was $496 million, compared with $550 million in the fourth quarter of 2018 and $484 million in the third quarter of 2019. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income in the fourth quarter of 2019 was 1.67% and 19.08%, respectively, compared with 1.93% and 22.16%, respectively, in the similar 2018 quarter and 1.66% and 18.85%, respectively, in the third quarter of 2019.

Diluted net operating earnings per common share for the year ended December 31, 2019 increased 8% to $13.86 from $12.86 in 2018. Net operating income in each of 2019 and 2018 was $1.94 billion. Expressed as a rate of return on average tangible assets and average tangible common shareholders' equity, net operating income was 1.69% and 19.08%, respectively, during 2019, compared with 1.72% and 19.09%, respectively, in 2018.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $1.01 billion in the fourth quarter of 2019, compared with $1.06 billion in the year-earlier quarter. That decline resulted from a 28 basis point narrowing of the net interest margin, to 3.64% in 2019's fourth quarter from 3.92% in the final quarter of 2018, that was partially offset by the impact of higher average earning assets, which rose from $107.8 billion in the fourth quarter of 2018 to $110.6 billion in the recent quarter. In the third quarter of 2019, taxable-equivalent net interest income was $1.04 billion, the net interest margin was 3.78% and average earning assets totaled $108.6 billion. Taxable-equivalent net interest income for the full year of 2019 increased to $4.15 billion from $4.09 billion in 2018. The net interest margin was 3.84% in 2019 and 3.83% in 2018.

 

Provision for Credit Losses/Asset Quality.  The provision for credit losses was $54 million in the final quarter of 2019, compared with $38 million in the corresponding 2018 quarter and $45 million in the third quarter of 2019. Net loan charge-offs were $41 million during the recent quarter, compared with $38 million in the fourth quarter of 2018 and $36 million in 2019's third quarter. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .18% and .17% in the final quarters of 2019 and 2018, respectively, and .16% in the third quarter of 2019. The provision for credit losses was $176 million for the year ended December 31, 2019, compared with $132 million in 2018. Net loan charge-offs during 2019 and 2018 aggregated $144 million and $130 million, respectively, representing .16% and .15%, respectively, of average loans outstanding.

Loans classified as nonaccrual totaled $963 million or 1.06% of total loans outstanding at December 31, 2019, compared with $894 million or 1.01% a year earlier and $1.01 billion or 1.12% at September 30, 2019. Assets taken in foreclosure of defaulted loans were $86 million at December 31, 2019, compared with $78 million and $80 million at December 31, 2018 and September 30, 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 $1.05 billion or 1.16% of loans outstanding at December 31, 2019, compared with $1.02 billion or 1.15% at December 31, 2018 and $1.04 billion or 1.16% at September 30, 2019.

 

Noninterest Income and Expense.  Noninterest income totaled $521 million in the fourth quarter of 2019, 8% higher than $481 million in the year-earlier quarter. That improvement resulted from significantly higher residential mortgage banking revenues and trust income, partially offset by unrealized losses on investment securities. During the third quarter of 2019, noninterest income totaled $528 million. The decline in such income in the recent quarter as compared with 2019's third quarter reflected lower commercial mortgage banking revenues and unrealized losses on investment securities that were partially offset by increases in letter of credit and credit-related fees and trust income.

 

Noninterest income rose 11% to $2.06 billion in 2019 from $1.86 billion in 2018. Growth was experienced in most major sources of noninterest income, led by mortgage banking revenues and trust income.

Noninterest expense totaled $824 million in 2019's final quarter, $802 million in the corresponding quarter of 2018 and $878 million in the third 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 $819 million in the recent quarter, $797 million in the fourth quarter of 2018 and $873 million in 2019's third quarter. Significant factors contributing to the higher level of noninterest expenses in the recent quarter as compared with year-earlier quarter were increased costs for salaries and employee benefits and outside data processing and software, partially offset by lower contributions to The M&T Charitable Foundation and a reduction of the valuation allowance for capitalized residential mortgage servicing rights. The lower level of noninterest expenses in the final 2019 quarter as compared with the immediately preceding quarter was attributable to reduced costs for professional services and salaries and employee benefits, and changes in the valuation allowance for capitalized residential mortgage servicing rights. That allowance was reduced by $16 million during the recent quarter, compared with an addition to the allowance of $14 million in the third quarter of 2019.

 

For the year ended December 31, 2019 noninterest expense aggregated $3.47 billion, compared with $3.29 billion in 2018. Noninterest operating expenses were $3.45 billion and $3.26 billion in 2019 and 2018, respectively. Contributing to the higher level of such expenses in 2019 were increased costs for salaries and employee benefits, equipment and net occupancy, outside data processing and software, and professional services, and a $48 million charge in the second quarter of 2019 associated with the sale of an equity investment in an asset manager. Partially offsetting those factors were lower costs associated with legal-related matters and charitable contributions, and a decline in FDIC assessments.

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 53.1% in the fourth quarter of 2019, 51.7% in the similar 2018 quarter and 55.9% in the third quarter of 2019. The efficiency ratio for the full year 2019 was 55.7%, compared with 54.8% in 2018.

Balance Sheet.  M&T had total assets of $119.9 billion at December 31, 2019, compared with $120.1 billion and $125.5 billion at December 31, 2018 and September 30, 2019, respectively. Loans and leases, net of unearned discount, were $90.9 billion at the recent quarter-end, $88.5 billion at December 31, 2018 and $89.8 billion at September 30, 2019. The increase in outstanding balances of loans and leases from September 30 to December 31, 2019 was predominantly attributable to growth in commercial loans and commercial real estate loans. Total deposits were $94.8 billion at December 31, 2019, compared with $90.2 billion a year earlier and $95.1 billion at September 30, 2019. The higher level of deposits at the end of 2019 as compared with a year earlier reflects increased deposits associated with residential mortgage servicing activities.

Total shareholders' equity was $15.7 billion, or 13.11% of total assets at December 31, 2019, compared with $15.5 billion, or 12.87% at December 31, 2018 and $15.8 billion, or 12.57% at September 30, 2019. Common shareholders' equity was $14.5 billion, or $110.78 per share, at December 31, 2019, compared with $14.2 billion, or $102.69 per share, a year-earlier and $14.5 billion, or $109.84 per share, at September 30, 2019.  Tangible equity per common share was $75.44 at December 31, 2019, compared with $69.28 at December 31, 2018 and $74.93 at September 30, 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 9.72% at December 31, 2019.

In accordance with its capital plan, M&T repurchased 1,724,000 shares of its common stock during the recent quarter at an average cost per share of $163.69 for a total cost of $282 million. In the aggregate, during 2019, M&T repurchased 8,257,000 shares of common stock at a total cost of $1.35 billion.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss fourth 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 #9399388.  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, January 30, 2020 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #9399388.  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.