BUFFALO, N.Y., July 19, 2023 -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for the quarter ended June 30, 2023.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $5.05 in the second quarter of 2023, up from $1.08 in the year-earlier quarter and $4.01 in the first quarter of 2023. GAAP-basis net income was $867 million in the recent quarter, $218 million in the second quarter of 2022 and $702 million in the initial 2023 quarter. GAAP-basis net income expressed as an annualized rate of return on average assets and average common shareholders' equity increased to 1.70% and 14.27%, respectively, in the second quarter of 2023 from .42% and 3.21%, respectively, in the corresponding 2022 period and 1.40% and 11.74%, respectively, in the first quarter of 2023. Non-operating merger-related expenses associated with the April 1, 2022 acquisition of People's United Financial, Inc. ("People's United") totaled $465 million ($346 million after-tax effect, or $1.94 of diluted earnings per common share) in 2022's second quarter. No merger-related expenses were incurred in the first half of 2023.

In April 2023 M&T completed the divestiture of its Collective Investment Trust ("CIT") business to a private equity firm. The sale of this business resulted in a pre-tax gain of $225 million ($157 million after tax, or $0.94 of diluted earnings per common share) in the second quarter of 2023 results of operations.

Daryl N. Bible, Chief Financial Officer, commenting on M&T's results noted, "The strong performance of our second quarter exemplifies the commitment of M&T to our operating principles and our purpose. Bolstered by the successful sale of the CIT business and healthy growth in commercial loans, we have further fortified our capital levels. Our dedication to our customers is evident through the resilience of our core deposit and funding levels. Moreover, our credit costs in the first half of 2023 were consistent with our long-term historical averages. As we move forward into the second half of 2023, our primary focus remains on serving the evolving needs of our diverse customer base by offering an extensive array of innovative products and services. I am proud of how our colleagues continue to care for our customers and make a difference in people's lives and in our communities."

 

For the first six months of 2023, diluted earnings per common share rose 163% to $9.06 from $3.45 in the year-earlier period. GAAP-basis net income for the first half of 2023 increased to $1.57 billion from $580 million in the corresponding 2022 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, 2023 was 1.55% and 13.02%, respectively, improved from .65% and 5.34%, respectively, in the similar 2022 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 and core deposit and other intangible asset balances, net of applicable deferred tax amounts) and expenses associated with merging acquired operations into M&T (when incurred), since such items are considered by management to be "nonoperating" in nature.

Merger-related expenses associated with the People's United acquisition in 2022 generally consisted of professional services, temporary help fees and other costs associated with actual or planned conversions of systems and/or integration of operations and the introduction of M&T to its new customers, costs related to terminations of existing contractual arrangements to purchase various services, severance, travel costs and, in the second quarter of 2022, an initial provision for credit losses of $242 million on loans not deemed to be purchased credit deteriorated ("PCD") on the April 1, 2022 acquisition date of People's United. Given the requirement under GAAP to recognize such losses above and beyond the impact of forecasted losses used in determining the fair value of acquired loans, M&T considers that initial provision to be a merger-related expense. 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. The amounts of merger-related expenses in 2022 are presented in the tables that accompany this release. No merger-related expenses were incurred in the first half of 2023.

Diluted net operating earnings per common share were $5.12 in the second quarter of 2023, $3.10 in the year-earlier quarter and $4.09 in 2023's first quarter. Net operating income was $879 million in the recent quarter, up from $578 million in the second quarter of 2022 and $715 million in the initial 2023 quarter. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income was 1.80% and 22.73%, respectively, in the second quarter of 2023, compared with 1.16% and 14.41%, respectively, in the corresponding 2022 period and 1.49% and 19.00%, respectively, in the first quarter of 2023.

Diluted net operating earnings per common share in the first six months of 2023 were $9.21, improved from $5.88 in the similar 2022 period. Net operating income during the first half of 2023 was $1.59 billion, 67% higher than $954 million recorded in the six-month period ended June 30, 2022. Net operating income expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity was 1.65% and 20.90%, respectively, in the initial six months of 2023, improved from 1.11% and 13.57%, respectively, in the similar 2022 period.

Taxable-equivalent Net Interest Income.  Expressed on a taxable-equivalent basis, net interest income totaled $1.81 billion in the recent quarter, compared with $1.42 billion in the second quarter of 2022 and $1.83 billion in the initial 2023 quarter. The increase from the year-earlier quarter reflects a 90 basis point widening of the net interest margin to 3.91% in the second quarter of 2023, that was damped by higher levels of borrowings. The modestly lower taxable-equivalent net interest income in the recent quarter as compared with 2023's first quarter reflects a 13 basis point narrowing of the net interest margin and a $7.09 billion rise in interest-bearing liabilities, partially offset by a $1.87 billion increase in average earning assets and by one additional day of taxable-equivalent net interest income. The decreased net interest margin predominantly resulted from higher rates paid on interest-bearing deposits.

 

Provision for Credit Losses/Asset Quality.  M&T recorded a provision for credit losses of $150 million in the second quarter of 2023, compared with $302 million in the year-earlier quarter and $120 million in the first quarter of 2023. The decline in provision as compared with the 2022's second quarter is primarily due to the $242 million provision recorded in the year-earlier quarter for non-PCD loans obtained in the acquisition of People's United, partially offset by lower forecasted commercial real estate values and other loan growth. The increase in provision in the recent quarter compared with the first quarter of 2023 also reflects a decline in forecasted commercial real estate values. Net loan charge-offs were $127 million in the second quarter of 2023, $50 million in the second quarter of 2022 and $70 million in 2023's first quarter. The higher level of charge-offs in recent quarter as compared with earlier quarters reflects higher charge-offs of commercial real estate loans including office and healthcare facilities. Net loan charge-offs expressed as an annualized percentage of average loans outstanding were .38% and .16% in the second quarters of 2023 and 2022, respectively, compared with .22% in the initial 2023 quarter.

Nonaccrual loans were $2.44 billion or 1.83% of loans outstanding at June 30, 2023, compared with $2.56 billion or 1.92% at March 31, 2023 and $2.63 billion or 2.05% at June 30, 2022. The balance of nonaccrual loans at the end of the recent quarter as compared with March 31, 2023 and June 30, 2022 reflects lower levels of hospitality-related loans. Assets taken in foreclosure of defaulted loans were $43 million at June 30, 2023, $29 million at June 30, 2022 and $45 million at March 31, 2023.

Allowance for Credit Losses.  For purposes of determining the adequacy of the allowance for credit losses M&T regularly performs comprehensive analyses of its loan portfolios and assesses forecasted economic conditions. As a result of those procedures and reflecting the impact of loan growth, the allowance for credit losses totaled $2.00 billion or 1.50% of loans outstanding at June 30, 2023, compared with $1.82 billion or 1.42% of loans outstanding at June 30, 2022 and $1.98 billion or 1.49% at March 31, 2023. The acquisition of People's United loans and leases resulted in a $341 million increase in the allowance for credit losses as of April 1, 2022, including $99 million related to PCD loans and $242 million related to non-PCD loans. Including the impact of the acquisition, M&T's allowance for credit losses was $1.81 billion on April 1, 2022, or 1.42% of then outstanding loans.

 

Noninterest Income and Expense.  Noninterest income totaled $803 million in the second quarter of 2023, improved from $571 million in the year-earlier quarter. The increase in the recent quarter is predominantly due to a $225 million gain on the sale of the CIT business, a rise in mortgage banking revenues of $24 million reflecting higher gains on sale of residential mortgages and favorable trading and non-hedging derivative gains. Those increases were partially offset by an $18 million decline in trust income reflecting the sale of the CIT business and a $9 million decrease in insurance revenues predominantly due to the sale of M&T Insurance Agency in 2022's fourth quarter. Noninterest income was $587 million in 2023's first quarter. The comparative increase in the recent quarter was driven by the gain recorded on the sale of the CIT business in the second quarter of 2023, a $22 million increase in mortgage banking revenues resulting largely from the bulk purchase of residential mortgage loan servicing rights at the end of the first quarter of 2023, higher service charges on deposit accounts and favorable trading and non-hedging derivative gains, partially offset by lower trust income of $21 million, reflecting the sale of the CIT business, and a $20 million distribution from Bayview Lending Group LLC received in the first quarter of 2023.

 

Noninterest expense aggregated $1.29 billion in the second quarter of 2023, down from $1.40 billion in the similar quarter of 2022 and $1.36 billion in the first quarter of 2023. Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets and merger-related expenses, noninterest operating expenses were $1.28 billion in the recent quarter, $1.16 billion in the second quarter of 2022 and $1.34 billion in 2023's initial quarter. The higher level of operating expenses in the recent quarter as compared with the year-earlier quarter reflects increased salaries and employee benefits expense, resulting from higher staffing levels and annual merit increases, and increases in outside data processing and software costs, expenses related to the bulk purchase of residential mortgage loan servicing rights and check fraud losses. Those higher costs were partially offset by a decline in professional services expenses reflecting lower sub-advisory fees as a result of the sale of the CIT business. The decline of operating expenses in the recent quarter as compared with the first quarter of 2023 reflects a decrease in salaries and employee benefits expense, predominantly due to seasonal stock compensation and employee benefits expenses recorded in the first quarter of 2023, partially offset by higher average staffing levels and the full quarter impact of merit increases. In addition, a decline in professional services expenses in the recent quarter, reflecting lower sub-advisory fees as a result of the sale of the CIT business, was partially offset by an increase in expenses related to the bulk purchase of residential mortgage loan 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 48.9% in the second quarter of 2023, 58.3% in the year-earlier quarter and 55.5% in the first quarter of 2023.

Balance Sheet.  M&T had total assets of $207.7 billion at June 30, 2023, compared with $204.0 billion and $203.0 billion at June 30, 2022 and March 31, 2023, respectively. Loans and leases, net of unearned discount, were $133.3 billion at June 30, 2023, compared with $128.5 billion at June 30, 2022 and $132.9 billion at March 31, 2023. The higher balance of loans and leases at June 30, 2023 as compared with June 30, 2022 and March 31, 2023 predominantly reflects higher outstanding balances of commercial loans, partially offset by lower commercial real estate loans. Total deposits were $162.1 billion at the recent quarter-end and $159.1 billion at March 31, 2023, compared with $170.4 billion at June 30, 2022. The increase in deposits in the recent quarter as compared with March 31, 2023 reflects an increase in time deposits and savings and interest-checking deposits, partially offset by a decline in noninterest-bearing deposits. The lower deposit levels at June 30, 2023 as compared with the June 30, 2022 reflect lower noninterest-bearing deposits and savings and interest-checking deposits, partially offset by higher time deposits as customers shifted funds to higher yielding deposit products.

Total shareholders' equity was $25.8 billion or 12.42% of total assets at June 30, 2023, $25.8 billion or 12.64% at June 30, 2022 and $25.4 billion or 12.50% at March 31, 2023. Common shareholders' equity was $23.8 billion, or $143.41 per share, at June 30, 2023, compared with $23.8 billion, or $135.16 per share, a year earlier and $23.4 billion, or $140.88 per share, at March 31, 2023. Tangible equity per common share was $91.58 at June 30, 2023, $85.78 at June 30, 2022 and $88.81 at March 31, 2023. 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 10.58% at June 30, 2023, compared with 10.16% three months earlier.

M&T repurchased 3,505,946 shares at an average cost per share of $171.14 resulting in a total cost of $600 million in 2022's second quarter and 3,838,157 shares at an average cost per share of $154.76 resulting in a total cost, including the share repurchase excise tax, of $600 million in the first quarter of 2023. There were no share repurchases in the second quarter of 2023.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss second quarter financial results today at 8:00 a.m. Eastern Time. Those wishing to participate in the call may dial (800) 225-9448. International participants, using any applicable international calling codes, may dial (203) 518-9708. Callers should reference M&T Bank Corporation or the conference ID #MTBQ223. 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 Wednesday July 26, 2023 by calling (800) 839-5642, or (402) 220-2564 for international participants. No conference ID or passcode is required. 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.

About M&T. M&T is a financial holding company headquartered in Buffalo, New York. M&T's principal banking subsidiary, M&T Bank, provides banking products and services in 12 states across the eastern U.S. from Maine to Virginia and Washington, D.C. Trust-related services are provided in select markets in the U.S. and abroad by M&T's Wilmington Trust-affiliated companies and by M&T Bank. For more information on M&T Bank, visit www.mtb.com.

Forward-Looking Statements.  This news release and related conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the rules and regulations of the SEC. Any statement that does not describe historical or current facts is a forward-looking statement, including statements based on current expectations, estimates and projections about M&T's business, management's beliefs and assumptions made by management.

Statements regarding the potential effects of events or factors specific to M&T and/or the financial industry as a whole, as well as national and global events generally, including economic conditions, on M&T's business, financial condition, liquidity and results of operations may constitute forward-looking statements. Such statements are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond M&T's control.

Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "target," "estimate," "continue," or "potential," by future conditional verbs such as "will," "would," "should," "could," or "may," or by variations of such words or by similar expressions. 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.

Examples of Future Factors include: the impact of M&T's acquisition of People's United (as described in the next paragraph); events and developments in the financial services industry, including legislation, regulations and other governmental actions as well as business conditions affecting the industry and/or M&T and its subsidiaries, individually or collectively; economic conditions, including inflation and market volatility; 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; regulatory supervision and oversight, including monetary policy and capital requirements; domestic or international political developments and other geopolitical events, including international conflicts; governmental and public policy changes, including tax policy; the outcome of pending and future litigation and governmental proceedings, including tax-related examinations and other matters; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board, regulatory agencies or legislation; increasing price, product and 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 and services; containing costs and expenses; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; 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, divestment and investment activities compared with M&T's initial expectations, including the full realization of anticipated cost savings and revenue enhancements.

In addition, Future Factors related to the acquisition of People's United include, among others: the possibility that the anticipated benefits of the transaction will not be realized when expected or at all; potential adverse reactions or changes to business, customer or employee relationships; M&T's success in executing its business plans and strategies and managing the risks involved in the foregoing; the results and costs of integration efforts; the business, economic and political conditions in the markets in which M&T and its subsidiaries operate; the outcome of any legal proceedings that may be instituted against M&T or its subsidiaries; and other factors related to the acquisition that may affect future results of M&T.

These are representative of the Future Factors that could affect the outcome of the forward-looking statements. In addition, as noted, 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.

M&T provides further detail regarding these risks and uncertainties in its Form 10-K for the year ended December 31, 2022, including in the Risk Factors section of such report, as well as in other SEC filings. Forward-looking statements speak only as of the date made, and M&T does not assume any duty and does not undertake to update forward-looking statements.