BUFFALO, N.Y., Jan. 18, 2024 -- M&T Bank Corporation ("M&T" or "the Company") reports quarterly net income of $482 million or $2.74 of diluted earnings per common share and full-year net income of $2.74 billion or $15.79 of diluted earnings per common share.

Financial Highlights

• The CET1 capital ratio increased 3 basis points to an estimated 10.98% at December 31, 2023, compared with 10.95% at September 30, 2023, modestly strengthening the Company's capital position.
• Net interest margin of 3.61% in the recent quarter narrowed from 3.79% in the third quarter of 2023 reflecting higher costs paid on deposits amidst a continued shift of customer funds to interest-bearing products.
• Growth in average commercial and industrial loans in the recent quarter was largely offset by a decline in commercial real estate loans.
• Reflecting continued demand for interest-bearing products, average deposits increased 1% from the third quarter of 2023.
• Higher provision for credit losses in the recent quarter reflects continued pressure on investor-owned commercial real estate borrowers and a $1.7 billion increase in loan balances from September 30, 2023 to December 31, 2023.
• Noninterest expense in the fourth quarter of 2023 includes an FDIC special assessment of $197 million ($146 million net of tax or $0.88 of diluted earnings per common share).

Chief Financial Officer Commentary

"M&T enters 2024 with stronger levels of capital, liquidity and credit reserves than a year earlier. Average commercial and consumer loans as well as average deposits all increased in the final quarter of 2023, and expenses remained well controlled after considering the FDIC special assessment. With commercial real estate values and higher interest rates impacting our commercial clientele, our relationship-based approach gives us confidence in our ability to work through those challenges with our customers and appropriately assess the associated credit risk and loss reserves. Over the past year we have strengthened relationships with our customers and welcomed new ones. We thank our employees for consistently showing up within the communities we serve to make a difference."

- Daryl N. Bible, M&T's Chief Financial Officer

 

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 Financial, Inc. ("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 and travel costs.
• An initial provision for credit losses of $242 million in the second quarter of 2022 on loans not deemed to be purchased credit deteriorated ("PCD") on the April 1, 2022 acquisition date.

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 year ended December 31, 2023.

For the year ended December 31, 2023, diluted net operating earnings per common share were $16.08, compared with $14.42 in 2022. Net operating income was $2.79 billion and $2.47 billion in 2023 and 2022, respectively. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income in 2023 was 1.42% and 17.60%, respectively, compared with 1.35% and 16.70%, respectively, in 2022. 

Taxable-equivalent net interest income decreased $55 million, or 3%, from the third quarter of 2023.

• Average interest-bearing deposits increased $5.8 billion and the rates paid on such deposits rose 36 basis points.
• Average long-term borrowings increased $661 million.
• The yield on average loans and leases increased 14 basis points.
• Average interest-bearing deposits at banks increased $3.5 billion.

Taxable-equivalent net interest income decreased $106 million, or 6%, compared with the year-earlier quarter.

• Average interest-bearing deposits rose $21.3 billion and the rates paid on those deposits increased 210 basis points.
• Average borrowings increased $7.7 billion.
• Yields earned on average loans and leases and average interest-bearing deposits at banks increased 121 basis points and 173 basis points, respectively.
• Average interest-bearing deposits at banks and average loans and leases increased $5.1 billion and $3.4 billion, respectively.
• The yield on average investment securities increased by 36 basis points.

Taxable-equivalent net interest income was $7.17 billion in 2023, an increase of $1.31 billion, or 22% from $5.86 billion in 2022.

• Average earning assets increased $14.2 billion to $187.0 billion in 2023 from $172.8 billion in 2022, reflecting the impact of one additional quarter of assets acquired from People's United on April 1, 2022, partially offset by lower average interest-bearing deposits at banks.
• Yields on average loans and leases and interest-bearing deposits at banks increased 166 basis points and 367 basis points, respectively.
• Average interest-bearing liabilities increased $25.7 billion also reflecting the impact of one additional quarter of liabilities assumed in the acquisition of People's United.
• Rates paid on average interest-bearing deposits increased 194 basis points.

 

M&T recorded a provision for credit losses of $225 million in the fourth quarter of 2023 and $150 million in the immediately preceding quarter, compared with $90 million in the fourth quarter of 2022. The comparatively higher provisions for credit losses in the most recent two quarters as compared with the fourth quarter of 2022 reflect commercial real estate values and higher interest rates contributing to a modest deterioration in the performance of loans to commercial borrowers. The provision for credit losses was $645 million in 2023, compared with $517 million in 2022. As previously described, included in the second quarter of 2022 was the $242 million provision related to loans obtained in the People's United acquisition that were considered non-PCD. Reflective of variability in the timing and amount of commercial real estate charge-offs, net charge-offs totaled $148 million in 2023's fourth quarter as compared with $96 million in the immediately preceding quarter. Net charge-offs were $40 million in the year-earlier quarter. As compared with the year-earlier fourth quarter, the two most recent quarter net charge-offs reflect higher levels of commercial real estate loan and commercial and industrial loan net charge-offs. Net charge-offs were $442 million and $160 million in 2023 and 2022, respectively, representing .33% and .13%, respectively, of average loans outstanding.

Nonaccrual loans were $2.17 billion at December 31, 2023, $176 million lower than at September 30, 2023 and $272 million lower than at December 31, 2022. The lower level of nonaccrual loans at the recent quarter end as compared with the immediately preceding quarter end was attributable to a decline in commercial real estate nonaccrual loans, including the impact of net charge-offs, and residential real estate nonaccrual loans. The decrease in nonaccrual loans at December 31, 2023 as compared with December 31, 2022 was predominantly due to lower levels of commercial real estate nonaccrual loans and residential real estate nonaccrual loans, partially offset by a rise in commercial and industrial nonaccrual loans.

Noninterest income in the fourth quarter of 2023 increased $19 million, or 3%, as compared with 2023's third quarter.

• Mortgage banking revenues increased $8 million reflecting higher margins on sales of commercial real estate loans.
• Gain (loss) on bank investment securities increased $4 million, which includes unrealized gains on Fannie Mae and Freddie Mac preferred stock and other equity securities.
• Trust income increased $3 million reflecting improved sales activity.
• Other revenues from operations rose $3 million resulting from comparatively favorable letter of credit and other credit-related fees.

Noninterest income declined $103 million, or 15%, as compared with the year-earlier fourth quarter.

• Other revenues from operations declined $121 million due to a $136 million gain on sale of M&T Insurance Agency ("MTIA") in fourth quarter of 2022, partially offset by a rise in tax-exempt income earned from bank owned life insurance and higher letter of credit and other credit-related fees.
• Trust income decreased $36 million reflecting lower revenues associated with the Company's Collective Investment Trust ("CIT") business following its sale in April 2023.
• Mortgage banking revenues rose $31 million due to higher servicing income related to the bulk purchase of residential real estate loan servicing rights in the first quarter of 2023 and higher gains on sales of commercial and residential real estate loans.
• Service charges on deposit accounts increased $15 million predominantly due to People's United conversion-related fee waivers in the fourth quarter of 2022 and a rise in commercial service charges.

Noninterest income rose $172 million, or 7%, to $2.53 billion in 2023 as compared with $2.36 billion in 2022, reflecting the sale of the CIT business in the second quarter of 2023, the sale of MTIA in the fourth quarter of 2022 and one additional quarter of revenues in 2023 from operations acquired from People's United. Other favorable factors contributing to the rise in noninterest income included higher mortgage banking revenues and trading account and non-hedging derivatives gains.

In the fourth quarter of 2023, the Company began presenting "professional and other services" as an individual component of "other expense" while combining the presentation of "printing, postage, and supplies" into "other costs of operations" within the Consolidated Statement of Income. Prior periods were reclassified to conform to the current presentation.

Noninterest expense aggregated $1.45 billion in the recent quarter, up from $1.28 billion in the third quarter of 2023. Excluding the amortization of core deposit and other intangible assets considered to be nonoperating in nature, noninterest operating expenses increased $173 million, or 14%, to $1.44 billion in the recent quarter from $1.26 billion in the immediately preceding quarter.

• Fourth quarter of 2023 expenses include a $197 million special assessment from the FDIC.
• Professional and other services operating expenses rose $10 million reflecting lower legal-related expenses in 2023's third quarter.
• Other costs of operations decreased $43 million reflecting losses associated with certain retail banking activities recognized in the third quarter of 2023 and lower merchant discount and credit card fees.

Noninterest expense increased $42 million from the fourth quarter of 2022. Noninterest operating expenses aggregated $1.35 billion in the fourth quarter of 2022 after excluding $45 million of merger-related expenses, considered to be nonoperating in nature, associated with the People's United acquisition and $18 million of amortization of core deposit and other intangible assets. Noninterest operating expenses increased $90 million, or 7%, from the year-earlier quarter inclusive of the following:

• FDIC assessments increased $204 million reflecting the $197 million FDIC special assessment.
• Other costs of operations decreased $122 million reflecting a $135 million charitable contribution to The M&T Charitable Foundation in the year-earlier quarter.
• Salaries and employee benefits expenses increased $31 million reflecting higher severance and other employee benefits expenses.
• Professional and other services operating expenses declined $30 million including lower sub-advisory fees resulting from the sale of the CIT business.

For the year ended December 31, 2023, noninterest expense aggregated $5.38 billion, compared with $5.05 billion in 2022. Noninterest operating expenses were $5.32 billion in 2023, compared with $4.66 billion in 2022 after excluding $338 million of merger-related expenses, considered to be nonoperating in nature, incurred in 2022 associated with the People's United acquisition and $62 million and $56 million of amortization of core deposit and other intangible assets in 2023 and 2022, respectively. The $661 million increase in noninterest operating expenses reflected one additional quarter of operations acquired from People's United, higher salaries and employee benefits expenses from merit and other salary increases, a rise in incentive compensation and increases in employee benefits costs, including severance, and higher FDIC assessments inclusive of the special assessment in the recent quarter.

At December 31, 2023, the Company reclassified the substantial majority of its loans secured by commercial real estate that were considered owner-occupied to commercial and industrial loans to reflect the variation in the management and underlying risk profile of such loans as compared with investor-owned commercial real estate loans. Prior periods were reclassified to conform to the current presentation.

Average earning assets increased $3.1 billion, or 2%, from the third quarter of 2023.

• Average interest-bearing deposits at banks increased $3.5 billion due to increased liquidity from a rise in average deposits and higher levels of borrowings.
• Average loans and leases increased a modest $153 million primarily reflective of growth in average balances of commercial and industrial loans and consumer loans, largely offset by a decline in average commercial real estate and residential real estate loans. The growth in commercial and industrial loans was mainly attributable to financial and insurance industry customers and motor vehicle and recreational finance dealers.
• Average investment securities declined $503 million primarily due to pay downs of fixed rate mortgage-backed securities.

Average earning assets increased $10.6 billion, or 6%, from the year-earlier fourth quarter.

• Average interest-bearing deposits at banks increased $5.1 billion due to increased liquidity from a rise in average deposits and higher levels of borrowings.
• Average loans and leases increased $3.4 billion predominantly due to higher average balances of commercial and industrial loans reflecting lending activities to financial and insurance industry customers and motor vehicle and recreational finance dealers, partially offset by a $2.3 billion decline in average commercial real estate loans.
• Average investment securities increased $2.2 billion due to the purchases of additional investment securities in the fourth quarter of 2022 and the first quarter of 2023.

 

Average interest-bearing liabilities increased $6.3 billion, or 5%, from the third quarter of 2023.

• Average interest-bearing deposits increased $5.8 billion, including a $4.8 billion increase in average non-brokered deposits.
• Average borrowings increased $472 million predominantly due to the issuance of medium-term senior notes totaling $1.0 billion in the fourth quarter of 2023, partially offset by modestly lower levels of average short-term borrowings from the Federal Home Loan Bank ("FHLB") of New York.

Average interest-bearing liabilities increased $29.0 billion, or 29%, from the fourth quarter of 2022.

• Average interest-bearing deposits rose $21.3 billion, including an $11.6 billion increase in average non-brokered deposits.
• Average borrowings increased $7.7 billion reflecting the issuances of senior notes totaling $3.5 billion and $1.0 billion in the first and fourth quarters of 2023, respectively, and increases in short-term borrowings from the FHLB of New York.

 

M&T's capital ratios remained well above the minimum set forth by regulatory requirements. Cash dividends declared on M&T's common and preferred stock totaled $217 million and $25 million, respectively, for the quarter ended December 31, 2023. M&T did not repurchase any shares of its common stock in the fourth quarter of 2023.

The CET1 capital ratio for M&T was estimated at 10.98% as of December 31, 2023. M&T's total risk-weighted assets at December 31, 2023 are estimated to be $154 billion.

M&T repurchased 3,838,157 shares of its common stock in accordance with its capital plan during the first quarter of 2023 for a total cost, including the share repurchase excise tax, of $600 million. There were no other share repurchases in 2023. M&T repurchased a total of 10,453,282 shares for a total cost of $1.8 billion in 2022.

Other

In the fourth quarter of 2023 the Company completed modifications to its management reporting system to conform its internal profitability reporting with certain organizational changes that resulted in the realignment of its business operations into three reportable segments: Commercial Bank, Retail Bank and Institutional Services and Wealth Management. The change will be reflected in the Company's upcoming Annual Report on Form 10-K filing for the year ended December 31, 2023.

Conference Call

Investors will have an opportunity to listen to M&T's conference call to discuss fourth quarter financial results today at 10:00 a.m. Eastern Time. Those wishing to participate in the call may dial (800) 347-7315. International participants, using any applicable international calling codes, may dial (785) 424-1755. Callers should reference M&T Bank Corporation or the conference ID #MTBQ423. 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 25, 2024 by calling (800) 839-2485, or (402) 220-7222 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, and management's beliefs and assumptions.

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, 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 which are difficult to predict and may cause actual outcomes to differ materially from what is expressed or forecast.

While there can be no assurance that any list of risks and uncertainties is complete, important factors that could cause actual outcomes and results to differ materially from those contemplated by forward-looking statements include the following, without limitation: economic conditions and growth rates, including inflation and market volatility; events and developments in the financial services industry, including industry conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, loan concentrations by type and industry, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; levels of client deposits; ability to contain costs and expenses; changes in the Company's credit ratings; the impact of the People's United acquisition; domestic or international political developments and other geopolitical events, including international conflicts and hostilities; changes and trends in the securities markets; common shares outstanding and 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; federal, state or local legislation and/or regulations affecting the financial services industry, or M&T and its subsidiaries individually or collectively, including tax policy; regulatory supervision and oversight, including monetary policy and capital requirements; governmental and public policy changes; political conditions, either nationally or in the states in which M&T and its subsidiaries do business; 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; 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; 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.

These are representative of the 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, and other 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 assumes no duty and does not undertake to update forward-looking statements.