18 January 2018

BUFFALO, N.Y. -- M&T Bank Corporation (“M&T”) (NYSE: MTB) today reported its results of operations for 2017.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles (“GAAP”) for the fourth quarter of 2017 were $2.01, up 2% from $1.98 in the similar 2016 quarter.  GAAP-basis net income in the recent quarter aggregated $322 million, compared with $331 million in the final quarter of 2016.  Diluted earnings per common share and GAAP-basis net income were $2.21 and $356 million, respectively, in the third quarter of 2017.  GAAP-basis net income for the fourth quarter of 2017 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.06% and 8.03%, respectively, compared with 1.05% and 8.13%, respectively, in the year-earlier quarter and 1.18% and 8.89%, respectively, in the third quarter of 2017.

M&T’s financial results for the final quarter of 2017 reflected several notable items.  The Tax Cuts and Jobs Act (“the Tax Act”) was enacted on December 22, 2017, reducing the corporate Federal income tax rate from 35% to 21% and making other changes to U.S. corporate income tax laws.  GAAP requires that the impact of the provisions of the Tax Act be accounted for in the period of enactment.  Accordingly, the estimated incremental income tax expense recorded by M&T in the fourth quarter of 2017 related to the Tax Act was $85 million, representing $.56 of diluted earnings per common share.  The additional expense was largely attributable to the reduction in carrying value of net deferred tax assets reflecting lower future tax benefits resulting from the lower corporate tax rate.  Also during the recent quarter, M&T realized investment securities gains of $14 million (after-tax effect), or $.09 of diluted earnings per common share, largely resulting from the sale of a portion of M&T’s Fannie Mae and Freddie Mac preferred stock holdings.  Finally, M&T contributed an additional $44 million to The M&T Charitable Foundation in the final 2017 quarter, reducing net income by $27 million, or $.18 of diluted earnings per common share.  In the aggregate, these items lowered net income by $98 million, or $.65 per diluted common share.
 
Earnings Highlights  
                                         
                            Change 4Q17 vs.  
($ in millions, except per share data)   4Q17     4Q16     3Q17     4Q16     3Q17  
                                         
Net income   $ 322     $ 331     $ 356       -2 %     -9 %
Net income available to common shareholders - diluted   $ 302     $ 308     $ 336       -2 %     -10 %
Diluted earnings per common share   $ 2.01     $ 1.98     $ 2.21       2 %     -9 %
Annualized return on average assets     1.06 %     1.05 %     1.18 %                
Annualized return on average common equity     8.03 %     8.13 %     8.89 %                
                                         



For the year ended December 31, 2017, diluted earnings per common share were $8.70, up 12% from $7.78 in 2016.  GAAP-basis net income for 2017 aggregated $1.41 billion, 7% higher than $1.32 billion in 2016.  Expressed as a rate of return on average assets and average common shareholders’ equity, GAAP-basis net income for 2017 was 1.17% and 8.87%, respectively, compared with 1.06% and 8.16%, respectively, in 2016.
 
Darren J. King, Executive Vice President and Chief Financial Officer, commented on M&T’s financial performance, “Financial results in 2017 highlight what was a successful year for M&T.  Strong growth in net interest income, credit costs that were significantly below our historical norms, and well controlled expenses led to a 12% rise in earnings per common share for the year.  Fourth quarter results were negatively impacted by the newly enacted tax legislation, but a lower corporate tax rate in the future should provide many benefits to M&T.  We are proud to carry on the legacy of our long-time Chairman and Chief Executive Officer, Bob Wilmers, through investing in the communities we serve by contributing $50 million during 2017 to The M&T Charitable Foundation, the highest annual amount in our history.”
 
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 $2.04 in the fourth quarter of 2017, compared with $2.01 in the year-earlier quarter and $2.24 in the third quarter of 2017.  Net operating income during the recent quarter was $327 million, compared with $336 million in the final quarter of 2016 and $361 million in 2017’s third quarter. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income was 1.12% and 11.77%, respectively, in the recent quarter, compared with 1.10% and 11.93%, respectively, in the fourth quarter of 2016 and 1.25% and 13.03%, respectively, in the third quarter of 2017.

For the year ended December 31, 2017, diluted net operating earnings per common share were $8.82, up 9% from $8.08 in 2016.  Net operating income in 2017 increased 5% to $1.43 billion from $1.36 billion in 2016.  Expressed as a rate of return on average tangible assets and average tangible common shareholders’ equity, net operating income was 1.23% and 13.00%, respectively, in 2017 and 1.14% and 12.25%, respectively, in 2016.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis aggregated $980 million in the fourth quarter of 2017, up 11% from $883 million in the year-earlier quarter. That growth resulted predominantly from a widening of the net interest margin to 3.56% in the recent quarter from 3.08% in the final 2016 quarter. Taxable-equivalent net interest income in the recent quarter was 2% higher than $966 million in the third quarter of 2017.

Contributing to that improvement were a 3 basis point widening of the net interest margin and an increase in average earning assets in the recent quarter as compared with the third quarter of 2017. Taxable-equivalent net interest income for the year ended December 31, 2017 aggregated $3.82 billion, up 9% from $3.50 billion in 2016. That improvement was predominantly the result of a widening of the net interest margin from 3.11% in 2016 to 3.47% in 2017.
 
                                         
Taxable-equivalent Net Interest Income  
                                         
                            Change 4Q17 vs.  
($ in millions)   4Q17     4Q16     3Q17     4Q16     3Q17  
                                         
Average earning assets   $ 109,412     $ 114,254     $ 108,642       -4 %     1 %
Net interest income - taxable-equivalent   $ 980     $ 883     $ 966       11 %     2 %
Net interest margin     3.56 %     3.08 %     3.53 %                
 
Provision for Credit Losses/Asset Quality.  The provision for credit losses was $31 million in the fourth quarter of 2017, compared with $62 million in the year-earlier quarter and $30 million in 2017’s third quarter. Net charge-offs of loans were $27 million during the recent quarter, compared with $49 million and $25 million in the fourth quarter of 2016 and the third quarter of 2017, respectively.  Expressed as an annualized percentage of average loans outstanding, net charge-offs were .12% and .22% in the final quarters of 2017 and 2016, respectively, and .11% in the third quarter of 2017.  The provision for credit losses was $168 million for the year ended December 31, 2017, compared with $190 million in 2016.  Net loan charge-offs during 2017 and 2016 totaled $140 million and $157 million, respectively, or .16% and .18%, respectively, of average loans outstanding.

Loans classified as nonaccrual totaled $883 million or 1.00% of total loans outstanding at December 31, 2017, compared with $920 million or 1.01% at December 31, 2016 and $869 million or .99% at September 30, 2017. Nonaccrual Hudson City-related residential real estate loans aggregated $215 million at December 31, 2017, compared with $190 million and $211 million at December 31, 2016 and September 30, 2017, respectively. Assets taken in foreclosure of defaulted loans totaled $112 million at December 31, 2017, compared with $139 million a year earlier and $111 million at September 30, 2017.

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 December 31, 2017, compared with $989 million at December 31, 2016 and $1.01 billion at September 30, 2017.  The allowance expressed as a percentage of outstanding loans was 1.16% at December 31, 2017, compared with 1.09% at December 31, 2016 and 1.15% at September 30, 2017.
 
Asset Quality Metrics  
                                         
                            Change 4Q17 vs.  
($ in millions)   4Q17     4Q16     3Q17     4Q16     3Q17  
                                         
At end of quarter                                        
Nonaccrual loans   $ 883     $ 920     $ 869       -4 %     2 %
Real estate and other foreclosed assets   $ 112     $ 139     $ 111       -20 %     1 %
Total nonperforming assets   $ 995     $ 1,059     $ 980       -6 %     1 %
Accruing loans past due 90 days or more (1)   $ 244     $ 301     $ 261       -19 %     -6 %
Nonaccrual loans as % of loans outstanding     1.00 %     1.01 %     .99 %                
                                         
Allowance for credit losses   $ 1,017     $ 989     $ 1,013       3 %      
Allowance for credit losses as % of loans outstanding     1.16 %     1.09 %     1.15 %                
                                         
For the period                                        
Provision for credit losses   $ 31     $ 62     $ 30       -50 %     3 %
Net charge-offs   $ 27     $ 49     $ 25       -45 %     9 %
Net charge-offs as % of average loans (annualized)     .12 %     .22 %     .11 %                
 
(1)      Excludes loans acquired at a discount.  Predominantly residential real estate loans.
Noninterest Income and Expense.  Noninterest income totaled $484 million in the recent quarter, compared with $465 million in the fourth quarter of 2016 and $459 million in the third quarter of 2017.  The recent quarter’s improvement as compared with the final 2016 quarter and 2017’s third quarter resulted largely from higher gains on investment securities and increased trust income.
 
Noninterest Income  
                                         
                            Change 4Q17 vs.  
($ in millions)   4Q17     4Q16     3Q17     4Q16     3Q17  
                                         
Mortgage banking revenues   $ 96     $ 98     $ 97       -2 %     -1 %
Service charges on deposit accounts     108       105       109       3 %     -1 %
Trust income     130       122       125       6 %     4 %
Brokerage services income     13       15       15       -16 %     -13 %
Trading account and foreign exchange gains     10       7       7       36 %     48 %
Gain on bank investment securities     21       2                    
Other revenues from operations     106       116       106       -8 %     -1 %
Total other income   $ 484     $ 465     $ 459       4 %     5 %

Noninterest income aggregated $1.85 billion in 2017, up from $1.83 billion in 2016. Higher trust income, service charges on deposit accounts and credit-related fees in 2017 were the drivers of that increase.

Noninterest expense totaled $796 million in the fourth quarter of 2017, $769 million in the year-earlier quarter and $806 million in the third quarter of 2017.  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 $789 million in the recent quarter, $760 million in the fourth quarter of 2016 and $798 million in 2017’s third quarter. The most significant factors for the rise in noninterest operating expenses in the recent quarter as compared with the final quarter of 2016 were increased contributions to The M&T Charitable Foundation and higher salaries and employee benefits expenses. The decline in noninterest operating expenses from the third quarter of 2017 resulted largely from the $50 million increase in the reserve for legal matters during the third quarter of 2017, largely offset by a $44 million increase in contributions to The M&T Charitable Foundation in 2017’s fourth quarter.
 
Noninterest Expense  
                                         
                            Change 4Q17 vs.  
($ in millions)   4Q17     4Q16     3Q17     4Q16     3Q17  
                                         
Salaries and employee benefits   $ 403     $ 393     $ 399       2 %     1 %
Equipment and net occupancy     71       70       75       2 %     -6 %
Outside data processing and software     50       44       46       14 %     9 %
FDIC assessments     24       29       24       -18 %     -1 %
Advertising and marketing     19       21       17       -8 %     11 %
Printing, postage and supplies     9       9       9       -1 %     -2 %
Amortization of core deposit and other intangible assets     7       9       8       -23 %     -10 %
Other costs of operations     213       194       228       10 %     -7 %
Total other expense   $ 796     $ 769     $ 806       3 %     -1 %
                                         
 
For the year ended December 31, 2017, noninterest expense aggregated $3.14 billion, compared with $3.05 billion in 2016.  Noninterest operating expenses were $3.11 billion and $2.97 billion in 2017 and 2016, respectively. The higher level of such expenses in 2017 resulted largely from increased costs for salaries and employee benefits, higher charitable contributions and increases to the reserve for legal matters.

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 54.7% in the recent quarter, 56.4% in the year-earlier quarter and 56.0% in the third quarter of 2017.  The efficiency ratio for the full year 2017 was 55.1%, improved from 56.1% in 2016.

Balance Sheet.  M&T had total assets of $118.6 billion at December 31, 2017, compared with $123.4 billion at December 31, 2016. Loans and leases, net of unearned discount, aggregated $88.0 billion at the recent year-end, $2.9 billion or 3% below $90.9 billion a year earlier. Investment securities were $14.7 billion at the end of 2017, compared with $16.3 billion at December 31, 2016.  Total deposits were $92.4 billion at the recent year-end and $95.5 billion at December 31, 2016.

Total shareholders' equity was $16.3 billion at December 31, 2017 and $16.5 billion a year earlier, representing 13.70% and 13.35%, respectively, of total assets.  Common shareholders' equity was $15.0 billion, or $100.03 per share, at December 31, 2017, compared with $15.3 billion, or $97.64 per share, at December 31, 2016.  Tangible equity per common share of $69.08 at December 31, 2017 was up 2% from $67.85 at December 31, 2016.  Common shareholders’ equity per share and tangible equity per common share were $99.70 and $69.02, respectively, at September 30, 2017.  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 10.93% at December 31, 2017.

In accordance with its 2017 capital plan, M&T repurchased 1,343,356 shares of its common stock during the recent quarter at an average cost per share of $166.91, for a total cost of $224 million.  During 2017, M&T repurchased a total of 7,369,105 shares of its common stock under the 2017 and 2016 capital plans at a total cost of $1.21 billion.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss fourth quarter and full-year 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 #4178049.  The conference call will be webcast live through M&T's website at http://ir.mandtbank.com/events.cfm. A replay of the call will be available through Thursday, February 1, 2018 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #4178049.  The event will also be archived and available by 7:00 p.m. today on M&T's website at http://ir.mandtbank.com/events.cfm.

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.

Media Contact:
C. Michael Zabel
(716) 842-2311

Investor Contact:
Donald J. MacLeod
(716) 842-5138

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