Le Lézard
Classified in: Business
Subjects: ERN, CCA

M&T Bank Corporation Announces Second Quarter Results


BUFFALO, N.Y., July 18, 2018 /PRNewswire/ -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for quarter ended June 30, 2018.

M&T Bank Corporation

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") for the second quarter of 2018 were $3.26, up 39% from $2.35 in the corresponding 2017 quarter and 46% higher than $2.23 in the first quarter of 2018.  GAAP-basis net income in the recent quarter was $493 million, up from $381 million in the second quarter of 2017 and $353 million in the initial 2018 quarter. GAAP-basis net income for the second quarter of 2018 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.70% and 13.32%, respectively, improved from 1.27% and 9.67%, respectively, in the year-earlier quarter and 1.22% and 9.15%, respectively, in the first quarter of 2018. During the initial 2018 quarter, M&T increased its reserve for litigation matters by $135 million in anticipation of the settlement of a Wilmington Trust Corporation civil litigation matter that was preliminarily approved by the court in July 2018. That increase, on an after-tax basis, reduced net income in that quarter by $102 million, or $.68 of diluted earnings per common share. As compared with 2017, income tax expense in 2018 reflects the reduction of the corporate Federal income tax rate from 35% to 21%.

Commenting on M&T's results for the second quarter, Darren J. King, Executive Vice President and Chief Financial Officer, noted, "M&T's financial performance in the second quarter was strong, led by a 12 basis point expansion of the net interest margin and higher trust income.  Credit quality continued to be very good with the net charge-off ratio well below our long-term average.  Expenses were in line with our expectations as we continued with our plan to invest savings realized from lower income tax rates in our employees, communities and customer service delivery capabilities. Furthermore, the Federal Reserve did not object to our revised 2018 Capital Plan that includes the repurchase of up to $1.8 billion of common shares and a 25% increase in M&T's quarterly common stock dividend."

Earnings Highlights





































Change 2Q18 vs.


($ in millions, except per share data)


2Q18



2Q17



1Q18



2Q17



1Q18























Net income


$

493



$

381



$

353




29

%



40

%

Net income available to common shareholders - diluted


$

473



$

361



$

333




31

%



42

%

Diluted earnings per common share


$

3.26



$

2.35



$

2.23




39

%



46

%

Annualized return on average assets



1.70

%



1.27

%



1.22

%









Annualized return on average common equity



13.32

%



9.67

%



9.15

%









 

For the six-month period ended June 30, 2018, diluted earnings per common share were $5.48, up 23% from $4.47 in the year-earlier period. GAAP-basis net income for the first six months of 2018 totaled $846 million, 16% higher than $730 million in the corresponding 2017 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, 2018 was 1.46% and 11.21%, respectively, improved from 1.21% and 9.28%, respectively, in the similar 2017 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 $3.29 in the recent quarter, up from $2.38 in the second quarter of 2017 and $2.26 in the initial 2018 quarter.  Net operating income for the second quarter of 2018 was $498 million, compared with $386 million in the year-earlier period and $357 million in the first quarter of 2018. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income was 1.79% and 19.91%, respectively, in the recent quarter, improved from 1.33% and 14.18%, respectively, in the second quarter of 2017 and 1.28% and 13.51%, respectively, in the first quarter of 2018.

Diluted net operating earnings per common share in the first six months of 2018 increased 22% to $5.54 from $4.53 in the first half of 2017. Net operating income during the six-month period ended June 30, 2018 was $855 million, up 16% from $740 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 1.53% and 16.65%, respectively, in the first half of 2018, compared with 1.27% and 13.61%, respectively, in the first six months of 2017.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis aggregated $1.01 billion in 2018's second quarter, 7% higher than $947 million in the similar 2017 quarter and 3% higher than $980 million in 2018's initial quarter. That growth resulted from a widening of the net interest margin to 3.83% in the recent quarter from 3.45% in the second quarter of 2017 and 3.71% in the first quarter of 2018. In each quarterly comparison, the impact of the improved margin was partially offset by lower average balances of loans and investment securities.

Taxable-equivalent Net Interest Income





































Change 2Q18 vs.


($ in millions)


2Q18



2Q17



1Q18



2Q17



1Q18























Average earning assets


$

106,210



$

109,987



$

107,231




-3

%



-1

%

Net interest income  ?  taxable-equivalent


$

1,014



$

947



$

980




7

%



3

%

Net interest margin



3.83

%



3.45

%



3.71

%









 

Provision for Credit Losses/Asset Quality.  The provision for credit losses was $35 million in the second quarter of 2018, compared with $52 million in the year-earlier quarter and $43 million in 2018's first quarter. Net charge-offs of loans were $35 million during the recent quarter, compared with $45 million in the second quarter of 2017 and $41 million in the first quarter of 2018.  Expressed as an annualized percentage of average loans outstanding, net charge-offs were .16% and .20% in the second quarters of 2018 and 2017, respectively, and .19% in the first quarter of 2018.

Loans classified as nonaccrual totaled $820 million or .93% of total loans outstanding at June 30, 2018, improved from $872 million or .98% a year earlier and $865 million or .99% at March 31, 2018. Assets taken in foreclosure of defaulted loans were $98 million at June 30, 2018, compared with $105 million at June 30, 2017 and $101 million at March 31, 2018.

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 or 1.16% of loans outstanding at each of June 30, 2018 and March 31, 2018, compared with $1.01 billion or 1.13% at June 30, 2017.

Asset Quality Metrics





































Change 2Q18 vs.


($ in millions)


2Q18



2Q17



1Q18



2Q17



1Q18























At end of quarter





















Nonaccrual loans


$

820



$

872



$

865




-6

%



-5

%

Real estate and other foreclosed assets


$

98



$

105



$

101




-6

%



-3

%

Total nonperforming assets


$

918



$

977



$

966




-6

%



-5

%

Accruing loans past due 90 days or more (1)


$

223



$

265



$

235




-16

%



-5

%

Nonaccrual loans as % of loans outstanding



.93

%



.98

%



.99

%






























Allowance for credit losses


$

1,019



$

1,008



$

1,020




1

%



?


Allowance for credit losses as % of loans outstanding



1.16

%



1.13

%



1.16

%






























For the period





















Provision for credit losses


$

35



$

52



$

43




-33

%



-19

%

Net charge-offs


$

35



$

45



$

41




-22

%



-13

%

Net charge-offs as % of average loans (annualized)



.16

%



.20

%



.19

%












(1) Excludes loans acquired at a discount.  Predominantly residential real estate loans.

Noninterest Income and Expense.  Noninterest income totaled $457 million in the recent quarter, compared with $461 million in the second quarter of 2017 and $459 million in the first quarter of 2018. Improved trust income and mortgage banking revenues in the recent quarter were offset by the impact of higher credit-related fees and income from bank-owned life insurance and brokerage services in the year earlier quarter and $23 million of income in the initial 2018 quarter from M&T's investment in Bayview Lending Group.

Noninterest Income





































Change 2Q18 vs.


($ in millions)


2Q18



2Q17



1Q18



2Q17



1Q18























Mortgage banking revenues


$

92



$

86



$

87




7

%



6

%

Service charges on deposit accounts



107




106




105




1

%



2

%

Trust income



138




127




131




9

%



5

%

Brokerage services income



13




17




13




-24

%



-6

%

Trading account and foreign exchange gains



5




8




5




-35

%



13

%

Gain (loss) on bank investment securities



2




?




(9)




?




?


Other revenues from operations



100




117




127




-14

%



-21

%

Total other income


$

457



$

461



$

459




-1

%



?


Noninterest expense totaled $777 million in the second quarter of 2018, $751 million in the year-earlier quarter and $933 million in the first quarter of 2018.  Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets, noninterest operating expenses were $770 million in the recent quarter, $743 million in the year-earlier period and $927 million in 2018's first quarter. Higher costs for salaries and employee benefits were the most significant factor associated with the rise in noninterest operating expenses in the recent quarter as compared with the year-earlier quarter. The higher noninterest operating expenses in the first quarter of 2018 reflected a $135 million increase in the reserve for litigation matters and seasonally higher stock-based compensation and employee benefits expenses.

Noninterest Expense





































Change 2Q18 vs.


($ in millions)


2Q18



2Q17



1Q18



2Q17



1Q18























Salaries and employee benefits


$

419



$

398



$

463




5

%



-10

%

Equipment and net occupancy



73




74




75




-1

%



-2

%

Outside data processing and software



49




45




49




12

%



3

%

FDIC assessments



20




25




20




-23

%



-4

%

Advertising and marketing



22




16




16




33

%



34

%

Printing, postage and supplies



9




9




9




-3

%



-6

%

Amortization of core deposit and other intangible assets



6




8




7




-21

%



-4

%

Other costs of operations



179




176




294




2

%



-39

%

Total other expense


$

777



$

751



$

933




3

%



-17

%

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 52.4% in the second quarter of 2018, 52.7% in the year-earlier quarter and 64.0% in the first quarter of 2018.

Balance Sheet.  M&T had total assets of $118.4 billion at June 30, 2018, compared with $120.9 billion at June 30, 2017 and $118.6 billion at March 31, 2018. Loans and leases, net of unearned discount, were $87.8 billion at June 30, 2018 and $89.1 billion at June 30, 2017. The decline from June 30, 2017 reflects acquired residential mortgage loan repayments, partially offset by growth in commercial real estate and consumer loans. Total deposits were $89.3 billion at the recent quarter-end, compared with $93.5 billion at June 30, 2017 and $90.9 billion at March 31, 2018. Those declines reflect maturities of time deposits and lower commercial escrow deposits.

Total shareholders' equity was $15.6 billion at June 30, 2018 and $16.3 billion a year earlier, representing 13.15% and 13.47%, respectively, of total assets. Total shareholders' equity was $15.7 billion, or 13.24% of total assets at March 31, 2018. Common shareholders' equity was $14.3 billion, or $99.43 per share, at June 30, 2018, compared with $15.1 billion, or $98.66 per share, a year-earlier and $14.5 billion, or $98.60 per share, at March 31, 2018.  Tangible equity per common share was $67.29 at June 30, 2018, compared with $68.20 at June 30, 2017 and $66.99 at March 31, 2018. 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 10.52% at June 30, 2018.

In accordance with its 2017 capital plan, M&T repurchased 2,608,376 shares of its common stock during the recent quarter at an average cost per share of $182.14, for a total cost of $475 million. In the aggregate, during the first six months of 2018, M&T repurchased 6,391,658 shares of common stock under that plan at a total cost of $1.2 billion.

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 #3553997.  The conference call will be webcast live through M&T's website at http://ir.mtb.com/events.cfm. A replay of the call will be available until Sunday, July 29, by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #3553997.  The event will also be archived and available by 7:00 p.m. today on M&T's website at http://ir.mtb.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.

Financial Highlights




Three months ended







Six months ended








June 30







June 30






Amounts in thousands, except per share


2018



2017



Change



2018



2017



Change


Performance

























Net income


$

493,160




381,053




29

%


$

845,770




729,980




16

%

Net income available to common shareholders



472,600




360,662




31

%



805,342




689,217




17

%

Per common share:

























Basic earnings


$

3.26




2.36




38

%


$

5.49




4.49




22

%

Diluted earnings



3.26




2.35




39

%



5.48




4.47




23

%

Cash dividends


$

.80




.75




7

%


$

1.55




1.50




3

%

Common shares outstanding:

























Average - diluted (1)



144,998




153,276




-5

%



146,941




154,108




-5

%

Period end (2)



144,261




152,539




-5

%



144,261




152,539




-5

%

Return on (annualized):

























Average total assets



1.70

%



1.27

%







1.46

%



1.21

%





Average common shareholders' equity



13.32

%



9.67

%







11.21

%



9.28

%





Taxable-equivalent net interest income


$

1,014,184




946,936




7

%


$

1,994,510




1,869,195




7

%

Yield on average earning assets



4.28

%



3.79

%







4.20

%



3.73

%





Cost of interest-bearing liabilities



.71

%



.52

%







.68

%



.52

%





Net interest spread



3.57

%



3.27

%







3.52

%



3.21

%





Contribution of interest-free funds



.26

%



.18

%







.25

%



.19

%





Net interest margin



3.83

%



3.45

%







3.77

%



3.40

%





Net charge-offs to average total net loans (annualized)



.16

%



.20

%







.17

%



.20

%





Net operating results (3)

























Net operating income


$

497,869




385,974




29

%


$

855,367




740,009




16

%

Diluted net operating earnings per common share



3.29




2.38




38

%



5.54




4.53




22

%

Return on (annualized):

























Average tangible assets



1.79

%



1.33

%







1.53

%



1.27

%





Average tangible common equity



19.91

%



14.18

%







16.65

%



13.61

%





Efficiency ratio



52.42

%



52.74

%







58.16

%



54.81

%
































At June 30
















Loan quality


2018



2017



Change














Nonaccrual loans


$

819,984




872,374




-6

%













Real estate and other foreclosed assets



98,062




104,424




-6

%













Total nonperforming assets


$

918,046




976,798




-6

%













Accruing loans past due 90 days or more (4)


$

223,026




265,461




-16

%













Government guaranteed loans included in totals above:

























Nonaccrual loans


$

34,870




39,296




-11

%













Accruing loans past due 90 days or more



202,394




235,227




-14

%













Renegotiated loans


$

242,528




221,892




9

%













Accruing loans acquired at a discount past due 90 days or more (5)


$

47,405




57,498




-18

%













Purchased impaired loans (6):

























Outstanding customer balance


$

606,683




838,476




-28

%













Carrying amount



352,465




512,393




-31

%













Nonaccrual loans to total net loans



.93

%



.98

%

















Allowance for credit losses to total loans



1.16

%



1.13

%


















(1)

Includes common stock equivalents.

(2)

Includes common stock issuable under deferred compensation plans.

(3)

Excludes amortization and balances related to goodwill and core deposit and other intangible assets and merger-related expenses which, except in the calculation of the efficiency ratio, are net of applicable income tax effects. Reconciliations of net income with net operating income appear herein.

(4)

Excludes loans acquired at a discount.  Predominantly residential real estate loans.

(5)

Loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately.

(6)

Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.

 

 

Financial Highlights, Five Quarter Trend




Three months ended




June 30,



March 31,



December 31,



September 30,



June 30,


Amounts in thousands, except per share


2018



2018



2017



2017



2017


Performance





















Net income


$

493,160




352,610




322,403




355,923




381,053


Net income available to common shareholders



472,600




332,749




302,486




335,804




360,662


Per common share:





















Basic earnings


$

3.26




2.24




2.01




2.22




2.36


Diluted earnings



3.26




2.23




2.01




2.21




2.35


Cash dividends


$

.80




.75




.75




.75




.75


Common shares outstanding:





















Average - diluted (1)



144,998




148,905




150,348




151,691




153,276


Period end (2)



144,261




146,799




150,112




151,291




152,539


Return on (annualized):





















Average total assets



1.70

%



1.22

%



1.06

%



1.18

%



1.27

%

Average common shareholders' equity



13.32

%



9.15

%



8.03

%



8.89

%



9.67

%

Taxable-equivalent net interest income


$

1,014,184




980,326




980,457




965,962




946,936


Yield on average earning assets



4.28

%



4.11

%



3.93

%



3.89

%



3.79

%

Cost of interest-bearing liabilities



.71

%



.64

%



.59

%



.57

%



.52

%

Net interest spread



3.57

%



3.47

%



3.34

%



3.32

%



3.27

%

Contribution of interest-free funds



.26

%



.24

%



.22

%



.21

%



.18

%

Net interest margin



3.83

%



3.71

%



3.56

%



3.53

%



3.45

%

Net charge-offs to average total net loans (annualized)



.16

%



.19

%



.12

%



.11

%



.20

%

Net operating results (3)





















Net operating income


$

497,869




357,498




326,664




360,658




385,974


Diluted net operating earnings per common share



3.29




2.26




2.04




2.24




2.38


Return on (annualized):





















Average tangible assets



1.79

%



1.28

%



1.12

%



1.25

%



1.33

%

Average tangible common equity



19.91

%



13.51

%



11.77

%



13.03

%



14.18

%

Efficiency ratio



52.42

%



63.98

%



54.65

%



56.00

%



52.74

%
























June 30,



March 31,



December 31,



September 30,



June 30,


Loan quality


2018



2018



2017



2017



2017


Nonaccrual loans


$

819,984




864,671




882,598




869,362




872,374


Real estate and other foreclosed assets



98,062




101,514




111,910




110,515




104,424


Total nonperforming assets


$

918,046




966,185




994,508




979,877




976,798


Accruing loans past due 90 days or more (4)


$

223,026




235,325




244,405




261,288




265,461


Government guaranteed loans included in totals above:





















Nonaccrual loans


$

34,870




36,618




35,677




34,687




39,296


Accruing loans past due 90 days or more



202,394




223,611




235,489




252,072




235,227


Renegotiated loans


$

242,528




226,829




221,513




226,672




221,892


Accruing loans acquired at a discount past due 90 days or more (5)


$

47,405




49,349




47,418




56,225




57,498


Purchased impaired loans (6):





















Outstanding customer balance


$

606,683




643,124




688,091




779,340




838,476


Carrying amount



352,465




378,000




410,015




466,943




512,393


Nonaccrual loans to total net loans



.93

%



.99

%



1.00

%



.99

%



.98

%

Allowance for credit losses to total loans



1.16

%



1.16

%



1.16

%



1.15

%



1.13

%


(1)

Includes common stock equivalents.

(2)

Includes common stock issuable under deferred compensation plans.

(3)

Excludes amortization and balances related to goodwill and core deposit and other intangible assets and merger-related expenses which, except in the calculation of the efficiency ratio, are net of applicable income tax effects. Reconciliations of net income with net operating income appear herein.

(4)

Excludes loans acquired at a discount.  Predominantly residential real estate loans.

(5)

Loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately.

(6)

Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value. 

 

 

Condensed Consolidated Statement of Income




Three months ended







Six months ended








June 30







June 30






Dollars in thousands


2018



2017



Change



2018



2017



Change


Interest income


$

1,128,905




1,030,413




10

%


$

2,211,055




2,036,446




9

%

Interest expense



120,118




92,213




30




226,751




183,986




23


Net interest income



1,008,787




938,200




8




1,984,304




1,852,460




7


Provision for credit losses



35,000




52,000




-33




78,000




107,000




-27


Net interest income after provision for credit losses



973,787




886,200




10




1,906,304




1,745,460




9


Other income

























Mortgage banking revenues



92,499




86,163




7




179,805




170,855




5


Service charges on deposit accounts



106,784




106,057




1




211,899




210,233




1


Trust income



137,641




126,797




9




269,016




246,812




9


Brokerage services income



12,629




16,617




-24




26,021




34,001




-23


Trading account and foreign exchange gains



5,255




8,084




-35




9,892




17,775




-44


Gain (loss) on bank investment securities



2,326




(17)




?




(7,105)




(17)




?


Other revenues from operations



100,280




117,115




-14




226,582




228,002




-1


Total other income



457,414




460,816




-1




916,110




907,661




1


Other expense

























Salaries and employee benefits



418,537




398,054




5




881,965




847,795




4


Equipment and net occupancy



73,031




73,797




-1




147,828




148,163




?


Outside data processing and software



49,712




44,575




12




98,141




88,876




10


FDIC assessments



19,560




25,353




-23




39,840




54,180




-26


Advertising and marketing



21,768




16,324




33




38,016




32,434




17


Printing, postage and supplies



8,719




8,957




-3




18,038




18,665




-3


Amortization of core deposit and other 
     
intangible assets



6,388




8,113




-21




13,020




16,533




-21


Other costs of operations



178,862




175,462




2




473,073




331,841




43


Total other expense



776,577




750,635




3




1,709,921




1,538,487




11


Income before income taxes



654,624




596,381




10




1,112,493




1,114,634




?


Applicable income taxes



161,464




215,328




-25




266,723




384,654




-31


Net income


$

493,160




381,053




29

%


$

845,770




729,980




16

%

 

 

Condensed Consolidated Statement of Income, Five Quarter Trend




Three months ended



June 30,



March 31,



December 31,



September 30,



June 30,

Dollars in thousands


2018



2018



2017



2017



2017

Interest income


$

1,128,905




1,082,150




1,074,139




1,057,210




1,030,413

Interest expense



120,118




106,633




102,689




100,076




92,213

Net interest income



1,008,787




975,517




971,450




957,134




938,200

Provision for credit losses



35,000




43,000




31,000




30,000




52,000

Net interest income after provision for credit losses



973,787




932,517




940,450




927,134




886,200

Other income




















Mortgage banking revenues



92,499




87,306




96,235




96,737




86,163

Service charges on deposit accounts



106,784




105,115




107,783




109,356




106,057

Trust income



137,641




131,375




129,669




124,900




126,797

Brokerage services income



12,629




13,392




12,768




14,676




16,617

Trading account and foreign exchange gains



5,255




4,637




10,468




7,058




8,084

Gain (loss) on bank investment securities



2,326




(9,431)




21,296




?




(17)

Other revenues from operations



100,280




126,302




105,834




106,702




117,115

Total other income



457,414




458,696




484,053




459,429




460,816

Other expense




















Salaries and employee benefits



418,537




463,428




402,394




398,605




398,054

Equipment and net occupancy



73,031




74,797




71,363




75,558




73,797

Outside data processing and software



49,712




48,429




50,033




45,761




44,575

FDIC assessments



19,560




20,280




23,722




23,969




25,353

Advertising and marketing



21,768




16,248




19,366




17,403




16,324

Printing, postage and supplies



8,719




9,319




8,563




8,732




8,957

Amortization of core deposit and other 
     intangible assets



6,388




6,632




7,025




7,808




8,113

Other costs of operations



178,862




294,211




213,347




228,189




175,462

Total other expense



776,577




933,344




795,813




806,025




750,635

Income before income taxes



654,624




457,869




628,690




580,538




596,381

Applicable income taxes



161,464




105,259




306,287




224,615




215,328

Net income


$

493,160




352,610




322,403




355,923




381,053

 

 

Condensed Consolidated Balance Sheet




June 30







Dollars in thousands


2018



2017



Change



ASSETS














Cash and due from banks


$

1,367,594




1,344,478




2


%

Interest-bearing deposits at banks



6,669,985




5,023,829




33



Federal funds sold



1,500




1,000




50



Trading account



148,303




174,646




-15



Investment securities



13,283,002




15,816,060




-16



Loans and leases:














Commercial, financial, etc.



21,894,857




22,191,051




-1



Real estate - commercial



34,137,937




33,348,991




2



Real estate - consumer



18,310,712




20,960,171




-13



Consumer



13,453,944




12,580,342




7



Total loans and leases, net of unearned discount



87,797,450




89,080,555




-1



Less: allowance for credit losses



1,019,248




1,008,225




1



Net loans and leases



86,778,202




88,072,330




-1



Goodwill



4,593,112




4,593,112




?



Core deposit and other intangible assets



58,569




86,422




-32



Other assets



5,525,786




5,784,690




-4



Total assets


$

118,426,053




120,896,567




-2


%















LIABILITIES AND SHAREHOLDERS' EQUITY














Noninterest-bearing deposits


$

32,086,191




32,366,426




-1


%

Interest-bearing deposits



56,924,970




60,978,895




-7



Deposits at Cayman Islands office



261,427




195,617




34



Total deposits



89,272,588




93,540,938




-5



Short-term borrowings



3,239,416




1,695,453




91



Accrued interest and other liabilities



1,953,848




1,727,059




13



Long-term borrowings



8,382,316




7,649,580




10



Total liabilities



102,848,168




104,613,030




-2



Shareholders' equity:














Preferred



1,231,500




1,231,500




?



Common



14,346,385




15,052,037




-5



Total shareholders' equity



15,577,885




16,283,537




-4



Total liabilities and shareholders' equity


$

118,426,053




120,896,567




-2


%

 

 

Condensed Consolidated Balance Sheet, Five Quarter Trend






June 30,



March 31,



December 31,



September 30,



June 30,

Dollars in thousands


2018



2018



2017



2017



2017

ASSETS




















Cash and due from banks


$

1,367,594




1,291,664




1,420,888




1,368,252




1,344,478

Interest-bearing deposits at banks



6,669,985




6,135,434




5,078,903




6,306,484




5,023,829

Federal funds sold



1,500




1,000




?




?




1,000

Trading account



148,303




141,134




132,909




170,516




174,646

Investment securities



13,283,002




14,066,564




14,664,525




15,073,926




15,816,060

Loans and leases:




















Commercial, financial, etc.



21,894,857




21,697,522




21,742,651




21,743,251




22,191,051

Real estate - commercial



34,137,937




33,753,506




33,366,373




32,914,288




33,348,991

Real estate - consumer



18,310,712




18,960,946




19,613,344




20,265,162




20,960,171

Consumer



13,453,944




13,298,775




13,266,615




13,002,433




12,580,342

Total loans and leases, net of unearned discount



87,797,450




87,710,749




87,988,983




87,925,134




89,080,555

Less: allowance for credit losses



1,019,248




1,019,671




1,017,198




1,013,326




1,008,225

Net loans and leases



86,778,202




86,691,078




86,971,785




86,911,808




88,072,330

Goodwill



4,593,112




4,593,112




4,593,112




4,593,112




4,593,112

Core deposit and other intangible assets



58,569




64,957




71,589




78,614




86,422

Other assets



5,525,786




5,637,881




5,659,776




5,899,092




5,784,690

Total assets


$

118,426,053




118,622,824




118,593,487




120,401,804




120,896,567





















LIABILITIES AND SHAREHOLDERS' EQUITY




















Noninterest-bearing deposits


$

32,086,191




31,817,516




33,975,180




33,111,246




32,366,426

Interest-bearing deposits



56,924,970




58,851,050




58,278,970




60,170,133




60,978,895

Deposits at Cayman Islands office



261,427




278,064




177,996




232,014




195,617

Total deposits



89,272,588




90,946,630




92,432,146




93,513,393




93,540,938

Short-term borrowings



3,239,416




1,626,129




175,099




200,768




1,695,453

Accrued interest and other liabilities



1,953,848




1,749,320




1,593,993




1,791,946




1,727,059

Long-term borrowings



8,382,316




8,591,051




8,141,430




8,577,645




7,649,580

Total liabilities



102,848,168




102,913,130




102,342,668




104,083,752




104,613,030

Shareholders' equity:




















Preferred



1,231,500




1,231,500




1,231,500




1,231,500




1,231,500

Common



14,346,385




14,478,194




15,019,319




15,086,552




15,052,037

Total shareholders' equity



15,577,885




15,709,694




16,250,819




16,318,052




16,283,537

Total liabilities and shareholders' equity


$

118,426,053




118,622,824




118,593,487




120,401,804




120,896,567

 

 

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates





Three months ended




Change in balance





Six months ended









June 30,




June 30,




March 31,




June 30, 2018 from





June 30,




Change


Dollars in millions



2018




2017




2018




June 30,




March 31,





2018




2017




in





Balance



Rate




Balance



Rate




Balance



Rate




2017




2018





Balance



Rate




Balance



Rate




balance



















































ASSETS

















































Interest-bearing deposits at banks


$

4,890



1.79

%



4,741



1.03

%



4,941



1.53

%



3

%



-1

%



$

4,916



1.66

%



5,443



.90

%



-10

%

Federal funds sold



1



2.23




1



1.44




3



1.85




?




?





2



1.91




?



?




?


Trading account



57



2.92




64



1.50




54



3.00




-11




6





55



2.96




62



1.84




-10


Investment securities



13,856



2.38




15,913



2.36




14,467



2.33




-13




-4





14,164



2.35




15,956



2.40




-11


Loans and leases, net of unearned discount

















































Commercial, financial, etc.



21,709



4.49




22,350



3.84




21,547



4.28




-3




1





21,628



4.39




22,320



3.75




-3


Real estate - commercial



33,687



4.95




33,214



4.30




33,652



4.73




1




?





33,670



4.84




33,195



4.24




1


Real estate - consumer



18,644



4.15




21,318



3.94




19,274



4.06




-13




-3





18,957



4.11




21,746



3.93




-13


Consumer



13,366



5.14




12,386



4.78




13,293



5.00




8




1





13,330



5.07




12,270



4.73




9


Total loans and leases, net



87,406



4.73




89,268



4.19




87,766



4.55




-2




?





87,585



4.64




89,531



4.14




-2


Total earning assets



106,210



4.28




109,987



3.79




107,231



4.11




-3




-1





106,722



4.20




110,992



3.73




-4


Goodwill



4,593







4,593







4,593







?




?





4,593







4,593







?


Core deposit and other intangible assets



62







90







68







-32




-10





65







94







-31


Other assets



5,548







6,095







5,792







-9




-4





5,641







6,186







-9


Total assets


$

116,413







120,765







117,684







-4

%



-1

%



$

117,021







121,865







-4

%


















































LIABILITIES AND SHAREHOLDERS' EQUITY

















































Interest-bearing deposits

















































Savings and interest-checking deposits


$

52,547



.37




53,611



.23




52,504



.31




-2

%



?

%



$

52,526



.34




53,437



.21




-2

%

Time deposits



5,997



.76




8,559



.76




6,320



.70




-30




-5





6,158



.73




9,057



.79




-32


Deposits at Cayman Islands office



225



.97




163



.69




248



.62




38




-9





236



.79




177



.62




33


Total interest-bearing deposits



58,769



.41




62,333



.30




59,072



.36




-6




-1





58,920



.38




62,671



.30




-6


Short-term borrowings



353



1.57




212



.71




280



1.28




66




26





317



1.44




199



.60




60


Long-term borrowings



8,480



2.75




8,292



2.16




8,606



2.54




2




-1





8,543



2.64




8,357



2.20




2


Total interest-bearing liabilities



67,602



.71




70,837



.52




67,958



.64




-5




-1





67,780



.68




71,227



.52




-5


Noninterest-bearing deposits



31,426







31,868







32,047







-1




-2





31,734







32,574







-3


Other liabilities



1,852







1,775







1,620







4




14





1,713







1,760







-3


Total liabilities



100,880







104,480







101,625







-3




-1





101,227







105,561







-4


Shareholders' equity



15,533







16,285







16,059







-5




-3





15,794







16,304







-3


Total liabilities and shareholders' equity


$

116,413







120,765







117,684







-4

%



-1

%



$

117,021







121,865







-4

%


















































Net interest spread






3.57







3.27







3.47
















3.52







3.21






Contribution of interest-free funds






.26







.18







.24
















.25







.19






Net interest margin






3.83

%






3.45

%






3.71

%















3.77

%






3.40

%





 

 

Reconciliation of GAAP to Non-GAAP Measures




Three months ended



Six months ended




June 30



June 30




2018



2017



2018



2017


Income statement data

















In thousands, except per share

















Net income

















Net income


$

493,160




381,053




845,770




729,980


Amortization of core deposit and other intangible assets (1)



4,709




4,921




9,597




10,029


Net operating income


$

497,869




385,974




855,367




740,009



















Earnings per common share

















Diluted earnings per common share


$

3.26




2.35




5.48




4.47


Amortization of core deposit and other intangible assets (1)



.03




.03




.06




.06


Diluted net operating earnings per common share


$

3.29




2.38




5.54




4.53



















Other expense

















Other expense


$

776,577




750,635




1,709,921




1,538,487


Amortization of core deposit and other intangible assets



(6,388)




(8,113)




(13,020)




(16,533)


Noninterest operating expense


$

770,189




742,522




1,696,901




1,521,954



















Efficiency ratio

















Noninterest operating expense (numerator)


$

770,189




742,522




1,696,901




1,521,954


Taxable-equivalent net interest income



1,014,184




946,936




1,994,510




1,869,195


Other income



457,414




460,816




916,110




907,661


Less:  Gain (loss) on bank investment securities



2,326




(17)




(7,105)




(17)


Denominator


$

1,469,272




1,407,769




2,917,725




2,776,873


Efficiency ratio



52.42

%



52.74

%



58.16

%



54.81

%

Balance sheet data

















In millions

















Average assets

















Average assets


$

116,413




120,765




117,021




121,865


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(62)




(90)




(65)




(94)


Deferred taxes



17




35




17




37


Average tangible assets


$

111,775




116,117




112,380




117,215


Average common equity

















Average total equity


$

15,533




16,285




15,794




16,304


Preferred stock



(1,232)




(1,232)




(1,232)




(1,232)


Average common equity



14,301




15,053




14,562




15,072


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(62)




(90)




(65)




(94)


Deferred taxes



17




35




17




37


Average tangible common equity


$

9,663




10,405




9,921




10,442



















At end of quarter

















Total assets

















Total assets


$

118,426




120,897










Goodwill



(4,593)




(4,593)










Core deposit and other intangible assets



(59)




(86)










Deferred taxes



16




33










Total tangible assets


$

113,790




116,251










Total common equity

















Total equity


$

15,578




16,284










Preferred stock



(1,232)




(1,232)










Undeclared dividends - cumulative preferred stock



(3)




(3)










Common equity, net of undeclared cumulative preferred dividends



14,343




15,049










Goodwill



(4,593)




(4,593)










Core deposit and other intangible assets



(59)




(86)










Deferred taxes



16




33










Total tangible common equity


$

9,707




10,403











(1)       After any related tax effect.

 

 

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




Three months ended




June 30,



March 31,



December 31,



September 30,



June 30,




2018



2018



2017



2017



2017


Income statement data





















In thousands, except per share





















Net income





















Net income


$

493,160




352,610




322,403




355,923




381,053


Amortization of core deposit and other intangible assets (1)



4,709




4,888




4,261




4,735




4,921


Net operating income


$

497,869




357,498




326,664




360,658




385,974























Earnings per common share





















Diluted earnings per common share


$

3.26




2.23




2.01




2.21




2.35


Amortization of core deposit and other intangible assets (1)



.03




.03




.03




.03




.03


Diluted net operating earnings per common share


$

3.29




2.26




2.04




2.24




2.38























Other expense





















Other expense


$

776,577




933,344




795,813




806,025




750,635


Amortization of core deposit and other intangible assets



(6,388)




(6,632)




(7,025)




(7,808)




(8,113)


Noninterest operating expense


$

770,189




926,712




788,788




798,217




742,522























Efficiency ratio





















Noninterest operating expense (numerator)


$

770,189




926,712




788,788




798,217




742,522


Taxable-equivalent net interest income



1,014,184




980,326




980,457




965,962




946,936


Other income



457,414




458,696




484,053




459,429




460,816


Less:  Gain (loss) on bank investment securities



2,326




(9,431)




21,296




?




(17)


Denominator


$

1,469,272




1,448,453




1,443,214




1,425,391




1,407,769


Efficiency ratio



52.42

%



63.98

%



54.65

%



56.00

%



52.74

%






















Balance sheet data





















In millions





















Average assets





















Average assets


$

116,413




117,684




120,226




119,515




120,765


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(62)




(68)




(75)




(82)




(90)


Deferred taxes



17




18




26




32




35


Average tangible assets


$

111,775




113,041




115,584




114,872




116,117























Average common equity





















Average total equity


$

15,533




16,059




16,271




16,301




16,285


Preferred stock



(1,232)




(1,232)




(1,232)




(1,232)




(1,232)


Average common equity



14,301




14,827




15,039




15,069




15,053


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(62)




(68)




(75)




(82)




(90)


Deferred taxes



17




18




26




32




35


Average tangible common equity


$

9,663




10,184




10,397




10,426




10,405























At end of quarter





















Total assets





















Total assets


$

118,426




118,623




118,593




120,402




120,897


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(59)




(65)




(72)




(79)




(86)


Deferred taxes



16




17




19




31




33


Total tangible assets


$

113,790




113,982




113,947




115,761




116,251























Total common equity





















Total equity


$

15,578




15,710




16,251




16,318




16,284


Preferred stock



(1,232)




(1,232)




(1,232)




(1,232)




(1,232)


Undeclared dividends - cumulative preferred stock



(3)




(3)




(3)




(3)




(3)


Common equity, net of undeclared cumulative preferred dividends



14,343




14,475




15,016




15,083




15,049


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(59)




(65)




(72)




(79)




(86)


Deferred taxes



16




17




19




31




33


Total tangible common equity


$

9,707




9,834




10,370




10,442




10,403



(1)       After any related tax effect.

 

 

SOURCE M&T Bank Corporation


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