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Press Release

M&T Bank Corporation Announces Second Quarter Results

BUFFALO, N.Y., July 23, 2020 /PRNewswire/ — M&T Bank Corporation (“M&T”) (NYSE: MTB) today reported its results of operations for the quarter ended June 30, 2020.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles (“GAAP”) were $1.74 in the second quarter of 2020, compared with $3.34 in the year-earlier quarter and $1.93 in the initial 2020 quarter. GAAP-basis net income in the recent quarter was $241 million, compared with $473 million in the second quarter of 2019 and $269 million in the first quarter of 2020. GAAP-basis net income for the second quarter of 2020 expressed as an annualized rate of return on average assets and average common shareholders’ equity was .71% and 6.13%, respectively, compared with 1.60% and 12.68%, respectively, in the corresponding 2019 period and .90% and 7.00%, respectively, in the initial quarter of 2020.

Commenting on M&T’s second quarter results, Darren J. King, Executive Vice President and Chief Financial Officer, noted, “While the low interest rate environment resulted in a decline in our net interest income, it also led to a 13% improvement in mortgage banking revenue compared with the first quarter. During the quarter we added to our provision for credit losses and at the same time grew our Common Equity Tier 1 ratio to 9.51%. M&T’s conservatively positioned balance sheet continues to be strong, with substantial liquidity and sufficient capital to meet the needs of our customers and communities.”

Financial results for the second quarter of 2020 were adversely impacted by the COVID-19 pandemic. The economic outlook at June 30 deteriorated as compared with what had been assumed as of the end of the first quarter of 2020, with considerable uncertainty existing about the length and extent of the pandemic’s impact on the nation’s economy. The provision for credit losses in the recent quarter rose to $325 million from $250 million in the initial 2020 quarter and $55 million in the second quarter of 2019. The 2020 periods reflect the adoption of new accounting guidance for the measurement of expected credit losses on financial instruments that became effective on January 1, 2020. Spurred by the COVID-19 pandemic, the low interest rate environment resulted in decreased taxable-equivalent net interest income, while waivers and reduced customer transaction activity led to lower fees earned on deposit accounts.

Earnings Highlights





































Change 2Q20 vs.


($ in millions, except per share data)


2Q20



2Q19



1Q20



2Q19



1Q20























Net income


$

241



$

473



$

269




-49

%



-10

%

Net income available to common shareholders  ̶  diluted


$

223



$

453



$

251




-51

%



-11

%

Diluted earnings per common share


$

1.74



$

3.34



$

1.93




-48

%



-10

%

Annualized return on average assets



.71

%



1.60

%



.90

%









Annualized return on average common equity



6.13

%



12.68

%



7.00

%









For the first six-months of 2020, diluted earnings per common share were $3.67, compared with $6.69 in the year-earlier period. GAAP-basis net income for the first half of 2020 totaled $510 million, compared with $956 million in the corresponding 2019 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, 2020 was .80% and 6.56%, respectively, compared with 1.64% and 12.91%, respectively, in the similar 2019 period.

Supplemental Reporting of Non-GAAP Results of Operations.  M&T consistently provides supplemental reporting of its results on a “net operating” or “tangible” basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill and core deposit and other intangible asset balances, net of applicable deferred tax amounts) and expenses associated with merging acquired operations into M&T (when incurred), since such items are considered by management to be “nonoperating” in nature.  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 $1.76 in the second quarter of 2020, compared with $3.37 in the year-earlier quarter and $1.95 in the first quarter of 2020.  Net operating income in 2020’s second quarter was $244 million, compared with $477 million in the second quarter of 2019 and $272 million in the first quarter of 2020. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders’ equity, net operating income in the recent quarter was .74% and 9.04%, respectively, compared with 1.68% and 18.83%, respectively, in the corresponding 2019 quarter and .94% and 10.39%, respectively, in the first quarter of 2020.

Diluted net operating earnings per common share in the first six months of 2020 were $3.71, compared with $6.74 in the similar 2019 period. Net operating income during the first half of 2020 was $516 million, compared with $963 million in the six-month period ended June 30, 2019. Net operating income expressed as an annualized rate of return on average tangible assets and average tangible common shareholders’ equity was .84% and 9.71%, respectively, in the initial six months of 2020, compared with 1.72% and 19.19% respectively, in the corresponding 2019 period.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $961 million in the recent quarter, compared with $1.05 billion in the second quarter of 2019. That decline resulted from a 78 basis point narrowing of the net interest margin, to 3.13% in the second quarter of 2020 from 3.91% in the second quarter of 2019, that was partially offset by the impact of a $16.0 billion or 15% increase in average earning assets to $123.5 billion in the second quarter of 2020 from $107.5 billion in the year-earlier quarter. Included in average earning assets in the recent quarter were $4.8 billion of average loan balances associated with the Paycheck Protection Program (“PPP”) that were funded during the quarter. In total, $6.5 billion of PPP loans originated by M&T were outstanding at June 30, 2020. In the first quarter of 2020, taxable-equivalent net interest income was $982 million, the net interest margin was 3.65% and average earning assets were $108.2 billion. As compared with the year-earlier quarter and the initial 2020 quarter, the recent quarter’s narrowing of the net interest margin resulted largely from lower yields on loans and deposits at the Federal Reserve Bank of New York, while the rise in average earning assets reflected higher balances in each of those asset types.






















Taxable-equivalent Net Interest Income





































Change 2Q20 vs.


($ in millions)


2Q20



2Q19



1Q20



2Q19



1Q20























Average earning assets


$

123,492



$

107,511



$

108,226




15

%



14

%

Net interest income  ̶  taxable-equivalent


$

961



$

1,047



$

982




-8

%



-2

%

Net interest margin



3.13

%



3.91

%



3.65

%









Provision for Credit Losses/Asset Quality.  The provision for credit losses was $325 million in the second quarter of 2020, compared with $55 million in the year-earlier quarter and $250 million in 2020’s initial quarter. The significant increases in the provision in the two most recent quarters as compared with the second quarter of 2019 follow the adoption of new accounting guidance on January 1, 2020 and reflect updated economic assumptions and projections of expected credit losses as of the end of each of the first two quarters of 2020 that include estimates of the impact of the COVID-19 pandemic. Net loan charge-offs were $71 million during the recent quarter, compared with $44 million in the corresponding quarter of 2019 and $49 million in the first quarter of 2020. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .29% and .20% during the three-month periods ended June 30, 2020 and 2019, respectively, and .22% in the first quarter of 2020. Net charge-offs were .31% of average loans in the recent quarter, excluding the impact of PPP loans.

Loans classified as nonaccrual totaled $1.16 billion or 1.18% of total loans outstanding at June 30, 2020. Nonaccrual loans outstanding at March 31, 2020 were $1.06 billion or 1.13% of total loans and at June 30, 2019 were $865 million or .96%. The adoption of the new accounting guidance previously mentioned resulted in an increase in nonaccrual loans on January 1, 2020 of $171 million. Assets taken in foreclosure of defaulted loans were $67 million at June 30, 2020, compared with $73 million and $84 million at June 30, 2019 and March 31, 2020, respectively.

Allowance for Credit Losses.  M&T regularly performs detailed analyses of individual borrowers and portfolios for purposes of assessing the adequacy of the allowance for credit losses. As a result of those analyses, the allowance for credit losses totaled $1.64 billion or 1.68% of loans outstanding at June 30, 2020, compared with $1.03 billion or 1.15% at June 30, 2019, $1.38 billion or 1.47% at March 31, 2020 and $1.18 billion or 1.30% as of January 1, 2020 following adoption of the current expected credit loss accounting rules. The adoption of the amended accounting guidance resulted in an increase to the allowance of $132 million on January 1, 2020. The allowance at June 30, 2020 represented 1.79% of total loans, excluding outstanding balances of PPP loans.

Asset Quality Metrics
















Change 2Q20 vs.


($ in millions)


2Q20



2Q19



1Q20



2Q19



1Q20























At end of quarter





















Nonaccrual loans


$

1,157



$

865



$

1,062




34

%



9

%

Real estate and other foreclosed assets


$

67



$

73



$

84




-8

%



-20

%

Total nonperforming assets


$

1,224



$

938



$

1,146




30

%



7

%

Accruing loans past due 90 days or more (1)


$

536



$

349



$

530




54

%



1

%

Nonaccrual loans as % of loans outstanding



1.18

%



.96

%



1.13

%






























Allowance for credit losses


$

1,638



$

1,030



$

1,384




59

%



18

%

Allowance for credit losses as % of loans outstanding



1.68

%



1.15

%



1.47

%






























For the period





















Provision for credit losses


$

325



$

55



$

250




491

%



30

%

Net charge-offs


$

71



$

44



$

49




60

%



45

%

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



.29

%



.20

%



.22

%









_____________

(1)

Predominantly residential real estate loans. Prior to 2020, excludes loans acquired at a discount.

Noninterest Income and Expense.  Noninterest income was $487 million in the recent quarter, compared with $512 million in the year-earlier quarter and $529 million in the first quarter of 2020. The lower level of noninterest income in the second quarter of 2020 as compared with those prior periods largely resulted from declines in service charges on deposit accounts, trading account and foreign exchange gains, merchant discount and credit card fees, and loan syndication fees, partially offset by higher residential mortgage banking revenues and trust income. In addition, income from Bayview Lending Group LLC of $23 million received in 2020’s initial quarter was predominantly offset by unrealized losses on investment securities of $21 million during that quarter.

Noninterest Income





































Change 2Q20 vs.


($ in millions)


2Q20



2Q19



1Q20



2Q19



1Q20























Mortgage banking revenues


$

145



$

107



$

128




35

%



13

%

Service charges on deposit accounts



78




108




106




-28

%



-27

%

Trust income



152




145




149




5

%



2

%

Brokerage services income



10




12




13




-16

%



-20

%

Trading account and foreign exchange gains



8




18




21




-55

%



-61

%

Gain (loss) on bank investment securities



7




9




(21)




-22

%




Other revenues from operations



87




113




133




-23

%



-35

%

Total


$

487



$

512



$

529




-5

%



-8

%

Noninterest expense totaled $807 million in the second quarter of 2020, down from $873 million in the corresponding quarter of 2019 and $906 million in the first quarter of 2020.  Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets, noninterest operating expenses aggregated $803 million in the recent quarter, $868 million in the second quarter of 2019 and $903 million in 2020’s first quarter. Factors contributing to the lower level of noninterest expenses in the recent quarter as compared with the year-earlier quarter were lower costs for professional and outside services and advertising and marketing, and a $48 million charge associated with an equity investment in an asset manager recorded in the second quarter of 2019. As compared with the initial 2020 quarter, the lower level of noninterest expenses in the recent quarter was largely attributable to a decline in expenses for salaries and employee benefits, reflecting decreased incentive compensation costs and seasonally higher stock-based compensation and employee benefits expenses during the first quarter, and lower advertising and marketing costs.

Noninterest Expense





































Change 2Q20 vs.


($ in millions)


2Q20



2Q19



1Q20



2Q19



1Q20























Salaries and employee benefits


$

459



$

456



$

537




1

%



-15

%

Equipment and net occupancy



77




79




80




-3

%



-3

%

Outside data processing and software



61




55




64




11

%



-5

%

FDIC assessments



14




10




12




45

%



16

%

Advertising and marketing



10




24




22




-59

%



-56

%

Printing, postage and supplies



11




10




11




9

%



4

%

Amortization of core deposit and other intangible assets



4




5




4




-23

%




Other costs of operations



171




234




176




-27

%



-3

%

Total


$

807



$

873



$

906




-8

%



-11

%






















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 55.7% in the second quarter of 2020, 56.0% in the year-earlier quarter and 58.9% in the first three months of 2020.

Balance Sheet.  M&T had total assets of $139.5 billion at June 30, 2020, up from $121.6 billion and $124.6 billion at June 30, 2019 and March 31, 2020, respectively. Loans and leases, net of unearned discount, were $97.8 billion at June 30, 2020, $89.9 billion at June 30, 2019 and $94.1 billion at March 31, 2020. The increase in total loans and leases at the recent quarter-end as compared with the second quarter of 2019 was driven largely by growth in commercial loans of $5.8 billion and commercial real estate loans of $2.0 billion. The commercial loan growth reflects loans originated as part of the PPP, which totaled $6.5 billion at June 30, 2020. Total deposits rose to $115.0 billion at the recent quarter-end, compared with $91.7 billion at June 30, 2019 and $100.2 billion at March 31, 2020. The higher level of deposits at the recent quarter-end as compared with the prior dates reflects both increased commercial and consumer deposits, as well as higher levels of deposits associated with residential mortgage servicing activities.

Total shareholders’ equity was $15.9 billion, or 11.43% of total assets at June 30, 2020, compared with $15.7 billion, or 12.91% at June 30, 2019 and $15.8 billion, or 12.70% at March 31, 2020. Common shareholders’ equity was $14.7 billion, or $114.54 per share, at June 30, 2020, compared with $14.5 billion, or $107.73 per share, a year-earlier and $14.6 billion, or $113.54 per share, at March 31, 2020.  Tangible equity per common share was $78.62 at June 30, 2020, compared with $73.29 at June 30, 2019 and $77.60 at March 31, 2020. In the calculation of tangible equity per common share, common shareholders’ equity is reduced by the carrying values of goodwill and core deposit and other intangible assets, net of applicable deferred tax balances.  M&T estimates that the ratio of Common Equity Tier 1 to risk-weighted assets under regulatory capital rules was approximately 9.51% at June 30, 2020, up from 9.19% three months earlier.

Conference Call.  Investors will have an opportunity to listen to M&T’s conference call to discuss second quarter financial results today at 11:00 a.m. Eastern Time.  Those wishing to participate in the call may dial (877) 780-2276.  International participants, using any applicable international calling codes, may dial (973) 582-2700.  Callers should reference M&T Bank Corporation or the conference ID #9253404.  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, July 30, 2020 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #9253404.  The event will also be archived and available by 3:00 p.m. today on M&T’s website at https://ir.mtb.com/events-presentations.

M&T is a financial holding company headquartered in Buffalo, New York.  M&T’s principal banking subsidiary, M&T Bank, operates banking offices in New York, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia and the District of Columbia.  Trust-related services are provided by M&T’s Wilmington Trust-affiliated companies and by M&T Bank.

Forward-Looking Statements.  This news release contains forward-looking statements that are based on current expectations, estimates and projections about M&T’s business, management’s beliefs and assumptions made by management.  Any statement that does not describe historical or current facts is a forward-looking statement, including statements regarding the potential effects of the Coronavirus Disease 2019 (“COVID-19”) pandemic on M&T’s business, financial condition, liquidity and results of operations. 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; risks and uncertainties relating to the impact of the COVID-19 pandemic; 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 or regulation; 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, regulatory agencies or legislation; 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.

Further, statements about the potential effects of the COVID-19 pandemic on M&T’s business, financial condition, liquidity and results of operations may constitute forward-looking statements and 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, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on customers, clients, third parties and M&T.

Financial Highlights




Three months ended







Six months ended








June 30







June 30






Amounts in thousands, except per share


2020



2019



Change



2020



2019



Change


Performance

























Net income


$

241,054




473,260




-49

%


$

509,876




956,002




-47

%

Net income available to common shareholders



223,099




452,633




-51

%



473,795




914,719




-48

%

Per common share:

























Basic earnings


$

1.74




3.34




-48

%


$

3.67




6.69




-45

%

Diluted earnings



1.74




3.34




-48

%



3.67




6.69




-45

%

Cash dividends


$

1.10




1.00




10

%


$

2.20




2.00




10

%

Common shares outstanding:

























Average – diluted (1)



128,333




135,464




-5

%



129,044




136,685




-6

%

Period end (2)



128,294




134,200




-4

%



128,294




134,200




-4

%

Return on (annualized):

























Average total assets



.71

%



1.60

%







.80

%



1.64

%





Average common shareholders’ equity



6.13

%



12.68

%







6.56

%



12.91

%





Taxable-equivalent net interest income


$

961,371




1,047,406




-8

%


$

1,943,239




2,103,433




-8

%

Yield on average earning assets



3.38

%



4.64

%







3.75

%



4.68

%





Cost of interest-bearing liabilities



.40

%



1.11

%







.60

%



1.08

%





Net interest spread



2.98

%



3.53

%







3.15

%



3.60

%





Contribution of interest-free funds



.15

%



.38

%







.22

%



.37

%





Net interest margin



3.13

%



3.91

%







3.37

%



3.97

%





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



.29

%



.20

%







.26

%



.15

%





Net operating results (3)

























Net operating income


$

243,958




477,001




-49

%


$

515,663




963,441




-46

%

Diluted net operating earnings per common share



1.76




3.37




-48

%



3.71




6.74




-45

%

Return on (annualized):

























Average tangible assets



.74

%



1.68

%







.84

%



1.72

%





Average tangible common equity



9.04

%



18.83

%







9.71

%



19.19

%





Efficiency ratio



55.71

%



55.98

%







57.36

%



56.77

%
































At June 30
















Loan quality


2020



2019



Change














Nonaccrual loans


$

1,156,650




865,384




34

%













Real estate and other foreclosed assets



66,763




72,907




-8

%













Total nonperforming assets


$

1,223,413




938,291




30

%













Accruing loans past due 90 days or more (4)


$

535,755




348,725




54

%













Government guaranteed loans included in totals above:

























Nonaccrual loans


$

51,165




36,765




39

%













Accruing loans past due 90 days or more



454,269




320,305




42

%













Renegotiated loans


$

234,768




254,332




-8

%













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


N/A




43,079

















Purchased impaired loans (6):

























Outstanding customer balance


N/A




473,834

















Carrying amount


N/A




263,025

















Nonaccrual loans to total net loans



1.18

%



.96

%

















Allowance for credit losses to total loans



1.68

%



1.15

%

















______________

(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)

Predominantly residential real estate loans. Prior to 2020, excludes loans acquired at a discount.

(5)

Prior to 2020, 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)

Prior to 2020, 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


2020



2020



2019



2019



2019


Performance





















Net income


$

241,054




268,822




493,066




480,081




473,260


Net income available to common shareholders



223,099




250,701




473,372




461,410




452,633


Per common share:





















Basic earnings


$

1.74




1.93




3.60




3.47




3.34


Diluted earnings



1.74




1.93




3.60




3.47




3.34


Cash dividends


$

1.10




1.10




1.10




1.00




1.00


Common shares outstanding:





















Average – diluted (1)



128,333




129,755




131,549




132,999




135,464


Period end (2)



128,294




128,282




130,589




132,277




134,200


Return on (annualized):





















Average total assets



.71

%



.90

%



1.60

%



1.58

%



1.60

%

Average common shareholders’ equity



6.13

%



7.00

%



12.95

%



12.73

%



12.68

%

Taxable-equivalent net interest income


$

961,371




981,868




1,014,225




1,035,469




1,047,406


Yield on average earning assets



3.38

%



4.18

%



4.27

%



4.51

%



4.64

%

Cost of interest-bearing liabilities



.40

%



.83

%



.97

%



1.10

%



1.11

%

Net interest spread



2.98

%



3.35

%



3.30

%



3.41

%



3.53

%

Contribution of interest-free funds



.15

%



.30

%



.34

%



.37

%



.38

%

Net interest margin



3.13

%



3.65

%



3.64

%



3.78

%



3.91

%

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



.29

%



.22

%



.18

%



.16

%



.20

%

Net operating results (3)





















Net operating income


$

243,958




271,705




496,237




483,830




477,001


Diluted net operating earnings per common share



1.76




1.95




3.62




3.50




3.37


Return on (annualized):





















Average tangible assets



.74

%



.94

%



1.67

%



1.66

%



1.68

%

Average tangible common equity



9.04

%



10.39

%



19.08

%



18.85

%



18.83

%

Efficiency ratio



55.71

%



58.91

%



53.15

%



55.95

%



55.98

%
























June 30,



March 31,



December 31,



September 30,



June 30,


Loan quality


2020



2020



2019



2019



2019


Nonaccrual loans


$

1,156,650




1,061,748




963,112




1,005,249




865,384


Real estate and other foreclosed assets



66,763




83,605




85,646




79,735




72,907


Total nonperforming assets


$

1,223,413




1,145,353




1,048,758




1,084,984




938,291


Accruing loans past due 90 days or more (4)


$

535,755




530,317




518,728




461,162




348,725


Government guaranteed loans included in totals above:





















Nonaccrual loans


$

51,165




50,561




50,891




43,144




36,765


Accruing loans past due 90 days or more



454,269




464,243




479,829




434,132




320,305


Renegotiated loans


$

234,768




232,439




234,424




240,781




254,332


Accruing loans acquired at a discount past due 90 days or

        more (5)


N/A



N/A




39,632




40,733




43,079


Purchased impaired loans (6):





















Outstanding customer balance


N/A



N/A




415,413




453,382




473,834


Carrying amount


N/A



N/A




227,545




253,496




263,025


Nonaccrual loans to total net loans



1.18

%



1.13

%



1.06

%



1.12

%



.96

%

Allowance for credit losses to total loans



1.68

%



1.47

%



1.16

%



1.16

%



1.15

%

______________

(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)

Predominantly residential real estate loans. Prior to 2020, excludes loans acquired at a discount.

(5)

Prior to 2020, 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)

Prior to 2020, 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


2020



2019



Change



2020



2019



Change


Interest income


$

1,032,242




1,237,913




-17

%


$

2,152,661




2,464,222




-13

%

Interest expense



75,105




196,432




-62




218,719




372,681




-41


Net interest income



957,137




1,041,481




-8




1,933,942




2,091,541




-8


Provision for credit losses



325,000




55,000



491




575,000




77,000




647


Net interest income after provision for credit losses



632,137




986,481




-36




1,358,942




2,014,541




-33


Other income

























Mortgage banking revenues



145,024




107,321




35




272,933




202,632




35


Service charges on deposit accounts



77,455




107,787




-28




183,616




210,899




-13


Trust income



151,882




144,382




5




300,633




277,168




8


Brokerage services income



10,463




12,478




-16




23,592




24,954




-5


Trading account and foreign exchange gains



8,290




18,453




-55




29,306




29,255





Gain (loss) on bank investment securities



6,969




8,911




-22




(13,813)




20,752





Other revenues from operations



87,190




112,763




-23




220,366




247,200




-11


Total other income



487,273




512,095




-5




1,016,633




1,012,860





Other expense

























Salaries and employee benefits



458,842




455,737




1




995,685




954,937




4


Equipment and net occupancy



77,089




79,150




-3




156,729




158,497




-1


Outside data processing and software



61,376




55,234




11




125,786




107,651




17


FDIC assessments



14,207




9,772




45




26,478




19,198




38


Advertising and marketing



9,842




24,046




-59




32,217




44,321




-27


Printing, postage and supplies



11,260




10,324




9




22,112




20,179




10


Amortization of core deposit and other
  intangible assets



3,913




5,077




-23




7,826




10,097




-22


Other costs of operations



170,513




233,692




-27




346,625




452,500




-23


Total other expense



807,042




873,032




-8




1,713,458




1,767,380




-3


Income before income taxes



312,368




625,544




-50




662,117




1,260,021




-47


Applicable income taxes



71,314




152,284




-53




152,241




304,019




-50


Net income


$

241,054




473,260




-49

%


$

509,876




956,002




-47

%

Condensed Consolidated Statement of Income, Five Quarter Trend




Three months ended




June 30,



March 31,



December 31,



September 30,



June 30,


Dollars in thousands


2020



2020



2019



2019



2019


Interest income


$

1,032,242




1,120,419




1,185,902




1,229,469




1,237,913


Interest expense



75,105




143,614




177,069




199,579




196,432


Net interest income



957,137




976,805




1,008,833




1,029,890




1,041,481


Provision for credit losses



325,000




250,000




54,000




45,000




55,000


Net interest income after provision for credit losses



632,137




726,805




954,833




984,890




986,481


Other income





















Mortgage banking revenues



145,024




127,909




118,134




137,004




107,321


Service charges on deposit accounts



77,455




106,161




110,987




111,092




107,787


Trust income



151,882




148,751




151,525




143,915




144,382


Brokerage services income



10,463




13,129




11,891




12,077




12,478


Trading account and foreign exchange gains



8,290




21,016




16,717




16,072




18,453


Gain (loss) on bank investment securities



6,969




(20,782)




(6,452)




3,737




8,911


Other revenues from operations



87,190




133,176




118,238




103,882




112,763


Total other income



487,273




529,360




521,040




527,779




512,095


Other expense





















Salaries and employee benefits



458,842




536,843




469,080




476,780




455,737


Equipment and net occupancy



77,089




79,640




82,892




82,690




79,150


Outside data processing and software



61,376




64,410




61,720




60,360




55,234


FDIC assessments



14,207




12,271




12,431




9,906




9,772


Advertising and marketing



9,842




22,375




27,063




22,088




24,046


Printing, postage and supplies



11,260




10,852




9,513




10,201




10,324


Amortization of core deposit and other
   intangible assets



3,913




3,913




4,305




5,088




5,077


Other costs of operations



170,513




176,112




156,679




210,506




233,692


Total other expense



807,042




906,416




823,683




877,619




873,032


Income before income taxes



312,368




349,749




652,190




635,050




625,544


Applicable income taxes



71,314




80,927




159,124




154,969




152,284


Net income


$

241,054




268,822




493,066




480,081




473,260


Condensed Consolidated Balance Sheet




June 30







Dollars in thousands


2020



2019



Change



ASSETS














Cash and due from banks


$

1,354,815




1,271,611




7

%


Interest-bearing deposits at banks



20,888,341




8,791,753




138



Trading account



1,293,534




479,403




170



Investment securities



8,454,344




11,580,249




-27



Loans and leases:














Commercial, financial, etc.



29,203,862




23,431,408




25



Real estate – commercial



37,159,451




35,194,375




6



Real estate – consumer



15,611,462




16,693,737




-6



Consumer



15,782,773




14,558,538




8



Total loans and leases, net of unearned discount



97,757,548




89,878,058




9



Less: allowance for credit losses



1,638,236




1,029,867




59



Net loans and leases



96,119,312




88,848,191




8



Goodwill



4,593,112




4,593,112






Core deposit and other intangible assets



21,208




38,428




-45



Other assets



6,812,303




5,952,148




14



Total assets


$

139,536,969




121,554,895




15

%
















LIABILITIES AND SHAREHOLDERS’ EQUITY














Noninterest-bearing deposits


$

45,397,843




30,747,946




48

%


Interest-bearing deposits



68,701,832




59,568,223




15



Deposits at Cayman Islands office



868,284




1,364,855




-36



Total deposits



114,967,959




91,681,024




25



Short-term borrowings



52,298




4,611,390




-99



Accrued interest and other liabilities



2,250,316




1,915,147




18



Long-term borrowings



6,321,291




7,655,507




-17



Total liabilities



123,591,864




105,863,068




17



Shareholders’ equity:














Preferred



1,250,000




1,231,500




2



Common



14,695,105




14,460,327




2



Total shareholders’ equity



15,945,105




15,691,827




2



Total liabilities and shareholders’ equity


$

139,536,969




121,554,895




15

%


Condensed Consolidated Balance Sheet, Five Quarter Trend







June 30,



March 31,



December 31,



September 30,



June 30,


Dollars in thousands


2020



2020



2019



2019



2019


ASSETS





















Cash and due from banks


$

1,354,815




1,298,192




1,432,805




1,818,861




1,271,611


Interest-bearing deposits at banks



20,888,341




8,896,307




7,190,154




12,495,524




8,791,753


Federal funds sold









3,500




200





Trading account



1,293,534




1,224,291




470,129




614,256




479,403


Investment securities



8,454,344




8,956,590




9,497,251




10,677,583




11,580,249


Loans and leases:





















Commercial, financial, etc.



29,203,862




26,243,648




23,838,168




23,201,372




23,431,408


Real estate – commercial



37,159,451




36,684,106




35,541,914




34,945,231




35,194,375


Real estate – consumer



15,611,462




15,643,014




16,156,094




16,500,955




16,693,737


Consumer



15,782,773




15,571,507




15,386,693




15,175,635




14,558,538


Total loans and leases, net of unearned discount



97,757,548




94,142,275




90,922,869




89,823,193




89,878,058


Less: allowance for credit losses



1,638,236




1,384,366




1,051,071




1,038,437




1,029,867


Net loans and leases



96,119,312




92,757,909




89,871,798




88,784,756




88,848,191


Goodwill



4,593,112




4,593,112




4,593,112




4,593,112




4,593,112


Core deposit and other intangible assets



21,208




25,121




29,034




33,339




38,428


Other assets



6,812,303




6,826,311




6,784,974




6,483,295




5,952,148


Total assets


$

139,536,969




124,577,833




119,872,757




125,500,926




121,554,895























LIABILITIES AND SHAREHOLDERS’ EQUITY





















Noninterest-bearing deposits


$

45,397,843




35,554,715




32,396,407




31,766,724




30,747,946


Interest-bearing deposits



68,701,832




63,410,672




60,689,618




61,785,212




59,568,223


Deposits at Cayman Islands office



868,284




1,217,921




1,684,044




1,561,997




1,364,855


Total deposits



114,967,959




100,183,308




94,770,069




95,113,933




91,681,024


Short-term borrowings



52,298




59,180




62,363




5,513,896




4,611,390


Accrued interest and other liabilities



2,250,316




2,198,116




2,337,490




2,090,762




1,915,147


Long-term borrowings



6,321,291




6,321,435




6,986,186




7,002,524




7,655,507


Total liabilities



123,591,864




108,762,039




104,156,108




109,721,115




105,863,068


Shareholders’ equity:





















Preferred



1,250,000




1,250,000




1,250,000




1,250,000




1,231,500


Common



14,695,105




14,565,794




14,466,649




14,529,811




14,460,327


Total shareholders’ equity



15,945,105




15,815,794




15,716,649




15,779,811




15,691,827


Total liabilities and shareholders’ equity


$

139,536,969




124,577,833




119,872,757




125,500,926




121,554,895


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, 2020 from




June 30,



Change


Dollars in millions


2020



2019



2020



June 30,



March 31,




2020



2019



in




Balance



Rate



Balance



Rate



Balance



Rate



2019



2020




Balance



Rate



Balance



Rate



balance


ASSETS










































Interest-bearing deposits at banks


$

16,454



.10

%


6,122



2.38

%


6,130



1.24

%


169

%


168

%



$

11,292



.41

%


5,368



2.39

%


110

%

Federal funds sold and agreements











































to resell securities



692



.11



1



2.83



1,224



1.34




-43





958



.90



1



2.83




Trading account



49



2.04



68



2.20



64



2.64



-28



-24





56



2.38



66



2.79



-16


Investment securities



8,500



2.24



12,170



2.49



9,102



2.22



-30



-7





8,801



2.23



12,557



2.51



-30


Loans and leases, net of unearned











































discount











































Commercial, financial, etc.



29,733



3.10



23,335



4.97



24,290



4.10



27



22





27,011



3.55



23,173



5.02



17


Real estate – commercial



36,947



4.42



34,768



5.30



36,034



4.83



6



3





36,491



4.62



34,647



5.32



5


Real estate – consumer



15,599



4.00



16,723



4.29



15,931



4.03



-7



-2





15,765



4.02



16,830



4.33



-6


Consumer



15,518



4.85



14,324



5.53



15,451



5.30



8







15,484



5.07



14,165



5.52



9


Total loans and leases, net



97,797



4.05



89,150



5.09



91,706



4.61



10



7





94,751



4.32



88,815



5.12



7


Total earning assets



123,492



3.38



107,511



4.64



108,226



4.18



15



14





115,858



3.75



106,807



4.68



8


Goodwill



4,593






4,593






4,593












4,593






4,593







Core deposit and other intangible











































assets



23






41






27






-44



-14





25






43






-42


Other assets



8,338






6,342






7,739






31



8





8,037






6,224






29


Total assets


$

136,446






118,487






120,585






15

%


13

%



$

128,513






117,667






9

%












































LIABILITIES AND SHAREHOLDERS’ EQUITY











































Interest-bearing deposits











































Savings and interest-checking











































deposits


$

62,927



.17



53,495



.69



56,366



.56



18

%


12

%



$

59,646



.35



52,799



.64



13

%

Time deposits



5,354



1.49



6,530



1.53



5,672



1.55



-18



-6





5,513



1.52



6,441



1.44



-14


Deposits at Cayman Islands











































office



1,017



.06



1,247



1.94



1,672



.82



-18



-39





1,344



.54



1,110



1.96



21


Total interest-bearing











































deposits



69,298



.27



61,272



.80



63,710



.65



13



9





66,503



.45



60,350



.75



10


Short-term borrowings



63



.01



1,263



2.51



58



.16



-95



9





60



.08



1,177



2.50



-95


Long-term borrowings



6,189



1.86



8,278



3.20



6,240



2.60



-25



-1





6,215



2.23



8,386



3.21



-26


Total interest-bearing liabilities



75,550



.40



70,813



1.11



70,008



.83



7



8





72,778



.60



69,913



1.08



4


Noninterest-bearing deposits



42,497






30,099






32,456






41



31





37,477






30,207






24


Other liabilities



2,446






1,945






2,401






26



2





2,422






1,948






24


Total liabilities



120,493






102,857






104,865






17



15





112,677






102,068






10


Shareholders’ equity



15,953






15,630






15,720






2



1





15,836






15,599






2


Total liabilities and











































shareholders’ equity


$

136,446






118,487






120,585






15

%


13

%



$

128,513






117,667






9

%












































Net interest spread






2.98






3.53






3.35














3.15






3.60





Contribution of interest-free funds






.15






.38






.30














.22






.37





Net interest margin






3.13

%





3.91

%





3.65

%













3.37

%





3.97

%




Reconciliation of Quarterly GAAP to Non-GAAP Measures




Three months ended



Six months ended




June 30



June 30




2020



2019



2020



2019


Income statement data

















In thousands, except per share

















Net income

















Net income


$

241,054




473,260




509,876




956,002


Amortization of core deposit and other intangible assets (1)



2,904




3,741




5,787




7,439


Net operating income


$

243,958




477,001




515,663




963,441



















Earnings per common share

















Diluted earnings per common share


$

1.74




3.34




3.67




6.69


Amortization of core deposit and other intangible assets (1)



.02




.03




.04




.05


Diluted net operating earnings per common share


$

1.76




3.37




3.71




6.74



















Other expense

















Other expense


$

807,042




873,032




1,713,458




1,767,380


Amortization of core deposit and other intangible assets



(3,913)




(5,077)




(7,826)




(10,097)


Noninterest operating expense


$

803,129




867,955




1,705,632




1,757,283


Efficiency ratio

















Noninterest operating expense (numerator)


$

803,129




867,955




1,705,632




1,757,283


Taxable-equivalent net interest income



961,371




1,047,406




1,943,239




2,103,433


Other income



487,273




512,095




1,016,633




1,012,860


Less:  Gain (loss) on bank investment securities



6,969




8,911




(13,813)




20,752


Denominator


$

1,441,675




1,550,590




2,973,685




3,095,541


Efficiency ratio



55.71

%



55.98

%



57.36

%



56.77

%

Balance sheet data

















In millions

















Average assets

















Average assets


$

136,446




118,487




128,513




117,667


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(23)




(41)




(25)




(43)


Deferred taxes



6




11




7




11


Average tangible assets


$

131,836




113,864




123,902




113,042


Average common equity

















Average total equity


$

15,953




15,630




15,836




15,599


Preferred stock



(1,250)




(1,232)




(1,250)




(1,232)


Average common equity



14,703




14,398




14,586




14,367


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(23)




(41)




(25)




(43)


Deferred taxes



6




11




7




11


Average tangible common equity


$

10,093




9,775




9,975




9,742


At end of quarter

















Total assets

















Total assets


$

139,537




121,555










Goodwill



(4,593)




(4,593)










Core deposit and other intangible assets



(21)




(38)










Deferred taxes



5




10










Total tangible assets


$

134,928




116,934










Total common equity

















Total equity


$

15,945




15,692










Preferred stock



(1,250)




(1,232)










Undeclared dividends – cumulative preferred stock






(3)










Common equity, net of undeclared cumulative preferred dividends



14,695




14,457










Goodwill



(4,593)




(4,593)










Core deposit and other intangible assets



(21)




(38)










Deferred taxes



5




10










Total tangible common equity


$

10,086




9,836










________________

(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,




2020



2020



2019



2019



2019


Income statement data





















In thousands, except per share





















Net income





















Net income


$

241,054




268,822




493,066




480,081




473,260


Amortization of core deposit and other intangible assets (1)



2,904




2,883




3,171




3,749




3,741


Net operating income


$

243,958




271,705




496,237




483,830




477,001























Earnings per common share





















Diluted earnings per common share


$

1.74




1.93




3.60




3.47




3.34


Amortization of core deposit and other intangible assets (1)



.02




.02




.02




.03




.03


Diluted net operating earnings per common share


$

1.76




1.95




3.62




3.50




3.37























Other expense





















Other expense


$

807,042




906,416




823,683




877,619




873,032


Amortization of core deposit and other intangible assets



(3,913)




(3,913)




(4,305)




(5,088)




(5,077)


Noninterest operating expense


$

803,129




902,503




819,378




872,531




867,955


Efficiency ratio





















Noninterest operating expense (numerator)


$

803,129




902,503




819,378




872,531




867,955


Taxable-equivalent net interest income



961,371




981,868




1,014,225




1,035,469




1,047,406


Other income



487,273




529,360




521,040




527,779




512,095


Less:  Gain (loss) on bank investment securities



6,969




(20,782)




(6,452)




3,737




8,911


Denominator


$

1,441,675




1,532,010




1,541,717




1,559,511




1,550,590


Efficiency ratio



55.71

%



58.91

%



53.15

%



55.95

%



55.98

%

Balance sheet data





















In millions





















Average assets





















Average assets


$

136,446




120,585




122,554




120,388




118,487


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(23)




(27)




(31)




(36)




(41)


Deferred taxes



6




7




8




10




11


Average tangible assets


$

131,836




115,972




117,938




115,769




113,864


Average common equity





















Average total equity


$

15,953




15,720




15,832




15,837




15,630


Preferred stock



(1,250)




(1,250)




(1,250)




(1,373)




(1,232)


Average common equity



14,703




14,470




14,582




14,464




14,398


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(23)




(27)




(31)




(36)




(41)


Deferred taxes



6




7




8




10




11


Average tangible common equity


$

10,093




9,857




9,966




9,845




9,775


At end of quarter





















Total assets





















Total assets


$

139,537




124,578




119,873




125,501




121,555


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(21)




(25)




(29)




(33)




(38)


Deferred taxes



5




6




7




8




10


Total tangible assets


$

134,928




119,966




115,258




120,883




116,934


Total common equity





















Total equity


$

15,945




15,816




15,717




15,780




15,692


Preferred stock



(1,250)




(1,250)




(1,250)




(1,250)




(1,232)


Undeclared dividends – cumulative preferred stock















(3)


Common equity, net of undeclared cumulative preferred

       dividends



14,695




14,566




14,467




14,530




14,457


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(21)




(25)




(29)




(33)




(38)


Deferred taxes



5




6




7




8




10


Total tangible common equity


$

10,086




9,954




9,852




9,912




9,836


__________________

(1)

After any related tax effect.

INVESTOR CONTACT:

Donald J. MacLeod


(716) 842-5138



MEDIA CONTACT:

C. Michael Zabel


(716) 842-5385

SOURCE M&T Bank Corporation

Related Links

http://www.mandtbank.com

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