M&T Bank Corporation Announces First Quarter Results

Rhea-AI Summary

M&T Bank Corporation (MTB) reported robust financial results for Q1 2021, achieving diluted EPS of $3.33, up 73% year-over-year and slightly down from $3.52 in Q4 2020. Net income increased to $447 million, 66% higher than Q1 2020, but 5% lower than the previous quarter. The bank's Common Equity Tier 1 Capital Ratio rose to 10.4%. Notable growth was observed in residential mortgage banking and trust revenues, while net interest income remained stable despite a decrease in net interest margin. M&T's allowance for credit losses totaled $1.64 billion, reflecting cautious optimism as the economy recovers from the pandemic.

Positive

• Diluted earnings per share increased 73% YoY to $3.33.
• Net income rose to $447 million, up 66% from Q1 2020.
• Common Equity Tier 1 Capital Ratio improved to 10.4%.
• Growth in residential mortgage banking and trust revenues.
• Provision for credit losses was a recapture of $25 million, significantly down from $250 million in Q1 2020.

Negative

• Net interest margin decreased to 2.97%, down 68 basis points YoY.
• Nonaccrual loans increased to 1.97% of total loans, up from 1.13% YoY.
• Noninterest income fell 4% from Q1 2020 and 8% from Q4 2020.

BUFFALO, N.Y., April 19, 2021 /PRNewswire/ -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for the quarter ended March 31, 2021.

GAAP Results of Operations. Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $3.33 in the first quarter of 2021, compared with $1.93 in the year-earlier quarter and $3.52 in the fourth quarter of 2020. GAAP-basis net income was $447 million in the recent quarter, $269 million in the first quarter of 2020 and $471 million in the final 2020 quarter. GAAP-basis net income in the initial 2021 quarter expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.22% and 11.57%, respectively, compared with .90% and 7.00%, respectively, in the corresponding 2020 period and 1.30% and 12.07%, respectively, in the fourth quarter of 2020.  Included in noninterest expenses in the recent quarter were merger-related expenses associated with M&T's proposed acquisition of People's United Financial, Inc. of $10 million ($8 million after tax-effect, or $.06 of diluted earnings per common share).

Commenting on M&T's results for the recent quarter, Darren J. King, Executive Vice President and Chief Financial Officer, stated, "We are pleased with our results for the first three months of the year.  The residential mortgage banking and trust businesses had strong revenue growth and expense levels were well-contained after considering the usual seasonal increase in salaries and employee benefits expenses.  Our outlook on forecasted credit losses improved considerably.  M&T's capital position remains solid, with the Common Equity Tier 1 Capital Ratio growing to 10.4% at March 31, 2021 from 10.0% at the end of 2020."

Earnings Highlights
														Change 1Q21 vs.
($ in millions, except per share data)		1Q21				1Q20				4Q20				1Q20				4Q20
Net income		$	447			$	269			$	471				66	%			-5	%
Net income available to common shareholders  ̶  diluted		$	428			$	251			$	452				71	%			-5	%
Diluted earnings per common share		$	3.33			$	1.93			$	3.52				73	%			-5	%
Annualized return on average assets			1.22	%			.90	%			1.30	%
Annualized return on average common equity			11.57	%			7.00	%			12.07	%

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 $3.41 in the first quarter of 2021, compared with $1.95 and $3.54 in the first and fourth quarters of 2020, respectively.  Net operating income aggregated $457 million in the recent quarter, $272 million in the first quarter of 2020 and $473 million in 2020's final quarter.  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 1.29% and 17.05%, respectively, .94% and 10.39%, respectively, in the similar quarter of 2020 and 1.35% and 17.53%, respectively, in the fourth quarter of 2020.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $985 million in the recent quarter, up from $982 million in the first quarter of 2020.  The impact of a $26.1 billion or 24% increase in average earning assets to $134.4 billion in the recent quarter from $108.2 billion in the first quarter of 2020 was substantially offset by a 68 basis point narrowing of the net interest margin to 2.97% in the first quarter of 2021 from 3.65% in the year-earlier quarter.  In the fourth quarter of 2020, taxable-equivalent net interest income was $993 million, the net interest margin was 3.00% and average earning assets were $131.9 billion.  The lower net interest income in the recent quarter as compared with 2020's fourth quarter reflects the fewer number of days in the first quarter of 2021, while the decline in the net interest margin was attributable to higher balances held in low yielding accounts at the Federal Reserve Bank of New York.

Taxable-equivalent Net Interest Income
														Change 1Q21 vs.
($ in millions)		1Q21				1Q20				4Q20				1Q20				4Q20
Average earning assets		$	134,355			$	108,226			$	131,916				24	%			2	%
Net interest income  ̶  taxable-equivalent		$	985			$	982			$	993			—					-1	%
Net interest margin			2.97	%			3.65	%			3.00	%

Provision for Credit Losses/Asset Quality.  The Company recorded a provision for credit losses recapture of $25 million in the first quarter of 2021, compared with provisions of $250 million in the year-earlier quarter and $75 million in 2020's fourth quarter.  The provision recapture reflects improvements in macroeconomic forecasts at March 31, 2021 as compared with previous forecasts. Nevertheless, the impact of those improvements was cautiously evaluated given the somewhat uneven and incomplete recovery evident in the economy through the recent quarter-end. The level of the provisions in the 2020 quarters reflected then projections of expected credit losses that were based on economic forecasts at those times.  Net loan charge-offs were $75 million during the recent quarter, compared with $49 million in the first quarter of 2020 and $97 million in the fourth quarter of 2020. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .31% and .22% in the first quarters of 2021 and 2020, respectively, and .39% in the fourth quarter of 2020.

Loans classified as nonaccrual totaled $1.96 billion or 1.97% of total loans outstanding at March 31, 2021, compared with $1.89 billion or 1.92% of total loans at December 31, 2020 and $1.06 billion or 1.13% at March 31, 2020.  The increase in nonaccrual loans from March 31, 2020 to the two most recent quarter-ends reflects the continuing impact of the pandemic on borrowers' ability to make contractual payments on their loans, most notably loans in the hospitality sector.  Assets taken in foreclosure of defaulted loans were $30 million at March 31, 2021, $84 million a year earlier and $35 million at December 31, 2020.

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 1.65% of loans outstanding at March 31, 2021, compared with $1.38 billion or 1.47% at March 31, 2020 and $1.74 billion or 1.76% at December 31, 2020. The allowance at March 31, 2021 and December 31, 2020 represented 1.75% and 1.86%, respectively, of total loans on those dates, excluding outstanding balances of Paycheck Protection Program ("PPP") loans.

Asset Quality Metrics
														Change 1Q21 vs.
($ in millions)		1Q21				1Q20				4Q20				1Q20				4Q20
At end of quarter
Nonaccrual loans		$	1,957			$	1,062			$	1,893				84	%			3	%
Real estate and other foreclosed assets		$	30			$	84			$	35				-64	%			-14	%
Total nonperforming assets		$	1,987			$	1,146			$	1,928				73	%			3	%
Accruing loans past due 90 days or more (1)		$	1,085			$	530			$	859				105	%			26	%
Nonaccrual loans as % of loans outstanding			1.97	%			1.13	%			1.92	%
Allowance for credit losses		$	1,636			$	1,384			$	1,736				18	%			-6	%
Allowance for credit losses as % of loans outstanding			1.65	%			1.47	%			1.76	%
For the period
Provision for credit losses		$	(25)			$	250			$	75				—				—
Net charge-offs		$	75			$	49			$	97				53	%			-23	%
Net charge-offs as % of average loans (annualized)			.31	%			.22	%			.39	%

__________________
(1)	Predominantly government-guaranteed residential real estate loans.

Noninterest Income and Expense.  Noninterest income was $506 million in the first quarter of 2021, compared with $529 million in the year-earlier quarter and $551 million in the fourth quarter of 2020. The lower level of noninterest income when compared with the first 2020 quarter resulted largely from declines in service charges on deposit accounts, trading account and foreign exchange gains and a $23 million distribution from Bayview Lending Group LLC ("BLG") in the initial 2020 quarter. Partially offsetting those factors were increased mortgage banking revenues and trust income, as well as lower unrealized losses on investment securities. The decreased income in the recent quarter as compared with the final quarter of 2020 predominantly reflects a fourth quarter 2020 distribution of $30 million from BLG that was made in lieu of a first quarter 2021 distribution and unrealized losses on investment securities.

Noninterest Income
														Change 1Q21 vs.
($ in millions)		1Q21				1Q20				4Q20				1Q20				4Q20
Mortgage banking revenues		$	139			$	128			$	140				8	%			-1	%
Service charges on deposit accounts			93				106				96				-13	%			-3	%
Trust income			156				149				151				5	%			3	%
Brokerage services income			13				13				12			—					7	%
Trading account and foreign exchange gains			6				21				7				-70	%			-13	%
Gain (loss) on bank investment securities			(12)				(21)				2			—				—
Other revenues from operations			111				133				143				-17	%			-22	%
Total		$	506			$	529			$	551				-4	%			-8	%

Noninterest expense totaled $919 million in the first quarter of 2021, compared with $906 million in the corresponding quarter of 2020 and $845 million in the fourth quarter of 2020.  Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets and merger-related expenses, noninterest operating expenses were $907 million in the recent quarter, $903 million in the first quarter of 2020 and $842 million in 2020's final quarter. Factors contributing to the modest increase in noninterest operating expenses in the recent quarter as compared with the year-earlier quarter were higher costs for salaries and employee benefits and professional services. Partially offsetting those factors were a recent quarter reduction of the valuation allowance for capitalized residential mortgage servicing rights of $9 million. When compared with the fourth quarter of 2020, the recent quarter increase in noninterest operating expenses resulted from higher costs for salaries and employee benefits, reflecting seasonally higher stock-based compensation and employee benefits expenses during the recent quarter that totaled $69 million, and increased professional services expenses, partially offset by the recent quarter reduction of the valuation allowance for capitalized residential mortgage servicing rights.

Noninterest Expense
														Change 1Q21 vs.
($ in millions)		1Q21				1Q20				4Q20				1Q20				4Q20
Salaries and employee benefits		$	541			$	537			$	476				1	%			14	%
Equipment and net occupancy			82				80				84				4	%			-2	%
Outside data processing and software			66				64				68				2	%			-3	%
FDIC assessments			14				12				15				16	%			-7	%
Advertising and marketing			15				22				18				-35	%			-18	%
Printing, postage and supplies			9				11				9				-14	%			12	%
Amortization of core deposit and other intangible assets			3				4				3				-30	%			-12	%
Other costs of operations			189				176				172				7	%			10	%
Total		$	919			$	906			$	845				1	%			9	%

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 60.3% in the first quarter of 2021, 58.9% in the year-earlier quarter and 54.6% in the fourth quarter of 2020.

Balance Sheet.  M&T had total assets of $150.5 billion at March 31, 2021, compared with $124.6 billion and $142.6 billion at March 31, 2020 and December 31, 2020, respectively. Loans and leases, net of unearned discount, were $99.3 billion at March 31, 2021, up from $94.1 billion at March 31, 2020 and $98.5 billion at December 31, 2020. The increase in total loans and leases at the recent quarter-end as compared with the first quarter of 2020 was driven largely by growth in commercial loans of $1.6 billion, residential real estate loans of $1.7 billion and consumer loans of $1.1 billion. The commercial loan growth reflects loans originated as part of the PPP which totaled $6.2 billion at March 31, 2021, as compared with $5.4 billion at December 31, 2020. The PPP was initiated during the second quarter of 2020. The rise in residential real estate loans was attributable to purchased government-guaranteed loans and the consumer loan increase reflects higher balances of recreational finance and automobile loans.  Total deposits rose to $128.5 billion at the recent quarter-end, compared with $100.2 billion at March 31, 2020 and $119.8 billion at December 31, 2020. The increased levels of deposits at the two most recent quarter-ends as compared with March 31, 2020 reflect higher levels of liquidity being maintained by many commercial and consumer customers.

Total shareholders' equity was $16.4 billion, or 10.93% of total assets at March 31, 2021, $15.8 billion, or 12.70% at March 31, 2020 and $16.2 billion, or 11.35% at December 31, 2020. Common shareholders' equity was $15.2 billion, or $118.12 per share, at March 31, 2021, compared with $14.6 billion, or $113.54 per share, a year-earlier and $14.9 billion, or $116.39 per share, at December 31, 2020. Tangible equity per common share was $82.35 at March 31, 2021, $77.60 at March 31, 2020 and $80.52 at December 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 10.4% at March 31, 2021, up from 10.0% three months earlier.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss first 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 #1019927.  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 Monday, April 26, 2021 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to the ID #1019927.  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 and related conference call may contain 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.

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 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.

Also as described further below, statements regarding M&T's expectations or predictions regarding the proposed transaction between M&T and People's United Financial, Inc. ("People's United") are forward-looking statements, including statements regarding the expected timing, completion and effects of the proposed transaction as well as M&T's and People's United's expected financial results, prospects, targets, goals and outlook.  

Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "target," "estimate," "continue," or "potential," by future conditional verbs such as "will," "would," "should," "could," or "may," or by variations of such words or by similar expressions.  These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Future Factors") which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.  

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, predictions and uncertainties relating to the impact of the COVID-19 pandemic and the People's United transaction; the impact of changes in market values on trust-related revenues; legislation or regulations 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.

In addition, Future Factors related to the proposed transaction between M&T and People's United, include, among others: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between M&T and People's United; the outcome of any legal proceedings that may be instituted against M&T or People's United; the possibility that the proposed transaction will not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated; the risk that any announcements relating to the proposed combination could have adverse effects on the market price of the common stock of either or both parties to the combination; the possibility that the anticipated benefits of the transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where M&T and People's United do business; certain restrictions during the pendency of the merger that may impact the parties' ability to pursue certain business opportunities or strategic transactions; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; M&T's and People's United's success in executing their respective business plans and strategies and managing the risks involved in the foregoing; and other factors that may affect future results of M&T and People's United; the business, economic and political conditions in the markets in which the parties operate; the risk that the proposed combination and its announcement could have an adverse effect on either or both parties' ability to retain customers and retain or hire key personnel and maintain relationships with customers; the risk that the proposed combination may be more difficult or time-consuming than anticipated, including in areas such as sales force, cost containment, asset realization, systems integration and other key strategies; revenues following the proposed combination may be lower than expected, including for possible reasons such as unexpected costs, charges or expenses resulting from the transactions; the unforeseen risks relating to liabilities of M&T or People's United that may exist; and uncertainty as to the extent of the duration, scope, and impacts of the COVID-19 pandemic on People's United, M&T and the proposed combination.

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.

M&T provides further detail regarding these risks and uncertainties in its 2020 Form 10-K, including in the Risk Factors section of such report, as well as in certain other SEC filings. Forward-looking statements speak only as of the date made, and M&T does not assume any duty and does not undertake to update forward-looking statements.   

Additional Information and Where to Find It. In connection with the proposed transaction with People's United, M&T filed with the SEC a registration statement (Registration No. 333-254962) on Form S-4 to register the shares of M&T's capital stock to be issued in connection with the proposed transaction. The registration statement includes a joint proxy statement of M&T and People's United which will be sent to the shareholders of M&T and People's United seeking their approval of the proposed transaction.

This communication does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval. INVESTORS AND SHAREHOLDERS OF M&T AND PEOPLE'S UNITED AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT M&T, PEOPLE'S UNITED AND THE PROPOSED TRANSACTION. Investors will be able to obtain a free copy of the registration statement, including the joint proxy statement/prospectus, as well as other relevant documents filed with the SEC containing information about M&T and People's United, without charge, at the SEC's website (http://www.sec.gov). Copies of the registration statement, including the joint proxy statement/prospectus, and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to Investor Relations, M&T Bank Corporation, One M&T Plaza, Buffalo, New York 14203, telephone (716) 635-4000, or  Steven Bodakowski, People's United Financial, Inc., 850 Main Street, Bridgeport, Connecticut 06604, telephone (203) 338-4202.

Participants in the Solicitation of Proxies in Connection with Proposed Transaction. M&T, People's United and certain of their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Information regarding M&T's directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on March 8, 2021, and certain of its Current Reports on Form 8-K.  Information regarding People's United's directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 1, 2021, as amended by an amendment to the Form 10-K filed with the SEC on March 30, 2021, and certain of its Current Reports on Form 8-K. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.

 

Financial Highlights
		Three months ended
		March 31
Amounts in thousands, except per share		2021				2020				Change
Performance
Net income		$	447,249				268,822				66	%
Net income available to common shareholders			428,093				250,701				71	%
Per common share:
Basic earnings		$	3.33				1.93				73	%
Diluted earnings			3.33				1.93				73	%
Cash dividends		$	1.10				1.10				—
Common shares outstanding:
Average - diluted (1)			128,669				129,755				-1	%
Period end (2)			128,658				128,282			—
Return on (annualized):
Average total assets			1.22	%			.90	%
Average common shareholders' equity			11.57	%			7.00	%
Taxable-equivalent net interest income		$	985,128				981,868			—
Yield on average earning assets			3.08	%			4.18	%
Cost of interest-bearing liabilities			.18	%			.83	%
Net interest spread			2.90	%			3.35	%
Contribution of interest-free funds			.07	%			.30	%
Net interest margin			2.97	%			3.65	%
Net charge-offs to average total net loans (annualized)			.31	%			.22	%
Net operating results (3)
Net operating income		$	457,372				271,705				68	%
Diluted net operating earnings per common share			3.41				1.95				75	%
Return on (annualized):
Average tangible assets			1.29	%			.94	%
Average tangible common equity			17.05	%			10.39	%
Efficiency ratio			60.3	%			58.9	%
		At March 31
Loan quality		2021				2020				Change
Nonaccrual loans		$	1,957,106				1,061,748				84	%
Real estate and other foreclosed assets			29,797				83,605				-64	%
Total nonperforming assets		$	1,986,903				1,145,353				73	%
Accruing loans past due 90 days or more (4)		$	1,084,553				530,317				105	%
Government guaranteed loans included in totals above:
Nonaccrual loans		$	51,668				50,561				2	%
Accruing loans past due 90 days or more			1,044,599				464,243				125	%
Renegotiated loans		$	242,121				232,439				4	%
Nonaccrual loans to total net loans			1.97	%			1.13	%
Allowance for credit losses to total loans			1.65	%			1.47	%

__________________
(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.

 

Financial Highlights, Five Quarter Trend
		Three months ended
		March 31,				December 31,				September 30,				June 30,				March 31,
Amounts in thousands, except per share		2021				2020				2020				2020				2020
Performance
Net income		$	447,249				471,140				372,136				241,054				268,822
Net income available to common shareholders			428,093				451,869				353,400				223,099				250,701
Per common share:
Basic earnings		$	3.33				3.52				2.75				1.74				1.93
Diluted earnings			3.33				3.52				2.75				1.74				1.93
Cash dividends		$	1.10				1.10				1.10				1.10				1.10
Common shares outstanding:
Average - diluted (1)			128,669				128,379				128,355				128,333				129,755
Period end (2)			128,658				128,333				128,303				128,294				128,282
Return on (annualized):
Average total assets			1.22	%			1.30	%			1.06	%			.71	%			.90	%
Average common shareholders' equity			11.57	%			12.07	%			9.53	%			6.13	%			7.00	%
Taxable-equivalent net interest income		$	985,128				993,252				947,114				961,371				981,868
Yield on average earning assets			3.08	%			3.15	%			3.13	%			3.38	%			4.18	%
Cost of interest-bearing liabilities			.18	%			.25	%			.30	%			.40	%			.83	%
Net interest spread			2.90	%			2.90	%			2.83	%			2.98	%			3.35	%
Contribution of interest-free funds			.07	%			.10	%			.12	%			.15	%			.30	%
Net interest margin			2.97	%			3.00	%			2.95	%			3.13	%			3.65	%
Net charge-offs to average total net loans (annualized)			.31	%			.39	%			.12	%			.29	%			.22	%
Net operating results (3)
Net operating income		$	457,372				473,453				375,029				243,958				271,705
Diluted net operating earnings per common share			3.41				3.54				2.77				1.76				1.95
Return on (annualized):
Average tangible assets			1.29	%			1.35	%			1.10	%			.74	%			.94	%
Average tangible common equity			17.05	%			17.53	%			13.94	%			9.04	%			10.39	%
Efficiency ratio			60.3	%			54.6	%			56.2	%			55.7	%			58.9	%
		March 31,				December 31,				September 30,				June 30,				March 31,
Loan quality		2021				2020				2020				2020				2020
Nonaccrual loans		$	1,957,106				1,893,299				1,239,972				1,156,650				1,061,748
Real estate and other foreclosed assets			29,797				34,668				49,872				66,763				83,605
Total nonperforming assets		$	1,986,903				1,927,967				1,289,844				1,223,413				1,145,353
Accruing loans past due 90 days or more (4)		$	1,084,553				859,208				527,258				535,755				530,317
Government guaranteed loans included in totals above:
Nonaccrual loans		$	51,668				48,820				45,975				51,165				50,561
Accruing loans past due 90 days or more			1,044,599				798,121				505,446				454,269				464,243
Renegotiated loans		$	242,121				238,994				242,581				234,768				232,439
Nonaccrual loans to total net loans			1.97	%			1.92	%			1.26	%			1.18	%			1.13	%
Allowance for credit losses to total loans			1.65	%			1.76	%			1.79	%			1.68	%			1.47	%

__________________
(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.

 

 

Condensed Consolidated Statement of Income
		Three months ended
		March 31
Dollars in thousands		2021				2020				Change
Interest income		$	1,016,962				1,120,419				-9	%
Interest expense			35,567				143,614				-75
Net interest income			981,395				976,805			—
Provision for credit losses			(25,000)				250,000			—
Net interest income after provision for credit losses			1,006,395				726,805				38
Other income
Mortgage banking revenues			138,754				127,909				8
Service charges on deposit accounts			92,777				106,161				-13
Trust income			156,022				148,751				5
Brokerage services income			13,113				13,129			—
Trading account and foreign exchange gains			6,284				21,016				-70
Loss on bank investment securities			(12,282)				(20,782)				—
Other revenues from operations			110,930				133,176				-17
Total other income			505,598				529,360				-4
Other expense
Salaries and employee benefits			541,078				536,843				1
Equipment and net occupancy			82,471				79,640				4
Outside data processing and software			65,751				64,410				2
FDIC assessments			14,188				12,271				16
Advertising and marketing			14,628				22,375				-35
Printing, postage and supplies			9,317				10,852				-14
Amortization of core deposit and other    intangible assets			2,738				3,913				-30
Other costs of operations			189,273				176,112				7
Total other expense			919,444				906,416				1
Income before income taxes			592,549				349,749				69
Applicable income taxes			145,300				80,927				80
Net income		$	447,249				268,822				66	%

 

Condensed Consolidated Statement of Income, Five Quarter Trend
		Three months ended
		March 31,				December 31,				September 30,				June 30,				March 31,
Dollars in thousands		2021				2020				2020				2020				2020
Interest income		$	1,016,962				1,038,890				1,001,161				1,032,242				1,120,419
Interest expense			35,567				49,610				58,066				75,105				143,614
Net interest income			981,395				989,280				943,095				957,137				976,805
Provision for credit losses			(25,000)				75,000				150,000				325,000				250,000
Net interest income after provision for credit losses			1,006,395				914,280				793,095				632,137				726,805
Other income
Mortgage banking revenues			138,754				140,441				153,267				145,024				127,909
Service charges on deposit accounts			92,777				95,817				91,355				77,455				106,161
Trust income			156,022				151,314				149,937				151,882				148,751
Brokerage services income			13,113				12,234				11,602				10,463				13,129
Trading account and foreign exchange gains			6,284				7,204				4,026				8,290				21,016
Gain (loss) on bank investment securities			(12,282)				1,619				2,773				6,969				(20,782)
Other revenues from operations			110,930				142,621				107,601				87,190				133,176
Total other income			505,598				551,250				520,561				487,273				529,360
Other expense
Salaries and employee benefits			541,078				476,110				478,897				458,842				536,843
Equipment and net occupancy			82,471				84,228				81,080				77,089				79,640
Outside data processing and software			65,751				68,034				64,660				61,376				64,410
FDIC assessments			14,188				15,204				12,121				14,207				12,271
Advertising and marketing			14,628				17,832				11,855				9,842				22,375
Printing, postage and supplies			9,317				8,335				9,422				11,260				10,852
Amortization of core deposit and other intangible assets			2,738				3,129				3,914				3,913				3,913
Other costs of operations			189,273				172,136				164,825				170,513				176,112
Total other expense			919,444				845,008				826,774				807,042				906,416
Income before income taxes			592,549				620,522				486,882				312,368				349,749
Applicable income taxes			145,300				149,382				114,746				71,314				80,927
Net income		$	447,249				471,140				372,136				241,054				268,822

 

Condensed Consolidated Balance Sheet
		March 31
Dollars in thousands		2021				2020				Change
ASSETS
Cash and due from banks		$	1,258,989				1,298,192				-3		%
Interest-bearing deposits at banks			31,407,227				8,896,307				253
Federal funds sold			1,000				—				—
Trading account			687,359				1,224,291				-44
Investment securities			6,610,667				8,956,590				-26
Loans and leases:
Commercial, financial, etc.			27,811,190				26,243,648				6
Real estate - commercial			37,425,974				36,684,106				2
Real estate - consumer			17,349,683				15,643,014				11
Consumer			16,712,233				15,571,507				7
Total loans and leases, net of unearned discount			99,299,080				94,142,275				5
Less: allowance for credit losses			1,636,206				1,384,366				18
Net loans and leases			97,662,874				92,757,909				5
Goodwill			4,593,112				4,593,112				—
Core deposit and other intangible assets			11,427				25,121				-55
Other assets			8,248,405				6,826,311				21
Total assets		$	150,481,060				124,577,833				21		%
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	53,641,419				35,554,715				51		%
Interest-bearing deposits			74,193,255				63,410,672				17
Deposits at Cayman Islands office			641,691				1,217,921				-47
Total deposits			128,476,365				100,183,308				28
Short-term borrowings			58,957				59,180			—
Accrued interest and other liabilities			2,000,727				2,198,116				-9
Long-term borrowings			3,498,503				6,321,435				-45
Total liabilities			134,034,552				108,762,039				23
Shareholders' equity:
Preferred			1,250,000				1,250,000				—
Common			15,196,508				14,565,794				4
Total shareholders' equity			16,446,508				15,815,794				4
Total liabilities and shareholders' equity		$	150,481,060				124,577,833				21		%

 

Condensed Consolidated Balance Sheet, Five Quarter Trend
		March 31,				December 31,				September 30,				June 30,				March 31,
Dollars in thousands		2021				2020				2020				2020				2020
ASSETS
Cash and due from banks		$	1,258,989				1,552,743				1,489,232				1,354,815				1,298,192
Interest-bearing deposits at banks			31,407,227				23,663,810				20,197,937				20,888,341				8,896,307
Federal funds sold			1,000				—				—				—				—
Trading account			687,359				1,068,581				1,215,573				1,293,534				1,224,291
Investment securities			6,610,667				7,045,697				7,723,004				8,454,344				8,956,590
Loans and leases:
Commercial, financial, etc.			27,811,190				27,574,564				27,891,648				29,203,862				26,243,648
Real estate - commercial			37,425,974				37,637,889				37,582,084				37,159,451				36,684,106
Real estate - consumer			17,349,683				16,752,993				16,663,708				15,611,462				15,643,014
Consumer			16,712,233				16,570,421				16,309,608				15,782,773				15,571,507
Total loans and leases, net of unearned discount			99,299,080				98,535,867				98,447,048				97,757,548				94,142,275
Less: allowance for credit losses			1,636,206				1,736,387				1,758,505				1,638,236				1,384,366
Net loans and leases			97,662,874				96,799,480				96,688,543				96,119,312				92,757,909
Goodwill			4,593,112				4,593,112				4,593,112				4,593,112				4,593,112
Core deposit and other intangible assets			11,427				14,165				17,294				21,208				25,121
Other assets			8,248,405				7,863,517				6,702,048				6,812,303				6,826,311
Total assets		$	150,481,060				142,601,105				138,626,743				139,536,969				124,577,833
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	53,641,419				47,572,884				44,201,670				45,397,843				35,554,715
Interest-bearing deposits			74,193,255				71,580,750				70,061,680				68,701,832				63,410,672
Deposits at Cayman Islands office			641,691				652,104				899,989				868,284				1,217,921
Total deposits			128,476,365				119,805,738				115,163,339				114,967,959				100,183,308
Short-term borrowings			58,957				59,482				46,123				52,298				59,180
Accrued interest and other liabilities			2,000,727				2,166,409				1,857,383				2,250,316				2,198,116
Long-term borrowings			3,498,503				4,382,193				5,458,885				6,321,291				6,321,435
Total liabilities			134,034,552				126,413,822				122,525,730				123,591,864				108,762,039
Shareholders' equity:
Preferred			1,250,000				1,250,000				1,250,000				1,250,000				1,250,000
Common			15,196,508				14,937,283				14,851,013				14,695,105				14,565,794
Total shareholders' equity			16,446,508				16,187,283				16,101,013				15,945,105				15,815,794
Total liabilities and shareholders' equity		$	150,481,060				142,601,105				138,626,743				139,536,969				124,577,833

 

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates
		Three months ended																								Change in balance
		March 31,								March 31,								December 31,								March 31, 2021 from
Dollars in millions		2021								2020								2020								March 31,				December 31,
		Balance				Rate				Balance				Rate				Balance				Rate				2020				2020
ASSETS
Interest-bearing deposits at banks		$	27,666				.10		%		6,130				1.24		%		22,206				.10		%		351		%		25		%
Federal funds sold and agreements to resell securities			678				.12				1,224				1.34				3,799				.12				-45				-82
Trading account			50				1.44				64				2.64				50				1.97				-22				—
Investment securities			6,605				2.28				9,102				2.22				7,195				2.25				-27				-8
Loans and leases, net of unearned discount
Commercial, financial, etc.			27,723				3.53				24,290				4.10				27,713				3.56				14				—
Real estate - commercial			37,609				4.16				36,034				4.83				37,707				4.15				4				—
Real estate - consumer			17,404				3.54				15,931				4.03				16,761				3.56				9				4
Consumer			16,620				4.64				15,451				5.30				16,485				4.78				8				1
Total loans and leases, net			99,356				3.99				91,706				4.61				98,666				4.01				8				1
Total earning assets			134,355				3.08				108,226				4.18				131,916				3.15				24				2
Goodwill			4,593								4,593								4,593								—				—
Core deposit and other intangible assets			13								27								16								-53				-18
Other assets			9,196								7,739								8,038								19				14
Total assets		$	148,157								120,585								144,563								23		%		2		%
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Savings and interest-checking deposits		$	70,458				.07				56,366				.56				69,133				.11				25		%		2		%
Time deposits			3,732				.76				5,672				1.55				4,113				.97				-34				-9
Deposits at Cayman Islands office			683				.11				1,672				.82				826				.11				-59				-17
Total interest-bearing deposits			74,873				.10				63,710				.65				74,072				.16				18				1
Short-term borrowings			62				.01				58				.16				64				.01				7				-4
Long-term borrowings			3,851				1.78				6,240				2.60				5,294				1.47				-38				-27
Total interest-bearing liabilities			78,786				.18				70,008				.83				79,430				.25				13				-1
Noninterest-bearing deposits			50,860								32,456								46,904								57				8
Other liabilities			2,184								2,401								2,016								-9				8
Total liabilities			131,830								104,865								128,350								26				3
Shareholders' equity			16,327								15,720								16,213								4				1
Total liabilities and shareholders' equity		$	148,157								120,585								144,563								23		%		2		%
Net interest spread							2.90								3.35								2.90
Contribution of interest-free funds							.07								.30								.10
Net interest margin							2.97		%						3.65		%						3.00		%

 

Reconciliation of Quarterly GAAP to Non-GAAP Measures, Five Quarter Trend
		Three months ended
		March 31,				December 31,				September 30,				June 30,				March 31,
		2021				2020				2020				2020				2020
Income statement data
In thousands, except per share
Net income
Net income		$	447,249				471,140				372,136				241,054				268,822
Amortization of core deposit and other intangible assets (1)			2,034				2,313				2,893				2,904				2,883
Merger-related expenses (1)			8,089				—				—				—				—
Net operating income		$	457,372				473,453				375,029				243,958				271,705
Earnings per common share
Diluted earnings per common share		$	3.33				3.52				2.75				1.74				1.93
Amortization of core deposit and other intangible assets (1)			.02				.02				.02				.02				.02
Merger-related expenses (1)			.06				—				—				—				—
Diluted net operating earnings per common share		$	3.41				3.54				2.77				1.76				1.95
Other expense
Other expense		$	919,444				845,008				826,774				807,042				906,416
Amortization of core deposit and other intangible assets			(2,738)				(3,129)				(3,914)				(3,913)				(3,913)
Merger-related expenses			(9,951)				—				—				—				—
Noninterest operating expense		$	906,755				841,879				822,860				803,129				902,503
Efficiency ratio
Noninterest operating expense (numerator)		$	906,755				841,879				822,860				803,129				902,503
Taxable-equivalent net interest income		$	985,128				993,252				947,114				961,371				981,868
Other income			505,598				551,250				520,561				487,273				529,360
Less:  Gain (loss) on bank investment securities			(12,282)				1,619				2,773				6,969				(20,782)
Denominator		$	1,503,008				1,542,883				1,464,902				1,441,675				1,532,010
Efficiency ratio			60.3	%			54.6	%			56.2	%			55.7	%			58.9	%
Balance sheet data
In millions
Average assets
Average assets		$	148,157				144,563				140,181				136,446				120,585
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(13)				(16)				(19)				(23)				(27)
Deferred taxes			3				4				5				6				7
Average tangible assets		$	143,554				139,958				135,574				131,836				115,972
Average common equity
Average total equity		$	16,327				16,213				16,073				15,953				15,720
Preferred stock			(1,250)				(1,250)				(1,250)				(1,250)				(1,250)
Average common equity			15,077				14,963				14,823				14,703				14,470
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(13)				(16)				(19)				(23)				(27)
Deferred taxes			3				4				5				6				7
Average tangible common equity		$	10,474				10,358				10,216				10,093				9,857
At end of quarter
Total assets
Total assets		$	150,481				142,601				138,627				139,537				124,578
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(12)				(14)				(17)				(21)				(25)
Deferred taxes			3				4				4				5				6
Total tangible assets		$	145,879				137,998				134,021				134,928				119,966
Total common equity
Total equity		$	16,447				16,187				16,101				15,945				15,816
Preferred stock			(1,250)				(1,250)				(1,250)				(1,250)				(1,250)
Common equity			15,197				14,937				14,851				14,695				14,566
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(12)				(14)				(17)				(21)				(25)
Deferred taxes			3				4				4				5				6
Total tangible common equity		$	10,595				10,334				10,245				10,086				9,954

_____________________
(1)	After any related tax effect.

 

INVESTOR CONTACT:	Donald J. MacLeod
	(716) 842-5138
MEDIA CONTACT:	Maya Dillon
	(212) 415-0557

 

 

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SOURCE M&T Bank Corporation

FAQ

What were M&T Bank's Q1 2021 earnings per share?

M&T Bank reported diluted earnings per share of $3.33 for Q1 2021.

How did M&T Bank's net income change in Q1 2021?

Net income for M&T Bank in Q1 2021 was $447 million, a 66% increase from Q1 2020.

What is M&T Bank's Common Equity Tier 1 Capital Ratio as of March 31, 2021?

M&T Bank's Common Equity Tier 1 Capital Ratio was 10.4% at March 31, 2021.

What were the primary drivers of M&T Bank's revenue growth in Q1 2021?

The primary drivers of revenue growth were strong performance in residential mortgage banking and trust services.

What was the provision for credit losses recorded by M&T Bank in Q1 2021?

M&T Bank recorded a provision for credit losses recapture of $25 million in Q1 2021.