M&T Bank Corporation Announces Second Quarter Results

Rhea-AI Summary

M&T Bank Corporation (MTB) reported strong financial results for Q2 2021, with diluted earnings per share rising to $3.41, a 96% increase year-over-year. Net income reached $458 million, up from $241 million in Q2 2020. The annualized return on average assets was 1.22%, and average common equity was 11.55%. Despite a decline in net interest income to $946 million due to narrowing margins, noninterest income increased to $514 million. The total assets stood at $150.6 billion, with loans at $97.1 billion. Provision for credit losses was significantly reduced to $15 million, reflecting improved asset quality.

Positive

• Diluted earnings per share increased 96% year-over-year to $3.41.
• Net income rose to $458 million from $241 million in the previous year.
• Annualized return on average assets improved to 1.22% and average common equity to 11.55%.
• Noninterest income increased to $514 million, driven by higher service charges and trust income.
• Provision for credit losses significantly reduced to $15 million, indicating improved asset quality.

Negative

• Net interest income decreased to $946 million from $961 million a year ago.
• Narrowing of net interest margin to 2.77%, down from 3.13% in Q2 2020.
• Nonaccrual loans rose 94% year-over-year to $2.24 billion, reflecting ongoing pandemic impacts.

BUFFALO, N.Y., July 21, 2021 /PRNewswire/ -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for the quarter ended June 30, 2021.

GAAP Results of Operations. Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $3.41 in the second quarter of 2021, up from $1.74 in the year-earlier quarter and $3.33 in the first quarter of 2021. GAAP-basis net income was $458 million in the recent quarter, $241 million in the second quarter of 2020 and $447 million in the initial 2021 quarter. GAAP-basis net income for the second 2021 quarter expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.22% and 11.55%, respectively, compared with .71% and 6.13%, respectively, in the corresponding 2020 period and 1.22% and 11.57%, respectively, in the first quarter of 2021. 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 $4 million ($3 million after tax-effect, or $.02 of diluted earnings per common share), compared with $10 million ($8 million after tax-effect, or $.06 of diluted earnings per common share) in the first quarter of 2021.

Commenting on M&T's results for the second quarter of 2021, Darren J. King, Executive Vice President and Chief Financial Officer, noted, "Reflecting signs of economic recovery, we were encouraged by the increased customer activity experienced during the recent quarter, particularly associated with debit and credit cards.  M&T's trust businesses continued their strong performance, with revenues up seven percent from last year's second quarter.  The year-over-year expense growth largely resulted from increased costs for incentives and other investments that had been curtailed in 2020 due to the pandemic.  M&T's balance sheet remains solid, highlighted by an allowance for credit losses to loans ratio of 1.62% and a Common Equity Tier 1 Capital Ratio of 10.7%, up from 10.4% at March 31, 2021."

Earnings Highlights
														Change 2Q21 vs.
($ in millions, except per share data)		2Q21				2Q20				1Q21				2Q20				1Q21
Net income		$	458			$	241			$	447				90	%			2	%
Net income available to common shareholders  ̶  diluted		$	439			$	223			$	428				97	%			2	%
Diluted earnings per common share		$	3.41			$	1.74			$	3.33				96	%			2	%
Annualized return on average assets			1.22	%			.71	%			1.22	%
Annualized return on average common equity			11.55	%			6.13	%			11.57	%

For the first six-months of 2021, diluted earnings per common share rose 83% to $6.73 from $3.67 in the year-earlier period.  GAAP-basis net income for the first half of 2021 increased to $905 million from $510 million in the corresponding 2020 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, 2021 was 1.22% and 11.56%, respectively, improved from .80% and 6.56%, respectively, in the similar 2020 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 increased to $3.45 in the second quarter of 2021 from $1.76 and $3.41 in the year-earlier quarter and the first quarter of 2021, respectively.  Net operating income totaled $463 million in 2021's second quarter, $244 million in the second quarter of 2020 and $457 million in the initial 2021 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 1.27% and 16.68%, respectively, .74% and 9.04%, respectively, in the corresponding 2020 quarter and 1.29% and 17.05%, respectively, in the first quarter of 2021.

Diluted net operating earnings per common share in the first six months of 2021 rose to $6.84 from $3.71 in the similar 2020 period.  Net operating income during the first half of 2021 was $920 million, up from $516 million in the six-month period ended June 30, 2020.  Net operating income expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity was 1.28% and 16.86%, respectively, in the initial six months of 2021, compared with .84% and 9.71% respectively, in the similar 2020 period.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $946 million in the recent quarter, compared with $961 million in the second quarter of 2020 and $985 million in the initial 2021 quarter.  The decrease in the recent quarter as compared with the earlier quarters was due to a narrowing of the net interest margin to 2.77% in the second quarter of 2021 from 3.13% in the year-earlier quarter and 2.97% in the first quarter of 2021.  The decreased net interest margin resulted from lower interest rates earned on loans and higher amounts of low-yielding balances at the Federal Reserve Bank of New York.  Interest income from Paycheck Protection Program ("PPP") loans, including recognition of fees associated with repaid loans, was $51 million in the recent quarter, $29 million in the year-earlier quarter and $70 million in the first quarter of 2021.

Taxable-equivalent Net Interest Income
														Change 2Q21 vs.
($ in millions)		2Q21				2Q20				1Q21				2Q20				1Q21
Average earning assets		$	136,951			$	123,492			$	134,355				11	%			2	%
Net interest income  ̶  taxable-equivalent		$	946			$	961			$	985				-2	%			-4	%
Net interest margin			2.77	%			3.13	%			2.97	%

Provision for Credit Losses/Asset Quality.  Recaptures of the provision for credit losses of $15 million and $25 million were recorded in the second and first quarters of 2021, respectively.  The provision for credit losses was $325 million in the second quarter of 2020.  The provision in each quarter adjusts the allowance for credit losses to reflect expected losses that are based on economic forecasts as of each quarter-end date. Net loan charge-offs were $46 million during the recent quarter, down from $71 million in the second quarter of 2020 and $75 million in the first quarter of 2021. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .19% and .29% in the second quarters of 2021 and 2020, respectively, and .31% in the first quarter of 2021.

Nonaccrual loans totaled $2.24 billion or 2.31% of total loans outstanding at June 30, 2021, compared with $1.96 billion or 1.97% of total loans at March 31, 2021 and $1.16 billion or 1.18% at June 30, 2020.  The increase in nonaccrual loans from June 30, 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 $28 million at June 30, 2021, $67 million a year earlier and $30 million at March 31, 2021.

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 $1.58 billion or 1.62% of loans outstanding at June 30, 2021, compared with $1.64 billion or 1.68% at June 30, 2020 and $1.64 billion or 1.65% at March 31, 2021. The allowance at June 30, 2021, June 30, 2020, and March 31, 2021 represented 1.69%, 1.79%, and 1.75%, respectively, of total loans on those dates, excluding outstanding balances of PPP loans.

Asset Quality Metrics
																																Change 2Q21 vs.
($ in millions)																				2Q21				2Q20				1Q21				2Q20				1Q21
At end of quarter
Nonaccrual loans																				$	2,242			$	1,157			$	1,957				94	%			15	%
Real estate and other foreclosed assets																				$	28			$	67			$	30				-58	%			-6	%
Total nonperforming assets																				$	2,270			$	1,224			$	1,987				86	%			14	%
Accruing loans past due 90 days or more (1)																				$	1,077			$	536			$	1,085				101	%			-1	%
Nonaccrual loans as % of loans outstanding																					2.31	%			1.18	%			1.97	%
Allowance for credit losses																				$	1,575			$	1,638			$	1,636				-4	%			-4	%
Allowance for credit losses as % of loans outstanding																					1.62	%			1.68	%			1.65	%
For the period
Provision for credit losses																				$	(15)			$	325			$	(25)				—				—
Net charge-offs																				$	46			$	71			$	75				-35	%			-39	%
Net charge-offs as % of average loans (annualized)																					.19	%			.29	%			.31	%

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

Noninterest Income and Expense.  Noninterest income increased to $514 million in the second quarter of 2021 from $487 million in the year-earlier quarter and $506 million in the first quarter of 2021. The higher level of the recent quarter's noninterest income when compared with the earlier quarters resulted largely from higher service charges on deposit accounts, merchant discount and credit card fees, and trust income.

Noninterest Income
														Change 2Q21 vs.
($ in millions)		2Q21				2Q20				1Q21				2Q20				1Q21
Mortgage banking revenues		$	133			$	145			$	139				-8	%			-4	%
Service charges on deposit accounts			99				78				93				27	%			6	%
Trust income			163				152				156				7	%			4	%
Brokerage services income			10				10				13				-2	%			-22	%
Trading account and foreign exchange gains			7				8				6				-22	%			3	%
Gain (loss) on bank investment securities			(11)				7				(12)			—				—
Other revenues from operations			113				87				111				29	%			2	%
Total		$	514			$	487			$	506				5	%			2	%

Noninterest expense totaled $865 million in the second quarter of 2021, compared with $807 million in the corresponding quarter of 2020 and $919 million in the first quarter of 2021.  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 $859 million in the recent quarter, $803 million in the second quarter of 2020 and $907 million in 2021's initial quarter. Factors contributing to the increase in noninterest operating expenses in the recent quarter as compared with the year-earlier quarter were higher costs for salaries and employee benefits, outside data processing and software, and professional services. As compared with the first quarter of 2021, the lower level of noninterest expenses in the recent quarter was predominantly attributable to a decline in expenses for salaries and employee benefits, reflecting seasonally higher stock-based compensation and employee benefits expenses during the initial 2021 quarter.  Reflecting the impact of lower interest rates on expected prepayments of serviced residential mortgage loans, M&T recorded an $8 million increase in the valuation allowance for capitalized residential mortgage servicing rights in the recent quarter, compared with a decrease in that valuation allowance of $9 million in the initial 2021 quarter.

 

Noninterest Expense
														Change 2Q21 vs.
($ in millions)		2Q21				2Q20				1Q21				2Q20				1Q21
Salaries and employee benefits		$	479			$	459			$	541				4	%			-11	%
Equipment and net occupancy			81				77				82				5	%			-2	%
Outside data processing and software			74				61				66				21	%			13	%
FDIC assessments			18				14				14				26	%			26	%
Advertising and marketing			13				10				15				36	%			-9	%
Printing, postage and supplies			11				11				9				-1	%			19	%
Amortization of core deposit and other intangible assets			3				4				3				-30	%		—
Other costs of operations			186				171				189				9	%			-2	%
Total		$	865			$	807			$	919				7	%			-6	%

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 58.4% in the second quarter of 2021, 55.7% in the year-earlier quarter and 60.3% in the first quarter of 2021.

Balance Sheet.  M&T had total assets of $150.6 billion at June 30, 2021, compared with $139.5 billion and $150.5 billion at June 30, 2020 and March 31, 2021, respectively. Loans and leases, net of unearned discount, were $97.1 billion at June 30, 2021, compared with $97.8 billion at June 30, 2020 and $99.3 billion at March 31, 2021. The lower level of loans and leases at the recent quarter-end as compared with June 30, 2020 reflects a $3.8 billion decline in commercial loans, largely offset by growth in consumer loans and residential real estate loans of $1.7 billion and $1.1 billion, respectively.  The lower commercial loan balances reflect declines in PPP and dealer floor plan loans.  The rise in consumer loans resulted from higher balances of recreational finance and automobile loans, while the increase in residential real estate loans was attributable to purchased government-guaranteed loans.  The decline in total loans and leases at the recent quarter-end as compared with the first quarter of 2021 resulted largely from lower commercial loans of $2.4 billion and residential real estate loans of $645 million, partially offset by a rise in consumer loans of $728 million. The decrease in commercial loans reflects lower balances of PPP loans. Those loans totaled $4.3 billion at June 30, 2021, compared with $6.5 billion at June 30, 2020 and $6.2 billion at March 31, 2021. The consumer loans increase reflects higher balances of recreational finance and automobile loans.  Total deposits were $128.3 billion at the recent quarter-end, compared with $115.0 billion at June 30, 2020 and $128.5 billion at March 31, 2021. The increased levels of deposits at the two most recent quarter-ends as compared with June 30, 2020 reflect higher levels of liquidity being maintained by many commercial and consumer customers.  During the recent quarter, M&T stopped accepting deposits for its Cayman Islands office.

Total shareholders' equity was $16.7 billion, or 11.10% of total assets at June 30, 2021, $15.9 billion, or 11.43% at June 30, 2020 and $16.4 billion, or 10.93% at March 31, 2021. Common shareholders' equity was $15.5 billion, or $120.22 per share, at June 30, 2021, compared with $14.7 billion, or $114.54 per share, a year-earlier and $15.2 billion, or $118.12 per share, at March 31, 2021. Tangible equity per common share was $84.47 at June 30, 2021, $78.62 at June 30, 2020 and $82.35 at March 31, 2021. 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 10.7% at June 30, 2021, up from 10.4% 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 #1338608.  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 Wednesday, July 28, 2021 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to the ID #1338608.  The event will also be archived and available by 3:00 p.m. today on M&T's website at https://ir.mtb.com/events-presentations.

About M&T. M&T is a financial holding company headquartered in Buffalo, New York.  M&T's principal banking subsidiary, M&T Bank, 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.

Who We Are.  We are a bank for communities – bringing the capabilities of a large bank with the care of a locally focused institution. Our purpose is to make a difference in people's lives serving all our stakeholders. The keys to our approach are characterized by responsible lending based on the advantages of local knowledge and scale, and our long history of being prudent stewards of our shareholders' capital. For more on our approach as a bank for communities, we committed to communicating our efforts transparently, in our inaugural ESG Report launched this quarter.

We have once again received an "Outstanding" Community Reinvestment Act (CRA) rating from the Federal Reserve Bank of New York – a streak of earning the regulatory agency's highest rating for meeting the credit needs of the bank's communities that dates to 1982. While these acknowledgements might not be the biggest markers of corporate financial success, they are some of the most important to us, because it recognizes our work to improve the quality of lives in all of our communities and for all of our stakeholders.  This, we believe, is the hallmark of building a healthier company.

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 risks, predictions and uncertainties relating to the impact of the COVID-19 pandemic; the impact of the People's United transaction, as described further below; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; common shares outstanding; common stock price volatility; fair value of and number of stock-based compensation awards to be issued in future periods; the impact of changes in market values on trust-related revenues; legislation 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 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.    

Financial Highlights
			Three months ended													Six months ended
			June 30													June 30
Amounts in thousands, except per share			2021				2020					Change				2021				2020				Change
Performance
Net income			$	458,069				241,054					90	%		$	905,318				509,876				78	%
Net income available to common shareholders				438,759				223,099					97	%			866,852				473,795				83	%
Per common share:
Basic earnings			$	3.41				1.74					96	%		$	6.74				3.67				84	%
Diluted earnings				3.41				1.74					96	%			6.73				3.67				83	%
Cash dividends			$	1.10				1.10					—			$	2.20				2.20			—
Common shares outstanding:
Average - diluted (1)				128,842				128,333					—				128,756				129,044			—
Period end (2)				128,686				128,294				—					128,686				128,294			—
Return on (annualized):
Average total assets				1.22	%			.71	%								1.22	%			.80	%
Average common shareholders' equity				11.55	%			6.13	%								11.56	%			6.56	%
Taxable-equivalent net interest income			$	946,072				961,371					-2	%		$	1,931,200				1,943,239				-1	%
Yield on average earning assets				2.85	%			3.38	%								2.97	%			3.75	%
Cost of interest-bearing liabilities				.14	%			.40	%								.17	%			.60	%
Net interest spread				2.71	%			2.98	%								2.80	%			3.15	%
Contribution of interest-free funds				.06	%			.15	%								.07	%			.22	%
Net interest margin				2.77	%			3.13	%								2.87	%			3.37	%
Net charge-offs to average total net loans (annualized)				.19	%			.29	%								.25	%			.26	%
Net operating results (3)
Net operating income			$	462,959				243,958					90	%		$	920,331				515,663				78	%
Diluted net operating earnings per common share				3.45				1.76					96	%			6.84				3.71				84	%
Return on (annualized):
Average tangible assets				1.27	%			.74	%								1.28	%			.84	%
Average tangible common equity				16.68	%			9.04	%								16.86	%			9.71	%
Efficiency ratio				58.4	%			55.7	%								59.4	%			57.4	%
			At June 30
Loan quality			2021				2020					Change
Nonaccrual loans			$	2,242,057				1,156,650					94	%
Real estate and other foreclosed assets				27,902				66,763					-58	%
Total nonperforming assets			$	2,269,959				1,223,413					86	%
Accruing loans past due 90 days or more (4)			$	1,077,227				535,755					101	%
Government guaranteed loans included in totals above:
Nonaccrual loans			$	49,796				51,165					-3	%
Accruing loans past due 90 days or more				1,029,331				454,269					127	%
Renegotiated loans			$	236,377				234,768					1	%
Nonaccrual loans to total net loans				2.31	%			1.18	%
Allowance for credit losses to total loans				1.62	%			1.68	%

(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
		June 30,				March 31,				December 31,				September 30,				June 30,
Amounts in thousands, except per share		2021				2021				2020				2020				2020
Performance
Net income		$	458,069				447,249				471,140				372,136				241,054
Net income available to common shareholders			438,759				428,093				451,869				353,400				223,099
Per common share:
Basic earnings		$	3.41				3.33				3.52				2.75				1.74
Diluted earnings			3.41				3.33				3.52				2.75				1.74
Cash dividends		$	1.10				1.10				1.10				1.10				1.10
Common shares outstanding:
Average - diluted (1)			128,842				128,669				128,379				128,355				128,333
Period end (2)			128,686				128,658				128,333				128,303				128,294
Return on (annualized):
Average total assets			1.22	%			1.22	%			1.30	%			1.06	%			.71	%
Average common shareholders' equity			11.55	%			11.57	%			12.07	%			9.53	%			6.13	%
Taxable-equivalent net interest income		$	946,072				985,128				993,252				947,114				961,371
Yield on average earning assets			2.85	%			3.08	%			3.15	%			3.13	%			3.38	%
Cost of interest-bearing liabilities			.14	%			.18	%			.25	%			.30	%			.40	%
Net interest spread			2.71	%			2.90	%			2.90	%			2.83	%			2.98	%
Contribution of interest-free funds			.06	%			.07	%			.10	%			.12	%			.15	%
Net interest margin			2.77	%			2.97	%			3.00	%			2.95	%			3.13	%
Net charge-offs to average total net loans (annualized)			.19	%			.31	%			.39	%			.12	%			.29	%
Net operating results (3)
Net operating income		$	462,959				457,372				473,453				375,029				243,958
Diluted net operating earnings per common share			3.45				3.41				3.54				2.77				1.76
Return on (annualized):
Average tangible assets			1.27	%			1.29	%			1.35	%			1.10	%			.74	%
Average tangible common equity			16.68	%			17.05	%			17.53	%			13.94	%			9.04	%
Efficiency ratio			58.4	%			60.3	%			54.6	%			56.2	%			55.7	%
		June 30,				March 31,				December 31,				September 30,				June 30,
Loan quality		2021				2021				2020				2020				2020
Nonaccrual loans		$	2,242,057				1,957,106				1,893,299				1,239,972				1,156,650
Real estate and other foreclosed assets			27,902				29,797				34,668				49,872				66,763
Total nonperforming assets		$	2,269,959				1,986,903				1,927,967				1,289,844				1,223,413
Accruing loans past due 90 days or more (4)		$	1,077,227				1,084,553				859,208				527,258				535,755
Government guaranteed loans included in totals above:
Nonaccrual loans		$	49,796				51,668				48,820				45,975				51,165
Accruing loans past due 90 days or more			1,029,331				1,044,599				798,121				505,446				454,269
Renegotiated loans		$	236,377				242,121				238,994				242,581				234,768
Nonaccrual loans to total net loans			2.31	%			1.97	%			1.92	%			1.26	%			1.18	%
Allowance for credit losses to total loans			1.62	%			1.65	%			1.76	%			1.79	%			1.68	%

(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												Six months ended
		June 30												June 30
Dollars in thousands		2021				2020				Change				2021				2020				Change
Interest income		$	970,358				1,032,242				-6	%		$	1,987,320				2,152,661				-8	%
Interest expense			28,018				75,105				-63				63,585				218,719				-71
Net interest income			942,340				957,137				-2				1,923,735				1,933,942				-1
Provision for credit losses			(15,000)				325,000			—					(40,000)				575,000			—
Net interest income after provision for credit losses			957,340				632,137				51				1,963,735				1,358,942				45
Other income
Mortgage banking revenues			133,313				145,024				-8				272,067				272,933			—
Service charges on deposit accounts			98,518				77,455				27				191,295				183,616				4
Trust income			162,991				151,882				7				319,013				300,633				6
Brokerage services income			10,265				10,463				-2				23,378				23,592				-1
Trading account and foreign exchange gains			6,502				8,290				-22				12,786				29,306				-56
Gain (loss) on bank investment securities			(10,655)				6,969			—					(22,937)				(13,813)				—
Other revenues from operations			112,699				87,190				29				223,629				220,366				1
Total other income			513,633				487,273				5				1,019,231				1,016,633				—
Other expense
Salaries and employee benefits			479,134				458,842				4				1,020,212				995,685				2
Equipment and net occupancy			80,848				77,089				5				163,319				156,729				4
Outside data processing and software			74,492				61,376				21				140,243				125,786				11
FDIC assessments			17,876				14,207				26				32,064				26,478				21
Advertising and marketing			13,364				9,842				36				27,992				32,217				-13
Printing, postage and supplies			11,133				11,260				-1				20,450				22,112				-8
Amortization of core deposit and other    intangible assets			2,737				3,913				-30				5,475				7,826				-30
Other costs of operations			185,761				170,513				9				375,034				346,625				8
Total other expense			865,345				807,042				7				1,784,789				1,713,458				4
Income before income taxes			605,628				312,368				94				1,198,177				662,117				81
Applicable income taxes			147,559				71,314				107				292,859				152,241				92
Net income		$	458,069				241,054				90	%		$	905,318				509,876				78	%

 

 

Condensed Consolidated Statement of Income, Five Quarter Trend
		Three months ended
		June 30,				March 31,				December 31,				September 30,				June 30,
Dollars in thousands		2021				2021				2020				2020				2020
Interest income		$	970,358				1,016,962				1,038,890				1,001,161				1,032,242
Interest expense			28,018				35,567				49,610				58,066				75,105
Net interest income			942,340				981,395				989,280				943,095				957,137
Provision for credit losses			(15,000)				(25,000)				75,000				150,000				325,000
Net interest income after provision for credit losses			957,340				1,006,395				914,280				793,095				632,137
Other income
Mortgage banking revenues			133,313				138,754				140,441				153,267				145,024
Service charges on deposit accounts			98,518				92,777				95,817				91,355				77,455
Trust income			162,991				156,022				151,314				149,937				151,882
Brokerage services income			10,265				13,113				12,234				11,602				10,463
Trading account and foreign exchange gains			6,502				6,284				7,204				4,026				8,290
Gain (loss) on bank investment securities			(10,655)				(12,282)				1,619				2,773				6,969
Other revenues from operations			112,699				110,930				142,621				107,601				87,190
Total other income			513,633				505,598				551,250				520,561				487,273
Other expense
Salaries and employee benefits			479,134				541,078				476,110				478,897				458,842
Equipment and net occupancy			80,848				82,471				84,228				81,080				77,089
Outside data processing and software			74,492				65,751				68,034				64,660				61,376
FDIC assessments			17,876				14,188				15,204				12,121				14,207
Advertising and marketing			13,364				14,628				17,832				11,855				9,842
Printing, postage and supplies			11,133				9,317				8,335				9,422				11,260
Amortization of core deposit and other intangible assets			2,737				2,738				3,129				3,914				3,913
Other costs of operations			185,761				189,273				172,136				164,825				170,513
Total other expense			865,345				919,444				845,008				826,774				807,042
Income before income taxes			605,628				592,549				620,522				486,882				312,368
Applicable income taxes			147,559				145,300				149,382				114,746				71,314
Net income		$	458,069				447,249				471,140				372,136				241,054

 

 

Condensed Consolidated Balance Sheet
		June 30
Dollars in thousands		2021				2020				Change
ASSETS
Cash and due from banks		$	1,410,468				1,354,815				4		%
Interest-bearing deposits at banks			33,864,824				20,888,341				62
Trading account			712,558				1,293,534				-45
Investment securities			6,143,177				8,454,344				-27
Loans and leases:
Commercial, financial, etc.			25,409,291				29,203,862				-13
Real estate - commercial			37,558,775				37,159,451				1
Real estate - consumer			16,704,951				15,611,462				7
Consumer			17,440,415				15,782,773				11
Total loans and leases, net of unearned discount			97,113,432				97,757,548				-1
Less: allowance for credit losses			1,575,128				1,638,236				-4
Net loans and leases			95,538,304				96,119,312				-1
Goodwill			4,593,112				4,593,112				—
Core deposit and other intangible assets			8,690				21,208				-59
Other assets			8,351,574				6,812,303				23
Total assets		$	150,622,707				139,536,969				8		%
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	55,621,230				45,397,843				23		%
Interest-bearing deposits			72,647,542				68,701,832				6
Deposits at Cayman Islands office			—				868,284				-100
Total deposits			128,268,772				114,967,959				12
Short-term borrowings			91,235				52,298				74
Accrued interest and other liabilities			2,042,948				2,250,316				-9
Long-term borrowings			3,499,448				6,321,291				-45
Total liabilities			133,902,403				123,591,864				8
Shareholders' equity:
Preferred			1,250,000				1,250,000				—
Common			15,470,304				14,695,105				5
Total shareholders' equity			16,720,304				15,945,105				5
Total liabilities and shareholders' equity		$	150,622,707				139,536,969				8		%

 

 

Condensed Consolidated Balance Sheet, Five Quarter Trend
		June 30,				March 31,				December 31,				September 30,				June 30,
Dollars in thousands		2021				2021				2020				2020				2020
ASSETS
Cash and due from banks		$	1,410,468				1,258,989				1,552,743				1,489,232				1,354,815
Interest-bearing deposits at banks			33,864,824				31,407,227				23,663,810				20,197,937				20,888,341
Federal funds sold			—				1,000				—				—				—
Trading account			712,558				687,359				1,068,581				1,215,573				1,293,534
Investment securities			6,143,177				6,610,667				7,045,697				7,723,004				8,454,344
Loans and leases:
Commercial, financial, etc.			25,409,291				27,811,190				27,574,564				27,891,648				29,203,862
Real estate - commercial			37,558,775				37,425,974				37,637,889				37,582,084				37,159,451
Real estate - consumer			16,704,951				17,349,683				16,752,993				16,663,708				15,611,462
Consumer			17,440,415				16,712,233				16,570,421				16,309,608				15,782,773
Total loans and leases, net of unearned discount			97,113,432				99,299,080				98,535,867				98,447,048				97,757,548
Less: allowance for credit losses			1,575,128				1,636,206				1,736,387				1,758,505				1,638,236
Net loans and leases			95,538,304				97,662,874				96,799,480				96,688,543				96,119,312
Goodwill			4,593,112				4,593,112				4,593,112				4,593,112				4,593,112
Core deposit and other intangible assets			8,690				11,427				14,165				17,294				21,208
Other assets			8,351,574				8,248,405				7,863,517				6,702,048				6,812,303
Total assets		$	150,622,707				150,481,060				142,601,105				138,626,743				139,536,969
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	55,621,230				53,641,419				47,572,884				44,201,670				45,397,843
Interest-bearing deposits			72,647,542				74,193,255				71,580,750				70,061,680				68,701,832
Deposits at Cayman Islands office			—				641,691				652,104				899,989				868,284
Total deposits			128,268,772				128,476,365				119,805,738				115,163,339				114,967,959
Short-term borrowings			91,235				58,957				59,482				46,123				52,298
Accrued interest and other liabilities			2,042,948				2,000,727				2,166,409				1,857,383				2,250,316
Long-term borrowings			3,499,448				3,498,503				4,382,193				5,458,885				6,321,291
Total liabilities			133,902,403				134,034,552				126,413,822				122,525,730				123,591,864
Shareholders' equity:
Preferred			1,250,000				1,250,000				1,250,000				1,250,000				1,250,000
Common			15,470,304				15,196,508				14,937,283				14,851,013				14,695,105
Total shareholders' equity			16,720,304				16,446,508				16,187,283				16,101,013				15,945,105
Total liabilities and shareholders' equity		$	150,622,707				150,481,060				142,601,105				138,626,743				139,536,969

 

 

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates
			Three months ended															Change in balance June 30, 2021 from						Six months ended June 30,
			June 30, 2021					June 30, 2020					March 31, 2021											2021						2020					Change in balance
			Balance		Rate			Balance		Rate			Balance		Rate			June 30, 2020			March 31, 2021			Balance			Rate			Balance		Rate
ASSETS
Interest-bearing deposits at banks		$	32,081		.11	%		16,454		.10	%		27,666		.10	%		95	%		16	%		$	29,886		.11	%		11,292		.41	%		165	%
Federal funds sold and agreements to resell securities			—		.48			692		.11			678		.12			-100			-100				337		.12			958		.90			—
Trading account			49		1.76			49		2.04			50		1.44			1			—				49		1.60			56		2.38			-12
Investment securities			6,211		2.23			8,500		2.24			6,605		2.28			-27			-6				6,407		2.25			8,801		2.23			-27
Loans and leases, net of unearned discount
Commercial, financial, etc.			27,055		3.26			29,733		3.10			27,723		3.53			-9			-2				27,387		3.39			27,011		3.55			1
Real estate - commercial			37,419		3.92			36,947		4.42			37,609		4.16			1			-1				37,513		4.04			36,491		4.62			3
Real estate - consumer			17,022		3.54			15,599		4.00			17,404		3.54			9			-2				17,212		3.54			15,765		4.02			9
Consumer			17,114		4.44			15,518		4.85			16,620		4.64			10			3				16,869		4.53			15,484		5.07			9
Total loans and leases, net			98,610		3.79			97,797		4.05			99,356		3.99			1			-1				98,981		3.89			94,751		4.32			4
Total earning assets			136,951		2.85			123,492		3.38			134,355		3.08			11			2				135,660		2.97			115,858		3.75			17
Goodwill			4,593					4,593					4,593					—			—				4,593					4,593					—
Core deposit and other intangible assets			10					23					13					-57			-21				11					25					-55
Other assets			9,087					8,338					9,196					9			-1				9,142					8,037					14
Total assets		$	150,641					136,446					148,157					10	%		2	%		$	149,406					128,513					16	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Savings and interest-checking deposits		$	71,561		.05			62,927		.17			70,458		.07			14	%		2	%		$	71,013		.06			59,646		.35			19	%
Time deposits			3,358		.61			5,354		1.49			3,732		.76			-37			-10				3,544		.69			5,513		1.52			-36
Deposits at Cayman Islands office			50		.12			1,017		.06			683		.11			-95			-93				365		.11			1,344		.54			-73
Total interest-bearing deposits			74,969		.07			69,298		.27			74,873		.10			8			—				74,922		.09			66,503		.45			13
Short-term borrowings			61		.01			63		.01			62		.01			-3			-1				61		.01			60		.08			2
Long-term borrowings			3,429		1.74			6,189		1.86			3,851		1.78			-45			-11				3,639		1.76			6,215		2.23			-41
Total interest-bearing liabilities			78,459		.14			75,550		.40			78,786		.18			4			—				78,622		.17			72,778		.60			8
Noninterest-bearing deposits			53,444					42,497					50,860					26			5				52,159					37,477					39
Other liabilities			2,167					2,446					2,184					-11			-1				2,175					2,422					-10
Total liabilities			134,070					120,493					131,830					11			2				132,956					112,677					18
Shareholders' equity			16,571					15,953					16,327					4			1				16,450					15,836					4
Total liabilities and shareholders' equity		$	150,641					136,446					148,157					10	%		2	%		$	149,406					128,513					16	%
Net interest spread					2.71					2.98					2.90												2.80					3.15
Contribution of interest-free funds					.06					.15					.07												.07					.22
Net interest margin					2.77	%				3.13	%				2.97	%											2.87	%				3.37	%

 

 

Reconciliation of Quarterly GAAP to Non-GAAP Measures
											Three months ended									Six months ended
											June 30									June 30
											2021				2020				2021				2020
Income statement data
In thousands, except per share
Net income
Net income											$	458,069				241,054				905,318				509,876
Amortization of core deposit and other intangible assets (1)												2,023				2,904				4,057				5,787
Merger-related expenses (1)												2,867				—				10,956				—
Net operating income											$	462,959				243,958				920,331				515,663
Earnings per common share
Diluted earnings per common share											$	3.41				1.74				6.73				3.67
Amortization of core deposit and other intangible assets (1)												.02				.02				.03				.04
Merger-related expenses (1)												.02				—				.08				—
Diluted net operating earnings per common share											$	3.45				1.76				6.84				3.71
Other expense
Other expense											$	865,345				807,042				1,784,789				1,713,458
Amortization of core deposit and other intangible assets												(2,737)				(3,913)				(5,475)				(7,826)
Merger-related expenses												(3,893)				—				(13,844)				—
Noninterest operating expense											$	858,715				803,129				1,765,470				1,705,632
Merger-related expenses
Salaries and employee benefits											$	4				—				4				—
Outside data processing and software												244				—				244				—
Advertising and marketing												24				—				24				—
Printing, postage and supplies												2,049				—				2,049				—
Other costs of operations												1,572				—				11,523				—
Other expense											$	3,893				—				13,844				—
Efficiency ratio
Noninterest operating expense (numerator)											$	858,715				803,129				1,765,470				1,705,632
Taxable-equivalent net interest income											$	946,072				961,371				1,931,200				1,943,239
Other income												513,633				487,273				1,019,231				1,016,633
Less:  Gain (loss) on bank investment securities												(10,655)				6,969				(22,937)				(13,813)
Denominator											$	1,470,360				1,441,675				2,973,368				2,973,685
Efficiency ratio												58.4	%			55.7	%			59.4	%			57.4	%
Balance sheet data
In millions
Average assets
Average assets											$	150,641				136,446				149,406				128,513
Goodwill												(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets												(10)				(23)				(11)				(25)
Deferred taxes												3				6				3				7
Average tangible assets											$	146,041				131,836				144,805				123,902
Average common equity
Average total equity											$	16,571				15,953				16,450				15,836
Preferred stock												(1,250)				(1,250)				(1,250)				(1,250)
Average common equity												15,321				14,703				15,200				14,586
Goodwill												(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets												(10)				(23)				(11)				(25)
Deferred taxes												3				6				3				7
Average tangible common equity											$	10,721				10,093				10,599				9,975
At end of quarter
Total assets
Total assets											$	150,623				139,537
Goodwill												(4,593)				(4,593)
Core deposit and other intangible assets												(9)				(21)
Deferred taxes												2				5
Total tangible assets											$	146,023				134,928
Total common equity
Total equity											$	16,720				15,945
Preferred stock												(1,250)				(1,250)
Common equity												15,470				14,695
Goodwill												(4,593)				(4,593)
Core deposit and other intangible assets												(9)				(21)
Deferred taxes												2				5
Total tangible common equity											$	10,870				10,086

(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,
						2021				2021				2020				2020				2020
Income statement data
In thousands, except per share
Net income
Net income						$	458,069				447,249				471,140				372,136				241,054
Amortization of core deposit and other intangible assets (1)							2,023				2,034				2,313				2,893				2,904
Merger-related expenses (1)							2,867				8,089				—				—				—
Net operating income						$	462,959				457,372				473,453				375,029				243,958
Earnings per common share
Diluted earnings per common share						$	3.41				3.33				3.52				2.75				1.74
Amortization of core deposit and other intangible assets (1)							.02				.02				.02				.02				.02
Merger-related expenses (1)							.02				.06				—				—				—
Diluted net operating earnings per common share						$	3.45				3.41				3.54				2.77				1.76
Other expense
Other expense						$	865,345				919,444				845,008				826,774				807,042
Amortization of core deposit and other intangible assets							(2,737)				(2,738)				(3,129)				(3,914)				(3,913)
Merger-related expenses							(3,893)				(9,951)				—				—				—
Noninterest operating expense						$	858,715				906,755				841,879				822,860				803,129
Merger-related expenses
Salaries and employee benefits						$	4				—				—				—				—
Outside data processing and software							244				—				—				—				—
Advertising and marketing							24				—				—				—				—
Printing, postage and supplies							2,049				—				—				—				—
Other costs of operations							1,572				9,951				—				—				—
Other expense						$	3,893				9,951				—				—				—
Efficiency ratio
Noninterest operating expense (numerator)						$	858,715				906,755				841,879				822,860				803,129
Taxable-equivalent net interest income						$	946,072				985,128				993,252				947,114				961,371
Other income							513,633				505,598				551,250				520,561				487,273
Less:  Gain (loss) on bank investment securities							(10,655)				(12,282)				1,619				2,773				6,969
Denominator						$	1,470,360				1,503,008				1,542,883				1,464,902				1,441,675
Efficiency ratio							58.4	%			60.3	%			54.6	%			56.2	%			55.7	%
Balance sheet data
In millions
Average assets
Average assets						$	150,641				148,157				144,563				140,181				136,446
Goodwill							(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets							(10)				(13)				(16)				(19)				(23)
Deferred taxes							3				3				4				5				6
Average tangible assets						$	146,041				143,554				139,958				135,574				131,836
Average common equity
Average total equity						$	16,571				16,327				16,213				16,073				15,953
Preferred stock							(1,250)				(1,250)				(1,250)				(1,250)				(1,250)
Average common equity							15,321				15,077				14,963				14,823				14,703
Goodwill							(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets							(10)				(13)				(16)				(19)				(23)
Deferred taxes							3				3				4				5				6
Average tangible common equity						$	10,721				10,474				10,358				10,216				10,093
At end of quarter
Total assets
Total assets						$	150,623				150,481				142,601				138,627				139,537
Goodwill							(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets							(9)				(12)				(14)				(17)				(21)
Deferred taxes							2				3				4				4				5
Total tangible assets						$	146,023				145,879				137,998				134,021				134,928
Total common equity
Total equity						$	16,720				16,447				16,187				16,101				15,945
Preferred stock							(1,250)				(1,250)				(1,250)				(1,250)				(1,250)
Common equity							15,470				15,197				14,937				14,851				14,695
Goodwill							(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets							(9)				(12)				(14)				(17)				(21)
Deferred taxes							2				3				4				4				5
Total tangible common equity						$	10,870				10,595				10,334				10,245				10,086
(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