M&T Bank Corporation Announces Second Quarter Results

Rhea-AI Summary

M&T Bank Corporation (MTB) reported Q2 2020 financial results, revealing a significant drop in earnings. Diluted earnings per share fell to $1.74 from $3.34 in Q2 2019, with net income dropping to $241 million, down 49%. The provision for credit losses increased sharply to $325 million due to COVID-19 impacts. Despite a 13% rise in mortgage banking revenue, overall net interest income decreased by 8% to $961 million. Total assets grew to $139.5 billion, primarily fueled by an increase in loans and deposits, including $6.5 billion from the Paycheck Protection Program.

Positive

• Mortgage banking revenue increased 13% quarter-over-quarter.
• Total assets rose to $139.5 billion, up from $121.6 billion a year ago.
• Common Equity Tier 1 ratio improved to 9.51%, indicating a strong capital position.

Negative

• Diluted earnings per common share dropped 48% year-over-year.
• Net income fell 49% compared to Q2 2019.
• Provision for credit losses increased significantly to $325 million.

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

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

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

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

Earnings Highlights
														Change 2Q20 vs.
($ in millions, except per share data)		2Q20			2Q19			1Q20			2Q19			1Q20
Net income		$	241			$	473			$	269				-49	%			-10	%
Net income available to common shareholders  ̶  diluted		$	223			$	453			$	251				-51	%			-11	%
Diluted earnings per common share		$	1.74			$	3.34			$	1.93				-48	%			-10	%
Annualized return on average assets			.71	%			1.60	%			.90	%
Annualized return on average common equity			6.13	%			12.68	%			7.00	%

For the first six-months of 2020, diluted earnings per common share were $3.67, compared with $6.69 in the year-earlier period. GAAP-basis net income for the first half of 2020 totaled $510 million, compared with $956 million in the corresponding 2019 period. Expressed as an annualized rate of return on average assets and average common shareholders' equity, GAAP-basis net income in the six-month period ended June 30, 2020 was .80% and 6.56%, respectively, compared with 1.64% and 12.91%, respectively, in the similar 2019 period.

Supplemental Reporting of Non-GAAP Results of Operations.  M&T consistently provides supplemental reporting of its results on a "net operating" or "tangible" basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill and core deposit and other intangible asset balances, net of applicable deferred tax amounts) and expenses associated with merging acquired operations into M&T (when incurred), since such items are considered by management to be "nonoperating" in nature.  The amounts of such "nonoperating" expenses are presented in the tables that accompany this release.  Although "net operating income" as defined by M&T is not a GAAP measure, M&T's management believes that this information helps investors understand the effect of acquisition activity in reported results.

Diluted net operating earnings per common share were $1.76 in the second quarter of 2020, compared with $3.37 in the year-earlier quarter and $1.95 in the first quarter of 2020.  Net operating income in 2020's second quarter was $244 million, compared with $477 million in the second quarter of 2019 and $272 million in the first quarter of 2020. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income in the recent quarter was .74% and 9.04%, respectively, compared with 1.68% and 18.83%, respectively, in the corresponding 2019 quarter and .94% and 10.39%, respectively, in the first quarter of 2020.

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

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

Taxable-equivalent Net Interest Income
														Change 2Q20 vs.
($ in millions)		2Q20			2Q19			1Q20			2Q19			1Q20
Average earning assets		$	123,492			$	107,511			$	108,226				15	%			14	%
Net interest income  ̶  taxable-equivalent		$	961			$	1,047			$	982				-8	%			-2	%
Net interest margin			3.13	%			3.91	%			3.65	%

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

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

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

Asset Quality Metrics
														Change 2Q20 vs.
($ in millions)		2Q20			2Q19			1Q20			2Q19			1Q20
At end of quarter
Nonaccrual loans		$	1,157			$	865			$	1,062				34	%			9	%
Real estate and other foreclosed assets		$	67			$	73			$	84				-8	%			-20	%
Total nonperforming assets		$	1,224			$	938			$	1,146				30	%			7	%
Accruing loans past due 90 days or more (1)		$	536			$	349			$	530				54	%			1	%
Nonaccrual loans as % of loans outstanding			1.18	%			.96	%			1.13	%
Allowance for credit losses		$	1,638			$	1,030			$	1,384				59	%			18	%
Allowance for credit losses as % of loans outstanding			1.68	%			1.15	%			1.47	%
For the period
Provision for credit losses		$	325			$	55			$	250				491	%			30	%
Net charge-offs		$	71			$	44			$	49				60	%			45	%
Net charge-offs as % of average loans (annualized)			.29	%			.20	%			.22	%

_____________
(1)	Predominantly residential real estate loans. Prior to 2020, excludes loans acquired at a discount.

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

Noninterest Income
														Change 2Q20 vs.
($ in millions)		2Q20			2Q19			1Q20			2Q19			1Q20
Mortgage banking revenues		$	145			$	107			$	128				35	%			13	%
Service charges on deposit accounts			78				108				106				-28	%			-27	%
Trust income			152				145				149				5	%			2	%
Brokerage services income			10				12				13				-16	%			-20	%
Trading account and foreign exchange gains			8				18				21				-55	%			-61	%
Gain (loss) on bank investment securities			7				9				(21)				-22	%			—
Other revenues from operations			87				113				133				-23	%			-35	%
Total		$	487			$	512			$	529				-5	%			-8	%

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

Noninterest Expense
														Change 2Q20 vs.
($ in millions)		2Q20			2Q19			1Q20			2Q19			1Q20
Salaries and employee benefits		$	459			$	456			$	537				1	%			-15	%
Equipment and net occupancy			77				79				80				-3	%			-3	%
Outside data processing and software			61				55				64				11	%			-5	%
FDIC assessments			14				10				12				45	%			16	%
Advertising and marketing			10				24				22				-59	%			-56	%
Printing, postage and supplies			11				10				11				9	%			4	%
Amortization of core deposit and other intangible assets			4				5				4				-23	%			—
Other costs of operations			171				234				176				-27	%			-3	%
Total		$	807			$	873			$	906				-8	%			-11	%

The efficiency ratio, or noninterest operating expenses divided by the sum of taxable-equivalent net interest income and noninterest income (exclusive of gains and losses from bank investment securities), measures the relationship of operating expenses to revenues.  M&T's efficiency ratio was 55.7% in the second quarter of 2020, 56.0% in the year-earlier quarter and 58.9% in the first three months of 2020.

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

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

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss second quarter financial results today at 11:00 a.m. Eastern Time.  Those wishing to participate in the call may dial (877) 780-2276.  International participants, using any applicable international calling codes, may dial (973) 582-2700.  Callers should reference M&T Bank Corporation or the conference ID #9253404.  The conference call will be webcast live through M&T's website at -1%26h%3D620024634%26u%3Dhttps%253A%252F%252Fir.mtb.com%252Fevents-presentations%26a%3Dhttps%253A%252F%252Fir.mtb.com%252Fevents-presentations&a=https%3A%2F%2Fir.mtb.com%2Fevents-presentations" rel="nofollow">https://ir.mtb.com/events-presentations. A replay of the call will be available through Thursday, July 30, 2020 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #9253404.  The event will also be archived and available by 3:00 p.m. today on M&T's website at -1%26h%3D620024634%26u%3Dhttps%253A%252F%252Fir.mtb.com%252Fevents-presentations%26a%3Dhttps%253A%252F%252Fir.mtb.com%252Fevents-presentations&a=https%3A%2F%2Fir.mtb.com%2Fevents-presentations" rel="nofollow">https://ir.mtb.com/events-presentations.

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

Forward-Looking Statements.  This news release contains forward-looking statements that are based on current expectations, estimates and projections about M&T's business, management's beliefs and assumptions made by management.  Any statement that does not describe historical or current facts is a forward-looking statement, including statements regarding the potential effects of the Coronavirus Disease 2019 ("COVID-19") pandemic on M&T's business, financial condition, liquidity and results of operations. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Future Factors") which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.  

Future Factors include changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; common shares outstanding; common stock price volatility; fair value of and number of stock-based compensation awards to be issued in future periods; risks and uncertainties relating to the impact of the COVID-19 pandemic; the impact of changes in market values on trust-related revenues; legislation affecting the financial services industry as a whole, and M&T and its subsidiaries individually or collectively, including tax legislation or regulation; regulatory supervision and oversight, including monetary policy and capital requirements; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board, regulatory agencies or legislation; increasing price and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of pending and future litigation and governmental proceedings, including tax-related examinations and other matters; continued availability of financing; financial resources in the amounts, at the times and on the terms required to support M&T and its subsidiaries' future businesses; and material differences in the actual financial results of merger, acquisition and investment activities compared with M&T's initial expectations, including the full realization of anticipated cost savings and revenue enhancements.

These are representative of the Future Factors that could affect the outcome of the forward-looking statements.  In addition, such statements could be affected by general industry and market conditions and growth rates, general economic and political conditions, either nationally or in the states in which M&T and its subsidiaries do business, including interest rate and currency exchange rate fluctuations, changes and trends in the securities markets, and other Future Factors.

Further, statements about the potential effects of the COVID-19 pandemic on M&T's business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond M&T's control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on customers, clients, third parties and M&T.

 

Financial Highlights
		Three months ended							Six months ended
		June 30							June 30
Amounts in thousands, except per share		2020			2019			Change			2020			2019			Change
Performance
Net income		$	241,054				473,260				-49	%		$	509,876				956,002				-47	%
Net income available to common shareholders			223,099				452,633				-51	%			473,795				914,719				-48	%
Per common share:
Basic earnings		$	1.74				3.34				-48	%		$	3.67				6.69				-45	%
Diluted earnings			1.74				3.34				-48	%			3.67				6.69				-45	%
Cash dividends		$	1.10				1.00				10	%		$	2.20				2.00				10	%
Common shares outstanding:
Average - diluted (1)			128,333				135,464				-5	%			129,044				136,685				-6	%
Period end (2)			128,294				134,200				-4	%			128,294				134,200				-4	%
Return on (annualized):
Average total assets			.71	%			1.60	%							.80	%			1.64	%
Average common shareholders' equity			6.13	%			12.68	%							6.56	%			12.91	%
Taxable-equivalent net interest income		$	961,371				1,047,406				-8	%		$	1,943,239				2,103,433				-8	%
Yield on average earning assets			3.38	%			4.64	%							3.75	%			4.68	%
Cost of interest-bearing liabilities			.40	%			1.11	%							.60	%			1.08	%
Net interest spread			2.98	%			3.53	%							3.15	%			3.60	%
Contribution of interest-free funds			.15	%			.38	%							.22	%			.37	%
Net interest margin			3.13	%			3.91	%							3.37	%			3.97	%
Net charge-offs to average total net loans (annualized)			.29	%			.20	%							.26	%			.15	%
Net operating results (3)
Net operating income		$	243,958				477,001				-49	%		$	515,663				963,441				-46	%
Diluted net operating earnings per common share			1.76				3.37				-48	%			3.71				6.74				-45	%
Return on (annualized):
Average tangible assets			.74	%			1.68	%							.84	%			1.72	%
Average tangible common equity			9.04	%			18.83	%							9.71	%			19.19	%
Efficiency ratio			55.71	%			55.98	%							57.36	%			56.77	%
		At June 30
Loan quality		2020			2019			Change
Nonaccrual loans		$	1,156,650				865,384				34	%
Real estate and other foreclosed assets			66,763				72,907				-8	%
Total nonperforming assets		$	1,223,413				938,291				30	%
Accruing loans past due 90 days or more (4)		$	535,755				348,725				54	%
Government guaranteed loans included in totals above:
Nonaccrual loans		$	51,165				36,765				39	%
Accruing loans past due 90 days or more			454,269				320,305				42	%
Renegotiated loans		$	234,768				254,332				-8	%
Accruing loans acquired at a discount past due 90 days or more (5)		N/A				43,079				—
Purchased impaired loans (6):
Outstanding customer balance		N/A				473,834				—
Carrying amount		N/A				263,025				—
Nonaccrual loans to total net loans			1.18	%			.96	%
Allowance for credit losses to total loans			1.68	%			1.15	%

______________
(1)	Includes common stock equivalents.
(2)	Includes common stock issuable under deferred compensation plans.
(3)	Excludes amortization and balances related to goodwill and core deposit and other intangible assets and merger-related expenses which, except in the calculation of the efficiency ratio, are net of applicable income tax effects. Reconciliations of net income with net operating income appear herein.
(4)	Predominantly residential real estate loans. Prior to 2020, excludes loans acquired at a discount.
(5)	Prior to 2020, loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately.
(6)	Prior to 2020, accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.

 

Financial Highlights, Five Quarter Trend
		Three months ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Amounts in thousands, except per share		2020			2020			2019			2019			2019
Performance
Net income		$	241,054				268,822				493,066				480,081				473,260
Net income available to common shareholders			223,099				250,701				473,372				461,410				452,633
Per common share:
Basic earnings		$	1.74				1.93				3.60				3.47				3.34
Diluted earnings			1.74				1.93				3.60				3.47				3.34
Cash dividends		$	1.10				1.10				1.10				1.00				1.00
Common shares outstanding:
Average - diluted (1)			128,333				129,755				131,549				132,999				135,464
Period end (2)			128,294				128,282				130,589				132,277				134,200
Return on (annualized):
Average total assets			.71	%			.90	%			1.60	%			1.58	%			1.60	%
Average common shareholders' equity			6.13	%			7.00	%			12.95	%			12.73	%			12.68	%
Taxable-equivalent net interest income		$	961,371				981,868				1,014,225				1,035,469				1,047,406
Yield on average earning assets			3.38	%			4.18	%			4.27	%			4.51	%			4.64	%
Cost of interest-bearing liabilities			.40	%			.83	%			.97	%			1.10	%			1.11	%
Net interest spread			2.98	%			3.35	%			3.30	%			3.41	%			3.53	%
Contribution of interest-free funds			.15	%			.30	%			.34	%			.37	%			.38	%
Net interest margin			3.13	%			3.65	%			3.64	%			3.78	%			3.91	%
Net charge-offs to average total net loans (annualized)			.29	%			.22	%			.18	%			.16	%			.20	%
Net operating results (3)
Net operating income		$	243,958				271,705				496,237				483,830				477,001
Diluted net operating earnings per common share			1.76				1.95				3.62				3.50				3.37
Return on (annualized):
Average tangible assets			.74	%			.94	%			1.67	%			1.66	%			1.68	%
Average tangible common equity			9.04	%			10.39	%			19.08	%			18.85	%			18.83	%
Efficiency ratio			55.71	%			58.91	%			53.15	%			55.95	%			55.98	%
		June 30,			March 31,			December 31,			September 30,			June 30,
Loan quality		2020			2020			2019			2019			2019
Nonaccrual loans		$	1,156,650				1,061,748				963,112				1,005,249				865,384
Real estate and other foreclosed assets			66,763				83,605				85,646				79,735				72,907
Total nonperforming assets		$	1,223,413				1,145,353				1,048,758				1,084,984				938,291
Accruing loans past due 90 days or more (4)		$	535,755				530,317				518,728				461,162				348,725
Government guaranteed loans included in totals above:
Nonaccrual loans		$	51,165				50,561				50,891				43,144				36,765
Accruing loans past due 90 days or more			454,269				464,243				479,829				434,132				320,305
Renegotiated loans		$	234,768				232,439				234,424				240,781				254,332
Accruing loans acquired at a discount past due 90 days or         more (5)		N/A			N/A				39,632				40,733				43,079
Purchased impaired loans (6):
Outstanding customer balance		N/A			N/A				415,413				453,382				473,834
Carrying amount		N/A			N/A				227,545				253,496				263,025
Nonaccrual loans to total net loans			1.18	%			1.13	%			1.06	%			1.12	%			.96	%
Allowance for credit losses to total loans			1.68	%			1.47	%			1.16	%			1.16	%			1.15	%

______________
(1)	Includes common stock equivalents.
(2)	Includes common stock issuable under deferred compensation plans.
(3)	Excludes amortization and balances related to goodwill and core deposit and other intangible assets and merger-related expenses which, except in the calculation of the efficiency ratio, are net of applicable income tax effects. Reconciliations of net income with net operating income appear herein.
(4)	Predominantly residential real estate loans. Prior to 2020, excludes loans acquired at a discount.
(5)	Prior to 2020, loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately.
(6)	Prior to 2020, accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.

 

Condensed Consolidated Statement of Income
		Three months ended							Six months ended
		June 30							June 30
Dollars in thousands		2020			2019			Change			2020			2019			Change
Interest income		$	1,032,242				1,237,913				-17	%		$	2,152,661				2,464,222				-13	%
Interest expense			75,105				196,432				-62				218,719				372,681				-41
Net interest income			957,137				1,041,481				-8				1,933,942				2,091,541				-8
Provision for credit losses			325,000				55,000			491				575,000				77,000				647
Net interest income after provision for credit losses			632,137				986,481				-36				1,358,942				2,014,541				-33
Other income
Mortgage banking revenues			145,024				107,321				35				272,933				202,632				35
Service charges on deposit accounts			77,455				107,787				-28				183,616				210,899				-13
Trust income			151,882				144,382				5				300,633				277,168				8
Brokerage services income			10,463				12,478				-16				23,592				24,954				-5
Trading account and foreign exchange gains			8,290				18,453				-55				29,306				29,255				—
Gain (loss) on bank investment securities			6,969				8,911				-22				(13,813)				20,752				—
Other revenues from operations			87,190				112,763				-23				220,366				247,200				-11
Total other income			487,273				512,095				-5				1,016,633				1,012,860				—
Other expense
Salaries and employee benefits			458,842				455,737				1				995,685				954,937				4
Equipment and net occupancy			77,089				79,150				-3				156,729				158,497				-1
Outside data processing and software			61,376				55,234				11				125,786				107,651				17
FDIC assessments			14,207				9,772				45				26,478				19,198				38
Advertising and marketing			9,842				24,046				-59				32,217				44,321				-27
Printing, postage and supplies			11,260				10,324				9				22,112				20,179				10
Amortization of core deposit and other   intangible assets			3,913				5,077				-23				7,826				10,097				-22
Other costs of operations			170,513				233,692				-27				346,625				452,500				-23
Total other expense			807,042				873,032				-8				1,713,458				1,767,380				-3
Income before income taxes			312,368				625,544				-50				662,117				1,260,021				-47
Applicable income taxes			71,314				152,284				-53				152,241				304,019				-50
Net income		$	241,054				473,260				-49	%		$	509,876				956,002				-47	%

 

Condensed Consolidated Statement of Income, Five Quarter Trend
		Three months ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Dollars in thousands		2020			2020			2019			2019			2019
Interest income		$	1,032,242				1,120,419				1,185,902				1,229,469				1,237,913
Interest expense			75,105				143,614				177,069				199,579				196,432
Net interest income			957,137				976,805				1,008,833				1,029,890				1,041,481
Provision for credit losses			325,000				250,000				54,000				45,000				55,000
Net interest income after provision for credit losses			632,137				726,805				954,833				984,890				986,481
Other income
Mortgage banking revenues			145,024				127,909				118,134				137,004				107,321
Service charges on deposit accounts			77,455				106,161				110,987				111,092				107,787
Trust income			151,882				148,751				151,525				143,915				144,382
Brokerage services income			10,463				13,129				11,891				12,077				12,478
Trading account and foreign exchange gains			8,290				21,016				16,717				16,072				18,453
Gain (loss) on bank investment securities			6,969				(20,782)				(6,452)				3,737				8,911
Other revenues from operations			87,190				133,176				118,238				103,882				112,763
Total other income			487,273				529,360				521,040				527,779				512,095
Other expense
Salaries and employee benefits			458,842				536,843				469,080				476,780				455,737
Equipment and net occupancy			77,089				79,640				82,892				82,690				79,150
Outside data processing and software			61,376				64,410				61,720				60,360				55,234
FDIC assessments			14,207				12,271				12,431				9,906				9,772
Advertising and marketing			9,842				22,375				27,063				22,088				24,046
Printing, postage and supplies			11,260				10,852				9,513				10,201				10,324
Amortization of core deposit and other    intangible assets			3,913				3,913				4,305				5,088				5,077
Other costs of operations			170,513				176,112				156,679				210,506				233,692
Total other expense			807,042				906,416				823,683				877,619				873,032
Income before income taxes			312,368				349,749				652,190				635,050				625,544
Applicable income taxes			71,314				80,927				159,124				154,969				152,284
Net income		$	241,054				268,822				493,066				480,081				473,260

 

Condensed Consolidated Balance Sheet
		June 30
Dollars in thousands		2020			2019			Change
ASSETS
Cash and due from banks		$	1,354,815				1,271,611				7	%
Interest-bearing deposits at banks			20,888,341				8,791,753				138
Trading account			1,293,534				479,403				170
Investment securities			8,454,344				11,580,249				-27
Loans and leases:
Commercial, financial, etc.			29,203,862				23,431,408				25
Real estate - commercial			37,159,451				35,194,375				6
Real estate - consumer			15,611,462				16,693,737				-6
Consumer			15,782,773				14,558,538				8
Total loans and leases, net of unearned discount			97,757,548				89,878,058				9
Less: allowance for credit losses			1,638,236				1,029,867				59
Net loans and leases			96,119,312				88,848,191				8
Goodwill			4,593,112				4,593,112				—
Core deposit and other intangible assets			21,208				38,428				-45
Other assets			6,812,303				5,952,148				14
Total assets		$	139,536,969				121,554,895				15	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	45,397,843				30,747,946				48	%
Interest-bearing deposits			68,701,832				59,568,223				15
Deposits at Cayman Islands office			868,284				1,364,855				-36
Total deposits			114,967,959				91,681,024				25
Short-term borrowings			52,298				4,611,390				-99
Accrued interest and other liabilities			2,250,316				1,915,147				18
Long-term borrowings			6,321,291				7,655,507				-17
Total liabilities			123,591,864				105,863,068				17
Shareholders' equity:
Preferred			1,250,000				1,231,500				2
Common			14,695,105				14,460,327				2
Total shareholders' equity			15,945,105				15,691,827				2
Total liabilities and shareholders' equity		$	139,536,969				121,554,895				15	%

 

Condensed Consolidated Balance Sheet, Five Quarter Trend
		June 30,			March 31,			December 31,			September 30,			June 30,
Dollars in thousands		2020			2020			2019			2019			2019
ASSETS
Cash and due from banks		$	1,354,815				1,298,192				1,432,805				1,818,861				1,271,611
Interest-bearing deposits at banks			20,888,341				8,896,307				7,190,154				12,495,524				8,791,753
Federal funds sold			—				—				3,500				200				—
Trading account			1,293,534				1,224,291				470,129				614,256				479,403
Investment securities			8,454,344				8,956,590				9,497,251				10,677,583				11,580,249
Loans and leases:
Commercial, financial, etc.			29,203,862				26,243,648				23,838,168				23,201,372				23,431,408
Real estate - commercial			37,159,451				36,684,106				35,541,914				34,945,231				35,194,375
Real estate - consumer			15,611,462				15,643,014				16,156,094				16,500,955				16,693,737
Consumer			15,782,773				15,571,507				15,386,693				15,175,635				14,558,538
Total loans and leases, net of unearned discount			97,757,548				94,142,275				90,922,869				89,823,193				89,878,058
Less: allowance for credit losses			1,638,236				1,384,366				1,051,071				1,038,437				1,029,867
Net loans and leases			96,119,312				92,757,909				89,871,798				88,784,756				88,848,191
Goodwill			4,593,112				4,593,112				4,593,112				4,593,112				4,593,112
Core deposit and other intangible assets			21,208				25,121				29,034				33,339				38,428
Other assets			6,812,303				6,826,311				6,784,974				6,483,295				5,952,148
Total assets		$	139,536,969				124,577,833				119,872,757				125,500,926				121,554,895
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	45,397,843				35,554,715				32,396,407				31,766,724				30,747,946
Interest-bearing deposits			68,701,832				63,410,672				60,689,618				61,785,212				59,568,223
Deposits at Cayman Islands office			868,284				1,217,921				1,684,044				1,561,997				1,364,855
Total deposits			114,967,959				100,183,308				94,770,069				95,113,933				91,681,024
Short-term borrowings			52,298				59,180				62,363				5,513,896				4,611,390
Accrued interest and other liabilities			2,250,316				2,198,116				2,337,490				2,090,762				1,915,147
Long-term borrowings			6,321,291				6,321,435				6,986,186				7,002,524				7,655,507
Total liabilities			123,591,864				108,762,039				104,156,108				109,721,115				105,863,068
Shareholders' equity:
Preferred			1,250,000				1,250,000				1,250,000				1,250,000				1,231,500
Common			14,695,105				14,565,794				14,466,649				14,529,811				14,460,327
Total shareholders' equity			15,945,105				15,815,794				15,716,649				15,779,811				15,691,827
Total liabilities and shareholders' equity		$	139,536,969				124,577,833				119,872,757				125,500,926				121,554,895

 

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates
		Three months ended			Change in balance				Six months ended
		June 30,			June 30,			March 31,			June 30, 2020 from				June 30,			Change
Dollars in millions		2020			2019			2020			June 30,			March 31,				2020			2019			in
		Balance			Rate			Balance			Rate			Balance			Rate			2019			2020				Balance			Rate			Balance			Rate			balance
ASSETS
Interest-bearing deposits at banks		$	16,454			.10	%		6,122			2.38	%		6,130			1.24	%		169	%		168	%			$	11,292			.41	%		5,368			2.39	%		110	%
Federal funds sold and agreements
to resell securities			692			.11			1			2.83			1,224			1.34		-			-43					958			.90			1			2.83			—
Trading account			49			2.04			68			2.20			64			2.64			-28			-24					56			2.38			66			2.79			-16
Investment securities			8,500			2.24			12,170			2.49			9,102			2.22			-30			-7					8,801			2.23			12,557			2.51			-30
Loans and leases, net of unearned
discount
Commercial, financial, etc.			29,733			3.10			23,335			4.97			24,290			4.10			27			22					27,011			3.55			23,173			5.02			17
Real estate - commercial			36,947			4.42			34,768			5.30			36,034			4.83			6			3					36,491			4.62			34,647			5.32			5
Real estate - consumer			15,599			4.00			16,723			4.29			15,931			4.03			-7			-2					15,765			4.02			16,830			4.33			-6
Consumer			15,518			4.85			14,324			5.53			15,451			5.30			8			—					15,484			5.07			14,165			5.52			9
Total loans and leases, net			97,797			4.05			89,150			5.09			91,706			4.61			10			7					94,751			4.32			88,815			5.12			7
Total earning assets			123,492			3.38			107,511			4.64			108,226			4.18			15			14					115,858			3.75			106,807			4.68			8
Goodwill			4,593						4,593						4,593						—			—					4,593						4,593						—
Core deposit and other intangible
assets			23						41						27						-44			-14					25						43						-42
Other assets			8,338						6,342						7,739						31			8					8,037						6,224						29
Total assets		$	136,446						118,487						120,585						15	%		13	%			$	128,513						117,667						9	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Savings and interest-checking
deposits		$	62,927			.17			53,495			.69			56,366			.56			18	%		12	%			$	59,646			.35			52,799			.64			13	%
Time deposits			5,354			1.49			6,530			1.53			5,672			1.55			-18			-6					5,513			1.52			6,441			1.44			-14
Deposits at Cayman Islands
office			1,017			.06			1,247			1.94			1,672			.82			-18			-39					1,344			.54			1,110			1.96			21
Total interest-bearing
deposits			69,298			.27			61,272			.80			63,710			.65			13			9					66,503			.45			60,350			.75			10
Short-term borrowings			63			.01			1,263			2.51			58			.16			-95			9					60			.08			1,177			2.50			-95
Long-term borrowings			6,189			1.86			8,278			3.20			6,240			2.60			-25			-1					6,215			2.23			8,386			3.21			-26
Total interest-bearing liabilities			75,550			.40			70,813			1.11			70,008			.83			7			8					72,778			.60			69,913			1.08			4
Noninterest-bearing deposits			42,497						30,099						32,456						41			31					37,477						30,207						24
Other liabilities			2,446						1,945						2,401						26			2					2,422						1,948						24
Total liabilities			120,493						102,857						104,865						17			15					112,677						102,068						10
Shareholders' equity			15,953						15,630						15,720						2			1					15,836						15,599						2
Total liabilities and
shareholders' equity		$	136,446						118,487						120,585						15	%		13	%			$	128,513						117,667						9	%
Net interest spread						2.98						3.53						3.35														3.15						3.60
Contribution of interest-free funds						.15						.38						.30														.22						.37
Net interest margin						3.13	%					3.91	%					3.65	%													3.37	%					3.97	%

 

Reconciliation of Quarterly GAAP to Non-GAAP Measures
		Three months ended			Six months ended
		June 30			June 30
		2020			2019			2020			2019
Income statement data
In thousands, except per share
Net income
Net income		$	241,054				473,260				509,876				956,002
Amortization of core deposit and other intangible assets (1)			2,904				3,741				5,787				7,439
Net operating income		$	243,958				477,001				515,663				963,441
Earnings per common share
Diluted earnings per common share		$	1.74				3.34				3.67				6.69
Amortization of core deposit and other intangible assets (1)			.02				.03				.04				.05
Diluted net operating earnings per common share		$	1.76				3.37				3.71				6.74
Other expense
Other expense		$	807,042				873,032				1,713,458				1,767,380
Amortization of core deposit and other intangible assets			(3,913)				(5,077)				(7,826)				(10,097)
Noninterest operating expense		$	803,129				867,955				1,705,632				1,757,283
Efficiency ratio
Noninterest operating expense (numerator)		$	803,129				867,955				1,705,632				1,757,283
Taxable-equivalent net interest income			961,371				1,047,406				1,943,239				2,103,433
Other income			487,273				512,095				1,016,633				1,012,860
Less:  Gain (loss) on bank investment securities			6,969				8,911				(13,813)				20,752
Denominator		$	1,441,675				1,550,590				2,973,685				3,095,541
Efficiency ratio			55.71	%			55.98	%			57.36	%			56.77	%
Balance sheet data
In millions
Average assets
Average assets		$	136,446				118,487				128,513				117,667
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(23)				(41)				(25)				(43)
Deferred taxes			6				11				7				11
Average tangible assets		$	131,836				113,864				123,902				113,042
Average common equity
Average total equity		$	15,953				15,630				15,836				15,599
Preferred stock			(1,250)				(1,232)				(1,250)				(1,232)
Average common equity			14,703				14,398				14,586				14,367
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(23)				(41)				(25)				(43)
Deferred taxes			6				11				7				11
Average tangible common equity		$	10,093				9,775				9,975				9,742
At end of quarter
Total assets
Total assets		$	139,537				121,555
Goodwill			(4,593)				(4,593)
Core deposit and other intangible assets			(21)				(38)
Deferred taxes			5				10
Total tangible assets		$	134,928				116,934
Total common equity
Total equity		$	15,945				15,692
Preferred stock			(1,250)				(1,232)
Undeclared dividends - cumulative preferred stock			—				(3)
Common equity, net of undeclared cumulative preferred dividends			14,695				14,457
Goodwill			(4,593)				(4,593)
Core deposit and other intangible assets			(21)				(38)
Deferred taxes			5				10
Total tangible common equity		$	10,086				9,836

________________
(1)	After any related tax effect.

 

Reconciliation of Quarterly GAAP to Non-GAAP Measures, Five Quarter Trend
		Three months ended
		June 30,			March 31,			December 31,			September 30,			June 30,
		2020			2020			2019			2019			2019
Income statement data
In thousands, except per share
Net income
Net income		$	241,054				268,822				493,066				480,081				473,260
Amortization of core deposit and other intangible assets (1)			2,904				2,883				3,171				3,749				3,741
Net operating income		$	243,958				271,705				496,237				483,830				477,001
Earnings per common share
Diluted earnings per common share		$	1.74				1.93				3.60				3.47				3.34
Amortization of core deposit and other intangible assets (1)			.02				.02				.02				.03				.03
Diluted net operating earnings per common share		$	1.76				1.95				3.62				3.50				3.37
Other expense
Other expense		$	807,042				906,416				823,683				877,619				873,032
Amortization of core deposit and other intangible assets			(3,913)				(3,913)				(4,305)				(5,088)				(5,077)
Noninterest operating expense		$	803,129				902,503				819,378				872,531				867,955
Efficiency ratio
Noninterest operating expense (numerator)		$	803,129				902,503				819,378				872,531				867,955
Taxable-equivalent net interest income			961,371				981,868				1,014,225				1,035,469				1,047,406
Other income			487,273				529,360				521,040				527,779				512,095
Less:  Gain (loss) on bank investment securities			6,969				(20,782)				(6,452)				3,737				8,911
Denominator		$	1,441,675				1,532,010				1,541,717				1,559,511				1,550,590
Efficiency ratio			55.71	%			58.91	%			53.15	%			55.95	%			55.98	%
Balance sheet data
In millions
Average assets
Average assets		$	136,446				120,585				122,554				120,388				118,487
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(23)				(27)				(31)				(36)				(41)
Deferred taxes			6				7				8				10				11
Average tangible assets		$	131,836				115,972				117,938				115,769				113,864
Average common equity
Average total equity		$	15,953				15,720				15,832				15,837				15,630
Preferred stock			(1,250)				(1,250)				(1,250)				(1,373)				(1,232)
Average common equity			14,703				14,470				14,582				14,464				14,398
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(23)				(27)				(31)				(36)				(41)
Deferred taxes			6				7				8				10				11
Average tangible common equity		$	10,093				9,857				9,966				9,845				9,775
At end of quarter
Total assets
Total assets		$	139,537				124,578				119,873				125,501				121,555
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(21)				(25)				(29)				(33)				(38)
Deferred taxes			5				6				7				8				10
Total tangible assets		$	134,928				119,966				115,258				120,883				116,934
Total common equity
Total equity		$	15,945				15,816				15,717				15,780				15,692
Preferred stock			(1,250)				(1,250)				(1,250)				(1,250)				(1,232)
Undeclared dividends - cumulative preferred stock			—				—				—				—				(3)
Common equity, net of undeclared cumulative preferred        dividends			14,695				14,566				14,467				14,530				14,457
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(21)				(25)				(29)				(33)				(38)
Deferred taxes			5				6				7				8				10
Total tangible common equity		$	10,086				9,954				9,852				9,912				9,836

__________________
(1)	After any related tax effect.

 

INVESTOR CONTACT:	Donald J. MacLeod
	(716) 842-5138
MEDIA CONTACT:	C. Michael Zabel
	(716) 842-5385

 

 

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SOURCE M&T Bank Corporation

FAQ

What were M&T Bank's earnings per share for Q2 2020?

M&T Bank's diluted earnings per share for Q2 2020 were $1.74.

How much did M&T Bank's net income decrease in Q2 2020?

M&T Bank's net income decreased by 49% in Q2 2020, totaling $241 million.

What was the provision for credit losses for M&T Bank in Q2 2020?

The provision for credit losses for M&T Bank in Q2 2020 was $325 million.

How did M&T Bank's total assets change by June 30, 2020?

By June 30, 2020, M&T Bank's total assets increased to $139.5 billion.

What impact did the COVID-19 pandemic have on M&T Bank's financial results?

The COVID-19 pandemic adversely affected M&T Bank's financial results, contributing to a substantial increase in provision for credit losses.