M&T Bank Corporation Announces Third Quarter Results

Rhea-AI Summary

M&T Bank Corporation (MTB) reported Q3 2020 results, with diluted earnings per share at $2.75, down 21% from $3.47 in Q3 2019. Net income was $372 million, a 22% decrease year-over-year. The net interest income declined to $947 million, reflecting an 83 basis point drop in net interest margin to 2.95%. The provision for credit losses increased to $150 million due to COVID-19 impact. Total assets rose to $138.6 billion, supported by a significant rise in loans and deposits. M&T maintains a strong capital position with a Common Equity Tier 1 ratio of approximately 9.81%.

Positive

• Growth in average earning assets by 18% to $127.7 billion.
• Robust mortgage banking revenues up 12% year-over-year.
• Higher deposit levels, reaching $115.2 billion.

Negative

• Net income decreased by 22% year-over-year to $372 million.
• Diluted earnings per share dropped by 21% compared to Q3 2019.
• Net interest margin narrowed significantly by 83 basis points.

BUFFALO, N.Y., Oct. 22, 2020 /PRNewswire/ -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for the quarter ended September 30, 2020.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $2.75 in the third quarter of 2020, compared with $3.47 in the year-earlier quarter and $1.74 in the second quarter of 2020. GAAP-basis net income was $372 million in the recent quarter, $480 million in the third quarter of 2019 and $241 million in the second 2020 quarter. GAAP-basis net income in the third quarter of 2020 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.06% and 9.53%, respectively, compared with 1.58% and 12.73%, respectively, in the similar 2019 period and .71% and 6.13%, respectively, in the second quarter of 2020. 

Darren J. King, Executive Vice President and Chief Financial Officer, commented on M&T's third quarter results, "Our results for the recent quarter reflect an uptick in economic activity across large portions of our customer base that contributed significantly to higher transaction levels and robust mortgage banking revenues. Coupled with well-controlled expenses that were in line with our expectations and prudent loan loss provisioning, M&T remains well-positioned as we enter the final quarter of 2020."

Earnings Highlights
														Change 3Q20 vs.
($ in millions, except per share data)		3Q20				3Q19				2Q20				3Q19				2Q20
Net income		$	372			$	480			$	241				-22	%			54	%
Net income available to common shareholders  ̶  diluted		$	353			$	461			$	223				-23	%			58	%
Diluted earnings per common share		$	2.75			$	3.47			$	1.74				-21	%			58	%
Annualized return on average assets			1.06	%			1.58	%			.71	%
Annualized return on average common equity			9.53	%			12.73	%			6.13	%

For the first nine months of 2020 and 2019, diluted earnings per common share were $6.42 and $10.16, respectively.  GAAP-basis net income for the nine-month period ended September 30, 2020 totaled $882 million, compared with $1.44 billion in the year-earlier period. Expressed as an annualized rate of return on average assets and average common shareholders' equity, GAAP-basis net income during the nine-month period ended September 30, 2020 was .89% and 7.57%, respectively, and was 1.62% and 12.85%, 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 $2.77 in the third quarter of 2020, $3.50 in the third quarter of 2019 and $1.76 in the second quarter of 2020.  Net operating income in 2020's third quarter was $375 million, compared with $484 million in the third quarter of 2019 and $244 million in the second 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 1.10% and 13.94%, respectively, 1.66% and 18.85%, respectively, in the corresponding quarter of 2019 and .74% and 9.04%, respectively, in the second quarter of 2020.

Diluted net operating earnings per common share during the first nine months of 2020 and 2019 were $6.49 and $10.24, respectively.  Net operating income during the nine-month period ended September 30, 2020 was $891 million, compared with $1.45 billion in the similar 2019 period.  Net operating income expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity was .93% and 11.15%, respectively, in the initial nine months of 2020 and was 1.70% and 19.07%, respectively, in the year-earlier period.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $947 million in the recent quarter, compared with $1.04 billion in the third quarter of 2019. That decline resulted from an 83 basis point narrowing of the net interest margin, to 2.95% in the third quarter of 2020 from 3.78% in the year-earlier quarter, that was partially offset by the impact of a $19.1 billion or 18% increase in average earning assets to $127.7 billion in the recent quarter from $108.6 billion in the third  quarter of 2019.   In the second quarter of 2020, taxable-equivalent net interest income was $961 million, the net interest margin was 3.13% and average earning assets were $123.5 billion.  Included in average earning assets in the third and second quarters of 2020 were $6.5 billion and $4.8 billion, respectively, of balances associated with the Paycheck Protection Program ("PPP") loans originated by M&T during 2020.  As compared with the third quarter of 2019, the recent quarter's narrowing of the net interest margin resulted largely from lower yields on loans and deposits held at the Federal Reserve Bank of New York, while the rise in average earning assets reflected higher balances of those same asset types.  The narrowing of the net interest margin from the second quarter to the third quarter of 2020 resulted from lower yields on loans and investment securities and the impact of a $4.4 billion rise in average balances of short-term earning assets, which earn a significantly lower yield than loans and investment securities.

Taxable-equivalent Net Interest Income
														Change 3Q20 vs.
($ in millions)		3Q20				3Q19				2Q20				3Q19				2Q20
Average earning assets		$	127,689			$	108,643			$	123,492				18	%			3	%
Net interest income  ̶  taxable-equivalent		$	947			$	1,035			$	961				-9	%			-1	%
Net interest margin			2.95	%			3.78	%			3.13	%

Provision for Credit Losses/Asset Quality.  The provision for credit losses totaled $150 million in the third quarter of 2020, up from $45 million in the year-earlier quarter, but down from $325 million in 2020's second quarter. The significantly higher level of the provision in the 2020 quarters reflected projections of expected credit losses under the provisions of new accounting guidance that became effective on January 1, 2020. Those projections included estimates of the impact of the COVID-19 pandemic. Prior to 2020, the provision for credit losses reflected incurred losses only.  Net loan charge-offs were $30 million during the recent quarter, compared with $36 million in the similar quarter of 2019 and $71 million in the second quarter of 2020. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .12% and .16% during the three-month periods ended September 30, 2020 and 2019, respectively, and .29% in the second quarter of 2020.  

Loans classified as nonaccrual totaled $1.24 billion or 1.26% of total loans outstanding at September 30, 2020, compared with $1.16 billion or 1.18% of total loans at June 30, 2020.  Nonaccrual loans outstanding at September 30, 2019 were $1.01 billion or 1.12% of total loans. 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 $50 million at September 30, 2020, compared with $80 million and $67 million at September 30, 2019 and June 30, 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 $1.76 billion or 1.79% of loans outstanding at September 30, 2020, compared with $1.04 billion or 1.16% at September 30, 2019, $1.64 billion or 1.68% at June 30, 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 September 30, 2020 and June 30, 2020 represented 1.91% and 1.79%, respectively, of total loans on those dates, excluding outstanding balances of PPP loans.

Asset Quality Metrics
														Change 3Q20 vs.
($ in millions)		3Q20				3Q19				2Q20				3Q19				2Q20
At end of quarter
Nonaccrual loans		$	1,240			$	1,005			$	1,157				23	%			7	%
Real estate and other foreclosed assets		$	50			$	80			$	67				-37	%			-25	%
Total nonperforming assets		$	1,290			$	1,085			$	1,224				19	%			5	%
Accruing loans past due 90 days or more (1)		$	527			$	461			$	536				14	%			-2	%
Nonaccrual loans as % of loans outstanding			1.26	%			1.12	%			1.18	%
Allowance for credit losses		$	1,759			$	1,038			$	1,638				69	%			7	%
Allowance for credit losses as % of loans outstanding			1.79	%			1.16	%			1.68	%
For the period
Provision for credit losses		$	150			$	45			$	325				233	%			-54	%
Net charge-offs		$	30			$	36			$	71				-18	%			-58	%
Net charge-offs as % of average loans (annualized)			.12	%			.16	%			.29	%

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

Noninterest Income and Expense.  Noninterest income was $521 million in the recent quarter, $528 million in the year-earlier quarter and $487 million in the second quarter of 2020. As compared with the third quarter of 2019, the recent quarter's higher residential mortgage banking revenues and trust income were more than offset by lower service charges on deposit accounts and trading account and foreign exchange gains. The recent quarter's improvement as compared with the second quarter of 2020 predominantly reflects higher service charges on deposit accounts, residential mortgage banking revenues and merchant discount and credit card fees.

Noninterest Income
														Change 3Q20 vs.
($ in millions)		3Q20				3Q19				2Q20				3Q19				2Q20
Mortgage banking revenues		$	153			$	137			$	145				12	%			6	%
Service charges on deposit accounts			91				111				78				-18	%			18	%
Trust income			150				144				152				4	%			-1	%
Brokerage services income			12				12				10				-4	%			11	%
Trading account and foreign exchange gains			4				16				8				-75	%			-51	%
Gain on bank investment securities			3				4				7				-26	%			-60	%
Other revenues from operations			108				104				87				4	%			23	%
Total		$	521			$	528			$	487				-1	%			7	%

Noninterest expense totaled $827 million in the third quarter of 2020, compared with $878 million in the corresponding quarter of 2019 and $807 million in the second quarter of 2020.  Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets, noninterest operating expenses were $823 million in the recent quarter, $873 million in the third quarter of 2019 and $803 million in 2020's second quarter. Contributing to the decreased level of noninterest expenses in the recent quarter as compared with the year-earlier quarter were lower costs for professional and outside services, advertising and marketing, and travel and entertainment. Additionally, the third quarter of 2019 included a $14 million addition to the valuation allowance for capitalized mortgage servicing rights, reflecting the impact of lower interest rates at that time on the valuation of such servicing rights. There was no similar increase to the valuation allowance in the recent quarter. As compared with the second 2020 quarter, higher costs for salaries and employee benefits in the recent quarter, reflective of improving business activity and one additional day, were partially offset by the impact of a $10 million addition to the valuation allowance for capitalized mortgage servicing rights recognized in the second quarter of 2020.

Noninterest Expense
														Change 3Q20 vs.
($ in millions)		3Q20				3Q19				2Q20				3Q19				2Q20
Salaries and employee benefits		$	479			$	477			$	459				—				4	%
Equipment and net occupancy			81				83				77				-2	%			5	%
Outside data processing and software			65				60				61				7	%			5	%
FDIC assessments			12				10				14				22	%			-15	%
Advertising and marketing			12				22				10				-46	%			20	%
Printing, postage and supplies			9				10				11				-8	%			-16	%
Amortization of core deposit and other intangible assets			4				5				4				-23	%			—
Other costs of operations			165				211				171				-22	%			-3	%
Total		$	827			$	878			$	807				-6	%			2	%

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 56.2% in the third quarter of 2020, 56.0% in the year-earlier quarter and 55.7% in the second quarter of 2020.

Balance Sheet.  M&T had total assets of $138.6 billion at September 30, 2020, compared with $125.5 billion and $139.5 billion at September 30, 2019 and June 30, 2020, respectively. Loans and leases, net of unearned discount, were $98.4 billion at September 30, 2020, up from $89.8 billion at September 30, 2019 and $97.8 billion at June 30, 2020. The increase in total loans and leases at the recent quarter-end as compared with the third quarter of 2019 was driven largely by growth in commercial loans of $4.7 billion and commercial real estate loans of $2.6 billion. The commercial loan growth reflects loans originated as part of the PPP, which totaled $6.5 billion at September 30, 2020. Total deposits rose to $115.2 billion at the recent quarter-end, compared with $95.1 billion at September 30, 2019 and $115.0 billion at June 30, 2020. The higher levels of deposits at the two most recent quarter-ends as compared with September 30, 2019 reflect both increased commercial and consumer deposits, as well as higher deposits associated with residential mortgage servicing activities.

Total shareholders' equity was $16.1 billion, or 11.61% of total assets at September 30, 2020, compared with $15.8 billion, or 12.57% at September 30, 2019 and $15.9 billion, or 11.43% at June 30, 2020. Common shareholders' equity was $14.9 billion, or $115.75 per share, at September 30, 2020, up from $14.5 billion, or $109.84 per share, a year-earlier and $14.7 billion, or $114.54 per share, at June 30, 2020. Tangible equity per common share was $79.85 at September 30, 2020, $74.93 at September 30, 2019 and $78.62 at June 30, 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 9.81% at September 30, 2020, up from 9.50% three months earlier.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss third 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 #1169149.  The conference call will be webcast live through M&T's website at https://ir.mtb.com/events-presentations. A replay of the call will be available through Thursday, October 29, 2020 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #1169149.  The event will also be archived and available by 3:00 p.m. today on M&T's website at https://ir.mtb.com/events-presentations.

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

Forward-Looking Statements.  This news release and related conference call may contain forward-looking statements that are based on current expectations, estimates and projections about M&T's business, management's beliefs and assumptions made by management.  Any statement that does not describe historical or current facts is a forward-looking statement, 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.

M&T provides further detail regarding these risks and uncertainties in its 2019 Form 10-K and subsequent Form 10-Qs, including in the respective Risk Factors sections of such reports, as well as in subsequent 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												Nine months ended
		September 30												September 30
Amounts in thousands, except per share		2020				2019				Change				2020				2019				Change
Performance
Net income		$	372,136				480,081				-22	%		$	882,012				1,436,083				-39	%
Net income available to common shareholders			353,400				461,410				-23	%			827,204				1,376,129				-40	%
Per common share:
Basic earnings		$	2.75				3.47				-21	%		$	6.42				10.16				-37	%
Diluted earnings			2.75				3.47				-21	%			6.42				10.16				-37	%
Cash dividends		$	1.10				1.00				10	%		$	3.30				3.00				10	%
Common shares outstanding:
Average - diluted (1)			128,355				132,999				-3	%			128,813				135,443				-5	%
Period end (2)			128,303				132,277				-3	%			128,303				132,277				-3	%
Return on (annualized):
Average total assets			1.06	%			1.58	%							.89	%			1.62	%
Average common shareholders' equity			9.53	%			12.73	%							7.57	%			12.85	%
Taxable-equivalent net interest income		$	947,114				1,035,469				-9	%		$	2,890,353				3,138,902				-8	%
Yield on average earning assets			3.13	%			4.51	%							3.53	%			4.62	%
Cost of interest-bearing liabilities			.30	%			1.10	%							.50	%			1.09	%
Net interest spread			2.83	%			3.41	%							3.03	%			3.53	%
Contribution of interest-free funds			.12	%			.37	%							.19	%			.38	%
Net interest margin			2.95	%			3.78	%							3.22	%			3.91	%
Net charge-offs to average total net loans (annualized)			.12	%			.16	%							.21	%			.15	%
Net operating results (3)
Net operating income		$	375,029				483,830				-22	%		$	890,692				1,447,271				-38	%
Diluted net operating earnings per common share			2.77				3.50				-21	%			6.49				10.24				-37	%
Return on (annualized):
Average tangible assets			1.10	%			1.66	%							.93	%			1.70	%
Average tangible common equity			13.94	%			18.85	%							11.15	%			19.07	%
Efficiency ratio			56.17	%			55.95	%							56.97	%			56.49	%
		At September 30
Loan quality		2020				2019				Change
Nonaccrual loans		$	1,239,972				1,005,249				23	%
Real estate and other foreclosed assets			49,872				79,735				-37	%
Total nonperforming assets		$	1,289,844				1,084,984				19	%
Accruing loans past due 90 days or more (4)		$	527,258				461,162				14	%
Government guaranteed loans included in totals above:
Nonaccrual loans		$	45,975				43,144				7	%
Accruing loans past due 90 days or more			505,446				434,132				16	%
Renegotiated loans		$	242,581				240,781				1	%
Accruing loans acquired at a discount past due 90 days or more (5)		N/A					40,733				—
Purchased impaired loans (6):
Outstanding customer balance		N/A					453,382				—
Carrying amount		N/A					253,496				—
Nonaccrual loans to total net loans			1.26	%			1.12	%
Allowance for credit losses to total loans			1.79	%			1.16	%

(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 appears 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
		September 30,				June 30,				March 31,				December 31,				September 30,
Amounts in thousands, except per share		2020				2020				2020				2019				2019
Performance
Net income		$	372,136				241,054				268,822				493,066				480,081
Net income available to common shareholders			353,400				223,099				250,701				473,372				461,410
Per common share:
Basic earnings		$	2.75				1.74				1.93				3.60				3.47
Diluted earnings			2.75				1.74				1.93				3.60				3.47
Cash dividends		$	1.10				1.10				1.10				1.10				1.00
Common shares outstanding:
Average - diluted (1)			128,355				128,333				129,755				131,549				132,999
Period end (2)			128,303				128,294				128,282				130,589				132,277
Return on (annualized):
Average total assets			1.06	%			.71	%			.90	%			1.60	%			1.58	%
Average common shareholders' equity			9.53	%			6.13	%			7.00	%			12.95	%			12.73	%
Taxable-equivalent net interest income		$	947,114				961,371				981,868				1,014,225				1,035,469
Yield on average earning assets			3.13	%			3.38	%			4.18	%			4.27	%			4.51	%
Cost of interest-bearing liabilities			.30	%			.40	%			.83	%			.97	%			1.10	%
Net interest spread			2.83	%			2.98	%			3.35	%			3.30	%			3.41	%
Contribution of interest-free funds			.12	%			.15	%			.30	%			.34	%			.37	%
Net interest margin			2.95	%			3.13	%			3.65	%			3.64	%			3.78	%
Net charge-offs to average total net loans (annualized)			.12	%			.29	%			.22	%			.18	%			.16	%
Net operating results (3)
Net operating income		$	375,029				243,958				271,705				496,237				483,830
Diluted net operating earnings per common share			2.77				1.76				1.95				3.62				3.50
Return on (annualized):
Average tangible assets			1.10	%			.74	%			.94	%			1.67	%			1.66	%
Average tangible common equity			13.94	%			9.04	%			10.39	%			19.08	%			18.85	%
Efficiency ratio			56.17	%			55.71	%			58.91	%			53.15	%			55.95	%
		September 30,				June 30,				March 31,				December 31,				September 30,
Loan quality		2020				2020				2020				2019				2019
Nonaccrual loans		$	1,239,972				1,156,650				1,061,748				963,112				1,005,249
Real estate and other foreclosed assets			49,872				66,763				83,605				85,646				79,735
Total nonperforming assets		$	1,289,844				1,223,413				1,145,353				1,048,758				1,084,984
Accruing loans past due 90 days or more (4)		$	527,258				535,755				530,317				518,728				461,162
Government guaranteed loans included in totals above:
Nonaccrual loans		$	45,975				51,165				50,561				50,891				43,144
Accruing loans past due 90 days or more			505,446				454,269				464,243				479,829				434,132
Renegotiated loans		$	242,581				234,768				232,439				234,424				240,781
Accruing loans acquired at a discount past due 90 days or         more (5)		N/A				N/A				N/A					39,632				40,733
Purchased impaired loans (6):
Outstanding customer balance		N/A				N/A				N/A					415,413				453,382
Carrying amount		N/A				N/A				N/A					227,545				253,496
Nonaccrual loans to total net loans			1.26	%			1.18	%			1.13	%			1.06	%			1.12	%
Allowance for credit losses to total loans			1.79	%			1.68	%			1.47	%			1.16	%			1.16	%

(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 appears 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												Nine months ended
		September 30												September 30
Dollars in thousands		2020				2019				Change				2020				2019				Change
Interest income		$	1,001,161				1,229,469				-19	%		$	3,153,822				3,693,691				-15	%
Interest expense			58,066				199,579				-71				276,785				572,260				-52
Net interest income			943,095				1,029,890				-8				2,877,037				3,121,431				-8
Provision for credit losses			150,000				45,000			233					725,000				122,000				494
Net interest income after provision for credit losses			793,095				984,890				-19				2,152,037				2,999,431				-28
Other income
Mortgage banking revenues			153,267				137,004				12				426,200				339,636				25
Service charges on deposit accounts			91,355				111,092				-18				274,971				321,991				-15
Trust income			149,937				143,915				4				450,570				421,083				7
Brokerage services income			11,602				12,077				-4				35,194				37,031				-5
Trading account and foreign exchange gains			4,026				16,072				-75				33,332				45,327				-26
Gain (loss) on bank investment securities			2,773				3,737				-26				(11,040)				24,489				—
Other revenues from operations			107,601				103,882				4				327,967				351,082				-7
Total other income			520,561				527,779				-1				1,537,194				1,540,639				—
Other expense
Salaries and employee benefits			478,897				476,780				—				1,474,582				1,431,717				3
Equipment and net occupancy			81,080				82,690				-2				237,809				241,187				-1
Outside data processing and software			64,660				60,360				7				190,446				168,011				13
FDIC assessments			12,121				9,906				22				38,599				29,104				33
Advertising and marketing			11,855				22,088				-46				44,072				66,409				-34
Printing, postage and supplies			9,422				10,201				-8				31,534				30,380				4
Amortization of core deposit and other    intangible assets			3,914				5,088				-23				11,740				15,185				-23
Other costs of operations			164,825				210,506				-22				511,450				663,006				-23
Total other expense			826,774				877,619				-6				2,540,232				2,644,999				-4
Income before income taxes			486,882				635,050				-23				1,148,999				1,895,071				-39
Applicable income taxes			114,746				154,969				-26				266,987				458,988				-42
Net income		$	372,136				480,081				-22	%		$	882,012				1,436,083				-39	%

 

 

Condensed Consolidated Statement of Income, Five Quarter Trend
		Three months ended
		September 30,				June 30,				March 31,				December 31,				September 30,
Dollars in thousands		2020				2020				2020				2019				2019
Interest income		$	1,001,161				1,032,242				1,120,419				1,185,902				1,229,469
Interest expense			58,066				75,105				143,614				177,069				199,579
Net interest income			943,095				957,137				976,805				1,008,833				1,029,890
Provision for credit losses			150,000				325,000				250,000				54,000				45,000
Net interest income after provision for credit losses			793,095				632,137				726,805				954,833				984,890
Other income
Mortgage banking revenues			153,267				145,024				127,909				118,134				137,004
Service charges on deposit accounts			91,355				77,455				106,161				110,987				111,092
Trust income			149,937				151,882				148,751				151,525				143,915
Brokerage services income			11,602				10,463				13,129				11,891				12,077
Trading account and foreign exchange gains			4,026				8,290				21,016				16,717				16,072
Gain (loss) on bank investment securities			2,773				6,969				(20,782)				(6,452)				3,737
Other revenues from operations			107,601				87,190				133,176				118,238				103,882
Total other income			520,561				487,273				529,360				521,040				527,779
Other expense
Salaries and employee benefits			478,897				458,842				536,843				469,080				476,780
Equipment and net occupancy			81,080				77,089				79,640				82,892				82,690
Outside data processing and software			64,660				61,376				64,410				61,720				60,360
FDIC assessments			12,121				14,207				12,271				12,431				9,906
Advertising and marketing			11,855				9,842				22,375				27,063				22,088
Printing, postage and supplies			9,422				11,260				10,852				9,513				10,201
Amortization of core deposit and other    intangible assets			3,914				3,913				3,913				4,305				5,088
Other costs of operations			164,825				170,513				176,112				156,679				210,506
Total other expense			826,774				807,042				906,416				823,683				877,619
Income before income taxes			486,882				312,368				349,749				652,190				635,050
Applicable income taxes			114,746				71,314				80,927				159,124				154,969
Net income		$	372,136				241,054				268,822				493,066				480,081

 

 

Condensed Consolidated Balance Sheet
		September 30
Dollars in thousands		2020				2019				Change
ASSETS
Cash and due from banks		$	1,489,232				1,818,861				-18		%
Interest-bearing deposits at banks			20,197,937				12,495,524				62
Federal funds sold			—				200				—
Trading account			1,215,573				614,256				98
Investment securities			7,723,004				10,677,583				-28
Loans and leases:
Commercial, financial, etc.			27,891,648				23,201,372				20
Real estate - commercial			37,582,084				34,945,231				8
Real estate - consumer			16,663,708				16,500,955				1
Consumer			16,309,608				15,175,635				7
Total loans and leases, net of unearned discount			98,447,048				89,823,193				10
Less: allowance for credit losses			1,758,505				1,038,437				69
Net loans and leases			96,688,543				88,784,756				9
Goodwill			4,593,112				4,593,112				—
Core deposit and other intangible assets			17,294				33,339				-48
Other assets			6,702,048				6,483,295				3
Total assets		$	138,626,743				125,500,926				10		%
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	44,201,670				31,766,724				39		%
Interest-bearing deposits			70,061,680				61,785,212				13
Deposits at Cayman Islands office			899,989				1,561,997				-42
Total deposits			115,163,339				95,113,933				21
Short-term borrowings			46,123				5,513,896				-99
Accrued interest and other liabilities			1,857,383				2,090,762				-11
Long-term borrowings			5,458,885				7,002,524				-22
Total liabilities			122,525,730				109,721,115				12
Shareholders' equity:
Preferred			1,250,000				1,250,000				—
Common			14,851,013				14,529,811				2
Total shareholders' equity			16,101,013				15,779,811				2
Total liabilities and shareholders' equity		$	138,626,743				125,500,926				10		%

 

 

Condensed Consolidated Balance Sheet, Five Quarter Trend
		September 30,				June 30,				March 31,				December 31,				September 30,
Dollars in thousands		2020				2020				2020				2019				2019
ASSETS
Cash and due from banks		$	1,489,232				1,354,815				1,298,192				1,432,805				1,818,861
Interest-bearing deposits at banks			20,197,937				20,888,341				8,896,307				7,190,154				12,495,524
Federal funds sold			—				—				—				3,500				200
Trading account			1,215,573				1,293,534				1,224,291				470,129				614,256
Investment securities			7,723,004				8,454,344				8,956,590				9,497,251				10,677,583
Loans and leases:
Commercial, financial, etc.			27,891,648				29,203,862				26,243,648				23,838,168				23,201,372
Real estate - commercial			37,582,084				37,159,451				36,684,106				35,541,914				34,945,231
Real estate - consumer			16,663,708				15,611,462				15,643,014				16,156,094				16,500,955
Consumer			16,309,608				15,782,773				15,571,507				15,386,693				15,175,635
Total loans and leases, net of unearned discount			98,447,048				97,757,548				94,142,275				90,922,869				89,823,193
Less: allowance for credit losses			1,758,505				1,638,236				1,384,366				1,051,071				1,038,437
Net loans and leases			96,688,543				96,119,312				92,757,909				89,871,798				88,784,756
Goodwill			4,593,112				4,593,112				4,593,112				4,593,112				4,593,112
Core deposit and other intangible assets			17,294				21,208				25,121				29,034				33,339
Other assets			6,702,048				6,812,303				6,826,311				6,784,974				6,483,295
Total assets		$	138,626,743				139,536,969				124,577,833				119,872,757				125,500,926
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	44,201,670				45,397,843				35,554,715				32,396,407				31,766,724
Interest-bearing deposits			70,061,680				68,701,832				63,410,672				60,689,618				61,785,212
Deposits at Cayman Islands office			899,989				868,284				1,217,921				1,684,044				1,561,997
Total deposits			115,163,339				114,967,959				100,183,308				94,770,069				95,113,933
Short-term borrowings			46,123				52,298				59,180				62,363				5,513,896
Accrued interest and other liabilities			1,857,383				2,250,316				2,198,116				2,337,490				2,090,762
Long-term borrowings			5,458,885				6,321,291				6,321,435				6,986,186				7,002,524
Total liabilities			122,525,730				123,591,864				108,762,039				104,156,108				109,721,115
Shareholders' equity:
Preferred			1,250,000				1,250,000				1,250,000				1,250,000				1,250,000
Common			14,851,013				14,695,105				14,565,794				14,466,649				14,529,811
Total shareholders' equity			16,101,013				15,945,105				15,815,794				15,716,649				15,779,811
Total liabilities and shareholders' equity		$	138,626,743				139,536,969				124,577,833				119,872,757				125,500,926

 

 

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates
		Three months ended																			Change in balance								Nine months ended
		September 30,							September 30,						June 30,						September 30, 2020 from								September 30,											Change
Dollars in millions		2020							2019						2020						September 30,			June 30,				2020						2019						in
		Balance				Rate			Balance			Rate			Balance			Rate			2019			2020				Balance			Rate			Balance			Rate			balance
ASSETS
Interest-bearing deposits at banks		$	16,440			.10	%		7,405			2.16	%		16,454			.10	%		122	%		—	%			$	13,021		.28	%		6,054			2.30	%		115	%
Federal funds sold and agreements
to resell securities			5,113			.13			18			2.01			692			.11			—			639					2,353		.33			6			2.06			—
Trading account			50			1.62			67			.89			49			2.04			-26			2					54		2.15			67			2.15			-19
Investment securities			7,876			1.95			11,075			2.48			8,500			2.24			-29			-7					8,490		2.14			12,058			2.50			-30
Loans and leases, net of unearned
discount
Commercial, financial, etc.			28,333			3.05			23,326			4.82			29,733			3.10			21			-5					27,455		3.37			23,225			4.95			18
Real estate - commercial			37,243			4.19			35,200			5.14			36,947			4.42			6			1					36,743		4.47			34,833			5.26			5
Real estate - consumer			16,558			3.69			16,673			4.20			15,599			4.00			-1			6					16,032		3.90			16,778			4.29			-4
Consumer			16,076			4.76			14,879			5.44			15,518			4.85			8			4					15,683		4.96			14,405			5.49			9
Total loans and leases, net			98,210			3.89			90,078			4.96			97,797			4.05			9			—					95,913		4.17			89,241			5.06			7
Total earning assets			127,689			3.13			108,643			4.51			123,492			3.38			18			3					119,831		3.53			107,426			4.62			12
Goodwill			4,593						4,593						4,593						—			—					4,593					4,593						—
Core deposit and other intangible
assets			19						36						23						-46			-17					23					41						-43
Other assets			7,880						7,116						8,338						11			-5					7,983					6,524						22
Total assets		$	140,181						120,388						136,446						16	%		3	%			$	132,430					118,584						12	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Savings and interest-checking
deposits		$	65,848			.14			55,680			.75			62,927			.17			18	%		5	%			$	61,729		.27			53,770			.68			15	%
Time deposits			4,715			1.22			6,343			1.59			5,354			1.49			-26			-12					5,245		1.43			6,408			1.49			-18
Deposits at Cayman Islands
office			957			.10			1,522			1.62			1,017			.06			-37			-6					1,214		.42			1,249			1.82			-3
Total interest-bearing
deposits			71,520			.21			63,545			.85			69,298			.27			13			3					68,188		.37			61,427			.79			11
Short-term borrowings			62			.01			1,212			2.28			63			.01			-95			-1					61		.06			1,189			2.43			-95
Long-term borrowings			5,499			1.51			7,121			3.13			6,189			1.86			-23			-11					5,974		2.01			7,959			3.19			-25
Total interest-bearing liabilities			77,081			.30			71,878			1.10			75,550			.40			7			2					74,223		.50			70,575			1.09			5
Noninterest-bearing deposits			44,786						30,550						42,497						47			5					39,931					30,323						32
Other liabilities			2,241						2,123						2,446						6			-8					2,360					2,007						18
Total liabilities			124,108						104,551						120,493						19			3					116,514					102,905						13
Shareholders' equity			16,073						15,837						15,953						1			1					15,916					15,679						2
Total liabilities and
shareholders' equity		$	140,181						120,388						136,446						16	%		3	%			$	132,430					118,584						12	%
Net interest spread						2.83						3.41						2.98													3.03						3.53
Contribution of interest-free funds						.12						.37						.15													.19						.38
Net interest margin						2.95	%					3.78	%					3.13	%												3.22	%					3.91	%

 

 

Reconciliation of Quarterly GAAP to Non-GAAP Measures
		Three months ended								Nine months ended
		September 30								September 30
		2020				2019				2020				2019
Income statement data
In thousands, except per share
Net income
Net income		$	372,136				480,081				882,012				1,436,083
Amortization of core deposit and other intangible assets (1)			2,893				3,749				8,680				11,188
Net operating income		$	375,029				483,830				890,692				1,447,271
Earnings per common share
Diluted earnings per common share		$	2.75				3.47				6.42				10.16
Amortization of core deposit and other intangible assets (1)			.02				.03				.07				.08
Diluted net operating earnings per common share		$	2.77				3.50				6.49				10.24
Other expense
Other expense		$	826,774				877,619				2,540,232				2,644,999
Amortization of core deposit and other intangible assets			(3,914)				(5,088)				(11,740)				(15,185)
Noninterest operating expense		$	822,860				872,531				2,528,492				2,629,814
Efficiency ratio
Noninterest operating expense (numerator)		$	822,860				872,531				2,528,492				2,629,814
Taxable-equivalent net interest income			947,114				1,035,469				2,890,353				3,138,902
Other income			520,561				527,779				1,537,194				1,540,639
Less:  Gain (loss) on bank investment securities			2,773				3,737				(11,040)				24,489
Denominator		$	1,464,902				1,559,511				4,438,587				4,655,052
Efficiency ratio			56.17	%			55.95	%			56.97	%			56.49	%
Balance sheet data
In millions
Average assets
Average assets		$	140,181				120,388				132,430				118,584
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(19)				(36)				(23)				(41)
Deferred taxes			5				10				6				11
Average tangible assets		$	135,574				115,769				127,820				113,961
Average common equity
Average total equity		$	16,073				15,837				15,916				15,679
Preferred stock			(1,250)				(1,373)				(1,250)				(1,279)
Average common equity			14,823				14,464				14,666				14,400
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(19)				(36)				(23)				(41)
Deferred taxes			5				10				6				11
Average tangible common equity		$	10,216				9,845				10,056				9,777
At end of quarter
Total assets
Total assets		$	138,627				125,501
Goodwill			(4,593)				(4,593)
Core deposit and other intangible assets			(17)				(33)
Deferred taxes			4				8
Total tangible assets		$	134,021				120,883
Total common equity
Total equity		$	16,101				15,780
Preferred stock			(1,250)				(1,250)
Common equity, net of undeclared cumulative preferred dividends			14,851				14,530
Goodwill			(4,593)				(4,593)
Core deposit and other intangible assets			(17)				(33)
Deferred taxes			4				8
Total tangible common equity		$	10,245			$	9,912

(1)	After any related tax effect.

 

 

Reconciliation of Quarterly GAAP to Non-GAAP Measures, Five Quarter Trend
		Three months ended
		September 30,				June 30,				March 31,				December 31,				September 30,
		2020				2020				2020				2019				2019
Income statement data
In thousands, except per share
Net income
Net income		$	372,136				241,054				268,822				493,066				480,081
Amortization of core deposit and other intangible assets (1)			2,893				2,904				2,883				3,171				3,749
Net operating income		$	375,029				243,958				271,705				496,237				483,830
Earnings per common share
Diluted earnings per common share		$	2.75				1.74				1.93				3.60				3.47
Amortization of core deposit and other intangible assets (1)			.02				.02				.02				.02				.03
Diluted net operating earnings per common share		$	2.77				1.76				1.95				3.62				3.50
Other expense
Other expense		$	826,774				807,042				906,416				823,683				877,619
Amortization of core deposit and other intangible assets			(3,914)				(3,913)				(3,913)				(4,305)				(5,088)
Noninterest operating expense		$	822,860				803,129				902,503				819,378				872,531
Efficiency ratio
Noninterest operating expense (numerator)		$	822,860				803,129				902,503				819,378				872,531
Taxable-equivalent net interest income			947,114				961,371				981,868				1,014,225				1,035,469
Other income			520,561				487,273				529,360				521,040				527,779
Less:  Gain (loss) on bank investment securities			2,773				6,969				(20,782)				(6,452)				3,737
Denominator		$	1,464,902				1,441,675				1,532,010				1,541,717				1,559,511
Efficiency ratio			56.17	%			55.71	%			58.91	%			53.15	%			55.95	%
Balance sheet data
In millions
Average assets
Average assets		$	140,181				136,446				120,585				122,554				120,388
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(19)				(23)				(27)				(31)				(36)
Deferred taxes			5				6				7				8				10
Average tangible assets		$	135,574				131,836				115,972				117,938				115,769
Average common equity
Average total equity		$	16,073				15,953				15,720				15,832				15,837
Preferred stock			(1,250)				(1,250)				(1,250)				(1,250)				(1,373)
Average common equity			14,823				14,703				14,470				14,582				14,464
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(19)				(23)				(27)				(31)				(36)
Deferred taxes			5				6				7				8				10
Average tangible common equity		$	10,216				10,093				9,857				9,966				9,845
At end of quarter
Total assets
Total assets		$	138,627				139,537				124,578				119,873				125,501
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(17)				(21)				(25)				(29)				(33)
Deferred taxes			4				5				6				7				8
Total tangible assets		$	134,021				134,928				119,966				115,258				120,883
Total common equity
Total equity		$	16,101				15,945				15,816				15,717				15,780
Preferred stock			(1,250)				(1,250)				(1,250)				(1,250)				(1,250)
Common equity, net of undeclared cumulative preferred    dividends			14,851				14,695				14,566				14,467				14,530
Goodwill			(4,593)				(4,593)				(4,593)				(4,593)				(4,593)
Core deposit and other intangible assets			(17)				(21)				(25)				(29)				(33)
Deferred taxes			4				5				6				7				8
Total tangible common equity		$	10,245				10,086				9,954				9,852				9,912

(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 diluted earnings per share for Q3 2020?

M&T Bank's diluted earnings per share for Q3 2020 were $2.75.

How much did M&T Bank's net income decrease in Q3 2020?

M&T Bank's net income in Q3 2020 was $372 million, a decrease of 22% compared to the same quarter in 2019.

What was the common equity tier 1 ratio for M&T Bank in Q3 2020?

The common equity tier 1 ratio for M&T Bank was approximately 9.81% in Q3 2020.

How did M&T Bank's net interest income change in Q3 2020?

M&T Bank's net interest income in Q3 2020 decreased to $947 million from $1.04 billion in Q3 2019.

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

The provision for credit losses increased to $150 million in Q3 2020 due to projections reflecting the expected impact of COVID-19.