M&T Bank Corporation Announces Third Quarter Results

BUFFALO, N.Y., Oct. 17, 2014 /PRNewswire/ -- M&T Bank Corporation ("M&T")MTB today reported its results of operations for the quarter ended September 30, 2014.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") for the third quarter of 2014 were $1.91, compared with $2.11 in the year-earlier quarter and $1.98 in the second quarter of 2014.  GAAP-basis net income in the recently completed quarter aggregated $275 million, compared with $294 million and $284 million in the third quarter of 2013 and the second quarter of 2014, respectively.  GAAP-basis net income for the third quarter of 2014 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.17% and 9.18%, respectively, compared with 1.39% and 11.06%, respectively, in the year-earlier quarter and 1.27% and 9.79%, respectively, in 2014's second quarter.  Reflected in last year's third quarter profits were after-tax gains of $34 million from loan securitization transactions that added $.26 of diluted earnings per common share to that quarter's results.

Commenting on M&T's financial performance for the recent quarter, Rene F. Jones, Vice Chairman and Chief Financial Officer, noted, "Revenue levels were largely unchanged in comparison with the linked quarter.  Average loans grew modestly and fee income declined slightly from the strong second quarter performance.  Most important was the substantial progress we have made on our key initiatives related to strengthening M&T's BSA/AML, compliance and risk management infrastructure.  That progress led to the continuation of an elevated level of operating expenses, but we firmly believe that our decision to invest in these initiatives is money well-spent.  Significantly, credit quality remained quite strong, as reflected in lower levels of nonperforming loans and net charge-offs when compared with the previous quarter."

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, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and gains and expenses associated with merging acquired operations into M&T, since such items are considered by management to be "nonoperating" in nature.  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 $1.94 in the third quarter of 2014, compared with $2.16 and $2.02 in the year-earlier quarter and the second quarter of 2014, respectively.  Net operating income during the recent quarter was $280 million, compared with $301 million in the third quarter of 2013 and $290 million in 2014's second quarter.  Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income was 1.24% and 13.80%, respectively, in the recent quarter, compared with 1.48% and 17.64%, respectively, in the third quarter of 2013 and 1.35% and 14.92%, respectively, in the second quarter of 2014. 

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $675 million in each of the second and third quarters of 2014.  A 17 basis point decline in the net interest margin to 3.23% in the recent quarter was offset by a $3.2 billion increase in average earning assets, including a $1.8 billion rise in average investment securities.  Taxable-equivalent net interest income in the recent quarter was down $4 million from $679 million in the year-earlier period reflecting a 38 basis point decline of the net interest margin from 3.61% in the third quarter of 2013 that was substantially offset by an $8.1 billion rise in average earning assets, including $5.8 billion of investment securities.  In each quarterly comparison, the decline in the net interest margin was attributable to increased lower-yielding balances of investment securities and deposits held at the Federal Reserve Bank of New York combined with continuing downward pressure on yields earned on loans. The growth in investment securities resulted from progress made in response to new regulatory liquidity requirements that were recently finalized and will become effective for M&T in January 2016.

Provision for Credit Losses/Asset Quality.  The provision for credit losses was $29 million in the recent quarter, compared with $48 million in the third quarter of 2013 and $30 million in 2014's second quarter. Net charge-offs of loans were $28 million during 2014's third quarter, compared with $48 million and $29 million in the third quarter of 2013 and second quarter of 2014, respectively.  Expressed as an annualized percentage of average loans outstanding, net charge-offs were .17% and .29% in the third quarter of 2014 and 2013, respectively, and .18% in the second quarter of 2014.

Loans classified as nonaccrual declined to $848 million, or 1.29% of total loans outstanding at September 30, 2014, improved from $916 million or 1.44% at September 30, 2013 and $880 million or 1.36% at June 30, 2014.  Assets taken in foreclosure of defaulted loans totaled $68 million at September 30, 2014, compared with $89 million and $60 million at September 30, 2013 and June 30, 2014, 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 totaled $919 million or 1.40% of loans outstanding at September 30, 2014, compared with $916 million or 1.44% at September 30, 2013 and $918 million or 1.42% at June 30, 2014. 

Noninterest Income and Expense.  Noninterest income totaled $451 million in the recent quarter, little changed from $456 million in the second quarter of 2014, but down from $477 million in the third quarter of 2013 when $56 million of pre-tax gains from loan securitization transactions were realized.  Excluding those gains, noninterest income in the year-earlier quarter aggregated $421 million. The improvement in the recent quarter as compared with 2013's third quarter, exclusive of the gains from securitizations, resulted predominantly from higher residential mortgage banking revenues associated with loan servicing activities. 

Noninterest expenses in the third quarter of 2014 totaled $679 million, compared with $659 million in the year-earlier quarter and $681 million in the second quarter of 2014.  Included in such amounts are expenses considered to be nonoperating in nature consisting of amortization of core deposit and other intangible assets.  Exclusive of those expenses, noninterest operating expenses were $672 million in each of the two most recent quarters and $648 million in the third quarter of 2013. The higher level of operating expenses in the recent quarter as compared with the year-earlier period was predominantly attributable to increased costs for professional services and salaries associated with BSA/AML activities, compliance, capital planning and stress testing, and risk management initiatives. 

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 59.7% in the recent quarter, 59.4% in the second quarter of 2014 and 56.0% in 2013's third quarter.

Balance Sheet.  M&T had total assets of $97.2 billion at September 30, 2014, up 15% from $84.4 billion a year earlier.  Investment securities were $13.3 billion at the recent quarter-end, up $5.0 billion or 61% from September 30, 2013.  M&T added investment securities during 2013 and 2014 through purchase and loan securitization transactions in order to enhance its liquidity position in response to new regulatory requirements.   Loans and leases, net of unearned discount, totaled $65.6 billion at September 30, 2014, $1.9 billion or 3% above $63.7 billion a year earlier.  Total deposits rose 12% to $74.3 billion at the recent quarter-end from $66.6 billion at September 30, 2013. 

Total shareholders' equity also rose 12% to $12.3 billion at September 30, 2014 from $11.0 billion a year earlier, representing 12.68% and 13.05%, respectively, of total assets.  Common shareholders' equity was $11.1 billion, or $83.99 per share, at September 30, 2014, compared with $10.1 billion, or $77.81 per share, at September 30, 2013.  Tangible equity per common share rose 13% to $57.10 at September 30, 2014 from $50.32 at September 30, 2013.  Common shareholders' equity per share and tangible equity per common share were $82.86 and $55.89, respectively, at June 30, 2014.  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's estimated Tier 1 common ratio, a regulatory capital measure, continued to increase and was 9.77% at September 30, 2014, compared with 9.08% and 9.63% at September 30, 2013 and June 30, 2014, respectively.  M&T estimates that the ratio of Common Equity Tier 1 to risk-weighted assets under the capital rules approved in July 2013 on a fully phased-in basis was approximately 9.52% as of September 30, 2014.

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 #15231149.  The conference call will be webcast live through M&T's website at http://ir.mandtbank.com/events.cfm.  A replay of the call will be available until October 20, 2014 by calling (800)585-8367, or (404)537-3406 for international participants, and by making reference to ID #15231149.  The event will also be archived and available by 7:00 p.m. today on M&T's website at http://ir.mandtbank.com/events.cfm.

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, Pennsylvania, Maryland, Virginia, West Virginia, Delaware 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.  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; 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; 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 or regulatory agencies; 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.

INVESTOR CONTACT: Donald J. MacLeod
                                  (716) 842-5138

MEDIA CONTACT: C. Michael Zabel
                            (716) 842-5385

 

 

 

 

 

 

 

 

 

 

 

 

SOURCE M&T Bank Corporation