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M&T Bank Corporation Announces Second Quarter Results

BUFFALO, N.Y., July 19, 2017 /PRNewswire/ -- M&T Bank Corporation ("M&T")(NYSE: MTB) today reported its results of operations for the quarter ended June 30, 2017.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") for the second quarter of 2017 were $2.35, up 19% from $1.98 in the year-earlier period and 11% higher than $2.12 in the first quarter of 2017.  GAAP-basis net income in the recently completed quarter totaled $381 million, a 13% rise from $336 million in the corresponding 2016 quarter and 9% above the $349 million recorded in the initial 2017 quarter.  GAAP-basis net income for the second quarter of 2017 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.27% and 9.67%, respectively, compared with 1.09% and 8.38%, respectively, in the year-earlier quarter and 1.15% and 8.89%, respectively, in the first quarter of 2017.

Commenting on the recent quarter's performance, Darren J. King, Executive Vice President and Chief Financial Officer, stated, "Financial results for M&T in the second quarter were highlighted by a continued widening of the net interest margin, which rose 11 basis points from the previous quarter to 3.45%.  Also contributing to the strong performance were increased trust income and well-controlled expenses that were in line with our expectations. As has been the case for some time, credit quality continued to be solid as net charge-offs were modest and nonaccrual loans decreased."

Earnings Highlights





































Change 2Q17 vs.


($ in millions, except per share data)


2Q17



2Q16



1Q17



2Q16



1Q17























Net income


$

381



$

336



$

349




13

%



9

%

Net income available to common shareholders - diluted


$

361



$

313



$

329




15

%



10

%

Diluted earnings per common share


$

2.35



$

1.98



$

2.12




19

%



11

%

Annualized return on average assets



1.27

%



1.09

%



1.15

%









Annualized return on average common equity



9.67

%



8.38

%



8.89

%









For the six-month period ended June 30, 2017, diluted earnings per common share were $4.47, up 20% from $3.71 in the year-earlier period.  GAAP-basis net income for the first six months of 2017 totaled $730 million, or 15% higher than $635 million in the similar 2016 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, 2017 was 1.21% and 9.28%, respectively, compared with 1.03% and 7.91%, respectively, in the corresponding 2016 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, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and expenses associated with merging acquired operations into M&T, since such items are considered by management to be "nonoperating" in nature.  The amounts of such "nonoperating" expense 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 $2.38 in the recent quarter, up from $2.07 and $2.15 in the year-earlier quarter and the first quarter of 2017, respectively. Net operating income rose to $386 million in the second quarter of 2017, 10% higher than $351 million in the second quarter of 2016 and 9% above $354 million in the initial 2017 quarter. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income was 1.33% and 14.18%, respectively, in the second quarter of 2017, compared with 1.18% and 12.68%, respectively, in the year-earlier quarter and 1.21% and 13.05%, respectively, in the first three months of 2017.

Diluted net operating earnings per common share in the first six months of 2017 increased 15% to $4.53 from $3.94 in the first half of 2016.  Net operating income during the six-month period ended June 30, 2017 was $740 million, a rise of 10% from $671 million in the similar 2016 period.  Net operating income expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity was 1.27% and 13.61%, respectively, in the first half of 2017, compared with 1.14% and 12.15%, respectively, in the first six months of 2016.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $947 million in the second quarter of 2017, an increase of $77 million, or 9%, from $870 million in the year-earlier quarter.  That improvement resulted predominantly from a widening of the net interest margin to 3.45% in the recent quarter from 3.13% in the second quarter of 2016. Taxable-equivalent net interest income in the recent quarter rose 3% from $922 million in the initial 2017 quarter.  That growth was primarily due to an 11 basis point widening of the net interest margin from 3.34% in the first quarter of 2017.






















Taxable-equivalent Net Interest Income





































Change 2Q17 vs.


($ in millions)


2Q17



2Q16



1Q17



2Q16



1Q17























Average earning assets


$

109,987



$

111,872



$

112,008




-2

%



-2

%

Net interest income - taxable-equivalent


$

947



$

870



$

922




9

%



3

%

Net interest margin



3.45

%



3.13

%



3.34

%









Provision for Credit Losses/Asset Quality.  The provision for credit losses was $52 million in the second quarter of 2017, compared with $32 million in the year-earlier quarter and $55 million in the first quarter of 2017.  Net charge-offs of loans were $45 million during the recent quarter, compared with $24 million in the second quarter of 2016 and $43 million in the initial 2017 quarter.  Expressed as an annualized percentage of average loans outstanding, net charge-offs were .20% and .11% in the second quarters of 2017 and 2016, respectively, and .19% in the first quarter of 2017.

Loans classified as nonaccrual totaled $872 million, or .98% of total loans outstanding at June 30, 2017, compared with $927 million or 1.04% at March 31, 2017 and $849 million or .96% at June 30, 2016. The decline in nonaccrual loans from March 31, 2017 to the recent quarter-end reflects the combined effect of borrower repayment performance and charge-offs of loans in nonaccrual status. The higher level of nonaccrual loans at the two most recent quarter-ends as compared with June 30, 2016 reflects the migration of previously performing loans obtained in the acquisition of Hudson City Bancorp, Inc. ("Hudson City") that became over 90 days past due after June 30, 2016.  Nonaccrual Hudson City-related residential real estate loans totaled $211 million, $113 million and $207 million at June 30, 2017, June 30, 2016 and March 31, 2017, respectively.  Assets taken in foreclosure of defaulted loans were $105 million at June 30, 2017, compared with $172 million at June 30, 2016 and $119 million at March 31, 2017.

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 $1.01 billion at June 30, 2017, compared with $970 million and $1.00 billion at June 30, 2016 and March 31, 2017, respectively.  The allowance expressed as a percentage of outstanding loans was 1.13% at June 30, 2017, compared with 1.10% at June 30, 2016 and 1.12% at March 31, 2017

Asset Quality Metrics





































Change 2Q17 vs.


($ in millions)


2Q17



2Q16



1Q17



2Q16



1Q17























At end of quarter





















Nonaccrual loans


$

872



$

849



$

927




3

%



-6

%

Real estate and other foreclosed assets


$

105



$

172



$

119




-39

%



-12

%

Total nonperforming assets


$

977



$

1,021



$

1,046




-4

%



-7

%

Accruing loans past due 90 days or more (1)


$

265



$

298



$

280




-11

%



-5

%

Nonaccrual loans as % of loans outstanding



.98

%



.96

%



1.04

%






























Allowance for credit losses


$

1,008



$

970



$

1,001




4

%



1

%

Allowance for credit losses as % of loans outstanding



1.13

%



1.10

%



1.12

%






























For the period





















Provision for credit losses


$

52



$

32



$

55




63

%



-5

%

Net charge-offs


$

45



$

24



$

43




86

%



6

%

Net charge-offs as % of average loans (annualized)



.20

%



.11

%



.19

%
















(1)

Excludes loans acquired at a discount.  Predominantly residential real estate loans.

Noninterest Income and Expense.  Noninterest income totaled $461 million in the second quarter of 2017, compared with $448 million in the year-earlier quarter and $447 million in the initial quarter of 2017.  The rise in noninterest income in the recent quarter as compared with the earlier quarters reflected higher trust income. An increase in credit-related fees also contributed to the improvement as compared with the year-earlier quarter.

Noninterest Income





































Change 2Q17 vs.


($ in millions)


2Q17



2Q16



1Q17



2Q16



1Q17























Mortgage banking revenues


$

86



$

89



$

85




-4

%



2

%

Service charges on deposit accounts



106




104




104




2

%



2

%

Trust income



127




121




120




5

%



6

%

Brokerage services income



17




16




17




2

%



-4

%

Trading account and foreign exchange gains



8




13




10




-39

%



-17

%

Other revenues from operations



117




105




111




12

%



6

%

Total other income


$

461



$

448



$

447




3

%



3

%

Noninterest expense in the second quarter of 2017 totaled $751 million, compared with $750 million in the year-earlier quarter and $788 million in the initial 2017 quarter.  Included in such amounts are expenses considered to be nonoperating in nature consisting of amortization of core deposit and other intangible assets and merger-related expenses.  Exclusive of those expenses, noninterest operating expenses were $743 million in the recent quarter, $726 million in the second quarter of 2016 and $779 million in the first quarter of 2017.  The most significant factors for the higher level of operating expenses in the recent quarter as compared with the second quarter of 2016 were increased legal costs, FDIC assessments, and outside data processing and software expenses.  As compared with the first quarter of 2017, the recent quarter's lower level of operating expenses was due, in large part, to a decline in salaries and employee benefits, including stock-based compensation, which were seasonally higher in the initial 2017 period.  That decline was partially offset by higher legal and other professional services costs in 2017's second quarter.

Noninterest Expense





































Change 2Q17 vs.


($ in millions)


2Q17



2Q16



1Q17



2Q16



1Q17























Salaries and employee benefits


$

399



$

399



$

450







-11

%

Equipment and net occupancy



74




76




74




-3

%



-1

%

Outside data processing and software



45




43




44




5

%



1

%

FDIC assessments



25




22




29




13

%



-12

%

Advertising and marketing



16




23




16




-28

%



1

%

Printing, postage and supplies



9




10




10




-10

%



-8

%

Amortization of core deposit and other intangible assets



8




11




9




-29

%



-4

%

Other costs of operations



175




166




156




5

%



12

%

Total other expense


$

751



$

750



$

788







-5

%






















Memo: Merger-related expenses included in above





$

13







-100

%




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 improved to 52.7% in the recent quarter from 55.1% in the second quarter of 2016 and 56.9% in the first quarter of 2017.

Balance Sheet.  M&T had total assets of $120.9 billion at June 30, 2017, compared with $123.8 billion at June 30, 2016 and $123.2 billion at March 31, 2017. Loans and leases, net of unearned discount, totaled $89.1 billion at the recent quarter-end, modestly changed from $88.5 billion at June 30, 2016 and $89.3 billion at March 31, 2017.  Investment securities were $15.8 billion, $15.0 billion and $16.0 billion at June 30, 2017, June 30, 2016, and March 31, 2017, respectively.  Total deposits were $93.5 billion at June 30, 2017, compared with $94.7 billion a year earlier and $97.0 billion at March 31, 2017.

Reflecting the impact of repurchases of M&T's common stock, total shareholders' equity declined to $16.3 billion at June 30, 2017 from $16.5 billion a year earlier, representing 13.47% and 13.30%, respectively, of total assets. Total shareholders' equity was $16.2 billion, or 13.16% of total assets, at March 31, 2017. Common shareholders' equity was $15.1 billion, or $98.66 per share, at June 30, 2017, compared with $15.2 billion, or $96.49 per share, at June 30, 2016 and $15.0 billion, or $97.40 per share, at March 31, 2017.  Tangible equity per common share rose to $68.20 at the recent quarter-end from $66.95 a year earlier and $67.16 at March 31, 2017.  In the calculation of tangible equity per common share, common shareholders' equity is reduced by the carrying values of goodwill and core deposit and other intangible assets, net of applicable deferred tax balances.  M&T estimates that the ratio of Common Equity Tier 1 to risk-weighted assets under regulatory capital rules was approximately 10.80% as of June 30, 2017

In accordance with its 2016 capital plan, M&T repurchased 1,409,807 shares of common stock during the recent quarter at an average cost per share of $159.52, for a total cost of $225 million.  In the aggregate, during the first six months of 2017, M&T repurchased 4,643,003 shares of common stock under that plan at a total cost of $757 million.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss second quarter financial results today at 10:00 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# 40703727. 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 through Wednesday, July 26, 2017 by calling (800)585-8367, or (404)537-3406 for international participants, and by making reference to ID# 40703727.  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, 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.  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.

Financial Highlights



Three months ended







Six months ended








June 30







June 30






Amounts in thousands, except per share


2017



2016



Change



2017



2016



Change


Performance

























Net income


$

381,053




336,031




13

%


$

729,980




634,559




15

%

Net income available to common shareholders



360,662




312,974




15

%



689,217




588,707




17

%

Per common share:

























Basic earnings


$

2.36




1.98




19

%


$

4.49




3.72




21

%

Diluted earnings



2.35




1.98




19

%



4.47




3.71




20

%

Cash dividends


$

.75




.70




7

%


$

1.50




1.40




7

%

Common shares outstanding:

























Average - diluted (1)



153,276




158,341




-3

%



154,108




158,761




-3

%

Period end (2)



152,539




157,917




-3

%



152,539




157,917




-3

%

Return on (annualized):

























Average total assets



1.27

%



1.09

%







1.21

%



1.03

%





Average common shareholders' equity



9.67

%



8.38

%







9.28

%



7.91

%





Taxable-equivalent net interest income


$

946,936




870,341




9

%


$

1,869,195




1,748,637




7

%

Yield on average earning assets



3.79

%



3.51

%







3.73

%



3.53

%





Cost of interest-bearing liabilities



.52

%



.56

%







.52

%



.55

%





Net interest spread



3.27

%



2.95

%







3.21

%



2.98

%





Contribution of interest-free funds



.18

%



.18

%







.19

%



.17

%





Net interest margin



3.45

%



3.13

%







3.40

%



3.15

%





Net charge-offs to average total net loans (annualized)



.20

%



.11

%







.20

%



.15

%






























Net operating results (3)

























Net operating income


$

385,974




350,604




10

%


$

740,009




670,668




10

%

Diluted net operating earnings per common share



2.38




2.07




15

%



4.53




3.94




15

%

Return on (annualized):

























Average tangible assets



1.33

%



1.18

%







1.27

%



1.14

%





Average tangible common equity



14.18

%



12.68

%







13.61

%



12.15

%





Efficiency ratio



52.74

%



55.06

%







54.81

%



56.03

%
































At June 30


















Loan quality


2017



2016



Change














Nonaccrual loans


$

872,374




848,855




3

%













Real estate and other foreclosed assets



104,424




172,473




-39

%













Total nonperforming assets


$

976,798




1,021,328




-4

%













Accruing loans past due 90 days or more (4)


$

265,461




298,449




-11

%













Government guaranteed loans included in totals above:

























Nonaccrual loans


$

39,296




52,486




-25

%













Accruing loans past due 90 days or more



235,227




269,962




-13

%













Renegotiated loans


$

221,892




211,159




5

%













Accruing loans acquired at a discount past due 90 days or 
     more (5)


$

57,498




68,591




-16

%













Purchased impaired loans (6):

























Outstanding customer balance


$

838,476




1,040,678




-19

%













Carrying amount



512,393




662,059




-23

%













Nonaccrual loans to total net loans



.98

%



.96

%

















Allowance for credit losses to total loans



1.13

%



1.10

%




























(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)

Excludes loans acquired at a discount.  Predominantly residential real estate loans.

(5)

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)

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


2017



2017



2016



2016



2016


Performance





















Net income


$

381,053




348,927




330,571




349,984




336,031


Net income available to common shareholders



360,662




328,567




307,797




326,998




312,974


Per common share:





















Basic earnings


$

2.36




2.13




1.98




2.10




1.98


Diluted earnings



2.35




2.12




1.98




2.10




1.98


Cash dividends


$

.75




.75




.70




.70




.70


Common shares outstanding:





















Average - diluted (1)



153,276




154,949




155,700




156,026




158,341


Period end (2)



152,539




153,781




156,213




154,987




157,917


Return on (annualized):





















Average total assets



1.27

%



1.15

%



1.05

%



1.12

%



1.09

%

Average common shareholders' equity



9.67

%



8.89

%



8.13

%



8.68

%



8.38

%

Taxable-equivalent net interest income


$

946,936




922,259




883,147




865,065




870,341


Yield on average earning assets



3.79

%



3.67

%



3.45

%



3.44

%



3.51

%

Cost of interest-bearing liabilities



.52

%



.52

%



.57

%



.59

%



.56

%

Net interest spread



3.27

%



3.15

%



2.88

%



2.85

%



2.95

%

Contribution of interest-free funds



.18

%



.19

%



.20

%



.20

%



.18

%

Net interest margin



3.45

%



3.34

%



3.08

%



3.05

%



3.13

%

Net charge-offs to average total net loans (annualized)



.20

%



.19

%



.22

%



.19

%



.11

%

Net operating results (3)





















Net operating income


$

385,974




354,035




336,095




355,929




350,604


Diluted net operating earnings per common share



2.38




2.15




2.01




2.13




2.07


Return on (annualized):





















Average tangible assets



1.33

%



1.21

%



1.10

%



1.18

%



1.18

%

Average tangible common equity



14.18

%



13.05

%



11.93

%



12.77

%



12.68

%

Efficiency ratio



52.74

%



56.93

%



56.42

%



55.92

%



55.06

%
























June 30,



March 31,



December 31,



September 30,



June 30,


Loan quality


2017



2017



2016



2016



2016


Nonaccrual loans


$

872,374




926,675




920,015




837,362




848,855


Real estate and other foreclosed assets



104,424




119,155




139,206




159,881




172,473


Total nonperforming assets


$

976,798




1,045,830




1,059,221




997,243




1,021,328


Accruing loans past due 90 days or more (4)


$

265,461




280,019




300,659




317,282




298,449


Government guaranteed loans included in totals above:





















Nonaccrual loans


$

39,296




39,610




40,610




47,130




52,486


Accruing loans past due 90 days or more



235,227




252,552




282,659




282,077




269,962


Renegotiated loans


$

221,892




191,343




190,374




217,559




211,159


Accruing loans acquired at a discount past due 90 days or 
     more (5)


$

57,498




63,732




61,144




65,182




68,591


Purchased impaired loans (6):





















Outstanding customer balance


$

838,476




890,431




927,446




981,105




1,040,678


Carrying amount



512,393




552,935




578,032




616,991




662,059


Nonaccrual loans to total net loans



.98

%



1.04

%



1.01

%



.93

%



.96

%

Allowance for credit losses to total loans



1.13

%



1.12

%



1.09

%



1.09

%



1.10

%










(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)

Excludes loans acquired at a discount.  Predominantly residential real estate loans.

(5)

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)

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


2017



2016



Change



2017



2016



Change


Interest income


$

1,030,413




970,621




6

%


$

2,036,446




1,943,455




5

%

Interest expense



92,213




106,802




-14




183,986




207,672




-11


Net interest income



938,200




863,819




9




1,852,460




1,735,783




7


Provision for credit losses



52,000




32,000




63




107,000




81,000




32


Net interest income after provision for credit losses



886,200




831,819




7




1,745,460




1,654,783




5


Other income

























Mortgage banking revenues



86,163




89,383




-4




170,855




171,446





Service charges on deposit accounts



106,057




103,872




2




210,233




206,277




2


Trust income



126,797




120,450




5




246,812




231,527




7


Brokerage services income



16,617




16,272




2




34,001




32,276




5


Trading account and foreign exchange gains



8,084




13,222




-39




17,775




20,680




-14


Gain (loss) on bank investment securities



(17)




264







(17)




268





Other revenues from operations



117,115




104,791




12




228,002




206,713




10


Total other income



460,816




448,254




3




907,661




869,187




4


Other expense

























Salaries and employee benefits



398,900




398,675







848,762




830,460




2


Equipment and net occupancy



73,797




75,724




-3




148,163




149,902




-1


Outside data processing and software



44,575




42,509




5




88,876




85,524




4


FDIC assessments



25,353




22,370




13




54,180




47,595




14


Advertising and marketing



16,324




22,613




-28




32,434




44,067




-26


Printing, postage and supplies



8,957




9,907




-10




18,665




21,893




-15


Amortization of core deposit and other 
     intangible assets



8,113




11,418




-29




16,533




23,737




-30


Other costs of operations



174,616




166,679




5




330,874




322,812




2


Total other expense



750,635




749,895







1,538,487




1,525,990




1


Income before income taxes



596,381




530,178




12




1,114,634




997,980




12


Applicable income taxes



215,328




194,147




11




384,654




363,421




6


Net income


$

381,053




336,031




13

%


$

729,980




634,559




15

%

 

Condensed Consolidated Statement of Income, Five Quarter Trend



Three months ended




June 30,



March 31,



December 31,



September 30,



June 30,


Dollars in thousands


2017



2017



2016



2016



2016


Interest income


$

1,030,413




1,006,033




982,901




969,515




970,621


Interest expense



92,213




91,773




107,137




111,175




106,802


Net interest income



938,200




914,260




875,764




858,340




863,819


Provision for credit losses



52,000




55,000




62,000




47,000




32,000


Net interest income after provision for credit losses



886,200




859,260




813,764




811,340




831,819


Other income





















Mortgage banking revenues



86,163




84,692




98,504




103,747




89,383


Service charges on deposit accounts



106,057




104,176




104,890




107,935




103,872


Trust income



126,797




120,015




122,003




118,654




120,450


Brokerage services income



16,617




17,384




15,233




15,914




16,272


Trading account and foreign exchange gains



8,084




9,691




7,692




12,754




13,222


Gain (loss) on bank investment securities



(17)







1,566




28,480




264


Other revenues from operations



117,115




110,887




115,571




103,866




104,791


Total other income



460,816




446,845




465,459




491,350




448,254


Other expense





















Salaries and employee benefits



398,900




449,862




393,354




399,786




398,675


Equipment and net occupancy



73,797




74,366




69,976




75,263




75,724


Outside data processing and software



44,575




44,301




43,987




42,878




42,509


FDIC assessments



25,353




28,827




28,991




28,459




22,370


Advertising and marketing



16,324




16,110




21,074




21,996




22,613


Printing, postage and supplies



8,957




9,708




8,681




8,972




9,907


Amortization of core deposit and other 
     intangible assets



8,113




8,420




9,089




9,787




11,418


Other costs of operations



174,616




156,258




193,951




165,251




166,679


Total other expense



750,635




787,852




769,103




752,392




749,895


Income before income taxes



596,381




518,253




510,120




550,298




530,178


Applicable income taxes



215,328




169,326




179,549




200,314




194,147


Net income


$

381,053




348,927




330,571




349,984




336,031


 

Condensed Consolidated Balance Sheet



June 30







Dollars in thousands


2017



2016



Change



ASSETS














Cash and due from banks


$

1,344,478




1,284,442




5


%

Interest-bearing deposits at banks



5,023,829




8,474,839




-41



Federal funds sold



1,000









Trading account



174,646




506,131




-65



Investment securities



15,816,060




14,963,084




6



Loans and leases:














Commercial, financial, etc.



22,191,051




21,469,242




3



Real estate - commercial



33,348,991




30,711,230




9



Real estate - consumer



20,960,171




24,530,249




-15



Consumer



12,580,342




11,811,277




7



Total loans and leases, net of unearned discount



89,080,555




88,521,998




1



Less: allowance for credit losses



1,008,225




970,496




4



Net loans and leases



88,072,330




87,551,502




1



Goodwill



4,593,112




4,593,112






Core deposit and other intangible assets



86,422




116,531




-26



Other assets



5,784,690




6,330,943




-9



Total assets


$

120,896,567




123,820,584




-2


%















LIABILITIES AND SHAREHOLDERS' EQUITY














Noninterest-bearing deposits


$

32,366,426




30,700,066




5


%

Interest-bearing deposits



60,978,895




63,756,514




-4



Deposits at Cayman Islands office



195,617




193,523




1



Total deposits



93,540,938




94,650,103




-1



Short-term borrowings



1,695,453




407,123




316



Accrued interest and other liabilities



1,727,059




1,963,093




-12



Long-term borrowings



7,649,580




10,328,751




-26



Total liabilities



104,613,030




107,349,070




-3



Shareholders' equity:














Preferred



1,231,500




1,231,500






Common (1)



15,052,037




15,240,014




-1



Total shareholders' equity



16,283,537




16,471,514




-1



Total liabilities and shareholders' equity


$

120,896,567




123,820,584




-2


%









(1)

Reflects accumulated other comprehensive loss, net of applicable income tax effect, of $270.1 million at June 30, 2017 and $101.0 million at June 30, 2016.

 

Condensed Consolidated Balance Sheet, Five Quarter Trend



June 30,



March 31,



December 31,



September 30,



June 30,


Dollars in thousands


2017



2017



2016



2016



2016


ASSETS





















Cash and due from banks


$

1,344,478




1,286,962




1,320,549




1,332,202




1,284,442


Interest-bearing deposits at banks



5,023,829




6,945,149




5,000,638




10,777,636




8,474,839


Federal funds sold



1,000














Trading account



174,646




174,854




323,867




488,588




506,131


Investment securities



15,816,060




15,968,415




16,250,468




14,733,574




14,963,084


Loans and leases:





















Commercial, financial, etc.



22,191,051




22,295,376




22,610,047




21,917,163




21,469,242


Real estate - commercial



33,348,991




33,071,654




33,506,394




32,078,762




30,711,230


Real estate - consumer



20,960,171




21,724,491




22,590,912




23,584,420




24,530,249


Consumer



12,580,342




12,221,481




12,146,063




12,066,147




11,811,277


Total loans and leases, net of unearned
discount



89,080,555




89,313,002




90,853,416




89,646,492




88,521,998


Less: allowance for credit losses



1,008,225




1,001,430




988,997




976,121




970,496


Net loans and leases



88,072,330




88,311,572




89,864,419




88,670,371




87,551,502


Goodwill



4,593,112




4,593,112




4,593,112




4,593,112




4,593,112


Core deposit and other intangible assets



86,422




94,535




97,655




106,744




116,531


Other assets



5,784,690




5,848,652




5,998,498




6,138,801




6,330,943


Total assets


$

120,896,567




123,223,251




123,449,206




126,841,028




123,820,584























LIABILITIES AND SHAREHOLDERS' EQUITY





















Noninterest-bearing deposits


$

32,366,426




34,279,591




32,813,896




33,127,627




30,700,066


Interest-bearing deposits



60,978,895




62,570,167




62,478,053




64,786,035




63,756,514


Deposits at Cayman Islands office



195,617




192,763




201,927




223,183




193,523


Total deposits



93,540,938




97,042,521




95,493,876




98,136,845




94,650,103


Short-term borrowings



1,695,453




185,102




163,442




213,846




407,123


Accrued interest and other liabilities



1,727,059




1,694,905




1,811,431




1,938,201




1,963,093


Long-term borrowings



7,649,580




8,087,619




9,493,835




10,211,160




10,328,751


Total liabilities



104,613,030




107,010,147




106,962,584




110,500,052




107,349,070


Shareholders' equity:





















Preferred



1,231,500




1,231,500




1,231,500




1,231,500




1,231,500


Common (1)



15,052,037




14,981,604




15,255,122




15,109,476




15,240,014


Total shareholders' equity



16,283,537




16,213,104




16,486,622




16,340,976




16,471,514


Total liabilities and shareholders' equity


$

120,896,567




123,223,251




123,449,206




126,841,028




123,820,584












(1)

Reflects accumulated other comprehensive loss, net of applicable income tax effect, of $270.1 million at June 30, 2017$291.6
million at March 31, 2017, $294.6 million at December 31, 2016, $114.6 million at September 30, 2016 and $101.0 million at
June 30, 2016.

 

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, 2017 from



June 30



Change



Dollars in millions


2017


2016


2017


June 30,


March 31,



2017


2016



in





Balance


Rate


Balance


Rate


Balance


Rate


2016


2017



Balance


Rate


Balance


Rate



balance



ASSETS





































Interest-bearing deposits at banks


$

4,741


1.03

%


8,711


.51

%


6,152


.80

%


-46

%


-23

%


$

5,443


.90

%


8,452


.51

%


-36

%


Federal funds sold



1


1.44






















Trading account



64


1.50



92


1.58



60


2.20



-31



7




62


1.84



88


1.68



-30



Investment securities



15,913


2.36



14,914


2.49



15,999


2.43



7



-1




15,956


2.40



15,131


2.55



5



Loans and leases, net of unearned
discount






































Commercial, financial, etc.



22,350


3.84



21,450


3.47



22,290


3.66



4






22,320


3.75



21,083


3.43



6



Real estate - commercial



33,214


4.30



30,134


4.09



33,175


4.18



10






33,195


4.24



29,780


4.12



11



Real estate - consumer



21,318


3.94



24,858


3.94



22,179


3.92



-14



-4




21,746


3.93



25,359


3.94



-14



Consumer



12,386


4.78



11,713


4.55



12,153


4.68



6



2




12,270


4.73



11,648


4.55



5



Total loans and leases, net



89,268


4.19



88,155


3.99



89,797


4.09



1



-1




89,531


4.14



87,870


3.99



2



Total earning assets



109,987


3.79



111,872


3.51



112,008


3.67



-2



-2




110,992


3.73



111,541


3.53





Goodwill



4,593





4,593





4,593










4,593





4,593







Core deposit and other intangible assets



90





122





98





-26



-8




94





128





-26



Other assets



6,095





7,119





6,279





-14



-3




6,186





7,217





-14



Total assets


$

120,765





123,706





122,978





-2

%


-2

%


$

121,865





123,479





-1

%








































LIABILITIES AND
SHAREHOLDERS' EQUITY






































Interest-bearing deposits






































Savings and interest-checking 
     deposits


$

53,611


.23



51,847


.16



53,260


.20



3

%


1

%


$

53,437


.21



51,091


.15



5

%


Time deposits



8,559


.76



12,755


.85



9,561


.81



-33



-10




9,057


.79



12,877


.80



-30



Deposits at Cayman Islands office



163


.69



182


.40



192


.56



-11



-15




177


.62



185


.41



-4



Total interest-bearing deposits



62,333


.30



64,784


.30



63,013


.29



-4



-1




62,671


.30



64,153


.28



-2



Short-term borrowings



212


.71



1,078


.43



184


.48



-80



15




199


.60



1,579


.42



-87



Long-term borrowings



8,292


2.16



10,297


2.27



8,423


2.25



-19



-2




8,357


2.20



10,413


2.24



-20



Total interest-bearing liabilities



70,837


.52



76,159


.56



71,620


.52



-7



-1




71,227


.52



76,145


.55



-6



Noninterest-bearing deposits



31,868





29,249





33,287





9



-4




32,574





29,059





12



Other liabilities



1,775





1,921





1,748





-8



2




1,760





1,947





-10



Total liabilities



104,480





107,329





106,655





-3



-2




105,561





107,151





-1



Shareholders' equity



16,285





16,377





16,323





-1






16,304





16,328







Total liabilities and shareholders' 
     equity


$

120,765





123,706





122,978





-2

%


-2

%


$

121,865





123,479





-1

%








































Net interest spread





3.27





2.95





3.15












3.21





2.98






Contribution of interest-free funds





.18





.18





.19












.19





.17






Net interest margin





3.45

%




3.13

%




3.34

%











3.40

%




3.15

%





 

Reconciliation of GAAP to Non-GAAP Measures



Three months ended



Six months ended




June 30



June 30




2017



2016



2017



2016


Income statement data

















In thousands, except per share

















Net income

















Net income


$

381,053




336,031




729,980




634,559


Amortization of core deposit and other intangible assets (1)



4,921




6,936




10,029




14,424


Merger-related expenses (1)






7,637







21,685


Net operating income


$

385,974




350,604




740,009




670,668



















Earnings per common share

















Diluted earnings per common share


$

2.35




1.98




4.47




3.71


Amortization of core deposit and other intangible assets (1)



.03




.04




.06




.09


Merger-related expenses (1)






.05







.14


Diluted net operating earnings per common share


$

2.38




2.07




4.53




3.94



















Other expense

















Other expense


$

750,635




749,895




1,538,487




1,525,990


Amortization of core deposit and other intangible assets



(8,113)




(11,418)




(16,533)




(23,737)


Merger-related expenses






(12,593)







(35,755)


Noninterest operating expense


$

742,522




725,884




1,521,954




1,466,498



















Merger-related expenses

















Salaries and employee benefits


$




60







5,334


Equipment and net occupancy






339







1,278


Outside data processing and software






352







1,067


Advertising and marketing






6,327







10,522


Printing, postage and supplies






545







1,482


Other costs of operations






4,970







16,072


Total


$




12,593







35,755



















Efficiency ratio

















Noninterest operating expense (numerator)


$

742,522




725,884




1,521,954




1,466,498


Taxable-equivalent net interest income



946,936




870,341




1,869,195




1,748,637


Other income



460,816




448,254




907,661




869,187


Less:  Gain (loss) on bank investment securities



(17)




264




(17)




268


Denominator


$

1,407,769




1,318,331




2,776,873




2,617,556


Efficiency ratio



52.74

%



55.06

%



54.81

%



56.03

%


















Balance sheet data

















In millions

















Average assets

















Average assets


$

120,765




123,706




121,865




123,479


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(90)




(122)




(94)




(128)


Deferred taxes



35




48




37




50


Average tangible assets


$

116,117




119,039




117,215




118,808


Average common equity

















Average total equity


$

16,285




16,377




16,304




16,328


Preferred stock



(1,232)




(1,232)




(1,232)




(1,232)


Average common equity



15,053




15,145




15,072




15,096


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(90)




(122)




(94)




(128)


Deferred taxes



35




48




37




50


Average tangible common equity


$

10,405




10,478




10,422




10,425



















At end of quarter

















Total assets

















Total assets


$

120,897




123,821










Goodwill



(4,593)




(4,593)










Core deposit and other intangible assets



(86)




(117)










Deferred taxes



33




46










Total tangible assets


$

116,251




119,157










Total common equity

















Total equity


$

16,284




16,472










Preferred stock



(1,232)




(1,232)










Undeclared dividends - cumulative preferred stock



(3)




(3)










Common equity, net of undeclared cumulative preferred dividends



15,049




15,237










Goodwill



(4,593)




(4,593)










Core deposit and other intangible assets



(86)




(117)










Deferred taxes



33




46










Total tangible common equity


$

10,403




10,573















(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,




2017



2017



2016



2016



2016


Income statement data





















In thousands, except per share





















Net income





















Net income


$

381,053




348,927




330,571




349,984




336,031


Amortization of core deposit and other intangible assets (1)



4,921




5,108




5,524




5,945




6,936


Merger-related expenses (1)















7,637


Net operating income


$

385,974




354,035




336,095




355,929




350,604























Earnings per common share





















Diluted earnings per common share


$

2.35




2.12




1.98




2.10




1.98


Amortization of core deposit and other intangible assets (1)



.03




.03




.03




.03




.04


Merger-related expenses (1)















.05


Diluted net operating earnings per common share


$

2.38




2.15




2.01




2.13




2.07























Other expense





















Other expense


$

750,635




787,852




769,103




752,392




749,895


Amortization of core deposit and other intangible assets



(8,113)




(8,420)




(9,089)




(9,787)




(11,418)


Merger-related expenses















(12,593)


Noninterest operating expense


$

742,522




779,432




760,014




742,605




725,884























Merger-related expenses





















Salaries and employee benefits


$













60


Equipment and net occupancy















339


Outside data processing and software















352


Advertising and marketing















6,327


Printing, postage and supplies















545


Other costs of operations















4,970


Total


$













12,593























Efficiency ratio





















Noninterest operating expense (numerator)


$

742,522




779,432




760,014




742,605




725,884


Taxable-equivalent net interest income



946,936




922,259




883,147




865,065




870,341


Other income



460,816




446,845




465,459




491,350




448,254


Less:  Gain (loss) on bank investment securities



(17)







1,566




28,480




264


Denominator


$

1,407,769




1,369,104




1,347,040




1,327,935




1,318,331


Efficiency ratio



52.74

%



56.93

%



56.42

%



55.92

%



55.06

%






















Balance sheet data





















In millions





















Average assets





















Average assets


$

120,765




122,978




125,734




124,725




123,706


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(90)




(98)




(102)




(112)




(122)


Deferred taxes



35




39




40




44




48


Average tangible assets


$

116,117




118,326




121,079




120,064




119,039


Average common equity





















Average total equity


$

16,285




16,323




16,673




16,347




16,377


Preferred stock



(1,232)




(1,232)




(1,492)




(1,232)




(1,232)


Average common equity



15,053




15,091




15,181




15,115




15,145


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(90)




(98)




(102)




(112)




(122)


Deferred taxes



35




39




40




44




48


Average tangible common equity


$

10,405




10,439




10,526




10,454




10,478























At end of quarter





















Total assets





















Total assets


$

120,897




123,223




123,449




126,841




123,821


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(86)




(95)




(98)




(107)




(117)


Deferred taxes



33




38




39




42




46


Total tangible assets


$

116,251




118,573




118,797




122,183




119,157


Total common equity





















Total equity


$

16,284




16,213




16,487




16,341




16,472


Preferred stock



(1,232)




(1,232)




(1,232)




(1,232)




(1,232)


Undeclared dividends - cumulative preferred stock



(3)




(3)




(3)




(3)




(3)


Common equity, net of undeclared cumulative preferred dividends



15,049




14,978




15,252




15,106




15,237


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(86)




(95)




(98)




(107)




(117)


Deferred taxes



33




38




39




42




46


Total tangible common equity


$

10,403




10,328




10,600




10,448




10,573







(1)     After any related tax effect.

 

View original content:http://www.prnewswire.com/news-releases/mt-bank-corporation-announces-second-quarter-results-300490641.html

SOURCE M&T Bank Corporation

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