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M&T Bank Corporation Announces 2017 Fourth Quarter And Full-Year Results

BUFFALO, N.Y., Jan. 18, 2018 /PRNewswire/ -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for 2017.

M&T Bank Corporation

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") for the fourth quarter of 2017 were $2.01, up 2% from $1.98 in the similar 2016 quarter.  GAAP-basis net income in the recent quarter aggregated $322 million, compared with $331 million in the final quarter of 2016.  Diluted earnings per common share and GAAP-basis net income were $2.21 and $356 million, respectively, in the third quarter of 2017.  GAAP-basis net income for the fourth quarter of 2017 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.06% and 8.03%, respectively, compared with 1.05% and 8.13%, respectively, in the year-earlier quarter and 1.18% and 8.89%, respectively, in the third quarter of 2017.

M&T's financial results for the final quarter of 2017 reflected several notable items.  The Tax Cuts and Jobs Act ("the Tax Act") was enacted on December 22, 2017, reducing the corporate Federal income tax rate from 35% to 21% and making other changes to U.S. corporate income tax laws.  GAAP requires that the impact of the provisions of the Tax Act be accounted for in the period of enactment.  Accordingly, the estimated incremental income tax expense recorded by M&T in the fourth quarter of 2017 related to the Tax Act was $85 million, representing $.56 of diluted earnings per common share.  The additional expense was largely attributable to the reduction in carrying value of net deferred tax assets reflecting lower future tax benefits resulting from the lower corporate tax rate.  Also during the recent quarter, M&T realized investment securities gains of $14 million (after-tax effect), or $.09 of diluted earnings per common share, largely resulting from the sale of a portion of M&T's Fannie Mae and Freddie Mac preferred stock holdings.  Finally, M&T contributed an additional $44 million to The M&T Charitable Foundation in the final 2017 quarter, reducing net income by $27 million, or $.18 of diluted earnings per common share.  In the aggregate, these items lowered net income by $98 million, or $.65 per diluted common share.

Earnings Highlights





































Change 4Q17 vs.


($ in millions, except per share data)


4Q17



4Q16



3Q17



4Q16



3Q17























Net income


$

322



$

331



$

356




-2

%



-9

%

Net income available to common shareholders - diluted


$

302



$

308



$

336




-2

%



-10

%

Diluted earnings per common share


$

2.01



$

1.98



$

2.21




2

%



-9

%

Annualized return on average assets



1.06

%



1.05

%



1.18

%









Annualized return on average common equity



8.03

%



8.13

%



8.89

%






























For the year ended December 31, 2017, diluted earnings per common share were $8.70, up 12% from $7.78 in 2016.  GAAP-basis net income for 2017 aggregated $1.41 billion, 7% higher than $1.32 billion in 2016.  Expressed as a rate of return on average assets and average common shareholders' equity, GAAP-basis net income for 2017 was 1.17% and 8.87%, respectively, compared with 1.06% and 8.16%, respectively, in 2016.

Darren J. King, Executive Vice President and Chief Financial Officer, commented on M&T's financial performance, "Financial results in 2017 highlight what was a successful year for M&T.  Strong growth in net interest income, credit costs that were significantly below our historical norms, and well controlled expenses led to a 12% rise in earnings per common share for the year.  Fourth quarter results were negatively impacted by the newly enacted tax legislation, but a lower corporate tax rate in the future should provide many benefits to M&T.  We are proud to carry on the legacy of our long-time Chairman and Chief Executive Officer, Bob Wilmers, through investing in the communities we serve by contributing $50 million during 2017 to The M&T Charitable Foundation, the highest annual amount in our history."

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" 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 $2.04 in the fourth quarter of 2017, compared with $2.01 in the year-earlier quarter and $2.24 in the third quarter of 2017.  Net operating income during the recent quarter was $327 million, compared with $336 million in the final quarter of 2016 and $361 million in 2017's third quarter. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income was 1.12% and 11.77%, respectively, in the recent quarter, compared with 1.10% and 11.93%, respectively, in the fourth quarter of 2016 and 1.25% and 13.03%, respectively, in the third quarter of 2017.

For the year ended December 31, 2017, diluted net operating earnings per common share were $8.82, up 9% from $8.08 in 2016.  Net operating income in 2017 increased 5% to $1.43 billion from $1.36 billion in 2016.  Expressed as a rate of return on average tangible assets and average tangible common shareholders' equity, net operating income was 1.23% and 13.00%, respectively, in 2017 and 1.14% and 12.25%, respectively, in 2016.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis aggregated $980 million in the fourth quarter of 2017, up 11% from $883 million in the year-earlier quarter. That growth resulted predominantly from a widening of the net interest margin to 3.56% in the recent quarter from 3.08% in the final 2016 quarter. Taxable-equivalent net interest income in the recent quarter was 2% higher than $966 million in the third quarter of 2017. Contributing to that improvement were a 3 basis point widening of the net interest margin and an increase in average earning assets in the recent quarter as compared with the third quarter of 2017. Taxable-equivalent net interest income for the year ended December 31, 2017 aggregated $3.82 billion, up 9% from $3.50 billion in 2016. That improvement was predominantly the result of a widening of the net interest margin from 3.11% in 2016 to 3.47% in 2017.






















Taxable-equivalent Net Interest Income





































Change 4Q17 vs.


($ in millions)


4Q17



4Q16



3Q17



4Q16



3Q17























Average earning assets


$

109,412



$

114,254



$

108,642




-4

%



1

%

Net interest income - taxable-equivalent


$

980



$

883



$

966




11

%



2

%

Net interest margin



3.56

%



3.08

%



3.53

%









Provision for Credit Losses/Asset Quality.  The provision for credit losses was $31 million in the fourth quarter of 2017, compared with $62 million in the year-earlier quarter and $30 million in 2017's third quarter. Net charge-offs of loans were $27 million during the recent quarter, compared with $49 million and $25 million in the fourth quarter of 2016 and the third quarter of 2017, respectively.  Expressed as an annualized percentage of average loans outstanding, net charge-offs were .12% and .22% in the final quarters of 2017 and 2016, respectively, and .11% in the third quarter of 2017.  The provision for credit losses was $168 million for the year ended December 31, 2017, compared with $190 million in 2016.  Net loan charge-offs during 2017 and 2016 totaled $140 million and $157 million, respectively, or .16% and .18%, respectively, of average loans outstanding.

Loans classified as nonaccrual totaled $883 million or 1.00% of total loans outstanding at December 31, 2017, compared with $920 million or 1.01% at December 31, 2016 and $869 million or .99% at September 30, 2017. Nonaccrual Hudson City-related residential real estate loans aggregated $215 million at December 31, 2017, compared with $190 million and $211 million at December 31, 2016 and September 30, 2017, respectively. Assets taken in foreclosure of defaulted loans totaled $112 million at December 31, 2017, compared with $139 million a year earlier and $111 million at September 30, 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 $1.02 billion at December 31, 2017, compared with $989 million at December 31, 2016 and $1.01 billion at September 30, 2017.  The allowance expressed as a percentage of outstanding loans was 1.16% at December 31, 2017, compared with 1.09% at December 31, 2016 and 1.15% at September 30, 2017.

Asset Quality Metrics





































Change 4Q17 vs.


($ in millions)


4Q17



4Q16



3Q17



4Q16



3Q17























At end of quarter





















Nonaccrual loans


$

883



$

920



$

869




-4

%



2

%

Real estate and other foreclosed assets


$

112



$

139



$

111




-20

%



1

%

Total nonperforming assets


$

995



$

1,059



$

980




-6

%



1

%

Accruing loans past due 90 days or more (1)


$

244



$

301



$

261




-19

%



-6

%

Nonaccrual loans as % of loans outstanding



1.00

%



1.01

%



.99

%






























Allowance for credit losses


$

1,017



$

989



$

1,013




3

%




Allowance for credit losses as % of loans outstanding



1.16

%



1.09

%



1.15

%






























For the period





















Provision for credit losses


$

31



$

62



$

30




-50

%



3

%

Net charge-offs


$

27



$

49



$

25




-45

%



9

%

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



.12

%



.22

%



.11

%

















(1)

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

Noninterest Income and Expense.  Noninterest income totaled $484 million in the recent quarter, compared with $465 million in the fourth quarter of 2016 and $459 million in the third quarter of 2017.  The recent quarter's improvement as compared with the final 2016 quarter and 2017's third quarter resulted largely from higher gains on investment securities and increased trust income.

Noninterest Income





































Change 4Q17 vs.


($ in millions)


4Q17



4Q16



3Q17



4Q16



3Q17























Mortgage banking revenues


$

96



$

98



$

97




-2

%



-1

%

Service charges on deposit accounts



108




105




109




3

%



-1

%

Trust income



130




122




125




6

%



4

%

Brokerage services income



13




15




15




-16

%



-13

%

Trading account and foreign exchange gains



10




7




7




36

%



48

%

Gain on bank investment securities



21




2











Other revenues from operations



106




116




106




-8

%



-1

%

Total other income


$

484



$

465



$

459




4

%



5

%

Noninterest income aggregated $1.85 billion in 2017, up from $1.83 billion in 2016. Higher trust income, service charges on deposit accounts and credit-related fees in 2017 were the drivers of that increase.

Noninterest expense totaled $796 million in the fourth quarter of 2017, $769 million in the year-earlier quarter and $806 million in the third quarter of 2017.  Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets and merger-related expenses, noninterest operating expenses were $789 million in the recent quarter, $760 million in the fourth quarter of 2016 and $798 million in 2017's third quarter. The most significant factors for the rise in noninterest operating expenses in the recent quarter as compared with the final quarter of 2016 were increased contributions to The M&T Charitable Foundation and higher salaries and employee benefits expenses. The decline in noninterest operating expenses from the third quarter of 2017 resulted largely from the $50 million increase in the reserve for legal matters during the third quarter of 2017, largely offset by a $44 million increase in contributions to The M&T Charitable Foundation in 2017's fourth quarter.

Noninterest Expense





































Change 4Q17 vs.


($ in millions)


4Q17



4Q16



3Q17



4Q16



3Q17























Salaries and employee benefits


$

403



$

393



$

399




2

%



1

%

Equipment and net occupancy



71




70




75




2

%



-6

%

Outside data processing and software



50




44




46




14

%



9

%

FDIC assessments



24




29




24




-18

%



-1

%

Advertising and marketing



19




21




17




-8

%



11

%

Printing, postage and supplies



9




9




9




-1

%



-2

%

Amortization of core deposit and other intangible assets



7




9




8




-23

%



-10

%

Other costs of operations



213




194




228




10

%



-7

%

Total other expense


$

796



$

769



$

806




3

%



-1

%






















For the year ended December 31, 2017, noninterest expense aggregated $3.14 billion, compared with $3.05 billion in 2016.  Noninterest operating expenses were $3.11 billion and $2.97 billion in 2017 and 2016, respectively. The higher level of such expenses in 2017 resulted largely from increased costs for salaries and employee benefits, higher charitable contributions and increases to the reserve for legal matters.

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 54.7% in the recent quarter, 56.4% in the year-earlier quarter and 56.0% in the third quarter of 2017.  The efficiency ratio for the full year 2017 was 55.1%, improved from 56.1% in 2016.

Balance Sheet.  M&T had total assets of $118.6 billion at December 31, 2017, compared with $123.4 billion at December 31, 2016. Loans and leases, net of unearned discount, aggregated $88.0 billion at the recent year-end, $2.9 billion or 3% below $90.9 billion a year earlier. Investment securities were $14.7 billion at the end of 2017, compared with $16.3 billion at December 31, 2016.  Total deposits were $92.4 billion at the recent year-end and $95.5 billion at December 31, 2016.

Total shareholders' equity was $16.3 billion at December 31, 2017 and $16.5 billion a year earlier, representing 13.70% and 13.35%, respectively, of total assets.  Common shareholders' equity was $15.0 billion, or $100.03 per share, at December 31, 2017, compared with $15.3 billion, or $97.64 per share, at December 31, 2016.  Tangible equity per common share of $69.08 at December 31, 2017 was up 2% from $67.85 at December 31, 2016.  Common shareholders' equity per share and tangible equity per common share were $99.70 and $69.02, respectively, at September 30, 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 10.93% at December 31, 2017.

In accordance with its 2017 capital plan, M&T repurchased 1,343,356 shares of its common stock during the recent quarter at an average cost per share of $166.91, for a total cost of $224 million.  During 2017, M&T repurchased a total of 7,369,105 shares of its common stock under the 2017 and 2016 capital plans at a total cost of $1.21 billion.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss fourth quarter and full-year 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 #4178049.  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 Thursday, February 1, 2018 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #4178049.  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







Year ended








December 31







December 31






Amounts in thousands, except per share


2017



2016



Change



2017



2016



Change


Performance

























Net income


$

322,403




330,571




-2

%


$

1,408,306




1,315,114




7

%

Net income available to common shareholders



302,486




307,797




-2

%



1,327,517




1,223,481




9

%

Per common share:

























Basic earnings


$

2.01




1.98




2

%


$

8.72




7.80




12

%

Diluted earnings



2.01




1.98




2

%



8.70




7.78




12

%

Cash dividends


$

.75




.70




7

%


$

3.00




2.80




7

%

Common shares outstanding:

























Average - diluted (1)



150,348




155,700




-3

%



152,551




157,304




-3

%

Period end (2)



150,112




156,213




-4

%



150,112




156,213




-4

%

Return on (annualized):

























Average total assets



1.06

%



1.05

%







1.17

%



1.06

%





Average common shareholders' equity



8.03

%



8.13

%







8.87

%



8.16

%





Taxable-equivalent net interest income


$

980,457




883,147




11

%


$

3,815,614




3,496,849




9

%

Yield on average earning assets



3.93

%



3.45

%







3.82

%



3.49

%





Cost of interest-bearing liabilities



.59

%



.57

%







.55

%



.56

%





Net interest spread



3.34

%



2.88

%







3.27

%



2.93

%





Contribution of interest-free funds



.22

%



.20

%







.20

%



.18

%





Net interest margin



3.56

%



3.08

%







3.47

%



3.11

%





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



.12

%



.22

%







.16

%



.18

%





Net operating results (3)

























Net operating income


$

326,664




336,095




-3

%


$

1,427,331




1,362,692




5

%

Diluted net operating earnings per common share



2.04




2.01




1

%



8.82




8.08




9

%

Return on (annualized):

























Average tangible assets



1.12

%



1.10

%







1.23

%



1.14

%





Average tangible common equity



11.77

%



11.93

%







13.00

%



12.25

%





Efficiency ratio



54.65

%



56.42

%







55.07

%



56.10

%
































At December 31
















Loan quality


2017



2016



Change














Nonaccrual loans


$

882,598




920,015




-4

%













Real estate and other foreclosed assets



111,910




139,206




-20

%













Total nonperforming assets


$

994,508




1,059,221




-6

%













Accruing loans past due 90 days or more (4)


$

244,405




300,659




-19

%













Government guaranteed loans included in totals above:

























Nonaccrual loans


$

35,677




40,610




-12

%













Accruing loans past due 90 days or more



235,489




282,659




-17

%













Renegotiated loans


$

221,513




190,374




16

%













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


$

47,418




61,144




-22

%













Purchased impaired loans (6):

























Outstanding customer balance


$

688,091




927,446




-26

%













Carrying amount



410,015




578,032




-29

%













Nonaccrual loans to total net loans



1.00

%



1.01

%

















Allowance for credit losses to total loans



1.16

%



1.09

%



























(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




December 31,



September 30,



June 30,



March 31,



December 31,


Amounts in thousands, except per share


2017



2017



2017



2017



2016


Performance





















Net income


$

322,403




355,923




381,053




348,927




330,571


Net income available to common shareholders



302,486




335,804




360,662




328,567




307,797


Per common share:





















Basic earnings


$

2.01




2.22




2.36




2.13




1.98


Diluted earnings



2.01




2.21




2.35




2.12




1.98


Cash dividends


$

.75




.75




.75




.75




.70


Common shares outstanding:





















Average - diluted (1)



150,348




151,691




153,276




154,949




155,700


Period end (2)



150,112




151,291




152,539




153,781




156,213


Return on (annualized):





















Average total assets



1.06

%



1.18

%



1.27

%



1.15

%



1.05

%

Average common shareholders' equity



8.03

%



8.89

%



9.67

%



8.89

%



8.13

%

Taxable-equivalent net interest income


$

980,457




965,962




946,936




922,259




883,147


Yield on average earning assets



3.93

%



3.89

%



3.79

%



3.67

%



3.45

%

Cost of interest-bearing liabilities



.59

%



.57

%



.52

%



.52

%



.57

%

Net interest spread



3.34

%



3.32

%



3.27

%



3.15

%



2.88

%

Contribution of interest-free funds



.22

%



.21

%



.18

%



.19

%



.20

%

Net interest margin



3.56

%



3.53

%



3.45

%



3.34

%



3.08

%

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



.12

%



.11

%



.20

%



.19

%



.22

%

Net operating results (3)





















Net operating income


$

326,664




360,658




385,974




354,035




336,095


Diluted net operating earnings per common share



2.04




2.24




2.38




2.15




2.01


Return on (annualized):





















Average tangible assets



1.12

%



1.25

%



1.33

%



1.21

%



1.10

%

Average tangible common equity



11.77

%



13.03

%



14.18

%



13.05

%



11.93

%

Efficiency ratio



54.65

%



56.00

%



52.74

%



56.93

%



56.42

%
























December 31,



September 30,



June 30,



March 31,



December 31,


Loan quality


2017



2017



2017



2017



2016


Nonaccrual loans


$

882,598




869,362




872,374




926,675




920,015


Real estate and other foreclosed assets



111,910




110,515




104,424




119,155




139,206


Total nonperforming assets


$

994,508




979,877




976,798




1,045,830




1,059,221


Accruing loans past due 90 days or more (4)


$

244,405




261,288




265,461




280,019




300,659


Government guaranteed loans included in totals above:





















Nonaccrual loans


$

35,677




34,687




39,296




39,610




40,610


Accruing loans past due 90 days or more



235,489




252,072




235,227




252,552




282,659


Renegotiated loans


$

221,513




226,672




221,892




191,343




190,374


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


$

47,418




56,225




57,498




63,732




61,144


Purchased impaired loans (6):





















Outstanding customer balance


$

688,091




779,340




838,476




890,431




927,446


Carrying amount



410,015




466,943




512,393




552,935




578,032


Nonaccrual loans to total net loans



1.00

%



.99

%



.98

%



1.04

%



1.01

%

Allowance for credit losses to total loans



1.16

%



1.15

%



1.13

%



1.12

%



1.09

%










(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







Year ended








December 31







December 31






Dollars in thousands


2017



2016



Change



2017



2016



Change


Interest income


$

1,074,139




982,901




9

%


$

4,167,795




3,895,871




7

%

Interest expense



102,689




107,137




-4




386,751




425,984




-9


Net interest income



971,450




875,764




11




3,781,044




3,469,887




9


Provision for credit losses



31,000




62,000




-50




168,000




190,000




-12


Net interest income after provision for credit losses



940,450




813,764




16




3,613,044




3,279,887




10


Other income

























Mortgage banking revenues



96,235




98,504




-2




363,827




373,697




-3


Service charges on deposit accounts



107,783




104,890




3




427,372




419,102




2


Trust income



129,669




122,003




6




501,381




472,184




6


Brokerage services income



12,768




15,233




-16




61,445




63,423




-3


Trading account and foreign exchange gains



10,468




7,692




36




35,301




41,126




-14


Gain on bank investment securities



21,296




1,566







21,279




30,314




-30


Other revenues from operations



105,834




115,571




-8




440,538




426,150




3


Total other income



484,053




465,459




4




1,851,143




1,825,996




1


Other expense

























Salaries and employee benefits



402,878




393,354




2




1,650,729




1,623,600




2


Equipment and net occupancy



71,363




69,976




2




295,084




295,141





Outside data processing and software



50,033




43,987




14




184,670




172,389




7


FDIC assessments



23,722




28,991




-18




101,871




105,045




-3


Advertising and marketing



19,366




21,074




-8




69,203




87,137




-21


Printing, postage and supplies



8,563




8,681




-1




35,960




39,546




-9


Amortization of core deposit and other intangible assets



7,025




9,089




-23




31,366




42,613




-26


Other costs of operations



212,863




193,951




10




771,442




682,014




13


Total other expense



795,813




769,103




3




3,140,325




3,047,485




3


Income before income taxes



628,690




510,120




23




2,323,862




2,058,398




13


Applicable income taxes



306,287




179,549




71




915,556




743,284




23


Net income


$

322,403




330,571




-2

%


$

1,408,306




1,315,114




7

%

 

 

Condensed Consolidated Statement of Income, Five Quarter Trend




Three months ended




December 31,



September 30,



June 30,



March 31,



December 31,


Dollars in thousands


2017



2017



2017



2017



2016


Interest income


$

1,074,139




1,057,210




1,030,413




1,006,033




982,901


Interest expense



102,689




100,076




92,213




91,773




107,137


Net interest income



971,450




957,134




938,200




914,260




875,764


Provision for credit losses



31,000




30,000




52,000




55,000




62,000


Net interest income after provision for credit losses



940,450




927,134




886,200




859,260




813,764


Other income





















Mortgage banking revenues



96,235




96,737




86,163




84,692




98,504


Service charges on deposit accounts



107,783




109,356




106,057




104,176




104,890


Trust income



129,669




124,900




126,797




120,015




122,003


Brokerage services income



12,768




14,676




16,617




17,384




15,233


Trading account and foreign exchange gains



10,468




7,058




8,084




9,691




7,692


Gain (loss) on bank investment securities



21,296







(17)







1,566


Other revenues from operations



105,834




106,702




117,115




110,887




115,571


Total other income



484,053




459,429




460,816




446,845




465,459


Other expense





















Salaries and employee benefits



402,878




399,089




398,900




449,862




393,354


Equipment and net occupancy



71,363




75,558




73,797




74,366




69,976


Outside data processing and software



50,033




45,761




44,575




44,301




43,987


FDIC assessments



23,722




23,969




25,353




28,827




28,991


Advertising and marketing



19,366




17,403




16,324




16,110




21,074


Printing, postage and supplies



8,563




8,732




8,957




9,708




8,681


Amortization of core deposit and other intangible assets



7,025




7,808




8,113




8,420




9,089


Other costs of operations



212,863




227,705




174,616




156,258




193,951


Total other expense



795,813




806,025




750,635




787,852




769,103


Income before income taxes



628,690




580,538




596,381




518,253




510,120


Applicable income taxes



306,287




224,615




215,328




169,326




179,549


Net income


$

322,403




355,923




381,053




348,927




330,571


 

 

Condensed Consolidated Balance Sheet




December 31







Dollars in thousands


2017



2016



Change



ASSETS














Cash and due from banks


$

1,420,888




1,320,549




8


%

Interest-bearing deposits at banks



5,078,903




5,000,638




2



Trading account



132,909




323,867




-59



Investment securities



14,664,525




16,250,468




-10



Loans and leases:














Commercial, financial, etc.



21,742,651




22,610,047




-4



Real estate - commercial



33,366,373




33,506,394






Real estate - consumer



19,613,344




22,590,912




-13



Consumer



13,266,615




12,146,063




9



Total loans and leases, net of unearned discount



87,988,983




90,853,416




-3



Less: allowance for credit losses



1,017,198




988,997




3



Net loans and leases



86,971,785




89,864,419




-3



Goodwill



4,593,112




4,593,112






Core deposit and other intangible assets



71,589




97,655




-27



Other assets



5,659,776




5,998,498




-6



Total assets


$

118,593,487




123,449,206




-4


%















LIABILITIES AND SHAREHOLDERS' EQUITY














Noninterest-bearing deposits


$

33,975,180




32,813,896




4


%

Interest-bearing deposits



58,278,970




62,478,053




-7



Deposits at Cayman Islands office



177,996




201,927




-12



Total deposits



92,432,146




95,493,876




-3



Short-term borrowings



175,099




163,442




7



Accrued interest and other liabilities



1,593,993




1,811,431




-12



Long-term borrowings



8,141,430




9,493,835




-14



Total liabilities



102,342,668




106,962,584




-4



Shareholders' equity:














Preferred



1,231,500




1,231,500






Common



15,019,319




15,255,122




-2



Total shareholders' equity



16,250,819




16,486,622




-1



Total liabilities and shareholders' equity


$

118,593,487




123,449,206




-4


%

 

 

Condensed Consolidated Balance Sheet, Five Quarter Trend








December 31,



September 30,



June 30,



March 31,



December 31,


Dollars in thousands


2017



2017



2017



2017



2016


ASSETS





















Cash and due from banks


$

1,420,888




1,368,252




1,344,478




1,286,962




1,320,549


Interest-bearing deposits at banks



5,078,903




6,306,484




5,023,829




6,945,149




5,000,638


Federal funds sold









1,000








Trading account



132,909




170,516




174,646




174,854




323,867


Investment securities



14,664,525




15,073,926




15,816,060




15,968,415




16,250,468


Loans and leases:





















Commercial, financial, etc.



21,742,651




21,743,251




22,191,051




22,295,376




22,610,047


Real estate - commercial



33,366,373




32,914,288




33,348,991




33,071,654




33,506,394


Real estate - consumer



19,613,344




20,265,162




20,960,171




21,724,491




22,590,912


Consumer



13,266,615




13,002,433




12,580,342




12,221,481




12,146,063


Total loans and leases, net of unearned discount



87,988,983




87,925,134




89,080,555




89,313,002




90,853,416


Less: allowance for credit losses



1,017,198




1,013,326




1,008,225




1,001,430




988,997


Net loans and leases



86,971,785




86,911,808




88,072,330




88,311,572




89,864,419


Goodwill



4,593,112




4,593,112




4,593,112




4,593,112




4,593,112


Core deposit and other intangible assets



71,589




78,614




86,422




94,535




97,655


Other assets



5,659,776




5,899,092




5,784,690




5,848,652




5,998,498


Total assets


$

118,593,487




120,401,804




120,896,567




123,223,251




123,449,206























LIABILITIES AND SHAREHOLDERS' EQUITY





















Noninterest-bearing deposits


$

33,975,180




33,111,246




32,366,426




34,279,591




32,813,896


Interest-bearing deposits



58,278,970




60,170,133




60,978,895




62,570,167




62,478,053


Deposits at Cayman Islands office



177,996




232,014




195,617




192,763




201,927


Total deposits



92,432,146




93,513,393




93,540,938




97,042,521




95,493,876


Short-term borrowings



175,099




200,768




1,695,453




185,102




163,442


Accrued interest and other liabilities



1,593,993




1,791,946




1,727,059




1,694,905




1,811,431


Long-term borrowings



8,141,430




8,577,645




7,649,580




8,087,619




9,493,835


Total liabilities



102,342,668




104,083,752




104,613,030




107,010,147




106,962,584


Shareholders' equity:





















Preferred



1,231,500




1,231,500




1,231,500




1,231,500




1,231,500


Common



15,019,319




15,086,552




15,052,037




14,981,604




15,255,122


Total shareholders' equity



16,250,819




16,318,052




16,283,537




16,213,104




16,486,622


Total liabilities and shareholders' equity


$

118,593,487




120,401,804




120,896,567




123,223,251




123,449,206


 

 

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates





Three months ended



Change in balance



Year ended






December 31,



December 31,



September 30,



December 31, 2017 from



December 31


Change

Dollars in millions


2017



2016



2017



December 31,



September 30,



2017


2016


in



Balance


Rate



Balance



Rate



Balance



Rate



2016



2017



Balance


Rate


Balance


Rate



balance








































ASSETS







































Interest-bearing deposits at banks


$

6,680


1.31

%


8,790



.54

%


4,740



1.25

%


-24

%


41

%


$

5,578


1.10

%


8,846


.51

%


-37

%

Trading account



87


1.31



70



2.05



73



1.92



23



18




71


1.70



85


1.71



-16


Investment securities



14,808


2.30



15,417



2.28



15,443



2.28



-4



-4




15,538


2.34



15,009


2.44



4


Loans and leases, net of unearned discount







































Commercial, financial, etc.



21,562


4.06



21,936



3.47



21,734



3.98



-2



-1




21,981


3.88



21,397


3.44



3


Real estate - commercial



33,138


4.61



32,822



4.01



33,257



4.50



1






33,196


4.40



30,915


4.06



7


Real estate - consumer



19,974


4.03



23,096



3.88



20,609



3.96



-14



-3




21,013


3.96



24,463


3.92



-14


Consumer



13,163


4.91



12,123



4.53



12,786



4.89



9



3




12,625


4.82



11,841


4.54



7


Total loans and leases, net



87,837


4.40



89,977



3.93



88,386



4.32



-2



-1




88,815


4.25



88,616


3.96




Total earning assets



109,412


3.93



114,254



3.45



108,642



3.89



-4



1




110,002


3.82



112,556


3.49



-2


Goodwill



4,593





4,593






4,593











4,593





4,593






Core deposit and other intangible assets



75





102






82






-27



-9




86





117





-26


Other assets



6,146





6,785






6,198






-9



-1




6,179





7,074





-13


Total assets


$

120,226





125,734






119,515






-4

%


1

%


$

120,860





124,340





-3

%








































LIABILITIES AND
SHAREHOLDERS' EQUITY







































Interest-bearing deposits







































Savings and interest-checking deposits


$

53,436


.29



54,055



.20



53,287



.28



-1

%


%


$

53,399


.25



52,194


.17



2

%

Time deposits



6,888


.70



10,936



.86



7,673



.72



-37



-10




8,161


.75



12,253


.84



-33


Deposits at Cayman Island office



215


.61



206



.42



169



.73



4



27




185


.64



199


.40



-7


Total interest-bearing deposits



60,539


.34



65,197



.31



61,129



.34



-7



-1




61,745


.32



64,646


.30



-4


Short-term borrowings



178


.81



200



.30



244



.90



-11



-27




205


.74



894


.41



-77


Long-term borrowings



8,464


2.37



9,901



2.26



8,033



2.35



-15



5




8,302


2.28



10,252


2.25



-19


Total interest-bearing liabilities



69,181


.59



75,298



.57



69,406



.57



-8






70,252


.55



75,792


.56



-7


Noninterest-bearing deposits



32,930





31,717






32,005






4



3




32,520





30,160





8


Other liabilities



1,844





2,046






1,803






-10



2




1,793





1,969





-9


Total liabilities



103,955





109,061






103,214






-5



1




104,565





107,921





-3


Shareholders' equity



16,271





16,673






16,301






-2






16,295





16,419





-1


Total liabilities and shareholders' equity


$

120,226





125,734






119,515






-4

%


1

%


$

120,860





124,340





-3

%








































Net interest spread





3.34






2.88






3.32












3.27





2.93





Contribution of interest-free funds





.22






.20






.21












.20





.18





Net interest margin





3.56

%





3.08

%





3.53

%











3.47

%




3.11

%




 

 

Reconciliation of GAAP to Non-GAAP Measures
















Three months ended



Year ended




December 31



December 31




2017



2016



2017



2016


Income statement data

















In thousands, except per share

















Net income

















Net income


$

322,403




330,571




1,408,306




1,315,114


Amortization of core deposit and other intangible assets (1)



4,261




5,524




19,025




25,893


Merger-related expenses (1)












21,685


Net operating income


$

326,664




336,095




1,427,331




1,362,692



















Earnings per common share

















Diluted earnings per common share


$

2.01




1.98




8.70




7.78


Amortization of core deposit and other intangible assets (1)



.03




.03




.12




.16


Merger-related expenses (1)












.14


Diluted net operating earnings per common share


$

2.04




2.01




8.82




8.08



















Other expense

















Other expense


$

795,813




769,103




3,140,325




3,047,485


Amortization of core deposit and other intangible assets



(7,025)




(9,089)




(31,366)




(42,613)


Merger-related expenses












(35,755)


Noninterest operating expense


$

788,788




760,014




3,108,959




2,969,117



















Merger-related expenses

















Salaries and employee benefits


$










5,334


Equipment and net occupancy












1,278


Outside data processing and software












1,067


Advertising and marketing












10,522


Printing, postage and supplies












1,482


Other costs of operations












16,072


Total


$










35,755



















Efficiency ratio

















Noninterest operating expense (numerator)


$

788,788




760,014




3,108,959




2,969,117


Taxable-equivalent net interest income



980,457




883,147




3,815,614




3,496,849


Other income



484,053




465,459




1,851,143




1,825,996


Less:  Gain on bank investment securities



21,296




1,566




21,279




30,314


Denominator


$

1,443,214




1,347,040




5,645,478




5,292,531


Efficiency ratio



54.65

%



56.42

%



55.07

%



56.10

%


















Balance sheet data

















In millions

















Average assets

















Average assets


$

120,226




125,734




120,860




124,340


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(75)




(102)




(86)




(117)


Deferred taxes



26




40




33




46


Average tangible assets


$

115,584




121,079




116,214




119,676


Average common equity

















Average total equity


$

16,271




16,673




16,295




16,419


Preferred stock



(1,232)




(1,492)




(1,232)




(1,297)


Average common equity



15,039




15,181




15,063




15,122


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(75)




(102)




(86)




(117)


Deferred taxes



26




40




33




46


Average tangible common equity


$

10,397




10,526




10,417




10,458



















At end of quarter

















Total assets

















Total assets


$

118,593




123,449










Goodwill



(4,593)




(4,593)










Core deposit and other intangible assets



(72)




(98)










Deferred taxes



19




39










Total tangible assets


$

113,947




118,797










Total common equity

















Total equity


$

16,251




16,487










Preferred stock



(1,232)




(1,232)










Undeclared dividends - cumulative preferred stock



(3)




(3)










Common equity, net of undeclared cumulative preferred dividends



15,016




15,252










Goodwill



(4,593)




(4,593)










Core deposit and other intangible assets



(72)




(98)










Deferred taxes



19




39










Total tangible common equity


$

10,370




10,600

















(1)     After any related tax effect.



 

 

Reconciliation of Quarterly GAAP to Non-GAAP Measures, Five Quarter Trend




Three months ended




December 31,



September 30,



June 30,



March 31,



December 31,




2017



2017



2017



2017



2016


Income statement data





















In thousands, except per share





















Net income





















Net income


$

322,403




355,923




381,053




348,927




330,571


Amortization of core deposit and other intangible assets (1)



4,261




4,735




4,921




5,108




5,524


Net operating income


$

326,664




360,658




385,974




354,035




336,095























Earnings per common share





















Diluted earnings per common share


$

2.01




2.21




2.35




2.12




1.98


Amortization of core deposit and other intangible assets (1)



.03




.03




.03




.03




.03


Diluted net operating earnings per common share


$

2.04




2.24




2.38




2.15




2.01























Other expense





















Other expense


$

795,813




806,025




750,635




787,852




769,103


Amortization of core deposit and other intangible assets



(7,025)




(7,808)




(8,113)




(8,420)




(9,089)


Noninterest operating expense


$

788,788




798,217




742,522




779,432




760,014























Efficiency ratio





















Noninterest operating expense (numerator)


$

788,788




798,217




742,522




779,432




760,014


Taxable-equivalent net interest income



980,457




965,962




946,936




922,259




883,147


Other income



484,053




459,429




460,816




446,845




465,459


Less:  Gain (loss) on bank investment securities



21,296







(17)







1,566


Denominator


$

1,443,214




1,425,391




1,407,769




1,369,104




1,347,040


Efficiency ratio



54.65

%



56.00

%



52.74

%



56.93

%



56.42

%






















Balance sheet data





















In millions





















Average assets





















Average assets


$

120,226




119,515




120,765




122,978




125,734


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(75)




(82)




(90)




(98)




(102)


Deferred taxes



26




32




35




39




40


Average tangible assets


$

115,584




114,872




116,117




118,326




121,079























Average common equity





















Average total equity


$

16,271




16,301




16,285




16,323




16,673


Preferred stock



(1,232)




(1,232)




(1,232)




(1,232)




(1,492)


Average common equity



15,039




15,069




15,053




15,091




15,181


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(75)




(82)




(90)




(98)




(102)


Deferred taxes



26




32




35




39




40


Average tangible common equity


$

10,397




10,426




10,405




10,439




10,526























At end of quarter





















Total assets





















Total assets


$

118,593




120,402




120,897




123,223




123,449


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(72)




(79)




(86)




(95)




(98)


Deferred taxes



19




31




33




38




39


Total tangible assets


$

113,947




115,761




116,251




118,573




118,797























Total common equity





















Total equity


$

16,251




16,318




16,284




16,213




16,487


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



15,016




15,083




15,049




14,978




15,252


Goodwill



(4,593)




(4,593)




(4,593)




(4,593)




(4,593)


Core deposit and other intangible assets



(72)




(79)




(86)




(95)




(98)


Deferred taxes



19




31




33




38




39


Total tangible common equity


$

10,370




10,442




10,403




10,328




10,600









(1)     After any related tax effect.

 

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SOURCE M&T Bank Corporation

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