M&T Bank Corporation
M&T BANK CORP (Form: 10-Q, Received: 11/04/2016 06:10:20)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-9861

 

M&T BANK CORPORATION

(Exact name of registrant as specified in its charter)

 

 

New York

 

16-0968385

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

One M & T Plaza

Buffalo, New York

 

14203

(Address of principal executive offices)

 

(Zip Code)

(716) 635-4000

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes       No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).        Yes       No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

 

Accelerated filer

Non-accelerated filer

 

  (Do not check if a smaller reporting company)

Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).        Yes       No

Number of shares of the registrant's Common Stock, $0.50 par value, outstanding as of the close of business on October 28, 2016: 155,048,618 shares.

 

 

 

 


M&T BANK CORPORATION

FORM 10-Q

For the Quarterly Period Ended September 30, 2016

 

Table of Contents of Information Required in Report

 

Page

 

 

 

 

 

Part I.  FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements.

 

 

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEET - September 30, 2016 and December 31, 2015

 

3

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF INCOME - Three and nine months ended September 30, 2016 and 2015

 

4

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - Three and nine months ended September 30, 2016 and 2015

 

5

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS - Nine months ended September 30, 2016 and 2015

 

6

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - Nine months ended September 30, 2016 and 2015

 

7

 

 

 

 

 

 

 

NOTES TO FINANCIAL STATEMENTS

 

8

 

 

 

 

 

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

48

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk.

 

82

 

 

 

 

 

Item 4.

 

Controls and Procedures.

 

82

 

 

 

 

 

Part II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings.

 

82

 

 

 

 

 

Item 1A.

 

Risk Factors.

 

83

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds.

 

83

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities.

 

83

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures.

 

83

 

 

 

 

 

Item 5.

 

Other Information.

 

83

 

 

 

 

 

Item 6.

 

Exhibits.

 

84

 

 

 

 

 

SIGNATURES

 

84

 

 

 

 

 

EXHIBIT INDEX

 

85

- 2 -


PART I. FINANCI AL INFORMATION

 

Item 1. Financial Statements.

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (Unaudited)

 

 

 

 

 

September 30,

 

 

December 31,

 

Dollars in thousands, except per share

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

Cash and due from banks

 

$

1,332,202

 

 

 

1,368,040

 

 

 

Interest-bearing deposits at banks

 

 

10,777,636

 

 

 

7,594,350

 

 

 

Trading account

 

 

488,588

 

 

 

273,783

 

 

 

Investment securities (includes pledged securities that can be sold or repledged of

    $1,856,326 at September 30, 2016; $2,136,712  at December 31, 2015)

 

 

 

 

 

 

 

 

 

 

Available for sale (cost: $11,551,614 at September 30, 2016;

   $12,138,636 at December 31, 2015)

 

 

11,862,567

 

 

 

12,242,671

 

 

 

Held to maturity (fair value: $2,456,097 at September 30, 2016;

   $2,864,147 at December 31, 2015)

 

 

2,409,950

 

 

 

2,859,709

 

 

 

Other (fair value: $461,057 at September 30, 2016; $554,059 at

   December 31, 2015)

 

 

461,057

 

 

 

554,059

 

 

 

Total investment securities

 

 

14,733,574

 

 

 

15,656,439

 

 

 

Loans and leases

 

 

89,887,257

 

 

 

87,719,234

 

 

 

Unearned discount

 

 

(240,765

)

 

 

(229,735

)

 

 

Loans and leases, net of unearned discount

 

 

89,646,492

 

 

 

87,489,499

 

 

 

Allowance for credit losses

 

 

(976,121

)

 

 

(955,992

)

 

 

Loans and leases, net

 

 

88,670,371

 

 

 

86,533,507

 

 

 

Premises and equipment

 

 

660,381

 

 

 

666,682

 

 

 

Goodwill

 

 

4,593,112

 

 

 

4,593,112

 

 

 

Core deposit and other intangible assets

 

 

106,744

 

 

 

140,268

 

 

 

Accrued interest and other assets

 

 

5,478,420

 

 

 

5,961,703

 

 

 

Total assets

 

$

126,841,028

 

 

 

122,787,884

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

Noninterest-bearing deposits

 

$

33,127,627

 

 

 

29,110,635

 

 

 

Interest-checking deposits

 

 

2,554,507

 

 

 

2,939,274

 

 

 

Savings deposits

 

 

50,510,523

 

 

 

46,627,370

 

 

 

Time deposits

 

 

11,721,005

 

 

 

13,110,392

 

 

 

Deposits at Cayman Islands office

 

 

223,183

 

 

 

170,170

 

 

 

Total deposits

 

 

98,136,845

 

 

 

91,957,841

 

 

 

Federal funds purchased and agreements to repurchase securities

 

 

213,846

 

 

 

150,546

 

 

 

Other short-term borrowings

 

 

 

 

 

1,981,636

 

 

 

Accrued interest and other liabilities

 

 

1,938,201

 

 

 

1,870,714

 

 

 

Long-term borrowings

 

 

10,211,160

 

 

 

10,653,858

 

 

 

Total liabilities

 

 

110,500,052

 

 

 

106,614,595

 

Shareholders' equity

 

Preferred stock, $1.00 par, 1,000,000 shares authorized;

   Issued and outstanding: Liquidation preference of $1,000 per

   share: 731,500 shares at September 30, 2016 and December 31,

   2015; Liquidation preference of $10,000 per share: 50,000

   shares at September 30, 2016 and December 31, 2015

 

 

1,231,500

 

 

 

1,231,500

 

 

 

Common stock, $.50 par, 250,000,000 shares authorized,

   159,950,278 shares issued at September 30, 2016; 159,563,512

   shares issued at December 31, 2015

 

 

79,975

 

 

 

79,782

 

 

 

Common stock issuable, 33,748 shares at September 30, 2016;

   36,644 shares at December 31, 2015

 

 

2,224

 

 

 

2,364

 

 

 

Additional paid-in capital

 

 

6,689,812

 

 

 

6,680,768

 

 

 

Retained earnings

 

 

9,021,965

 

 

 

8,430,502

 

 

 

Accumulated other comprehensive income (loss), net

 

 

(114,559

)

 

 

(251,627

)

 

 

Treasury stock - common, at cost - 4,997,089 shares at September 30, 2016

 

 

(569,941

)

 

 

 

 

 

Total shareholders’ equity

 

 

16,340,976

 

 

 

16,173,289

 

 

 

Total liabilities and shareholders’ equity

 

$

126,841,028

 

 

 

122,787,884

 

 

 

- 3 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

 

 

 

 

 

Three months ended September 30

 

 

Nine months ended September 30

 

In thousands, except per share

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

Loans and leases, including fees

 

$

871,345

 

 

 

672,092

 

 

$

2,602,208

 

 

 

1,981,904

 

 

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fully taxable

 

 

84,893

 

 

 

93,062

 

 

 

274,092

 

 

 

272,163

 

 

 

Exempt from federal taxes

 

 

623

 

 

 

950

 

 

 

2,081

 

 

 

3,330

 

 

 

Deposits at banks

 

 

12,354

 

 

 

3,852

 

 

 

33,684

 

 

 

10,321

 

 

 

Other

 

 

300

 

 

 

70

 

 

 

905

 

 

 

749

 

 

 

Total interest income

 

 

969,515

 

 

 

770,026

 

 

 

2,912,970

 

 

 

2,268,467

 

Interest expense

 

Interest-checking deposits

 

 

378

 

 

 

360

 

 

 

1,192

 

 

 

1,020

 

 

 

Savings deposits

 

 

23,689

 

 

 

10,937

 

 

 

59,714

 

 

 

31,517

 

 

 

Time deposits

 

 

27,886

 

 

 

3,643

 

 

 

79,075

 

 

 

11,073

 

 

 

Deposits at Cayman Islands office

 

 

204

 

 

 

151

 

 

 

578

 

 

 

448

 

 

 

Short-term borrowings

 

 

169

 

 

 

32

 

 

 

3,474

 

 

 

102

 

 

 

Long-term borrowings

 

 

58,849

 

 

 

62,076

 

 

 

174,814

 

 

 

188,764

 

 

 

Total interest expense

 

 

111,175

 

 

 

77,199

 

 

 

318,847

 

 

 

232,924

 

 

 

Net interest income

 

 

858,340

 

 

 

692,827

 

 

 

2,594,123

 

 

 

2,035,543

 

 

 

Provision for credit losses

 

 

47,000

 

 

 

44,000

 

 

 

128,000

 

 

 

112,000

 

 

 

Net interest income after provision for credit losses

 

 

811,340

 

 

 

648,827

 

 

 

2,466,123

 

 

 

1,923,543

 

Other income

 

Mortgage banking revenues

 

 

103,747

 

 

 

84,035

 

 

 

275,193

 

 

 

288,238

 

 

 

Service charges on deposit accounts

 

 

107,935

 

 

 

107,259

 

 

 

314,212

 

 

 

314,860

 

 

 

Trust income

 

 

118,654

 

 

 

113,744

 

 

 

350,181

 

 

 

356,076

 

 

 

Brokerage services income

 

 

15,914

 

 

 

16,902

 

 

 

48,190

 

 

 

49,224

 

 

 

Trading account and foreign exchange gains

 

 

12,754

 

 

 

8,362

 

 

 

33,434

 

 

 

20,639

 

 

 

Gain (loss) on bank investment securities

 

 

28,480

 

 

 

 

 

 

28,748

 

 

 

(108

)

 

 

Other revenues from operations

 

 

103,866

 

 

 

109,397

 

 

 

310,579

 

 

 

348,000

 

 

 

Total other income

 

 

491,350

 

 

 

439,699

 

 

 

1,360,537

 

 

 

1,376,929

 

Other expense

 

Salaries and employee benefits

 

 

399,786

 

 

 

363,567

 

 

 

1,230,246

 

 

 

1,115,117

 

 

 

Equipment and net occupancy

 

 

75,263

 

 

 

68,470

 

 

 

225,165

 

 

 

201,792

 

 

 

Printing, postage and supplies

 

 

8,972

 

 

 

8,691

 

 

 

30,865

 

 

 

27,586

 

 

 

Amortization of core deposit and other intangible assets

 

 

9,787

 

 

 

4,090

 

 

 

33,524

 

 

 

16,848

 

 

 

FDIC assessments

 

 

28,459

 

 

 

11,090

 

 

 

76,054

 

 

 

32,551

 

 

 

Other costs of operations

 

 

230,125

 

 

 

197,908

 

 

 

682,528

 

 

 

642,925

 

 

 

Total other expense

 

 

752,392

 

 

 

653,816

 

 

 

2,278,382

 

 

 

2,036,819

 

 

 

Income before taxes

 

 

550,298

 

 

 

434,710

 

 

 

1,548,278

 

 

 

1,263,653

 

 

 

Income taxes

 

 

200,314

 

 

 

154,309

 

 

 

563,735

 

 

 

454,951

 

 

 

Net income

 

$

349,984

 

 

 

280,401

 

 

$

984,543

 

 

 

808,702

 

 

 

Net income available to common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

326,992

 

 

 

257,337

 

 

$

915,670

 

 

 

739,627

 

 

 

Diluted

 

 

326,998

 

 

 

257,346

 

 

 

915,686

 

 

 

739,656

 

 

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.10

 

 

 

1.94

 

 

$

5.82

 

 

 

5.59

 

 

 

Diluted

 

 

2.10

 

 

 

1.93

 

 

 

5.80

 

 

 

5.56

 

 

 

Cash dividends per common share

 

$

.70

 

 

 

.70

 

 

$

2.10

 

 

 

2.10

 

 

 

Average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

155,493

 

 

 

132,630

 

 

 

157,336

 

 

 

132,347

 

 

 

Diluted

 

 

156,026

 

 

 

133,376

 

 

 

157,843

 

 

 

133,089

 

 

 

- 4 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

 

 

 

Three months ended September 30

 

 

Nine months ended September 30

 

In thousands

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

349,984

 

 

 

280,401

 

 

$

984,543

 

 

 

808,702

 

Other comprehensive income (loss), net of tax and reclassification adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on investment securities

 

 

(17,133

)

 

 

48,332

 

 

 

127,331

 

 

 

1,053

 

Cash flow hedges adjustments

 

 

(23

)

 

 

(24

)

 

 

(70

)

 

 

823

 

Foreign currency translation adjustment

 

 

(229

)

 

 

(3

)

 

 

(1,847

)

 

 

(521

)

Defined benefit plans liability adjustments

 

 

3,847

 

 

 

5,724

 

 

 

11,654

 

 

 

16,166

 

Total other comprehensive income (loss)

 

 

(13,538

)

 

 

54,029

 

 

 

137,068

 

 

 

17,521

 

Total comprehensive income

 

$

336,446

 

 

 

334,430

 

 

$

1,121,611

 

 

 

826,223

 

 

 

- 5 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

 

 

 

 

 

Nine months ended September 30

 

In thousands

 

 

 

2016

 

 

2015

 

Cash flows from operating activities

 

Net income

 

$

984,543

 

 

 

808,702

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

128,000

 

 

 

112,000

 

 

 

Depreciation and amortization of premises and equipment

 

 

79,911

 

 

 

73,916

 

 

 

Amortization of capitalized servicing rights

 

 

37,979

 

 

 

36,730

 

 

 

Amortization of core deposit and other intangible assets

 

 

33,524

 

 

 

16,848

 

 

 

Provision for deferred income taxes

 

 

109,274

 

 

 

20,141

 

 

 

Asset write-downs

 

 

14,276

 

 

 

5,775

 

 

 

Net gain on sales of assets

 

 

(46,732

)

 

 

(61,969

)

 

 

Net change in accrued interest receivable, payable

 

 

(13,833

)

 

 

(5,484

)

 

 

Net change in other accrued income and expense

 

 

113,809

 

 

 

11,200

 

 

 

Net change in loans originated for sale

 

 

(285,824

)

 

 

232,974

 

 

 

Net change in trading account assets and liabilities

 

 

(82,837

)

 

 

(2,993

)

 

 

Net cash provided by operating activities

 

 

1,072,090

 

 

 

1,247,840

 

Cash flows from investing activities

 

Proceeds from sales of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

61,947

 

 

 

2,579

 

 

 

Other

 

 

94,516

 

 

 

377

 

 

 

Proceeds from maturities of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

1,690,665

 

 

 

1,343,869

 

 

 

Held to maturity

 

 

459,399

 

 

 

519,359

 

 

 

Purchases of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

(1,150,523

)

 

 

(3,320,931

)

 

 

Held to maturity

 

 

(15,806

)

 

 

(22,592

)

 

 

Other

 

 

(1,514

)

 

 

(8,179

)

 

 

Net increase in loans and leases

 

 

(2,021,004

)

 

 

(2,208,660

)

 

 

Net (increase) decrease in interest-bearing deposits at banks

 

 

(3,183,286

)

 

 

1,757,601

 

 

 

Capital expenditures, net

 

 

(65,277

)

 

 

(42,744

)

 

 

Net decrease in loan servicing advances

 

 

121,226

 

 

 

461,700

 

 

 

Other, net

 

 

11,459

 

 

 

(75,449

)

 

 

Net cash used by investing activities

 

 

(3,998,198

)

 

 

(1,593,070

)

Cash flows from financing activities

 

Net increase (decrease) in deposits

 

 

6,195,511

 

 

 

(636,144

)

 

 

Net decrease in short-term borrowings

 

 

(1,886,701

)

 

 

(18,893

)

 

 

Proceeds from long-term borrowings

 

 

 

 

 

1,500,000

 

 

 

Payments on long-term borrowings

 

 

(427,035

)

 

 

(324,308

)

 

 

Purchases of treasury stock

 

 

(604,000

)

 

 

 

 

 

Dividends paid - common

 

 

(333,042

)

 

 

(281,149

)

 

 

Dividends paid - preferred

 

 

(58,003

)

 

 

(58,003

)

 

 

Other, net

 

 

3,540

 

 

 

40,074

 

 

 

Net cash provided by financing activities

 

 

2,890,270

 

 

 

221,577

 

 

 

Net decrease in cash and cash equivalents

 

 

(35,838

)

 

 

(123,653

)

 

 

Cash and cash equivalents at beginning of period

 

 

1,368,040

 

 

 

1,373,357

 

 

 

Cash and cash equivalents at end of period

 

$

1,332,202

 

 

 

1,249,704

 

Supplemental disclosure of cash flow information

 

Interest received during the period

 

$

2,923,278

 

 

 

2,234,476

 

 

 

Interest paid during the period

 

 

387,695

 

 

 

234,989

 

 

 

Income taxes paid during the period

 

 

138,375

 

 

 

373,016

 

Supplemental schedule of noncash investing and financing activities

 

Real estate acquired in settlement of loans

 

$

100,106

 

 

 

35,018

 

 

 

Securitization of residential mortgage loans allocated to

 

 

 

 

 

 

 

 

 

 

Available-for-sale investment securities

 

 

18,685

 

 

 

51,481

 

 

 

Capitalized servicing rights

 

 

193

 

 

 

528

 

 

 

 

- 6 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Additional

 

 

 

 

 

 

comprehensive

 

 

 

 

 

 

 

 

 

 

 

Preferred

 

 

Common

 

 

stock

 

 

paid-in

 

 

Retained

 

 

income

 

 

Treasury

 

 

 

 

 

In thousands, except per share

 

stock

 

 

stock

 

 

issuable

 

 

capital

 

 

earnings

 

 

(loss), net

 

 

stock

 

 

Total

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - January 1, 2015

 

$

1,231,500

 

 

 

66,157

 

 

 

2,608

 

 

 

3,409,506

 

 

 

7,807,119

 

 

 

(180,994

)

 

 

 

 

 

12,335,896

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

808,702

 

 

 

17,521

 

 

 

 

 

 

826,223

 

Preferred stock cash dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(60,953

)

 

 

 

 

 

 

 

 

(60,953

)

Exercise of 2,315 Series A stock warrants into 904 shares of common stock

 

 

 

 

 

1

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation plans: