M&T Bank Corporation
M&T BANK CORP (Form: 10-Q, Received: 05/05/2017 14:36:24)

 

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 March 31, 2017

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,” “smaller reporting company,” and “emerging growth 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

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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 April 28, 2017: 153,863,872 shares.

 

 

 


 

 

M&T BANK CORPORATION

FORM 10-Q

For the Quarterly Period Ended March 31, 2017

 

Table of Contents of Information Required in Report

 

Page

 

 

 

 

 

Part I.  FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements.

 

 

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEET - March 31, 2017 and December 31, 2016

 

3

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF INCOME - Three months ended March 31, 2017 and 2016

 

4

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - Three months ended March 31, 2017 and 2016

 

5

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS - Three months ended March 31, 2017 and 201 6

 

6

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - Three months ended March 31, 2017 and 201 6

 

7

 

 

 

 

 

 

 

NOTES TO FINANCIAL STATEMENTS

 

8

 

 

 

 

 

Item 2.

 

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

 

47

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk.

 

79

 

 

 

 

 

Item 4.

 

Controls and Procedures.

 

79

 

 

 

 

 

Part II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings.

 

79

 

 

 

 

 

Item 1A.

 

Risk Factors.

 

81

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds.

 

81

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities.

 

81

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures.

 

81

 

 

 

 

 

Item 5.

 

Other Information.

 

81

 

 

 

 

 

Item 6.

 

Exhibits.

 

82

 

 

 

 

 

SIGNATURES

 

82

 

 

 

 

 

EXHIBIT INDEX

 

83

- 2 -


PART I. FINANCI AL INFORMATION

 

Item 1. Financial Statements.

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (Unaudited)

 

 

 

 

 

March 31,

 

 

December 31,

 

Dollars in thousands, except per share

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

Cash and due from banks

 

$

1,286,962

 

 

 

1,320,549

 

 

 

Interest-bearing deposits at banks

 

 

6,945,149

 

 

 

5,000,638

 

 

 

Trading account

 

 

174,854

 

 

 

323,867

 

 

 

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

    $519,063 at March 31, 2017; $1,203,473 at December 31, 2016)

 

 

 

 

 

 

 

 

 

 

Available for sale (cost: $12,640,244 at March 31, 2017;

   $13,338,301 at December 31, 2016)

 

 

12,631,000

 

 

 

13,332,072

 

 

 

Held to maturity (fair value: $2,865,885 at March 31, 2017;

   $2,451,222 at December 31, 2016)

 

 

2,876,119

 

 

 

2,457,278

 

 

 

Other (fair value: $461,296 at March 31, 2017;

   $461,118 at December 31, 2016)

 

 

461,296

 

 

 

461,118

 

 

 

Total investment securities

 

 

15,968,415

 

 

 

16,250,468

 

 

 

Loans and leases

 

 

89,555,547

 

 

 

91,101,677

 

 

 

Unearned discount

 

 

(242,545

)

 

 

(248,261

)

 

 

Loans and leases, net of unearned discount

 

 

89,313,002

 

 

 

90,853,416

 

 

 

Allowance for credit losses

 

 

(1,001,430

)

 

 

(988,997

)

 

 

Loans and leases, net

 

 

88,311,572

 

 

 

89,864,419

 

 

 

Premises and equipment

 

 

672,769

 

 

 

675,263

 

 

 

Goodwill

 

 

4,593,112

 

 

 

4,593,112

 

 

 

Core deposit and other intangible assets

 

 

94,535

 

 

 

97,655

 

 

 

Accrued interest and other assets

 

 

5,175,883

 

 

 

5,323,235

 

 

 

Total assets

 

$

123,223,251

 

 

 

123,449,206

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

Noninterest-bearing deposits

 

$

34,279,591

 

 

 

32,813,896

 

 

 

Savings and interest-checking deposits

 

 

53,542,149

 

 

 

52,346,207

 

 

 

Time deposits

 

 

9,028,018

 

 

 

10,131,846

 

 

 

Deposits at Cayman Islands office

 

 

192,763

 

 

 

201,927

 

 

 

Total deposits

 

 

97,042,521

 

 

 

95,493,876

 

 

 

Federal funds purchased and agreements to repurchase securities

 

 

185,102

 

 

 

163,442

 

 

 

Accrued interest and other liabilities

 

 

1,694,905

 

 

 

1,811,431

 

 

 

Long-term borrowings

 

 

8,087,619

 

 

 

9,493,835

 

 

 

Total liabilities

 

 

107,010,147

 

 

 

106,962,584

 

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 March 31, 2017 and December 31,

   2016; Liquidation preference of $10,000 per share: 50,000

   shares at March 31, 2017 and December 31, 2016

 

 

1,231,500

 

 

 

1,231,500

 

 

 

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

   159,825,445 shares issued at March 31, 2017;

   159,945,678 shares issued at December 31, 2016

 

 

79,913

 

 

 

79,973

 

 

 

Common stock issuable, 28,740 shares at March 31, 2017;

   32,403 shares at December 31, 2016

 

 

1,921

 

 

 

2,145

 

 

 

Additional paid-in capital

 

 

6,603,355

 

 

 

6,676,948

 

 

 

Retained earnings

 

 

9,437,450

 

 

 

9,222,488

 

 

 

Accumulated other comprehensive income (loss), net

 

 

(291,567

)

 

 

(294,636

)

 

 

Treasury stock - common, at cost - 6,073,095 shares at March 31, 2017;

   3,764,742 shares at December 31, 2016

 

 

(849,468

)

 

 

(431,796

)

 

 

Total shareholders’ equity

 

 

16,213,104

 

 

 

16,486,622

 

 

 

Total liabilities and shareholders’ equity

 

$

123,223,251

 

 

 

123,449,206

 

 

- 3 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

 

 

 

 

 

Three Months Ended March 31

 

In thousands, except per share

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

Loans and leases, including fees

 

$

898,038

 

 

 

863,385

 

 

 

Investment securities

 

 

 

 

 

 

 

 

 

 

Fully taxable

 

 

95,124

 

 

 

98,015

 

 

 

Exempt from federal taxes

 

 

430

 

 

 

795

 

 

 

Deposits at banks

 

 

12,162

 

 

 

10,337

 

 

 

Other

 

 

279

 

 

 

302

 

 

 

Total interest income

 

 

1,006,033

 

 

 

972,834

 

Interest expense

 

Savings and interest-checking deposits

 

 

25,634

 

 

 

16,305

 

 

 

Time deposits

 

 

18,998

 

 

 

24,322

 

 

 

Deposits at Cayman Islands office

 

 

265

 

 

 

193

 

 

 

Short-term borrowings

 

 

216

 

 

 

2,162

 

 

 

Long-term borrowings

 

 

46,660

 

 

 

57,888

 

 

 

Total interest expense

 

 

91,773

 

 

 

100,870

 

 

 

Net interest income

 

 

914,260

 

 

 

871,964

 

 

 

Provision for credit losses

 

 

55,000

 

 

 

49,000

 

 

 

Net interest income after provision for credit losses

 

 

859,260

 

 

 

822,964

 

Other income

 

Mortgage banking revenues

 

 

84,692

 

 

 

82,063

 

 

 

Service charges on deposit accounts

 

 

104,176

 

 

 

102,405

 

 

 

Trust income

 

 

120,015

 

 

 

111,077

 

 

 

Brokerage services income

 

 

17,384

 

 

 

16,004

 

 

 

Trading account and foreign exchange gains

 

 

9,691

 

 

 

7,458

 

 

 

Gain on bank investment securities

 

 

 

 

 

4

 

 

 

Other revenues from operations

 

 

110,887

 

 

 

101,922

 

 

 

Total other income

 

 

446,845

 

 

 

420,933

 

Other expense

 

Salaries and employee benefits

 

 

449,862

 

 

 

431,785

 

 

 

Equipment and net occupancy

 

 

74,366

 

 

 

74,178

 

 

 

Outside data processing and software

 

 

44,301

 

 

 

43,015

 

 

 

FDIC assessments

 

 

28,827

 

 

 

25,225

 

 

 

Advertising and marketing

 

 

16,110

 

 

 

21,454

 

 

 

Printing, postage and supplies

 

 

9,708

 

 

 

11,986

 

 

 

Amortization of core deposit and other intangible assets

 

 

8,420

 

 

 

12,319

 

 

 

Other costs of operations

 

 

156,258

 

 

 

156,133

 

 

 

Total other expense

 

 

787,852

 

 

 

776,095

 

 

 

Income before taxes

 

 

518,253

 

 

 

467,802

 

 

 

Income taxes

 

 

169,326

 

 

 

169,274

 

 

 

Net income

 

$

348,927

 

 

 

298,528

 

 

 

Net income available to common shareholders

 

 

 

 

 

 

 

 

 

 

Basic

 

$

328,562

 

 

 

275,744

 

 

 

Diluted

 

 

328,567

 

 

 

275,748

 

 

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.13

 

 

 

1.74

 

 

 

Diluted

 

 

2.12

 

 

 

1.73

 

 

 

Cash dividends per common share

 

$

.75

 

 

 

.70

 

 

 

Average common shares outstanding

 

 

 

 

 

 

 

 

 

 

Basic

 

 

154,427

 

 

 

158,734

 

 

 

Diluted

 

 

154,949

 

 

 

159,181

 

 

 

- 4 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

 

 

 

Three Months Ended March 31

 

 

In thousands

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

348,927

 

 

 

298,528

 

 

Other comprehensive income, net of tax and reclassification adjustments:

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on investment securities

 

 

(1,356

)

 

 

97,194

 

 

Cash flow hedges adjustments

 

 

(23

)

 

 

(24

)

 

Foreign currency translation adjustment

 

 

476

 

 

 

(53

)

 

Defined benefit plans liability adjustments

 

 

3,972

 

 

 

4,321

 

 

Total other comprehensive income

 

 

3,069

 

 

 

101,438

 

 

Total comprehensive income

 

$

351,996

 

 

 

399,966

 

 

 

 

- 5 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

 

 

 

 

 

Three Months Ended March 31

 

In thousands

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating

   activities

 

Net income

 

$

348,927

 

 

 

298,528

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

55,000

 

 

 

49,000

 

 

 

Depreciation and amortization of premises and equipment

 

 

27,429

 

 

 

27,141

 

 

 

Amortization of capitalized servicing rights

 

 

13,543

 

 

 

12,249

 

 

 

Amortization of core deposit and other intangible assets

 

 

8,420

 

 

 

12,319

 

 

 

Provision for deferred income taxes

 

 

36,731

 

 

 

50,075

 

 

 

Asset write-downs

 

 

5,118

 

 

 

8,940

 

 

 

Net gain on sales of assets

 

 

(11,647

)

 

 

(5,399

)

 

 

Net change in accrued interest receivable, payable

 

 

(23,782

)

 

 

(16,530

)

 

 

Net change in other accrued income and expense

 

 

(209

)

 

 

70,766

 

 

 

Net change in loans originated for sale

 

 

712,954

 

 

 

211

 

 

 

Net change in trading account assets and liabilities

 

 

113,332

 

 

 

(59,080

)

 

 

Net cash provided by operating activities

 

 

1,285,816

 

 

 

448,220

 

Cash flows from investing

   activities

 

Proceeds from sales of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

 

 

 

518

 

 

 

Other

 

 

100

 

 

 

18,121

 

 

 

Proceeds from maturities of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

697,756

 

 

 

511,549

 

 

 

Held to maturity

 

 

121,455

 

 

 

132,636

 

 

 

Purchases of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

(5,143

)

 

 

(311,302

)

 

 

Held to maturity

 

 

(539,516

)

 

 

(5,343

)

 

 

Other

 

 

(278

)

 

 

(124

)

 

 

Net decrease (increase) in loans and leases

 

 

797,351

 

 

 

(439,712

)

 

 

Net increase in interest-bearing deposits at banks

 

 

(1,944,511

)

 

 

(1,950,831

)

 

 

Capital expenditures, net

 

 

(21,521

)

 

 

(16,307

)

 

 

Net decrease in loan servicing advances

 

 

56,437

 

 

 

37,600

 

 

 

Other, net

 

 

11,863

 

 

 

7,920

 

 

 

Net cash used by investing activities

 

 

(826,007

)

 

 

(2,015,275

)

Cash flows from financing

   activities

 

Net increase in deposits

 

 

1,550,297

 

 

 

2,264,623

 

 

 

Net increase (decrease) in short-term borrowings

 

 

21,660

 

 

 

(343,838

)

 

 

Payments on long-term borrowings

 

 

(1,401,410

)

 

 

(317,187

)

 

 

Purchases of treasury stock

 

 

(532,073

)

 

 

(100,000

)

 

 

Dividends paid — common

 

 

(116,566

)

 

 

(112,000

)

 

 

Dividends paid — preferred

 

 

(17,368

)

 

 

(17,368

)

 

 

Other, net

 

 

2,064

 

 

 

2,960

 

 

 

Net cash provided (used) by financing activities

 

 

(493,396

)

 

 

1,377,190

 

 

 

Net decrease in cash and cash equivalents

 

 

(33,587

)

 

 

(189,865

)

 

 

Cash and cash equivalents at beginning of period

 

 

1,320,549

 

 

 

1,368,040

 

 

 

Cash and cash equivalents at end of period

 

$

1,286,962

 

 

 

1,178,175

 

Supplemental disclosure of cash

   flow information

 

Interest received during the period

 

$

1,001,129

 

 

 

968,223

 

 

 

Interest paid during the period

 

 

116,183

 

 

 

146,568

 

 

 

Income taxes paid (refunded) during the period

 

 

29,272

 

 

 

(86,146

)

Supplemental schedule of

   noncash investing and financing

   activities

 

Real estate acquired in settlement of loans

 

$

23,607

 

 

 

33,737

 

 

 

Securitization of residential mortgage loans allocated to

 

 

 

 

 

 

 

 

 

 

Available-for-sale investment securities

 

 

3,684

 

 

 

8,452

 

 

 

Capitalized servicing rights

 

 

36

 

 

 

92

 

 

 

 

- 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

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2016

 

$

1,231,500

 

 

 

79,782

 

 

 

2,364

 

 

 

6,680,768

 

 

 

8,430,502

 

 

 

(251,627

)

 

 

 

 

 

16,173,289

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

298,528

 

 

 

101,438

 

 

 

 

 

 

399,966

 

Preferred stock cash dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,318

)

 

 

 

 

 

 

 

 

(20,318

)

Purchases of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(100,000

)

 

 

(100,000

)

Stock-based compensation plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation expense, net

 

 

 

 

 

178

 

 

 

 

 

 

(978

)

 

 

 

 

 

 

 

 

745

 

 

 

(55

)

Exercises of stock options, net

 

 

 

 

 

18

 

 

 

 

 

 

2,335

 

 

 

 

 

 

 

 

 

265

 

 

 

2,618

 

Stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

275

 

 

 

 

 

 

 

 

 

10,319

 

 

 

10,594

 

Directors’ stock plan

 

 

 

 

 

2

 

 

 

 

 

 

471

 

 

 

 

 

 

 

 

 

 

 

 

473

 

Deferred compensation plans, net,

   including dividend equivalents

 

 

 

 

 

2

 

 

 

(184

)

 

 

234

 

 

 

(23

)

 

 

 

 

 

 

 

 

29

 

Other

 

 

 

 

 

 

 

 

 

 

 

394

 

 

 

 

 

 

 

 

 

 

 

 

394

 

Common stock cash dividends —

   $.70 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(111,937

)

 

 

 

 

 

 

 

 

(111,937

)

Balance — March 31, 2016

 

$

1,231,500

 

 

 

79,982

 

 

 

2,180

 

 

 

6,683,499

 

 

 

8,596,752

 

 

 

(150,189

)

 

 

(88,671

)

 

 

16,355,053

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2017

 

$

1,231,500

 

 

 

79,973

 

 

 

2,145

 

 

 

6,676,948

 

 

 

9,222,488

 

 

 

(294,636

)

 

 

(431,796

)

 

 

16,486,622

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

348,927

 

 

 

3,069

 

 

 

 

 

 

351,996

 

Preferred stock cash dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,237

)

 

 

 

 

 

 

 

 

(18,237

)

Exercise of 87,515 Series A stock

   warrants into 47,954 shares of

   common stock

 

 

 

 

 

 

 

 

 

 

 

(5,934

)

 

 

 

 

 

 

 

 

5,934

 

 

 

 

Purchases of treasury stock