M&T Bank Corporation
M&T BANK CORP (Form: 10-Q, Received: 05/04/2018 12:52:15)

 

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, 2018

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 30, 2018: 145,235,614 shares.

 

 

 


M&T BANK CORPORATION

FORM 10-Q

For the Quarterly Period Ended March 31, 2018

 

Table of Contents of Information Required in Report

 

Page

 

 

 

 

 

Part I.  FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements.

 

 

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEET - March 31, 2018 and December 31, 201 7

 

3

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF INCOME - Three months ended March 31, 2018 and 201 7

 

4

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - Three months ended March 31, 2018 and 201 7

 

5

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS - Three months ended March 31, 2018 and 201 7

 

6

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - Three months ended March 31, 2018 and 201 7

 

7

 

 

 

 

 

 

 

NOTES TO FINANCIAL STATEMENTS

 

8

 

 

 

 

 

Item 2.

 

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

 

46

 

 

 

 

 

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

 

 

 

 

 

 

 

 

- 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

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

Cash and due from banks

 

$

1,291,664

 

 

$

1,420,888

 

 

 

Interest-bearing deposits at banks

 

 

6,135,434

 

 

 

5,078,903

 

 

 

Federal funds sold

 

 

1,000

 

 

 

 

 

 

Trading account

 

 

141,134

 

 

 

132,909

 

 

 

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

   $470,906 at March 31, 2018; $487,151 at December 31, 2017)

 

 

 

 

 

 

 

 

 

 

Available for sale (cost: $10,508,620 at March 31, 2018;

   $10,938,796 at December 31, 2017)

 

 

10,297,856

 

 

 

10,896,284

 

 

 

Held to maturity (fair value: $3,160,215 at March 31, 2018;

   $3,341,762 at December 31, 2017)

 

 

3,228,756

 

 

 

3,353,213

 

 

 

Equity and other securities (cost: $526,593 at March 31, 2018;

   $415,028 at December 31, 2017)

 

 

539,952

 

 

 

415,028

 

 

 

Total investment securities

 

 

14,066,564

 

 

 

14,664,525

 

 

 

Loans and leases

 

 

87,967,757

 

 

 

88,242,886

 

 

 

Unearned discount

 

 

(257,008

)

 

 

(253,903

)

 

 

Loans and leases, net of unearned discount

 

 

87,710,749

 

 

 

87,988,983

 

 

 

Allowance for credit losses

 

 

(1,019,671

)

 

 

(1,017,198

)

 

 

Loans and leases, net

 

 

86,691,078

 

 

 

86,971,785

 

 

 

Premises and equipment

 

 

628,706

 

 

 

646,451

 

 

 

Goodwill

 

 

4,593,112

 

 

 

4,593,112

 

 

 

Core deposit and other intangible assets

 

 

64,957

 

 

 

71,589

 

 

 

Accrued interest and other assets

 

 

5,009,175

 

 

 

5,013,325

 

 

 

Total assets

 

$

118,622,824

 

 

$

118,593,487

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

Noninterest-bearing deposits

 

$

31,817,516

 

 

$

33,975,180

 

 

 

Savings and interest-checking deposits

 

 

52,724,608

 

 

 

51,698,008

 

 

 

Time deposits

 

 

6,126,442

 

 

 

6,580,962

 

 

 

Deposits at Cayman Islands office

 

 

278,064

 

 

 

177,996

 

 

 

Total deposits

 

 

90,946,630

 

 

 

92,432,146

 

 

 

Short-term borrowings

 

 

1,626,129

 

 

 

175,099

 

 

 

Accrued interest and other liabilities

 

 

1,749,320

 

 

 

1,593,993

 

 

 

Long-term borrowings

 

 

8,591,051

 

 

 

8,141,430

 

 

 

Total liabilities

 

 

102,913,130

 

 

 

102,342,668

 

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, 2018 and December 31,

   2017; Liquidation preference of $10,000 per share: 50,000

   shares at March 31, 2018 and December 31, 2017

 

 

1,231,500

 

 

 

1,231,500

 

 

 

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

   159,768,397 shares issued at March 31, 2018;

   159,817,518 shares issued at December 31, 2017

 

 

79,884

 

 

 

79,909

 

 

 

Common stock issuable, 24,371 shares at March 31, 2018;

   27,138 shares at December 31, 2017

 

 

1,675

 

 

 

1,847

 

 

 

Additional paid-in capital

 

 

6,572,281

 

 

 

6,590,855

 

 

 

Retained earnings

 

 

10,404,458

 

 

 

10,164,804

 

 

 

Accumulated other comprehensive income (loss), net

 

 

(483,243

)

 

 

(363,814

)

 

 

Treasury stock — common, at cost — 12,993,850 shares at March 31, 2018;

    9,733,115 shares at December 31, 2017

 

 

(2,096,861

)

 

 

(1,454,282

)

 

 

Total shareholders’ equity

 

 

15,709,694

 

 

 

16,250,819

 

 

 

Total liabilities and shareholders’ equity

 

$

118,622,824

 

 

$

118,593,487

 

 

- 3 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

 

 

 

 

 

Three Months Ended March 31

 

In thousands, except per share

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

Loans and leases, including fees

 

$

979,969

 

 

 

898,038

 

 

 

Investment securities

 

 

 

 

 

 

 

 

 

 

Fully taxable

 

 

82,852

 

 

 

95,124

 

 

 

Exempt from federal taxes

 

 

248

 

 

 

430

 

 

 

Deposits at banks

 

 

18,677

 

 

 

12,162

 

 

 

Other

 

 

404

 

 

 

279

 

 

 

Total interest income

 

 

1,082,150

 

 

 

1,006,033

 

Interest expense

 

Savings and interest-checking deposits

 

 

40,527

 

 

 

25,634

 

 

 

Time deposits

 

 

10,936

 

 

 

18,998

 

 

 

Deposits at Cayman Islands office

 

 

381

 

 

 

265

 

 

 

Short-term borrowings

 

 

883

 

 

 

216

 

 

 

Long-term borrowings

 

 

53,906

 

 

 

46,660

 

 

 

Total interest expense

 

 

106,633

 

 

 

91,773

 

 

 

Net interest income

 

 

975,517

 

 

 

914,260

 

 

 

Provision for credit losses

 

 

43,000

 

 

 

55,000

 

 

 

Net interest income after provision for credit losses

 

 

932,517

 

 

 

859,260

 

Other income

 

Mortgage banking revenues

 

 

87,306

 

 

 

84,692

 

 

 

Service charges on deposit accounts

 

 

105,115

 

 

 

104,176

 

 

 

Trust income

 

 

131,375

 

 

 

120,015

 

 

 

Brokerage services income

 

 

13,392

 

 

 

17,384

 

 

 

Trading account and foreign exchange gains

 

 

4,637

 

 

 

9,691

 

 

 

Gain (loss) on bank investment securities

 

 

(9,431

)

 

 

 

 

 

Other revenues from operations

 

 

126,302

 

 

 

110,887

 

 

 

Total other income

 

 

458,696

 

 

 

446,845

 

Other expense

 

Salaries and employee benefits

 

 

463,428

 

 

 

449,741

 

 

 

Equipment and net occupancy

 

 

74,797

 

 

 

74,366

 

 

 

Outside data processing and software

 

 

48,429

 

 

 

44,301

 

 

 

FDIC assessments

 

 

20,280

 

 

 

28,827

 

 

 

Advertising and marketing

 

 

16,248

 

 

 

16,110

 

 

 

Printing, postage and supplies

 

 

9,319

 

 

 

9,708

 

 

 

Amortization of core deposit and other intangible assets

 

 

6,632

 

 

 

8,420

 

 

 

Other costs of operations

 

 

294,211

 

 

 

156,379

 

 

 

Total other expense

 

 

933,344

 

 

 

787,852

 

 

 

Income before taxes

 

 

457,869

 

 

 

518,253

 

 

 

Income taxes

 

 

105,259

 

 

 

169,326

 

 

 

Net income

 

$

352,610

 

 

 

348,927

 

 

 

Net income available to common shareholders

 

 

 

 

 

 

 

 

 

 

Basic

 

$

332,748

 

 

 

328,562

 

 

 

Diluted

 

 

332,749

 

 

 

328,567

 

 

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.24

 

 

 

2.13

 

 

 

Diluted

 

 

2.23

 

 

 

2.12

 

 

 

Cash dividends per common share

 

$

.75

 

 

 

.75

 

 

 

Average common shares outstanding

 

 

 

 

 

 

 

 

 

 

Basic

 

 

148,688

 

 

 

154,427

 

 

 

Diluted

 

 

148,905

 

 

 

154,949

 

 

 

- 4 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

 

 

 

Three Months Ended March 31

 

 

In thousands

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

352,610

 

 

 

348,927

 

 

Other comprehensive income, net of tax and reclassification adjustments:

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on investment securities

 

 

(100,684

)

 

 

(1,356

)

 

Cash flow hedges adjustments

 

 

(10,442

)

 

 

(23

)

 

Foreign currency translation adjustment

 

 

1,290

 

 

 

476

 

 

Defined benefit plans liability adjustments

 

 

7,260

 

 

 

3,972

 

 

Total other comprehensive income (loss)

 

 

(102,576

)

 

 

3,069

 

 

Total comprehensive income

 

$

250,034

 

 

 

351,996

 

 

 

 

- 5 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

 

 

 

 

 

Three Months Ended March 31

 

In thousands

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating

   activities

 

Net income

 

$

352,610

 

 

 

348,927

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

43,000

 

 

 

55,000

 

 

 

Depreciation and amortization of premises and equipment

 

 

27,281

 

 

 

27,429

 

 

 

Amortization of capitalized servicing rights

 

 

11,656

 

 

 

13,543

 

 

 

Amortization of core deposit and other intangible assets

 

 

6,632

 

 

 

8,420

 

 

 

Provision for deferred income taxes

 

 

(124,772

)

 

 

36,731

 

 

 

Asset write-downs

 

 

3,192

 

 

 

5,118

 

 

 

Net gain on sales of assets

 

 

(4,547

)

 

 

(11,647

)

 

 

Net change in accrued interest receivable, payable

 

 

(14,803

)

 

 

(23,782

)

 

 

Net change in other accrued income and expense

 

 

165,114

 

 

 

(209

)

 

 

Net change in loans originated for sale

 

 

(72,403

)

 

 

712,954

 

 

 

Net change in trading account assets and liabilities

 

 

91,219

 

 

 

113,332

 

 

 

Net cash provided by operating activities

 

 

484,179

 

 

 

1,285,816

 

Cash flows from investing

   activities

 

Proceeds from sales of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

100

 

 

 

 

 

 

Other

 

 

254,860

 

 

 

100

 

 

 

Proceeds from maturities of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

349,294

 

 

 

697,756

 

 

 

Held to maturity

 

 

123,923

 

 

 

121,455

 

 

 

Purchases of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

(100

)

 

 

(5,143

)

 

 

Held to maturity

 

 

 

 

 

(539,516

)

 

 

Other

 

 

(288,259

)

 

 

(278

)

 

 

Net decrease in loans and leases

 

 

303,886

 

 

 

797,351

 

 

 

Net increase in interest-bearing deposits at banks

 

 

(1,056,531

)

 

 

(1,944,511

)

 

 

Capital expenditures, net

 

 

(9,544

)

 

 

(21,521

)

 

 

Net decrease in loan servicing advances

 

 

115,163

 

 

 

56,437

 

 

 

Other, net

 

 

(41,322

)

 

 

11,863

 

 

 

Net cash used by investing activities

 

 

(248,530

)

 

 

(826,007

)

Cash flows from financing

   activities

 

Net increase (decrease) in deposits

 

 

(1,484,629

)

 

 

1,550,297

 

 

 

Net increase in short-term borrowings

 

 

1,451,030

 

 

 

21,660

 

 

 

Proceeds from long-term borrowings

 

 

999,594

 

 

 

 

 

 

Payments on long-term borrowings

 

 

(504,192

)

 

 

(1,401,410

)

 

 

Purchases of treasury stock

 

 

(720,966

)

 

 

(532,073

)

 

 

Dividends paid — common

 

 

(112,318

)

 

 

(116,566

)

 

 

Dividends paid — preferred

 

 

(17,368

)

 

 

(17,368

)

 

 

Other, net

 

 

24,976

 

 

 

2,064

 

 

 

Net cash used by financing activities

 

 

(363,873

)

 

 

(493,396

)

 

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(128,224

)

 

 

(33,587

)

 

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

1,420,888

 

 

 

1,320,549

 

 

 

Cash, cash equivalents and restricted cash at end of period

 

$

1,292,664

 

 

 

1,286,962

 

Supplemental disclosure of cash

   flow information

 

Interest received during the period

 

$

1,077,676

 

 

 

1,001,129

 

 

 

Interest paid during the period

 

 

118,342

 

 

 

116,183

 

 

 

Income taxes paid during the period

 

 

37,999

 

 

 

29,272

 

Supplemental schedule of

   noncash investing and financing

   activities

 

Real estate acquired in settlement of loans

 

$

15,410

 

 

 

23,607

 

 

 

Securitization of residential mortgage loans allocated to

 

 

 

 

 

 

 

 

 

 

Available-for-sale investment securities

 

 

5,128

 

 

 

3,684

 

 

 

Capitalized servicing rights

 

 

64

 

 

 

36

 

 

 

 

- 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

 

 

 

 

 

Dollars in thousands, except per share

 

Stock

 

 

Stock

 

 

Issuable

 

 

Capital

 

 

Earnings

 

 

(Loss), Net

 

 

Stock

 

 

Total

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(532,073

)

 

 

(532,073

)

Stock-based compensation plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation expense, net

 

 

 

 

 

(60

)

 

 

 

 

 

(67,016

)

 

 

 

 

 

 

 

 

55,667

 

 

 

(11,409

)

Exercises of stock options, net

 

 

 

 

 

 

 

 

 

 

 

(3,127

)

 

 

 

 

 

 

 

 

43,789

 

 

 

40,662

 

Stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

2,563

 

 

 

 

 

 

 

 

 

8,268

 

 

 

10,831

 

Directors’ stock plan

 

 

 

 

 

 

 

 

 

 

 

126

 

 

 

 

 

 

 

 

 

347

 

 

 

473

 

Deferred compensation plans, net,

   including dividend equivalents

 

 

 

 

 

 

 

 

(224

)

 

 

(205

)

 

 

(21

)

 

 

 

 

 

396

 

 

 

(54

)

Common stock cash dividends —

   $.75 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(115,707

)

 

 

 

 

 

 

 

 

(115,707

)

Balance — March 31, 2017

 

$

1,231,500

 

 

 

79,913

 

 

 

1,921

 

 

 

6,603,355

 

 

 

9,437,450

 

 

 

(291,567

)

 

 

(849,468

)

 

 

16,213,104

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2018

 

$

1,231,500

 

 

 

79,909

 

 

 

1,847

 

 

 

6,590,855

 

 

 

10,164,804

 

 

 

(363,814

)

 

 

(1,454,282

)

 

 

16,250,819

 

Cumulative effect of change in

   accounting principle — equity

   securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,853

 

 

 

(16,853

)

 

 

 

 

 

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

352,610

 

 

 

(102,576

)

 

 

 

 

 

250,034

 

Preferred stock cash dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,130

)