M&T Announces Year-End Earnings
M&T Announces Year-End Earnings
January 9, 2002
Cash net income for 2001 rose 34% to $482.3 million from $358.6 million in 2000. Expressed as a rate of return on average tangible assets, cash net income was 1.63% in 2001, up from 1.56% in 2000. Cash return on average tangible common equity improved to 28.50% in 2001 from 27.65% in 2000. Cash earnings exclude the after-tax effect of nonrecurring merger-related expenses and amortization of goodwill and core deposit intangible. Nonrecurring merger expenses were generally related to systems conversions and other one-time costs of integrating and conforming acquired operations with and into M&T.
Diluted cash earnings per share for the fourth quarter of 2001 were $1.30, up 14% from $1.14 in the year-earlier quarter. Cash net income for the recent quarter was $126.5 million, 17% higher than the $108.1 million earned in the final quarter of 2000. The annualized cash returns on average tangible assets and average tangible equity were 1.67% and 29.43%, respectively, in 2001's fourth quarter, up from 1.57% and 28.93%, respectively, in the corresponding 2000 period.
Taxable-equivalent net interest income increased 36% to $1.176 billion in 2001 from $864.7 million in 2000. The improvement resulted from higher average loans outstanding and a widening of M&T's net interest margin, or taxable-equivalent net interest income expressed as a percentage of average earning assets. Including the impact of the Keystone Financial, Inc. ("Keystone") and Premier National Bancorp, Inc.("Premier") acquisitions, average loans outstanding in 2001 were $24.4 billion, up 32% from $18.5 billion in 2000. Net interest margin improved by 21 basis points (hundredths of one percent) to 4.23% in 2001 from 4.02% a year earlier.
Reflecting the weakened economy, nationally and in markets directly served by M&T, the provision for credit losses increased to $103.5 million in 2001 from $38.0 million in 2000. Net charge-offs of loans during the recent year totaled $75.3 million or .31% of average loans outstanding, compared with $29.0 million or .16% of average loans in 2000. Nonperforming loans were $190.5 million at December 31, 2001, or .76% of total loans, compared with $110.6 million or .49% a year earlier. Loans past due 90 days or more and accruing interest totaled $146.9 million at the recent year-end, compared with $141.8 million a year earlier. Included in these loans at December 31, 2001 and 2000 were $108 million and $93 million, respectively, of one-to-four family residential mortgage loans serviced by M&T and repurchased from the Government National Mortgage Association. The outstanding principal balances of these loans, which were repurchased to reduce servicing costs, are fully guaranteed by government agencies. In general, the remaining portion of accruing loans past due 90 days or more are either also guaranteed by government agencies or well-secured by collateral.
M&T's allowance for credit losses totaled $425.0 million, or 1.69% of total loans at December 31, 2001, up from $374.7 million or 1.65% a year earlier. Reflecting the increase in nonperforming loans noted above, the ratio of the allowance for credit losses to nonperforming loans was 223% at the recent year-end, compared with 339% at December 31, 2000. Assets taken in foreclosure of defaulted loans were $16.4 million and $13.6 million at December 31, 2001 and 2000, respectively.
Noninterest income rose to $477.4 million in 2001, up 47% from $324.7 million a year earlier. Approximately 55% of the increase was attributable to revenues related to operations in market areas associated with the Keystone and Premier acquisitions. Higher revenues from providing deposit account and mortgage banking services also contributed to the increase in noninterest income.
Noninterest operating expenses, which exclude amortization of goodwill and core deposit intangible and nonrecurring merger-related expenses, were $818.7 million in 2001, representing an increase of 37% from $598.9 million in 2000. Expenses related to the acquired operations of Keystone and, to a lesser extent, Premier were large contributors to the higher expense levels.
The efficiency ratio, or noninterest operating expenses divided by the sum of taxable-equivalent net interest income and noninterest income, measures the relationship of operating expenses to revenues. M&T's cash-basis efficiency ratio, calculated using the operating expense totals noted above and excluding gains and losses from sales of bank investment securities from noninterest income, was 49.6% in 2001, improved from 50.2% in 2000.
Net income measured in accordance with generally accepted accounting principles ("GAAP") includes the impact of non-cash charges for amortization of goodwill and core deposit intangible, as well as nonrecurring merger-related expenses. GAAP-basis diluted earnings per share for 2001 were $3.82, up 11% from $3.44 in 2000. On the same basis, net income for 2001 rose 32% to $378.1 million from $286.2 million in the prior year. GAAP-basis net income for 2001 expressed as a rate of return on average assets and average common stockholders' equity was 1.23% and 12.78% respectively, compared with 1.21% and 14.07%, respectively, for 2000. The after-tax impact of merger-related expenses incurred in 2001 was $4.8 million ($.05 per diluted share), compared with $16.4 million ($.20 per diluted share) in 2000. Charges for goodwill and core deposit intangible amortization, after tax effect, were $66.4 million ($.67 per diluted share) and $32.9 million ($.33 per diluted share), respectively, during 2001. Comparable after-tax amortization charges in 2000 were $40.4 million ($.48 per diluted share) for goodwill and $15.7 million ($.19 per diluted share) for core deposit intangible. Pursuant to Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," which M&T adopted on January 1, 2002, goodwill associated with corporate acquisitions will no longer be amortized beginning in 2002. However, amortization of core deposit and certain other intangible assets will continue and is expected to approximate $33 million (after-tax) in 2002.
For the final quarter of 2001, GAAP-basis diluted earnings per share and net income were $1.05 and $101.7 million, respectively, compared with $.76 and $72.0 million, respectively, in the last quarter of 2000. Merger-related expenses for the final quarter of 2000, after tax-effect, were $14.3 million ($.15 per diluted share). There were no similar expenses in the recently completed quarter. The annualized returns on average assets and average common equity for the fourth quarter of 2001 were 1.29% and 13.70%, respectively, compared with 1.01% and 11.03%, respectively, in the year-earlier quarter.
Robert G. Wilmers, Chairman of the Board, President and Chief Executive Officer of M&T, commented that "2001 was a challenging, yet successful year for M&T. We are pleased with M&T's financial results for the year, particularly given the general slowdown in economic activity in the country since early 2001. Despite these trying economic conditions, at this time we remain comfortable with the consensus of analysts' estimates for GAAP-basis diluted earnings per share in 2002 of $4.89."
At December 31, 2001, M&T had total assets of $31.5 billion, compared with $28.9 billion a year earlier. Loans and leases, net of unearned discount, increased 11% to $25.2 billion at the end of 2001 from $22.7 billion at December 31, 2000. Deposits totaled $21.6 billion at December 31, 2001, up from $20.2 billion at December 31, 2000. Assets, loans and deposits obtained in the February 9, 2001 acquisition of Premier were $1.8 billion, $1.0 billion and $1.4 billion, respectively. Total stockholders' equity rose 9% to $2.9 billion at December 31, 2001, representing 9.35% of total assets, compared with $2.7 billion or 9.33% a year earlier. Common stockholders' equity per share was $31.33 at the recent year-end and $28.93 at December 31, 2000. Tangible equity per common share was $18.34 and $16.74 at December 31, 2001 and 2000, respectively.
In November 2001, M&T announced that it had been authorized by its Board of Directors to purchase up to 5,000,000 shares of its common stock. Through December 31, 2001, M&T had repurchased 624,513 shares of common stock pursuant to such plan at an average cost of $71.70 per share. During 2001, M&T completed previously authorized repurchase plans that had been announced in November 1999 and June 2001. In total, during 2001 M&T repurchased 4,396,303 shares of its common stock at an average cost per share of $73.64.
Investors will have an opportunity to listen to M&T's conference call to discuss fourth quarter and full year financial results and the 2002 outlook at 9:00 a.m. Eastern Standard Time ("EST") on Thursday, January 10, 2002. Those wishing to participate on the call may dial 877-232-1251. The conference call will also be webcast live at http://ir.mandtbank.com/calendar.cfm. A replay of the call will be available until January 11, 2002 by calling 800-642-1687, code 2827228. The event will also be archived and available by noon (EST), January 10, 2002 on M&T's website at http://ir.mandtbank.com/calendar.cfm.
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. M&T undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Future Factors include changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; credit losses; sources of liquidity; legislation affecting the financial services industry as a whole, and M&T and its subsidiaries individually or collectively; regulatory supervision and oversight, including required capital levels; 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, including environmental regulations; 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; 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 and acquisition activities compared to 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 conditions, including interest rate and currency exchange rate fluctuations, and other Future Factors.
M&T BANK CORPORATION
Financial Highlights
Three months ended Year ended
Amounts in thousands, December 31 December 31
except per share 2001 2000 Change 2001 2000 Change
-------- ------- ----- ------ ------ ------
Performance
Net income $ 101,734 71,967 41 % $ 378,075 286,156 32 %
Per common share:
Basic earnings $ 1.08 .78 38 % $ 3.95 3.55 11 %
Diluted earnings 1.05 .76 38 3.82 3.44 11
Cash dividends $ .25 .25 - $ 1.00 .625 60
Common shares outstanding:
Average - diluted (1) 97,179 95,088 2 % 99,024 83,171 19 %
Period end (2) 93,814 93,333 1 93,814 93,333 1
Return on (annualized):
Average total assets 1.29% 1.01% 1.23% 1.21%
Average common
stockholders' equity 13.70% 11.03% 12.78% 14.07%
Taxable-equivalent net
interest income $ 308,934 261,807 18 % $1,175,801 864,734 36 %
Yield on average earning
assets (3) 6.97% 8.47% 7.62% 8.30%
Cost of interest-bearing
liabilities 3.03% 5.12% 3.91% 4.91%
Net interest spread (3) 3.94% 3.35% 3.71% 3.39%
Contribution of
interest-free funds .40% .70% .52% .63%
Net interest margin (3) 4.34% 4.05% 4.23% 4.02%
Net charge-offs to average total
net loans (annualized) .33% .22% .31% .16%
Cash operating results (4)
Cash net income $ 126,451 93,838 35 % $ 477,420 342,241 39 %
Cash net income, excluding
acquisition-related
expenses 126,451 108,100 17 482,264 358,639 34
Diluted cash earnings
per common share 1.30 .99 31 4.82 4.11 17
Diluted cash earnings per
common share, excluding
acquisition-related
expenses 1.30 1.14 14 4.87 4.31 13
Return on (annualized):
Average tangible assets 1.67% 1.36% 1.62% 1.49%
Average tangible assets,
excluding
acquisition-related
expenses 1.67% 1.57% 1.63% 1.56%
Average tangible common
equity 29.43% 25.11% 28.22% 26.38%
Average tangible common
equity, excluding
acquisition-related
expenses 29.43% 28.93% 28.50% 27.65%
Efficiency ratio, excluding
acquisition-related
expenses 49.16% 50.20% 49.58% 50.22%
At December 31
------------------
2001 2000 Change
--------- -------- ------
Loan quality
Nonaccrual loans $ 180,344 100,951 79 %
Renegotiated loans 10,128 9,688 5
---------- ---------
Total nonperforming
loans $ 190,472 110,639 72
========== =========
Accruing loans past
due 90 days or more $ 146,899 141,843 4 %
Nonperforming loans to
total net loans .76% .49%
Allowance for credit
losses to total net
loans 1.69% 1.65%
(1) Includes common stock equivalents
(2) Includes common stock issuable under deferred compensation
plans
(3) On a fully taxable-equivalent basis
(4) Excludes amortization and balances related to goodwill and
core deposit intangible which, except in the calculation of
the efficiency ratio, are net of applicable income tax effects
M&T BANK CORPORATION
Condensed Consolidated Statement of Income
Three months ended Year ended
December 31 December 31
-------------- --------------
Dollars in thousands 2001 2000 Change 2001 2000 Change
----- ------ ----- ------ ------- -----
Interest income $ 491,713 544,586 -10 % $ 2,101,885 1,772,784 19 %
Interest expense 186,849 286,538 -35 943,597 918,597 3
-------- -------- ---------- ----------
Net interest income 304,864 258,048 18 1,158,288 854,187 36
Provision for credit
losses 33,000 14,000 136 103,500 38,000 172
-------- -------- ---------- ----------
Net interest income
after provision for
credit losses 271,864 244,048 11 1,054,788 816,187 29
Other income
Mortgage banking
revenues 27,221 17,625 54 102,699 63,168 63
Service charges
on deposit
accounts 38,455 29,366 31 144,302 92,544 56
Trust income 16,662 15,586 7 64,395 45,165 43
Brokerage
services income 10,380 8,156 27 39,349 32,795 20
Trading account
and foreign
exchange gains 1,871 776 141 4,462 2,351 90
Gain (loss) on
sales of bank
investment
securities - (3,104) - 1,873 (3,078) -
Other revenues
from operations 33,107 34,373 -4 120,346 91,727 31
-------- -------- ---------- ----------
Total other
income 127,696 102,778 24 477,426 324,672 47
Other expense
Salaries and employee
benefits 110,345 99,471 11 434,937 329,209 32
Equipment and net
occupancy 27,291 26,676 2 111,403 80,960 38
Printing, postage and
supplies 6,370 6,943 -8 25,512 20,138 27
Amortization of goodwill
and core deposit
intangible 29,666 27,256 9 121,636 69,576 75
Other costs of
operations 70,639 73,841 -4 254,830 194,570 31
-------- -------- ---------- ----------
Total other
expense 244,311 234,187 4 948,318 694,453 37
Income before income
taxes 155,249 112,639 38 583,896 446,406 31
Applicable income
taxes 53,515 40,672 32 205,821 160,250 28
-------- -------- ---------- ----------
Net income $ 101,734 71,967 41 % $ 378,075 286,156 32 %
======== ======== ========== ==========
M&T BANK CORPORATION
Condensed Consolidated Balance Sheet
December 31
------------------
Dollars in thousands 2001 2000 Change
----- ----- ------
ASSETS
Cash and due from banks $ 965,664 750,259 29 %
Money-market assets 84,356 57,794 46
Investment securities 3,024,137 3,309,853 -9
Loans and leases, net
of unearned discount 25,187,760 22,742,814 11
Less: Allowance for credit losses 425,008 374,703 13
---------- ----------
Net loans and leases 24,762,752 22,368,111 11
Goodwill and core deposit
intangible 1,267,826 1,199,407 6
Other assets 1,345,461 1,264,032 6
---------- ----------
Total assets $ 31,450,196 28,949,456 9 %
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits at
U.S. offices $ 3,704,004 3,344,913 11 %
Other deposits at U.S. offices 17,098,501 16,643,249 3
Deposits at foreign office 777,895 244,511 218
---------- ----------
Total deposits 21,580,400 20,232,673 7
Short-term borrowings 3,045,830 2,072,824 47
Accrued interest and
other liabilities 422,746 528,958 -20
Long-term borrowings 3,461,769 3,414,516 1
---------- ----------
Total liabilities 28,510,745 26,248,971 9
Stockholders' equity (1) 2,939,451 2,700,485 9
---------- ----------
Total liabilities and
stockholders' equity $ 31,450,196 28,949,456 9 %
========== ==========
(1) Reflects accumulated other comprehensive income, net of applicable
income taxes, of $22.8 million at December 31, 2001 and
accumulated other comprehensive loss, net of applicable income
taxes, of $432 thousand at December 31, 2000.
M&T BANK CORPORATION
Condensed Consolidated Average Balance Sheet
Three months ended
December 31
-----------------------
Dollars in thousands 2001 2000 Change
----- ----- ------
ASSETS
Money-market assets $ 178,169 46,174 286 %
Investment securities 3,029,198 3,559,247 -15
Loans and leases, net of
unearned discount
Commercial, financial, etc. 5,180,585 4,925,691 5
Real estate - commercial 9,401,222 8,571,563 10
Real estate - consumer 5,317,277 4,604,469 15
Consumer 5,117,339 4,038,782 27
--------- ---------
Total loans and leases, net 25,016,423 22,140,505 13
--------- ---------
Total earning assets 28,223,790 25,745,926 10
Goodwill and core deposit
intangible 1,293,140 1,169,512 11
Other assets 1,759,318 1,571,287 12
--------- ---------
Total assets $ 31,276,248 28,486,725 10 %
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
NOW accounts 752,792 694,531 8 %
Savings deposits 8,009,248 6,199,603 29
Time deposits 8,306,755 9,568,453 -13
Deposits at foreign office 363,204 265,216 37
--------- ---------
Total interest-bearing
deposits 17,431,999 16,727,803 4
--------- ---------
Borrowings 7,021,450 5,511,388 27
--------- ---------
Total interest-bearing
liabilities 24,453,449 22,239,191 10
Noninterest-bearing deposits 3,465,366 3,172,160 9
Other liabilities 410,353 479,148 -14
--------- ---------
Total liabilities 28,329,168 25,890,499 9
Stockholders' equity 2,947,080 2,596,226 14
--------- ---------
Total liabilities and
stockholders' equity $ 31,276,248 28,486,725 10 %
========= =========
M&T BANK CORPORATION
Condensed Consolidated Average Balance Sheet
Year ended
December 31
--------------------
Dollars in thousands 2001 2000 Change
----- ----- -----
ASSETS
Money-market assets $ 79,755 238,946 -67 %
Investment securities 3,307,574 2,758,089 20
Loans and leases, net of
unearned discount
Commercial, financial, etc. 5,270,538 4,128,767 28
Real estate - commercial 9,224,193 7,187,773 28
Real estate - consumer 5,228,081 3,798,202 38
Consumer 4,707,445 3,387,951 39
--------- ---------
Total loans and leases, net 24,430,257 18,502,693 32
--------- ---------
Total earning assets 27,817,586 21,499,728 29
Goodwill and core deposit
intangible 1,322,105 765,847 73
Other assets 1,686,052 1,392,383 21
--------- ---------
Total assets $ 30,825,743 23,657,958 30 %
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
NOW accounts 721,655 485,683 49 %
Savings deposits 7,378,180 5,506,827 34
Time deposits 8,905,814 7,674,054 16
Deposits at foreign office 327,496 250,578 31
--------- ---------
Total interest-bearing
deposits 17,333,145 13,917,142 25
--------- ---------
Borrowings 6,817,979 4,800,878 42
--------- ---------
Total interest-bearing
liabilities 24,151,124 18,718,020 29
Noninterest-bearing deposits 3,326,858 2,424,638 37
Other liabilities 389,560 482,059 -19
--------- ---------
Total liabilities 27,867,542 21,624,717 29
Stockholders' equity 2,958,201 2,033,241 45
--------- ---------
Total liabilities and
stockholders' equity $ 30,825,743 23,657,958 30 %
========= =========