M&T Bank Corporation Announces 2020 Fourth Quarter And Full-Year Results

January 21, 2021 at 5:40 AM EST

BUFFALO, N.Y., Jan. 21, 2021 /PRNewswire/ -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for 2020.

GAAP Results of Operations. Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $3.52 in the fourth quarter of 2020, compared with $3.60 in the year-earlier quarter and $2.75 in the third quarter of 2020. GAAP-basis net income was $471 million in the recent quarter, $493 million in the final quarter of 2019 and $372 million in the third 2020 quarter. GAAP-basis net income in the fourth quarter of 2020 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.30% and 12.07%, respectively, compared with 1.60% and 12.95%, respectively, in the corresponding 2019 period and 1.06% and 9.53%, respectively, in the third quarter of 2020. 

Darren J. King, M&T's Executive Vice President and Chief Financial Officer, commented, "In what has been an extremely challenging year, M&T responded quickly and effectively to take on those challenges while continuing to meet the needs of our customers through the extraordinary efforts of our employees.  Although the effects of the pandemic and the low interest rate environment impacted M&T's financial results in 2020, we were pleased with the growth experienced in the mortgage banking and trust businesses, as well as the role we played in providing our customers the opportunity to participate in the Paycheck Protection Program."

Earnings Highlights





































Change 4Q20 vs.


($ in millions, except per share data)


4Q20



4Q19



3Q20



4Q19



3Q20























Net income


$

471



$

493



$

372




-4

%



27

%

Net income available to common shareholders  ̶  diluted


$

452



$

473



$

353




-5

%



28

%

Diluted earnings per common share


$

3.52



$

3.60



$

2.75




-2

%



28

%

Annualized return on average assets



1.30

%



1.60

%



1.06

%









Annualized return on average common equity



12.07

%



12.95

%



9.53

%









For the years ended December 31, 2020 and 2019, diluted earnings per common share were $9.94 and $13.75, respectively. GAAP-basis net income in 2020 totaled $1.35 billion, compared with $1.93 billion in 2019. Expressed as a rate of return on average assets and average common shareholders' equity, GAAP-basis net income in 2020 was 1.00% and 8.72%, respectively, and 1.61% and 12.87%, respectively, in 2019.

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 and core deposit and other intangible asset balances, net of applicable deferred tax amounts) and expenses associated with merging acquired operations into M&T (when incurred), 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 $3.54 in the final quarter of 2020, compared with $3.62 in the fourth quarter of 2019 and $2.77 in the third quarter of 2020.  Net operating income aggregated $473 million in the recent quarter, $496 million in the fourth quarter of 2019 and $375 million in 2020's third quarter.  Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income in the fourth quarter of 2020 was 1.35% and 17.53%, respectively, 1.67% and 19.08%, respectively, in the similar quarter of 2019 and 1.10% and 13.94%, respectively, in the third quarter of 2020.

Diluted net operating earnings per common share for the years ended December 31, 2020 and 2019 were $10.02 and $13.86, respectively.  Net operating income in 2020 was $1.36 billion, compared with $1.94 billion in 2019.  Net operating income expressed as a rate of return on average tangible assets and average tangible common shareholders' equity was 1.04% and 12.79%, respectively, in 2020 and 1.69% and 19.08%, respectively, in 2019.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $993 million in the recent quarter, compared with $1.01 billion in the fourth quarter of 2019. That decline resulted from a 64 basis point narrowing of the net interest margin, to 3.00% in the fourth quarter of 2020 from 3.64% in the year-earlier quarter, that was partially offset by the impact of a $21.3 billion or 19% increase in average earning assets to $131.9 billion in the recent quarter from $110.6 billion in the final quarter of 2019.   In the third quarter of 2020, taxable-equivalent net interest income was $947 million, the net interest margin was 2.95% and average earning assets were $127.7 billion.  During the recent quarter, $29 million of interest income was recognized from the accelerated amortization of deferred fees related to payments received on Paycheck Protection Program ("PPP") loans originated by M&T during 2020.  At December 31, 2020 and September 30, 2020, outstanding balances of PPP loans totaled $5.4 billion and $6.5 billion, respectively.  As compared with the final quarter of 2019, the recent quarter's narrowing of the net interest margin resulted largely from lower yields on loans and deposits held at the Federal Reserve Bank of New York, while the rise in average earning assets reflected higher balances of those same asset types. The improvement in the net interest margin in the recent quarter as compared with 2020's third quarter reflects a five basis point decline in average rates paid to customers on deposits, while the impacts of accelerated amortization of deferred PPP fees and increased levels of low-yielding balances held at the Federal Reserve Bank of New York were largely offsetting.  Taxable-equivalent net interest income for the full year of 2020 was $3.88 billion and in 2019 was $4.15 billion. The net interest margin was 3.16% in 2020 and 3.84% in 2019.

Taxable-equivalent Net Interest Income
















Change 4Q20 vs.


($ in millions)


4Q20



4Q19



3Q20



4Q19



3Q20























Average earning assets


$

131,916



$

110,581



$

127,689




19

%



3

%

Net interest income  ̶  taxable-equivalent


$

993



$

1,014



$

947




-2

%



5

%

Net interest margin



3.00

%



3.64

%



2.95

%









Provision for Credit Losses/Asset Quality.  The provision for credit losses totaled $75 million in the fourth quarter of 2020, compared with $54 million in the year-earlier quarter and $150 million in 2020's third quarter. The provision was $800 million for the year ended December 31, 2020, compared with $176 million in 2019.  The significantly higher level of the provision in 2020 reflected projections of expected credit losses under the provisions of new accounting guidance that became effective on January 1, 2020. Those projections included estimates of the economic impact of the COVID-19 pandemic. Prior to 2020, the provision for credit losses reflected incurred losses only.  Net loan charge-offs were $97 million during the recent quarter, compared with $41 million in the final quarter of 2019 and $30 million in the third quarter of 2020. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .39% and .18% in the final quarters of 2020 and 2019, respectively, and .12% in the third quarter of 2020. Net loan charge-offs during 2020 and 2019 aggregated $247 million and $144 million, respectively, representing .26% and .16%, respectively, of average loans outstanding.

Loans classified as nonaccrual rose to $1.89 billion or 1.92% of total loans outstanding at December 31, 2020 from $1.24 billion or 1.26% of total loans at September 30, 2020.  That significant increase reflected the continuing impact of the pandemic on borrowers' ability to make contractual payments on their loans, particularly loans collateralized by hotels.  Of the $653 million rise in nonaccrual loans during the fourth quarter of 2020, $530 million were associated with hotels.  Nonaccrual loans outstanding at December 31, 2019 were $963 million or 1.06% of total loans. The adoption of the new accounting guidance previously mentioned resulted in an increase in nonaccrual loans on January 1, 2020 of $171 million.  Assets taken in foreclosure of defaulted loans were $35 million at December 31, 2020, $86 million at December 31, 2019 and $50 million at  September 30, 2020.

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 $1.74 billion or 1.76% of loans outstanding at December 31, 2020, compared with $1.05 billion or 1.16% at December 31, 2019, $1.76 billion or 1.79% at September 30, 2020 and $1.18 billion or 1.30% as of January 1, 2020 following adoption of the current expected credit loss accounting rules. The adoption of the amended accounting guidance resulted in an increase to the allowance of $132 million on January 1, 2020. The allowance at December 31, 2020 and September 30, 2020 represented 1.86% and 1.91%, respectively, of total loans on those dates, excluding outstanding balances of PPP loans.

Asset Quality Metrics
















Change 4Q20 vs.


($ in millions)


4Q20



4Q19



3Q20



4Q19



3Q20























At end of quarter





















Nonaccrual loans


$

1,893



$

963



$

1,240




97

%



53

%

Real estate and other foreclosed assets


$

35



$

86



$

50




-60

%



-30

%

Total nonperforming assets


$

1,928



$

1,049



$

1,290




84

%



49

%

Accruing loans past due 90 days or more (1)


$

859



$

519



$

527




66

%



63

%

Nonaccrual loans as % of loans outstanding



1.92

%



1.06

%



1.26

%






























Allowance for credit losses


$

1,736



$

1,051



$

1,759




65

%



-1

%

Allowance for credit losses as % of loans outstanding



1.76

%



1.16

%



1.79

%






























For the period





















Provision for credit losses


$

75



$

54



$

150




39

%



-50

%

Net charge-offs


$

97



$

41



$

30




135

%



227

%

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



.39

%



.18

%



.12

%
















(1)

Predominantly government-guaranteed residential real estate loans. Prior to 2020, excludes loans acquired at a discount.

Noninterest Income and Expense.  Noninterest income was $551 million in the fourth quarter of 2020 and $521 million in each of the year-earlier quarter and the third quarter of 2020. The improvement when compared with the final 2019 quarter resulted largely from a $30 million distribution from Bayview Lending Group LLC and  higher mortgage banking revenues. Partially offsetting those factors were declines in service charges on deposit accounts, loan syndication fees and trading account and foreign exchange gains. The higher income in the recent quarter as compared with the third quarter of 2020 predominantly reflects the distribution from Bayview Lending Group LLC and increased commercial mortgage banking revenues, partially offset by a decline in residential mortgage banking revenues.

Noninterest Income
















Change 4Q20 vs.


($ in millions)


4Q20



4Q19



3Q20



4Q19



3Q20























Mortgage banking revenues


$

140



$

118



$

153




19

%



-8

%

Service charges on deposit accounts



96




111




91




-14

%



5

%

Trust income



151




151




150







1

%

Brokerage services income



12




12




12




3

%



5

%

Trading account and foreign exchange gains



7




17




4




-57

%



79

%

Gain (loss) on bank investment securities



2




(6)




3







-42

%

Other revenues from operations



143




118




108




21

%



33

%

Total


$

551



$

521



$

521




6

%



6

%

Noninterest income improved to $2.09 billion in 2020 from $2.06 billion in 2019. A 24% rise in mortgage banking revenues, higher trust income and increased income from Bayview Lending Group LLC were partially offset by declines in service charges on deposit accounts, trading account and foreign exchange gains and loan syndication fees.

Noninterest expense totaled $845 million in the final quarter of 2020, compared with $824 million in the corresponding quarter of 2019 and $827 million in the third quarter of 2020.  Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets, noninterest operating expenses were $842 million in the recent quarter, $819 million in the fourth quarter of 2019 and $823 million in 2020's third quarter. Significant factors contributing to the higher level of noninterest expenses in the recent quarter as compared with the year-earlier quarter were higher costs for salaries and employee benefits, changes  in the valuation allowance for capitalized residential mortgage servicing rights and $14 million of expenses related to the planned transition of the support for M&T's retail brokerage and advisory business to the platform of LPL Financial, partially offset by lower costs for professional and outside services, advertising and marketing, and travel and entertainment. The valuation allowance for capitalized residential mortgage servicing rights was increased by $3 million in the fourth quarter of 2020, compared with a reduction in the allowance of $16 million in the final 2019 quarter.  When compared with the third quarter of 2020, the recent quarter increase in noninterest expenses largely reflected expenses for the retail brokerage and advisory business support transition and higher costs for advertising and marketing.

Noninterest Expense
















Change 4Q20 vs.


($ in millions)


4Q20



4Q19



3Q20



4Q19



3Q20























Salaries and employee benefits


$

476



$

469



$

479




1

%



-1

%

Equipment and net occupancy



84




83




81




2

%



4

%

Outside data processing and software



68




62




65




10

%



5

%

FDIC assessments



15




12




12




22

%



25

%

Advertising and marketing



18




27




12




-34

%



50

%

Printing, postage and supplies



9




10




9




-12

%



-12

%

Amortization of core deposit and other intangible assets



3




4




4




-27

%



-20

%

Other costs of operations



172




157




165




10

%



4

%

Total


$

845



$

824



$

827




3

%



2

%


For the year ended December 31, 2020, noninterest expense aggregated $3.39 billion, compared with $3.47 billion in 2019. Noninterest operating expenses were $3.37 billion and $3.45 billion in 2020 and 2019, respectively. Contributing to the lower level of such expenses in 2020 were decreased costs for professional and outside services, legal-related matters, advertising and marketing, travel and entertainment, and a $48 million charge in the second quarter of 2019 associated with the sale of an equity investment in an asset manager. Those factors were partially offset by higher costs for salaries and employee benefits, outside data processing and software, increases to the valuation allowance for capitalized residential mortgage servicing rights and the transition expenses noted earlier.

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 54.6% in the fourth quarter of 2020, 53.1% in the year-earlier quarter and 56.2% in the third quarter of 2020. The efficiency ratio for the full year 2020 was 56.3%, compared with 55.7% in 2019.

Balance Sheet.  M&T had total assets of $142.6 billion at December 31, 2020, compared with $119.9 billion and $138.6 billion at December 31, 2019 and September 30, 2020, respectively. Loans and leases, net of unearned discount, were $98.5 billion at December 31, 2020, up from $90.9 billion at December 31, 2019 and $98.4 billion at September 30, 2020. The increase in total loans and leases at the recent quarter-end as compared with the fourth quarter of 2019 was driven largely by growth in commercial loans of $3.7 billion and commercial real estate loans of $2.1 billion. The commercial loan growth reflects loans originated as part of the PPP, which totaled $5.4 billion at December 31, 2020. Total deposits rose to $119.8 billion at the recent quarter-end, compared with $94.8 billion at December 31, 2019 and $115.2 billion at September 30, 2020. The higher levels of deposits at the two most recent quarter-ends as compared with December 31, 2019 reflect increased commercial and consumer deposits, as well as higher deposits associated with residential mortgage servicing activities.

Total shareholders' equity was $16.2 billion, or 11.35% of total assets at December 31, 2020, $15.7 billion, or 13.11% at December 31, 2019 and $16.1 billion, or 11.61% at September 30, 2020. Common shareholders' equity was $14.9 billion, or $116.39 per share, at December 31, 2020, compared with $14.5 billion, or $110.78 per share, a year-earlier and $14.9 billion, or $115.75 per share, at September 30, 2020. Tangible equity per common share was $80.52 at December 31, 2020, $75.44 at December 31, 2019 and $79.85 at September 30, 2020. 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 10.0% at December 31, 2020, up from 9.81% three months earlier and 9.73% at December 31, 2019.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss fourth quarter 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 #1884289.  The conference call will be webcast live through M&T's website at https://ir.mtb.com/events-presentations. A replay of the call will be available through Thursday, January 28, 2021 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to the ID #1884289.  The event will also be archived and available by 3:00 p.m. today on M&T's website at https://ir.mtb.com/events-presentations.

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 and related conference call may contain 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.  Any statement that does not describe historical or current facts is a forward-looking statement, including statements regarding the potential effects of the Coronavirus Disease 2019 ("COVID-19") pandemic on M&T's business, financial condition, liquidity and results of operations. 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; risks and uncertainties relating to the impact of the COVID-19 pandemic; 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 or regulation; 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, regulatory agencies or legislation; 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.

Further, statements about the potential effects of the COVID-19 pandemic on M&T's business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond M&T's control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on customers, clients, third parties and M&T.

M&T provides further detail regarding these risks and uncertainties in its 2019 Form 10-K and subsequent Form 10-Qs, including in the respective Risk Factors sections of such reports, as well as in subsequent SEC filings. Forward-looking statements speak only as of the date made, and M&T does not assume any duty and does not undertake to update forward-looking statements.    

 

Financial Highlights




Three months ended







Year ended








December 31







December 31






Amounts in thousands, except per share


2020



2019



Change



2020



2019



Change


Performance

























Net income


$

471,140




493,066




-4

%


$

1,353,152




1,929,149




-30

%

Net income available to common shareholders



451,869




473,372




-5

%



1,279,068




1,849,511




-31

%

Per common share:

























Basic earnings


$

3.52




3.60




-2

%


$

9.94




13.76




-28

%

Diluted earnings



3.52




3.60




-2

%



9.94




13.75




-28

%

Cash dividends


$

1.10




1.10






$

4.40




4.10




7

%

Common shares outstanding:

























Average - diluted (1)



128,379




131,549




-2

%



128,704




134,462




-4

%

Period end (2)



128,333




130,589




-2

%



128,333




130,589




-2

%

Return on (annualized):

























Average total assets



1.30

%



1.60

%







1.00

%



1.61

%





Average common shareholders' equity



12.07

%



12.95

%







8.72

%



12.87

%





Taxable-equivalent net interest income


$

993,252




1,014,225




-2

%


$

3,883,605




4,153,127




-6

%

Yield on average earning assets



3.15

%



4.27

%







3.43

%



4.53

%





Cost of interest-bearing liabilities



.25

%



.97

%







.43

%



1.05

%





Net interest spread



2.90

%



3.30

%







3.00

%



3.48

%





Contribution of interest-free funds



.10

%



.34

%







.16

%



.36

%





Net interest margin



3.00

%



3.64

%







3.16

%



3.84

%





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



.39

%



.18

%







.26

%



.16

%





Net operating results (3)

























Net operating income


$

473,453




496,237




-5

%


$

1,364,145




1,943,508




-30

%

Diluted net operating earnings per common share



3.54




3.62




-2

%



10.02




13.86




-28

%

Return on (annualized):

























Average tangible assets



1.35

%



1.67

%







1.04

%



1.69

%





Average tangible common equity



17.53

%



19.08

%







12.79

%



19.08

%





Efficiency ratio



54.6

%



53.1

%







56.3

%



55.7

%
































At December 31
















Loan quality


2020



2019



Change














Nonaccrual loans


$

1,893,299




963,112




97

%













Real estate and other foreclosed assets



34,668




85,646




-60

%













Total nonperforming assets


$

1,927,967




1,048,758




84

%













Accruing loans past due 90 days or more (4)


$

859,208




518,728




66

%













Government guaranteed loans included in totals above:

























Nonaccrual loans


$

48,820




50,891




-4

%













Accruing loans past due 90 days or more



798,121




479,829




66

%













Renegotiated loans


$

238,994




234,424




2

%













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


N/A




39,632

















Purchased impaired loans (6):

























Outstanding customer balance


N/A




415,413

















Carrying amount


N/A




227,545

















Nonaccrual loans to total net loans



1.92

%



1.06

%

















Allowance for credit losses to total loans



1.76

%



1.16

%
























(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)

Predominantly residential real estate loans. Prior to 2020, excludes loans acquired at a discount.

(5)

Prior to 2020, 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)

Prior to 2020, 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


2020



2020



2020



2020



2019


Performance





















Net income


$

471,140




372,136




241,054




268,822




493,066


Net income available to common shareholders



451,869




353,400




223,099




250,701




473,372


Per common share:





















Basic earnings


$

3.52




2.75




1.74




1.93




3.60


Diluted earnings



3.52




2.75




1.74




1.93




3.60


Cash dividends


$

1.10




1.10




1.10




1.10




1.10


Common shares outstanding:





















Average - diluted (1)



128,379




128,355




128,333




129,755




131,549


Period end (2)



128,333




128,303




128,294




128,282




130,589


Return on (annualized):





















Average total assets



1.30

%



1.06

%



.71

%



.90

%



1.60

%

Average common shareholders' equity



12.07

%



9.53

%



6.13

%



7.00

%



12.95

%

Taxable-equivalent net interest income


$

993,252




947,114




961,371




981,868




1,014,225


Yield on average earning assets



3.15

%



3.13

%



3.38

%



4.18

%



4.27

%

Cost of interest-bearing liabilities



.25

%



.30

%



.40

%



.83

%



.97

%

Net interest spread



2.90

%



2.83

%



2.98

%



3.35

%



3.30

%

Contribution of interest-free funds



.10

%



.12

%



.15

%



.30

%



.34

%

Net interest margin



3.00

%



2.95

%



3.13

%



3.65

%



3.64

%

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



.39

%



.12

%



.29

%



.22

%



.18

%

Net operating results (3)





















Net operating income


$

473,453




375,029




243,958




271,705




496,237


Diluted net operating earnings per common share



3.54




2.77




1.76




1.95




3.62


Return on (annualized):





















Average tangible assets



1.35

%



1.10

%



.74

%



0.94

%



1.67

%

Average tangible common equity



17.53

%



13.94

%



9.04

%



10.39

%



19.08

%

Efficiency ratio



54.6

%



56.2

%



55.7

%



58.9

%



53.1

%
























December 31,



September 30,



June 30,



March 31,



December 31,


Loan quality


2020



2020



2020



2020



2019


Nonaccrual loans


$

1,893,299




1,239,972




1,156,650




1,061,748




963,112


Real estate and other foreclosed assets



34,668




49,872




66,763




83,605




85,646


Total nonperforming assets


$

1,927,967




1,289,844




1,223,413




1,145,353




1,048,758


Accruing loans past due 90 days or more (4)


$

859,208




527,258




535,755




530,317




518,728


Government guaranteed loans included in totals above:





















Nonaccrual loans


$

48,820




45,975




51,165




50,561




50,891


Accruing loans past due 90 days or more



798,121




505,446




454,269




464,243




479,829


Renegotiated loans


$

238,994




242,581




234,768




232,439




234,424


Accruing loans acquired at a discount past due 90 days or

        more (5)


N/A



N/A



N/A



N/A




39,632


Purchased impaired loans (6):





















Outstanding customer balance


N/A



N/A



N/A



N/A




415,413


Carrying amount


N/A



N/A



N/A



N/A




227,545


Nonaccrual loans to total net loans



1.92

%



1.26

%



1.18

%



1.13

%



1.06

%

Allowance for credit losses to total loans



1.76

%



1.79

%



1.68

%



1.47

%



1.16

%








(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)

Predominantly residential real estate loans. Prior to 2020, excludes loans acquired at a discount.

(5)

Prior to 2020, 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)

Prior to 2020, 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


2020



2019



Change



2020



2019



Change


Interest income


$

1,038,890




1,185,902




-12

%


$

4,192,712




4,879,593




-14

%

Interest expense



49,610




177,069




-72




326,395




749,329




-56


Net interest income



989,280




1,008,833




-2




3,866,317




4,130,264




-6


Provision for credit losses



75,000




54,000



39




800,000




176,000




355


Net interest income after provision for credit losses



914,280




954,833




-4




3,066,317




3,954,264




-22


Other income

























Mortgage banking revenues



140,441




118,134




19




566,641




457,770




24


Service charges on deposit accounts



95,817




110,987




-14




370,788




432,978




-14


Trust income



151,314




151,525







601,884




572,608




5


Brokerage services income



12,234




11,891




3




47,428




48,922




-3


Trading account and foreign exchange gains



7,204




16,717




-57




40,536




62,044




-35


Gain (loss) on bank investment securities



1,619




(6,452)







(9,421)




18,037





Other revenues from operations



142,621




118,238




21




470,588




469,320





Total other income



551,250




521,040




6




2,088,444




2,061,679




1


Other expense