M&T Bank Corporation Announces Second Quarter Results

July 23, 2020 at 6:35 AM EDT

BUFFALO, N.Y., July 23, 2020 /PRNewswire/ -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for the quarter ended June 30, 2020.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $1.74 in the second quarter of 2020, compared with $3.34 in the year-earlier quarter and $1.93 in the initial 2020 quarter. GAAP-basis net income in the recent quarter was $241 million, compared with $473 million in the second quarter of 2019 and $269 million in the first quarter of 2020. GAAP-basis net income for the second quarter of 2020 expressed as an annualized rate of return on average assets and average common shareholders' equity was .71% and 6.13%, respectively, compared with 1.60% and 12.68%, respectively, in the corresponding 2019 period and .90% and 7.00%, respectively, in the initial quarter of 2020.

Commenting on M&T's second quarter results, Darren J. King, Executive Vice President and Chief Financial Officer, noted, "While the low interest rate environment resulted in a decline in our net interest income, it also led to a 13% improvement in mortgage banking revenue compared with the first quarter. During the quarter we added to our provision for credit losses and at the same time grew our Common Equity Tier 1 ratio to 9.51%. M&T's conservatively positioned balance sheet continues to be strong, with substantial liquidity and sufficient capital to meet the needs of our customers and communities."

Financial results for the second quarter of 2020 were adversely impacted by the COVID-19 pandemic. The economic outlook at June 30 deteriorated as compared with what had been assumed as of the end of the first quarter of 2020, with considerable uncertainty existing about the length and extent of the pandemic's impact on the nation's economy. The provision for credit losses in the recent quarter rose to $325 million from $250 million in the initial 2020 quarter and $55 million in the second quarter of 2019. The 2020 periods reflect the adoption of new accounting guidance for the measurement of expected credit losses on financial instruments that became effective on January 1, 2020. Spurred by the COVID-19 pandemic, the low interest rate environment resulted in decreased taxable-equivalent net interest income, while waivers and reduced customer transaction activity led to lower fees earned on deposit accounts.

Earnings Highlights

 
                                         
                           

Change 2Q20 vs.

 

($ in millions, except per share data)

 

2Q20

   

2Q19

   

1Q20

   

2Q19

   

1Q20

 
                                         

Net income

 

$

241

   

$

473

   

$

269

     

-49

%

   

-10

%

Net income available to common shareholders  ̶  diluted

 

$

223

   

$

453

   

$

251

     

-51

%

   

-11

%

Diluted earnings per common share

 

$

1.74

   

$

3.34

   

$

1.93

     

-48

%

   

-10

%

Annualized return on average assets

   

.71

%

   

1.60

%

   

.90

%

               

Annualized return on average common equity

   

6.13

%

   

12.68

%

   

7.00

%

               

For the first six-months of 2020, diluted earnings per common share were $3.67, compared with $6.69 in the year-earlier period. GAAP-basis net income for the first half of 2020 totaled $510 million, compared with $956 million in the corresponding 2019 period. Expressed as an annualized rate of return on average assets and average common shareholders' equity, GAAP-basis net income in the six-month period ended June 30, 2020 was .80% and 6.56%, respectively, compared with 1.64% and 12.91%, respectively, in the similar 2019 period.

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 $1.76 in the second quarter of 2020, compared with $3.37 in the year-earlier quarter and $1.95 in the first quarter of 2020.  Net operating income in 2020's second quarter was $244 million, compared with $477 million in the second quarter of 2019 and $272 million in the first quarter of 2020. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income in the recent quarter was .74% and 9.04%, respectively, compared with 1.68% and 18.83%, respectively, in the corresponding 2019 quarter and .94% and 10.39%, respectively, in the first quarter of 2020.

Diluted net operating earnings per common share in the first six months of 2020 were $3.71, compared with $6.74 in the similar 2019 period. Net operating income during the first half of 2020 was $516 million, compared with $963 million in the six-month period ended June 30, 2019. Net operating income expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity was .84% and 9.71%, respectively, in the initial six months of 2020, compared with 1.72% and 19.19% respectively, in the corresponding 2019 period.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $961 million in the recent quarter, compared with $1.05 billion in the second quarter of 2019. That decline resulted from a 78 basis point narrowing of the net interest margin, to 3.13% in the second quarter of 2020 from 3.91% in the second quarter of 2019, that was partially offset by the impact of a $16.0 billion or 15% increase in average earning assets to $123.5 billion in the second quarter of 2020 from $107.5 billion in the year-earlier quarter. Included in average earning assets in the recent quarter were $4.8 billion of average loan balances associated with the Paycheck Protection Program ("PPP") that were funded during the quarter. In total, $6.5 billion of PPP loans originated by M&T were outstanding at June 30, 2020. In the first quarter of 2020, taxable-equivalent net interest income was $982 million, the net interest margin was 3.65% and average earning assets were $108.2 billion. As compared with the year-earlier quarter and the initial 2020 quarter, the recent quarter's narrowing of the net interest margin resulted largely from lower yields on loans and deposits at the Federal Reserve Bank of New York, while the rise in average earning assets reflected higher balances in each of those asset types.

                                         

Taxable-equivalent Net Interest Income

 
                                         
                           

Change 2Q20 vs.

 

($ in millions)

 

2Q20

   

2Q19

   

1Q20

   

2Q19

   

1Q20

 
                                         

Average earning assets

 

$

123,492

   

$

107,511

   

$

108,226

     

15

%

   

14

%

Net interest income  ̶  taxable-equivalent

 

$

961

   

$

1,047

   

$

982

     

-8

%

   

-2

%

Net interest margin

   

3.13

%

   

3.91

%

   

3.65

%

               

Provision for Credit Losses/Asset Quality.  The provision for credit losses was $325 million in the second quarter of 2020, compared with $55 million in the year-earlier quarter and $250 million in 2020's initial quarter. The significant increases in the provision in the two most recent quarters as compared with the second quarter of 2019 follow the adoption of new accounting guidance on January 1, 2020 and reflect updated economic assumptions and projections of expected credit losses as of the end of each of the first two quarters of 2020 that include estimates of the impact of the COVID-19 pandemic. Net loan charge-offs were $71 million during the recent quarter, compared with $44 million in the corresponding quarter of 2019 and $49 million in the first quarter of 2020. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .29% and .20% during the three-month periods ended June 30, 2020 and 2019, respectively, and .22% in the first quarter of 2020. Net charge-offs were .31% of average loans in the recent quarter, excluding the impact of PPP loans.

Loans classified as nonaccrual totaled $1.16 billion or 1.18% of total loans outstanding at June 30, 2020. Nonaccrual loans outstanding at March 31, 2020 were $1.06 billion or 1.13% of total loans and at June 30, 2019 were $865 million or .96%. 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 $67 million at June 30, 2020, compared with $73 million and $84 million at June 30, 2019 and March 31, 2020, respectively.

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 $1.64 billion or 1.68% of loans outstanding at June 30, 2020, compared with $1.03 billion or 1.15% at June 30, 2019, $1.38 billion or 1.47% at March 31, 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 June 30, 2020 represented 1.79% of total loans, excluding outstanding balances of PPP loans.

Asset Quality Metrics

 
                           

Change 2Q20 vs.

 

($ in millions)

 

2Q20

   

2Q19

   

1Q20

   

2Q19

   

1Q20

 
                                         

At end of quarter

                                       

Nonaccrual loans

 

$

1,157

   

$

865

   

$

1,062

     

34

%

   

9

%

Real estate and other foreclosed assets

 

$

67

   

$

73

   

$

84

     

-8

%

   

-20

%

Total nonperforming assets

 

$

1,224

   

$

938

   

$

1,146

     

30

%

   

7

%

Accruing loans past due 90 days or more (1)

 

$

536

   

$

349

   

$

530

     

54

%

   

1

%

Nonaccrual loans as % of loans outstanding

   

1.18

%

   

.96

%

   

1.13

%

               
                                         

Allowance for credit losses

 

$

1,638

   

$

1,030

   

$

1,384

     

59

%

   

18

%

Allowance for credit losses as % of loans outstanding

   

1.68

%

   

1.15

%

   

1.47

%

               
                                         

For the period

                                       

Provision for credit losses

 

$

325

   

$

55

   

$

250

     

491

%

   

30

%

Net charge-offs

 

$

71

   

$

44

   

$

49

     

60

%

   

45

%

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

   

.29

%

   

.20

%

   

.22

%

               

_____________

(1)

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

Noninterest Income and Expense.  Noninterest income was $487 million in the recent quarter, compared with $512 million in the year-earlier quarter and $529 million in the first quarter of 2020. The lower level of noninterest income in the second quarter of 2020 as compared with those prior periods largely resulted from declines in service charges on deposit accounts, trading account and foreign exchange gains, merchant discount and credit card fees, and loan syndication fees, partially offset by higher residential mortgage banking revenues and trust income. In addition, income from Bayview Lending Group LLC of $23 million received in 2020's initial quarter was predominantly offset by unrealized losses on investment securities of $21 million during that quarter.

Noninterest Income

 
                                         
                           

Change 2Q20 vs.

 

($ in millions)

 

2Q20

   

2Q19

   

1Q20

   

2Q19

   

1Q20

 
                                         

Mortgage banking revenues

 

$

145

   

$

107

   

$

128

     

35

%

   

13

%

Service charges on deposit accounts

   

78

     

108

     

106

     

-28

%

   

-27

%

Trust income

   

152

     

145

     

149

     

5

%

   

2

%

Brokerage services income

   

10

     

12

     

13

     

-16

%

   

-20

%

Trading account and foreign exchange gains

   

8

     

18

     

21

     

-55

%

   

-61

%

Gain (loss) on bank investment securities

   

7

     

9

     

(21)

     

-22

%

   

 

Other revenues from operations

   

87

     

113

     

133

     

-23

%

   

-35

%

Total

 

$

487

   

$

512

   

$

529

     

-5

%

   

-8

%

Noninterest expense totaled $807 million in the second quarter of 2020, down from $873 million in the corresponding quarter of 2019 and $906 million in the first quarter of 2020.  Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets, noninterest operating expenses aggregated $803 million in the recent quarter, $868 million in the second quarter of 2019 and $903 million in 2020's first quarter. Factors contributing to the lower level of noninterest expenses in the recent quarter as compared with the year-earlier quarter were lower costs for professional and outside services and advertising and marketing, and a $48 million charge associated with an equity investment in an asset manager recorded in the second quarter of 2019. As compared with the initial 2020 quarter, the lower level of noninterest expenses in the recent quarter was largely attributable to a decline in expenses for salaries and employee benefits, reflecting decreased incentive compensation costs and seasonally higher stock-based compensation and employee benefits expenses during the first quarter, and lower advertising and marketing costs.

Noninterest Expense

 
                                         
                           

Change 2Q20 vs.

 

($ in millions)

 

2Q20

   

2Q19

   

1Q20

   

2Q19

   

1Q20

 
                                         

Salaries and employee benefits

 

$

459

   

$

456

   

$

537

     

1

%

   

-15

%

Equipment and net occupancy

   

77

     

79

     

80

     

-3

%

   

-3

%

Outside data processing and software

   

61

     

55

     

64

     

11

%

   

-5

%

FDIC assessments

   

14

     

10

     

12

     

45

%

   

16

%

Advertising and marketing

   

10

     

24

     

22

     

-59

%

   

-56

%

Printing, postage and supplies

   

11

     

10

     

11

     

9

%

   

4

%

Amortization of core deposit and other intangible assets

   

4

     

5

     

4

     

-23

%

   

 

Other costs of operations

   

171

     

234

     

176

     

-27

%

   

-3

%

Total

 

$

807

   

$

873

   

$

906

     

-8

%

   

-11

%

                                         

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 55.7% in the second quarter of 2020, 56.0% in the year-earlier quarter and 58.9% in the first three months of 2020.

Balance Sheet.  M&T had total assets of $139.5 billion at June 30, 2020, up from $121.6 billion and $124.6 billion at June 30, 2019 and March 31, 2020, respectively. Loans and leases, net of unearned discount, were $97.8 billion at June 30, 2020, $89.9 billion at June 30, 2019 and $94.1 billion at March 31, 2020. The increase in total loans and leases at the recent quarter-end as compared with the second quarter of 2019 was driven largely by growth in commercial loans of $5.8 billion and commercial real estate loans of $2.0 billion. The commercial loan growth reflects loans originated as part of the PPP, which totaled $6.5 billion at June 30, 2020. Total deposits rose to $115.0 billion at the recent quarter-end, compared with $91.7 billion at June 30, 2019 and $100.2 billion at March 31, 2020. The higher level of deposits at the recent quarter-end as compared with the prior dates reflects both increased commercial and consumer deposits, as well as higher levels of deposits associated with residential mortgage servicing activities.

Total shareholders' equity was $15.9 billion, or 11.43% of total assets at June 30, 2020, compared with $15.7 billion, or 12.91% at June 30, 2019 and $15.8 billion, or 12.70% at March 31, 2020. Common shareholders' equity was $14.7 billion, or $114.54 per share, at June 30, 2020, compared with $14.5 billion, or $107.73 per share, a year-earlier and $14.6 billion, or $113.54 per share, at March 31, 2020.  Tangible equity per common share was $78.62 at June 30, 2020, compared with $73.29 at June 30, 2019 and $77.60 at March 31, 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 9.51% at June 30, 2020, up from 9.19% three months earlier.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss second 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 #9253404.  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, July 30, 2020 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #9253404.  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 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.  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.

 

Financial Highlights

 
   

Three months ended

           

Six months ended

         
   

June 30

           

June 30

         

Amounts in thousands, except per share

 

2020

   

2019

   

Change

   

2020

   

2019

   

Change

 

Performance

                                               

Net income

 

$

241,054

     

473,260

     

-49

%

 

$

509,876

     

956,002

     

-47

%

Net income available to common shareholders

   

223,099

     

452,633

     

-51

%

   

473,795

     

914,719

     

-48

%

Per common share:

                                               

Basic earnings

 

$

1.74

     

3.34

     

-48

%

 

$

3.67

     

6.69

     

-45

%

Diluted earnings

   

1.74

     

3.34

     

-48

%

   

3.67

     

6.69

     

-45

%

Cash dividends

 

$

1.10

     

1.00

     

10

%

 

$

2.20

     

2.00

     

10

%

Common shares outstanding:

                                               

Average - diluted (1)

   

128,333

     

135,464

     

-5

%

   

129,044

     

136,685

     

-6

%

Period end (2)

   

128,294

     

134,200

     

-4

%

   

128,294

     

134,200

     

-4

%

Return on (annualized):

                                               

Average total assets

   

.71

%

   

1.60

%

           

.80

%

   

1.64

%

       

Average common shareholders' equity

   

6.13

%

   

12.68

%

           

6.56

%

   

12.91

%

       

Taxable-equivalent net interest income

 

$

961,371

     

1,047,406

     

-8

%

 

$

1,943,239

     

2,103,433

     

-8

%

Yield on average earning assets

   

3.38

%

   

4.64

%

           

3.75

%

   

4.68

%

       

Cost of interest-bearing liabilities

   

.40

%

   

1.11

%

           

.60

%

   

1.08

%

       

Net interest spread

   

2.98

%

   

3.53

%

           

3.15

%

   

3.60

%

       

Contribution of interest-free funds

   

.15

%

   

.38

%

           

.22

%

   

.37

%

       

Net interest margin

   

3.13

%

   

3.91

%

           

3.37

%

   

3.97

%

       

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

   

.29

%

   

.20

%

           

.26

%

   

.15

%

       

Net operating results (3)

                                               

Net operating income

 

$

243,958

     

477,001

     

-49

%

 

$

515,663

     

963,441

     

-46

%

Diluted net operating earnings per common share

   

1.76

     

3.37

     

-48

%

   

3.71

     

6.74

     

-45

%

Return on (annualized):

                                               

Average tangible assets

   

.74

%

   

1.68

%

           

.84

%

   

1.72

%

       

Average tangible common equity

   

9.04

%

   

18.83

%

           

9.71

%

   

19.19

%

       

Efficiency ratio

   

55.71

%

   

55.98

%

           

57.36

%

   

56.77

%

       
                                                 
   

At June 30

                             

Loan quality

 

2020

   

2019

   

Change

                         

Nonaccrual loans

 

$

1,156,650

     

865,384

     

34

%

                       

Real estate and other foreclosed assets

   

66,763

     

72,907

     

-8

%

                       

Total nonperforming assets

 

$

1,223,413

     

938,291

     

30

%

                       

Accruing loans past due 90 days or more (4)

 

$

535,755

     

348,725

     

54

%

                       

Government guaranteed loans included in totals above:

                                               

Nonaccrual loans

 

$

51,165

     

36,765

     

39

%

                       

Accruing loans past due 90 days or more

   

454,269

     

320,305

     

42

%

                       

Renegotiated loans

 

$

234,768

     

254,332

     

-8

%

                       

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

 

N/A

     

43,079

     

                         

Purchased impaired loans (6):

                                               

Outstanding customer balance

 

N/A

     

473,834

     

                         

Carrying amount

 

N/A

     

263,025

     

                         

Nonaccrual loans to total net loans

   

1.18

%

   

.96

%

                               

Allowance for credit losses to total loans

   

1.68

%

   

1.15

%

                               

______________

(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

 
   

June 30,

   

March 31,

   

December 31,

   

September 30,

   

June 30,

 

Amounts in thousands, except per share

 

2020

   

2020

   

2019

   

2019

   

2019

 

Performance

                                       

Net income

 

$

241,054

     

268,822

     

493,066

     

480,081

     

473,260

 

Net income available to common shareholders

   

223,099

     

250,701

     

473,372

     

461,410

     

452,633

 

Per common share:

                                       

Basic earnings

 

$

1.74

     

1.93

     

3.60

     

3.47

     

3.34

 

Diluted earnings

   

1.74

     

1.93

     

3.60

     

3.47

     

3.34

 

Cash dividends

 

$

1.10

     

1.10

     

1.10

     

1.00

     

1.00

 

Common shares outstanding:

                                       

Average - diluted (1)

   

128,333

     

129,755

     

131,549

     

132,999

     

135,464

 

Period end (2)

   

128,294

     

128,282

     

130,589

     

132,277

     

134,200

 

Return on (annualized):

                                       

Average total assets

   

.71

%

   

.90

%

   

1.60

%

   

1.58

%

   

1.60

%

Average common shareholders' equity

   

6.13

%

   

7.00

%

   

12.95

%

   

12.73

%

   

12.68

%

Taxable-equivalent net interest income

 

$

961,371

     

981,868

     

1,014,225

     

1,035,469

     

1,047,406

 

Yield on average earning assets

   

3.38

%

   

4.18

%

   

4.27

%

   

4.51

%

   

4.64

%

Cost of interest-bearing liabilities

   

.40

%

   

.83

%

   

.97

%

   

1.10

%

   

1.11

%

Net interest spread

   

2.98

%

   

3.35

%

   

3.30

%

   

3.41

%

   

3.53

%

Contribution of interest-free funds

   

.15

%

   

.30

%

   

.34

%

   

.37

%

   

.38

%

Net interest margin

   

3.13

%

   

3.65

%

   

3.64

%

   

3.78

%

   

3.91

%

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

   

.29

%

   

.22

%

   

.18

%

   

.16

%

   

.20

%

Net operating results (3)

                                       

Net operating income

 

$

243,958

     

271,705

     

496,237

     

483,830

     

477,001

 

Diluted net operating earnings per common share

   

1.76

     

1.95

     

3.62

     

3.50

     

3.37

 

Return on (annualized):

                                       

Average tangible assets

   

.74

%

   

.94

%

   

1.67

%

   

1.66

%

   

1.68

%

Average tangible common equity

   

9.04

%

   

10.39

%

   

19.08

%

   

18.85

%

   

18.83

%

Efficiency ratio

   

55.71

%

   

58.91

%

   

53.15

%

   

55.95

%

   

55.98

%

                                         
   

June 30,

   

March 31,

   

December 31,

   

September 30,

   

June 30,

 

Loan quality

 

2020

   

2020

   

2019

   

2019

   

2019

 

Nonaccrual loans

 

$

1,156,650

     

1,061,748

     

963,112

     

1,005,249

     

865,384

 

Real estate and other foreclosed assets

   

66,763

     

83,605

     

85,646

     

79,735

     

72,907

 

Total nonperforming assets

 

$

1,223,413

     

1,145,353

     

1,048,758

     

1,084,984

     

938,291

 

Accruing loans past due 90 days or more (4)

 

$

535,755

     

530,317

     

518,728

     

461,162

     

348,725

 

Government guaranteed loans included in totals above:

                                       

Nonaccrual loans

 

$

51,165

     

50,561

     

50,891

     

43,144

     

36,765

 

Accruing loans past due 90 days or more

   

454,269

     

464,243

     

479,829

     

434,132

     

320,305

 

Renegotiated loans

 

$

234,768

     

232,439

     

234,424

     

240,781

     

254,332

 

Accruing loans acquired at a discount past due 90 days or

        more (5)

 

N/A

   

N/A

     

39,632

     

40,733

     

43,079

 

Purchased impaired loans (6):

                                       

Outstanding customer balance

 

N/A

   

N/A

     

415,413

     

453,382

     

473,834

 

Carrying amount

 

N/A

   

N/A

     

227,545

     

253,496

     

263,025

 

Nonaccrual loans to total net loans

   

1.18

%

   

1.13

%

   

1.06

%

   

1.12

%

   

.96

%

Allowance for credit losses to total loans

   

1.68

%

   

1.47

%

   

1.16

%

   

1.16

%

   

1.15

%

______________

(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

           

Six months ended

         
   

June 30

           

June 30

         

Dollars in thousands

 

2020

   

2019

   

Change

   

2020

   

2019

   

Change

 

Interest income

 

$

1,032,242

     

1,237,913

     

-17

%

 

$

2,152,661

     

2,464,222

     

-13

%

Interest expense

   

75,105

     

196,432

     

-62

     

218,719

     

372,681

     

-41

 

Net interest income

   

957,137

     

1,041,481

     

-8

     

1,933,942

     

2,091,541

     

-8

 

Provision for credit losses

   

325,000

     

55,000

   

491

     

575,000

     

77,000

     

647

 

Net interest income after provision for credit losses

   

632,137

     

986,481

     

-36

     

1,358,942

     

2,014,541

     

-33

 

Other income

                                               

Mortgage banking revenues

   

145,024

     

107,321

     

35

     

272,933

     

202,632

     

35

 

Service charges on deposit accounts

   

77,455

     

107,787

     

-28

     

183,616

     

210,899

     

-13

 

Trust income

   

151,882

     

144,382

     

5

     

300,633

     

277,168

     

8

 

Brokerage services income

   

10,463

     

12,478

     

-16

     

23,592

     

24,954

     

-5

 

Trading account and foreign exchange gains

   

8,290

     

18,453

     

-55

     

29,306

     

29,255

     

 

Gain (loss) on bank investment securities

   

6,969

     

8,911

     

-22

     

(13,813)

     

20,752

     

 

Other revenues from operations

   

87,190

     

112,763

     

-23

     

220,366

     

247,200

     

-11

 

Total other income

   

487,273

     

512,095

     

-5

     

1,016,633

     

1,012,860

     

 

Other expense

                                               

Salaries and employee benefits

   

458,842

     

455,737

     

1

     

995,685

     

954,937

     

4

 

Equipment and net occupancy

   

77,089

     

79,150

     

-3

     

156,729

     

158,497

     

-1

 

Outside data processing and software

   

61,376

     

55,234

     

11

     

125,786

     

107,651

     

17

 

FDIC assessments

   

14,207

     

9,772

     

45

     

26,478

     

19,198

     

38

 

Advertising and marketing

   

9,842

     

24,046

     

-59

     

32,217

     

44,321

     

-27

 

Printing, postage and supplies

   

11,260

     

10,324

     

9

     

22,112

     

20,179

     

10

 

Amortization of core deposit and other
  intangible assets

   

3,913

     

5,077

     

-23

     

7,826

     

10,097

     

-22

 

Other costs of operations

   

170,513

     

233,692

     

-27

     

346,625

     

452,500