M&T Bank Corporation Announces Second Quarter Earnings
BUFFALO, N.Y.--(BUSINESS WIRE)--July 10, 2002--M&T Bank Corporation ("M&T")(NYSE: MTB - News) today reported that diluted cash earnings per share rose 13% to $1.35 for the quarter ended June 30, 2002 from $1.19 in the second quarter of 2001.
Cash net income for the recent quarter was $130 million, up 8% from $120 million in the year-earlier quarter. Expressed as an annualized rate of return on average tangible assets, cash net income was 1.73% in 2002's second quarter, up from 1.62% in the second quarter of 2001. The annualized cash return on average tangible common equity rose to 29.69% in the recent quarter from 27.99% in the year-earlier quarter.
For the first six months of 2002, diluted cash earnings per share were $2.69, an increase of 15% from $2.33 in the corresponding 2001 period. Cash net income for the first half of 2002 rose to $259 million, up 12% from $232 million in the comparable 2001 period. For the first six months of 2002, cash return on average tangible assets was an annualized 1.74%, compared with 1.61% in the similar period of 2001. Cash return on average tangible common equity for the first half of 2002 rose to an annualized 29.98% from 27.96% in the corresponding 2001 period. Cash earnings exclude the after-tax effect of expenses associated with merging acquired operations into M&T and amortization of intangible assets.
Since 1998, M&T has provided supplemental reporting of its operating results on a "cash" or "tangible" basis (which excludes the after-tax effect of amortization of goodwill and core deposit and other intangible assets and the related asset balances resulting from acquisition transactions). Management believes that such reporting represents a relevant measure of financial performance.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets," M&T ceased amortization of goodwill associated with corporate acquisitions, effective January 1, 2002. Amortization of such goodwill during the second quarter and first six months of 2001, none of which was tax deductible, totaled $16 million ($.16 per diluted share) and $31 million ($.31 per diluted share), respectively. Charges for amortization of core deposit and other intangible assets totaled $13 million ($9 million after tax effect, or $.09 per diluted share) during the second quarter of 2002, compared with $15 million ($9 million after tax effect, or $.09 per diluted share) during the year-earlier quarter. Similar amortization charges for the first half of 2002 and 2001 were $27 million ($17 million after tax effect, or $.18 per diluted share) and $30 million ($18 million after tax effect, or $.18 per diluted share), respectively. At June 30, 2002 and 2001, M&T had goodwill of $1.1 billion, and core deposit and other intangible assets of $144 million and $200 million, respectively, recorded as assets.
Net income measured in accordance with generally accepted accounting principles ("GAAP") includes the impact of non-cash charges for the amortization of intangible assets, as well as nonrecurring merger-related expenses. GAAP-basis diluted earnings per share for the second quarter of 2002 rose 34% to $1.26, from $.94 in the year-earlier period. On the same basis, the recent quarter's net income totaled $121 million, up 28% from $95 million in the second quarter of 2001. As noted previously, the after-tax impact of amortization of goodwill in the second quarter of 2001 was $16 million, or $.16 per diluted share. As a result, pro forma GAAP-basis diluted earnings per share and net income for last year's second quarter, computed as if SFAS No. 142 had been effective in 2001, were $1.10 and $111 million, respectively. GAAP-basis net income for the second quarter of 2002 expressed as an annualized rate of return on average assets and average common stockholders' equity was 1.56% and 16.49%, respectively, compared with 1.23% and 12.61%, respectively, in the year-earlier quarter. Pro forma GAAP-basis annualized returns on average assets and average common stockholders' equity for the second quarter of 2001 were 1.43% and 14.71%, respectively, after excluding the impact of goodwill amortization. There were no merger-related expenses in the second quarters of 2002 or 2001.
Through June 30, 2002 and 2001, GAAP-basis diluted earnings per share were $2.51 and $1.79, respectively. GAAP-basis net income for the first six months of 2002 totaled $242 million, compared with $178 million in the year-earlier period. The after-tax impact of merger-related expenses during the first six months of 2001 was $5 million ($.05 per diluted share). There were no similar expenses in the current year's first six months. As already noted, the after-tax impact of amortization of goodwill for the first half of 2001 was $31 million, or $.31 per diluted share, resulting in proforma GAAP-basis diluted earnings per share and net income for that period, calculated as if SFAS No. 142 had been in effect during 2001, of $2.10 and $209 million, respectively. GAAP-basis net income for the first six months of 2002 expressed as an annualized rate of return on average assets and average common stockholders' equity was 1.56% and 16.56%, respectively, compared with 1.18% and 12.24%, respectively, in the corresponding 2001 period. Proforma GAAP-basis annualized returns on average assets and average common shareholders' equity for the first six months of 2001 after excluding the impact of goodwill amortization were 1.38% and 14.33%, respectively.
Taxable-equivalent net interest income increased 7% to $313 million in the second quarter of 2002 from $292 million in the year-earlier quarter. The improvement reflects a widening of M&T's net interest margin, or taxable-equivalent net interest income expressed as an annualized percentage of average earning assets, and higher average loans outstanding. Net interest margin improved by 25 basis points (hundredths of one percent) to 4.43% in the recent quarter from 4.18% in the corresponding quarter of 2001. Average loans outstanding increased 3% to $25.2 billion in 2002's second quarter from $24.5 billion in the comparable 2001 period, reflecting a $1.2 billion increase in consumer loans, partially offset by lower commercial loans and residential real estate loans.
The provision for credit losses totaled $28 million in the second quarter of 2002, up from $24 million a year earlier. Net charge-offs of loans also rose during the recent quarter to $25 million from $15 million in the year-earlier period. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .39% in 2002's second quarter, compared with .24% in the similar 2001 period. Loans classified as nonperforming totaled $168 million, or .66% of total loans at June 30, 2002, compared with $162 million or .65% at June 30, 2001. Loans past due 90 days or more and accruing interest were $128 million at the recent quarter-end, down from $139 million a year earlier. Included in these loans at June 30, 2002 and 2001 were $104 million 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 are fully guaranteed by government agencies. The loans were repurchased to reduce the cost of servicing them. The remaining portion of accruing loans past due 90 days or more are either also guaranteed by government agencies or well-secured by collateral.
The allowance for credit losses totaled $436 million, or 1.70% of total loans, at June 30, 2002, compared with $409 million, or 1.65%, a year earlier. The ratio of the allowance for credit losses to nonperforming loans was 260% and 253% at June 30, 2002 and 2001, respectively. Assets taken in foreclosure of defaulted loans were $22 million at June 30, 2002, compared with $11 million a year earlier.
Noninterest income in the second quarter of 2002 totaled $121 million, 3% higher than $118 million in the year-earlier quarter. Higher revenues from providing deposit account and brokerage services contributed to the improvement, offset in part by lower mortgage banking revenues and securities transaction gains. Noninterest operating expenses, which exclude amortization of intangible assets, were $210 million in the recent quarter, compared with $202 million in the second quarter of 2001. Higher costs for salaries, including commissions and incentive compensation, contributed to the increase in operating expenses. 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 efficiency ratio, calculated using the noninterest operating expense totals noted above and excluding gains (losses) from sales of bank investment securities from noninterest income, improved to 48.4% in the second quarter of 2002 from 49.5% in the year-earlier period.
Michael P. Pinto, Executive Vice President and Chief Financial Officer of M&T, commented that, "Growth in the consumer loan portfolio, especially home equity lines of credit and automobile loans, and a continued widening of the net interest margin, were significant factors contributing to M&T's favorable second quarter results. While many uncertainties exist in the economies of the markets we serve, at this time we believe that M&T's full-year results will meet or exceed analysts' current estimates of $5.03 of diluted GAAP earnings per share."
M&T had total assets of $31.7 billion at June 30, 2002, up from $31.2 billion at June 30, 2001. Loans and leases, net of unearned discount, rose 3% to $25.6 billion at the recent quarter-end from $24.8 billion a year earlier. Deposits were $21.9 billion at June 30, 2002, compared with $20.0 billion at June 30, 2001. Total stockholders' equity was $3.0 billion at June 30, 2002 and 2001. Common stockholders' equity per share was $32.29 and $31.00 at June 30, 2002 and 2001, respectively. Tangible equity per common share was $19.34 at June 30, 2002, compared with $17.68 at June 30, 2001.
In November 2001, M&T announced that it had been authorized by its Board of Directors to repurchase up to 5,000,000 shares of its common stock. Through June 30, 2002, M&T had repurchased 3,224,098 shares of common stock pursuant to the repurchase program at an average cost of $78.63 per share.
Investors will have an opportunity to listen to M&T's conference call to discuss second quarter financial results at 10:00 a.m. Eastern Standard Time ("EST") today, July 10, 2002. Those wishing to participate in the call may dial 800-810-0924.
The conference call will also be webcast live at http://ir.mandtbank.com/calendar.cfm. A replay of the call will be available until July 11, 2002 by calling 888-203-1112, code 481166. The event will also be archived and available by noon (EST), July 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
Amounts in thousands, June 30
except per share -------------------------
2002 2001 Change
---------- ---------- ----------
Performance
-----------
Net income $ 121,494 94,808 28 %
Per common share:
Basic earnings $ 1.31 .98 34 %
Diluted earnings 1.26 .94 34
Cash dividends $ .25 .25 -
Common shares outstanding:
Average - diluted (1) 96,188 100,722 -5 %
Period end (2) 92,192 96,339 -4
Return on (annualized):
Average total assets 1.56% 1.23%
Average common stockholders'
equity 16.49% 12.61%
Taxable-equivalent net interest
income $ 313,097 291,947 7 %
Yield on average earning
assets 6.57% 7.80%
Cost of interest-bearing
liabilities 2.50% 4.16%
Net interest spread 4.07% 3.64%
Contribution of interest-free
funds .36% .54%
Net interest margin 4.43% 4.18%
Net charge-offs to average
total net loans (annualized) .39% .24%
Cash operating results (3)
----------------------
Cash net income $ 130,027 119,899 8 %
Cash net income, excluding
acquisition-related expenses 130,027 119,899 8
Diluted cash earnings per
common share 1.35 1.19 13
Diluted cash earnings per
common share, excluding
acquisition-related
expenses 1.35 1.19 13
Return on (annualized):
Average tangible assets 1.73% 1.62%
Average tangible assets,
excluding acquisition-related
expenses 1.73% 1.62%
Average tangible common equity 29.69% 27.99%
Average tangible common equity,
excluding acquisition-related
expenses 29.69% 27.99%
Efficiency ratio, excluding
acquisition-related
expenses 48.35% 49.45%
At June 30
-------------------------
2002 2001 Change
---------- ---------- ----------
Loan quality
------------
Nonaccrual loans $ 159,468 152,885 4 %
Renegotiated loans 8,463 8,739 -3
---------- ----------
Total nonperforming loans $ 167,931 161,624 4
========== ==========
Accruing loans past due 90
days or more $ 128,127 139,062 -8 %
Nonperforming loans to total
net loans .66% .65%
Allowance for credit losses
to total net loans 1.70% 1.65%
Six months ended
June 30
---------------------------
2002 2001 Change
---------- ---------- ----------
Performance
-----------
Net income $ 242,058 178,474 36 %
Per common share:
Basic earnings $ 2.60 1.85 41 %
Diluted earnings 2.51 1.79 40
Cash dividends $ .50 .50 -
Common shares outstanding:
Average - diluted (1) 96,339 99,668 -3 %
Period end (2) 92,192 96,339 -4
Return on (annualized):
Average total assets 1.56% 1.18%
Average common stockholders'
equity 16.56% 12.24%
Taxable-equivalent net
interest income $ 617,756 568,315 9 %
Yield on average earning
assets 6.62% 8.06%
Cost of interest-bearing
liabilities 2.57% 4.46%
Net interest spread 4.05% 3.60%
Contribution of interest-free
funds .35% .57%
Net interest margin 4.40% 4.17%
Net charge-offs to average
total net loans (annualized) .33% .26%
Cash operating results (3)
----------------------
Cash net income $ 259,384 227,446 14 %
Cash net income, excluding
acquisition-related expenses 259,384 232,290 12
Diluted cash earnings per
common share 2.69 2.28 18
Diluted cash earnings per
common share, excluding
acquisition-related expenses 2.69 2.33 15
Return on (annualized):
Average tangible assets 1.74% 1.57%
Average tangible assets,
excluding acquisition-related
expenses 1.74% 1.61%
Average tangible common equity 29.98% 27.38%
Average tangible common equity,
excluding acquisition-related
expenses 29.98% 27.96%
Efficiency ratio, excluding
acquisition-related
expenses 48.63% 50.09%
----------------------------------------------------------------------
(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 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
June 30
------------------------
Dollars in thousands 2002 2001 Change
---------- ---------- ----------
Interest income $ 461,425 539,625 -14 %
Interest expense 151,949 252,477 -40
---------- -----------
Net interest income 309,476 287,148 8
Provision for credit losses 28,000 24,000 17
---------- -----------
Net interest income after
provision for credit losses 281,476 263,148 7
Other income
Mortgage banking revenues 23,281 25,029 -7
Service charges on deposit
accounts 40,811 36,313 12
Trust income 15,318 16,317 -6
Brokerage services income 12,078 9,470 28
Trading account and foreign
exchange gains 386 1,566 -75
Gain (loss) on sales of bank
investment securities (170) 1,550 -
Other revenues from
operations 29,475 27,591 7
---------- -----------
Total other income 121,179 117,836 3
Other expense
Salaries and employee
benefits 115,650 109,455 6
Equipment and net
occupancy 25,727 27,727 -7
Printing, postage and
supplies 5,871 6,230 -6
Amortization of goodwill - 15,762 -100
Amortization of core
deposit and other
intangible assets 13,142 15,387 -15
Other costs of operations 62,826 58,451 7
---------- -----------
Total other expense 223,216 233,012 -4
Income before income taxes 179,439 147,972 21
Applicable income taxes 57,945 53,164 9
---------- -----------
Net income $ 121,494 94,808 28 %
========== ===========
Six months ended
June 30
-------------------------
Dollars in thousands 2002 2001 Change
---------- ------------ -----------
Interest income $ 922,612 1,088,203 -15 %
Interest expense 312,076 529,074 -41
---------- ------------
Net interest income 610,536 559,129 9
Provision for credit
losses 52,000 42,500 22
---------- ------------
Net interest income after
provision for credit
losses 558,536 516,629 8
Other income
Mortgage banking revenues 51,193 50,689 1
Service charges on
deposit accounts 80,336 68,847 17
Trust income 31,123 32,144 -3
Brokerage services income 22,997 19,480 18
Trading account and foreign
exchange gains 1,429 2,368 -40
Gain (loss) on sales of bank
investment securities 1 1,629 -
Other revenues from
operations 58,328 54,406 7
---------- ------------
Total other income 245,407 229,563 7
Other expense
Salaries and employee
benefits 229,053 215,342 6
Equipment and net
occupancy 52,931 55,885 -5
Printing, postage and
supplies 11,904 13,304 -11
Amortization of goodwill - 30,509 -100
Amortization of core
deposit and other
intangible assets 26,685 30,451 -12
Other costs of operations 125,876 122,322 3
---------- ------------
Total other expense 446,449 467,813 -5
Income before income taxes 357,494 278,379 28
Applicable income taxes 115,436 99,905 16
---------- ------------
Net income $ 242,058 178,474 36 %
========== ============
M&T BANK CORPORATION
Condensed Consolidated Balance Sheet
June 30
----------------------------
Dollars in thousands 2002 2001 Change
------------ ----------- ------------
ASSETS
Cash and due from banks $ 864,158 713,685 21 %
Money-market assets 92,514 70,399 31
Investment securities 2,960,512 3,377,169 -12
Loans and leases, net
of unearned discount 25,603,569 24,774,428 3
Less: Allowance for
credit losses 436,395 408,506 7
------------ ------------
Net loans and leases 25,167,174 24,365,922 3
Goodwill 1,097,553 1,148,312 -4
Core deposit and other
intangible assets 143,589 199,639 -28
Other assets 1,360,031 1,327,020 2
------------ ------------
Total assets $ 31,685,531 31,202,146 2 %
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing
deposits at U.S. offices $ 3,800,508 3,371,044 13 %
Other deposits at
U.S. offices 16,839,791 16,340,965 3
Deposits at foreign
office 1,217,273 329,432 270
------------- ------------
Total deposits 21,857,572 20,041,441 9
Short-term borrowings 2,244,272 3,971,354 -43
Accrued interest and
other liabilities 394,882 475,600 -17
Long-term borrowings 4,211,920 3,727,043 13
------------- ------------
Total liabilities 28,708,646 28,215,438 2
Stockholders' equity (1) 2,976,885 2,986,708 -
------------- ------------
Total liabilities and
stockholders' equity $ 31,685,531 31,202,146 2 %
============= ============
(1) Reflects accumulated other comprehensive income, net of
applicable income taxes, of $35.4 million at June 30, 2002 and
$10.4 million at June 30, 2001.
M&T BANK CORPORATION
Condensed Consolidated Average Balance Sheet
and Annualized Taxable-equivalent Rates
Three months ended
June 30
-----------------------------
Dollars in millions 2002 2001
------------- ------------- Change in
Balance Rate Balance Rate balance
------- ---- ------- ---- --------
ASSETS
Money-market assets $ 273 1.76 % 31 3.69 % 773 %
Investment securities 2,888 5.90 3,502 6.74 -18
Loans and leases, net of
unearned discount
Commercial, financial, etc 5,070 5.24 5,383 7.43 -6
Real estate - commercial 9,432 7.09 9,232 8.08 2
Real estate - consumer 4,901 7.32 5,263 7.88 -7
Consumer 5,811 6.78 4,582 8.36 27
------- -------
Total loans and
leases, net 25,214 6.70 24,460 7.96 3
------- -------
Total earning assets 28,375 6.57 27,993 7.80 1
Goodwill 1,098 1,156 -5
Core deposit and other
intangible assets 150 207 -28
Other assets 1,704 1,661 3
------- -------
Total assets $ 31,327 31,017 1 %
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
NOW accounts $ 757 .56 708 1.25 7 %
Savings deposits 8,822 1.23 7,280 1.90 21
Time deposits 7,642 3.34 9,029 5.36 -15
Deposits at foreign office 404 1.51 304 3.99 33
------- -------
Total interest-bearing
deposits 17,625 2.12 17,321 3.72 2
------- -------
Short-term borrowings 2,677 1.77 3,543 4.36 -24
Long-term borrowings 4,121 4.56 3,485 6.15 18
------- -------
Total interest-bearing
liabilities 24,423 2.50 24,349 4.16 -
Noninterest-bearing deposits 3,585 3,269 10
Other liabilities 363 384 -6
------- -------
Total liabilities 28,371 28,002 1
Stockholders' equity 2,956 3,015 -2
------- -------
Total liabilities and
stockholders' equity $ 31,327 31,017 1 %
======== ========
Net interest spread 4.07 3.64
Contribution of
interest-free funds .36 .54
Net interest margin 4.43 % 4.18 %
Six months ended
June 30
-----------------------------
Dollars in millions 2002 2001
------------- ------------ Change in
Balance Rate Balance Rate balance
------- ---- ------- ----- --------
ASSETS
Money-market assets $ 267 1.78 % 53 4.69 % 406%
Investment securities 2,899 5.91 3,486 6.89 -17
Loans and leases, net of
unearned discount
Commercial, financial, etc 5,064 5.23 5,281 7.92 -4
Real estate - commercial 9,402 7.10 9,085 8.24 3
Real estate - consumer 5,070 7.33 5,128 7.92 -1
Consumer 5,626 6.86 4,435 8.73 27
------- --------
Total loans and
leases, net 25,162 6.75 23,929 8.23 5
------- --------
Total earning assets 28,328 6.62 27,468 8.06 3
Goodwill 1,098 1,124 -2
Core deposit and other
intangible assets 157 208 -25
Other assets 1,716 1,650 4
------- --------
Total assets $ 31,299 30,450 3%
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
NOW accounts 748 .53 712 1.53 5%
Savings deposits 8,641 1.26 7,024 2.09 23
Time deposits 7,890 3.49 9,414 5.59 -16
Deposits at foreign office 441 1.51 284 4.57 56
------- --------
Total interest-bearing
deposits 17,720 2.23 17,434 4.00 2
------- --------
Short-term borrowings 2,820 1.77 3,001 4.89 -6
Long-term borrowings 3,924 4.70 3,464 6.45 13
------- --------
Total interest-bearing
liabilities 24,464 2.57 23,899 4.46 2
Noninterest-bearing deposits 3,520 3,227 9
Other liabilities 367 383 -4
------- --------
Total liabilities 28,351 27,509 3
Stockholders' equity 2,948 2,941 -
------- --------
Total liabilities and
stockholders' equity $ 31,299 30,450 3%
======== ========
Net interest spread 4.05 3.60
Contribution of
interest-free funds .35 .57
Net interest margin 4.40 % 4.17 %
Contact:
M&T Bank Corporation
Michael S. Piemonte, 716/842-5138