M&T Bank Corporation Announces Fourth Quarter Earnings.
For the fourth quarter of 1999, diluted cash earnings per share were $9.73, an increase of 17% from $8.31 in the year-earlier quarter. Cash net income in the recently completed quarter was $78.4 million, 17% higher than the $67.3 million earned in the final quarter of 1998. The annualized cash returns on average tangible assets and average tangible equity were 1.45% and 26.67%, respectively, in 1999's fourth quarter, up from 1.36% and 24.57%, respectively, in the comparable 1998 period.
Cash earnings exclude the after-tax effect of amortization of goodwill and core deposit intangible and expenses associated with merging acquired operations into M&T. The impact of merger-related expenses was $3.0 million ($4.7 million pre-tax) or $.37 per diluted share for 1999. Such expenses related to the acquisitions of FNB Rochester Corp. on June 1, 1999 and 29 branch offices from The Chase Manhattan Bank on September 24, 1999. Merger-related expenses in 1998 were related to M&T's acquisition of ONBANCorp, Inc. on April 1, 1998 and totaled $14.0 million ($21.3 million pretax) or $1.76 per diluted share.
Reflecting growth in average loans outstanding, taxable-equivalent net interest income increased 13% to $767.1 million in 1999 from $679.1 million in 1998. Average loans outstanding in 1999 were $16.4 billion, up 15% from $14.3 billion in 1998. Net interest margin, or taxable-equivalent net interest income expressed as a percentage of average earning assets, was 4.02% in 1999, compared with 4.01% in 1998.
The provision for possible credit losses was $44.5 million in 1999, compared with $43.2 million in 1998. Net charge-offs during 1999 were $40.3 million or .25% of average loans outstanding, compared with $39.4 million or .28% of average loans outstanding in the prior year. The allowance for possible credit losses was $316.2 million or 1.82% of loans outstanding at December 31, 1999, compared with $306.3 million or 1.94% at the prior year-end. Nonperforming loans declined to $103.2 million at the recent year-end, or .59% of total loans, compared with $117.0 million or .74% at December 31, 1998. The allowance's coverage of nonperforming loans increased to 306% at December 31, 1999 from 262% a year earlier. Assets acquired in settlement of defaulted loans were $10.0 million and $11.1 million at the end of 1999 and 1998, respectively.
Noninterest income grew by 14% to $282.4 million in 1999 from $247.6 million in 1998, after excluding $15.3 million of tax-exempt income M&T recognized in 1998 in connection with a contribution of appreciated investment securities with a fair value of $24.6 million to an affiliated charitable foundation. Noninterest expenses associated with operations, which exclude amortization of goodwill and core deposit intangible and certain nonrecurring expenses, were $524.6 million in 1999, an increase of 8% from $485.7 million in 1998. The excluded items consist of nonrecurring merger-related expenses of $4.7 million and $21.3 million in 1999 and 1998, respectively, amortization of goodwill and core deposit intangible of $49.7 million in 1999 and $34.5 million in 1998, and $24.6 million of expense related to the previously mentioned contribution to the affiliated charitable foundation in 1998. The efficiency ratio, or noninterest expense divided by the sum of taxable-equivalent net interest income and noninterest income, measures how much of a company's revenue is consumed by operating expenses. Reflecting the smooth integration of the 1998 and 1999 acquisitions into M&T, the efficiency ratio, calculated using the adjusted income and expense totals noted above and excluding gains from sales of bank investment securities from noninterest income, improved significantly to 50.06% in 1999 from 52.51% in 1998.
Diluted earnings per share measured in accordance with generally accepted accounting principles, which includes the effect of merger-related expenses and amortization of goodwill and core deposit intangible, for the year ended December 31, 1999 were $32.83, up 25% from $26.16 in 1998. On the same basis, net income for 1999 rose 28% to $265.6 million from $208.0 million in the prior year. The rates of return on average total assets and average common stockholders' equity in 1999 were 1.26% and 15.30%, respectively, compared with 1.14% and 13.86% in 1998.
At December 31, 1999, M&T had total assets of $22.4 billion, compared with $20.6 billion a year earlier. Loans and leases, net of unearned discount, increased 10% to $17.4 billion at the end of 1999 from $15.8 billion at December 31, 1998. Deposits were $15.4 billion at December 31, 1999, up 4% from $14.7 billion at December 31, 1998. Total stockholders' equity rose 12% to $1.8 billion or 8.02% of total assets at year-end 1999 from $1.6 billion or 7.78% a year earlier. Common stockholders' equity per share was $232.41 at the recent year-end and $207.94 at December 31, 1998. Tangible equity per common share was $151.40 and $139.89 at December 31, 1999 and 1998, respectively.
Pursuant to previously announced repurchase programs, during 1999 M&T acquired 167,833 shares of its common stock at an average cost per share of $475.38 for reissuance upon the possible future exercise of outstanding stock options. M&T's most recent program to repurchase up to 190,465 common shares was announced in November 1999. Through December 31, 1999, M&T had repurchased 31,910 shares of common stock pursuant to the most recently announced plan.