mtb-10q_20170630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-9861

 

M&T BANK CORPORATION

(Exact name of registrant as specified in its charter)

 

 

New York

 

16-0968385

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

One M & T Plaza

Buffalo, New York

 

14203

(Address of principal executive offices)

 

(Zip Code)

(716) 635-4000

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).       Yes      No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

 

Accelerated filer

Non-accelerated filer

 

  (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).       Yes      No

Number of shares of the registrant's Common Stock, $0.50 par value, outstanding as of the close of business on July 31, 2017: 151,931,921 shares.

 

 


M&T BANK CORPORATION

FORM 10-Q

For the Quarterly Period Ended June 30, 2017

 

Table of Contents of Information Required in Report

 

Page

 

 

 

 

 

Part I.  FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements.

 

 

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEET - June 30, 2017 and December 31, 2016

 

3

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF INCOME - Three and six months ended June 30, 2017 and 2016

 

4

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - Three and six months ended June 30, 2017 and 2016

 

5

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS - Six months ended June 30, 2017 and 2016

 

6

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - Six months ended June 30, 2017 and 2016

 

7

 

 

 

 

 

 

 

NOTES TO FINANCIAL STATEMENTS

 

8

 

 

 

 

 

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

52

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk.

 

89

 

 

 

 

 

Item 4.

 

Controls and Procedures.

 

89

 

 

 

 

 

Part II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings.

 

89

 

 

 

 

 

Item 1A.

 

Risk Factors.

 

91

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds.

 

91

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities.

 

91

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures.

 

91

 

 

 

 

 

Item 5.

 

Other Information.

 

91

 

 

 

 

 

Item 6.

 

Exhibits.

 

92

 

 

 

 

 

SIGNATURES

 

92

 

 

 

 

 

EXHIBIT INDEX

 

93

- 2 -


PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements.

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (Unaudited)

 

 

 

 

 

June 30,

 

 

December 31,

 

Dollars in thousands, except per share

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

Cash and due from banks

 

$

1,344,478

 

 

 

1,320,549

 

 

 

Interest-bearing deposits at banks

 

 

5,023,829

 

 

 

5,000,638

 

 

 

Federal funds sold

 

 

1,000

 

 

 

 

 

 

Trading Account

 

 

174,646

 

 

 

323,867

 

 

 

Investment securities (includes pledged securities that can be sold or repledged of

    $504,827 at June 30, 2017; $1,203,473 at December 31, 2016)

 

 

 

 

 

 

 

 

 

 

Available for sale (cost: $11,911,151 at June 30, 2017;

   $13,338,301 at December 31, 2016)

 

 

11,928,865

 

 

 

13,332,072

 

 

 

Held to maturity (fair value: $3,380,532 at June 30, 2017;

   $2,451,222 at December 31, 2016)

 

 

3,388,268

 

 

 

2,457,278

 

 

 

Other (fair value: $498,927 at June 30, 2017;

   $461,118 at December 31, 2016)

 

 

498,927

 

 

 

461,118

 

 

 

Total investment securities

 

 

15,816,060

 

 

 

16,250,468

 

 

 

Loans and leases

 

 

89,322,293

 

 

 

91,101,677

 

 

 

Unearned discount

 

 

(241,738

)

 

 

(248,261

)

 

 

Loans and leases, net of unearned discount

 

 

89,080,555

 

 

 

90,853,416

 

 

 

Allowance for credit losses

 

 

(1,008,225

)

 

 

(988,997

)

 

 

Loans and leases, net

 

 

88,072,330

 

 

 

89,864,419

 

 

 

Premises and equipment

 

 

673,552

 

 

 

675,263

 

 

 

Goodwill

 

 

4,593,112

 

 

 

4,593,112

 

 

 

Core deposit and other intangible assets

 

 

86,422

 

 

 

97,655

 

 

 

Accrued interest and other assets

 

 

5,111,138

 

 

 

5,323,235

 

 

 

Total assets

 

$

120,896,567

 

 

 

123,449,206

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

Noninterest-bearing deposits

 

$

32,366,426

 

 

 

32,813,896

 

 

 

Savings and interest-checking deposits

 

 

52,871,146

 

 

 

52,346,207

 

 

 

Time deposits

 

 

8,107,749

 

 

 

10,131,846

 

 

 

Deposits at Cayman Islands office

 

 

195,617

 

 

 

201,927

 

 

 

Total deposits

 

 

93,540,938

 

 

 

95,493,876

 

 

 

Federal funds purchased and agreements to repurchase securities

 

 

195,453

 

 

 

163,442

 

 

 

Other short-term borrowings

 

 

1,500,000

 

 

 

 

 

 

Accrued interest and other liabilities

 

 

1,727,059

 

 

 

1,811,431

 

 

 

Long-term borrowings

 

 

7,649,580

 

 

 

9,493,835

 

 

 

Total liabilities

 

 

104,613,030

 

 

 

106,962,584

 

Shareholders' equity

 

Preferred stock, $1.00 par, 1,000,000 shares authorized;

   Issued and outstanding: Liquidation preference of $1,000 per

   share: 731,500 shares at June 30, 2017 and December 31,

   2016; Liquidation preference of $10,000 per share: 50,000

   shares at June 30, 2017 and December 31, 2016

 

 

1,231,500

 

 

 

1,231,500

 

 

 

Common stock, $.50 par, 250,000,000 shares authorized,

   159,821,693 shares issued at June 30, 2017;

   159,945,678 shares issued at December 31, 2016

 

 

79,911

 

 

 

79,973

 

 

 

Common stock issuable, 28,835 shares at June 30, 2017;

   32,403 shares at December 31, 2016

 

 

1,940

 

 

 

2,145

 

 

 

Additional paid-in capital

 

 

6,604,930

 

 

 

6,676,948

 

 

 

Retained earnings

 

 

9,685,478

 

 

 

9,222,488

 

 

 

Accumulated other comprehensive income (loss), net

 

 

(270,081

)

 

 

(294,636

)

 

 

Treasury stock - common, at cost - 7,311,105 shares at June 30, 2017;

   3,764,742 shares at December 31, 2016

 

 

(1,050,141

)

 

 

(431,796

)

 

 

Total shareholders’ equity

 

 

16,283,537

 

 

 

16,486,622

 

 

 

Total liabilities and shareholders’ equity

 

$

120,896,567

 

 

 

123,449,206

 

 

- 3 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

 

 

 

 

 

 

Three Months Ended June 30

 

 

Six Months Ended June 30

 

In thousands, except per share

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

Loans and leases, including fees

 

$

924,640

 

 

 

867,478

 

 

$

1,822,678

 

 

 

1,730,863

 

 

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fully taxable

 

 

92,996

 

 

 

91,184

 

 

 

188,120

 

 

 

189,199

 

 

 

Exempt from federal taxes

 

 

379

 

 

 

663

 

 

 

809

 

 

 

1,458

 

 

 

Deposits at banks

 

 

12,213

 

 

 

10,993

 

 

 

24,375

 

 

 

21,330

 

 

 

Other

 

 

185

 

 

 

303

 

 

 

464

 

 

 

605

 

 

 

Total interest income

 

 

1,030,413

 

 

 

970,621

 

 

 

2,036,446

 

 

 

1,943,455

 

Interest expense

 

Savings and interest-checking deposits

 

 

30,543

 

 

 

20,534

 

 

 

56,177

 

 

 

36,839

 

 

 

Time deposits

 

 

16,303

 

 

 

26,867

 

 

 

35,301

 

 

 

51,189

 

 

 

Deposits at Cayman Islands office

 

 

281

 

 

 

181

 

 

 

546

 

 

 

374

 

 

 

Short-term borrowings

 

 

378

 

 

 

1,143

 

 

 

594

 

 

 

3,305

 

 

 

Long-term borrowings

 

 

44,708

 

 

 

58,077

 

 

 

91,368

 

 

 

115,965

 

 

 

Total interest expense

 

 

92,213

 

 

 

106,802

 

 

 

183,986

 

 

 

207,672

 

 

 

Net interest income

 

 

938,200

 

 

 

863,819

 

 

 

1,852,460

 

 

 

1,735,783

 

 

 

Provision for credit losses

 

 

52,000

 

 

 

32,000

 

 

 

107,000

 

 

 

81,000

 

 

 

Net interest income after provision for credit losses

 

 

886,200

 

 

 

831,819

 

 

 

1,745,460

 

 

 

1,654,783

 

Other income

 

Mortgage banking revenues

 

 

86,163

 

 

 

89,383

 

 

 

170,855

 

 

 

171,446

 

 

 

Service charges on deposit accounts

 

 

106,057

 

 

 

103,872

 

 

 

210,233

 

 

 

206,277

 

 

 

Trust income

 

 

126,797

 

 

 

120,450

 

 

 

246,812

 

 

 

231,527

 

 

 

Brokerage services income

 

 

16,617

 

 

 

16,272

 

 

 

34,001

 

 

 

32,276

 

 

 

Trading account and foreign exchange gains

 

 

8,084

 

 

 

13,222

 

 

 

17,775

 

 

 

20,680

 

 

 

Gain (loss) on bank investment securities

 

 

(17

)

 

 

264

 

 

 

(17

)

 

 

268

 

 

 

Other revenues from operations

 

 

117,115

 

 

 

104,791

 

 

 

228,002

 

 

 

206,713

 

 

 

Total other income

 

 

460,816

 

 

 

448,254

 

 

 

907,661

 

 

 

869,187

 

Other expense

 

Salaries and employee benefits

 

 

398,900

 

 

 

398,675

 

 

 

848,762

 

 

 

830,460

 

 

 

Equipment and net occupancy

 

 

73,797

 

 

 

75,724

 

 

 

148,163

 

 

 

149,902

 

 

 

Outside data processing and software

 

 

44,575

 

 

 

42,509

 

 

 

88,876

 

 

 

85,524

 

 

 

FDIC assessments

 

 

25,353

 

 

 

22,370

 

 

 

54,180

 

 

 

47,595

 

 

 

Advertising and marketing

 

 

16,324

 

 

 

22,613

 

 

 

32,434

 

 

 

44,067

 

 

 

Printing, postage and supplies

 

 

8,957

 

 

 

9,907

 

 

 

18,665

 

 

 

21,893

 

 

 

Amortization of core deposit and other intangible assets

 

 

8,113

 

 

 

11,418

 

 

 

16,533

 

 

 

23,737

 

 

 

Other costs of operations

 

 

174,616

 

 

 

166,679

 

 

 

330,874

 

 

 

322,812

 

 

 

Total other expense

 

 

750,635

 

 

 

749,895

 

 

 

1,538,487

 

 

 

1,525,990

 

 

 

Income before taxes

 

 

596,381

 

 

 

530,178

 

 

 

1,114,634

 

 

 

997,980

 

 

 

Income taxes

 

 

215,328

 

 

 

194,147

 

 

 

384,654

 

 

 

363,421

 

 

 

Net income

 

$

381,053

 

 

 

336,031

 

 

$

729,980

 

 

 

634,559

 

 

 

Net income available to common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

360,658

 

 

 

312,968

 

 

$

689,208

 

 

 

588,697

 

 

 

Diluted

 

 

360,662

 

 

 

312,974

 

 

 

689,217

 

 

 

588,707

 

 

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.36

 

 

 

1.98

 

 

$

4.49

 

 

 

3.72

 

 

 

Diluted

 

 

2.35

 

 

 

1.98

 

 

 

4.47

 

 

 

3.71

 

 

 

Cash dividends per common share

 

$

.75

 

 

 

.70

 

 

$

1.50

 

 

 

1.40

 

 

 

Average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

152,857

 

 

 

157,802

 

 

 

153,638

 

 

 

158,268

 

 

 

Diluted

 

 

153,276

 

 

 

158,341

 

 

 

154,108

 

 

 

158,761

 

 

- 4 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

 

 

 

Three Months Ended June 30

 

 

Six Months Ended June 30

 

In thousands

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

381,053

 

 

 

336,031

 

 

$

729,980

 

 

 

634,559

 

Other comprehensive income, net of tax and reclassification adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains on investment securities

 

 

16,932

 

 

 

47,270

 

 

 

15,576

 

 

 

144,464

 

Cash flow hedges adjustments

 

 

(955

)

 

 

(23

)

 

 

(978

)

 

 

(47

)

Foreign currency translation adjustment

 

 

1,150

 

 

 

(1,565

)

 

 

1,626

 

 

 

(1,618

)

Defined benefit plans liability adjustments

 

 

4,359

 

 

 

3,486

 

 

 

8,331

 

 

 

7,807

 

Total other comprehensive income

 

 

21,486

 

 

 

49,168

 

 

 

24,555

 

 

 

150,606

 

Total comprehensive income

 

$

402,539

 

 

 

385,199

 

 

$

754,535

 

 

 

785,165

 

 

 

- 5 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

 

 

 

 

 

Six Months Ended June 30

 

In thousands

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating

   activities

 

Net income

 

$

729,980

 

 

 

634,559

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

107,000

 

 

 

81,000

 

 

 

Depreciation and amortization of premises and equipment

 

 

54,901

 

 

 

53,514

 

 

 

Amortization of capitalized servicing rights

 

 

27,984

 

 

 

24,648

 

 

 

Amortization of core deposit and other intangible assets

 

 

16,533

 

 

 

23,737

 

 

 

Provision for deferred income taxes

 

 

17,136

 

 

 

94,458

 

 

 

Asset write-downs

 

 

8,797

 

 

 

7,737

 

 

 

Net gain on sales of assets

 

 

(21,272

)

 

 

(10,477

)

 

 

Net change in accrued interest receivable, payable

 

 

(6,350

)

 

 

2,358

 

 

 

Net change in other accrued income and expense

 

 

50,660

 

 

 

(32,180

)

 

 

Net change in loans originated for sale

 

 

545,864

 

 

 

(188,771

)

 

 

Net change in trading account assets and liabilities

 

 

92,054

 

 

 

(40,552

)

 

 

Net cash provided by operating activities

 

 

1,623,287

 

 

 

650,031

 

Cash flows from investing

   activities

 

Proceeds from sales of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

512,129

 

 

 

4,970

 

 

 

Other

 

 

31,016

 

 

 

85,389

 

 

 

Proceeds from maturities of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

1,151,982

 

 

 

1,067,100

 

 

 

Held to maturity

 

 

245,105

 

 

 

291,917

 

 

 

Purchases of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

(244,449

)

 

 

(518,203

)

 

 

Held to maturity

 

 

(1,175,608

)

 

 

(10,456

)

 

 

Other

 

 

(68,825

)

 

 

(1,019

)

 

 

Net decrease (increase) in loans and leases

 

 

1,134,470

 

 

 

(930,426

)

 

 

Net increase in interest-bearing deposits at banks

 

 

(23,191

)

 

 

(880,489

)

 

 

Capital expenditures, net

 

 

(49,862

)

 

 

(36,619

)

 

 

Net decrease in loan servicing advances

 

 

104,289

 

 

 

119,190

 

 

 

Other, net

 

 

47,742

 

 

 

(98,452

)

 

 

Net cash provided (used) by investing activities

 

 

1,664,798

 

 

 

(907,098

)

Cash flows from financing

   activities

 

Net increase (decrease) in deposits

 

 

(1,949,877

)

 

 

2,705,332

 

 

 

Net increase (decrease) in short-term borrowings

 

 

1,532,011

 

 

 

(1,693,603

)

 

 

Proceeds from long-term borrowings

 

 

898,200

 

 

 

 

 

 

Payments on long-term borrowings

 

 

(2,728,059

)

 

 

(322,591

)

 

 

Purchases of treasury stock

 

 

(756,967

)

 

 

(254,000

)

 

 

Dividends paid — common

 

 

(230,652

)

 

 

(223,179

)

 

 

Dividends paid — preferred

 

 

(36,474

)

 

 

(40,635

)

 

 

Other, net

 

 

8,662

 

 

 

2,145

 

 

 

Net cash provided (used) by financing activities

 

 

(3,263,156

)

 

 

173,469

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

24,929

 

 

 

(83,598

)

 

 

Cash and cash equivalents at beginning of period

 

 

1,320,549

 

 

 

1,368,040

 

 

 

Cash and cash equivalents at end of period

 

$

1,345,478

 

 

 

1,284,442

 

Supplemental disclosure of cash

   flow information

 

Interest received during the period

 

$

2,038,009

 

 

 

1,947,027

 

 

 

Interest paid during the period

 

 

199,621

 

 

 

257,222

 

 

 

Income taxes paid during the period

 

 

321,106

 

 

 

105,361

 

Supplemental schedule of

   noncash investing and financing

   activities

 

Real estate acquired in settlement of loans

 

$

57,202

 

 

 

66,286

 

 

 

Securitization of residential mortgage loans allocated to

 

 

 

 

 

 

 

 

 

 

Available-for-sale investment securities

 

 

10,025

 

 

 

13,923

 

 

 

Capitalized servicing rights

 

 

106

 

 

 

143

 

 

 

 

 

- 6 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Additional

 

 

 

 

 

 

Comprehensive

 

 

 

 

 

 

 

 

 

 

 

Preferred

 

 

Common

 

 

Stock

 

 

Paid-in

 

 

Retained

 

 

Income

 

 

Treasury

 

 

 

 

 

Dollars in thousands, except per share

 

Stock

 

 

Stock

 

 

Issuable

 

 

Capital

 

 

Earnings

 

 

(Loss), Net

 

 

Stock

 

 

Total

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2016

 

$

1,231,500

 

 

 

79,782

 

 

 

2,364

 

 

 

6,680,768

 

 

 

8,430,502

 

 

 

(251,627

)

 

 

 

 

 

16,173,289

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

634,559

 

 

 

150,606

 

 

 

 

 

 

785,165

 

Preferred stock cash dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(40,635

)