mtb-10q_20170930.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 September 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 October 31, 2017: 150,515,367  shares.

 

 


M&T BANK CORPORATION

FORM 10-Q

For the Quarterly Period Ended September 30, 2017

 

Table of Contents of Information Required in Report

 

Page

 

 

 

 

 

Part I.  FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements.

 

 

 

 

 

 

 

 

 

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

 

3

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF INCOME - Three and nine months ended September 30, 2017 and 2016

 

4

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - Three and nine months ended September 30, 2017 and 2016

 

5

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS - Nine months ended September 30, 2017 and 2016

 

6

 

 

 

 

 

 

 

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

 

7

 

 

 

 

 

 

 

NOTES TO FINANCIAL STATEMENTS

 

8

 

 

 

 

 

Item 2.

 

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

 

53

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk.

 

90

 

 

 

 

 

Item 4.

 

Controls and Procedures.

 

90

 

 

 

 

 

Part II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings.

 

90

 

 

 

 

 

Item 1A.

 

Risk Factors.

 

92

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds.

 

92

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities.

 

92

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures.

 

92

 

 

 

 

 

Item 5.

 

Other Information.

 

92

 

 

 

 

 

Item 6.

 

Exhibits.

 

93

 

 

 

 

 

SIGNATURES

 

93

 

 

 

 

 

- 2 -


PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements.

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (Unaudited)

 

 

 

 

 

September 30,

 

 

December 31,

 

Dollars in thousands, except per share

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

Cash and due from banks

 

$

1,368,252

 

 

 

1,320,549

 

 

 

Interest-bearing deposits at banks

 

 

6,306,484

 

 

 

5,000,638

 

 

 

Trading account

 

 

170,516

 

 

 

323,867

 

 

 

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

   $488,200 at September 30, 2017; $1,203,473 at December 31, 2016)

 

 

 

 

 

 

 

 

 

 

Available for sale (cost: $11,369,815 at September 30, 2017;

   $13,338,301 at December 31, 2016)

 

 

11,416,824

 

 

 

13,332,072

 

 

 

Held to maturity (fair value: $3,247,954 at September 30, 2017;

   $2,451,222 at December 31, 2016)

 

 

3,242,124

 

 

 

2,457,278

 

 

 

Other (fair value: $414,978 at September 30, 2017;

   $461,118 at December 31, 2016)

 

 

414,978

 

 

 

461,118

 

 

 

Total investment securities

 

 

15,073,926

 

 

 

16,250,468

 

 

 

Loans and leases

 

 

88,171,225

 

 

 

91,101,677

 

 

 

Unearned discount

 

 

(246,091

)

 

 

(248,261

)

 

 

Loans and leases, net of unearned discount

 

 

87,925,134

 

 

 

90,853,416

 

 

 

Allowance for credit losses

 

 

(1,013,326

)

 

 

(988,997

)

 

 

Loans and leases, net

 

 

86,911,808

 

 

 

89,864,419

 

 

 

Premises and equipment

 

 

656,713

 

 

 

675,263

 

 

 

Goodwill

 

 

4,593,112

 

 

 

4,593,112

 

 

 

Core deposit and other intangible assets

 

 

78,614

 

 

 

97,655

 

 

 

Accrued interest and other assets

 

 

5,242,379

 

 

 

5,323,235

 

 

 

Total assets

 

$

120,401,804

 

 

 

123,449,206

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

Noninterest-bearing deposits

 

$

33,111,246

 

 

 

32,813,896

 

 

 

Savings and interest-checking deposits

 

 

52,936,615

 

 

 

52,346,207

 

 

 

Time deposits

 

 

7,233,518

 

 

 

10,131,846

 

 

 

Deposits at Cayman Islands office

 

 

232,014

 

 

 

201,927

 

 

 

Total deposits

 

 

93,513,393

 

 

 

95,493,876

 

 

 

Federal funds purchased and agreements to repurchase securities

 

 

200,768

 

 

 

163,442

 

 

 

Accrued interest and other liabilities

 

 

1,791,946

 

 

 

1,811,431

 

 

 

Long-term borrowings

 

 

8,577,645

 

 

 

9,493,835

 

 

 

Total liabilities

 

 

104,083,752

 

 

 

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: shares 731,500 at September 30, 2017 and December 31,

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

   shares at September 30, 2017 and December 31, 2016

 

 

1,231,500

 

 

 

1,231,500

 

 

 

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

   159,819,892 shares issued at September 30, 2017;

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

 

 

79,910

 

 

 

79,973

 

 

 

Common stock issuable, 27,019 shares at September 30, 2017;

   32,403 shares at December 31, 2016

 

 

1,827

 

 

 

2,145

 

 

 

Additional paid-in capital

 

 

6,598,048

 

 

 

6,676,948

 

 

 

Retained earnings

 

 

9,909,415

 

 

 

9,222,488

 

 

 

Accumulated other comprehensive income (loss), net

 

 

(247,915

)

 

 

(294,636

)

 

 

Treasury stock — common, at cost — 8,555,636 shares at September 30, 2017;

   3,764,742 shares at December 31, 2016

 

 

(1,254,733

)

 

 

(431,796

)

 

 

Total shareholders’ equity

 

 

16,318,052

 

 

 

16,486,622

 

 

 

Total liabilities and shareholders’ equity

 

$

120,401,804

 

 

 

123,449,206

 

 

- 3 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

 

 

 

 

 

 

Three Months Ended September 30

 

 

Nine Months Ended September 30

 

In thousands, except per share

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

Loans and leases, including fees

 

$

953,662

 

 

 

871,345

 

 

$

2,776,340

 

 

 

2,602,208

 

 

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fully taxable

 

 

87,937

 

 

 

84,893

 

 

 

276,057

 

 

 

274,092

 

 

 

Exempt from federal taxes

 

 

345

 

 

 

623

 

 

 

1,154

 

 

 

2,081

 

 

 

Deposits at banks

 

 

14,970

 

 

 

12,354

 

 

 

39,345

 

 

 

33,684

 

 

 

Other

 

 

296

 

 

 

300

 

 

 

760

 

 

 

905

 

 

 

Total interest income

 

 

1,057,210

 

 

 

969,515

 

 

 

3,093,656

 

 

 

2,912,970

 

Interest expense

 

Savings and interest-checking deposits

 

 

37,714

 

 

 

24,067

 

 

 

93,891

 

 

 

60,906

 

 

 

Time deposits

 

 

13,992

 

 

 

27,886

 

 

 

49,293

 

 

 

79,075

 

 

 

Deposits at Cayman Islands office

 

 

310

 

 

 

204

 

 

 

856

 

 

 

578

 

 

 

Short-term borrowings

 

 

554

 

 

 

169

 

 

 

1,148

 

 

 

3,474

 

 

 

Long-term borrowings

 

 

47,506

 

 

 

58,849

 

 

 

138,874

 

 

 

174,814

 

 

 

Total interest expense

 

 

100,076

 

 

 

111,175

 

 

 

284,062

 

 

 

318,847

 

 

 

Net interest income

 

 

957,134

 

 

 

858,340

 

 

 

2,809,594

 

 

 

2,594,123

 

 

 

Provision for credit losses

 

 

30,000

 

 

 

47,000

 

 

 

137,000

 

 

 

128,000

 

 

 

Net interest income after provision for credit losses

 

 

927,134

 

 

 

811,340

 

 

 

2,672,594

 

 

 

2,466,123

 

Other income

 

Mortgage banking revenues

 

 

96,737

 

 

 

103,747

 

 

 

267,592

 

 

 

275,193

 

 

 

Service charges on deposit accounts

 

 

109,356

 

 

 

107,935

 

 

 

319,589

 

 

 

314,212

 

 

 

Trust income

 

 

124,900

 

 

 

118,654

 

 

 

371,712

 

 

 

350,181

 

 

 

Brokerage services income

 

 

14,676

 

 

 

15,914

 

 

 

48,677

 

 

 

48,190

 

 

 

Trading account and foreign exchange gains

 

 

7,058

 

 

 

12,754

 

 

 

24,833

 

 

 

33,434

 

 

 

Gain (loss) on bank investment securities

 

 

 

 

 

28,480

 

 

 

(17

)

 

 

28,748

 

 

 

Other revenues from operations

 

 

106,702

 

 

 

103,866

 

 

 

334,704

 

 

 

310,579

 

 

 

Total other income

 

 

459,429

 

 

 

491,350

 

 

 

1,367,090

 

 

 

1,360,537

 

Other expense

 

Salaries and employee benefits

 

 

399,089

 

 

 

399,786

 

 

 

1,247,851

 

 

 

1,230,246

 

 

 

Equipment and net occupancy

 

 

75,558

 

 

 

75,263

 

 

 

223,721

 

 

 

225,165

 

 

 

Outside data processing and software

 

 

45,761

 

 

 

42,878

 

 

 

134,637

 

 

 

128,402

 

 

 

FDIC assessments

 

 

23,969

 

 

 

28,459

 

 

 

78,149

 

 

 

76,054

 

 

 

Advertising and marketing

 

 

17,403

 

 

 

21,996

 

 

 

49,837

 

 

 

66,063

 

 

 

Printing, postage and supplies

 

 

8,732

 

 

 

8,972

 

 

 

27,397

 

 

 

30,865

 

 

 

Amortization of core deposit and other intangible assets

 

 

7,808

 

 

 

9,787

 

 

 

24,341

 

 

 

33,524

 

 

 

Other costs of operations

 

 

227,705

 

 

 

165,251

 

 

 

558,579

 

 

 

488,063

 

 

 

Total other expense

 

 

806,025

 

 

 

752,392

 

 

 

2,344,512

 

 

 

2,278,382

 

 

 

Income before taxes

 

 

580,538

 

 

 

550,298

 

 

 

1,695,172

 

 

 

1,548,278

 

 

 

Income taxes

 

 

224,615

 

 

 

200,314

 

 

 

609,269

 

 

 

563,735

 

 

 

Net income

 

$

355,923

 

 

 

349,984

 

 

$

1,085,903

 

 

 

984,543

 

 

 

Net income available to common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

335,801

 

 

 

326,992

 

 

$

1,025,011

 

 

 

915,670

 

 

 

Diluted

 

 

335,804

 

 

 

326,998

 

 

 

1,025,023

 

 

 

915,686

 

 

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.22

 

 

 

2.10

 

 

$

6.71

 

 

 

5.82

 

 

 

Diluted

 

 

2.21

 

 

 

2.10

 

 

 

6.69

 

 

 

5.80

 

 

 

Cash dividends per common share

 

$

.75

 

 

 

.70

 

 

$

2.25

 

 

 

2.10

 

 

 

Average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

151,347

 

 

 

155,493

 

 

 

152,866

 

 

 

157,336

 

 

 

Diluted

 

 

151,691

 

 

 

156,026

 

 

 

153,293

 

 

 

157,843

 

 

- 4 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

 

 

 

Three Months Ended September 30

 

 

Nine Months Ended September 30

 

In thousands

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

355,923

 

 

 

349,984

 

 

$

1,085,903

 

 

 

984,543

 

Other comprehensive income, net of tax and reclassification adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on investment securities

 

 

18,258

 

 

 

(17,133

)

 

 

33,834

 

 

 

127,331

 

Cash flow hedges adjustments

 

 

(1,120

)

 

 

(23

)

 

 

(2,098

)

 

 

(70

)

Foreign currency translation adjustment

 

 

863

 

 

 

(229

)

 

 

2,489

 

 

 

(1,847

)

Defined benefit plans liability adjustments

 

 

4,165

 

 

 

3,847

 

 

 

12,496

 

 

 

11,654

 

Total other comprehensive income (loss)

 

 

22,166

 

 

 

(13,538

)

 

 

46,721

 

 

 

137,068

 

Total comprehensive income

 

$

378,089

 

 

 

336,446

 

 

$

1,132,624

 

 

 

1,121,611

 

 

 

- 5 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

 

 

 

 

 

Nine Months Ended September 30

 

In thousands

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating

   activities

 

Net income

 

$

1,085,903

 

 

 

984,543

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

137,000

 

 

 

128,000

 

 

 

Depreciation and amortization of premises and equipment

 

 

84,631

 

 

 

79,911

 

 

 

Amortization of capitalized servicing rights

 

 

41,475

 

 

 

37,979

 

 

 

Amortization of core deposit and other intangible assets

 

 

24,341

 

 

 

33,524

 

 

 

Provision for deferred income taxes

 

 

9,926

 

 

 

109,274

 

 

 

Asset write-downs

 

 

10,878

 

 

 

14,276

 

 

 

Net gain on sales of assets

 

 

(27,967

)

 

 

(46,732

)

 

 

Net change in accrued interest receivable, payable

 

 

(23,059

)

 

 

(13,833

)

 

 

Net change in other accrued income and expense

 

 

110,138

 

 

 

113,809

 

 

 

Net change in loans originated for sale

 

 

523,895

 

 

 

(285,824

)

 

 

Net change in trading account assets and liabilities

 

 

88,705

 

 

 

(82,837

)

 

 

Net cash provided by operating activities

 

 

2,065,866

 

 

 

1,072,090

 

Cash flows from investing

   activities

 

Proceeds from sales of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

512,143

 

 

 

61,947

 

 

 

Other

 

 

178,244

 

 

 

94,516

 

 

 

Proceeds from maturities of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

1,650,258

 

 

 

1,690,665

 

 

 

Held to maturity

 

 

390,278

 

 

 

459,399

 

 

 

Purchases of investment securities

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

(248,705

)

 

 

(1,150,523

)

 

 

Held to maturity

 

 

(1,175,608

)

 

 

(15,806

)

 

 

Other

 

 

(132,104

)

 

 

(1,514

)

 

 

Net decrease (increase) in loans and leases

 

 

2,259,049

 

 

 

(2,021,004

)

 

 

Net increase in interest-bearing deposits at banks

 

 

(1,305,846

)

 

 

(3,183,286

)

 

 

Capital expenditures, net

 

 

(62,515

)

 

 

(65,277

)

 

 

Net decrease in loan servicing advances

 

 

47,786

 

 

 

121,226

 

 

 

Other, net

 

 

66,357

 

 

 

11,459

 

 

 

Net cash provided (used) by investing activities

 

 

2,179,337

 

 

 

(3,998,198

)

Cash flows from financing

   activities

 

Net increase (decrease) in deposits

 

 

(1,976,237

)

 

 

6,195,511

 

 

 

Net increase (decrease) in short-term borrowings

 

 

37,326

 

 

 

(1,886,701

)

 

 

Proceeds from long-term borrowings

 

 

2,145,950

 

 

 

 

 

 

Payments on long-term borrowings

 

 

(3,029,320

)

 

 

(427,035

)

 

 

Purchases of treasury stock

 

 

(981,691

)

 

 

(604,000

)

 

 

Dividends paid — common

 

 

(345,166

)

 

 

(333,042

)

 

 

Dividends paid — preferred

 

 

(53,842

)

 

 

(58,003

)

 

 

Other, net

 

 

5,480

 

 

 

3,540

 

 

 

Net cash provided (used) by financing activities

 

 

(4,197,500

)

 

 

2,890,270

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

47,703

 

 

 

(35,838

)

 

 

Cash and cash equivalents at beginning of period

 

 

1,320,549

 

 

 

1,368,040

 

 

 

Cash and cash equivalents at end of period

 

$

1,368,252

 

 

 

1,332,202

 

Supplemental disclosure of cash

   flow information

 

Interest received during the period

 

$

3,088,042

 

 

 

2,923,278

 

 

 

Interest paid during the period

 

 

310,640

 

 

 

387,695

 

 

 

Income taxes paid during the period

 

 

462,163

 

 

 

138,375

 

Supplemental schedule of

   noncash investing and financing

   activities

 

Real estate acquired in settlement of loans

 

$

88,551

 

 

 

100,106

 

 

 

Securitization of residential mortgage loans allocated to

 

 

 

 

 

 

 

 

 

 

Available-for-sale investment securities

 

 

22,527

 

 

 

18,685

 

 

 

Capitalized servicing rights

 

 

262

 

 

 

193

 

 

 

 

 

- 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

984,543

 

 

 

137,068

 

 

 

 

 

 

1,121,611

 

Preferred stock cash dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(60,953

)

 

 

 

 

 

 

 

 

(60,953

)

Exercise of 5,320 Series A stock

   warrants into 1,983 shares of

   common stock

 

 

 

 

 

 

 

 

 

 

 

(223