false 0000036270 0000036270 2022-07-20 2022-07-20 0000036270 us-gaap:CommonStockMember 2022-07-20 2022-07-20 0000036270 us-gaap:SeriesHPreferredStockMember 2022-07-20 2022-07-20

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 20, 2022

 

M&T BANK CORPORATION

(Exact name of registrant as specified in its charter)

 

New York

(State or other jurisdiction of incorporation)

 

1-9861		16-0968385
(Commission File Number)		(I.R.S. Employer Identification No.)
One M&T Plaza, Buffalo, New York		14203
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (716) 635-4000

(NOT APPLICABLE)

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class	Trading Symbols	Name of Each Exchange on Which Registered
Common Stock, $.50 par value	MTB	New York Stock Exchange
Perpetual Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series H	MTBPrH	New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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. ☐

 

 

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Item 2.02.Results of Operations and Financial Condition.

On July 20, 2022, M&T Bank Corporation announced its results of operations for the quarter ended June 30, 2022. The public announcement was made by means of a news release, the text of which is set forth in Exhibit 99.1 hereto.

The information under Item 2.02 in this Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability of such section, nor shall it be deemed incorporated by reference in any filing of  M&T Bank Corporation under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.		Exhibit Description
99.1		News Release dated July 20, 2022.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

2

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		M&T BANK CORPORATION
Date:  July 20, 2022		By:		/s/ Darren J. King
				Darren J. King
				Senior Executive Vice President and Chief Financial Officer

 

3

 

 

 

 

Exhibit 99.1

 

 

 

M&T BANK CORPORATION ANNOUNCES SECOND QUARTER RESULTS

BUFFALO, NEW YORK -- M&T Bank Corporation (“M&T”) (NYSE: MTB) today reported its results of operations for the quarter ended June 30, 2022.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles (“GAAP”) were $1.08 in the second quarter of 2022, compared with $3.41 in the year-earlier quarter and $2.62 in the first quarter of 2022. GAAP-basis net income was $218 million in the recent quarter, $458 million in the second quarter of 2021 and $362 million in the first 2022 quarter. GAAP-basis net income in the second quarter of 2022 expressed as an annualized rate of return on average assets and average common shareholders' equity was .42% and 3.21%, respectively, compared with 1.22% and 11.55%, respectively, in the similar 2021 period and .97% and 8.55%, respectively, in the first quarter of 2022. M&T’s second quarter 2022 results reflect a full-quarter impact of its April 1, 2022 acquisition of People’s United Financial, Inc. (“People’s United”). However, the results reflect non-operating merger-related expenses associated with the acquisition of $465 million ($346 million after-tax effect, or $1.94 of diluted earnings per common share) in the recent quarter, compared with $4 million ($3 million after-tax effect, or $.02 of diluted earnings per common share) in the year-earlier quarter and $17 million ($13 million after-tax effect, or $.10 of diluted earnings per share) in the initial quarter of 2022.

The closing of the acquisition of People’s United resulted in the issuance of 50.3 million common shares. Pursuant to the terms of the merger agreement, People’s United shareholders received consideration valued at .118 of an M&T common share in exchange for each common share of People’s United. Additionally, People’s United outstanding preferred stock was converted into shares of Series H preferred stock of M&T (NYSE: MTBPrH). The fair value of assets acquired in the transaction totaled approximately $64.2 billion, including $35.8 billion of loans and leases, while liabilities assumed were approximately $55.5 billion, including $53.0 billion of deposits. The purchase price totaled approximately $8.4 billion (with the price based on M&T’s close price of $164.66 per share as of April 1, 2022). The transaction resulted in approximately $3.9 billion of goodwill recorded on M&T’s balance sheet. The company anticipates transferring financial records of People’s United to M&T’s core operating systems by the end of the third quarter.

Darren J. King, Chief Financial Officer, commented on M&T’s results, “We were extremely pleased with the second quarter results and our continued momentum following the acquisition of People’s United. Higher average earning assets and the benefits from an increased net interest margin helped drive revenue growth, while expenses remained well controlled. Although financial results for the recent quarter reflect significant

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merger-related expenses, the acquisition has already had a positive impact on M&T’s net operating results. In addition, our capital position remains very strong with an estimated Common Equity Tier 1 ratio of 10.9%.”

 

For the first six-months of 2022, diluted earnings per common share were $3.45, compared with $6.73 in the year-earlier period. GAAP-basis net income was $580 million and $905 million in the first half of 2022 and 2021, respectively.  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, 2022 was .65% and 5.34%, respectively, compared with 1.22% and 11.56%, respectively, in the similar 2021 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.

Reflected in merger-related expenses in the second quarter of 2022 was a provision for credit losses of $242 million. GAAP requires that acquired loans be recorded at estimated fair value, which includes the use of interest rate and expected credit loss assumptions to forecast estimated cash flows. GAAP also provides that an allowance for credit losses on loans acquired, but not classified as purchased credit deteriorated (“PCD”) also be recognized. Accordingly, M&T recorded a $242 million provision related to such loans obtained in the People’s United acquisition. Given the requirement to recognize such losses above and beyond the impact of forecasted losses used in determining the fair value of acquired loans, M&T considers that provision to be a merger-related expense. Other merger-related expenses generally consist of professional services and other temporary help fees associated with actual or planned conversions of systems and/or integration of operations, costs related to terminations of existing contractual arrangements to purchase various services, severance and travel costs. 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.

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Diluted net operating earnings per common share were $3.10 in the second quarter of 2022, compared with $3.45 in the year-earlier quarter and $2.73 in the first quarter of 2022. Net operating income aggregated $578 million in the recent quarter, $463 million in the second quarter of 2021 and $376 million in 2022’s first quarter. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income in the second quarter of 2022 was 1.16% and 14.41%, respectively, 1.27% and 16.68%, respectively, in the similar quarter of 2021 and 1.04% and 12.44%, respectively, in the first quarter of 2022.

Diluted net operating earnings per common share in the first six months of 2022 totaled $5.88, compared with $6.84 in the similar 2021 period. Net operating income during the first half of 2022 was $954 million, up from $920 million in the six-month period ended June 30, 2021. Net operating income expressed as an annualized rate of return on average tangible assets and average tangible common shareholders’ equity was 1.11% and 13.57%, respectively, in the initial six months of 2022, compared with 1.28% and 16.86%, respectively, in the similar 2021 period.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis totaled $1.42 billion in the recent quarter, compared with $946 million in the second quarter of 2021 and $907 million in the first quarter of 2022. The increase compared with the earlier quarters reflects a higher net interest margin and the impact of earning assets obtained in the acquisition of People’s United that totaled approximately $56.6 billion on April 1, 2022. Average earning assets rose to $189.8 billion in the recent quarter, 39% above the $136.9 billion average in the second quarter of 2021 and 37% higher than $138.6 billion in 2022’s first quarter. Average loans outstanding were $127.6 billion in the second quarter of 2022, compared with $98.6 billion in the year earlier quarter and $92.2 billion in the first quarter of 2022. Reflecting the impact of rising interest rates, the net interest margin increased to 3.01% in the second quarter of 2022, up from 2.77% in the corresponding quarter of 2021 and 2.65% in the first quarter of 2022.

 

Provision for Credit Losses/Asset Quality.  The provision for credit losses was $302 million in the second quarter of 2022. As already noted, included in that amount was a $242 million provision, recorded in accordance with GAAP, related to loans obtained in the People’s United acquisition that were considered non-PCD. GAAP provides that an allowance for credit losses on such loans be recorded beyond the recognition of the fair value of the loans at the acquisition date. In addition to that merger-related provision, M&T recorded a

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provision for credit losses of $60 million in the recent quarter. A $10 million provision was recorded in the initial quarter of 2022 and a $15 million provision recovery in the second quarter of 2021. Net loan charge-offs were $50 million in the second quarter of 2022, $46 million in the second quarter of 2021 and $7 million in 2022’s first quarter. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .16% and .19% in the second quarters of 2022 and 2021, respectively, and .03% in the first quarter of 2022.

Loans classified as nonaccrual totaled $2.63 billion at June 30, 2022, up from $2.24 billion at June 30, 2021 and $2.13 billion at March 31, 2022. The increase in the balance of nonaccrual loans resulted from loans obtained in the acquisition of People’s United. Nonaccrual loans as a percentage of total loans declined to 2.05% at the recent quarter-end from 2.31% a year earlier and 2.32% at March 31, 2022. Assets taken in foreclosure of defaulted loans were $29 million at June 30, 2022, $28 million a year earlier and $24 million at March 31, 2022.

Allowance for Credit Losses.  M&T regularly performs comprehensive analyses of its loan portfolios and assesses forecasted economic conditions for purposes of determining the adequacy of the allowance for credit losses. As a result of those procedures, the allowance for credit losses totaled $1.82 billion or 1.42% of loans outstanding at June 30, 2022. The acquisition of People’s United loans and leases resulted in a $341 million increase in the allowance for credit losses as of April 1, 2022, including $99 million related to PCD loans and $242 million related to non-PCD loans. Including the impact of the acquisition, M&T’s allowance for credit losses was $1.81 billion on April 1, 2022, or 1.42% of then outstanding loans. The allowance for credit losses was $1.58 billion or 1.62% of loans outstanding at June 30, 2021 and $1.47 billion or 1.60% at March 31, 2022.

 

Noninterest Income and Expense.  Noninterest income totaled $571 million in the second quarter of 2022, up from $514 million in the year-earlier quarter. People’s United-related revenues in the recent quarter added approximately $79 million to noninterest income, including $33 million in service charges on deposit accounts

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and $14 million in trust income. Excluding People’s United-related revenues, the lower level of noninterest income in the most recent quarter as compared with the second quarter of 2021 reflects decreased mortgage banking revenues impacted by M&T’s decision to retain recently originated mortgage loans in portfolio rather than sell such loans while still selling select lower-yielding mortgage loans, partially offset by higher trust income and brokerage services income. Noninterest income was $541 million in this year’s first quarter. The comparative decline in the recent quarter, excluding People’s United-related revenues, was predominantly the result of decreased mortgage banking revenues and receipt of a $30 million distribution resulting from M&T’s investment in Bayview Lending Group in 2022’s initial quarter, whereas no similar distribution was received in the recent quarter. Those declines were partially offset by higher trust income and increased merchant discount and credit card fees included in other revenues from operations.

Noninterest expense totaled $1.40 billion in the second quarter of 2022, compared with $865 million in the similar quarter of 2021 and $960 million in the first quarter of 2022. Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets and merger-related expenses, noninterest operating expenses were $1.16 billion in the recent quarter, $859 million in the second quarter of 2021 and $941 million in 2022’s first quarter. The most significant factor for the higher level of operating expenses in the recent quarter was the impact of operations obtained in the People’s United acquisition.

 

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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 58.3% in the second quarter of 2022, 58.4% in the year-earlier quarter and 64.9% in the first quarter of 2022. The higher ratio in 2022’s first quarter reflects seasonally higher salaries and employee benefits expenses in that quarter.

Balance Sheet.  M&T had total assets of $204.0 billion at June 30, 2022, compared with $150.6 billion and $149.9 billion at June 30, 2021 and March 31, 2022, respectively. Loans and leases, net of unearned discount, were $128.5 billion at June 30, 2022, compared with $97.1 billion at June 30, 2021 and $91.8 billion at March 31, 2022. The higher level of loans and leases at the recent quarter-end as compared with the earlier dates noted is largely a reflection of balances associated with the acquisition of People’s United. Also reflective of that acquisition, total deposits rose to $170.4 billion at the recent quarter-end, compared with $128.3 billion a year earlier and $126.3 billion at March 31, 2022.

Total shareholders' equity was $25.8 billion or 12.64% of total assets at June 30, 2022, $16.7 billion or 11.10% at June 30, 2021 and $17.9 billion or 11.93% at March 31, 2022. Common shareholders' equity was $23.8 billion, or $135.16 per share, at June 30, 2022, compared with $15.5 billion, or $120.22 per share, a year-earlier and $16.1 billion, or $124.93 per share, at March 31, 2022. Tangible equity per common share was $85.78 at June 30, 2022, $84.47 at June 30, 2021 and $89.33 at March 31, 2022. 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 10.9% at June 30, 2022, compared with 11.7% three months earlier and 10.7% at June 30, 2021.

In accordance with its capital plan, M&T repurchased 3,505,946 shares of its common stock during the recent quarter at an average cost per share of $171.14 resulting in a total cost of $600 million.

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Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss second quarter financial results today at 10:00 a.m. Eastern Time. Those wishing to participate in the call may dial (888) 632-3384. International participants, using any applicable international calling codes, may dial (785) 830-1914. Callers should reference M&T Bank Corporation or the conference ID #MTBQ222. 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 Wednesday July 27, 2022 by calling (800) 925-9346, or (402) 220-5380 for international participants. No conference ID is required. 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.

About M&T. M&T is a financial holding company headquartered in Buffalo, New York. M&T's principal banking subsidiary, M&T Bank, provides banking products and services in 12 states across the eastern U.S. from Maine to Virginia and Washington, D.C. Trust-related services are provided in select markets in the U.S. and abroad by M&T's Wilmington Trust-affiliated companies and by M&T Bank. For more information on M&T Bank, visit www.mtb.com.

Upon closing the acquisition of People’s United, M&T and The M&T Charitable Foundation launched a series of investments and activities to support communities across New England and New York. Among those efforts was the announcement of the Amplify Fund – a philanthropic investment to drive sustainable impact across the legacy People's United region. The Fund will be deployed over three years to benefit historically under-represented, low- and moderate-income communities using a racial equity and justice lens.

Last month, the company also launched a Multicultural Small Business Innovation Lab in Bridgeport, Connecticut. This follows successful initiatives in Buffalo and Harrisburg. The seven-week program is designed to help local multicultural business owners thrive, grow and pursue new ideas by providing guidance and skills to expand and operate their businesses. It will accept as many as 50 entrepreneurs and is part of M&T Bank’s mission to build a culturally fluent bank that understands the needs of the communities it serves and provide the resources to address those needs.

Forward-Looking Statements.  This news release and related conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the rules and regulations of the SEC.  Any statement that does not describe historical or current facts is a forward-looking statement, including statements based on current expectations, estimates and projections about M&T's business, and management's beliefs and assumptions.

Statements regarding the potential effects of events or factors specific to M&T and/or the financial industry as a whole, as well as national and global events generally, 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. As

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described further below, statements regarding M&T’s expectations or predictions regarding the acquisition of People’s United are also forward-looking statements, including statements regarding the expected financial results, prospects, targets, goals and outlook.

Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could,” or “may,” or by variations of such words or by similar expressions. 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 the impact of the People’s United transaction (as described in the next paragraph); the impact of the war in Ukraine; the impact of the COVID-19 pandemic; economic conditions including inflation and supply chain issues; 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; the impact of changes in market values on trust-related revenues; legislation or regulations affecting the financial services industry and/or M&T and its subsidiaries individually or collectively, including tax policy; regulatory supervision and oversight, including monetary policy and capital requirements; governmental and public policy changes; the outcome of pending and future litigation and governmental proceedings, including tax-related examinations and other matters; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board, regulatory agencies or legislation; increasing price, product and 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 and services; containing costs and expenses; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; 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.

In addition, future factors related to the acquisition of People’s United include, among others: the outcome of any legal proceedings that may be instituted against M&T; the possibility that the anticipated benefits of the transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where M&T does business; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships;

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M&T’s success in executing its business plans and strategies and managing the risks involved in the foregoing; the business, economic and political conditions in the markets in which M&T operates; and other factors that may affect future results of M&T.  

Future factors related to the acquisition also include risks, such as, among others: that there could be an adverse effect on M&T’s ability to retain customers and retain or hire key personnel and maintain relationships with customers; that integration efforts may be more difficult or time-consuming than anticipated, including in areas such as sales force, cost containment, asset realization, systems integration and other key strategies; that profitability following the combination may be lower than expected including for possible reasons such as lower than expected revenues or higher or unexpected costs, charges or expenses resulting from the transaction; unforeseen risks that may exist; and other factors that may affect future results of M&T.

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.

M&T provides further detail regarding these risks and uncertainties in its Form 10-K for the year-ended December 31, 2021, including in the Risk Factors section of such report, as well as in other SEC filings. Forward-looking statements speak only as of the date made and M&T does not assume any duty and does not undertake to update forward-looking statements.

 

 

 

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Financial Highlights

 

 

 

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Financial Highlights, Five Quarter Trend

 

 

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Condensed Consolidated Statement of Income

 

 

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Condensed Consolidated Statement of Income, Five Quarter Trend

 

 

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Condensed Consolidated Balance Sheet

 

 

 

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Condensed Consolidated Balance Sheet, Five Quarter Trend

 

 

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Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates

 

 

 

 

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Reconciliation of Quarterly GAAP to Non-GAAP Measures

 

 

 

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Reconciliation of Quarterly GAAP to Non-GAAP Measures, Five Quarter Trend