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 March 31, 2019

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)

Registrant's telephone number, including area code:

(716) 635-4000

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

6.375% Cumulative Perpetual Preferred Stock,

Series A, $1,000 liquidation preference per share

MTBPr

New York Stock Exchange

6.375% Cumulative Perpetual Preferred Stock,

Series C, $1,000 liquidation preference per share

MTBPrC

New York Stock Exchange

 

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 every Interactive Data File required to be submitted 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 such files).       Yes      No

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

Large accelerated filer

 

 

Accelerated filer

Non-accelerated filer

 

  

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 April 26, 2019: 136,622,163 shares.

 

 


 

M&T BANK CORPORATION

FORM 10-Q

For the Quarterly Period Ended March 31, 2019

 

Table of Contents of Information Required in Report

 

Page

 

 

 

 

 

Part I.  FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements.

 

 

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEET – March 31, 2019 and December 31, 2018

 

3

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF INCOME – Three months ended March 31, 2019 and 2018

 

4

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME – Three months ended March 31, 2019 and 2018

 

5

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS – Three months ended March 31, 2019 and 2018

 

6

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY – Three months ended March 31, 2019 and 2018

 

7

 

 

 

 

 

 

 

NOTES TO FINANCIAL STATEMENTS

 

8

 

 

 

 

 

Item 2.

 

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

 

47

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk.

 

78

 

 

 

 

 

Item 4.

 

Controls and Procedures.

 

78

 

 

 

 

 

Part II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings.

 

78

 

 

 

 

 

Item 1A.

 

Risk Factors.

 

79

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds.

 

79

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities.

 

79

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures.

 

79

 

 

 

 

 

Item 5.

 

Other Information.

 

79

 

 

 

 

 

Item 6.

 

Exhibits.

 

80

 

 

 

 

 

SIGNATURES

 

80

 

 

 

 

 

 

 

 

- 2 -


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (Unaudited)

 

 

 

March 31,

 

 

December 31,

 

(Dollars in thousands, except per share)

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

1,267,260

 

 

$

1,605,439

 

Interest-bearing deposits at banks

 

 

7,602,897

 

 

 

8,105,197

 

Trading account

 

 

276,322

 

 

 

185,584

 

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

   $471,572 at March 31, 2019; $487,365 at December 31, 2018)

 

 

 

 

 

 

 

 

Available for sale (cost: $8,398,686 at March 31, 2019;

   $8,869,423 at December 31, 2018)

 

 

8,325,584

 

 

 

8,682,509

 

Held to maturity (fair value: $3,699,596 at March 31, 2019;

   $3,255,483 at December 31, 2018)

 

 

3,714,699

 

 

 

3,316,640

 

Equity and other securities (cost: $468,232 at March 31, 2019;

   $677,187 at December 31, 2018)

 

 

496,557

 

 

 

693,664

 

Total investment securities

 

 

12,536,840

 

 

 

12,692,813

 

Loans and leases

 

 

88,897,260

 

 

 

88,733,492

 

Unearned discount

 

 

(257,377

)

 

 

(267,015

)

Loans and leases, net of unearned discount

 

 

88,639,883

 

 

 

88,466,477

 

Allowance for credit losses

 

 

(1,019,337

)

 

 

(1,019,444

)

Loans and leases, net

 

 

87,620,546

 

 

 

87,447,033

 

Premises and equipment

 

 

1,044,761

 

 

 

647,408

 

Goodwill

 

 

4,593,112

 

 

 

4,593,112

 

Core deposit and other intangible assets

 

 

43,947

 

 

 

47,067

 

Accrued interest and other assets

 

 

5,039,520

 

 

 

4,773,750

 

Total assets

 

$

120,025,205

 

 

$

120,097,403

 

Liabilities

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

29,966,753

 

 

$

32,256,668

 

Savings and interest-checking deposits

 

 

52,932,297

 

 

 

50,963,744

 

Time deposits

 

 

6,501,509

 

 

 

6,124,254

 

Deposits at Cayman Islands office

 

 

1,069,191

 

 

 

811,906

 

Total deposits

 

 

90,469,750

 

 

 

90,156,572

 

Short-term borrowings

 

 

3,602,566

 

 

 

4,398,378

 

Accrued interest and other liabilities

 

 

1,889,336

 

 

 

1,637,348

 

Long-term borrowings

 

 

8,476,024

 

 

 

8,444,914

 

Total liabilities

 

 

104,437,676

 

 

 

104,637,212

 

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 March 31, 2019 and December 31, 2018;

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

   shares at March 31, 2019 and December 31, 2018

 

 

1,231,500

 

 

 

1,231,500

 

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

   159,741,898 shares issued at March 31, 2019;

   159,765,044 shares issued at December 31, 2018

 

 

79,871

 

 

 

79,883

 

Common stock issuable, 21,324 shares at March 31, 2019;

   24,563 shares at December 31, 2018

 

 

1,514

 

 

 

1,726

 

Additional paid-in capital

 

 

6,568,480

 

 

 

6,579,342

 

Retained earnings

 

 

11,842,371

 

 

 

11,516,672

 

Accumulated other comprehensive income (loss), net

 

 

(288,009

)

 

 

(420,081

)

Treasury stock — common, at cost — 23,126,505 shares at March 31, 2019;

    21,255,275 shares at December 31, 2018

 

 

(3,848,198

)

 

 

(3,528,851

)

Total shareholders’ equity

 

 

15,587,529

 

 

 

15,460,191

 

Total liabilities and shareholders’ equity

 

$

120,025,205

 

 

$

120,097,403

 

 

See accompanying notes to financial statements.

- 3 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

 

 

 

Three Months Ended March 31

 

(In thousands, except per share)

 

2019

 

 

2018

 

Interest income

 

 

 

 

 

 

 

 

Loans and leases, including fees

 

$

1,117,913

 

 

$

979,969

 

Investment securities

 

 

 

 

 

 

 

 

Fully taxable

 

 

80,411

 

 

 

82,852

 

Exempt from federal taxes

 

 

95

 

 

 

248

 

Deposits at banks

 

 

27,407

 

 

 

18,677

 

Other

 

 

483

 

 

 

404

 

Total interest income

 

 

1,226,309

 

 

 

1,082,150

 

Interest expense

 

 

 

 

 

 

 

 

Savings and interest-checking deposits

 

 

76,138

 

 

 

40,527

 

Time deposits

 

 

21,081

 

 

 

10,936

 

Deposits at Cayman Islands office

 

 

4,738

 

 

 

381

 

Short-term borrowings

 

 

6,713

 

 

 

883

 

Long-term borrowings

 

 

67,579

 

 

 

53,906

 

Total interest expense

 

 

176,249

 

 

 

106,633

 

Net interest income

 

 

1,050,060

 

 

 

975,517

 

Provision for credit losses

 

 

22,000

 

 

 

43,000

 

Net interest income after provision for credit losses

 

 

1,028,060

 

 

 

932,517

 

Other income

 

 

 

 

 

 

 

 

Mortgage banking revenues

 

 

95,311

 

 

 

87,306

 

Service charges on deposit accounts

 

 

103,112

 

 

 

105,115

 

Trust income

 

 

132,786

 

 

 

131,375

 

Brokerage services income

 

 

12,476

 

 

 

13,392

 

Trading account and foreign exchange gains

 

 

10,802

 

 

 

4,637

 

Gain (loss) on bank investment securities

 

 

11,841

 

 

 

(9,431

)

Other revenues from operations

 

 

134,437

 

 

 

126,302

 

Total other income

 

 

500,765

 

 

 

458,696

 

Other expense

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

499,200

 

 

 

463,428

 

Equipment and net occupancy

 

 

79,347

 

 

 

74,797

 

Outside data processing and software

 

 

52,417

 

 

 

48,429

 

FDIC assessments

 

 

9,426

 

 

 

20,280

 

Advertising and marketing

 

 

20,275

 

 

 

16,248

 

Printing, postage and supplies

 

 

9,855

 

 

 

9,319

 

Amortization of core deposit and other intangible assets

 

 

5,020

 

 

 

6,632

 

Other costs of operations

 

 

218,808

 

 

 

294,211

 

Total other expense

 

 

894,348

 

 

 

933,344

 

Income before taxes

 

 

634,477

 

 

 

457,869

 

Income taxes

 

 

151,735

 

 

 

105,259

 

Net income

 

$

482,742

 

 

$

352,610

 

Net income available to common shareholders

 

 

 

 

 

 

 

 

Basic

 

$

462,086

 

 

$

332,748

 

Diluted

 

 

462,086

 

 

 

332,749

 

Net income per common share

 

 

 

 

 

 

 

 

Basic

 

$

3.35

 

 

$

2.24

 

Diluted

 

 

3.35

 

 

 

2.23

 

Average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

137,889

 

 

 

148,688

 

Diluted

 

 

137,920

 

 

 

148,905

 

 

See accompanying notes to financial statements.

- 4 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

 

 

 

Three Months Ended March 31

 

(In thousands)

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

Net income

 

$

482,742

 

 

 

352,610

 

Other comprehensive income (loss), net of tax and

   reclassification adjustments:

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on investment securities

 

 

84,591

 

 

 

(100,684

)

Cash flow hedges adjustments

 

 

44,921

 

 

 

(10,442

)

Foreign currency translation adjustment

 

 

275

 

 

 

1,290

 

Defined benefit plans liability adjustments

 

 

2,285

 

 

 

7,260

 

Total other comprehensive income (loss)

 

 

132,072

 

 

 

(102,576

)

Total comprehensive income

 

$

614,814

 

 

 

250,034

 

 

See accompanying notes to financial statements.

- 5 -


M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

 

 

 

Three Months Ended March 31

 

(In thousands)

 

2019

 

 

2018

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

482,742

 

 

$

352,610

 

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

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

22,000

 

 

 

43,000

 

Depreciation and amortization of premises and equipment

 

 

50,982

 

 

 

27,281

 

Amortization of capitalized servicing rights

 

 

16,170

 

 

 

11,656

 

Amortization of core deposit and other intangible assets

 

 

5,020

 

 

 

6,632

 

Provision for deferred income taxes

 

 

13,441

 

 

 

(124,772

)

Asset write-downs

 

 

1,919

 

 

 

3,192

 

Net gain on sales of assets

 

 

(5,171

)

 

 

(4,547

)

Net change in accrued interest receivable, payable

 

 

(35,071

)

 

 

(14,803

)

Net change in other accrued income and expense

 

 

(171,304

)

 

 

165,114

 

Net change in loans originated for sale

 

 

202,670

 

 

 

(72,403

)

Net change in trading account assets and liabilities

 

 

(170,092

)

 

 

91,219

 

Net cash provided by operating activities

 

 

413,306

 

 

 

484,179

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Proceeds from sales of investment securities

 

 

 

 

 

 

 

 

Available for sale

 

 

 

 

 

100

 

Equity and other securities

 

 

312,743

 

 

 

254,860

 

Proceeds from maturities of investment securities

 

 

 

 

 

 

 

 

Available for sale

 

 

371,714

 

 

 

349,294

 

Held to maturity

 

 

99,960

 

 

 

123,923

 

Purchases of investment securities

 

 

 

 

 

 

 

 

Available for sale

 

 

(1,595

)

 

 

(100

)

Held to maturity

 

 

(495,277

)

 

 

 

Equity and other securities

 

 

(103,795

)

 

 

(288,259

)

Net (increase) decrease in loans and leases

 

 

(412,670

)

 

 

303,886

 

Net (increase) decrease in interest-bearing deposits at banks

 

 

502,300

 

 

 

(1,056,531

)

Capital expenditures, net

 

 

(30,710

)

 

 

(9,544

)

Net decrease in loan servicing advances

 

 

22,891

 

 

 

115,163

 

Other, net

 

 

5,700

 

 

 

(41,322

)

Net cash provided (used) by investing activities

 

 

271,261

 

 

 

(248,530

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Net increase (decrease) in deposits

 

 

313,849

 

 

 

(1,484,629

)

Net increase (decrease) in short-term borrowings

 

 

(795,812

)

 

 

1,451,030

 

Proceeds from long-term borrowings

 

 

 

 

 

999,594

 

Payments on long-term borrowings

 

 

(1,139

)

 

 

(504,192

)

Purchases of treasury stock

 

 

(365,628

)

 

 

(720,966

)

Dividends paid — common

 

 

(139,595

)

 

 

(112,318

)

Dividends paid — preferred

 

 

(17,368

)

 

 

(17,368

)

Other, net

 

 

(17,053

)

 

 

24,976

 

Net cash used by financing activities

 

 

(1,022,746

)

 

 

(363,873

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(338,179

)

 

 

(128,224

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

1,605,439

 

 

 

1,420,888

 

Cash, cash equivalents and restricted cash at end of period

 

$

1,267,260

 

 

$

1,292,664

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

Interest received during the period

 

$

1,194,023

 

 

$

1,077,676

 

Interest paid during the period

 

 

191,309

 

 

 

118,342

 

Income taxes paid during the period

 

 

149,548

 

 

 

37,999

 

Supplemental schedule of noncash investing and financing activities

 

 

 

 

 

 

 

 

Real estate acquired in settlement of loans

 

$

24,840

 

 

$

15,410

 

Securitization of residential mortgage loans allocated to

 

 

 

 

 

 

 

 

Available-for-sale investment securities

 

$

5,379

 

 

$

5,128

 

Capitalized servicing rights

 

 

83

 

 

 

64

 

Adoption of lease accounting standard

 

 

 

 

 

 

 

 

Right-of-use assets

 

$

393,877

 

 

$

 

Other liabilities

 

 

398,810

 

 

 

 

Additions to right-of-use assets under operating leases

 

 

20,410

 

 

 

 

 

See accompanying notes to financial statements.

 

 

- 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

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2018

 

$

1,231,500

 

 

 

79,909

 

 

 

1,847

 

 

 

6,590,855

 

 

 

10,164,804

 

 

 

(363,814

)

 

 

(1,454,282

)

 

$

16,250,819

 

Cumulative effect of change in

   accounting principle — equity

   securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,853

 

 

 

(16,853

)

 

 

 

 

 

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

352,610

 

 

 

(102,576

)

 

 

 

 

 

250,034

 

Preferred stock cash dividends (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,130

)

 

 

 

 

 

 

 

 

(18,130

)

Exercise of 36,974 Series A stock

   warrants into 22,553 shares of

   common stock

 

 

 

 

 

 

 

 

 

 

 

(3,455

)

 

 

 

 

 

 

 

 

3,455

 

 

 

 

Purchases of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(720,966

)

 

 

(720,966

)

Stock-based compensation plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation expense, net

 

 

 

 

 

(25

)

 

 

 

 

 

(15,362

)

 

 

 

 

 

 

 

 

21,220

 

 

 

5,833

 

Exercises of stock options, net

 

 

 

 

 

 

 

 

 

 

 

(1,945

)

 

 

 

 

 

 

 

 

44,045

 

 

 

42,100

 

Stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

2,358

 

 

 

 

 

 

 

 

 

8,766

 

 

 

11,124

 

Directors’ stock plan

 

 

 

 

 

 

 

 

 

 

 

74

 

 

 

 

 

 

 

 

 

515

 

 

 

589

 

Deferred compensation plans, net,

   including dividend equivalents

 

 

 

 

 

 

 

 

(172

)

 

 

(244

)

 

 

(18

)

 

 

 

 

 

386

 

 

 

(48

)

Common stock cash dividends —

   $.75 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(111,661

)

 

 

 

 

 

 

 

 

(111,661

)

Balance — March 31, 2018

 

$

1,231,500

 

 

 

79,884

 

 

 

1,675

 

 

 

6,572,281

 

 

 

10,404,458

 

 

 

(483,243

)

 

 

(2,096,861

)

 

$

15,709,694

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2019

 

$

1,231,500

 

 

 

79,883

 

 

 

1,726

 

 

 

6,579,342

 

 

 

11,516,672

 

 

 

(420,081

)

 

 

(3,528,851

)

 

$

15,460,191

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

482,742

 

 

 

132,072

 

 

 

 

 

 

614,814

 

Preferred stock cash dividends (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,130

)

 

 

 

 

 

 

 

 

 

(18,130

)

Purchases of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(365,628

)

 

 

(365,628

)

Stock-based compensation plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation expense, net

 

 

 

 

 

(12

)

 

 

 

 

 

(7,606

)

 

 

 

 

 

 

 

 

25,738

 

 

 

18,120

 

Exercises of stock options, net

 

 

 

 

 

 

 

 

 

 

 

(2,818

)

 

 

 

 

 

 

 

 

7,545

 

 

 

4,727

 

Stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

(67

)

 

 

 

 

 

 

 

 

11,899

 

 

 

11,832

 

Directors’ stock plan

 

 

 

 

 

 

 

 

 

 

 

(84

)

 

 

 

 

 

 

 

 

613

 

 

 

529

 

Deferred compensation plans, net,

   including dividend equivalents

 

 

 

 

 

 

 

 

(212

)

 

 

(316

)

 

 

(22

)

 

 

 

 

 

486

 

 

 

(64

)

Performance share unit dividends