M&T Bank Corporation Announces 2014 Fourth Quarter and Full-Year Profits

BUFFALO, N.Y., Jan. 20, 2015 /PRNewswire/ -- M&T Bank Corporation ("M&T")(NYSE: MTB) today reported its results of operations for 2014.

GAAP Results of Operations.  Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") for the fourth quarter of 2014 were $1.92, up from $1.56 in the year-earlier quarter and $1.91 in the third quarter of 2014.  GAAP-basis net income in the recent quarter totaled $278 million, compared with $221 million in the fourth quarter of 2013 and $275 million in 2014's third quarter.  Expressed as an annualized rate of return on average assets and average common shareholders' equity, GAAP-basis net income for the recent quarter was 1.12% and 9.10%, respectively, compared with 1.03% and 7.99%, respectively, in the year-earlier quarter and 1.17% and 9.18%, respectively, in the third quarter of 2014.

For the full year of 2014, diluted earnings per common share were $7.42, compared with $8.20 for 2013.  Net income totaled $1.07 billion in 2014, compared with $1.14 billion in 2013.  The 2013 results reflect after-tax gains from investment securities and loan securitization transactions of $67 million ($110 million pre-tax) or $.51 of diluted earnings per common share.  Expressed as a rate of return on average assets and average common shareholders' equity, net income in 2014 was 1.16% and 9.08%, respectively, compared with 1.36% and 10.93%, respectively, in 2013. 

Commenting on M&T's performance in 2014, René F. Jones, Vice Chairman and Chief Financial Officer, noted, "Results for this past year's final quarter were solid.  We had improved revenues, healthy loan growth, stable expense levels and excellent credit experience.  Overall, 2014 represented a year of considerable investment in our infrastructure.  Significant progress was made on our BSA/AML, compliance, risk management and technology initiatives that will position us well moving forward.  In a year of substantial resource commitment, we further strengthened our already formidable balance sheet by raising our capital and liquidity levels."

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, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and gains and expenses associated with merging acquired operations into M&T, since such items are considered by management to be "nonoperating" in nature.  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. 

Diluted net operating earnings per common share were $1.95 in the final quarter of 2014, compared with $1.61 in the year-earlier period and $1.94 in the third quarter of 2014.  Net operating income for the recent quarter was $282 million, compared with $228 million and $280 million in the fourth quarter of 2013 and the third quarter of 2014, respectively.  For the three months ended December 31, 2014, net operating income expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity was 1.18% and 13.55%, respectively, compared with 1.11% and 12.67% in the corresponding 2013 period and 1.24% and 13.80%, respectively, in the third quarter of 2014.

For the year ended December 31, 2014, diluted net operating earnings per common share was $7.57, compared with $8.48 in 2013.  Net operating income for 2014 and 2013 totaled $1.09 billion and $1.17 billion, respectively.  Net operating income in 2014 expressed as a rate of return on average tangible assets and average tangible common shareholders' equity was 1.23% and 13.76%, respectively, compared with 1.47% and 17.79%, respectively, in 2013.

Taxable-equivalent Net Interest Income.  Net interest income expressed on a taxable-equivalent basis aggregated $688 million in the fourth quarter of 2014, up 2% from $673 million earned in the year-earlier quarter and from $675 million recorded in the third quarter of 2014.  As compared with the fourth quarter of 2013, a $12.9 billion rise in average earning assets in the recent quarter, reflecting increases of $6.1 billion in average balances of interest-bearing deposits at banks and $4.6 billion in average investment securities balances, was largely offset by a 46 basis point (hundredths of one percent) decline in the net interest margin to 3.10% in the final 2014 quarter from 3.56% in the year-earlier quarter. The growth in investment securities resulted from progress made in response to new regulatory liquidity requirements that will be effective for M&T in January 2016.  The increase in taxable-equivalent net interest income as compared with the third quarter of 2014 reflects a $5.2 billion rise in average earning assets, due to higher average interest-bearing deposits at banks of $4.0 billion and a $1.0 billion rise in average loans outstanding, largely offset by a 13 basis point decline in the net interest margin, which was attributable to the increased amount of interest-bearing deposits at banks.  For the year ended December 31, 2014, net interest income on a taxable-equivalent basis aggregated $2.70 billion, little changed from 2013. A $7.7 billion or 10% increase in average earning assets in 2014 was offset by a 34 basis point narrowing of the net interest margin to 3.31% in 2014 from 3.65% in 2013.

Provision for Credit Losses/Asset Quality.  The provision for credit losses was $33 million during the recent quarter, compared with $42 million in the year-earlier quarter and $29 million in the third quarter of 2014.  Net charge-offs of loans were $32 million during the fourth quarter of 2014, compared with $42 million and $28 million in the final 2013 quarter and the third quarter of 2014, respectively.  Expressed as an annualized percentage of average loans outstanding, net charge-offs were .19% and .26% in the fourth quarter of 2014 and 2013, respectively, and .17% in 2014's third quarter.  The provision for credit losses declined 33% to $124 million in 2014 from $185 million in 2013.  Net loan charge-offs during 2014 totaled $121 million, or .19% of average loans outstanding, improved from $183 million, or .28% of average loans in 2013.

Loans classified as nonaccrual declined to $799 million, or 1.20% of total loans outstanding at December 31, 2014, improved from $874 million or 1.36% a year earlier and $848 million or 1.29% at September 30, 2014.  Assets taken in foreclosure of defaulted loans were $64 million at December 31, 2014, improved from $67 million and $68 million at December 31, 2013 and September 30, 2014, respectively. 

Allowance for Credit Losses.  M&T regularly performs detailed analyses of individual borrowers and portfolios for purposes of assessing the adequacy of the allowance for credit losses.  As a result of those analyses, the allowance totaled $920 million or 1.38% of loans outstanding at December 31, 2014, compared with $917 million or 1.43% a year earlier and $919 million or 1.40% at September 30, 2014. 

Noninterest Income and Expense.  Noninterest income aggregated $452 million in the recently completed quarter, up from $446 million and $451 million in the fourth quarter of 2013 and the third quarter of 2014, respectively.  The improvement as compared with the final 2013 quarter resulted from higher residential mortgage banking revenues associated with loan servicing activities.  

Noninterest income totaled $1.78 billion and $1.87 billion during the years ended December 31, 2014 and 2013, respectively.  The higher level of noninterest income in 2013 was primarily the result of net gains on investment securities and gains on securitization activities, which aggregated $110 million. Excluding those gains, noninterest income in 2014 was up $24 million from 2013. The major contributors to that improvement were higher residential mortgage banking revenues and trust income, partially offset by declines in service charges on deposit accounts and trading account and foreign exchange gains.

Noninterest expense in the fourth quarter of 2014 totaled $680 million, compared with $743 million in the year-earlier quarter and $679 million in 2014's third quarter.  Included in such amounts are expenses considered to be nonoperating in nature consisting of amortization of core deposit and other intangible assets.  Exclusive of those expenses, noninterest operating expenses were $673 million in the recent quarter, compared with $733 million and $672 million in the fourth quarter of 2013 and the third quarter of 2014, respectively.  The lower noninterest operating expenses in the recent quarter as compared with the year-earlier quarter reflect a decline in professional services costs and a $40 million litigation-related accrual in the final 2013 quarter.

For the year ended December 31, 2014, noninterest expense aggregated $2.74 billion, compared with $2.64 billion in the previous year.  Noninterest operating expenses were $2.71 billion in 2014 and $2.58 billion in 2013.  The increase in noninterest operating expenses was largely attributable to higher costs for professional services and salaries associated with BSA/AML activities, compliance, capital planning and stress testing, and risk management initiatives, partially offset by lower FDIC assessments.

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 59.1% in the recent quarter, compared with 65.5% in the year-earlier quarter and 59.7% in the third quarter of 2014.  The efficiency ratio for the full year 2014 was 60.5%, compared with 57.0% in 2013. 

Balance Sheet.  M&T had total assets of $96.7 billion at December 31, 2014, up 14% from $85.2 billion a year earlier.  Investment securities were $13.0 billion at the recent year-end, up $4.2 billion or 48% from December 31, 2013.  Loans and leases, net of unearned discount, rose 4% to $66.7 billion at the 2014 year-end from $64.1 billion at December 31, 2013.  Total deposits were $73.6 billion at the recent year-end, up 10% or $6.5 billion from $67.1 billion at December 31, 2013. 

Total shareholders' equity rose $1.0 billion or 9% to $12.3 billion at December 31, 2014 from $11.3 billion a year earlier, representing 12.76% and 13.28%, respectively, of total assets.  Common shareholders' equity was $11.1 billion, or $83.88 per share, at December 31, 2014, compared with $10.4 billion, or $79.81 per share, at December 31, 2013.  Tangible equity per common share rose 9% to $57.06 at December 31, 2014 from $52.45 a year earlier.  Common shareholders' equity per share and tangible equity per share were $83.99 and $57.10, respectively, at September 30, 2014.  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's estimated Tier 1 common ratio, a regulatory capital measure, rose to 9.83% at December 31, 2014, improved from 9.22% and 9.76% at December 31, 2013 and September 30, 2014, respectively.  M&T estimates that the ratio of Common Equity Tier 1 to risk-weighted assets under the capital rules approved in July 2013 on a fully phased-in basis was approximately 9.59% as of December 31, 2014.

Conference Call.  Investors will have an opportunity to listen to M&T's conference call to discuss fourth quarter and full-year financial results today at 10:00 a.m. Eastern Time.  Those wishing to participate in the call may dial (877)780-2276. International participants, using any applicable international calling codes, may dial (973)582-2700.  Callers should reference M&T Bank Corporation or the conference ID #65658552.  The conference call will be webcast live through M&T's website at http://ir.mandtbank.com/events.cfm.  A replay of the call will be available until January 23, 2015 by calling (800)585-8367, or (404)537-3406 for international participants, and by making reference to ID #65658552.  The event will also be archived and available by 7:00 p.m. today on M&T's website at http://ir.mandtbank.com/events.cfm.

M&T is a financial holding company headquartered in Buffalo, New York.  M&T's principal banking subsidiary, M&T Bank, operates banking offices in New York, Pennsylvania, Maryland, Virginia, West Virginia, Delaware and the District of Columbia.  Trust-related services are provided by M&T's Wilmington Trust-affiliated companies and by M&T Bank.

Forward-Looking Statements.  This news release contains forward-looking statements that are based on current expectations, estimates and projections about M&T's business, management's beliefs and assumptions made by management.  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 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 affecting the financial services industry as a whole, and M&T and its subsidiaries individually or collectively, including tax legislation; regulatory supervision and oversight, including monetary policy and capital requirements; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; increasing price and product/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/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of pending and future litigation and governmental proceedings, including tax-related examinations and other matters; 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.

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.

SOURCE M&T Bank Corporation