M&T Bank Corporation Issues Revised 2013 Results Based On Litigation Settlement

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Feb 12, 2014, 08:57 ET

BUFFALO, N.Y., Feb. 12, 2014 /PRNewswire/ -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported that on February 10, 2014 it reached a settlement in the previously disclosed matter of Mennen, et al v. Mennen, Wilmington Trust Company, et al that was scheduled for a trial to commence yesterday in the Delaware Chancery Court. Following that settlement, M&T recognized an increase to its reserve for litigation as of December 31, 2013 of $40 million that reduced net income from that which M&T reported on January 17, 2014 by $24 million. The impact on diluted earnings per common share was $.18 for each of the quarter and the year ended December 31, 2013.

The effect of this increased reserve on M&T's financial information as of and for the three months and full-year ended December 31, 2013 is included in the accompanying tables.

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.

M&T BANK CORPORATION
Impact on Previously Reported Financial Information

		Three months ended					Year ended
Dollars in thousands,		December 31, 2013					December 31, 2013
except per share		Initially		As			Initially	As
		Reported		Revised			Reported	Revised

Other costs of operations	$	261,422		301,422		$	820,327	860,327
Income before income taxes		367,658		327,658			1,757,549	1,717,549
Applicable income taxes		121,936		106,236			594,769	579,069
Net income		245,722		221,422			1,162,780	1,138,480
Net income available to common shareholders		227,449		203,451			1,086,481	1,062,496
Diluted earnings per common share		1.74		1.56			8.38	8.20



		At December 31, 2013
		Initially		As
		Reported		Revised

Other assets	$	5,900,032		5,915,732
Accrued interest and other liabilities		1,328,922		1,368,922
Total shareholders' equity		11,329,832		11,305,532
Tangible common equity to tangible assets ratio		8.42	%	8.39	%
Estimated Tier 1 common ratio		9.25	%	9.22	%
Estimated Common Equity Tier 1 ratio (Basel III)		9.01	%	8.98	%

M&T BANK CORPORATION
Financial Highlights

		Three months ended							Year ended
Amounts in thousands,		December 31							December 31
except per share		2013		2012		Change			2013		2012		Change

Performance

Net income	$	221,422		296,193		-25	%	$	1,138,480		1,029,498		11	%
Net income available to common shareholders		203,451		276,605		-26	%		1,062,496		953,429		11	%

Per common share:
Basic earnings	$	1.57		2.18		-28	%	$	8.26		7.57		9	%
Diluted earnings		1.56		2.16		-28	%		8.20		7.54		9	%
Cash dividends	$	.70		.70		-		$	2.80		2.80		-

Common shares outstanding:
Average - diluted (1)		130,464		127,800		2	%		129,603		126,405		3	%
Period end (2)		130,564		128,234		2	%		130,564		128,234		2	%

Return on (annualized):
Average total assets		1.03	%	1.45	%				1.36	%	1.29	%
Average common shareholders' equity		7.99	%	12.10	%				10.93	%	10.96	%

Taxable-equivalent net interest income	$	672,683		673,929		-		$	2,698,200		2,624,907		3	%

Yield on average earning assets		3.92	%	4.17	%				4.03	%	4.22	%
Cost of interest-bearing liabilities		.56	%	.67	%				.60	%	.74	%
Net interest spread		3.36	%	3.50	%				3.43	%	3.48	%
Contribution of interest-free funds		.20	%	.24	%				.22	%	.25	%
Net interest margin		3.56	%	3.74	%				3.65	%	3.73	%

Net charge-offs to average total
net loans (annualized)		.26	%	.27	%				.28	%	.30	%

Net operating results (3)

Net operating income	$	227,797		304,657		-25	%	$	1,174,635		1,072,510		10	%
Diluted net operating earnings per common share		1.61		2.23		-28	%		8.48		7.88		8	%
Return on (annualized):
Average tangible assets		1.11	%	1.56	%				1.47	%	1.40	%
Average tangible common equity		12.67	%	20.46	%				17.79	%	19.42	%
Efficiency ratio		65.48	%	53.63	%				57.05	%	56.19	%


(1) Includes common stock equivalents.
(2) Includes common stock issuable under deferred compensation plans.
(3) Excludes amortization and balances related to goodwill and core deposit and other intangible assets and merger-related gains and expenses which, except in
the calculation of the efficiency ratio, are net of applicable income tax effects. Reconciliations of net income with net operating income appear herein.

M&T BANK CORPORATION
Condensed Consolidated Statement of Income

		Three months ended					Year ended
		December 31					December 31
Dollars in thousands		2013	2012	Change			2013	2012	Change

Interest income	$	734,466	745,353	-1	%	$	2,957,334	2,941,685	1	%
Interest expense		67,982	77,931	-13			284,105	343,169	-17

Net interest income		666,484	667,422	-			2,673,229	2,598,516	3

Provision for credit losses		42,000	49,000	-14			185,000	204,000	-9

Net interest income after
provision for credit losses		624,484	618,422	1			2,488,229	2,394,516	4

Other income
Mortgage banking revenues		82,169	116,546	-29			331,265	349,064	-5
Service charges on deposit accounts		110,436	112,364	-2			446,941	446,698	-
Trust income		125,876	116,915	8			496,008	471,852	5
Brokerage services income		15,807	14,872	6			65,647	59,059	11
Trading account and foreign exchange gains		13,690	10,356	32			40,828	35,634	15
Gain on bank investment securities		-	-	-			56,457	9	-
Other-than-temporary impairment losses
recognized in earnings		-	(14,491)	-			(9,800)	(47,822)	-
Equity in earnings of Bayview Lending Group LLC		(6,136)	(4,941)	-			(16,126)	(21,511)	-
Other revenues from operations		104,404	101,543	3			453,985	374,287	21
Total other income		446,246	453,164	-2			1,865,205	1,667,270	12

Other expense
Salaries and employee benefits		336,159	323,010	4			1,355,178	1,314,540	3
Equipment and net occupancy		68,670	62,884	9			264,327	257,551	3
Printing, postage and supplies		8,808	10,417	-15			39,557	41,929	-6
Amortization of core deposit and other
intangible assets		10,439	13,865	-25			46,912	60,631	-23
FDIC assessments		17,574	23,398	-25			69,584	101,110	-31
Other costs of operations		301,422	192,572	57			860,327	733,499	17
Total other expense		743,072	626,146	19			2,635,885	2,509,260	5

Income before income taxes		327,658	445,440	-26			1,717,549	1,552,526	11

Applicable income taxes		106,236	149,247	-29			579,069	523,028	11

Net income	$	221,422	296,193	-25	%	$	1,138,480	1,029,498	11	%

M&T BANK CORPORATION
Condensed Consolidated Balance Sheet

		December 31
Dollars in thousands		2013	2012	Change

ASSETS

Cash and due from banks	$	1,573,361	1,983,615	-21	%

Interest-bearing deposits at banks		1,651,138	129,945	-

Federal funds sold and agreements
to resell securities		99,573	3,000	-

Trading account assets		376,131	488,966	-23

Investment securities		8,796,497	6,074,361	45

Loans and leases:

Commercial, financial, etc		18,705,216	17,776,953	5
Real estate - commercial		26,148,208	25,993,790	1
Real estate - consumer		8,928,221	11,240,837	-21
Consumer		10,291,514	11,559,377	-11
Total loans and leases, net of unearned discount		64,073,159	66,570,957	-4
Less: allowance for credit losses		916,676	925,860	-1

Net loans and leases		63,156,483	65,645,097	-4

Goodwill		3,524,625	3,524,625	-

Core deposit and other intangible assets		68,851	115,763	-41

Other assets		5,915,732	5,043,431	17

Total assets	$	85,162,391	83,008,803	3	%


LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits	$	24,661,007	24,240,802	2	%

Interest-bearing deposits		42,134,859	40,325,932	4

Deposits at Cayman Islands office		322,746	1,044,519	-69

Total deposits		67,118,612	65,611,253	2

Short-term borrowings		260,455	1,074,482	-76

Accrued interest and other liabilities		1,368,922	1,512,717	-10

Long-term borrowings		5,108,870	4,607,758	11

Total liabilities		73,856,859	72,806,210	1

Shareholders' equity:

Preferred		881,500	872,500	1
Common (1)		10,424,032	9,330,093	12

Total shareholders' equity		11,305,532	10,202,593	11

Total liabilities and shareholders' equity	$	85,162,391	83,008,803	3	%


(1) Reflects accumulated other comprehensive loss, net of applicable income tax effect, of $64.2 million
at December 31, 2013 and $240.3 million at December 31, 2012.

M&T BANK CORPORATION
Reconciliation of GAAP to Non-GAAP Measures


		Three months ended					Year ended
		December 31					December 31
		2013		2012			2013		2012
Income statement data
In thousands, except per share
*Net income*
Net income	$	221,422		296,193		$	1,138,480		1,029,498
Amortization of core deposit and other
intangible assets (1)		6,375		8,464			28,644		37,011
Merger-related expenses (1)		-		-			7,511		6,001
Net operating income	$	227,797		304,657		$	1,174,635		1,072,510
*Earnings per common share*
Diluted earnings per common share	$	1.56		2.16		$	8.20		7.54
Amortization of core deposit and other
intangible assets (1)		.05		.07			.22		.29
Merger-related expenses (1)		-		-			.06		.05
Diluted net operating earnings per common share	$	1.61		2.23		$	8.48		7.88
*Other expense*
Other expense	$	743,072		626,146		$	2,635,885		2,509,260
Amortization of core deposit and other
intangible assets		(10,439)		(13,865)			(46,912)		(60,631)
Merger-related expenses		-		-			(12,364)		(9,879)
Noninterest operating expense	$	732,633		612,281		$	2,576,609		2,438,750
*Merger-related expenses*
Salaries and employee benefits	$	-		-		$	836		4,997
Equipment and net occupancy		-		-			690		15
Printing, postage and supplies		-		-			1,825		-
Other costs of operations		-		-			9,013		4,867
Total	$	-		-		$	12,364		9,879
*Efficiency ratio*
Noninterest operating expense (numerator)	$	732,633		612,281		$	2,576,609		2,438,750
Taxable-equivalent net interest income		672,683		673,929			2,698,200		2,624,907
Other income		446,246		453,164			1,865,205		1,667,270
Less: Gain on bank investment securities		-		-			56,457		9
Net OTTI losses recognized in earnings		-		(14,491)			(9,800)		(47,822)
Denominator	$	1,118,929		1,141,584		$	4,516,748		4,339,990
Efficiency ratio		65.48	%	53.63	%		57.05	%	56.19	%


Balance sheet data
In millions
At end of quarter
*Total assets*
Total assets	$	85,162		83,009
Goodwill		(3,525)		(3,525)
Core deposit and other intangible assets		(69)		(116)
Deferred taxes		21		34
Total tangible assets	$	81,589		79,402
*Total common equity*
Total equity	$	11,306		10,203
Preferred stock		(882)		(873)
Undeclared dividends - cumulative preferred stock		(3)		(3)
Common equity, net of undeclared cumulative
preferred dividends		10,421		9,327
Goodwill		(3,525)		(3,525)
Core deposit and other intangible assets		(69)		(116)
Deferred taxes		21		34
Total tangible common equity	$	6,848		5,720


(1) After any related tax effect.