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M&T Bank Corporation Announces Third Quarter Results

The following excerpt is from the company's SEC filing.

BUFFALO, NEW YORK M&T Bank Corporation (M&T) (NYSE: MTB) today reported its results of operations for the quarter ended September 30, 2015.

GAAP Results of Operations.

Diluted earnings per common share measured in accordance with generally accepted accounting principles (GAAP) for the third quarter of 2015 were $1.93, up from $1.91 in the year-earlier quarter. GAAP-basis net income in the recent quarter aggregated $280 million, improved from $275 million in the third quarter of 2014. Diluted earnings per common share and GAAP-basis net income were $1.98 and $287 million, respectively, in 2015s second quarter. GAAP-basis net income for the third quarter of 2015 expressed as an annualized rate of return on average assets and average common shareholders equity was 1.13% and 8.93%, respectively, compared with 1.17% and 9.18%, respectively, in the year-earlier quarter and 1.18% and 9.37%, respectively, in 2015s second quarter.

Commenting on M&Ts financial performance for the recent quarter, René F. Jones, Vice Chairman and Chief Financial Officer, noted, Financial results for the third quarter reflected growth in net interest income and several core noninterest income categories as compared with the second quarter dampened by a slowdown in mortgage loan origination

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M&T BANK CORPORATION

activities that depressed both residential and commercial mortgage banking revenues. Significantly, year over year revenues were up and expenses were down, and our credit quality remained strong. We have quickly resumed working on our merger with Hudson City, and will soon be positioned with our new colleagues to bring the full array of M&Ts banking products and services to the communities across New Jersey.

For the first nine months of 2015, diluted earnings per common share were $5.56, improved from $5.50 in the similar period of 2014. GAAP-basis net income for the nine-month period ended September 30, 2015 aggregated $809 million, 3% higher than $789 million in the year-earlier period. Expressed as an annualized rate of return on average assets and average common shareholders equity, GAAP-basis net income for the first nine months of 2015 was 1.11% and 8.77%, respectively, compared with 1.17% and 9.07%, respectively, in the corresponding 2014 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, 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&Ts 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 $1.95 in the third quarter of 2015, compared with $1.94 in the year-earlier quarter and $2.01 in the second quarter of 2015. Net operating income during the recent quarter was $283 million, compared with $280 million in the third quarter of 2014 and $290 million in 2015s second quarter. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders equity, net operating income was 1.18% and 12.98%, respectively, in the recent quarter, 1.24% and 13.80%, respectively, in the third quarter of 2014 and 1.24% and 13.76%, respectively, in the second quarter of 2015.

Taxable-equivalent Net Interest Income.

Net interest income expressed on a taxable-equivalent basis totaled $699 million in the third quarter of 2015, up 4% from $675 million in the third quarter of 2014. Contributing to that improvement was a $5.7 billion increase in average earning assets, partially offset by a 9 basis point narrowing of the net interest margin. The growth in earning assets included a $3.1 billion rise in average loans and leases and a $1.7 billion increase in average investment securities. Taxable-equivalent net interest income in the recent quarter was up an annualized 6% from $689 million in the second 2015 quarter. That improvement reflects a $179 million increase in average loans outstanding, tempered by a 3 basis point narrowing of the net interest margin. In each quarterly comparison, the decline in the net interest margin includes the effect of increased lower-yielding balances of investment securities and deposits held at the Federal Reserve Bank of New York.

Provision for Credit Losses/Asset Quality.

The provision for credit losses was $44 million in the recent quarter, compared with $29 million in the third quarter of 2014 and $30 million in

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2015s second quarter. Net charge-offs of loans were $40 million during the third quarter of 2015, compared with $28 million and $21 million in the third quarter of 2014 and second quarter of 2015, respectively. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .24% and .17% in the third quarter of 2015 and 2014, respectively, and .13% in the second quarter of 2015.

Loans classified as nonaccrual declined to $787 million, or 1.15% of total loans outstanding at September 30, 2015, improved from $848 million or 1.29% at September 30, 2014 and $797 million or 1.17% at June 30, 2015. Assets taken in foreclosure of defaulted loans totaled $66 million at September 30, 2015, compared with $68 million a year earlier and $64 million at June 30, 2015.

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 $934 million and $930 million at September 30 and June 30, 2015, respectively, or 1.36% of loans outstanding at each of those dates, compared with $919 million or 1.40% at September 30, 2014.

Noninterest Income and Expense.

Noninterest income totaled $440 million in the recent quarter, compared with $451 million in the third quarter of 2014 and $497 million in the second quarter of 2015. The decline from the second 2015 quarter was largely due to a $45 million gain in the second quarter of 2015 from the sale of M&Ts trade processing business within its retirement services division and to lower mortgage banking revenues. As compared with 2014s third quarter, the recent quarter decline reflects lower mortgage banking revenues and trust income. The lower

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trust income resulted largely from the trade processing business divestiture in 2015.

Noninterest expense in the third quarter of 2015 totaled $654 million, improved from $665 million in the year-earlier quarter and $697 million in the second quarter of 2015. 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 $650 million in the recent quarter, down from $658 million in the third quarter of 2014 and $691...


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