01—Abstract
Summary
Summary of the 10-K filed March 18, 1997. Cited figures are marked; the original filing is the authoritative source.
First Empire State Corporation, the Buffalo, New York bank holding company whose subsidiaries include Manufacturers and Traders Trust Company (M&T Bank), reported consolidated total assets of $12.9 billiona, deposits of $10.5 billion and stockholders' equity of $906 million at December 31, 1996.
Net income rose 15% to $151.1 millionb, or $21.31 per common share (primary), compared with $131.0 million, or $18.79, in 1995. Fully diluted earnings per share rose 18% to $20.97. Return on average assets was 1.21% and return on average common stockholders' equity was 17.60%.
Net interest margin was 4.45%, little changed from 4.43% in 1995, and taxable-equivalent net interest income grew 9% to $536 millionc on 14% average loan growth. Credit costs rose modestly. The provision for possible credit losses was $43.3 million, against net charge-offs of $35.2 million, up from $21.3 million in 1995, driven mainly by consumer loans.
Nonperforming loans were $97.9 milliond, or .91% of loans, and the allowance covered them 276 times. Noninterest income increased 17% to $170 million, aided by mortgage banking and credit card revenues. Noninterest expense rose 9% to $409 million.
Management said the allowance was adequate, and the company stated it was well capitalized, with a consolidated Tier 1 risk-based ratio of 8.40% and a total risk-based ratio of 11.32%. Subsequent to year-end, the company completed a $150 million offering of 8.234% trust preferred securities on January 31, 1997, which count as Tier 1 capital.
The company also planned to merge East New York Savings Bank into M&T Bank in the second quarter of 1997. A pending lawsuit by Giant of Maryland, Inc. seeks $40 million in damages, which management is vigorously defending and has sent to arbitration.
02—Key points
Key Highlights
- Net income rose 15% to $151.1 million in 1996; primary earnings per common share were $21.31, up from $18.79 (fully diluted $20.97, up 18%).
- Net interest margin was 4.45% in 1996, compared with 4.43% in 1995, while average loans grew 14%.
- Total assets reached $12.9 billion, deposits $10.5 billion, and stockholders' equity $906 million at year-end 1996.
- Provision for possible credit losses was $43.3 million, against net charge-offs of $35.2 million (up from $21.3 million), mainly from consumer loans.
- Noninterest income grew 17% to $170 million and noninterest expense rose 9% to $409 million.
- Capital ratios exceeded 'well capitalized' thresholds, with a Tier 1 risk-based ratio of 8.40% and total risk-based ratio of 11.32%.
- Issued $150 million of 8.234% trust preferred securities on January 31, 1997, and planned to merge East New York Savings Bank into M&T Bank in 2Q 1997.
03—Questions
Frequently Asked Questions
How did earnings change in 1996?
Net income increased 15% to $151.1 million from $131.0 million in 1995. Primary earnings per common share rose 13% to $21.31, and fully diluted earnings per share rose 18% to $20.97. The 1995 results included $4.5 million of securities gains.
How healthy is the loan portfolio?
Nonaccrual loans were $58.2 million, or .54% of loans, down from $75.2 million a year earlier. Total nonperforming loans were $97.9 million, or .91% of loans. The allowance for possible credit losses was $270.5 million, or 2.52% of net loans, and management judged it adequate. Net charge-offs were .35% of average loans, up from .24% in 1995.
What is the status of the capital position and recent financing?
Total stockholders' equity was $906 million, or 7.00% of total assets. The company and its banks were classified as well capitalized. On January 31, 1997, it raised $150 million through trust preferred securities at 8.234%, which qualify as Tier 1 capital.
Are there material legal proceedings?
Giant of Maryland, Inc. sued M&T Bank, N.A. in December 1996, seeking $40 million in damages over a co-branded credit card agreement. Giant later withdrew its injunction request and consented to arbitration. Management believes M&T Bank, N.A. has meritorious defenses and is vigorously defending the claims.
What corporate changes are planned?
East New York Savings Bank is to merge into M&T Bank, which the company expects to complete in the second quarter of 1997, after which East New York will operate as the New York City Division of M&T Bank. M&T Bank would then represent 97% of consolidated assets, and the company stated it actively reviews acquisition opportunities.
04—Continue