What is the Allfirst acquisition and how will it change M&T?

M&T agreed to acquire Allfirst Financial Inc. from AIB by issuing 26.7 million common shares and paying $886.1 million in cash. The filing says the combined company would have about $50 billion in pro forma assets and rank among the 20 largest bank holding companies in the U.S. AIB would own about 22.5% of M&T's common stock. Completion is expected shortly after the end of the first quarter of 2003, subject to regulatory approvals.

How much control will AIB have after the acquisition?

AIB would designate four directors to the M&T and M&T Bank boards while it holds at least 15% of M&T common stock, and it would have representation on key committees. Governance terms include bylaw restrictions requiring Executive Committee approval for certain actions, and AIB has anti-dilution purchase rights to maintain its 22.5% stake. The filing also states that AIB would be expected to be deemed M&T's bank holding company for regulatory purposes.

How did M&T's earnings and profitability trend in 2002?

Net income was $485.1 million, up 28% from $378.1 million, and the return on average assets was 1.52% versus 1.23%. The return on average common equity was 16.15% versus 12.78%. Noninterest income rose 7% to $512 million, and the efficiency ratio improved to 51.91% from 56.94%. The company also ceased goodwill amortization under SFAS No. 142 effective January 1, 2002.

What is the credit quality and capital position?

Net charge-offs were $108 million, or .42% of average loans, up from $75 million. Nonperforming loans were $215 million, or .84% of loans and leases, and the allowance for credit losses was $436 million, or 1.70% of total loans. The Tier 1 risk-based capital ratio was 7.93%, the total risk-based capital ratio was 11.11%, and the leverage ratio was 6.97%. M&T Bank and M&T Bank, N.A. were classified as well capitalized.

M&T Bank 10-K FY2002 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed February 27, 2003. Cited figures are marked; the original filing is the authoritative source.

M&T Bank Corporation (MTB) reported net income of $485.1 million^a, or $5.07 per diluted share, for 2002, up 28% from $378.1 million in 2001.

Total assets were $33.2 billion^b at December 31, 2002, with deposits of $21.7 billion and stockholders' equity of $3.2 billion. Taxable-equivalent net interest income rose 7% to $1.26 billion, the net interest margin widened to 4.36% from 4.23%, and noninterest income rose 7% to $512 million. Net charge-offs rose to $108 million (.42% of average loans) from $75 million, and nonperforming loans were $215 million, or .84% of loans and leases.

The central event is the pending acquisition of Allfirst Financial Inc. from Allied Irish Banks, p.l.c. (AIB), agreed September 26, 2002 and approved by M&T stockholders on December 16, 2002. M&T will issue 26.7 million shares and pay $886.1 million^c in cash.

The filing states that AIB will then own approximately 22.5% of M&T common stock and receive board representation, governance rights, anti-dilution protections and a right of first refusal. The combined company would have about $50 billion^d in pro forma assets, and the acquisition is expected to close shortly after the end of the first quarter of 2003, subject to regulatory approvals.

At year-end, M&T Bank and M&T Bank, N.A. were classified as well capitalized, with a total risk-based capital ratio of 11.11% and a leverage ratio of 6.97% at the consolidated level. Management repurchased shares in 2002 but discontinued purchases in the third quarter to build capital for the Allfirst transaction.

02—Key points

Key Highlights

Net income rose 28% to $485.1 million in 2002; diluted EPS was $5.07, up 33% from $3.82.
Net interest margin improved to 4.36% from 4.23%, and taxable-equivalent net interest income rose 7% to $1.26 billion.
Pending Allfirst acquisition: 26.7 million M&T shares and $886.1 million in cash to AIB; AIB would own about 22.5% of M&T, with four board designees and other governance rights.
Pro forma combined company would have about $50 billion in total assets and over 700 branches in six states and the District of Columbia.
Net charge-offs rose to $108 million (.42% of average loans) from $75 million; nonperforming loans were $215 million, or .84% of loans and leases.
Stockholders' equity reached $3.2 billion, or $34.53 per share; cash diluted EPS was $5.41, and the company repurchased 3,007,585 shares in 2002.
Quarterly cash dividend was increased to $.30 per share in the fourth quarter of 2002 from $.25.

03—Questions

Frequently Asked Questions

What is the Allfirst acquisition and how will it change M&T?
M&T agreed to acquire Allfirst Financial Inc. from AIB by issuing 26.7 million common shares and paying $886.1 million in cash. The filing says the combined company would have about $50 billion in pro forma assets and rank among the 20 largest bank holding companies in the U.S. AIB would own about 22.5% of M&T's common stock. Completion is expected shortly after the end of the first quarter of 2003, subject to regulatory approvals.
How much control will AIB have after the acquisition?
AIB would designate four directors to the M&T and M&T Bank boards while it holds at least 15% of M&T common stock, and it would have representation on key committees. Governance terms include bylaw restrictions requiring Executive Committee approval for certain actions, and AIB has anti-dilution purchase rights to maintain its 22.5% stake. The filing also states that AIB would be expected to be deemed M&T's bank holding company for regulatory purposes.
How did M&T's earnings and profitability trend in 2002?
Net income was $485.1 million, up 28% from $378.1 million, and the return on average assets was 1.52% versus 1.23%. The return on average common equity was 16.15% versus 12.78%. Noninterest income rose 7% to $512 million, and the efficiency ratio improved to 51.91% from 56.94%. The company also ceased goodwill amortization under SFAS No. 142 effective January 1, 2002.
What is the credit quality and capital position?
Net charge-offs were $108 million, or .42% of average loans, up from $75 million. Nonperforming loans were $215 million, or .84% of loans and leases, and the allowance for credit losses was $436 million, or 1.70% of total loans. The Tier 1 risk-based capital ratio was 7.93%, the total risk-based capital ratio was 11.11%, and the leverage ratio was 6.97%. M&T Bank and M&T Bank, N.A. were classified as well capitalized.

04—Continue

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