01—Abstract
Summary
Summary of the 10-K filed February 22, 2011. Cited figures are marked; the original filing is the authoritative source.
M&T Bank Corporation (MTB), a New York bank holding company headquartered in Buffalo, reported total assets of $68.0 billiona, deposits of $49.8 billion and shareholders' equity of $8.4 billion at December 31, 2010.
Net income rose to $736 millionb, or $5.69 diluted earnings per common share, compared with $380 million, or $2.89, in 2009. The improvement was driven mainly by a wider net interest margin, which rose to 3.84% from 3.49%, and lower provision for credit losses, which fell to $368 million from $604 million. Net charge-offs declined to $346 million from $514 million, though charge-offs remained above historical levels, particularly in residential real estate and builder/developer loans.
The filing also highlights pending and completed acquisitions. M&T Bank agreed on November 1, 2010 to acquire Wilmington Trust Corporation in a stock transaction valued at $351 millionc, expected to close by mid-2011. It also acquired certain assets and deposits of K Bank from the FDIC, recording an after-tax gain of $17 million.
The Tier 1 capital ratio was 9.47% and the total capital ratio was 13.08% at year-end. The filing notes that the Dodd-Frank Act and forthcoming Basel III rules may bring higher capital and liquidity requirements, and that M&T expects to be subject to heightened prudential standards as a bank holding company with more than $50 billiond in assets. The company's common dividend was $2.80 per share in each of 2010, 2009 and 2008.
Allied Irish Banks sold its 26.7 million M&T shares in November 2010, ending AIB's governance rights. Other-than-temporary impairment charges on investment securities totaled $86 million in 2010, down from $138 million in 2009, and privately issued residential mortgage-backed securities carried unrealized losses of $252 million at year-end.
02—Key points
Key Highlights
- Net income of $736 million, or $5.69 diluted EPS, up from $380 million, or $2.89, in 2009
- Net interest margin widened to 3.84% from 3.49%, reflecting lower rates paid on deposits and borrowings
- Provision for credit losses fell to $368 million from $604 million; net charge-offs fell to $346 million from $514 million
- Pending acquisition of Wilmington Trust Corporation valued at $351 million in stock, expected to close by mid-2011
- Completed K Bank transaction with the FDIC, producing an after-tax gain of $17 million
- Tier 1 capital ratio of 9.47% and total capital ratio of 13.08% at December 31, 2010
- Allied Irish Banks sold its 26.7 million M&T shares on November 4, 2010, ending AIB's shareholder governance rights
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 22, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Interest Expense | $462.27M$669.45M | −30.9% |
| Net Income | $736.16M$379.89M | +93.8% |
| EPS (Basic) | $5.72$2.90 | +97.2% |
| EPS (Diluted) | $5.69$2.89 | +96.9% |
| Shares Outstanding (Basic) | 118.19M114.66M | +3.1% |
| Shares Outstanding (Diluted) | 118.84M114.78M | +3.5% |
05—Questions
Frequently Asked Questions
How much did M&T Bank's profitability improve in 2010?
Net income rose to $736 million, or $5.69 per diluted common share, from $380 million, or $2.89, in 2009. Net interest income on a taxable-equivalent basis increased 10% to $2.29 billion, and the provision for credit losses declined 39% to $368 million.
What is the status of the Wilmington Trust acquisition?
On November 1, 2010, M&T agreed to acquire Wilmington Trust Corporation in a stock-for-stock transaction valued at $351 million, plus the assumption of $330 million of Wilmington Trust's TARP preferred stock. The merger is subject to regulatory and shareholder approvals and is expected to close by mid-2011.
How strong is M&T's capital position?
At December 31, 2010, the consolidated Tier 1 capital ratio was 9.47% and the total capital ratio was 13.08%, above the well-capitalized minimums of 6% and 10%. The leverage ratio was 9.33%. The filing notes that Basel III and Dodd-Frank rules could require substantially more capital in the future.
What credit risks does the filing highlight?
Credit quality remained under pressure. Nonaccrual loans were $1.24 billion, or 2.38% of loans and leases, and accruing loans past due 90 days or more were $270 million. Residential real estate, builder and developer loans, and Alt-A mortgages were the most significant problem areas, and the company noted that charge-offs remained above historical levels.
How did the Dodd-Frank Act affect M&T?
The filing says the Dodd-Frank Act will significantly change bank regulation, including heightened prudential standards for bank holding companies with at least $50 billion in assets, which includes M&T. It also notes that trust preferred securities will be phased out of Tier 1 capital beginning in 2013, and that deposit insurance assessments are expected to increase in 2011.
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