01—Abstract
Summary
Summary of the 10-K filed February 23, 2012. Cited figures are marked; the original filing is the authoritative source.
M&T Bank Corporation (MTB), a New York business corporation registered as a financial holding company, reported consolidated total assets of $77.9 billiona, deposits of $59.4 billion and shareholders' equity of $9.3 billion at December 31, 2011.
The company acquired Wilmington Trust Corporation on May 16, 2011 in a stock-for-stock transaction, which added approximately $10.8 billionb of assets and $8.9 billion of deposits. For 2011, net income was $859 million, or $6.35 of diluted earnings per common share, compared with $736 million, or $5.69, in 2010. Net operating income, a non-GAAP measure the company provides, was $884 million, or $6.55 per diluted share.
Net interest income rose to $2.39 billionc from $2.27 billion, and the provision for credit losses fell to $270 million from $368 million. Net charge-offs declined to $265 million, or .47% of average loans and leases. Noninterest expense rose 29% to $2.48 billion, reflecting Wilmington Trust operations, a $79 million other-than-temporary impairment charge on the company's 20% investment in Bayview Lending Group LLC, and a $30 million charitable contribution.
The filing reports a Tier 1 capital ratio of 9.67% and a total capital ratio of 13.26% at year-end, both above the well-capitalized minimums. The filing also flags regulatory change as a material risk. M&T became a financial holding company on March 1, 2011, and as a bank holding company with $50 billiond or more in assets it is subject to the Dodd-Frank Act, proposed systemically important financial institution rules, and Basel III capital and liquidity standards.
Its Tier 1 capital includes trust preferred securities that will be phased out beginning in 2013. Nonaccrual loans were $1.10 billion, or 1.83% of loans and leases, down from 2.19% a year earlier.
02—Key points
Key Highlights
- Net income of $859 million, or $6.35 diluted EPS, up from $736 million, or $5.69, in 2010.
- Wilmington Trust acquisition completed May 16, 2011; the company recorded a $65 million non-taxable gain and $112 million of core deposit intangibles.
- Net interest margin narrowed to 3.73% from 3.84%; average earning assets rose to $64.7 billion from $59.7 billion.
- Provision for credit losses declined to $270 million from $368 million; net charge-offs fell to .47% of average loans from .67%.
- Noninterest expense rose 29% to $2.48 billion, including a $79 million impairment on the Bayview Lending Group investment and a $30 million charitable contribution.
- Other income rose 43% to $1.58 billion, driven largely by higher trust income, which increased to $332 million from $123 million.
- Tier 1 capital ratio of 9.67% and total capital ratio of 13.26% at December 31, 2011; Dodd-Frank and Basel III rules are an ongoing regulatory uncertainty.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 23, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $3.97B— | — |
| Interest Expense | $402.33M$462.27M | −13.0% |
| Net Income | $859.48M$736.16M | +16.8% |
| EPS (Basic) | $6.37$5.72 | +11.4% |
| EPS (Diluted) | $6.35$5.69 | +11.6% |
| Shares Outstanding (Basic) | 122.66M118.19M | +3.8% |
| Shares Outstanding (Diluted) | 123.08M118.84M | +3.6% |
05—Questions
Frequently Asked Questions
How did M&T perform financially in 2011?
Net income was $859 million, or $6.35 per diluted common share, up 17% in total net income and 12% per diluted share from $736 million, or $5.69, in 2010. Results benefited from higher net interest income, lower credit costs and $150 million of gains on investment securities sales, partly offset by higher noninterest expenses.
What was the effect of the Wilmington Trust acquisition?
M&T acquired Wilmington Trust Corporation on May 16, 2011 for 4,694,486 M&T common shares with a fair value of $406 million. Assets acquired totaled about $10.8 billion, including $6.4 billion of loans and leases, and liabilities assumed were $10.0 billion, including $8.9 billion of deposits. The transaction produced a $65 million non-taxable gain and is the main driver of higher trust income and noninterest expense.
How is credit quality trending?
The provision for credit losses fell to $270 million from $368 million, and net charge-offs declined to $265 million, or .47% of average loans and leases, from $346 million, or .67%. Nonaccrual loans totaled $1.10 billion, or 1.83% of loans and leases, compared with 2.19% at year-end 2010. The filing notes that residential real estate and builder and developer loans remain the main sources of elevated losses.
What regulatory risks does the filing highlight?
M&T is subject to Dodd-Frank Act rulemaking, including proposed enhanced prudential standards for institutions with $50 billion or more in assets, the Volcker Rule, and debit card interchange fee limits. Basel III capital and liquidity requirements are also expected, and trust preferred securities will be phased out of Tier 1 capital beginning in January 2013. The company says the full financial impact cannot yet be determined.
What capital actions did M&T take in 2011?
M&T redeemed $370 million of its Series A Preferred Stock issued under the U.S. Treasury's Capital Purchase Program and issued $500 million of 6.875% non-cumulative Series D preferred stock. Common dividends were $2.80 per share, and the company repurchased no common stock during 2011.
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