01—Abstract
Summary
Summary of the 10-K filed February 25, 2013. Cited figures are marked; the original filing is the authoritative source.
M&T Bank Corporation (MTB) reported net income of $1.03 billiona for 2012, or $7.54 per diluted common share, up from $859 million, or $6.35 per diluted share, in 2011.
Total assets were $83.0 billionb, deposits $65.6 billion and shareholders' equity $10.2 billion at December 31, 2012. The improvement was driven by higher net interest income, lower credit costs, and significantly higher mortgage banking revenues and trust income, partially offset by net investment securities losses in 2012. Results for 2012 reflect the full-year impact of the Wilmington Trust acquisition completed May 16, 2011.
Credit quality improved: the provision for credit losses fell to $204 millionc from $270 million, and net charge-offs were $186 million, or .30% of average loans and leases, versus .47% in 2011. Nonaccrual loans were $1.01 billion, or 1.52% of loans and leases, down from 1.83%. Capital remained strong, with a Tier 1 capital ratio of 10.22% and a total capital ratio of 13.39% at year-end 2012.
The filing also discloses the pending acquisition of Hudson City Bancorp, announced August 27, 2012, with an estimated purchase price of $4.2 billiond and expected completion by mid-year 2013. Management highlights ongoing regulatory change under the Dodd-Frank Act and Basel III, with the Basel III implementation date postponed and no new effective date announced as of February 2013.
02—Key points
Key Highlights
- Net income rose 20% to $1.03 billion in 2012; diluted EPS of $7.54 compared with $6.35 in 2011.
- Net interest income on a taxable-equivalent basis rose 9% to $2.62 billion; net interest margin was 3.73%, unchanged from 2011.
- Other income reached $1.67 billion, up 5%, led by mortgage banking revenues ($349 million, versus $166 million) and trust income ($472 million, versus $332 million).
- Provision for credit losses declined to $204 million from $270 million; net charge-offs were .30% of average loans and leases, down from .47%.
- Efficiency ratio improved to 56.2% from 60.4% in 2011.
- Hudson City Bancorp acquisition, with an estimated purchase price of $4.2 billion, is pending and expected to close by mid-year 2013.
- Tier 1 capital ratio of 10.22% and total capital ratio of 13.39% at December 31, 2012; M&T exited TARP through the U.S. Treasury's 2012 sale of its preferred shares.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 25, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $4.27B$3.97B | +7.4% |
| Interest Expense | $343.17M$402.33M | −14.7% |
| Net Income | $1.03B$859.48M | +19.8% |
| EPS (Basic) | $7.57$6.37 | +18.8% |
| EPS (Diluted) | $7.54$6.35 | +18.7% |
| Shares Outstanding (Basic) | 125.86M122.66M | +2.6% |
| Shares Outstanding (Diluted) | 126.41M123.08M | +2.7% |
05—Questions
Frequently Asked Questions
How did M&T's profitability change in 2012?
Net income was $1.03 billion, or $7.54 per diluted common share, compared with $859 million, or $6.35 per diluted share, in 2011. The improvement reflected higher net interest income, lower credit costs and significantly higher mortgage banking revenues and trust income, partly offset by net investment securities losses in 2012. Return on average assets was 1.29%, compared with 1.16% in 2011.
What is the status of the Hudson City acquisition?
On August 27, 2012, M&T agreed to acquire Hudson City Bancorp, Inc. Hudson City shareholders will receive consideration valued at .08403 of an M&T share per Hudson City share, paid in M&T common stock or cash, subject to proration, with an aggregate split of 60% stock and 40% cash. The estimated purchase price was $4.2 billion. The deal is subject to regulatory approvals and shareholder votes and is expected to be completed by mid-year 2013.
How strong is M&T's capital position?
At December 31, 2012, the consolidated Tier 1 capital ratio was 10.22%, the total capital ratio was 13.39% and the leverage ratio was 10.07%. Shareholders' equity was $10.2 billion, or 12.29% of total assets. Tangible common equity per share was $44.61, compared with $37.79 a year earlier. The filing notes that trust preferred securities will begin phasing out of Tier 1 capital under Dodd-Frank starting January 2013.
What is the trend in credit quality?
Credit quality improved in 2012. The provision for credit losses fell to $204 million from $270 million, and net charge-offs were $186 million versus $265 million. Nonaccrual loans were $1.01 billion, or 1.52% of loans and leases, compared with 1.83% a year earlier. Accruing loans 90 days or more past due, excluding acquired loans, rose to .54% of total loans from .48%.
What regulatory risks does the filing highlight?
The filing describes extensive Dodd-Frank Act rulemaking, including enhanced prudential standards for bank holding companies with $50 billion or more in assets, which M&T is. It also discusses the Basel III capital and liquidity framework, which U.S. regulators proposed in June 2012. Implementation was postponed in November 2012, and no new effective date had been announced as of February 2013. Management says the full impact of these rules on its capital is uncertain, and that compliance will likely increase costs and may limit certain business opportunities.
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