01—Abstract
Summary
Summary of the 10-K filed February 21, 2014. Cited figures are marked; the original filing is the authoritative source.
M&T Bank Corporation (MTB) reported net income of $1.14 billiona, or $8.20 of diluted earnings per common share, for 2013, up 11% and 9%, respectively, from $1.03 billion, or $7.54, in 2012.
Net interest income on a taxable-equivalent basis rose 3% to $2.70 billionb, though the net interest margin narrowed to 3.65% from 3.73%. The provision for credit losses declined 9% to $185 million, and net charge-offs were $183 million, or .28% of average loans and leases. Other income rose 12% to $1.87 billion, aided by securities gains, loan securitization gains and the sale of Visa and MasterCard shares, while other expense increased 5% to $2.64 billion.
At December 31, 2013, the company reported consolidated total assets of $85.2 billionc, deposits of $67.1 billion and shareholders' equity of $11.3 billion. Its estimated Common Equity Tier 1 ratio on a fully phased-in basis under the New Capital Rules was approximately 8.98%. Management also reported that the company faces a pending acquisition of Hudson City Bancorp, valued at about $5.0 billion, with the merger termination date extended to December 31, 2014 because of a regulatory written agreement with the Federal Reserve Bank of New York related to Bank Secrecy Act and anti-money laundering compliance.
The filing also discloses ongoing SEC and DOJ investigations of Wilmington Trust Corporation, a subsidiary acquired in 2011, relating to pre-acquisition financial reporting, and a pending securities class action. Management estimates the range of reasonably possible losses beyond recorded liabilities at between $0d and $50 million in the aggregate.
02—Key points
Key Highlights
- Net income rose 11% to $1.14 billion in 2013; diluted EPS rose 9% to $8.20 from $7.54.
- Net interest income (taxable-equivalent) increased 3% to $2.70 billion, while the net interest margin declined to 3.65% from 3.73%.
- Provision for credit losses fell 9% to $185 million; net charge-offs were $183 million, or .28% of average loans and leases.
- Other income increased 12% to $1.87 billion, including $56 million of gains on bank investment securities and $63 million of securitization gains.
- Other expense rose 5% to $2.64 billion, including a $40 million increase in the litigation reserve tied to a Wilmington Trust-related lawsuit.
- Estimated fully phased-in CET1 ratio under the New Capital Rules was approximately 8.98% at December 31, 2013.
- The pending Hudson City Bancorp acquisition (about $5.0 billion) has its termination date extended to December 31, 2014 amid a BSA/AML written agreement with the Federal Reserve Bank of New York.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 21, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $4.54B$4.27B | +6.4% |
| Interest Expense | $284.11M$343.17M | −17.2% |
| Net Income | $1.14B$1.03B | +10.6% |
| EPS (Basic) | $8.26$7.57 | +9.1% |
| EPS (Diluted) | $8.20$7.54 | +8.8% |
| Shares Outstanding (Basic) | 128.65M125.86M | +2.2% |
| Shares Outstanding (Diluted) | 129.60M126.41M | +2.5% |
05—Questions
Frequently Asked Questions
How did M&T perform financially in 2013?
Net income was $1.14 billion, or $8.20 per diluted common share, up 11% and 9%, respectively, from 2012. Return on average assets was 1.36%, and the return on average common shareholders' equity was 10.93%.
What is the status of the Hudson City acquisition?
M&T agreed in 2012 to acquire Hudson City Bancorp, with consideration valued at about $5.0 billion based on M&T's December 31, 2013 closing price. The merger has received common shareholder approval but still requires regulatory approvals. Because of a written agreement with the Federal Reserve Bank of New York on BSA/AML compliance, the merger agreement's termination date was extended to December 31, 2014, and there can be no assurance the deal will close by then.
What regulatory and legal matters does the filing disclose?
M&T and M&T Bank entered a written agreement with the Federal Reserve Bank of New York in June 2013 on BSA/AML compliance. Wilmington Trust is the subject of ongoing SEC and DOJ investigations relating to pre-acquisition financial reporting, and a related securities class action is pending. The company estimates the range of reasonably possible losses beyond recorded liabilities at $0 to $50 million in the aggregate.
How strong is M&T's capital position?
At December 31, 2013, M&T's consolidated Tier 1 Capital ratio was 12.00% and its Total Capital ratio was 15.07%. Shareholders' equity was $11.3 billion, or 13.28% of total assets. Management estimated the fully phased-in CET1 ratio under the New Capital Rules at approximately 8.98%.
What drove the change in credit quality and loan growth?
Net charge-offs fell to $183 million from $186 million, and the provision declined to $185 million from $204 million. Nonaccrual loans totaled $874 million, or 1.36% of loans and leases, down from $1.01 billion, or 1.52%, a year earlier. Average loans and leases grew 4% to $65.1 billion, led by commercial loans and commercial real estate.
06—Continue