01—Abstract
Summary
Summary of the 10-K filed February 20, 2015. Cited figures are marked; the original filing is the authoritative source.
M&T Bank Corporation (MTB) reported net income of $1.07 billiona, or $7.42 of diluted earnings per common share, for 2014, down 6% and 10%, respectively, from $1.14 billion, or $8.20 per diluted share, in 2013.
The decline reflected higher other expense, which rose 4% to $2.74 billionb, largely due to increased professional services and salary costs tied to BSA/AML, compliance, capital planning and stress testing, and risk management. Partially offsetting these were a 33% decline in the provision for credit losses to $124 million, higher mortgage banking revenues, and no securities gains or losses in 2014 compared with net gains on investment securities in 2013. Net interest margin narrowed to 3.31% from 3.65%, and the efficiency ratio rose to 60.5% from 57.0%.
At December 31, 2014, consolidated total assets were $96.7 billionc, deposits were $73.6 billion and shareholders' equity was $12.3 billion. Credit quality improved, with net charge-offs of $121 million, or .19% of average loans and leases, versus .28% in 2013, and nonaccrual loans of $799 million, or 1.20% of outstanding loans and leases. Management estimated the fully phased-in Common Equity Tier 1 ratio under the New Capital Rules, effective January 1, 2015, at approximately 9.62%.
The filing also describes the pending acquisition of Hudson City Bancorp, valued at about $5.4 billiond, which remains subject to regulatory approval, and the extension of the merger agreement termination date to April 30, 2015. M&T also remains subject to a June 2013 written agreement with the Federal Reserve Bank of New York related to its Bank Secrecy Act/Anti-Money Laundering program, and the DOJ investigation and securities litigation involving Wilmington Trust are ongoing.
02—Key points
Key Highlights
- Net income of $1.07 billion ($7.42 diluted EPS) in 2014, down 6% and 10% from 2013, with other expense up 4% to $2.74 billion driven by BSA/AML, compliance, and risk management costs.
- Provision for credit losses fell 33% to $124 million, and net charge-offs declined to .19% of average loans and leases from .28% in 2013.
- Net interest margin narrowed to 3.31% from 3.65%, and the efficiency ratio rose to 60.5% from 57.0%.
- Total assets of $96.7 billion, deposits of $73.6 billion and shareholders' equity of $12.3 billion at December 31, 2014.
- Pending Hudson City Bancorp acquisition valued at approximately $5.4 billion remains subject to regulatory approval; the termination date was extended to April 30, 2015.
- Estimated fully phased-in CET1 ratio of approximately 9.62% under the New Capital Rules effective January 1, 2015.
- Ongoing BSA/AML written agreement with the Federal Reserve Bank of New York and DOJ and securities litigation related to Wilmington Trust.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 20, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $4.46B$4.54B | −1.8% |
| Interest Expense | $280.43M$284.11M | −1.3% |
| Net Income | $1.07B$1.14B | −6.3% |
| EPS (Basic) | $7.47$8.26 | −9.6% |
| EPS (Diluted) | $7.42$8.20 | −9.5% |
| Shares Outstanding (Basic) | 130.95M128.65M | +1.8% |
| Shares Outstanding (Diluted) | 131.84M129.60M | +1.7% |
05—Questions
Frequently Asked Questions
How did M&T's earnings change in 2014?
Net income was $1.07 billion, or $7.42 per diluted common share, compared with $1.14 billion, or $8.20 per diluted share, in 2013, a decline of 6% in net income and 10% in diluted EPS. Lower securities gains and higher operating expenses offset a significantly lower provision for credit losses and higher mortgage banking revenues.
What is driving higher expenses at M&T?
Other expense rose 4% to $2.74 billion in 2014. The filing attributes the increase largely to higher costs for professional services and salaries associated with BSA/AML activities, compliance, capital planning and stress testing, and risk management, partially offset by lower FDIC assessments.
What is the status of the Hudson City acquisition?
M&T agreed in August 2012 to acquire Hudson City Bancorp, with total consideration valued at about $5.4 billion. Both companies' common shareholders have approved the merger, but it remains subject to regulatory approvals, including Federal Reserve approval. The termination date was extended to April 30, 2015, and the filing states there can be no assurance the merger will close by that date.
How is M&T's credit quality trending?
Credit quality improved in 2014. Net charge-offs were $121 million, or .19% of average loans and leases, compared with $183 million, or .28%, in 2013. Nonaccrual loans totaled $799 million, or 1.20% of outstanding loans and leases, down from $874 million, or 1.36%, a year earlier.
How does M&T's capital position compare with the new rules?
Management estimated M&T's Common Equity Tier 1 ratio under the New Capital Rules, on a fully phased-in basis, was approximately 9.62% as of December 31, 2014. The New Capital Rules became effective January 1, 2015, and the filing states management believes M&T is in compliance with the targeted capital ratios.
06—Continue