01—Abstract
Summary
Summary of the 10-K filed February 19, 2016. Cited figures are marked; the original filing is the authoritative source.
M&T Bank Corporation (MTB) reported consolidated total assets of $122.8 billiona, deposits of $92.0 billion and shareholders' equity of $16.2 billion at December 31, 2015, with 16,331 full-time and 1,145 part-time employees.
The company is a New York business corporation registered as a financial holding company, and its principal banking subsidiary, M&T Bank, represented 99% of consolidated assets. Net income for 2015 was $1.08 billionb, or $7.18 of diluted earnings per common share, compared with $1.07 billion, or $7.42, in 2014. Net operating income, a non-GAAP measure excluding acquisition-related amortization and merger expenses, was $1.16 billion, or $7.74 per diluted share.
The year was dominated by the November 1, 2015 acquisition of Hudson City Bancorp, which added about $19.0 billionc of loans, $17.9 billion of deposits and $5.2 billion of total consideration, including $2.1 billion in cash and 25,953,950 M&T shares. Net interest income rose to $2.84 billion and the net interest margin narrowed to 3.14% from 3.31%, while the provision for credit losses increased to $170 million from $124 million. Other expense rose to $2.82 billion, including $76 million of merger-related expenses, and the efficiency ratio was 57.98%.
Nonaccrual loans were $799 milliond, or .91% of loans, and the allowance for credit losses equaled 1.09% of total loans and leases. The filing also flags regulatory and legal matters for investors. Wilmington Trust Corporation, a subsidiary acquired by M&T in 2011, was indicted on January 6, 2016 relating to alleged pre-acquisition conduct, and the company is under investigation regarding FHA and government-sponsored enterprise loan origination.
M&T's range of reasonably possible losses beyond recorded liabilities was stated as between $0 and $40 million. The company also operates under a written agreement with the Federal Reserve Bank of New York concerning its Bank Secrecy Act/anti-money laundering program, and it expects to be subject to the new liquidity coverage ratio requirement beginning January 1, 2016.
02—Key points
Key Highlights
- Total assets reached $122.8 billion at year-end 2015, up from $96.7 billion, following the Hudson City acquisition completed November 1, 2015.
- Net income was $1.08 billion, or $7.18 diluted EPS, versus $1.07 billion, or $7.42, in 2014; net operating income was $1.16 billion, or $7.74 per diluted share.
- Net interest margin fell to 3.14% from 3.31%, a 17 basis point narrowing, while average earning assets rose 12% to $91.2 billion.
- Shareholders' equity was $16.2 billion, or $93.60 per common share, and tangible common equity per share was $64.28.
- Nonaccrual loans were $799 million (.91% of loans), and net charge-offs were .19% of average loans, unchanged from 2014.
- Wilmington Trust Corporation was indicted on January 6, 2016 over alleged pre-acquisition conduct; the company says it will vigorously defend itself.
- Dividends of $2.80 per common share were maintained, and a $200 million share repurchase program was authorized in November 2015, with $100 million repurchased in January 2016.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 19, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $4.67B$4.46B | +4.8% |
| Interest Expense | $328.26M$280.43M | +17.1% |
| Net Income | $1.08B$1.07B | +1.3% |
| EPS (Basic) | $7.22$7.47 | −3.3% |
| EPS (Diluted) | $7.18$7.42 | −3.2% |
| Shares Outstanding (Basic) | 136.80M130.95M | +4.5% |
| Shares Outstanding (Diluted) | 137.53M131.84M | +4.3% |
05—Questions
Frequently Asked Questions
What did the Hudson City acquisition add to M&T's balance sheet?
M&T acquired Hudson City Bancorp on November 1, 2015 for $2.1 billion in cash and 25,953,950 M&T common shares, a purchase price of about $5.2 billion. Assets acquired totaled about $36.7 billion, including $19.0 billion of loans, and liabilities assumed were $31.5 billion, including $17.9 billion of deposits. The company recorded about $1.1 billion of goodwill and a $132 million core deposit intangible.
How did earnings and margins trend in 2015?
Net income was $1.08 billion in 2015 versus $1.07 billion in 2014, and diluted EPS was $7.18 versus $7.42. Taxable-equivalent net interest income rose to $2.87 billion, but the net interest margin narrowed to 3.14% from 3.31%, largely due to lower yields on investment securities and loans. Merger-related expenses reduced diluted EPS by $.44 in 2015.
What legal and regulatory risks does the filing disclose?
The filing discloses a January 6, 2016 indictment of Wilmington Trust Corporation relating to pre-acquisition conduct, and an ongoing government investigation into FHA-insured and Freddie Mac/Fannie Mae loan origination, where settlement discussions continue. Reasonably possible losses beyond recorded liabilities were stated as between $0 and $40 million. M&T and M&T Bank also remain under a written agreement with the Federal Reserve Bank of New York related to Bank Secrecy Act/anti-money laundering compliance.
How strong is M&T's capital position?
M&T reported a consolidated common equity Tier 1 ratio of 11.08% and a total capital ratio of 14.92% at December 31, 2015, both above the stated minimums under the New Capital Rules. Shareholders' equity was 13.17% of total assets. The company's 2015 capital plan was not objected to by the Federal Reserve, allowing a $.70 quarterly dividend and up to $200 million of common repurchases in the first half of 2016.
What were credit quality trends?
Nonaccrual loans totaled $799 million at year-end 2015, unchanged from 2014 and down from $874 million in 2013, or .91% of loans outstanding. Accruing loans past due 90 days or more were $317 million, or .36% of loans. The allowance for credit losses was $956 million, or 1.09% of total loans and leases, down from 1.38% a year earlier, reflecting the Hudson City loans recorded at fair value.
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