01—Abstract
Summary
Summary of the 10-K filed February 22, 2021. Cited figures are marked; the original filing is the authoritative source.
M&T Bank Corporation (MTB) reported net income of $1.35 billiona, or $9.94 per diluted common share, for 2020, down from $1.93 billion, or $13.75 per diluted share, in 2019.
The decline was driven primarily by a sharp rise in the provision for credit losses to $800 millionb from $176 million, reflecting the adoption of new credit loss accounting guidance on January 1, 2020 and the economic effects of the COVID-19 pandemic. Net interest income fell to $3.87 billion from $4.13 billion as the net interest margin narrowed to 3.16% from 3.84%, reflecting lower interest rates. Other income rose modestly to $2.09 billion, supported by higher mortgage banking revenues and trust income.
At December 31, 2020, consolidated total assets were $142.6 billionc, deposits were $119.8 billion, and shareholders' equity was $16.2 billion. Nonaccrual loans rose to $1.89 billion, or 1.92% of total loans and leases, from $963 million a year earlier, and accruing loans past due 90 days or more increased to $859 million.
The company suspended share repurchases in the second half of 2020 under Federal Reserve capital preservation measures; in January 2021 its board authorized a new repurchase program of up to $800 milliond. A subsequent event disclosed in the filing is the agreement announced February 22, 2021 to acquire People's United Financial, Inc. in an all-stock transaction valued at approximately $7.6 billion, expected to close in the fourth quarter of 2021 subject to regulatory and shareholder approvals.
02—Key points
Key Highlights
- Net income of $1.35 billion ($9.94 diluted EPS) in 2020, down 30% from $1.93 billion ($13.75) in 2019.
- Provision for credit losses rose to $800 million from $176 million in 2019, following the January 1, 2020 adoption of new credit loss accounting and COVID-19 economic assumptions; the adoption added $132 million to the allowance.
- Net interest margin narrowed 68 basis points to 3.16% from 3.84%, and taxable-equivalent net interest income declined 6% to $3.88 billion.
- Total assets of $142.6 billion, deposits of $119.8 billion, and shareholders' equity of $16.2 billion at December 31, 2020; allowance for credit losses was $1.74 billion, or 1.76% of loans.
- Nonaccrual loans increased to $1.89 billion (1.92% of loans) from $963 million; $530 million of hotel loans were added to nonaccrual in 2020.
- Net operating income of $1.36 billion ($10.02 diluted net operating EPS) excludes after-tax amortization of intangibles.
- Subsequent event: agreement to acquire People's United Financial, Inc. in an all-stock deal valued at about $7.6 billion, expected to close in Q4 2021.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 22, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $5.95B$6.19B | −3.8% |
| Interest Expense | $326.39M$749.33M | −56.4% |
| Net Income | $1.35B$1.93B | −29.9% |
| EPS (Basic) | $9.94$13.76 | −27.8% |
| EPS (Diluted) | $9.94$13.75 | −27.7% |
| Shares Outstanding (Basic) | 128.64M134.43M | −4.3% |
| Shares Outstanding (Diluted) | 128.70M134.46M | −4.3% |
05—Questions
Frequently Asked Questions
How did the COVID-19 pandemic affect M&T's 2020 results?
The filing states the pandemic caused significant economic disruption and led to a sharp increase in the provision for credit losses to $800 million in 2020, up from $176 million in 2019. Lower interest rates reduced net interest income, and fee income from service charges and credit-related fees declined, partly offset by higher mortgage banking revenues. Payment deferrals were granted on $3.8 billion of loans, and $5.4 billion of PPP loans remained outstanding at year-end.
Why did the allowance for credit losses increase so much in 2020?
The allowance rose to $1.74 billion from $1.05 billion. The filing attributes the increase to the $132 million adoption impact of the new credit loss standard effective January 1, 2020, and to forecasted economic conditions from the pandemic. The allowance equaled 1.76% of loans at year-end, compared with 1.16% a year earlier.
What are M&T's capital return plans following the Federal Reserve restrictions?
The filing states M&T suspended share repurchases during the third and fourth quarters of 2020 under Federal Reserve measures and limited common dividends. Quarterly common dividends were $1.10 per share in 2020. On January 20, 2021, the board authorized a new repurchase program of up to $800 million, subject to regulatory limitations and the Federal Reserve's capital plan review.
What is the People's United acquisition?
On February 22, 2021, M&T agreed to acquire People's United Financial, Inc., headquartered in Bridgeport, Connecticut, in an all-stock transaction with a total market value of about $7.6 billion. People's United shareholders would receive 0.118 of an M&T share per share held. People's United preliminarily reported total assets of about $63 billion, loans of $44 billion, and deposits of $52 billion. Closing is expected in the fourth quarter of 2021, subject to regulatory and shareholder approvals.
06—Continue