01—Abstract
Summary
Summary of the 10-K filed February 16, 2022. Cited figures are marked; the original filing is the authoritative source.
M&T Bank Corporation (MTB), a New York bank holding company headquartered in Buffalo, reported net income of $1.86 billiona, or $13.80 of diluted earnings per common share, for 2021, up from $1.35 billion, or $9.94, in 2020.
Total assets were $155.1 billionb, deposits $131.5 billion, and shareholders' equity $17.9 billion at December 31, 2021. The provision for credit losses was a recapture of $75 million in 2021, compared with a provision of $800 million in 2020, reflecting improved economic forecasts after the COVID-19 pandemic. Taxable-equivalent net interest income declined to $3.84 billion from $3.88 billion, as the net interest margin narrowed 40 basis points to 2.76%.
The pending acquisition of People's United Financial, Inc. is the most significant development in the filing. The all-stock transaction is valued at approximately $7.8 billionc and has been approved by both companies' shareholders and by the New York State Department of Financial Services and Connecticut Department of Banking, but still requires Federal Reserve Board approval. Merger-related expenses were $44 million pre-tax in 2021, or $.25 per diluted share.
The filing also discloses a $1.5 billiond allowance for credit losses against $92.9 billion of net loans, with nonaccrual loans rising to $2.06 billion, or 2.22% of total loans, driven largely by hotel-related commercial real estate exposure. Capital and liquidity remained strong. The Federal Reserve assigned M&T a Stress Capital Buffer of 2.5%, and common dividends declared rose to $4.50 per share in 2021 from $4.40 in 2020, after a fourth-quarter increase to $1.20 per quarter.
No shares were repurchased under the $800 million authorization announced in January 2021. The filing also notes that the Federal Reserve lowered interest rates during the pandemic, pressuring net interest income, and that management expects the low-rate environment to continue weighing on the margin until general rates rise.
02—Key points
Key Highlights
- Net income rose 37% to $1.86 billion in 2021 from $1.35 billion in 2020; diluted EPS was $13.80 versus $9.94.
- Provision for credit losses was a $75 million recapture in 2021, compared with an $800 million provision in 2020.
- Net interest margin narrowed 40 basis points to 2.76% in 2021 from 3.16% in 2020, as average earning assets grew to $139.1 billion.
- Pending all-stock acquisition of People's United Financial, valued at about $7.8 billion, awaits Federal Reserve Board approval.
- Nonaccrual loans were $2.06 billion, or 2.22% of total loans, up from 1.92% a year earlier, mainly in the hospitality sector.
- Total deposits reached $131.5 billion, and the Federal Reserve set a Stress Capital Buffer of 2.5% for M&T.
- Quarterly common dividend was increased to $1.20 per share in the fourth quarter of 2021 from $1.10; no shares were repurchased in 2021.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 16, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $5.99B$5.95B | +0.6% |
| Interest Expense | $114.00M$326.39M | −65.1% |
| Net Income | $1.86B$1.35B | +37.4% |
| EPS (Basic) | $13.81$9.94 | +38.9% |
| EPS (Diluted) | $13.80$9.94 | +38.8% |
| Shares Outstanding (Basic) | 128.65M128.64M | 0.0% |
| Shares Outstanding (Diluted) | 128.81M128.70M | +0.1% |
05—Questions
Frequently Asked Questions
How did M&T's profitability change in 2021?
Net income was $1.86 billion, or $13.80 per diluted share, compared with $1.35 billion, or $9.94, in 2020. The improvement was driven mainly by a $75 million provision recapture in 2021 versus an $800 million provision in 2020, partly offset by lower net interest income and higher other expenses.
What is the status of the People's United acquisition?
M&T agreed on February 22, 2021 to acquire People's United in an all-stock deal valued at about $7.8 billion. Shareholders of both companies and the New York State Department of Financial Services and Connecticut Department of Banking have approved it. The transaction remains subject to approval by the Federal Reserve Board, and the filing says the merger is expected to close promptly after approvals and customary closing conditions are met.
How is M&T's credit quality trending?
Nonaccrual loans rose to $2.06 billion, or 2.22% of total loans and leases, from 1.92% at year-end 2020. The increase reflects pandemic effects on borrowers, notably in hotel-related commercial real estate. The allowance for credit losses was $1.47 billion, or 1.58% of loans, down from 1.76% a year earlier, after the 2021 provision recapture.
What are the capital and dividend implications for shareholders?
The Federal Reserve set a Stress Capital Buffer of 2.5%, the regulatory floor, effective October 1, 2021, which implies a CET1 requirement of 7.0%. Common dividends declared were $4.50 per share in 2021 versus $4.40 in 2020, and the quarterly rate was raised to $1.20 in the fourth quarter. No shares were repurchased under the $800 million authorization in 2021.
Why did net interest income decline in 2021?
Taxable-equivalent net interest income fell to $3.84 billion from $3.88 billion, mainly because the net interest margin narrowed to 2.76% from 3.16%. The filing attributes this to lower loan yields and the low-rate environment set by the Federal Reserve during the pandemic, partly offset by higher average earning assets of $139.1 billion, largely low-yielding balances held at the Federal Reserve Bank of New York.
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