01—Abstract
Summary
Summary of the 10-K filed February 22, 2023. Cited figures are marked; the original filing is the authoritative source.
M&T Bank Corporation (MTB) reported net income of $1.99 billiona, or $11.53 of diluted earnings per common share, for 2022, compared with $1.86 billion, or $13.80, in 2021.
The year was shaped by the April 1, 2022 acquisition of People's United Financial, Inc., which added $35.8 billionb of loans and leases, $11.6 billion of investment securities and $53.0 billion of deposits. Taxable-equivalent net interest income rose 53% to $5.86 billion, driven by a net interest margin of 3.39% (up from 2.76%) and higher earning assets. Merger-related expenses after tax were $432 million, or $2.63 of diluted earnings per share, which reduced reported results; net operating income was $2.47 billion, or $14.42 per diluted share.
Credit costs rose, with a provision for credit losses of $517 millionc including $242 million on non-PCD loans acquired from People's United, and nonaccrual loans of $2.44 billion (1.85% of total loans). Noninterest expense rose to $5.05 billion, and the efficiency ratio was 56.6%. Shareholders' equity reached $25.3 billion, and the company repurchased $1.8 billion of common stock in 2022 under a $3.0 billion authorization approved in July 2022.
Common dividends declared totaled $4.80d per share. The filing also notes regulatory and strategic items for investors, including a Stress Capital Buffer of 4.7% effective October 1, 2022 (CET1 requirement of 9.2%), the sale of M&T Insurance Agency for a $136 million pre-tax gain, and an agreement to sell the Collective Investment Trust business of Wilmington Trust, N.A. with a gain expected in the first half of 2023. LIBOR transition, deposit funding costs and commercial real estate exposure, particularly in hotel and office sectors, are highlighted as ongoing risks.
02—Key points
Key Highlights
- Net income of $1.99 billion in 2022 versus $1.86 billion in 2021; diluted EPS of $11.53 versus $13.80, reflecting $2.63 per share of after-tax merger-related expenses tied to People's United.
- Net operating income of $2.47 billion, or $14.42 per diluted share, excluding amortization of intangibles and merger-related expenses.
- Taxable-equivalent net interest income rose 53% to $5.86 billion, with net interest margin widening 63 basis points to 3.39%.
- Total assets of $200.7 billion, deposits of $163.5 billion and shareholders' equity of $25.3 billion at December 31, 2022.
- Provision for credit losses of $517 million, including $242 million on acquired non-PCD loans; nonaccrual loans were $2.44 billion, or 1.85% of total loans and leases.
- Repurchased $1.8 billion of common stock in 2022; a new $3.0 billion repurchase program was authorized in July 2022.
- Stress Capital Buffer of 4.7% became effective October 1, 2022, setting a CET1 requirement of 9.2%.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 22, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $8.18B$5.99B | +36.5% |
| Interest Expense | $425.00M$114.00M | +272.8% |
| Net Income | $1.99B$1.86B | +7.2% |
| EPS (Basic) | $11.59$13.81 | −16.1% |
| EPS (Diluted) | $11.53$13.80 | −16.4% |
| Shares Outstanding (Basic) | 163.17M128.65M | +26.8% |
| Shares Outstanding (Diluted) | 164.03M128.81M | +27.3% |
05—Questions
Frequently Asked Questions
How did the People's United acquisition affect M&T's 2022 results?
The acquisition closed April 1, 2022, adding $35.8 billion of loans and leases, $11.6 billion of investment securities and $53.0 billion of deposits. It drove the 53% increase in taxable-equivalent net interest income and higher noninterest expense, and it generated $432 million of after-tax merger-related expenses, or $2.63 per diluted share.
Why did net interest income increase so much in 2022?
Average earning assets grew to $172.8 billion from $139.1 billion, largely from the People's United acquisition, and the net interest margin widened to 3.39% from 2.76% as the Federal Reserve raised its target federal funds rate by a total of 4.25% during 2022.
What credit trends should investors watch?
The provision for credit losses was $517 million versus a $75 million recapture in 2021. Nonaccrual loans were $2.44 billion, concentrated in hospitality, office and health care-related commercial real estate. Criticized commercial and commercial real estate loans totaled $10.7 billion, of which investor-owned commercial real estate was $7.8 billion.
How much capital did M&T return to shareholders in 2022?
M&T repurchased 10,453,282 common shares for about $1.8 billion in 2022 and declared common dividends of $4.80 per share, totaling $786 million, plus $96.6 million in preferred dividends.
What regulatory capital requirement applies to M&T after 2022 stress testing?
M&T's Stress Capital Buffer of 4.7% became effective October 1, 2022. Combined with the 4.5% minimum CET1 ratio, this results in a CET1 capital requirement of 9.2%. M&T's consolidated CET1 ratio at year-end 2022 was 10.44%.
06—Continue