GAAP Results of Operations. Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were
GAAP-basis diluted earnings per common share for the years ended
Notable Fourth Quarter Events. Based on a detailed review of its investment securities portfolio, during the recent quarter other-than-temporary impairment charges of
M&T announced in December that it has entered into a definitive agreement to acquire Provident Bankshares Corporation ("Provident") in a stock-for-stock transaction. Provident, which is based in
Supplemental Reporting of Non-GAAP Results of Operations. M&T consistently provides supplemental reporting of its results on a "net operating" or "tangible" basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and expenses associated with merging acquired operations into M&T, because such expenses are considered by management to be "nonoperating" in nature. Although "net operating income" as defined by M&T is not a GAAP measure, M&T's management believes that this information helps investors understand the effect of acquisition activity in reported results. Amortization of core deposit and other intangible assets, after tax effect, for the years ended
Diluted net operating earnings per common share, which exclude the impact of amortization of core deposit and other intangible assets and merger-related expenses, were
For 2008's fourth quarter, diluted net operating earnings per common share were
Taxable-equivalent Net Interest Income. Taxable-equivalent net interest income was
During the fourth quarter of 2008, taxable-equivalent net interest income was
Provision for Credit Losses/Asset Quality. The provision for credit losses rose to
The rise in net charge-offs from 2007 to 2008 was significantly influenced by the state of the economy in
Loans classified as nonaccrual totaled
Assets taken in foreclosure of defaulted loans increased to
During 2008, in an effort to assist borrowers M&T modified the terms of residential real estate mortgages having outstanding balances at
Loans past due 90 days or more and accruing interest totaled
Allowance for Credit Losses. M&T regularly performs detailed analyses of individual borrowers and portfolios for purposes of assessing the adequacy of the allowance for credit losses. Reflecting those analyses, the allowance was
Noninterest Income and Expense. Noninterest income aggregated
Noninterest income of
Noninterest expense in 2008 totaled
Noninterest expense in the final quarter of 2008 totaled
The efficiency ratio, or noninterest operating expenses divided by the sum of taxable-equivalent net interest income and noninterest income (exclusive of gains and losses from bank investment securities), measures the relationship of operating expenses to revenues. M&T's efficiency ratio was 54.4% in 2008, compared with 52.8% in 2007. During 2008's fourth quarter, M&T's efficiency ratio was 57.0%, compared with 54.3% in the year-earlier quarter and 55.2% in the third quarter of 2008.
Balance Sheet. M&T had total assets of
During
Conference Call. Investors will have an opportunity to listen to M&T's conference call to discuss fourth quarter and full year financial results today at
M&T is a bank holding company whose banking subsidiaries, M&T Bank and M&T Bank, National Association, operate branch offices in
Forward-Looking Statements. This news release contains forward-looking statements that are based on current expectations, estimates and projections about M&T's business, management's beliefs and assumptions made by management. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Future Factors") which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.
Future Factors include changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; common shares outstanding; common stock price volatility; fair value of and number of stock-based compensation awards to be issued in future periods; legislation affecting the financial services industry as a whole, and M&T and its subsidiaries individually or collectively, including tax legislation; regulatory supervision and oversight, including monetary policy and required capital levels; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies; increasing price and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of pending and future litigation and governmental proceedings, including tax-related examinations and other matters; continued availability of financing; financial resources in the amounts, at the times and on the terms required to support M&T and its subsidiaries' future businesses; and material differences in the actual financial results of merger, acquisition and investment activities compared with M&T's initial expectations, including the full realization of anticipated cost savings and revenueenhancements.
These are representative of the Future Factors that could affect the outcome of the forward-looking statements. In addition, such statements could be affected by general industry and market conditions and growth rates, general economic and political conditions, either nationally or in the states in which M&T and its subsidiaries do business, including interest rate and currency exchange rate fluctuations, changes and trends in the securities markets, and other Future Factors.
Additional Information about the M&T/Provident Transaction:
The proposed transaction will be submitted to Provident's stockholders for their consideration. M&T will file a Registration Statement on Form S-4, which will include a preliminary version of a Proxy Statement of Provident and a preliminary Prospectus of M&T to be sent to Provident's stockholders, and each of Provident and M&T may file other relevant documents concerning the proposed transaction with the U.S. Securities and Exchange Commission (the "SEC"). STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
You will be able to obtain a free copy of the Proxy Statement/Prospectus, as well as other filings containing information about M&T and Provident at the SEC's Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, at http://www.mtb.com under the tab "About Us" and then under the heading "Investor Relations" and then under "SEC Filings." Copies of the Proxy Statement/Prospectus and the SEC filings that will be incorporated by reference in the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Investor Relations, One M&T Plaza,
M&T and Provident and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Provident in connection with the proposed transaction. Information about the directors and executive officers of M&T is set forth in the proxy statement for M&T's 2008 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on
M&T BANK CORPORATION Financial Highlights Three months ended Year ended December 31 December 31 ------------- --------------- Amounts in thousands, 2008 2007 Change 2008 2007 Change except per share ---- ---- ------ ---- ---- ------ Performance ----------- Net income $102,241 64,930 57% $ 555,887 654,259 -15% Per common share: Basic earnings $ .92 .60 53% $ 5.04 6.05 -17% Diluted earnings .92 .60 53 5.01 5.95 -16 Cash dividends $ .70 .70 - $ 2.80 2.60 8 Common shares outstanding: Average - diluted (1) 110,620 109,034 1% 110,904 110,012 1% Period end (2) 110,444 109,935 - 110,444 109,935 - Return on (annualized): Average total assets .63% .42% .85% 1.12% Average common stockholders' equity 6.41% 4.05% 8.64% 10.47% Taxable-equivalent net interest income $491,042 475,836 3% $1,961,657 1,871,070 5% Yield on average earning assets 5.35% 6.65% 5.69% 6.86% Cost of interest- bearing liabilities 2.32% 3.75% 2.68% 3.85% Net interest spread 3.03% 2.90% 3.01% 3.01% Contribution of interest-free funds .34% .55% .37% .59% Net interest margin 3.37% 3.45% 3.38% 3.60% Net charge-offs to average total net loans (annualized) 1.17% .46% .78% .26% Net operating results (3) ------------------------- Net operating income $111,784 83,719 34% $ 598,551 703,820 -15% Diluted net operating earnings per common share 1.00 .77 30 5.39 6.40 -16 Return on (annualized): Average tangible assets .72% .57% .97% 1.27% Average tangible common equity 15.01% 10.49% 19.63% 22.58% Efficiency ratio 57.03% 54.30% 54.35% 52.77% At December 31 ------------- Loan quality 2008 2007 Change ------------ ---- ---- ------ Nonaccrual loans $755,397 431,282 75% Accruing loans past due 90 days or more 158,991 77,319 106% Renegotiated loans 91,575 15,884 477% Real estate and other foreclosed assets 99,617 40,175 148% Nonaccrual loans to total net loans 1.54% .90% Allowance for credit losses to total net loans 1.61% 1.58% ------------------------------------------------------------------------- (1) Includes common stock equivalents. (2) Includes common stock issuable under deferred compensation plans. (3) Excludes amortization and balances related to goodwill and core deposit and other intangible assets and merger-related expenses which, except in the calculation of the efficiency ratio, are net of applicable income tax effects. M&T BANK CORPORATION Condensed Consolidated Statement of Income Three months ended Year ended December 31 December 31 ----------------- -------------------- Dollars in thousands 2008 2007 Change 2008 2007 Change -------- -------- ------ --------- --------- ------ Interest income $ 774,501 912,574 -15% $3,277,591 3,544,813 -8% Interest expense 288,426 442,364 -35 1,337,795 1,694,576 -21 -------- -------- --------- --------- Net interest income 486,075 470,210 3 1,939,796 1,850,237 5 Provision for credit losses 151,000 101,000 50 412,000 192,000 115 -------- -------- --------- --------- Net interest income after provision for credit losses 335,075 369,210 -9 1,527,796 1,658,237 -8 Other income Mortgage banking revenues 39,721 30,831 29 156,012 111,893 39 Service charges on deposit accounts 106,367 105,847 - 430,532 409,462 5 Trust income 36,630 39,945 -8 156,149 152,636 2 Brokerage services income 15,284 12,689 20 64,186 59,533 8 Trading account and foreign exchange gains 2,003 9,806 -80 17,630 30,271 -42 Loss on bank investment securities (23,504)(127,281) - (147,751) (126,096) - Equity in earnings of Bayview Lending Group, LLC (8,687) 14,529 - (37,453) 8,935 - Other revenues from operations 73,603 74,124 -1 299,674 286,355 5 -------- -------- --------- --------- Total other income 241,417 160,490 50 938,979 932,989 1 Other expense Salaries and employee benefits 232,410 226,111 3 957,086 908,315 5 Equipment and net occupancy 47,795 43,014 11 188,845 169,050 12 Printing, postage and supplies 8,401 9,879 -15 35,860 35,765 - Amortization of core deposit and other intangible assets 15,708 15,971 -2 66,646 66,486 - Other costs of operations 142,505 150,498 -5 478,559 448,073 7 -------- --------- --------- --------- Total other expense 446,819 445,473 - 1,726,996 1,627,689 6 Income before income taxes 129,673 84,227 54 739,779 963,537 -23 Applicable income taxes 27,432 19,297 42 183,892 309,278 -41 -------- --------- --------- --------- Net income $ 102,241 64,930 57% $ 555,887 654,259 -15% ======== ========= ========= ========= M&T BANK CORPORATION Condensed Consolidated Balance Sheet December 31 ---------------------- Dollars in thousands 2008 2007 Change ----------- --------- ------ ASSETS Cash and due from banks $ 1,546,804 1,719,509 -10% Interest-bearing deposits at banks 10,284 18,431 -44 Federal funds sold and agreements to resell securities 111,347 48,038 132 Trading account assets 617,821 281,244 120 Investment securities 7,919,207 8,961,998 -12 Loans and leases, net of unearned discount 49,000,463 48,021,562 2 Less: allowance for credit losses 787,904 759,439 4 ------- ------- Net loans and leases 48,212,559 47,262,123 2 Goodwill 3,192,128 3,196,433 - Core deposit and other intangible assets 183,496 248,556 -26 Other assets 4,022,111 3,139,307 28 --------- --------- Total assets $ 65,815,757 64,875,639 1% =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Noninterest-bearing deposits at U.S. offices $ 8,856,114 8,131,662 9% Other deposits at U.S. offices 29,677,163 27,278,099 9 Deposits at foreign office 4,047,986 5,856,427 -31 --------- --------- Total deposits 42,581,263 41,266,188 3 Short-term borrowings 3,009,735 5,821,897 -48 Accrued interest and other liabilities 1,364,879 984,353 39 Long-term borrowings 12,075,149 10,317,945 17 ---------- ---------- Total liabilities 59,031,026 58,390,383 1 Stockholders' equity (1) 6,784,731 6,485,256 5 --------- --------- Total liabilities and stockholders' equity $ 65,815,757 64,875,639 1% =========== ========== ------------------------------------------------------------------------- (1) Reflects accumulated other comprehensive loss, net of applicable income tax effect, of $736.9 million at December 31, 2008 and $114.8 million at December 31, 2007. M&T BANK CORPORATION Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates Three months ended December 31 ------------------------------- Dollars in millions 2008 2007 -------------- -------------- Change in Balance Rate Balance Rate balance ------- ---- ------- ---- ------- ASSETS Interest-bearing deposits at banks $ 13 .55% 12 3.48% 9% Federal funds sold and agreements to resell securities 103 .41 725 4.86 -86 Trading account assets 99 3.16 68 1.48 45 Investment securities 8,894 4.90 7,905 5.12 13 Loans and leases, net of unearned discount Commercial, financial, etc. 14,213 4.74 12,551 6.90 13 Real estate - commercial 18,666 5.55 16,459 7.12 13 Real estate - consumer 4,904 5.85 6,327 6.13 -22 Consumer 11,027 6.08 10,718 7.35 3 ------- ------- Total loans and leases, net 48,810 5.45 46,055 6.95 6 ------- ------- Total earning assets 57,919 5.35 54,765 6.65 6 Goodwill 3,192 3,006 6 Core deposit and other intangible assets 191 213 -10 Other assets 3,640 3,565 2 ------- ------- Total assets $ 64,942 61,549 6% ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing deposits NOW accounts $ 528 .45 491 1.18 8% Savings deposits 19,540 1.27 15,265 1.71 28 Time deposits 9,388 3.06 10,353 4.55 -9 Deposits at foreign office 2,985 .71 4,975 4.52 -40 ------- ------- Total interest- bearing deposits 32,441 1.72 31,084 3.09 4 ------- ------- Short-term borrowings 4,950 .82 5,899 4.62 -16 Long-term borrowings 12,058 4.55 9,809 5.31 23 ------- ------- Total interest-bearing liabilities 49,449 2.32 46,792 3.75 6 Noninterest-bearing deposits 8,006 7,481 7 Other liabilities 1,133 916 24 ------- ------- Total liabilities 58,588 55,189 6 Stockholders' equity 6,354 6,360 - ------- ------- Total liabilities and stockholders' equity $ 64,942 61,549 6% ======= ======= Net interest spread 3.03 2.90 Contribution of interest-free funds .34 .55 Net interest margin 3.37% 3.45% Year ended December 31 ------------------------------- Dollars in millions 2008 2007 -------------- -------------- Change in Balance Rate Balance Rate balance ------- ---- ------- ---- ------- ASSETS Interest-bearing deposits at banks $ 10 1.07% 9 3.36% 13% Federal funds sold and agreements to resell securities 109 1.91 432 5.52 -75 Trading account assets 79 1.95 62 1.20 28 Investment securities 8,973 5.05 7,318 5.05 23 Loans and leases, net of unearned discount Commercial, financial, etc. 13,802 5.24 12,177 7.16 13 Real estate - commercial 18,428 5.82 15,748 7.35 17 Real estate - consumer 5,465 6.03 6,015 6.39 -9 Consumer 11,150 6.43 10,190 7.44 9 ------- ------- Total loans and leases, net 48,845 5.82 44,130 7.19 11 ------- ------- Total earning assets 58,016 5.69 51,951 6.86 12 Goodwill 3,193 2,933 9 Core deposit and other intangible assets 214 221 -3 Other assets 3,709 3,440 8 ------- ------- Total assets $ 65,132 58,545 11% ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing deposits NOW accounts $ 502 .58 461 1.01 9% Savings deposits 18,170 1.37 14,985 1.67 21 Time deposits 9,583 3.45 10,597 4.68 -10 Deposits at foreign office 3,986 2.12 4,185 4.97 -5 ------- ------- Total interest-bearing deposits 32,241 2.07 30,228 3.17 7 ------- ------- Short-term borrowings 6,086 2.34 5,386 5.09 13 Long-term borrowings 11,605 4.56 8,428 5.47 38 ------- ------- Total interest-bearing liabilities 49,932 2.68 44,042 3.85 13 Noninterest-bearing deposits 7,674 7,400 4 Other liabilities 1,089 856 27 ------- ------- Total liabilities 58,695 52,298 12 Stockholders' equity 6,437 6,247 3 ------ ------- Total liabilities and stockholders' equity $ 65,132 58,545 11% ======= ======= Net interest spread 3.01 3.01 Contribution of interest-free funds .37 .59 Net interest margin 3.38% 3.60% M&T BANK CORPORATION Reconciliation of Quarterly GAAP to Non-GAAP Measures Three months ended Year ended ------------------------- ---------------- December 31 September 30 December 31 2008 2007 2008 2008 2007 -------- ------ ------- ------- ------- Income statement data --------------------- Amounts in thousands, except per share Net income Net income $ 102,241 64,930 91,185 555,887 654,259 Amortization of core deposit and other intangible assets (1) 9,543 9,719 9,624 40,504 40,491 Merger-related expenses (1) - 9,070 - 2,160 9,070 -------- ------- ------- ------- ------- Net operating income $ 111,784 83,719 100,809 598,551 703,820 ======== ======= ======= ======= ======= Earnings per common share Diluted earnings per common share $ .92 .60 .82 5.01 5.95 Amortization of core deposit and other intangible assets (1) .08 .09 .09 .36 .37 Merger-related expenses (1) - .08 - .02 .08 -------- ------ ------- ------- ------- Diluted net operating earnings per common share $ 1.00 .77 .91 5.39 6.40 ======== ====== ======= ======= ======= Balance sheet data ------------------ Dollars in millions Average assets Average assets $ 64,942 61,549 64,997 65,132 58,545 Goodwill (3,192) (3,006) (3,192) (3,193) (2,933) Core deposit and other intangible assets (191) (213) (206) (214) (221) Deferred taxes 25 25 28 30 24 -------- ------ ------- ------- ------- Average tangible assets $ 61,584 58,355 61,627 61,755 55,415 ======== ====== ======= ======= ======= Average common equity Average common equity $ 6,299 6,360 6,415 6,423 6,247 Goodwill (3,192) (3,006) (3,192) (3,193) (2,933) Core deposit and other intangible assets (191) (213) (206) (214) (221) Deferred taxes 25 25 28 30 24 -------- ------ ------- ------- ------- Average tangible common equity $ 2,941 3,166 3,045 3,046 3,117 ======== ====== ======= ======= ======= ------------------------------------------------------------------------- (1) After any related tax effect.
INVESTOR CONTACT: Donald J. MacLeod (716) 842-5138 MEDIA CONTACT: C. Michael Zabel (716) 842-5385
SOURCE M&T Bank Corporation