PR Newswire | Jan 21, 2021 05:41AM EST

01/21 04:40 CST

M&T Bank Corporation Announces 2020 Fourth Quarter And Full-Year Results BUFFALO, N.Y., Jan. 21, 2021

BUFFALO, N.Y., Jan. 21, 2021 /PRNewswire/ -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for 2020.

GAAP Results of Operations. Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $3.52 in the fourth quarter of 2020, compared with $3.60 in the year-earlier quarter and $2.75 in the third quarter of 2020. GAAP-basis net income was $471 million in the recent quarter, $493 million in the final quarter of 2019 and $372 million in the third 2020 quarter. GAAP-basis net income in the fourth quarter of 2020 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.30% and 12.07%, respectively, compared with 1.60% and 12.95%, respectively, in the corresponding 2019 period and 1.06% and 9.53%, respectively, in the third quarter of 2020.

Darren J. King, M&T's Executive Vice President and Chief Financial Officer, commented, "In what has been an extremely challenging year, M&T responded quickly and effectively to take on those challenges while continuing to meet the needs of our customers through the extraordinary efforts of our employees. Although the effects of the pandemic and the low interest rate environment impacted M&T's financial results in 2020, we were pleased with the growth experienced in the mortgage banking and trust businesses, as well as the role we played in providing our customers the opportunity to participate in the Paycheck Protection Program."

Earnings Highlights

Change 4Q20 vs.

($ in millions, except per share data) 4Q20 4Q19 3Q20 4Q19 3Q20

Net income $ 471 $ 493 $ 372 -4 % 27 %

Net income available to common shareholders ? diluted $ 452 $ 473 $ 353 -5 % 28 %

Diluted earnings per common share $ 3.52 $ 3.60 $ 2.75 -2 % 28 %

Annualized return on average assets 1.30 % 1.60 % 1.06 %

Annualized return on average common equity 12.07 % 12.95 % 9.53 %

For the years ended December 31, 2020 and 2019, diluted earnings per common share were $9.94 and $13.75, respectively. GAAP-basis net income in 2020 totaled $1.35 billion, compared with $1.93 billion in 2019. Expressed as a rate of return on average assets and average common shareholders' equity, GAAP-basis net income in 2020 was 1.00% and 8.72%, respectively, and 1.61% and 12.87%, respectively, in 2019.

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 and core deposit and other intangible asset balances, net of applicable deferred tax amounts) and expenses associated with merging acquired operations into M&T (when incurred), since such items are considered by management to be "nonoperating" in nature. The amounts of such "nonoperating" expenses are presented in the tables that accompany this release. 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.

Diluted net operating earnings per common share were $3.54 in the final quarter of 2020, compared with $3.62 in the fourth quarter of 2019 and $2.77 in the third quarter of 2020. Net operating income aggregated $473 million in the recent quarter, $496 million in the fourth quarter of 2019 and $375 million in 2020's third quarter. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income in the fourth quarter of 2020 was 1.35% and 17.53%, respectively, 1.67% and 19.08%, respectively, in the similar quarter of 2019 and 1.10% and 13.94%, respectively, in the third quarter of 2020.

Diluted net operating earnings per common share for the years ended December 31, 2020 and 2019 were $10.02 and $13.86, respectively. Net operating income in 2020 was $1.36 billion, compared with $1.94 billion in 2019. Net operating income expressed as a rate of return on average tangible assets and average tangible common shareholders' equity was 1.04% and 12.79%, respectively, in 2020 and 1.69% and 19.08%, respectively, in 2019.

Taxable-equivalent Net Interest Income. Net interest income expressed on a taxable-equivalent basis totaled $993 million in the recent quarter, compared with $1.01 billion in the fourth quarter of 2019. That decline resulted from a 64 basis point narrowing of the net interest margin, to 3.00% in the fourth quarter of 2020 from 3.64% in the year-earlier quarter, that was partially offset by the impact of a $21.3 billion or 19% increase in average earning assets to $131.9 billion in the recent quarter from $110.6 billion in the final quarter of 2019. In the third quarter of 2020, taxable-equivalent net interest income was $947 million, the net interest margin was 2.95% and average earning assets were $127.7 billion. During the recent quarter, $29 million of interest income was recognized from the accelerated amortization of deferred fees related to payments received on Paycheck Protection Program ("PPP") loans originated by M&T during 2020. At December 31, 2020 and September 30, 2020, outstanding balances of PPP loans totaled $5.4 billion and $6.5 billion, respectively. As compared with the final quarter of 2019, the recent quarter's narrowing of the net interest margin resulted largely from lower yields on loans and deposits held at the Federal Reserve Bank of New York, while the rise in average earning assets reflected higher balances of those same asset types. The improvement in the net interest margin in the recent quarter as compared with 2020's third quarter reflects a five basis point decline in average rates paid to customers on deposits, while the impacts of accelerated amortization of deferred PPP fees and increased levels of low-yielding balances held at the Federal Reserve Bank of New York were largely offsetting. Taxable-equivalent net interest income for the full year of 2020 was $3.88 billion and in 2019 was $4.15 billion. The net interest margin was 3.16% in 2020 and 3.84% in 2019.

Taxable-equivalent Net Interest Income

Change 4Q20 vs.

($ in millions) 4Q20 4Q19 3Q20 4Q19 3Q20

Average earning assets $ 131,916 $ 110,581 $ 127,689 19 % 3 %

Net interest income ? taxable-equivalent $ 993 $ 1,014 $ 947 -2 % 5 %

Net interest margin 3.00 % 3.64 % 2.95 %

Provision for Credit Losses/Asset Quality. The provision for credit losses totaled $75 million in the fourth quarter of 2020, compared with $54 million in the year-earlier quarter and $150 million in 2020's third quarter. The provision was $800 million for the year ended December 31, 2020, compared with $176 million in 2019. The significantly higher level of the provision in 2020 reflected projections of expected credit losses under the provisions of new accounting guidance that became effective on January 1, 2020. Those projections included estimates of the economic impact of the COVID-19 pandemic. Prior to 2020, the provision for credit losses reflected incurred losses only. Net loan charge-offs were $97 million during the recent quarter, compared with $41 million in the final quarter of 2019 and $30 million in the third quarter of 2020. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .39% and .18% in the final quarters of 2020 and 2019, respectively, and .12% in the third quarter of 2020. Net loan charge-offs during 2020 and 2019 aggregated $247 million and $144 million, respectively, representing .26% and .16%, respectively, of average loans outstanding.

Loans classified as nonaccrual rose to $1.89 billion or 1.92% of total loans outstanding at December 31, 2020 from $1.24 billion or 1.26% of total loans at September 30, 2020. That significant increase reflected the continuing impact of the pandemic on borrowers' ability to make contractual payments on their loans, particularly loans collateralized by hotels. Of the $653 million rise in nonaccrual loans during the fourth quarter of 2020, $530 million were associated with hotels. Nonaccrual loans outstanding at December 31, 2019 were $963 million or 1.06% of total loans. The adoption of the new accounting guidance previously mentioned resulted in an increase in nonaccrual loans on January 1, 2020 of $171 million. Assets taken in foreclosure of defaulted loans were $35 million at December 31, 2020, $86 million at December 31, 2019 and $50 million at September 30, 2020.

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. As a result of those analyses, the allowance for credit losses totaled $1.74 billion or 1.76% of loans outstanding at December 31, 2020, compared with $1.05 billion or 1.16% at December 31, 2019, $1.76 billion or 1.79% at September 30, 2020 and $1.18 billion or 1.30% as of January 1, 2020 following adoption of the current expected credit loss accounting rules. The adoption of the amended accounting guidance resulted in an increase to the allowance of $132 million on January 1, 2020. The allowance at December 31, 2020 and September 30, 2020 represented 1.86% and 1.91%, respectively, of total loans on those dates, excluding outstanding balances of PPP loans.

Asset Quality Metrics

Change 4Q20 vs.

($ in millions) 4Q20 4Q19 3Q20 4Q19 3Q20

At end of quarter

Nonaccrual loans $ 1,893 $ 963 $ 1,240 97 % 53 %

Real estate and other foreclosed assets $ 35 $ 86 $ 50 -60 % -30 %

Total nonperforming assets $ 1,928 $ 1,049 $ 1,290 84 % 49 %

Accruing loans past due 90 days or more (1) $ 859 $ 519 $ 527 66 % 63 %

Nonaccrual loans as % of loans outstanding 1.92 % 1.06 % 1.26 %

Allowance for credit losses $ 1,736 $ 1,051 $ 1,759 65 % -1 %

Allowance for credit losses as % of loans outstanding 1.76 % 1.16 % 1.79 %

For the period

Provision for credit losses $ 75 $ 54 $ 150 39 % -50 %

Net charge-offs $ 97 $ 41 $ 30 135 % 227 %

Net charge-offs as % of average loans (annualized) .39 % .18 % .12 %

(1) Predominantly government-guaranteed residential real estate loans. Prior to 2020, excludes loans acquired at a discount.

Noninterest Income and Expense. Noninterest income was $551 million in the fourth quarter of 2020 and $521 million in each of the year-earlier quarter and the third quarter of 2020. The improvement when compared with the final 2019 quarter resulted largely from a $30 million distribution from Bayview Lending Group LLC and higher mortgage banking revenues. Partially offsetting those factors were declines in service charges on deposit accounts, loan syndication fees and trading account and foreign exchange gains. The higher income in the recent quarter as compared with the third quarter of 2020 predominantly reflects the distribution from Bayview Lending Group LLC and increased commercial mortgage banking revenues, partially offset by a decline in residential mortgage banking revenues.

Noninterest Income

Change 4Q20 vs.

($ in millions) 4Q20 4Q19 3Q20 4Q19 3Q20

Mortgage banking revenues $ 140 $ 118 $ 153 19 % -8 %

Service charges on deposit accounts 96 111 91 -14 % 5 %

Trust income 151 151 150 - 1 %

Brokerage services income 12 12 12 3 % 5 %

Trading account and foreign exchange gains 7 17 4 -57 % 79 %

Gain (loss) on bank investment securities 2 (6) 3 - -42 %

Other revenues from operations 143 118 108 21 % 33 %

Total $ 551 $ 521 $ 521 6 % 6 %

Noninterest income improved to $2.09 billion in 2020 from $2.06 billion in 2019. A 24% rise in mortgage banking revenues, higher trust income and increased income from Bayview Lending Group LLC were partially offset by declines in service charges on deposit accounts, trading account and foreign exchange gains and loan syndication fees.

Noninterest expense totaled $845 million in the final quarter of 2020, compared with $824 million in the corresponding quarter of 2019 and $827 million in the third quarter of 2020. Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets, noninterest operating expenses were $842 million in the recent quarter, $819 million in the fourth quarter of 2019 and $823 million in 2020's third quarter. Significant factors contributing to the higher level of noninterest expenses in the recent quarter as compared with the year-earlier quarter were higher costs for salaries and employee benefits, changes in the valuation allowance for capitalized residential mortgage servicing rights and $14 million of expenses related to the planned transition of the support for M&T's retail brokerage and advisory business to the platform of LPL Financial, partially offset by lower costs for professional and outside services, advertising and marketing, and travel and entertainment. The valuation allowance for capitalized residential mortgage servicing rights was increased by $3 million in the fourth quarter of 2020, compared with a reduction in the allowance of $16 million in the final 2019 quarter. When compared with the third quarter of 2020, the recent quarter increase in noninterest expenses largely reflected expenses for the retail brokerage and advisory business support transition and higher costs for advertising and marketing.

Noninterest Expense

Change 4Q20 vs.

($ in millions) 4Q20 4Q19 3Q20 4Q19 3Q20

Salaries and employee benefits $ 476 $ 469 $ 479 1 % -1 %

Equipment and net occupancy 84 83 81 2 % 4 %

Outside data processing and software 68 62 65 10 % 5 %

FDIC assessments 15 12 12 22 % 25 %

Advertising and marketing 18 27 12 -34 % 50 %

Printing, postage and supplies 9 10 9 -12 % -12 %

Amortization of core deposit and other intangible assets 3 4 4 -27 % -20 %

Other costs of operations 172 157 165 10 % 4 %

Total $ 845 $ 824 $ 827 3 % 2 %

For the year ended December 31, 2020, noninterest expense aggregated $3.39 billion, compared with $3.47 billion in 2019. Noninterest operating expenses were $3.37 billion and $3.45 billion in 2020 and 2019, respectively. Contributing to the lower level of such expenses in 2020 were decreased costs for professional and outside services, legal-related matters, advertising and marketing, travel and entertainment, and a $48 million charge in the second quarter of 2019 associated with the sale of an equity investment in an asset manager. Those factors were partially offset by higher costs for salaries and employee benefits, outside data processing and software, increases to the valuation allowance for capitalized residential mortgage servicing rights and the transition expenses noted earlier.

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 54.6% in the fourth quarter of 2020, 53.1% in the year-earlier quarter and 56.2% in the third quarter of 2020. The efficiency ratio for the full year 2020 was 56.3%, compared with 55.7% in 2019.

Balance Sheet. M&T had total assets of $142.6 billion at December 31, 2020, compared with $119.9 billion and $138.6 billion at December 31, 2019 and September 30, 2020, respectively. Loans and leases, net of unearned discount, were $98.5 billion at December 31, 2020, up from $90.9 billion at December 31, 2019 and $98.4 billion at September 30, 2020. The increase in total loans and leases at the recent quarter-end as compared with the fourth quarter of 2019 was driven largely by growth in commercial loans of $3.7 billion and commercial real estate loans of $2.1 billion. The commercial loan growth reflects loans originated as part of the PPP, which totaled $5.4 billion at December 31, 2020. Total deposits rose to $119.8 billion at the recent quarter-end, compared with $94.8 billion at December 31, 2019 and $115.2 billion at September 30, 2020. The higher levels of deposits at the two most recent quarter-ends as compared with December 31, 2019 reflect increased commercial and consumer deposits, as well as higher deposits associated with residential mortgage servicing activities.

Total shareholders' equity was $16.2 billion, or 11.35% of total assets at December 31, 2020, $15.7 billion, or 13.11% at December 31, 2019 and $16.1 billion, or 11.61% at September 30, 2020. Common shareholders' equity was $14.9 billion, or $116.39 per share, at December 31, 2020, compared with $14.5 billion, or $110.78 per share, a year-earlier and $14.9 billion, or $115.75 per share, at September 30, 2020. Tangible equity per common share was $80.52 at December 31, 2020, $75.44 at December 31, 2019 and $79.85 at September 30, 2020. In the calculation of tangible equity per common share, common shareholders' equity is reduced by the carrying values of goodwill and core deposit and other intangible assets, net of applicable deferred tax balances. M&T estimates that the ratio of Common Equity Tier 1 to risk-weighted assets under regulatory capital rules was approximately 10.0% at December 31, 2020, up from 9.81% three months earlier and 9.73% at December 31, 2019.

Conference Call. Investors will have an opportunity to listen to M&T's conference call to discuss fourth quarter financial results today at 11:00 a.m. Eastern Time. Those wishing to participate in the call may dial (877) 780-2276. International participants, using any applicable international calling codes, may dial (973) 582-2700. Callers should reference M&T Bank Corporation or the conference ID #1884289. The conference call will be webcast live through M&T's website at https://ir.mtb.com/events-presentations. A replay of the call will be available through Thursday, January 28, 2021 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to the ID #1884289. The event will also be archived and available by 3:00 p.m. today on M&T's website at https://ir.mtb.com/events-presentations.

M&T is a financial holding company headquartered in Buffalo, New York. M&T's principal banking subsidiary, M&T Bank, operates banking offices in New York, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia and the District of Columbia. Trust-related services are provided by M&T's Wilmington Trust-affiliated companies and by M&T Bank.

Forward-Looking Statements. This news release and related conference call may contain 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. Any statement that does not describe historical or current facts is a forward-looking statement, including statements regarding the potential effects of the Coronavirus Disease 2019 ("COVID-19") pandemic on M&T's business, financial condition, liquidity and results of operations. 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; risks and uncertainties relating to the impact of the COVID-19 pandemic; the impact of changes in market values on trust-related revenues; legislation affecting the financial services industry as a whole, and M&T and its subsidiaries individually or collectively, including tax legislation or regulation; regulatory supervision and oversight, including monetary policy and capital requirements; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board, regulatory agencies or legislation; 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 revenue enhancements.

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.

Further, statements about the potential effects of the COVID-19 pandemic on M&T's business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond M&T's control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on customers, clients, third parties and M&T.

M&T provides further detail regarding these risks and uncertainties in its 2019 Form 10-K and subsequent Form 10-Qs, including in the respective Risk Factors sections of such reports, as well as in subsequent SEC filings. Forward-looking statements speak only as of the date made, and M&T does not assume any duty and does not undertake to update forward-looking statements.

Financial Highlights

Three months ended Year ended

December 31 December 31

Amounts in thousands, except per share 2020 2019 Change 2020 2019 Change

Performance

Net income $ 471,140 493,066 -4 % $ 1,353,152 1,929,149 -30 %

Net income available to common shareholders 451,869 473,372 -5 % 1,279,068 1,849,511 -31 %

Per common share:

Basic earnings $ 3.52 3.60 -2 % $ 9.94 13.76 -28 %

Diluted earnings 3.52 3.60 -2 % 9.94 13.75 -28 %

Cash dividends $ 1.10 1.10 - $ 4.40 4.10 7 %

Common shares outstanding:

Average - diluted (1) 128,379 131,549 -2 % 128,704 134,462 -4 %

Period end (2) 128,333 130,589 -2 % 128,333 130,589 -2 %

Return on (annualized):

Average total assets 1.30 % 1.60 % 1.00 % 1.61 %

Average common shareholders' equity 12.07 % 12.95 % 8.72 % 12.87 %

Taxable-equivalent net interest income $ 993,252 1,014,225 -2 % $ 3,883,605 4,153,127 -6 %

Yield on average earning assets 3.15 % 4.27 % 3.43 % 4.53 %

Cost of interest-bearing liabilities .25 % .97 % .43 % 1.05 %

Net interest spread 2.90 % 3.30 % 3.00 % 3.48 %

Contribution of interest-free funds .10 % .34 % .16 % .36 %

Net interest margin 3.00 % 3.64 % 3.16 % 3.84 %

Net charge-offs to average total net loans (annualized) .39 % .18 % .26 % .16 %

Net operating results (3)

Net operating income $ 473,453 496,237 -5 % $ 1,364,145 1,943,508 -30 %

Diluted net operating earnings per common share 3.54 3.62 -2 % 10.02 13.86 -28 %

Return on (annualized):

Average tangible assets 1.35 % 1.67 % 1.04 % 1.69 %

Average tangible common equity 17.53 % 19.08 % 12.79 % 19.08 %

Efficiency ratio 54.6 % 53.1 % 56.3 % 55.7 %

At December 31

Loan quality 2020 2019 Change

Nonaccrual loans $ 1,893,299 963,112 97 %

Real estate and other foreclosed assets 34,668 85,646 -60 %

Total nonperforming assets $ 1,927,967 1,048,758 84 %

Accruing loans past due 90 days or more (4) $ 859,208 518,728 66 %

Government guaranteed loans included in totals above:

Nonaccrual loans $ 48,820 50,891 -4 %

Accruing loans past due 90 days or more 798,121 479,829 66 %

Renegotiated loans $ 238,994 234,424 2 %

Accruing loans acquired at a discount past due 90 days or more (5) N/A 39,632 -

Purchased impaired loans (6):

Outstanding customer balance N/A 415,413 -

Carrying amount N/A 227,545 -

Nonaccrual loans to total net loans 1.92 % 1.06 %

Allowance for credit losses to total loans 1.76 % 1.16 %

(1) Includes common stock equivalents.

(2) Includes common stock issuable under deferred compensation plans.

Excludes amortization and balances related to goodwill and core deposit and other intangible assets and merger-related expenses which, except in the(3) calculation of the efficiency ratio, are net of applicable income tax effects. Reconciliations of net income with net operating income appear herein.

(4) Predominantly residential real estate loans. Prior to 2020, excludes loans acquired at a discount.

Prior to 2020, loans acquired at a discount that were recorded at fair value(5) at acquisition date. This category does not include purchased impaired loans that are presented separately.

(6) Prior to 2020, accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.

Financial Highlights, Five Quarter Trend

Three months ended

December 31, September 30, June 30, March 31, December 31,

Amounts in thousands, except per share 2020 2020 2020 2020 2019

Performance

Net income $ 471,140 372,136 241,054 268,822 493,066

Net income available to common shareholders 451,869 353,400 223,099 250,701 473,372

Per common share:

Basic earnings $ 3.52 2.75 1.74 1.93 3.60

Diluted earnings 3.52 2.75 1.74 1.93 3.60

Cash dividends $ 1.10 1.10 1.10 1.10 1.10

Common shares outstanding:

Average - diluted (1) 128,379 128,355 128,333 129,755 131,549

Period end (2) 128,333 128,303 128,294 128,282 130,589

Return on (annualized):

Average total assets 1.30 % 1.06 % .71 % .90 % 1.60 %

Average common shareholders' equity 12.07 % 9.53 % 6.13 % 7.00 % 12.95 %

Taxable-equivalent net interest income $ 993,252 947,114 961,371 981,868 1,014,225

Yield on average earning assets 3.15 % 3.13 % 3.38 % 4.18 % 4.27 %

Cost of interest-bearing liabilities .25 % .30 % .40 % .83 % .97 %

Net interest spread 2.90 % 2.83 % 2.98 % 3.35 % 3.30 %

Contribution of interest-free funds .10 % .12 % .15 % .30 % .34 %

Net interest margin 3.00 % 2.95 % 3.13 % 3.65 % 3.64 %

Net charge-offs to average total net loans (annualized) .39 % .12 % .29 % .22 % .18 %

Net operating results (3)

Net operating income $ 473,453 375,029 243,958 271,705 496,237

Diluted net operating earnings per common share 3.54 2.77 1.76 1.95 3.62

Return on (annualized):

Average tangible assets 1.35 % 1.10 % .74 % 0.94 % 1.67 %

Average tangible common equity 17.53 % 13.94 % 9.04 % 10.39 % 19.08 %

Efficiency ratio 54.6 % 56.2 % 55.7 % 58.9 % 53.1 %

December 31, September 30, June 30, March 31, December 31,

Loan quality 2020 2020 2020 2020 2019

Nonaccrual loans $ 1,893,299 1,239,972 1,156,650 1,061,748 963,112

Real estate and other foreclosed assets 34,668 49,872 66,763 83,605 85,646

Total nonperforming assets $ 1,927,967 1,289,844 1,223,413 1,145,353 1,048,758

Accruing loans past due 90 days or more (4) $ 859,208 527,258 535,755 530,317 518,728

Government guaranteed loans included in totals above:

Nonaccrual loans $ 48,820 45,975 51,165 50,561 50,891

Accruing loans past due 90 days or more 798,121 505,446 454,269 464,243 479,829

Renegotiated loans $ 238,994 242,581 234,768 232,439 234,424

Accruing loans acquired at a discount past due 90 days or N/A N/A N/A N/A 39,632 more (5)

Purchased impaired loans (6):

Outstanding customer balance N/A N/A N/A N/A 415,413

Carrying amount N/A N/A N/A N/A 227,545

Nonaccrual loans to total net loans 1.92 % 1.26 % 1.18 % 1.13 % 1.06 %

Allowance for credit losses to total loans 1.76 % 1.79 % 1.68 % 1.47 % 1.16 %

(1) Includes common stock equivalents.

(2) Includes common stock issuable under deferred compensation plans.

Excludes amortization and balances related to goodwill and core deposit and other intangible assets and merger-related expenses which, except in the(3) calculation of the efficiency ratio, are net of applicable income tax effects. Reconciliations of net income with net operating income appear herein.

(4) Predominantly residential real estate loans. Prior to 2020, excludes loans acquired at a discount.

Prior to 2020, loans acquired at a discount that were recorded at fair value(5) at acquisition date. This category does not include purchased impaired loans that are presented separately.

(6) Prior to 2020, accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.

Condensed Consolidated Statement of Income

Three months ended Year ended

December 31 December 31

Dollars in thousands 2020 2019 Change 2020 2019 Change

Interest income $ 1,038,890 1,185,902 -12 % $ 4,192,712 4,879,593 -14 %

Interest expense 49,610 177,069 -72 326,395 749,329 -56

Net interest income 989,280 1,008,833 -2 3,866,317 4,130,264 -6

Provision for credit losses 75,000 54,000 39 800,000 176,000 355

Net interest income after provision for credit losses 914,280 954,833 -4 3,066,317 3,954,264 -22

Other income

Mortgage banking revenues 140,441 118,134 19 566,641 457,770 24

Service charges on deposit accounts 95,817 110,987 -14 370,788 432,978 -14

Trust income 151,314 151,525 - 601,884 572,608 5

Brokerage services income 12,234 11,891 3 47,428 48,922 -3

Trading account and foreign exchange gains 7,204 16,717 -57 40,536 62,044 -35

Gain (loss) on bank investment securities 1,619 (6,452) - (9,421) 18,037 -

Other revenues from operations 142,621 118,238 21 470,588 469,320 -

Total other income 551,250 521,040 6 2,088,444 2,061,679 1

Other expense

Salaries and employee benefits 476,110 469,080 1 1,950,692 1,900,797 3

Equipment and net occupancy 84,228 82,892 2 322,037 324,079 -1

Outside data processing and software 68,034 61,720 10 258,480 229,731 13

FDIC assessments 15,204 12,431 22 53,803 41,535 30

Advertising and marketing 17,832 27,063 -34 61,904 93,472 -34

Printing, postage and supplies 8,335 9,513 -12 39,869 39,893 -

Amortization of core deposit and other 3,129 4,305 -27 14,869 19,490 -24 intangible assets

Other costs of operations 172,136 156,679 10 683,586 819,685 -17

Total other expense 845,008 823,683 3 3,385,240 3,468,682 -2

Income before income taxes 620,522 652,190 -5 1,769,521 2,547,261 -31

Applicable income taxes 149,382 159,124 -6 416,369 618,112 -33

Net income $ 471,140 493,066 -4 % $ 1,353,152 1,929,149 -30 %

Condensed Consolidated Statement of Income, Five Quarter Trend

Three months ended

December 31, September 30, June 30, March 31, December 31,

Dollars in thousands 2020 2020 2020 2020 2019

Interest income $ 1,038,890 1,001,161 1,032,242 1,120,419 1,185,902

Interest expense 49,610 58,066 75,105 143,614 177,069

Net interest income 989,280 943,095 957,137 976,805 1,008,833

Provision for credit losses 75,000 150,000 325,000 250,000 54,000

Net interest income after provision for credit losses 914,280 793,095 632,137 726,805 954,833

Other income

Mortgage banking revenues 140,441 153,267 145,024 127,909 118,134

Service charges on deposit accounts 95,817 91,355 77,455 106,161 110,987

Trust income 151,314 149,937 151,882 148,751 151,525

Brokerage services income 12,234 11,602 10,463 13,129 11,891

Trading account and foreign exchange gains 7,204 4,026 8,290 21,016 16,717

Gain (loss) on bank investment securities 1,619 2,773 6,969 (20,782) (6,452)

Other revenues from operations 142,621 107,601 87,190 133,176 118,238

Total other income 551,250 520,561 487,273 529,360 521,040

Other expense

Salaries and employee benefits 476,110 478,897 458,842 536,843 469,080

Equipment and net occupancy 84,228 81,080 77,089 79,640 82,892

Outside data processing and software 68,034 64,660 61,376 64,410 61,720

FDIC assessments 15,204 12,121 14,207 12,271 12,431

Advertising and marketing 17,832 11,855 9,842 22,375 27,063

Printing, postage and supplies 8,335 9,422 11,260 10,852 9,513

Amortization of core deposit and other intangible assets 3,129 3,914 3,913 3,913 4,305

Other costs of operations 172,136 164,825 170,513 176,112 156,679

Total other expense 845,008 826,774 807,042 906,416 823,683

Income before income taxes 620,522 486,882 312,368 349,749 652,190

Applicable income taxes 149,382 114,746 71,314 80,927 159,124

Net income $ 471,140 372,136 241,054 268,822 493,066

Condensed Consolidated Balance Sheet

December 31

Dollars in thousands 2020 2019 Change

ASSETS

Cash and due from banks $ 1,552,743 1,432,805 8 %

Interest-bearing deposits at banks 23,663,810 7,190,154 229

Federal funds sold - 3,500 -

Trading account 1,068,581 470,129 127

Investment securities 7,045,697 9,497,251 -26

Loans and leases:

Commercial, financial, etc. 27,574,564 23,838,168 16

Real estate - commercial 37,637,889 35,541,914 6

Real estate - consumer 16,752,993 16,156,094 4

Consumer 16,570,421 15,386,693 8

Total loans and leases, net of unearned discount 98,535,867 90,922,869 8

Less: allowance for credit losses 1,736,387 1,051,071 65

Net loans and leases 96,799,480 89,871,798 8

Goodwill 4,593,112 4,593,112 -

Core deposit and other intangible assets 14,165 29,034 -51

Other assets 7,863,517 6,784,974 16

Total assets $ 142,601,105 119,872,757 19 %

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits $ 47,572,884 32,396,407 47 %

Interest-bearing deposits 71,580,750 60,689,618 18

Deposits at Cayman Islands office 652,104 1,684,044 -61

Total deposits 119,805,738 94,770,069 26

Short-term borrowings 59,482 62,363 -5

Accrued interest and other liabilities 2,166,409 2,337,490 -7

Long-term borrowings 4,382,193 6,986,186 -37

Total liabilities 126,413,822 104,156,108 21

Shareholders' equity:

Preferred 1,250,000 1,250,000 -

Common 14,937,283 14,466,649 3

Total shareholders' equity 16,187,283 15,716,649 3

Total liabilities and shareholders' equity $ 142,601,105 119,872,757 19 %

Condensed Consolidated Balance Sheet, Five Quarter Trend

December 31, September 30, June 30, March 31, December 31,

Dollars in thousands 2020 2020 2020 2020 2019

ASSETS

Cash and due from banks $ 1,552,743 1,489,232 1,354,815 1,298,192 1,432,805

Interest-bearing deposits at banks 23,663,810 20,197,937 20,888,341 8,896,307 7,190,154

Federal funds sold - - - - 3,500

Trading account 1,068,581 1,215,573 1,293,534 1,224,291 470,129

Investment securities 7,045,697 7,723,004 8,454,344 8,956,590 9,497,251

Loans and leases:

Commercial, financial, etc. 27,574,564 27,891,648 29,203,862 26,243,648 23,838,168

Real estate - commercial 37,637,889 37,582,084 37,159,451 36,684,106 35,541,914

Real estate - consumer 16,752,993 16,663,708 15,611,462 15,643,014 16,156,094

Consumer 16,570,421 16,309,608 15,782,773 15,571,507 15,386,693

Total loans and leases, net of unearned discount 98,535,867 98,447,048 97,757,548 94,142,275 90,922,869

Less: allowance for credit losses 1,736,387 1,758,505 1,638,236 1,384,366 1,051,071

Net loans and leases 96,799,480 96,688,543 96,119,312 92,757,909 89,871,798

Goodwill 4,593,112 4,593,112 4,593,112 4,593,112 4,593,112

Core deposit and other intangible assets 14,165 17,294 21,208 25,121 29,034

Other assets 7,863,517 6,702,048 6,812,303 6,826,311 6,784,974

Total assets $ 142,601,105 138,626,743 139,536,969 124,577,833 119,872,757

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits $ 47,572,884 44,201,670 45,397,843 35,554,715 32,396,407

Interest-bearing deposits 71,580,750 70,061,680 68,701,832 63,410,672 60,689,618

Deposits at Cayman Islands office 652,104 899,989 868,284 1,217,921 1,684,044

Total deposits 119,805,738 115,163,339 114,967,959 100,183,308 94,770,069

Short-term borrowings 59,482 46,123 52,298 59,180 62,363

Accrued interest and other liabilities 2,166,409 1,857,383 2,250,316 2,198,116 2,337,490

Long-term borrowings 4,382,193 5,458,885 6,321,291 6,321,435 6,986,186

Total liabilities 126,413,822 122,525,730 123,591,864 108,762,039 104,156,108

Shareholders' equity:

Preferred 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000

Common 14,937,283 14,851,013 14,695,105 14,565,794 14,466,649

Total shareholders' equity 16,187,283 16,101,013 15,945,105 15,815,794 15,716,649

Total liabilities and shareholders' equity $ 142,601,105 138,626,743 139,536,969 124,577,833 119,872,757

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalentRates

Three months ended Change in balance Year ended

December 31, December 31, September 30, December 31, 2020 from December 31, Change

Dollars in millions 2020 2019 2020 December 31, September 30, 2020 2019 in

Balance Rate Balance Rate Balance Rate 2019 2020 Balance Rate Balance Rate balance

ASSETS

Interest-bearing deposits at banks $ 22,206 .10 % 8,944 1.65 % 16,440 .10 % 148 % 35 % $ 15,329 .21 % 6,783 2.08 % 126 %

Federal funds sold and agreements

to resell securities 3,799 .12 1,279 1.68 5,113 .13 197 -26 2,717 .26 327 1.68 -

Trading account 50 1.97 70 4.36 50 1.62 -30 - 53 2.10 68 2.72 -22

Investment securities 7,195 2.25 10,044 2.51 7,876 1.95 -28 -9 8,165 2.16 11,550 2.50 -29

Loans and leases, net of unearned

discount

Commercial, financial, etc. 27,713 3.56 23,548 4.36 28,333 3.05 18 -2 27,520 3.42 23,306 4.80 18

Real estate - commercial 37,707 4.15 35,039 5.06 37,243 4.19 8 1 36,986 4.39 34,885 5.21 6

Real estate - consumer 16,761 3.56 16,330 4.15 16,558 3.69 3 1 16,215 3.82 16,665 4.25 -3

Consumer 16,485 4.78 15,327 5.26 16,076 4.76 8 3 15,884 4.92 14,638 5.43 9

Total loans and leases, net 98,666 4.01 90,244 4.77 98,210 3.89 9 - 96,605 4.13 89,494 4.99 8

Total earning assets 131,916 3.15 110,581 4.27 127,689 3.13 19 3 122,869 3.43 108,222 4.53 14

Goodwill 4,593 4,593 4,593 - - 4,593 4,593 -

Core deposit and other intangible

assets 16 31 19 -50 -19 21 38 -44

Other assets 8,038 7,349 7,880 9 2 7,997 6,731 19

Total assets $ 144,563 122,554 140,181 18 % 3 % $ 135,480 119,584 13 %

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing deposits

Savings and interest-checking

deposits $ 69,133 .11 57,103 .66 65,848 .14 21 % 5 % $ 63,590 .23 54,610 .67 16 %

Time deposits 4,113 .97 6,015 1.58 4,715 1.22 -32 -13 4,960 1.34 6,309 1.51 -21

Deposits at Cayman Islands

office 826 .11 1,716 1.14 957 .10 -52 -14 1,117 .36 1,367 1.60 -18

Total interest-bearing

deposits 74,072 .16 64,834 .76 71,520 .21 14 4 69,667 .31 62,286 .78 12

Short-term borrowings 64 .01 675 1.86 62 .01 -91 3 62 .05 1,059 2.34 -94

Long-term borrowings 5,294 1.47 6,941 2.83 5,499 1.51 -24 -4 5,803 1.88 7,703 3.11 -25

Total interest-bearing liabilities 79,430 .25 72,450 .97 77,081 .30 10 3 75,532 .43 71,048 1.05 6

Noninterest-bearing deposits 46,904 32,069 44,786 46 5 41,683 30,763 35

Other liabilities 2,016 2,203 2,241 -8 -10 2,274 2,055 11

Total liabilities 128,350 106,722 124,108 20 3 119,489 103,866 15

Shareholders' equity 16,213 15,832 16,073 2 1 15,991 15,718 2

Total liabilities and

shareholders' equity $ 144,563 122,554 140,181 18 % 3 % $ 135,480 119,584 13 %

Net interest spread 2.90 3.30 2.83 3.00 3.48

Contribution of interest-free funds .10 .34 .12 .16 .36

Net interest margin 3.00 % 3.64 % 2.95 % 3.16 % 3.84 %

Reconciliation of Quarterly GAAP to Non-GAAP Measures

Three months ended Year ended

December 31 December 31

2020 2019 2020 2019

Income statement data

In thousands, except per share

Net income

Net income $ 471,140 493,066 1,353,152 1,929,149

Amortization of core deposit and other intangible assets (1) 2,313 3,171 10,993 14,359

Net operating income $ 473,453 496,237 1,364,145 1,943,508

Earnings per common share

Diluted earnings per common share $ 3.52 3.60 9.94 13.75

Amortization of core deposit and other intangible assets (1) .02 .02 .08 .11

Diluted net operating earnings per common share $ 3.54 3.62 10.02 13.86

Other expense

Other expense $ 845,008 823,683 3,385,240 3,468,682

Amortization of core deposit and other intangible assets (3,129) (4,305) (14,869) (19,490)

Noninterest operating expense $ 841,879 819,378 3,370,371 3,449,192

Efficiency ratio

Noninterest operating expense (numerator) $ 841,879 819,378 3,370,371 3,449,192

Taxable-equivalent net interest income 993,252 1,014,225 3,883,605 4,153,127

Other income 551,250 521,040 2,088,444 2,061,679

Less: Gain (loss) on bank investment securities 1,619 (6,452) (9,421) 18,037

Denominator $ 1,542,883 1,541,717 5,981,470 6,196,769

Efficiency ratio 54.6 % 53.1 % 56.3 % 55.7 %

Balance sheet data

In millions

Average assets

Average assets $ 144,563 122,554 135,480 119,584

Goodwill (4,593) (4,593) (4,593) (4,593)

Core deposit and other intangible assets (16) (31) (21) (38)

Deferred taxes 4 8 5 10

Average tangible assets $ 139,958 117,938 130,871 114,963

Average common equity

Average total equity $ 16,213 15,832 15,991 15,718

Preferred stock (1,250) (1,250) (1,250) (1,272)

Average common equity 14,963 14,582 14,741 14,446

Goodwill (4,593) (4,593) (4,593) (4,593)

Core deposit and other intangible assets (16) (31) (21) (38)

Deferred taxes 4 8 5 10

Average tangible common equity $ 10,358 9,966 10,132 9,825

At end of quarter

Total assets

Total assets $ 142,601 119,873

Goodwill (4,593) (4,593)

Core deposit and other intangible assets (14) (29)

Deferred taxes 4 7

Total tangible assets $ 137,998 115,258

Total common equity

Total equity $ 16,187 15,717

Preferred stock (1,250) (1,250)

Common equity 14,937 14,467

Goodwill (4,593) (4,593)

Core deposit and other intangible assets (14) (29)

Deferred taxes 4 7

Total tangible common equity $ 10,334 9,852

(1) After any related tax effect.

Reconciliation of Quarterly GAAP to Non-GAAP Measures, Five Quarter Trend

Three months ended

December 31, September 30, June 30, March 31, December 31,

2020 2020 2020 2020 2019

Income statement data

In thousands, except per share

Net income

Net income $ 471,140 372,136 241,054 268,822 493,066

Amortization of core deposit and other intangible assets (1) 2,313 2,893 2,904 2,883 3,171

Net operating income $ 473,453 375,029 243,958 271,705 496,237

Earnings per common share

Diluted earnings per common share $ 3.52 2.75 1.74 1.93 3.60

Amortization of core deposit and other intangible assets (1) .02 .02 .02 .02 .02

Diluted net operating earnings per common share $ 3.54 2.77 1.76 1.95 3.62

Other expense

Other expense $ 845,008 826,774 807,042 906,416 823,683

Amortization of core deposit and other intangible assets (3,129) (3,914) (3,913) (3,913) (4,305)

Noninterest operating expense $ 841,879 822,860 803,129 902,503 819,378

Efficiency ratio

Noninterest operating expense (numerator) $ 841,879 822,860 803,129 902,503 819,378

Taxable-equivalent net interest income 993,252 947,114 961,371 981,868 1,014,225

Other income 551,250 520,561 487,273 529,360 521,040

Less: Gain (loss) on bank investment securities 1,619 2,773 6,969 (20,782) (6,452)

Denominator $ 1,542,883 1,464,902 1,441,675 1,532,010 1,541,717

Efficiency ratio 54.6 % 56.2 % 55.7 % 58.9 % 53.1 %

Balance sheet data

In millions

Average assets

Average assets $ 144,563 140,181 136,446 120,585 122,554

Goodwill (4,593) (4,593) (4,593) (4,593) (4,593)

Core deposit and other intangible assets (16) (19) (23) (27) (31)

Deferred taxes 4 5 6 7 8

Average tangible assets $ 139,958 135,574 131,836 115,972 117,938

Average common equity

Average total equity $ 16,213 16,073 15,953 15,720 15,832

Preferred stock (1,250) (1,250) (1,250) (1,250) (1,250)

Average common equity 14,963 14,823 14,703 14,470 14,582

Goodwill (4,593) (4,593) (4,593) (4,593) (4,593)

Core deposit and other intangible assets (16) (19) (23) (27) (31)

Deferred taxes 4 5 6 7 8

Average tangible common equity $ 10,358 10,216 10,093 9,857 9,966

At end of quarter

Total assets

Total assets $ 142,601 138,627 139,537 124,578 119,873

Goodwill (4,593) (4,593) (4,593) (4,593) (4,593)

Core deposit and other intangible assets (14) (17) (21) (25) (29)

Deferred taxes 4 4 5 6 7

Total tangible assets $ 137,998 134,021 134,928 119,966 115,258

Total common equity

Total equity $ 16,187 16,101 15,945 15,816 15,717

Preferred stock (1,250) (1,250) (1,250) (1,250) (1,250)

Common equity 14,937 14,851 14,695 14,566 14,467

Goodwill (4,593) (4,593) (4,593) (4,593) (4,593)

Core deposit and other intangible assets (14) (17) (21) (25) (29)

Deferred taxes 4 4 5 6 7

Total tangible common equity $ 10,334 10,245 10,086 9,954 9,852

(1) After any related tax effect.

INVESTOR CONTACT: Donald J. MacLeod

(716) 842-5138

MEDIA CONTACT: C. Michael Zabel

(716) 842-5385

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SOURCE M&T Bank Corporation