PR Newswire | Oct 20, 2021 06:47AM EDT

10/20 05:46 CDT

M&T Bank Corporation Announces Third Quarter Results BUFFALO, N.Y., Oct. 20, 2021

BUFFALO, N.Y., Oct. 20, 2021 /PRNewswire/ -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for the quarter ended September 30, 2021.

GAAP Results of Operations. Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $3.69 in the third quarter of 2021, up from $2.75 in the year-earlier quarter and $3.41 in the second quarter of 2021. GAAP-basis net income was $495 million in the recent quarter, $372 million in the third quarter of 2020 and $458 million in the second 2021 quarter. GAAP-basis net income for the third quarter of 2021 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.28% and 12.16%, respectively, improved from 1.06% and 9.53%, respectively, in the similar 2020 period and 1.22% and 11.55%, respectively, in the second quarter of 2021. Included in noninterest expenses in the recent quarter were merger-related expenses associated with M&T's proposed acquisition of People's United Financial, Inc. of $9 million ($7 million after tax-effect, or $.05 of diluted earnings per common share), compared with $4 million ($3 million after tax-effect, or $.02 of diluted earnings per common share) in the second quarter of 2021. There were no merger-related expenses in the third quarter of 2020.

Darren J. King, Executive Vice President and Chief Financial Officer, commented on M&T's third quarter results, "Results in the recent quarter reflect the strength of M&T's diversified business model. Fee income was robust, driven by strong mortgage banking, trust and brokerage, and other payments revenue relative to the year-earlier and immediately preceding quarters. Higher expense levels, notably incentive compensation and other professional services costs, were largely associated with the increased revenue but also reflect a reversion to more normal levels. Our balance sheet remains strong, as evidenced by a Common Equity Tier 1 Capital Ratio of 11.1% at September 30, 2021, improved from 10.7% at the end of the second quarter."

Earnings Highlights

Change 3Q21 vs.

($ in millions, except per share data) 3Q21 3Q20 2Q21 3Q20 2Q21

Net income $ 495 $ 372 $ 458 33 % 8 %

Net income available to common shareholders ? diluted $ 476 $ 353 $ 439 35 % 8 %

Diluted earnings per common share $ 3.69 $ 2.75 $ 3.41 34 % 8 %

Annualized return on average assets 1.28 % 1.06 % 1.22 %

Annualized return on average common equity 12.16 % 9.53 % 11.55 %

For the first nine-months of 2021, diluted earnings per common share rose 62% to $10.43 from $6.42 in the year-earlier period. GAAP-basis net income for the nine-month period ended September 30, 2021 increased to $1.40 billion from $882 million in the corresponding 2020 period. Expressed as an annualized rate of return on average assets and average common shareholders' equity, GAAP-basis net income in the nine-month period ended September 30, 2021 was 1.24% and 11.76%, respectively, improved from .89% and 7.57%, respectively, in the corresponding 2020 period. Merger-related expenses for the first nine months of 2021 were $23 million ($17 million after tax-effect, or $.13 of diluted earnings per common share). There were no merger-related expenses in the similar period of 2020.

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 $3.76 in the recent quarter, up from $2.77 and $3.45 in the third quarter of 2020 and the second quarter of 2021, respectively. Net operating income totaled $504 million in 2021's third quarter, $375 million in the third quarter of 2020 and $463 million in the second quarter of 2021. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income in the recent quarter was 1.34% and 17.54%, respectively, 1.10% and 13.94%, respectively, in the year-earlier quarter and 1.27% and 16.68%, respectively, in the second quarter of 2021.

Diluted net operating earnings per common share during the first nine months of 2021 increased to $10.61 from $6.49 in the similar 2020 period. Net operating income during the nine-month periods ended September 30, 2021 and 2020 was $1.42 billion and $891 million, respectively. Net operating income expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity was 1.30% and 17.10%, respectively, in the first nine months of 2021 and was .93% and 11.15%, respectively, in the corresponding 2020 period.

Taxable-equivalent Net Interest Income. Net interest income expressed on a taxable-equivalent basis totaled $971 million in the recent quarter, up from $947 million in the third quarter of 2020 and $946 million in the second 2021 quarter. The recent quarter improvement as compared with the year-earlier quarter was largely due to lower rates paid on deposit accounts offset, in part, by the impact of lower average outstanding loan balances. As compared with the second quarter of 2021, the higher net interest income in the recent quarter was predominantly the result of increased yields on loans, reflecting fees received from payoffs of Paycheck Protection Program ("PPP") loans. The net interest margin in the third quarter of 2021, the third quarter of 2020 and the second quarter of 2021 was 2.74%, 2.95% and 2.77%, respectively. The lower net interest margin in the two most recent quarters reflects higher amounts of low-yielding balances at the Federal Reserve Bank of New York. Those balances add to net interest income, but lower the reported net interest margin. Interest income from PPP loans, including recognition of fees associated with repaid loans, was $71 million in the recent quarter, compared with $39 million in the third quarter of 2020 and $51 million in the second quarter of 2021.

Taxable-equivalent Net Interest Income

Change 3Q21 vs.

($ in millions) 3Q21 3Q20 2Q21 3Q20 2Q21

Average earning assets $ 140,420 $ 127,689 $ 136,951 10 % 3 %

Net interest income ? taxable-equivalent $ 971 $ 947 $ 946 3 % 3 %

Net interest margin 2.74 % 2.95 % 2.77 %

Provision for Credit Losses/Asset Quality. Recaptures of the provision for credit losses of $20 million and $15 million were recorded in the third and second quarters of 2021, respectively. The provision for credit losses totaled $150 million in the third quarter of 2020. The provision in each quarter adjusts the allowance for credit losses to reflect expected losses that are based on economic forecasts as of each quarter-end date. Net loan charge-offs were $40 million during the recent quarter, compared with $30 million in the third quarter of 2020 and $46 million in the second quarter of 2021. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .17% and .12% in the third quarters of 2021 and 2020, respectively, and .19% in the second quarter of 2021.

Loans classified as nonaccrual totaled $2.24 billion at each of September 30, 2021 and June 30, 2021, compared with $1.24 billion at September 30, 2020. As a percentage of loans outstanding, nonaccrual loans were 2.40%, 2.31% and 1.26% at September 30, 2021, June 30, 2021 and September 30, 2020, respectively. The increase in nonaccrual loans from September 30, 2020 to the two most recent quarter-ends reflects the continuing impact of the pandemic on borrowers' ability to make contractual payments on their loans, most notably loans in the hospitality sector. Assets taken in foreclosure of defaulted loans were $25 million at September 30, 2021, $50 million a year earlier and $28 million at June 30, 2021.

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 $1.52 billion or 1.62% of loans outstanding at September 30, 2021, compared with $1.76 billion or 1.79% at September 30, 2020 and $1.58 billion or 1.62% at June 30, 2021. The allowance at September 30, 2021, September 30, 2020, and June 30, 2021 represented 1.66%, 1.91%, and 1.69%, respectively, of total loans on those dates, excluding outstanding balances of PPP loans.

Asset Quality Metrics

Change 3Q21 vs.

($ in millions) 3Q21 3Q20 2Q21 3Q20 2Q21

At end of quarter

Nonaccrual loans $ 2,242 $ 1,240 $ 2,242 81 % -

Real estate and other foreclosed assets $ 25 $ 50 $ 28 -50 % -11 %

Total nonperforming assets $ 2,267 $ 1,290 $ 2,270 76 % -

Accruing loans past due 90 days or more (1) $ 1,026 $ 527 $ 1,077 95 % -5 %

Nonaccrual loans as % of loans outstanding 2.40 % 1.26 % 2.31 %

Allowance for credit losses $ 1,515 $ 1,759 $ 1,575 -14 % -4 %

Allowance for credit losses as % of loans outstanding 1.62 % 1.79 % 1.62 %

For the period

Provision for credit losses $ (20) $ 150 $ (15) - -

Net charge-offs $ 40 $ 30 $ 46 35 % -13 %

Net charge-offs as % of average loans (annualized) .17 % .12 % .19 %

____________

(1) Predominantly government-guaranteed residential real estate loans.

Noninterest Income and Expense. Noninterest income was $569 million in the third quarter of 2021, up from $521 million in the year-earlier quarter and $514 million in the second quarter of 2021. As compared with the third quarter of 2020, the higher level of noninterest income in the recent quarter resulted largely from higher service charges on deposit accounts, merchant discount and credit card fees, mortgage banking revenues and income from M&T's trust and brokerage services businesses. The recent quarter's improvement as compared with the second quarter of 2021 reflects increases in mortgage banking revenues, service charges on deposit accounts, brokerage services income, credit-related fees, and lower unrealized losses on investment securities. Brokerage services income in the recent quarter included approximately $10 million of revenues associated with the sale of select investment products of LPL Financial, an independent financial services broker. Prior to the transition of M&T's retail brokerage and certain trust customer business to LPL Financial in mid-June 2021, those customers were provided proprietary trust products managed by M&T and revenues related thereto were reported as trust income.

Noninterest Income

Change 3Q21 vs.

($ in millions) 3Q21 3Q20 2Q21 3Q20 2Q21

Mortgage banking revenues $ 160 $ 153 $ 133 4 % 20 %

Service charges on deposit accounts 105 91 99 15 % 7 %

Trust income 157 150 163 5 % -4 %

Brokerage services income 20 12 10 77 % 100 %

Trading account and foreign exchange gains 6 4 7 38 % -14 %

Gain (loss) on bank investment securities - 3 (11) - -

Other revenues from operations 121 108 113 12 % 7 %

Total $ 569 $ 521 $ 514 9 % 11 %

Noninterest expense totaled $899 million in the third quarter of 2021, compared with $827 million in the corresponding quarter of 2020 and $865 million in the second quarter of 2021. Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets and merger-related expenses, noninterest operating expenses were $888 million in the recent quarter, $823 million in the third quarter of 2020 and $859 million in 2021's second quarter. Factors contributing to the increase in noninterest operating expenses in the recent quarter as compared with the year-earlier quarter were higher costs for salaries and employee benefits (reflecting increased incentive compensation expenses), outside data processing and software, and professional services. As compared with the second quarter of 2021, the higher level of noninterest operating expenses in the recent quarter resulted largely from higher incentive compensation.

Noninterest Expense

Change 3Q21 vs.

($ in millions) 3Q21 3Q20 2Q21 3Q20 2Q21

Salaries and employee benefits $ 510 $ 479 $ 479 7 % 7 %

Equipment and net occupancy 81 81 81 - -

Outside data processing and software 73 65 74 13 % -2 %

FDIC assessments 19 12 18 55 % 5 %

Advertising and marketing 15 12 13 28 % 14 %

Printing, postage and supplies 8 9 11 -16 % -29 %

Amortization of core deposit and other intangible assets 3 4 3 -30 % -

Other costs of operations 190 165 186 16 % 3 %

Total $ 899 $ 827 $ 865 9 % 4 %

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 57.7% in the third quarter of 2021, 56.2% in the year-earlier quarter and 58.4% in the second quarter of 2021.

Balance Sheet. M&T had total assets of $151.9 billion at September 30, 2021, compared with $138.6 billion and $150.6 billion at September 30, 2020 and June 30, 2021, respectively. Loans and leases, net of unearned discount, were $93.6 billion at September 30, 2021, compared with $98.4 billion at September 30, 2020 and $97.1 billion at June 30, 2021. The lower level of loans and leases at the recent quarter-end as compared with September 30, 2020 reflects a $5.4 billion decline in commercial loans, partially offset by growth in consumer loans of $1.5 billion. The lower commercial loan balances reflect declines in PPP and dealer floor plan loans. The rise in consumer loans resulted from higher balances of recreational finance and automobile loans. The decline in total loans and leases at the recent quarter-end as compared with June 30, 2021 resulted largely from lower commercial loans of $2.9 billion. The decrease in commercial loans reflects lower balances of PPP loans. Those loans totaled $2.2 billion at September 30, 2021, compared with $6.5 billion at September 30, 2020 and $4.3 billion at June 30, 2021. Total deposits were $128.7 billion at the recent quarter-end, $115.2 billion at September 30, 2020 and $128.3 billion at June 30, 2021. The increased levels of deposits at the two most recent quarter-ends as compared with September 30, 2020 reflect higher levels of liquidity being maintained by many commercial and consumer customers.

Total shareholders' equity was $17.5 billion, or 11.54% of total assets at September 30, 2021, $16.1 billion, or 11.61% at September 30, 2020 and $16.7 billion, or 11.10% at June 30, 2021. Common shareholders' equity was $15.8 billion, or $122.60 per share, at September 30, 2021, compared with $14.9 billion, or $115.75 per share, a year-earlier and $15.5 billion, or $120.22 per share, at June 30, 2021. Tangible equity per common share was $86.88 at September 30, 2021, $79.85 at September 30, 2020 and $84.47 at June 30, 2021. 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 11.1% at September 30, 2021, up from 10.7% three months earlier.

Conference Call. Investors will have an opportunity to listen to M&T's conference call to discuss third quarter financial results today at 11:00 a.m. Eastern Time. Those wishing to participate in the call may dial (877) 876-9173. International participants, using any applicable international calling codes, may dial (785) 424-1667. Callers should reference M&T Bank Corporation or the conference ID #MTBQ321. 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 Wednesday, October 27, 2021 by calling (800) 727-6189, or (402) 220-2671 for international participants. No conference ID is required. 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.

About M&T. 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.

Who We Are. We are a bank for communities - bringing the capabilities of a large bank with the care of a locally focused institution. Our purpose is to make a difference in people's lives serving all our stakeholders. The keys to our approach are characterized by responsible lending based on the advantages of local knowledge and scale, and our long history of being prudent stewards of our shareholders' capital. For more on our approach as a bank for communities, please review our latest ESG report available on M&T's website.

Earlier this month it was announced that M&T Bank again ranked in the nation's top 10 for U.S. Small Business Administration lending. For 13 consecutive years, M&T Bank has remained one of the top 10 SBA lenders in the country. Additionally in the quarter, M&T Bank continued to focus on its multicultural customers in its diverse communities by establishing several multicultural banking centers across its footprint to enhance local branch experience by offering services in English and other languages. Customers can also now complete cash transactions at M&T Bank ATMs in four languages.

Forward-Looking Statements. This news release and related conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the rules and regulations of the SEC. Any statement that does not describe historical or current facts is a forward-looking statement, including statements based on current expectations, estimates and projections about M&T's business, and management's beliefs and assumptions.

Statements regarding 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.

Also as described further below, statements regarding M&T's expectations or predictions regarding the proposed transaction between M&T and People's United Financial, Inc. ("People's United") are forward-looking statements, including statements regarding the expected timing, completion and effects of the proposed transaction as well as M&T's and People's United's expected financial results, prospects, targets, goals and outlook.

Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "target," "estimate," "continue," or "potential," by future conditional verbs such as "will," "would," "should," "could," or "may," or by variations of such words or by similar expressions. 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 includerisks, predictions and uncertainties relating to the impact of the People's United transaction (as described in the next paragraph); the impact of the COVID-19 pandemic;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; the impact of changes in market values on trust-related revenues; legislation or regulations affecting the financial services industry and/or M&T and its subsidiaries individually or collectively, including tax policy; 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, product and 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 and 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.

In addition, future factors related to the proposed transaction between M&T and People's United include, among others: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between M&T and People's United; the outcome of any legal proceedings that may be instituted against M&T or People's United; the possibility that the proposed transaction will not close when expected or at all because required regulatory or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated; the risk that any announcements relating to the proposed combination could have adverse effects on the market price of the common stock of either or both parties to the combination; the possibility that the anticipated benefits of the transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where M&T and People's United do business? certain restrictions during the pendency of the merger that may impact the parties' ability to pursue certain business opportunities or strategic transactions; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events? diversion of management's attention from ongoing business operations and opportunities? potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction? M&T's and People's United's success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the business, economic and political conditions in the markets in which the parties operate; and other factors that may affect future results of M&T and People's United.

Future factors related to the proposed transaction also include risks, such as, among others: that the proposed combination and its announcement could have an adverse effect on either or both parties' ability to retain customers and retain or hire key personnel and maintain relationships with customers; that the proposed combination may be more difficult or time-consuming than anticipated, including in areas such as sales force, cost containment, asset realization, systems integration and other key strategies; and that revenues following the proposed combination may be lower than expected, including for possible reasons such as unexpected costs, charges or expenses resulting from the transactions; as well as the unforeseen risks relating to liabilities of M&T or People's United that may exist, and uncertainty as to the extent of the duration, scope, and impacts of the COVID-19 pandemic on People's United, M&T and the proposed combination.

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.

M&T provides further detail regarding these risks and uncertainties in its 2020 Form 10-K, including in the Risk Factors section of such report, as well as in other 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 Nine months ended

September 30 September 30

Amounts in thousands, except per share 2021 2020 Change 2021 2020 Change

Performance

Net income $ 495,460 372,136 33 % $ 1,400,778 882,012 59 %

Net income available to common shareholders 475,961 353,400 35 % 1,342,812 827,204 62 %

Per common share:

Basic earnings $ 3.70 2.75 35 % $ 10.44 6.42 63 %

Diluted earnings 3.69 2.75 34 % 10.43 6.42 62 %

Cash dividends $ 1.10 1.10 - $ 3.30 3.30 -

Common shares outstanding:

Average - diluted (1) 128,844 128,355 - 128,786 128,813 -

Period end (2) 128,699 128,303 - 128,699 128,303 -

Return on (annualized):

Average total assets 1.28 % 1.06 % 1.24 % .89 %

Average common shareholders' equity 12.16 % 9.53 % 11.76 % 7.57 %

Taxable-equivalent net interest income $ 970,953 947,114 3 % $ 2,902,154 2,890,353 -

Yield on average earning assets 2.82 % 3.13 % 2.91 % 3.53 %

Cost of interest-bearing liabilities .14 % .30 % .15 % .50 %

Net interest spread 2.68 % 2.83 % 2.76 % 3.03 %

Contribution of interest-free funds .06 % .12 % .07 % .19 %

Net interest margin 2.74 % 2.95 % 2.83 % 3.22 %

Net charge-offs to average total net loans (annualized) .17 % .12 % .22 % .21 %

Net operating results (3)

Net operating income $ 504,030 375,029 34 % $ 1,424,361 890,692 60 %

Diluted net operating earnings per common share 3.76 2.77 36 % 10.61 6.49 63 %

Return on (annualized):

Average tangible assets 1.34 % 1.10 % 1.30 % .93 %

Average tangible common equity 17.54 % 13.94 % 17.10 % 11.15 %

Efficiency ratio 57.7 % 56.2 % 58.8 % 57.0 %

At September 30

Loan quality 2021 2020 Change

Nonaccrual loans $ 2,242,263 1,239,972 81 %

Real estate and other foreclosed assets 24,786 49,872 -50 %

Total nonperforming assets $ 2,267,049 1,289,844 76 %

Accruing loans past due 90 days or more (4) $ 1,026,080 527,258 95 %

Government guaranteed loans included in totals above:

Nonaccrual loans $ 47,358 45,975 3 %

Accruing loans past due 90 days or more 947,091 505,446 87 %

Renegotiated loans $ 242,955 242,581 -

Nonaccrual loans to total net loans 2.40 % 1.26 %

Allowance for credit losses to total loans 1.62 % 1.79 %

______________

(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.

Financial Highlights, Five Quarter Trend

Three months ended

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

Amounts in thousands, except per share 2021 2021 2021 2020 2020

Performance

Net income $ 495,460 458,069 447,249 471,140 372,136

Net income available to common shareholders 475,961 438,759 428,093 451,869 353,400

Per common share:

Basic earnings $ 3.70 3.41 3.33 3.52 2.75

Diluted earnings 3.69 3.41 3.33 3.52 2.75

Cash dividends $ 1.10 1.10 1.10 1.10 1.10

Common shares outstanding:

Average - diluted (1) 128,844 128,842 128,669 128,379 128,355

Period end (2) 128,699 128,686 128,658 128,333 128,303

Return on (annualized):

Average total assets 1.28 % 1.22 % 1.22 % 1.30 % 1.06 %

Average common shareholders' equity 12.16 % 11.55 % 11.57 % 12.07 % 9.53 %

Taxable-equivalent net interest income $ 970,953 946,072 985,128 993,252 947,114

Yield on average earning assets 2.82 % 2.85 % 3.08 % 3.15 % 3.13 %

Cost of interest-bearing liabilities .14 % .14 % .18 % .25 % .30 %

Net interest spread 2.68 % 2.71 % 2.90 % 2.90 % 2.83 %

Contribution of interest-free funds .06 % .06 % .07 % .10 % .12 %

Net interest margin 2.74 % 2.77 % 2.97 % 3.00 % 2.95 %

Net charge-offs to average total net loans (annualized) .17 % .19 % .31 % .39 % .12 %

Net operating results (3)

Net operating income $ 504,030 462,959 457,372 473,453 375,029

Diluted net operating earnings per common share 3.76 3.45 3.41 3.54 2.77

Return on (annualized):

Average tangible assets 1.34 % 1.27 % 1.29 % 1.35 % 1.10 %

Average tangible common equity 17.54 % 16.68 % 17.05 % 17.53 % 13.94 %

Efficiency ratio 57.7 % 58.4 % 60.3 % 54.6 % 56.2 %

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

Loan quality 2021 2021 2021 2020 2020

Nonaccrual loans $ 2,242,263 2,242,057 1,957,106 1,893,299 1,239,972

Real estate and other foreclosed assets 24,786 27,902 29,797 34,668 49,872

Total nonperforming assets $ 2,267,049 2,269,959 1,986,903 1,927,967 1,289,844

Accruing loans past due 90 days or more (4) $ 1,026,080 1,077,227 1,084,553 859,208 527,258

Government guaranteed loans included in totals above:

Nonaccrual loans $ 47,358 49,796 51,668 48,820 45,975

Accruing loans past due 90 days or more 947,091 1,029,331 1,044,599 798,121 505,446

Renegotiated loans $ 242,955 236,377 242,121 238,994 242,581

Nonaccrual loans to total net loans 2.40 % 2.31 % 1.97 % 1.92 % 1.26 %

Allowance for credit losses to total loans 1.62 % 1.62 % 1.65 % 1.76 % 1.79 %

______________

(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.

Condensed Consolidated Statement of Income

Three months ended Nine months ended

September 30 September 30

Dollars in thousands 2021 2020 Change 2021 2020 Change

Interest income $ 992,946 1,001,161 -1 % $ 2,980,266 3,153,822 -6 %

Interest expense 25,696 58,066 -56 89,281 276,785 -68

Net interest income 967,250 943,095 3 2,890,985 2,877,037 -

Provision for credit losses (20,000) 150,000 - (60,000) 725,000 -

Net interest income after provision for credit losses 987,250 793,095 24 2,950,985 2,152,037 37

Other income

Mortgage banking revenues 159,995 153,267 4 432,062 426,200 1

Service charges on deposit accounts 105,426 91,355 15 296,721 274,971 8

Trust income 156,876 149,937 5 475,889 450,570 6

Brokerage services income 20,490 11,602 77 43,868 35,194 25

Trading account and foreign exchange gains 5,563 4,026 38 18,349 33,332 -45

Gain (loss) on bank investment securities 291 2,773 - (22,646) (11,040) -

Other revenues from operations 120,485 107,601 12 344,114 327,967 5

Total other income 569,126 520,561 9 1,588,357 1,537,194 3

Other expense

Salaries and employee benefits 510,422 478,897 7 1,530,634 1,474,582 4

Equipment and net occupancy 80,738 81,080 - 244,057 237,809 3

Outside data processing and software 72,782 64,660 13 213,025 190,446 12

FDIC assessments 18,810 12,121 55 50,874 38,599 32

Advertising and marketing 15,208 11,855 28 43,200 44,072 -2

Printing, postage and supplies 7,917 9,422 -16 28,367 31,534 -10

Amortization of core deposit and other 2,738 3,914 -30 8,213 11,740 -30 intangible assets

Other costs of operations 190,719 164,825 16 565,753 511,450 11

Total other expense 899,334 826,774 9 2,684,123 2,540,232 6

Income before income taxes 657,042 486,882 35 1,855,219 1,148,999 61

Applicable income taxes 161,582 114,746 41 454,441 266,987 70

Net income $ 495,460 372,136 33 % $ 1,400,778 882,012 59 %

Condensed Consolidated Statement of Income, Five Quarter Trend

Three months ended

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

Dollars in thousands 2021 2021 2021 2020 2020

Interest income $ 992,946 970,358 1,016,962 1,038,890 1,001,161

Interest expense 25,696 28,018 35,567 49,610 58,066

Net interest income 967,250 942,340 981,395 989,280 943,095

Provision for credit losses (20,000) (15,000) (25,000) 75,000 150,000

Net interest income after provision for credit losses 987,250 957,340 1,006,395 914,280 793,095

Other income

Mortgage banking revenues 159,995 133,313 138,754 140,441 153,267

Service charges on deposit accounts 105,426 98,518 92,777 95,817 91,355

Trust income 156,876 162,991 156,022 151,314 149,937

Brokerage services income 20,490 10,265 13,113 12,234 11,602

Trading account and foreign exchange gains 5,563 6,502 6,284 7,204 4,026

Gain (loss) on bank investment securities 291 (10,655) (12,282) 1,619 2,773

Other revenues from operations 120,485 112,699 110,930 142,621 107,601

Total other income 569,126 513,633 505,598 551,250 520,561

Other expense

Salaries and employee benefits 510,422 479,134 541,078 476,110 478,897

Equipment and net occupancy 80,738 80,848 82,471 84,228 81,080

Outside data processing and software 72,782 74,492 65,751 68,034 64,660

FDIC assessments 18,810 17,876 14,188 15,204 12,121

Advertising and marketing 15,208 13,364 14,628 17,832 11,855

Printing, postage and supplies 7,917 11,133 9,317 8,335 9,422

Amortization of core deposit and other 2,738 2,737 2,738 3,129 3,914 intangible assets

Other costs of operations 190,719 185,761 189,273 172,136 164,825

Total other expense 899,334 865,345 919,444 845,008 826,774

Income before income taxes 657,042 605,628 592,549 620,522 486,882

Applicable income taxes 161,582 147,559 145,300 149,382 114,746

Net income $ 495,460 458,069 447,249 471,140 372,136

Condensed Consolidated Balance Sheet

September 30

Dollars in thousands 2021 2020 Change

ASSETS

Cash and due from banks $ 1,479,712 1,489,232 -1 %

Interest-bearing deposits at banks 38,445,788 20,197,937 90

Trading account 624,556 1,215,573 -49

Investment securities 6,447,622 7,723,004 -17

Loans and leases:

Commercial, financial, etc. 22,514,940 27,891,648 -19

Real estate - commercial 37,023,952 37,582,084 -1

Real estate - consumer 16,209,354 16,663,708 -3

Consumer 17,834,648 16,309,608 9

Total loans and leases, net of unearned discount 93,582,894 98,447,048 -5

Less: allowance for credit losses 1,515,024 1,758,505 -14

Net loans and leases 92,067,870 96,688,543 -5

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

Core deposit and other intangible assets 5,952 17,294 -66

Other assets 8,236,582 6,702,048 23

Total assets $ 151,901,194 138,626,743 10 %

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits $ 56,542,309 44,201,670 28 %

Interest-bearing deposits 72,158,987 70,061,680 3

Deposits at Cayman Islands office - 899,989 -100

Total deposits 128,701,296 115,163,339 12

Short-term borrowings 103,548 46,123 125

Accrued interest and other liabilities 2,067,188 1,857,383 11

Long-term borrowings 3,500,391 5,458,885 -36

Total liabilities 134,372,423 122,525,730 10

Shareholders' equity:

Preferred 1,750,000 1,250,000 40

Common 15,778,771 14,851,013 6

Total shareholders' equity 17,528,771 16,101,013 9

Total liabilities and shareholders' equity $ 151,901,194 138,626,743 10 %

Condensed Consolidated Balance Sheet, Five Quarter Trend

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

Dollars in thousands 2021 2021 2021 2020 2020

ASSETS

Cash and due from banks $ 1,479,712 1,410,468 1,258,989 1,552,743 1,489,232

Interest-bearing deposits at banks 38,445,788 33,864,824 31,407,227 23,663,810 20,197,937

Federal funds sold - - 1,000 - -

Trading account 624,556 712,558 687,359 1,068,581 1,215,573

Investment securities 6,447,622 6,143,177 6,610,667 7,045,697 7,723,004

Loans and leases:

Commercial, financial, etc. 22,514,940 25,409,291 27,811,190 27,574,564 27,891,648

Real estate - commercial 37,023,952 37,558,775 37,425,974 37,637,889 37,582,084

Real estate - consumer 16,209,354 16,704,951 17,349,683 16,752,993 16,663,708

Consumer 17,834,648 17,440,415 16,712,233 16,570,421 16,309,608

Total loans and leases, net of unearned discount 93,582,894 97,113,432 99,299,080 98,535,867 98,447,048

Less: allowance for credit losses 1,515,024 1,575,128 1,636,206 1,736,387 1,758,505

Net loans and leases 92,067,870 95,538,304 97,662,874 96,799,480 96,688,543

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

Core deposit and other intangible assets 5,952 8,690 11,427 14,165 17,294

Other assets 8,236,582 8,351,574 8,248,405 7,863,517 6,702,048

Total assets $ 151,901,194 150,622,707 150,481,060 142,601,105 138,626,743

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits $ 56,542,309 55,621,230 53,641,419 47,572,884 44,201,670

Interest-bearing deposits 72,158,987 72,647,542 74,193,255 71,580,750 70,061,680

Deposits at Cayman Islands office - - 641,691 652,104 899,989

Total deposits 128,701,296 128,268,772 128,476,365 119,805,738 115,163,339

Short-term borrowings 103,548 91,235 58,957 59,482 46,123

Accrued interest and other liabilities 2,067,188 2,042,948 2,000,727 2,166,409 1,857,383

Long-term borrowings 3,500,391 3,499,448 3,498,503 4,382,193 5,458,885

Total liabilities 134,372,423 133,902,403 134,034,552 126,413,822 122,525,730

Shareholders' equity:

Preferred 1,750,000 1,250,000 1,250,000 1,250,000 1,250,000

Common 15,778,771 15,470,304 15,196,508 14,937,283 14,851,013

Total shareholders' equity 17,528,771 16,720,304 16,446,508 16,187,283 16,101,013

Total liabilities and shareholders' equity $ 151,901,194 150,622,707 150,481,060 142,601,105 138,626,743

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalentRates

Three months ended Change in balance Nine months ended

September 30, September 30, June 30, September 30, 2021 from September 30, Change

Dollars in millions 2021 2020 2021 September 30, June 30, 2021 2020 in

Balance Rate Balance Rate Balance Rate 2020 2021 Balance Rate Balance Rate balance

ASSETS

Interest-bearing deposits at banks $ 39,036 .15 % 16,440 .10 % 32,081 .11 % 137 % 22 % $ 32,969 .12 % 13,021 .28 % 153 %

Federal funds sold and agreements to - .47 5,113 .13 - .48 -100 40 223 .12 2,353 .33 -resell securities

Trading account 51 2.71 50 1.62 49 1.76 2 3 50 1.97 54 2.15 -7

Investment securities 6,019 2.19 7,876 1.95 6,211 2.23 -24 -3 6,276 2.23 8,490 2.14 -26

Loans and leases, net of unearneddiscount

Commercial, financial, etc. 23,730 3.96 28,333 3.05 27,055 3.26 -16 -12 26,155 3.57 27,455 3.37 -5

Real estate - commercial 37,547 3.87 37,243 4.19 37,419 3.92 1 - 37,525 3.98 36,743 4.47 2

Real estate - consumer 16,379 3.59 16,558 3.69 17,022 3.54 -1 -4 16,932 3.56 16,032 3.90 6

Consumer 17,658 4.34 16,076 4.76 17,114 4.44 10 3 17,134 4.47 15,683 4.96 9

Total loans and leases, net 95,314 3.95 98,210 3.89 98,610 3.79 -3 -3 97,746 3.91 95,913 4.17 2

Total earning assets 140,420 2.82 127,689 3.13 136,951 2.85 10 3 137,264 2.91 119,831 3.53 15

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

Core deposit and other intangible assets 7 19 10 -62 -27 10 23 -57

Other assets 9,017 7,880 9,087 14 -1 9,100 7,983 14

Total assets $ 154,037 140,181 150,641 10 % 2 % $ 150,967 132,430 14 %

LIABILITIES AND SHAREHOLDERS'EQUITY

Interest-bearing deposits

Savings and interest-checking $ 70,976 .04 65,848 .14 71,561 .05 8 % -1 % $ 71,000 .05 61,729 .27 15 %deposits

Time deposits 3,061 .46 4,715 1.22 3,358 .61 -35 -9 3,381 .62 5,245 1.43 -36

Deposits at Cayman Islands office - - 957 .10 50 .12 -100 -100 242 .11 1,214 .42 -80

Total interest-bearing deposits 74,037 .06 71,520 .21 74,969 .07 4 -1 74,623 .08 68,188 .37 9

Short-term borrowings 91 .01 62 .01 61 .01 48 50 72 .01 61 .06 18

Long-term borrowings 3,431 1.75 5,499 1.51 3,429 1.74 -38 - 3,569 1.76 5,974 2.01 -40

Total interest-bearing liabilities 77,559 .14 77,081 .30 78,459 .14 1 -1 78,264 .15 74,223 .50 5

Noninterest-bearing deposits 57,218 44,786 53,444 28 7 53,864 39,931 35

Other liabilities 2,151 2,241 2,167 -4 -1 2,167 2,360 -8

Total liabilities 136,928 124,108 134,070 10 2 134,295 116,514 15

Shareholders' equity 17,109 16,073 16,571 6 3 16,672 15,916 5

Total liabilities and shareholders' $ 154,037 140,181 150,641 10 % 2 % $ 150,967 132,430 14 %equity

Net interest spread 2.68 2.83 2.71 2.76 3.03

Contribution of interest-free funds .06 .12 .06 .07 .19

Net interest margin 2.74 % 2.95 % 2.77 % 2.83 % 3.22 %

Reconciliation of Quarterly GAAP to Non-GAAP Measures

Three months ended Nine months ended

September 30 September 30

2021 2020 2021 2020

Income statement data

In thousands, except per share

Net income

Net income $ 495,460 372,136 1,400,778 882,012

Amortization of core deposit and other intangible assets (1) 2,028 2,893 6,085 8,680

Merger-related expenses (1) 6,542 - 17,498 -

Net operating income $ 504,030 375,029 1,424,361 890,692

Earnings per common share

Diluted earnings per common share $ 3.69 2.75 10.43 6.42

Amortization of core deposit and other intangible assets (1) .02 .02 .05 .07

Merger-related expenses (1) .05 - .13 -

Diluted net operating earnings per common share $ 3.76 2.77 10.61 6.49

Other expense

Other expense $ 899,334 826,774 2,684,123 2,540,232

Amortization of core deposit and other intangible assets (2,738) (3,914) (8,213) (11,740)

Merger-related expenses (8,826) - (22,670) -

Noninterest operating expense $ 887,770 822,860 2,653,240 2,528,492

Merger-related expenses

Salaries and employee benefits $ 60 - 64 -

Equipment and net occupancy 1 - 1 -

Outside data processing and software 625 - 869 -

Advertising and marketing 505 - 529 -

Printing, postage and supplies 730 - 2,779 -

Other costs of operations 6,905 - 18,428 -

Other expense $ 8,826 - 22,670 -

Efficiency ratio

Noninterest operating expense (numerator) $ 887,770 822,860 2,653,240 2,528,492

Taxable-equivalent net interest income $ 970,953 947,114 2,902,154 2,890,353

Other income 569,126 520,561 1,588,357 1,537,194

Less: Gain (loss) on bank investment securities 291 2,773 (22,646) (11,040)

Denominator $ 1,539,788 1,464,902 4,513,157 4,438,587

Efficiency ratio 57.7 % 56.2 % 58.8 % 57.0 %

Balance sheet data

In millions

Average assets

Average assets $ 154,037 140,181 150,967 132,430

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

Core deposit and other intangible assets (7) (19) (10) (23)

Deferred taxes 2 5 2 6

Average tangible assets $ 149,439 135,574 146,366 127,820

Average common equity

Average total equity $ 17,109 16,073 16,672 15,916

Preferred stock (1,495) (1,250) (1,332) (1,250)

Average common equity 15,614 14,823 15,340 14,666

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

Core deposit and other intangible assets (7) (19) (10) (23)

Deferred taxes 2 5 2 6

Average tangible common equity $ 11,016 10,216 10,739 10,056

At end of quarter

Total assets

Total assets $ 151,901 138,627

Goodwill (4,593) (4,593)

Core deposit and other intangible assets (6) (17)

Deferred taxes 2 4

Total tangible assets $ 147,304 134,021

Total common equity

Total equity $ 17,529 16,101

Preferred stock (1,750) (1,250)

Common equity 15,779 14,851

Goodwill (4,593) (4,593)

Core deposit and other intangible assets (6) (17)

Deferred taxes 2 4

Total tangible common equity $ 11,182 10,245

__________________

(1) After any related tax effect.

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

Three months ended

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

2021 2021 2021 2020 2020

Income statement data

In thousands, except per share

Net income

Net income $ 495,460 458,069 447,249 471,140 372,136

Amortization of core deposit and other intangible assets (1) 2,028 2,023 2,034 2,313 2,893

Merger-related expenses (1) 6,542 2,867 8,089 - -

Net operating income $ 504,030 462,959 457,372 473,453 375,029

Earnings per common share

Diluted earnings per common share $ 3.69 3.41 3.33 3.52 2.75

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

Merger-related expenses (1) .05 .02 .06 - -

Diluted net operating earnings per common share $ 3.76 3.45 3.41 3.54 2.77

Other expense

Other expense $ 899,334 865,345 919,444 845,008 826,774

Amortization of core deposit and other intangible assets (2,738) (2,737) (2,738) (3,129) (3,914)

Merger-related expenses (8,826) (3,893) (9,951) - -

Noninterest operating expense $ 887,770 858,715 906,755 841,879 822,860

Merger-related expenses

Salaries and employee benefits $ 60 4 - - -

Equipment and net occupancy 1 - - - -

Outside data processing and software 625 244 - - -

Advertising and marketing 505 24 - - -

Printing, postage and supplies 730 2,049 - - -

Other costs of operations 6,905 1,572 9,951 - -

Other expense $ 8,826 3,893 9,951 - -

Efficiency ratio

Noninterest operating expense (numerator) $ 887,770 858,715 906,755 841,879 822,860

Taxable-equivalent net interest income $ 970,953 946,072 985,128 993,252 947,114

Other income 569,126 513,633 505,598 551,250 520,561

Less: Gain (loss) on bank investment securities 291 (10,655) (12,282) 1,619 2,773

Denominator $ 1,539,788 1,470,360 1,503,008 1,542,883 1,464,902

Efficiency ratio 57.7 % 58.4 % 60.3 % 54.6 % 56.2 %

Balance sheet data

In millions

Average assets

Average assets $ 154,037 150,641 148,157 144,563 140,181

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

Core deposit and other intangible assets (7) (10) (13) (16) (19)

Deferred taxes 2 3 3 4 5

Average tangible assets $ 149,439 146,041 143,554 139,958 135,574

Average common equity

Average total equity $ 17,109 16,571 16,327 16,213 16,073

Preferred stock (1,495) (1,250) (1,250) (1,250) (1,250)

Average common equity 15,614 15,321 15,077 14,963 14,823

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

Core deposit and other intangible assets (7) (10) (13) (16) (19)

Deferred taxes 2 3 3 4 5

Average tangible common equity $ 11,016 10,721 10,474 10,358 10,216

At end of quarter

Total assets

Total assets $ 151,901 150,623 150,481 142,601 138,627

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

Core deposit and other intangible assets (6) (9) (12) (14) (17)

Deferred taxes 2 2 3 4 4

Total tangible assets $ 147,304 146,023 145,879 137,998 134,021

Total common equity

Total equity $ 17,529 16,720 16,447 16,187 16,101

Preferred stock (1,750) (1,250) (1,250) (1,250) (1,250)

Common equity 15,779 15,470 15,197 14,937 14,851

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

Core deposit and other intangible assets (6) (9) (12) (14) (17)

Deferred taxes 2 2 3 4 4

Total tangible common equity $ 11,182 10,870 10,595 10,334 10,245

__________________

(1) After any related tax effect.

INVESTOR CONTACT: Donald J. MacLeod

(716) 842-5138

MEDIA CONTACT: Maya Dillon

(212) 415-0557

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SOURCE M&T Bank Corporation