PR Newswire | Jan 20, 2022 06:38AM EST

01/20 05:37 CST

M&T BANK CORPORATION ANNOUNCES FOURTH QUARTER AND FULL-YEAR RESULTS BUFFALO, N.Y., Jan. 20, 2022

BUFFALO, N.Y., Jan. 20, 2022 /PRNewswire/ -- M&T Bank Corporation ("M&T") (NYSE: MTB) today reported its results of operations for the full year and quarter ended December 31, 2021.

GAAP Results of Operations. Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $3.37 in the fourth quarter of 2021, compared with $3.52 in the year-earlier quarter and $3.69 in the third quarter of 2021. GAAP-basis net income was $458 million in the recent quarter, $471 million in the fourth quarter of 2020 and $495 million in the third 2021 quarter. GAAP-basis net income for the fourth quarter of 2021 expressed as an annualized rate of return on average assets and average common shareholders' equity was 1.15% and 10.91%, respectively, compared with 1.30% and 12.07%, respectively, in the similar 2020 period and 1.28% and 12.16%, respectively, in the third 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 $21 million ($16 million after-tax effect, or $.12 of diluted earnings per common share), compared with $9 million ($7 million after-tax effect, or $.05 of diluted earnings per common share) in the third quarter of 2021. There were no merger-related expenses in the fourth quarter of 2020.

Darren J. King, Executive Vice President and Chief Financial Officer, commented on M&T's results, "Despite last year's challenging environment, M&T realized significant increases in both diluted earnings per share and net income. These results reflect our prudent credit underwriting, improved economic conditions and growth in noninterest income. Our capital position remains very strong. During the year we saw our Common Equity Tier 1 ratio increase to 11.4% from 10.0% at the end of 2020. Looking forward, we stand ready to complete our acquisition of People's United and to strategically deploy our excess liquidity and capital as we manage through a likely period of rising interest rates and elevated inflation."

Earnings Highlights

Change 4Q21 vs.

($ in millions, except per share data) 4Q21 4Q20 3Q21 4Q20 3Q21

Net income $ 458 $ 471 $ 495 -3 % -8 %

Net income available to common shareholders ? diluted $ 434 $ 452 $ 476 -4 % -9 %

Diluted earnings per common share $ 3.37 $ 3.52 $ 3.69 -4 % -9 %

Annualized return on average assets 1.15 % 1.30 % 1.28 %

Annualized return on average common equity 10.91 % 12.07 % 12.16 %

For the year ended December 31, 2021 diluted earnings per common share were $13.80, up 39% from $9.94 in 2020. GAAP-basis net income in 2021 totaled $1.86 billion, improved significantly from $1.35 billion in 2020. Expressed as an annualized rate of return on average assets and average common shareholders' equity, GAAP-basis net income in 2021 was 1.22% and 11.54%, respectively, and 1.00% and 8.72%, respectively, in 2020. Merger-related expenses in 2021 were $44 million ($34 million after-tax effect, or $.25 of diluted earnings per common share). There were no merger-related expenses in 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 $3.50 in the final quarter of 2021, compared with $3.54 in the fourth quarter of 2020 and $3.76 in the third quarter of 2021. Net operating income aggregated $475 million in the recent quarter, $473 million in the fourth quarter of 2020 and $504 million in 2021'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 2021 was 1.23% and 15.98%, respectively, 1.35% and 17.53%, respectively, in the similar quarter of 2020 and 1.34% and 17.54%, respectively, in the third quarter of 2021.

Diluted net operating earnings per common share for the years ended December 31, 2021 and 2020 were $14.11 and $10.02, respectively. Net operating income in 2021 was $1.90 billion, compared with $1.36 billion in 2020. Net operating income expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity was 1.28% and 16.80%, respectively, in 2021 and 1.04% and 12.79%, respectively, in 2020.

Taxable-equivalent Net Interest Income. Net interest income expressed on a taxable-equivalent basis totaled $937 million in the recent quarter, down from $993 million in the fourth quarter of 2020 and $971 million in the third quarter of 2021. The decrease compared with the earlier quarters reflects lower outstanding average loan balances and a reduced net interest margin. Average loans outstanding and the net interest margin were $93.3 billion and 2.58%, respectively, in the recent quarter, compared with $98.7 billion and 3.00%, respectively, in the year earlier quarter and $95.3 billion and 2.74%, respectively, in the third quarter of 2021. Outstanding loans under the Paycheck Protection Program ("PPP") averaged $1.65 billion in 2021's fourth quarter, compared with $6.18 billion in the fourth quarter of 2020 and $3.26 billion in the third quarter of 2021. Interest income from PPP loans, including recognition of fees associated with repaid loans, was $41 million in the recent quarter, compared with $73 million in the fourth quarter of 2020 and $71 million in the third quarter of 2021.Taxable equivalent net interest income for the full year of 2021 was $3.84 billion and in 2020 was $3.88 billion. Average loans outstanding were $96.6 billion in each of 2021 and 2020, but the net interest margin declined to 2.76% in 2021 from 3.16% in 2020.

Taxable-equivalent Net Interest Income

Change 4Q21 vs.

($ in millions) 4Q21 4Q20 3Q21 4Q20 3Q21

Average earning assets $ 144,420 $ 131,916 $ 140,420 9 % 3 %

Net interest income ? taxable-equivalent $ 937 $ 993 $ 971 -6 % -3 %

Net interest margin 2.58 % 3.00 % 2.74 %

Provision for Credit Losses/Asset Quality. Reflecting improvements in economic conditions and the credit environment, recaptures of the provision for credit losses of $15 million and $20 million were recorded in the fourth and third quarters of 2021, respectively, compared with a provision of $75 million in the fourth quarter of 2020. A recapture of $75 million was recorded for the year ended December 31, 2021, compared with $800 million of provision for credit losses in 2020. Net loan charge-offs were $31 million during the recent quarter, compared with $97 million in the final quarter of 2020 and $40 million in the third quarter of 2021. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .13% and .39% in the fourth quarters of 2021 and 2020, respectively, and .17% in the third quarter of 2021. Net loan charge-offs during all of 2021 and 2020 aggregated $192 million and $247 million, respectively, representing .20% and .26%, respectively, of average loans outstanding.

Loans classified as nonaccrual totaled $2.06 billion at December 31, 2021, up from $1.89 billion at December 31, 2020, but down from $2.24 billion at September 30, 2021. As a percentage of loans outstanding, nonaccrual loans were 2.22%, 1.92% and 2.40% at December 31, 2021, December 31, 2020 and September 30, 2021, respectively. Assets taken in foreclosure of defaulted loans were $24 million at December 31, 2021, $35 million a year earlier and $25 million at September 30, 2021.

Allowance for Credit Losses. M&T regularly performs comprehensive analyses of its loan 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 $1.47 billion or 1.58% of loans outstanding at December 31, 2021, compared with $1.74 billion or 1.76% at December 31, 2020 and $1.52 billion or 1.62% at September 30, 2021. The allowance at December 31, 2021, December 31, 2020, and September 30, 2021 represented 1.60%, 1.86%, and 1.66%, respectively, of total loans on those dates, excluding outstanding balances of PPP loans.

Asset Quality Metrics

Change 4Q21 vs.

($ in millions) 4Q21 4Q20 3Q21 4Q20 3Q21

At end of quarter

Nonaccrual loans $ 2,060 $ 1,893 $ 2,242 9 % -8 %

Real estate and other foreclosed assets $ 24 $ 35 $ 25 -31 % -4 %

Total nonperforming assets $ 2,084 $ 1,928 $ 2,267 8 % -8 %

Accruing loans past due 90 days or more (1) $ 963 $ 859 $ 1,026 12 % -6 %

Nonaccrual loans as % of loans outstanding 2.22 % 1.92 % 2.40 %

Allowance for credit losses $ 1,469 $ 1,736 $ 1,515 -15 % -3 %

Allowance for credit losses as % of loans outstanding 1.58 % 1.76 % 1.62 %

For the period

Provision for credit losses $ (15) $ 75 $ (20) -120 % -25 %

Net charge-offs $ 31 $ 97 $ 40 -68 % -23 %

Net charge-offs as % of average loans (annualized) .13 % .39 % .17 %

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

Noninterest Income and Expense. Noninterest income was $579 million in the fourth quarter of 2021, compared with $551 million in the year-earlier quarter and $569 million in the third quarter of 2021. As compared with the final quarter of 2020, the increased level of noninterest income in the recent quarter resulted largely from higher trust income, service charges on deposit accounts and brokerage services income. The final quarter of 2021 and 2020 each reflected a $30 million distribution from Bayview Lending Group LLC ("BLG"). Compared with the third quarter of 2021, higher noninterest income in the recent quarter reflected the distribution from BLG and increased trust income, offset by lower mortgage banking revenues that reflect M&T's decision to retain recently originated mortgage loans in portfolio rather than sell such loans. No distributions from BLG were received in the third quarter of 2021.

Noninterest Income

Change 4Q21 vs.

($ in millions) 4Q21 4Q20 3Q21 4Q20 3Q21

Mortgage banking revenues $ 139 $ 140 $ 160 -1 % -13 %

Service charges on deposit accounts 105 96 105 10 % -

Trust income 169 151 157 12 % 8 %

Brokerage services income 19 12 20 55 % -8 %

Trading account and foreign exchange gains 6 7 6 -16 % 8 %

Gain (loss) on bank investment securities 2 2 - -12 % -

Other revenues from operations 139 143 121 -3 % 15 %

Total $ 579 $ 551 $ 569 5 % 2 %

Noninterest income rose to $2.17 billion in 2021 from $2.09 billion in 2020. The increase resulted from a $43 million, or 7%, increase in trust income and higher service charges on deposit accounts and brokerage services income, partially offset by lower trading account and foreign exchange gains.

Noninterest expense totaled $928 million in the fourth quarter of 2021, compared with $845 million in the corresponding quarter of 2020 and $899 million in the third 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 $904 million in the recent quarter, $842 million in the fourth quarter of 2020 and $888 million in 2021's third 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 (including increased incentive compensation expenses), outside data processing and software, and professional services. As compared with the third quarter of 2021, the greater level of noninterest operating expenses in the recent quarter resulted largely from seasonally higher advertising and marketing costs, increased salaries and employee benefits, and a rise in outside data processing and software.

Noninterest Expense

Change 4Q21 vs.

($ in millions) 4Q21 4Q20 3Q21 4Q20 3Q21

Salaries and employee benefits $ 515 $ 476 $ 510 8 % 1 %

Equipment and net occupancy 83 84 81 -2 % 2 %

Outside data processing and software 79 68 73 16 % 8 %

FDIC assessments 19 15 19 24 % -

Advertising and marketing 21 18 15 19 % 40 %

Printing, postage and supplies 8 9 8 -2 % 3 %

Amortization of core deposit and other intangible assets 2 3 3 -38 % -29 %

Other costs of operations 201 172 190 17 % 5 %

Total $ 928 $ 845 $ 899 10 % 3 %

For the year ended December 31, 2021, noninterest expense was $3.61 billion compared with $3.39 billion in 2020. Noninterest operating expenses aggregated $3.56 billion in 2021 and $3.37 billion in 2020. As compared with the prior year, salaries and employee benefits (predominantly incentive compensation expenses), outside data processing and software, and professional services were higher in 2021.

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 59.7% in the fourth quarter of 2021, 54.6% in the year-earlier quarter and 57.7% in the third quarter of 2021. The efficiency ratio for the full year 2021 was 59.0%, compared with 56.3% in 2020.

Balance Sheet. M&T had total assets of $155.1 billion at December 31, 2021, compared with $142.6 billion and $151.9 billion at December 31, 2020 and September 30, 2021, respectively. Loans and leases, net of unearned discount, were $92.9 billion at December 31, 2021, compared with $98.5 billion at December 31, 2020 and $93.6 billion at September 30, 2021. The lower level of loans and leases at the recent quarter-end as compared with December 31, 2020 reflects a $4.1 billion decline in commercial loans resulting from reduced balances of PPP loans outstanding. PPP loans totaled $1.2 billion at December 31, 2021, compared with $5.4 billion at December 31, 2020 and $2.2 billion at September 30, 2021. Total deposits were $131.5 billion at the recent quarter-end, $119.8 billion at December 31, 2020 and $128.7 billion at September 30, 2021. The higher amount of deposits at the two most recent quarter-ends as compared with December 31, 2020 resulted from increased non-interest bearing deposits.

Total shareholders' equity was $17.9 billion, or 11.54% of total assets at December 31, 2021, $16.2 billion, or 11.35% at December 31, 2020 and $17.5 billion, or 11.54% at September 30, 2021. Common shareholders' equity was $16.2 billion, or $125.51 per share, at December 31, 2021, compared with $14.9 billion, or $116.39 per share, a year-earlier and $15.8 billion, or $122.60 per share, at September 30, 2021. Tangible equity per common share was $89.80 at December 31, 2021, $80.52 at December 31, 2020 and $86.88 at September 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 11.4% at December 31, 2021, up from 11.1% three months earlier and 10.0% at December 31, 2020.

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 (866) 518-6930. International participants, using any applicable international calling codes, may dial (203) 518-9797. Callers should reference M&T Bank Corporation or the conference ID #MTBQ421. 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 27, 2022 by calling (800) 934-2127, or (402) 220-1139 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.

In October 2021 M&T announced its Community Growth Plan, to provide $43 billion in loans, investments, and other financial support to create greater economic opportunity for low-to-moderate income families and neighborhoods, as well as people and communities of color. The bank's five-year Community Growth Plan has been developed in collaboration with the National Community Reinvestment Coalition in conjunction with M&T's proposed acquisition of People's United Financial Inc. and will become operational shortly after closing of the transaction.

In keeping with its community-focused approach to banking, M&T announced an expansion of the services it provides to communities with high concentrations of ethnic and racial diversity by designating an additional 99 bank branches as multicultural centers, bringing the total to 118 such centers. Located in cities across the Northeast and Mid-Atlantic, the centers will offer banking and other financial services in customers' preferred languages and employ bankers from the community who understand the cultural nuances of the individuals and neighborhoods they serve.

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.

Brian KlockINVESTOR CONTACT: Donald MacLeod

(716) 842-5138

MEDIA CONTACT: Maya Dillon

(646) 735-1958

Financial Highlights

Three months ended Year ended

December 31 December 31

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

Performance

Net income $ 457,968 471,140 -3 % $ 1,858,746 1,353,152 37 %

Net income available to common shareholders 434,171 451,869 -4 % 1,776,987 1,279,068 39 %

Per common share:

Basic earnings $ 3.37 3.52 -4 % $ 13.81 9.94 39 %

Diluted earnings 3.37 3.52 -4 % 13.80 9.94 39 %

Cash dividends $ 1.20 1.10 9 % $ 4.50 4.40 2 %

Common shares outstanding:

Average - diluted (1) 128,888 128,379 - 128,812 128,704 -

Period end (2) 128,705 128,333 - 128,705 128,333 -

Return on (annualized):

Average total assets 1.15 % 1.30 % 1.22 % 1.00 %

Average common shareholders' equity 10.91 % 12.07 % 11.54 % 8.72 %

Taxable-equivalent net interest income $ 937,356 993,252 -6 % $ 3,839,509 3,883,605 -1 %

Yield on average earning assets 2.64 % 3.15 % 2.84 % 3.43 %

Cost of interest-bearing liabilities .12 % .25 % .14 % .43 %

Net interest spread 2.52 % 2.90 % 2.70 % 3.00 %

Contribution of interest-free funds .06 % .10 % .06 % .16 %

Net interest margin 2.58 % 3.00 % 2.76 % 3.16 %

Net charge-offs to average total net loans (annualized) .13 % .39 % .20 % .26 %

Net operating results (3)

Net operating income $ 475,477 473,453 - $ 1,899,838 1,364,145 39 %

Diluted net operating earnings per common share 3.50 3.54 -1 % 14.11 10.02 41 %

Return on (annualized):

Average tangible assets 1.23 % 1.35 % 1.28 % 1.04 %

Average tangible common equity 15.98 % 17.53 % 16.80 % 12.79 %

Efficiency ratio 59.7 % 54.6 % 59.0 % 56.3 %

At December 31

Loan quality 2021 2020 Change

Nonaccrual loans $ 2,060,083 1,893,299 9 %

Real estate and other foreclosed assets 23,901 34,668 -31 %

Total nonperforming assets $ 2,083,984 1,927,967 8 %

Accruing loans past due 90 days or more (4) $ 963,399 859,208 12 %

Government guaranteed loans included in totals above:

Nonaccrual loans $ 51,429 48,820 5 %

Accruing loans past due 90 days or more 927,788 798,121 16 %

Renegotiated loans $ 230,408 238,994 -4 %

Nonaccrual loans to total net loans 2.22 % 1.92 %

Allowance for credit losses to total loans 1.58 % 1.76 %

(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

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

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

Performance

Net income $ 457,968 495,460 458,069 447,249 471,140

Net income available to common shareholders 434,171 475,961 438,759 428,093 451,869

Per common share:

Basic earnings $ 3.37 3.70 3.41 3.33 3.52

Diluted earnings 3.37 3.69 3.41 3.33 3.52

Cash dividends $ 1.20 1.10 1.10 1.10 1.10

Common shares outstanding:

Average - diluted (1) 128,888 128,844 128,842 128,669 128,379

Period end (2) 128,705 128,699 128,686 128,658 128,333

Return on (annualized):

Average total assets 1.15 % 1.28 % 1.22 % 1.22 % 1.30 %

Average common shareholders' equity 10.91 % 12.16 % 11.55 % 11.57 % 12.07 %

Taxable-equivalent net interest income $ 937,356 970,953 946,072 985,128 993,252

Yield on average earning assets 2.64 % 2.82 % 2.85 % 3.08 % 3.15 %

Cost of interest-bearing liabilities .12 % .14 % .14 % .18 % .25 %

Net interest spread 2.52 % 2.68 % 2.71 % 2.90 % 2.90 %

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

Net interest margin 2.58 % 2.74 % 2.77 % 2.97 % 3.00 %

Net charge-offs to average total net loans (annualized) .13 % .17 % .19 % .31 % .39 %

Net operating results (3)

Net operating income $ 475,477 504,030 462,959 457,372 473,453

Diluted net operating earnings per common share 3.50 3.76 3.45 3.41 3.54

Return on (annualized):

Average tangible assets 1.23 % 1.34 % 1.27 % 1.29 % 1.35 %

Average tangible common equity 15.98 % 17.54 % 16.68 % 17.05 % 17.53 %

Efficiency ratio 59.7 % 57.7 % 58.4 % 60.3 % 54.6 %

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

Loan quality 2021 2021 2021 2021 2020

Nonaccrual loans $ 2,060,083 2,242,263 2,242,057 1,957,106 1,893,299

Real estate and other foreclosed assets 23,901 24,786 27,902 29,797 34,668

Total nonperforming assets $ 2,083,984 2,267,049 2,269,959 1,986,903 1,927,967

Accruing loans past due 90 days or more (4) $ 963,399 1,026,080 1,077,227 1,084,553 859,208

Government guaranteed loans included in totals above:

Nonaccrual loans $ 51,429 47,358 49,796 51,668 48,820

Accruing loans past due 90 days or more 927,788 947,091 1,029,331 1,044,599 798,121

Renegotiated loans $ 230,408 242,955 236,377 242,121 238,994

Nonaccrual loans to total net loans 2.22 % 2.40 % 2.31 % 1.97 % 1.92 %

Allowance for credit losses to total loans 1.58 % 1.62 % 1.62 % 1.65 % 1.76 %

(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 Year ended

December 31 December 31

Dollars in thousands 2021 2020 Change 2021 2020 Change

Interest income $ 958,518 1,038,890 -8 % $ 3,938,784 4,192,712 -6 %

Interest expense 24,725 49,610 -50 114,006 326,395 -65

Net interest income 933,793 989,280 -6 3,824,778 3,866,317 -1

Provision for credit losses (15,000) 75,000 -120 (75,000) 800,000 -109

Net interest income after provision for credit losses 948,793 914,280 4 3,899,778 3,066,317 27

Other income

Mortgage banking revenues 139,267 140,441 -1 571,329 566,641 1

Service charges on deposit accounts 105,392 95,817 10 402,113 370,788 8

Trust income 168,827 151,314 12 644,716 601,884 7

Brokerage services income 18,923 12,234 55 62,791 47,428 32

Trading account and foreign exchange gains 6,027 7,204 -16 24,376 40,536 -40

Gain (loss) on bank investment securities 1,426 1,619 -12 (21,220) (9,421) -

Other revenues from operations 138,775 142,621 -3 482,889 470,588 3

Total other income 578,637 551,250 5 2,166,994 2,088,444 4

Other expense

Salaries and employee benefits 515,043 476,110 8 2,045,677 1,950,692 5

Equipment and net occupancy 82,641 84,228 -2 326,698 322,037 1

Outside data processing and software 78,814 68,034 16 291,839 258,480 13

FDIC assessments 18,830 15,204 24 69,704 53,803 30

Advertising and marketing 21,228 17,832 19 64,428 61,904 4

Printing, postage and supplies 8,140 8,335 -2 36,507 39,869 -8

Amortization of core deposit and other

intangible assets 1,954 3,129 -38 10,167 14,869 -32

Other costs of operations 200,850 172,136 17 766,603 683,586 12

Total other expense 927,500 845,008 10 3,611,623 3,385,240 7

Income before income taxes 599,930 620,522 -3 2,455,149 1,769,521 39

Applicable income taxes 141,962 149,382 -5 596,403 416,369 43

Net income $ 457,968 471,140 -3 % $ 1,858,746 1,353,152 37 %

Condensed Consolidated Statement of Income, Five Quarter Trend

Three months ended

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

Dollars in thousands 2021 2021 2021 2021 2020

Interest income $ 958,518 992,946 970,358 1,016,962 1,038,890

Interest expense 24,725 25,696 28,018 35,567 49,610

Net interest income 933,793 967,250 942,340 981,395 989,280

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

Net interest income after provision for credit losses 948,793 987,250 957,340 1,006,395 914,280

Other income

Mortgage banking revenues 139,267 159,995 133,313 138,754 140,441

Service charges on deposit accounts 105,392 105,426 98,518 92,777 95,817

Trust income 168,827 156,876 162,991 156,022 151,314

Brokerage services income 18,923 20,490 10,265 13,113 12,234

Trading account and foreign exchange gains 6,027 5,563 6,502 6,284 7,204

Gain (loss) on bank investment securities 1,426 291 (10,655) (12,282) 1,619

Other revenues from operations 138,775 120,485 112,699 110,930 142,621

Total other income 578,637 569,126 513,633 505,598 551,250

Other expense

Salaries and employee benefits 515,043 510,422 479,134 541,078 476,110

Equipment and net occupancy 82,641 80,738 80,848 82,471 84,228

Outside data processing and software 78,814 72,782 74,492 65,751 68,034

FDIC assessments 18,830 18,810 17,876 14,188 15,204

Advertising and marketing 21,228 15,208 13,364 14,628 17,832

Printing, postage and supplies 8,140 7,917 11,133 9,317 8,335

Amortization of core deposit and other

intangible assets 1,954 2,738 2,737 2,738 3,129

Other costs of operations 200,850 190,719 185,761 189,273 172,136

Total other expense 927,500 899,334 865,345 919,444 845,008

Income before income taxes 599,930 657,042 605,628 592,549 620,522

Applicable income taxes 141,962 161,582 147,559 145,300 149,382

Net income $ 457,968 495,460 458,069 447,249 471,140

Condensed Consolidated Balance Sheet

December 31

Dollars in thousands 2021 2020 Change

ASSETS

Cash and due from banks $ 1,337,577 1,552,743 -14 %

Interest-bearing deposits at banks 41,872,304 23,663,810 77

Trading account 468,031 1,068,581 -56

Investment securities 7,155,860 7,045,697 2

Loans and leases:

Commercial, financial, etc. 23,473,324 27,574,564 -15

Real estate - commercial 35,389,730 37,637,889 -6

Real estate - consumer 16,074,445 16,752,993 -4

Consumer 17,974,953 16,570,421 8

Total loans and leases, net of unearned discount 92,912,452 98,535,867 -6

Less: allowance for credit losses 1,469,226 1,736,387 -15

Net loans and leases 91,443,226 96,799,480 -6

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

Core deposit and other intangible assets 3,998 14,165 -72

Other assets 8,233,052 7,863,517 5

Total assets $ 155,107,160 142,601,105 9 %

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits $ 60,131,480 47,572,884 26 %

Interest-bearing deposits 71,411,929 71,580,750 -

Deposits at Cayman Islands office - 652,104 -100

Total deposits 131,543,409 119,805,738 10

Short-term borrowings 47,046 59,482 -21

Accrued interest and other liabilities 2,127,931 2,166,409 -2

Long-term borrowings 3,485,369 4,382,193 -20

Total liabilities 137,203,755 126,413,822 9

Shareholders' equity:

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

Common 16,153,405 14,937,283 8

Total shareholders' equity 17,903,405 16,187,283 11

Total liabilities and shareholders' equity $ 155,107,160 142,601,105 9 %

Condensed Consolidated Balance Sheet, Five Quarter Trend

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

Dollars in thousands 2021 2021 2021 2021 2020

ASSETS

Cash and due from banks $ 1,337,577 1,479,712 1,410,468 1,258,989 1,552,743

Interest-bearing deposits at banks 41,872,304 38,445,788 33,864,824 31,407,227 23,663,810

Federal funds sold - - - 1,000 -

Trading account 468,031 624,556 712,558 687,359 1,068,581

Investment securities 7,155,860 6,447,622 6,143,177 6,610,667 7,045,697

Loans and leases:

Commercial, financial, etc. 23,473,324 22,514,940 25,409,291 27,811,190 27,574,564

Real estate - commercial 35,389,730 37,023,952 37,558,775 37,425,974 37,637,889

Real estate - consumer 16,074,445 16,209,354 16,704,951 17,349,683 16,752,993

Consumer 17,974,953 17,834,648 17,440,415 16,712,233 16,570,421

Total loans and leases, net of unearned discount 92,912,452 93,582,894 97,113,432 99,299,080 98,535,867

Less: allowance for credit losses 1,469,226 1,515,024 1,575,128 1,636,206 1,736,387

Net loans and leases 91,443,226 92,067,870 95,538,304 97,662,874 96,799,480

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

Core deposit and other intangible assets 3,998 5,952 8,690 11,427 14,165

Other assets 8,233,052 8,236,582 8,351,574 8,248,405 7,863,517

Total assets $ 155,107,160 151,901,194 150,622,707 150,481,060 142,601,105

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits $ 60,131,480 56,542,309 55,621,230 53,641,419 47,572,884

Interest-bearing deposits 71,411,929 72,158,987 72,647,542 74,193,255 71,580,750

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

Total deposits 131,543,409 128,701,296 128,268,772 128,476,365 119,805,738

Short-term borrowings 47,046 103,548 91,235 58,957 59,482

Accrued interest and other liabilities 2,127,931 2,067,188 2,042,948 2,000,727 2,166,409

Long-term borrowings 3,485,369 3,500,391 3,499,448 3,498,503 4,382,193

Total liabilities 137,203,755 134,372,423 133,902,403 134,034,552 126,413,822

Shareholders' equity:

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

Common 16,153,405 15,778,771 15,470,304 15,196,508 14,937,283

Total shareholders' equity 17,903,405 17,528,771 16,720,304 16,446,508 16,187,283

Total liabilities and shareholders' equity $ 155,107,160 151,901,194 150,622,707 150,481,060 142,601,105

Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalentRates

Year ended

Three months ended Change in balance

December 31

December 31 December 31, September 30, December 31, 2021 from

Change

2020

Dollars in millions 2021 2020 2021 December 31, September 30, 2021

in

Rate

Balance Rate Balance Rate Balance Rate 2020 2021 Balance Rate Balance

balance

ASSETS

.21

%Interest-bearing deposits at banks $ 44,316 .15 % 22,206 .10 % 39,036 .15 % 100 % 14 % $ 35,829 .13 % 15,329

134

%

.26

Federal funds sold and agreements to resell - .47 3,799 .12 - .47 -100 - 167 .12 2,717securities -94

2.10

Trading account 50 1.62 50 1.97 51 2.71 1 -2 50 1.89 53

-5

2.16

Investment securities 6,804 2.12 7,195 2.25 6,019 2.19 -5 13 6,409 2.20 8,165

-22

Loans and leases, net of unearned discount

3.42

Commercial, financial, etc. 22,330 3.65 27,713 3.56 23,730 3.96 -19 -6 25,191 3.58 27,520

-8

4.39

Real estate - commercial 36,717 3.89 37,707 4.15 37,547 3.87 -3 -2 37,321 3.96 36,986

1

3.82

Real estate - consumer 16,290 3.53 16,761 3.56 16,379 3.59 -3 -1 16,770 3.55 16,215

3

4.92

Consumer 17,913 4.31 16,485 4.78 17,658 4.34 9 1 17,331 4.43 15,884

9

4.13

Total loans and leases, net 93,250 3.87 98,666 4.01 95,314 3.95 -5 -2 96,613 3.90 96,605

-

3.43

Total earning assets 144,420 2.64 131,916 3.15 140,420 2.82 9 3 139,068 2.84 122,869

13

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

Core deposit and other intangible assets 5 16 7 -69 -34 8 21 -59

Other assets 8,704 8,038 9,017 8 -3 9,000 7,997 13

Total assets $ 157,722 144,563 154,037 9 % 2 % $ 152,669 135,480 13

%



LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing deposits

.23

Savings and interest-checking deposits $ 70,518 .04 69,133 .11 70,976 .04 2 % -1 % $ 70,879 .05 63,590 11

%

1.34

Time deposits 2,914 .40 4,113 .97 3,061 .46 -29 -5 3,263 .57 4,960

-34

.36

Deposits at Cayman Islands office - - 826 .11 - - -100 - 181 .11 1,117

-84

.31

Total interest-bearing deposits 73,432 .05 74,072 .16 74,037 .06 -1 -1 74,323 .07 69,667

7

.05

Short-term borrowings 58 .01 64 .01 91 .01 -9 -37 68 .01 62

11

1.88

Long-term borrowings 3,441 1.77 5,294 1.47 3,431 1.75 -35 - 3,537 1.76 5,803

-39

.43

Total interest-bearing liabilities 76,931 .12 79,430 .25 77,559 .14 -3 -1 77,928 .14 75,532

3

Noninterest-bearing deposits 61,012 46,904 57,218 30 7 55,666 41,683 34

Other liabilities 2,166 2,016 2,151 7 1 2,166 2,274 -5

Total liabilities 140,109 128,350 136,928 9 2 135,760 119,489 14

Shareholders' equity 17,613 16,213 17,109 9 3 16,909 15,991 6

Total liabilities and shareholders' equity $ 157,722 144,563 154,037 9 % 2 % $ 152,669 135,480 13

%

3.00

Net interest spread 2.52 2.90 2.68 2.70

.16

Contribution of interest-free funds .06 .10 .06 .06

3.16

Net interest margin 2.58 % 3.00 % 2.74 % 2.76 % %

Reconciliation of Quarterly GAAP to Non-GAAP Measures

Three months ended Year ended

December 31 December 31

2021 2020 2021 2020

Income statement data

In thousands, except per share

Net income

Net income $ 457,968 471,140 1,858,746 1,353,152

Amortization of core deposit and other intangible assets (1) 1,447 2,313 7,532 10,993

Merger-related expenses (1) 16,062 - 33,560 -

Net operating income $ 475,477 473,453 1,899,838 1,364,145

Earnings per common share

Diluted earnings per common share $ 3.37 3.52 13.80 9.94

Amortization of core deposit and other intangible assets (1) .01 .02 .06 .08

Merger-related expenses (1) .12 - .25 -

Diluted net operating earnings per common share $ 3.50 3.54 14.11 10.02

Other expense

Other expense $ 927,500 845,008 3,611,623 3,385,240

Amortization of core deposit and other intangible assets (1,954) (3,129) (10,167) (14,869)

Merger-related expenses (21,190) - (43,860) -

Noninterest operating expense $ 904,356 841,879 3,557,596 3,370,371

Merger-related expenses

Salaries and employee benefits $ 112 - 176 -

Equipment and net occupancy 340 - 341 -

Outside data processing and software 250 - 1,119 -

Advertising and marketing 337 - 866 -

Printing, postage and supplies 186 - 2,965 -

Other costs of operations 19,965 - 38,393 -

Other expense $ 21,190 - 43,860 -

Efficiency ratio

Noninterest operating expense (numerator) $ 904,356 841,879 3,557,596 3,370,371

Taxable-equivalent net interest income $ 937,356 993,252 3,839,509 3,883,605

Other income 578,637 551,250 2,166,994 2,088,444

Less: Gain (loss) on bank investment securities 1,426 1,619 (21,220) (9,421)

Denominator $ 1,514,567 1,542,883 6,027,723 5,981,470

Efficiency ratio 59.7 % 54.6 % 59 % 56.3 %

Balance sheet data

In millions

Average assets

Average assets $ 157,722 144,563 152,669 135,480

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

Core deposit and other intangible assets (5) (16) (8) (21)

Deferred taxes 1 4 2 5

Average tangible assets $ 153,125 139,958 148,070 130,871

Average common equity

Average total equity $ 17,613 16,213 16,909 15,991

Preferred stock (1,750) (1,250) (1,438) (1,250)

Average common equity 15,863 14,963 15,471 14,741

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

Core deposit and other intangible assets (5) (16) (8) (21)

Deferred taxes 1 4 2 5

Average tangible common equity $ 11,266 10,358 10,872 10,132

At end of quarter

Total assets

Total assets $ 155,107 142,601

Goodwill (4,593) (4,593)

Core deposit and other intangible assets (4) (14)

Deferred taxes 1 4

Total tangible assets $ 150,511 137,998

Total common equity

Total equity $ 17,903 16,187

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

Common equity 16,153 14,937

Goodwill (4,593) (4,593)

Core deposit and other intangible assets (4) (14)

Deferred taxes 1 4

Total tangible common equity $ 11,557 10,334

(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,

2021 2021 2021 2021 2020

Income statement data

In thousands, except per share

Net income

Net income $ 457,968 495,460 458,069 447,249 471,140

Amortization of core deposit and other intangible assets (1) 1,447 2,028 2,023 2,034 2,313

Merger-related expenses (1) 16,062 6,542 2,867 8,089 -

Net operating income $ 475,477 504,030 462,959 457,372 473,453

Earnings per common share

Diluted earnings per common share $ 3.37 3.69 3.41 3.33 3.52

Amortization of core deposit and other intangible assets (1) .01 .02 .02 .02 .02

Merger-related expenses (1) .12 .05 .02 .06 -

Diluted net operating earnings per common share $ 3.50 3.76 3.45 3.41 3.54

Other expense

Other expense $ 927,500 899,334 865,345 919,444 845,008

Amortization of core deposit and other intangible assets (1,954) (2,738) (2,737) (2,738) (3,129)

Merger-related expenses (21,190) (8,826) (3,893) (9,951) -

Noninterest operating expense $ 904,356 887,770 858,715 906,755 841,879

Merger-related expenses

Salaries and employee benefits $ 112 60 4 - -

Equipment and net occupancy 340 1 - - -

Outside data processing and software 250 625 244 - -

Advertising and marketing 337 505 24 - -

Printing, postage and supplies 186 730 2,049 - -

Other costs of operations 19,965 6,905 1,572 9,951 -

Other expense $ 21,190 8,826 3,893 9,951 -

Efficiency ratio

Noninterest operating expense (numerator) $ 904,356 887,770 858,715 906,755 841,879

Taxable-equivalent net interest income $ 937,356 970,953 946,072 985,128 993,252

Other income 578,637 569,126 513,633 505,598 551,250

Less: Gain (loss) on bank investment securities 1,426 291 (10,655) (12,282) 1,619

Denominator $ 1,514,567 1,539,788 1,470,360 1,503,008 1,542,883

Efficiency ratio 59.7 % 57.7 % 58.4 % 60.3 % 54.6 %

Balance sheet data

In millions

Average assets

Average assets $ 157,722 154,037 150,641 148,157 144,563

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

Core deposit and other intangible assets (5) (7) (10) (13) (16)

Deferred taxes 1 2 3 3 4

Average tangible assets $ 153,125 149,439 146,041 143,554 139,958

Average common equity

Average total equity $ 17,613 17,109 16,571 16,327 16,213

Preferred stock (1,750) (1,495) (1,250) (1,250) (1,250)

Average common equity 15,863 15,614 15,321 15,077 14,963

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

Core deposit and other intangible assets (5) (7) (10) (13) (16)

Deferred taxes 1 2 3 3 4

Average tangible common equity $ 11,266 11,016 10,721 10,474 10,358

At end of quarter

Total assets

Total assets $ 155,107 151,901 150,623 150,481 142,601

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

Core deposit and other intangible assets (4) (6) (9) (12) (14)

Deferred taxes 1 2 2 3 4

Total tangible assets $ 150,511 147,304 146,023 145,879 137,998

Total common equity

Total equity $ 17,903 17,529 16,720 16,447 16,187

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

Common equity 16,153 15,779 15,470 15,197 14,937

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

Core deposit and other intangible assets (4) (6) (9) (12) (14)

Deferred taxes 1 2 2 3 4

Total tangible common equity $ 11,557 11,182 10,870 10,595 10,334

(1) After any related tax effect.

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SOURCE M&T Bank Corporation