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M&T Bank Corp. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 23, 2012 04:00PM

M&T Bank Corp. (MTB) filed Annual Report for the period ended 2011-12-31. M&t Bank Corp has a market cap of $10.42 billion; its shares were traded at around $81.91 with a P/E ratio of 12.8 and P/S ratio of 2.4. The dividend yield of M&t Bank Corp stocks is 3.4%. M&t Bank Corp had an annual average earning growth of 0.4% over the past 10 years.



Highlight of Business Operations:

Net income for the Company during 2011 was $859 million or $6.35 of diluted earnings per common share, up 17% and 12%, respectively, from $736 million or $5.69 of diluted earnings per common share in 2010. Basic earnings per common share increased 11% to $6.37 in 2011 from $5.72 in 2010. Net income in 2009 totaled $380 million, while diluted and basic earnings per common share were $2.89 and $2.90, respectively. The after-tax impact of net merger-related gains and expenses associated with the acquisition transactions previously described totaled to a net gain of $13 million (net expenses of $19 million pre-tax) or $.10 of basic and diluted earnings per common share in 2011, compared with a net gain of $16 million ($27 million pre-tax) or $.14 of basic and diluted earnings per common share in 2010. Net merger-related expenses of $36 million ($60 million pre-tax) or $.31 of basic and diluted earnings per common share were incurred in 2009. Expressed as a rate of return on average assets, net income in 2011 was 1.16%, compared with 1.08% in 2010 and .56% in 2009. The return on average common shareholders’ equity was 9.67% in 2011, 9.30% in 2010 and 5.07% in 2009.

Revenues from servicing residential mortgage loans for others were $83 million in 2011, compared with $80 million in 2010 and $82 million in 2009. Included in such servicing revenues were amounts related to purchased servicing rights associated with small balance commercial mortgage loans totaling $23 million in 2011, $27 million in 2010 and $29 million in 2009. Residential mortgage loans serviced for others aggregated $40.7 billion at December 31, 2011, $21.1 billion a year earlier and $21.4 billion at December 31, 2009, including the small balance commercial mortgage loans noted above of approximately $4.4 billion, $5.2 billion and $5.5 billion at December 31, 2011, 2010 and 2009, respectively. Reflected in residential mortgage loans serviced for others were loans sub-serviced for others of $14.3 billion at December 31, 2011. Loans sub-serviced for others were not significant at December 31, 2010. During 2011, the Company purchased servicing rights which had outstanding principal balances at December 31, 2011 totaling $6.4 billion. Capitalized residential mortgage loan servicing assets, net of any applicable valuation allowance for possible impairment, totaled $145 million at December 31, 2011, compared with $118 million and $141 million at December 31, 2010 and 2009, respectively. The valuation allowance for possible impairment of capitalized residential mortgage servicing assets totaled $2 million and $50 thousand at the 2011 and 2009

Commercial mortgage banking revenues totaled $63 million in 2011, $58 million in 2010 and $42 million in 2009. Revenues from loan origination and sales activities were $41 million in 2011, $40 million in 2010 and $27 million in 2009. Commercial mortgage loans originated for sale to other investors totaled approximately $1.5 billion in 2011, compared with $1.6 billion in 2010 and $1.1 billion in 2009. Loan servicing revenues totaled $22 million in 2011, $18 million in 2010 and $15 million in 2009. Capitalized commercial mortgage loan servicing assets aggregated $51 million at December 31, 2011, $43 million at December 31, 2010 and $33 million at December 31, 2009. Commercial mortgage loans serviced for other investors totaled $9.0 billion, $8.1 billion and $7.1 billion at December 31, 2011, 2010 and 2009, respectively, and included $1.8 billion, $1.6 billion and $1.3 billion, respectively, of loan balances for which investors had recourse to the Company if such balances are ultimately uncollectible. Commitments to sell commercial mortgage loans and commitments to originate commercial mortgage loans for sale were $339 million and $178 million, respectively, at December 31, 2011, $276 million and $73 million, respectively, at December 31, 2010 and $303 million and $180 million, respectively, at December 31, 2009. Commercial mortgage loans held for sale totaled $161 million, $204 million and $123 million at December 31, 2011, 2010 and 2009, respectively.

Taxable-equivalent net interest income rose 8% to $625 million in the recent quarter from $580 million in the fourth quarter of 2010. That growth reflects a 15% increase in average earning assets partially offset by a 25 basis point narrowing of the Company’s net interest margin. Average earning assets in the fourth quarter of 2011 totaled $68.8 billion, up from $59.7 billion in the year-earlier quarter. That growth resulted from higher average loans and leases, which rose 16% to $59.1 billion in the recent quarter from $51.1 billion in 2010’s final quarter, and higher interest-bearing deposits at banks, predominantly balances held at the Federal Reserve Bank of New York. Average commercial loan and lease balances were $15.4 billion in the recent quarter, up $2.4 billion or 18% from $13.0 billion in the fourth quarter of 2010. Commercial real estate loans averaged $24.1 billion in the fourth quarter of 2011, up $3.5 billion from $20.6 billion in the year-earlier quarter. Average residential real estate loans outstanding rose 27% or $1.6 billion to $7.5 billion in the recent quarter from $5.9 billion in the fourth quarter of 2010. Included in the residential real estate loan portfolio were loans held for sale, which averaged $233 million and $556 million in the fourth quarters of 2011 and 2010, respectively. Consumer loans averaged $12.1 billion in the recent quarter, up $503 million, or 4%, from $11.6 billion in the final 2010 quarter. The most significant factor for the growth in average loans outstanding in the recent quarter as compared with the fourth quarter of 2010 was the Wilmington Trust acquisition. Loans associated with Wilmington Trust totaled $6.4 billion on the May 16, 2011 acquisition date, consisting of approximately $1.4 billion of commercial loans and leases, $3.2 billion of commercial real estate loans, $680 million of residential real estate loans and $1.1 billion of consumer loans. Also contributing to the rise in average residential real estate loans was the impact of the Company retaining for portfolio a large portion of loans originated since October 1, 2010. Total loans increased $1.7 billion to $60.1 billion at December 31, 2011 from $58.4 billion at September 30, 2011. That growth was largely attributable to increases in commercial loans, commercial real estate loans and residential real estate loans. The yield on earning assets declined to 4.17% in the fourth quarter of 2011 from 4.58% in the year-earlier quarter. The rate paid on interest-bearing liabilities declined 15 basis points to .82% in the recently completed quarter from .97% in the similar 2010 quarter. The resulting net interest

The “All Other” category reflects other activities of the Company that are not directly attributable to the reported segments. Reflected in this category are the amortization of core deposit and other intangible assets resulting from the acquisitions of financial institutions, M&T’s share of the operating losses of BLG, merger-related gains and expenses resulting from acquisitions and the net impact of the Company’s allocation methodologies for internal transfers for funding charges and credits associated with the earning assets and interest-bearing liabilities of the Company’s reportable segments and the provision for credit losses. The “All Other” category also includes the CCS and WAS activities obtained in the acquisition of Wilmington Trust on May 16, 2011 and the pre-acquisition trust activities of the Company. As of December 31, 2011 those activities were being operated as separate business lines. Revenues for CCS, WAS and the non Wilmington Trust-related trust activities were $119 million, $87 million and $116 million for the year ended December 31, 2011. Individually and combined the net income of those activities did not exceed 10% of the Company’s net income in the recent year. The various components of the “All Other” category resulted in net losses of $145 million, $78 million and $335 million in 2011, 2010 and 2009, respectively. Contributing most to the unfavorable performance in 2011 as compared with 2010 were the following increased expenses, each largely related to the Wilmington Trust acquisition: a $150 million rise in personnel costs ($148 million related to the Wilmington Trust acquisition); increased equipment and net occupancy expenses of $25 million; and merger-related expenses of $84 million. Additional factors contributing to the unfavorable performance were: the $79 million other-than-temporary impairment charge related to M&T’s 20% investment in BLG; the $30 million cash contribution M&T made to The M&T Charitable Foundation in the fourth quarter of 2011; and the unfavorable impact from the Company’s allocation methodologies for internal transfers for funding charges and credits associated with the earning assets and interest-bearing liabilities of the Company’s reportable segments and the provision for credit losses. Partly offsetting those unfavorable items were higher trust revenues of $210 million (reflecting the Wilmington Trust acquisition), the $65 million non-taxable gain on the Wilmington acquisition recorded in 2011 as compared with net taxable merger-related gains of $27 million in 2010, and the $55 million CDO litigation settlement received in the fourth quarter of 2011. As compared with 2009, the improved performance in 2010 was largely due to the favorable impact from the Company’s allocation methodologies for internal transfers for funding charges and credits associated with the earning assets and interest-bearing liabilities of the Company’s reportable segments and the provision for credit losses and the $27 million net merger-related gain in 2010, compared with net merger-related expenses in 2009 totaling $60 million.

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