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M&T Bank Corp. Reports Operating Results (10-Q/A)
Posted by: gurufocus (IP Logged)
Date: August 9, 2012 05:27PM

M&T Bank Corp. (MTB) filed Amended Quarterly Report for the period ended 2012-06-30. M&t Bank Corporation has a market cap of $11.06 billion; its shares were traded at around $86.8 with a P/E ratio of 14.6 and P/S ratio of 2.5. The dividend yield of M&t Bank Corporation stocks is 3.2%. M&t Bank Corporation had an annual average earning growth of 0.5% over the past 10 years.



Highlight of Business Operations:

Net income for M&T Bank Corporation (“M&T”) in the second quarter of 2012 was $233 million or $1.71 of diluted earnings per common share, compared with $322 million or $2.42 of diluted earnings per common share in the second quarter of 2011. During the first quarter of 2012, net income totaled $206 million or $1.50 of diluted earnings per common share. Basic earnings per common share were $1.71 in the recent quarter, compared with $2.43 in the second quarter of 2011 and $1.50 in the initial 2012 quarter. The after-tax impact of net acquisition and integration-related gains and expenses (included herein as merger-related expenses) resulted in expenses of $4 million ($7 million pre-tax) or $.03 of basic and diluted earnings per common share in the second quarter of 2012, compared with a gain of $42 million ($28 million pre-tax) or $.33 of basic and diluted earnings per common share in the year-earlier quarter and expenses of $2 million ($3 million pre-tax), or $.01 of basic and diluted earnings per common share in the first quarter of 2012. Such gains and expenses were associated with M&T’s May 16, 2011 acquisition of Wilmington Trust Corporation (“Wilmington Trust”), headquartered in Wilmington, Delaware. For the first six months of 2012, net income totaled $440 million or $3.20 of diluted earnings per common share, compared with $529 million or $4.02 of diluted earnings per common share in the first half of 2011. Basic earnings per common share for the six-month periods ended June 30, 2012 and 2011 were $3.21 and $4.04, respectively. The after-tax impact of merger-related gains and expenses during the first six months of 2012 was expenses of $6 million ($10 million pre-tax), or $.05 of basic and diluted earnings per common share, compared with a gain of $39 million ($24 million pre-tax) or $.32 of basic and diluted earnings per common share during the six-month period ended June 30, 2011.

Revenues from servicing residential mortgage loans for others were $25 million in the recent quarter, compared with $19 million and $27 million during the quarters ended June 30, 2011 and March 31, 2012, respectively. Included in such servicing revenues were amounts related to purchased servicing rights associated with small balance commercial mortgage loans, which totaled $5 million in each of the first and second quarters of 2012, compared with $6 million in the second quarter of 2011. Residential mortgage loans serviced for others totaled $37.9 billion at June 30, 2012, compared with $21.6 billion at June 30, 2011, $39.4 billion at March 31, 2012 and $40.7 billion at December 31, 2011, including the small balance commercial mortgage loans noted above of $4.2 billion at June 30, 2012, $4.8 billion at June 30, 2011, $4.3 billion at March 31, 2012 and $4.4 billion at December 31, 2011. Reflected in residential mortgage loans serviced for others were loans sub-serviced for others of $13.5 billion at June 30, 2012, $13.9 billion at March 31, 2012 and $14.3 billion at December 31, 2011. Loans sub-serviced for others were not significant at June 30, 2011. On September 30, 2011, the Company purchased servicing rights associated with residential mortgage loans having outstanding principal balances of approximately $6.7 billion. The outstanding balances of such loans as of June 30, 2012, March 31, 2012 and December 31, 2011 were $5.8 billion, $6.1 billion and $6.4 billion, respectively. Approximately $5 million of servicing fees relating to that portfolio of loans were included in mortgage banking revenues in each of the three-month periods ended June 30, 2012, March 31, 2012 and December 31, 2011. Capitalized residential mortgage servicing assets, net of any applicable valuation allowance for impairment, aggregated $124 million at June 30, 2012, compared with $111 million a year earlier, $135 million at March 31, 2012 and $145 million at December 31, 2011. The valuation allowance for possible impairment of residential mortgage servicing assets totaled approximately $1 million at each of June 30, 2012 and March 31, 2012 and $2 million at December 31, 2011. There was no similar valuation allowance at June 30, 2011. Included in capitalized residential mortgage servicing assets were $12 million at June 30, 2012, $21 million at June 30,

Commercial mortgage banking revenues were $23 million in the second quarter of 2012, up from $17 million in the year-earlier period and $18 million in the first quarter of 2012. Included in such amounts were revenues from loan origination and sales activities of $17 million in the recent quarter, compared with $12 million in each of the second quarter of 2011 and the initial 2012 quarter. Commercial mortgage loan servicing revenues were $6 million in each of the second and first quarters of 2012, compared with $5 million in 2011’s second quarter. Capitalized commercial mortgage servicing assets totaled $54 million and $48 million at June 30, 2012 and 2011, respectively, and $51 million at December 31, 2011. Commercial mortgage loans serviced for other investors totaled $9.8 billion, $8.5 billion and $9.0 billion at June 30, 2012, June 30, 2011 and December 31, 2011, respectively, and included $1.8 billion, $1.7 billion and $1.8 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 $244 million and $134 million, respectively, at June 30, 2012, $309 million and $181 million, respectively, at June 30, 2011 and $339 million and $178 million, respectively, at December 31, 2011. Commercial mortgage loans held for sale at June 30, 2012 and 2011 were $110 million and $128 million, respectively, and $161 million at December 31, 2011.

Net income earned by the Business Banking segment totaled $37 million in the recent quarter, 40% above the $27 million recorded in the second quarter of 2011 and 5% higher than the $35 million earned in the three months ended March 31, 2012. The most significant component of the improvement from the year-earlier quarter was a $9 million decline in the provision for credit losses, due to lower net charge-offs of loans. Other favorable factors included $2 million increases in net interest income and fees earned for providing deposit account services. The higher net interest income resulted from a rise in average outstanding deposit balances of $1.0 billion, including the full-quarter impact of the Wilmington Trust acquisition, partially offset by a 16 basis point narrowing of the net interest margin on deposits. In comparison to the initial 2012 quarter, a $2 million decline in the provision for credit losses, higher fees earned for providing deposit account services and reduced personnel costs were offset, in part, by a $4 million decrease in net interest income, due to a $293 million decline in average outstanding loan balances and a 6 basis point narrowing of the net interest margin on loans. The Business Banking segment’s net contribution totaled $72 million in the first half of 2012, a 37% improvement from the $53 million earned in the corresponding 2011 period. That improvement was attributable to the following factors: a $16 million reduction in the provision for credit losses; higher net interest income of $11 million, the result of higher average outstanding deposit balances of $1.2 billion; increased merchant and credit card revenues of $3 million; and higher fees earned for providing deposit account services totaling $3 million.

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 of financial institutions 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. Revenues for CCS, WAS and the non-Wilmington Trust-related trust activities in the recent quarter were $50 million, $40 million and $32 million, respectively, compared with $26 million, $18 million and $29 million, respectively, in the year-earlier quarter and $49 million, $35 million and $33 million, respectively, in the first quarter of 2012. Individually and combined the net income of those activities did not exceed 10% of the Company’s net income. The various components of the “All Other” category resulted in net losses totaling $53 million and $65 million in the second and first quarters of 2012, respectively, and net income of $17 million for the quarter ended June 30, 2011. Contributing most to the unfavorable performance in the recent quarter as compared with the year-earlier period were the following factors: the impact of the $65 million non-taxable gain on the Wilmington Trust acquisition recorded in 2011’s second quarter; increased personnel-related and professional services expenses of $27 million and $12 million, respectively (both largely related to the Wilmington Trust acquisition); 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. Higher trust revenues totaling $49 million in 2012’s second quarter (reflecting the full-quarter impact of the Wilmington Trust acquisition) and higher merger-related expenses of $30 million in the second quarter of 2011 as compared with the current quarter partially offset the unfavorable factors. In comparison to the first quarter of 2012, the improved recent quarter performance was due to a decline in personnel costs largely related to seasonally higher stock-based compensation, payroll-related taxes and employer contributions for retirement savings plan benefits related to incentive compensation payments and unemployment insurance recorded in the first quarter of 2012. The “All Other” category incurred net losses of $118 million and $14 million for the first six months of 2012 and 2011, respectively. The unfavorable performance in the first half of 2012 as compared with the same 2011 period resulted from the following factors: higher expenses relating to the Wilmington Trust acquisition, including increased personnel-related and professional services costs of $90 million and $35 million, respectively; the impact of the $65 million non-taxable gain on the Wilmington Trust acquisition recorded in 2011’s second quarter; 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. Partially offsetting those unfavorable items were higher trust revenues in 2012 of $134 million, reflecting the full six-month impact of the Wilmington Trust acquisition, and the impact of higher merger-related expenses recorded in the first half of 2011, totaling $41 million, compared with $10 million of similar costs recorded in the corresponding 2012 period.

Read the The complete Report



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