UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172022
or
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☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-9861
M&T BANK CORPORATION
(Exact name of registrant as specified in its charter)
New York |
| 16-0968385 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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One M & T Plaza Buffalo, New York |
| 14203 |
(Address of principal executive offices) |
| (Zip Code) |
(716) 635-4000
(Registrant's telephone number, including area code)code:
(716) 635-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbols | Name of Each Exchange on Which Registered |
Common Stock, $.50 par value | MTB | New York Stock Exchange |
Perpetual Fixed-to-Floating Rate | MTBPrH | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒Yes☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer |
| ☒ |
| Accelerated filer | ☐ |
Non-accelerated filer |
| ☐ |
| Smaller reporting company | ☐ |
Emerging growth company |
| ☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Number of shares of the registrant's Common Stock, $0.50 par value, outstanding as of the close of business on October 31, 2017: 150,515,367November 1, 2022: 172,613,343 shares.
- 1 -
M&T BANK CORPORATION
FORM 10-Q
For the Quarterly Period Ended September 30, 20172022
Table of Contents of Information Required in Report |
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Item 1. |
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| CONSOLIDATED BALANCE SHEET |
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| CONSOLIDATED STATEMENT OF INCOME |
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| CONSOLIDATED STATEMENT OF CASH FLOWS |
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Item 2. |
| Management's Discussion and Analysis of Financial Condition and Results of |
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Item 3. |
| Quantitative and Qualitative Disclosures About Market |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
| Unregistered Sales of Equity Securities and Use of |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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- 2 -
PART I. FINANCIALFINANCIAL INFORMATION
M&T BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Unaudited)
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| September 30, |
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| December 31, |
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Dollars in thousands, except per share |
| 2017 |
|
| 2016 |
| ||||||||||||
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Assets |
| Cash and due from banks |
| $ | 1,368,252 |
|
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| 1,320,549 |
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| Interest-bearing deposits at banks |
|
| 6,306,484 |
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| 5,000,638 |
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| Trading account |
|
| 170,516 |
|
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| 323,867 |
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| September 30, |
| December 31, |
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| Investment securities (includes pledged securities that can be sold or repledged of $488,200 at September 30, 2017; $1,203,473 at December 31, 2016) |
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| Available for sale (cost: $11,369,815 at September 30, 2017; $13,338,301 at December 31, 2016) |
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| 11,416,824 |
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| 13,332,072 |
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| Held to maturity (fair value: $3,247,954 at September 30, 2017; $2,451,222 at December 31, 2016) |
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| 3,242,124 |
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| 2,457,278 |
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| Other (fair value: $414,978 at September 30, 2017; $461,118 at December 31, 2016) |
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| 414,978 |
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| 461,118 |
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| Total investment securities |
|
| 15,073,926 |
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| 16,250,468 |
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| Loans and leases |
|
| 88,171,225 |
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| 91,101,677 |
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| Unearned discount |
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| (246,091 | ) |
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| (248,261 | ) | ||||||||
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| Loans and leases, net of unearned discount |
|
| 87,925,134 |
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| 90,853,416 |
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| Allowance for credit losses |
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| (1,013,326 | ) |
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| (988,997 | ) | ||||||||
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| Loans and leases, net |
|
| 86,911,808 |
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| 89,864,419 |
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| Premises and equipment |
|
| 656,713 |
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| 675,263 |
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| Goodwill |
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| 4,593,112 |
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| 4,593,112 |
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| Core deposit and other intangible assets |
|
| 78,614 |
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| 97,655 |
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| Accrued interest and other assets |
|
| 5,242,379 |
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| 5,323,235 |
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| Total assets |
| $ | 120,401,804 |
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| 123,449,206 |
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(Dollars in thousands, except per share) |
| 2022 |
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| 2021 |
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Assets |
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Cash and due from banks |
| $ | 2,255,810 |
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| $ | 1,337,577 |
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Interest-bearing deposits at banks |
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| 25,391,528 |
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| 41,872,304 |
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Trading account |
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| 129,672 |
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| 49,745 |
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Investment securities |
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Available for sale (cost: $11,340,155 at September 30, 2022; |
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| 10,870,346 |
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| 3,955,804 |
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Held to maturity (fair value: $11,554,655 at September 30, 2022; |
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| 12,898,862 |
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| 2,734,674 |
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Equity and other securities (cost: $832,604 at September 30, 2022; |
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| 834,557 |
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| 465,382 |
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Total investment securities |
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| 24,603,765 |
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| 7,155,860 |
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Loans and leases |
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| 128,608,538 |
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| 93,136,678 |
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Unearned discount |
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| (382,951 | ) |
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| (224,226 | ) | ||||||||||
Loans and leases, net of unearned discount |
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| 128,225,587 |
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| 92,912,452 |
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Allowance for credit losses |
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| (1,875,591 | ) |
|
| (1,469,226 | ) | ||||||||||
Loans and leases, net |
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| 126,349,996 |
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| 91,443,226 |
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Premises and equipment |
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| 1,620,339 |
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| 1,144,765 |
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Goodwill |
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| 8,501,357 |
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| 4,593,112 |
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Core deposit and other intangible assets |
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| 226,974 |
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| 3,998 |
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Accrued interest and other assets |
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| 8,876,038 |
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| 7,506,573 |
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Total assets |
| $ | 197,955,479 |
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| $ | 155,107,160 |
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Liabilities |
| Noninterest-bearing deposits |
| $ | 33,111,246 |
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| 32,813,896 |
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| Savings and interest-checking deposits |
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| 52,936,615 |
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| 52,346,207 |
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| Time deposits |
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| 7,233,518 |
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| 10,131,846 |
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| Deposits at Cayman Islands office |
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| 232,014 |
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| 201,927 |
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| Total deposits |
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| 93,513,393 |
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| 95,493,876 |
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| Federal funds purchased and agreements to repurchase securities |
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| 200,768 |
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| 163,442 |
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| Accrued interest and other liabilities |
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| 1,791,946 |
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| 1,811,431 |
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| Long-term borrowings |
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| 8,577,645 |
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| 9,493,835 |
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| Total liabilities |
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| 104,083,752 |
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| 106,962,584 |
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Noninterest-bearing deposits |
| $ | 73,023,271 |
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| $ | 60,131,480 |
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Savings and interest-checking deposits |
|
| 86,015,700 |
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| 68,603,966 |
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Time deposits |
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| 4,806,417 |
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| 2,807,963 |
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Total deposits |
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| 163,845,388 |
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| 131,543,409 |
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Short-term borrowings |
|
| 917,806 |
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| 47,046 |
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Accrued interest and other liabilities |
|
| 4,476,456 |
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| 2,127,931 |
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Long-term borrowings |
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| 3,459,336 |
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| 3,485,369 |
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Total liabilities |
|
| 172,698,986 |
|
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| 137,203,755 |
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Shareholders' equity |
| Preferred stock, $1.00 par, 1,000,000 shares authorized; Issued and outstanding: Liquidation preference of $1,000 per share: shares 731,500 at September 30, 2017 and December 31, 2016; Liquidation preference of $10,000 per share: 50,000 shares at September 30, 2017 and December 31, 2016 |
|
| 1,231,500 |
|
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| 1,231,500 |
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| Common stock, $.50 par, 250,000,000 shares authorized, 159,819,892 shares issued at September 30, 2017; 159,945,678 shares issued at December 31, 2016 |
|
| 79,910 |
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| 79,973 |
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| Common stock issuable, 27,019 shares at September 30, 2017; 32,403 shares at December 31, 2016 |
|
| 1,827 |
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| 2,145 |
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| Additional paid-in capital |
|
| 6,598,048 |
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| 6,676,948 |
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| Retained earnings |
|
| 9,909,415 |
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| 9,222,488 |
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| Accumulated other comprehensive income (loss), net |
|
| (247,915 | ) |
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| (294,636 | ) | ||||||||
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| Treasury stock — common, at cost — 8,555,636 shares at September 30, 2017; 3,764,742 shares at December 31, 2016 |
|
| (1,254,733 | ) |
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| (431,796 | ) | ||||||||
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| Total shareholders’ equity |
|
| 16,318,052 |
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| 16,486,622 |
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| Total liabilities and shareholders’ equity |
| $ | 120,401,804 |
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| 123,449,206 |
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Preferred stock, $1.00 par, 20,000,000 shares authorized; |
|
| 2,010,600 |
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| 1,750,000 |
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Common stock, $.50 par, 250,000,000 shares authorized, |
|
| 89,718 |
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| 79,871 |
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Common stock issuable, 13,951 shares at September 30, 2022; |
|
| 1,098 |
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| 1,212 |
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Additional paid-in capital |
|
| 9,994,395 |
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| 6,635,000 |
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Retained earnings |
|
| 15,219,828 |
|
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| 14,646,448 |
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Accumulated other comprehensive income (loss), net |
|
| (899,993 | ) |
|
| (127,578 | ) | ||||||||||
Treasury stock — common, at cost — 6,551,133 shares at September 30, 2022; |
|
| (1,159,153 | ) |
|
| (5,081,548 | ) | ||||||||||
Total shareholders’ equity |
|
| 25,256,493 |
|
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| 17,903,405 |
| ||||||||||
Total liabilities and shareholders’ equity |
| $ | 197,955,479 |
|
| $ | 155,107,160 |
|
See accompanying notes to financial statements.
- 3 -
M&T BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
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(In thousands, except per share) |
| 2022 |
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| 2021 |
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| 2022 |
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| 2021 |
| ||||
Interest income |
|
|
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|
|
|
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|
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Loans and leases, including fees |
| $ | 1,455,612 |
|
| $ | 944,422 |
|
| $ | 3,572,954 |
|
| $ | 2,843,969 |
|
Investment securities |
|
|
|
|
|
|
|
|
|
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Fully taxable |
|
| 135,766 |
|
|
| 33,209 |
|
|
| 294,290 |
|
|
| 104,736 |
|
Exempt from federal taxes |
|
| 16,555 |
|
|
| 48 |
|
|
| 34,388 |
|
|
| 113 |
|
Deposits at banks |
|
| 172,956 |
|
|
| 14,923 |
|
|
| 272,009 |
|
|
| 30,507 |
|
Other |
|
| 624 |
|
|
| 344 |
|
|
| 1,270 |
|
|
| 941 |
|
Total interest income |
|
| 1,781,513 |
|
|
| 992,946 |
|
|
| 4,174,911 |
|
|
| 2,980,266 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
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Savings and interest-checking deposits |
|
| 68,690 |
|
|
| 7,000 |
|
|
| 103,344 |
|
|
| 26,556 |
|
Time deposits |
|
| 1,124 |
|
|
| 3,573 |
|
|
| 3,748 |
|
|
| 15,667 |
|
Deposits at Cayman Islands office |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 201 |
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Short-term borrowings |
|
| 2,670 |
|
|
| 2 |
|
|
| 6,090 |
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|
| 5 |
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Long-term borrowings |
|
| 30,338 |
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|
| 15,121 |
|
|
| 67,147 |
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|
| 46,852 |
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Total interest expense |
|
| 102,822 |
|
|
| 25,696 |
|
|
| 180,329 |
|
|
| 89,281 |
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Net interest income |
|
| 1,678,691 |
|
|
| 967,250 |
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|
| 3,994,582 |
|
|
| 2,890,985 |
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Provision for credit losses |
|
| 115,000 |
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| (20,000 | ) |
|
| 427,000 |
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|
| (60,000 | ) |
Net interest income after provision for credit losses |
|
| 1,563,691 |
|
|
| 987,250 |
|
|
| 3,567,582 |
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|
| 2,950,985 |
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Other income |
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Mortgage banking revenues |
|
| 83,041 |
|
|
| 159,995 |
|
|
| 275,115 |
|
|
| 432,062 |
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Service charges on deposit accounts |
|
| 115,213 |
|
|
| 105,426 |
|
|
| 340,890 |
|
|
| 296,721 |
|
Trust income |
|
| 186,577 |
|
|
| 156,876 |
|
|
| 545,874 |
|
|
| 475,889 |
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Brokerage services income |
|
| 21,086 |
|
|
| 20,490 |
|
|
| 65,414 |
|
|
| 43,868 |
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Trading account and non-hedging derivative gains |
|
| 5,081 |
|
|
| 5,563 |
|
|
| 12,743 |
|
|
| 18,349 |
|
Gain/(loss) on bank investment securities |
|
| (1,108 | ) |
|
| 291 |
|
|
| (1,913 | ) |
|
| (22,646 | ) |
Other revenues from operations |
|
| 153,189 |
|
|
| 120,485 |
|
|
| 436,943 |
|
|
| 344,114 |
|
Total other income |
|
| 563,079 |
|
|
| 569,126 |
|
|
| 1,675,066 |
|
|
| 1,588,357 |
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Other expense |
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|
|
|
|
|
|
|
|
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|
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Salaries and employee benefits |
|
| 736,354 |
|
|
| 510,422 |
|
|
| 2,090,075 |
|
|
| 1,530,634 |
|
Equipment and net occupancy |
|
| 127,117 |
|
|
| 80,738 |
|
|
| 337,584 |
|
|
| 244,057 |
|
Outside data processing and software |
|
| 95,068 |
|
|
| 72,782 |
|
|
| 268,607 |
|
|
| 213,025 |
|
FDIC assessments |
|
| 28,105 |
|
|
| 18,810 |
|
|
| 66,266 |
|
|
| 50,874 |
|
Advertising and marketing |
|
| 21,398 |
|
|
| 15,208 |
|
|
| 58,057 |
|
|
| 43,200 |
|
Printing, postage and supplies |
|
| 14,768 |
|
|
| 7,917 |
|
|
| 40,488 |
|
|
| 28,367 |
|
Amortization of core deposit and other intangible assets |
|
| 18,384 |
|
|
| 2,738 |
|
|
| 38,024 |
|
|
| 8,213 |
|
Other costs of operations |
|
| 238,059 |
|
|
| 190,719 |
|
|
| 743,047 |
|
|
| 565,753 |
|
Total other expense |
|
| 1,279,253 |
|
|
| 899,334 |
|
|
| 3,642,148 |
|
|
| 2,684,123 |
|
Income before taxes |
|
| 847,517 |
|
|
| 657,042 |
|
|
| 1,600,500 |
|
|
| 1,855,219 |
|
Income taxes |
|
| 200,921 |
|
|
| 161,582 |
|
|
| 374,208 |
|
|
| 454,441 |
|
Net income |
| $ | 646,596 |
|
| $ | 495,460 |
|
| $ | 1,226,292 |
|
| $ | 1,400,778 |
|
Net income available to common shareholders |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 620,549 |
|
| $ | 475,958 |
|
| $ | 1,152,400 |
|
| $ | 1,342,805 |
|
Diluted |
|
| 620,554 |
|
|
| 475,961 |
|
|
| 1,152,406 |
|
|
| 1,342,812 |
|
Net income per common share |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 3.55 |
|
| $ | 3.70 |
|
| $ | 7.18 |
|
| $ | 10.44 |
|
Diluted |
|
| 3.53 |
|
|
| 3.69 |
|
|
| 7.14 |
|
|
| 10.43 |
|
Average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
|
| 174,609 |
|
|
| 128,689 |
|
|
| 160,474 |
|
|
| 128,632 |
|
Diluted |
|
| 175,682 |
|
|
| 128,844 |
|
|
| 161,295 |
|
|
| 128,786 |
|
|
|
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
| ||||||||||
In thousands, except per share |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
| Loans and leases, including fees |
| $ | 953,662 |
|
|
| 871,345 |
|
| $ | 2,776,340 |
|
|
| 2,602,208 |
|
|
| Investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fully taxable |
|
| 87,937 |
|
|
| 84,893 |
|
|
| 276,057 |
|
|
| 274,092 |
|
|
| Exempt from federal taxes |
|
| 345 |
|
|
| 623 |
|
|
| 1,154 |
|
|
| 2,081 |
|
|
| Deposits at banks |
|
| 14,970 |
|
|
| 12,354 |
|
|
| 39,345 |
|
|
| 33,684 |
|
|
| Other |
|
| 296 |
|
|
| 300 |
|
|
| 760 |
|
|
| 905 |
|
|
| Total interest income |
|
| 1,057,210 |
|
|
| 969,515 |
|
|
| 3,093,656 |
|
|
| 2,912,970 |
|
Interest expense |
| Savings and interest-checking deposits |
|
| 37,714 |
|
|
| 24,067 |
|
|
| 93,891 |
|
|
| 60,906 |
|
|
| Time deposits |
|
| 13,992 |
|
|
| 27,886 |
|
|
| 49,293 |
|
|
| 79,075 |
|
|
| Deposits at Cayman Islands office |
|
| 310 |
|
|
| 204 |
|
|
| 856 |
|
|
| 578 |
|
|
| Short-term borrowings |
|
| 554 |
|
|
| 169 |
|
|
| 1,148 |
|
|
| 3,474 |
|
|
| Long-term borrowings |
|
| 47,506 |
|
|
| 58,849 |
|
|
| 138,874 |
|
|
| 174,814 |
|
|
| Total interest expense |
|
| 100,076 |
|
|
| 111,175 |
|
|
| 284,062 |
|
|
| 318,847 |
|
|
| Net interest income |
|
| 957,134 |
|
|
| 858,340 |
|
|
| 2,809,594 |
|
|
| 2,594,123 |
|
|
| Provision for credit losses |
|
| 30,000 |
|
|
| 47,000 |
|
|
| 137,000 |
|
|
| 128,000 |
|
|
| Net interest income after provision for credit losses |
|
| 927,134 |
|
|
| 811,340 |
|
|
| 2,672,594 |
|
|
| 2,466,123 |
|
Other income |
| Mortgage banking revenues |
|
| 96,737 |
|
|
| 103,747 |
|
|
| 267,592 |
|
|
| 275,193 |
|
|
| Service charges on deposit accounts |
|
| 109,356 |
|
|
| 107,935 |
|
|
| 319,589 |
|
|
| 314,212 |
|
|
| Trust income |
|
| 124,900 |
|
|
| 118,654 |
|
|
| 371,712 |
|
|
| 350,181 |
|
|
| Brokerage services income |
|
| 14,676 |
|
|
| 15,914 |
|
|
| 48,677 |
|
|
| 48,190 |
|
|
| Trading account and foreign exchange gains |
|
| 7,058 |
|
|
| 12,754 |
|
|
| 24,833 |
|
|
| 33,434 |
|
|
| Gain (loss) on bank investment securities |
|
| — |
|
|
| 28,480 |
|
|
| (17 | ) |
|
| 28,748 |
|
|
| Other revenues from operations |
|
| 106,702 |
|
|
| 103,866 |
|
|
| 334,704 |
|
|
| 310,579 |
|
|
| Total other income |
|
| 459,429 |
|
|
| 491,350 |
|
|
| 1,367,090 |
|
|
| 1,360,537 |
|
Other expense |
| Salaries and employee benefits |
|
| 399,089 |
|
|
| 399,786 |
|
|
| 1,247,851 |
|
|
| 1,230,246 |
|
|
| Equipment and net occupancy |
|
| 75,558 |
|
|
| 75,263 |
|
|
| 223,721 |
|
|
| 225,165 |
|
|
| Outside data processing and software |
|
| 45,761 |
|
|
| 42,878 |
|
|
| 134,637 |
|
|
| 128,402 |
|
|
| FDIC assessments |
|
| 23,969 |
|
|
| 28,459 |
|
|
| 78,149 |
|
|
| 76,054 |
|
|
| Advertising and marketing |
|
| 17,403 |
|
|
| 21,996 |
|
|
| 49,837 |
|
|
| 66,063 |
|
|
| Printing, postage and supplies |
|
| 8,732 |
|
|
| 8,972 |
|
|
| 27,397 |
|
|
| 30,865 |
|
|
| Amortization of core deposit and other intangible assets |
|
| 7,808 |
|
|
| 9,787 |
|
|
| 24,341 |
|
|
| 33,524 |
|
|
| Other costs of operations |
|
| 227,705 |
|
|
| 165,251 |
|
|
| 558,579 |
|
|
| 488,063 |
|
|
| Total other expense |
|
| 806,025 |
|
|
| 752,392 |
|
|
| 2,344,512 |
|
|
| 2,278,382 |
|
|
| Income before taxes |
|
| 580,538 |
|
|
| 550,298 |
|
|
| 1,695,172 |
|
|
| 1,548,278 |
|
|
| Income taxes |
|
| 224,615 |
|
|
| 200,314 |
|
|
| 609,269 |
|
|
| 563,735 |
|
|
| Net income |
| $ | 355,923 |
|
|
| 349,984 |
|
| $ | 1,085,903 |
|
|
| 984,543 |
|
|
| Net income available to common shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
| $ | 335,801 |
|
|
| 326,992 |
|
| $ | 1,025,011 |
|
|
| 915,670 |
|
|
| Diluted |
|
| 335,804 |
|
|
| 326,998 |
|
|
| 1,025,023 |
|
|
| 915,686 |
|
|
| Net income per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
| $ | 2.22 |
|
|
| 2.10 |
|
| $ | 6.71 |
|
|
| 5.82 |
|
|
| Diluted |
|
| 2.21 |
|
|
| 2.10 |
|
|
| 6.69 |
|
|
| 5.80 |
|
|
| Cash dividends per common share |
| $ | .75 |
|
|
| .70 |
|
| $ | 2.25 |
|
|
| 2.10 |
|
|
| Average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
| 151,347 |
|
|
| 155,493 |
|
|
| 152,866 |
|
|
| 157,336 |
|
|
| Diluted |
|
| 151,691 |
|
|
| 156,026 |
|
|
| 153,293 |
|
|
| 157,843 |
|
See accompanying notes to financial statements.
- 4 -
M&T BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
| ||||||||||||||||||||||||||
In thousands |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||||||||||||||||||
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
| ||||||||||||||||||||||||||
(In thousands) |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net income |
| $ | 355,923 |
|
|
| 349,984 |
|
| $ | 1,085,903 |
|
|
| 984,543 |
|
| $ | 646,596 |
|
| $ | 495,460 |
|
| $ | 1,226,292 |
|
| $ | 1,400,778 |
|
Other comprehensive income, net of tax and reclassification adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Net unrealized gains (losses) on investment securities |
|
| 18,258 |
|
|
| (17,133 | ) |
|
| 33,834 |
|
|
| 127,331 |
| ||||||||||||||||
Other comprehensive income (loss), net of tax and |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Net unrealized losses on investment securities |
|
| (218,852 | ) |
|
| (9,314 | ) |
|
| (425,770 | ) |
|
| (39,808 | ) | ||||||||||||||||
Cash flow hedges adjustments |
|
| (1,120 | ) |
|
| (23 | ) |
|
| (2,098 | ) |
|
| (70 | ) |
|
| (172,285 | ) |
|
| (38,038 | ) |
|
| (344,534 | ) |
|
| (152,175 | ) |
Foreign currency translation adjustment |
|
| 863 |
|
|
| (229 | ) |
|
| 2,489 |
|
|
| (1,847 | ) | ||||||||||||||||
Foreign currency translation adjustments |
|
| (5,359 | ) |
|
| (1,579 | ) |
|
| (11,271 | ) |
|
| (886 | ) | ||||||||||||||||
Defined benefit plans liability adjustments |
|
| 4,165 |
|
|
| 3,847 |
|
|
| 12,496 |
|
|
| 11,654 |
|
|
| 2,993 |
|
|
| 15,486 |
|
|
| 9,160 |
|
|
| 45,482 |
|
Total other comprehensive income (loss) |
|
| 22,166 |
|
|
| (13,538 | ) |
|
| 46,721 |
|
|
| 137,068 |
|
|
| (393,503 | ) |
|
| (33,445 | ) |
|
| (772,415 | ) |
|
| (147,387 | ) |
Total comprehensive income |
| $ | 378,089 |
|
|
| 336,446 |
|
| $ | 1,132,624 |
|
|
| 1,121,611 |
|
| $ | 253,093 |
|
| $ | 462,015 |
|
| $ | 453,877 |
|
| $ | 1,253,391 |
|
See accompanying notes to financial statements.
- 5 -
M&T BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
|
|
|
| Nine Months Ended September 30 |
| |||||
In thousands |
|
|
| 2017 |
|
| 2016 |
| ||
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
| Net income |
| $ | 1,085,903 |
|
|
| 984,543 |
|
|
| Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
| Provision for credit losses |
|
| 137,000 |
|
|
| 128,000 |
|
|
| Depreciation and amortization of premises and equipment |
|
| 84,631 |
|
|
| 79,911 |
|
|
| Amortization of capitalized servicing rights |
|
| 41,475 |
|
|
| 37,979 |
|
|
| Amortization of core deposit and other intangible assets |
|
| 24,341 |
|
|
| 33,524 |
|
|
| Provision for deferred income taxes |
|
| 9,926 |
|
|
| 109,274 |
|
|
| Asset write-downs |
|
| 10,878 |
|
|
| 14,276 |
|
|
| Net gain on sales of assets |
|
| (27,967 | ) |
|
| (46,732 | ) |
|
| Net change in accrued interest receivable, payable |
|
| (23,059 | ) |
|
| (13,833 | ) |
|
| Net change in other accrued income and expense |
|
| 110,138 |
|
|
| 113,809 |
|
|
| Net change in loans originated for sale |
|
| 523,895 |
|
|
| (285,824 | ) |
|
| Net change in trading account assets and liabilities |
|
| 88,705 |
|
|
| (82,837 | ) |
|
| Net cash provided by operating activities |
|
| 2,065,866 |
|
|
| 1,072,090 |
|
Cash flows from investing activities |
| Proceeds from sales of investment securities |
|
|
|
|
|
|
|
|
|
| Available for sale |
|
| 512,143 |
|
|
| 61,947 |
|
|
| Other |
|
| 178,244 |
|
|
| 94,516 |
|
|
| Proceeds from maturities of investment securities |
|
|
|
|
|
|
|
|
|
| Available for sale |
|
| 1,650,258 |
|
|
| 1,690,665 |
|
|
| Held to maturity |
|
| 390,278 |
|
|
| 459,399 |
|
|
| Purchases of investment securities |
|
|
|
|
|
|
|
|
|
| Available for sale |
|
| (248,705 | ) |
|
| (1,150,523 | ) |
|
| Held to maturity |
|
| (1,175,608 | ) |
|
| (15,806 | ) |
|
| Other |
|
| (132,104 | ) |
|
| (1,514 | ) |
|
| Net decrease (increase) in loans and leases |
|
| 2,259,049 |
|
|
| (2,021,004 | ) |
|
| Net increase in interest-bearing deposits at banks |
|
| (1,305,846 | ) |
|
| (3,183,286 | ) |
|
| Capital expenditures, net |
|
| (62,515 | ) |
|
| (65,277 | ) |
|
| Net decrease in loan servicing advances |
|
| 47,786 |
|
|
| 121,226 |
|
|
| Other, net |
|
| 66,357 |
|
|
| 11,459 |
|
|
| Net cash provided (used) by investing activities |
|
| 2,179,337 |
|
|
| (3,998,198 | ) |
Cash flows from financing activities |
| Net increase (decrease) in deposits |
|
| (1,976,237 | ) |
|
| 6,195,511 |
|
|
| Net increase (decrease) in short-term borrowings |
|
| 37,326 |
|
|
| (1,886,701 | ) |
|
| Proceeds from long-term borrowings |
|
| 2,145,950 |
|
|
| — |
|
|
| Payments on long-term borrowings |
|
| (3,029,320 | ) |
|
| (427,035 | ) |
|
| Purchases of treasury stock |
|
| (981,691 | ) |
|
| (604,000 | ) |
|
| Dividends paid — common |
|
| (345,166 | ) |
|
| (333,042 | ) |
|
| Dividends paid — preferred |
|
| (53,842 | ) |
|
| (58,003 | ) |
|
| Other, net |
|
| 5,480 |
|
|
| 3,540 |
|
|
| Net cash provided (used) by financing activities |
|
| (4,197,500 | ) |
|
| 2,890,270 |
|
|
| Net increase (decrease) in cash and cash equivalents |
|
| 47,703 |
|
|
| (35,838 | ) |
|
| Cash and cash equivalents at beginning of period |
|
| 1,320,549 |
|
|
| 1,368,040 |
|
|
| Cash and cash equivalents at end of period |
| $ | 1,368,252 |
|
|
| 1,332,202 |
|
Supplemental disclosure of cash flow information |
| Interest received during the period |
| $ | 3,088,042 |
|
|
| 2,923,278 |
|
|
| Interest paid during the period |
|
| 310,640 |
|
|
| 387,695 |
|
|
| Income taxes paid during the period |
|
| 462,163 |
|
|
| 138,375 |
|
Supplemental schedule of noncash investing and financing activities |
| Real estate acquired in settlement of loans |
| $ | 88,551 |
|
|
| 100,106 |
|
|
| Securitization of residential mortgage loans allocated to |
|
|
|
|
|
|
|
|
|
| Available-for-sale investment securities |
|
| 22,527 |
|
|
| 18,685 |
|
|
| Capitalized servicing rights |
|
| 262 |
|
|
| 193 |
|
|
| Nine Months Ended September 30 |
| |||||
(In thousands) |
| 2022 |
|
| 2021 |
| ||
Cash flows from operating activities |
|
|
|
|
|
| ||
Net income |
| $ | 1,226,292 |
|
| $ | 1,400,778 |
|
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
|
| ||
Provision for credit losses |
|
| 427,000 |
|
|
| (60,000 | ) |
Depreciation and amortization of premises and equipment |
|
| 219,737 |
|
|
| 169,232 |
|
Amortization of capitalized servicing rights |
|
| 75,165 |
|
|
| 66,000 |
|
Amortization of core deposit and other intangible assets |
|
| 38,024 |
|
|
| 8,213 |
|
Provision for deferred income taxes |
|
| (89,413 | ) |
|
| 70,190 |
|
Asset write-downs |
|
| 7,358 |
|
|
| 5,046 |
|
Net gain on sales of assets |
|
| (14,583 | ) |
|
| (15,260 | ) |
Net change in accrued interest receivable, payable |
|
| (58,629 | ) |
|
| 20,395 |
|
Net change in other accrued income and expense |
|
| (71,004 | ) |
|
| 50,804 |
|
Net change in loans originated for sale |
|
| 560,861 |
|
|
| (117,139 | ) |
Net change in trading account and non-hedging derivative assets and liabilities |
|
| 1,299,313 |
|
|
| 419,772 |
|
Net cash provided by operating activities |
|
| 3,620,121 |
|
|
| 2,018,031 |
|
Cash flows from investing activities |
|
|
|
|
|
| ||
Proceeds from sales of investment securities |
|
|
|
|
|
| ||
Equity and other securities |
|
| 42,999 |
|
|
| 8,937 |
|
Proceeds from maturities of investment securities |
|
|
|
|
|
| ||
Available for sale |
|
| 641,573 |
|
|
| 1,139,203 |
|
Held to maturity |
|
| 1,053,989 |
|
|
| 476,352 |
|
Purchases of investment securities |
|
|
|
|
|
| ||
Available for sale |
|
| (7,219,785 | ) |
|
| (5,389 | ) |
Held to maturity |
|
| (796,312 | ) |
|
| (1,087,656 | ) |
Equity and other securities |
|
| (155,290 | ) |
|
| (27,270 | ) |
Net (increase) decrease in loans and leases |
|
| (58,942 | ) |
|
| 4,977,272 |
|
Net (increase) decrease in interest-bearing deposits at banks |
|
| 25,674,122 |
|
|
| (14,781,978 | ) |
Capital expenditures, net |
|
| (126,810 | ) |
|
| (87,165 | ) |
Net (increase) decrease in loan servicing advances |
|
| 1,324,912 |
|
|
| (402,175 | ) |
Acquisition, net of cash consideration |
|
|
|
|
|
| ||
Bank and bank holding company |
|
| 393,923 |
|
|
| — |
|
Other, net |
|
| (516,504 | ) |
|
| (388,305 | ) |
Net cash provided (used) by investing activities |
|
| 20,257,875 |
|
|
| (10,178,174 | ) |
Cash flows from financing activities |
|
|
|
|
|
| ||
Net increase (decrease) in deposits |
|
| (20,663,949 | ) |
|
| 8,895,558 |
|
Net increase (decrease) in short-term borrowings |
|
| (24,111 | ) |
|
| 44,066 |
|
Proceeds from long-term borrowings |
|
| 499,250 |
|
|
| 9,500 |
|
Payments on long-term borrowings |
|
| (907,191 | ) |
|
| (853,041 | ) |
Purchases of treasury stock |
|
| (1,200,000 | ) |
|
| — |
|
Dividends paid — common |
|
| (578,968 | ) |
|
| (425,541 | ) |
Dividends paid — preferred |
|
| (80,600 | ) |
|
| (55,388 | ) |
Proceeds from issuance of Series I preferred stock |
|
| — |
|
|
| 495,000 |
|
Other, net |
|
| (4,194 | ) |
|
| (23,042 | ) |
Net cash provided (used) by financing activities |
|
| (22,959,763 | ) |
|
| 8,087,112 |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
| 918,233 |
|
|
| (73,031 | ) |
Cash, cash equivalents and restricted cash at beginning of period |
|
| 1,337,577 |
|
|
| 1,552,743 |
|
Cash, cash equivalents and restricted cash at end of period |
| $ | 2,255,810 |
|
| $ | 1,479,712 |
|
Supplemental disclosure of cash flow information |
|
|
|
|
|
| ||
Interest received during the period |
| $ | 4,145,231 |
|
| $ | 2,976,574 |
|
Interest paid during the period |
|
| 214,552 |
|
|
| 116,402 |
|
Income taxes paid during the period |
|
| 362,866 |
|
|
| 278,783 |
|
Supplemental schedule of noncash investing and financing activities |
|
|
|
|
|
| ||
Real estate acquired in settlement of loans |
| $ | 21,017 |
|
| $ | 6,822 |
|
Additions to right-of-use assets under operating leases |
|
| 99,705 |
|
|
| 34,404 |
|
Loans held for sale transferred to loans held for investment |
|
| — |
|
|
| 330,188 |
|
Acquisition of bank and bank holding company |
|
|
|
|
|
| ||
Common stock issued |
|
| 8,286,515 |
|
|
| — |
|
Common stock awards converted |
|
| 104,810 |
|
|
| — |
|
Fair value of |
|
|
|
|
|
| ||
Assets acquired (noncash) |
|
| 63,757,316 |
|
|
| — |
|
Liabilities assumed |
|
| 55,499,314 |
|
|
| — |
|
Preferred stock converted |
|
| 260,600 |
|
|
| — |
|
See accompanying notes to financial statements.
- 6 -
M&T BANK CORPORATION AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
| Common |
|
| Additional |
|
|
|
|
| Comprehensive |
|
|
|
|
|
|
| ||||||||
|
| Preferred |
|
| Common |
|
| Stock |
|
| Paid-in |
|
| Retained |
|
| Income |
|
| Treasury |
|
|
|
| ||||||||
Dollars in thousands, except per share |
| Stock |
|
| Stock |
|
| Issuable |
|
| Capital |
|
| Earnings |
|
| (Loss), Net |
|
| Stock |
|
| Total |
| ||||||||
Three Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Balance — July 1, 2022 |
| $ | 2,010,600 |
|
| $ | 89,718 |
|
| $ | 1,090 |
|
| $ | 9,986,881 |
|
| $ | 14,808,637 |
|
| $ | (506,490 | ) |
| $ | (595,905 | ) |
| $ | 25,794,531 |
|
Total comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 646,596 |
|
|
| (393,503 | ) |
|
| — |
|
|
| 253,093 |
|
Preferred stock cash dividends (a) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (24,941 | ) |
|
| — |
|
|
| — |
|
|
| (24,941 | ) |
Purchases of treasury stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (600,000 | ) |
|
| (600,000 | ) |
Stock-based compensation transactions, net |
|
| — |
|
|
| — |
|
|
| 8 |
|
|
| 7,514 |
|
|
| (327 | ) |
|
| — |
|
|
| 36,752 |
|
|
| 43,947 |
|
Common stock cash dividends — |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (210,137 | ) |
|
| — |
|
|
| — |
|
|
| (210,137 | ) |
Balance — September 30, 2022 |
| $ | 2,010,600 |
|
| $ | 89,718 |
|
| $ | 1,098 |
|
| $ | 9,994,395 |
|
| $ | 15,219,828 |
|
| $ | (899,993 | ) |
| $ | (1,159,153 | ) |
| $ | 25,256,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Nine Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Balance — January 1, 2022 |
| $ | 1,750,000 |
|
| $ | 79,871 |
|
| $ | 1,212 |
|
| $ | 6,635,000 |
|
| $ | 14,646,448 |
|
| $ | (127,578 | ) |
| $ | (5,081,548 | ) |
| $ | 17,903,405 |
|
Total comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,226,292 |
|
|
| (772,415 | ) |
|
| — |
|
|
| 453,877 |
|
Acquisition of People's United Financial, Inc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Common stock issued |
|
| — |
|
|
| 9,824 |
|
|
| — |
|
|
| 3,256,821 |
|
|
| — |
|
|
| — |
|
|
| 5,019,870 |
|
|
| 8,286,515 |
|
Common stock awards converted |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 104,810 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 104,810 |
|
Conversion of Series H preferred stock |
|
| 260,600 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 260,600 |
|
Preferred stock cash dividends (a) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (71,647 | ) |
|
| — |
|
|
| — |
|
|
| (71,647 | ) |
Purchases of treasury stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,200,000 | ) |
|
| (1,200,000 | ) |
Stock-based compensation transactions, net |
|
| — |
|
|
| 23 |
|
|
| (114 | ) |
|
| (2,236 | ) |
|
| (970 | ) |
|
| — |
|
|
| 102,525 |
|
|
| 99,228 |
|
Common stock cash dividends — |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (580,295 | ) |
|
| — |
|
|
| — |
|
|
| (580,295 | ) |
Balance — September 30, 2022 |
| $ | 2,010,600 |
|
| $ | 89,718 |
|
| $ | 1,098 |
|
| $ | 9,994,395 |
|
| $ | 15,219,828 |
|
| $ | (899,993 | ) |
| $ | (1,159,153 | ) |
| $ | 25,256,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Balance — July 1, 2021 |
| $ | 1,250,000 |
|
| $ | 79,871 |
|
| $ | 1,179 |
|
| $ | 6,620,528 |
|
| $ | 14,030,215 |
|
| $ | (176,974 | ) |
| $ | (5,084,515 | ) |
| $ | 16,720,304 |
|
Total comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 495,460 |
|
|
| (33,445 | ) |
|
| — |
|
|
| 462,015 |
|
Preferred stock cash dividends (a) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (17,050 | ) |
|
| — |
|
|
| — |
|
|
| (17,050 | ) |
Issuance of Series I preferred stock |
|
| 500,000 |
|
|
| — |
|
|
| — |
|
|
| (5,000 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 495,000 |
|
Stock-based compensation transactions, net |
|
| — |
|
|
| — |
|
|
| 17 |
|
|
| 9,128 |
|
|
| (207 | ) |
|
| — |
|
|
| 2,069 |
|
|
| 11,007 |
|
Common stock cash dividends — |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (142,505 | ) |
|
| — |
|
|
| — |
|
|
| (142,505 | ) |
Balance — September 30, 2021 |
| $ | 1,750,000 |
|
| $ | 79,871 |
|
| $ | 1,196 |
|
| $ | 6,624,656 |
|
| $ | 14,365,913 |
|
| $ | (210,419 | ) |
| $ | (5,082,446 | ) |
| $ | 17,528,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Balance — January 1, 2021 |
| $ | 1,250,000 |
|
| $ | 79,871 |
|
| $ | 1,344 |
|
| $ | 6,617,404 |
|
| $ | 13,444,428 |
|
| $ | (63,032 | ) |
| $ | (5,142,732 | ) |
| $ | 16,187,283 |
|
Total comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,400,778 |
|
|
| (147,387 | ) |
|
| — |
|
|
| 1,253,391 |
|
Preferred stock cash dividends (a) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (51,150 | ) |
|
| — |
|
|
| — |
|
|
| (51,150 | ) |
Issuance of Series I preferred stock |
|
| 500,000 |
|
|
| — |
|
|
| — |
|
|
| (5,000 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 495,000 |
|
Stock-based compensation transactions, net |
|
| — |
|
|
| — |
|
|
| (148 | ) |
|
| 12,252 |
|
|
| (616 | ) |
|
| — |
|
|
| 60,286 |
|
|
| 71,774 |
|
Common stock cash dividends — |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (427,527 | ) |
|
| — |
|
|
| — |
|
|
| (427,527 | ) |
Balance — September 30, 2021 |
| $ | 1,750,000 |
|
| $ | 79,871 |
|
| $ | 1,196 |
|
| $ | 6,624,656 |
|
| $ | 14,365,913 |
|
| $ | (210,419 | ) |
| $ | (5,082,446 | ) |
| $ | 17,528,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| Common |
|
| Additional |
|
|
|
|
|
| Comprehensive |
|
|
|
|
|
|
|
|
| |||
|
| Preferred |
|
| Common |
|
| Stock |
|
| Paid-in |
|
| Retained |
|
| Income |
|
| Treasury |
|
|
|
|
| |||||||
Dollars in thousands, except per share |
| Stock |
|
| Stock |
|
| Issuable |
|
| Capital |
|
| Earnings |
|
| (Loss), Net |
|
| Stock |
|
| Total |
| ||||||||
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — January 1, 2016 |
| $ | 1,231,500 |
|
|
| 79,782 |
|
|
| 2,364 |
|
|
| 6,680,768 |
|
|
| 8,430,502 |
|
|
| (251,627 | ) |
|
| — |
|
|
| 16,173,289 |
|
Total comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 984,543 |
|
|
| 137,068 |
|
|
| — |
|
|
| 1,121,611 |
|
Preferred stock cash dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (60,953 | ) |
|
| — |
|
|
| — |
|
|
| (60,953 | ) |
Exercise of 5,320 Series A stock warrants into 1,983 shares of common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (223 | ) |
|
| — |
|
|
| — |
|
|
| 223 |
|
|
| — |
|
Purchases of treasury stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (604,000 | ) |
|
| (604,000 | ) |
Stock-based compensation plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense, net |
|
| — |
|
|
| 171 |
|
|
| — |
|
|
| 7,315 |
|
|
| — |
|
|
| — |
|
|
| 10,890 |
|
|
| 18,376 |
|
Exercises of stock options, net |
|
| — |
|
|
| 18 |
|
|
| — |
|
|
| (183 | ) |
|
| — |
|
|
| — |
|
|
| 11,576 |
|
|
| 11,411 |
|
Stock purchase plan |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 275 |
|
|
| — |
|
|
| — |
|
|
| 10,319 |
|
|
| 10,594 |
|
Directors’ stock plan |
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 526 |
|
|
| — |
|
|
| — |
|
|
| 1,047 |
|
|
| 1,575 |
|
Deferred compensation plans, net, including dividend equivalents |
|
| — |
|
|
| 2 |
|
|
| (140 | ) |
|
| 232 |
|
|
| (70 | ) |
|
| — |
|
|
| 4 |
|
|
| 28 |
|
Other |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,102 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,102 |
|
Common stock cash dividends — $2.10 per share |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (332,057 | ) |
|
| — |
|
|
| — |
|
|
| (332,057 | ) |
Balance — September 30, 2016 |
| $ | 1,231,500 |
|
|
| 79,975 |
|
|
| 2,224 |
|
|
| 6,689,812 |
|
|
| 9,021,965 |
|
|
| (114,559 | ) |
|
| (569,941 | ) |
|
| 16,340,976 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — January 1, 2017 |
| $ | 1,231,500 |
|
|
| 79,973 |
|
|
| 2,145 |
|
|
| 6,676,948 |
|
|
| 9,222,488 |
|
|
| (294,636 | ) |
|
| (431,796 | ) |
|
| 16,486,622 |
|
Total comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,085,903 |
|
|
| 46,721 |
|
|
| — |
|
|
| 1,132,624 |
|
Preferred stock cash dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (54,604 | ) |
|
| — |
|
|
| — |
|
|
| (54,604 | ) |
Exercise of 304,436 Series A stock warrants into 165,498 shares of common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (22,992 | ) |
|
| — |
|
|
| — |
|
|
| 22,992 |
|
|
| — |
|
Purchases of treasury stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (981,691 | ) |
|
| (981,691 | ) |
Stock-based compensation plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense, net |
|
| — |
|
|
| (63 | ) |
|
| — |
|
|
| (51,606 | ) |
|
| — |
|
|
| — |
|
|
| 57,685 |
|
|
| 6,016 |
|
Exercises of stock options, net |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (6,722 | ) |
|
| — |
|
|
| — |
|
|
| 68,014 |
|
|
| 61,292 |
|
Stock purchase plan |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,563 |
|
|
| — |
|
|
| — |
|
|
| 8,268 |
|
|
| 10,831 |
|
Directors’ stock plan |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 225 |
|
|
| — |
|
|
| — |
|
|
| 1,201 |
|
|
| 1,426 |
|
Deferred compensation plans, net, including dividend equivalents |
|
| — |
|
|
| — |
|
|
| (318 | ) |
|
| (368 | ) |
|
| (65 | ) |
|
| — |
|
|
| 594 |
|
|
| (157 | ) |
Common stock cash dividends — $2.25 per share |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (344,307 | ) |
|
| — |
|
|
| — |
|
|
| (344,307 | ) |
Balance — September 30, 2017 |
| $ | 1,231,500 |
|
|
| 79,910 |
|
|
| 1,827 |
|
|
| 6,598,048 |
|
|
| 9,909,415 |
|
|
| (247,915 | ) |
|
| (1,254,733 | ) |
|
| 16,318,052 |
|
See accompanying notes to financial statements.
- 7 -
1. Significant accounting policies
The consolidated interim financial statements of M&T Bank Corporation (“M&T”) and subsidiaries (“the Company”) were compiled in accordance with generally accepted accounting principles (“GAAP”) using the accounting policies set forth in note 1 of Notes to Financial Statements included in Form 10-K for the year ended December 31, 20162021 (“20162021 Annual Report”), except that effective January 2017. Following the Company adopted amended accounting guidance that is discussedacquisition of People's United Financial, Inc. ("People's United") on April 1, 2022 and conformance of financial statement presentation, certain reclassifications have been made to prior period amounts to conform with current period presentation. The reclassifications had no effect on previously reported total assets, total liabilities, shareholders' equity or net income. Specifically, the fair values of interest rate and foreign exchange derivative contracts not designated as hedging instruments as presented in note 16 herein.11 have been included in other assets and other liabilities rather than in trading account assets and liabilities. The most significant of those changes related to the accounting for excess tax benefits or deficiencies associated with share-based compensation whereby beginningfinancial statements contain all adjustments which are, in 2017 those amounts are recognized in income tax expense. Previously, tax effects resulting from changes in M&T’s share price subsequent to the grant date were recorded through shareholders’ equity. The adoption of this new accounting guidance resulted in a reduction of income tax expense for the three months ended March 31, 2017 of $18 million, or $.12 of diluted earnings per common share. The impact on income tax expense and diluted earnings per common share in the second and third quarters of 2017 was not significant. In the opinion of management, all adjustments necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the interim periods presented.
2. Acquisition and divestiture
On April 1, 2022, M&T completed the acquisition of People's United. Through subsidiaries, People's United provided commercial banking, retail banking and wealth management services to individual, corporate and municipal customers through a network of branches located in Connecticut, southeastern New York, Massachusetts, Vermont, New Hampshire and Maine. Following the merger, People's United Bank, National Association, a national banking association and a wholly owned subsidiary of People's United, merged with and into Manufacturers and Traders Trust Company ("M&T Bank"), the principal banking subsidiary of M&T, with M&T Bank as the surviving entity. The results of operations acquired from People's United have been madeincluded in the Company's financial results since April 1, 2022.
Pursuant to the terms of the merger agreement dated February 22, 2021, People’s United shareholders received consideration valued at .118 of an M&T common share in exchange for each common share of People’s United. The purchase price totaled approximately $8.4 billion (with the price based on M&T’s closing price of $164.66 per share as of April 1, 2022). M&T issued 50,325,004 common shares in completing the transaction. Additionally, People’s United outstanding preferred stock was converted into new shares of Series H Preferred Stock of M&T. The acquisition of People's United expanded the Company's geographical footprint and management expects the Company will benefit from greater geographical diversity and the advantages of scale associated with a larger company.
- 8 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. Acquisition and divestiture, continued
The People’s United transaction has been accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and preferred stock converted were allrecorded at estimated fair value on the acquisition date. The consideration paid for People’s United common equity and the preliminary amounts of identifiable assets acquired, liabilities assumed and preferred stock converted as of the acquisition date follows.
|
| (In thousands) |
| |
Consideration: |
|
|
| |
Common stock issued (50,325,004 shares) |
| $ | 8,286,515 |
|
Common stock awards converted |
|
| 104,810 |
|
Cash |
|
| 1,824 |
|
Total consideration |
|
| 8,393,149 |
|
|
|
|
| |
Net assets acquired: |
|
|
| |
Identifiable assets |
|
|
| |
Cash and due from banks |
|
| 395,747 |
|
Interest-bearing deposits at banks |
|
| 9,193,346 |
|
Investment securities |
|
| 11,574,689 |
|
Loans and leases |
|
| 35,840,648 |
|
Core deposit and other intangible assets |
|
| 261,000 |
|
Other assets |
|
| 2,979,388 |
|
Total identifiable assets acquired |
|
| 60,244,818 |
|
Liabilities and preferred stock |
|
|
| |
Deposits |
|
| 52,967,915 |
|
Borrowings |
|
| 1,389,012 |
|
Other liabilities |
|
| 1,142,387 |
|
Total liabilities assumed |
|
| 55,499,314 |
|
Preferred stock |
|
| 260,600 |
|
Total liabilities and preferred stock |
|
| 55,759,914 |
|
Net assets acquired |
|
| 4,484,904 |
|
Goodwill |
| $ | 3,908,245 |
|
The following is a normal recurring nature.description of the methodologies used to estimate the fair values of the significant assets acquired, liabilities assumed and preferred stock converted at the acquisition date:
Cash and due from banks and interest-bearing deposits in banks: Given the short-term nature of these assets, the carrying amount was determined to be a reasonable estimate of fair value.
Investment securities: Investment securities have been determined using quoted market prices, if available. If quoted market prices were not available, investment securities were valued by reference to quoted prices for similar securities or through model-based techniques.
Loans and leases: The fair values of loans and leases were generally based on a discounted cash flow methodology that considered market interest rates, expected credit losses, prepayment assumptions and other market factors for loans with similar characteristics including loan type, collateral, fixed or variable interest rate and credit risk characteristics. Expected credit losses were determined based on credit characteristics and other factors such as default and recovery rates of similar products.
Core deposit and other intangible assets: The core deposit intangible asset represents the value of certain customer deposit relationships. The fair value of the core deposit intangible asset was based on a discounted cash flow methodology that considered expected customer attrition rates, costs associated with maintaining the deposit relationships and alternative funding costs. Other intangible assets were also valued using expected and contractual cash flows.
Deposits: The fair value of deposits with no maturity date was determined to be the amount payable on demand at the acquisition date. The fair value of time deposits was determined by discounting contractual cash flows, that considered market interest rates in relation to contractual interest rates for instruments with like remaining maturities.
- 9 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. AcquisitionsAcquisition and divestiture, continued
Borrowings: The fair value of borrowings was determined using quoted market prices for the instrument, if available. If quoted market prices for the instrument were not available, similar instruments with quoted market prices were referenced.
Preferred stock: The fair value of preferred stock converted was determined using quoted market prices.
GAAP requires loans and leases obtained through an acquisition that have experienced a more-than-insignificant deterioration in credit quality since origination be considered purchased credit deteriorated (“PCD”). The Company considered several factors in the determination of PCD loans, including loan grades assigned to acquired commercial loans and leases and commercial real estate loans utilizing the Company's loan grading system and delinquency status and history for acquired loans backed by residential real estate. Loans and leases acquired from People's United and identified as PCD totaled $3.4 billion at April 1, 2022. For those loans and leases, the initial estimate of expected credit losses of $99 million was established through an adjustment to increase both the initial carrying value and allowance for credit losses. GAAP also provides that an allowance for credit losses on loans acquired, but not classified as PCD, also be recognized. Accordingly, the Company recorded $242 million of provision for credit losses for non-PCD acquired loans and leases at the acquisition date. The following table reconciles the unpaid principal balance to the fair value of PCD loans and leases at April 1, 2022:
| Total |
| |
|
|
| |
Unpaid principal balance (a) | $ | 3,410,506 |
|
Allowance for credit losses at acquisition (a) |
| (99,000 | ) |
Non-credit discount |
| (106,814 | ) |
Fair value | $ | 3,204,692 |
|
In connection with the acquisition, the Company recorded approximately $3.9 billion of Hudson City Bancorp, Inc. (“Hudson City”)goodwill, which represents the excess of the purchase price over the fair value of the net assets acquired, and $261 million of core deposit and other intangible assets. The core deposit and other intangible assets are being amortized over periods of three to seven years. The preliminary allocation of goodwill recorded as a result of the acquisition to the Company’s reportable segments is as follows:
| December 31, 2021 |
|
| Acquisition of People's United |
|
| September 30, 2022 |
| |||
| (In thousands) |
| |||||||||
|
|
|
|
|
|
|
|
| |||
Business Banking | $ | 864,366 |
|
| $ | 693,905 |
|
| $ | 1,558,271 |
|
Commercial Banking |
| 1,401,873 |
|
|
| 2,686,253 |
|
|
| 4,088,126 |
|
Commercial Real Estate |
| 654,389 |
|
|
| 291,217 |
|
|
| 945,606 |
|
Discretionary Portfolio |
| — |
|
|
| — |
|
|
| — |
|
Residential Mortgage Banking |
| — |
|
|
| — |
|
|
| — |
|
Retail Banking |
| 1,309,191 |
|
|
| 221,196 |
|
|
| 1,530,387 |
|
All Other |
| 363,293 |
|
|
| 15,674 |
|
|
| 378,967 |
|
Total | $ | 4,593,112 |
|
| $ | 3,908,245 |
|
| $ | 8,501,357 |
|
Due to the integration of People's United operating systems and activities with those of the Company, the Company's ability to report on Novemberthe former operations of People's United is inherently limited. The Company estimates that included in the Consolidated Statement of Income from the acquisition date through September 30, 2022 are total revenues of approximately $1.0 billion and a net loss of approximately $13 million related to the acquisition of People's United.
- 10 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. Acquisition and divestiture, continued
The following table presents certain pro forma information as if People’s United had been acquired on January 1, 20152021. These results combine the historical results of People’s United into the Company’s consolidated statement of income and, while adjustments were made for the estimated impact of certain fair valuation adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place as indicated. For example, merger-related expenses noted below are included in the periods where such expenses were incurred. Additionally, the Company expects to achieve operating cost savings and other business synergies as a result of the acquisition which are not reflected in the pro forma amounts that follow:
|
| Pro forma |
|
| Pro forma |
| |||||
|
| Nine Months Ended September 30, |
|
| Three Months Ended September 30 |
| |||||
|
| 2022 |
| 2021 |
|
| 2021 |
| |||
|
| (In thousands) |
|
| (In thousands) |
| |||||
Total revenues(a) |
| $ | 6,134,400 |
| $ | 6,056,364 |
|
| $ | 2,054,462 |
|
Net income |
|
| 1,399,913 |
|
| 1,769,781 |
|
|
| 664,820 |
|
In connection with the People’s United acquisition, the Company incurred merger-related expenses related to systems conversions and other costs of integrating and conforming acquired operations with and into the Company. Those expenses consisted largely of professional services and other temporary help fees associated with preparing for systems conversions and/or integration of operations; costs related to termination of existing contractual arrangements for various services; initial marketing and promotion expenses designed to introduce the CompanyM&T Bank to its new customers; severance (for former Hudson CityPeople’s United employees); travel costs; and other costs of completing the transaction and commencing operations in new markets and offices.
The Company expects that there will be additional merger-related expenses in 2022. A summary of merger-related expenses included in the consolidated statement of income follows:follows.
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
| (In thousands) |
|
| (In thousands) |
| ||||||||||
Salaries and employee benefits |
| $ | 13,094 |
|
| $ | 60 |
|
| $ | 98,480 |
|
| $ | 64 |
|
Equipment and net occupancy |
|
| 2,106 |
|
|
| 1 |
|
|
| 4,415 |
|
|
| 1 |
|
Outside data processing software |
|
| 2,277 |
|
|
| 625 |
|
|
| 3,245 |
|
|
| 869 |
|
Advertising and marketing |
|
| 2,177 |
|
|
| 505 |
|
|
| 4,004 |
|
|
| 529 |
|
Printing, postage and supplies |
|
| 651 |
|
|
| 730 |
|
|
| 3,833 |
|
|
| 2,779 |
|
Other cost of operations |
|
| 32,722 |
|
|
| 6,905 |
|
|
| 179,231 |
|
|
| 18,428 |
|
Other expense |
| $ | 53,027 |
|
| $ | 8,826 |
|
| $ | 293,208 |
|
| $ | 22,670 |
|
The Company also recognized a $242 million provision for credit losses on acquired loans that were not deemed to be PCD on April 1, 2022. GAAP requires that acquired loans be recorded at estimated fair value, which includes the use of interest rate and expected credit loss assumptions to forecast estimated cash flows. GAAP also provides that an allowance for credit losses on loans acquired, but not classified as PCD also be recognized above and beyond the impact of forecasted losses used in determining the fair value of acquired loans. Accordingly, the Company recorded a $242 million provision for credit losses related to such loans obtained in the People's United transaction in the three months ended June 30, 2022.
|
| Nine Months Ended September 30, 2016 |
| |
|
| (In thousands) |
| |
|
|
|
|
|
Salaries and employee benefits |
| $ | 5,334 |
|
Equipment and net occupancy |
|
| 1,278 |
|
Outside data processing and software |
|
| 1,067 |
|
Advertising and marketing |
|
| 10,522 |
|
Printing, postage and supplies |
|
| 1,482 |
|
Other costs of operations |
|
| 16,072 |
|
Total |
| $ | 35,755 |
|
There were no merger-related expenses duringOn September 29, 2022 M&T Bank announced it had entered into a definitive agreement to sell M&T Insurance Agency, Inc. ("MTIA"), a wholly owned insurance agency subsidiary of M&T Bank to Arthur J. Gallagher & Co. The transaction was completed on October 31, 2022. The Company expects to recognize a pre-tax gain on the three-month or nine-month periodssale of approximately $135 million. MTIA had assets of $25 million and shareholders' equity of $10 million at September 30, 2022. For the nine months ended September 30, 2017 or during the three-month period ended September 30, 2016.2022 and 2021, MTIA recorded revenues of $31 million and $29 million, respectively, and net income of $4 million and $1 million, respectively.
- 811 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
The amortized cost and estimated fair value of investment securities were as follows:
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Estimated |
| ||||
|
| (In thousands) |
| |||||||||||||
September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Treasury and federal agencies |
| $ | 7,908,153 |
|
| $ | 413 |
|
| $ | 249,838 |
|
| $ | 7,658,728 |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government issued or guaranteed |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial |
|
| 613,752 |
|
|
| — |
|
|
| 7,181 |
|
|
| 606,571 |
|
Residential |
|
| 2,635,976 |
|
|
| 127 |
|
|
| 205,157 |
|
|
| 2,430,946 |
|
Other debt securities |
|
| 182,274 |
|
|
| 311 |
|
|
| 8,484 |
|
|
| 174,101 |
|
|
|
| 11,340,155 |
|
|
| 851 |
|
|
| 470,660 |
|
|
| 10,870,346 |
|
Investment securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Treasury and federal agencies |
|
| 1,199,539 |
|
|
| — |
|
|
| 49,633 |
|
|
| 1,149,906 |
|
Obligations of states and political subdivisions |
|
| 2,663,917 |
|
|
| 6 |
|
|
| 221,631 |
|
|
| 2,442,292 |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government issued or guaranteed |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial |
|
| 927,503 |
|
|
| — |
|
|
| 106,215 |
|
|
| 821,288 |
|
Residential |
|
| 8,053,619 |
|
|
| — |
|
|
| 967,653 |
|
|
| 7,085,966 |
|
Privately issued |
|
| 52,479 |
|
|
| 9,260 |
|
|
| 8,341 |
|
|
| 53,398 |
|
Other debt securities |
|
| 1,805 |
|
|
| — |
|
|
| — |
|
|
| 1,805 |
|
|
|
| 12,898,862 |
|
|
| 9,266 |
|
|
| 1,353,473 |
|
|
| 11,554,655 |
|
Total debt securities |
| $ | 24,239,017 |
|
| $ | 10,117 |
|
| $ | 1,824,133 |
|
| $ | 22,425,001 |
|
Equity and other securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Readily marketable equity — at fair value |
| $ | 192,584 |
|
| $ | 4,943 |
|
| $ | 2,990 |
|
| $ | 194,537 |
|
Other — at cost |
|
| 640,020 |
|
|
| — |
|
|
| — |
|
|
| 640,020 |
|
Total equity and other securities |
| $ | 832,604 |
|
| $ | 4,943 |
|
| $ | 2,990 |
|
| $ | 834,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Treasury and federal agencies |
| $ | 682,267 |
|
| $ | 229 |
|
| $ | 3,806 |
|
| $ | 678,690 |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government issued or guaranteed |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential |
|
| 3,042,771 |
|
|
| 113,102 |
|
|
| 561 |
|
|
| 3,155,312 |
|
Other debt securities |
|
| 124,309 |
|
|
| 1,974 |
|
|
| 4,481 |
|
|
| 121,802 |
|
|
|
| 3,849,347 |
|
|
| 115,305 |
|
|
| 8,848 |
|
|
| 3,955,804 |
|
Investment securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Treasury and federal agencies |
|
| 3,052 |
|
|
| — |
|
|
| 9 |
|
|
| 3,043 |
|
Obligations of states and political subdivisions |
|
| 177 |
|
|
| 2 |
|
|
| — |
|
|
| 179 |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government issued or guaranteed |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential |
|
| 2,667,328 |
|
|
| 49,221 |
|
|
| 8,376 |
|
|
| 2,708,173 |
|
Privately issued |
|
| 61,555 |
|
|
| 10,520 |
|
|
| 14,742 |
|
|
| 57,333 |
|
Other debt securities |
|
| 2,562 |
|
|
| — |
|
|
| — |
|
|
| 2,562 |
|
|
|
| 2,734,674 |
|
|
| 59,743 |
|
|
| 23,127 |
|
|
| 2,771,290 |
|
Total debt securities |
| $ | 6,584,021 |
|
| $ | 175,048 |
|
| $ | 31,975 |
|
| $ | 6,727,094 |
|
Equity and other securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Readily marketable equity — at fair value |
| $ | 73,774 |
|
| $ | 4,460 |
|
| $ | 594 |
|
| $ | 77,640 |
|
Other — at cost |
|
| 387,742 |
|
|
| — |
|
|
| — |
|
|
| 387,742 |
|
Total equity and other securities |
| $ | 461,516 |
|
| $ | 4,460 |
|
| $ | 594 |
|
| $ | 465,382 |
|
|
| Amortized Cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Losses |
|
| Estimated Fair Value |
| ||||
|
| (In thousands) |
| |||||||||||||
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and federal agencies |
| $ | 2,017,901 |
|
|
| 25 |
|
|
| 10,809 |
|
| $ | 2,007,117 |
|
Obligations of states and political subdivisions |
|
| 2,621 |
|
|
| 59 |
|
|
| 2 |
|
|
| 2,678 |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed |
|
| 9,155,485 |
|
|
| 92,915 |
|
|
| 63,917 |
|
|
| 9,184,483 |
|
Privately issued |
|
| 30 |
|
|
| — |
|
|
| — |
|
|
| 30 |
|
Other debt securities |
|
| 136,769 |
|
|
| 2,739 |
|
|
| 10,978 |
|
|
| 128,530 |
|
Equity securities |
|
| 57,009 |
|
|
| 37,427 |
|
|
| 450 |
|
|
| 93,986 |
|
|
|
| 11,369,815 |
|
|
| 133,165 |
|
|
| 86,156 |
|
|
| 11,416,824 |
|
Investment securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and political subdivisions |
|
| 32,445 |
|
|
| 190 |
|
|
| 81 |
|
|
| 32,554 |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed |
|
| 3,063,164 |
|
|
| 41,849 |
|
|
| 7,147 |
|
|
| 3,097,866 |
|
Privately issued |
|
| 141,430 |
|
|
| 1,753 |
|
|
| 30,734 |
|
|
| 112,449 |
|
Other debt securities |
|
| 5,085 |
|
|
| — |
|
|
| — |
|
|
| 5,085 |
|
|
|
| 3,242,124 |
|
|
| 43,792 |
|
|
| 37,962 |
|
|
| 3,247,954 |
|
Other securities |
|
| 414,978 |
|
|
| — |
|
|
| — |
|
|
| 414,978 |
|
Total |
| $ | 15,026,917 |
|
|
| 176,957 |
|
|
| 124,118 |
|
| $ | 15,079,756 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and federal agencies |
| $ | 1,912,110 |
|
|
| 386 |
|
|
| 9,952 |
|
| $ | 1,902,544 |
|
Obligations of states and political subdivisions |
|
| 3,570 |
|
|
| 77 |
|
|
| 6 |
|
|
| 3,641 |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed |
|
| 10,980,507 |
|
|
| 88,343 |
|
|
| 113,989 |
|
|
| 10,954,861 |
|
Privately issued |
|
| 45 |
|
|
| — |
|
|
| 1 |
|
|
| 44 |
|
Other debt securities |
|
| 134,105 |
|
|
| 1,407 |
|
|
| 16,996 |
|
|
| 118,516 |
|
Equity securities |
|
| 307,964 |
|
|
| 45,073 |
|
|
| 571 |
|
|
| 352,466 |
|
|
|
| 13,338,301 |
|
|
| 135,286 |
|
|
| 141,515 |
|
|
| 13,332,072 |
|
Investment securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and political subdivisions |
|
| 60,858 |
|
|
| 267 |
|
|
| 224 |
|
|
| 60,901 |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed |
|
| 2,233,173 |
|
|
| 37,498 |
|
|
| 7,374 |
|
|
| 2,263,297 |
|
Privately issued |
|
| 157,704 |
|
|
| 897 |
|
|
| 37,120 |
|
|
| 121,481 |
|
Other debt securities |
|
| 5,543 |
|
|
| — |
|
|
| — |
|
|
| 5,543 |
|
|
|
| 2,457,278 |
|
|
| 38,662 |
|
|
| 44,718 |
|
|
| 2,451,222 |
|
Other securities |
|
| 461,118 |
|
|
| — |
|
|
| — |
|
|
| 461,118 |
|
Total |
| $ | 16,256,697 |
|
|
| 173,948 |
|
|
| 186,233 |
|
| $ | 16,244,412 |
|
- 912 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. Investment securities, continued
There were no significant gross realized gains or losses from sales of investment securities for the three-month and nine-month periods ended September 30, 2017. During2022 and 2021. Unrealized losses on equity securities were $1 million and $2 million during the three months and nine months ended September 30, 2016,2022, respectively, compared with unrealized gains on equity securities of less than $1 million and unrealized losses of $23 million during the Company sold substantially all of its collateralized debt obligations held in the available-for-sale investment securities portfolio for a gain of $28 million. There were no other significant gross realized gains or losses from the sale of investment securities for the three-monththree months and nine-month periodsnine months ended September 30, 2016.2021, respectively.
At September 30, 2017,2022, the amortized cost and estimated fair value of debt securities by contractual maturity were as follows:
|
| Amortized |
|
| Estimated |
| ||
|
| (In thousands) |
| |||||
Debt securities available for sale: |
|
|
|
|
|
| ||
Due in one year or less |
| $ | 6,886 |
|
| $ | 6,813 |
|
Due after one year through five years |
|
| 7,979,072 |
|
|
| 7,727,233 |
|
Due after five years through ten years |
|
| 74,469 |
|
|
| 71,558 |
|
Due after ten years |
|
| 30,000 |
|
|
| 27,225 |
|
|
|
| 8,090,427 |
|
|
| 7,832,829 |
|
Mortgage-backed securities available for sale |
|
| 3,249,728 |
|
|
| 3,037,517 |
|
|
| $ | 11,340,155 |
|
| $ | 10,870,346 |
|
Debt securities held to maturity: |
|
|
|
|
|
| ||
Due in one year or less |
| $ | 292,223 |
|
| $ | 290,088 |
|
Due after one year through five years |
|
| 1,096,658 |
|
|
| 1,045,997 |
|
Due after five years through ten years |
|
| 1,045,507 |
|
|
| 992,244 |
|
Due after ten years |
|
| 1,430,873 |
|
|
| 1,265,674 |
|
|
|
| 3,865,261 |
|
|
| 3,594,003 |
|
Mortgage-backed securities held to maturity |
|
| 9,033,601 |
|
|
| 7,960,652 |
|
|
| $ | 12,898,862 |
|
| $ | 11,554,655 |
|
|
| Amortized Cost |
|
| Estimated Fair Value |
| ||
|
| (In thousands) |
| |||||
Debt securities available for sale: |
|
|
|
|
|
|
|
|
Due in one year or less |
| $ | 393,453 |
|
|
| 392,506 |
|
Due after one year through five years |
|
| 1,632,143 |
|
|
| 1,622,447 |
|
Due after five years through ten years |
|
| 72,508 |
|
|
| 72,854 |
|
Due after ten years |
|
| 59,187 |
|
|
| 50,518 |
|
|
|
| 2,157,291 |
|
|
| 2,138,325 |
|
Mortgage-backed securities available for sale |
|
| 9,155,515 |
|
|
| 9,184,513 |
|
|
| $ | 11,312,806 |
|
|
| 11,322,838 |
|
Debt securities held to maturity: |
|
|
|
|
|
|
|
|
Due in one year or less |
| $ | 18,640 |
|
|
| 18,738 |
|
Due after one year through five years |
|
| 13,612 |
|
|
| 13,619 |
|
Due after five years through ten years |
|
| 193 |
|
|
| 197 |
|
Due after ten years |
|
| 5,085 |
|
|
| 5,085 |
|
|
|
| 37,530 |
|
|
| 37,639 |
|
Mortgage-backed securities held to maturity |
|
| 3,204,594 |
|
|
| 3,210,315 |
|
|
| $ | 3,242,124 |
|
|
| 3,247,954 |
|
- 1013 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. Investment securities, continued
A summary of investment securities that as of September 30, 20172022 and December 31, 20162021 had been in a continuous unrealized loss position for less than twelve months and those that had been in a continuous unrealized loss position for twelve months or longer follows:
|
| Less Than 12 Months |
|
| 12 Months or More |
| ||||||||||
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
| ||||
|
| (In thousands) |
| |||||||||||||
September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Treasury and federal agencies |
| $ | 7,159,893 |
|
| $ | 224,986 |
|
| $ | 253,585 |
|
| $ | 24,852 |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government issued or guaranteed |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial |
|
| 606,571 |
|
|
| 7,181 |
|
|
| — |
|
|
| — |
|
Residential |
|
| 2,401,907 |
|
|
| 204,279 |
|
|
| 18,668 |
|
|
| 878 |
|
Other debt securities |
|
| 99,347 |
|
|
| 2,827 |
|
|
| 68,872 |
|
|
| 5,657 |
|
|
|
| 10,267,718 |
|
|
| 439,273 |
|
|
| 341,125 |
|
|
| 31,387 |
|
Investment securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Treasury and federal agencies |
|
| 1,146,912 |
|
|
| 49,618 |
|
|
| 2,994 |
|
|
| 15 |
|
Obligations of states and political subdivisions |
|
| 2,426,287 |
|
|
| 221,631 |
|
|
| — |
|
|
| — |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government issued or guaranteed |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial |
|
| 821,288 |
|
|
| 106,215 |
|
|
| — |
|
|
| — |
|
Residential |
|
| 6,416,154 |
|
|
| 819,363 |
|
|
| 669,812 |
|
|
| 148,290 |
|
Privately issued |
|
| — |
|
|
| — |
|
|
| 37,642 |
|
|
| 8,341 |
|
|
|
| 10,810,641 |
|
|
| 1,196,827 |
|
|
| 710,448 |
|
|
| 156,646 |
|
Total |
| $ | 21,078,359 |
|
| $ | 1,636,100 |
|
| $ | 1,051,573 |
|
| $ | 188,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Treasury and federal agencies |
| $ | 598,566 |
|
| $ | 3,806 |
|
| $ | — |
|
| $ | — |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government issued or guaranteed |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential |
|
| 10,111 |
|
|
| 54 |
|
|
| 20,824 |
|
|
| 507 |
|
Other debt securities |
|
| 3,760 |
|
|
| 74 |
|
|
| 66,419 |
|
|
| 4,407 |
|
|
|
| 612,437 |
|
|
| 3,934 |
|
|
| 87,243 |
|
|
| 4,914 |
|
Investment securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Treasury and federal agencies |
|
| 3,043 |
|
|
| 9 |
|
|
| — |
|
|
| — |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government issued or guaranteed |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential |
|
| 1,372,236 |
|
|
| 8,356 |
|
|
| 1,251 |
|
|
| 20 |
|
Privately issued |
|
| — |
|
|
| — |
|
|
| 43,692 |
|
|
| 14,742 |
|
|
|
| 1,375,279 |
|
|
| 8,365 |
|
|
| 44,943 |
|
|
| 14,762 |
|
Total |
| $ | 1,987,716 |
|
| $ | 12,299 |
|
| $ | 132,186 |
|
| $ | 19,676 |
|
|
| Less Than 12 Months |
|
| 12 Months or More |
| ||||||||||
|
| Fair Value |
|
| Unrealized Losses |
|
| Fair Value |
|
| Unrealized Losses |
| ||||
|
| (In thousands) |
| |||||||||||||
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and federal agencies |
| $ | 1,576,717 |
|
|
| (8,002 | ) |
|
| 373,852 |
|
|
| (2,807 | ) |
Obligations of states and political subdivisions |
|
| — |
|
|
| — |
|
|
| 474 |
|
|
| (2 | ) |
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed |
|
| 2,854,982 |
|
|
| (32,123 | ) |
|
| 1,298,054 |
|
|
| (31,794 | ) |
Other debt securities |
|
| 1,500 |
|
|
| (3 | ) |
|
| 60,518 |
|
|
| (10,975 | ) |
Equity securities |
|
| 18,185 |
|
|
| (303 | ) |
|
| 153 |
|
|
| (147 | ) |
|
|
| 4,451,384 |
|
|
| (40,431 | ) |
|
| 1,733,051 |
|
|
| (45,725 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and political subdivisions |
|
| 4,932 |
|
|
| (31 | ) |
|
| 7,093 |
|
|
| (50 | ) |
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed |
|
| 638,863 |
|
|
| (2,832 | ) |
|
| 157,923 |
|
|
| (4,315 | ) |
Privately issued |
|
| — |
|
|
| — |
|
|
| 53,631 |
|
|
| (30,734 | ) |
|
|
| 643,795 |
|
|
| (2,863 | ) |
|
| 218,647 |
|
|
| (35,099 | ) |
Total |
| $ | 5,095,179 |
|
|
| (43,294 | ) |
|
| 1,951,698 |
|
|
| (80,824 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and federal agencies |
| $ | 1,710,241 |
|
|
| (9,950 | ) |
|
| 2,295 |
|
|
| (2 | ) |
Obligations of states and political subdivisions |
|
| — |
|
|
| — |
|
|
| 593 |
|
|
| (6 | ) |
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed |
|
| 6,730,829 |
|
|
| (113,374 | ) |
|
| 81,003 |
|
|
| (615 | ) |
Privately issued |
|
| — |
|
|
| — |
|
|
| 27 |
|
|
| (1 | ) |
Other debt securities |
|
| 100 |
|
|
| (1 | ) |
|
| 85,400 |
|
|
| (16,995 | ) |
Equity securities |
|
| 17,776 |
|
|
| (422 | ) |
|
| 151 |
|
|
| (149 | ) |
|
|
| 8,458,946 |
|
|
| (123,747 | ) |
|
| 169,469 |
|
|
| (17,768 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and political subdivisions |
|
| 17,988 |
|
|
| (126 | ) |
|
| 11,891 |
|
|
| (98 | ) |
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed |
|
| 618,832 |
|
|
| (6,842 | ) |
|
| 17,481 |
|
|
| (532 | ) |
Privately issued |
|
| 17,911 |
|
|
| (1,222 | ) |
|
| 57,016 |
|
|
| (35,898 | ) |
|
|
| 654,731 |
|
|
| (8,190 | ) |
|
| 86,388 |
|
|
| (36,528 | ) |
Total |
| $ | 9,113,677 |
|
|
| (131,937 | ) |
|
| 255,857 |
|
|
| (54,296 | ) |
The Company owned 9394,330 individual investmentdebt securities with aggregate gross unrealized losses of $124 million$1.8 billion at September 30, 2017.2022. Based on a review of each of the securities in the investment securities portfolio at September 30, 2017,2022, the Company concluded that it expected to recover the amortized cost basis of its investment. As of September 30, 2017,2022, the Company does not intend to sell nor is it anticipated that it would be required to sell any of its impaired investment securities at a loss. At September 30, 2017,2022, the Company has not identified
- 11 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. Investment securities, continued
events or changes in circumstances which may have a significant adverse effect on the carryingfair value of the $415$640 million of cost method equity securities.
- 14 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. Investment securities, continued
The Company estimated no material allowance for credit losses for its investment securities.securities classified as held-to-maturity at September 30, 2022 or December 31, 2021.
At September 30, 2022 and December 31, 2021 investment securities with carrying values of $10.3 billion (including $581 million related to repurchase transactions) and $5.1 billion (including $96 million related to repurchase transactions), respectively, were pledged to secure borrowings, lines of credit and governmental deposits.
4. Loans and leases and the allowance for credit losses
A summary of current, past due and nonaccrual loans as of September 30, 20172022 and December 31, 20162021 follows:
|
| Current |
|
| 30-89 Days |
|
| Accruing |
|
| Nonaccrual |
|
| Total |
| |||||
|
| (In thousands) |
| |||||||||||||||||
September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial, financial, leasing, etc. |
| $ | 37,938,053 |
|
|
| 481,091 |
|
|
| 20,639 |
|
|
| 368,166 |
|
| $ | 38,807,949 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial |
|
| 35,880,425 |
|
|
| 227,399 |
|
|
| 38,470 |
|
|
| 1,406,200 |
|
|
| 37,552,494 |
|
Residential builder and developer |
|
| 1,377,505 |
|
|
| 62 |
|
|
| — |
|
|
| 1,930 |
|
|
| 1,379,497 |
|
Other commercial construction |
|
| 6,981,412 |
|
|
| 157,175 |
|
|
| 1,900 |
|
|
| 66,187 |
|
|
| 7,206,674 |
|
Residential |
|
| 20,709,362 |
|
|
| 580,357 |
|
|
| 411,731 |
|
|
| 285,395 |
|
|
| 21,986,845 |
|
Residential — limited documentation |
|
| 974,779 |
|
|
| 17,274 |
|
|
| — |
|
|
| 95,382 |
|
|
| 1,087,435 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Home equity lines and loans |
|
| 4,959,845 |
|
|
| 25,370 |
|
|
| — |
|
|
| 78,208 |
|
|
| 5,063,423 |
|
Recreational finance |
|
| 8,738,849 |
|
|
| 41,758 |
|
|
| — |
|
|
| 38,718 |
|
|
| 8,819,325 |
|
Automobile |
|
| 4,282,895 |
|
|
| 35,550 |
|
|
| — |
|
|
| 40,318 |
|
|
| 4,358,763 |
|
Other |
|
| 1,897,867 |
|
|
| 12,730 |
|
|
| 3,763 |
|
|
| 48,822 |
|
|
| 1,963,182 |
|
Total |
| $ | 123,740,992 |
|
|
| 1,578,766 |
|
|
| 476,503 |
|
|
| 2,429,326 |
|
| $ | 128,225,587 |
|
December 31, 2021 |
|
|
| |||||||||||||||||
Commercial, financial, leasing, etc. |
| $ | 23,101,810 |
|
|
| 142,208 |
|
|
| 8,284 |
|
|
| 221,022 |
|
| $ | 23,473,324 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial |
|
| 24,712,643 |
|
|
| 319,099 |
|
|
| 31,733 |
|
|
| 1,069,280 |
|
|
| 26,132,755 |
|
Residential builder and developer |
|
| 1,400,437 |
|
|
| 2,904 |
|
|
| — |
|
|
| 3,005 |
|
|
| 1,406,346 |
|
Other commercial construction |
|
| 7,722,049 |
|
|
| 17,175 |
|
|
| — |
|
|
| 111,405 |
|
|
| 7,850,629 |
|
Residential |
|
| 13,294,872 |
|
|
| 239,561 |
|
|
| 920,080 |
|
|
| 355,858 |
|
|
| 14,810,371 |
|
Residential — limited documentation |
|
| 1,124,520 |
|
|
| 16,666 |
|
|
| — |
|
|
| 122,888 |
|
|
| 1,264,074 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Home equity lines and loans |
|
| 3,476,617 |
|
|
| 15,486 |
|
|
| — |
|
|
| 70,488 |
|
|
| 3,562,591 |
|
Recreational finance |
|
| 7,985,173 |
|
|
| 40,544 |
|
|
| — |
|
|
| 27,811 |
|
|
| 8,053,528 |
|
Automobile |
|
| 4,604,772 |
|
|
| 40,064 |
|
|
| — |
|
|
| 34,037 |
|
|
| 4,678,873 |
|
Other |
|
| 1,620,147 |
|
|
| 12,223 |
|
|
| 3,302 |
|
|
| 44,289 |
|
|
| 1,679,961 |
|
Total |
| $ | 89,043,040 |
|
|
| 845,930 |
|
|
| 963,399 |
|
|
| 2,060,083 |
|
| $ | 92,912,452 |
|
|
| Current |
|
| 30-89 Days Past Due |
|
| Accruing Loans Past Due 90 Days or More (a) |
|
| Accruing Loans Acquired at a Discount Past Due 90 days or More (b) |
|
| Purchased Impaired (c) |
|
| Nonaccrual |
|
| Total |
| |||||||
|
| (In thousands) |
| |||||||||||||||||||||||||
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
| $ | 21,486,942 |
|
|
| 48,159 |
|
|
| 3,710 |
|
|
| 369 |
|
|
| 75 |
|
|
| 203,996 |
|
| $ | 21,743,251 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 24,724,768 |
|
|
| 273,539 |
|
|
| 1,710 |
|
|
| 7,523 |
|
|
| 20,509 |
|
|
| 200,193 |
|
|
| 25,228,242 |
|
Residential builder and developer |
|
| 1,604,095 |
|
|
| 26,182 |
|
|
| — |
|
|
| 4,413 |
|
|
| 10,717 |
|
|
| 2,416 |
|
|
| 1,647,823 |
|
Other commercial construction |
|
| 5,952,636 |
|
|
| 51,132 |
|
|
| 1,220 |
|
|
| — |
|
|
| 13,972 |
|
|
| 19,263 |
|
|
| 6,038,223 |
|
Residential |
|
| 15,868,656 |
|
|
| 458,066 |
|
|
| 249,983 |
|
|
| 10,025 |
|
|
| 307,529 |
|
|
| 236,363 |
|
|
| 17,130,622 |
|
Residential — limited documentation |
|
| 2,829,667 |
|
|
| 88,814 |
|
|
| — |
|
|
| — |
|
|
| 114,141 |
|
|
| 101,918 |
|
|
| 3,134,540 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines and loans |
|
| 5,275,572 |
|
|
| 34,878 |
|
|
| 772 |
|
|
| 9,856 |
|
|
| — |
|
|
| 75,584 |
|
|
| 5,396,662 |
|
Automobile |
|
| 3,327,148 |
|
|
| 67,280 |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
|
| 21,267 |
|
|
| 3,415,696 |
|
Other |
|
| 4,120,712 |
|
|
| 33,070 |
|
|
| 3,893 |
|
|
| 24,038 |
|
|
| — |
|
|
| 8,362 |
|
|
| 4,190,075 |
|
Total |
| $ | 85,190,196 |
|
|
| 1,081,120 |
|
|
| 261,288 |
|
|
| 56,225 |
|
|
| 466,943 |
|
|
| 869,362 |
|
| $ | 87,925,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
|
| |||||||||||||||||||||||||
Commercial, financial, leasing, etc. |
| $ | 22,287,857 |
|
|
| 53,503 |
|
|
| 6,195 |
|
|
| 417 |
|
|
| 641 |
|
|
| 261,434 |
|
| $ | 22,610,047 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 25,076,684 |
|
|
| 183,531 |
|
|
| 7,054 |
|
|
| 12,870 |
|
|
| 31,404 |
|
|
| 176,201 |
|
|
| 25,487,744 |
|
Residential builder and developer |
|
| 1,884,989 |
|
|
| 4,667 |
|
|
| 5 |
|
|
| 1,952 |
|
|
| 14,006 |
|
|
| 16,707 |
|
|
| 1,922,326 |
|
Other commercial construction |
|
| 5,985,118 |
|
|
| 77,701 |
|
|
| 922 |
|
|
| 198 |
|
|
| 14,274 |
|
|
| 18,111 |
|
|
| 6,096,324 |
|
Residential |
|
| 17,631,377 |
|
|
| 485,468 |
|
|
| 281,298 |
|
|
| 11,537 |
|
|
| 378,549 |
|
|
| 229,242 |
|
|
| 19,017,471 |
|
Residential — limited documentation |
|
| 3,239,344 |
|
|
| 88,366 |
|
|
| — |
|
|
| — |
|
|
| 139,158 |
|
|
| 106,573 |
|
|
| 3,573,441 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines and loans |
|
| 5,502,091 |
|
|
| 44,565 |
|
|
| — |
|
|
| 12,678 |
|
|
| — |
|
|
| 81,815 |
|
|
| 5,641,149 |
|
Automobile |
|
| 2,869,232 |
|
|
| 56,158 |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
|
| 18,674 |
|
|
| 2,944,065 |
|
Other |
|
| 3,491,629 |
|
|
| 31,286 |
|
|
| 5,185 |
|
|
| 21,491 |
|
|
| — |
|
|
| 11,258 |
|
|
| 3,560,849 |
|
Total |
| $ | 87,968,321 |
|
|
| 1,025,245 |
|
|
| 300,659 |
|
|
| 61,144 |
|
|
| 578,032 |
|
|
| 920,015 |
|
| $ | 90,853,416 |
|
|
|
|
|
|
|
At September 30, 2022 and December 31, 2021, the Company had $39 million and $1.2 billion, respectively, of outstanding loan balances, consisting predominantly of residential real estate loans, for which COVID-19 related payment deferrals were granted. Those loans met the criteria described in note 1 of Notes to Financial Statements in the 2021 Annual Report and, accordingly, are not considered past due or otherwise in default of loan terms as of the date presented. Included in those loan balances were $20 million and $974 million of government-guaranteed loans at September 30, 2022 and December 31, 2021, respectively. Payment deferrals are generally scheduled to expire in 2022 and/or are in the process of formal modification of repayment terms for previously deferred payments.
One-to-four family residential mortgage loans held for sale were $43 million and $474 million at September 30, 2022 and December 31, 2021, respectively. Commercial real estate loans held for sale were $300 million at September 30, 2022 and $425 million at December 31, 2021.
- 1215 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
One-to-four family residential mortgage loans held for sale were $347 million and $414 million at September 30, 2017 and December 31, 2016, respectively. Commercial real estate loans held for sale were $224 million at September 30, 2017 and $643 million at December 31, 2016.Credit quality indicators
The outstanding principal balance and the carrying amount of loans acquired at a discount that were recorded at fair value at the acquisition date and included in the consolidated balance sheet were as follows:
|
| September 30, |
|
| December 31, |
| ||
|
| 2017 |
|
| 2016 |
| ||
|
| (In thousands) |
| |||||
|
|
|
|
|
|
|
|
|
Outstanding principal balance |
| $ | 1,584,126 |
|
|
| 2,311,699 |
|
Carrying amount: |
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
|
| 42,878 |
|
|
| 59,928 |
|
Commercial real estate |
|
| 308,426 |
|
|
| 456,820 |
|
Residential real estate |
|
| 665,278 |
|
|
| 799,802 |
|
Consumer |
|
| 127,919 |
|
|
| 487,721 |
|
|
| $ | 1,144,501 |
|
|
| 1,804,271 |
|
Purchased impaired loans included in the table above totaled $467 million at September 30, 2017 and $578 million at December 31, 2016, representing less than 1% of the Company’s assets as of each date. A summary of changes in the accretable yield for loans acquired at a discount for the three months and nine months ended September 30, 2017 and 2016 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended September 30 |
| |||||||||||||
|
| 2017 |
|
| 2016 |
| ||||||||||
|
| Purchased |
|
| Other |
|
| Purchased |
|
| Other |
| ||||
|
| Impaired |
|
| Acquired |
|
| Impaired |
|
| Acquired |
| ||||
|
| (In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
| $ | 133,532 |
|
|
| 163,099 |
|
| $ | 162,023 |
|
|
| 245,195 |
|
Interest income |
|
| (10,815 | ) |
|
| (20,064 | ) |
|
| (12,784 | ) |
|
| (26,540 | ) |
Reclassifications from nonaccretable balance |
|
| 30,799 |
|
|
| 6,041 |
|
|
| 2,256 |
|
|
| 12,050 |
|
Other (a) |
|
| — |
|
|
| 1,545 |
|
|
| — |
|
|
| (818 | ) |
Balance at end of period |
| $ | 153,516 |
|
|
| 150,621 |
|
| $ | 151,495 |
|
|
| 229,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended September 30 |
| |||||||||||||
|
| 2017 |
|
| 2016 |
| ||||||||||
|
| Purchased |
|
| Other |
|
| Purchased |
|
| Other |
| ||||
|
| Impaired |
|
| Acquired |
|
| Impaired |
|
| Acquired |
| ||||
|
| (In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
| $ | 154,233 |
|
|
| 201,153 |
|
| $ | 184,618 |
|
|
| 296,434 |
|
Interest income |
|
| (32,546 | ) |
|
| (66,505 | ) |
|
| (40,906 | ) |
|
| (97,300 | ) |
Reclassifications from nonaccretable balance |
|
| 31,829 |
|
|
| 11,076 |
|
|
| 7,783 |
|
|
| 20,647 |
|
Other (a) |
|
| — |
|
|
| 4,897 |
|
|
| — |
|
|
| 10,106 |
|
Balance at end of period |
| $ | 153,516 |
|
|
| 150,621 |
|
| $ | 151,495 |
|
|
| 229,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 13 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
Changes in the allowance for credit losses for the three months ended September 30, 2017 were as follows:
|
| Commercial, Financial, |
|
| Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| Leasing, etc. |
|
| Commercial |
|
| Residential |
|
| Consumer |
|
| Unallocated |
|
| Total |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | 339,314 |
|
|
| 366,229 |
|
|
| 66,006 |
|
|
| 158,559 |
|
|
| 78,117 |
|
| $ | 1,008,225 |
|
Provision for credit losses |
|
| 2,451 |
|
|
| (7,699 | ) |
|
| 1,267 |
|
|
| 33,886 |
|
|
| 95 |
|
|
| 30,000 |
|
Net charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
| (9,714 | ) |
|
| (258 | ) |
|
| (4,206 | ) |
|
| (32,874 | ) |
|
| — |
|
|
| (47,052 | ) |
Recoveries |
|
| 4,423 |
|
|
| 5,895 |
|
|
| 2,028 |
|
|
| 9,807 |
|
|
| — |
|
|
| 22,153 |
|
Net (charge-offs) recoveries |
|
| (5,291 | ) |
|
| 5,637 |
|
|
| (2,178 | ) |
|
| (23,067 | ) |
|
| — |
|
|
| (24,899 | ) |
Ending balance |
| $ | 336,474 |
|
|
| 364,167 |
|
|
| 65,095 |
|
|
| 169,378 |
|
|
| 78,212 |
|
| $ | 1,013,326 |
|
Changes in the allowance for credit losses for the three months ended September 30, 2016 were as follows:
|
| Commercial, Financial, |
|
| Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| Leasing, etc. |
|
| Commercial |
|
| Residential |
|
| Consumer |
|
| Unallocated |
|
| Total |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | 316,079 |
|
|
| 349,674 |
|
|
| 69,660 |
|
|
| 157,361 |
|
|
| 77,722 |
|
| $ | 970,496 |
|
Provision for credit losses |
|
| 26,222 |
|
|
| 9,963 |
|
|
| (6,232 | ) |
|
| 16,539 |
|
|
| 508 |
|
|
| 47,000 |
|
Net charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
| (21,075 | ) |
|
| (1,564 | ) |
|
| (6,754 | ) |
|
| (29,882 | ) |
|
| — |
|
|
| (59,275 | ) |
Recoveries |
|
| 6,958 |
|
|
| 1,704 |
|
|
| 1,919 |
|
|
| 7,319 |
|
|
| — |
|
|
| 17,900 |
|
Net (charge-offs) recoveries |
|
| (14,117 | ) |
|
| 140 |
|
|
| (4,835 | ) |
|
| (22,563 | ) |
|
| — |
|
|
| (41,375 | ) |
Ending balance |
| $ | 328,184 |
|
|
| 359,777 |
|
|
| 58,593 |
|
|
| 151,337 |
|
|
| 78,230 |
|
| $ | 976,121 |
|
Changes in the allowance for credit losses for the nine months ended September 30, 2017 were as follows:
|
| Commercial, Financial, |
|
| Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| Leasing, etc. |
|
| Commercial |
|
| Residential |
|
| Consumer |
|
| Unallocated |
|
| Total |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | 330,833 |
|
|
| 362,719 |
|
|
| 61,127 |
|
|
| 156,288 |
|
|
| 78,030 |
|
| $ | 988,997 |
|
Provision for credit losses |
|
| 44,642 |
|
|
| 1,201 |
|
|
| 14,067 |
|
|
| 76,908 |
|
|
| 182 |
|
|
| 137,000 |
|
Net charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
| (51,318 | ) |
|
| (7,556 | ) |
|
| (16,364 | ) |
|
| (96,060 | ) |
|
| — |
|
|
| (171,298 | ) |
Recoveries |
|
| 12,317 |
|
|
| 7,803 |
|
|
| 6,265 |
|
|
| 32,242 |
|
|
| — |
|
|
| 58,627 |
|
Net (charge-offs) recoveries |
|
| (39,001 | ) |
|
| 247 |
|
|
| (10,099 | ) |
|
| (63,818 | ) |
|
| — |
|
|
| (112,671 | ) |
Ending balance |
| $ | 336,474 |
|
|
| 364,167 |
|
|
| 65,095 |
|
|
| 169,378 |
|
|
| 78,212 |
|
| $ | 1,013,326 |
|
- 14 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
Changes in the allowance for credit losses for the nine months ended September 30, 2016 were as follows:
|
| Commercial, Financial, |
|
| Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| Leasing, etc. |
|
| Commercial |
|
| Residential |
|
| Consumer |
|
| Unallocated |
|
| Total |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | 300,404 |
|
|
| 326,831 |
|
|
| 72,238 |
|
|
| 178,320 |
|
|
| 78,199 |
|
| $ | 955,992 |
|
Provision for credit losses |
|
| 39,667 |
|
|
| 29,799 |
|
|
| (610 | ) |
|
| 59,113 |
|
|
| 31 |
|
|
| 128,000 |
|
Net charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
| (34,711 | ) |
|
| (3,569 | ) |
|
| (18,816 | ) |
|
| (107,761 | ) |
|
| — |
|
|
| (164,857 | ) |
Recoveries |
|
| 22,824 |
|
|
| 6,716 |
|
|
| 5,781 |
|
|
| 21,665 |
|
|
| — |
|
|
| 56,986 |
|
Net (charge-offs) recoveries |
|
| (11,887 | ) |
|
| 3,147 |
|
|
| (13,035 | ) |
|
| (86,096 | ) |
|
| — |
|
|
| (107,871 | ) |
Ending balance |
| $ | 328,184 |
|
|
| 359,777 |
|
|
| 58,593 |
|
|
| 151,337 |
|
|
| 78,230 |
|
| $ | 976,121 |
|
Despite the allocation in the preceding tables, the allowance for credit losses is general in nature and is available to absorb losses from any loan or lease type.
In establishing the allowance for credit losses, the Company estimates losses attributable to specific troubled credits identified through both normal and detailed or intensified credit review processes and also estimates losses inherent in other loans and leases on a collective basis. For purposes of determining the level of the allowance for credit losses, the Company evaluates its loan and lease portfolio by loan type. The amounts of loss components in the Company’s loan and lease portfolios are determined through a loan-by-loan analysis of larger balance commercial loans and commercial real estate loans that are in nonaccrual status and by applying loss factors to groups of loan balances based on loan type and management’s classification of such loans under the Company’s loan grading system. Measurement of the specific loss components is typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. In determining the allowance for credit losses, the Company utilizes a loan grading system which is applied to commercial and commercial real estate credits on an individual loan basis. Loan officers are responsible for continually assigning grades to these loans based on standards outlined in the Company’s Credit Policy. Internal loan grades are also monitored by the Company’s credit review department to ensure consistency and strict adherence to the prescribed standards. Loan grades are assigned loss component factors that reflect the Company’s loss estimate for each group of loans and leases. Factors considered in assigning loan grades and loss component factors include borrower-specific information related to expected future cash flows and operating results, collateral values, geographic location, financial condition and performance, payment status, and other information; levels of and trends in portfolio charge-offs and recoveries; levels of and trends in portfolio delinquencies and impaired loans; changes in thedifferentiate risk profile of specific portfolios; trends in volume and terms of loans; effects of changes in credit concentrations; and observed trends and practices in the banking industry. As updated appraisals are obtained on individual loans or other events in the market place indicate that collateral values have significantly changed, individual loan grades are adjusted as appropriate. Changes in other factors cited may also lead to loan grade changes at any time. Except for consumer loans and residential real estate loans that are considered smaller balance homogenous loans and acquired loans that are evaluated on an aggregated basis, the Company considers a loan to be impaired for purposes of applying GAAP when, based on current information and events, it is probable that the Company will be unable to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days. Regardless of loan type, the Company considers a loan to be impaired if it qualifies as a troubled debt restructuring. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows.
- 15 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
The following tables provide information with respect to loans and leases that were considered impaired as of September 30, 2017 and December 31, 2016 and for the three-month and nine-month periods ended September 30, 2017 and 2016.
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||||||||||||||||
|
| Recorded Investment |
|
| Unpaid Principal Balance |
|
| Related Allowance |
|
| Recorded Investment |
|
| Unpaid Principal Balance |
|
| Related Allowance |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
| $ | 148,747 |
|
|
| 179,120 |
|
|
| 49,447 |
|
|
| 168,072 |
|
|
| 184,432 |
|
|
| 48,480 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 73,144 |
|
|
| 81,244 |
|
|
| 10,200 |
|
|
| 71,862 |
|
|
| 86,666 |
|
|
| 11,620 |
|
Residential builder and developer |
|
| 6,537 |
|
|
| 6,842 |
|
|
| 288 |
|
|
| 7,396 |
|
|
| 8,361 |
|
|
| 506 |
|
Other commercial construction |
|
| 1,626 |
|
|
| 1,785 |
|
|
| 292 |
|
|
| 2,475 |
|
|
| 2,731 |
|
|
| 448 |
|
Residential |
|
| 97,483 |
|
|
| 118,030 |
|
|
| 3,475 |
|
|
| 86,680 |
|
|
| 105,944 |
|
|
| 3,457 |
|
Residential — limited documentation |
|
| 79,030 |
|
|
| 94,194 |
|
|
| 4,600 |
|
|
| 82,547 |
|
|
| 97,718 |
|
|
| 6,000 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines and loans |
|
| 48,231 |
|
|
| 52,975 |
|
|
| 8,711 |
|
|
| 44,693 |
|
|
| 48,965 |
|
|
| 8,027 |
|
Automobile |
|
| 14,225 |
|
|
| 16,743 |
|
|
| 3,011 |
|
|
| 16,982 |
|
|
| 18,272 |
|
|
| 3,740 |
|
Other |
|
| 3,176 |
|
|
| 5,633 |
|
|
| 650 |
|
|
| 3,791 |
|
|
| 5,296 |
|
|
| 776 |
|
|
|
| 472,199 |
|
|
| 556,566 |
|
|
| 80,674 |
|
|
| 484,498 |
|
|
| 558,385 |
|
|
| 83,054 |
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
|
| 80,952 |
|
|
| 97,073 |
|
|
| — |
|
|
| 100,805 |
|
|
| 124,786 |
|
|
| — |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 148,733 |
|
|
| 158,815 |
|
|
| — |
|
|
| 113,276 |
|
|
| 121,846 |
|
|
| — |
|
Residential builder and developer |
|
| 1,174 |
|
|
| 1,174 |
|
|
| — |
|
|
| 14,368 |
|
|
| 21,124 |
|
|
| — |
|
Other commercial construction |
|
| 17,850 |
|
|
| 37,237 |
|
|
| — |
|
|
| 15,933 |
|
|
| 35,281 |
|
|
| — |
|
Residential |
|
| 17,312 |
|
|
| 23,291 |
|
|
| — |
|
|
| 16,823 |
|
|
| 24,161 |
|
|
| — |
|
Residential — limited documentation |
|
| 11,091 |
|
|
| 18,480 |
|
|
| — |
|
|
| 15,429 |
|
|
| 24,590 |
|
|
| — |
|
|
|
| 277,112 |
|
|
| 336,070 |
|
|
| — |
|
|
| 276,634 |
|
|
| 351,788 |
|
|
| — |
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
|
| 229,699 |
|
|
| 276,193 |
|
|
| 49,447 |
|
|
| 268,877 |
|
|
| 309,218 |
|
|
| 48,480 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 221,877 |
|
|
| 240,059 |
|
|
| 10,200 |
|
|
| 185,138 |
|
|
| 208,512 |
|
|
| 11,620 |
|
Residential builder and developer |
|
| 7,711 |
|
|
| 8,016 |
|
|
| 288 |
|
|
| 21,764 |
|
|
| 29,485 |
|
|
| 506 |
|
Other commercial construction |
|
| 19,476 |
|
|
| 39,022 |
|
|
| 292 |
|
|
| 18,408 |
|
|
| 38,012 |
|
|
| 448 |
|
Residential |
|
| 114,795 |
|
|
| 141,321 |
|
|
| 3,475 |
|
|
| 103,503 |
|
|
| 130,105 |
|
|
| 3,457 |
|
Residential — limited documentation |
|
| 90,121 |
|
|
| 112,674 |
|
|
| 4,600 |
|
|
| 97,976 |
|
|
| 122,308 |
|
|
| 6,000 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines and loans |
|
| 48,231 |
|
|
| 52,975 |
|
|
| 8,711 |
|
|
| 44,693 |
|
|
| 48,965 |
|
|
| 8,027 |
|
Automobile |
|
| 14,225 |
|
|
| 16,743 |
|
|
| 3,011 |
|
|
| 16,982 |
|
|
| 18,272 |
|
|
| 3,740 |
|
Other |
|
| 3,176 |
|
|
| 5,633 |
|
|
| 650 |
|
|
| 3,791 |
|
|
| 5,296 |
|
|
| 776 |
|
Total |
| $ | 749,311 |
|
|
| 892,636 |
|
|
| 80,674 |
|
|
| 761,132 |
|
|
| 910,173 |
|
|
| 83,054 |
|
- 16 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
|
| Three Months Ended September 30, 2017 |
|
| Three Months Ended September 30, 2016 |
| ||||||||||||||||||
|
|
|
|
|
| Interest Income Recognized |
|
|
|
|
|
| Interest Income Recognized |
| ||||||||||
|
| Average Recorded Investment |
|
| Total |
|
| Cash Basis |
|
| Average Recorded Investment |
|
| Total |
|
| Cash Basis |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
| $ | 224,526 |
|
|
| 391 |
|
|
| 391 |
|
|
| 262,796 |
|
|
| 744 |
|
|
| 744 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 233,572 |
|
|
| 1,425 |
|
|
| 1,425 |
|
|
| 175,256 |
|
|
| 1,806 |
|
|
| 1,806 |
|
Residential builder and developer |
|
| 8,550 |
|
|
| 895 |
|
|
| 895 |
|
|
| 26,996 |
|
|
| 405 |
|
|
| 405 |
|
Other commercial construction |
|
| 16,578 |
|
|
| 25 |
|
|
| 25 |
|
|
| 21,500 |
|
|
| 190 |
|
|
| 190 |
|
Residential |
|
| 113,892 |
|
|
| 1,903 |
|
|
| 905 |
|
|
| 96,961 |
|
|
| 1,572 |
|
|
| 570 |
|
Residential — limited documentation |
|
| 91,974 |
|
|
| 1,624 |
|
|
| 569 |
|
|
| 101,877 |
|
|
| 1,501 |
|
|
| 378 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines and loans |
|
| 47,831 |
|
|
| 419 |
|
|
| 99 |
|
|
| 41,740 |
|
|
| 368 |
|
|
| 112 |
|
Automobile |
|
| 14,588 |
|
|
| 251 |
|
|
| 22 |
|
|
| 18,571 |
|
|
| 303 |
|
|
| 19 |
|
Other |
|
| 3,269 |
|
|
| 80 |
|
|
| 2 |
|
|
| 4,077 |
|
|
| 72 |
|
|
| 11 |
|
Total |
| $ | 754,780 |
|
|
| 7,013 |
|
|
| 4,333 |
|
|
| 749,774 |
|
|
| 6,961 |
|
|
| 4,235 |
|
|
| Nine Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2016 |
| ||||||||||||||||||
|
|
|
|
|
| Interest Income Recognized |
|
|
|
|
|
| Interest Income Recognized |
| ||||||||||
|
| Average Recorded Investment |
|
| Total |
|
| Cash Basis |
|
| Average Recorded Investment |
|
| Total |
|
| Cash Basis |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
| $ | 242,410 |
|
|
| 1,674 |
|
|
| 1,674 |
|
|
| 283,783 |
|
|
| 7,055 |
|
|
| 7,055 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 205,814 |
|
|
| 3,213 |
|
|
| 3,213 |
|
|
| 177,579 |
|
|
| 3,891 |
|
|
| 3,891 |
|
Residential builder and developer |
|
| 14,551 |
|
|
| 1,791 |
|
|
| 1,791 |
|
|
| 30,832 |
|
|
| 488 |
|
|
| 488 |
|
Other commercial construction |
|
| 15,474 |
|
|
| 958 |
|
|
| 958 |
|
|
| 19,774 |
|
|
| 563 |
|
|
| 563 |
|
Residential |
|
| 108,741 |
|
|
| 5,004 |
|
|
| 2,285 |
|
|
| 97,229 |
|
|
| 4,778 |
|
|
| 2,591 |
|
Residential — limited documentation |
|
| 94,680 |
|
|
| 4,573 |
|
|
| 1,292 |
|
|
| 104,382 |
|
|
| 4,580 |
|
|
| 1,648 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines and loans |
|
| 46,829 |
|
|
| 1,240 |
|
|
| 290 |
|
|
| 33,998 |
|
|
| 937 |
|
|
| 295 |
|
Automobile |
|
| 15,483 |
|
|
| 788 |
|
|
| 62 |
|
|
| 20,358 |
|
|
| 964 |
|
|
| 83 |
|
Other |
|
| 3,430 |
|
|
| 227 |
|
|
| 8 |
|
|
| 10,987 |
|
|
| 371 |
|
|
| 74 |
|
Total |
| $ | 747,412 |
|
|
| 19,468 |
|
|
| 11,573 |
|
|
| 778,922 |
|
|
| 23,627 |
|
|
| 16,688 |
|
- 17 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
In accordance with the previously described policies, the Company utilizes a loan grading system that is applied to allamongst its commercial loans and commercial real estate loans. Loan grades are utilized to differentiate risk within the portfolio and consider the expectations of default for each loan. Commercial loans and commercial real estate loansLoans with a lower expectation of default are assigned one of ten possible “pass” loan grades and are generally ascribed lower loss factors when determining the allowance for credit losses. Loans with an elevated level of credit risk are classified as “criticized” and are ascribed a higher loss factor when determining the allowance for credit losses. Criticized loans may be classified as “nonaccrual” if the Company no longer expects to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more. All larger- balance
Line of business personnel in different geographic locations with support from and review by the Company’s credit risk personnel review and reassign loan grades based on their detailed knowledge of individual borrowers and their judgment of the impact on such borrowers resulting from changing conditions in their respective regions. Factors considered in assigning loan grades include borrower-specific information related to expected future cash flows and operating results, collateral values, geographic location, financial condition and performance, payment status, and other information. The Company’s policy is that at least annually, updated financial information be obtained from commercial borrowers associated with pass grade loans and additional analysis performed. On a quarterly basis, the Company’s centralized credit risk department reviews all criticized commercial loans and commercial real estate loans are individually reviewed by centralized credit personnel each quartergreater than $1 million to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. Smaller-balance criticized loans are analyzed by business line risk management areas to ensure proper loan grade classification. Furthermore, criticized nonaccrual commercial loans and commercial real estate loans are considered impaired and, as a result, specific loss allowances on such loans are established within the allowance for credit losses to the extent appropriate in each individual instance.
The following table summarizes the loan grades applied at September 30, 2022 to the various classes of the Company’s commercial loans and commercial real estate loans.loans by origination year.
|
| Term Loans by Origination Year |
|
| Revolving |
|
| Revolving Loans Converted to Term |
|
|
|
| ||||||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
|
| Prior |
|
| Loans |
|
| Loans |
|
| Total |
| |||||||||
|
| (In thousands) |
| |||||||||||||||||||||||||||||||||
Commercial, financial, leasing, etc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Loan grades: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pass |
| $ | 5,781,789 |
|
|
| 5,344,496 |
|
|
| 2,395,097 |
|
|
| 2,002,268 |
|
|
| 984,260 |
|
|
| 2,170,726 |
|
|
| 17,905,476 |
|
|
| 33,403 |
|
| $ | 36,617,515 |
|
Criticized accrual |
|
| 183,126 |
|
|
| 255,935 |
|
|
| 159,898 |
|
|
| 119,906 |
|
|
| 67,885 |
|
|
| 302,787 |
|
|
| 715,190 |
|
|
| 17,541 |
|
|
| 1,822,268 |
|
Criticized nonaccrual |
|
| 15,954 |
|
|
| 47,840 |
|
|
| 42,491 |
|
|
| 43,953 |
|
|
| 37,789 |
|
|
| 64,076 |
|
|
| 110,414 |
|
|
| 5,649 |
|
|
| 368,166 |
|
Total commercial, |
| $ | 5,980,869 |
|
|
| 5,648,271 |
|
|
| 2,597,486 |
|
|
| 2,166,127 |
|
|
| 1,089,934 |
|
|
| 2,537,589 |
|
|
| 18,731,080 |
|
|
| 56,593 |
|
| $ | 38,807,949 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loan grades: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pass |
| $ | 3,169,811 |
|
|
| 3,566,811 |
|
|
| 3,480,606 |
|
|
| 4,628,815 |
|
|
| 3,534,628 |
|
|
| 11,778,026 |
|
|
| 852,233 |
|
|
| 45,264 |
|
| $ | 31,056,194 |
|
Criticized accrual |
|
| 116,303 |
|
|
| 325,114 |
|
|
| 532,354 |
|
|
| 1,028,855 |
|
|
| 1,040,898 |
|
|
| 1,987,906 |
|
|
| 58,670 |
|
|
| — |
|
|
| 5,090,100 |
|
Criticized nonaccrual |
|
| 9,313 |
|
|
| 9,119 |
|
|
| 199,654 |
|
|
| 185,468 |
|
|
| 187,115 |
|
|
| 791,882 |
|
|
| 23,649 |
|
|
| — |
|
|
| 1,406,200 |
|
Total commercial real |
| $ | 3,295,427 |
|
|
| 3,901,044 |
|
|
| 4,212,614 |
|
|
| 5,843,138 |
|
|
| 4,762,641 |
|
|
| 14,557,814 |
|
|
| 934,552 |
|
|
| 45,264 |
|
| $ | 37,552,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Residential builder and developer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loan grades: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pass |
| $ | 561,314 |
|
|
| 367,867 |
|
|
| 33,935 |
|
|
| 31,596 |
|
|
| 18,574 |
|
|
| 9,878 |
|
|
| 169,941 |
|
|
| — |
|
| $ | 1,193,105 |
|
Criticized accrual |
|
| — |
|
|
| 23,263 |
|
|
| 11,294 |
|
|
| 107,408 |
|
|
| 14,514 |
|
|
| 62 |
|
|
| 27,921 |
|
|
| — |
|
|
| 184,462 |
|
Criticized nonaccrual |
|
| — |
|
|
| 654 |
|
|
| — |
|
|
| 518 |
|
|
| — |
|
|
| 758 |
|
|
| — |
|
|
| — |
|
|
| 1,930 |
|
Total residential builder |
| $ | 561,314 |
|
|
| 391,784 |
|
|
| 45,229 |
|
|
| 139,522 |
|
|
| 33,088 |
|
|
| 10,698 |
|
|
| 197,862 |
|
|
| — |
|
| $ | 1,379,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other commercial construction: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loan grades: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pass |
| $ | 526,338 |
|
|
| 1,079,329 |
|
|
| 1,388,737 |
|
|
| 1,431,834 |
|
|
| 401,870 |
|
|
| 327,992 |
|
|
| 23,584 |
|
|
| 618 |
|
| $ | 5,180,302 |
|
Criticized accrual |
|
| 46,282 |
|
|
| 163,004 |
|
|
| 249,622 |
|
|
| 971,447 |
|
|
| 386,480 |
|
|
| 136,358 |
|
|
| 6,992 |
|
|
| — |
|
|
| 1,960,185 |
|
Criticized nonaccrual |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 25,352 |
|
|
| 10,588 |
|
|
| 27,814 |
|
|
| 2,433 |
|
|
| — |
|
|
| 66,187 |
|
Total other commercial |
| $ | 572,620 |
|
|
| 1,242,333 |
|
|
| 1,638,359 |
|
|
| 2,428,633 |
|
|
| 798,938 |
|
|
| 492,164 |
|
|
| 33,009 |
|
|
| 618 |
|
| $ | 7,206,674 |
|
|
|
|
|
|
| Real Estate |
| |||||||||
|
| Commercial, |
|
|
|
|
|
| Residential |
|
| Other |
| |||
|
| Financial, |
|
|
|
|
|
| Builder and |
|
| Commercial |
| |||
|
| Leasing, etc. |
|
| Commercial |
|
| Developer |
|
| Construction |
| ||||
|
| (In thousands) |
| |||||||||||||
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass |
| $ | 20,561,077 |
|
|
| 24,309,923 |
|
|
| 1,580,763 |
|
|
| 5,830,122 |
|
Criticized accrual |
|
| 978,178 |
|
|
| 718,126 |
|
|
| 64,644 |
|
|
| 188,838 |
|
Criticized nonaccrual |
|
| 203,996 |
|
|
| 200,193 |
|
|
| 2,416 |
|
|
| 19,263 |
|
Total |
| $ | 21,743,251 |
|
|
| 25,228,242 |
|
|
| 1,647,823 |
|
|
| 6,038,223 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass |
| $ | 21,398,581 |
|
|
| 24,570,269 |
|
|
| 1,789,071 |
|
|
| 5,912,351 |
|
Criticized accrual |
|
| 950,032 |
|
|
| 741,274 |
|
|
| 116,548 |
|
|
| 165,862 |
|
Criticized nonaccrual |
|
| 261,434 |
|
|
| 176,201 |
|
|
| 16,707 |
|
|
| 18,111 |
|
Total |
| $ | 22,610,047 |
|
|
| 25,487,744 |
|
|
| 1,922,326 |
|
|
| 6,096,324 |
|
- 1816 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
In determiningThe Company considers repayment performance a significant indicator of credit quality for its residential real estate loan and consumer loan portfolios. A summary of loans in accrual and nonaccrual status at September 30, 2022 for the allowance for credit losses,various classes of the Company’s residential real estate loans and consumer loans are generally evaluated collectively after considering such factors as payment performance and recent loss experience and trends, which are mainly driven by current collateral values in the market place as well as the amount of loan defaults. Loss rates on such loans are determined by reference to recent charge-off history and are evaluated (and adjusted if deemed appropriate) through consideration of other factors including near-term forecasted loss estimates developed by the Company’s credit department. In arriving at such forecasts, the Company considers the current estimated fair value of its collateral based on geographical adjustments for home price depreciation/appreciation and overall borrower repayment performance. With regard to collateral values, the realizability of such values by the Company contemplates repayment of any first lien position prior to recovering amounts on a second lien position. However, residential real estate loans and outstanding balances of home equity loans and lines of credit that are more than 150 days past due are generally evaluated for collectability on a loan-by-loan basis giving consideration to estimated collateral values. The carrying value of residential real estate loans and home equity loans and lines of credit for which a partial charge-off has been recognized totaled $39 million and $27 million, respectively, at September 30, 2017 and $44 million and $32 million, respectively, at December 31, 2016. Residential real estate loans and home equity loans and lines of credit that were more than 150 days past due but did not require a partial charge-off because the net realizable value of the collateral exceeded the outstanding customer balance were $19 million and $33 million, respectively, at September 30, 2017 and $16 million and $39 million, respectively, at December 31, 2016.origination year follows.
The Company also measures additional losses for purchased impaired loans when it is probable that the Company will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition. The determination of the allocated portion of the allowance for credit losses is very subjective. Given that inherent subjectivity and potential imprecision involved in determining the allocated portion of the allowance for credit losses, the Company also provides an inherent unallocated portion of the allowance. The unallocated portion of the allowance is intended to recognize probable losses that are not otherwise identifiable and includes management’s subjective determination of amounts necessary to provide for the possible use of imprecise estimates in determining the allocated portion of the allowance. Therefore, the level of the unallocated portion of the allowance is primarily reflective of the inherent imprecision in the various calculations used in determining the allocated portion of the allowance for credit losses. Other factors that could also lead to changes in the unallocated portion include the effects of expansion into new markets for which the Company does not have the same degree of familiarity and experience regarding portfolio performance in changing market conditions, the introduction of new loan and lease product types, and other risks associated with the Company’s loan portfolio that may not be specifically identifiable.
|
| Term Loans by Origination Year |
|
| Revolving |
|
| Revolving Loans Converted to Term |
|
|
|
| ||||||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
|
| Prior |
|
| Loans |
|
| Loans |
|
| Total |
| |||||||||
|
| (In thousands) |
| |||||||||||||||||||||||||||||||||
Residential: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Current |
| $ | 4,057,196 |
|
|
| 4,049,835 |
|
|
| 2,734,863 |
|
|
| 1,345,076 |
|
|
| 760,442 |
|
|
| 7,731,831 |
|
|
| 30,119 |
|
|
| — |
|
| $ | 20,709,362 |
|
30-89 days past due |
|
| 35,387 |
|
|
| 53,249 |
|
|
| 28,996 |
|
|
| 76,049 |
|
|
| 15,744 |
|
|
| 363,807 |
|
|
| 7,125 |
|
|
| — |
|
|
| 580,357 |
|
Accruing loans past due |
|
| 6,137 |
|
|
| 39,753 |
|
|
| 27,044 |
|
|
| 12,697 |
|
|
| 17,304 |
|
|
| 308,796 |
|
|
| — |
|
|
| — |
|
|
| 411,731 |
|
Nonaccrual |
|
| 2,741 |
|
|
| 7,978 |
|
|
| 2,831 |
|
|
| 7,899 |
|
|
| 2,954 |
|
|
| 260,243 |
|
|
| 749 |
|
|
| — |
|
|
| 285,395 |
|
Total residential |
| $ | 4,101,461 |
|
|
| 4,150,815 |
|
|
| 2,793,734 |
|
|
| 1,441,721 |
|
|
| 796,444 |
|
|
| 8,664,677 |
|
|
| 37,993 |
|
|
| — |
|
| $ | 21,986,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Residential - limited documentation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current |
| $ | — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 974,779 |
|
|
| — |
|
|
| — |
|
| $ | 974,779 |
|
30-89 days past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 17,274 |
|
|
| — |
|
|
| — |
|
|
| 17,274 |
|
Accruing loans past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Nonaccrual |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 95,382 |
|
|
| — |
|
|
| — |
|
|
| 95,382 |
|
Total residential - limited |
| $ | — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,087,435 |
|
|
| — |
|
|
| — |
|
| $ | 1,087,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Home equity lines and loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Current |
| $ | 179 |
|
|
| 2,205 |
|
|
| 2,506 |
|
|
| 16,700 |
|
|
| 25,043 |
|
|
| 104,764 |
|
|
| 3,323,628 |
|
|
| 1,484,820 |
|
| $ | 4,959,845 |
|
30-89 days past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 27 |
|
|
| — |
|
|
| 993 |
|
|
| 1,376 |
|
|
| 22,974 |
|
|
| 25,370 |
|
Accruing loans past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Nonaccrual |
|
| 3 |
|
|
| 15 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6,311 |
|
|
| 8,748 |
|
|
| 63,131 |
|
|
| 78,208 |
|
Total home equity lines and loans |
| $ | 182 |
|
|
| 2,220 |
|
|
| 2,506 |
|
|
| 16,727 |
|
|
| 25,043 |
|
|
| 112,068 |
|
|
| 3,333,752 |
|
|
| 1,570,925 |
|
| $ | 5,063,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Recreational finance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current |
| $ | 2,270,380 |
|
|
| 2,397,260 |
|
|
| 1,673,217 |
|
|
| 1,016,693 |
|
|
| 517,571 |
|
|
| 863,728 |
|
|
| — |
|
|
| — |
|
| $ | 8,738,849 |
|
30-89 days past due |
|
| 3,636 |
|
|
| 7,922 |
|
|
| 9,136 |
|
|
| 6,797 |
|
|
| 4,199 |
|
|
| 10,068 |
|
|
| — |
|
|
| — |
|
|
| 41,758 |
|
Accruing loans past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Nonaccrual |
|
| 862 |
|
|
| 5,310 |
|
|
| 7,946 |
|
|
| 6,905 |
|
|
| 5,821 |
|
|
| 11,874 |
|
|
| — |
|
|
| — |
|
|
| 38,718 |
|
Total recreational finance |
| $ | 2,274,878 |
|
|
| 2,410,492 |
|
|
| 1,690,299 |
|
|
| 1,030,395 |
|
|
| 527,591 |
|
|
| 885,670 |
|
|
| — |
|
|
| — |
|
| $ | 8,819,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Automobile: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current |
| $ | 1,040,034 |
|
|
| 1,698,621 |
|
|
| 780,755 |
|
|
| 433,718 |
|
|
| 202,662 |
|
|
| 127,105 |
|
|
| — |
|
|
| — |
|
| $ | 4,282,895 |
|
30-89 days past due |
|
| 3,753 |
|
|
| 9,992 |
|
|
| 6,091 |
|
|
| 6,354 |
|
|
| 4,641 |
|
|
| 4,719 |
|
|
| — |
|
|
| — |
|
|
| 35,550 |
|
Accruing loans past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Nonaccrual |
|
| 557 |
|
|
| 8,573 |
|
|
| 7,837 |
|
|
| 8,418 |
|
|
| 6,710 |
|
|
| 8,223 |
|
|
| — |
|
|
| — |
|
|
| 40,318 |
|
Total automobile |
| $ | 1,044,344 |
|
|
| 1,717,186 |
|
|
| 794,683 |
|
|
| 448,490 |
|
|
| 214,013 |
|
|
| 140,047 |
|
|
| — |
|
|
| — |
|
| $ | 4,358,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current |
| $ | 210,244 |
|
|
| 192,316 |
|
|
| 66,148 |
|
|
| 42,643 |
|
|
| 11,594 |
|
|
| 25,864 |
|
|
| 1,338,436 |
|
|
| 10,622 |
|
| $ | 1,897,867 |
|
30-89 days past due |
|
| 2,558 |
|
|
| 1,083 |
|
|
| 338 |
|
|
| 441 |
|
|
| 161 |
|
|
| 114 |
|
|
| 7,598 |
|
|
| 437 |
|
|
| 12,730 |
|
Accruing loans past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8 |
|
|
| 3,755 |
|
|
| — |
|
|
| 3,763 |
|
Nonaccrual |
|
| 1,405 |
|
|
| 742 |
|
|
| 304 |
|
|
| 277 |
|
|
| 79 |
|
|
| 245 |
|
|
| 45,668 |
|
|
| 102 |
|
|
| 48,822 |
|
Total other |
| $ | 214,207 |
|
|
| 194,141 |
|
|
| 66,790 |
|
|
| 43,361 |
|
|
| 11,834 |
|
|
| 26,231 |
|
|
| 1,395,457 |
|
|
| 11,161 |
|
| $ | 1,963,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Total loans and leases at |
| $ | 18,045,302 |
|
|
| 19,658,286 |
|
|
| 13,841,700 |
|
|
| 13,558,114 |
|
|
| 8,259,526 |
|
|
| 28,514,393 |
|
|
| 24,663,705 |
|
|
| 1,684,561 |
|
| $ | 128,225,587 |
|
- 1917 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
The following table summarizes the loan grades applied at December 31, 2021 to the various classes of the Company’s commercial loans and commercial real estate loans by origination year.
The allocation
|
| Term Loans by Origination Year |
|
| Revolving |
|
| Revolving Loans Converted to Term |
|
|
|
| ||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
|
| 2017 |
|
| Prior |
|
| Loans |
|
| Loans |
|
| Total |
| |||||||||
|
| (In thousands) |
| |||||||||||||||||||||||||||||||||
Commercial, financial, leasing, etc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Loan grades: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pass |
| $ | 4,798,052 |
|
|
| 1,916,072 |
|
|
| 1,476,786 |
|
|
| 951,881 |
|
|
| 500,615 |
|
|
| 1,398,775 |
|
|
| 10,993,461 |
|
|
| 18,699 |
|
| $ | 22,054,341 |
|
Criticized accrual |
|
| 196,680 |
|
|
| 98,595 |
|
|
| 107,010 |
|
|
| 73,126 |
|
|
| 36,232 |
|
|
| 185,935 |
|
|
| 484,755 |
|
|
| 15,628 |
|
|
| 1,197,961 |
|
Criticized nonaccrual |
|
| 19,462 |
|
|
| 23,229 |
|
|
| 17,114 |
|
|
| 39,908 |
|
|
| 20,927 |
|
|
| 33,698 |
|
|
| 60,175 |
|
|
| 6,509 |
|
|
| 221,022 |
|
Total commercial, |
| $ | 5,014,194 |
|
|
| 2,037,896 |
|
|
| 1,600,910 |
|
|
| 1,064,915 |
|
|
| 557,774 |
|
|
| 1,618,408 |
|
|
| 11,538,391 |
|
|
| 40,836 |
|
| $ | 23,473,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loan grades: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pass |
| $ | 3,413,587 |
|
|
| 2,662,999 |
|
|
| 3,682,178 |
|
|
| 2,648,388 |
|
|
| 2,076,155 |
|
|
| 5,232,790 |
|
|
| 728,948 |
|
|
| — |
|
| $ | 20,445,045 |
|
Criticized accrual |
|
| 133,133 |
|
|
| 480,146 |
|
|
| 685,701 |
|
|
| 1,068,552 |
|
|
| 468,530 |
|
|
| 1,743,798 |
|
|
| 38,570 |
|
|
| — |
|
|
| 4,618,430 |
|
Criticized nonaccrual |
|
| 21,587 |
|
|
| 133,560 |
|
|
| 195,084 |
|
|
| 83,857 |
|
|
| 76,628 |
|
|
| 520,473 |
|
|
| 38,091 |
|
|
| — |
|
|
| 1,069,280 |
|
Total commercial real |
| $ | 3,568,307 |
|
|
| 3,276,705 |
|
|
| 4,562,963 |
|
|
| 3,800,797 |
|
|
| 2,621,313 |
|
|
| 7,497,061 |
|
|
| 805,609 |
|
|
| — |
|
| $ | 26,132,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Residential builder and developer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loan grades: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pass |
| $ | 786,983 |
|
|
| 106,510 |
|
|
| 75,287 |
|
|
| 47,587 |
|
|
| 4,680 |
|
|
| 12,450 |
|
|
| 230,017 |
|
|
| — |
|
| $ | 1,263,514 |
|
Criticized accrual |
|
| 2,055 |
|
|
| 5,356 |
|
|
| 117,258 |
|
|
| 13,637 |
|
|
| 630 |
|
|
| — |
|
|
| 891 |
|
|
| — |
|
|
| 139,827 |
|
Criticized nonaccrual |
|
| — |
|
|
| — |
|
|
| 2,910 |
|
|
| — |
|
|
| — |
|
|
| 95 |
|
|
| — |
|
|
| — |
|
|
| 3,005 |
|
Total residential builder |
| $ | 789,038 |
|
|
| 111,866 |
|
|
| 195,455 |
|
|
| 61,224 |
|
|
| 5,310 |
|
|
| 12,545 |
|
|
| 230,908 |
|
|
| — |
|
| $ | 1,406,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other commercial construction: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loan grades: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pass |
| $ | 957,947 |
|
|
| 1,781,603 |
|
|
| 2,022,276 |
|
|
| 832,547 |
|
|
| 152,669 |
|
|
| 273,556 |
|
|
| 38,781 |
|
|
| — |
|
| $ | 6,059,379 |
|
Criticized accrual |
|
| 24,103 |
|
|
| 54,191 |
|
|
| 675,226 |
|
|
| 583,428 |
|
|
| 228,739 |
|
|
| 114,158 |
|
|
| — |
|
|
| — |
|
|
| 1,679,845 |
|
Criticized nonaccrual |
|
| — |
|
|
| — |
|
|
| 71,613 |
|
|
| 3,303 |
|
|
| 12,263 |
|
|
| 19,970 |
|
|
| 4,256 |
|
|
| — |
|
|
| 111,405 |
|
Total other commercial |
| $ | 982,050 |
|
|
| 1,835,794 |
|
|
| 2,769,115 |
|
|
| 1,419,278 |
|
|
| 393,671 |
|
|
| 407,684 |
|
|
| 43,037 |
|
|
| — |
|
| $ | 7,850,629 |
|
- 18 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
A summary of loans in accrual and nonaccrual status at December 31, 2021 for the various classes of the Company’s residential real estate loans and consumer loans by origination year follows.
|
| Term Loans by Origination Year |
|
| Revolving |
|
| Revolving Loans Converted to Term |
|
|
|
| ||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
|
| 2017 |
|
| Prior |
|
| Loans |
|
| Loans |
|
| Total |
| |||||||||
|
| (In thousands) |
| |||||||||||||||||||||||||||||||||
Residential: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Current |
| $ | 3,057,118 |
|
|
| 1,672,090 |
|
|
| 1,075,896 |
|
|
| 466,040 |
|
|
| 1,037,958 |
|
|
| 5,913,461 |
|
|
| 72,309 |
|
|
| — |
|
| $ | 13,294,872 |
|
30-89 days past due |
|
| 15,245 |
|
|
| 12,535 |
|
|
| 9,886 |
|
|
| 6,132 |
|
|
| 33,097 |
|
|
| 162,666 |
|
|
| — |
|
|
| — |
|
|
| 239,561 |
|
Accruing loans past due |
|
| 10,924 |
|
|
| 100,581 |
|
|
| 28,512 |
|
|
| 31,996 |
|
|
| 205,318 |
|
|
| 542,749 |
|
|
| — |
|
|
| — |
|
|
| 920,080 |
|
Nonaccrual |
|
| 3,359 |
|
|
| 19,858 |
|
|
| 7,119 |
|
|
| 4,577 |
|
|
| 5,890 |
|
|
| 314,792 |
|
|
| 263 |
|
|
| — |
|
|
| 355,858 |
|
Total residential |
| $ | 3,086,646 |
|
|
| 1,805,064 |
|
|
| 1,121,413 |
|
|
| 508,745 |
|
|
| 1,282,263 |
|
|
| 6,933,668 |
|
|
| 72,572 |
|
|
| — |
|
| $ | 14,810,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Residential - limited documentation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current |
| $ | — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,124,520 |
|
|
| — |
|
|
| — |
|
| $ | 1,124,520 |
|
30-89 days past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 16,666 |
|
|
| — |
|
|
| — |
|
|
| 16,666 |
|
Accruing loans past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Nonaccrual |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 122,888 |
|
|
| — |
|
|
| — |
|
|
| 122,888 |
|
Total residential - limited |
| $ | — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,264,074 |
|
|
| — |
|
|
| — |
|
| $ | 1,264,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Home equity lines and loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Current |
| $ | 304 |
|
|
| 777 |
|
|
| 2,793 |
|
|
| 1,730 |
|
|
| 1,944 |
|
|
| 38,015 |
|
|
| 2,348,279 |
|
|
| 1,082,775 |
|
| $ | 3,476,617 |
|
30-89 days past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 21 |
|
|
| — |
|
|
| 698 |
|
|
| 346 |
|
|
| 14,421 |
|
|
| 15,486 |
|
Accruing loans past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Nonaccrual |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 5,750 |
|
|
| 4,951 |
|
|
| 59,787 |
|
|
| 70,488 |
|
Total home equity lines and loans |
| $ | 304 |
|
|
| 777 |
|
|
| 2,793 |
|
|
| 1,751 |
|
|
| 1,944 |
|
|
| 44,463 |
|
|
| 2,353,576 |
|
|
| 1,156,983 |
|
| $ | 3,562,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Recreational finance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current |
| $ | 2,890,111 |
|
|
| 2,088,342 |
|
|
| 1,267,929 |
|
|
| 646,883 |
|
|
| 445,868 |
|
|
| 646,040 |
|
|
| — |
|
|
| — |
|
| $ | 7,985,173 |
|
30-89 days past due |
|
| 5,929 |
|
|
| 8,912 |
|
|
| 8,317 |
|
|
| 5,074 |
|
|
| 5,189 |
|
|
| 7,123 |
|
|
| — |
|
|
| — |
|
|
| 40,544 |
|
Accruing loans past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Nonaccrual |
|
| 1,341 |
|
|
| 4,646 |
|
|
| 4,871 |
|
|
| 4,918 |
|
|
| 4,039 |
|
|
| 7,996 |
|
|
| — |
|
|
| — |
|
|
| 27,811 |
|
Total recreational finance |
| $ | 2,897,381 |
|
|
| 2,101,900 |
|
|
| 1,281,117 |
|
|
| 656,875 |
|
|
| 455,096 |
|
|
| 661,159 |
|
|
| — |
|
|
| — |
|
| $ | 8,053,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Automobile: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current |
| $ | 2,220,061 |
|
|
| 1,097,684 |
|
|
| 662,000 |
|
|
| 341,655 |
|
|
| 211,774 |
|
|
| 71,598 |
|
|
| — |
|
|
| — |
|
| $ | 4,604,772 |
|
30-89 days past due |
|
| 8,508 |
|
|
| 6,615 |
|
|
| 8,936 |
|
|
| 7,161 |
|
|
| 5,715 |
|
|
| 3,129 |
|
|
| — |
|
|
| — |
|
|
| 40,064 |
|
Accruing loans past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Nonaccrual |
|
| 1,588 |
|
|
| 4,390 |
|
|
| 7,847 |
|
|
| 7,867 |
|
|
| 6,882 |
|
|
| 5,463 |
|
|
| — |
|
|
| — |
|
|
| 34,037 |
|
Total automobile |
| $ | 2,230,157 |
|
|
| 1,108,689 |
|
|
| 678,783 |
|
|
| 356,683 |
|
|
| 224,371 |
|
|
| 80,190 |
|
|
| — |
| �� |
| — |
|
| $ | 4,678,873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current |
| $ | 244,346 |
|
|
| 96,945 |
|
|
| 73,586 |
|
|
| 24,424 |
|
|
| 16,924 |
|
|
| 14,321 |
|
|
| 1,148,096 |
|
|
| 1,505 |
|
| $ | 1,620,147 |
|
30-89 days past due |
|
| 2,937 |
|
|
| 404 |
|
|
| 472 |
|
|
| 255 |
|
|
| 101 |
|
|
| 5,712 |
|
|
| 1,908 |
|
|
| 434 |
|
|
| 12,223 |
|
Accruing loans past due |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,302 |
|
|
| — |
|
|
| — |
|
|
| 3,302 |
|
Nonaccrual |
|
| 2,051 |
|
|
| 326 |
|
|
| 326 |
|
|
| 193 |
|
|
| 104 |
|
|
| 353 |
|
|
| 40,807 |
|
|
| 129 |
|
|
| 44,289 |
|
Total other |
| $ | 249,334 |
|
|
| 97,675 |
|
|
| 74,384 |
|
|
| 24,872 |
|
|
| 17,129 |
|
|
| 23,688 |
|
|
| 1,190,811 |
|
|
| 2,068 |
|
| $ | 1,679,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Total loans and leases at |
| $ | 18,817,411 |
|
|
| 12,376,366 |
|
|
| 12,286,933 |
|
|
| 7,895,140 |
|
|
| 5,558,871 |
|
|
| 18,542,940 |
|
|
| 16,234,904 |
|
|
| 1,199,887 |
|
| $ | 92,912,452 |
|
- 19 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
Allowance for credit losses
For purposes of determining the level of the allowance for credit losses, summarizedthe Company evaluates its loan and lease portfolio by type. Changes in the allowance for credit losses for the three months ended September 30, 2022 and 2021 were as follows:
|
| Commercial, |
|
| Real Estate |
|
|
|
|
|
|
| ||||||||
|
| Leasing, etc. |
|
| Commercial |
|
| Residential |
|
| Consumer |
|
| Total |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Three Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning balance |
| $ | 414,473 |
|
|
| 708,393 |
|
|
| 124,326 |
|
|
| 576,598 |
|
| $ | 1,823,790 |
|
Provision for credit losses |
|
| 43,343 |
|
|
| 26,949 |
|
|
| (11,169 | ) |
|
| 55,877 |
|
|
| 115,000 |
|
Net charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Charge-offs |
|
| (37,396 | ) |
|
| (35,213 | ) |
|
| (2,572 | ) |
|
| (26,086 | ) |
|
| (101,267 | ) |
Recoveries |
|
| 22,022 |
|
|
| 401 |
|
|
| 2,234 |
|
|
| 13,411 |
|
|
| 38,068 |
|
Net charge-offs |
|
| (15,374 | ) |
|
| (34,812 | ) |
|
| (338 | ) |
|
| (12,675 | ) |
|
| (63,199 | ) |
Ending balance |
| $ | 442,442 |
|
|
| 700,530 |
|
|
| 112,819 |
|
|
| 619,800 |
|
| $ | 1,875,591 |
|
|
| Commercial, Financial, |
|
| Real Estate |
|
|
|
|
|
|
| ||||||||
|
| Leasing, etc. |
|
| Commercial |
|
| Residential |
|
| Consumer |
|
| Total |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning balance |
| $ | 314,852 |
|
|
| 679,963 |
|
|
| 77,869 |
|
|
| 502,444 |
|
| $ | 1,575,128 |
|
Provision for credit losses |
|
| (292 | ) |
|
| (42,016 | ) |
|
| (3,522 | ) |
|
| 25,830 |
|
|
| (20,000 | ) |
Net charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Charge-offs |
|
| (26,598 | ) |
|
| (14,242 | ) |
|
| (1,925 | ) |
|
| (21,508 | ) |
|
| (64,273 | ) |
Recoveries |
|
| 3,785 |
|
|
| 2,362 |
|
|
| 1,903 |
|
|
| 16,119 |
|
|
| 24,169 |
|
Net charge-offs |
|
| (22,813 | ) |
|
| (11,880 | ) |
|
| (22 | ) |
|
| (5,389 | ) |
|
| (40,104 | ) |
Ending balance |
| $ | 291,747 |
|
|
| 626,067 |
|
|
| 74,325 |
|
|
| 522,885 |
|
| $ | 1,515,024 |
|
Changes in the allowance for credit losses for the nine months ended September 30, 2022 and 2021 were as follows:
|
| Commercial, Financial, |
|
| Real Estate |
|
|
|
|
|
|
| ||||||||
|
| Leasing, etc. |
|
| Commercial |
|
| Residential |
|
| Consumer |
|
| Total |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Nine Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning balance |
| $ | 283,899 |
|
|
| 557,239 |
|
|
| 71,726 |
|
|
| 556,362 |
|
| $ | 1,469,226 |
|
Allowance on acquired PCD loans |
|
| 41,003 |
|
|
| 55,812 |
|
|
| 1,833 |
|
|
| 352 |
|
|
| 99,000 |
|
Provision for credit losses (a) |
|
| 167,985 |
|
|
| 116,288 |
|
|
| 40,719 |
|
|
| 102,008 |
|
|
| 427,000 |
|
Net charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Charge-offs (b) |
|
| (94,555 | ) |
|
| (45,809 | ) |
|
| (9,407 | ) |
|
| (78,148 | ) |
|
| (227,919 | ) |
Recoveries |
|
| 44,110 |
|
|
| 17,000 |
|
|
| 7,948 |
|
|
| 39,226 |
|
|
| 108,284 |
|
Net charge-offs |
|
| (50,445 | ) |
|
| (28,809 | ) |
|
| (1,459 | ) |
|
| (38,922 | ) |
|
| (119,635 | ) |
Ending balance |
| $ | 442,442 |
|
|
| 700,530 |
|
|
| 112,819 |
|
|
| 619,800 |
|
| $ | 1,875,591 |
|
- 20 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
|
| Commercial, Financial, |
|
| Real Estate |
|
|
|
|
|
|
| ||||||||
|
| Leasing, etc. |
|
| Commercial |
|
| Residential |
|
| Consumer |
|
| Total |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning balance |
| $ | 405,846 |
|
|
| 670,719 |
|
|
| 103,590 |
|
|
| 556,232 |
|
| $ | 1,736,387 |
|
Provision for credit losses |
|
| (57,610 | ) |
|
| 32,650 |
|
|
| (29,026 | ) |
|
| (6,014 | ) |
|
| (60,000 | ) |
Net charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Charge-offs |
|
| (93,638 | ) |
|
| (87,417 | ) |
|
| (6,586 | ) |
|
| (79,926 | ) |
|
| (267,567 | ) |
Recoveries |
|
| 37,149 |
|
|
| 10,115 |
|
|
| 6,347 |
|
|
| 52,593 |
|
|
| 106,204 |
|
Net charge-offs |
|
| (56,489 | ) |
|
| (77,302 | ) |
|
| (239 | ) |
|
| (27,333 | ) |
|
| (161,363 | ) |
Ending balance |
| $ | 291,747 |
|
|
| 626,067 |
|
|
| 74,325 |
|
|
| 522,885 |
|
| $ | 1,515,024 |
|
Despite the allocation in the preceding tables, the allowance for credit losses is general in nature and is available to absorb losses from any loan or lease type. In determining the allowance for credit losses, accruing loans with similar risk characteristics are generally evaluated collectively. The Company utilizes statistically developed models to project principal balances over the remaining contractual lives of the loan portfolios and to determine estimated credit losses through a reasonable and supportable forecast period. Individual loan credit quality indicators including loan grade and borrower repayment performance can inform the models, which have been statistically developed based on historical correlations of credit losses with prevailing economic metrics, including unemployment, gross domestic product and real estate prices. Model forecasts may be adjusted for inherent limitations or biases that have been identified through independent validation and back-testing of model performance to actual realized results. At each of September 30, 2022 and December 31, 2021, the Company utilized a reasonable and supportable forecast period of two years. Subsequent to this forecast period the Company reverted, ratably over a one-year period, to historical loss experience to inform its estimate of losses for the remaining contractual life of each portfolio. The Company also estimates losses attributable to specific troubled credits identified through both normal and targeted credit review processes. The amounts of specific loss components in the Company’s loan and lease portfolios are determined through a loan-by-loan analysis of larger balance commercial loans and commercial real estate loans that are in nonaccrual status. Such loss estimates are typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. To the extent that those loans are collateral-dependent, they are evaluated based on the basisfair value of the loan’s collateral as estimated at or near the financial statement date. As the quality of a loan deteriorates to the point of classifying the loan as “criticized,” the process of obtaining updated collateral valuation information is usually initiated, unless it is not considered warranted given factors such as the relative size of the loan, the characteristics of the collateral or the age of the last valuation. In those cases where current appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed necessary, for estimates of subsequent declines in values as determined by line of business and/or loan workout personnel. Those adjustments are reviewed and assessed for reasonableness by the Company’s credit risk personnel. Accordingly, for real estate collateral securing larger nonaccrual commercial loans and commercial real estate loans, estimated collateral values are based on current appraisals and estimates of value. For non-real estate loans, collateral is assigned a discounted estimated liquidation value and, depending on the nature of the collateral, is verified through field exams or other procedures. In assessing collateral, real estate and non-real estate values are reduced by an estimate of selling costs.
- 21 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
For residential real estate loans, including home equity loans and lines of credit, the excess of the loan balance over the net realizable value of the property collateralizing the loan is charged-off when the loan becomes 150 days delinquent. That charge-off is based on recent indications of value from external parties that are generally obtained shortly after a loan becomes nonaccrual. Loans to consumers that file for bankruptcy are generally charged-off to estimated net collateral value shortly after the Company is notified of such filings. When evaluating individual home equity loans and lines of credit for charge off and for purposes of estimating losses in determining the allowance for credit losses, the Company gives consideration to the required repayment of any first lien positions related to collateral property. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment methodologygiving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows.
Changes in the amount of the allowance for credit losses reflect the outcome of the procedures described herein, including the impact of changes in macroeconomic forecasts as compared with previous forecasts, as well as the impact of portfolio concentrations, imprecision in economic forecasts, geopolitical conditions and other risk factors that might influence the loss estimation process.
The Company’s reserve for off-balance sheet credit exposures was as follows:
not material at September 30, 2022 and December 31, 2021.
|
| Commercial, Financial, |
|
| Real Estate |
|
|
|
|
|
|
|
|
| ||||||
|
| Leasing, etc. |
|
| Commercial |
|
| Residential |
|
| Consumer |
|
| Total |
| |||||
|
| (In thousands) |
| |||||||||||||||||
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
| $ | 49,447 |
|
|
| 10,780 |
|
|
| 8,075 |
|
|
| 12,372 |
|
| $ | 80,674 |
|
Collectively evaluated for impairment |
|
| 287,027 |
|
|
| 353,387 |
|
|
| 47,674 |
|
|
| 157,006 |
|
|
| 845,094 |
|
Purchased impaired |
|
| — |
|
|
| — |
|
|
| 9,346 |
|
|
| — |
|
|
| 9,346 |
|
Allocated |
| $ | 336,474 |
|
|
| 364,167 |
|
|
| 65,095 |
|
|
| 169,378 |
|
|
| 935,114 |
|
Unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 78,212 |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,013,326 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
| $ | 48,480 |
|
|
| 12,500 |
|
|
| 9,457 |
|
|
| 12,543 |
|
| $ | 82,980 |
|
Collectively evaluated for impairment |
|
| 282,353 |
|
|
| 348,301 |
|
|
| 47,993 |
|
|
| 143,745 |
|
|
| 822,392 |
|
Purchased impaired |
|
| — |
|
|
| 1,918 |
|
|
| 3,677 |
|
|
| — |
|
|
| 5,595 |
|
Allocated |
| $ | 330,833 |
|
|
| 362,719 |
|
|
| 61,127 |
|
|
| 156,288 |
|
|
| 910,967 |
|
Unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 78,030 |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 988,997 |
|
The recorded investment inInformation with respect to loans and leases summarized onthat were considered nonaccrual at the basisbeginning and end of the Company’s impairment methodology was as follows:reporting period and the interest income recognized on such loans for the three months and nine months ended September 30, 2022 and 2021 follows.
|
| September 30, 2022 |
|
| June 30, 2022 |
|
| January 1, 2022 |
|
| Three Months Ended September 30, 2022 |
|
| Nine Months Ended September 30, 2022 |
| |||||||||||||
|
| Amortized Cost with Allowance |
|
| Amortized Cost without Allowance |
|
| Total |
|
| Amortized Cost |
|
| Amortized Cost |
|
| Interest Income Recognized |
|
| Interest Income Recognized |
| |||||||
|
| (In thousands) |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial, financial, leasing, etc. |
| $ | 207,841 |
|
| $ | 160,325 |
|
| $ | 368,166 |
|
| $ | 442,496 |
|
| $ | 221,022 |
|
| $ | 4,708 |
|
| $ | 20,423 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial |
|
| 394,502 |
|
|
| 1,011,698 |
|
|
| 1,406,200 |
|
|
| 1,476,658 |
|
|
| 1,069,280 |
|
|
| 7,059 |
|
|
| 14,944 |
|
Residential builder and developer |
|
| 1,930 |
|
|
| — |
|
|
| 1,930 |
|
|
| 518 |
|
|
| 3,005 |
|
|
| — |
|
|
| 1,687 |
|
Other commercial construction |
|
| 25,235 |
|
|
| 40,952 |
|
|
| 66,187 |
|
|
| 73,046 |
|
|
| 111,405 |
|
|
| 22 |
|
|
| 3,398 |
|
Residential |
|
| 160,704 |
|
|
| 124,691 |
|
|
| 285,395 |
|
|
| 331,376 |
|
|
| 355,858 |
|
|
| 8,059 |
|
|
| 21,397 |
|
Residential — limited documentation |
|
| 61,297 |
|
|
| 34,085 |
|
|
| 95,382 |
|
|
| 112,608 |
|
|
| 122,888 |
|
|
| 229 |
|
|
| 456 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Home equity lines and loans |
|
| 38,324 |
|
|
| 39,884 |
|
|
| 78,208 |
|
|
| 79,445 |
|
|
| 70,488 |
|
|
| 669 |
|
|
| 3,291 |
|
Recreational finance |
|
| 31,295 |
|
|
| 7,423 |
|
|
| 38,718 |
|
|
| 33,414 |
|
|
| 27,811 |
|
|
| 166 |
|
|
| 488 |
|
Automobile |
|
| 36,075 |
|
|
| 4,243 |
|
|
| 40,318 |
|
|
| 36,266 |
|
|
| 34,037 |
|
|
| 35 |
|
|
| 110 |
|
Other |
|
| 48,741 |
|
|
| 81 |
|
|
| 48,822 |
|
|
| 47,178 |
|
|
| 44,289 |
|
|
| 84 |
|
|
| 268 |
|
Total |
| $ | 1,005,944 |
|
| $ | 1,423,382 |
|
| $ | 2,429,326 |
|
| $ | 2,633,005 |
|
| $ | 2,060,083 |
|
| $ | 21,031 |
|
| $ | 66,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 22 -
|
| Commercial, Financial, |
|
| Real Estate |
|
|
|
|
|
|
|
|
| ||||||
|
| Leasing, etc. |
|
| Commercial |
|
| Residential |
|
| Consumer |
|
| Total |
| |||||
|
| (In thousands) |
| |||||||||||||||||
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
| $ | 229,699 |
|
|
| 249,064 |
|
|
| 204,916 |
|
|
| 65,632 |
|
| $ | 749,311 |
|
Collectively evaluated for impairment |
|
| 21,513,477 |
|
|
| 32,620,026 |
|
|
| 19,638,576 |
|
|
| 12,936,801 |
|
|
| 86,708,880 |
|
Purchased impaired |
|
| 75 |
|
|
| 45,198 |
|
|
| 421,670 |
|
|
| — |
|
|
| 466,943 |
|
Total |
| $ | 21,743,251 |
|
|
| 32,914,288 |
|
|
| 20,265,162 |
|
|
| 13,002,433 |
|
| $ | 87,925,134 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
| $ | 268,877 |
|
|
| 224,630 |
|
|
| 201,479 |
|
|
| 65,466 |
|
| $ | 760,452 |
|
Collectively evaluated for impairment |
|
| 22,340,529 |
|
|
| 33,222,080 |
|
|
| 21,871,726 |
|
|
| 12,080,597 |
|
|
| 89,514,932 |
|
Purchased impaired |
|
| 641 |
|
|
| 59,684 |
|
|
| 517,707 |
|
|
| — |
|
|
| 578,032 |
|
Total |
| $ | 22,610,047 |
|
|
| 33,506,394 |
|
|
| 22,590,912 |
|
|
| 12,146,063 |
|
| $ | 90,853,416 |
|
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
| September 30, 2021 |
|
| June 30, 2021 |
|
| January 1, 2021 |
|
| Three Months Ended September 30, 2021 |
|
| Nine Months Ended September 30, 2021 |
| ||||||||||||||
|
| Amortized Cost with Allowance |
|
| Amortized Cost without Allowance |
|
| Total |
|
| Amortized Cost |
|
| Amortized Cost |
|
| Interest Income Recognized |
|
| Interest Income Recognized |
| |||||||
|
| (In thousands) |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial, financial, leasing, etc. |
| $ | 171,040 |
|
| $ | 109,149 |
|
| $ | 280,189 |
|
| $ | 330,040 |
|
| $ | 306,827 |
|
| $ | 4,646 |
|
| $ | 10,661 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial |
|
| 332,014 |
|
|
| 820,856 |
|
|
| 1,152,870 |
|
|
| 1,081,546 |
|
|
| 775,894 |
|
|
| 2,256 |
|
|
| 4,518 |
|
Residential builder and developer |
|
| 594 |
|
|
| — |
|
|
| 594 |
|
|
| 14,552 |
|
|
| 1,094 |
|
|
| 206 |
|
|
| 239 |
|
Other commercial construction |
|
| 36,750 |
|
|
| 121,949 |
|
|
| 158,699 |
|
|
| 133,758 |
|
|
| 114,039 |
|
|
| 255 |
|
|
| 570 |
|
Residential |
|
| 196,918 |
|
|
| 156,508 |
|
|
| 353,426 |
|
|
| 372,144 |
|
|
| 365,729 |
|
|
| 6,809 |
|
|
| 17,603 |
|
Residential — limited documentation |
|
| 81,538 |
|
|
| 44,991 |
|
|
| 126,529 |
|
|
| 136,683 |
|
|
| 147,170 |
|
|
| 100 |
|
|
| 336 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Home equity lines and loans |
|
| 38,582 |
|
|
| 32,892 |
|
|
| 71,474 |
|
|
| 76,711 |
|
|
| 79,392 |
|
|
| 979 |
|
|
| 2,924 |
|
Recreational finance |
|
| 18,428 |
|
|
| 5,479 |
|
|
| 23,907 |
|
|
| 23,276 |
|
|
| 25,519 |
|
|
| 164 |
|
|
| 478 |
|
Automobile |
|
| 27,258 |
|
|
| 3,744 |
|
|
| 31,002 |
|
|
| 31,090 |
|
|
| 39,404 |
|
|
| 46 |
|
|
| 143 |
|
Other |
|
| 43,330 |
|
|
| 243 |
|
|
| 43,573 |
|
|
| 42,257 |
|
|
| 38,231 |
|
|
| 110 |
|
|
| 433 |
|
Total |
| $ | 946,452 |
|
| $ | 1,295,811 |
|
| $ | 2,242,263 |
|
| $ | 2,242,057 |
|
| $ | 1,893,299 |
|
| $ | 15,571 |
|
| $ | 37,905 |
|
- 23 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
Loan modifications
During the normal course of business, the Company modifies loans to maximize recovery efforts. If the borrower is experiencing financial difficulty and a concession is granted, the Company considers such modifications as troubled debt restructurings and classifies those loans as either nonaccrual loans or renegotiated loans. The types of concessions that the Company grants typically include principal deferrals and interest rate concessions, but may also include other types of concessions.
- 20 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
The tables that follow summarize the Company’s loan modification activities that were considered troubled debt restructurings for the three-month and nine-month periods ended September 30, 20172022 and 2016:2021:
|
|
|
|
|
|
|
| Post-modification (a) |
| |||||||||||||||||||
|
| Number |
|
| Pre- |
|
| Principal Deferral |
|
| Interest Rate Reduction |
|
| Other |
|
| Combination of Concession Types |
|
| Total |
| |||||||
Three Months Ended September 30, 2022 |
| (Dollars in thousands) |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial, financial, leasing, etc. |
|
| 70 |
|
| $ | 32,451 |
|
| $ | 11,237 |
|
| $ | 446 |
|
| $ | 229 |
|
| $ | 21,519 |
|
| $ | 33,431 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial |
|
| 14 |
|
|
| 22,951 |
|
|
| 7,222 |
|
|
| — |
|
|
| 122 |
|
|
| 15,543 |
|
|
| 22,887 |
|
Residential |
|
| 57 |
|
|
| 14,380 |
|
|
| 11,094 |
|
|
| — |
|
|
| — |
|
|
| 3,470 |
|
|
| 14,564 |
|
Residential — limited documentation |
|
| 2 |
|
|
| 155 |
|
|
| 155 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 155 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Home equity lines and loans |
|
| 25 |
|
|
| 1,700 |
|
|
| 1,504 |
|
|
| — |
|
|
| — |
|
|
| 196 |
|
|
| 1,700 |
|
Recreational finance |
|
| 167 |
|
|
| 6,937 |
|
|
| 6,937 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6,937 |
|
Automobile |
|
| 474 |
|
|
| 9,755 |
|
|
| 9,755 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 9,755 |
|
Other |
|
| 30 |
|
|
| 371 |
|
|
| 371 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 371 |
|
Total |
|
| 839 |
|
| $ | 88,700 |
|
| $ | 48,275 |
|
| $ | 446 |
|
| $ | 351 |
|
| $ | 40,728 |
|
| $ | 89,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial, financial, leasing, etc. |
|
| 62 |
|
| $ | 49,884 |
|
| $ | 6,051 |
|
| $ | — |
|
| $ | 40,242 |
|
| $ | 3,479 |
|
| $ | 49,772 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial |
|
| 15 |
|
|
| 53,198 |
|
|
| 30,311 |
|
|
| — |
|
|
| 262 |
|
|
| 22,599 |
|
|
| 53,172 |
|
Residential |
|
| 64 |
|
|
| 14,443 |
|
|
| 12,281 |
|
|
| — |
|
|
| — |
|
|
| 1,984 |
|
|
| 14,265 |
|
Residential — limited documentation |
|
| 4 |
|
|
| 828 |
|
|
| 828 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 828 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Home equity lines and loans |
|
| 22 |
|
|
| 1,349 |
|
|
| 1,246 |
|
|
| — |
|
|
| — |
|
|
| 103 |
|
|
| 1,349 |
|
Recreational finance |
|
| 67 |
|
|
| 2,565 |
|
|
| 2,565 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,565 |
|
Automobile |
|
| 146 |
|
|
| 2,711 |
|
|
| 2,711 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,711 |
|
Other |
|
| 15 |
|
|
| 123 |
|
|
| 123 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 123 |
|
Total |
|
| 395 |
|
| $ | 125,101 |
|
| $ | 56,116 |
|
| $ | — |
|
| $ | 40,504 |
|
| $ | 28,165 |
|
| $ | 124,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Post-modification (a) |
| |||||||||||||
|
| Number |
|
| Pre- modification recorded investment |
|
| Principal Deferral |
|
| Other |
|
| Combination of Concession Types |
|
| Total |
| ||||||
Three Months Ended September 30, 2017 |
| (Dollars in thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
|
| 49 |
|
| $ | 15,812 |
|
| $ | 5,888 |
|
| $ | 97 |
|
| $ | 9,251 |
|
| $ | 15,236 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 17 |
|
|
| 5,861 |
|
|
| 1,420 |
|
|
| 868 |
|
|
| 3,450 |
|
|
| 5,738 |
|
Residential |
|
| 34 |
|
|
| 5,123 |
|
|
| 3,033 |
|
|
| — |
|
|
| 2,716 |
|
|
| 5,749 |
|
Residential — limited documentation |
|
| 4 |
|
|
| 515 |
|
|
| 383 |
|
|
| — |
|
|
| 167 |
|
|
| 550 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines and loans |
|
| 25 |
|
|
| 2,154 |
|
|
| 461 |
|
|
| — |
|
|
| 1,776 |
|
|
| 2,237 |
|
Automobile |
|
| 17 |
|
|
| 342 |
|
|
| 326 |
|
|
| — |
|
|
| 16 |
|
|
| 342 |
|
Other |
|
| 1 |
|
|
| 5 |
|
|
| 5 |
|
|
| — |
|
|
| — |
|
|
| 5 |
|
Total |
|
| 147 |
|
| $ | 29,812 |
|
| $ | 11,516 |
|
| $ | 965 |
|
| $ | 17,376 |
|
| $ | 29,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
|
| 43 |
|
| $ | 69,486 |
|
| $ | 40,183 |
|
| $ | — |
|
| $ | 19,802 |
|
| $ | 59,985 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 18 |
|
|
| 14,925 |
|
|
| 11,644 |
|
|
| — |
|
|
| 2,614 |
|
|
| 14,258 |
|
Residential |
|
| 30 |
|
|
| 5,638 |
|
|
| 4,714 |
|
|
| — |
|
|
| 1,214 |
|
|
| 5,928 |
|
Residential — limited documentation |
|
| 6 |
|
|
| 827 |
|
|
| 470 |
|
|
| — |
|
|
| 493 |
|
|
| 963 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines and loans |
|
| 26 |
|
|
| 2,552 |
|
|
| 251 |
|
|
| — |
|
|
| 2,301 |
|
|
| 2,552 |
|
Automobile |
|
| 10 |
|
|
| 186 |
|
|
| 186 |
|
|
| — |
|
|
| — |
|
|
| 186 |
|
Other |
|
| 1 |
|
|
| 26 |
|
|
| 26 |
|
|
| — |
|
|
| — |
|
|
| 26 |
|
Total |
|
| 134 |
|
| $ | 93,640 |
|
| $ | 57,474 |
|
| $ | — |
|
| $ | 26,424 |
|
| $ | 83,898 |
|
- 2124 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
|
|
|
|
|
|
|
| Post-modification (a) |
| |||||||||||||||||||
|
| Number |
|
| Pre- |
|
| Principal Deferral |
|
| Interest Rate Reduction |
|
| Other |
|
| Combination of Concession Types |
|
| Total |
| |||||||
Nine Months Ended September 30, 2022 |
| (Dollars in thousands) |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial, financial, leasing, etc. |
|
| 147 |
|
| $ | 79,437 |
|
| $ | 49,671 |
|
| $ | 455 |
|
| $ | 983 |
|
| $ | 30,262 |
|
| $ | 81,371 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial |
|
| 44 |
|
|
| 33,349 |
|
|
| 13,052 |
|
|
| — |
|
|
| 2,223 |
|
|
| 17,728 |
|
|
| 33,003 |
|
Residential |
|
| 221 |
|
|
| 56,912 |
|
|
| 40,821 |
|
|
| — |
|
|
| — |
|
|
| 18,469 |
|
|
| 59,290 |
|
Residential — limited documentation |
|
| 7 |
|
|
| 1,231 |
|
|
| 1,049 |
|
|
| — |
|
|
| — |
|
|
| 193 |
|
|
| 1,242 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Home equity lines and loans |
|
| 93 |
|
|
| 6,483 |
|
|
| 6,089 |
|
|
| — |
|
|
| — |
|
|
| 461 |
|
|
| 6,550 |
|
Recreational finance |
|
| 514 |
|
|
| 19,138 |
|
|
| 19,131 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 19,131 |
|
Automobile |
|
| 1,537 |
|
|
| 29,789 |
|
|
| 29,759 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 29,759 |
|
Other |
|
| 128 |
|
|
| 1,170 |
|
|
| 1,170 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,170 |
|
Total |
|
| 2,691 |
|
| $ | 227,509 |
|
| $ | 160,742 |
|
| $ | 455 |
|
| $ | 3,206 |
|
| $ | 67,113 |
|
| $ | 231,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Nine Months Ended September 30, 2021 |
|
|
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial, financial, leasing, etc. |
|
| 244 |
|
| $ | 174,366 |
|
| $ | 42,143 |
|
| $ | — |
|
| $ | 40,464 |
|
| $ | 90,770 |
|
| $ | 173,377 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial |
|
| 83 |
|
|
| 223,209 |
|
|
| 48,841 |
|
|
| — |
|
|
| 30,832 |
|
|
| 141,456 |
|
|
| 221,129 |
|
Other commercial construction |
|
| 3 |
|
|
| 542 |
|
|
| 532 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 532 |
|
Residential |
|
| 304 |
|
|
| 88,067 |
|
|
| 80,411 |
|
|
| — |
|
|
| — |
|
|
| 7,391 |
|
|
| 87,802 |
|
Residential — limited documentation |
|
| 17 |
|
|
| 2,349 |
|
|
| 2,292 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,292 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Home equity lines and loans |
|
| 64 |
|
|
| 5,034 |
|
|
| 4,702 |
|
|
| — |
|
|
| — |
|
|
| 277 |
|
|
| 4,979 |
|
Recreational finance |
|
| 173 |
|
|
| 5,896 |
|
|
| 5,896 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 5,896 |
|
Automobile |
|
| 516 |
|
|
| 9,182 |
|
|
| 9,168 |
|
|
| — |
|
|
| — |
|
|
| 14 |
|
|
| 9,182 |
|
Other |
|
| 338 |
|
|
| 2,393 |
|
|
| 2,393 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,393 |
|
Total |
|
| 1,742 |
|
| $ | 511,038 |
|
| $ | 196,378 |
|
| $ | — |
|
| $ | 71,296 |
|
| $ | 239,908 |
|
| $ | 507,582 |
|
|
|
|
|
|
|
|
|
|
| Post-modification (a) |
| |||||||||||||
|
| Number |
|
| Pre- modification recorded investment |
|
| Principal Deferral |
|
| Other |
|
| Combination of Concession Types |
|
| Total |
| ||||||
Nine Months Ended September 30, 2017 |
| (Dollars in thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
|
| 162 |
|
| $ | 93,346 |
|
| $ | 18,449 |
|
| $ | 6,459 |
|
| $ | 47,211 |
|
| $ | 72,119 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 67 |
|
|
| 38,608 |
|
|
| 16,193 |
|
|
| 868 |
|
|
| 21,332 |
|
|
| 38,393 |
|
Residential builder and developer |
|
| 3 |
|
|
| 12,291 |
|
|
| — |
|
|
| — |
|
|
| 10,879 |
|
|
| 10,879 |
|
Other commercial construction |
|
| 2 |
|
|
| 168 |
|
|
| 168 |
|
|
| — |
|
|
| — |
|
|
| 168 |
|
Residential |
|
| 105 |
|
|
| 22,459 |
|
|
| 11,608 |
|
|
| — |
|
|
| 12,557 |
|
|
| 24,165 |
|
Residential — limited documentation |
|
| 17 |
|
|
| 3,724 |
|
|
| 618 |
|
|
| — |
|
|
| 3,352 |
|
|
| 3,970 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines and loans |
|
| 85 |
|
|
| 7,885 |
|
|
| 1,040 |
|
|
| 491 |
|
|
| 6,442 |
|
|
| 7,973 |
|
Automobile |
|
| 59 |
|
|
| 1,160 |
|
|
| 1,089 |
|
|
| — |
|
|
| 71 |
|
|
| 1,160 |
|
Other |
|
| 6 |
|
|
| 85 |
|
|
| 85 |
|
|
| — |
|
|
| — |
|
|
| 85 |
|
Total |
|
| 506 |
|
| $ | 179,726 |
|
| $ | 49,250 |
|
| $ | 7,818 |
|
| $ | 101,844 |
|
| $ | 158,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
|
| 112 |
|
| $ | 148,204 |
|
| $ | 98,561 |
|
| $ | — |
|
| $ | 39,971 |
|
| $ | 138,532 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 55 |
|
|
| 36,984 |
|
|
| 17,802 |
|
|
| 4,576 |
|
|
| 13,546 |
|
|
| 35,924 |
|
Residential builder and developer |
|
| 3 |
|
|
| 23,905 |
|
|
| 22,958 |
|
|
| — |
|
|
| — |
|
|
| 22,958 |
|
Other commercial construction |
|
| 2 |
|
|
| 374 |
|
|
| 250 |
|
|
| — |
|
|
| 124 |
|
|
| 374 |
|
Residential |
|
| 73 |
|
|
| 11,946 |
|
|
| 7,945 |
|
|
| — |
|
|
| 4,705 |
|
|
| 12,650 |
|
Residential — limited documentation |
|
| 14 |
|
|
| 2,415 |
|
|
| 803 |
|
|
| — |
|
|
| 1,872 |
|
|
| 2,675 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines and loans |
|
| 84 |
|
|
| 9,189 |
|
|
| 655 |
|
|
| — |
|
|
| 8,534 |
|
|
| 9,189 |
|
Automobile |
|
| 148 |
|
|
| 1,005 |
|
|
| 865 |
|
|
| 55 |
|
|
| 85 |
|
|
| 1,005 |
|
Other |
|
| 78 |
|
|
| 1,192 |
|
|
| 951 |
|
|
| 45 |
|
|
| 196 |
|
|
| 1,192 |
|
Total |
|
| 569 |
|
| $ | 235,214 |
|
| $ | 150,790 |
|
| $ | 4,676 |
|
| $ | 69,033 |
|
| $ | 224,499 |
|
|
|
Troubled debt restructurings are considered to be impaired loans and for purposes of establishing the allowance for credit losses are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Impairment of troubled debt restructurings that have subsequently defaulted may also be measured based on the loan’s observable market price or the fair value of collateral if the loan is collateral-dependent. Charge-offs may also be recognized on troubled debt restructurings that have subsequently defaulted. Loans that were modified as troubled debt restructurings during the twelve months ended September 30, 20172022 and 20162021 and for which there was a subsequent payment default during the nine-month periods ended September 30, 20172022 and 2016,2021, respectively, were not material.
- 22 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Loans and leases and the allowance for credit losses, continued
The amount of foreclosed residential real estate property held by the Company totaled $106was $36 million and $129$24 million at September 30, 20172022 and December 31, 2016,2021, respectively. There were $545$187 million and $506$151 million at September 30, 20172022 and December 31, 2016,2021, respectively, inof loans secured by residential real estate that were in the process of foreclosure. Of all loans in the process of foreclosure at September 30, 2017,2022, approximately 48% were classified as purchased impaired and 20%46% were government guaranteed.
The Company pledged certain loans to secure outstanding borrowings and available lines of credit. At September 30, 2022, the Company pledged approximately $9.9 billion of commercial loans and leases, $13.9 billion of commercial real estate loans, $18.7 billion of one-to-four family residential real estate loans, $3.1 billion of home equity loans and lines of credit and $10.4 billion of other consumer loans. At December 31, 2021, the Company pledged approximately $9.5 billion of commercial loans and leases, $11.9 billion of commercial real estate loans, $11.5 billion of one-to-four family residential real estate loans, $1.9 billion of homes equity loans and lines of credit and $10.2 billion of other consumer loans.
- 25 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. Borrowings
During May 2017, M&T Bank, the principal bank subsidiary of M&T, issued $900 million of senior notes that mature in May 2022 pursuant to a Bank Note Program, of which $650 million have a 2.50% fixed interest rate and $250 million have a variable rate paid quarterly at rates that are indexed to the three-month London Interbank Offered Rate (“LIBOR”). During June 2017, M&T Bank redeemed $750 million of 1.40% fixed rate senior notes. The notes had a maturity date of July 25, 2017 and were redeemable on or after the 30th day prior to the maturity date. During August 2017, M&T Bank issued $750 million of three-year 2.05% fixed rate senior notes due August 2020 and $500 million of ten-year 3.40% fixed rate subordinated notes due August 2027.
M&T had $519$535 million of fixed and variable rate junior subordinated deferrable interest debentures ("Junior Subordinated Debentures") outstanding at September 30, 20172022 that are held by various trusts that were issued in connection with the issuance by those trusts of preferred capital securities ("Capital Securities") and common securities ("Common Securities"). The proceeds from the issuances of the Capital Securities and the Common Securities were used by the trusts to purchase the Junior Subordinated Debentures. The Common Securities of each of those trusts are wholly owned by M&T and are the only class of each trust's securities possessing general voting powers. The Capital Securities represent preferred undivided interests in the assets of the corresponding trust. Under the Federal Reserve Board’s risk-based capital guidelines, the securities are includable in M&T’s Tier 2 regulatory capital.
Holders of the Capital Securities receive preferential cumulative cash distributions unless M&T exercises its right to extend the payment of interest on the Junior Subordinated Debentures as allowed by the terms of each such debenture, in which case payment of distributions on the respective Capital Securities will be deferred for comparable periods. During an extended interest period, M&T may not pay dividends or distributions on, or repurchase, redeem or acquire any shares of its capital stock. In general, the agreements governing the Capital Securities, in the aggregate, provide a full, irrevocable and unconditional guarantee by M&T of the payment of distributions on, the redemption of, and any liquidation distribution with respect to the Capital Securities. The obligations under such guarantee and the Capital Securities are subordinate and junior in right of payment to all senior indebtedness of M&T.
The Capital Securities will remain outstanding until the Junior Subordinated Debentures are repaid at maturity, are redeemed prior to maturity or are distributed in liquidation to the trusts. The Capital Securities are mandatorily redeemable in whole, but not in part, upon repayment at the stated maturity dates (ranging from 2027 to 2033)2033) of the Junior Subordinated Debentures or the earlier redemption of the Junior Subordinated Debentures in whole upon the occurrence of one or more events set forth in the indentures relating to the Capital Securities, and in whole or in part at any time after an optional redemption prior to contractual maturity contemporaneously with the optional redemption of the related Junior Subordinated Debentures in whole or in part, subject to possible regulatory approval.
On April 18, 2022, M&T Bank, the principal subsidiary of M&T, redeemed $650 million of fixed rate senior notes that were due to mature on May 18, 2022. In addition, $250 million of variable rate senior notes of M&T Bank matured on May 18, 2022. On August 16, 2022, M&T issued $500 million of 4.553% fixed rate senior notes that mature in August 2028.
Short-term borrowings assumed in the People's United acquisition totaled $895 million and included $503 million of 3.65% fixed-rate unsecured senior notes due to mature in December 2022, $390 million of agreements to repurchase securities which consisted of secured overnight transactions with commercial and municipal customers that subsequently matured and $2 million of Federal Home Loan Bank secured advances accruing interest at fixed-rates ranging from .01% to .75% and maturing at various dates through January 2023. On October 6, 2022, M&T redeemed the fixed rate senior notes assumed in the People's United acquisition.
Long-term borrowings assumed in the People's United acquisition totaled $494 million and included $405 million of 4.0% fixed-rate subordinated notes due to mature in July 2024, $78 million of 5.75% fixed-rate subordinated notes due to mature in October 2024 and $11 million of Federal Home Loan Bank secured advances accruing interest at fixed-rates ranging from .01% to 3.00% and maturing at various dates through 2039.
- 2326 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. Borrowings, continued6. Shareholders’ Equity
Also included in long-term borrowings are agreements to repurchase securities of $425 million and $1.1 billion at September 30, 2017 and December 31, 2016, respectively. The agreements reflect various repurchase dates through 2020, however, the contractual maturities of the underlying investment securities extend beyond such repurchase dates. The agreements are subject to legally enforceable master netting arrangements, however, the Company has not offset any amounts related to these agreements in its consolidated financial statements. The Company posted collateral consisting primarily of government guaranteed mortgage-backed securities of $445 million and $1.1 billion at September 30, 2017 and December 31, 2016, respectively.
6. Shareholders' equity
M&T is authorized to issue 1,000,00020,000,000 shares of preferred stock with a $1.00$1.00 par value per share. Preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference, but have no general voting rights.
Issued and outstanding preferred stock of M&T as of September 30, 20172022 and December 31, 20162021 is presented below:
|
| Shares Issued and Outstanding |
|
| Carrying Value |
| ||
|
| (Dollars in thousands) |
| |||||
Series A (a) |
|
|
|
|
|
|
|
|
Fixed Rate Cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share |
|
| 230,000 |
|
| $ | 230,000 |
|
Series C (a) |
|
|
|
|
|
|
|
|
Fixed Rate Cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share |
|
| 151,500 |
|
| $ | 151,500 |
|
Series E (b) |
|
|
|
|
|
|
|
|
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share |
|
| 350,000 |
|
| $ | 350,000 |
|
Series F (c) |
|
|
|
|
|
|
|
|
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock, $10,000 liquidation preference per share |
|
| 50,000 |
|
| $ | 500,000 |
|
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||||||||||
|
| Shares |
|
| Carrying Value |
|
| Shares |
|
| Carrying Value |
| ||||
|
| (Dollars in thousands) |
| |||||||||||||
Series E (a) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock |
|
| 350,000 |
|
| $ | 350,000 |
|
|
| 350,000 |
|
| $ | 350,000 |
|
Series F (b) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock |
|
| 50,000 |
|
| $ | 500,000 |
|
|
| 50,000 |
|
| $ | 500,000 |
|
Series G (c) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fixed-Rate Reset Non-cumulative Perpetual Preferred Stock |
|
| 40,000 |
|
| $ | 400,000 |
|
|
| 40,000 |
|
| $ | 400,000 |
|
Series H (d) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock |
|
| 10,000,000 |
|
| $ | 260,600 |
|
|
| — |
|
|
| — |
|
Series I (e) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fixed-Rate Reset Non-cumulative Perpetual Preferred Stock |
|
| 50,000 |
|
| $ | 500,000 |
|
|
| 50,000 |
|
| $ | 500,000 |
|
|
Dividends, if declared, are paid semi-annually at a rate of 6.45% through February 14, 2024 and thereafter will be paid quarterly at a rate of the three-month LIBOR plus 361 basis points. The shares are redeemable in whole or in part on or after February 15, 2024. |
|
|
|
|
In addition to the Series A warrants mentioned in (a) above, a warrant to purchase 95,472 shares of M&T common stockmay redeem all of the shares within 90 days following that occurrence.
- 2427 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. Revenue from contracts with customers
The Company generally charges customer accounts or otherwise bills customers upon completion of its services. Typically the Company’s contracts with customers have a duration of one year or less and payment for services is received at least annually, but oftentimes more frequently as services are provided. At September 30, 2022 and December 31, 2021, the Company had $70 million and $68 million, respectively, of amounts receivable related to recognized revenue from the sources in the accompanying tables. Such amounts are classified in accrued interest and other assets in the Company’s consolidated balance sheet. In certain situations the Company is paid in advance of providing services and defers the recognition of revenue until its service obligation is satisfied. At September 30, 2022 and December 31, 2021, the Company had deferred revenue of $46 million and $45 million, respectively, related to the sources in the accompanying tables recorded in accrued interest and other liabilities in the consolidated balance sheet.
The following tables summarize sources of the Company’s noninterest income during the three-month and nine-month periods ended September 30, 2022 and 2021 that are subject to the revenue recognition accounting guidance.
|
| Business Banking |
|
| Commercial Banking |
|
| Commercial Real Estate |
|
| Discretionary Portfolio |
|
| Residential Mortgage Banking |
|
| Retail Banking |
|
| All Other |
|
| Total |
| ||||||||
Three Months Ended September 30, 2022 | (In thousands) |
| ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Classification in consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Service charges on deposit |
| $ | 19,277 |
|
|
| 30,406 |
|
|
| 3,683 |
|
|
| — |
|
|
| — |
|
|
| 61,223 |
|
|
| 624 |
|
| $ | 115,213 |
|
Trust income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 186,577 |
|
|
| 186,577 |
|
Brokerage services income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 21,086 |
|
|
| 21,086 |
|
Other revenues from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Merchant discount and credit |
|
| 16,234 |
|
|
| 17,731 |
|
|
| 1,104 |
|
|
| — |
|
|
| — |
|
|
| 6,874 |
|
|
| 561 |
|
|
| 42,504 |
|
Other |
|
| — |
|
|
| 9,878 |
|
|
| 1,961 |
|
|
| 904 |
|
|
| 558 |
|
|
| 3,980 |
|
|
| 8,767 |
|
|
| 26,048 |
|
|
| $ | 35,511 |
|
|
| 58,015 |
|
|
| 6,748 |
|
|
| 904 |
|
|
| 558 |
|
|
| 72,077 |
|
|
| 217,615 |
|
| $ | 391,428 |
|
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Classification in consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Service charges on deposit |
| $ | 14,205 |
|
|
| 25,054 |
|
|
| 2,977 |
|
|
| — |
|
|
| — |
|
|
| 61,696 |
|
|
| 1,494 |
|
| $ | 105,426 |
|
Trust income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 156,876 |
|
|
| 156,876 |
|
Brokerage services income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (20 | ) |
|
| 20,510 |
|
|
| 20,490 |
|
Other revenues from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Merchant discount and credit |
|
| 14,376 |
|
|
| 14,970 |
|
|
| 878 |
|
|
| — |
|
|
| — |
|
|
| 5,912 |
|
|
| 138 |
|
|
| 36,274 |
|
Other |
|
| — |
|
|
| 1,879 |
|
|
| 2,180 |
|
|
| 283 |
|
|
| 1,501 |
|
|
| 5,674 |
|
|
| 8,311 |
|
|
| 19,828 |
|
|
| $ | 28,581 |
|
|
| 41,903 |
|
|
| 6,035 |
|
|
| 283 |
|
|
| 1,501 |
|
|
| 73,262 |
|
|
| 187,329 |
|
| $ | 338,894 |
|
- 28 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. Revenue from contracts with customers, continued
|
| Business Banking |
|
| Commercial Banking |
|
| Commercial Real Estate |
|
| Discretionary Portfolio |
|
| Residential Mortgage Banking |
|
| Retail Banking |
|
| All Other |
|
| Total |
| ||||||||
Nine Months Ended September 30, 2022 | (In thousands) |
| ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Classification in consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Service charges on deposit |
| $ | 53,581 |
|
|
| 85,806 |
|
|
| 10,903 |
|
|
| — |
|
|
| — |
|
|
| 185,990 |
|
|
| 4,610 |
|
| $ | 340,890 |
|
Trust income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 545,874 |
|
|
| 545,874 |
|
Brokerage services income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 65,414 |
|
|
| 65,414 |
|
Other revenues from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Merchant discount and credit |
|
| 45,874 |
|
|
| 48,044 |
|
|
| 2,836 |
|
|
| — |
|
|
| — |
|
|
| 19,408 |
|
|
| 946 |
|
|
| 117,108 |
|
Other |
|
| — |
|
|
| 13,040 |
|
|
| 8,228 |
|
|
| 2,468 |
|
|
| 3,413 |
|
|
| 16,752 |
|
|
| 33,416 |
|
|
| 77,317 |
|
|
| $ | 99,455 |
|
|
| 146,890 |
|
|
| 21,967 |
|
|
| 2,468 |
|
|
| 3,413 |
|
|
| 222,150 |
|
|
| 650,260 |
|
| $ | 1,146,603 |
|
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Classification in consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Service charges on deposit |
| $ | 39,644 |
|
|
| 74,304 |
|
|
| 8,768 |
|
|
| — |
|
|
| — |
|
|
| 169,734 |
|
|
| 4,271 |
|
| $ | 296,721 |
|
Trust income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 475,889 |
|
|
| 475,889 |
|
Brokerage services income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 43,868 |
|
|
| 43,868 |
|
Other revenues from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Merchant discount and credit |
|
| 37,570 |
|
|
| 39,812 |
|
|
| 1,823 |
|
|
| — |
|
|
| — |
|
|
| 15,741 |
|
|
| (207 | ) |
|
| 94,739 |
|
Other |
|
| — |
|
|
| 3,890 |
|
|
| 5,197 |
|
|
| 1,043 |
|
|
| 4,670 |
|
|
| 17,493 |
|
|
| 30,456 |
|
|
| 62,749 |
|
|
| $ | 77,214 |
|
|
| 118,006 |
|
|
| 15,788 |
|
|
| 1,043 |
|
|
| 4,670 |
|
|
| 202,968 |
|
|
| 554,277 |
|
| $ | 973,966 |
|
- 29 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
8. Pension plans and other postretirement benefits
The Company provides defined benefit pension and other postretirement benefits (including health care and life insurance benefits) to qualified retired employees. Net periodic defined benefit cost for defined benefit plans consisted of the following:
|
| Pension |
|
| Other |
| ||||||||||
|
| Three Months Ended September 30 |
| |||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
| (In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Service cost |
| $ | 4,423 |
|
| $ | 5,128 |
|
| $ | 689 |
|
| $ | 254 |
|
Interest cost on projected benefit obligation |
|
| 22,060 |
|
|
| 15,468 |
|
|
| 581 |
|
|
| 328 |
|
Expected return on plan assets |
|
| (50,188 | ) |
|
| (35,862 | ) |
|
| — |
|
|
| — |
|
Amortization of prior service cost (credit) |
|
| 129 |
|
|
| 139 |
|
|
| (693 | ) |
|
| (1,185 | ) |
Amortization of net actuarial loss (gain) |
|
| 4,974 |
|
|
| 22,254 |
|
|
| (370 | ) |
|
| (324 | ) |
Net periodic cost (benefit) |
| $ | (18,602 | ) |
| $ | 7,127 |
|
| $ | 207 |
|
| $ | (927 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Pension |
|
| Other |
| ||||||||||
|
| Nine Months Ended September 30 |
| |||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
| (In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Service cost |
| $ | 13,237 |
|
| $ | 15,385 |
|
| $ | 1,914 |
|
| $ | 760 |
|
Interest cost on projected benefit obligation |
|
| 60,407 |
|
|
| 46,404 |
|
|
| 1,607 |
|
|
| 984 |
|
Expected return on plan assets |
|
| (137,421 | ) |
|
| (107,586 | ) |
|
| — |
|
|
| — |
|
Amortization of prior service cost (credit) |
|
| 387 |
|
|
| 415 |
|
|
| (2,079 | ) |
|
| (3,554 | ) |
Amortization of net actuarial loss (gain) |
|
| 14,921 |
|
|
| 66,763 |
|
|
| (1,111 | ) |
|
| (971 | ) |
Net periodic cost (benefit) |
| $ | (48,469 | ) |
| $ | 21,381 |
|
| $ | 331 |
|
| $ | (2,781 | ) |
|
| Pension Benefits |
|
| Other Postretirement Benefits |
| ||||||||||
|
| Three Months Ended September 30 |
| |||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
|
| (In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
| $ | 5,048 |
|
|
| 6,259 |
|
|
| 293 |
|
| 399 |
| |
Interest cost on projected benefit obligation |
|
| 19,818 |
|
|
| 20,853 |
|
|
| 929 |
|
|
| 1,242 |
|
Expected return on plan assets |
|
| (27,131 | ) |
|
| (27,118 | ) |
|
| — |
|
|
| — |
|
Amortization of prior service cost (credit) |
|
| 139 |
|
|
| (807 | ) |
|
| (340 | ) |
|
| (339 | ) |
Amortization of net actuarial loss (gain) |
|
| 7,316 |
|
|
| 7,536 |
|
|
| (247 | ) |
|
| 15 |
|
Net periodic benefit cost |
| $ | 5,190 |
|
|
| 6,723 |
|
|
| 635 |
|
|
| 1,317 |
|
|
| Pension Benefits |
|
| Other Postretirement Benefits |
| ||||||||||
|
| Nine Months Ended September 30 |
| |||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
|
| (In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
| $ | 15,145 |
|
|
| 18,778 |
|
|
| 878 |
|
|
| 1,197 |
|
Interest cost on projected benefit obligation |
|
| 59,452 |
|
|
| 62,558 |
|
|
| 2,787 |
|
|
| 3,728 |
|
Expected return on plan assets |
|
| (81,393 | ) |
|
| (81,355 | ) |
|
| — |
|
|
| — |
|
Amortization of prior service cost (credit) |
|
| 418 |
|
|
| (2,421 | ) |
|
| (1,019 | ) |
|
| (1,019 | ) |
Amortization of net actuarial loss (gain) |
|
| 21,947 |
|
|
| 22,609 |
|
|
| (741 | ) |
|
| 45 |
|
Net periodic benefit cost |
| $ | 15,569 |
|
|
| 20,169 |
|
|
| 1,905 |
|
|
| 3,951 |
|
ExpenseService cost is reflected in salaries and employee benefits expense in the consolidated statement of income. The other components of net periodic benefit cost are reflected in other costs of operations. Expenses incurred in connection with the Company's defined contribution pension and retirement savings plans totaled $16,085,000$32 million and $14,783,000$23 million for the three months ended September 30, 20172022 and 2016,2021, respectively, and $53,127,000$98 million and $47,747,000$81 million for the nine months ended September 30, 20172022 and 2016,2021, respectively, and are included in salaries and employee benefits expense.
Prior to 2022, net actuarial losses were generally amortized over the average remaining service periods of active participants in the Company’s defined benefit pension plan. If substantially all of the plan’s participants are inactive, GAAP provides for the average remaining life expectancy of the participants to be used instead of average remaining service period in determining such amortization. Substantially all of the participants in the Company’s defined benefit pension plan were inactive and beginning in 2022 the average remaining life expectancy is now utilized prospectively to amortize the net unrecognized losses. The change increased the amortization period by approximately sixteen years and reduced the amount of amortization of unrecognized losses recorded for the three and nine months ended September 30, 2022 from what would have been recorded without such change in amortization period by $9 million and $27 million, respectively.
- 2530 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
8.9. Earnings per common share
The computations of basic earnings per common share follow:
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
| (In thousands, except per share) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income available to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 646,596 |
|
| $ | 495,460 |
|
| $ | 1,226,292 |
|
| $ | 1,400,778 |
|
Less: Preferred stock dividends |
|
| (24,941 | ) |
|
| (17,050 | ) |
|
| (71,647 | ) |
|
| (51,150 | ) |
Net income available to common equity |
|
| 621,655 |
|
|
| 478,410 |
|
|
| 1,154,645 |
|
|
| 1,349,628 |
|
Less: Income attributable to unvested stock-based |
|
| (1,106 | ) |
|
| (2,452 | ) |
|
| (2,245 | ) |
|
| (6,823 | ) |
Net income available to common shareholders |
| $ | 620,549 |
|
| $ | 475,958 |
|
| $ | 1,152,400 |
|
| $ | 1,342,805 |
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Common shares outstanding (including common |
|
| 174,921 |
|
|
| 129,580 |
|
|
| 160,793 |
|
|
| 129,529 |
|
Less: Unvested stock-based compensation awards |
|
| (312 | ) |
|
| (891 | ) |
|
| (319 | ) |
|
| (897 | ) |
Weighted-average shares outstanding |
|
| 174,609 |
|
|
| 128,689 |
|
|
| 160,474 |
|
|
| 128,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic earnings per common share |
| $ | 3.55 |
|
| $ | 3.70 |
|
| $ | 7.18 |
|
| $ | 10.44 |
|
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
|
| (In thousands, except per share) |
| |||||||||||||
Income available to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 355,923 |
|
|
| 349,984 |
|
|
| 1,085,903 |
|
|
| 984,543 |
|
Less: Preferred stock dividends (a) |
|
| (18,130 | ) |
|
| (20,318 | ) |
|
| (54,604 | ) |
|
| (60,953 | ) |
Net income available to common equity |
|
| 337,793 |
|
|
| 329,666 |
|
|
| 1,031,299 |
|
|
| 923,590 |
|
Less: Income attributable to unvested stock-based compensation awards |
|
| (1,992 | ) |
|
| (2,674 | ) |
|
| (6,288 | ) |
|
| (7,920 | ) |
Net income available to common shareholders |
| $ | 335,801 |
|
|
| 326,992 |
|
|
| 1,025,011 |
|
|
| 915,670 |
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding (including common stock issuable) and unvested stock-based compensation awards |
|
| 152,245 |
|
|
| 156,767 |
|
|
| 153,814 |
|
|
| 158,710 |
|
Less: Unvested stock-based compensation awards |
|
| (898 | ) |
|
| (1,274 | ) |
|
| (948 | ) |
|
| (1,374 | ) |
Weighted-average shares outstanding |
|
| 151,347 |
|
|
| 155,493 |
|
|
| 152,866 |
|
|
| 157,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
| $ | 2.22 |
|
|
| 2.10 |
|
|
| 6.71 |
|
|
| 5.82 |
|
(a)Including impact of not as yet declared cumulative dividends.
The computations of diluted earnings per common share follow:
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
| (In thousands, except per share) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income available to common equity |
| $ | 621,655 |
|
| $ | 478,410 |
|
| $ | 1,154,645 |
|
| $ | 1,349,628 |
|
Less: Income attributable to unvested stock-based |
|
| (1,101 | ) |
|
| (2,449 | ) |
|
| (2,239 | ) |
|
| (6,816 | ) |
Net income available to common shareholders |
| $ | 620,554 |
|
| $ | 475,961 |
|
| $ | 1,152,406 |
|
| $ | 1,342,812 |
|
Adjusted weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Common and unvested stock-based compensation |
|
| 174,921 |
|
|
| 129,580 |
|
|
| 160,793 |
|
|
| 129,529 |
|
Less: Unvested stock-based compensation awards |
|
| (312 | ) |
|
| (891 | ) |
|
| (319 | ) |
|
| (897 | ) |
Plus: Incremental shares from assumed conversion |
|
| 1,073 |
|
|
| 155 |
|
|
| 821 |
|
|
| 154 |
|
Adjusted weighted-average shares outstanding |
|
| 175,682 |
|
|
| 128,844 |
|
|
| 161,295 |
|
|
| 128,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted earnings per common share |
| $ | 3.53 |
|
| $ | 3.69 |
|
| $ | 7.14 |
|
| $ | 10.43 |
|
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
|
| (In thousands, except per share) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common equity |
| $ | 337,793 |
|
|
| 329,666 |
|
|
| 1,031,299 |
|
|
| 923,590 |
|
Less: Income attributable to unvested stock-based compensation awards |
|
| (1,989 | ) |
|
| (2,668 | ) |
|
| (6,276 | ) |
|
| (7,904 | ) |
Net income available to common shareholders |
| $ | 335,804 |
|
|
| 326,998 |
|
|
| 1,025,023 |
|
|
| 915,686 |
|
Adjusted weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common and unvested stock-based compensation awards |
|
| 152,245 |
|
|
| 156,767 |
|
|
| 153,814 |
|
|
| 158,710 |
|
Less: Unvested stock-based compensation awards |
|
| (898 | ) |
|
| (1,274 | ) |
|
| (948 | ) |
|
| (1,374 | ) |
Plus: Incremental shares from assumed conversion of stock-based compensation awards and warrants to purchase common stock |
|
| 344 |
|
|
| 533 |
|
|
| 427 |
|
|
| 507 |
|
Adjusted weighted-average shares outstanding |
|
| 151,691 |
|
|
| 156,026 |
|
|
| 153,293 |
|
|
| 157,843 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
| $ | 2.21 |
|
|
| 2.10 |
|
|
| 6.69 |
|
|
| 5.80 |
|
GAAP defines unvested share-based awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities that shall be included in the computation of earnings per common share pursuant to the two-class method. The Company has issued stock-based compensation awards in the form of restricted stock and restricted stock units which, in accordance with GAAP, are considered participating securities.
Stock-based compensation awards and warrants to purchase common stock of M&T representing 408,657252,793 common shares and 2,015,870314,155 common shares during the three-month periods ended September 30, 2017 and 2016, respectively, and 404,487 and 2,513,288 common shares during the nine-month periods ended September 30, 20172022, respectively, and 2016,460,710 common shares and 461,792 common shares during the three-month and nine-month periods ended September 30, 2021, respectively, were not included in the computations of diluted earnings per common share because the effect on those periods would have been antidilutive.
- 2631 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
The following tables display the components of other comprehensive income (loss) and amounts reclassified from accumulated other comprehensive income (loss) to net income:
|
| Investment |
|
| Defined Benefit |
|
|
|
|
| Total |
|
|
| Income |
|
|
|
| ||||||
|
| Securities |
|
| Plans |
|
| Other |
|
| Before Tax |
|
|
| Tax |
|
| Net |
| ||||||
|
| (In thousands) |
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance — January 1, 2022 |
| $ | 104,691 |
|
|
| (360,276 | ) |
|
| 83,531 |
|
| $ | (172,054 | ) |
|
|
| 44,476 |
|
| $ | (127,578 | ) |
Other comprehensive income (loss) before reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Unrealized holding losses, net |
|
| (576,266 | ) |
|
| — |
|
|
| — |
|
|
| (576,266 | ) |
|
|
| 149,186 |
|
|
| (427,080 | ) |
Foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| (14,564 | ) |
|
| (14,564 | ) |
|
|
| 3,293 |
|
|
| (11,271 | ) |
Unrealized losses on cash flow hedges |
|
| — |
|
|
| — |
|
|
| (429,310 | ) |
|
| (429,310 | ) |
|
|
| 111,150 |
|
|
| (318,160 | ) |
Total other comprehensive income (loss) before |
|
| (576,266 | ) |
|
| — |
|
|
| (443,874 | ) |
|
| (1,020,140 | ) |
|
|
| 263,629 |
|
|
| (756,511 | ) |
Amounts reclassified from accumulated other comprehensive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Amortization of unrealized holding losses on |
|
| 1,766 |
|
|
| — |
|
|
| — |
|
|
| 1,766 |
| (a) |
|
| (456 | ) |
|
| 1,310 |
|
Accretion of net gain on terminated cash flow hedges |
|
| — |
|
|
| — |
|
|
| (90 | ) |
|
| (90 | ) | (c) |
|
| 24 |
|
|
| (66 | ) |
Net yield adjustment from cash flow hedges |
|
| — |
|
|
| — |
|
|
| (35,500 | ) |
|
| (35,500 | ) | (a) |
|
| 9,192 |
|
|
| (26,308 | ) |
Amortization of prior service credit |
|
| — |
|
|
| (1,692 | ) |
|
| — |
|
|
| (1,692 | ) | (d) |
|
| 413 |
|
|
| (1,279 | ) |
Amortization of actuarial losses |
|
| — |
|
|
| 13,810 |
|
|
| — |
|
|
| 13,810 |
| (d) |
|
| (3,371 | ) |
|
| 10,439 |
|
Total other comprehensive income (loss) |
|
| (574,500 | ) |
|
| 12,118 |
|
|
| (479,464 | ) |
|
| (1,041,846 | ) |
|
|
| 269,431 |
|
|
| (772,415 | ) |
Balance — September 30, 2022 |
| $ | (469,809 | ) |
|
| (348,158 | ) |
|
| (395,933 | ) |
| $ | (1,213,900 | ) |
|
|
| 313,907 |
|
| $ | (899,993 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance — January 1, 2021 |
| $ | 195,386 |
|
|
| (650,087 | ) |
|
| 369,558 |
|
| $ | (85,143 | ) |
|
|
| 22,111 |
|
| $ | (63,032 | ) |
Other comprehensive income (loss) before reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Unrealized holding losses, net |
|
| (57,388 | ) |
|
| — |
|
|
| — |
|
|
| (57,388 | ) |
|
|
| 15,124 |
|
|
| (42,264 | ) |
Foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| (1,246 | ) |
|
| (1,246 | ) |
|
|
| 360 |
|
|
| (886 | ) |
Unrealized gains on cash flow hedges |
|
| — |
|
|
| — |
|
|
| 821 |
|
|
| 821 |
|
|
|
| (214 | ) |
|
| 607 |
|
Total other comprehensive income (loss) before |
|
| (57,388 | ) |
|
| — |
|
|
| (425 | ) |
|
| (57,813 | ) |
|
|
| 15,270 |
|
|
| (42,543 | ) |
Amounts reclassified from accumulated other comprehensive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Amortization of unrealized holding losses on |
|
| 3,333 |
|
|
| — |
|
|
| — |
|
|
| 3,333 |
| (a) |
|
| (871 | ) |
|
| 2,462 |
|
Gains realized in net income |
|
| (8 | ) |
|
| — |
|
|
| — |
|
|
| (8 | ) | (b) |
|
| 2 |
|
|
| (6 | ) |
Accretion of net gain on terminated cash flow hedges |
|
| — |
|
|
| — |
|
|
| (90 | ) |
|
| (90 | ) | (c) |
|
| 24 |
|
|
| (66 | ) |
Net yield adjustment from cash flow hedges |
|
| — |
|
|
| — |
|
|
| (206,713 | ) |
|
| (206,713 | ) | (a) |
|
| 53,997 |
|
|
| (152,716 | ) |
Amortization of prior service credit |
|
| — |
|
|
| (3,139 | ) |
|
| — |
|
|
| (3,139 | ) | (d) |
|
| 860 |
|
|
| (2,279 | ) |
Amortization of actuarial losses |
|
| — |
|
|
| 65,792 |
|
|
| — |
|
|
| 65,792 |
| (d) |
|
| (18,031 | ) |
|
| 47,761 |
|
Total other comprehensive income (loss) |
|
| (54,063 | ) |
|
| 62,653 |
|
|
| (207,228 | ) |
|
| (198,638 | ) |
|
|
| 51,251 |
|
|
| (147,387 | ) |
Balance — September 30, 2021 |
| $ | 141,323 |
|
|
| (587,434 | ) |
|
| 162,330 |
|
| $ | (283,781 | ) |
|
|
| 73,362 |
|
| $ | (210,419 | ) |
|
| Investment Securities |
|
| Defined Benefit |
|
|
|
|
|
| Total Amount |
|
|
| Income |
|
|
|
|
| ||||||||
|
| With OTTI (a) |
|
| All Other |
|
| Plans |
|
| Other |
|
| Before Tax |
|
|
| Tax |
|
| Net |
| |||||||
|
| (In thousands) |
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — January 1, 2017 |
| $ | 46,725 |
|
|
| (73,785 | ) |
|
| (449,917 | ) |
|
| (8,268 | ) |
| $ | (485,245 | ) |
|
|
| 190,609 |
|
| $ | (294,636 | ) |
Other comprehensive income before reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains (losses), net |
|
| (7,365 | ) |
|
| 60,586 |
|
|
| — |
|
|
| — |
|
|
| 53,221 |
|
|
|
| (20,934 | ) |
|
| 32,287 |
|
Foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,829 |
|
|
| 3,829 |
|
|
|
| (1,340 | ) |
|
| 2,489 |
|
Unrealized losses on cash flow hedges |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,076 | ) |
|
| (1,076 | ) |
|
|
| 424 |
|
|
| (652 | ) |
Total other comprehensive income (loss) before reclassifications |
|
| (7,365 | ) |
|
| 60,586 |
|
|
| — |
|
|
| 2,753 |
|
|
| 55,974 |
|
|
|
| (21,850 | ) |
|
| 34,124 |
|
Amounts reclassified from accumulated other comprehensive income that (increase) decrease net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of unrealized holding losses on held-to-maturity (“HTM”) securities |
|
| — |
|
|
| 2,535 |
|
|
| — |
|
|
| — |
|
|
| 2,535 |
| (b) |
|
| (998 | ) |
|
| 1,537 |
|
(Gains) losses realized in net income |
|
| (50 | ) |
|
| 67 |
|
|
| — |
|
|
| — |
|
|
| 17 |
| (c) |
|
| (7 | ) |
|
| 10 |
|
Accretion of net gain on terminated cash flow hedges |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (109 | ) |
|
| (109 | ) | (d) |
|
| 43 |
|
|
| (66 | ) |
Net yield adjustment from cash flow hedges currently in effect |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,275 | ) |
|
| (2,275 | ) | (b) |
|
| 895 |
|
|
| (1,380 | ) |
Amortization of prior service credit |
|
| — |
|
|
| — |
|
|
| (601 | ) |
|
| — |
|
|
| (601 | ) | (e) |
|
| 236 |
|
|
| (365 | ) |
Amortization of actuarial losses |
|
| — |
|
|
| — |
|
|
| 21,206 |
|
|
| — |
|
|
| 21,206 |
| (e) |
|
| (8,345 | ) |
|
| 12,861 |
|
Total reclassifications |
|
| (50 | ) |
|
| 2,602 |
|
|
| 20,605 |
|
|
| (2,384 | ) |
|
| 20,773 |
|
|
|
| (8,176 | ) |
|
| 12,597 |
|
Total gain (loss) during the period |
|
| (7,415 | ) |
|
| 63,188 |
|
|
| 20,605 |
|
|
| 369 |
|
|
| 76,747 |
|
|
|
| (30,026 | ) |
|
| 46,721 |
|
Balance — September 30, 2017 |
| $ | 39,310 |
|
|
| (10,597 | ) |
|
| (429,312 | ) |
|
| (7,899 | ) |
| $ | (408,498 | ) |
|
|
| 160,583 |
|
| $ | (247,915 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — January 1, 2016 |
| $ | 16,359 |
|
|
| 62,849 |
|
|
| (489,660 | ) |
|
| (4,093 | ) |
| $ | (414,545 | ) |
|
|
| 162,918 |
|
| $ | (251,627 | ) |
Other comprehensive income before reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains, net |
|
| 1,228 |
|
|
| 234,438 |
|
|
| — |
|
|
| — |
|
|
| 235,666 |
|
|
|
| (92,714 | ) |
|
| 142,952 |
|
Foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,836 | ) |
|
| (2,836 | ) |
|
|
| 989 |
|
|
| (1,847 | ) |
Total other comprehensive income (loss) before reclassifications |
|
| 1,228 |
|
|
| 234,438 |
|
|
| — |
|
|
| (2,836 | ) |
|
| 232,830 |
|
|
|
| (91,725 | ) |
|
| 141,105 |
|
Amounts reclassified from accumulated other comprehensive income that (increase) decrease net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of unrealized holding losses on HTM securities |
|
| — |
|
|
| 2,998 |
|
|
| — |
|
|
| — |
|
|
| 2,998 |
| (b) |
|
| (1,180 | ) |
|
| 1,818 |
|
Gains realized in net income |
|
| — |
|
|
| (28,748 | ) |
|
| — |
|
|
| — |
|
|
| (28,748 | ) | (c) |
|
| 11,309 |
|
|
| (17,439 | ) |
Accretion of net gain on terminated cash flow hedges |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (116 | ) |
|
| (116 | ) | (d) |
|
| 46 |
|
|
| (70 | ) |
Amortization of prior service credit |
|
| — |
|
|
| — |
|
|
| (3,440 | ) |
|
| — |
|
|
| (3,440 | ) | (e) |
|
| 1,354 |
|
|
| (2,086 | ) |
Amortization of actuarial losses |
|
| — |
|
|
| — |
|
|
| 22,654 |
|
|
| — |
|
|
| 22,654 |
| (e) |
|
| (8,914 | ) |
|
| 13,740 |
|
Total reclassifications |
|
| — |
|
|
| (25,750 | ) |
|
| 19,214 |
|
|
| (116 | ) |
|
| (6,652 | ) |
|
|
| 2,615 |
|
|
| (4,037 | ) |
Total gain (loss) during the period |
|
| 1,228 |
|
|
| 208,688 |
|
|
| 19,214 |
|
|
| (2,952 | ) |
|
| 226,178 |
|
|
|
| (89,110 | ) |
|
| 137,068 |
|
Balance — September 30, 2016 |
| $ | 17,587 |
|
|
| 271,537 |
|
|
| (470,446 | ) |
|
| (7,045 | ) |
| $ | (188,367 | ) |
|
|
| 73,808 |
|
| $ | (114,559 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 27 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
9. Comprehensive income, continued
Accumulated other comprehensive income (loss), net consisted of the following:
|
|
|
|
| Defined |
|
|
|
|
|
|
| ||||
|
| Investment |
|
| Benefit |
|
|
|
|
|
|
| ||||
|
| Securities |
|
| Plans |
|
| Other |
|
| Total |
| ||||
|
| (In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Balance — December 31, 2021 |
| $ | 77,625 |
|
| $ | (267,145 | ) |
| $ | 61,942 |
|
| $ | (127,578 | ) |
Net gain (loss) during period |
|
| (425,770 | ) |
|
| 9,160 |
|
|
| (355,805 | ) |
|
| (772,415 | ) |
Balance — September 30, 2022 |
| $ | (348,145 | ) |
| $ | (257,985 | ) |
| $ | (293,863 | ) |
| $ | (899,993 | ) |
- 32 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
|
| Investment Securities |
|
| Defined Benefit |
|
|
|
|
|
|
|
|
| ||||||
|
| With OTTI |
|
| All Other |
|
| Plans |
|
| Other |
|
| Total |
| |||||
|
| (In thousands) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — December 31, 2016 |
| $ | 28,338 |
|
|
| (44,657 | ) |
|
| (272,874 | ) |
|
| (5,443 | ) |
| $ | (294,636 | ) |
Net gain (loss) during period |
|
| (4,496 | ) |
|
| 38,330 |
|
|
| 12,496 |
|
|
| 391 |
|
|
| 46,721 |
|
Balance — September 30, 2017 |
| $ | 23,842 |
|
|
| (6,327 | ) |
|
| (260,378 | ) |
|
| (5,052 | ) |
| $ | (247,915 | ) |
10.11. Derivative financial instruments
As part of managing interest rate risk, the Company enters into interest rate swap agreements to modify the repricing characteristics of certain portions of the Company’s portfolios of earning assets and interest-bearing liabilities. The Company designates interest rate swap agreements utilized in the management of interest rate risk as either fair value hedges or cash flow hedges. Interest rate swap agreements are generally entered into with counterparties that meet established credit standards and most contain master netting, collateral and/or settlement provisions protecting the at-risk party. Based on adherence to the Company’s credit standards and the presence of the netting, collateral or settlement provisions, the Company believes that the credit risk inherent in these contracts was not significantmaterial as of September 30, 2017.2022.
The net effect of interest rate swap agreements was to decrease net interest income by $22 million and to increase net interest income by $7$50 million and $9 million forduring the three-month periods ended September 30, 2017 and 2016, respectively, and $18 million and $30 million for the nine-month periods ended September 30, 20172022, respectively, and 2016,to increase net interest income by $67 million and $233 million during the three-month and nine-month periods ended September 30, 2021, respectively.
Information about interest rate swap agreements entered into for interest rate risk management purposes summarized by type of financial instrument the swap agreements were intended to hedge follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
| Weighted- |
|
| Estimated |
| ||||||||
|
| Notional |
|
| Average |
|
| Average Rate |
|
| Fair Value |
| ||||||||
|
| Amount |
|
| Maturity |
|
| Fixed |
|
| Variable |
|
| Gain (Loss) (a) |
| |||||
|
| (In thousands) |
|
| (In years) |
|
|
|
|
|
|
|
| (In thousands) |
| |||||
September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Fair value hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Fixed rate long-term borrowings (b) |
| $ | 1,500,000 |
|
|
| 3.5 |
|
|
| 2.98 | % |
|
| 3.59 | % |
| $ | (2,765 | ) |
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest payments on variable rate |
|
| 19,900,000 |
|
|
| 1.3 |
|
|
| 1.80 | % |
|
| 3.09 | % |
|
| (8,730 | ) |
Total |
| $ | 21,400,000 |
|
|
| 1.5 |
|
|
|
|
|
|
|
| $ | (11,495 | ) | ||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Fair value hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Fixed rate long-term borrowings (b) |
| $ | 1,650,000 |
|
|
| 2.3 |
|
|
| 2.86 | % |
|
| 0.74 | % |
| $ | 41 |
|
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest payments on variable rate |
|
| 21,700,000 |
|
|
| 0.6 |
|
|
| 1.24 | % |
|
| 0.09 | % |
|
| (248 | ) |
Total |
| $ | 23,350,000 |
|
|
| 0.7 |
|
|
|
|
|
|
|
| $ | (207 | ) |
|
|
|
|
|
|
|
|
|
| Weighted- Average Rate |
|
|
|
|
| |||||
|
| Notional Amount |
|
| Average Maturity |
|
| Fixed |
|
| Variable |
|
| Estimated Fair Value Gain (a) |
| |||||
|
| (In thousands) |
|
| (In years) |
|
|
|
|
|
|
|
|
|
| (In thousands) |
| |||
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate long-term borrowings (b) |
| $ | 4,950,000 |
|
|
| 2.9 |
|
|
| 2.63 | % |
|
| 2.04 | % |
| $ | 697 |
|
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable rate commercial real estate loans (b) |
|
| 2,000,000 |
|
|
| 1.6 |
|
|
| 1.46 | % |
|
| 1.24 | % |
|
| — |
|
Total |
| $ | 6,950,000 |
|
|
| 2.5 |
|
|
|
|
|
|
|
|
|
| $ | 697 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate long-term borrowings (b) |
| $ | 900,000 |
|
|
| 1.1 |
|
|
| 3.75 | % |
|
| 2.08 | % |
| $ | 11,892 |
|
|
|
|
|
- 28 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
10. Derivative financial instruments, continued
The Company utilizes commitments to sell residential and commercial real estate loans to hedge the exposure to changes in the fair value of real estate loans held for sale. Such commitments have generally been designated as fair value hedges. The Company also utilizes commitments to sell real estate loans to offset the exposure to changes in fair value of certain commitments to originate real estate loans for sale.
Derivative financial instruments used for trading account purposesnot designated as hedging instruments included interest rate contracts, foreign exchange and other option contracts, foreign exchange forward and spot contracts, and financial futures.futures contracts. Interest rate contracts entered into for trading account purposesnot designated as hedging instruments had notional values of $15.5$45.6 billion and $21.6$32.6 billion at September 30, 20172022 and December 31, 2016,2021, respectively. The notional amounts of foreign currencyexchange and other option and futures contracts entered into for trading account purposesnot designated as hedging instruments aggregated $545 million$1.9 billion and $471 million$1.1 billion at September 30, 20172022 and December 31, 2016,2021, respectively.
- 33 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
11. Derivative financial instruments, continued
Information about the fair values of derivative instruments in the Company’s consolidated balance sheet and consolidated statement of income follows:
|
| Asset Derivatives |
|
| Liability Derivatives |
| ||||||||||
|
| Fair Value |
|
| Fair Value |
| ||||||||||
|
| September 30, |
|
| December 31, |
|
| September 30, |
|
| December 31, |
| ||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
| (In thousands) |
| |||||||||||||
Derivatives designated and qualifying as hedging instruments (a) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate swap agreements |
| $ | 228 |
|
| $ | 258 |
|
| $ | 11,723 |
|
| $ | 465 |
|
Commitments to sell real estate loans |
|
| 18,364 |
|
|
| 4,044 |
|
|
| 4 |
|
|
| 548 |
|
|
|
| 18,592 |
|
|
| 4,302 |
|
|
| 11,727 |
|
|
| 1,013 |
|
Derivatives not designated and qualifying as hedging instruments (a) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage banking: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage-related commitments to originate real estate loans for sale |
|
| 843 |
|
|
| 11,728 |
|
|
| 49,149 |
|
|
| 5,288 |
|
Commitments to sell real estate loans |
|
| 56,167 |
|
|
| 8,137 |
|
|
| — |
|
|
| 4,108 |
|
Other: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate contracts (b) |
|
| 371,834 |
|
|
| 410,056 |
|
|
| 1,378,145 |
|
|
| 76,278 |
|
Foreign exchange and other option and futures contracts |
|
| 44,431 |
|
|
| 8,230 |
|
|
| 42,343 |
|
|
| 7,156 |
|
|
|
| 473,275 |
|
|
| 438,151 |
|
|
| 1,469,637 |
|
|
| 92,830 |
|
Total derivatives |
| $ | 491,867 |
|
| $ | 442,453 |
|
| $ | 1,481,364 |
|
| $ | 93,843 |
|
|
| Asset Derivatives |
|
| Liability Derivatives |
| ||||||||||
|
| Fair Value |
|
| Fair Value |
| ||||||||||
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||
|
| (In thousands) |
| |||||||||||||
Derivatives designated and qualifying as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements (a) |
| $ | 2,048 |
|
| $ | 11,892 |
|
| $ | 1,351 |
|
| $ | — |
|
Commitments to sell real estate loans (a) |
|
| 1,667 |
|
|
| 33,189 |
|
|
| 1,551 |
|
|
| 1,347 |
|
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements (a) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| 3,715 |
|
|
| 45,081 |
|
|
| 2,902 |
|
|
| 1,347 |
|
Derivatives not designated and qualifying as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-related commitments to originate real estate loans for sale (a) |
|
| 13,962 |
|
|
| 8,060 |
|
|
| 240 |
|
|
| 735 |
|
Commitments to sell real estate loans (a) |
|
| 3,153 |
|
|
| 5,210 |
|
|
| 936 |
|
|
| 399 |
|
Trading: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts (b) |
|
| 104,178 |
|
|
| 228,810 |
|
|
| 103,825 |
|
|
| 167,737 |
|
Foreign exchange and other option and futures contracts (b) |
|
| 6,823 |
|
|
| 7,908 |
|
|
| 5,905 |
|
|
| 6,639 |
|
|
|
| 128,116 |
|
|
| 249,988 |
|
|
| 110,906 |
|
|
| 175,510 |
|
Total derivatives |
| $ | 131,831 |
|
| $ | 295,069 |
|
| $ | 113,808 |
|
| $ | 176,857 |
|
|
| Amount of Gain (Loss) Recognized |
| |||||||||||||
|
| Three Months Ended September 30 |
| |||||||||||||
|
| 2022 |
|
| 2021 |
| ||||||||||
|
| Derivative |
|
| Hedged Item |
|
| Derivative |
|
| Hedged Item |
| ||||
|
| (In thousands) |
| |||||||||||||
Derivatives in fair value hedging relationships |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate swap agreements: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fixed rate long-term borrowings (a) |
| $ | (50,976 | ) |
|
| 50,821 |
|
| $ | (9,713 | ) |
|
| 9,636 |
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate contracts (b) |
| $ | 6,946 |
|
|
|
|
| $ | 2,068 |
|
|
|
| ||
Foreign exchange and other option and futures contracts (b) |
|
| 4,462 |
|
|
|
|
|
| 3,060 |
|
|
|
| ||
Total |
| $ | 11,408 |
|
|
|
|
| $ | 5,128 |
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Amount of Gain (Loss) Recognized |
| |||||||||||||
|
| Nine Months Ended September 30 |
| |||||||||||||
|
| 2022 |
|
| 2021 |
| ||||||||||
|
| Derivative |
|
| Hedged Item |
|
| Derivative |
|
| Hedged Item |
| ||||
|
| (In thousands) |
| |||||||||||||
Derivatives in fair value hedging relationships |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate swap agreements: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fixed rate long-term borrowings (a) |
| $ | (114,932 | ) |
|
| 114,581 |
|
| $ | (42,217 | ) |
|
| 41,456 |
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate contracts (b) |
| $ | 17,907 |
|
|
|
|
| $ | 8,047 |
|
|
|
| ||
Foreign exchange and other option and futures contracts (b) |
|
| 10,701 |
|
|
|
|
|
| 6,286 |
|
|
|
| ||
Total |
| $ | 28,608 |
|
|
|
|
| $ | 14,333 |
|
|
|
|
|
|
|
|
- 2934 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
10.11. Derivative financial instruments, continued
|
| Amount of Gain (Loss) Recognized |
| |||||||||||||
|
| Three Months Ended September 30, 2017 |
|
| Three Months Ended September 30, 2016 |
| ||||||||||
|
| Derivative |
|
| Hedged Item |
|
| Derivative |
|
| Hedged Item |
| ||||
|
| (In thousands) |
| |||||||||||||
Derivatives in fair value hedging relationships |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate long-term borrowings (a) |
| $ | (13,509 | ) |
|
| 14,026 |
|
| $ | (12,588 | ) |
|
| 12,587 |
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts (b) |
| $ | (418 | ) |
|
|
|
|
| $ | 4,822 |
|
|
|
|
|
Foreign exchange and other option and futures contracts (b) |
|
| 1,362 |
|
|
|
|
|
|
| 1,746 |
|
|
|
|
|
Total |
| $ | 944 |
|
|
|
|
|
| $ | 6,568 |
|
|
|
|
|
|
| Carrying Amount of the Hedged Item |
|
| Cumulative Amount of Fair Value Hedging Adjustment Increasing (Decreasing) the Carrying Amount of the |
| ||||||||||
|
| September 30, 2022 |
|
| December 31, 2021 |
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||||
|
| (In thousands) |
| |||||||||||||
Location in the Consolidated Balance Sheet |
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Long-term debt |
| $ | 1,427,977 |
|
| $ | 1,692,943 |
|
| $ | (70,971 | ) |
| $ | 43,610 |
|
|
| Amount of Gain (Loss) Recognized |
| |||||||||||||
|
| Nine Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2016 |
| ||||||||||
|
| Derivative |
|
| Hedged Item |
|
| Derivative |
|
| Hedged Item |
| ||||
|
| (In thousands) |
| |||||||||||||
Derivatives in fair value hedging relationships |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate long-term borrowings (a) |
| $ | (23,423 | ) |
|
| 23,049 |
|
| $ | (22,832 | ) |
|
| 21,603 |
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts (b) |
| $ | 2,363 |
|
|
|
|
|
| $ | 11,578 |
|
|
|
|
|
Foreign exchange and other option and futures contracts (b) |
|
| 4,766 |
|
|
|
|
|
|
| 5,415 |
|
|
|
|
|
Total |
| $ | 7,129 |
|
|
|
|
|
| $ | 16,993 |
|
|
|
|
|
|
|
|
|
The amount of gain (loss)interest income recognized in the consolidated statement of income associated with derivatives designated as cash flow hedges was not materiala decrease of $22 million and an increase of $58 million for the three months ended September 30, 2022 and 2021, respectively, and an increase of $36 million and $207 million for the nine months ended September 30, 2017.2022 and 2021, respectively. As of September 30, 2022 the unrealized net loss recognized in other comprehensive income related to cash flow hedges was $377 million, of which losses of $16 million, $75 million and $286 million related to interest rate swap agreements maturing in 2022, 2023, and 2025, respectively.
The Company also has commitments to sell and commitments to originate residential and commercial real estate loans that are considered derivatives. The Company designates certain of the commitments to sell real estate loans as fair value hedges of real estate loans held for sale. The Company also utilizes commitments to sell real estate loans to offset the exposure to changes in the fair value of certain commitments to originate real estate loans for sale. As a result of these activities, net unrealized pre-tax gains related to hedged loans held for sale, commitments to originate loans for sale and commitments to sell loans were approximately $27$12 million and $28$24 million at September 30, 20172022 and December 31, 2016,2021, respectively. Changes in unrealized gains and losses are included in mortgage banking revenues and, in general, are realized in subsequent periods as the related loans are sold and commitments satisfied.
The Company does not offset derivative asset and liability positions in its consolidated financial statements. The Company’s exposure to credit risk by entering into derivative contracts is mitigated through master netting agreements and collateral posting or settlement requirements. Master netting agreements covering interest rate and foreign exchange contracts with the same party include a right to set-off that becomes enforceable in the event of default, early termination or under other specific conditions.
- 30 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
10. Derivative financial instruments, continued
The aggregate fair value of derivative financial instruments in a liability position which are subject to enforceable master netting arrangements was $17 million and $34 million at September 30, 2017 and December 31, 2016, respectively. After consideration of such netting arrangements for purposes of posting collateral, the net liability positions with counterparties aggregated $17which are subject to master netting arrangements was $1 million and $30$35 million at September 30, 20172022 and December 31, 2016,2021, respectively. The Company was required to post collateral relating tofor those positions of $18$33 million and $27 millionat December 31, 2021. No collateral was posted for those positions at September 30, 2017 and December 31, 2016, respectively.2022. Certain of the Company’s derivative financial instruments contain provisions that require the Company to maintain specific credit ratings from credit rating agencies to avoid higher collateral posting requirements. If the Company’s debt rating were to fall below specified ratings, the counterparties of the derivative financial instruments could demand immediate incremental collateralization on those instruments in a net liability position. The aggregate fair value of all derivative financial instruments with such credit risk-related contingent features in a net liability position on September 30, 2017 was less than $1 million, for which the Company2022 was not required to post collateral in the normal course of business. If the credit risk-related contingent features had been triggered on September 30, 2017, the Company would not have been required to post any collateral to counterparties.material.
The aggregate fair value of derivative financial instruments in an asset position and the net asset positions with counterparties which are subject to enforceable master netting arrangements was $7 million and $15$316 million at September 30, 20172022 and $7 million at December 31, 2016, respectively. After consideration of such netting arrangements for purposes of posting collateral, the net asset positions with counterparties aggregated $7 million and $11 million at September 30, 2017 and December 31, 2016, respectively.2021. Counterparties posted collateral relating to those positions of $5 million and $9$308 million at September 30, 20172022 and $6 million at December 31, 2016, respectively. Trading account interest2021. Interest rate swap agreements entered into with customers are subject to the Company’s credit risk standards and often contain collateral provisions.
- 35 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
11. Derivative financial instruments, continued
In addition to the derivative contracts noted above, the Company clears certain derivative transactions through a clearinghouse, rather than directly with counterparties. Those transactions cleared through a clearinghouse require initial margin collateral and variation margin payments depending on the contracts being in a net asset or liability position. The amount of initial margin collateral posted by the Company was $49$215 million and $111$132 million at September 30, 20172022 and December 31, 2016,2021, respectively. The fair value asset and liability amounts of derivative contracts at September 30, 2017 have been reduced by variation margin payments treated as settlements of $89 million and $45 million, respectively.as described herein. Variation margin on derivative contracts not treated as settlements continues to represent collateral posted or received by the Company. For those contracts, the net fair values of derivative financial instruments cleared through clearinghouses for which variation margin is required was a net asset position of $1 million and $63 million at September 30, 2017 and December 31, 2016, respectively. Collateral posted by the clearinghouses associated with that net asset position was $1 million and $81 million at September 30, 2017 and December 31, 2016, respectively.
11.12. Variable interest entities and asset securitizations
The Company’s securitization activity has consisted of securitizing loans originated for sale into government issued or guaranteed mortgage-backed securities. The Company has not recognized any losses as a result of having securitized assets.
As described in note 5, M&T has issued junior subordinated debentures payable to various trusts that have issued Capital Securities. M&T owns the common securities of those trust entities. The Company is not considered to be the primary beneficiary of those entities and, accordingly, the trusts are not included in the Company’s consolidated financial statements. At each of September 30, 20172022 and December 31, 2016,2021, the Company included the junior subordinated debentures as “long-term borrowings” in its consolidated balance sheet and recognized $24$23 million in other assets for its “investment” in the common securities of the trusts that will be concomitantly repaid to M&T by the respective trust from the proceeds of M&T’s repayment of the junior subordinated debentures associated with preferred capital securities described in note 5.
- 31 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
11. Variable interest entities and asset securitizations, continued
The Company has invested as a limited partner in various partnerships that collectively had total assets of approximately $1.0$8.5 billion at September 30, 20172022 and $3.0 billion at December 31, 2016.2021. Those partnerships generally construct or acquire properties for which the investing partners are eligible to receive certain federal income tax credits in accordance with government guidelines. Such investments may also provide tax deductible losses to the partners. The partnership investments also assist the Company in achieving its community reinvestment initiatives. As a limited partner, there is no recourse to the Company by creditors of the partnerships. However, the tax credits that result from the Company’s investments in such partnerships are generally subject to recapture should a partnership fail to comply with the respective government regulations. The Company’s maximum exposure to losscarrying amount of its investments in such partnerships was $329 million,$1.4 billion, including $118$505 million of unfunded commitments, at September 30, 20172022 and $294$933 million, including $102$361 million of unfunded commitments, at December 31, 2016.2021. Contingent commitments to provide additional capital contributions to these partnerships were not material at September 30, 2017.2022. The Company has not provided financial or other support to the partnerships that was not contractually required. The Company’s maximum exposure to loss from its investments in such partnerships as of September 30, 2022 was $1.6 billion, including possible recapture of certain tax credits. Management currently estimates that no material losses are probable as a result of the Company’s involvement with such entities. The Company, in its position as limited partner, does not direct the activities that most significantly impact the economic performance of the partnerships and, therefore, in accordance with the accounting provisions for variable interest entities, the partnership entities are not included in the Company’s consolidated financial statements. The Company’s investment costin qualified affordable housing projects is amortized to income taxes in the consolidated statement of income as tax credits and other tax benefits resulting from deductible losses associated with the projects are received. The Company amortized $11$37 million and $35$94 million of its investments in qualified affordable housing projects to income tax expense during the three-month and nine-month periods ended September 30, 2017,2022, respectively, and recognized $16$44 million and $47$108 million of tax credits and other tax benefits during those respective periods. Similarly, for the three-month and nine-month periods ended September 30, 2016,2021, the Company amortized $13$25 million and $34$63 million respectively, of its investments in qualified affordable housing projects to income tax expense, respectively, and recognized $18$27 million and $46$70 million of tax credits and other tax benefits during those respective periods.
The Company serves as investment advisor for certain registered money-market funds. The Company has no explicit arrangement to provide support to those funds, but may waive portions of its allowable management fees as a result of market conditions.conditions.
- 36 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12.13. Fair value measurements
GAAP permits an entity to choose to measure eligible financial instruments and other items at fair value. The Company has not made any fair value elections at September 30, 2017.2022.
Pursuant to GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy exists in GAAP for fair value measurements based upon the inputs to the valuation of an asset or liability.
Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities.
Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active or by model-based techniques in which all significant inputs are observable in the market.
Level 3 — Valuation is derived from model-based and other techniques in which at least one significant input is unobservable and which may be based on the Company's own estimates about the assumptions that market participants would use to value the asset or liability.
When available, the Company attempts to use quoted market prices in active markets to determine fair value and classifies such items as Level 1 or Level 2. If quoted market prices in active markets are not available, fair value
- 32 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12. Fair value measurements, continued
is often determined using model-based techniques incorporating various assumptions including interest rates, prepayment speeds and credit losses. Assets and liabilities valued using model-based techniques are classified as either Level 2 or Level 3, depending on the lowest level classification of an input that is considered significant to the overall valuation. The following is a description of the valuation methodologies used for the Company's assets and liabilities that are measured on a recurring basis at estimated fair value.
Trading account assets and liabilities
Trading account assets and liabilities consist primarily of interest rate swap agreements and foreign exchange contracts with customers who require such services with offsetting positions with third parties to minimize the Company's risk with respect to such transactions. The Company generally determines the fair value of its derivative trading account assets and liabilities using externally developed pricing models based on market observable inputs and, therefore, classifies such valuations as Level 2. Mutual funds held in connection with deferred compensation and other arrangements have been classified as Level 1 valuations. Valuations of investments in municipal and other bondsdebt securities can generally be obtained through reference to quoted prices in less active markets for the same or similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2.
Investment securities available for sale and equity securities
The majority of the Company's available-for-sale investment securities have been valued by reference to prices for similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2. Certain investments in mutual funds and equity securities are actively traded and, therefore, have been classified as Level 1 valuations.
Real estate loans held for sale
The Company utilizes commitments to sell real estate loans to hedge the exposure to changes in fair value of real estate loans held for sale. The carrying value of hedged real estate loans held for sale includes changes in estimated fair value during the hedge period. Typically, the Company attempts to hedge real estate loans held for sale from the date of close through the sale date. The fair value of hedged real estate loans held for sale is generally calculated by reference to quoted prices in secondary markets for commitments to sell real estate loans with similar characteristics and, accordingly, such loans have been classified as a Level 2 valuation.
- 37 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
13. Fair value measurements, continued
Commitments to originate real estate loans for sale and commitments to sell real estate loans
The Company enters into various commitments to originate real estate loans for sale and commitments to sell real estate loans. Such commitments are considered to beaccounted for as derivative financial instruments and, therefore, are carried at estimated fair value on the consolidated balance sheet. The estimated fair values of such commitments were generally calculated by reference to quoted prices in secondary markets for commitments to sell real estate loans to certain government-sponsored entities and other parties. The fair valuations of commitments to sell real estate loans generally result in a Level 2 classification. The estimated fair value of commitments to originate real estate loans for sale are adjusted to reflect the Company's anticipated commitment expirations. The estimated commitment expirations are considered significant unobservable inputs contributing to the Level 3 classification of commitments to originate real estate loans for sale. Significant unobservable inputs used in the determination of estimated fair value of commitments to originate real estate loans for sale are included in the accompanying table of significant unobservable inputs to Level 3 measurements.
Interest rate swap agreements used for interest rate risk management
The Company utilizes interest rate swap agreements as part of the management of interest rate risk to modify the repricing characteristics of certain portions of its portfolios of earning assets and interest-bearing liabilities. The Company generally determines the fair value of its interest rate swap agreements using externally developed pricing
- 33 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12. Fair value measurements, continued
models based on market observable inputs and, therefore, classifies such valuations as Level 2. The Company has considered counterparty credit risk in the valuation of its interest rate swap agreement assets and has considered its own credit risk in the valuation of its interest rate swap agreement liabilities.
Non-hedging derivatives
Non-hedging derivatives consist primarily of interest rate contracts and foreign exchange contracts with customers who require such services with offsetting positions with third parties to minimize the Company's risk with respect to such transactions. The Company generally determines the fair value of its non-hedging derivative assets and liabilities using externally developed pricing models based on market observable inputs and, therefore, classifies such valuations as Level 2.
- 38 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
13. Fair value measurements, continued
The following tables present assets and liabilities at September 30, 20172022 and December 31, 20162021 measured at estimated fair value on a recurring basis:
|
| Fair Value Measurements |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
|
| (In thousands) |
| |||||||||||||
September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Trading account |
| $ | 129,672 |
|
| $ | 129,672 |
|
| $ | — |
|
| $ | — |
|
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Treasury and federal agencies |
|
| 7,658,728 |
|
|
| — |
|
|
| 7,658,728 |
|
|
| — |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government issued or guaranteed |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial |
|
| 606,571 |
|
|
| — |
|
|
| 606,571 |
|
|
| — |
|
Residential |
|
| 2,430,946 |
|
|
| — |
|
|
| 2,430,946 |
|
|
| — |
|
Other debt securities |
|
| 174,101 |
|
|
| — |
|
|
| 174,101 |
|
|
| — |
|
|
|
| 10,870,346 |
|
|
| — |
|
|
| 10,870,346 |
|
|
| — |
|
Equity securities |
|
| 194,537 |
|
|
| 184,811 |
|
|
| 9,726 |
|
|
| — |
|
Real estate loans held for sale |
|
| 342,720 |
|
|
| — |
|
|
| 342,720 |
|
|
| — |
|
Other assets (a) |
|
| 491,867 |
|
|
| — |
|
|
| 491,024 |
|
|
| 843 |
|
Total assets |
| $ | 12,029,142 |
|
| $ | 314,483 |
|
| $ | 11,713,816 |
|
| $ | 843 |
|
Other liabilities (a) |
|
| 1,481,364 |
|
|
| — |
|
|
| 1,432,215 |
|
|
| 49,149 |
|
Total liabilities |
| $ | 1,481,364 |
|
| $ | — |
|
| $ | 1,432,215 |
|
| $ | 49,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Trading account |
| $ | 49,745 |
|
| $ | 49,545 |
|
| $ | 200 |
|
| $ | — |
|
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Treasury and federal agencies |
|
| 678,690 |
|
|
| — |
|
|
| 678,690 |
|
|
| — |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government issued or guaranteed |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential |
|
| 3,155,312 |
|
|
| — |
|
|
| 3,155,312 |
|
|
| — |
|
Other debt securities |
|
| 121,802 |
|
|
| — |
|
|
| 121,802 |
|
|
| — |
|
|
|
| 3,955,804 |
|
|
| — |
|
|
| 3,955,804 |
|
|
| — |
|
Equity securities |
|
| 77,640 |
|
|
| 68,850 |
|
|
| 8,790 |
|
|
| — |
|
Real estate loans held for sale |
|
| 899,282 |
|
|
| — |
|
|
| 899,282 |
|
|
| — |
|
Other assets (a) |
|
| 442,453 |
|
|
| — |
|
|
| 430,725 |
|
|
| 11,728 |
|
Total assets |
| $ | 5,424,924 |
|
| $ | 118,395 |
|
| $ | 5,294,801 |
|
| $ | 11,728 |
|
Other liabilities (a) |
|
| 93,843 |
|
|
| — |
|
|
| 88,555 |
|
|
| 5,288 |
|
Total liabilities |
| $ | 93,843 |
|
| $ | — |
|
| $ | 88,555 |
|
| $ | 5,288 |
|
|
| Fair Value Measurements |
|
| Level 1 (a) |
|
| Level 2 (a) |
|
| Level 3 |
| ||||
|
| (In thousands) |
| |||||||||||||
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading account assets |
| $ | 170,516 |
|
|
| 47,927 |
|
|
| 122,589 |
|
|
| — |
|
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and federal agencies |
|
| 2,007,117 |
|
|
| — |
|
|
| 2,007,117 |
|
|
| — |
|
Obligations of states and political subdivisions |
|
| 2,678 |
|
|
| — |
|
|
| 2,678 |
|
|
| — |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed |
|
| 9,184,483 |
|
|
| — |
|
|
| 9,184,483 |
|
|
| — |
|
Privately issued |
|
| 30 |
|
|
| — |
|
|
| — |
|
|
| 30 |
|
Other debt securities |
|
| 128,530 |
|
|
| — |
|
|
| 128,530 |
|
|
| — |
|
Equity securities |
|
| 93,986 |
|
|
| 50,917 |
|
|
| 43,069 |
|
|
| — |
|
|
|
| 11,416,824 |
|
|
| 50,917 |
|
|
| 11,365,877 |
|
|
| 30 |
|
Real estate loans held for sale |
|
| 571,199 |
|
|
| — |
|
|
| 571,199 |
|
|
| — |
|
Other assets (b) |
|
| 20,830 |
|
|
| — |
|
|
| 6,868 |
|
|
| 13,962 |
|
Total assets |
| $ | 12,179,369 |
|
|
| 98,844 |
|
|
| 12,066,533 |
|
|
| 13,992 |
|
Trading account liabilities |
| $ | 109,730 |
|
|
| — |
|
|
| 109,730 |
|
|
| — |
|
Other liabilities (b) |
|
| 4,078 |
|
|
| — |
|
|
| 3,838 |
|
|
| 240 |
|
Total liabilities |
| $ | 113,808 |
|
|
| — |
|
|
| 113,568 |
|
|
| 240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading account assets |
| $ | 323,867 |
|
|
| 46,135 |
|
|
| 277,732 |
|
|
| — |
|
Investment securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and federal agencies |
|
| 1,902,544 |
|
|
| — |
|
|
| 1,902,544 |
|
|
| — |
|
Obligations of states and political subdivisions |
|
| 3,641 |
|
|
| — |
|
|
| 3,641 |
|
|
| — |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed |
|
| 10,954,861 |
|
|
| — |
|
|
| 10,954,861 |
|
|
| — |
|
Privately issued |
|
| 44 |
|
|
| — |
|
|
| — |
|
|
| 44 |
|
Other debt securities |
|
| 118,516 |
|
|
| — |
|
|
| 118,516 |
|
|
| — |
|
Equity securities |
|
| 352,466 |
|
|
| 301,711 |
|
|
| 50,755 |
|
|
| — |
|
|
|
| 13,332,072 |
|
|
| 301,711 |
|
|
| 13,030,317 |
|
|
| 44 |
|
Real estate loans held for sale |
|
| 1,056,180 |
|
|
| — |
|
|
| 1,056,180 |
|
|
| — |
|
Other assets (b) |
|
| 58,351 |
|
|
| — |
|
|
| 50,291 |
|
|
| 8,060 |
|
Total assets |
| $ | 14,770,470 |
|
|
| 347,846 |
|
|
| 14,414,520 |
|
|
| 8,104 |
|
Trading account liabilities |
| $ | 174,376 |
|
|
| — |
|
|
| 174,376 |
|
|
| — |
|
Other liabilities (b) |
|
| 2,481 |
|
|
| — |
|
|
| 1,746 |
|
|
| 735 |
|
Total liabilities |
| $ | 176,857 |
|
|
| — |
|
|
| 176,122 |
|
|
| 735 |
|
|
|
|
|
- 3439 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12.13. Fair value measurements, continued
The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended September 30, 20172022 and 2021 were as follows:
|
| Other Assets and Other Liabilities |
|
| |
2022 |
| (In thousands) |
|
| |
|
|
|
|
| |
Balance — June 30, 2022 |
| $ | (24,181 | ) |
|
Total gains (losses) realized/unrealized: |
|
|
|
| |
Included in earnings |
|
| (9,321 | ) | (a) |
Transfers out of Level 3 |
|
| (14,804 | ) | (b) |
Balance — September 30, 2022 |
| $ | (48,306 | ) |
|
Changes in unrealized gains included in earnings |
| $ | (17,160 | ) | (a) |
|
|
|
|
| |
2021 |
|
|
|
| |
|
|
|
|
| |
Balance — June 30, 2021 |
| $ | 35,666 |
|
|
Total gains realized/unrealized: |
|
|
|
| |
Included in earnings |
|
| 44,152 |
| (a) |
Transfers out of Level 3 |
|
| (59,673 | ) | (b) |
Balance — September 30, 2021 |
| $ | 20,145 |
|
|
Changes in unrealized gains included in earnings |
| $ | 18,196 |
| (a) |
|
| Investment Securities Available for Sale |
|
|
|
|
|
| |
|
| Privately Issued Mortgage-Backed Securities |
|
| Other Assets and Other Liabilities |
|
| ||
|
| (In thousands) |
|
| |||||
|
|
|
|
|
|
|
|
|
|
Balance — June 30, 2017 |
| $ | 35 |
|
|
| 12,425 |
|
|
Total gains (losses) realized/unrealized: |
|
|
|
|
|
|
|
|
|
Included in earnings |
|
| — |
|
|
| 22,313 |
| (b) |
Settlements |
|
| (5 | ) |
|
| — |
|
|
Transfers in and/or out of Level 3 (a) |
|
| — |
|
|
| (21,016 | ) | (d) |
Balance — September 30, 2017 |
| $ | 30 |
|
|
| 13,722 |
|
|
Changes in unrealized gains included in earnings related to assets still held at September 30, 2017 |
| $ | — |
|
|
| 12,659 |
| (b) |
The changes in
|
| Investment Securities Available for Sale |
|
|
|
|
|
|
| |||||
|
| Privately Issued Mortgage-Backed Securities |
|
| Collateralized Debt Obligations |
|
|
| Other Assets and Other Liabilities |
|
| |||
|
| (In thousands) |
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — June 30, 2016 |
| $ | 57 |
|
|
| 43,305 |
|
|
|
| 21,383 |
|
|
Total gains (losses) realized/unrealized: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings |
|
| — |
|
|
| 28,475 |
|
|
|
| 45,534 |
| (b) |
Included in other comprehensive income |
|
| — |
|
|
| (15,050 | ) | (c) |
|
| — |
|
|
Sales |
|
| — |
|
|
| (56,730 | ) |
|
|
| — |
|
|
Settlements |
|
| (6 | ) |
|
| — |
|
|
|
| — |
|
|
Transfers in and/or out of Level 3 (a) |
|
| — |
|
|
| — |
|
|
|
| (37,117 | ) | (d) |
Balance — September 30, 2016 |
| $ | 51 |
|
|
| — |
|
|
|
| 29,800 |
|
|
Changes in unrealized gains included in earnings related to assets still held at September 30, 2016 |
| $ | — |
|
|
| — |
|
|
|
| 27,663 |
| (b) |
- 3540 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12.13. Fair value measurements, continued
The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the nine months ended September 30, 20172022 and 2021 were as follows:
|
| Investment Securities Available for Sale |
|
|
|
|
|
| |
|
| Privately Issued Mortgage-Backed Securities |
|
| Other Assets and Other Liabilities |
|
| ||
|
| (In thousands) |
|
| |||||
|
|
|
|
|
|
|
|
|
|
Balance — January 1, 2017 |
| $ | 44 |
|
|
| 7,325 |
|
|
Total gains (losses) realized/unrealized: |
|
|
|
|
|
|
|
|
|
Included in earnings |
|
| — |
|
|
| 65,824 |
| (b) |
Settlements |
|
| (14 | ) |
|
| — |
|
|
Transfers in and/or out of Level 3 (a) |
|
| — |
|
|
| (59,427 | ) | (d) |
Balance — September 30, 2017 |
| $ | 30 |
|
| $ | 13,722 |
|
|
Changes in unrealized gains included in earnings related to assets still held at September 30, 2017 |
| $ | — |
|
| $ | 13,684 |
| (b) |
|
| Investment Securities |
|
|
|
|
| ||
|
| Privately Issued Mortgage-Backed Securities |
|
| Other Assets and Other Liabilities |
|
| ||
2022 |
| (In thousands) |
|
| |||||
|
|
|
|
|
|
|
| ||
Balance — January 1, 2022 |
| $ | — |
|
| $ | 6,440 |
|
|
Total gains (losses) realized/unrealized: |
|
|
|
|
|
|
| ||
Included in earnings |
|
| — |
|
|
| (34,630 | ) | (a) |
Transfers out of Level 3 |
|
| — |
|
|
| (20,116 | ) | (b) |
Balance — September 30, 2022 |
| $ | — |
|
| $ | (48,306 | ) |
|
Changes in unrealized gains included in earnings |
| $ | — |
|
| $ | (48,108 | ) | (a) |
The changes
2021 |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| ||
Balance — January 1, 2021 |
| $ | 16 |
|
| $ | 43,234 |
|
|
Total gains realized/unrealized: |
|
|
|
|
|
|
| ||
Included in earnings |
|
| — |
|
|
| 102,489 |
| (a) |
Settlements |
|
| (16 | ) |
|
| — |
|
|
Transfers out of Level 3 |
|
| — |
|
|
| (125,578 | ) | (b) |
Balance — September 30, 2021 |
| $ | — |
|
| $ | 20,145 |
|
|
Changes in unrealized gains included in earnings |
| $ | — |
|
| $ | 21,722 |
| (a) |
|
| Investment Securities Available for Sale |
|
|
|
|
|
|
| |||||
|
| Privately Issued Mortgage-Backed Securities |
|
| Collateralized Debt Obligations |
|
|
| Other Assets and Other Liabilities |
|
| |||
|
|
|
|
|
| (In thousands) |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — January 1, 2016 |
| $ | 74 |
|
|
| 47,393 |
|
|
|
| 9,879 |
|
|
Total gains (losses) realized/unrealized: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings |
|
| — |
|
|
| 28,475 |
|
|
|
| 104,862 |
| (b) |
Included in other comprehensive income |
|
| — |
|
|
| (18,268 | ) | (c) |
|
| — |
|
|
Sales |
|
| — |
|
|
| (56,730 | ) |
|
|
| — |
|
|
Settlements |
|
| (23 | ) |
|
| (870 | ) |
|
|
| — |
|
|
Transfers in and/or out of Level 3 (a) |
|
| — |
|
|
| — |
|
|
|
| (84,941 | ) | (d) |
Balance — September 30, 2016 |
| $ | 51 |
|
|
| — |
|
|
|
| 29,800 |
|
|
Changes in unrealized gains included in earnings related to assets still held at September 30, 2016 |
| $ | — |
|
|
| — |
|
|
|
| 29,288 |
| (b) |
|
|
|
|
|
|
|
|
- 3641 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12.13. Fair value measurements, continued
The Company is required, on a nonrecurring basis, to adjust the carrying value of certain assets or provide valuation allowances related to certain assets using fair value measurements. The more significant of those assets follow.
Loans
Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectibleuncollectable portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace and the related nonrecurring fair value measurement adjustments have generally been classified as Level 2, unless significant adjustments have been made to the valuation that are not readily observable by market participants. Non-real estate collateral supporting commercial loans generally consists of business assets such as receivables, inventory and equipment. Fair value estimations are typically determined by discounting recorded values of those assets to reflect estimated net realizable value considering specific borrower facts and circumstances and the experience of credit personnel in their dealings with similar borrower collateral liquidations. Such discounts were generally in the range of 15%15% to 90%90% with a weighted-average of 37% at September 30, 2017.2022. As these discounts are not readily observable and are considered significant, the valuations have been classified as Level 3. Automobile collateral is typically valued by reference to independent pricing sources based on recent sales transactions of similar vehicles and, accordingly, the related nonrecurring fair value measurement adjustments have been classified as Level 2. Collateral values for other consumer installment loans are generally estimated based on historical recovery rates for similar types of loans.loans which at September 30, 2022 was 66%. As these recovery rates are not readily observable by market participants, such valuation adjustments have been classified as Level 3. Loans subject to nonrecurring fair value measurement were $184$706 million at September 30, 20172022 ($105439 million and $79$267 million of which were classified as Level 2 and Level 3, respectively), $293$574 million at December 31, 20162021 ($153340 million and $140$234 million of which were classified as Level 2 and Level 3, respectively) and $249$591 million at September 30, 20162021 ($144330 million and $105$261 million of which were classified as Level 2 and Level 3, respectively). Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on September 30, 20172022 were decreases of $16$38 million and $55$128 million for the three-month and nine-month periods ended September 30, 2017,2022, respectively. Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on September 30, 20162021 were decreases of $20$35 million and $42$125 million for the three-month and nine-month periods ended September 30, 2016,2021, respectively.
- 42 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
13. Fair value measurements, continued
Assets taken in foreclosure of defaulted loans
Assets taken in foreclosure of defaulted loans are primarily comprised of commercial and residential real property and are generally measured at the lower of cost or fair value less costs to sell. The fair value of the real property is generally determined using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace and the related nonrecurring fair value measurement adjustments have generally been classified as Level 2. Assets taken ininto foreclosure of defaulted loans subject to nonrecurring fair value measurement were $36 million and $53 millionnot material at September 30, 20172022 and 2016, respectively.2021. Changes in fair value recognized for those foreclosed assets held by the Company were not material during the three-month and nine-month periods ended September 30, 20172022 and 2016.2021.
Capitalized servicing rights
Capitalized servicing rights are initially measured at fair value in the Company’s consolidated balance sheet. The Company utilizes the amortization method to subsequently measure its capitalized servicing assets. In accordance with GAAP, the Company must record impairment charges, on a nonrecurring basis, when the carrying value of certain strata exceed their estimated fair value. To estimate the fair value of servicing rights, the Company considers market prices for similar assets, if available, and the present value of expected future cash flows associated with the servicing rights calculated using assumptions that market participants would use in estimating future servicing income and expense. Such assumptions include estimates of the cost of servicing loans, loan default rates, an appropriate discount rate, and prepayment speeds. For purposes of evaluating and measuring impairment of capitalized servicing rights, the Company stratifies such assets based on the predominant risk characteristics of the underlying financial instruments that are expected to have the most impact on projected prepayments, cost of servicing and other factors affecting future cash flows associated with the servicing rights. Such factors may include financial asset or loan type, note rate and term. The amount of impairment recognized is the amount by which the carrying value of the capitalized servicing rights for a stratum exceed estimated fair value. Impairment is recognized through a valuation allowance. The determination of fair value of capitalized servicing rights is considered a Level 3 valuation. Capitalized servicing rights related to residential mortgage loans of $138 million at December 31, 2021 required a valuation allowance of $24 million. Significant unobservable inputs used in this Level 3 valuation included a weighted-average prepayment speed of 14.64% and a weighted-average option-adjusted spread of 900 basis points at December 31, 2021. Changes in fair value recognized for impairment of capitalized servicing rights were decreases in the valuation allowance of $10 million and $24 million, respectively, for the three-month and nine-month periods ended September 30, 2022 and $1 million during the nine-month period ended September 30, 2021.
- 37 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12. Fair value measurements, continued
Significant unobservable inputs to Level 3 measurements
The following tables presenttable presents quantitative information about significant unobservable inputs used in the fair value measurements for certain Level 3 assets and liabilities at September 30, 20172022 and December 31, 2016:2021:
|
| Fair Value |
|
| Valuation |
| Unobservable |
| Range | |
|
| (In thousands) |
|
|
|
|
|
|
| |
September 30, 2022 |
|
|
|
|
|
|
|
|
| |
Recurring fair value measurements |
|
|
|
|
|
|
|
|
| |
Net other assets (liabilities) (a) |
| $ | (48,306 | ) |
| Discounted cash flow |
| Commitment expirations |
| 0% - 90% (4%) |
|
|
|
|
|
|
|
|
|
| |
December 31, 2021 |
|
|
|
|
|
|
|
|
| |
Recurring fair value measurements |
|
|
|
|
|
|
|
|
| |
Net other assets (liabilities) (a) |
| $ | 6,440 |
|
| Discounted cash flow |
| Commitment expirations |
| 0% - 80% (10%) |
|
| Fair Value |
|
| Valuation Technique |
| Unobservable Inputs/Assumptions |
|
| Range (Weighted- Average) |
| |||
|
| (In thousands) |
|
|
|
|
|
|
|
|
|
|
| |
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring fair value measurements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Privately issued mortgage-backed securities |
| $ | 30 |
|
| Two independent pricing quotes |
|
| — |
|
| �� | — |
|
Net other assets (liabilities) (a) |
|
| 13,722 |
|
| Discounted cash flow |
| Commitment expirations |
|
| 0%-80% (28%) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring fair value measurements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Privately issued mortgage-backed securities |
| $ | 44 |
|
| Two independent pricing quotes |
|
| — |
|
|
| — |
|
Net other assets (liabilities) (a) |
|
| 7,325 |
|
| Discounted cash flow |
| Commitment expirations |
|
| 0%-77% (30%) |
|
- 43 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
|
|
13. Fair value measurements, continued
Sensitivity of fair value measurements to changes in unobservable inputs
An increase (decrease) in the estimate of expirations for commitments to originate real estate loans would generally result in a lower (higher) fair value measurement. Estimated commitment expirations are derived considering loan type, changes in interest rates and remaining length of time until closing.
- 38 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12. Fair value measurements, continued
Disclosures of fair value of financial instruments
The carrying amounts and estimated fair value for financial instrument assets (liabilities) are presented in the following table:tables:
|
| September 30, 2017 |
|
| September 30, 2022 |
| ||||||||||||||||||||||||||||||||||
|
| Carrying Amount |
|
| Estimated Fair Value |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Carrying |
|
| Estimated |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||||
|
| (In thousands) |
|
| (In thousands) |
| ||||||||||||||||||||||||||||||||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
| $ | 1,368,252 |
|
|
| 1,368,252 |
|
|
| 1,290,532 |
|
|
| 77,720 |
|
|
| — |
|
| $ | 2,255,810 |
|
|
| 2,255,810 |
|
|
| 2,115,730 |
|
|
| 140,080 |
|
|
| — |
|
Interest-bearing deposits at banks |
|
| 6,306,484 |
|
|
| 6,306,484 |
|
|
| — |
|
|
| 6,306,484 |
|
|
| — |
|
|
| 25,391,528 |
|
|
| 25,391,528 |
|
|
| — |
|
|
| 25,391,528 |
|
|
| — |
|
Trading account assets |
|
| 170,516 |
|
|
| 170,516 |
|
|
| 47,927 |
|
|
| 122,589 |
|
|
| — |
| ||||||||||||||||||||
Trading account |
|
| 129,672 |
|
|
| 129,672 |
|
|
| 129,672 |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||
Investment securities |
|
| 15,073,926 |
|
|
| 15,079,756 |
|
|
| 50,917 |
|
|
| 14,916,360 |
|
|
| 112,479 |
|
|
| 24,603,765 |
|
|
| 23,259,558 |
|
|
| 184,811 |
|
|
| 23,021,349 |
|
|
| 53,398 |
|
Loans and leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial loans and leases |
|
| 21,743,251 |
|
|
| 21,409,984 |
|
|
| — |
|
|
| — |
|
|
| 21,409,984 |
|
|
| 38,807,949 |
|
|
| 38,230,478 |
|
|
| — |
|
|
| — |
|
|
| 38,230,478 |
|
Commercial real estate loans |
|
| 32,914,288 |
|
|
| 32,507,319 |
|
|
| — |
|
|
| 223,659 |
|
|
| 32,283,660 |
|
|
| 46,138,665 |
|
|
| 44,324,720 |
|
|
| — |
|
|
| 300,373 |
|
|
| 44,024,347 |
|
Residential real estate loans |
|
| 20,265,162 |
|
|
| 20,369,392 |
|
|
| — |
|
|
| 4,557,929 |
|
|
| 15,811,463 |
|
|
| 23,074,280 |
|
|
| 21,173,522 |
|
|
| — |
|
|
| 7,262,522 |
|
|
| 13,911,000 |
|
Consumer loans |
|
| 13,002,433 |
|
|
| 12,935,924 |
|
|
| — |
|
|
| — |
|
|
| 12,935,924 |
|
|
| 20,204,693 |
|
|
| 19,844,173 |
|
|
| — |
|
|
| — |
|
|
| 19,844,173 |
|
Allowance for credit losses |
|
| (1,013,326 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,875,591 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Loans and leases, net |
|
| 86,911,808 |
|
|
| 87,222,619 |
|
|
| — |
|
|
| 4,781,588 |
|
|
| 82,441,031 |
|
|
| 126,349,996 |
|
|
| 123,572,893 |
|
|
| — |
|
|
| 7,562,895 |
|
|
| 116,009,998 |
|
Accrued interest receivable |
|
| 325,982 |
|
|
| 325,982 |
|
|
| — |
|
|
| 325,982 |
|
|
| — |
|
|
| 539,270 |
|
|
| 539,270 |
|
|
| — |
|
|
| 539,270 |
|
|
| — |
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest-bearing deposits |
| $ | (33,111,246 | ) |
|
| (33,111,246 | ) |
|
| — |
|
|
| (33,111,246 | ) |
|
| — |
|
| $ | (73,023,271 | ) |
|
| (73,023,271 | ) |
|
| — |
|
|
| (73,023,271 | ) |
|
| — |
|
Savings and interest-checking deposits |
|
| (52,936,615 | ) |
|
| (52,936,615 | ) |
|
| — |
|
|
| (52,936,615 | ) |
|
| — |
|
|
| (86,015,700 | ) |
|
| (86,015,700 | ) |
|
| — |
|
|
| (86,015,700 | ) |
|
| — |
|
Time deposits |
|
| (7,233,518 | ) |
|
| (7,294,182 | ) |
|
| — |
|
|
| (7,294,182 | ) |
|
| — |
|
|
| (4,806,417 | ) |
|
| (4,797,112 | ) |
|
| — |
|
|
| (4,797,112 | ) |
|
| — |
|
Deposits at Cayman Islands office |
|
| (232,014 | ) |
|
| (232,014 | ) |
|
| — |
|
|
| (232,014 | ) |
|
| — |
| ||||||||||||||||||||
Short-term borrowings |
|
| (200,768 | ) |
|
| (200,768 | ) |
|
| — |
|
|
| (200,768 | ) |
|
| — |
|
|
| (917,806 | ) |
|
| (917,806 | ) |
|
| — |
|
|
| (917,806 | ) |
|
| — |
|
Long-term borrowings |
|
| (8,577,645 | ) |
|
| (8,630,195 | ) |
|
| — |
|
|
| (8,630,195 | ) |
|
| — |
|
|
| (3,459,336 | ) |
|
| (3,431,790 | ) |
|
| — |
|
|
| (3,431,790 | ) |
|
| — |
|
Accrued interest payable |
|
| (69,290 | ) |
|
| (69,290 | ) |
|
| — |
|
|
| (69,290 | ) |
|
| — |
|
|
| (38,502 | ) |
|
| (38,502 | ) |
|
| — |
|
|
| (38,502 | ) |
|
| — |
|
Trading account liabilities |
|
| (109,730 | ) |
|
| (109,730 | ) |
|
| — |
|
|
| (109,730 | ) |
|
| — |
| ||||||||||||||||||||
Other financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Commitments to originate real estate loans for sale |
| $ | 13,722 |
|
|
| 13,722 |
|
|
| — |
|
|
| — |
|
|
| 13,722 |
|
| $ | (48,306 | ) |
|
| (48,306 | ) |
|
| — |
|
|
| — |
|
|
| (48,306 | ) |
Commitments to sell real estate loans |
|
| 2,333 |
|
|
| 2,333 |
|
|
| — |
|
|
| 2,333 |
|
|
| — |
|
|
| 74,527 |
|
|
| 74,527 |
|
|
| — |
|
|
| 74,527 |
|
|
| — |
|
Other credit-related commitments |
|
| (119,938 | ) |
|
| (119,938 | ) |
|
| — |
|
|
| — |
|
|
| (119,938 | ) |
|
| (135,000 | ) |
|
| (135,000 | ) |
|
| — |
|
|
| — |
|
|
| (135,000 | ) |
Interest rate swap agreements used for interest rate risk management |
|
| 697 |
|
|
| 697 |
|
|
| — |
|
|
| 697 |
|
|
| — |
|
|
| (11,495 | ) |
|
| (11,495 | ) |
|
| — |
|
|
| (11,495 | ) |
|
| — |
|
Interest rate and foreign exchange contracts |
|
| (1,004,223 | ) |
|
| (1,004,223 | ) |
|
| — |
|
|
| (1,004,223 | ) |
|
| — |
|
- 3944 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12.13. Fair value measurements, continued
|
| December 31, 2016 |
|
| December 31, 2021 |
| ||||||||||||||||||||||||||||||||||
|
| Carrying Amount |
|
| Estimated Fair Value |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Carrying |
|
| Estimated |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||||
|
|
|
|
|
| (In thousands) |
|
|
|
|
|
|
|
| (In thousands) |
|
|
| ||||||||||||||||||||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
| $ | 1,320,549 |
|
|
| 1,320,549 |
|
|
| 1,249,654 |
|
|
| 70,895 |
|
| — |
|
| $ | 1,337,577 |
|
|
| 1,337,577 |
|
|
| 1,205,269 |
|
|
| 132,308 |
|
|
| — |
| |
Interest-bearing deposits at banks |
|
| 5,000,638 |
|
|
| 5,000,638 |
|
|
| — |
|
|
| 5,000,638 |
|
| — |
|
|
| 41,872,304 |
|
|
| 41,872,304 |
|
|
| — |
|
|
| 41,872,304 |
|
|
| — |
| |
Trading account assets |
|
| 323,867 |
|
|
| 323,867 |
|
|
| 46,135 |
|
|
| 277,732 |
|
| — |
| |||||||||||||||||||||
Trading account |
|
| 49,745 |
|
|
| 49,745 |
|
|
| 49,545 |
|
|
| 200 |
|
|
| — |
| ||||||||||||||||||||
Investment securities |
|
| 16,250,468 |
|
|
| 16,244,412 |
|
|
| 301,711 |
|
|
| 15,821,176 |
|
|
| 121,525 |
|
|
| 7,155,860 |
|
|
| 7,192,476 |
|
|
| 68,850 |
|
|
| 7,066,293 |
|
|
| 57,333 |
|
Loans and leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial loans and leases |
|
| 22,610,047 |
|
|
| 22,239,428 |
|
| — |
|
| — |
|
|
| 22,239,428 |
|
|
| 23,473,324 |
|
|
| 23,285,224 |
|
|
| — |
|
|
| — |
|
|
| 23,285,224 |
| ||
Commercial real estate loans |
|
| 33,506,394 |
|
|
| 33,129,428 |
|
| — |
|
|
| 642,590 |
|
|
| 32,486,838 |
|
|
| 35,389,730 |
|
|
| 34,730,191 |
|
|
| — |
|
|
| 425,010 |
|
|
| 34,305,181 |
| |
Residential real estate loans |
|
| 22,590,912 |
|
|
| 22,638,167 |
|
| — |
|
|
| 4,912,488 |
|
|
| 17,725,679 |
|
|
| 16,074,445 |
|
|
| 16,160,799 |
|
|
| — |
|
|
| 4,524,018 |
|
|
| 11,636,781 |
| |
Consumer loans |
|
| 12,146,063 |
|
|
| 12,061,590 |
|
| — |
|
|
| — |
|
|
| 12,061,590 |
|
|
| 17,974,953 |
|
|
| 18,121,363 |
|
|
| — |
|
|
| — |
|
|
| 18,121,363 |
| |
Allowance for credit losses |
|
| (988,997 | ) |
|
| — |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,469,226 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| |
Loans and leases, net |
|
| 89,864,419 |
|
|
| 90,068,613 |
|
| — |
|
|
| 5,555,078 |
|
|
| 84,513,535 |
|
|
| 91,443,226 |
|
|
| 92,297,577 |
|
|
| — |
|
|
| 4,949,028 |
|
|
| 87,348,549 |
| |
Accrued interest receivable |
|
| 308,805 |
|
|
| 308,805 |
|
| — |
|
|
| 308,805 |
|
| — |
|
|
| 335,162 |
|
|
| 335,162 |
|
|
| — |
|
|
| 335,162 |
|
|
| — |
| ||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest-bearing deposits |
| $ | (32,813,896 | ) |
|
| (32,813,896 | ) |
| — |
|
|
| (32,813,896 | ) |
| — |
|
| $ | (60,131,480 | ) |
|
| (60,131,480 | ) |
|
| — |
|
|
| (60,131,480 | ) |
|
| — |
| ||
Savings and interest-checking deposits |
|
| (52,346,207 | ) |
|
| (52,346,207 | ) |
| — |
|
|
| (52,346,207 | ) |
| — |
|
|
| (68,603,966 | ) |
|
| (68,603,966 | ) |
|
| — |
|
|
| (68,603,966 | ) |
|
| — |
| ||
Time deposits |
|
| (10,131,846 | ) |
|
| (10,222,585 | ) |
| — |
|
|
| (10,222,585 | ) |
| — |
|
|
| (2,807,963 | ) |
|
| (2,810,143 | ) |
|
| — |
|
|
| (2,810,143 | ) |
|
| — |
| ||
Deposits at Cayman Islands office |
|
| (201,927 | ) |
|
| (201,927 | ) |
| — |
|
|
| (201,927 | ) |
| — |
| ||||||||||||||||||||||
Short-term borrowings |
|
| (163,442 | ) |
|
| (163,442 | ) |
| — |
|
|
| (163,442 | ) |
| — |
|
|
| (47,046 | ) |
|
| (47,046 | ) |
|
| — |
|
|
| (47,046 | ) |
|
| — |
| ||
Long-term borrowings |
|
| (9,493,835 | ) |
|
| (9,473,844 | ) |
| — |
|
|
| (9,473,844 | ) |
| — |
|
|
| (3,485,369 | ) |
|
| (3,562,223 | ) |
|
| — |
|
|
| (3,562,223 | ) |
|
| — |
| ||
Accrued interest payable |
|
| (75,172 | ) |
|
| (75,172 | ) |
| — |
|
|
| (75,172 | ) |
| — |
|
|
| (40,866 | ) |
|
| (40,866 | ) |
|
| — |
|
|
| (40,866 | ) |
|
| — |
| ||
Trading account liabilities |
|
| (174,376 | ) |
|
| (174,376 | ) |
| — |
|
|
| (174,376 | ) |
| — |
| ||||||||||||||||||||||
Other financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Commitments to originate real estate loans for sale |
| $ | 7,325 |
|
|
| 7,325 |
|
| — |
|
|
| — |
|
|
| 7,325 |
|
| $ | 6,440 |
|
|
| 6,440 |
|
|
| — |
|
|
| — |
|
|
| 6,440 |
| |
Commitments to sell real estate loans |
|
| 36,653 |
|
|
| 36,653 |
|
| — |
|
|
| 36,653 |
|
| — |
|
|
| 7,525 |
|
|
| 7,525 |
|
|
| — |
|
|
| 7,525 |
|
|
| — |
| ||
Other credit-related commitments |
|
| (136,295 | ) |
|
| (136,295 | ) |
| — |
|
|
| — |
|
|
| (136,295 | ) |
|
| (123,032 | ) |
|
| (123,032 | ) |
|
| — |
|
|
| — |
|
|
| (123,032 | ) | |
Interest rate swap agreements used for interest rate risk management |
|
| 11,892 |
|
|
| 11,892 |
|
| — |
|
|
| 11,892 |
|
| — |
|
|
| (207 | ) |
|
| (207 | ) |
|
| — |
|
|
| (207 | ) |
|
| — |
| ||
Interest rate and foreign exchange contracts |
|
| 334,852 |
|
|
| 334,852 |
|
|
| — |
|
|
| 334,852 |
|
|
| — |
|
With the exception of marketable securities, certain off-balance sheet financial instruments and mortgage loans originated for sale, the Company’s financial instruments are not readily marketable and market prices do not exist. The Company, in attempting to comply with the provisions of GAAP that require disclosures of fair value of financial instruments, has not attempted to market its financial instruments to potential buyers, if any exist. Since negotiated prices in illiquid markets depend greatly upon the then present motivations of the buyer and seller, it is reasonable to assume that actual sales prices could vary widely from any estimate of fair value made without the benefit of negotiations. Additionally, changes in market interest rates can dramatically impact the value of financial instruments in a short period of time. The following assumptions, methods and calculations were used in determining the estimated fair value of financial instruments not measured at fair value in the consolidated balance sheet.
Cash and cash equivalents, interest-bearing deposits at banks, deposits at Cayman Islands office, short-term borrowings, accrued interest receivable and accrued interest payable
Due to the nature of cash and cash equivalents and the near maturity of interest-bearing deposits at banks, deposits at Cayman Islands office, short-term borrowings, accrued interest receivable and accrued interest payable, the Company estimated that the carrying amount of such instruments approximated estimated fair value.
- 40 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12. Fair value measurements, continued
Investment securities
Estimated fair values of investments in readily marketable securities were generally based on quoted market prices. Investment securities that were not readily marketable were assigned amounts based on estimates provided by outside parties or modeling techniques that relied upon discounted calculations of projected cash flows or, in the case of other investment securities, which include capital stock of the Federal Reserve Bank of New York and the Federal Home Loan Bank of New York, at an amount equal to the carrying amount.
Loans and leases
In general, discount rates used to calculate values for loan products were based on the Company’s pricing at the respective period end. A higher discount rate was assumed with respect to estimated cash flows associated with nonaccrual loans. Projected loan cash flows were adjusted for estimated credit losses. However, such estimates made by the Company may not be indicative of assumptions and adjustments that a purchaser of the Company’s loans and leases would seek.
Deposits
Pursuant to GAAP, the estimated fair value ascribed to noninterest-bearing deposits, savings deposits and interest-checking deposits must be established at carrying value because of the customers’ ability to withdraw funds immediately. Time deposit accounts are required to be revalued based upon prevailing market interest rates for similar maturity instruments. As a result, amounts assigned to time deposits were based on discounted cash flow calculations using prevailing market interest rates based on the Company’s pricing at the respective date for deposits with comparable remaining terms to maturity.
The Company believes that deposit accounts have a value greater than that prescribed by GAAP. The Company feels, however, that the value associated with these deposits is greatly influenced by characteristics of the buyer, such as the ability to reduce the costs of servicing the deposits and deposit attrition which often occurs following an acquisition.
Long-term borrowings
The amounts assigned to long-term borrowings were based on quoted market prices, when available, or were based on discounted cash flow calculations using prevailing market interest rates for borrowings of similar terms and credit risk.
Other commitments and contingencies
As described in note 13, in the normal course of business, various commitments and contingent liabilities are outstanding, such as loan commitments, credit guarantees and letters of credit. The Company’s pricing of such financial instruments is based largely on credit quality and relationship, probability of funding and other requirements. Loan commitments often have fixed expiration dates and contain termination and other clauses which provide for relief from funding in the event of significant deterioration in the credit quality of the customer. The rates and terms of the Company’s loan commitments, credit guarantees and letters of credit are competitive with other financial institutions operating in markets served by the Company. The Company believes that the carrying amounts, which are included in other liabilities, are reasonable estimates of the fair value of these financial instruments.
- 41 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12. Fair value measurements, continued
The Company does not believe that the estimated information presented herein is representative of the earnings power or value of the Company. The preceding analysis, which is inherently limited in depicting fair value, also does not consider any value associated with existing customer relationships nor the ability of the Company to create value through loan origination, deposit gathering or fee generating activities. Many of the estimates presented herein are based upon the use of highly subjective information and assumptions and, accordingly, the results may not be precise. Management believes that fair value estimates may not be comparable between financial institutions due to the wide range of permitted valuation techniques and numerous estimates which must be made. Furthermore, because the disclosed fair value amounts were estimated as of the balance sheet date, the amounts actually realized or paid upon maturity or settlement of the various financial instruments could be significantly different.
- 45 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
13.14. Commitments and contingencies
In the normal course of business, various commitments and contingent liabilities are outstanding. The following table presents the Company's significant commitments. Certain of these commitments are not included in the Company's consolidated balance sheet.
| September 30, |
|
| December 31, |
| ||
| 2022 |
|
| 2021 |
| ||
| (In thousands) |
| |||||
Commitments to extend credit |
|
|
|
|
| ||
Home equity lines of credit | $ | 8,317,141 |
|
| $ | 5,693,045 |
|
Commercial real estate loans to be sold |
| 401,369 |
|
|
| 324,943 |
|
Other commercial real estate |
| 5,063,155 |
|
|
| 4,998,631 |
|
Residential real estate loans to be sold |
| 57,155 |
|
|
| 233,257 |
|
Other residential real estate |
| 889,013 |
|
|
| 924,211 |
|
Commercial and other |
| 32,089,753 |
|
|
| 22,145,057 |
|
Standby letters of credit |
| 2,393,048 |
|
|
| 2,151,595 |
|
Commercial letters of credit |
| 28,926 |
|
|
| 31,981 |
|
Financial guarantees and indemnification contracts |
| 3,893,455 |
|
|
| 4,211,797 |
|
Commitments to sell real estate loans |
| 783,405 |
|
|
| 1,367,523 |
|
|
| September 30, |
|
| December 31, |
| ||
|
| 2017 |
|
| 2016 |
| ||
|
| (In thousands) |
| |||||
Commitments to extend credit |
|
|
|
|
|
|
|
|
Home equity lines of credit |
| $ | 5,492,892 |
|
|
| 5,499,609 |
|
Commercial real estate loans to be sold |
|
| 170,786 |
|
|
| 70,100 |
|
Other commercial real estate |
|
| 5,749,428 |
|
|
| 6,451,709 |
|
Residential real estate loans to be sold |
|
| 482,650 |
|
|
| 478,950 |
|
Other residential real estate |
|
| 202,702 |
|
|
| 232,721 |
|
Commercial and other |
|
| 12,677,838 |
|
|
| 12,298,473 |
|
Standby letters of credit |
|
| 2,657,352 |
|
|
| 2,987,091 |
|
Commercial letters of credit |
|
| 42,684 |
|
|
| 44,723 |
|
Financial guarantees and indemnification contracts |
|
| 3,385,498 |
|
|
| 3,043,580 |
|
Commitments to sell real estate loans |
|
| 1,052,472 |
|
|
| 1,489,237 |
|
Commitments to extend credit are agreements to lend to customers, generally having fixed expiration dates or other termination clauses that may require payment of a fee. In addition to the amounts in the preceding table, the Company had discretionary funding commitments to commercial customers of $15.2 billion and $10.8 billion at September 30, 2022 and December 31, 2021, respectively, that the Company had the unconditional right to cancel prior to funding. Standby and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party, whereas commercial letters of credit are issued to facilitate commerce and typically result in the commitment being funded when the underlying transaction is consummated between the customer and a third party. The credit risk associated with commitments to extend credit and standby and commercial letters of credit is essentially the same as that involved with extending loans to customers and is subject to normal credit policies. Collateral may be obtained based on management's assessment of the customer's creditworthiness.
Financial guarantees and indemnification contracts are oftentimes similar to standby letterspredominantly comprised of credit and include mandatory purchase agreements issued to ensure that customer obligations are fulfilled, recourse obligations associated with sold loans and other guarantees of customer performance or compliance with designated rules and regulations.commitments. Included in financial guarantees and indemnification contracts are loan principal amounts sold with recourse in conjunction with the Company's involvement in the Fannie Mae Delegated Underwriting and Servicing program. The Company's maximum credit risk for recourse associated with loans sold under this program totaled approximately $3.2 billion and $2.8$3.7 billion at September 30, 20172022 and $4.0 billion at December 31, 2016, respectively.2021. There have been no material losses incurred as a result of those credit recourse arrangements.
- 42 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
13. Commitments and contingencies, continued
Since many loan commitments, standby letters of credit, and guarantees and indemnification contracts expire without being funded in whole or in part, the contract amounts are not necessarily indicative of future cash flows.
The Company utilizes commitments to sell real estate loans to hedge exposure to changes in the fair value of real estate loans held for sale. Such commitments are consideredaccounted for as derivatives and along with commitments to originate real estate loans to be held for sale are generally recorded in the consolidated balance sheet at estimated fair market value.
The Company also has commitments under long-term operating leases.- 46 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
14. Commitments and contingencies, continued
The Company is contractually obligated to repurchase previously sold residential real estate loans that do not ultimately meet investor sale criteria related to underwriting procedures or loan documentation. When required to do so, the Company may reimburse loan purchasers for losses incurred or may repurchase certain loans. The Company reduces residential mortgage banking revenues by an estimate for losses related to its obligations to loan purchasers. The amount of those charges is based on the volume of loans sold, the level of reimbursement requests received from loan purchasers and estimates of losses that may be associated with previously sold loans. At September 30, 20172022, the Company believes that its obligation to loan purchasers was not material to the Company’s consolidated financial position.
M&T and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings and other matters in which claims for monetary damages are asserted. On an on-going basis management, after consultation with legal counsel, assesses the Company’s liabilities and contingencies in connection with such proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability, was between $0$0 and $50 million.$25 million as of September 30, 2022. Although the Company does not believe that the outcome of pending litigationslegal matters will be material to the Company’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.
14.15. Segment information
Reportable segments have been determined based upon the Company's internal profitability reporting system, which is organized by strategic business unit. Certain strategic business units have been combined for segment information reporting purposes where the nature of the products and services, the type of customer and the distribution of those products and services are similar. The reportable segments are Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and Retail Banking.
The financial information of the Company's segments was compiled utilizing the accounting policies described in note 2223 of Notes to Financial Statements in the 20162021 Annual Report. The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, the financial information of the reported segments is not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data. As disclosed in the 2016 Annual Report, during 2016 the Company revised its funds transfer pricing allocation related to borrowings. Additionally, during the second quarter of 2017, the Company revised its funds transfer pricing allocation related to certain deposit categories. As a result, prior period
- 43 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
14. Segment information, continued
financial information has been reclassified to provide segment information on a comparable basis, as noted in the following tables.
|
| Three Months Ended September 30, 2016 |
| |||||||||||||||||||||
|
| Total Revenues as Previously Reported |
|
| Impact of Changes |
|
| Total Revenues as Reclassified |
|
| Net Income (Loss) as Previously Reported |
|
| Impact of Changes |
|
| Net Income (Loss) as Reclassified |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Banking |
| $ | 116,513 |
|
|
| 4,388 |
|
|
| 120,901 |
|
| $ | 21,422 |
|
|
| 2,602 |
|
|
| 24,024 |
|
Commercial Banking |
|
| 268,683 |
|
|
| (155 | ) |
|
| 268,528 |
|
|
| 102,796 |
|
|
| (92 | ) |
|
| 102,704 |
|
Commercial Real Estate |
|
| 205,562 |
|
|
| — |
|
|
| 205,562 |
|
|
| 90,065 |
|
|
| — |
|
|
| 90,065 |
|
Discretionary Portfolio |
|
| 114,391 |
|
|
| (8,806 | ) |
|
| 105,585 |
|
|
| 50,773 |
|
|
| (5,222 | ) |
|
| 45,551 |
|
Residential Mortgage Banking |
|
| 108,576 |
|
|
| (11,901 | ) |
|
| 96,675 |
|
|
| 22,924 |
|
|
| (7,059 | ) |
|
| 15,865 |
|
Retail Banking |
|
| 353,016 |
|
|
| 8,848 |
|
|
| 361,864 |
|
|
| 69,506 |
|
|
| 5,247 |
|
|
| 74,753 |
|
All Other |
|
| 182,949 |
|
|
| 7,626 |
|
|
| 190,575 |
|
|
| (7,502 | ) |
|
| 4,524 |
|
|
| (2,978 | ) |
Total |
| $ | 1,349,690 |
|
|
| — |
|
|
| 1,349,690 |
|
| $ | 349,984 |
|
|
| — |
|
|
| 349,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended September 30, 2016 |
| |||||||||||||||||||||
|
| Total Revenues as Previously Reported |
|
| Impact of Changes |
|
| Total Revenues as Reclassified |
|
| Net Income (Loss) as Previously Reported |
|
| Impact of Changes |
|
| Net Income (Loss) as Reclassified |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Banking |
| $ | 344,562 |
|
|
| 13,022 |
|
|
| 357,584 |
|
| $ | 69,617 |
|
|
| 7,723 |
|
|
| 77,340 |
|
Commercial Banking |
|
| 787,781 |
|
|
| (423 | ) |
|
| 787,358 |
|
|
| 309,515 |
|
|
| (251 | ) |
|
| 309,264 |
|
Commercial Real Estate |
|
| 575,117 |
|
|
| — |
|
|
| 575,117 |
|
|
| 254,682 |
|
|
| — |
|
|
| 254,682 |
|
Discretionary Portfolio |
|
| 324,195 |
|
|
| (28,575 | ) |
|
| 295,620 |
|
|
| 151,522 |
|
|
| (16,947 | ) |
|
| 134,575 |
|
Residential Mortgage Banking |
|
| 309,393 |
|
|
| (28,539 | ) |
|
| 280,854 |
|
|
| 59,981 |
|
|
| (16,926 | ) |
|
| 43,055 |
|
Retail Banking |
|
| 1,037,727 |
|
|
| 25,196 |
|
|
| 1,062,923 |
|
|
| 204,291 |
|
|
| 14,943 |
|
|
| 219,234 |
|
All Other |
|
| 575,885 |
|
|
| 19,319 |
|
|
| 595,204 |
|
|
| (65,065 | ) |
|
| 11,458 |
|
|
| (53,607 | ) |
Total |
| $ | 3,954,660 |
|
|
| — |
|
|
| 3,954,660 |
|
| $ | 984,543 |
|
|
| — |
|
|
| 984,543 |
|
As also described in note 22 in the 2016 Annual Report, neither goodwill nor core deposit and other intangible assets (and the amortization charges associated with such assets) resulting from acquisitions of financial institutions have been allocated to the Company's reportable segments, but are included in the “All Other” category. The Company does, however, assign such intangible assets to business units for purposes of testing for impairment.
- 44 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
14. Segment information, continued
Information about the Company's segments is presented in the following table:follows.
|
| Three Months Ended September 30 |
| |||||||||||||||||||||
|
| 2017 |
|
| 2016 |
| ||||||||||||||||||
|
| Total Revenues(a) |
|
| Inter- segment Revenues |
|
| Net Income (Loss) |
|
| Total Revenues(a) |
|
| Inter- segment Revenues |
|
| Net Income (Loss) |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Banking |
| $ | 130,501 |
|
|
| 919 |
|
|
| 31,408 |
|
| $ | 120,901 |
|
|
| 1,086 |
|
|
| 24,024 |
|
Commercial Banking |
|
| 267,822 |
|
|
| 840 |
|
|
| 109,797 |
|
|
| 268,528 |
|
|
| 950 |
|
|
| 102,704 |
|
Commercial Real Estate |
|
| 212,014 |
|
|
| 401 |
|
|
| 97,295 |
|
|
| 205,562 |
|
|
| 463 |
|
|
| 90,065 |
|
Discretionary Portfolio |
|
| 65,808 |
|
|
| (12,346 | ) |
|
| 31,515 |
|
|
| 105,585 |
|
|
| (14,795 | ) |
|
| 45,551 |
|
Residential Mortgage Banking |
|
| 90,018 |
|
|
| 18,866 |
|
|
| 13,546 |
|
|
| 96,675 |
|
|
| 22,051 |
|
|
| 15,865 |
|
Retail Banking |
|
| 392,542 |
|
|
| 2,668 |
|
|
| 96,329 |
|
|
| 361,864 |
|
|
| 3,052 |
|
|
| 74,753 |
|
All Other |
|
| 257,858 |
|
|
| (11,348 | ) |
|
| (23,967 | ) |
|
| 190,575 |
|
|
| (12,807 | ) |
|
| (2,978 | ) |
Total |
| $ | 1,416,563 |
|
|
| — |
|
|
| 355,923 |
|
| $ | 1,349,690 |
|
|
| — |
|
|
| 349,984 |
|
|
| Nine Months Ended September 30 |
| |||||||||||||||||||||
|
| 2017 |
|
| 2016 |
| ||||||||||||||||||
|
| Total Revenues(a) |
|
| Inter- segment Revenues |
|
| Net Income (Loss) |
|
| Total Revenues(a) |
|
| Inter- segment Revenues |
|
| Net Income (Loss) |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Banking |
| $ | 375,816 |
|
|
| 2,836 |
|
|
| 85,146 |
|
| $ | 357,584 |
|
|
| 3,274 |
|
|
| 77,340 |
|
Commercial Banking |
|
| 818,846 |
|
|
| 2,603 |
|
|
| 328,211 |
|
|
| 787,358 |
|
|
| 2,917 |
|
|
| 309,264 |
|
Commercial Real Estate |
|
| 604,437 |
|
|
| 1,165 |
|
|
| 269,113 |
|
|
| 575,117 |
|
|
| 1,299 |
|
|
| 254,682 |
|
Discretionary Portfolio |
|
| 216,798 |
|
|
| (37,670 | ) |
|
| 95,200 |
|
|
| 295,620 |
|
|
| (43,726 | ) |
|
| 134,575 |
|
Residential Mortgage Banking |
|
| 264,120 |
|
|
| 55,221 |
|
|
| 37,206 |
|
|
| 280,854 |
|
|
| 62,955 |
|
|
| 43,055 |
|
Retail Banking |
|
| 1,144,964 |
|
|
| 8,760 |
|
|
| 282,614 |
|
|
| 1,062,923 |
|
|
| 9,198 |
|
|
| 219,234 |
|
All Other |
|
| 751,703 |
|
|
| (32,915 | ) |
|
| (11,587 | ) |
|
| 595,204 |
|
|
| (35,917 | ) |
|
| (53,607 | ) |
Total |
| $ | 4,176,684 |
|
|
| — |
|
|
| 1,085,903 |
|
| $ | 3,954,660 |
|
|
| — |
|
|
| 984,543 |
|
- 4547 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
14.15. Segment information, continued
|
| Three Months Ended September 30 |
| |||||||||||||||||||||
|
| 2022 |
|
| 2021 |
| ||||||||||||||||||
|
| Total |
|
| Inter- |
|
| Net |
|
| Total |
|
| Inter- |
|
| Net |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Business Banking |
| $ | 241,629 |
|
| $ | 663 |
|
| $ | 94,094 |
|
| $ | 181,873 |
|
| $ | 694 |
|
| $ | 72,017 |
|
Commercial Banking |
|
| 510,549 |
|
|
| 802 |
|
|
| 214,063 |
|
|
| 295,209 |
|
|
| 1,009 |
|
|
| 144,367 |
|
Commercial Real Estate |
|
| 234,479 |
|
|
| 249 |
|
|
| 94,937 |
|
|
| 228,317 |
|
|
| 227 |
|
|
| 84,663 |
|
Discretionary Portfolio |
|
| 36,622 |
|
|
| (23,044 | ) |
|
| 11,813 |
|
|
| 112,529 |
|
|
| (14,448 | ) |
|
| 74,666 |
|
Residential Mortgage Banking |
|
| 95,091 |
|
|
| 35,647 |
|
|
| (3,283 | ) |
|
| 159,213 |
|
|
| 25,150 |
|
|
| 46,077 |
|
Retail Banking |
|
| 650,229 |
|
|
| (5 | ) |
|
| 181,639 |
|
|
| 357,335 |
|
|
| (53 | ) |
|
| 88,004 |
|
All Other |
|
| 473,171 |
|
|
| (14,312 | ) |
|
| 53,333 |
|
|
| 201,900 |
|
|
| (12,579 | ) |
|
| (14,334 | ) |
Total |
| $ | 2,241,770 |
|
| $ | — |
|
| $ | 646,596 |
|
| $ | 1,536,376 |
|
| $ | — |
|
| $ | 495,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended September 30 |
| |||||||||||||||||||||
|
| 2022 |
|
| 2021 |
| ||||||||||||||||||
|
| Total |
|
| Inter- |
|
| Net |
|
| Total |
|
| Inter- |
|
| Net |
| ||||||
|
| (In thousands) |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Business Banking |
| $ | 586,605 |
|
| $ | 2,060 |
|
| $ | 205,741 |
|
| $ | 482,874 |
|
| $ | 2,157 |
|
| $ | 159,895 |
|
Commercial Banking (b) |
|
| 1,239,300 |
|
|
| 2,605 |
|
|
| 521,749 |
|
|
| 865,780 |
|
|
| 2,830 |
|
|
| 378,040 |
|
Commercial Real Estate |
|
| 676,176 |
|
|
| 687 |
|
|
| 314,284 |
|
|
| 629,719 |
|
|
| 679 |
|
|
| 242,625 |
|
Discretionary Portfolio |
|
| 190,761 |
|
|
| (74,952 | ) |
|
| 103,283 |
|
|
| 365,380 |
|
|
| (34,554 | ) |
|
| 243,744 |
|
Residential Mortgage Banking |
|
| 346,409 |
|
|
| 110,986 |
|
|
| 35,028 |
|
|
| 459,655 |
|
|
| 70,208 |
|
|
| 125,791 |
|
Retail Banking (b) |
|
| 1,523,992 |
|
|
| (12 | ) |
|
| 379,688 |
|
|
| 1,055,240 |
|
|
| 500 |
|
|
| 262,562 |
|
All Other (b) |
|
| 1,106,405 |
|
|
| (41,374 | ) |
|
| (333,481 | ) |
|
| 620,694 |
|
|
| (41,820 | ) |
|
| (11,879 | ) |
Total |
| $ | 5,669,648 |
|
| $ | — |
|
| $ | 1,226,292 |
|
| $ | 4,479,342 |
|
| $ | — |
|
| $ | 1,400,778 |
|
|
| Average Total Assets |
| |||||||||
|
| Nine Months Ended September 30 |
|
| Year Ended |
| ||||||
|
| 2022 |
|
| 2021 |
|
| 2021 |
| |||
|
| (In millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
| |||
Business Banking |
| $ | 7,515 |
|
| $ | 8,386 |
|
| $ | 8,007 |
|
Commercial Banking |
|
| 40,464 |
|
|
| 29,109 |
|
|
| 28,559 |
|
Commercial Real Estate |
|
| 28,811 |
|
|
| 25,913 |
|
|
| 25,628 |
|
Discretionary Portfolio |
|
| 40,987 |
|
|
| 22,317 |
|
|
| 22,262 |
|
Residential Mortgage Banking |
|
| 4,370 |
|
|
| 6,582 |
|
|
| 6,463 |
|
Retail Banking |
|
| 20,063 |
|
|
| 17,701 |
|
|
| 17,897 |
|
All Other |
|
| 45,185 |
|
|
| 40,959 |
|
|
| 43,853 |
|
Total |
| $ | 187,395 |
|
| $ | 150,967 |
|
| $ | 152,669 |
|
|
| Average Total Assets |
| |||||||||
|
| Nine Months Ended September 30 |
|
| Year Ended December 31 |
| ||||||
|
| 2017 |
|
| 2016 |
|
| 2016 |
| |||
|
| (In millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Banking |
| $ | 5,596 |
|
|
| 5,442 |
|
|
| 5,456 |
|
Commercial Banking |
|
| 26,699 |
|
|
| 25,363 |
|
|
| 25,592 |
|
Commercial Real Estate |
|
| 22,800 |
|
|
| 20,571 |
|
|
| 21,131 |
|
Discretionary Portfolio |
|
| 37,807 |
|
|
| 41,253 |
|
|
| 40,867 |
|
Residential Mortgage Banking |
|
| 2,335 |
|
|
| 2,578 |
|
|
| 2,569 |
|
Retail Banking |
|
| 12,519 |
|
|
| 11,739 |
|
|
| 11,840 |
|
All Other |
|
| 13,317 |
|
|
| 16,951 |
|
|
| 16,885 |
|
Total |
| $ | 121,073 |
|
|
| 123,897 |
|
|
| 124,340 |
|
- 48 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
|
|
15.16. Relationship with Bayview Lending Group LLC and Bayview Financial Holdings, L.P.
M&T holds a 20%20% minority interest in Bayview Lending Group LLC ("BLG"), a privately-held commercial mortgage company. M&T recognizes income or loss from BLG using the equity method of accounting. That investment had no remaining carrying value at September 30, 20172022 as a result of cumulative losses recognized and cash distributions received.received in prior years. Cash distributions now received from BLG are recognized as income by M&T and included in other revenues from operations. That income totaled $30 million for the nine-month period ended September 30, 2022. There was no similar cash distribution during the nine-month period ended September 30, 2021 or in the three-month period ended September 30, 2022.
Bayview Financial Holdings, L.P. (together with its affiliates, "Bayview Financial"), a privately-held specialty mortgage finance company, is BLG's majority investor. In addition to their common investment in BLG, the Company and Bayview Financial conduct other business activities with each other. The Company has obtained loan servicing rights for mortgage loans from BLG and Bayview Financial having outstanding principal balances of $3.2$1.4 billion and $3.5$1.6 billion at September 30, 20172022 and December 31, 2016,2021, respectively. Revenues from those servicing rights were $4$3 million and $5$2 million forin the three-month periods ended September 30, 20172022 and 2016,2021, respectively, and $13$7 million and $15 million for each of the nine-month periods ended September 30, 20172022 and 2016, respectively.2021. The Company sub-services residential mortgage loans for Bayview Financial having outstanding principal balances of $59.3$81.2 billion and $30.4$74.7 billion at September 30, 20172022 and December 31, 2016,2021, respectively. Revenues earned for sub-servicing loans for Bayview Financial were $26$33 million and $25$39 million for the three-month periods ended September 30, 20172022 and 2016,2021, respectively, and $74$119 million and $73$110 million forin the nine-month periods ended September 30, 20172022 and 2016,2021, respectively. In addition, the Company held $141$52 million and $158$62 million of mortgage-backed securities in its held-to-maturity portfolio at September 30, 20172022 and December 31, 2016,2021, respectively, that were securitized by Bayview Financial. In April 2017,At September 30, 2022, the Company provided aheld $298 million of Bayview Financial's $2.0 billion syndicated loan tofacility. The Company held $210 million of Bayview Financial for $100 million at terms consistent with those offered to non-affiliated customers. That loan was subsequently paid in full in June 2017. Also in June 2017, a newFinancial's $1.4 billion syndicated loan facility was entered into by Bayview Financial for $750 million, of which the Company held $88 million at September 30, 2017.December 31, 2021.
- 4649 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
16.17. Recent accounting developments
Effective January 1, 2017,The following table provides a description of accounting standards that were adopted by the Company adopted amended accounting guidance for share-based transactions. The most significant aspect of the amended guidancein 2022 as well as standards that affects the Company requiresare not effective that all excess tax benefits and tax deficiencies be recognized in income tax expense in the income statement and that such amounts be recognized in the period in which the tax deduction arises or in the period in whichcould have an expiration of an award occurs. The adoption of this guidance resulted in an $18 million reduction of income tax expense for the three-month period ended March 31, 2017, that under previous accounting guidance would have been recognized directly in shareholders’ equity. The amended accounting guidance did not have a significant impact on income tax expense in the three-month periods ended September 30 and June 30, 2017.
Effective January 2017, the Company also adopted amended accounting guidance for the transition to the equity method of accounting. The amended guidance eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method has been in effect during all previous periods that the investment had been held. Instead, the amended guidance requires the investor to adopt the equity method of accounting as of the date the investment first qualifies for such accounting. The adoption of this guidance did not have a material effect on the Company’sM&T’s consolidated financial position or results of operations.statements upon adoption.
Standard | Description | Required date of adoption | Effect on consolidated financial statements | ||||||||
Standards Adopted in 2022 | |||||||||||
Changes to Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity | The amendments reduce the number of accounting models for convertible debt instruments and convertible preferred stock. The amendments also reduce form-over-substance-based guidance for the derivatives scope exception for contracts in an entity’s own equity. | January 1, 2022 | At January 1, 2022 the Company did not have the types of instruments affected by the amended guidance and, therefore, the adoption had no impact on its consolidated financial statements. | ||||||||
Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options | The amendments clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. | January 1, 2022 | At January 1, 2022 the Company did not have the types of instruments affected by the amended guidance and, therefore, the adoption had no impact on its consolidated financial statements. | ||||||||
Lessor’s Accounting for Certain Leases with Variable Lease Payments | The amendments update the classification guidance for lessors. Under the amended guidance lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: 1. The lease would have been classified as a sales-type lease or a direct financing lease. 2. The lessor would have otherwise recognized a day-one loss. When a lease is classified as operating, the lessor does not recognize a net investment in the lease, does not derecognize the underlying asset, and, therefore, does not recognize a selling profit or loss. | January 1, 2022 | The Company adopted the amended guidance effective January 1, 2022 using a prospective transition method. The adoption did not have a material impact on the Company’s consolidated financial statements. |
In January 2017, the Company adopted two amendments to the accounting guidance for derivatives and hedging. The first amendment clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The second amendment clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment is required to assess the embedded call (put) options solely in accordance with a four-step decision sequence and no longer has to assess whether the event that triggers the ability to exercise the option is related to interest rates or credit risks. The adoption of this guidance did not have a material effect on the Company’s consolidated financial position or results of operations.
In August 2017, the Financial Accounting Standards Board (“FASB”) issued amended guidance expanding and clarifying hedge accounting for nonfinancial and financial risk components, aligning the recognition and presentation of the effects of the hedging instrument and hedged item in the financial statements, and simplifying the requirements for assessing effectiveness in a hedging relationship. The guidance eliminates the concept of benchmark interest rates for cash flow hedges of interest rate risk and permits variability in cash flows attributable to the contractually specified interest rate to be designated as the hedged risk in a cash flows hedge of a variable-rate financial instrument. For a fair value hedge of interest rate risk, the amended guidance added the Securities Industry and Financial Markets Association Municipal Swap Rate as an eligible benchmark interest rate. The amendments also change the guidance for designating fair value hedges of interest rate risk and for measuring the change in fair value of the hedged item in fair value hedges of interest rate risk by (1) for a closed portfolio of prepayable financial assets or one or more beneficial interests secured by a portfolio of prepayable financial instruments, permitting an amount that is not expected to be affected by prepayments, defaults, and other events affecting the timing and amount of cash flow (“last of layer” method) to be designated as the hedged item, (2) permitting the change in fair value of the hedged item to be measured on the basis of the benchmark interest rate component of the contractual coupon cash flows rather than the full contractual coupon cash flows, (3) permitting the hedged item in a partial-term fair value hedge to be measured by assuming the hedged item has a term that reflects only the designated cash flows being hedged, and (4) for prepayable financial instruments, permitting the consideration of only how changes in the benchmark interest rate affect a decision to settle a debt instrument before its scheduled maturity in calculating the change in fair value of the hedged item attributable to interest rate risk. As it relates to aligning the recognition and
- 4750 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
16.17. Recent accounting developments, continued
presentation of the effects of the hedging instrument and hedged item in the financial statements, the amended guidance requires (1) the entire change in fair value of the hedging instrument that is included in the assessment of hedge effectiveness to be presented in the same income statement line item that is used to present the earnings effect of the hedged item in a fair value hedge and the hedged transaction in a cash flow hedge and (2) for cash flow hedges, the entire change in fair value of the hedging instrument to be included in other comprehensive income (hedge ineffectiveness no longer will be recognized in earnings for cash flow hedges) and reclassified to earnings when the hedged forecasted transaction effects earnings. From the perspective of simplifying the requirements for assessing effectiveness in a hedging relationship, the amendments permit (1) qualitative subsequent assessments of hedge effectiveness when the facts and circumstances related to the hedging relationship have not changed, (2) initial prospective quantitative assessments at any time after hedge designation up to the first quarterly effectiveness testing date, and (3) application of the long-haul method for assessing hedge effectiveness if the shortcut method was initially applied and is no longer appropriate. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018, with early adoption permitted. If adopted in an interim period, the effects of the adoption should be reflected as of the beginning of the fiscal year of adoption. For cash flow hedges existing at the date of adoption, a cumulative-effect adjustment should be applied related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments. The amended presentation and disclosure guidance is required only prospectively. The Company is evaluating when it will adopt the amended guidance and does not expect such adoption will have a material impact on its consolidated financial statements.
In May 2017, the FASB issued amended guidance relating to which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting. The guidance requires an entity to account for the effects of a modification unless all the following criteria are met: (1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award was modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award was modified; and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award was modified. The guidance is effective for annual periods; and interim periods within those annual periods beginning after December 15, 2017, and should be applied on a prospective basis to an award modified on or after the adoption date. The Company does not expect the guidance to have a material impact on its consolidated financial statements.
In March 2017, the FASB issued amended guidance requiring the premium on callable debt securities held at a premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018, with early adoption permitted. If adopted in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company does not expect the guidance to have a material impact on its consolidated financial statements.
In March 2017, the FASB issued amended guidance requiring the service cost component of the net periodic pension cost and net periodic postretirement benefit cost to be reported in the same line item in the income statement as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments also require that the other components of net benefit costs be presented separately from the service cost
- 48 -
NOTES TO FINANCIAL STATEMENTS, CONTINUED
16. Recent accounting developments, continued
component. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017, using a retrospective transition method for the presentation of the service cost and other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The amendments allow for a practical expedient that permits the use of the amounts disclosed in the Company’s pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company does not expect the guidance to have a material impact on its consolidated financial statements.
In January 2017, the FASB issued amended guidance eliminating step 2 from the goodwill impairment test. Under the amendments to the guidance, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized, however, should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The guidance is effective for annual periods or any interim goodwill impairment tests beginning after December 15, 2019 using a prospective transition method. Early adoption is permitted. The Company does not expect the guidance will have a material impact on its consolidated financial statements, unless at some point in the future one of its reporting units were to fail step 1 of the goodwill impairment test.
In January 2017, the FASB issued amended guidance clarifying the definition of a business for purposes of evaluating whether transactions would be accounted for as acquisitions (or disposals) of assets or businesses. The amendments provide a screen to determine when a set of assets and activities (collectively referred to as a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar assets, the set is not a business. If the screen is not met, the amendments (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output, and (2) remove the evaluation of whether a market participant could replace missing elements. The guidance is effective for annual
periods and interim periods within those annual periods beginning after December 15, 2017 using a prospective transition method. The Company does not expect the guidance to have a material impact on its consolidated financial statements.
In November 2016, the FASB issued amended guidance for the presentation of restricted cash in the statement of cash flows. The guidance requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. In addition, when cash, cash equivalents, and restricted cash or restricted cash equivalents are presented in more than one line item within the statement of financial position, the line items and amounts must be presented on the face of the statement of cash flows or disclosed in the notes to the financial statements. Information about the nature of restrictions on an entity’s cash and cash equivalents must also be disclosed. The guidance, which applies only to the consolidated statement of cash flows, is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017, using a retrospective transition method.
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
16. Recent accounting developments, continued
In August 2016, the FASB issued amended guidance for how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance addresses the following eight specific cash flow issues: (1) cash payments for debt extinguishment costs should be classified as cash outflows for financing activities; (2) for zero-coupon debt instruments, the portion of the cash payment attributable to the accreted interest should be classified as a cash outflow for operating activities; (3) contingent consideration payments made after a business combination should be classified based on the timing of the payment; (4) cash proceeds received from the settlement of insurance claims should be classified on the basis of the related insurance coverage; (5) cash proceeds received from the settlement of corporate-owned and bank-owned life insurance policies should be classified as cash inflows from investing activities; (6) when the equity method is applied, an accounting policy election should be made to classify distributions received using either the cumulative earnings approach or the nature of the distribution approach; (7) cash receipts from payments on a transferor’s beneficial interests obtained in a securitization of financial assets should be classified as cash inflows from investing activities; and (8) the classification of cash receipts and payments that have aspects of more than one class of cash flows should be determined by applying specific guidance in GAAP. The guidance, which only impacts the presentation of the consolidated statement of cash flows, is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017.
In June 2016, the FASB issued amended guidance for the measurement of credit losses on certain financial assets. The amended guidance requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. The allowance for credit losses will represent a valuation account that is deducted from the amortized cost basis of the financial assets to present their net carrying value at the amount expected to be collected. The income statement will reflect the measurement of credit losses for newly recognized financial assets as well as expected increases or decreases of expected credit losses that have taken place during the period. When determining the allowance, expected credit losses over the contractual term of the financial asset(s) (taking into account prepayments) will be estimated considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The amended guidance also requires recording an allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination. The initial allowance for these assets will be added to the purchase price at acquisition rather than being reported as an expense. Subsequent changes in the allowance will be recorded through the income statement as an expense adjustment. In addition, the amended guidance requires credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. The calculation of credit losses for available-for-sale securities will be similar to how it is determined under existing guidance. The guidance is effective for annual periods and interim periods within those annual periods beginning after
December 15, 2019. The Company is assessing the new guidance to determine what modifications to existing credit estimation processes may be required. The Company expects that the new guidance will result in an increase in its allowance for credit losses as a result of considering credit losses over the expected life of its loan portfolios. Increases in the level of the allowance for credit losses will also reflect new requirements to include the nonaccretable principal difference on purchased credit impaired loans and estimated credit losses on investment securities classified as held-to-maturity, if any. The Company is still evaluating the extent of the increase to the allowance for credit losses and the impact to its financial statements.
In February 2016, the FASB issued guidance related to the accounting for leases. The core principle of the guidance is that all leases create an asset and a liability for the lessee and, therefore, lease assets and lease liabilities should be recognized in the balance sheet. Lease assets will be recognized as a right-of-use asset and lease liabilities will be recognized as a liability to make lease payments. While the guidance requires all leases to be recognized in the balance sheet, there continues to be a differentiation between finance leases and operating leases for purposes of income statement recognition and cash flow statement presentation. For finance leases, interest on the lease liability
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
16. Recent accounting developments, continued
and amortization of the right-of-use asset will be recognized separately in the statement of income. Repayments of principal on those lease liabilities will be classified within financing activities and payments of interest on the lease liability will be classified within operating activities in the statement of cash flows. For operating leases, a single lease cost is recognized in the statement of income and allocated over the lease term, generally on a straight-line basis. All cash payments are presented within operating activities in the statement of cash flows. The accounting applied by lessors is largely unchanged from existing GAAP, however, the guidance eliminates the accounting model for leveraged leases for leases that commence after the effective date of the guidance. The guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company occupies certain banking offices and uses certain equipment under noncancelable operating lease agreements, which currently are not reflected in its consolidated balance sheet. Upon adoption of the guidance, the Company expects to report increased assets and increased liabilities as a result of recognizing right-of-use assets and lease liabilities on its consolidated balance sheet. The Company was committed to $467 million of minimum lease payments under noncancelable operating lease agreements at December 31, 2016. The Company does not expect the new guidance will have a material impact to its consolidated statement of income.
In January 2016, the FASB issued amended guidance related to recognition and measurement of financial assets and liabilities. The amended guidance requires that equity investments (excluding those accounted for under the equity method of accounting or those that result in consolidation of the investee) be measured at fair value with changes in fair value recognized in net income. An entity can elect to measure equity investments that do not have readily determinable fair values at cost less impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The impairment assessment of equity investments without readily determinable fair values is simplified by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates impairment exists, an entity is required to measure the investment at fair value. The guidance eliminates the requirement for public business entities to disclose the method and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. Further, the guidance requires public entities to use the exit price when measuring the fair value of financial instruments for disclosure purposes. The guidance also requires an entity to present separately in other comprehensive income, a change in the instrument-specific credit risk when the entity has elected to measure a liability at fair value in accordance with the fair value option. Separate presentation of financial assets and liabilities by measurement category and type of instrument on the balance sheet or accompanying notes to the financial statements is required. The guidance also clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. This guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. The Company does hold certain equity securities in its available-for-sale portfolio. Upon adoption of this guidance, fair value changes in such equity securities will be recognized in the consolidated statement of income as opposed to accumulated other comprehensive income where they are recognized under current accounting guidance. Although those securities have historically fluctuated in value, how those securities could change in value in the future is not predictable.
In May 2014, the FASB issued amended accounting and disclosure guidance for revenue from contracts with customers. The core principle of the accounting guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer. The amended disclosure guidance requires sufficient information to enable users of financial statements to understand the nature, amount,
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
16. Recent accounting developments, continued
timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amended guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The guidance should be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application (the “modified retrospective approach”). The Company expects to adopt the revenue recognition guidance in the first quarter of 2018. A significant amount of the Company’s revenues are derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance. With respect to noninterest income, the Company has identified revenue streams within the scope of the guidance and is in the final stages of its accounting analysis of the underlying contracts. The Company does not presently expect that changes in the timing of revenue recognition will be material to the amount of annual revenue recognized by the Company.
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| Description | Required date of adoption | Effect on consolidated financial statements | ||||||||
Standards Not Yet Adopted as of September 30, 2022 | |||||||||||
Accounting for Contract Assets and | The amendments require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with specified revenue recognition guidance. At the acquisition date, an acquirer should account for the related revenue contracts as if it had originated the contracts and may assess how the acquiree applied the revenue guidance to determine what to record for such contracts. The guidance is generally expected to result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements. | January 1, 2023 Early adoption permitted | The amendments should be applied prospectively to business combinations occurring on or after the effective date of The Company does not expect the guidance will have a material impact on its consolidated financial statements. | ||||||||
Fair Value Hedging of Multiple Hedge Layers under Portfolio Layer Method | The amendments allow multiple hedged layers to be designated for a single closed portfolio of financial assets or one or more beneficial interests secured by a portfolio of financial instruments. If multiple hedged layers are designated, the amendments require an analysis to be performed to support the expectation that the aggregate amount of the hedged layers is anticipated to be outstanding for the designated hedge periods. Only closed portfolios may be hedged under the portfolio layer method (that is, no assets can be added to the closed portfolio once established), however designating new hedging relationships and dedesignating existing hedging relationships associated with the closed portfolio any time after the closed portfolio is established is permitted. | January 1, 2023 Early adoption permitted | The amendments should be applied on a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. The Company does not expect the guidance will have a material impact on its consolidated financial statements. | ||||||||
Accounting for Troubled Debt Restructurings (TDRs) and Expansion of Vintage Disclosures Applicable to Credit Losses | The amendments (1) eliminate the accounting guidance for TDRs and require enhanced disclosure for certain loan refinancings by creditors when a borrower is experiencing financial difficulty and (2) require disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases within credit loss disclosures. | January 1, 2023 Early adoption permitted | The amendments should be applied prospectively, except for the amendments related to the recognition and measurement of TDRs for which an option is permitted to apply a modified retrospective transition method. Under the amended guidance the Company will no longer be required to identify TDRs and apply specialized accounting to such loans. The Company does not expect the guidance will have a material impact on its consolidated financial statements outside of the modified disclosure requirements. | ||||||||
Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions | The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. In addition, the amendments require the following disclosures for equity securities subject to contractual sale restrictions: 1. The fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; 2. The nature and remaining duration of the restriction(s); and 3. The circumstances that could cause a lapse in the restriction(s). | January 1, 2024 Early adoption permitted | The amendments should be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. The Company does not expect the guidance will have a material impact on its consolidated financial statements. |
Overview
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
M&T Bank Corporation (“M&T”) recordedhad net income of $647 million in the third quarter of 20172022, compared with $495 million in the corresponding quarter of $3562021 and $218 million or $2.21in the second quarter of diluted2022. Diluted and basic earnings per common share compared with $350were $3.53 and $3.55, respectively, in the recent quarter, $3.69 and $3.70, respectively, in the third quarter of 2021 and were each $1.08 in the second quarter of 2022. M&T's second and third quarter results each reflect a full-quarter impact of its April 1, 2022 acquisition of People's United Financial, Inc. ("People's United"). The after-tax impact of merger-related expenses was $39 million ($53 million pre-tax) or $2.10$.22 of basic and diluted earnings per common share in the similar quarter of 2016. Net income in the second quarter of 2017 totaled $381 million or $2.35 of diluted earnings per common share. Basic earnings per common share were $2.22 in the recent quarter, compared with $2.10$7 million ($9 million pre-tax) or $.05 of basic and $2.36 in the third quarter of 2016 and the second quarter of 2017, respectively. For the first nine months of 2017, net income was $1.09 billion or $6.69 of diluted earnings per common share, compared with $985 million or $5.80 of diluted earnings per common share in the corresponding 2016 period. Basicthird quarter of 2021 and $346 million ($465 million pre-tax) or $1.94 of basic and diluted earnings per common share were $6.71in the second quarter of 2022. Such expenses included professional services and other temporary help fees associated with conversions of systems and/or integration of operations, costs related to terminations of existing contractual arrangements to purchase various services, severance, travel costs and, in the second quarter of 2022, an initial provision for credit losses on loans not deemed to be purchased credit deteriorated ("PCD") on April 1, 2022. Net income aggregated $1.23 billion or $7.14 of diluted and $7.18 of basic earnings per common share in the first nine months of 2017,2022, compared with $5.82 for$1.40 billion or $10.43 of diluted and $10.44 of basic earnings per common share in the initialcorresponding 2021 period. Merger-related expenses were $398 million ($535 million pre-tax) or $2.46 of basic and diluted earnings per common share in the nine months ended September 30, 2022 and $17 million ($23 million pre-tax) or $.13 of 2016.basic and diluted earnings per common share in the nine months ended September 30, 2021.
The annualized rate of return on average total assets for M&T and its consolidated subsidiaries (“the Company”) in each of the third quarterquarters of 20172022 and 2021 was 1.18%,1.28% compared with 1.12% in the year-earlier quarter and 1.27%.42% in the second quarter of 2017.2022. The annualized rate of return on average common shareholders’ equity was 8.89%10.43% in the recently completedrecent quarter, compared with 8.68% and 9.67%12.16% in the third quarter of 20162021 and 3.21% in the second 2017 quarter respectively.of 2022. During the nine-month period ended September 30, 2017,2022, the annualized rates of return on average assets and average common shareholders’ equity were 1.20%.87% and 9.15%7.24%, respectively, compared with 1.06%1.24% and 8.17%11.76%, respectively, in the similarcorresponding period of 2016.2021.
On October 9, 2017, Wilmington Trust Corporation, a wholly owned subsidiary of M&T, reached an agreement withApril 1, 2022, the U.S. Attorney’s Office for the District of Delaware related to alleged conduct that took place between 2009 and 2010 prior toCompany closed the acquisition of Wilmington Trust Corporation by M&T. UnderPeople's United resulting in the issuance of 50,325,004 common shares. Pursuant to the terms of the merger agreement, Wilmington Trust Corporation was required to pay $60 million and settled the government’s claims. The settlement amount included $16 million previously paid to the U.S. Securities and Exchange Commission in a related action. The result was a paymentPeople’s United shareholders received consideration valued at .118 of $44 million that is not deductible for income tax purposes. Wilmington Trust Corporation did not admit any liability.
As of September 30, 2017, the Company increased the reserve for legal matters by $50 million. That increase, coupled with the non-deductible nature of the $44 million payment, reduced net income by $48 million, or $.31 of diluted earnings peran M&T common share in exchange for each common share of People’s United. The purchase price totaled approximately $8.4 billion (with the third quarterprice based on M&T’s closing price of 2017. $164.66 per share as of April 1, 2022). Additionally, People’s United outstanding preferred stock was converted into new shares of Series H preferred stock of M&T.
DuringThe People's United transaction has been accounted for using the first quarteracquisition method of 2017,accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair value on the acquisition date. M&T adopted new accounting guidance for share-based transactions. That guidance requires that all excess tax benefitspreliminarily recorded assets acquired of $64.2 billion, including $35.8 billion of loans and tax deficiencies associatedleases and $11.6 billion of investment securities, and liabilities assumed totaling $55.5 billion, including $53.0 billion of deposits. The transaction added $8.4 billion to M&T's common shareholders' equity and $261 million to preferred equity. In connection with share-based compensation be recognizedthe acquisition the Company recorded $3.9 billion of goodwill and $261 million of core deposit and other intangible assets. The acquisition of People's United formed a banking franchise with approximately $200 billion in income tax expenseassets serving communities in the income statement. Previously, tax effects resultingNortheast and Mid-Atlantic from changes in M&T’s share price subsequentMaine to the grant date were recorded through shareholders’ equity at the time of vesting or exercise. The adoption of the amended accounting guidance resulted in an $18 million reduction of income tax expense or $.12 of diluted earnings per common share in the initial 2017 quarter. The impact of that change in accounting on income tax expense was not significant in the second and third quarters of 2017.
During the third quarter of 2016, the Company sold substantially all of its collateralized debt obligations with an amortized cost of $28 million held in the available-for-sale investment securities portfolio, resulting in an after-tax gain of $17 million ($28 million pre-tax), or $.11 per diluted common share. Those securities, which had been obtained in previous acquisitions, were sold in response to the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) commonly referred to as the “Volcker Rule.” There were no significant gains or losses on investment securities during the second or third quarters of 2017.
On June 28, 2017,Virginia, including Washington, D.C. M&T announced thatcompleted the Federal Reserve did not objecttransfer of most financial records of People’s United to M&T’s proposed 2017 Capital Plan. That capital plan includescore operating systems in the recent quarter.
On July 19, 2022 the Company's Board of Directors authorized a program to repurchase of up to $900 million$3.0 billion of M&T's common shares duringstock. The action replaced the four-quarter period starting on July 1, 2017, an increase inprevious program under which the quarterly common stock dividendrepurchases in the second quarter of 2018 of up to $.05 per share to $.80 per share, and the issuance of subordinated capital notes in the third quarter of 2017 of $500 million. M&T may continue to pay dividends and interest on equity and debt instruments included in regulatory capital, including preferred stock, trust preferred securities and subordinated debt that2022 were outstanding at December 31, 2016, consistent with the contractual terms of those instruments. Dividends are subject to declaration
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by M&T’s Board of Directors. In July 2017, M&T’s Board of Directors authorized a new stock repurchase program to repurchase up to $900 million of shares of M&T’s common stock subject to all applicable regulatory limitations, including those set forth in M&T’s 2017 Capital Plan.conducted. In accordance with the program and its capital plan, M&T’s 2017 Capital Plan,&T repurchased 3,282,449 shares of its common stock during the thirdrecent quarter at an average cost per share of 2017,$182.79 resulting in a total cost of $600 million. During the first nine months of 2022, M&T repurchased 1,382,7466,788,395 shares of its common stock at aan average cost per share of $225 million and issued $500 million of subordinated capital notes. In accordance with M&T’s revised 2016 Capital Plan, during the second quarter of 2017, M&T repurchased 1,409,807 shares of its common stock at$176.77 resulting in a total cost of $225 million and in the first quarter of 2017, M&T repurchased 3,233,196 shares of its common stock at a cost of $532 million and increased the quarterly common stock dividend from $.70 to $.75 per share. In the aggregate, M&T repurchased 6,025,749 shares of its common stock at a cost of $982 million during the first three quarters of 2017 and 5,307,595 shares for $604 million during the first three quarters of 2016.$1.2 billion.
On July 25, 2017, the Federal Reserve Bank of New York terminated its written agreement with M&T and its principal bank subsidiary, M&T Bank, that had been entered into in June 2013. Under the terms of that agreement, M&T and M&T Bank implemented an enhanced compliance risk management program designed to ensure compliance with the Bank Secrecy Act and anti-money-laundering laws and regulations (“BSA/AML”) and took other steps to enhance their compliance practices.- 52 -
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, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and gains (when realized) and expenses (when incurred) associated with merging acquired operations into the Company, since such items are considered by management to be “nonoperating” in nature. Those merger-related expenses generally consist of professional services and other temporary help fees associated with the actual or planned conversion of systems and/or integration of operations; costs related to branch and office consolidations; costs related to termination of existing contractual arrangements to purchase various services; initial marketing and promotion expenses designed to introduce the Company to its new customers; severance; incentive compensation costs; travel costs; and printing, supplies and other costs of completing the transactions and commencing operations in new markets and offices. Merger-related expenses associated with the 2015 acquisition of Hudson City Bancorp, Inc. (“Hudson City”) were $36 million ($22 million after-tax effect) in the first nine months of 2016 ($.14 per diluted common share). There were no merger-related expenses during the third quarter of 2016 or in the first nine months of 2017. 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.
Net operating income was $361totaled $700 million in the third quarter of 2017,2022, compared with $356$504 million in the year-earlier quarter and $578 million in the second 2022 quarter. Diluted net operating earnings per common share for the recent quarter were $2.24, compared with $2.13 in the third quarterquarters of 2016. Net operating income2022 and diluted net operating earnings per common share2021 were $386 million$3.83 and $2.38,$3.76, respectively, compared with $3.10 in the second quarter of 2017.2022. For the first nine months of 2017,2022, net operating income and diluted net operating earnings per common share were $1.10$1.65 billion and $6.78,$9.78, respectively, compared with $1.03$1.42 billion and $6.07,$10.61, respectively, in the corresponding 2016 period.first nine months of 2021.
Net operating income in the recent quarter expressed as an annualized rate of return on average tangible assets was 1.25%1.44%, compared with 1.18%1.34% in the year-earlier quarter and 1.33% in the secondthird quarter of 2017. 2021 and 1.16% in 2022’s second quarter.Net operating income represented an annualized return on average tangible common equity of 13.03%17.89% in 2017’sthe third quarter compared with 12.77%of 2022, 17.54% in the similaryear-earlier quarter and 14.41% in the second quarter of 2016 and 14.18% in 2017’s second quarter.2022. For the first nine months of 2017,2022, net operating income represented an annualized return on average tangible assets and average tangible common shareholders’ equity of 1.26%1.23% and 13.42%15.13%, respectively, compared with 1.15%1.30% and 12.36%17.10%, respectively, in the first nine months of 2016.corresponding 2021 period.
Reconciliations of GAAP amounts with corresponding non-GAAP amounts are provided in table 2.
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Taxable-equivalent Net Interest Income
Taxable-equivalent net interest income was $966 million$1.69 billion in the third quarter of 2017, 12%2022, 74% higher than $865$971 million recorded in the year-earlier quarter. That growth resulted primarilyincrease reflects the impact of $42.0 billion in additional average earning assets predominantly resulting from the People's United transaction, and a widening94 basis point (hundredths of one percent) expansion of the net interest margin, or taxable-equivalent net interest income expressed as an annualized percentage of average earning assets, to 3.53%3.68% in the recent quarter from 3.05%2.74% in the corresponding 2016 period. The improvement in the net interest margin was largely the resultthird quarter of the2021. That increase resulted from higher interest rate environment due to actions initiated byyields on loans, deposits at the Federal Reserve Bank ("FRB") of New York, and investment securities, partially offset by a 27 basis point increase in mid-December 2016, mid-March 2017 and mid-June 2017 to raise its target Federal funds rate by .25% at each of those dates.the rates paid on interest-bearing liabilities. Taxable-equivalent net interest income in the recent quarter increased from $947$268 million infrom the second 2017 quarter predominantly due toof 2022 reflecting an 8 basis point (hundredths of one percent) widening ofincrease in the net interest margin from 3.45% in the second quarter of 2017. That widening reflected the impact in the recent quarter offrom 3.01% in the June interest rate increase initiated by the Federal Reserve.
prior quarter. For the first three quartersnine months of 2017,2022, taxable-equivalent net interest income was $2.84$4.02 billion, 8% higher than $2.61up 39% from $2.90 billion in the similar period of 2016. Thatcorresponding 2021 period. The increase was primarily duelargely attributable to the higher level of earning assets, including the impact of the People's United transaction, and a 32 basis point widening of the net interest margin to 3.44%3.15% in 2017the 2022 period from 3.12%2.83% in 2016. Also contributing to the year-earlier period. The higher taxable-equivalent net interest incomemargin in the 2017 period was growthrecent periods is generally reflective of a rising interest rate environment resulting from actions taken by the Federal Reserve to raise interest rates in average loan balances, which increased $986 million froman attempt to temper inflationary pressures on the first nine months of 2016.U.S. economy.
Average loans and leases totaled $88.4 billion in the recent quarter, compared with $88.7$127.5 billion in the third quarter of 2016. Commercial2022, up $32.2 billion or 34% from $95.3 billion in the similar quarter of 2021. Included in average loans and leases in the recent quarter were loans obtained in the People's United acquisition. Loans acquired from People's United totaled $35.8 billion on the April 1, 2022 acquisition date and consisted of approximately $13.6 billion of commercial loans and leases, $13.5 billion of commercial real estate loans, $7.1 billion of residential real estate loans and $1.6 billion of consumer loans. Including the impact of the acquired loan balances, commercial loans and leases averaged $21.7$38.3 billion in the recent quarter, $14.6 billion or 61% higher than in the year-earlier quarter. Partially offsetting the increase from acquired loans was a reduction in average balances of Paycheck Protection Program (“PPP”) loans, reflecting loan repayments by the Small Business Administration. PPP loans averaged $241 million in the third quarter of 2022, compared with $3.3 billion in the third quarter of 2017, $254 million or 1% above $21.5 billion in the year-earlier quarter.2021. Average commercial real estate loans were $33.3$46.3 billion in the recent quarter, up $2.0
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$8.7 billion or 6%,23% from $31.3$37.5 billion in the thirdcorresponding quarter of 2016. Reflecting ongoing repayments2021. That increase was predominantly due to the impact of loans obtained in the acquisition of Hudson City, averagePeople's United partially offset by a reduction in balances of construction and permanent mortgage loans, reflecting repayments by customers. Average residential real estate loans declined $3.5increased $6.6 billion or 14%,40% to $20.6$23.0 billion in the third quarter of 20172022 from $24.1$16.4 billion in the year-earlier quarter. IncludedThe growth in average residential real estate loans werewas largely attributable to the acquisition of loans held for sale, which averaged $346 millionfrom People's United and the Company's decision in the recentthird quarter and $374 million in the corresponding 2016 quarter.of 2021 to retain rather than sell most originated residential mortgage loans. Consumer loans averaged $12.8$20.0 billion in the third quarter of 2017, an increase of $844 million,2022, up $2.3 billion or 7%,13% from $11.9$17.7 billion in the year-earlier quarter, reflecting the impact of loans obtained in the acquisition of People's United (that consisted predominantly due to growth in average automobile and recreational vehicle loans, partially offset by lowerof outstanding balances of home equity lines of credit.credit) and growth in average recreational finance loans (consisting predominantly of loans secured by recreational vehicles and boats).
Average loan and lease balances in the third quarter of 2017 declined $882 million2022 were $127.5 billion, little changed from $89.3$127.6 billion in the second quarter of 2017. As compared with 2017’s second quarter, average commercial2022. Commercial loan and lease average balances decreased $616 million, or 3%, in the recent quarter and average residentialincreased $504 million from $37.8 billion in the second quarter of 2022. Average commercial real estate loans in the third quarter of 20172022 declined $710$946 million or 3%, reflecting the continued pay down of loans obtainedfrom $47.2 billion in the acquisitionsecond quarter of Hudson City, while commercial2022. Average balances of residential real estate loan average balancesloans in the recently completed quarter increased $43$201 million or less than 1%, and averagefrom $22.8 billion in 2022’s second quarter. Average consumer loans in the recent quarter increased $400$167 million or 3%.from $19.8 billion in 2022’s second quarter. The accompanying table summarizes quarterly changes in the major components of the loan and lease portfolio.
- 55 -
(net of unearned discount)
|
|
|
|
| Percent Increase |
|
| ||||||
|
|
|
|
| (Decrease) from |
|
| ||||||
|
| Third Quarter |
|
| Third Quarter |
|
| Second Quarter |
|
| |||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| |||
|
| (In millions) |
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
| |||
Commercial, financial, etc. |
| $ | 38,321 |
|
|
| 61 |
| % |
| 1 |
| % |
Real estate — commercial |
|
| 46,282 |
|
|
| 23 |
|
|
| (2 | ) |
|
Real estate — consumer |
|
| 22,962 |
|
|
| 40 |
|
|
| 1 |
|
|
Consumer |
|
|
|
|
|
|
|
|
|
| |||
Recreational finance |
|
| 8,626 |
|
|
| 9 |
|
|
| 4 |
|
|
Automobile |
|
| 4,379 |
|
|
| (4 | ) |
|
| (5 | ) |
|
Home equity lines and loans |
|
| 5,056 |
|
|
| 38 |
|
|
| — |
|
|
Other |
|
| 1,899 |
|
|
| 25 |
|
|
| 5 |
|
|
Total consumer |
|
| 19,960 |
|
|
| 13 |
|
|
| 1 |
|
|
Total |
| $ | 127,525 |
|
|
| 34 |
| % |
| — |
| % |
|
|
|
|
|
| Percent Increase |
|
| |||||
|
|
|
|
|
| (Decrease) from |
|
| |||||
|
| 3rd Qtr. |
|
| 3rd Qtr. |
|
| 2nd Qtr. |
|
| |||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| |||
|
| (In millions) |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, etc. |
| $ | 21,734 |
|
|
| 1 |
| % |
| (3 | ) | % |
Real estate — commercial |
|
| 33,257 |
|
|
| 6 |
|
|
| — |
|
|
Real estate — consumer |
|
| 20,609 |
|
|
| (14 | ) |
|
| (3 | ) |
|
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile |
|
| 3,328 |
|
|
| 19 |
|
|
| 5 |
|
|
Home equity lines and loans |
|
| 5,413 |
|
|
| (6 | ) |
|
| (1 | ) |
|
Other |
|
| 4,045 |
|
|
| 19 |
|
|
| 9 |
|
|
Total consumer |
|
| 12,786 |
|
|
| 7 |
|
|
| 3 |
|
|
Total |
| $ | 88,386 |
|
|
| — |
| % |
| (1 | ) | % |
For the first nine months of 2017,2022, average loans and leases totaled $89.1$115.9 billion, up $986 million, or 1%,19% from $88.2$97.7 billion in the corresponding period2021 period. The impact of 2016. Growthloans obtained in commercial real estatethe People's United acquisition was the most significant factor for that increase offset, in part, by lower average balances of PPP loans commercial loansof $549 million and leases$4.9 billion in the first nine months of 2022 and consumer loans were partially offset by a decline in residential real estate loans.2021, respectively.
The investment securities portfolio averaged $15.4$23.9 billion in the recentthird quarter of 2022, up $1.1$17.9 billion or 8%, from $14.4$6.0 billion in the year-earlier quarter but $470 million lowerand $1.6 billion higher than the $15.9$22.4 billion averaged in the second quarter of 2017.2022. For the first nine months of 20172022 and 2016,2021, investment securities averaged $15.8$18.1 billion and $14.9$6.3 billion, respectively. Those changesThe higher average balance in the recent periods reflect the net effectacquisition of People’s United, which added approximately $11.6 billion to the investment securities portfolio on April 1, 2022, and purchases offset by maturitiesof approximately $2.7 billion of investment securities during each of the quarters ended September 30, 2022, June 30, 2022 and pay downsMarch 31, 2022. The purchases in the first nine months of mortgage-backed securities. During the second quarter of 2017, the Company purchased $658 million of mortgage-backed securities,2022 consisted predominantly Ginnie Mae securities, and $214 million of U.S. Treasury notes. The Company sold $512 million of available-for-sale Fannie Maenotes and Freddie Macfixed rate residential mortgage-backed securities during 2017’s second quarter largely due to the limitations on the amount of Fannie Mae and Freddie Mac mortgage-backed securities that are permitted to be included in the highest tier of “high quality liquid assets” for the Liquidity Coverage Ratio (“LCR”) calculation. During the third quarter of 2016, the Company sold substantially all of its collateralized debt obligations that were held in the available-for-sale investment securities portfolio for a gain of approximately $28 million. Those securities were sold in large part in response to the provisions of the Volcker Rule. During the third quarter of 2017, theresecurities. There were no significant purchases or sales of investment securities. securities during the first nine months of 2022 or 2021. The Company routinely has increases and decreases in its holdings of capital stock of the Federal Home Loan Bank (“FHLB”) of New York and the FRB of New York. Those holdings are accounted for at cost and are adjusted based on amounts of outstanding borrowings and available lines of credit with those entities.
- 54 -
The investment securities portfolio is largely comprised of residential mortgage-backed securities debt securities issued by municipalities, trust preferred securities issued by certain financial institutions, and shorter-term U.S. Treasury notes and, federal agency notes.following the acquisition of People's United, municipal securities. When purchasing investment securities, the Company considers its liquidity position and its overall interest-rate risk profile as well as the adequacy of expected returns relative to risks assumed, including prepayments. The Company manages its investment securities portfolio, in part, to satisfy the requirements of the LCR that became effective in January 2016. The LCR is intended to ensure that banks hold a sufficient amount of “high quality liquid assets” to cover the anticipated net cash outflows during a hypothetical acute 30-day stress scenario. For additional information concerning the LCR rules, refer to Part I, Item 1 of M&T’s Form 10-K for the year ended December 31, 2016 under the heading “Liquidity.”
In addition to the sales noted above, the Company may occasionally sell investment securities as a result of changes in interest rates and spreads, actual or anticipated prepayments, credit risk associated with a particular security, or as a result of restructuring its investment securities portfolio in connection with a business combination. The amounts of investment securities held by the Company are influenced by such factors as available yield in comparison with alternative investments, demand for loans, which generally yield more than investment securities, ongoing repayments, the levels of deposits, and management of liquidity (including the LCR) and balance sheet size and resulting capital ratios.
- 56 -
Fair value changes in equity securities with readily determinable fair values are recognized in the consolidated statement of income. Net unrealized losses on such equity securities were not significant in the third quarter of 2022, the second quarter of 2022 or the third quarter of 2021. Net unrealized losses for the first nine months of 2022 and 2021 were $2 million and $23 million, respectively. Those losses include changes in the value of the Company’s holdings of Fannie Mae and Freddie Mac preferred stock.
The Company regularly reviews its debt investment securities for declines in value below amortized cost that might be characterized as “other than temporary.” Thereindicative of credit-related losses. In light of such reviews, there were no other-than-temporary impairment chargescredit-related losses on debt investment securities recognized in either of the nine-month periods ended September 30, 20172022 or 2016.2021. Based on management’s assessment of future cash flows associated with individual investment securities as of September 30, 2022, the Company did not expect to incur any material credit-related losses in its portfolios of debt investment securities. Additional information about the investment securities portfolio is included in notes 3 and 1213 of Notes to Financial Statements.
Other earning assets include interest-bearing deposits at the Federal Reserve BankFRB of New York and other banks, trading account assets, and federal funds sold.sold and agreements to resell securities. Those other earning assets in the aggregate averaged $4.8$30.9 billion in the two most recent quarters,recently completed quarter, compared with $9.8$39.1 billion in the thirdyear-earlier quarter and $39.8 billion in the second quarter of 2016.2022. Interest-bearing deposits at banks averaged $4.7$30.8 billion, $39.0 billion and $39.4 billion during each of the quartersthree months ended September 30, 20172022, September 30, 2021 and June 30, 2017 and $9.7 billion in the quarter ended September 30, 2016. For the nine-month periods ended September 30, 2017 and 2016, average balances of interest-bearing deposits at banks were $5.2 billion and $8.9 billion,2022, respectively. The amounts of investment securities and other earning assets held by the Company are influenced by such factors as demand for loans, which generally yield more than investment securities and other earning assets, ongoing repayments, the levels of deposits, and management of liquidity (including the LCR) and balance sheet size and resulting capital ratios. The amounts of interest-bearing deposits at banks at the respective dates were predominantly comprised of deposits held at the Federal Reserve BankFRB of New York. The levelsdecline in the recent quarter reflects actions taken by the Company including the purchases of thoseinvestment securities and treasury stock and the management of select deposit relationships designed to reduce the balances of higher-cost deposit accounts. In general, the level of deposits often fluctuateheld at the FRB of New York also fluctuates due to changes in trust-related deposits of commercial entities, purchasestrust-related deposits and additions to or maturities of investment securities or borrowings to manage the Company’s liquidity.borrowings.
As a result of the changes described herein, average earning assets totaled $108.6$182.4 billion in the most recent quarter, compared with $112.9$140.4 billion in the year-earlierthird quarter of 2021 and $110.0$189.8 billion in the second quarter of 2017.2022. Average earning assets aggregated $110.2totaled $170.4 billion and $112.0$137.3 billion during the nine-month periods ended September 30, 2017first nine months of 2022 and 2016,2021, respectively.
The most significant source of funding for the Company is core deposits. The Company considers noninterest-bearing deposits, interest-bearing transaction accounts, savings deposits and time deposits of $250,000 or less as core deposits. The Company’s branch network is its principal source of core deposits, which generally carry lower interest rates than wholesale funds of comparable maturities. Average core deposits totaled $91.0$162.8 billion in the third quarter of 2017, compared with $93.22022, up 28% from $127.1 billion in the year-earliersimilar 2021 quarter, and $92.0but down 4% from $169.6 billion in the second quarter of 2017.2022. The People's United acquisition added approximately $50.8 billion of core deposits on April 1, 2022, including $30.8 billion of savings and interest-checking deposits, $2.6 billion of time deposits and $17.4 billion of noninterest-bearing deposits. The decline in average core deposits in the thirdrecent quarter of 2017 as compared with the year-earlier quarter reflected a $4.1 billion, or 37%, decrease in time deposits, predominantly related to maturities of relatively high-rate deposits obtained in the acquisition of Hudson City, partially offset by growth in noninterest-bearing deposits, in part reflecting balances associated with trust customers. As compared with 2017’s second quarter of 2022 is largely reflective of the most significant factor forCompany's initiative to reduce certain historically higher-cost deposits as well as customer reactions to the decrease in average core deposits in the recent quarter was the continued decline of average time deposits, largely associated with deposits obtained in the Hudson City acquisition.generally rising rate environment. The following table provides an analysis of quarterly changes in the components of average core deposits.
- 55 -
AVERAGE CORE DEPOSITS
|
|
|
|
| Percent Increase |
|
| ||||||
|
|
|
|
| (Decrease) from |
|
| ||||||
|
| Third Quarter |
|
| Third Quarter |
|
| Second Quarter |
|
| |||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| |||
|
| (In millions) |
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
| |||
Savings and interest-checking deposits |
| $ | 85,585 |
|
|
| 27 |
| % |
| (6 | ) | % |
Time deposits |
|
| 4,313 |
|
|
| 60 |
|
|
| (8 | ) |
|
Noninterest-bearing deposits |
|
| 72,861 |
|
|
| 27 |
|
|
| (2 | ) |
|
Total |
| $ | 162,759 |
|
|
| 28 |
| % |
| (4 | ) | % |
|
|
|
|
|
| Percent Increase |
|
| |||||
|
|
|
|
|
| (Decrease) from |
|
| |||||
|
| 3rd Qtr. |
|
| 3rd Qtr. |
|
| 2nd Qtr. |
|
| |||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| |||
|
| (In millions) |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings and interest-checking deposits |
| $ | 52,056 |
|
|
| 1 |
| % |
| (1 | ) | % |
Time deposits |
|
| 6,897 |
|
|
| (37 | ) |
|
| (10 | ) |
|
Noninterest-bearing deposits |
|
| 32,005 |
|
|
| 4 |
|
|
| — |
|
|
Total |
| $ | 90,958 |
|
|
| (2 | ) | % |
| (1 | ) | % |
- 57 -
The Company also receives funding from other deposit sources, including branch-related time deposits over $250,000, brokered deposits and, prior to June 30, 2021, deposits associated with the Company’s Cayman Islands office, and brokered deposits.office. Time deposits over $250,000 excluding brokered deposits, averaged $717$681 million in the recent quarter, compared with $1.3 billion$357 million in the third quarter of 20162021 and $808 million in the second 2017 quarter.quarter of 2022. In the second quarter of 2021, the Company introduced a new interest-bearing sweep product (included in savings and interest-bearing deposits) that replaced the Eurodollar sweep product previously recorded as Cayman Islands office deposits. As a result, there are no longer deposits averaged $169 million, $220 millionmaintained at the Cayman Islands office and $163 million for the quarters ended September 30, 2017, September 30, 2016 and June 30, 2017, respectively. Brokered time deposits averaged $59 million in each of the quarters ended September 30, 2017, September 30, 2016 and June 30, 2017.office is closed. The Company also had brokered savings and interest-bearing transaction accounts, which in the aggregate averaged $1.2$3.8 billion $1.0 billionduring each of the recent quarter and $1.1 billion during the third quarter of 2017, the corresponding 2016 quarter2021 and $4.2 billion during the second quarter of 2017, respectively. 2022. Total uninsured deposits, including deposits associated with the People's United acquisition, were estimated to be $74.7 billion at September 30, 2022 and $69.1 billion at December 31, 2021.
The levels of brokered deposit accounts reflectaccompanying table summarizes average total deposits for the demand for such deposits, largely resulting from the desire of brokerage firms to earn reasonable yields while ensuring that customer deposits are fully insured. The level of Cayman Islands office deposits is also reflective of customer demand. Additional amounts of Cayman Islands office deposits or brokered deposits may be added in the future depending on market conditions, including demand by customersquarters ended September 30, 2022, June 30, 2022 and other investors for those deposits, and the cost of funds available from alternative sources at the time.September 30, 2021.
AVERAGE DEPOSITS
|
| Retail |
|
| Trust |
|
| Commercial |
|
| Total |
| ||||
|
| (In millions) |
| |||||||||||||
Three Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Savings and interest-checking deposits |
| $ | 51,196 |
|
| $ | 7,008 |
|
| $ | 31,156 |
|
| $ | 89,360 |
|
Time deposits |
|
| 4,607 |
|
|
| 12 |
|
|
| 431 |
|
|
| 5,050 |
|
Noninterest-bearing deposits |
|
| 14,414 |
|
|
| 10,927 |
|
|
| 47,520 |
|
|
| 72,861 |
|
Total |
| $ | 70,217 |
|
| $ | 17,947 |
|
| $ | 79,107 |
|
| $ | 167,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Savings and interest-checking deposits |
| $ | 52,750 |
|
| $ | 6,852 |
|
| $ | 35,547 |
|
| $ | 95,149 |
|
Time deposits |
|
| 5,001 |
|
|
| 17 |
|
|
| 462 |
|
|
| 5,480 |
|
Noninterest-bearing deposits |
|
| 14,483 |
|
|
| 11,691 |
|
|
| 47,880 |
|
|
| 74,054 |
|
Total |
| $ | 72,234 |
|
| $ | 18,560 |
|
| $ | 83,889 |
|
| $ | 174,683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Savings and interest-checking deposits |
| $ | 34,344 |
|
| $ | 5,934 |
|
| $ | 30,698 |
|
| $ | 70,976 |
|
Time deposits |
|
| 2,892 |
|
|
| 12 |
|
|
| 157 |
|
|
| 3,061 |
|
Noninterest-bearing deposits |
|
| 8,557 |
|
|
| 12,022 |
|
|
| 36,639 |
|
|
| 57,218 |
|
Total |
| $ | 45,793 |
|
| $ | 17,968 |
|
| $ | 67,494 |
|
| $ | 131,255 |
|
The Company also uses borrowings from banks, securities dealers, various Federal Home Loan Banks, the Federal Reserve BankFRB of New York and others as sources of funding. Short-term borrowings represent borrowing arrangements that at the time they were entered into or were assumed in an acquisition had a contractual maturity of less than one year.year or less. Average short-term borrowings totaled $244 million in the recent quarter, compared with $231$913 million in the third quarter of 2016 and $212 million in the second quarter of 2017. Included in short-term borrowings were unsecured federal funds borrowings, which generally mature on the next business day, that averaged $139 million and $160 million in the third quarters of 2017 and 2016, respectively, and $141 million in the second quarter of 2017.
Long-term borrowings averaged $8.0 billion in the recent quarter,2022, compared with $10.3 billion$91 million in the year-earlier quarter and $8.3$1.1 billion in the second quarter of 2017.2022. Short-term borrowings assumed in connection with the People's United acquisition totaled $895 million. In October 2022 M&T redeemed $500 million of unsecured senior notes due to mature in December 2022 that had been assumed in the acquisition of People's United and included in short-term borrowings.
- 56 -
Long-term borrowings averaged $3.3 billion in each of the two most recent quarters, compared with $3.4 billion in the third quarter of 2021. Average balances of the Company’s outstanding senior notes were $1.7 billion during each of the three months ended September 30, 2022 and June 30, 2022, compared with $2.4 billion in the third quarter of 2021. In August 2022, M&T issued $500 million of senior notes that mature in August 2028 and pay a fixed rate of 4.553% semi-annually until August 2027 after which the Secured Overnight Financing Rate ("SOFR") plus 1.78% will be paid quarterly until maturity. In April 2022, M&T Bank has a Bank Note Program whereby M&T Bank may offer unsecured senior and subordinated notes. Average balances of senior notes outstanding under that program were $4.7 billion, $5.2 billion and $4.8 billion during the three-month periods ended September 30, 2017, September 30, 2016 and June 30, 2017, respectively. During August 2017, M&T Bank issued $750redeemed $650 million of 2.05% fixed rate senior notes that were due to mature in 2020.on May 18, 2022. During May 2017, M&T Bank issued $650 million of fixed rate and2022, $250 million of variable rate senior notes that mature in 2022. During June 2017,of M&T Bank redeemed $750matured. In January 2021, $350 million of 1.40% fixedvariable rate senior notes. The notes had a maturity date of July 25, 2017 and were redeemable on or after the 30th day prior to the maturity date. Outstanding balances of the senior unsecured notes were $5.0 billion at September 30, 2017 and $5.2 billion at December 31, 2016. Also included in average long-term borrowings were amounts borrowed from the Federal Home Loan Banks of New York, Atlanta and Pittsburgh of $580 million in the recent quarter, compared with $1.2 billion and $1.0 billion in the third quarter of 2016 and the second quarter of 2017, respectively.matured. Subordinated capital notes included in long-term borrowings averaged $1.8 billion$982 million in the recentthird quarter and $1.5 billion during each of 2022, $500 million in the quartersthree-month period ended September 30, 20162021 and June 30, 2017. During August 2017,$983 million in the second quarter of 2022. In March 2021, M&T Bank issuedredeemed $500 million of 3.40% fixed rate subordinated capital notes that mature in 2027 in accordance with M&T’s 2017 Capital Plan.notes. Junior subordinated debentures associated with trust preferred securities that were included in average long-term borrowings totaled $518were $534 million, in each of the two most recent quarters, compared with $516$530 million inand $533 million during the third quarters of 2022 and 2021 and the second quarter of 2016.2022, respectively. Additional information regarding junior subordinated debentures is provided in note 5 of Notes to Financial Statements. Also included inAs of April 1, 2022, long-term borrowings were agreements to repurchase securities, which averaged $427 millionassumed in the recently completed quarter, compared with $1.9 billion in the year-earlier quarter and $430 million in the second quarter of 2017. The lower average balances of repurchase agreements in the 2017 periods as compared with the third quarter of 2016 reflect maturities. The repurchase agreements held at September 30, 2017People's United acquisition totaled $425$494 million and have various repurchase dates through 2020, however, the contractual maturitiesincluded $483 million of the underlying securities extend beyond such repurchase dates. fixed-rate subordinated notes and $11 million of FHLB advances.
The Company has utilized interest rate swap agreements to modify the repricing characteristics of certain components of its loans and long-term debt. As of September 30, 2017,2022, interest rate swap agreements were used to hedgeas fair value hedges of approximately $5.0$1.5 billion of outstanding fixed rate long-term borrowings. During the third quarter of 2017, the Company entered into $1.3 billion ofAdditionally, interest rate swap agreements to hedge the senior notes and subordinated capital notes issued in
- 58 -
August 2017. In the second quarterwith a notional amount of 2017, the Company entered into $2.8$15.25 billion were used as cash flow hedges of interest payments associated with variable rate swap agreements to hedge the aforementioned senior notes issued during that quarter and certain existing fixed rate borrowings.commercial real estate loans. Further information on interest rate swap agreements is provided herein and in note 1011 of Notes to Financial Statements.
Changes in the composition of the Company’s earning assets and interest-bearing liabilities, as discussed herein, as well as changes in interest rates and spreads, can impact net interest income. Net interest spread, or the difference between the taxable-equivalent yield on earning assets and the rate paid on interest-bearing liabilities, was 3.32%3.49% in the recent quarter, compared with 2.85%up 81 basis points from 2.68% in the third quarter of 2016.2021. The yield on earning assets during the third quarter of 20172022 was 3.89%3.90%, up 45108 basis points from 3.44%2.82% in the year-earliersimilar 2021 period, while the rate paid on interest-bearing liabilities decreased twoincreased 27 basis points to .57%.41% in the recent quarter from .59%.14% in the similar 2016year-earlier period. In the second quarter of 2017,2022, the net interest spread was 3.27%2.92%, the yield on earning assets was 3.79%3.12% and the rate paid on interest-bearing liabilities was .52%.20%. The increases in the net interest spread since the third quarter of 2021 reflect the impact of generally rising interest rates that resulted in higher yields on loans and leases, deposits at the FRB of New York and investment securities, partially offset by higher rates on interest-bearing liabilities. For the first nine months of 2017,2022, the net interest spread was 3.25%3.03%, up 3127 basis points from 2.76% in the year-earlier period. The yield on earning assets and the rate paid on interest-bearing liabilities for the nine-month period ended September 30, 2017first nine months of 2022 were 3.79%3.30% and .54%.27%, respectively, compared with 3.50%2.91% and .56%.15%, respectively, in the corresponding 2016 period.initial nine months of 2021. The wideningFederal Reserve raised its target Federal funds rate 3.00% since September 30, 2021, including hikes of the net interest spread1.50% and 1.25% in the recent quarter as compared with the third quarter of 20162022 and second quarter of 2017 and in the first nine months of 2017 as compared with the corresponding nine months of 2016 was largely due to the effect of increases in short-term interest rates initiated by the Federal Reserve in mid-December 2016, mid-March 2017 and mid-June 2017 that contributed to higher yields on loans and leases.2022, respectively.
Net interest-free funds consist largely of noninterest-bearing demand deposits and shareholders’ equity, partially offset by bank owned life insurance and non-earning assets, including goodwill and core deposit and other intangible assets. Net interest-free funds averaged $39.2 billion in the recent quarter, compared with $37.3$83.8 billion in the third quarter of 20162022, compared with $62.9 billion in the year-earlier quarter and $39.1$84.7 billion in the second quarter of 2017.2022. During the first nine months of 2022 and 2021, average net interest-free funds aggregated $78.0 billion and $59.0 billion, respectively. The increases in average net interest-free funds in the recent quarter and the second quarter of 2022 as compared with third quarter of 2021 reflect higher average balances of noninterest-bearing deposits and shareholders’ equity that include the impact of the acquisition of People's United. Shareholders’ equity averaged $25.7 billion during the three-month period ended September 30, 2022, compared with $17.1 billion during the year-earlier period and $26.1 billion during the three-month period ended June 30, 2022. The higher amounts of shareholders' equity in the two most recent quarters as compared with 2021's third quarter reflect retained earnings and additional equity issued in connection with the People's United acquisition, partially offset by share repurchase activity. M&T issued $8.4 billion of common equity and $261 million of preferred equity in completing the acquisition of People's United on April 1, 2022. M&T also
- 57 -
repurchased $600 million of its common stock in each of the third quarterand second quarters of 2016 reflect higher average balances of noninterest-bearing deposits. Those deposits averaged $32.0 billion, $30.8 billion and $31.9 billion in the quarters ended September 30, 2017, September 30, 2016 and June 30, 2017, respectively. During the first nine months of 2017 and 2016, average net interest-free funds aggregated $39.6 billion and $36.0 billion, respectively. The growth in average noninterest-bearing deposits since the third quarter of 2016 reflects, in part, higher deposits of trust customers. Shareholders’ equity averaged $16.3 billion and goodwill2022. Goodwill and core deposit and other intangible assets averaged $4.7$8.7 billion and $8.8 billion in eachthe third quarter of 2022 and second quarter of 2022, respectively, up from $4.6 billion in the third quarter of 2021. The Company recorded $3.9 billion of goodwill on April 1, 2022 which represents excess consideration over the fair value of net assets acquired in the People's United transaction. As part of the three-month periods ended September 30, 2017, September 30, 2016transaction, intangible assets were identified and June 30, 2017. Cashrecorded at fair value, thereby increasing the balance of core deposit and other intangible assets on the Company's balance sheet by $261 million on April 1, 2022. Reflecting the impact of the People's United acquisition, the cash surrender value of bank owned life insurance averaged $1.8$2.6 billion in each of the third and second quarters of 2022, compared with $1.9 billion in the recentthird quarter compared with $1.7 billion during each of the quarters ended September 30, 2016 and June 30, 2017. Increases2021. Changes in the cash surrender value of bank owned life insurance and benefits received are not included in interest income, but rather are recorded in “other revenues from operations.” The contribution of net interest-free funds to net interest margin was .21%.19% in the third quarter of 2017,2022, compared with .20%.06% and .18%.09% in the third quarter of 20162021 and the second quarter of 2017,2022, respectively. ThatThe increased contribution forof net interest-free funds to net interest margin in the most recent quarter as compared with the third quarter of 2021 and second quarter of 2022 reflects the higher rates on interest-bearing liabilities used to value net interest-free funds. The contribution of net interest-free funds to net interest margin in the first nine months of 20172022 and 20162021 was .19%.12% and .18%.07%, respectively.
Reflecting the changes to the net interest spread and the contribution of net interest-free funds as described herein, the Company’s net interest margin was 3.53%3.68% in the third quarter of 2017,2022, compared with 3.05%2.74% in the corresponding 2016year-earlier period and 3.45%3.01% in the second quarter of 2017.2022. During the first nine months of 20172022 and 2016,2021, the net interest margin was 3.44%3.15% and 3.12%2.83%, respectively. Future changes in market interest rates or spreads, as well as changes in the composition of the Company’s portfolios of earning assets and interest-bearing liabilities that result in reductions inchanges to spreads, could adversely impact the Company’s net interest income and net interest margin. The Federal Open Market Committee has conducted a series of basis point increases in short-term interest rates during the first nine months of 2022. These actions have led to generally higher interest rates overall and, accordingly, have contributed to the Company's higher net interest margin in the recent quarter as compared with the year-earlier quarter and immediately preceding quarter.
Management assesses the potential impact of future changes in interest rates and spreads by projecting net interest income under several interest rate scenarios. In managing interest rate risk, the Company has utilized interest rate swap agreements to modify the repricing characteristics of certain portions of its earning assets and interest-bearing liabilities. Periodic settlement amounts arising from these agreements are reflected in either the yields earned on earning assets or the rates paid on interest-bearing liabilities. The notional amount of interest rate swap agreements entered into for interest rate risk management purposes was $7.0$16.75 billion (excluding $4.65 billion of forward-starting swap agreements) at September 30, 2017,
- 59 -
compared with $1.42022, $19.0 billion and $900 million(excluding $8.35 billion of forward-starting swap agreements) at September 30, 20162021 and $15.0 billion (excluding $8.35 billion of forward-starting swap agreements) at December 31, 2016, respectively.2021. Under the terms of those interest rate swap agreements, the Company received payments based on the outstanding notional amount at fixed rates and made payments at variable rates. The $6.1 billion increase in notional amount from December 31, 2016 reflects additions of $2.0 billion ofAt September 30, 2022 interest rate swaps designatedswap agreements with notional amounts of $15.25 billion were serving as cash flow hedges of interest payments associated with variable rate commercial real estate loans, compared with $17.35 billion at September 30, 2021 and $4.1$13.35 billion at December 31, 2021. Interest rate swap agreements with notional amounts of interest rate swaps designated$1.5 billion at September 30, 2022 and $1.65 billion at each of September 30, 2021 and December 31, 2021 were serving as fair value hedges of fixed rate long-term borrowings. There were noThe Company enters into forward-starting interest rate swap agreements designatedpredominantly to extend the term of its interest rate swap agreements serving as cash flow hedges at September 30, 2016 or December 31, 2016.and provide a hedge against changing interest rates on certain of its variable rate loans.
- 58 -
In a fair value hedge, the fair value of the derivative (the interest rate swap agreement) and changes in the fair value of the hedged item are recorded in the Company’s consolidated balance sheet with the corresponding gain or loss recognized in current earnings. The difference between changes in the fair value of the interest rate swap agreements and the hedged items represents hedge ineffectiveness and is recorded in “other revenues from operations” inas an adjustment to the Company’s consolidated statementinterest income or interest expense of income.the respective hedged item. In a cash flow hedge, unlike in a fair value hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects earnings. The ineffective portion of the gain or loss is reported in “other revenues from operations” immediately. The amounts of hedge ineffectiveness recognized during each of the quarters ended September 30, 2017,2022, September 30, 20162021 and June 30, 20172022 were not material to the Company’s consolidated results of operations. The estimated aggregate netInformation regarding the fair value of interest rate swap agreements designated as fair value hedges represented losses (without considerationand hedge ineffectiveness is presented in note 11 of any settlement payments)Notes to Financial Statements. Information regarding the valuation of approximately $12 million at September 30, 2017, compared with gains (without consideration of any settlement payments) of $21 million at September 30, 2016, $12 million at December 31, 2016 and $2 million at June 30, 2017. The fair values of such interest rate swap agreements were substantially offset by changes in the fair values of the hedged items. The estimated fair values of the interest rate swap agreements designated as cash flow hedges were net losses (without consideration of any settlement payments) of approximately $3.4 million at September 30, 2017 and $1.5 million at June 30, 2017. Net of applicable income taxes, the amount of such losses reflectedincluded in “accumulated other comprehensive income net”is presented in the Company’s consolidated balance sheet were approximately $2 million and $1 million at September 30 and June 30, 2017, respectively.note 10 of Notes to Financial Statements. The changes in the fair values of the interest rate swap agreements and the hedged items primarily result from the effects of changing interest rates and spreads. The Company’s credit exposure as of September 30, 2017 with respect to the estimated fair value of interest rate swap agreements used for managing interest rate risk has been substantially mitigated through master netting arrangements with trading account interest rate contracts with the same counterparty, periodic settlements and counterparty postings of $5 million of collateral with the Company.
The weighted-average rates to be received and paid under interest rate swap agreements currently in effect were 2.29% and 1.81% respectively, at September 30, 2017. The average notional amounts of interest rate swap agreements entered into for interest rate risk management purposes, the related effect on net interest income and margin, and the weighted-average interest rates paid or received on those swap agreements are presented in the accompanying table. Additional information about the Company’s use of interest rate swap agreements and other derivatives is included in note 1011 of Notes to Financial Statements.
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|
| Three Months Ended September 30 | |||||||||||||||
. |
| 2022 |
|
| 2021 |
|
| ||||||||||
|
|
|
|
| Rate(a) |
|
| Amount |
|
| Rate(a) |
|
| ||||
|
| (Dollars in thousands) | |||||||||||||||
Increase (decrease) in: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest income |
| $ | (22,466 | ) |
|
| .(05 | ) | % | $ | 58,058 |
|
|
| .16 |
| % |
Interest expense |
|
| (651 | ) |
|
| — |
|
|
| (8,731 | ) |
|
| .(04 | ) |
|
Net interest income/margin |
| $ | (21,815 | ) |
|
| .(05 | ) | % | $ | 66,789 |
|
|
| .19 |
| % |
Average notional amount (c) |
| $ | 16,472,826 |
|
|
|
|
| $ | 18,923,913 |
|
|
|
|
| ||
Rate received (b) |
|
|
|
|
| 2.06 |
| % |
|
|
|
| 1.53 |
| % | ||
Rate paid (b) |
|
|
|
|
| 2.57 |
| % |
|
|
|
| .15 |
| % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Nine Months Ended September 30, | |||||||||||||||
. |
| 2022 |
|
| 2021 |
|
| ||||||||||
|
| Amount |
|
| Rate(a) |
|
| Amount |
|
| Rate(a) |
|
| ||||
|
| (Dollars in thousands) | |||||||||||||||
Increase (decrease) in: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest income |
| $ | 35,500 |
|
|
| .03 |
| % | $ | 206,713 |
|
|
| .20 |
| % |
Interest expense |
|
| (14,436 | ) |
|
| .(02 | ) |
|
| (26,084 | ) |
|
| .(04 | ) |
|
Net interest income/margin |
| $ | 49,936 |
|
|
| .04 |
| % | $ | 232,797 |
|
|
| .23 |
| % |
Average notional amount (c) |
| $ | 15,452,015 |
|
|
|
|
| $ | 18,915,751 |
|
|
|
|
| ||
Rate received (b) |
|
|
|
|
| 1.67 |
| % |
|
|
|
| 1.79 |
| % | ||
Rate paid (b) |
|
|
|
|
| 1.25 |
| % |
|
|
|
| .17 |
| % |
|
| Three Months Ended September 30 |
|
| |||||||||||||
. |
| 2017 |
|
| 2016 |
|
| ||||||||||
|
| Amount |
|
| Rate(a) |
|
| Amount |
|
| Rate(a) |
|
| ||||
|
| (Dollars in thousands) |
|
| |||||||||||||
Increase (decrease) in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
| $ | 1,181 |
|
|
| — |
| % | $ | — |
|
|
| — |
| % |
Interest expense |
|
| (6,059 | ) |
|
| (.03 | ) |
|
| (9,462 | ) |
|
| (.05 | ) |
|
Net interest income/margin |
| $ | 7,240 |
|
|
| .03 |
| % | $ | 9,462 |
|
|
| .03 |
| % |
Average notional amount |
| $ | 6,352,174 |
|
|
|
|
|
| $ | 1,400,000 |
|
|
|
|
|
|
Rate received (b) |
|
|
|
|
|
| 2.26 |
| % |
|
|
|
|
| 4.42 |
| % |
Rate paid (b) |
|
|
|
|
|
| 1.76 |
| % |
|
|
|
|
| 1.68 |
| % |
|
| Nine Months Ended September 30 |
|
| |||||||||||||
|
| 2017 |
|
| 2016 |
|
| ||||||||||
|
| Amount |
|
| Rate(a) |
|
| Amount |
|
| Rate(a) |
|
| ||||
|
| (Dollars in thousands) |
|
| |||||||||||||
Increase (decrease) in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
| $ | 2,275 |
|
|
| — |
| % | $ | — |
|
|
| — |
| % |
Interest expense |
|
| (15,611 | ) |
|
| (.03 | ) |
|
| (29,593 | ) |
|
| (.05 | ) |
|
Net interest income/margin |
| $ | 17,886 |
|
|
| .02 |
| % | $ | 29,593 |
|
|
| .04 |
| % |
Average notional amount |
| $ | 3,807,326 |
|
|
|
|
|
| $ | 1,400,000 |
|
|
|
|
|
|
Rate received (b) |
|
|
|
|
|
| 2.38 |
| % |
|
|
|
|
| 4.42 |
| % |
Rate paid (b) |
|
|
|
|
|
| 1.74 |
| % |
|
|
|
|
| 1.58 |
| % |
|
|
|
|
As a financial intermediary, the Company is exposed to various risks, including liquidity and market risk. Liquidity refers to the Company’s ability to ensure that sufficient cash flow and liquid assets are available to satisfy current and future obligations, including demands for loans and deposit withdrawals, funding operating costs and other corporate purposes. Liquidity risk arises whenever the maturities of financial instruments included in assets and liabilities differ.
The most significant source of funding for the Company is core deposits, which are generated from a large base of consumer, corporate and institutional customers. That customer base has, over the past several years, become more geographically diverse as a result of expansion of the Company’s businesses. Nevertheless, the Company faces competition in offering products and services from a large array of financial market participants, including banks,
- 59 -
thrifts, mutual funds, securities dealers and others. The Company supplements funding provided through deposits with various short-term and long-term wholesale borrowings, including overnight federal funds purchased, short-term advances from the FHLB of New York, brokered deposits, and longer-term borrowings. M&T’s bank subsidiaries have&T Bank has access to additional funding sources through borrowings from the FHLB of New York, lines of credit with the Federal Reserve BankFRB of New York, the previously notedM&T Bank’s Bank Note Program, and other available borrowing facilities. The Bank Note Program enables M&T Bank to offer unsecured senior and subordinated notes. The Company has, from time to time, also issued subordinated capital notes and junior subordinated debentures associated with trust preferred securities to provide liquidity and enhance regulatory capital ratios. Such notes generally qualify under the Federal Reserve Board’s risk-based capital guidelines for inclusion in the Company’s regulatory capital. However, pursuant to the Dodd-Frank Act, theThe Company’s junior subordinated debentures associated with trust preferred securities have been phased-out of the definition of Tier 1 capital. Beginning January 1, 2016 those instrumentsand other subordinated capital notes are considered Tier 2 capital and are only includable in total regulatory capital.
The Company has informal and sometimes reciprocal sources At each of funding available through various arrangements for unsecured short-term borrowings from a wide group of banks and other financial institutions. Short-term federal funds borrowings were $134 million, $159 million and $112 million at September 30, 2017, September 30, 20162022 and December 31, 2016, respectively. In general, those2021, long-term borrowings were unsecured and matured on the next business day. In addition to satisfying customer demand, aggregated $3.5 billion.
Cayman Islands office deposits may behad been used by some customers of the Company as an alternative to short-term borrowings.other deposit and investment products. During the second quarter of 2021, the Company introduced a new interest-bearing sweep product (included in savings and interest-checking deposits) that replaced the Eurodollar sweep product previously recorded as Cayman Islands office deposits. As a result, the Cayman Islands office has been closed and there were no Cayman Islands office deposits totaled $232 million atoutstanding as of September 30, 2017, $223 million at September 30, 20162022 and $202 million at December 31, 2016.2021. The Company has also benefited from the placement of brokered deposits. The Company had brokered savings and interest-bearing checkinginterest-checking deposit accounts which totaledaggregated approximately $1.3$3.3 billion at September 30, 2017, $1.12022, $3.2 billion at December 31, 2021 and $3.4 billion at September 30, 2016 and $1.2 billion at December 31, 2016.2021. Brokered time deposits were not a significant source of funding as of those dates.
- 61 -
The Company’s ability to obtain funding from these other sources could be negatively impacted should the Company experience a substantial deterioration in its financial condition or its debt ratings, or should the availability of short-term funding become restricted due to a disruption in the financial markets. The Company attempts to quantify such credit-event risk by modeling scenarios that estimate the liquidity impact resulting from a short-term ratings downgrade over various grading levels. Such impact is estimated by attempting to measure the effect on available unsecured lines of credit, available capacity from secured borrowing sources and securitizable assets. In addition to deposits and borrowings, other sources of liquidity include maturities of investment securities and other earning assets, repayments of loans and investment securities, and cash generated from operations, such as fees collected for services.
Certain customers of the Company obtain financing through the issuance of variable rate demand bonds (“VRDBs”). The VRDBs are generally enhanced by letters of credit provided by M&T Bank. M&T Bank oftentimes acts as remarketing agent for the VRDBs and, at its discretion, may from time-to-time own some of the VRDBs while such instruments are remarketed. When this occurs, the VRDBs are classified as trading account assets in the Company’s consolidated balance sheet. Nevertheless, M&T Bank is not contractually obligated to purchase the VRDBs. There were $2 millionThe value of VRDBs in the Company’s trading account was not material at September 30, 2017, compared with $73 million at September 30, 2016 and $30 million at2022 or December 31, 2016.2021. The total amountamounts of VRDBs outstanding backed by M&T Bank letters of credit was $1.2 billionwere $633 million at September 30, 2017, compared with $1.6 billion2022, $662 million at December 31, 2021 and $1.3 billion$683 million at September 30, 2016 and December 31, 2016, respectively.2021. M&T Bank also serves as remarketing agent for most of those bonds.
The Company enters into contractual obligations in the normal course of business that require future cash payments. Such obligations include, among others, payments related to deposits, borrowings, leases and other contractual commitments. Off-balance sheet commitments to customers may impact liquidity, including commitments to extend credit, standby letters of credit, commercial letters of credit, financial guarantees and indemnification contracts, and commitments to sell real estate loans. Because many of these commitments or contracts expire without being funded in whole or in part, the contract amounts are not necessarily indicative of future cash flows. Further discussion of these commitments is provided in note 1314 of Notes to Financial Statements.
M&T’s primary source of funds to pay for operating expenses, shareholder dividends and treasury stock repurchases has historically been the receipt of dividends from its bank subsidiaries, which are subject to various regulatory limitations. Dividends from any bank subsidiary to M&T are limited by the amount of earnings of the subsidiary in the current year and the two preceding years. For purposes of that test, at September 30, 20172022 approximately $819$937 million was available for payment of dividends to M&T from bank subsidiaries. Information regarding theM&T also may
- 60 -
obtain funding through long-term debt obligationsborrowings. Outstanding senior notes of M&T is includedat September 30, 2022 and December 31, 2021 were $1.22 billion and $766 million, respectively. M&T assumed $503 million of short-term borrowings and $78 million of long-term borrowings in note 5the acquisition of Notes to Financial Statements.People's United. In October 2022, M&T redeemed the short-term borrowings obtained in the acquisition of People's United. Junior subordinated debentures of M&T associated with trust preferred securities outstanding at September 30, 2022 and December 31, 2021 totaled $535 million and $532 million, respectively.
Management closely monitors the Company’s liquidity position on an ongoing basis for compliance with internal policies and believes that available sources of liquidity are adequate to meet funding needs anticipated in the normalordinary course of business. Management does not anticipate engaging in any activities, either currently or in the long-term, for which adequate funding would not be available and would therefore result in a significant strain on liquidity at either M&T or its subsidiary banks. Banking regulators have enacted the LCR rules requiring a banking company to maintain a minimum amount of liquid assets to withstand a standardized supervisory liquidity stress scenario. The Company has taken steps to maintain appropriate liquidity and is in compliance with the LCR rules.
Market risk is the risk of loss from adverse changes in the market prices and/or interest rates of the Company’s financial instruments. The primary market risk the Company is exposed to is interest rate risk. Interest rate risk arises from the Company’s core banking activities of lending and deposit-taking, because assets and liabilities reprice at different times and by different amounts as interest rates change. As a result, net interest income earned by the Company is subject to the effects of changing interest rates. The Company measures interest rate risk by calculating the variability of net interest income in future periods under various interest rate scenarios using projected balances for earning assets, interest-bearing liabilities and derivatives used to hedgemanage interest rate risk. Management’s philosophy toward interest rate risk management is to limit the variability of net interest income. The
- 62 -
balances of financial instruments used in the projections are based on expected growth from forecasted business opportunities, anticipated prepayments of loans and investment securities, and expected maturities of investment securities, loans and deposits. Management uses a “value of equity” model to supplement the modeling technique described above. Those supplemental analyses are based on discounted cash flows associated with on- and off-balance sheet financial instruments. Such analyses are modeled to reflect changes in interest rates and provide management with a long-term interest rate risk metric. The Company has entered into interest rate swap agreements to help manage exposure to interest rate risk. At September 30, 2022, the aggregate notional amount of interest rate swap agreements entered into for interest rate risk management purposes that were currently in effect was $16.75 billion. In addition, the Company has entered into $4.65 billion of forward-starting interest rate swap agreements.
The Company’s Asset-Liability Committee, which includes members of senior management, monitors the sensitivity of the Company’s net interest income to changes in interest rates with the aid of a computer model that forecasts net interest income under different interest rate scenarios. In modeling changing interest rates, the Company considers different yield curve shapes that consider both parallel (that is, simultaneous changes in interest rates at each point on the yield curve) and non-parallel (that is, allowing interest rates at points on the yield curve to vary by different amounts) shifts in the yield curve. In utilizing the model, projections ofmarket-implied forward interest rates over the subsequent twelve months are generally used to determine a base interest rate scenario for the net interest income simulation. That calculated base net interest income is then compared to the income calculated under the varying interest rate scenarios are compared to a base interest rate scenario.scenarios. The model considers the impact of ongoing lending and deposit-gathering activities, as well as interrelationships in the magnitude and timing of the repricing of financial instruments, including the effect of changing interest rates on expected prepayments and maturities. When deemed prudent, management has taken actions to mitigate exposure to interest rate risk through the use of on- or off-balance sheet financial instruments and intends to do so in the future. Possible actions include, but are not limited to, changes in the pricing of loan and deposit products, modifying the composition of earning assets and interest-bearing liabilities, and adding to, modifying or terminating existing interest rate swap agreements or other financial instruments used for interest rate risk management purposes.
The accompanying table as of September 30, 20172022 and December 31, 20162021 displays the estimated impact on net interest income from non-trading financial instruments in the base scenario described above resulting from parallel changes in interest rates across repricing categories during the first modeling year.
- 61 -
SENSITIVITY OF NET INTEREST INCOME
TO CHANGES IN INTEREST RATES
|
| Calculated Increase (Decrease) |
|
| |||||
Changes in interest rates |
| September 30, 2022 |
|
| December 31, 2021 |
|
| ||
|
| (In thousands) |
|
| |||||
|
|
|
|
|
|
|
| ||
+200 basis points |
| $ | 251,494 |
|
|
| 533,317 |
|
|
+100 basis points |
|
| 179,848 |
|
|
| 297,573 |
|
|
-100 basis points |
|
| (248,760 | ) |
|
| (204,760 | ) |
|
-200 basis points |
|
| (520,661 | ) |
|
| — |
| (a) |
|
| Calculated Increase (Decrease) in Projected Net Interest Income |
|
| |||||
Changes in interest rates |
| September 30, 2017 |
|
| December 31, 2016 |
|
| ||
|
| (In thousands) |
|
| |||||
|
|
|
|
|
|
|
|
|
|
+200 basis points |
| $ | 134,336 |
|
|
| 227,283 |
|
|
+100 basis points |
|
| 96,895 |
|
|
| 147,400 |
|
|
-50 basis points |
|
| — |
| (a) |
| (98,945 | ) |
|
-100 basis points |
|
| (180,632 | ) |
|
| — |
| (a) |
(a)scenario.scenario as of December 31, 2021
The Company utilized many assumptions to calculate the impact that changes in interest rates may have on net interest income. The more significant of those assumptions included the rate of prepayments of mortgage-related assets, cash flows from derivative and other financial instruments, held for non-trading purposes, loan and deposit volumes and pricing, and deposit maturities. In the scenarios presented, the Company also assumed gradual changes in interest rates during a twelve-month period as compared with the base scenario. In the declining rate scenario, the rate changes may be limited to lesser amounts such that interest rates remain positiveat or above zero on all points of the yield curve. In 2016,Changes in amounts presented since December 31, 2021 reflect higher balances of earnings assets obtained in the Company suspendedPeople's United acquisition, changes in portfolio composition, the -100 basis point scenario due to the persistent low level of market-implied forward interest rates. This scenario was reinstated as of June 30, 2017.rates and hedging actions taken by the Company. The assumptions used in interest rate sensitivity modeling are inherently uncertain and, as a result, the Company cannot precisely predict the impact of changes in interest rates on
- 63 -
net interest income. Actual results may differ significantly from those presented due to the timing, magnitude and frequency of changes in interest rates and changes in market conditions and interest rate differentials (spreads) between maturity/repricing categories, as well as any actions, such as those previously described, which management may take to counter such changes. Given recent increases
A significant amount of the Company’s interest-earning assets, interest-bearing liabilities, preferred equity instruments and interest rate swap agreements have contractual repricing terms that reference the London Interbank Offered Rate (“LIBOR”). Various regulatory bodies have encouraged banks to transition away from LIBOR as soon as practicable, generally cease entering new contracts that use LIBOR as a reference rate no later than December 31, 2021, and for new contracts entered into before December 31, 2021 to utilize a reference rate other than LIBOR or include robust language that includes a clearly defined alternative reference rate after LIBOR’s discontinuation. Publication of certain tenors of LIBOR has already ceased and complete cessation of LIBOR publication is expected by June 30, 2023. Effective December 31, 2021, the Company essentially discontinued entering into new LIBOR-based contracts.
At September 30, 2022 the Company had LIBOR-based commercial loans and leases and commercial real estate loans of $36.6 billion and residential mortgage and consumer loans of $4.3 billion outstanding. Approximately 70% of the loans either mature before June 30, 2023 or have been amended to include appropriate alternative language to be effective upon cessation of LIBOR publication. Approximately $731 million of borrowings and $1.1 billion of preferred equity instruments reference LIBOR as of September 30, 2022. The Company’s interest rate swap agreements primarily reference LIBOR. In October 2020, the International Swaps and Derivatives Association, Inc. published the IBOR Fallbacks Supplement (“Supplement”) and the IBOR Fallback Protocol (“Protocol”). The Protocol enables market participants to incorporate certain revisions into their legacy non-cleared derivative trades with other counterparties that also choose to adhere to the Protocol. M&T adhered to the Protocol in short-termNovember 2020 and is in the process of remediating its interest rates, management believesrate swap transactions with its end-user customers. With respect to the Company’s cleared interest rate swap agreements that reference LIBOR, clearinghouses have adopted the likelihoodsame relevant Secured Overnight Financing Rate (“SOFR”) benchmark alternatives of potential volatilitythe Supplement and Protocol.
As loans mature and new originations occur a larger percentage of interest rates has increased. As a result,the Company’s variable-rate loans are expected to reference SOFR or other indexes, including the Bloomberg Short Term Bank Yield Index (“BSBY”). At September 30, 2022 the Company had approximately $21.3 billion and $274 million of outstanding loan balances that reference SOFR and BSBY, respectively. Additionally, as previously described, in 2017 management addedof September 30, 2022, the Company had $15.6 billion of notional amount of interest rate swap agreements designated as hedging instrumentscash flow hedges of commercial real estate loans,
- 62 -
including $4.7 billion of forward-starting interest rate swap agreements that become effective in 2023, and notional amounts of $4.3 billion of non-hedging derivative interest rate contracts that are referenced to mitigateSOFR. The Company’s usage of interest rate swap agreements referenced to SOFR or BSBY is expected to increase in response to the discontinuation of LIBOR. The Company continues to work with its customers and other counterparties to remediate LIBOR-based agreements which expire after June 30, 2023 by incorporating alternative language, negotiating new agreements, or other means. The discontinuation of LIBOR and uncertainty relating to the emergence of one or more alternative benchmark indexes to replace LIBOR could materially impact the Company’s exposure to such potential volatility. In light of the uncertaintiesinterest rate risk profile and assumptions associated with the process, the amounts presented in the table are not considered significant to the Company’s past or projected net interest income.its management thereof.
Changes in fair value of the Company’s financial instruments can also result from a lack of trading activity for similar instruments in the financial markets. That impact is most notable on the values assigned to some of the Company’s investment securities. Information about the fair valuation of investment securities is presented herein under the heading “Capital” and in notes 3 and 1213 of Notes to Financial Statements.
The Company engages in limited trading account activitiesenters into interest rate and foreign exchange contracts to meet the financial needs of customers that it includes in its financial statements as non-hedging derivatives within other assets and to fund the Company’s obligations under certain deferred compensation plans.other liabilities. Financial instruments utilized in trading accountfor such activities consist predominantly of interest rate contracts, such as swap agreements and forward and futures contracts related to foreign currencies. The Company generally mitigates the foreign currency and interest rate risk associated with trading accountcustomer activities by entering into offsetting trading positions with third parties that are also included in the trading account.other assets and other liabilities. The fair values of the offsetting trading accountnon-hedging derivative positions associated with interest rate contracts and foreign currency and other option and futures contracts are presented in note 1011 of Notes to Financial Statements. The amounts of gross and net trading account positions, as well as the type of trading account activities conducted by the Company, are subject to a well-defined series of potential loss exposure limits established by management and approved by M&T’s Board of Directors. However, asAs with any non-government guaranteed financial instrument, the Company is exposed to credit risk associated with counterparties to the Company’s trading accountnon-hedging derivative activities.
The notional amounts of interest rate contracts entered into for trading account purposes were $15.5 billion at September 30, 2017, $21.2 billion at September 30, 2016 and $21.6 billion at December 31, 2016. The notional amounts of foreign currency and other option and futures contracts entered into for trading account purposes were $545 million at September 30, 2017, compared with $891 million at September 30, 2016 and $471 million at December 31, 2016. Although the notional amounts of these contracts are not recorded in the consolidated balance sheet, the unsettled fair values of allsuch financial instruments used for trading account activities are recorded in the consolidated balance sheet. The fair values of all trading accountsuch non-hedging derivative assets and liabilities recognized on the balance sheet totaled $171were $416 million and $110 million,$1.42 billion, respectively, at September 30, 2017. Effective January 2017, certain clearinghouse exchanges revised their rules to re-characterize required collateral postings for changes in fair value of exchange-traded derivatives as legal settlements of those positions. As a result, the2022 and $418 million and $83 million, respectively, at December 31, 2021. The fair value asset and liability amounts at September 30, 20172022 have been reduced by contractual settlements of $89$1.15 billion and $20 million, respectively, and at December 31, 2021 have been reduced by contractual settlements of $54 million and $29$305 million, respectively. The fair values of trading account assets and liabilities were $489 million and $293 million, respectively,associated with the Company's non-hedging derivative activities at September 30, 2016 and $3242022 as compared with December 31, 2021 reflect changes in values associated with interest rate swap agreements entered into with commercial customers that are not subject to periodic variation margin settlement payments.
Trading account assets were $130 million and $174at September 30, 2022, $50 million respectively, at December 31, 2016.2021 and $51 million at September 30, 2021. Included in trading account assets were assets related to deferred compensation plans totalingaggregating $23 million at September 30, 2022, compared with $21 million at each of September 30, 20172021 and 2016 and $22 million at December 31, 2016.2021. Changes in the fair values of such assets are recorded as “trading account and foreign exchangenon-hedging derivative gains” in the consolidated statement of income. Included in “other liabilities” in the consolidated balance sheet wereat September 30, 2022 was $29 million of liabilities related to deferred compensation plans, totaling $26compared with $25 million at each of September 30, 2017, September 30, 20162021 and $24 million at December 31, 2016.2021. Changes in the balances of such liabilities due to the valuation of allocated investment options to which the liabilities are indexed are recorded in “other costs of operations” in the consolidated statement of income. Also included in trading account assets were investments in mutual funds and other assets that the Company was required to hold under terms of certain non-qualified supplemental retirement and other benefit plans that were assumed by the Company in various acquisitions. Those assets totaled $25$107 million at September 30, 2017, $282022 and $29 million at each of September 30, 2021 and December 31, 2021. The increase at September 30, 20162022 as compared with the prior dates reflects assets obtained in the acquisition of the People's United non-qualified supplemental retirement and $24 million at December 31, 2016.other benefit plans.
- 6463 -
Given the Company’s policies limits and positions, management believes that the potential loss exposure to the Company resulting from market risk associated with trading account and non-hedging derivative activities was not material, however, as previously noted, the Company is exposed to credit risk associated with counterparties to transactions related to the Company’s trading accountactions to mitigate foreign currency and interest rate risk associated with customer activities. Additional information about the Company’s use of derivative financial instruments in its trading account activities is included in note 1011 of Notes to Financial Statements.
Provision for Credit Losses
The Company maintains an allowance for credit losses that in management’s judgment appropriately reflects losses inherent in the loan and lease portfolio. A provision for credit losses is recorded to adjust the level of the allowance to reflect expected credit losses that are based on economic forecasts as of each reporting date. Provisions for credit losses of $115 million and $302 million were recorded in the third and second quarters of 2022, respectively, compared with a credit loss recapture of $20 million in the third quarter of 2021. The provision recorded in the second quarter of 2022 included $242 million on loans obtained in the acquisition of People's United not deemed necessary by management. Theto be PCD. GAAP requires a provision for credit losses to be recorded beyond the recognition of the fair value of the loans at the acquisition date. In addition to the recorded provision, the allowance for credit losses was $30also increased by $99 million in the second quarter of 2022 to reflect the expected credit losses on loans obtained in the acquisition of People's United deemed to be PCD. That addition represents an increase of the carrying values of loans identified as PCD at the time of the acquisition. The Company's estimates of expected credit losses at September 30, 2022 reflect anticipated increases in unemployment spurred by Federal Reserve initiatives to curb high rates of inflation that could lead to overall deterioration of economic conditions and, thus, credit quality during an eight-quarter forecast period. Risks considered included inflation, a projected rise in unemployment, reduction of economic growth projections, decreasing residential real estate prices as compared with the immediately preceding quarter and continued concerns about commercial real estate values in the hospitality and office building sectors. Macroeconomic assumptions used to estimate credit losses on loans acquired from People's United at the April 1, 2022 acquisition date were consistent with those used by the Company to estimate credit losses at March 31, 2022.
Net charge-offs of loans were $63 million in the recent quarter, compared with $47net charge-offs of $40 million in the third quarter of 20162021 and $52$50 million in the second quarter of 2017. For the nine-month periods ended September 30, 2017 and 2016, the provision for credit losses was $137 million and $128 million, respectively. Net charge-offs of loans were $25 million in the recent quarter, compared with $41 million in the corresponding 2016 quarter and $45 million in the second quarter of 2017.2022. Net charge-offs as an annualized percentage of average loans and leases were .11%.20% in the recentthird quarter compared with .19%of 2022, .17% in the year-earlier quarter and .20%.16% in the second quarter of 2017.2022. As an annualized percentage by loan type, net charge-offs (recoveries) for the third quarter of 2022, third quarter of 2021 and the second quarter of 2022 were .16%, .38% and .31% for commercial loans and leases, .30%, .13% and .06% for commercial real estate loans and .25%, .12% and .26% for consumer loans, respectively. Net charge-offs of residential real estate loans as an annualized percentage of average loan balances were less than .01% for each of the three quarters noted herein. Net charge-offs for the nine-month periods ended September 30, totaled $1132022 and 2021 were $120 million in 2017 and $108$161 million, in 2016,respectively, representing an annualized rate of .17%.14% and .16%.22%, respectively, of average loans and leases in those respective periods.leases. A summary of net charge-offs by loan type is presented in the table that follows.
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NET CHARGE-OFFS (RECOVERIES)
BY LOAN/LEASE TYPE
|
| 2022 |
| |||||||||||||
|
| First Quarter |
|
| Second |
|
| Third Quarter |
|
| Year- |
| ||||
|
| (In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial, financial, leasing, etc. |
| $ | 5,569 |
|
|
| 29,502 |
|
|
| 15,374 |
|
|
| 50,445 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial |
|
| (13,143 | ) |
|
| 7,140 |
|
|
| 34,812 |
|
|
| 28,809 |
|
Residential |
|
| 865 |
|
|
| 256 |
|
|
| 338 |
|
|
| 1,459 |
|
Consumer |
|
| 13,576 |
|
|
| 12,671 |
|
|
| 12,675 |
|
|
| 38,922 |
|
|
| $ | 6,867 |
|
|
| 49,569 |
|
|
| 63,199 |
|
|
| 119,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 2021 |
| |||||||||||||
|
| First Quarter |
|
| Second Quarter |
|
| Third Quarter |
|
| Year- |
| ||||
|
| (In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial, financial, leasing, etc. |
| $ | 4,434 |
|
|
| 29,242 |
|
|
| 22,813 |
|
|
| 56,489 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial |
|
| 54,092 |
|
|
| 11,330 |
|
|
| 11,880 |
|
|
| 77,302 |
|
Residential |
|
| 366 |
|
|
| (149 | ) |
|
| 22 |
|
|
| 239 |
|
Consumer |
|
| 16,289 |
|
|
| 5,655 |
|
|
| 5,389 |
|
|
| 27,333 |
|
|
| $ | 75,181 |
|
|
| 46,078 |
|
|
| 40,104 |
|
|
| 161,363 |
|
| �� | 2017 |
| |||||||||||||
|
| First Quarter |
|
| Second Quarter |
|
| Third Quarter |
|
| Year- to-date |
| ||||
|
| (In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
| $ | 11,896 |
|
|
| 21,814 |
|
|
| 5,291 |
|
|
| 39,001 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| 3,971 |
|
|
| 1,419 |
|
|
| (5,637 | ) |
|
| (247 | ) |
Residential |
|
| 4,752 |
|
|
| 3,169 |
|
|
| 2,178 |
|
|
| 10,099 |
|
Consumer |
|
| 21,948 |
|
|
| 18,803 |
|
|
| 23,067 |
|
|
| 63,818 |
|
|
| $ | 42,567 |
|
|
| 45,205 |
|
|
| 24,899 |
|
|
| 112,671 |
|
|
| 2016 |
| |||||||||||||
|
| First Quarter |
|
| Second Quarter |
|
| Third Quarter |
|
| Year- to-date |
| ||||
|
| (In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
| $ | 902 |
|
|
| (3,132 | ) |
|
| 14,117 |
|
|
| 11,887 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
| (1,141 | ) |
|
| (1,866 | ) |
|
| (140 | ) |
|
| (3,147 | ) |
Residential |
|
| 5,085 |
|
|
| 3,115 |
|
|
| 4,835 |
|
|
| 13,035 |
|
Consumer |
|
| 37,394 |
|
|
| 26,139 |
|
|
| 22,563 |
|
|
| 86,096 |
|
|
| $ | 42,240 |
|
|
| 24,256 |
|
|
| 41,375 |
|
|
| 107,871 |
|
Reflected inThe net charge-offs of commercial loans and leases was: an $8in the third quarter of 2022 reflect a $23 million charge-off of a loan to a paper distribution company partially offset by recoveries of previously charged-off loan balances. Net charge-offs of commercial loans in the second quarter of 2017 associated with2022 include a provider of asset management, trading, and merger and acquisition advisory services; a $6 million charge-off in the first quarter of 2017 associated with a producer of powdered cellulose and fiber filler products used for food and industrial applications; a $12$23 million charge-off of loansa loan to a consumer products manufacturer. The net charge-offs of commercial maintenance services providerreal estate loans in the third quarter of 20162022 reflect a $20 million charge-off of a loan to a healthcare provider and a $7 million recoverycharge-off of a previously charged-off loan in the second quarter of 2016.to a residential leasing company. Included in net charge-offs of consumer loans and leases werewere: net charge-offs during the
- 65 -
quarters ended September 30, 2017, September 30, 2016 and June 30, 2017, respectively, of:recoveries of automobile loans of $9less than $1 million in the recent quarter, $2 million in the year-earlier quarter and $1 million in the second quarter of 2022; net charge-offs of recreational finance loans of $5 million in the third quarter of 2022, $1 million in the year-earlier quarter and $7 million in the second 2022 quarter; and $7 million; recreational vehicle loansnet recoveries of $4 million, $4 million and $2 million; and home equity loans and lines of credit secured by one-to-four family residential properties of $2less than $1 million $5 million and $3 million. Beginning in each of the firstrecent quarter, the third quarter of 2016, the Company accelerated the charge off of consumer loans associated with customers who were either deceased or had filed for bankruptcy that, in accordance with GAAP, had previously been considered when determining the level of the allowance for credit losses2021 and were charged-off following the Company’s normal charge-off procedures to the extent the loans subsequently became delinquent. Reflected in consumer loan charge-offs in the second quarter of 2016 was a $6 million charge-off of a personal usage loan. For the nine-month periods ended September 30, 20172022. Net charge-offs associated with other consumer loans including credit cards and 2016, net consumer loan charge-offs included the following: automobileinstallment loans of $25 million and $24 million, respectively; recreational vehicle loans of $11 million and $19 million, respectively; and home equity loans and lines of credit oftotaled $8 million and $14 million, respectively.
Loans acquired in connection with acquisition transactions subsequent to 2008 were recorded at fair value with no carry-over of any previously recorded allowance for credit losses. Determining the fair valueeach of the acquired loans required estimating cash flows expected to be collected on the loans and discounting those cash flows at then-current interest rates. For acquired loans where fair value was less than outstanding principal as of the acquisition daterecent quarter and the resulting discount was due, at least in part, to credit deterioration, the excesssecond quarter of expected cash flows over the carrying value of the loans is recognized as interest income over the lives of loans. The difference between contractually required payments and the cash flows expected to be collected is referred to as the nonaccretable balance and is not recorded on the consolidated balance sheet. The nonaccretable balance reflects estimated future credit losses and other contractually required payments that the Company does not expect to collect. The Company regularly evaluates the reasonableness of its cash flow projections associated2022, compared with such loans, including its estimates of lifetime principal losses. Any decreases to the expected cash flows require the Company to evaluate the need for an additional allowance for credit losses and could lead to charge-offs of loan balances. Any significant increases in expected cash flows result in additional interest income to be recognized over the then-remaining lives of the loans. The carrying amount of loans acquired at a discount subsequent to 2008 and accounted for based on expected cash flows was $1.1 billion, $2.0 billion and $1.8 billion at September 30, 2017, September 30, 2016 and December 31, 2016, respectively. The nonaccretable balance related to remaining principal losses associated with loans acquired at a discount as of September 30, 2017 and December 31, 2016 is presented$7 million in the accompanying table.third quarter of 2021.
NONACCRETABLE BALANCE - PRINCIPAL
|
| Remaining balance |
| |||||
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (In thousands) |
| |||||
|
|
|
|
|
|
|
|
|
Commercial, financial, leasing, etc. |
| $ | 4,606 |
|
|
| 4,794 |
|
Commercial real estate |
|
| 31,524 |
|
|
| 39,867 |
|
Residential real estate |
|
| 36,128 |
|
|
| 59,657 |
|
Consumer |
|
| 8,484 |
|
|
| 11,275 |
|
Total |
| $ | 80,742 |
|
|
| 115,593 |
|
For acquired loans where the fair value exceeded the outstanding principal balance, the resulting premium is recognized as a reduction of interest income over the lives of the loans. Immediately following the acquisition date and thereafter, an allowance for credit losses is recorded for incurred losses inherent in the portfolio, consistent with the accounting for originated loans and leases. The carrying amount of Hudson City loans acquired at a premium was $12.1 billion and $14.2 billion at September 30, 2017 and December 31, 2016, respectively. GAAP does not allow the credit loss component of the net premium associated with those loans to be bifurcated and accounted for as a nonaccreting balance as is the case with purchased impaired loans and other loans acquired at a discount. Rather, subsequent to the acquisition date, incurred losses associated with those loans are evaluated using methods consistent with those applied to originated loans and such losses are considered by management in evaluating the Company’s allowance for credit losses.
- 66 -
Nonaccrual loans aggregated $869 million$2.43 billion or .99%1.89% of total loans and leases outstanding at September 30, 2017,2022, compared with $837 million$2.24 billion or .93% a year earlier, $920 million2.40% at September 30, 2021, $2.06 billion or 1.01%2.22% at December 31, 20162021 and $872 million$2.63 billion or .98%2.05% at June 30, 2017. The higher levels of nonaccrual loans since September 30, 2016 reflect the migration of previously performing residential real estate loans2022. Loans obtained in the acquisition of Hudson CityPeople's United that became past due over 90 days afterhave been classified as nonaccrual totaled $581 million at September 30, 2016.2022 and $545 million at June 30, 2022. The lower level of nonaccrual loans at September 30, 2017 as compared with December 31, 2016 reflects the effectcontinuing impact of borrower repayment performanceeconomic conditions on borrowers’ abilities to make contractual payments on their loans, most notably commercial real estate loans in the hospitality, office, retail and charge-offs. health care-related sectors.
Accruing loans past due 90 days or more (excluding loans acquired at a discount) totaled $261were $477 million or .30%.37% of total loans and leases at September 30, 2017,2022, compared with $317 million$1.03 billion or .35%1.10% at September 30, 2016, $3012021, $963 million or .33%1.04% at December 31, 20162021 and $265$524 million or .30%.41% at June 30, 2017. Those amounts2022. Accruing loans past due 90 days or more were predominantly residential real estate loans and included loans guaranteed by government-related entities of $252$423 million, $282$947 million, $283$928 million and $235$468 million at September 30, 2017,2022, September 30, 2016,2021, December 31, 20162021 and June 30, 2017,2022, respectively. The lower balance at September 30, 2022 and June 30, 2022 compared with the 2021 dates reflects residential real estate loans guaranteed by government-related entities receiving payment deferrals during the COVID-19 pandemic, but ineligible for treatment under the CARES act, that exited these arrangements and complied with modified terms to
- 65 -
become current. Guaranteed loans included one-to-four family residential mortgage loans serviced by the Company that were repurchasedpurchased to reduce associated servicing costs, including a requirement to advance principal and interest payments that had not been received from individual mortgagors. Despite the loans being purchased by the Company, the insurance or guarantee by the applicable government-related entity remains in force. The outstanding principal balances of the repurchasedthose purchased loans that are guaranteed by government-related entities totaled $207$366 million at September 30, 2017, $2252022, $919 million at September 30, 2016, $224a year earlier, $889 million at December 31, 20162021 and $185$435 million at June 30, 2017.2022. The remaining accruing loans past due 90 days or more not guaranteed by government-related entities were loans considered to be with creditworthy borrowers that were in the process of collection or renewal.
Purchased impaired loans are loans obtained in acquisition transactions subsequent to 2008 that asThe direct and indirect effects of the acquisition date were specifically identified as displaying signsCOVID-19 pandemic resulted in a dramatic reduction in 2020 in economic activity that severely hampered the ability of credit deteriorationsome businesses and consumers to meet their repayment obligations. Information regarding the Company's treatment of loan modifications subject to applicable regulatory guidance issued during the pandemic, including the CARES Act, can be found in Management's Discussion and Analysis of Financial Condition and Results of Operations within Form 10-K for which the Company did not expect to collect all contractually required principal and interest payments. Those loans were impaired at the date of acquisition, were recorded at estimated fair value and were generally delinquent in payments, but, in accordanceyear ended December 31, 2021. COVID-19 related modifications with GAAP, the Company continues to accrue interest income on such loans based on the estimated expected cash flows associated with the loans. The carrying amount of such loans was $467 millionpayment deferrals at September 30, 2017, or .5% of total loans. Of that amount, $411 million was related to the Hudson City acquisition. Purchased impaired loans totaled $617 million and $578 million at September 30 and December 31, 2016, respectively.2022 were not material.
Accruing loans acquired at a discount past due 90 days or more are loans that could not be specifically identified as impaired as of the acquisition date, but were recorded at estimated fair value as of such date. Such loans totaled $56 million at September 30, 2017, compared with $65 million at September 30, 2016 and $61 million at December 31, 2016.
The Company also modified the terms of select loans in an effort to assist borrowers.borrowers that were not related to the COVID-19 pandemic. If the borrower was experiencing financial difficulty and a concession was granted, the Company considered such modifications as troubled debt restructurings. Loan modifications included such actions as the extension of loan maturity dates and the lowering of interest rates and monthly payments. The objective of the modifications was to increase loan repayments by customers and thereby reduce net charge-offs. In accordance with GAAP, the modified loans are included in impaired loans for purposes of determining the level of the allowance for credit losses. Information about modifications of loans that are considered troubled debt restructurings is included in note 4 of Notes to Financial Statements.
Residential real estate loans modified under specified loss mitigation programs prescribed by government guarantors that were not related to the COVID-19 pandemic have not been included in renegotiated loans because the loan guarantee remains in full force and, accordingly, the Company has not granted a concession with respect to the ultimate collection of the original loan balance. Such loans aggregated $184 million, $170 million and $171$382 million at September 30, 2017,2022, $425 million at each of September 30, 20162021 and December 31, 2016, respectively.2021, and $356 million at June 30, 2022.
- 67 -
Nonaccrual commercialCommercial loans and leases were $204classified as nonaccrual totaled $368 million, $280 million, $221 million and $442 million at September 30, 2017, $231 million at2022, September 30, 2016, $261 million at2021, December 31, 2016 and $201 million at June 30, 2017. Commercial real estate loans classified as nonaccrual aggregated $222 million at September 30, 2017, $198 million at September 30, 2016, $211 million at December 31, 2016 and $225 million at June 30, 2017. Nonaccrual commercial real estate loans included construction-related loans of $22 million, $41 million, $35 million and $23 million at September 30, 2017, September 30, 2016, December 31, 20162021 and June 30, 2017,2022, respectively. Those nonaccrual construction loans included loans to residential builders and developers of $2 million, $20 million, $17 million and $7 million at September 30, 2017, September 30, 2016, December 31, 2016 and June 30, 2017, respectively. Information about the location of nonaccrual and charged-off loans to residential real estate builders and developers as of and for the three-month period ended September 30, 2017 is presented in the accompanying table.
RESIDENTIAL BUILDER AND DEVELOPER LOANS, NET OF UNEARNED DISCOUNT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarter Ended |
|
| |||||
|
| September 30, 2017 |
|
|
| September 30, 2017 |
|
| ||||||||||||||
|
|
|
|
|
| Nonaccrual |
|
|
| Net Charge-offs (Recoveries) |
|
| ||||||||||
|
| Outstanding Balances(b) |
|
| Balances |
|
| Percent of Outstanding Balances |
|
|
| Balances |
|
| Annualized Percent of Average Outstanding Balances |
|
| |||||
|
| (Dollars in thousands) |
|
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York |
| $ | 430,628 |
|
| $ | 382 |
|
|
| .09 |
| % |
| $ | (33 | ) |
|
| (.03 | ) | % |
Pennsylvania |
|
| 100,932 |
|
|
| 263 |
|
|
| .26 |
|
|
|
| (3,608 | ) |
|
| (13.13 | ) |
|
Mid-Atlantic (a) |
|
| 469,064 |
|
|
| 1,691 |
|
|
| .36 |
|
|
|
| (249 | ) |
|
| (.21 | ) |
|
Other |
|
| 663,269 |
|
|
| 1,187 |
|
|
| .18 |
|
|
|
| (13 | ) |
|
| (.01 | ) |
|
Total |
| $ | 1,663,893 |
|
| $ | 3,523 |
|
|
| .21 |
| % |
| $ | (3,903 | ) |
|
| (.93 | ) | % |
|
|
|
|
ResidentialCommercial real estate loans in nonaccrual status aggregated $338$1.47 billion, $1.31 billion, $1.18 billion, and $1.55 billion September 30, 2022, September 30, 2021, December 31, 2021 and June 30, 2022, respectively. Commercial real estate loans in nonaccrual status were largely reflective of loans in the hospitality, office, retail and health care-related sectors. Commercial loans and leases and commercial real estate loans acquired from People's United and classified as nonaccrual totaled $136 million and $416 million, respectively, at September 30, 2017, compared with $3032022 and $188 million at September 30, 2016, $336and $312 million, at December 31, 2016 and $343 millionrespectively, at June 30, 2017. The increase in residential real estate loans classified as nonaccrual subsequent to September 30, 2016 reflects the migration of previously performing loans obtained in the acquisition of Hudson City that became more than 90 days delinquent. Such nonaccrual2022.
Nonaccrual residential real estate loans totaled $211 million at each of September 30 and June 30, 2017, $149$381 million at September 30, 2016 and $1902022, compared with $480 million at September 30, 2021, $479 million at December 31, 2016. Those2021 and $444 million at June 30, 2022. The decreases since September 30, 2021 largely reflect borrower repayment performance since that date partially offset by $17 million of residential real estate loans could not be identifiedacquired from People's United and classified as purchased impaired loansnonaccrual at the acquisition date because the borrowers were making loan payments at that time and the loans were not recorded at a discount.September 30, 2022. Included in residential real estate loans classified as nonaccrual were limited documentation first mortgage loans of $102 million, $89 million, $107 million and $106$95 million at September 30, 2017,2022, compared with $127 million at September 30, 2016,2021, $123 million at December 31, 20162021 and $113 million at June 30, 2017, respectively.2022. Limited documentation first mortgage loans represent loans secured by residential real estate that at origination typically included some form of limited borrower documentation requirements as compared with more traditional loans. Such loans in the Company’s portfolio prior to the Hudson City transaction were originated by theThe Company before 2008. Hudson City discontinued itsno longer originates limited documentation loan program in January 2014.loans. Residential real estate loans past due 90 days or more and accruing interest (excluding loans acquired at a discount) aggregated $250$412 million at September 30, 2017,2022, compared with $281$945 million at each of September 30, 2016 and2021, $920 million at December 31, 20162021 and $233$474 million at June 30, 2017. A substantial portion of such2022. Those amounts related predominantly to guaranteedgovernment-guaranteed loans repurchased from government-related entities.as previously noted. The lower balances at the two most recent quarter-ends also reflect improved borrower repayment performance. Information about the location of nonaccrual and charged-off residential real estate loans as of and for the quarter ended September 30, 20172022 is presented in the accompanying table.
- 6866 -
SELECTED RESIDENTIAL REAL ESTATE-RELATED LOAN DATA
|
| September 30, 2017 |
|
| Quarter Ended September 30, 2017 |
| ||||||||||||||
|
|
|
|
|
| Nonaccrual |
|
| Net Charge-offs (Recoveries) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized Percent of |
| |
|
|
|
|
|
|
|
|
|
| Percent of |
|
|
|
|
|
| Average |
| ||
|
| Outstanding |
|
|
|
|
|
| Outstanding |
|
|
|
|
|
| Outstanding |
| |||
|
| Balances |
|
| Balances |
|
| Balances |
|
| Balances |
|
| Balances |
| |||||
|
| (Dollars in thousands) |
| |||||||||||||||||
Residential mortgages: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York |
| $ | 5,749,347 |
|
| $ | 77,500 |
|
|
| 1.35 | % |
| $ | 1,023 |
|
|
| .07 | % |
Pennsylvania |
|
| 1,449,304 |
|
|
| 15,090 |
|
|
| 1.04 |
|
|
| 50 |
|
|
| .01 |
|
Maryland |
|
| 1,149,341 |
|
|
| 13,122 |
|
|
| 1.14 |
|
|
| (412 | ) |
|
| (.14 | ) |
New Jersey |
|
| 4,472,114 |
|
|
| 58,123 |
|
|
| 1.30 |
|
|
| 1,014 |
|
|
| .09 |
|
Other Mid-Atlantic (a) |
|
| 1,004,391 |
|
|
| 10,438 |
|
|
| 1.04 |
|
|
| (11 | ) |
|
| (.01 | ) |
Other |
|
| 3,283,823 |
|
|
| 61,418 |
|
|
| 1.87 |
|
|
| 573 |
|
|
| .07 |
|
Total |
| $ | 17,108,320 |
|
| $ | 235,691 |
|
|
| 1.38 | % |
| $ | 2,237 |
|
|
| .05 | % |
Residential construction loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York |
| $ | 5,032 |
|
| $ | — |
|
|
| — | % |
| $ | — |
|
|
| — | % |
Pennsylvania |
|
| 1,936 |
|
|
| 343 |
|
|
| 17.74 |
|
|
| (66 | ) |
|
| (16.23 | ) |
Maryland |
|
| 1,376 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
New Jersey |
|
| 1,984 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Other Mid-Atlantic (a) |
|
| 3,742 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Other |
|
| 8,232 |
|
|
| 329 |
|
|
| 3.99 |
|
|
| (17 | ) |
|
| (.90 | ) |
Total |
| $ | 22,302 |
|
| $ | 672 |
|
|
| 3.01 | % |
| $ | (83 | ) |
|
| (1.55 | %) |
Limited documentation first mortgages: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York |
| $ | 1,351,590 |
|
| $ | 40,086 |
|
|
| 2.97 | % |
| $ | 39 |
|
|
| .01 | % |
Pennsylvania |
|
| 65,542 |
|
|
| 5,333 |
|
|
| 8.14 |
|
|
| (112 | ) |
|
| (.66 | ) |
Maryland |
|
| 38,316 |
|
|
| 2,605 |
|
|
| 6.80 |
|
|
| 20 |
|
|
| .21 |
|
New Jersey |
|
| 1,207,609 |
|
|
| 25,694 |
|
|
| 2.13 |
|
|
| 158 |
|
|
| .05 |
|
Other Mid-Atlantic (a) |
|
| 31,445 |
|
|
| 2,210 |
|
|
| 7.03 |
|
|
| 84 |
|
|
| 1.00 |
|
Other |
|
| 440,038 |
|
|
| 25,990 |
|
|
| 5.91 |
|
|
| (165 | ) |
|
| (.14 | ) |
Total |
| $ | 3,134,540 |
|
| $ | 101,918 |
|
|
| 3.25 | % |
| $ | 24 |
|
|
| — | % |
First lien home equity loans and lines of credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York |
| $ | 1,293,963 |
|
| $ | 15,927 |
|
|
| 1.23 | % |
| $ | 699 |
|
|
| .22 | % |
Pennsylvania |
|
| 809,772 |
|
|
| 8,772 |
|
|
| 1.08 |
|
|
| 92 |
|
|
| .05 |
|
Maryland |
|
| 668,522 |
|
|
| 6,544 |
|
|
| .98 |
|
|
| 468 |
|
|
| .28 |
|
New Jersey |
|
| 60,068 |
|
|
| 351 |
|
|
| .58 |
|
|
| 43 |
|
|
| .31 |
|
Other Mid-Atlantic (a) |
|
| 207,006 |
|
|
| 1,701 |
|
|
| .82 |
|
|
| 11 |
|
|
| .02 |
|
Other |
|
| 28,365 |
|
|
| 915 |
|
|
| 3.22 |
|
|
| 53 |
|
|
| .82 |
|
Total |
| $ | 3,067,696 |
|
| $ | 34,210 |
|
|
| 1.12 | % |
| $ | 1,366 |
|
|
| .18 | % |
Junior lien home equity loans and lines of credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York |
| $ | 835,542 |
|
| $ | 20,598 |
|
|
| 2.47 | % |
| $ | 634 |
|
|
| .30 | % |
Pennsylvania |
|
| 326,133 |
|
|
| 3,844 |
|
|
| 1.18 |
|
|
| (75 | ) |
|
| (.09 | ) |
Maryland |
|
| 719,782 |
|
|
| 11,402 |
|
|
| 1.58 |
|
|
| 287 |
|
|
| .16 |
|
New Jersey |
|
| 117,989 |
|
|
| 1,196 |
|
|
| 1.01 |
|
|
| 142 |
|
|
| .47 |
|
Other Mid-Atlantic (a) |
|
| 280,435 |
|
|
| 2,089 |
|
|
| .74 |
|
|
| 204 |
|
|
| .28 |
|
Other |
|
| 41,420 |
|
|
| 1,761 |
|
|
| 4.25 |
|
|
| (200 | ) |
|
| (1.92 | ) |
Total |
| $ | 2,321,301 |
|
| $ | 40,890 |
|
|
| 1.76 | % |
| $ | 992 |
|
|
| .17 | % |
Limited documentation junior lien: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York |
| $ | 753 |
|
| $ | — |
|
|
| — | % |
| $ | (1 | ) |
|
| (.48 | %) |
Pennsylvania |
|
| 324 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Maryland |
|
| 1,373 |
|
|
| 91 |
|
|
| 6.64 |
|
|
| — |
|
|
| — |
|
New Jersey |
|
| 382 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Other Mid-Atlantic (a) |
|
| 643 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Other |
|
| 4,190 |
|
|
| 393 |
|
|
| 9.38 |
|
|
| 19 |
|
|
| 1.77 |
|
Total |
| $ | 7,665 |
|
| $ | 484 |
|
|
| 6.31 | % |
| $ | 18 |
|
|
| .92 | % |
|
|
- 69 -
Nonaccrual consumer loans were $105$206 million at September 30, 2017, compared with $1042022, $170 million at September 30, 2016, $1122021, $177 million at December 31, 20162021 and $103$196 million at June 30, 2017.2022. Included in nonaccrual consumer loans at September 30, 2017,2022, September 30, 2016,2021, December 31, 20162021 and June 30, 20172022 were: automobile loans of $21$40 million, $14$31 million, $19$34 million and $17$36 million, respectively; recreational vehiclefinance loans of $5$39 million, $6$24 million, $7$28 million and $5$33 million, respectively; and outstanding balances of home equity loans and lines of credit of $76$78 million, $80$71 million, $82$70 million and $77$79 million, respectively. Consumer loans acquired from People's United and classified as nonaccrual at September 30, 2022 totaled $12 million and consisted predominantly of home equity loans and lines of credit. Information about the location of nonaccrual and charged-off home equity loans and lines of credit as of and for the quarter ended September 30, 20172022 is presented in the accompanying table.
Information about past due and nonaccrual loans as of September 30, 20172022 and December 31, 20162021 is also included in note 4 of Notes to Financial Statements.
SELECTED RESIDENTIAL REAL ESTATE-RELATED LOAN DATA
|
|
|
|
|
|
|
|
|
|
|
| Quarter Ended |
| ||||||||
|
| September 30, 2022 |
|
|
| September 30, 2022 |
| ||||||||||||||
|
|
|
|
| Nonaccrual |
|
|
| Net Charge-offs (Recoveries) |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Percent of |
| |||||
|
|
|
|
|
|
|
| Percent of |
|
|
|
|
|
| Average |
| |||||
|
| Outstanding |
|
|
|
|
| Outstanding |
|
|
|
|
|
| Outstanding |
| |||||
|
| Balances |
|
| Balances |
|
| Balances |
|
|
| Balances |
|
| Balances |
| |||||
|
| (Dollars in thousands) |
| ||||||||||||||||||
Residential mortgages: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
New York |
| $ | 6,553,820 |
|
| $ | 111,080 |
|
|
| 1.69 | % |
|
| $ | 1,383 |
|
|
| .09 | % |
Mid-Atlantic (a) |
|
| 6,549,714 |
|
|
| 104,464 |
|
|
| 1.59 |
|
|
|
| (185 | ) |
|
| .(01 | ) |
New England (b) |
|
| 6,187,859 |
|
|
| 49,177 |
|
|
| .79 |
|
|
|
| (124 | ) |
|
| .(01 | ) |
Other |
|
| 2,631,196 |
|
|
| 19,086 |
|
|
| .73 |
|
|
|
| (216 | ) |
|
| .(03 | ) |
Total |
| $ | 21,922,589 |
|
| $ | 283,807 |
|
|
| 1.29 | % |
|
| $ | 858 |
|
|
| .02 | % |
Residential construction loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
New York |
| $ | 21,563 |
|
| $ | 375 |
|
|
| 1.74 | % |
|
| $ | — |
|
|
| — | % |
Mid-Atlantic (a) |
|
| 21,688 |
|
|
| 336 |
|
|
| 1.55 |
|
|
|
| — |
|
|
| — |
|
New England (b) |
|
| 18,439 |
|
|
| 877 |
|
|
| 4.76 |
|
|
|
| — |
|
|
| — |
|
Other |
|
| 2,566 |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
Total |
| $ | 64,256 |
|
| $ | 1,588 |
|
|
| 2.47 | % |
|
| $ | — |
|
|
| — | % |
Limited documentation first lien mortgages: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
New York |
| $ | 501,679 |
|
| $ | 40,427 |
|
|
| 8.06 | % |
|
| $ | 45 |
|
|
| .03 | % |
Mid-Atlantic (a) |
|
| 442,905 |
|
|
| 34,664 |
|
|
| 7.83 |
|
|
|
| — |
|
|
| — |
|
New England (b) |
|
| 99,097 |
|
|
| 15,358 |
|
|
| 15.50 |
|
|
|
| — |
|
|
| — |
|
Other |
|
| 43,754 |
|
|
| 4,933 |
|
|
| 11.27 |
|
|
|
| (565 | ) |
|
| (4.94 | ) |
Total |
| $ | 1,087,435 |
|
| $ | 95,382 |
|
|
| 8.77 | % |
|
| $ | (520 | ) |
|
| .(18 | %) |
First lien home equity loans and lines of credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
New York |
| $ | 969,253 |
|
| $ | 16,728 |
|
|
| 1.73 | % |
|
| $ | 274 |
|
|
| .17 | % |
Mid-Atlantic (a) |
|
| 1,110,862 |
|
|
| 21,961 |
|
|
| 1.98 |
|
|
|
| (18 | ) |
|
| .(01 | ) |
New England (b) |
|
| 704,555 |
|
|
| 2,551 |
|
|
| .36 |
|
|
|
| — |
|
|
| — |
|
Other |
|
| 20,620 |
|
|
| 1,010 |
|
|
| 4.90 |
|
|
|
| (20 | ) |
|
| .(01 | ) |
Total |
| $ | 2,805,290 |
|
| $ | 42,250 |
|
|
| 1.51 | % |
|
| $ | 236 |
|
|
| .03 | % |
Junior lien home equity loans and lines of credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
New York |
| $ | 768,949 |
|
| $ | 16,106 |
|
|
| 2.09 | % |
|
| $ | (479 | ) |
|
| .(41 | %) |
Mid-Atlantic (a) |
|
| 929,851 |
|
|
| 16,674 |
|
|
| 1.79 |
|
|
|
| (539 | ) |
|
| .(45 | ) |
New England (b) |
|
| 538,721 |
|
|
| 2,802 |
|
|
| .52 |
|
|
|
| 376 |
|
|
| .36 |
|
Other |
|
| 20,612 |
|
|
| 376 |
|
|
| 1.82 |
|
|
|
| — |
|
|
| — |
|
Total |
| $ | 2,258,133 |
|
| $ | 35,958 |
|
|
| 1.59 | % |
|
| $ | (642 | ) |
|
| .(11 | %) |
Real estate and other foreclosed assets totaled $111$37 million at September 30, 2017,2022, compared with $160$25 million at September 30, 2016, $1392021, $24 million at December 31, 20162021 and $104$29 million at June 30, 2017.2022. Net gains or losses resulting from sales ofassociated with real estate and other foreclosed assets were not material induring the three-month periodsthree months and nine months ended September 30, 2017, September 30, 2016 or June 30, 2017.2022 and 2021. At September 30, 2017, the Company’s holding2022, foreclosed assets are comprised predominantly of residential real estate-related properties comprised approximately 96% of foreclosed assets.properties.
- 67 -
A comparative summary of nonperforming assets and certain past due, renegotiated and impaired loan data and credit quality ratios is presented in the accompanying table.
NONPERFORMING ASSET AND PAST DUE, RENOGIATEDRENEGOTIATED AND IMPAIRED LOAN DATA
|
| 2022 Quarters |
|
| 2021 Quarters |
| ||||||||||||||
|
| Third |
|
| Second |
|
| First |
|
| Fourth |
|
| Third |
| |||||
|
| (Dollars in thousands) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Nonaccrual loans |
| $ | 2,429,326 |
|
|
| 2,633,005 |
|
|
| 2,134,231 |
|
|
| 2,060,083 |
|
|
| 2,242,263 |
|
Real estate and other foreclosed assets |
|
| 37,031 |
|
|
| 28,692 |
|
|
| 23,524 |
|
|
| 23,901 |
|
|
| 24,786 |
|
Total nonperforming assets |
| $ | 2,466,357 |
|
|
| 2,661,697 |
|
|
| 2,157,755 |
|
|
| 2,083,984 |
|
|
| 2,267,049 |
|
Accruing loans past due 90 days or more(a) |
| $ | 476,503 |
|
|
| 523,662 |
|
|
| 776,751 |
|
|
| 963,399 |
|
|
| 1,026,080 |
|
Government guaranteed loans included in totals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Nonaccrual loans |
| $ | 44,797 |
|
|
| 46,937 |
|
|
| 46,151 |
|
|
| 51,429 |
|
|
| 47,358 |
|
Accruing loans past due 90 days or more(a) |
|
| 423,371 |
|
|
| 467,834 |
|
|
| 689,831 |
|
|
| 927,788 |
|
|
| 947,091 |
|
Renegotiated loans |
| $ | 356,797 |
|
|
| 276,584 |
|
|
| 242,108 |
|
|
| 230,408 |
|
|
| 242,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Nonaccrual loans to total loans and leases, net of |
|
| 1.89 | % |
|
| 2.05 | % |
|
| 2.32 | % |
|
| 2.22 | % |
|
| 2.40 | % |
Nonperforming assets to total net loans and |
|
| 1.92 | % |
|
| 2.07 | % |
|
| 2.35 | % |
|
| 2.24 | % |
|
| 2.42 | % |
Accruing loans past due 90 days or more(a) to |
|
| .37 | % |
|
| .41 | % |
|
| .85 | % |
|
| 1.04 | % |
|
| 1.10 | % |
|
| 2017 Quarters |
|
| 2016 Quarters |
|
| ||||||||||||||
|
| Third |
|
| Second |
|
| First |
|
| Fourth |
|
| Third |
|
| |||||
|
| (Dollars in thousands) |
|
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans |
| $ | 869,362 |
|
|
| 872,374 |
|
|
| 926,675 |
|
|
| 920,015 |
|
|
| 837,362 |
|
|
Real estate and other foreclosed assets |
|
| 110,515 |
|
|
| 104,424 |
|
|
| 119,155 |
|
|
| 139,206 |
|
|
| 159,881 |
|
|
Total nonperforming assets |
| $ | 979,877 |
|
|
| 976,798 |
|
|
| 1,045,830 |
|
|
| 1,059,221 |
|
|
| 997,243 |
|
|
Accruing loans past due 90 days or more(a) |
| $ | 261,288 |
|
|
| 265,461 |
|
|
| 280,019 |
|
|
| 300,659 |
|
|
| 317,282 |
|
|
Government guaranteed loans included in totals above: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans |
| $ | 34,687 |
|
|
| 39,296 |
|
|
| 39,610 |
|
|
| 40,610 |
|
|
| 47,130 |
|
|
Accruing loans past due 90 days or more |
|
| 252,072 |
|
|
| 235,227 |
|
|
| 252,552 |
|
|
| 282,659 |
|
|
| 282,077 |
|
|
Renegotiated loans |
| $ | 226,672 |
|
|
| 221,892 |
|
|
| 191,343 |
|
|
| 190,374 |
|
|
| 217,559 |
|
|
Acquired accruing loans past due 90 days or more(b) |
| $ | 56,225 |
|
|
| 57,498 |
|
|
| 63,732 |
|
|
| 61,144 |
|
|
| 65,182 |
|
|
Purchased impaired loans(c): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding customer balance |
| $ | 779,340 |
|
|
| 838,476 |
|
|
| 890,431 |
|
|
| 927,446 |
|
|
| 981,105 |
|
|
Carrying amount |
|
| 466,943 |
|
|
| 512,393 |
|
|
| 552,935 |
|
|
| 578,032 |
|
|
| 616,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans to total loans and leases, net of unearned discount |
|
| .99 | % |
|
| .98 | % |
|
| 1.04 | % |
|
| 1.01 | % |
|
| .93 | % |
|
Nonperforming assets to total net loans and leases and real estate and other foreclosed assets |
|
| 1.11 | % |
|
| 1.10 | % |
|
| 1.17 | % |
|
| 1.16 | % |
|
| 1.11 | % |
|
Accruing loans past due 90 days or more (a) to total loans and leases, net of unearned discount |
|
| .30 | % |
|
| .30 | % |
|
| .31 | % |
|
| .33 | % |
|
| .35 | % |
|
(a) Excludes loans acquired at a discount.
(b) Loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately.
(c) Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.
- 70 -
Management determineddetermines the allowance for credit losses by performing ongoing evaluationsunder accounting guidance that requires estimating the amount of current expected credit losses over the remaining contractual term of the loan and lease portfolio, including such factors asportfolio. A description of the differing economic risks associated with each loan category,methodologies used by the financial condition of specific borrowers, the economic environment in which borrowers operate, the level of delinquent loans, the value of any collateral and, where applicable, the existence of any guarantees or indemnifications. Management evaluated the impact of changes in interest rates and overall economic conditions on the ability of borrowersCompany to meet repayment obligations when quantifying the Company’s exposure toestimate its allowance for credit losses andcan be found in note 4 of Notes to Financial Statements.
In establishing the allowance for suchcredit losses, as of each reporting date. Factorsthe Company estimates losses attributable to specific troubled credits identified through both normal and targeted credit review processes and also considered by management when performing its assessment, in addition to general economic conditions and the other factors described above, included, but were not limited to: (i) the impact of residential real estate values on the Company’s portfolio of loans to residential real estate builders and developers andestimates losses for other loans secured by residential real estate; (ii)and leases with similar risk characteristics on a collective basis. For purposes of determining the concentrations of commercial real estate loans in the Company’s loan portfolio; (iii) the amount of commercial and industrial loans to businesses in areas of New York State outside of the New York City metropolitan area and in central Pennsylvania that have historically experienced less economic growth and vitality than the vast majority of other regions of the country; (iv) the expected repayment performance associated with the Company’s first and second lien loans secured by residential real estate, including loans obtained in the acquisition of Hudson City that were not classified as purchased impaired; and (v) the size of the Company’s portfolio of loans to individual consumers, which historically have experienced higher net charge-offs as a percentage of loans outstanding than other loan types. The level of the allowance is adjusted based onfor credit losses, the resultsCompany evaluates its loan and lease portfolio by type. At the time of management’s analysis.
Management cautiously and conservatively evaluatedthe Company’s analysis regarding the determination of the allowance for credit losses as of September 30, 2017 in light of: (i) residential real estate values and the level of delinquencies of loans secured by residential real estate; (ii) economic conditions in the markets served by the Company; (iii) slower growth in private sector employment in upstate New York and central Pennsylvania than in other regions served by the Company and nationally; (iv) the significant subjectivity involved in commercial real estate valuations; and (v) the amount of loan growth experienced by the Company. While there has been general improvement in economic conditions,2022, concerns continue to existexisted about the strengthsomewhat incomplete recovery evident in some sectors of the economy; elevated levels of inflation; fears of a slowing economy and sustainability of such improvements;possible recession in coming quarters; the volatile nature of global markets including the impactand international economic conditions that could have onimpact the U.S. economy; Federal Reserve positioning of monetary policy; ongoing supply chain issues and wage pressures impacting commercial borrowers; the extent to which borrowers, in particular commercial real estate borrowers, may be negatively affected by pandemic-related and general economic conditions; and continued stagnant population and economic growth in the upstate New York and central Pennsylvania regions (approximately 55%37% of the Company’s loans and leases are to customers in New York State and Pennsylvania).
that historically lag other regions of the country. The Company utilizes a loan grading system which is applied to alldifferentiate risk amongst its commercial loans and commercial real estate loans. Loan grades are utilized to differentiate risk within the portfolio and consider the expectations of default for each loan. Commercial loans and commercial real estate loansLoans with a lower expectation of default are assigned one of ten possible “pass” loan grades and are generally ascribed lower loss factors when determining the allowance for credit losses. Loans withwhile specific loans determined to have an elevated level of credit risk are classified as “criticized” and are ascribed a higher loss factor when determining the allowance for credit losses. Criticized loans“criticized.” A criticized loan may be classified as “nonaccrual” if the Company no longer expects to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more. Criticized commercial loans and commercial real estate loans were $2.4totaled $10.9 billion, including $2.8 billion of loans acquired from People's United, at each of September 30, 2017 and December 31, 2016,2022, compared with $2.5$9.6 billion at September 30, 20162021, $9.0 billion at December 31, 2021 and $2.3$11.6 billion at June 30, 2017. Approximately 97%2022, including $2.8 billion of loan balances added toloans acquired from People's United. The level of criticized loans remains reflective of the impact of current conditions on many borrowers, particularly those with investor-owned commercial real estate loans in the hotel, office and healthcare sectors. Investor-owned commercial real estate loans
- 68 -
comprised $8.0 billion or 74% of total criticized category during the recent quarter were less than 90 days past due and 86%loans at September 30, 2022. The weighted-average loan-to-value (“LTV”) ratio for investor-owned commercial real estate properties was approximately 60%. Criticized loans secured by investor-owned commercial real estate had a current payment status. Given payment performance, amountweighted-average LTV ratio of supporting collateral, and, in certain instances, the existenceapproximately 65%.
Line of loan guarantees, the Company still expects to collect the full outstanding principal balance on most of those loans.
Loan officersbusiness personnel in different geographic locations with the support offrom and review by the Company’s credit departmentrisk personnel are responsible to continuously review and reassign loan grades to pass and criticized loans based on their detailed knowledge of individual borrowers and their judgment of the impact on such borrowers resulting from changing conditions in their respective regions. AtThe Company’s policy is that, at least annually, updated financial information is obtained from commercial borrowers associated with pass grade loans and additional analysis is performed. On a quarterly basis, the Company’s centralized credit risk department reviews all criticized commercial loans and commercial real estate loans greater than $1 million to determine the appropriateness of the assigned loan grade, including whether the loan
- 71 -
should be reported as accruing or nonaccruing. For criticized nonaccrual loans, additional meetings are held with loan officers and their managers, workout specialists and senior management to discuss each of the relationships. In analyzing criticized loans, borrower-specific information is reviewed, including operating results, future cash flows, recent developments and the borrower’s outlook, and other pertinent data. The timing and extent of potential losses, considering collateral valuation and other factors, and the Company’s potential courses of action are reviewed. To the extent that these loans are collateral-dependent, they are evaluated based on the fair value of the loan’s collateral as estimated at or near the financial statement date. As the quality of a loan deteriorates to the point of classifying the loan as “criticized,” the process of obtaining updated collateral valuation information is usually initiated, unless it is not considered warranted given factors such as the relative size of the loan, the characteristics of the collateral or the age of the last valuation. In those cases where current appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed necessary, for estimates of subsequent declines in value as determined by line of business and/or loan workout personnel in the respective geographic regions. Those adjustments are reviewed and assessed for reasonableness by the Company’s credit department. Accordingly, for real estate collateral securing larger commercial loans and commercial real estate loans, estimated collateral values are based on current appraisals and estimates of value. For non-real estate loans, collateral is assigned a discounted estimated liquidation value and, depending on the nature of the collateral, is verified through field exams or other procedures. In assessing collateral, real estate and non-real estate values are reduced by an estimate of selling costs. contemplated.
With regard to residential real estate loans, the Company’s loss identification and estimation techniques make reference to loan performance and house price data in specific areas of the country where collateral securing the Company’s residential real estate loans is located. For residential real estate-related loans, including home equity loans and lines of credit, the excess of the loan balance over the net realizable value of the property collateralizing the loan is charged-off when the loan becomes 150 days delinquent. That charge-off is based on recent indications of value from external parties that are generally obtained shortly after a loan becomes nonaccrual. Loans to consumers that file for bankruptcy are generally charged off to estimated net collateral value shortly after the Company is notified of such filings. At September 30, 2017,2022, approximately 57%55% of the Company’s home equity portfolio consisted of first lien loans and lines of credit. Of the remainingcredit and 45% were junior liens. With respect to junior lien loans, in the portfolio, approximately 69% (or approximately 30% of the aggregate home equity portfolio)consisted of junior lien loans that were behind a first lien mortgage loan that was not owned or serviced by the Company. Toto the extent known by the Company, if a related senior lien loan would be on nonaccrual status because of payment delinquency, even if such senior lien loan was not owned by the Company, the junior lien loan or line that is owned by the Company is placed on nonaccrual status. At September 30, 2017, the balance of junior lien loans and lines that were in nonaccrual status solely as a result of first lien loan performance was $10 million, compared with $14 million at September 30, 2016, $12 million at December 31, 2016 and $11 million at June 30, 2017. In monitoring the credit quality of its home equity portfolio for purposes of determining the allowance for credit losses, the Company reviews delinquency and nonaccrual information and considers recent charge-off experience. When evaluating individual home equity loans and lines of credit for charge-offcharge off and for purposes of estimating incurred losses in determining the allowance for credit losses, the Company gives consideration to the required repayment of any first lien positions related to collateral property. Home equity line of credit terms vary but such lines are generally originated with an open draw period of ten years followed by an amortization period of up to twenty years. At September 30, 2017,2022 approximately 83%86% of all outstanding balances of home equity lines of credit related to lines that were still in the draw period, the weighted-average remaining draw periods were approximately five years, and approximately 20%18% were making contractually allowed payments that do not include any repayment of principal.
Factors that influence the Company’s credit loss experience include overall economic conditions affecting businesses and consumers, generally, but also residential and commercial real estate valuations, in particular, given the size of the Company’s real estate loan portfolios. Commercial real estate valuations can be highly subjective, as they are based upon many assumptions. Such valuations can be significantly affected over relatively short periods of time by changes in business climate, economic conditions, interest rates and, in many cases, the results of operations of businesses and other occupants of the real property. Similarly, residential real estate valuations can be impacted by housing trends, the availability of financing at reasonable interest rates and general economic conditions affecting consumers.
The Company generally estimates current expected credit losses on loans with similar risk characteristics on a collective basis. To estimate expected losses, the Company utilizes statistically developed models to project principal balances over the remaining contractual lives of the loan portfolios and determine estimated credit losses through a reasonable and supportable forecast period. The Company’s approach for estimating current expected credit losses for loans and leases at September 30, 2022, September 30, 2021 and December 31, 2021 included utilizing macroeconomic assumptions to project losses over a two-year reasonable and supportable forecast period. Subsequent
- 7269 -
to the forecast period, the Company reverted to longer-term historical loss experience, over a period of one year, to estimate expected credit losses over the remaining contractual life. Forward-looking estimates of certain macroeconomic variables are determined by the M&T Scenario Development Group, which is comprised of senior management business leaders and economists. Events posing emerging risks to the macroeconomic environment, such as international conflicts and other events, inflation and supply chain issues, are considered when developing economic forecasts even if the events do not directly and materially impact the Company’s financial results. Supply chain disruptions, inflationary pressures or other peripheral impacts of global events may alter economic forecasts and the Company monitors this activity as part of its risk management procedures in assessing the allowance for credit losses. Among the assumptions utilized as of September 30, 2022 was that the national unemployment rate will average 3.9% through the reasonable and supportable forecast period. The forecast also assumed gross domestic product grows at a 1.5% average rate during the first year of the reasonable and supportable forecast period and at a 2.7% average rate in the second year. Commercial real estate prices were assumed to cumulatively grow 6.5% and residential real estate prices were assumed to contract 4.4% over the two-year reasonable and supportable forecast period. As of June 30, 2022 the national unemployment rate was assumed to average 3.4% through the reasonable and supportable period. The forecast also assumed gross domestic product would grow during the first year of the reasonable and supportable period at a 2.4% average annual rate and at a 2.9% average rate in the second year. Commercial real estate and residential real estate prices were assumed to cumulatively grow 11.6% and 0.4%, respectively, over the two-year reasonable and supportable forecast period. As of December 31, 2021 the forecast assumed that national unemployment would average 4.6% through the first year of the reasonable and supportable forecast period before gradually improving to 3.7% in the latter half of 2023. The forecast also assumed gross domestic product would grow during 2022 at a 3.1% average annual rate and during 2023 at a 2.7% annual rate. Commercial and residential real estate prices were assumed to cumulatively grow 11.1% and 5.9%, respectively, over the two-year reasonable and supportable forecast period. Among the assumptions utilized as of September 30, 2021 was that the national unemployment rate would continue to be at then elevated levels, on average 4.6%, through the remainder of 2021, followed by a gradual improvement reaching 3.5% within the reasonable and supportable forecast period. The forecast also assumed gross domestic product would grow at an average annualized rate of 3.3% during the eight-quarter forecast period. The commercial real estate price index was assumed to be down modestly in 2021, but improving in 2022 and 2023. Residential real estate prices were not assumed to fluctuate significantly. The assumptions utilized were based on the information available to the Company at or near September 30, 2022, June 30, 2022, December 31, 2021 and September 30, 2021 (at the time the Company was preparing its estimate of expected credit losses as of those dates).
In determiningestablishing the allowance for credit losses the Company estimates losses attributablealso considers the impact of portfolio concentrations, imprecision in economic forecasts, geopolitical conditions and other risk factors that might influence the loss estimation process. With respect to specific troubled credits identified through both normal and detailed or intensified credit review processes and also estimates losses inherent in other loans and leases. In quantifying incurred losses,economic forecasts the Company considersassessed the factorslikelihood of alternative economic scenarios during the two-year reasonable and usessupportable time period. Generally, an increase in unemployment rate or a decrease in any of the techniques described hereinrate of change in gross domestic product, commercial real estate prices or home prices could have an adverse impact on expected credit losses and may result in note 4 of Notesan increase to Financial Statements. For purposes of determining the level of the allowance for credit losses,losses. Forward looking economic forecasts are subject to inherent imprecision and future events may differ materially from forecasted events. In consideration of such uncertainty, the Company segments its loan and lease portfolio by loan type. The amount of specific loss componentsfollowing alternative economic scenarios were considered to estimate the possible impact on modeled credit losses.
A potential downside economic scenario assumed the unemployment rate averages 7.1% in the Company’s loanreasonable and lease portfolios is determined through a loan-by-loan analysissupportable forecast period. The scenario also assumed gross domestic product contracts 2.4% in the first year of commercial loansthe reasonable and supportable forecast period before recovering to 2.2% growth in the second year and commercial real estate loans in nonaccrual status. Measurement of the specific loss components is typically based on expected future cash flows, collateral values or other factors that may impact the borrower’s ability to pay. Losses associated withand residential real estate loansprices cumulatively decline 18.4% and consumer loans11.4%, respectively, by the end of the reasonable and supportable forecast period.
A potential upside economic scenario assumed the unemployment rate declines to approximately 3.4% for the duration of the reasonable and supportable forecast period. The scenario also assumes gross domestic product grows 5.2% in the initial year of the reasonable and supportable forecast period and 2.0% in the second year while commercial real estate and residential real estate prices cumulatively rise 8.9% and 1.4%, respectively, over the two-year reasonable and supportable forecast period.
- 70 -
The scenario analyses resulted in an additional $370 million of modeled credit losses under the assumptions of the downside economic scenario, whereas under the assumptions of the upside economic scenario a $161 million reduction in modeled credit losses could occur. These examples are generally determined by referenceonly a few of the numerous possible economic scenarios that could be utilized in assessing the sensitivity of expected credit losses. The estimated impacts on credit losses in such scenarios pertain only to recent charge-off historymodeled credit losses and are evaluated (and adjusted if deemed appropriate) throughdo not include consideration of other factors including near-term forecasted loss estimates developed by the Company’s credit department. These forecasts give consideration to overall borrower repayment performance and current geographic region changes in collateral values using third party published historical price indices or automated valuation methodologies. With regard to collateral values, the realizability of such values by the Company contemplates repayment of any first lien position prior to recovering amounts onmay evaluate when determining its allowance for credit losses.
As a junior lien position. Approximately 43% of the Company’s home equity portfolio consists of junior lien loans and lines of credit. Except for consumer loans and residential real estate loans that are considered smaller balance homogeneous loans and are evaluated collectively and loans obtained at a discount in acquisition transactions, the Company considers a loan to be impaired when, based on current information and events,result, it is probablepossible that the Company will be unable to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more and has been placedmay, at another point in nonaccrual status. Those impaired loans are evaluated for specifictime, reach different conclusions regarding credit loss components. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Loans less than 90 days delinquent are deemed to have a minimal delay in payment and are generally not considered to be impaired. Loans acquired in connection with acquisition transactions subsequent to 2008 were recorded at fair value with no carry-over of any previously recorded allowance for credit losses. Determining the fair value of the acquired loans required estimating cash flows expected to be collected on the loans and discounting those cash flows at then-current interest rates. For loans acquired at a discount, the impact of estimated future credit losses represents the predominant difference between contractually required payments and the cash flows expected to be collected. Subsequent decreases to those expected cash flows require the Company to evaluate the need for an additional allowance for credit losses and could lead to charge-offs of acquired loan balances. Additional information regarding theestimates. The Company’s process for determining the allowance for credit losses undergoes quarterly and periodic evaluations by independent risk management personnel, which among many other considerations, evaluate the reasonableness of management’s methodology and significant assumptions. Further information about the Company’s methodology to estimate expected credit losses is included in note 4 of Notes to Financial Statements.
Management believes that the allowance for credit losses at September 30, 20172022 appropriately reflected expected credit losses inherent in the portfolio as of that date. The allowance for credit losses was $1.01totaled $1.88 billion or 1.15% of total loans and leases at September 30, 2017,2022, compared with $976 million or 1.09%$1.52 billion at September 30, 2016, $989 million or 1.09%2021, $1.47 billion at December 31, 20162021 and $1.01$1.82 billion or 1.13% at June 30, 2017. The ratio2022. As a percentage of loans outstanding, the allowance was 1.46% at September 30, 2022, 1.62% at September 30, 2021, 1.58% at December 31, 2021 and 1.42% at June 30, 2022. Using the same methodology described herein, the Company added $341 million to total loans and leases at each respective date reflects the impact of loans obtained in acquisition transactions subsequent to 2008 that have been recorded at estimated fair value. As noted earlier, GAAP prohibits any carry-over of an allowance for credit losses for acquiredrelated to the $35.8 billion of loans recorded at fair value. However, for loans acquired at a premium, GAAP provides that anand leases obtained in the acquisition of People's United on April 1, 2022. The combined Company allowance for credit losses be recognized for incurred losses inherent in the portfolio.at April 1, 2022 as a percentage of loans outstanding was 1.42%. The level of the allowance reflects management’s evaluation of the loan and lease portfolio using the methodology and considering the factors as described herein. Should the various economic forecasts and credit factors considered by management in establishing the allowance for credit losses change and should management’s assessment of losses inherent in the loan portfolio also change, the level of the allowance as a percentage of loans could increase or decrease in future periods. The reported level of the allowance reflects management’s evaluation of the loan and lease portfolio as of each respective date.
The ratio of the allowance for credit losses to total nonaccrual loans was 117% at each of September 30, 20172022 and 2016, compared with 107% at December 31, 20162021 was 77% and 116% at June 30, 2017.71%, respectively. Given the Company’s general position as a secured lender and its practice of charging off loan balances when collection is deemed doubtful, that ratio and changes in thatthe ratio are generally not an indicative measure of the adequacy of the Company’s allowance
- 73 -
for credit losses, nor does management rely upon that ratio in assessing the adequacy of the Company’s allowance for credit losses. The level of the allowance reflects management’s evaluation of the loan and lease portfolio as of each respective date.
Other Income
Other income totaled $459$563 million in the third quarter of 2017,2022, compared with $491$569 million in the corresponding 2016 periodyear-earlier quarter. Trust income, service charges on deposit accounts and $461credit-related fees all increased reflecting the acquisition of People's United, but were offset by a decline in mortgage banking revenues resulting from the Company's decision to retain the substantial majority of recently originated mortgage loans in portfolio rather than sell such loans. Other income was $571 million in the second quarter of 2017.2022. The higher other income in last year’s third quarter resulted predominantly from $28 million of gains on bank investment securities. As compared with the second quarter of 2017, higher mortgage banking revenuesmodest decline in the recent quarter were largelyresulted from lower service charges on deposit accounts and trust income, offset by lowerhigher credit-related fees.
Mortgage banking revenues were $97$83 million in each of the recentthird quarter and second quarter of 2022, compared with $104$160 million in the third quarter of 2016 and $86 million in the second quarter of 2017.2021. Mortgage banking revenues are comprised of both residential and commercial mortgage banking activities. The Company’s involvement in commercial mortgage banking activities includes the origination, sales and servicing of loans under the multi-family loan programs of Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development.
Residential mortgage banking revenues, consisting of realized gains and losses from sales of residential real estate loans and loan servicing rights, unrealized gains and losses on residential real estate loans held for sale and related commitments, residential real estate loan servicing fees, and other residential real estate loan-related fees and income, were $63$55 million in the third quarter of 2017, compared with $672022, $110 million in the year-earliersimilar quarter of 2021 and $61$50 million in 2017’sthe second quarter. The decline inquarter of 2022. As compared with the third quarter of 2021, lower residential mortgage banking revenues in the recent quarter resulted from decreased gains associated with loans held for sale and related commitments, reflecting the Company’s decision late in the third quarter of 2021 to retain most originated mortgage loans in portfolio
- 71 -
rather than sell such loans. Residential mortgage banking revenues were $5 million lower in the second quarter of 2022 as compared with the corresponding 2016recent quarter was theas a result of lower gains from origination activities, reflectingthe Company recognizing a 9% declineloss on lower-yielding repurchased mortgage loans in origination volumes. The improvement from 2017’sthe second quarter was due to higher servicing fees.of 2022.
New commitments to originate residential real estate loans to be sold were approximately $757 million in the recently completed quarter, compared with $836$47 million in the third quarter of 20162022, compared with $1.1 billion in the year-earlier quarter and $773$78 million in the second quarter of 2017.2022. Realized gains and losses from sales of residential real estate loans and loan servicing rights and recognized net unrealized gains or losses attributable to residential real estate loans held for sale, commitments to originate loans for sale and commitments to sell loans totaled to gains of $17 million in each of the second and third quarters of 2017, compared with gains of $21$1 million in the third quarter of 2016.2022 and $49 million in the corresponding period of 2021, compared with losses of $17 million in 2022’s second quarter.
Loans held for sale that were secured by residential real estate were $347aggregated $43 million at September 30, 2017, $4152022, $279 million at September 30, 20162021 and $414$474 million at December 31, 2016.2021. Commitments to sell residential real estate loans and commitments to originate residential real estate loans for sale at pre-determined rates aggregated $658totaled $80 million and $483$57 million, respectively, at September 30, 2017, $8452022, compared with $795 million and $636$751 million, respectively, at September 30, 2016,2021 and $777$617 million and $479$233 million, respectively, at December 31, 2016.2021. Net recognized unrealized gains on residential real estate loans held for sale, commitments to sell loans, and commitments to originate loans for sale were $15$1 million at each of September 30, 2017 and December 31, 2016, and2022, $22 million at September 30, 2016.2021 and $10 million at December 31, 2021. Changes in such net unrealized gains or losses are recorded in mortgage banking revenues and resulted in a net decreasesincrease in revenues of $2$1 million in the recent quarter compared with net increases of $3and $10 million in the third quarter of 2016 and $42021, compared with a net decrease of $5 million in the second quarter of 2017.2022.
Revenues from servicing residential real estate loans for others were $46 million in each of the third quarters of 2017 and 2016, compared with $44$54 million during the quarter ended September 30, 2022, compared with $61 million and $67 million during the three months ended September 30, 2021 and June 30, 2017.2022, respectively. Residential real estate loans serviced for others aggregated $81.9totaled $104.0 billion at September 30, 2017, $55.02022, $97.1 billion at September 30, 2016, $53.22021, $97.9 billion at December 31, 20162021 and $72.6$102.5 billion at June 30, 2017.2022. Reflected in residential real estate loans serviced for others were loans sub-serviced for others of $59.3$81.2 billion, $73.2 billion, $74.7 billion and $79.0 billion at September 30, 2017, $32.1 billion at2022, September 30, 2016, $30.4 billion at2021, December 31, 20162021 and $49.9 billion at June 30, 2017.2022, respectively. Revenues earned for sub-servicing loans aggregated $26totaled $33 million forduring the three-month period ended September 30, 2017, comparedrecent quarter, $39 million in the third quarter of 2021 and $44 million in the second quarter of 2022. The decrease in sub-servicing fees in the recent quarter reflects lower fees associated with $25 million for
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eachmodifying and selling reperforming loans previously repurchased by the holder of the three-month periods ended June 30, 2017 and September 30, 2016. During 2017, the Company acquired additional sub-servicing of residential real estate loans as follows: in March, approximately $12.4 billion of outstanding principal balances were added; in June, outstanding principal balances of approximately $11.2 billion were added; and during September, approximately $12.0 billion of outstanding principal balances were added.contractual servicing rights. The contractual servicing rights associated with loans sub-serviced by the Company were predominantly held by affiliates of Bayview Lending Group LLC (“BLG”("BLG"). Information about the Company’s relationship with BLG and its affiliates is included in note 1516 of Notes to Financial Statements.
Capitalized servicing rights consist largely of servicing associated with loans sold by the Company. Capitalized residential mortgage loan servicing assets totaled $116$208 million at September 30, 2017, compared with $1172022, $218 million at each of September 30, 2016 and2021, $217 million at December 31, 2016.2021 and $215 million at June 30, 2022.
Commercial mortgage banking revenues totaled $34$28 million in the third quarter of 2017,2022 compared with $37to $50 million in the corresponding 2016 periodthird quarter of 2021 and $25$33 million in the second quarter of 2017.2022. Included in such amounts were revenues from loan origination and sales activities of $21 million in the recently completed quarter, compared with $25$12 million and $11$24 million in the third quarterquarters of 20162022 and 2021, respectively, compared with $14 million in the second quarter of 2017, respectively.2022. Commercial real estate loans originated for sale to other investors aggregated approximately $839 million in the third quarter of 2017, compared with $721 million in the year-earlier quarter and $510 million in the second quarter of 2017. Loan servicing revenues were $13$906 million in the recent quarter, compared with $11 million$1.7 billion in the third quarter of 20162021 and $14$692 million in the second 2017 quarter.quarter of 2022. Loan servicing revenues totaled $16 million and $26 million in the third quarters of 2022 and 2021, respectively, compared with $19 million in the second quarter of 2022. Capitalized commercial mortgage servicing assets totaled $111were $129 million and $92$131 million at September 30, 20172022 and 2016,September 30, 2021, respectively, and $104$133 million at December 31, 2016.2021. Commercial real estate loans serviced for other investors totaled $15.7 billion, $11.3 billion, and $11.8$25.1 billion at September 30, 2017,2022, $23.1 billion at September 30, 20162021 and $23.7 billion at December 31, 2016, respectively,2021. Those servicing amounts included $3.7 billion at September 30, 2022, $3.9 billion at September 30, 2021 and included $3.2$4.0 billion $2.7 billion and $2.8 billion, respectively,at December 31, 2021 of loan balances for which investors had recourse to the Company if such balances are ultimately uncollectible. In January 2017, the Company purchaseduncollectable. Included in commercial mortgage servicing rightsreal estate loans serviced for others were loans sub-serviced for others of $3.7 billion at September 30, 2022, $3.4 billion at September 30, 2021 and other assets associated with approximately $2.7$3.5 billion of loans. The purchase price and assets acquired were not material to the Company’s consolidated financial position.at December 31, 2021. Commitments to sell commercial real estate loans and commitments to originate commercial real estate loans for sale were $394$703 million and $171$401 million, respectively, at September 30, 2017, $6942022, $993 million and $403$434 million,
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respectively, at September 30, 20162021 and $713$751 million and $70$325 million, respectively, at December 31, 2016.2021. Commercial real estate loans held for sale at September 30, 2017,2022, September 30, 20162021 and December 31, 20162021 were $224$300 million, $290$559 million and $643$425 million, respectively. The higher balance at December 31, 2016 reflected loans originated late in 2016 that were not delivered to investors until 2017.
Service charges on deposit accounts were $109$115 million and $105 million in the third quarterquarters of 2017,2022 and 2021, respectively, compared with $108 million in the similar 2016 quarter and $106$124 million in the second quarter of 2017. Brokerage services income, which includes revenues from2022. The People's United acquisition contributed $20 million to the sale of mutual funds and annuities and securities brokerage fees, aggregated $15 million during the recently completed quarter, compared with $16 millionservice charges on deposit accounts total in the thirdmost recent quarter of 2016 and $17$33 million in the second 2017 quarter. Trading accountquarter of 2022. The lower fees associated with People's United reflect waivers of certain fees in September following conversion of customer deposit accounts to the Company's deposit servicing system. The Company is waiving additional fees and foreign exchange activity resulted in gains of $7 millionreimbursing select customers in the third quarterfourth quarter. The Company does not expect those amounts to ultimately be material to its consolidated financial position or results of 2017, comparedoperations. Excluding the contribution associated with gains of $13 million and $8 millionthe People's United acquisition, the decrease in the thirdrecent quarter of 2016 and the second quarter of 2017, respectively. The decline in such gains in the two most recent quarters as compared with the thirdyear-earlier quarter, reflected the Company's planned elimination, announced in February 2022, of 2016 reflects reduced activity related to interest rate swap transactions executed on behalf of commercial customers. Information about the notional amount of interest rate, foreign exchangecertain non-sufficient funds fees and other contracts entered into by the Company for trading account purposes is included in note 10 of Notes to Financial Statements and herein under the heading “Taxable-equivalent Net Interest Income.”overdraft protection transfer charges from linked deposit accounts.
Trust income includes fees related to two significant businesses. The Institutional Client Services (“ICS”) business provides a variety of trustee, agency, investment management and administrative services for corporations and institutions, investment bankers, corporate tax, finance and legal executives, and other institutional clients who: (i) use capital markets financing structures; (ii) use independent trustees to hold retirement plan and other assets; and (iii) need investment and cash management services. The Wealth Advisory Services (“WAS”) business helpsoffers personal trust, planning, fiduciary, asset management, family office and other services designed to help high net worth clientsindividuals and families grow, their wealth, protect it,preserve and transfer it to their heirs. A comprehensive array of wealth
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management services are offered, including asset management, fiduciary services and family office services.wealth. Trust income totaled $125aggregated $187 million in the third quarter of 2017,2022, compared with $119$157 million in the thirdyear-earlier quarter of 2016 and $127$190 million in the second quarter of 2017.2022. Trust income contributed from the acquisition of People's United totaled approximately $11 million in the recent quarter and $14 million in the second quarter of 2022. Revenues associated with the ICS business were approximately $64 million, $58 million and $63$114 million during the quartersquarter ended September 30, 2017, September 30, 20162022 and $109 million during the quarter ended June 30, 2017, respectively. The higher revenues in the two most recent quarters as2022, each inclusive of $2 million of People's United-related revenue, compared with $94 million during the third quarter of 2016 reflect increased fees earned from money-market funds and stronger sales activities. Revenues attributable to WAS were approximately $56 million, $52 million and $60 million for the three-month periods ended September 30, 2017, September 30, 2016 and June 30, 2017, respectively.2021. The increasehigher revenues in the recent quarter as compared with the similar 2016 periodprior year third quarter were largely reflectsattributable to reduced fee waivers of $13 million resulting from higher rates on money market fund accounts and incremental fees from sales. Relative to the impact of improved equity market performance and stronger sales activities. The second quarter of 2017 included $42022, the higher level of ICS revenues resulted from lower money market fund account fee waivers and higher collective fund fees. Revenues attributable to WAS, including $8 million of People's United-related fees, totaled approximately $71 million in the three-month period ended September 30, 2022, compared with $78 million, including $10 million of People's United-related fees, during the quarter ended June 30, 2022 and $63 million during the quarter ended September 30, 2021. The decline in WAS revenues in the recent quarter as compared with the second quarter of 2022 was largely reflective of annual tax preparation fees. Total trust assets, which include assets under management and assets under administration, totaled $230.5 billion at September 30, 2017, compared with $208.4 billion at September 30, 2016 and $210.6 billion at December 31, 2016.service fees of $4 million recognized in the second quarter of 2022. Trust assets under management were $76.9$153.5 billion, $70.8$152.2 billion, $165.6 billion and $70.7$151.8 billion at September 30, 2017,2022, September 30, 2016 and2021, December 31, 2016,2021 and June 30, 2022, respectively. Trust assets under management include the Company’s proprietary mutual funds’ assets of $10.7$12.7 billion, $11.5$13.0 billion, $13.2 billion and $10.9$11.9 billion at September 30, 2017,2022, September 30, 2016 and2021, December 31, 2016,2021 and June 30, 2022, respectively. Additional trust income from investment management activities aggregated $5 million in the recent quarter, $8 million in the third quartercomprised of 2016 and $4 million in the second quarter of 2017. That income largely relates to fees earned from retail customer investment accounts and from an affiliated investment manager. Assets managed by that affiliated manager totaled $6.6 billion at September 30, 2017, $7.0 billion at September 30, 2016 and $7.3 billion at December 31, 2016. The Company’s trust income from that affiliate was not material during any of the quarters then-ended.
The Company realized gains from sales of investment securities of $28 million during the third quarter of 2016, when the Company sold substantially all of its collateralized debt obligations that had been held in the available-for-sale investment securities portfolio and that had been obtained through the acquisition of other banks. In total, securities with an amortized cost of $28 million were sold. Divestiture of the majority of those securities would have been required prior to July 21, 2017 in accordance with the provisions of the Volcker Rule. There were no significant gains or losses on investment securities in the second or third quarters of 2017.
Other revenues from operations were $107$2 million in the third quarter of 2017, compared with $1042022, less than $1 million in the year-earlierthird quarter of 2021 and $117$3 million in the second quarter of 2017. The higher other2022.
Brokerage services income, which includes revenues from operationsthe sale of mutual funds and annuities and securities brokerage fees, and, since June 2021, sales of select investment products of LPL Financial, totaled $21 million in the third quarter of 2022, $20 million in the third quarter of 2021 and $24 million in the second quarter of 2017 reflects a greater2022. The acquisition of People's United contributed approximately $2 million and $3 million to brokerage services income in the third and second quarters of 2022, respectively. Trading account and non-hedging derivative gains were $5 million, $6 million and $2 million during the quarters ended September 30, 2022, September 30, 2021 and June 30, 2022, respectively. Information about the notional amount of letter of creditinterest rate, foreign exchange and other credit-related feescontracts entered into by the Company is included in that quarter.note 11 of Notes to Financial Statements and herein under the heading “Taxable-equivalent Net Interest Income.”
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Other revenues from operations were $153 million in the third quarter of 2022, compared with $120 million in the corresponding 2021 period and $148 million in the second quarter of 2022. Other revenues from operations associated with the People's United acquisition totaled $28 million and $29 million in the third and second quarters of 2022, respectively. Included in other revenues from operations were the following significant components. Letter of credit and other credit-related fees aggregated $25$54 million in the recent quarter, compared with $31 million and $35$36 million in the year-earlier quarter and $38 million in the second quarter of 2022. As compared with the second quarter of 2022, the higher credit-related fees in 2022's third quarter resulted from an increase in loan syndication fees. The increase in letter of 2016credit and the second 2017 quarter, respectively. The lower revenuesother credit-related fees in the recent quarter as compared with those prior periods predominantly resulted from declines in fees for providingthe year-earlier quarter reflects both higher loan syndication services.fees and the impact resulting from the acquisition of People's United. Reflecting increased customer activity and incremental revenues associated with the People's United acquisition, revenues from merchant discount and credit card fees were $45 million in each of the recent quarter and second quarter of 2022, compared with $39 million in the year-earlier quarter. Tax-exempt income from bank owned life insurance, which includes increaseschanges in the cash surrender value of life insurance policies and benefits received, aggregated $16 million in the most recent quarter, compared withtotaled $12 million and $14 million in the third quarter of 20162022, $11 million in the third quarter of 2021 and $14 million in the second quarter of 2017, respectively. Revenues2022. The Company owns both general account and separate account policies. To the extent market conditions change such that the market value of assets in a separate account bank owned life insurance policy becomes less than the previously recorded cash surrender value, an adjustment is recorded as a reduction to "other revenues from operations." The increase in interest rates during 2022 has led to reductions of the market values of assets in some separate account bank owned life insurance policies below previously recorded cash surrender value. While the resultant reductions in recognized cash surrender value have not been material, a continued rise in interest rates could result in additional adjustments. Insurance-related sales commissions and other revenues totaled $13 million in the quarter ended September 30, 2022, compared with $10 million in the third quarter of 2021 and $14 million in the second quarter of 2022.
Other income totaled $1.68 billion during the first nine months of 2022, compared with $1.59 billion during the year-earlier period. Higher trust income, service charges on deposit accounts, brokerage services income, income resulting from a distribution received from the Company's investment in BLG in 2022, a reduction in unrealized losses on investment securities, and an increase in credit-related and merchant discount and credit card fees were $31partially offset by lower mortgage banking revenues. The acquisition of People's United contributed approximately $140 million in the quarter ended September 30, 2017, compared with $28 million and $29 million during the quarters ended September 30, 2016 and June 30, 2017, respectively. Insurance-related sales commissions andto other revenues were $10 million in the third quarter of 2017, compared with $11 million in each of the year-earlier quarter and the second quarter of 2017. M&T’s share of the operating losses of BLG recognized using the equity method of accounting and cash distributions received resulted in losses of $2 million in the third quarter of 2016 and income of $1 million in the second quarterand third quarters of 2017. There was no income or loss attributable to M&T’s investment in BLG in the recent quarter. During the second quarter of 2017, the operating losses of BLG resulted in M&T reducing the carrying value of its investment in BLG to zero. During that quarter, M&T received a cash distribution from BLG that resulted in the recognition of income by M&T. M&T expects cash distributions from BLG in the future, but the timing and amount of those distributions cannot be estimated at this time. BLG is entitled to receive distributions from affiliates that provide asset management and2022.
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other services that are available for distribution to BLG’s owners, including M&T. Information about the Company’s relationship with BLG and its affiliates is included in note 15 of Notes to Financial Statements.
Other income aggregated $1.37 billionMortgage banking revenues totaled $275 million during the first nine months of 2017, $72022, compared with $432 million higher than $1.36 billionduring the similar period in the first nine months of 2016. That increase was largely attributable to higher trust income, merchant discount and credit card fees, and credit-related fees, and lower losses related to M&T’s share of the operating losses of BLG. Partially offsetting those improvements were lower2021. Residential mortgage banking revenues and trading account and foreign exchange gains in the 2017 period and gains on investment securities recognized during the 2016 period.
Mortgage banking revenues totaled $268aggregated $181 million and $275$315 million during the nine-month periods ended September 30, 20172022 and 2016,2021, respectively. Residential mortgage banking revenues aggregated $183 million in the first nine months of 2017, compared with $192 million during the nine-month period ended September 30, 2016. New commitments to originate residential real estate loans to be sold aggregated $2.3$286 million and $3.7 billion and $2.4 billion duringin the firstinitial nine months of 20172022 and 2016,2021, respectively. Realized gains from sales of residential real estate loans and loan servicing rights and recognized unrealized gains and losses on residential real estate loans held for sale, commitments to originate loans for sale and commitments to sell loans aggregated to gainslosses of $47 million and $54$2 million in the nine-month periods ended September 30, 2017first nine months of 2022, compared with gains of $138 million in the first nine months of 2021. The reductions in volume and 2016, respectively.revenues reflect the Company’s decision to retain the substantial majority of recently originated mortgage loans in portfolio rather than sell such loans. Revenues from servicing residential mortgagereal estate loans for others through September 30 were $136$183 million in 2017the first nine months of 2022 and $137$177 million in 2016.the corresponding 2021 period. Included in servicing revenues were sub-servicing revenues aggregating $74$119 million and $73$110 million in the first nine months of 20172022 and 2016,2021, respectively. Commercial mortgage banking revenues were $85 million and $83 million inFor the nine months ended September 30, 2017commercial mortgage banking revenues were $94 million and 2016,$117 million in 2022 and 2021, respectively. Commercial real estate loans originated for sale to other investors totaled $1.7$2.2 billion and $1.6$2.7 billion induring the nine-month periods ended September 30, 20172022 and 2016,2021, respectively. The decline in commercial mortgage banking revenues is predominantly reflective of the origination volumes.
Service charges on deposit accounts aggregated $320$341 million during the first nine months of 2017,2022, compared with $314$297 million in the year-earlier period. The increase can be attributed to the acquisition of People's United and increased consumer activity, partially offset by reductions resulting from the Company's planned elimination of certain fees and charges beginning in the second quarter of 2022. Trust income totaled $372$546 million and $350$476 million during the first nine months of 20172022 and 2016,2021, respectively. The increase in trust income in 20172022 as compared with 20162021 was largely due to higher revenues from the ICS business, reflecting lower money market fund fee waivers, increased fees earned from money-market funds and stronger sales
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activities and higher retirement services income from growth in collective fund balances, as well as WAS revenues associated with the WAS business, resulting from improved equity market performance and stronger sales activities.People's United acquisition. Brokerage services income was $49totaled $65 million and $48 million in the nine-month periods ended September 30, 2017 and 2016, respectively. Trading account and foreign exchange activity resulted in gains of $25 million and $33 million for the first nine months of 2017 and 2016, respectively. The decline resulted predominantly from reduced activity associated2022, compared with interest rate swap agreements executed on behalf of commercial customers. Gains on investment securities were not significant in 2017 and were $29$44 million in the nine-month period ended September 30, 2016.2021. That increase reflects a change in June 2021 in product delivery to retail brokerage and certain trust customers related to the LPL Financial relationship. Revenues associated with the sale of investment products of LPL Financial, an independent financial services broker, are included in “brokerage services income.” Prior to the transition to LPL Financial’s product platform, revenues earned from providing those customers with proprietary trust products managed by the Company were reported as trust income.
Net unrealized losses on investment securities, including investments of Fannie Mae and Freddie Mac preferred stock, totaling $2 million were recognized during the first nine months of 2022, compared with net unrealized losses of $23 million in the corresponding 2021 period.
Other revenues from operations totaled $335$437 million (including approximately $55 million associated with the acquisition of People's United) in the first nine months of 2017,2022, compared with $311$344 million in the similar 2016year-earlier period. Other revenues from operations include the following significant components. Letter of credit and other credit-related fees aggregated $94$119 million (including $21 million associated with the acquisition of People's United) and $89$96 million in 20172022 and 2016,2021, respectively. The higher revenuesMerchant discount and credit card fees were $124 million (including $5 million associated with the acquisition of People's United) and $101 million in the 2017 period were largely attributable to fees for providing loan syndication services.first nine months of 2022 and 2021, respectively. Income from bank owned life insurance totaled $44 million in 2017 and $41 million in 2016. Merchant discount and credit card fees were $88 million and $81$36 million in the first nine months of 2017 and 2016, respectively. The higher revenues2022, compared with $34 million in the 2017 period were largely attributable to increased transaction volumes related to merchant activity and usage of the Company’s credit card products.corresponding 2021 period. Insurance-related commissions and other revenues aggregated $33$42 million and $32$35 million in 2017the first nine months of 2022 and 2016,2021, respectively. M&T’s investment in BLG resulted in lossesincome of $1$30 million in 2017 and $8 millionthe first nine months of 2022; there was no similar income in 2016.the first nine months of 2021.
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Other expense aggregated $806 milliontotaled $1.28 billion in the third quarter of 2017,2022, compared with $752$899 million in the year-earlier quarter and $751 million$1.40 billion in the 2017’s second quarter.quarter of 2022. Included in those amounts are expenses considered to be “nonoperating” in nature consisting of amortization of core deposit and other intangible assets of $8$18 million in each of the two most recent quarterssecond and $10third quarter of 2022 and $3 million in the third quarter of 2016.2021, and merger-related expenses of $53 million, $9 million and $223 million in the recent quarter, third quarter of 2021 and second quarter of 2022, respectively. Exclusive of those nonoperating expenses, noninterest operating expenses were $798$1.21 billion in the recent quarter, compared with $888 million in the year-earlier quarter and $1.16 billion in the second quarter of 2022. Operations acquired from People's United were the largest contributor to the rise in noninterest operating expenses in the third and second quarters of 2022 as compared with the third quarter of 2017, compared with $743 million in each of2021. Factors contributing to the third quarter of 2016 and the second quarter of 2017. The most significant factors for the increasedhigher level of operating expenses in the recent2022’s third quarter as compared with the earlier quartersyear-earlier quarter, in addition to People's United-related noninterest operating expenses, were increased legal-relatedhigher costs for salaries and professional services costs.employee benefits and outside data processing and software, offset by lower defined benefit pension-related expenses included in other costs of operations. As compared with the second quarter of September 30, 2017,2022, the Company increasedincrease in the recent quarter was predominantly attributed to higher salaries and benefits expenses resulting from an additional pay day and M&T's continued investment in its reserve for legal matters by $50 million.talent base through salaries and incentive compensation. Table 2 provides a reconciliation of other expense to noninterest operating expense.
Other expense for the first nine months of 2017 aggregated $2.342022 totaled $3.64 billion, $66 million higher than $2.28compared with $2.68 billion in the first nine months of 2016.year-earlier period. Included in those amounts are expenses considered to be “nonoperating” in nature consisting of amortization of core deposit and other intangible assets of $24$38 million and $34$8 million in the nine-month periods ended September 30, 20172022 and 2016,2021, respectively, and merger-related expenses of $36$293 million inand $23 million during the first nine months of 2016.same respective periods. Exclusive of those nonoperating expenses, noninterest operating expenses for the first nine months of 2017 increased 5%2022 were $3.31 billion, compared with $2.65 billion in the first nine months of 2021. Approximately three-fourths of that increase can be attributed to $2.32 billion from $2.21 billion fromoperating expenses associated with the corresponding 2016 period. That $111 millionPeople's United acquisition. In addition, the year-over-year increase was largely due toreflects higher legal-relatedcosts for salaries and employee benefits, outside data processing and software, equipment and net occupancy and professional serviceservices expenses partially offset by lower defined benefit pension-related expenses included in other costs and increased expenses for salaries, including incentive compensation.of operations.
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Salaries and employee benefits expense totaled $399 million in each of the recent quarter and the second quarter of 2017, compared with $400$736 million in the third quarter 2016.of 2022, compared with $510 million in the year-earlier quarter and $776 million in the second quarter of 2022. Excluding the nonoperating expense items described earlier, salaries and employee benefits expense totaled $723 million and $691 million in the third and second quarters of 2022, respectively. The higher operating expense in the recent quarter as compared with the third quarter of 2021 reflects higher employee staffing levels, including employees retained from the acquisition of People's United, and higher salaries from merit increases and incentive compensation. Comparing the recent quarter with the second quarter of 2022, the increase reflected an additional pay day in the recent quarter and M&T's continued investment in its talent base through salaries and incentive compensation. During the first nine months of 20172022 and 2016,2021, salaries and employee benefits expense totaled $1.25aggregated $2.09 billion and $1.23$1.53 billion, respectively. The higher level ofExcluding nonoperating expenses described herein, salaries and employee benefits expense in the first nine months of 2017 as compared with2022 totaled $1.99 billion. The higher operating expense level in 2022 largely reflects increased staffing levels, including the similar 2016 period was largely attributable toaddition of People's United employees at the impactbeginning of annualthe second quarter, higher salaries resulting from merit increases and highera rise in incentive compensation. The Company, in accordance with GAAP, has accelerated the recognition of compensation costs.costs for stock-based awards granted to retirement-eligible employees and employees who will become retirement-eligible prior to full vesting of the award. Salaries and employee benefits expense included stock-based compensation of $10$21 million, $12 million and $23 million, in each of the three-month periods ended September 30, 2017,2022, September 30, 20162021 and June 30, 2017,2022, respectively, and $52$94 million and $55$74 million during the nine-month periods ended September 30, 20172022 and 2016,September 30, 2021, respectively. The number of full-time equivalent employees was 16,47822,879 at September 30, 2017, 16,7092022, compared with 17,103 and 22,680 at September 30, 2016, 16,593 at December 31, 20162021 and 16,526 at June 30, 2017,2022, respectively. The increase in staffing levels since September 30, 2021 was predominantly the result of the acquisition of People's United.
Excluding the nonoperating expense items described earlier from each quarter, nonpersonnelnon-personnel operating expenses were $399$485 million, $377 million and $343$471 million in the quarters ended September 30, 2017 and2022, September 30, 2016, respectively,2021 and $344 million in the second quarter of 2017.June 30, 2022, respectively. On that same basis, such expenses were $1.07$1.32 billion and $984 million$1.12 billion in the nine-month periods ended September 30, 20172022 and 2016,2021, respectively. The increasesincrease in nonpersonnelnon-personnel operating expenses reflected in the2022’s third 2017 quarter as compared with the year-earlier quarter and the2022’s second quarter of 2017,reflects higher FDIC assessments and professional services expenses. The higher non-personnel operating expenses in the first nine months of 20172022 periods as compared with the first nine monthscorresponding 2021 periods is predominantly attributable to the impact of 2016, were predominantly the result ofPeople's United acquisition. In addition to those expenses, higher legal-relatedcosts for outside data processing and software, professional services and equipment and net occupancy were offset by reduced defined benefit pension-related expenses. Components of pension expense included in other costs includingof operations reflect the $50 million increaseamortization of net unrecognized losses included in accumulated other comprehensive income. Such net unrecognized losses had been amortized over the average remaining service periods of active participants in the plan. If all or substantially all of the plan’s participants are inactive, GAAP provides for the average remaining life expectancy of the participants to be used instead of average remaining service period. Substantially all of the participants in the Company’s reserve for legal matters asqualified defined benefit pension plan were inactive and beginning in 2022 the average remaining life expectancy was utilized prospectively to amortize the net unrecognized gains and losses of September 30, 2017.the Plan existent at each measurement date. The change increased the amortization period by approximately sixteen years and reduced the amount of quarterly amortization of unrecognized losses recorded in 2022 from what would have been recorded without such change in the amortization period by $9 million.
The efficiency ratio measures the relationship of noninterest operating expenses to revenues. The Company’s efficiency ratio was 56.0%53.6% during the recent quarter, compared with 55.9% during57.7% and 58.3% in the third quarter of 20162021 and 52.7% in the second quarter of 2017.2022, respectively. The efficiency ratios for the nine-month periods ended September 30, 20172022 and 20162021 were 55.2%58.1% and 56.0%58.8%, respectively. The calculation of the efficiency ratio is presented in Table 2.
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The provision for income taxes forIncome tax expense was $201 million in the third quarter of 2017 was $225 million,2022, compared with $200 million and $215$162 million in the year-earlier quarter and $60 million in the second quarter of 2017, respectively.2022. For the nine-month periods ended September 30, 20172022 and 2016, the provision for income taxes was $609 million and $564 million, respectively. As noted earlier, M&T adopted new accounting guidance for share-based transactions during the first quarter of 2017. That guidance requires that all excess tax benefits and tax deficiencies associated with share-based compensation be recognized as a component of2021, income tax expense in the income statement. Previously, tax effects resulting from changes to M&T’s share price subsequent to the grant date were recorded through shareholders’ equity at the time of vesting or exercise. The adoption of the amended accounting guidance resulted in an $18was $374 million reduction of income tax expense in the initial 2017 quarter. The impact of the amended guidance on the second and third quarters of 2017 was not significant. As discussed earlier, the October 2017 settlement between Wilmington Trust Corporation and the U.S. Attorney’s Office for the District of Delaware resulted in a $44$454 million, payment by Wilmington Trust Corporation that is not deductible for income tax purposes, resulting in a higher effective tax rate in the recent quarter.respectively. The effective tax rates were 38.7%23.7%, 36.4%24.6% and 36.1%21.7% for the quarters ended September 30, 2017,2022, September 30, 20162021 and June 30, 2017,2022, respectively, and 35.9%23.4% and 36.4%24.5% for the nine-month periods ended September 30, 20172022 and 2016,2021, respectively. Excluding the impact on income tax expense of the Wilmington Trust Corporation matter, the effective tax rate would have been 35.8% in the third quarter of 2017.
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The effective tax rate is affected by the level of income earned that is exempt from tax relative to the overall level of pre-tax income, the level of income allocated to the various state and local jurisdictions where the Company operates, because tax rates differ among such jurisdictions, and the impact of any large butdiscrete or infrequently occurring items.
The Company’s effective tax rate in future periods will also be affected by the results of operations allocated to the various tax jurisdictions within which the Company operates, any change in income tax laws or regulations within those jurisdictions, and interpretations of income tax regulations that differ from the Company’s interpretations by any of various tax authorities that may examine tax returns filed by M&T or any of its subsidiaries.
Capital
Shareholders’ equity was $16.3$25.3 billion at each of September 30, 2017 and 2016,2022, representing 13.55% and 12.88%12.76% of total assets, respectively, compared with $16.5$17.5 billion or 13.35%11.54% a year earlier and $17.9 billion or 11.54% at December 31, 2016.2021. The increase in shareholders' equity reflects the issuance of 50,325,004 M&T common shares and other common equity consideration totaling $8.4 billion for the acquisition of People's United and the conversion of People's United preferred stock into 10,000,000 shares of Series H Perpetual Fixed-to-Floating Rate Non-cumulative Preferred Stock of M&T ("Series H Preferred Stock") amounting to $261 million.
Included in shareholders’ equity was preferred stock with financial statement carrying values of $1.2$2.01 billion at September 30, 2022, compared with $1.75 billion at each of September 30, 2017, September 30, 20162021 and December 31, 2016. Further information concerning2021. On April 1, 2022, the Company closed the acquisition of People's United resulting in the issuance of 10,000,000 shares of Series H Preferred Stock, par value $1.00 per share and liquidation preference of $25.00 per share, valued at $261 million. Through December 14, 2026, holders of the Series H Preferred Stock are entitled to receive, only when, as and if declared by M&T’s&T's Board of Directors, non-cumulative cash dividends at an annual rate of 5.625%, payable quarterly in arrears. Subsequent to December 14, 2026, holders will be entitled to receive, only when, as and if declared by M&T's Board of Directors, non-cumulative cash dividends at an annual rate of the three-month LIBOR plus 402 basis points. The Series H preferred stock canmay be foundredeemed at M&T's option, in note 6whole or in part, from time to time, on or after April 1, 2027 or, in whole but not in part, at any time within 90 days following a regulatory capital treatment event whereby the full liquidation value of Notes to Financial Statements. the shares no longer qualifies as "additional Tier 1 capital". The Series H Preferred Stock is listed on the NYSE under the symbol MTPrH.
Reflecting the impact of repurchases of M&T’s common stock, commonCommon shareholders’ equity was $15.1$23.2 billion, or $134.45 per share, at each of September 30, 2017 and 2016,2022, compared with $15.8 billion, or $99.70$122.60 per share, a year earlier and $97.47$16.2 billion, or $125.51 per share, respectively, compared with $15.3 billion, or $97.64 at December 31, 2016.2021. Tangible equity per common share, which excludes goodwill and core deposit and other intangible assets and applicable deferred tax balances, was $69.02$84.28 at the end of the recent quarter, compared with $67.42 a year earlier$86.88 at September 30, 2021 and $67.85$89.80 at December 31, 2016.2021. The Company’s ratio of tangible common equity to tangible assets was 9.02%7.70% at September 30, 2017,2022, compared with 8.55%7.59% a year earlier and 8.92%7.68% at December 31, 2016.2021. Reconciliations of total common shareholders’ equity and tangible common equity and total assets and tangible assets as of each of those respective dates are presented in table 2.
Shareholders’ equity reflects accumulated other comprehensive income or loss, which includes the net after-tax impact of unrealized gains or losses on investment securities classified as available for sale, remaining unrealized losses on held-to-maturity securities transferred from available for which an other-than-temporary impairment charge hassale that have not yet been recognized,amortized, gains or losses associated with interest rate swap agreements designated as cash flow hedges, foreign currency translation adjustments and adjustments to reflect the funded status of defined benefit pension and other postretirement plans. Net unrealized gainslosses on investment securities reflected in shareholders’ equity, net of applicable tax effect, were $18$348 million or $.12$2.01 per common share, at September 30, 2017 and $1752022 compared with net unrealized gains of $105 million, or $1.13$.81 per common share, at September 30, 2016, compared with net unrealized losses of $162021 and $78 million, or $.10$.60 per common share, at December
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31, 2016.2021. Changes in unrealized gains and losses on investment securities are predominantly reflective of the impact of changes in interest rates on the values of such securities.
Reflected in the carrying amount of available for sale investment securities at September 30, 2017 were pre-tax effect unrealized losses of $86 million on securities with an amortized cost of $6.3 billion and pre-tax effect unrealized gains of $133 million on securities with an amortized cost of $5.1 billion. Information about unrealized gains and losses as of September 30, 20172022 and December 31, 20162021 is included in note 3 of Notes to Financial Statements.
Reflected in the carrying amount of available-for-sale investment securities at September 30, 2022 were pre-tax effect unrealized gains of $1 million on securities with an amortized cost of $261 million and pre-tax effect unrealized losses of $471 million on securities with an amortized cost of $11.1 billion. Information concerning the Company’s fair valuations of investment securities is provided in note 12notes 3 and 13 of Notes to Financial Statements.
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Each reporting period the Company reviews its available-for-sale investment securities for declines in value that might be indicative of credit-related losses through an analysis of the creditworthiness of the issuer or the credit performance of the underlying collateral supporting the bond. If the Company does not expect to recover the entire amortized cost basis of a debt security a credit loss is recognized in the consolidated statement of income. A loss is also recognized if the Company intends to sell a bond or it more likely than not will be required to sell a bond before recovery of the amortized cost basis.
As of September 30, 2017,2022, based on a review of each of the securities in the available-for-sale investment securities portfolio, the Company concluded that it expected to realize the declines in the valuesamortized cost basis of any securities containing an unrealized loss were temporary and that any other-than-temporary impairment charges were not appropriate.each security. As of September 30, 2017,2022, the Company did not intend to sell nor is it anticipated that it would be required to sell any of its impaired securities that is, wherefor which fair value iswas less than the amortized cost basis of the security. The Company intends to continue to closely monitor the performance of its securities because changes in their underlying credit performance or other events could cause the amortized cost basis of those securities to become other-than-temporarily impaired. However, because the unrealized losses on available-for-saleuncollectable.
Accounting guidance requires investment securities have generally already been reflected in the financial statement valuesheld to maturity to be presented at their net carrying value that is expected to be collected over their contractual term. The Company estimated no material credit losses for its investment securities classified as held-to-maturity at September 30, 2022 and shareholders’ equity, any recognitionDecember 31, 2021. The amortized cost basis of an other-than-temporary decline in valueobligations of those investment securities would not have a material effect on the Company’s consolidated financial condition. Any other-than-temporary impairment charge related to held-to-maturity securities would result in reductions in the financial statement values for investment securitiesstates and shareholders’ equity. Additional information concerning fair value measurements and the Company’s approach to the classification of such measurements is included in note 12 of the Notes to Financial Statements.
The Company assessed impairment losses on privately issued mortgage-backed securitiespolitical subdivisions in the held-to-maturity portfolio by performing internal modeling to estimate bond-specific cash flows considering recent performance of the mortgage loan collateral and utilizing assumptions about future defaults and loss severity. These bond-specific cash flows also reflect the placement of the bond in the overall securitization structure and the remaining subordination levels. In total,totaled $2.7 billion at September 30, 20172022 and less than $1 million at December 31, 2021. The increase reflected municipal securities obtained in the acquisition of People's United. At September 30, 2022 and December 31, 2016,2021, the Company had in its held-to-maturity portfolio privately issued mortgage-backed securities with an amortized cost basis of $141$52 million and $158$62 million, respectively, and a fair value of $112$53 million and $121$57 million, respectively. At September 30, 2017, 85%2022, 83% of thethose mortgage-backed securities were in the most senior tranche of the securitization structure with 22% being independently rated as investment grade.structure. The mortgage-backed securities are generally collateralized by residential and small-balance commercial real estate loans originated between 2004 and 2008 and had a weighted-average credit enhancement of 17% at September 30, 2017, calculated by dividing the remaining unpaid principal balance of bonds subordinate to the bonds owned by the Company plus any overcollateralization remaining in the securitization structure by the remaining unpaid principal balance of all bonds in the securitization structure. The weighted-average default percentage and loss severity assumptions utilized in the Company’s internal modeling were 33% and 64% respectively. Given the terms of the securitization structure, the bonds held by the Company may defer interest payments in certain circumstances, but after2008. After considering the repayment structure and estimated future collateral cash flows of each individual senior and subordinate tranche bond, the Company has concluded that as of September 30, 2017,2022, it expected to recover the amortized cost basis of those privately issued mortgage-backed securities were not other-than-temporarily impaired.securities. Nevertheless, it is possible that adverse changes in the estimated future performance of mortgage loan collateral underlying such securities could impact the Company’s conclusions.
Adjustments to reflect the funded status of defined benefit pension and other postretirement plans, net of applicable tax effect, reduced accumulated other comprehensive income by $260$258 million, or $1.72$1.49 per common share, at September 30, 2017, $2852022, $436 million or $1.84$3.38 per common share, at September 30, 20162021 and $273$267 million or $1.75$2.08 per common share, at December 31, 2016.2021.
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Consistent with its revised 2016 Capital Plan filed withIn January 2021 M&T’s Board of Directors authorized a plan to repurchase up to $800 million of shares of M&T’s common stock subject to all applicable regulatory limitations. In February 2022, the Federal Reserve,Board reaffirmed that plan. M&T repurchased 3,233,1963,505,946 shares of its common sharesstock for $532 million during the first quarter of 2017 and 1,409,807 common shares for $225$600 million in the second quarter of 2017.2022. There were no repurchases pursuant to that repurchase plan during 2021. On June 28, 2017,July 19, 2022, M&T announced that the Federal Reserve did not object&T's Board of Directors authorized a new stock purchase program to M&T’s 2017 Capital Plan. That plan includes the repurchase of up to $900 million$3.0 billion of common shares duringsubject to all applicable regulatory reporting limitations. The new plan authorized in July 2022 replaced the four-quarter period beginningprevious plan. M&T repurchased 3,282,449 shares of its common stock for $600 million under the new program in the third quarter of 2022.
Cash dividends declared on July 1, 2017M&T's common stock totaled $210 million in the recent quarter, compared with $143 million and $215 million in the quarters ended September 30, 2021 and June 30, 2022, respectively. During the fourth quarter of 2021, M&T's Board of Directors authorized an increase in the quarterly common stock cash dividend into $1.20 per common share from the second quarterprevious rate of 2018 of up to $.05$1.10 per share to $.80 percommon share. M&T may also continue to pay dividends and interest on other equity and debt instruments included in regulatory capital, including preferredCommon stock trust preferred securities and subordinated debt that were outstanding at December 31, 2016, consistent with the contractual terms of those instruments. Dividends are subject to declaration by M&T’s Board of Directors. Furthermore, on July 18, 2017, M&T’s Board of Directors authorized a new stock repurchase program to repurchase up to $900 million of shares of its common stock subject to all applicable regulatory reporting limitations, including those set forth in M&T’s 2017 Capital Plan. During the recent quarter, M&T repurchased 1,382,746 common shares for $225 million in accordance with that program. In total, M&T repurchased 6,025,749 common shares during the first nine months of 2017 for an aggregate amount of $982 million. M&T repurchased 5,307,595 shares of common stock during the first nine months of 2016 at a total cost of $604 million.
Cashcash dividends declared on M&T’s common stock aggregated $114 million in the recent quarter, compared with $109 million and $115 million in the quarters ended September 30, 2016 and June 30, 2017, respectively. Cash dividends on common stock during the nine-month periods ended September 30, 20172022 and 20162021 were $344$581 million and $332$428 million, respectively.
Cash dividends declared on preferred stock totaled $18aggregated $25 million during eachin both the recent quarter and second quarter of the two most recent quarters, as2022 compared with $20$17 million in the third quarter of 2016. The decline in preferred2021. Preferred stock dividends intotaled $72 million and $51 million during the two most recent quarters as compared with the third quarterfirst nine months of 2016 resulted from the lower dividend rate for the $500 million of Series F preferred stock issued in October 2016 as compared with the like-amount of Series D preferred stock that had been redeemed in December 2016.2022 and 2021, respectively.
M&T and its subsidiary banks are required to comply with applicable capital adequacy standards established by the federal banking agencies. Pursuant to those regulations, the minimum capital ratios are as follows:
4.5% Common Equity Tier 1 (“CET1”) to risk-weighted assets (each as defined in the capital regulations);
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6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets (each as defined in the capital regulations);
8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets (each as defined in the capital regulations); and
4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”), as defined in the capital regulations.
InCapital regulations require buffers in addition to the minimum risk-based capital regulations provide forratios noted above. M&T is subject to a stress capital buffer requirement that is determined through the phase-in ofFederal Reserve’s supervisory stress tests and M&T’s bank subsidiaries are subject to a “capitalcapital conservation buffer”buffer requirement. The buffer requirement must be composed entirely of CET1 and for each entity was 2.5% of risk-weighted assets at September 30, 2022. In June 2022, the Federal Reserve released the results of its most recent supervisory stress tests. Based on topthose results, on October 1, 2022, M&T's stress capital buffer of 4.7% became effective.
The federal bank regulatory agencies have issued rules that allow banks and bank holding companies to phase-in the impact of adopting the expected credit loss accounting model on regulatory capital. Those rules allow banks and bank holding companies to delay for two years the day one impact on retained earnings of adopting the expected loss accounting standard and 25% of the cumulative change in the reported allowance for credit losses subsequent to the initial adoption through the end of 2021, followed by a three-year transition period. M&T and its subsidiary banks adopted these minimum risk-weighted asset ratios. When fully phased-in on January 1, 2019rules and the impact is reflected in the regulatory capital conservation buffer will be 2.5%. For 2017, the phase-in transition portion of that buffer is 1.25%.ratios presented herein.
The regulatory capital ratios of the Company and its bank subsidiaries, M&T Bank and Wilmington Trust, N.A., as of September 30, 20172022 are presented in the accompanying table.
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September 30, 20172022
| M&T |
|
| M&T |
|
| Wilmington |
|
| |||
| (Consolidated) |
|
| Bank |
|
| Trust, N.A. |
|
| |||
|
|
|
|
|
|
|
|
|
| |||
Common equity Tier 1 |
| 10.75 | % |
|
| 11.37 | % |
|
| 257.25 | % |
|
Tier 1 capital |
| 12.13 | % |
|
| 11.37 | % |
|
| 257.25 | % |
|
Total capital |
| 13.96 | % |
|
| 12.87 | % |
|
| 257.76 | % |
|
Tier 1 leverage |
| 9.13 | % |
|
| 8.56 | % |
|
| 83.96 | % |
|
|
| M&T |
| M&T |
|
| Wilmington | |
|
| (Consolidated) |
| Bank |
|
| Trust, N.A. | |
|
|
|
|
|
|
|
|
|
Common equity Tier 1 |
| 10.98% |
|
| 10.69% |
|
| 67.58% |
Tier 1 capital |
| 12.25% |
|
| 10.69% |
|
| 67.58% |
Total capital |
| 14.87% |
|
| 12.99% |
|
| 68.14% |
Tier 1 leverage |
| 10.35% |
|
| 9.05% |
|
| 14.55% |
The Company is subject to the comprehensive regulatory framework applicable to bank and financial holding companies and their subsidiaries, which includes regular examinations by a number of regulators. Regulation of financial institutions such as M&T and its subsidiaries is intended primarily for the protection of depositors, the Deposit Insurance Fund of the FDIC and the banking and financial system as a whole, and generally is not intended for the protection of shareholders, investors or creditors other than insured depositors. Changes in laws, regulations and regulatory policies applicable to the Company’s operations can increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive environment in which the Company operates, all of which could have a material effect on the business, financial condition or results of operations of the Company and in M&T’s ability to pay dividends. For additional information concerning this comprehensive regulatory framework, refer to Part I, Item 1 of M&T’s Form 10-K for the year ended December 31, 2016.2021.
Segment Information
As required by GAAP, theThe Company's reportable segments have been determined based upon its internal profitability reporting system, which is organized by strategic business unit. Financial information about the Company's segments is presented in note 1415 of Notes to Financial Statements. As disclosed in M&T’s Form 10-K for the year ended December 31, 2016, in the fourth quarter of 2016 the Company revised its funds transfer pricing allocation related to borrowings. Additionally, during the second quarter of 2017, the Company revised its funds transfer pricing allocation related to certain deposit categories. As a result of the changesThe reportable segments are Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and as described in note 14 of Notes to Financial Statements, prior period financial information has been reclassified to provide segment information on a comparable basis.Retail Banking.
The Business Banking segment contributed net income of $31 million during the quarter ended September 30, 2017, compared with $24$94 million in the third quarter of 20162022, up from $72 million in the third quarter of 2021 and $29$71 million in the second quarter of 2017.2022. As compared with the2021’s third
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quarter, of 2016, the recent quarter’s higher net income primarily reflected an $8a rise in net interest income of $54 million and higher service charges on deposit accounts of $5 million partially offset by a $20 million increase in centrally-allocated costs associated with data processing, risk management and other support services provided to the Business Banking segment and higher personnel-related costs of $6 million (each reflecting the impact of the People’s United acquisition). The increase in net interest income that resulted largely from a widening of the net interest margin on deposits of 16126 basis points and an increase inhigher average outstanding deposit balances of $629 million.$7.1 billion, which was offset, in part, by a narrowing of the net interest margin on loans. The improvementgrowth in net income in 2017’s thirdthe recent quarter as compared with the immediately precedingsecond quarter of 2022 reflected a $4$40 million increase in net interest income. That improvementincome, resulting largely from an 80 basis point widening of the net interest margin on deposits. Partially offsetting that increase in net interest income was a $7 million rise in centrally-allocated costs associated with data processing, risk management and other support services provided to the Business Banking segment. Net income for the Business Banking segment totaled $206 million during the first nine months of 2022, compared with $160 million in the corresponding 2021 period. The 29% year-over-year increase reflected a six-month impact of the People’s United acquisition and was predominantly attributable to higher average outstandingnet interest income of $82 million, an increase in service charges on deposit balancesaccounts of $254$14 million and higher merchant discount and credit card fees of $8 million, partially offset by a rise in centrally-allocated costs associated with data processing, risk management and other support services provided to the Business Banking segment of $32 million and higher personnel-related costs of $6 million. The higher net interest income reflected a widening of the net interest margin on deposits of 359 basis points and higher average balances of deposits of $5.5 billion, partially offset by a narrowing of the impactnet interest margin on loans of one additional day in the current quarter. 67 basis points.
Net income earned by the BusinessCommercial Banking segment totaled $85$214 million during the first nine months of 2017, compared with $77recent quarter, up from $144 million in the year-earlier period. That 10%quarter and $163 million in the second quarter of 2022. As compared with the third quarter of 2021, the recent quarter included a $178 million increase in net income was attributable to a $16 million rise in net interest income reflecting a 140 basis point widening of the net interest margin on deposits and an increase in average outstanding loan and deposit balances of $18.8 billion and $3.2 billion, respectively, and higher merchant discountcredit-related fees each reflecting the impact of the People’s United acquisition. Partially offsetting that higher net interest income was a $58 million increase in centrally-allocated costs associated with data processing, risk management and credit card feesother support services provided to the Commercial Banking segment, higher personnel-related costs of $2$28 million offset, in part, byand a $5$27 million increase in the provision for credit losses,losses. The 31% rise in net income in the recent quarter as compared with the second quarter of 2022 was primarily due to a $57 million increase in net interest income, driven by a 94 basis point widening of the net interest margin on deposits and higher credit-related fees of $13 million. Through the first nine months of the year, net income for the Commercial Banking segment totaled $522 million in 2022, compared with $378 million in the corresponding 2021 period. That rise in net income was predominantly due to an increase in net interest income of $305 million, reflecting a widening of the net interest margin on deposits of 98 basis points and higher average outstanding balances in loans of $11.1 billion (including the six-month impact of the People’s United acquisition), an increase of $35 million in letter of credit and other credit-related fees, and higher deposit service charges. Those favorable factors were offset, in part, by increases in centrally-allocated costs associated with data processing, risk management and other support services provided to the Commercial Banking segment, personnel-related expenses and other costs of operations (all largely reflecting the six-month impact of the People’s United acquisition).
The Commercial Real Estate segment recorded net income of $95 million in the third quarter of 2022, compared with $85 million in the similar 2021 period and $122 million in the second quarter of 2022. The higher net charge-offs.income as compared with the year-earlier quarter reflected an $18 million increase in net interest income, a $19 million decrease in the provision for credit losses and a $6 million decline in other costs of operations. The improvementhigher net interest income predominantly resulted from a 129 basis point widening of the net interest margin on deposits and higher loan balances of $5.1 billion, partially offset by a reduction in the net interest margin on loans of 56 basis points. A decrease in commercial mortgage banking revenues and a rise in centrally-allocated costs associated with data processing, risk management and other support services provided to the Commercial Real Estate segment largely offset those favorable factors. The decline in commercial mortgage banking revenues reflects reduced origination volume and lower servicing revenues. The $27 million decrease in the recent quarter’s net income as compared with the immediately preceding quarter was largely the result of a $9 million increase in each of centrally-allocated costs associated with data processing, risk management and other support services provided to the Commercial Real Estate segment and the
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provision for credit losses, and a decline in commercial mortgage banking revenues mainly resulting from lower servicing revenues. Net income for the Commercial Real Estate segment was $314 million during the nine-month period ended September 30, 2022, up 30% from $243 million in the corresponding 2021 period. That rise reflects a $72 million decrease in the provision for credit losses and higher revenues of $46 million that includes an increase in net interest income of $45 million. Higher credit-related and other fees were offset by a decline in commercial mortgage banking revenues. The impact of those overall improvements was reduced by higher centrally-allocated costs associated with data processing, risk management and other support services provided to the Commercial Real Estate segment. The increase in net interest income reflected a widening of the net interest margin on deposits of 15 basis points and an increase in average outstanding deposit balances of $399 million.
Net income of the Commercial Banking segment was $110 million in the recent quarter, compared with $103 million in 2016’s third quarter and $106 million in the second quarter of 2017. The recent quarter’s 7% rise in net income as compared with the third quarter of 2016 was largely due to a $12 million decrease in the provision for credit losses and a $6 million increase in net interest income. Those favorable factors were partially offset by an $8
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million decline in letter of credit and credit-related fees, primarily due to lower loan syndication fees. The higher net interest income resulted predominately from a widening of the net interest margin on deposits of 4056 basis points and higher average outstanding balances of loans and deposits of $780 million,$2.7 billion and $2.0 billion, respectively, partially offset by a narrowing of the net interest margin on loans of 1524 basis pointspoints.
Net income recorded by the Discretionary Portfolio segment aggregated $12 million during the three-month period ended September 30, 2022, compared with $75 million in the year-earlier period and $56 million earned in the second quarter of 2022. The decline in the recent quarter’s net income as compared with the third quarter of 2021 was due primarily to a $63 million decrease in net interest income. The lower net interest income was mainly driven by a decline in average outstanding deposit balances of $795$4.0 billion and reduced income from interest rate swap agreements entered into for interest rate risk management purposes, partially offset by an increase in average balances of investment securities and loans of $17.8 billion and $7.9 billion, respectively, reflecting balances obtained in the acquisition of People’s United and the purchase of investment securities during 2022. The lower net income in the recent quarter as compared with the 2022’s second quarter reflected decreases in net interest income of $57 million. The decline in net interest income was primarily due to reduced income from interest rate swap agreements entered into for interest rate risk management purposes. Net income for this segment for the first nine months totaled $103 million in 2022 and $244 million in 2021. The decline in net income can be attributed to lower net interest income due to reduced income from interest rate swap agreements entered into for interest rate risk management purposes. Intersegment fees paid to the Residential Mortgage Banking segment during the first nine months of 2022 increased $40 million. Partially offsetting those unfavorable factors was a $22 million reduction of valuation losses on investment securities as compared with the corresponding 2021 period.
The Residential Mortgage Banking segment recorded a net loss of $3 million in the recent quarter, compared with net income of $46 million in the third quarter of 2021 and $9 million in the second quarter of 2022. The decline in the recent quarter from the third quarter of 2021 predominantly resulted from a $38 million decrease in revenues (including intersegment revenues) associated with lower mortgage origination and sales activities, lower net interest income and a rise in centrally-allocated costs associated with data processing, risk management and other support services provided to the Residential Mortgage Banking segment. As compared with the net income in the second quarter of 2022, the net loss in the recent quarter reflected lower mortgage banking revenues of $13 million, predominantly associated with servicing residential real estate loans (including intersegment revenues) and a decline in net interest income of $11 million, partially offset by higher revenues of $7 million (including intersegment revenues) associated with mortgage origination and sales activities. The Residential Mortgage Banking segment earned $35 million in the first nine months of 2022, compared with $126 million in the similar period of 2021. The decline compared with the corresponding 2021 period was largely due to a decrease in revenues of $95 million (including intersegment revenues) resulting from lower mortgage origination and sales activities, lower net interest income of $31 million and a $19 million rise in centrally-allocated costs associated with data processing, risk management and other support services provided to the Residential Mortgage Banking segment, partially offset by an increase of $20 million in revenues associated with servicing residential real estate loans (including intersegment revenues). The decline in net interest income was driven by a decline in average outstanding balances in loans and deposits of $1.7 billion and $1.4 billion, respectively.
Net income for the Retail Banking segment totaled $182 million in the third quarter of 2022, compared with $88 million in the corresponding quarter of 2021 and $114 million in the second quarter of 2022. The rise in net income in the recent quarter as compared with the secondyear-earlier quarter reflected a $291 million increase in net interest income, largely driven by a widening of 2017 was largely duethe net interest margin earned on deposits of 119 basis points and higher average outstanding deposit and loan balances of $24.4 billion and $2.2 billion, respectively (reflecting the impact of the People’s United acquisition). Those favorable factors were partially offset by higher expenses, also reflecting the
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impact of the People's United acquisition, including higher personnel-related costs of $73 million, a rise in centrally-allocated expenses associated with support services provided to a $13the Retail Banking segment of $32 million, decreasean increase in equipment and net occupancy costs of $28 million, higher other costs of operations of $21 million and an increase in the provision for credit losses and higherof $7 million. The 59% improvement in net income in the current quarter as compared with the second quarter of 2022 reflected an increase in net interest income of $3$137 million, reflecting the impactwhich was offset, in part, by lower service charges on deposit accounts of one additional day$5 million, higher personnel-related costs of $20 million and increases in the current quarter, partially offset by a $9 million decrease in credit-related fees, primarily due to lower loan syndication fees. Year-to-date net income for the Commercial Banking segment totaled $328 million in 2017, compared with $309 million in 2016. That improvement was largely due to higher net interest incomeother operating expenses of $19 million, a $7 million decline in the provision for credit losses and a $4 million$26 million. The increase on gains on sales of previously leased equipment. The improvement in net interest income reflected a widening of the net interest margin on deposits of 3181 basis points, and higher average loan balances of $1.3 billion, partially offset by a narrowinglower average deposit balances of the net interest margin on loans of 17 basis points.
$2.0 billion. The Commercial Real EstateRetail Banking segment recorded net income of $97$380 million in the third quarter of 2017, compared with $90 million in the year-earlier period and $87 million in the second quarter of 2017. The recent quarter’s improvement in net income as compared with the third quarter of 2016 reflects a $10 million rise in net interest income and a $3 million decrease in the provision for credit losses, partially offset by lower trading account and foreign exchange gains of $5 million, due predominately to reduced activity related to interest rate swap transactions executed on behalf of customers. The higher net interest income resulted from an increase in average outstanding loan balances of $1.1 billion and a widening of the net interest margin on deposits of 46 basis points, partially offset by a narrowing of the net interest margin on loans of 5 basis points. The recent quarter’s 11% increase in net income as compared with the immediately preceding quarter reflected higher mortgage banking revenues as previously noted, resulting from increased loan origination activities, and a $5 million increase in net interest income. The higher net interest income resulted largely from a widening of net interest margin on loans of 4 basis points and the impact of one additional day in the current quarter. Net income for the Commercial Real Estate segment totaled $269$263 million in the first nine months of 2017, compared with $255 million in2022 and 2021, respectively. The improvement from the similar 2016 period. That improvement resulted from a rise in2021 period reflected higher net interest income of $33$449 million and higher letterconsumer service charges on deposit accounts of credit and other credit-related fees of $4 million,$16 million. Those favorable factors were partially offset by lower trading accounthigher personnel-related costs of $122 million, a rise in centrally-allocated expenses associated with support services provided to the Retail Banking segment of $104 million, an increase in equipment and foreign exchange gainsnet occupancy costs of $11$49 million, higher professional services expense of $20 million, and a $5 millionan increase in personnel-related expenses. The higher net interest income resulted from increased average outstanding loan balances of $2.2 billion and a widening of the net interest margin on deposits of 37 basis points offset, in part, by a narrowing of the net interest margin on loans of 13 basis points. The lower trading account and foreign exchange gains during the nine-month period ended September 30, 2017 resulted from decreased activity related to interest rate swap transactions executed on behalf of customers.
Net income earned by the Discretionary Portfolio segment totaled $32 million during the three-month period ended September 30, 2017, compared with $46 million in the year-earlier period and $30 million in the second quarter of 2017. Reflected in the results for the third quarter of 2016 were net after-tax investment securities gains of $17 million ($28 million pre-tax), while there were no significant gains or losses on investment securities in 2017. Largely in response to the provisions of the Dodd-Frank Act commonly referred to as the “Volcker Rule,” the Company sold substantially all of its collateralized debt obligations in 2016’s third quarter. In addition to those gains on investment securities, contributing to the recent quarter decline in net income as compared with the third quarter of 2016 was a $17 million decline in net interest income, due largely to lower average outstanding loan balances of $3.4 billion and a narrowing of the net interest margin on loans of 9 basis points. Partially offsetting those unfavorable factors were a $6 million decline in the provision for credit losses and lower loan and other real estate servicing costs. As compared with the second quarter of 2017, a $6 million decrease in the provision for credit losses and lower operating expenses in the recent quarter were largely offset by(all reflecting a $7 million decline in net interest income. The lower net interest income reflected decreased average outstanding loan balances of $758 million and a narrowingsix-month impact of the net interest margin on investment securities of 6 basis points.People’s United acquisition). The Discretionary Portfolio segment recorded net income of $95 million and $135 million in the first nine months of 2017 and 2016, respectively. That year-over-year decline was predominantly the result of a $57 million decrease in net interest income and the noted
- 83 -
investment securities gains recorded in 2016, partially offset by lower loan and other real estate-related servicing costs. The decreaseincrease in net interest income reflected lower average outstanding loan balances of $3.6 billion and a 12 basis point narrowing of the net interest margin on loans, each largely due to pay downs of loans obtained in the acquisition of Hudson City, partially offset by a widening of the net interest margin on investment securities of 9 basis points.
Net income recorded by the Residential Mortgage Banking segment aggregated $14 million in each of the two most recent quarters, compared with $16 million in the third quarter of 2016. The decline in net income for the third quarter of 2017 as compared with the year-earlier period was predominantly attributable to lower revenues of $7 million associated with mortgage origination and sales activities (including intersegment revenues) and servicing income. As compared with the second quarter of 2017, increased personnel expenses and a decrease in net interest income were largely offset by higher origination and servicing income. Year-to-date net income for this segment totaled $37 million in 2017 and $43 million in 2016. Contributing to that decline were decreased revenues from mortgage origination and sales activities (including intersegment revenues) and from servicing residential real estate loans.
Net income for the Retail Banking segment totaled $96 million in the quarter ended September 30, 2017, compared with $75 million in the year-earlier period and $100 million in the second quarter of 2017. As compared with the third quarter of 2016, a $30 million rise in net interest income in the recent quarter and decreases in advertising, marketing and personnel-related costs contributed to the improvement. The higher net interest income was due to a 3954 basis point widening of the net interest margin on deposits offset, in part, by lowerand higher average outstanding deposit and loan balances of $3.9 billion. The modest decline in net income in the recent quarter as compared with the second quarter of 2017 reflected$18.2 billion and $2.1 billion, respectively, partially offset by a $7 million rise in the provision for credit losses and an increase in equipment and net occupancy costs of $5 million. Partially offsetting those unfavorable factors was a $7 million increase in net interest income, resulting largely from a widening25 basis point narrowing of the net interest margin on deposits of 6 basis points, the impact of one additional day in the current quarter and an increase in the average outstanding loan balances of $420 million, partially offset by lower average outstanding deposit balances of $1.4 billion. The Retail Banking segment recorded net income of $283 million and $219 million in the first nine months of 2017 and 2016, respectively. That improvement was predominantly due to a $79 million rise in net interest income, primarily reflecting a widening of the net interest margin on deposits of 34 basis points that was offset, in part, by lower average outstanding deposit balances of $3.1 billion, and a $14 million decrease in the provision for credit losses due, in part, to higher levels of partial charge-offs recognized in the first quarter of 2016 associated with loans for which the Company identified that the customer was either bankrupt or deceased.loans.
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 results ofdistributed income from BLG, merger-related expenses resulting from acquisitions (when incurred) 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 trust income of the Company that reflects the ICS and WAS business activities. The various components of the “All Other” category resulted inreported net income totaling $53 million for the quarter ended September 30, 2022 as compared with net losses of $24$14 million and $317 million in the year-earlier quarter and second quarter of 2022, respectively. The “All Other” category had net losses of $333 million and $12 million for the third quarter of 2017nine-month periods ended September 30, 2022 and $3 million in the corresponding 2016 quarter,2021, respectively. As compared with net income of $16 million in the second quarter of 2017. The higher net loss inrespective 2021 periods the recent quarter and first nine months of 2022 each reflected higher net interest income and trust income, as compared with the year-earlier quarter resulted largely from increased legal-related and professional services costs of $66 million (including additions to the reserve for legal matters of $50 million in 2017’s third quarter) and a $6 million increase in personnel-related expenses. Those unfavorable factors were partially offset bywell as the favorable impact from the Company’s allocation methodologies for internal transfers for funding charges and credits associated with earning assets and interest-bearing liabilities of the Company’s reportable segments. Those favorable factors were offset by increases in the recent quarterprovision for credit losses and higher trust incomeexpenses resulting from the acquisition of $6 million. As compared with thePeople’s United (inclusive of merger-related expenses). The net income earnedloss recorded in the second quarter of 2017, the recent quarter’s net loss predominately2022 reflected the $50 million addition to the reservean increased provision for legal matters, partially offset by the favorable impact from the Company’s allocation methodology. The “All Other” category had netcredit losses of $12 million and $54 million for the nine-month periods ended September 30, 2017 and 2016, respectively. The lower net
- 84 -
loss in the 2017 period was predominantly due to: merger-related expenses of $36 million in 2016(there were no such expenses in 2017); higher trust income of $22 million; tax benefits of $19 million recognized in 2017 associated with the adoptionacquisition of new accounting guidance requiring that excess tax benefits associated with share-based compensation be recognized in income tax expense in the income statement; and the favorable impact from the Company’s allocation methodology. Those favorable factors were partially offset by higher legal-related and professional services costs and personnel-related expenses during 2017.People's United.
Recent Accounting Developments
A discussion of recent accounting developments is included in note 1617 of Notes to Financial Statements.
- 82 -
Forward-Looking Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this quarterly report 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 aredoes not describe historical or current facts is a forward-looking statement, including statements based on current expectations, estimates and projections about the Company’s business, management’sand management's beliefs and assumptions made by management. assumptions.
Statements regarding the potential effects of events or factors specific to the Company and/or the financial industry as a whole, as well as national and global events generally, on the Company'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 the Company's control. As described further below, statements regarding M&T's expectations or predictions regarding the acquisition of People's United are also forward-looking statements, including statements regarding the 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,” “positions,” “prospects”"believe," "expect," "anticipate," "intend," "target," "estimate," "continue," or “potential,”"potential," by future conditional verbs such as “will,” “would,” “should,” “could,”"will," "would," "should," "could," or “may,”"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”("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. Forward-looking statements speak only as
Examples of future factors include: the impact of the date they are madePeople's United transaction (as described in the next paragraph); economic conditions including inflation and supply chain issues; the Company assumes no duty to update forward-looking statements.
Future Factors includeimpact of international conflicts and other events; 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 ofon 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 and/or regulationregulations affecting the financial services industry as a whole, andand/or M&T and its subsidiaries individually or collectively, including tax legislation or regulation;policy; regulatory supervision and oversight, including monetary policy and capital requirements; governmental and public policy changes; the outcome of pending and future litigation and governmental proceedings, including tax-related examinations and other matters; changes in accounting policies or procedures as may be required by the FASBFinancial Accounting Standards Board, regulatory agencies or regulatory agencies;legislation; increasing price, product and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/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’subsidiaries' future businesses; and material differences in the actual financial results of merger, acquisition and investment activities compared with M&T’s&T's initial expectations, including the full realization of anticipated cost savings and revenue enhancements.
In addition, future factors related to the acquisition of People's United include, among others: the outcome of any legal proceedings that may be instituted against M&T or its subsidiaries; 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 the Company does business; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships; the Company's success in executing its business plans and strategies and managing the risks involved in the foregoing; the business, economic and political conditions in the markets in which the Company operates; and other factors that may affect future results of the Company.
- 83 -
Future factors related to the acquisition also include risks, such as, among others: that there could be an adverse effect on the Company's ability to retain customers and retain or hire key personnel and maintain relationships with customers; that integration efforts 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; that profitability following the combination may be lower than expected including for possible reasons such as lower than expected revenues or higher or unexpected costs, charges or expenses resulting from the transaction; unforeseen risks that may exist; and other factors that may affect future results of the Company.
These are representative of the Future Factorsfuture 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.future factors.
M&T provides further detail regarding these risks and uncertainties in its Form 10-K for the year ended December 31, 2021, 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.
- 8584 -
M&T BANK CORPORATION AND SUBSIDIARIES
Table 1
QUARTERLY TRENDS
|
| 2022 Quarters |
|
| 2021 Quarters |
|
| ||||||||||||||||||||||
|
| Third |
|
| Second |
|
| First |
|
| Fourth |
|
| Third |
|
| Second |
|
| First |
|
| |||||||
Earnings and dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Amounts in thousands, except per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Interest income (taxable-equivalent basis) |
| $ | 1,793,340 |
|
| $ | 1,475,868 |
|
|
| 931,490 |
|
|
| 962,081 |
|
|
| 996,649 |
|
|
| 974,090 |
|
|
| 1,020,695 |
|
|
Interest expense |
|
| 102,822 |
|
|
| 53,425 |
|
|
| 24,082 |
|
|
| 24,725 |
|
|
| 25,696 |
|
|
| 28,018 |
|
|
| 35,567 |
|
|
Net interest income |
|
| 1,690,518 |
|
|
| 1,422,443 |
|
|
| 907,408 |
|
|
| 937,356 |
|
|
| 970,953 |
|
|
| 946,072 |
|
|
| 985,128 |
|
|
Less: provision for credit losses |
|
| 115,000 |
|
|
| 302,000 |
|
|
| 10,000 |
|
|
| (15,000 | ) |
|
| (20,000 | ) |
|
| (15,000 | ) |
|
| (25,000 | ) |
|
Other income |
|
| 563,079 |
|
|
| 571,100 |
|
|
| 540,887 |
|
|
| 578,637 |
|
|
| 569,126 |
|
|
| 513,633 |
|
|
| 505,598 |
|
|
Less: other expense |
|
| 1,279,253 |
|
|
| 1,403,154 |
|
|
| 959,741 |
|
|
| 927,500 |
|
|
| 899,334 |
|
|
| 865,345 |
|
|
| 919,444 |
|
|
Income before income taxes |
|
| 859,344 |
|
|
| 288,389 |
|
|
| 478,554 |
|
|
| 603,493 |
|
|
| 660,745 |
|
|
| 609,360 |
|
|
| 596,282 |
|
|
Applicable income taxes |
|
| 200,921 |
|
|
| 60,141 |
|
|
| 113,146 |
|
|
| 141,962 |
|
|
| 161,582 |
|
|
| 147,559 |
|
|
| 145,300 |
|
|
Taxable-equivalent adjustment |
|
| 11,827 |
|
|
| 10,726 |
|
|
| 3,234 |
|
|
| 3,563 |
|
|
| 3,703 |
|
|
| 3,732 |
|
|
| 3,733 |
|
|
Net income |
| $ | 646,596 |
|
| $ | 217,522 |
|
|
| 362,174 |
|
|
| 457,968 |
|
|
| 495,460 |
|
|
| 458,069 |
|
|
| 447,249 |
|
|
Net income available to common shareholders-diluted |
| $ | 620,554 |
|
| $ | 192,236 |
|
|
| 339,590 |
|
|
| 434,171 |
|
|
| 475,961 |
|
|
| 438,759 |
|
|
| 428,093 |
|
|
Per common share data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Basic earnings |
| $ | 3.55 |
|
| $ | 1.08 |
|
|
| 2.63 |
|
|
| 3.37 |
|
|
| 3.70 |
|
|
| 3.41 |
|
|
| 3.33 |
|
|
Diluted earnings |
|
| 3.53 |
|
|
| 1.08 |
|
|
| 2.62 |
|
|
| 3.37 |
|
|
| 3.69 |
|
|
| 3.41 |
|
|
| 3.33 |
|
|
Cash dividends |
| $ | 1.20 |
|
| $ | 1.20 |
|
|
| 1.20 |
|
|
| 1.20 |
|
|
| 1.10 |
|
|
| 1.10 |
|
|
| 1.10 |
|
|
Average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Basic |
|
| 174,609 |
|
|
| 177,367 |
|
|
| 128,945 |
|
|
| 128,698 |
|
|
| 128,689 |
|
|
| 128,671 |
|
|
| 128,537 |
|
|
Diluted |
|
| 175,682 |
|
|
| 178,277 |
|
|
| 129,416 |
|
|
| 128,888 |
|
|
| 128,844 |
|
|
| 128,842 |
|
|
| 128,669 |
|
|
Performance ratios, annualized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Return on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Average assets |
|
| 1.28 |
| % |
| .42 |
| % |
| .97 |
| % |
| 1.15 |
| % |
| 1.28 |
| % |
| 1.22 |
| % |
| 1.22 |
| % |
Average common shareholders’ equity |
|
| 10.43 |
| % |
| 3.21 |
| % |
| 8.55 |
| % |
| 10.91 |
| % |
| 12.16 |
| % |
| 11.55 |
| % |
| 11.57 |
| % |
Net interest margin on average earning assets |
|
| 3.68 |
| % |
| 3.01 |
| % |
| 2.65 |
| % |
| 2.58 |
| % |
| 2.74 |
| % |
| 2.77 |
| % |
| 2.97 |
| % |
Nonaccrual loans to total loans and leases, net of |
|
| 1.89 |
| % |
| 2.05 |
| % |
| 2.32 |
| % |
| 2.22 |
| % |
| 2.40 |
| % |
| 2.31 |
| % |
| 1.97 |
| % |
Net operating (tangible) results (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net operating income (in thousands) |
| $ | 700,030 |
|
| $ | 577,622 |
|
|
| 375,999 |
|
|
| 475,477 |
|
|
| 504,030 |
|
|
| 462,959 |
|
|
| 457,372 |
|
|
Diluted net operating income per common share |
| $ | 3.83 |
|
| $ | 3.10 |
|
|
| 2.73 |
|
|
| 3.50 |
|
|
| 3.76 |
|
|
| 3.45 |
|
|
| 3.41 |
|
|
Annualized return on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Average tangible assets |
|
| 1.44 |
| % |
| 1.16 |
| % |
| 1.04 |
| % |
| 1.23 |
| % |
| 1.34 |
| % |
| 1.27 |
| % |
| 1.29 |
| % |
Average tangible common shareholders’ equity |
|
| 17.89 |
| % |
| 14.41 |
| % |
| 12.44 |
| % |
| 15.98 |
| % |
| 17.54 |
| % |
| 16.68 |
| % |
| 17.05 |
| % |
Efficiency ratio (b) |
|
| 53.6 |
| % |
| 58.3 |
| % |
| 64.9 |
| % |
| 59.7 |
| % |
| 57.7 |
| % |
| 58.4 |
| % |
| 60.3 |
| % |
Balance sheet data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
In millions, except per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Average balances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total assets (c) |
| $ | 201,131 |
|
| $ | 208,865 |
|
|
| 151,648 |
|
|
| 157,722 |
|
|
| 154,037 |
|
|
| 150,641 |
|
|
| 148,157 |
|
|
Total tangible assets (c) |
|
| 192,450 |
|
|
| 200,170 |
|
|
| 147,053 |
|
|
| 153,125 |
|
|
| 149,439 |
|
|
| 146,041 |
|
|
| 143,554 |
|
|
Earning assets |
|
| 182,382 |
|
|
| 189,755 |
|
|
| 138,624 |
|
|
| 144,420 |
|
|
| 140,420 |
|
|
| 136,951 |
|
|
| 134,355 |
|
|
Investment securities |
|
| 23,945 |
|
|
| 22,384 |
|
|
| 7,724 |
|
|
| 6,804 |
|
|
| 6,019 |
|
|
| 6,211 |
|
|
| 6,605 |
|
|
Loans and leases, net of unearned discount |
|
| 127,525 |
|
|
| 127,599 |
|
|
| 92,159 |
|
|
| 93,250 |
|
|
| 95,314 |
|
|
| 98,610 |
|
|
| 99,356 |
|
|
Deposits |
|
| 167,271 |
|
|
| 174,683 |
|
|
| 128,055 |
|
|
| 134,444 |
|
|
| 131,255 |
|
|
| 128,413 |
|
|
| 125,733 |
|
|
Common shareholders’ equity (c) |
|
| 23,654 |
|
|
| 24,079 |
|
|
| 16,144 |
|
|
| 15,863 |
|
|
| 15,614 |
|
|
| 15,321 |
|
|
| 15,077 |
|
|
Tangible common shareholders’ equity (c) |
|
| 14,973 |
|
|
| 15,384 |
|
|
| 11,549 |
|
|
| 11,266 |
|
|
| 11,016 |
|
|
| 10,721 |
|
|
| 10,474 |
|
|
At end of quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total assets (c) |
| $ | 197,955 |
|
| $ | 204,033 |
|
|
| 149,864 |
|
|
| 155,107 |
|
|
| 151,901 |
|
|
| 150,623 |
|
|
| 150,481 |
|
|
Total tangible assets (c) |
|
| 189,281 |
|
|
| 195,344 |
|
|
| 145,269 |
|
|
| 150,511 |
|
|
| 147,304 |
|
|
| 146,023 |
|
|
| 145,879 |
|
|
Earning assets |
|
| 178,351 |
|
|
| 185,109 |
|
|
| 137,237 |
|
|
| 141,990 |
|
|
| 138,527 |
|
|
| 137,171 |
|
|
| 137,367 |
|
|
Investment securities |
|
| 24,604 |
|
|
| 22,802 |
|
|
| 9,357 |
|
|
| 7,156 |
|
|
| 6,448 |
|
|
| 6,143 |
|
|
| 6,611 |
|
|
Loans and leases, net of unearned discount |
|
| 128,226 |
|
|
| 128,486 |
|
|
| 91,808 |
|
|
| 92,912 |
|
|
| 93,583 |
|
|
| 97,113 |
|
|
| 99,299 |
|
|
Deposits |
|
| 163,845 |
|
|
| 170,358 |
|
|
| 126,319 |
|
|
| 131,543 |
|
|
| 128,701 |
|
|
| 128,269 |
|
|
| 128,476 |
|
|
Common shareholders’ equity (c) |
|
| 23,245 |
|
|
| 23,784 |
|
|
| 16,126 |
|
|
| 16,153 |
|
|
| 15,779 |
|
|
| 15,470 |
|
|
| 15,197 |
|
|
Tangible common shareholders’ equity (c) |
|
| 14,571 |
|
|
| 15,095 |
|
|
| 11,531 |
|
|
| 11,557 |
|
|
| 11,182 |
|
|
| 10,870 |
|
|
| 10,595 |
|
|
Equity per common share |
|
| 134.45 |
|
|
| 135.16 |
|
|
| 124.93 |
|
|
| 125.51 |
|
|
| 122.60 |
|
|
| 120.22 |
|
|
| 118.12 |
|
|
Tangible equity per common share |
|
| 84.28 |
|
|
| 85.78 |
|
|
| 89.33 |
|
|
| 89.80 |
|
|
| 86.88 |
|
|
| 84.47 |
|
|
| 82.35 |
|
|
|
| 2017 Quarters |
|
| 2016 Quarters |
|
| ||||||||||||||||||||||
|
| Third |
|
| Second |
|
| First |
|
| Fourth |
|
| Third |
|
| Second |
|
| First |
|
| |||||||
Earnings and dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in thousands, except per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (taxable-equivalent basis) |
| $ | 1,066,038 |
|
|
| 1,039,149 |
|
|
| 1,014,032 |
|
|
| 990,284 |
|
|
| 976,240 |
|
|
| 977,143 |
|
|
| 979,166 |
|
|
Interest expense |
|
| 100,076 |
|
|
| 92,213 |
|
|
| 91,773 |
|
|
| 107,137 |
|
|
| 111,175 |
|
|
| 106,802 |
|
|
| 100,870 |
|
|
Net interest income |
|
| 965,962 |
|
|
| 946,936 |
|
|
| 922,259 |
|
|
| 883,147 |
|
|
| 865,065 |
|
|
| 870,341 |
|
|
| 878,296 |
|
|
Less: provision for credit losses |
|
| 30,000 |
|
|
| 52,000 |
|
|
| 55,000 |
|
|
| 62,000 |
|
|
| 47,000 |
|
|
| 32,000 |
|
|
| 49,000 |
|
|
Other income |
|
| 459,429 |
|
|
| 460,816 |
|
|
| 446,845 |
|
|
| 465,459 |
|
|
| 491,350 |
|
|
| 448,254 |
|
|
| 420,933 |
|
|
Less: other expense |
|
| 806,025 |
|
|
| 750,635 |
|
|
| 787,852 |
|
|
| 769,103 |
|
|
| 752,392 |
|
|
| 749,895 |
|
|
| 776,095 |
|
|
Income before income taxes |
|
| 589,366 |
|
|
| 605,117 |
|
|
| 526,252 |
|
|
| 517,503 |
|
|
| 557,023 |
|
|
| 536,700 |
|
|
| 474,134 |
|
|
Applicable income taxes |
|
| 224,615 |
|
|
| 215,328 |
|
|
| 169,326 |
|
|
| 179,549 |
|
|
| 200,314 |
|
|
| 194,147 |
|
|
| 169,274 |
|
|
Taxable-equivalent adjustment |
|
| 8,828 |
|
|
| 8,736 |
|
|
| 7,999 |
|
|
| 7,383 |
|
|
| 6,725 |
|
|
| 6,522 |
|
|
| 6,332 |
|
|
Net income |
| $ | 355,923 |
|
|
| 381,053 |
|
|
| 348,927 |
|
|
| 330,571 |
|
|
| 349,984 |
|
|
| 336,031 |
|
|
| 298,528 |
|
|
Net income available to common shareholders-diluted |
| $ | 335,804 |
|
|
| 360,662 |
|
|
| 328,567 |
|
|
| 307,797 |
|
|
| 326,998 |
|
|
| 312,974 |
|
|
| 275,748 |
|
|
Per common share data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings |
| $ | 2.22 |
|
|
| 2.36 |
|
|
| 2.13 |
|
|
| 1.98 |
|
|
| 2.10 |
|
|
| 1.98 |
|
|
| 1.74 |
|
|
Diluted earnings |
|
| 2.21 |
|
|
| 2.35 |
|
|
| 2.12 |
|
|
| 1.98 |
|
|
| 2.10 |
|
|
| 1.98 |
|
|
| 1.73 |
|
|
Cash dividends |
| $ | .75 |
|
|
| .75 |
|
|
| .75 |
|
|
| .70 |
|
|
| .70 |
|
|
| .70 |
|
|
| .70 |
|
|
Average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 151,347 |
|
|
| 152,857 |
|
|
| 154,427 |
|
|
| 155,123 |
|
|
| 155,493 |
|
|
| 157,802 |
|
|
| 158,734 |
|
|
Diluted |
|
| 151,691 |
|
|
| 153,276 |
|
|
| 154,949 |
|
|
| 155,700 |
|
|
| 156,026 |
|
|
| 158,341 |
|
|
| 159,181 |
|
|
Performance ratios, annualized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
| 1.18 |
| % |
| 1.27 |
| % |
| 1.15 |
| % |
| 1.05 |
| % |
| 1.12 |
| % |
| 1.09 |
| % |
| .97 |
| % | |
Average common shareholders’ equity |
|
| 8.89 |
| % |
| 9.67 |
| % |
| 8.89 |
| % |
| 8.13 |
| % |
| 8.68 |
| % |
| 8.38 |
| % |
| 7.44 |
| % |
Net interest margin on average earning assets (taxable-equivalent basis) |
|
| 3.53 |
| % |
| 3.45 |
| % |
| 3.34 |
| % |
| 3.08 |
| % |
| 3.05 |
| % |
| 3.13 |
| % |
| 3.18 |
| % |
Nonaccrual loans to total loans and leases, net of unearned discount |
|
| .99 |
| % |
| .98 |
| % |
| 1.04 |
| % |
| 1.01 |
| % |
| .93 |
| % |
| .96 |
| % |
| 1.00 |
| % |
Net operating (tangible) results (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income (in thousands) |
| $ | 360,658 |
|
|
| 385,974 |
|
|
| 354,035 |
|
|
| 336,095 |
|
|
| 355,929 |
|
|
| 350,604 |
|
|
| 320,064 |
|
|
Diluted net operating income per common share |
|
| 2.24 |
|
|
| 2.38 |
|
|
| 2.15 |
|
|
| 2.01 |
|
|
| 2.13 |
|
|
| 2.07 |
|
|
| 1.87 |
|
|
Annualized return on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible assets |
|
| 1.25 |
| % |
| 1.33 |
| % |
| 1.21 |
| % |
| 1.10 |
| % |
| 1.18 |
| % |
| 1.18 |
| % |
| 1.09 |
| % |
Average tangible common shareholders’ equity |
|
| 13.03 |
| % |
| 14.18 |
| % |
| 13.05 |
| % |
| 11.93 |
| % |
| 12.77 |
| % |
| 12.68 |
| % |
| 11.62 |
| % |
Efficiency ratio (b) |
|
| 56.00 |
| % |
| 52.74 |
| % |
| 56.93 |
| % |
| 56.42 |
| % |
| 55.92 |
| % |
| 55.06 |
| % |
| 57.00 |
| % |
Balance sheet data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In millions, except per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average balances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets (c) |
| $ | 119,515 |
|
|
| 120,765 |
|
|
| 122,978 |
|
|
| 125,734 |
|
|
| 124,725 |
|
|
| 123,706 |
|
|
| 123,252 |
|
|
Total tangible assets (c) |
|
| 114,872 |
|
|
| 116,117 |
|
|
| 118,326 |
|
|
| 121,079 |
|
|
| 120,064 |
|
|
| 119,039 |
|
|
| 118,577 |
|
|
Earning assets |
|
| 108,642 |
|
|
| 109,987 |
|
|
| 112,008 |
|
|
| 114,254 |
|
|
| 112,864 |
|
|
| 111,872 |
|
|
| 111,211 |
|
|
Investment securities |
|
| 15,443 |
|
|
| 15,913 |
|
|
| 15,999 |
|
|
| 15,417 |
|
|
| 14,361 |
|
|
| 14,914 |
|
|
| 15,348 |
|
|
Loans and leases, net of unearned discount |
|
| 88,386 |
|
|
| 89,268 |
|
|
| 89,797 |
|
|
| 89,977 |
|
|
| 88,732 |
|
|
| 88,155 |
|
|
| 87,584 |
|
|
Deposits |
|
| 93,134 |
|
|
| 94,201 |
|
|
| 96,300 |
|
|
| 96,914 |
|
|
| 95,852 |
|
|
| 94,033 |
|
|
| 92,391 |
|
|
Common shareholders’ equity (c) |
|
| 15,069 |
|
|
| 15,053 |
|
|
| 15,091 |
|
|
| 15,181 |
|
|
| 15,115 |
|
|
| 15,145 |
|
|
| 15,047 |
|
|
Tangible common shareholders’ equity (c) |
|
| 10,426 |
|
|
| 10,405 |
|
|
| 10,439 |
|
|
| 10,526 |
|
|
| 10,454 |
|
|
| 10,478 |
|
|
| 10,372 |
|
|
At end of quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets (c) |
| $ | 120,402 |
|
|
| 120,897 |
|
|
| 123,223 |
|
|
| 123,449 |
|
|
| 126,841 |
|
|
| 123,821 |
|
|
| 124,626 |
|
|
Total tangible assets (c) |
|
| 115,761 |
|
|
| 116,251 |
|
|
| 118,573 |
|
|
| 118,797 |
|
|
| 122,183 |
|
|
| 119,157 |
|
|
| 119,955 |
|
|
Earning assets |
|
| 109,365 |
|
|
| 109,976 |
|
|
| 112,287 |
|
|
| 112,192 |
|
|
| 115,293 |
|
|
| 112,057 |
|
|
| 113,005 |
|
|
Investment securities |
|
| 15,074 |
|
|
| 15,816 |
|
|
| 15,968 |
|
|
| 16,250 |
|
|
| 14,734 |
|
|
| 14,963 |
|
|
| 15,467 |
|
|
Loans and leases, net of unearned discount |
|
| 87,925 |
|
|
| 89,081 |
|
|
| 89,313 |
|
|
| 90,853 |
|
|
| 89,646 |
|
|
| 88,522 |
|
|
| 87,872 |
|
|
Deposits |
|
| 93,513 |
|
|
| 93,541 |
|
|
| 97,043 |
|
|
| 95,494 |
|
|
| 98,137 |
|
|
| 94,650 |
|
|
| 94,215 |
|
|
Common shareholders’ equity, net of undeclared cumulative preferred dividends (c) |
|
| 15,083 |
|
|
| 15,049 |
|
|
| 14,978 |
|
|
| 15,252 |
|
|
| 15,106 |
|
|
| 15,237 |
|
|
| 15,120 |
|
|
Tangible common shareholders’ equity (c) |
|
| 10,442 |
|
|
| 10,403 |
|
|
| 10,328 |
|
|
| 10,600 |
|
|
| 10,448 |
|
|
| 10,573 |
|
|
| 10,449 |
|
|
Equity per common share |
|
| 99.70 |
|
|
| 98.66 |
|
|
| 97.40 |
|
|
| 97.64 |
|
|
| 97.47 |
|
|
| 96.49 |
|
|
| 95.00 |
|
|
Tangible equity per common share |
|
| 69.02 |
|
|
| 68.20 |
|
|
| 67.16 |
|
|
| 67.85 |
|
|
| 67.42 |
|
|
| 66.95 |
|
|
| 65.65 |
|
|
Market price per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
| $ | 166.85 |
|
|
| 164.03 |
|
|
| 173.72 |
|
|
| 158.35 |
|
|
| 120.40 |
|
|
| 121.11 |
|
|
| 119.24 |
|
|
Low |
|
| 141.12 |
|
|
| 147.55 |
|
|
| 149.51 |
|
|
| 112.25 |
|
|
| 111.13 |
|
|
| 107.01 |
|
|
| 100.08 |
|
|
Closing |
|
| 161.04 |
|
|
| 161.95 |
|
|
| 154.73 |
|
|
| 156.43 |
|
|
| 116.10 |
|
|
| 118.23 |
|
|
| 111.00 |
|
|
|
|
|
|
|
|
- 8685 -
M&T BANK CORPORATION AND SUBSIDIARIES
Table 2
RECONCILIATION OF QUARTERLY GAAP TO NON-GAAP MEASURES
|
| 2022 Quarters |
|
| 2021 Quarters |
| ||||||||||||||||||||||
|
| Third |
|
| Second |
|
| First |
|
| Fourth |
|
| Third |
|
| Second |
|
| First |
| |||||||
Income statement data (in thousands, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net income |
|
| 646,596 |
|
| $ | 217,522 |
|
|
| 362,174 |
|
|
| 457,968 |
|
|
| 495,460 |
|
|
| 458,069 |
|
|
| 447,249 |
|
Amortization of core deposit and other |
|
| 14,141 |
|
|
| 14,138 |
|
|
| 933 |
|
|
| 1,447 |
|
|
| 2,028 |
|
|
| 2,023 |
|
|
| 2,034 |
|
Merger-related expenses (a) |
|
| 39,293 |
|
|
| 345,962 |
|
|
| 12,892 |
|
|
| 16,062 |
|
|
| 6,542 |
|
|
| 2,867 |
|
|
| 8,089 |
|
Net operating income |
|
| 700,030 |
|
| $ | 577,622 |
|
|
| 375,999 |
|
|
| 475,477 |
|
|
| 504,030 |
|
|
| 462,959 |
|
|
| 457,372 |
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Diluted earnings per common share |
|
| 3.53 |
|
| $ | 1.08 |
|
|
| 2.62 |
|
|
| 3.37 |
|
|
| 3.69 |
|
|
| 3.41 |
|
|
| 3.33 |
|
Amortization of core deposit and other |
|
| .08 |
|
|
| .08 |
|
|
| .01 |
|
|
| .01 |
|
|
| .02 |
|
|
| .02 |
|
|
| .02 |
|
Merger-related expenses (a) |
|
| .22 |
|
|
| 1.94 |
|
|
| .10 |
|
|
| .12 |
|
|
| .05 |
|
|
| .02 |
|
|
| .06 |
|
Diluted net operating earnings per |
|
| 3.83 |
|
| $ | 3.10 |
|
|
| 2.73 |
|
|
| 3.50 |
|
|
| 3.76 |
|
|
| 3.45 |
|
|
| 3.41 |
|
Other expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Other expense |
|
| 1,279,253 |
|
| $ | 1,403,154 |
|
|
| 959,741 |
|
|
| 927,500 |
|
|
| 899,334 |
|
|
| 865,345 |
|
|
| 919,444 |
|
Amortization of core deposit and other |
|
| (18,384 | ) |
|
| (18,384 | ) |
|
| (1,256 | ) |
|
| (1,954 | ) |
|
| (2,738 | ) |
|
| (2,737 | ) |
|
| (2,738 | ) |
Merger-related expenses |
|
| (53,027 | ) |
|
| (222,809 | ) |
|
| (17,372 | ) |
|
| (21,190 | ) |
|
| (8,826 | ) |
|
| (3,893 | ) |
|
| (9,951 | ) |
Noninterest operating expense |
|
| 1,207,842 |
|
| $ | 1,161,961 |
|
|
| 941,113 |
|
|
| 904,356 |
|
|
| 887,770 |
|
|
| 858,715 |
|
|
| 906,755 |
|
Merger-related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Salaries and employee benefits |
|
| 13,094 |
|
| $ | 85,299 |
|
|
| 87 |
|
|
| 112 |
|
|
| 60 |
|
|
| 4 |
|
|
| — |
|
Equipment and net occupancy |
|
| 2,106 |
|
|
| 502 |
|
|
| 1,807 |
|
|
| 340 |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
Outside data processing and software |
|
| 2,277 |
|
|
| 716 |
|
|
| 252 |
|
|
| 250 |
|
|
| 625 |
|
|
| 244 |
|
|
| — |
|
Advertising and marketing |
|
| 2,177 |
|
|
| 1,199 |
|
|
| 628 |
|
|
| 337 |
|
|
| 505 |
|
|
| 24 |
|
|
| — |
|
Printing, postage and supplies |
|
| 651 |
|
|
| 2,460 |
|
|
| 722 |
|
|
| 186 |
|
|
| 730 |
|
|
| 2,049 |
|
|
| — |
|
Other costs of operations |
|
| 32,722 |
|
|
| 132,633 |
|
|
| 13,876 |
|
|
| 19,965 |
|
|
| 6,905 |
|
|
| 1,572 |
|
|
| 9,951 |
|
Other expense |
|
| 53,027 |
|
|
| 222,809 |
|
|
| 17,372 |
|
|
| 21,190 |
|
|
| 8,826 |
|
|
| 3,893 |
|
|
| 9,951 |
|
Provision for credit losses |
|
| — |
|
|
| 242,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
|
| 53,027 |
|
| $ | 464,809 |
|
| $ | 17,372 |
|
| $ | 21,190 |
|
| $ | 8,826 |
|
| $ | 3,893 |
|
| $ | 9,951 |
|
Efficiency ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Noninterest operating expense (numerator) |
|
| 1,207,842 |
|
| $ | 1,161,961 |
|
|
| 941,113 |
|
|
| 904,356 |
|
|
| 887,770 |
|
|
| 858,715 |
|
|
| 906,755 |
|
Taxable-equivalent net interest income |
|
| 1,690,518 |
|
| $ | 1,422,443 |
|
|
| 907,408 |
|
|
| 937,356 |
|
|
| 970,953 |
|
|
| 946,072 |
|
|
| 985,128 |
|
Other income |
|
| 563,079 |
|
|
| 571,100 |
|
|
| 540,887 |
|
|
| 578,637 |
|
|
| 569,126 |
|
|
| 513,633 |
|
|
| 505,598 |
|
Less: Gain (loss) on bank investment |
|
| (1,108 | ) |
|
| (62 | ) |
|
| (743 | ) |
|
| 1,426 |
|
|
| 291 |
|
|
| (10,655 | ) |
|
| (12,282 | ) |
Denominator |
|
| 2,254,705 |
|
| $ | 1,993,605 |
|
|
| 1,449,038 |
|
|
| 1,514,567 |
|
|
| 1,539,788 |
|
|
| 1,470,360 |
|
|
| 1,503,008 |
|
Efficiency ratio |
|
| 53.6 | % |
|
| 58.3 | % |
|
| 64.9 | % |
|
| 59.7 | % |
|
| 57.7 | % |
|
| 58.4 | % |
|
| 60.3 | % |
Balance sheet data (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Average assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Average assets |
|
| 201,131 |
|
| $ | 208,865 |
|
|
| 151,648 |
|
|
| 157,722 |
|
|
| 154,037 |
|
|
| 150,641 |
|
|
| 148,157 |
|
Goodwill |
|
| (8,501 | ) |
|
| (8,501 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
Core deposit and other intangible assets |
|
| (236 | ) |
|
| (254 | ) |
|
| (3 | ) |
|
| (5 | ) |
|
| (7 | ) |
|
| (10 | ) |
|
| (13 | ) |
Deferred taxes |
|
| 56 |
|
|
| 60 |
|
|
| 1 |
|
|
| 1 |
|
|
| 2 |
|
|
| 3 |
|
|
| 3 |
|
Average tangible assets |
|
| 192,450 |
|
| $ | 200,170 |
|
|
| 147,053 |
|
|
| 153,125 |
|
|
| 149,439 |
|
|
| 146,041 |
|
|
| 143,554 |
|
Average common equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Average total equity |
|
| 25,665 |
|
| $ | 26,090 |
|
|
| 17,894 |
|
|
| 17,613 |
|
|
| 17,109 |
|
|
| 16,571 |
|
|
| 16,327 |
|
Preferred stock |
|
| (2,011 | ) |
|
| (2,011 | ) |
|
| (1,750 | ) |
|
| (1,750 | ) |
|
| (1,495 | ) |
|
| (1,250 | ) |
|
| (1,250 | ) |
Average common equity |
|
| 23,654 |
|
|
| 24,079 |
|
|
| 16,144 |
|
|
| 15,863 |
|
|
| 15,614 |
|
|
| 15,321 |
|
|
| 15,077 |
|
Goodwill |
|
| (8,501 | ) |
|
| (8,501 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
Core deposit and other intangible assets |
|
| (236 | ) |
|
| (254 | ) |
|
| (3 | ) |
|
| (5 | ) |
|
| (7 | ) |
|
| (10 | ) |
|
| (13 | ) |
Deferred taxes |
|
| 56 |
|
|
| 60 |
|
|
| 1 |
|
|
| 1 |
|
|
| 2 |
|
|
| 3 |
|
|
| 3 |
|
Average tangible common equity |
|
| 14,973 |
|
| $ | 15,384 |
|
|
| 11,549 |
|
|
| 11,266 |
|
|
| 11,016 |
|
|
| 10,721 |
|
|
| 10,474 |
|
At end of quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total assets |
|
| 197,955 |
|
| $ | 204,033 |
|
|
| 149,864 |
|
|
| 155,107 |
|
|
| 151,901 |
|
|
| 150,623 |
|
|
| 150,481 |
|
Goodwill |
|
| (8,501 | ) |
|
| (8,501 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
Core deposit and other intangible assets |
|
| (227 | ) |
|
| (245 | ) |
|
| (3 | ) |
|
| (4 | ) |
|
| (6 | ) |
|
| (9 | ) |
|
| (12 | ) |
Deferred taxes |
|
| 54 |
|
|
| 57 |
|
|
| 1 |
|
|
| 1 |
|
|
| 2 |
|
|
| 2 |
|
|
| 3 |
|
Total tangible assets |
|
| 189,281 |
|
| $ | 195,344 |
|
|
| 145,269 |
|
|
| 150,511 |
|
|
| 147,304 |
|
|
| 146,023 |
|
|
| 145,879 |
|
Total common equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total equity |
|
| 25,256 |
|
| $ | 25,795 |
|
|
| 17,876 |
|
|
| 17,903 |
|
|
| 17,529 |
|
|
| 16,720 |
|
|
| 16,447 |
|
Preferred stock |
|
| (2,011 | ) |
|
| (2,011 | ) |
|
| (1,750 | ) |
|
| (1,750 | ) |
|
| (1,750 | ) |
|
| (1,250 | ) |
|
| (1,250 | ) |
Common equity |
|
| 23,245 |
|
|
| 23,784 |
|
|
| 16,126 |
|
|
| 16,153 |
|
|
| 15,779 |
|
|
| 15,470 |
|
|
| 15,197 |
|
Goodwill |
|
| (8,501 | ) |
|
| (8,501 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
Core deposit and other intangible assets |
|
| (227 | ) |
|
| (245 | ) |
|
| (3 | ) |
|
| (4 | ) |
|
| (6 | ) |
|
| (9 | ) |
|
| (12 | ) |
Deferred taxes |
|
| 54 |
|
|
| 57 |
|
|
| 1 |
|
|
| 1 |
|
|
| 2 |
|
|
| 2 |
|
|
| 3 |
|
Total tangible common equity |
|
| 14,571 |
|
| $ | 15,095 |
|
|
| 11,531 |
|
|
| 11,557 |
|
|
| 11,182 |
|
|
| 10,870 |
|
|
| 10,595 |
|
|
| 2017 Quarters |
|
| 2016 Quarters |
| ||||||||||||||||||||||
|
| Third |
|
| Second |
|
| First |
|
| Fourth |
|
| Third |
|
| Second |
|
| First |
| |||||||
Income statement data (in thousands, except per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 355,923 |
|
|
| 381,053 |
|
|
| 348,927 |
|
|
| 330,571 |
|
|
| 349,984 |
|
|
| 336,031 |
|
|
| 298,528 |
|
Amortization of core deposit and other intangible assets (a) |
|
| 4,735 |
|
|
| 4,921 |
|
|
| 5,108 |
|
|
| 5,524 |
|
|
| 5,945 |
|
|
| 6,936 |
|
|
| 7,488 |
|
Merger-related expenses (a) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 7,637 |
|
|
| 14,048 |
|
Net operating income |
| $ | 360,658 |
|
|
| 385,974 |
|
|
| 354,035 |
|
|
| 336,095 |
|
|
| 355,929 |
|
|
| 350,604 |
|
|
| 320,064 |
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
| $ | 2.21 |
|
|
| 2.35 |
|
|
| 2.12 |
|
|
| 1.98 |
|
|
| 2.10 |
|
|
| 1.98 |
|
|
| 1.73 |
|
Amortization of core deposit and other intangible assets (a) |
|
| .03 |
|
|
| .03 |
|
|
| .03 |
|
|
| .03 |
|
|
| .03 |
|
|
| .04 |
|
|
| .05 |
|
Merger-related expenses (a) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| .05 |
|
|
| .09 |
|
Diluted net operating earnings per common share |
| $ | 2.24 |
|
| $ | 2.38 |
|
| $ | 2.15 |
|
| $ | 2.01 |
|
| $ | 2.13 |
|
| $ | 2.07 |
|
| $ | 1.87 |
|
Other expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense |
| $ | 806,025 |
|
|
| 750,635 |
|
|
| 787,852 |
|
|
| 769,103 |
|
|
| 752,392 |
|
|
| 749,895 |
|
|
| 776,095 |
|
Amortization of core deposit and other intangible assets |
|
| (7,808 | ) |
|
| (8,113 | ) |
|
| (8,420 | ) |
|
| (9,089 | ) |
|
| (9,787 | ) |
|
| (11,418 | ) |
|
| (12,319 | ) |
Merger-related expenses |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (12,593 | ) |
|
| (23,162 | ) |
Noninterest operating expense |
| $ | 798,217 |
|
|
| 742,522 |
|
|
| 779,432 |
|
|
| 760,014 |
|
|
| 742,605 |
|
|
| 725,884 |
|
|
| 740,614 |
|
Merger-related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
| $ | — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 60 |
|
|
| 5,274 |
|
Equipment and net occupancy |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 339 |
|
|
| 939 |
|
Outside data processing and software |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 352 |
|
|
| 715 |
|
Advertising and marketing |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6,327 |
|
|
| 4,195 |
|
Printing, postage and supplies |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 545 |
|
|
| 937 |
|
Other costs of operations |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,970 |
|
|
| 11,102 |
|
Total |
| $ | — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 12,593 |
|
|
| 23,162 |
|
Efficiency ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest operating expense (numerator) |
| $ | 798,217 |
|
|
| 742,522 |
|
|
| 779,432 |
|
|
| 760,014 |
|
|
| 742,605 |
|
|
| 725,884 |
|
|
| 740,614 |
|
Taxable-equivalent net interest income |
|
| 965,962 |
|
|
| 946,936 |
|
|
| 922,259 |
|
|
| 883,147 |
|
|
| 865,065 |
|
|
| 870,341 |
|
|
| 878,296 |
|
Other income |
|
| 459,429 |
|
|
| 460,816 |
|
|
| 446,845 |
|
|
| 465,459 |
|
|
| 491,350 |
|
|
| 448,254 |
|
|
| 420,933 |
|
Less: Gain on bank investment securities |
|
| — |
|
|
| (17 | ) |
|
| — |
|
|
| 1,566 |
|
|
| 28,480 |
|
|
| 264 |
|
|
| 4 |
|
Denominator |
| $ | 1,425,391 |
|
|
| 1,407,769 |
|
|
| 1,369,104 |
|
|
| 1,347,040 |
|
|
| 1,327,935 |
|
|
| 1,318,331 |
|
|
| 1,299,225 |
|
Efficiency ratio |
|
| 56.00 | % |
|
| 52.74 | % |
|
| 56.93 | % |
|
| 56.42 | % |
|
| 55.92 | % |
|
| 55.06 | % |
|
| 57.00 | % |
Balance sheet data (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
| $ | 119,515 |
|
|
| 120,765 |
|
|
| 122,978 |
|
|
| 125,734 |
|
|
| 124,725 |
|
|
| 123,706 |
|
|
| 123,252 |
|
Goodwill |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
Core deposit and other intangible assets |
|
| (82 | ) |
|
| (90 | ) |
|
| (98 | ) |
|
| (102 | ) |
|
| (112 | ) |
|
| (122 | ) |
|
| (134 | ) |
Deferred taxes |
|
| 32 |
|
|
| 35 |
|
|
| 39 |
|
|
| 40 |
|
|
| 44 |
|
|
| 48 |
|
|
| 52 |
|
Average tangible assets |
| $ | 114,872 |
|
|
| 116,117 |
|
|
| 118,326 |
|
|
| 121,079 |
|
|
| 120,064 |
|
|
| 119,039 |
|
|
| 118,577 |
|
Average common equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average total equity |
| $ | 16,301 |
|
|
| 16,285 |
|
|
| 16,323 |
|
|
| 16,673 |
|
|
| 16,347 |
|
|
| 16,377 |
|
|
| 16,279 |
|
Preferred stock |
|
| (1,232 | ) |
|
| (1,232 | ) |
|
| (1,232 | ) |
|
| (1,492 | ) |
|
| (1,232 | ) |
|
| (1,232 | ) |
|
| (1,232 | ) |
Average common equity |
|
| 15,069 |
|
|
| 15,053 |
|
|
| 15,091 |
|
|
| 15,181 |
|
|
| 15,115 |
|
|
| 15,145 |
|
|
| 15,047 |
|
Goodwill |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
Core deposit and other intangible assets |
|
| (82 | ) |
|
| (90 | ) |
|
| (98 | ) |
|
| (102 | ) |
|
| (112 | ) |
|
| (122 | ) |
|
| (134 | ) |
Deferred taxes |
|
| 32 |
|
|
| 35 |
|
|
| 39 |
|
|
| 40 |
|
|
| 44 |
|
|
| 48 |
|
|
| 52 |
|
Average tangible common equity |
| $ | 10,426 |
|
|
| 10,405 |
|
|
| 10,439 |
|
|
| 10,526 |
|
|
| 10,454 |
|
|
| 10,478 |
|
|
| 10,372 |
|
At end of quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
| 120,402 |
|
|
| 120,897 |
|
|
| 123,223 |
|
|
| 123,449 |
|
|
| 126,841 |
|
|
| 123,821 |
|
|
| 124,626 |
|
Goodwill |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
Core deposit and other intangible assets |
|
| (79 | ) |
|
| (86 | ) |
|
| (95 | ) |
|
| (98 | ) |
|
| (107 | ) |
|
| (117 | ) |
|
| (128 | ) |
Deferred taxes |
|
| 31 |
|
|
| 33 |
|
|
| 38 |
|
|
| 39 |
|
|
| 42 |
|
|
| 46 |
|
|
| 50 |
|
Total tangible assets |
| $ | 115,761 |
|
|
| 116,251 |
|
|
| 118,573 |
|
|
| 118,797 |
|
|
| 122,183 |
|
|
| 119,157 |
|
|
| 119,955 |
|
Total common equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
| $ | 16,318 |
|
|
| 16,284 |
|
|
| 16,213 |
|
|
| 16,487 |
|
|
| 16,341 |
|
|
| 16,472 |
|
|
| 16,355 |
|
Preferred stock |
|
| (1,232 | ) |
|
| (1,232 | ) |
|
| (1,232 | ) |
|
| (1,232 | ) |
|
| (1,232 | ) |
|
| (1,232 | ) |
|
| (1,232 | ) |
Undeclared dividends — cumulative preferred stock |
|
| (3 | ) |
|
| (3 | ) |
|
| (3 | ) |
|
| (3 | ) |
|
| (3 | ) |
|
| (3 | ) |
|
| (3 | ) |
Common equity, net of undeclared cumulative preferred dividends |
|
| 15,083 |
|
|
| 15,049 |
|
|
| 14,978 |
|
|
| 15,252 |
|
|
| 15,106 |
|
|
| 15,237 |
|
|
| 15,120 |
|
Goodwill |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
|
| (4,593 | ) |
Core deposit and other intangible assets |
|
| (79 | ) |
|
| (86 | ) |
|
| (95 | ) |
|
| (98 | ) |
|
| (107 | ) |
|
| (117 | ) |
|
| (128 | ) |
Deferred taxes |
|
| 31 |
|
|
| 33 |
|
|
| 38 |
|
|
| 39 |
|
|
| 42 |
|
|
| 46 |
|
|
| 50 |
|
Total tangible common equity |
| $ | 10,442 |
|
|
| 10,403 |
|
|
| 10,328 |
|
|
| 10,600 |
|
|
| 10,448 |
|
|
| 10,573 |
|
|
| 10,449 |
|
|
|
- 8786 -
M&T BANK CORPORATION AND SUBSIDIARIES
Table 3
AVERAGE BALANCE SHEETS AND ANNUALIZED TAXABLE-EQUIVALENT RATES
|
| 2022 Third Quarter |
|
| 2022 Second Quarter |
|
| 2022 First Quarter |
|
| |||||||||||||||||||||||||||
|
| Average |
|
| Interest |
|
| Average |
|
| Average |
|
| Interest |
|
| Average |
|
| Average |
|
| Interest |
|
| Average |
|
| |||||||||
Average balance in millions; interest in thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loans and leases, net of unearned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Commercial, financial, etc. |
| $ | 38,321 |
|
| $ | 470,738 |
|
|
| 4.87 |
| % | $ | 37,818 |
|
| $ | 373,543 |
|
|
| 3.96 |
| % | $ | 23,305 |
|
| $ | 207,715 |
|
|
| 3.61 |
| % |
Real estate – commercial |
|
| 46,282 |
|
|
| 531,225 |
|
|
| 4.49 |
|
|
| 47,227 |
|
|
| 461,594 |
|
|
| 3.87 |
|
|
| 34,957 |
|
|
| 337,100 |
|
|
| 3.86 |
|
|
Real estate – consumer |
|
| 22,962 |
|
|
| 220,464 |
|
|
| 3.84 |
|
|
| 22,761 |
|
|
| 207,080 |
|
|
| 3.64 |
|
|
| 15,870 |
|
|
| 141,001 |
|
|
| 3.55 |
|
|
Consumer |
|
| 19,960 |
|
|
| 239,471 |
|
|
| 4.76 |
|
|
| 19,793 |
|
|
| 210,290 |
|
|
| 4.26 |
|
|
| 18,027 |
|
|
| 188,017 |
|
|
| 4.23 |
|
|
Total loans and leases, net |
|
| 127,525 |
|
|
| 1,461,898 |
|
|
| 4.55 |
|
|
| 127,599 |
|
|
| 1,252,507 |
|
|
| 3.94 |
|
|
| 92,159 |
|
|
| 873,833 |
|
|
| 3.85 |
|
|
Interest-bearing deposits at banks |
|
| 30,752 |
|
|
| 172,956 |
|
|
| 2.23 |
|
|
| 39,386 |
|
|
| 80,773 |
|
|
| .82 |
|
|
| 38,693 |
|
|
| 18,280 |
|
|
| .19 |
|
|
Federal funds sold and agreements |
|
| 29 |
|
|
| 41 |
|
|
| .55 |
|
|
| 250 |
|
|
| 253 |
|
|
| .41 |
|
|
| — |
|
|
| — |
|
|
| .71 |
|
|
Trading account |
|
| 131 |
|
|
| 583 |
|
|
| 1.78 |
|
|
| 136 |
|
|
| 199 |
|
|
| .59 |
|
|
| 48 |
|
|
| 194 |
|
|
| 1.61 |
|
|
Investment securities (b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
U.S. Treasury and federal agencies |
|
| 20,227 |
|
|
| 124,084 |
|
|
| 2.43 |
|
|
| 18,644 |
|
|
| 109,755 |
|
|
| 2.36 |
|
|
| 7,077 |
|
|
| 35,911 |
|
|
| 2.06 |
|
|
Obligations of states and political subdivisions |
|
| 2,688 |
|
|
| 23,626 |
|
|
| 3.49 |
|
|
| 2,768 |
|
|
| 23,344 |
|
|
| 3.38 |
|
|
| — |
|
|
| 3 |
|
|
| 6.99 |
|
|
Other |
|
| 1,030 |
|
|
| 10,152 |
|
|
| 3.91 |
|
|
| 972 |
|
|
| 9,037 |
|
|
| 3.73 |
|
|
| 647 |
|
|
| 3,269 |
|
|
| 2.05 |
|
|
Total investment securities |
|
| 23,945 |
|
|
| 157,862 |
|
|
| 2.62 |
|
|
| 22,384 |
|
|
| 142,136 |
|
|
| 2.55 |
|
|
| 7,724 |
|
|
| 39,183 |
|
|
| 2.06 |
|
|
Total earning assets |
|
| 182,382 |
|
|
| 1,793,340 |
|
|
| 3.90 |
|
|
| 189,755 |
|
|
| 1,475,868 |
|
|
| 3.12 |
|
|
| 138,624 |
|
|
| 931,490 |
|
|
| 2.72 |
|
|
Allowance for credit losses |
|
| (1,822 | ) |
|
|
|
|
|
|
|
| (1,814 | ) |
|
|
|
|
|
|
|
| (1,475 | ) |
|
|
|
|
|
|
| ||||||
Cash and due from banks |
|
| 1,962 |
|
|
|
|
|
|
|
|
| 1,690 |
|
|
|
|
|
|
|
|
| 1,448 |
|
|
|
|
|
|
|
| ||||||
Other assets |
|
| 18,609 |
|
|
|
|
|
|
|
|
| 19,234 |
|
|
|
|
|
|
|
|
| 13,051 |
|
|
|
|
|
|
|
| ||||||
Total assets |
| $ | 201,131 |
|
|
|
|
|
|
|
| $ | 208,865 |
|
|
|
|
|
|
|
| $ | 151,648 |
|
|
|
|
|
|
|
| ||||||
Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Savings and interest-checking deposits |
| $ | 89,360 |
|
| $ | 68,690 |
|
|
| .31 |
|
| $ | 95,149 |
|
| $ | 27,907 |
|
|
| .12 |
|
| $ | 67,267 |
|
| $ | 6,747 |
|
|
| .04 |
|
|
Time deposits |
|
| 5,050 |
|
|
| 1,124 |
|
|
| .09 |
|
|
| 5,480 |
|
|
| 1,227 |
|
|
| .09 |
|
|
| 2,647 |
|
|
| 1,397 |
|
|
| .21 |
|
|
Total interest-bearing deposits |
|
| 94,410 |
|
|
| 69,814 |
|
|
| .29 |
|
|
| 100,629 |
|
|
| 29,134 |
|
|
| .12 |
|
|
| 69,914 |
|
|
| 8,144 |
|
|
| .05 |
|
|
Short-term borrowings |
|
| 913 |
|
|
| 2,670 |
|
|
| 1.16 |
|
|
| 1,126 |
|
|
| 3,419 |
|
|
| 1.22 |
|
|
| 56 |
|
|
| 1 |
|
|
| .01 |
|
|
Long-term borrowings |
|
| 3,281 |
|
|
| 30,338 |
|
|
| 3.67 |
|
|
| 3,282 |
|
|
| 20,872 |
|
|
| 2.55 |
|
|
| 3,442 |
|
|
| 15,937 |
|
|
| 1.88 |
|
|
Total interest-bearing liabilities |
|
| 98,604 |
|
|
| 102,822 |
|
|
| .41 |
|
|
| 105,037 |
|
|
| 53,425 |
|
|
| .20 |
|
|
| 73,412 |
|
|
| 24,082 |
|
|
| .13 |
|
|
Noninterest-bearing deposits |
|
| 72,861 |
|
|
|
|
|
|
|
|
| 74,054 |
|
|
|
|
|
|
|
|
| 58,141 |
|
|
|
|
|
|
|
| ||||||
Other liabilities |
|
| 4,001 |
|
|
|
|
|
|
|
|
| 3,684 |
|
|
|
|
|
|
|
|
| 2,201 |
|
|
|
|
|
|
|
| ||||||
Total liabilities |
|
| 175,466 |
|
|
|
|
|
|
|
|
| 182,775 |
|
|
|
|
|
|
|
|
| 133,754 |
|
|
|
|
|
|
|
| ||||||
Shareholders’ equity |
|
| 25,665 |
|
|
|
|
|
|
|
|
| 26,090 |
|
|
|
|
|
|
|
|
| 17,894 |
|
|
|
|
|
|
|
| ||||||
Total liabilities and shareholders’ equity |
| $ | 201,131 |
|
|
|
|
|
|
|
| $ | 208,865 |
|
|
|
|
|
|
|
| $ | 151,648 |
|
|
|
|
|
|
|
| ||||||
Net interest spread |
|
|
|
|
|
|
|
| 3.49 |
|
|
|
|
|
|
|
|
| 2.92 |
|
|
|
|
|
|
|
|
| 2.59 |
|
| ||||||
Contribution of interest-free funds |
|
|
|
|
|
|
|
| .19 |
|
|
|
|
|
|
|
|
| .09 |
|
|
|
|
|
|
|
|
| .06 |
|
| ||||||
Net interest income/margin on earning assets |
|
|
|
| $ | 1,690,518 |
|
|
| 3.68 |
| % |
|
|
| $ | 1,422,443 |
|
|
| 3.01 |
| % |
|
|
| $ | 907,408 |
|
|
| 2.65 |
| % |
|
| 2017 Third Quarter |
|
| 2017 Second Quarter |
|
| 2017 First Quarter |
|
| |||||||||||||||||||||||||||
|
| Average Balance |
|
| Interest |
|
| Average Rate |
|
| Average Balance |
|
| Interest |
|
| Average Rate |
|
| Average Balance |
|
| Interest |
|
| Average Rate |
|
| |||||||||
Average balance in millions; interest in thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases, net of unearned discount* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, etc. |
| $ | 21,734 |
|
| $ | 217,953 |
|
|
| 3.98 |
| % |
| 22,350 |
|
|
| 213,840 |
|
|
| 3.84 |
| % |
| 22,290 |
|
|
| 201,126 |
|
|
| 3.66 |
| % |
Real estate — commercial |
|
| 33,257 |
|
|
| 382,352 |
|
|
| 4.50 |
|
|
| 33,214 |
|
|
| 361,313 |
|
|
| 4.30 |
|
|
| 33,175 |
|
|
| 347,010 |
|
|
| 4.18 |
|
|
Real estate — consumer |
|
| 20,609 |
|
|
| 204,008 |
|
|
| 3.96 |
|
|
| 21,318 |
|
|
| 210,152 |
|
|
| 3.94 |
|
|
| 22,179 |
|
|
| 217,263 |
|
|
| 3.92 |
|
|
Consumer |
|
| 12,786 |
|
|
| 157,721 |
|
|
| 4.89 |
|
|
| 12,386 |
|
|
| 147,597 |
|
|
| 4.78 |
|
|
| 12,153 |
|
|
| 140,170 |
|
|
| 4.68 |
|
|
Total loans and leases, net |
|
| 88,386 |
|
|
| 962,034 |
|
|
| 4.32 |
|
|
| 89,268 |
|
|
| 932,902 |
|
|
| 4.19 |
|
|
| 89,797 |
|
|
| 905,569 |
|
|
| 4.09 |
|
|
Interest-bearing deposits at banks |
|
| 4,740 |
|
|
| 14,970 |
|
|
| 1.25 |
|
|
| 4,741 |
|
|
| 12,213 |
|
|
| 1.03 |
|
|
| 6,152 |
|
|
| 12,162 |
|
|
| .80 |
|
|
Federal funds sold |
|
| — |
|
|
| 1 |
|
|
| 1.58 |
|
|
| 1 |
|
|
| 3 |
|
|
| 1.44 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
Trading account |
|
| 73 |
|
|
| 351 |
|
|
| 1.92 |
|
|
| 64 |
|
|
| 240 |
|
|
| 1.50 |
|
|
| 60 |
|
|
| 328 |
|
|
| 2.20 |
|
|
Investment securities** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and federal agencies |
|
| 14,632 |
|
|
| 81,707 |
|
|
| 2.22 |
|
|
| 15,060 |
|
|
| 87,171 |
|
|
| 2.32 |
|
|
| 15,113 |
|
|
| 88,573 |
|
|
| 2.38 |
|
|
Obligations of states and political subdivisions |
|
| 37 |
|
|
| 442 |
|
|
| 4.69 |
|
|
| 46 |
|
|
| 553 |
|
|
| 4.86 |
|
|
| 56 |
|
|
| 578 |
|
|
| 4.17 |
|
|
Other |
|
| 774 |
|
|
| 6,533 |
|
|
| 3.35 |
|
|
| 807 |
|
|
| 6,067 |
|
|
| 3.02 |
|
|
| 830 |
|
|
| 6,822 |
|
|
| 3.33 |
|
|
Total investment securities |
|
| 15,443 |
|
|
| 88,682 |
|
|
| 2.28 |
|
|
| 15,913 |
|
|
| 93,791 |
|
|
| 2.36 |
|
|
| 15,999 |
|
|
| 95,973 |
|
|
| 2.43 |
|
|
Total earning assets |
|
| 108,642 |
|
|
| 1,066,038 |
|
|
| 3.89 |
|
|
| 109,987 |
|
|
| 1,039,149 |
|
|
| 3.79 |
|
|
| 112,008 |
|
|
| 1,014,032 |
|
|
| 3.67 |
|
|
Allowance for credit losses |
|
| (1,014 | ) |
|
|
|
|
|
|
|
|
|
| (1,011 | ) |
|
|
|
|
|
|
|
|
|
| (1,003 | ) |
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
| 1,297 |
|
|
|
|
|
|
|
|
|
|
| 1,257 |
|
|
|
|
|
|
|
|
|
|
| 1,283 |
|
|
|
|
|
|
|
|
|
|
Other assets |
|
| 10,590 |
|
|
|
|
|
|
|
|
|
|
| 10,532 |
|
|
|
|
|
|
|
|
|
|
| 10,690 |
|
|
|
|
|
|
|
|
|
|
Total assets |
| $ | 119,515 |
|
|
|
|
|
|
|
|
|
|
| 120,765 |
|
|
|
|
|
|
|
|
|
|
| 122,978 |
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings and interest-checking deposits |
| $ | 53,287 |
|
|
| 37,714 |
|
|
| .28 |
|
|
| 53,611 |
|
|
| 30,543 |
|
|
| .23 |
|
|
| 53,260 |
|
|
| 25,634 |
|
|
| .20 |
|
|
Time deposits |
|
| 7,673 |
|
|
| 13,992 |
|
|
| .72 |
|
|
| 8,559 |
|
|
| 16,303 |
|
|
| .76 |
|
|
| 9,561 |
|
|
| 18,998 |
|
|
| .81 |
|
|
Deposits at Cayman Islands office |
|
| 169 |
|
|
| 310 |
|
|
| .73 |
|
|
| 163 |
|
|
| 281 |
|
|
| .69 |
|
|
| 192 |
|
|
| 265 |
|
|
| .56 |
|
|
Total interest-bearing deposits |
|
| 61,129 |
|
|
| 52,016 |
|
|
| .34 |
|
|
| 62,333 |
|
|
| 47,127 |
|
|
| .30 |
|
|
| 63,013 |
|
|
| 44,897 |
|
|
| .29 |
|
|
Short-term borrowings |
|
| 244 |
|
|
| 554 |
|
|
| .90 |
|
|
| 212 |
|
|
| 378 |
|
|
| .71 |
|
|
| 184 |
|
|
| 216 |
|
|
| .48 |
|
|
Long-term borrowings |
|
| 8,033 |
|
|
| 47,506 |
|
|
| 2.35 |
|
|
| 8,292 |
|
|
| 44,708 |
|
|
| 2.16 |
|
|
| 8,423 |
|
|
| 46,660 |
|
|
| 2.25 |
|
|
Total interest-bearing liabilities |
|
| 69,406 |
|
|
| 100,076 |
|
|
| .57 |
|
|
| 70,837 |
|
|
| 92,213 |
|
|
| .52 |
|
|
| 71,620 |
|
|
| 91,773 |
|
|
| .52 |
|
|
Noninterest-bearing deposits |
|
| 32,005 |
|
|
|
|
|
|
|
|
|
|
| 31,868 |
|
|
|
|
|
|
|
|
|
|
| 33,287 |
|
|
|
|
|
|
|
|
|
|
Other liabilities |
|
| 1,803 |
|
|
|
|
|
|
|
|
|
|
| 1,775 |
|
|
|
|
|
|
|
|
|
|
| 1,748 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| 103,214 |
|
|
|
|
|
|
|
|
|
|
| 104,480 |
|
|
|
|
|
|
|
|
|
|
| 106,655 |
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
| 16,301 |
|
|
|
|
|
|
|
|
|
|
| 16,285 |
|
|
|
|
|
|
|
|
|
|
| 16,323 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
| $ | 119,515 |
|
|
|
|
|
|
|
|
|
|
| 120,765 |
|
|
|
|
|
|
|
|
|
|
| 122,978 |
|
|
|
|
|
|
|
|
|
|
Net interest spread |
|
|
|
|
|
|
|
|
|
| 3.32 |
|
|
|
|
|
|
|
|
|
|
| 3.27 |
|
|
|
|
|
|
|
|
|
|
| 3.15 |
|
|
Contribution of interest-free funds |
|
|
|
|
|
|
|
|
|
| .21 |
|
|
|
|
|
|
|
|
|
|
| .18 |
|
|
|
|
|
|
|
|
|
|
| .19 |
|
|
Net interest income/margin on earning assets |
|
|
|
|
| $ | 965,962 |
|
|
| 3.53 |
| % |
|
|
|
|
| 946,936 |
|
|
| 3.45 |
| % |
|
|
|
|
| 922,259 |
|
|
| 3.34 |
| % |
(continued)
|
|
|
|
(continued)
- 8887 -
M&T BANK CORPORATION AND SUBSIDIARIES
Table 3 (continued)
AVERAGE BALANCE SHEETS AND ANNUALIZED TAXABLE-EQUIVALENT RATES (continued)
|
| 2021 Fourth Quarter |
|
| 2021 Third Quarter |
|
| ||||||||||||||||||
|
| Average |
|
| Interest |
|
| Average |
|
| Average |
|
| Interest |
|
| Average |
|
| ||||||
Average balance in millions; interest in thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Loans and leases, net of unearned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commercial, financial, etc. |
| $ | 22,330 |
|
| $ | 205,491 |
|
|
| 3.65 |
| % | $ | 23,730 |
|
| $ | 236,820 |
|
|
| 3.96 |
| % |
Real estate – commercial |
|
| 36,717 |
|
|
| 364,795 |
|
|
| 3.89 |
|
|
| 37,547 |
|
|
| 371,150 |
|
|
| 3.87 |
|
|
Real estate – consumer |
|
| 16,290 |
|
|
| 143,675 |
|
|
| 3.53 |
|
|
| 16,379 |
|
|
| 146,898 |
|
|
| 3.59 |
|
|
Consumer |
|
| 17,913 |
|
|
| 194,619 |
|
|
| 4.31 |
|
|
| 17,658 |
|
|
| 193,256 |
|
|
| 4.34 |
|
|
Total loans and leases, net |
|
| 93,250 |
|
|
| 908,580 |
|
|
| 3.87 |
|
|
| 95,314 |
|
|
| 948,124 |
|
|
| 3.95 |
|
|
Interest-bearing deposits at banks |
|
| 44,316 |
|
|
| 16,984 |
|
|
| .15 |
|
|
| 39,036 |
|
|
| 14,922 |
|
|
| .15 |
|
|
Federal funds sold and agreements |
|
| — |
|
|
| — |
|
|
| .47 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
Trading account |
|
| 50 |
|
|
| 202 |
|
|
| 1.62 |
|
|
| 51 |
|
|
| 345 |
|
|
| 2.71 |
|
|
Investment securities (b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
U.S. Treasury and federal agencies |
|
| 6,150 |
|
|
| 32,516 |
|
|
| 2.10 |
|
|
| 5,352 |
|
|
| 30,362 |
|
|
| 2.25 |
|
|
Obligations of states and political |
|
| — |
|
|
| 3 |
|
|
| 6.82 |
|
|
| — |
|
|
| 3 |
|
|
| 6.44 |
|
|
Other |
|
| 654 |
|
|
| 3,796 |
|
|
| 2.30 |
|
|
| 667 |
|
|
| 2,893 |
|
|
| 1.72 |
|
|
Total investment securities |
|
| 6,804 |
|
|
| 36,315 |
|
|
| 2.12 |
|
|
| 6,019 |
|
|
| 33,258 |
|
|
| 2.19 |
|
|
Total earning assets |
|
| 144,420 |
|
|
| 962,081 |
|
|
| 2.64 |
|
|
| 140,420 |
|
|
| 996,649 |
|
|
| 2.82 |
|
|
Allowance for credit losses |
|
| (1,521 | ) |
|
|
|
|
|
|
|
| (1,577 | ) |
|
|
|
|
|
|
| ||||
Cash and due from banks |
|
| 1,483 |
|
|
|
|
|
|
|
|
| 1,480 |
|
|
|
|
|
|
|
| ||||
Other assets |
|
| 13,340 |
|
|
|
|
|
|
|
|
| 13,714 |
|
|
|
|
|
|
|
| ||||
Total assets |
| $ | 157,722 |
|
|
|
|
|
|
|
| $ | 154,037 |
|
|
|
|
|
|
|
| ||||
Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Savings and interest-checking deposits |
| $ | 70,518 |
|
| $ | 6,443 |
|
|
| .04 |
|
| $ | 70,976 |
|
| $ | 7,000 |
|
|
| .04 |
|
|
Time deposits |
|
| 2,914 |
|
|
| 2,968 |
|
|
| .40 |
|
|
| 3,061 |
|
|
| 3,573 |
|
|
| .46 |
|
|
Total interest-bearing deposits |
|
| 73,432 |
|
|
| 9,411 |
|
|
| .05 |
|
|
| 74,037 |
|
|
| 10,573 |
|
|
| .06 |
|
|
Short-term borrowings |
|
| 58 |
|
|
| — |
|
|
| .01 |
|
|
| 91 |
|
|
| 2 |
|
|
| .01 |
|
|
Long-term borrowings |
|
| 3,441 |
|
|
| 15,314 |
|
|
| 1.77 |
|
|
| 3,431 |
|
|
| 15,121 |
|
|
| 1.75 |
|
|
Total interest-bearing liabilities |
|
| 76,931 |
|
|
| 24,725 |
|
|
| .12 |
|
|
| 77,559 |
|
|
| 25,696 |
|
|
| .14 |
|
|
Noninterest-bearing deposits |
|
| 61,012 |
|
|
|
|
|
|
|
|
| 57,218 |
|
|
|
|
|
|
|
| ||||
Other liabilities |
|
| 2,166 |
|
|
|
|
|
|
|
|
| 2,151 |
|
|
|
|
|
|
|
| ||||
Total liabilities |
|
| 140,109 |
|
|
|
|
|
|
|
|
| 136,928 |
|
|
|
|
|
|
|
| ||||
Shareholders’ equity |
|
| 17,613 |
|
|
|
|
|
|
|
|
| 17,109 |
|
|
|
|
|
|
|
| ||||
Total liabilities and shareholders’ equity |
| $ | 157,722 |
|
|
|
|
|
|
|
| $ | 154,037 |
|
|
|
|
|
|
|
| ||||
Net interest spread |
|
|
|
|
|
|
|
| 2.52 |
|
|
|
|
|
|
|
|
| 2.68 |
|
| ||||
Contribution of interest-free funds |
|
|
|
|
|
|
|
| .06 |
|
|
|
|
|
|
|
|
| .06 |
|
| ||||
Net interest income/margin on earning assets |
|
|
|
| $ | 937,356 |
|
|
| 2.58 |
| % |
|
|
| $ | 970,953 |
|
|
| 2.74 |
| % |
|
| 2016 Fourth Quarter |
|
| 2016 Third Quarter |
|
| ||||||||||||||||||
|
| Average Balance |
|
| Interest |
|
| Average Rate |
|
| Average Balance |
|
| Interest |
|
| Average Rate |
|
| ||||||
Average balance in millions; interest in thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases, net of unearned discount* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, etc. |
| $ | 21,936 |
|
| $ | 191,228 |
|
|
| 3.47 |
| % |
| 21,480 |
|
|
| 185,552 |
|
|
| 3.44 |
| % |
Real estate — commercial |
|
| 32,822 |
|
|
| 336,597 |
|
|
| 4.01 |
|
|
| 31,252 |
|
|
| 319,694 |
|
|
| 4.00 |
|
|
Real estate — consumer |
|
| 23,096 |
|
|
| 223,758 |
|
|
| 3.88 |
|
|
| 24,058 |
|
|
| 235,813 |
|
|
| 3.92 |
|
|
Consumer |
|
| 12,123 |
|
|
| 138,144 |
|
|
| 4.53 |
|
|
| 11,942 |
|
|
| 136,592 |
|
|
| 4.55 |
|
|
Total loans and leases, net |
|
| 89,977 |
|
|
| 889,727 |
|
|
| 3.93 |
|
|
| 88,732 |
|
|
| 877,651 |
|
|
| 3.93 |
|
|
Interest-bearing deposits at banks |
|
| 8,790 |
|
|
| 11,833 |
|
|
| .54 |
|
|
| 9,681 |
|
|
| 12,355 |
|
|
| .51 |
|
|
Federal funds sold |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
Trading account |
|
| 70 |
|
|
| 358 |
|
|
| 2.05 |
|
|
| 90 |
|
|
| 342 |
|
|
| 1.52 |
|
|
Investment securities** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and federal agencies |
|
| 14,511 |
|
|
| 80,510 |
|
|
| 2.21 |
|
|
| 13,418 |
|
|
| 78,259 |
|
|
| 2.32 |
|
|
Obligations of states and political subdivisions |
|
| 71 |
|
|
| 778 |
|
|
| 4.38 |
|
|
| 82 |
|
|
| 888 |
|
|
| 4.32 |
|
|
Other |
|
| 835 |
|
|
| 7,078 |
|
|
| 3.37 |
|
|
| 861 |
|
|
| 6,745 |
|
|
| 3.12 |
|
|
Total investment securities |
|
| 15,417 |
|
|
| 88,366 |
|
|
| 2.28 |
|
|
| 14,361 |
|
|
| 85,892 |
|
|
| 2.38 |
|
|
Total earning assets |
|
| 114,254 |
|
|
| 990,284 |
|
|
| 3.45 |
|
|
| 112,864 |
|
|
| 976,240 |
|
|
| 3.44 |
|
|
Allowance for credit losses |
|
| (989 | ) |
|
|
|
|
|
|
|
|
|
| (982 | ) |
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
| 1,278 |
|
|
|
|
|
|
|
|
|
|
| 1,281 |
|
|
|
|
|
|
|
|
|
|
Other assets |
|
| 11,191 |
|
|
|
|
|
|
|
|
|
|
| 11,562 |
|
|
|
|
|
|
|
|
|
|
Total assets |
| $ | 125,734 |
|
|
|
|
|
|
|
|
|
|
| 124,725 |
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings and interest-checking deposits |
| $ | 54,055 |
|
|
| 26,798 |
|
|
| .20 |
|
|
| 52,516 |
|
|
| 24,067 |
|
|
| .18 |
|
|
Time deposits |
|
| 10,936 |
|
|
| 23,766 |
|
|
| .86 |
|
|
| 12,334 |
|
|
| 27,886 |
|
|
| .90 |
|
|
Deposits at Cayman Islands office |
|
| 206 |
|
|
| 219 |
|
|
| .42 |
|
|
| 220 |
|
|
| 204 |
|
|
| .37 |
|
|
Total interest-bearing deposits |
|
| 65,197 |
|
|
| 50,783 |
|
|
| .31 |
|
|
| 65,070 |
|
|
| 52,157 |
|
|
| .32 |
|
|
Short-term borrowings |
|
| 200 |
|
|
| 151 |
|
|
| .30 |
|
|
| 231 |
|
|
| 169 |
|
|
| .29 |
|
|
Long-term borrowings |
|
| 9,901 |
|
|
| 56,203 |
|
|
| 2.26 |
|
|
| 10,287 |
|
|
| 58,849 |
|
|
| 2.28 |
|
|
Total interest-bearing liabilities |
|
| 75,298 |
|
|
| 107,137 |
|
|
| .57 |
|
|
| 75,588 |
|
|
| 111,175 |
|
|
| .59 |
|
|
Noninterest-bearing deposits |
|
| 31,717 |
|
|
|
|
|
|
|
|
|
|
| 30,782 |
|
|
|
|
|
|
|
|
|
|
Other liabilities |
|
| 2,046 |
|
|
|
|
|
|
|
|
|
|
| 2,008 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| 109,061 |
|
|
|
|
|
|
|
|
|
|
| 108,378 |
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
| 16,673 |
|
|
|
|
|
|
|
|
|
|
| 16,347 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
| $ | 125,734 |
|
|
|
|
|
|
|
|
|
|
| 124,725 |
|
|
|
|
|
|
|
|
|
|
Net interest spread |
|
|
|
|
|
|
|
|
|
| 2.88 |
|
|
|
|
|
|
|
|
|
|
| 2.85 |
|
|
Contribution of interest-free funds |
|
|
|
|
|
|
|
|
|
| .20 |
|
|
|
|
|
|
|
|
|
|
| .20 |
|
|
Net interest income/margin on earning assets |
|
|
|
|
| $ | 883,147 |
|
|
| 3.08 |
| % |
|
|
|
|
| 865,065 |
|
|
| 3.05 |
| % |
|
|
|
|
- 8988 -
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Incorporated by reference to the discussion contained under the caption “Taxable-equivalent Net Interest Income” in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Item 4. Controls and Procedures.
(a) Evaluation of disclosure controls and procedures. Based upon their evaluation of the effectiveness of M&T’s disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)), Robert G. Wilmers,René F. Jones, Chairman of the Board and Chief Executive Officer, and Darren J. King, Senior Executive Vice President and Chief Financial Officer, concluded that M&T’s disclosure controls and procedures were effective as of September 30, 2017.2022.
(b) Changes in internal control over financial reporting. M&T regularly assesses the adequacy of its internal control over financial reporting and enhances its controls in response to internal control assessments and internal and external audit and regulatory recommendations. No changes in internal control over financial reporting have been identified in connection with the evaluation of disclosure controls and procedures during the quarter ended September 30, 20172022 that have materially affected, or are reasonably likely to materially affect, M&T’s internal control over financial reporting. Management has excluded processes and controls of People’s United from its assessment of internal control over financial reporting for the quarter ended September 30, 2022. Assets and liabilities associated with the People's United transaction that have not yet been converted to M&T's systems or processes as of September 30, 2022 include loans and leases of $5.5 billion, other assets of $106 million and other liabilities of $170 million. Approximately $94 million and $182 million of total revenues for the three and six months ended September 30, 2022, respectively, was contributed from business activities of People's United that have not yet been converted to M&T's systems or processes.
- 89 -
Item 1. Legal Proceedings.
M&T and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings and other matters in which claims for monetary damages are asserted. On an on-going basis management, after consultation with legal counsel, assesses the Company’s liabilities and contingencies in connection with such proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability, was between $0 and $50 million.$25 million as of September 30, 2022. Although the Company does not believe that the outcome of pending litigationslegal matters will be material to the Company’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.
Wilmington Trust Corporation Investigative and Litigation Matters
DOJ Investigation (United States v. Wilmington Trust Corp., et al, District of Delaware, Crim. No. 15-23-RGA): Prior to M&T’s acquisition of Wilmington Trust Corporation, the Department of Justice (“DOJ”) commenced an investigation of Wilmington Trust Corporation relating to Wilmington Trust Corporation’s financial reporting and securities filings, as well as certain commercial real estate lending relationships involving its subsidiary bank, Wilmington Trust Company, all of which relate to filings and activities occurring prior to the acquisition of Wilmington Trust Corporation by M&T. On January 6, 2016, the U.S. Attorney for the District of Delaware obtained an indictment against Wilmington Trust Corporation relating to alleged conduct that occurred prior to M&T’s acquisition of Wilmington Trust Corporation in May 2011. On October 9, 2017, Wilmington Trust Corporation reached a civil settlement with the U.S. Attorney’s Office for the District of Delaware to resolve this matter. Under the terms of the agreement, Wilmington Trust Corporation agreed to pay $60 million. The settlement amount included $16 million previously paid by Wilmington Trust Corporation to the U.S. Securities and Exchange Commission in a related action. Wilmington Trust Corporation did not admit any liability, nor was there any finding of wrongdoing.All indictments and charges against Wilmington Trust Corporation were dismissed by Court order on October 12, 2017.Item 1A. Risk Factors.
- 90 -
In Re Wilmington Trust Securities Litigation (U.S. District Court, District of Delaware, Case No. 10-CV-0990-SLR): Beginning on November 18, 2010, a series of parties, purporting to be class representatives, commenced a putative class action lawsuit against Wilmington Trust Corporation, alleging that Wilmington Trust Corporation’s financial reporting and securities filings were in violation of securities laws. The cases were consolidated and Wilmington Trust Corporation moved to dismiss. The Court issued an order denying Wilmington Trust Corporation’s motion to dismiss on March 20, 2014. Fact discovery commenced. Plaintiffs’ motion for class certification was granted on September 3, 2015. On April 13, 2016, the Court issued an order staying fact discovery in the case pending completion of the trial in U.S. v. Wilmington Trust Corp., et al. On September 19, 2016, the plaintiffs filed a motion to modify the stay of discovery in this matter to allow for additional, limited discovery. On December 19, 2016, the Court issued an order lifting the existing stay in its entirety. The Court has removed this matter from the trial calendar, to be rescheduled at some future date.
Due to their complex nature, it is difficult to estimate when litigation or investigatory matters such as these may be resolved. As set forth in the introductory paragraph to this Item 1 — Legal Proceedings, losses from current litigation and regulatory matters which the Company is subject to that are not currently considered probable are within a range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability, and are included in the range of reasonably possible losses set forth above.
- 91 -
There have been no material changes in risk factors relating to M&T to those disclosed in response to Item 1A. to Part I of Form 10-K for the year ended December 31, 2016.2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a) – (b) Not applicable.
(c)
|
| Issuer Purchases of Equity Securities |
| |||||||||||||
Period |
| (a)Total |
|
| (b)Average |
|
| (c)Total |
|
| (d)Maximum |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
July 1 - July 31, 2022 |
|
| 275,689 |
|
| $ | 172.00 |
|
|
| 275,000 |
|
| $ | 2,952,688,995 |
|
August 1 - August 31, 2022 |
|
| 1,754,105 |
|
|
| 183.75 |
|
|
| 1,750,000 |
|
|
| 2,631,148,585 |
|
September 1 - September 30, 2022 |
|
| 1,265,647 |
|
|
| 183.80 |
|
|
| 1,257,449 |
|
|
| 2,400,000,142 |
|
Total |
|
| 3,295,441 |
|
| $ | 182.78 |
|
|
| 3,282,449 |
|
|
|
|
|
| Issuer Purchases of Equity Securities |
| |||||||||||||
Period |
| (a)Total Number of Shares (or Units) Purchased (1) |
|
| (b)Average Price Paid per Share (or Unit) |
|
| (c)Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |
|
| (d)Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased Under the Plans or Programs (2) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 1 — July 31, 2017 |
|
| 600,005 |
|
| $ | 161.59 |
|
|
| 600,000 |
|
| $ | 803,048,000 |
|
August 1 — August 31, 2017 |
|
| 778,806 |
|
|
| 163.32 |
|
|
| 778,052 |
|
|
| 675,976,000 |
|
September 1 — September 30, 2017 |
|
| 4,694 |
|
|
| 149.10 |
|
|
| 4,694 |
|
|
| 675,276,000 |
|
Total |
|
| 1,383,505 |
|
| $ | 162.52 |
|
|
| 1,382,746 |
|
|
|
|
|
- 90 -
|
|
|
|
Item 3. Defaults Upon Senior Securities.
(None.)
Item 4. Mine Safety Disclosures.
(Not applicable.)
Item 5. Other Information.
(None.)
Item 6. Exhibits.
(None.)
- 92 -
The following exhibits are filed as a part of this report.
No. |
|
|
|
| |
31.1 | ||
|
| |
|
|
|
31.2 |
| |
|
| |
32.1 |
| |
|
| |
32.2 |
| |
|
| |
101.INS |
| Inline XBRL Instance Document. Filed herewith. |
|
| |
101.SCH |
| Inline XBRL Taxonomy Extension Schema. Filed herewith. |
|
| |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase. Filed herewith. |
|
| |
|
| Inline XBRL Taxonomy Extension Definition Linkbase. Filed herewith. |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase. Filed herewith. | |
|
| |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase. Filed herewith. |
|
| |
|
|
|
September 30, 2022 has been formatted in Inline XBRL. |
- 91 -
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| M&T BANK CORPORATION | ||
|
|
| ||
Date: November |
| By: |
| /s/ Darren J. King |
|
|
|
| Darren J. King |
|
|
|
| Senior Executive Vice President and Chief Financial Officer |
- 9392 -