M&t Bank Corp. has a market cap of $9.81 billion; its shares were traded at around $82.49 with a P/E ratio of 15.4 and P/S ratio of 2.7. The dividend yield of M&t Bank Corp. stocks is 3.4%. M&t Bank Corp. had an annual average earning growth of 1.3% over the past 10 years.
MTB is in the portfolios of Warren Buffett of Berkshire Hathaway, Bill Gates of Bill & Melinda Gates Foundation Trust, Murray Stahl of Horizon Asset Management, Louis Moore Bacon of Moore Capital Management, LP, Mario Gabelli of GAMCO Investors, Jim Simons of Renaissance Technologies LLC, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:
M&T Bank Corporation (“M&T”) recorded net income in the third quarter of 2010 of $192 million or $1.48 of diluted earnings per common share, compared with $128 million or $.97 of diluted earnings per common share in the third quarter of 2009. During the second quarter of 2010, net income totaled $189 million or $1.46 of diluted earnings per common share. Basic earnings per common share were $1.49 in the recent quarter, compared with $.97 in the year-earlier quarter and $1.47 in the second quarter of 2010. The after-tax impact of net acquisition and integration-related gains and expenses (included herein as merger-related expenses)resulted in income of $9 million ($15 million pre-tax) or $.08 of basic and diluted earnings per common share in the third quarter of 2009. Such gains and expenses related to M&T’s May 23, 2009 acquisition of Provident Bankshares Corporation (“Provident”) and to the August 28, 2009 agreement between the Federal Deposit Insurance Corporation (“FDIC”) and M&T Bank, the principal banking subsidiary of M&T, for M&T Bank to assume all of the deposits and acquire certain assets of Bradford Bank (“Bradford”). There were no merger-related expenses during 2010. For the nine months ended September 30, 2010, net income was $532 million or $4.10 per diluted common share, compared with $243 million or $1.84 per diluted common share during the similar period of 2009. Basic earnings per common share were $4.12 for the first nine months of 2010, compared with $1.84 in the corresponding nine-month period of 2009. The after-tax impact of merger-related gains and expenses was $33 million ($54 million pre-tax) or $.28 of basic and diluted earnings per common share in the nine-month period ended September 30, 2009.
Several noteworthy items are reflected in M&T’s third quarter 2009 results. On August 28, 2009 M&T Bank entered into a purchase and assumption agreement with the FDIC to assume all of the deposits and acquire certain assets of Bradford, a bank based in Baltimore, Maryland. As part of the transaction, M&T Bank entered into a loss-share arrangement with the FDIC whereby M&T Bank will be reimbursed by the FDIC for most losses it incurs on the acquired loan portfolio. Assets acquired in the transaction totaled approximately $469 million, including $302 million of loans, and liabilities assumed aggregated $440 million, including $361 million of deposits. The transaction was accounted for using the acquisition method of accounting. In accordance with GAAP, M&T Bank recorded an after-tax gain on the transaction of $18 million ($29 million before taxes) during the third quarter of 2009. The gain reflected the amount of financial support and indemnification against loan losses that M&T obtained from the FDIC. Merger-related expenses associated with this transaction and with M&T’s second quarter acquisition of Provident totaled $9 million, after applicable tax effect, in 2009’s third quarter. Also reflected in M&T’s third quarter 2009 results were $29 million of after-tax other-than-temporary impairment charges ($47 million before taxes) on certain available-for-sale investment securities. Specifically, such charges related to certain privately issued CMOs backed by residential real estate loans and CDOs backed by pooled trust preferred securities of financial institutions. Finally, M&T’s results in the third quarter of 2009 benefited from a $10 million reversal of accrued income taxes for previously uncertain tax positions in various jurisdictions. The overall impact of the items described herein was to reduce M&T’s third quarter 2009 net income by approximately $9 million, or $.08 of diluted earnings per common share.
The Provident transaction has been accounted for using the acquisition method of accounting. Accordingly, the assets acquired and liabilities assumed were recorded by M&T at their estimated fair values as of the acquisition date. Assets acquired totaled $6.3 billion, including $4.0 billion of loans and leases (including approximately $1.7 billion of commercial real estate loans, $1.4 billion of consumer loans, $700 million of commercial loans and leases and $300 million of residential real estate loans) and $1.0 billion of investment securities. Liabilities assumed were $5.9 billion, including $5.1 billion of deposits. The transaction added $436 million to M&T’s stockholders’ equity, including $280 million of common equity and $156 million of preferred equity. In connection with the acquisition, the Company recorded $332 million of goodwill and $63 million of core deposit intangible. The core deposit intangible is being amortized over seven years using an accelerated method. The acquisition of Provident expanded the Company’s presence in the Mid-Atlantic area, gave the Company the second largest deposit share in Maryland, and tripled the Company’s presence in Virginia.
As a result of business combinations and other acquisitions, the Company had intangible assets consisting of goodwill and core deposit and other intangible assets totaling $3.7 billion at each of September 30, 2010, September 30, 2009 and December 31, 2009. Included in such intangible assets was goodwill of $3.5 billion at each of those respective dates. Amortization of core deposit and other intangible assets, after tax effect, totaled $8 million ($.07 per diluted common share) during the third quarter of 2010, compared with $10 million ($.09 per diluted common share) during the year-earlier quarter and $9 million ($.07 per diluted common share) during the second quarter of 2010. For the nine-month periods ended September 30, 2010 and 2009, amortization of core deposit and other intangible assets, after tax effect, totaled $27 million ($.23 per diluted common share) and $29 million ($.25 per diluted common share), respectively.
Average loans and leases declined $1.5 billion, or 3%, to $50.8 billion in the recent quarter from $52.3 billion in the third quarter of 2009. Average commercial loan and lease balances declined $945 million, or 7%, to $12.9 billion in the third quarter of 2010 from $13.8 billion in the year-earlier quarter. That decline was the result of generally lower demand for commercial loans. Commercial real estate loans averaged $20.6 billion in the recent quarter, compared with $20.8 billion in the third quarter of 2009. Average outstanding residential real estate loans increased $251 million or 5% to $5.7 billion in the recently completed quarter from $5.4 billion in the third quarter of 2009. Included in that portfolio were loans held for sale, which averaged $441 million in the third quarter of 2010, compared with $613 million in the year-earlier quarter. Consumer loans averaged $11.7 billion in the recent quarter, $560 million or 5% lower than $12.2 billion in 2009’s third quarter. That decline was largely due to lower average outstanding automobile and home equity loan balances.
$100,000, excluding brokered certificates of deposit, averaged $1.6 billion in the third quarter of 2010, compared with $2.5 billion in the year-earlier quarter and $1.7 billion in the second quarter of 2010. Offshore branch deposits, primarily comprised of balances of $100,000 or more, averaged $802 million, $1.4 billion and $972 million for the three-month periods ended September 30, 2010, September 30, 2009 and June 30, 2010, respectively. Brokered time deposits averaged $571 million in the recent quarter, compared with $1.1 billion in the third quarter of 2009 and $709 million in the second quarter of 2010. The Company also had brokered NOW and brokered money-market deposit accounts, which in the aggregate averaged $1.5 billion during the recently completed quarter, compared with $709 million and $1.2 billion during the similar quarter of 2009 and the second quarter of 2010, respectively. The higher level of such deposits in the two most recent quarters as compared with the third quarter of 2009 reflects continued uncertain economic markets and the desire of brokerage firms to earn reasonable yields while ensuring that customer deposits were fully insured. Offshore branch deposits and brokered deposits have been used by the Company as alternatives to short-term borrowings. Additional amounts of offshore branch deposits or brokered deposits may be added in the future depending on market conditions, including demand by customers and other investors for those deposits, and the cost of funds available from alternative sources at the time.
