Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - M&T BANK CORP | d595215d8k.htm |
 Barclays Global Financial Services
Conference
September 9, 2013
Exhibit 99 |
 2
Disclaimer
This
presentation
contains
forward
looking
statements
within
the
meaning of the Private Securities Litigation Reform Act
of 1995 giving M&T’s expectations or predictions of future financial or
business performance or conditions. Forward- looking statements are
typically identified by words such as “believe,”
“expect,”
“anticipate,”
“intend,”
“target,”
“estimate,”
“continue,”
“positions,”
“prospects”
or
“potential,”
by
future
conditional
verbs
such
as
“will,”
“would,”
“should,”
“could”
or
“may”, or by variations of such words or by similar expressions. These
forward-looking statements are subject to numerous assumptions, risks
and uncertainties which change over time. Forward-looking statements speak only as of
the date they are made and we assume no duty to update forward-looking
statements. On August
27, 2012, M&T Bank Corporation, a New York corporation (“M&T”),
entered into an Agreement and Plan of Merger (the “Merger
Agreement”) with Hudson City Bancorp, Inc., a Delaware corporation (“Hudson City”) and
Wilmington Trust Corporation, a Delaware corporation and a wholly owned subsidiary
of M&T (“WTC”). The Merger Agreement provides that, upon the
terms and subject to the conditions set forth therein, Hudson City will merge with and
into WTC, with WTC continuing as the surviving entity (the “Merger”). In
addition to factors previously disclosed in M&T’s reports filed
with the SEC and those identified elsewhere in this filing, the following factors among others, could cause
actual results to differ materially from forward-looking statements or
historical performance: ability to obtain regulatory approvals and meet
other closing conditions to the Merger, including approval by M&T and Hudson City shareholders,
on
the
expected
terms
and
schedule;
delay
in
closing
the
Merger;
difficulties and delays in integrating the M&T and
Hudson
City
businesses
or
fully
realizing
cost
savings
and
other
benefits; business disruption following the Merger;
changes in asset quality and credit risk; the inability to sustain revenue and
earnings growth; changes in interest rates and capital markets; inflation;
customer acceptance of M&T products and services; customer borrowing, repayment,
investment and deposit practices; customer disintermediation; the introduction,
withdrawal, success and timing of business initiatives; competitive
conditions; the inability to realize cost savings or revenues or to implement integration
plans and other consequences associated with mergers, acquisitions and
divestitures; economic conditions; and the impact, extent and timing of
technological changes, capital management activities, and other actions of the Federal
Reserve Board and legislative and regulatory actions and reforms.
Annualized, pro forma, projected and estimated numbers are used for illustrative
purpose only, are not forecasts and may not reflect actual results.
|
 3
M&T Bank Corporate Profile
Top 20 US-based full-service
commercial bank holding company
by assets and Top 15 by market cap
Founded in 1856
$83 billion total assets
726 domestic branches and more
than 2,000 ATMs
15,411 employees located in New
York, Maryland, Pennsylvania,
Washington, D.C., Virginia, West
Virginia and Delaware
Over 2 million consumer/retail
household customers
215,000 commercial customers
As of 6/30/13 |
 4
A Changing Banking Environment
Higher Liquidity
Higher Capital
Strong Risk Management
Modest Loan Demand
Low but Rising Interest Rates
Pressure on Returns
A Viable Business Model is Essential |
 5
GAAP Earnings
2010
2011
2012
1Q13
2Q13
YOY
QOQ
Net Income ($MM)
736
859
1,029
274
348
49%
27%
EPS ($ per share)
5.69
6.35
7.54
1.98
2.55
49%
29%
Net Operating Earnings
Net Operating Income ($MM)
755
884
1,073
285
361
46%
27%
Net Operating EPS ($ per share)
5.84
6.55
7.88
2.06
2.65
46%
29%
2Q13 versus
Strong Earnings Results
Net
Operating
Income
and
Net
Operating
EPS
are
non-GAAP
financial
measures
(Excludes
merger-related
gains
and
expenses
and
amortization
expense
associated
with
intangible
assets
).
Refer
to
the
Appendix
for
a
reconciliation
between
these
measures
and
GAAP. |
 6
2006
2010
2011
2012
2Q12
1Q13
Net Interest Margin
3.70%
3.84%
3.73%
3.73%
3.74%
3.71%
Efficiency Ratio - Tangible
(1)
51.51%
53.71%
60.43%
56.19%
56.86%
55.88%
Pre-tax, Pre-provision Earnings
(1)
($MM)
1,312
1,461
1,495
1,757
412
453
Allowance to Loans (As At)
1.51%
1.74%
1.51%
1.39%
1.46%
1.41%
Net Charge-Offs to Loans
0.16%
0.67%
0.47%
0.30%
0.34%
0.23%
Net Operating Return on
Tangible Assets
(2)
1.67%
1.17%
1.26%
1.40%
1.30%
1.48%
Tangible Common Equity
(2)
29.55%
18.95%
17.96%
19.42%
18.54%
18.71%
Common Equity to Assets - Tangible
5.84%
6.19%
6.40%
7.20%
6.65%
7.51%
7.85%
Tier 1 Common Capital Ratio
6.42%
6.51%
6.86%
7.57%
7.15%
7.93%
8.55%
Tier 1 Capital Ratio
7.74%
9.47%
9.67%
10.22%
9.92%
10.62%
11.31%
Total Capital Ratio
11.78%
13.08%
13.26%
13.39%
13.29%
13.81%
14.47%
Leverage Ratio
7.20%
9.33%
9.28%
10.07%
9.49%
10.26%
10.48%
TBV per Share
28.57
33.26
37.79
44.61
40.52
46.11
Prior Quarters
48.26
588
1.41%
0.35%
1.81%
22.72%
2Q13
3.71%
50.92%
Key Ratios
(1)
The Efficiency Ratio and Pre-tax, Pre-provision Earnings are non-GAAP
financial measures. A reconciliation of GAAP to non-GAAP financial
measures is available in the Appendix. (2)
Excludes merger-related gains and expenses and amortization expense associated
with intangible assets. Strong
credit
metrics
Superior
pre-credit
earnings
Focused
on returns
Consistent
capital
generation |
 7
M&T’s 2Q13 Actions Enhancing Capital & Liquidity
Reduced risk sensitive assets
•
Sale of $1.0 billion of private-label MBS securities
Divested non-core assets
•
Visa / Mastercard stock sale
Securitized $296 million of FHA loans & held resulting GNMA securities
Securitize and retain FHA loan production |
 8
Further Actions Enhancing M&T’s Capital & Liquidity
Continue to build liquid asset buffer
•
Complete securitization of FHA loans ($1.3 billion total) and
retain as GNMA securities
•
Maintain program to securitize FHA mortgage production & retain
as GNMA securities
Continue to enhance the liquidity, capital and risk profile of the bank
•
Consumer Loan securitization
•
Continue building liquidity through Bank Note Program
•
Potential refinancing of TruPS |
 9
M&T Capital Build
7.57
6.86
6.51
5.66
6.08
5.62
6.42
6.12
5.81
5.74
8.55
4.0
5.0
6.0
7.0
8.0
9.0
Q2’
13
’12
’11
’10
’09
’08
’07
’06
’05
’04
’03
Tier 1 Common Capital Ratio %
10.22
9.67
9.47
8.59
8.83
6.84
7.74
7.56
7.31
7.30
11.31
6.0
7.0
8.0
9.0
10.0
11.0
12.0
Q2’
13
’12
’11
’10
’09
’08
’07
’06
’05
’04
’03
Tier 1 Capital Ratio %
7.17
6.34
6.16
5.09
4.55
4.95
5.79
5.49
5.33
5.51
7.82
4.0
5.0
6.0
7.0
8.0
9.0
’06
’05
’04
’03
Q2’
13
’12
’11
’10
’09
’08
’07
Tangible Common Equity / Assets %*
10.07
9.28
9.33
8.43
8.35
6.59
7.20
6.94
6.73
6.98
10.48
6.0
7.0
8.0
9.0
10.0
11.0
12.0
Q2’
13
’12
’11
’10
’09
’08
’07
’06
’05
’04
’03
Tier 1 Leverage Ratio %
*Street TCE / TA
Source: SNL Financial |
 10
Mortgage Banking Environment
Cautious revenue outlook for 2H-2013
driven by lower gain on sale and volumes
Re-fi volumes impacted by higher rates,
purchase volume appears to have slowed
Industry competition driven by large banks
seeking market share
QTD Fed H-8 report shows $13 billion decline in
industry mortgages
Source: Mortgage Bankers Association
-42%
-54%
946
439
0
200
400
600
800
1000
1200
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Total Mortage Application Index
M&T Gain on Sale Revenues -
Last 5 Quarters
$ in millions
$0
$10
$20
$30
$40
$50
$60
$70
$80
2Q12
3Q12
4Q12
1Q13
2Q13
Residential Gain on Sale Income
Commercial Gain on Sale Income |
 11
Significant Investments for the Future
Capital Planning
IT Investments
Risk Management Framework
Compliance
Sub-servicing Hires
Higher Expenses
We are focused on investing today to position M&T for relative
outperformance in the future
M&T has continued to manage core expenses well, but sizable investments in risk
management, compliance and other areas will increase expenses
|
 12
Net Interest Margin / Rate Sensitivity
M&T remains positioned for rising rates
NII simulation in 2Q1310Q projects a +100bp gradual, parallel
increase in rates benefits NII by about 4%
10Q reflects pro-forma impact of initiatives outlined
M&T (and most banks) more sensitive to short end of curve
Continue to expect ~3bp of core NIM compression/quarter
Continued elevated cash balances at the Fed dilutes reported NIM
but not NII |
 13
Summary
Mortgage banking –
Residential GOS margins and volumes declining rapidly
•
Commercial originations also down
Costs of risk management infrastructure build and staffing for sub-servicing
contract driving expense growth
Capital and liquidity build continues
Modest loan growth
Earning assets growing w/ retention of securities
Core NIM pressure of about 3 bp per quarter |
 Long-term Profitability Outperformance
Net Interest Margin %
Operating Efficiency Ratio %
Return on Tangible Common Equity %
Pre-Tax Pre-Provision Net Revenues
to Average Total Assets %
Note: Peer benchmarking group includes BBT, CMA, FITB, HBAN, KEY, MTB, PNC, RF,
STI, USB, WFC, and ZION. Source: SNL Financial; M&T
Efficiency ratio for 2Q’13 excludes a non-recurring reversal ($25.5 million) of a contingent compensation
obligation from the Wilmington Trust merger.
14 |
 15
Deploying Capital Where and When it Makes Sense
5 Years
2003 -
2007
5 Years
2008 -
2012
30 Years
1983 -
2012
Dividends
49%
Capital
Retained
51%
Share
Repurchases
52%
Dividends
28%
Capital
Retained
20%
Cumulative Capital Retained, Dividends and Share Repurchases
Share
Repurchases
31%
Dividends
32%
Capital
Retained
37% |
 16
Earnings & Dividend Growth: 1983 –
1H13
Note:
Data
prior
to
1998
does
not
include
provisions
of
SFAS
No.
123
and
No.
148
stock
option
expensing.
Net Operating Income and Net Operating EPS are non-GAAP financial measures.
Refer to the Appendix for a reconciliation between these measures and
GAAP $0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
Dividends
GAAP EPS
Impact of Amortization and Merger-related expenses
|
 17
M&T Bank Corporation…
a solid investment
(1)
1983 Stock Prices Source: Compustat and/or Bigcharts.com
Of the largest 100 banks operating in 1983, only 23 remain today.
Among the remaining, M&T ranks 1st in stock price growth!
Stock
Closing Price at
Return
6/30/2013
3/31/1983
CAGR
Rank
Company Name
Ticker
($)
($)
1
(%)
1
M&T Bank Corporation
MTB
111.75
1.34
15.8
2
State Street Corporation
STT
65.21
1.06
14.6
3
U.S. Bancorp
USB
36.15
0.92
12.9
4
Northern Trust Corporation
NTRS
57.90
1.51
12.8
5
Wells Fargo & Company
WFC
41.27
1.18
12.5
23
—
—
4.1
Median
—
—
8.3
MTB Price @ Median Growth Rate
14.88
1.34
8.3 |
 18
M&T Bank Corporation…
a solid investment
(1)
CAGR calculated assuming reinvestment of dividends through June 30, 2013.
(2)
Includes 667 U.S. based publicly traded stocks
$2,385 invested in M&T in 1980 would be worth $1 million today
Rank
Company Name
Industry
Annual Return
1
Eaton Vance Corp.
Financials
25.2
2
Gap Inc.
Consumer Discretionary
24.0
3
L Brands Inc.
Consumer Discretionary
22.9
4
TJX Cos.
Consumer Discretionary
22.8
5
Stryker Corp.
Health Care
22.0
6
Wal-Mart Stores Inc.
Consumer Staples
21.9
7
Hasbro Inc.
Consumer Discretionary
21.7
8
Mylan Inc.
Health Care
21.6
9
Precision Castparts Corp.
Industrials
21.5
10
Progressive Corp.
Financials
21.3
11
State Street Corp.
Financials
21.1
12
Valspar Corp.
Materials
21.1
13
HollyFrontier Corp.
Energy
20.8
14
Flowers Foods Inc.
Consumer Staples
20.8
15
Berkshire Hathaway Inc. Cl A
Financials
20.6
16
Danaher Corp.
Industrials
20.0
17
Sherwin-Williams Co.
Materials
19.9
18
Raven Industries Inc.
Industrials
19.9
19
Leucadia National Corp.
Financials
19.8
20
AFLAC Inc.
Financials
19.8
21
Forest Laboratories Inc.
Health Care
19.8
22
M&T Bank Corp.
Financials
19.8
19.8% Annual rate of return since 1980
1
22
nd
best return of entire universe
2
of U.S. based stocks traded publicly since 1980 |
 Appendix |
 20
Reconciliation of GAAP and Non-GAAP Measures
Net Income
2006
2007
2008
2009
2010
2011
2Q12
2012
1Q13
2Q13
$'s in millions
Net income
$839.2
$654.3
$555.9
$379.9
$736.2
$859.5
$233.4
$1,029.5
$274.1
$348.5
Intangible amortization*
38.5
40.5
40.5
39.0
35.3
37.6
9.7
37.0
8.1
7.6
Merger-related items*
3.0
9.1
2.2
36.5
(16.3)
(12.8)
4.3
6.0
2.9
4.6
Net operating income
$880.7
$703.8
$598.6
$455.4
$755.2
$884.3
$247.4
$1,072.5
$285.1
$360.7
Pre-Tax,
Pre-Provision
Income
Net Income for EPS
$839.2
$654.3
$555.1
$332.0
$675.9
$781.8
$214.7
$953.4
$255.1
$328.6
Preferred Div., Amort. of Pref. Stock
& Unvested Stock Awards
$0.0
$0.0
$0.8
$47.9
$60.3
$77.7
$18.7
$76.1
$19.0
$19.9
Income Taxes
$392.4
$309.2
$183.9
$139.4
$356.6
$365.1
$118.8
$523.0
$141.2
$182.2
GAAP Pre-tax Income
$1,231.6
$963.5
$739.8
$519.3
$1,092.8
$1,224.6
$352.2
$1,552.5
$415.3
$530.7
Provision for credit losses
80.0
192.0
412.0
604.0
368.0
270.0
60.0
204.0
38.0
57.0
Pre-Tax, Pre-Provision Income
$1,311.6
$1,155.5
$1,151.8
$1,123.3
$1,460.8
$1,494.6
$412.2
$1,756.5
$453.3
$587.7
Earnings Per Share
Diluted earnings per share
$7.37
$5.95
$5.01
$2.89
$5.69
$6.35
$1.71
$7.54
$1.98
$2.55
Intangible amortization*
0.33
0.37
0.36
0.34
0.29
0.30
0.08
0.29
0.06
0.06
Merger-related items*
0.03
0.08
0.02
0.31
(0.14)
(0.10)
0.03
0.05
0.02
0.04
Diluted net operating
earnings per share
$7.73
$6.40
$5.39
$3.54
$5.84
$6.55
$1.82
$7.88
$2.06
$2.65
Efficiency Ratio
$'s in millions
Non-interest expenses
$1,551.7
$1,627.7
$1,727.0
$1,980.6
$1,914.8
$2,478.1
$627.4
$2,509.3
$635.5
$598.6
less: intangible amortization
63.0
66.5
66.6
64.3
58.1
61.6
15.9
60.6
13.3
12.5
less: merger-related expenses
5.0
14.9
3.5
89.2
0.8
83.7
7.2
9.9
4.7
7.6
Non-interest operating expenses
$1,483.7
$1,546.3
$1,656.8
$1,827.2
$1,856.0
$2,332.8
$604.3
$2,438.8
$617.5
$578.5
Tax equivalent revenues
$2,883.1
$2,804.1
$2,900.6
$3,125.7
$3,399.6
$3,998.6
$1,046.3
$4,292.2
$1,095.4
$1,192.5
less: gain/(loss) on sale of securities
2.6
1.2
34.4
1.2
2.8
150.2
(0.41)
0.0
-
56.46
less: net OTTI losses recognized
-
(127.3)
(182.2)
(138.3)
(86.3)
(77.0)
(16.2)
(47.8)
(9.8)
-
less: merger-related gains
-
-
-
29.1
27.5
64.9
-
-
-
-
Denominator for efficiency ratio
$2,880.5
$2,930.2
$3,048.4
$3,233.7
$3,455.6
$3,860.5
$1,062.9
$4,340.0
$1,105.2
$1,136.0
Net operating efficiency ratio
51.5%
52.8%
54.4%
56.5%
53.7%
60.4%
56.9%
56.2%
55.9%
50.9%
*Net of tax |
 21
Reconciliation of GAAP and Non-GAAP Measures
Average Assets
2006
2007
2008
2009
2010
2011
2Q12
2012
1Q13
2Q13
$'s in millions
Average assets
55,839
$
58,545
$
65,132
$
67,472
$
68,380
$
73,977
$
80,087
$
79,983
$
81,913
$
83,352
$
Goodwill
(2,908)
(2,933)
(3,193)
(3,393)
(3,525)
(3,525)
(3,525)
(3,525)
(3,525)
(3,525)
Core deposit and other
intangible assets
(191)
(221)
(214)
(191)
(153)
(168)
(151)
(144)
(109)
(95)
Deferred taxes
38
24
30
33
29
43
44
42
32
28
Average tangible assets
52,778
$
55,415
$
61,755
$
63,921
$
64,731
$
70,327
$
76,455
$
76,356
$
78,311
$
79,760
$
Average Common Equity
$'s in millions
Average common equity
6,041
$
6,247
$
6,423
$
6,616
$
7,367
$
8,207
$
8,668
$
8,834
$
9,448
$
9,687
$
Goodwill
(2,908)
(2,933)
(3,193)
(3,393)
(3,525)
(3,525)
(3,525)
(3,525)
(3,525)
(3,525)
Core deposit and other
intangible assets
(191)
(221)
(214)
(191)
(153)
(168)
(151)
(144)
(109)
(95)
Deferred taxes
38
24
30
33
29
43
44
42
32
28
Average tangible common equity
2,980
$
3,117
$
3,046
$
3,065
$
3,718
$
4,557
$
5,036
$
5,207
$
5,846
$
6,095
$ |
 22
BB&T Corporation
M&T Bank Corporation
PNC Financial Services Group, Inc.
Comerica Incorporated
Regions Financial Corporation
Fifth Third Bancorp
Wells Fargo & Company
SunTrust Banks, Inc.
Huntington Bancshares Incorporated
Zions Bancorporation
KeyCorp
M&T Peer Group
U.S. Bancorp |