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| 8-K - FORM 8-K - M&T BANK CORP | d286457d8k.htm |
 BancAnalysts Association of Boston
Conference Presentation
November 4, 2016 Exhibit 99.1 |
 2 Disclaimer This presentation contains forward- looking statements within the meaning of the Private Securities Litigation Reform Act of
1995 giving M&T Bank Corporation’s (“M&T”) 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. Actual results may
differ materially from current projections. Forward-looking statements involve known and unknown risks and uncertainties. A number of factors, many of which are beyond M&T’s control, could cause our actual
results, events or developments, or industry results to be materially different from
any future results, events or developments expressed, implied or
anticipated by such forward-looking statements and so our business and financial condition and results of operations could be materially and adversely affected. In addition to factors previously disclosed in M&T’s reports
filed with
the U.S. Securities and Exchange Commission (the “SEC”) and those identified
elsewhere in this document, the following factors, among others, could
cause actual results to differ materially from forward-looking statements or historical performance: 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 pressures; the inability to realize cost savings, revenues or other benefits, or to implement integration plans
and other consequences associated with mergers, acquisitions and
divestitures; general economic conditions and weakening in the economy;
deteriorating credit quality; political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; changes in accounting policies or procedures; significant litigation; and the
impact, extent and timing of technological changes, capital management activities, and
other actions of the Federal Reserve Board and other 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 Introduction |
 4 Who is M&T Bank Corporation? Top 20 US-based commercial bank holding company Have grown substantially from $2 billion in assets in 1983 to $127 billion at September
30, 2016 17,090 employees across 803 domestic branches in eight states and Washington DC 3.7 million customers representing 5.9 million accounts $78 billion of assets under management (1) Lowest percentage credit losses among the large money-center / superregional banks through the financial crisis 1 of only 2 commercial banks (out of 20) in S&P 500 not to reduce its dividend
M&T has not posted a quarterly loss going back to 1976 – 161 quarters All data as of third quarter 2016. 1 – Includes affiliated manager. |
 5 Key Ratios Notes: 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. The
Efficiency Ratio reflects non-interest expense (excluding amortization expense associated with intangible assets and merger-related expenses) as a percentage of fully taxable equivalent net interest income and non-interest revenues (excluding gains or losses from securities transactions and
merger-related gains). 2 –
Excludes merger-related gains and expenses and amortization expense associated with
intangible assets. 3 –
Years prior to 2011 not restated for change of accounting policy for LIHTC
4 – Annual PPNR to RWA calculated using a trailing 12 month average 5 – Preliminary (5) (5) (5) (5) 2010 2011 2012 2013 2014 2015 2Q'16 3Q'16 Superior Pre-Credit Earnings Net Interest Margin 3.84% 3.73% 3.73% 3.65% 3.31% 3.14% 3.13% 3.05% Efficiency Ratio – Tangible (1)(3) 53.71% 59.49% 55.28% 55.98% 59.29% 57.98% 55.06% 55.92% PPNR (1)(3) 1,461 1,531 1,796 1,951 1,766 1,845 562 597 PPNR to RWA (1)(3)(4) 2.28% 2.26% 2.43% 2.61% 2.35% 2.14% 2.35% 2.43% Strong Credit Metrics Allowance to Loans (As At) 1.74% 1.51% 1.39% 1.43% 1.38% 1.09% 1.10% 1.09% Net Charge-Offs to Loans 0.67% 0.47% 0.30% 0.28% 0.19% 0.19% 0.11% 0.19% Focused on Returns Net Operating Return on: Tangible Assets (1) (2) 1.17% 1.26% 1.40% 1.47% 1.23% 1.18% 1.18% 1.18% Tangible Common Equity (1) (2) 18.95% 17.96% 19.42% 17.79% 13.76% 13.00% 12.68% 12.77% Consistent Capital Generation Tangible Common Equity to Tangible Assets 6.19% 6.40% 7.20% 8.39% 8.11% 8.69% 8.87% 8.55% Tier 1 Common Capital Ratio 6.51% 6.86% 7.57% 9.22% 9.83% NA NA NA Common Equity Tier 1 Ratio NA NA NA NA NA 11.08% 11.01% 10.78% Tier 1 Capital Ratio 9.47% 9.67% 10.22% 12.00% 12.47% 12.68% 12.29% 12.04% Balance Sheet (As At) Loans to Deposits 104.39% 101.18% 101.46% 95.46% 90.60% 95.14% 93.53% 91.35% Securities to Assets 10.51% 9.85% 7.32% 10.33% 13.44% 12.75% 12.08% 11.62% |
 6 Focus on Returns Drives M&T’s Operating Model M&T primarily measures performance using ROTCE throughout the cycle ROTCE focus provides consistent decision-making framework for evaluating: Lending decisions Allocation of capital to business units Acquisitions Return capital in excess of requirements to shareholders Low volatility in credit, PPNR, and ROTCE Outperformance in profitability metrics, particularly in stressed environments Low cost of capital Results Model |
 7 NCOs / Average Loans Low Volatility Model – 20 Year History Versus Peer Banks Pre-tax Pre-provision Net Revenue (PPNR) MTB Peers Difference Median 0.27% 0.44% (0.17%) Maximum 5 1.18% 2.84% (1.66%) NCO / Average Loans Ratio (2Q96 to 2Q16):
MTB Peers Difference Median 2.77% 2.57% +0.20% Minimum 5 2.09% 1.75% +0.34% PPNR / RWA Ratio (2Q96 to 2Q16): Notes: 1 – Blue dots on above charts represent peer banks. The peer bank list is in the appendix.
2 – Loss volatility is calculated as standard deviation of net charge offs to average loans.
3 – PPNR excludes securities gains/losses, extraordinary items, and amortization of intangibles and goodwill impairment.
4 – PPNR volatility is calculated as the standard deviation of QoQ change in PPNR as a percent of average risk-weighted assets with PPNR calculated using the trailing 4-quarters and average risk-weighted assets estimated by taking a 5 quarter rolling average of period end balances.
5 – Peer maximum and minimums represent the maximum/minimum of the quarterly peer medians.
Source: SNL Financial. Low credit losses and stable PPNR throughout the cycle, including in stress MTB 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% Volatility (20Y Standard Deviation) 2 MTB 0% 1% 2% 3% 4% 5% 0% 5% 10% 15% Volatility (20Y Standard Deviation) 4 1 |
 8 17.8% 10.9% 12.4% 9.5% 11.2% -91.2% -22.9% -12.2% -22.8% -15.2% -2.6% -44.8% Max Min Median Consistently Profitable Throughout the Cycle Notes: ROTCE range is from 2007-2015 annuals and Q3 2016 YTD. Volatility is calculated as standard deviation of ROTCE. Net operating
income and average tangible common equity calculations are found in the
appendix. Source: SNL Financial.
Return on Tangible Common Equity: 2007 – Q3 2016 YTD ROTCE Volatility 7.8% 4.0% 3.5% 5.5% 3.1% 32.4% 13.2% 8.6% 12.8% 12.4% 4.4% 17.4% |
 9 Focus on Returns Supports Outperformance Notes: Years prior to 2011 not restated for LIHTC. Refer to appendix for peer group list and GAAP reconciliation.
Source: SNL Financial.
MTB 3Q 2016: 2.43% MTB 3Q 2016: 3.05% MTB 3Q 2016: 0.19% PPNR to RWA % Net Interest margin % Net Operating Efficiency Ratio% NCOs to Average Loans % MTB 3Q 2016: 55.92% MTB Peer Maximum Peer Median Peer Minimum MTB Peer Maximum Peer Median Peer Minimum MTB Peer Maximum Peer Median Peer Minimum MTB Peer Maximum Peer Median Peer Minimum |
 10 Capacity for Increased Return of Capital Tier 1 Common Ratio CET1 Ratio CCAR Non-Objection: 2015 capital growth for M&T supported by Hudson City acquisition Increased capital return post-Hudson City N/A 2013 Q4 2014 Q4 2015 Q4 2016 Q3 Peer 1 11.22% Peer 7 11.92% Peer 7 12.22% Peer 7 12.00% Peer 2 11.21% Peer 2 11.65% MTB 11.08% Peer 2 11.10% Peer 3 10.90% Peer 1 11.17% Peer 4 11.07% Peer 4 10.93% Peer 4 10.82% Peer 4 11.04% Peer 1 10.94% MTB 10.78% Peer 5 10.64% Peer 6 10.89% Peer 2 10.93% Peer 5 10.68% Peer 6 10.47% Peer 8 10.61% Peer 6 10.64% Peer 6 10.62% Peer 7 10.18% Peer 5 10.50% Peer 5 10.54% Peer 10 10.16% Peer 8 9.87% Peer 3 10.23% Peer 8 10.25% Peer 8 10.06% Peer 9 9.82% MTB 9.83% Peer 9 9.96% Peer 9 9.77% Peer 10 9.45% Peer 11 9.72% Peer 10 9.82% Peer 1 9.55% Peer 11 9.38% Peer 10 9.65% Peer 3 9.79% Peer 11 9.48% MTB 9.22% Peer 9 9.60% Peer 11 9.55% Peer 3 9.09% Notes: (1) September 30, 2016 ratios reflect preliminary results based on earnings disclosures and 10-Q filings.
Source: SNL Financial.
1 |
 11 Opportunities |
 12 Today’s Agenda Seize local market opportunities as they present themselves Build M&T presence in key geographies – e.g., New Jersey Grow capital-efficient, fee-based businesses to complement lending-focused
businesses |
 13 50% 19% Upstate NY Rest of Footprint New Customer Growth Focused front line sales efforts across middle market, small business, and retail Media support from brand, TV, print, and direct mail Customer incentives – focused on active accounts New Customer Growth: 3Q 2016 vs. 3Q 2015 Note: Represents change in number of new customers opening checking accounts during quarter. |
 14 60% 36% 19% Consumer Growth (# Checking Accounts) Business Bank Loans ($) Commercial Bank Loans ($) Building New Jersey Presence Strong growth rates – from a low base Balance sheet repositioning continues and will persist through 2017 into 2018 Loan portfolio transitioning from residential mortgage to commercial Deposit mix shift New Jersey Growth: 3Q 2016 vs. 2Q 2016 Note: Represents change in number of new customers opening checking accounts during quarter (growth rate not annualized) and quarter-end loan balances (loan growth rates are annualized). |
 15 Average Earning Asset Trends 2Q 2016 3Q 2016 Q/Q Change ($ in billions) Balance Balance % (Anlzd) Residential Mortgages $24.9 $24.1 (13%) Other Loans $63.3 $64.7 +9% Total Loans $88.2 $88.7 +3% Investment Securities $14.9 $14.4 (15%) Other Earning Assets $8.8 $9.8 +44% Total Earning Assets $111.9 $112.9 +4% Other earning assets primarily comprised of cash on deposit at the Fed; Variability affects earning assets and NIM, with limited NII impact Note: 1 – Values may not foot due to rounding. |
 16 ($ in billions) Trust-Related Supports trust fee income Trust demand deposits-received in a fiduciary or administrative capacity in
connection with capital markets transactions -
short duration and high turnover
prohibit long term investment
Mortgage Escrow Supports servicing fee income Mortgage servicing escrow deposits - monthly cash payments received from mortgagors; aggregated and remitted to bondholders in a lump sum - short duration and high turnover prohibit long term investment LCR Requirements / Excess Liquidity Other cash and securities held for liquidity/LCR purposes Core deposits deemed to have a high likelihood of outflow during a liquidity crisis
(as defined by the LCR rule) held as ultra-short duration asset
Liquidity held at Fed pending reinvestment into longer duration HQLA
Total Other Earning Assets Q3 2016 Average: $9.8 billion LTM Range: $6.2 – $9.8 billion Fee Businesses and Liquidity Requirements Drive Cash Balances |
 17 Illustrative Example – Change in Other Earning Assets Increase of $1 billion in non-interest bearing trust-related deposits Funds held at the Federal Reserve earning 50 basis points Deposits support trust and servicing fee income Capital efficient with low regulatory capital requirements Illustrative Example ($ in millions) Average Earning Assets Net Interest Income Net Interest Margin 3Q16 Actuals $112,864 $865.1 3.05% Increased Trust Deposits $1,000 $1.3 (0.02%) Net of Increase $113,864 $866.4 3.03% % Change +0.9% +0.1% Variability in trust and escrow deposits affects net interest margin, with limited impact to net interest income |
 18 Long-term Shareholder Outperformance |
 19 2.80 2.10 7.74 6.07 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 Dividends GAAP EPS Impact of Amortization and Merger-related expenses Earnings & Dividend Growth: 1983-2015 |
 20 Stock Closing Price at Return 9/30/2016 3/31/1983 CAGR Rank Company Name Ticker ($) ($) (%) 1 M&T Bank Corporation MTB 116.10 1.34 14.3 2 State Street Corporation STT 69.63 1.06 13.3 3 U.S. Bancorp USB 42.89 0.92 12.2 4 Northern Trust Corporation NTRS 67.99 1.51 12.0 6 Wells Fargo & Company WFC 44.28 1.18 11.4 23 — — 3.7 Median — — 8.7 MTB Price @ Median Growth Rate 21.95 1.34 8.7 Of the largest 100 banks operating in 1983, only 23 remain today. Among the remaining, M&T ranks 1 st in stock price growth M&T Bank Corporation…a solid investment (1) 1983 Stock Prices Source: Compustat and/or Bigcharts.com 1 |
 21 18.2% Annual rate of return since 1980 1 In the top 30 of the entire universe 2 of U.S. based stocks traded publicly since 1980 M&T Bank Corporation…a solid investment (1) CAGR calculated assuming reinvestment of dividends through September 30, 2016 (2) Includes 587 U.S. based publically traded stocks $2,127 invested in M&T in 1980 would be worth $1 million as of today Rank Company Name Industry Annual Return 1 Eaton Vance Corp. Financials 23.1 2 L Brands, Inc. Consumer Discretionary 22.4 3 TJX Companies, Inc. Consumer Discretionary 22.1 4 Stryker Corporation Health Care 21.9 5 Hasbro, Inc. Consumer Discretionary 21.8 6 Valspar Corporation Materials 20.8 7 Progressive Corporation Financials 20.3 8 Mylan N.V. Health Care 20.2 9 Wal-Mart Stores, Inc. Consumer Staples 19.9 10 Gap, Inc. Consumer Discretionary 19.9 11 Equifax Inc. Industrials 19.8 12 Danaher Corporation Health Care 19.8 13 Sherwin-Williams Company Materials 19.5 14 State Street Corporation Financials 19.5 15 Berkshire Hathaway Inc. Class A Financials 19.4 16 Astronics Corporation Industrials 19.3 17 Constellation Brands, Inc. Class B Consumer Staples 19.1 18 Aflac Incorporated Financials 18.8 19 Walgreens Boots Alliance Inc Consumer Staples 18.8 20 Lowe's Companies, Inc. Consumer Discretionary 18.5 21 RLI Corp. Financials 18.5 22 Church & Dwight Co., Inc. Consumer Staples 18.4 23 V.F. Corporation Consumer Discretionary 18.3 24 Robert Half International Inc. Industrials 18.3 25 M&T Bank Corporation Financials 18.2 26 Graco Inc. Industrials 18.2 27 Flowers Foods, Inc. Consumer Staples 17.9 28 Tyson Foods, Inc. Class A Consumer Staples 17.8 29 Sysco Corporation Consumer Staples 17.7 30 HollyFrontier Corporation Energy 17.5 |
 22 Appendix and GAAP Reconciliations |
 23 Reconciliation of GAAP and Non-GAAP Measures (1) Years prior to 2011 not restated for change of accounting policy for LIHTC Net Income 2010 2011 2012 2013 2014 2015 2Q16 3Q16 $ in millions Net income $736.2 $859.5 $1,029.5 $1,138.5 $1,066.2 $1,079.7 $336.0 $350.0 Intangible amortization* 35.3 37.6 37.0 28.6 20.7 16.2 6.9 5.9 Merger-related items* (16.3) (12.8) 6.0 7.5 - 60.8 7.6 - Net operating income $755.2 $884.3 $1,072.5 $1,174.6 $1,086.9 $1,156.6 $350.6 $355.9 PPNR (1) Net Income for EPS $675.9 $781.8 $953.4 $1,062.5 $978.6 $987.7 $313.0 $327.0 Preferred Div., Amort. of Pref. Stock & Unvested Stock Awards $60.3 $77.7 $76.1 $75.9 $87.7 $92.0 $23.1 $23.0 Income Taxes $356.6 $401.3 $562.5 $627.1 $576.0 $595.0 $194.1 $200.3 GAAP Pre-tax Income $1,092.8 $1,260.8 $1,592.0 $1,765.6 $1,642.2 $1,674.7 $530.2 $550.3 Provision for credit losses 368.0 270.0 204.0 185.0 124.0 170.0 32.0 47.0 Pre-Tax, Pre-Provision Net Revenue $1,460.8 $1,530.8 $1,796.0 $1,950.6 $1,766.2 $1,844.7 $562.2 $597.3 Earnings Per Share Diluted earnings per share $5.69 $6.35 $7.54 $8.20 $7.42 $7.18 $1.98 $2.10 Intangible amortization* 0.29 0.30 0.29 0.22 0.15 0.12 0.04 0.03 Merger-related items* (0.14) (0.10) 0.05 0.06 - 0.44 0.05 - Diluted net operating earnings per share $5.84 $6.55 $7.88 $8.48 $7.57 $7.74 $2.07 $2.13 Efficiency Ratio (1) $ in millions Non-interest expenses $1,914.8 $2,441.9 $2,469.8 $2,587.9 $2,689.5 $2,822.9 $749.9 $752.4 less: intangible amortization 58.1 61.6 60.6 46.9 33.8 26.4 11.4 9.8 less: merger-related expenses 0.8 83.7 9.9 12.4 - 76.0 12.6 - Non-interest operating expenses $1,856.0 $2,296.6 $2,399.2 $2,528.6 $2,655.7 $2,720.5 $725.9 $742.6 Tax equivalent revenues $3,399.6 $3,998.6 $4,292.2 $4,563.4 $4,479.4 $4,692.1 $1,318.6 $1,356.4 less: gain/(loss) on sale of securities 2.8 150.2 0.0 56.5 - (0.1) 0.3 28.5 less: net OTTI losses recognized (86.3) (77.0) (47.8) (9.8) - - - - less: merger-related gains 27.5 64.9 - - - - - - Denominator for efficiency ratio $3,455.6 $3,860.5 $4,340.0 $4,516.7 $4,479.4 $4,692.2 $1,318.3 $1,327.9 Net operating efficiency ratio 53.7% 59.5% 55.3% 56.0% 59.3% 58.0% 55.1% 55.9% *Net of tax |
 24 Reconciliation of GAAP and Non-GAAP Measures Average Assets 2010 2011 2012 2013 2014 2015 2Q16 3Q16 $ in millions Average assets 68,380 $ 73,977 $ 79,983 $ 83,662 $ 92,143 $ 101,780 $ 123,706 $ 124,725 $ Goodwill (3,525) (3,525) (3,525) (3,525) (3,525) (3,694) (4,593) (4,593) Core deposit and other intangible assets (153) (168) (144) (90) (50) (45) (122) (112) Deferred taxes 29 43 42 27 15 16 48 44 Average tangible assets
64,731 $ 70,327 $ 76,356 $ 80,074 $ 88,583 $ 98,057 $ 119,039 $ 120,064 $ Average Common Equity $ in millions Average common equity 7,367 $ 8,207 $ 8,834 $ 9,844 $ 10,905 $ 11,996 $ 15,145 $ 15,115 $ Goodwill (3,525) (3,525) (3,525) (3,525) (3,525) (3,694) (4,593) (4,593) Core deposit and other intangible assets (153) (168) (144) (90) (50) (45) (122) (112) Deferred taxes 29 43 42 27 15 16 48 44 Average tangible common equity
3,718 $ 4,557 $ 5,207 $ 6,256 $ 7,345 $ 8,273 $ 10,478 $ 10,454 $ |
 25 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 |