UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
or
[ ] 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 | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| One M & T Plaza | ||
| Buffalo, New York | 14203 | |
| (Address of principal | (Zip Code) | |
| executive offices) |
(716) 842-5445
(Registrant’s telephone number, including area code)
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 x No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No
Number of shares of the registrant’s Common Stock, $0.50 par value, outstanding as of the close of business on April 30, 2003: 119,238,112 shares.
M&T BANK CORPORATION
FORM 10-Q
For the Quarterly Period Ended March 31, 2003
| Table of Contents of Information Required in Report | Page | |||||
Part I. FINANCIAL INFORMATION |
||||||
Item 1. |
Financial Statements. | |||||
| CONSOLIDATED
BALANCE SHEET — March 31, 2003 and December 31, 2002 |
3 | |||||
| CONSOLIDATED STATEMENT OF INCOME — Three months ended March 31, 2003 and 2002 |
4 | |||||
| CONSOLIDATED STATEMENT OF CASH FLOWS — Three months ended March 31, 2003 and 2002 |
5 | |||||
| CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY — Three months ended March 31, 2003 and 2002 |
6 | |||||
| CONSOLIDATED SUMMARY OF CHANGES IN ALLOWANCE FOR CREDIT LOSSES — Three months ended March 31, 2003 and 2002 |
6 | |||||
NOTES TO FINANCIAL STATEMENTS |
7 | |||||
| Item 2. | Management’s
Discussion and Analysis of Financial Condition and Results of Operations. |
15 | ||||
| Item 3. | Quantitative
and Qualitative Disclosures About Market Risk. |
36 | ||||
Item 4. |
Controls and Procedures. |
36 | ||||
Part II. OTHER INFORMATION |
||||||
Item 1. |
Legal Proceedings. |
36 | ||||
Item 2. |
Changes in Securities and Use of Proceeds. |
36 | ||||
Item 3. |
Defaults Upon Senior Securities. |
36 | ||||
Item 4. |
Submission of Matters to a Vote of Security Holders. |
36 | ||||
Item 5. |
Other Information. |
36 | ||||
Item 6. |
Exhibits and Reports on Form 8-K. |
36 | ||||
SIGNATURES |
37 | |||||
CERTIFICATIONS |
38 | |||||
EXHIBIT INDEX |
40 | |||||
-2-
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSOLIDATED BALANCE SHEET (Unaudited)
| March 31, | December 31, | |||||||||||
| Dollars in thousands, except per share | 2003 | 2002 | ||||||||||
Assets |
Cash and
due from banks |
$ | 841,827 | 963,772 | ||||||||
Money-market
assets |
||||||||||||
Interest-bearing
deposits at banks |
8,798 | 7,856 | ||||||||||
Federal
funds sold and agreements to resell securities |
1,065 | 320,359 | ||||||||||
Trading
account |
49,366 | 51,628 | ||||||||||
Total money-market
assets |
59,229 | 379,843 | ||||||||||
Investment
securities |
||||||||||||
Available
for sale (cost: $3,694,081 at March 31, 2003; |
||||||||||||
$3,508,300
at December 31, 2002) |
3,775,379 | 3,599,135 | ||||||||||
Held to
maturity (market value: $91,981 at March 31, 2003; |
||||||||||||
$87,893
at December 31, 2002) |
90,419 | 86,397 | ||||||||||
Other (market
value: $280,505 at March 31, 2003; |
||||||||||||
$269,618
at December 31, 2002) |
280,505 | 269,618 | ||||||||||
Total investment
securities |
4,146,303 | 3,955,150 | ||||||||||
Loans and
leases |
26,427,911 | 25,936,942 | ||||||||||
Unearned
discount |
(203,798 | ) | (209,158 | ) | ||||||||
Allowance
for credit losses |
(444,680 | ) | (436,472 | ) | ||||||||
Loans
and leases, net |
25,779,433 | 25,291,312 | ||||||||||
Premises
and equipment |
231,834 | 238,986 | ||||||||||
Goodwill |
1,097,553 | 1,097,553 | ||||||||||
Core deposit
and other intangible assets |
107,342 | 118,790 | ||||||||||
Accrued
interest and other assets |
1,180,270 | 1,155,775 | ||||||||||
Total assets |
$ | 33,443,791 | 33,201,181 | |||||||||
Liabilities |
Noninterest-bearing
deposits |
$ | 3,901,172 | 4,072,085 | ||||||||
NOW accounts |
1,053,288 | 1,029,060 | ||||||||||
Savings
deposits |
9,611,890 | 9,156,678 | ||||||||||
Time deposits |
5,446,613 | 6,246,384 | ||||||||||
Deposits
at foreign office |
1,911,259 | 1,160,716 | ||||||||||
Total deposits |
21,924,222 | 21,664,923 | ||||||||||
Federal
funds purchased and agreements |
||||||||||||
to repurchase
securities |
1,862,116 | 2,067,834 | ||||||||||
Other short-term
borrowings |
524,927 | 1,361,580 | ||||||||||
Accrued
interest and other liabilities |
424,887 | 400,991 | ||||||||||
Long-term
borrowings |
5,394,920 | 4,497,374 | ||||||||||
Total liabilities |
30,131,072 | 29,992,702 | ||||||||||
Stockholders’
equity |
Preferred
stock, $1 par, 1,000,000 shares authorized, |
|||||||||||
none outstanding |
— | — | ||||||||||
Common stock,
$.50 par, 250,000,000 shares authorized, |
||||||||||||
97,139,347
shares issued |
48,570 | 48,570 | ||||||||||
Common stock
issuable, 126,259 shares at March 31, 2003; |
||||||||||||
126,670
shares at December 31, 2002 |
6,385 | 6,190 | ||||||||||
Additional
paid-in capital |
1,187,715 | 1,192,998 | ||||||||||
Retained
earnings |
2,386,646 | 2,297,848 | ||||||||||
Accumulated
other comprehensive income, net |
49,356 | 54,772 | ||||||||||
Treasury
stock - common, at cost - 4,762,616 shares at |
||||||||||||
March 31,
2003; 5,110,736 shares at December 31, 2002 |
(365,953 | ) | (391,899 | ) | ||||||||
Total
stockholders' equity |
3,312,719 | 3,208,479 | ||||||||||
Total liabilities
and stockholders' equity |
$ | 33,443,791 | 33,201,181 | |||||||||
-3-
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
| Three months ended March 31 | ||||||||||||
| In thousands, except per share | 2003 | 2002 | ||||||||||
Interest
income |
Loans and
leases, including fees |
$ | 387,365 | 419,943 | ||||||||
Money-market
assets |
||||||||||||
Deposits
at banks |
14 | 18 | ||||||||||
Federal
funds sold and agreements to resell securities |
1,744 | 1,070 | ||||||||||
Trading
account |
48 | 58 | ||||||||||
Investment
securities |
||||||||||||
Fully taxable |
42,369 | 34,897 | ||||||||||
Exempt from
federal taxes |
4,019 | 5,201 | ||||||||||
Total interest
income |
435,559 | 461,187 | ||||||||||
Interest
expense |
NOW accounts |
708 | 919 | |||||||||
Savings
deposits |
22,684 | 26,973 | ||||||||||
Time deposits |
38,111 | 72,898 | ||||||||||
Deposits
at foreign office |
3,123 | 1,791 | ||||||||||
Short-term
borrowings |
11,152 | 12,883 | ||||||||||
Long-term
borrowings |
43,814 | 44,663 | ||||||||||
Total interest
expense |
119,592 | 160,127 | ||||||||||
Net interest
income |
315,967 | 301,060 | ||||||||||
Provision
for credit losses |
33,000 | 24,000 | ||||||||||
Net interest
income after provision for credit losses |
282,967 | 277,060 | ||||||||||
Other
income |
Mortgage
banking revenues |
34,464 | 27,912 | |||||||||
Service
charges on deposit accounts |
43,349 | 39,525 | ||||||||||
Trust income |
14,199 | 15,805 | ||||||||||
Brokerage
services income |
10,048 | 10,919 | ||||||||||
Trading
account and foreign exchange gains |
641 | 1,043 | ||||||||||
Gain on
sales of bank investment securities |
233 | 171 | ||||||||||
Other revenues
from operations |
29,913 | 28,853 | ||||||||||
Total other
income |
132,847 | 124,228 | ||||||||||
Other
expense |
Salaries
and employee benefits |
124,074 | 123,454 | |||||||||
Equipment
and net occupancy |
27,151 | 27,204 | ||||||||||
Printing,
postage and supplies |
7,013 | 6,033 | ||||||||||
Amortization
of core deposit and other intangible assets |
11,598 | 13,543 | ||||||||||
Other costs
of operations |
72,442 | 63,050 | ||||||||||
Total other
expense |
242,278 | 233,284 | ||||||||||
Income before
taxes |
173,536 | 168,004 | ||||||||||
Income taxes |
56,998 | 54,427 | ||||||||||
Net income |
$ | 116,538 | 113,577 | |||||||||
Net income
per common share |
||||||||||||
Basic |
$ | 1.26 | 1.22 | |||||||||
Diluted |
1.23 | 1.18 | ||||||||||
Cash dividends
per common share |
$ | .30 | .25 | |||||||||
Average
common shares outstanding |
||||||||||||
Basic |
92,399 | 93,265 | ||||||||||
Diluted |
95,062 | 96,300 | ||||||||||
-4-
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
| Three months ended March 31 | ||||||||||||
| In thousands | 2003 | 2002 | ||||||||||
Cash
flows from |
Net income |
$ | 116,538 | 113,577 | ||||||||
operating
activities |
Adjustments
to reconcile net income to net cash |
|||||||||||
provided
by operating activities |
||||||||||||
Provision
for credit losses |
33,000 | 24,000 | ||||||||||
Depreciation
and amortization of premises and equipment |
9,646 | 10,172 | ||||||||||
Amortization
of capitalized servicing rights |
11,449 | 8,275 | ||||||||||
Amortization
of core deposit and other intangible assets |
11,598 | 13,543 | ||||||||||
Provision
for deferred income taxes |
(12,476 | ) | (12,901 | ) | ||||||||
Asset
write-downs |
144 | 114 | ||||||||||
Net (gain)
loss on sales of assets |
228 | (310 | ) | |||||||||
Net
change in accrued interest receivable, payable |
347 | 3,064 | ||||||||||
Net change
in other accrued income and expense |
46,306 | 60,574 | ||||||||||
Net change
in loans held for sale |
157,332 | 190,083 | ||||||||||
Net change
in trading account assets and liabilities |
20 | (991 | ) | |||||||||
Net
cash provided by operating activities |
374,132 | 409,200 | ||||||||||
Cash flows
from |
Proceeds
from sales of investment securities |
|||||||||||
investing activities |
Available
for sale |
887 | 6,919 | |||||||||
Other |
19,112 | 5,506 | ||||||||||
Proceeds
from maturities of investment securities |
||||||||||||
Available
for sale |
805,631 | 209,741 | ||||||||||
Held to
maturity |
10,290 | 14,606 | ||||||||||
Purchases
of investment securities |
||||||||||||
Available
for sale |
(992,824 | ) | (57,206 | ) | ||||||||
Held
to maturity |
(14,329 | ) | (12,869 | ) | ||||||||
Other |
(30,000 | ) | (22,485 | ) | ||||||||
Additions
to capitalized servicing rights |
(14,500 | ) | (22,599 | ) | ||||||||
Net
increase in loans and leases |
(684,294 | ) | (162,104 | ) | ||||||||
Capital
expenditures, net |
(3,044 | ) | (2,510 | ) | ||||||||
Other,
net |
4,217 | (43,310 | ) | |||||||||
Net
cash used by investing activities |
(898,854 | ) | (86,311 | ) | ||||||||
Cash
flows from |
Net
increase in deposits |
259,552 | 44,190 | |||||||||
financing
activities |
Net decrease
in short-term borrowings |
(1,042,370 | ) | (902,870 | ) | |||||||
Proceeds
from long-term borrowings |
999,568 | 700,000 | ||||||||||
Payments
on long-term borrowings |
(101,760 | ) | (51,786 | ) | ||||||||
Purchases
of treasury stock |
— | (99,317 | ) | |||||||||
Dividends
paid - common |
(27,701 | ) | (23,231 | ) | ||||||||
Other,
net |
(3,806 | ) | 19,269 | |||||||||
Net cash
provided (used) by financing activities |
83,483 | (313,745 | ) | |||||||||
Net
increase (decrease) in cash and cash equivalents |
(441,239 | ) | 9,144 | |||||||||
Cash and
cash equivalents at beginning of period |
1,284,131 | 1,006,750 | ||||||||||
Cash and
cash equivalents at end of period |
$ | 842,892 | 1,015,894 | |||||||||
Supplemental |
Interest
received during the period |
$ | 431,148 | 459,624 | ||||||||
disclosure
of cash |
Interest
paid during the period |
115,746 | 154,498 | |||||||||
flow
information |
||||||||||||