M&T BANK CORP - 10-Q Quarterly Report

x Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

o Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

One M & T Plaza Buffalo, New York 14203
(Address of principal executive offices)(Zip 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.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (Unaudited)


	September 30,			December 31,
Dollars in Thousands, Except Per Share	2004			2003

Assets
Cash and due from banks	$	1,754,040			1,877,494
Money-market assets
Interest-bearing deposits at banks		8,631			13,194
Federal funds sold and agreements to resell securities		6,029			22,288
Trading account		158,575			214,833

Total money-market assets		173,235			250,315

Investment securities
Available for sale (cost: $8,011,696 at September 30, 2004; $6,800,341 at December 31, 2003)		8,047,513			6,862,937
Held to maturity (market value: $99,630 at September 30, 2004; $108,053 at December 31, 2003)		96,803			104,872
Other (market value: $292,972 at September 30, 2004; $291,341 at December 31, 2003)		292,972			291,341

Total investment securities		8,437,288			7,259,150

Loans and leases		38,199,813			36,037,598
Unearned discount		(249,497	)		(265,163	)
Allowance for credit losses		(626,344	)		(614,058	)

Loans and leases, net		37,323,972			35,158,377

Premises and equipment		371,075			398,971
Goodwill		2,904,081			2,904,081
Core deposit and other intangible assets		181,814			240,830
Accrued interest and other assets		1,741,395			1,736,863

Total assets	$	52,886,900			49,826,081

Liabilities
Noninterest-bearing deposits	$	8,416,476			8,411,296
NOW accounts		712,736			1,738,427
Savings deposits		14,925,788			14,118,521
Time deposits		7,135,632			6,637,249
Deposits at foreign office		3,785,067			2,209,451

Total deposits		34,975,699			33,114,944

Federal funds purchased and agreements to repurchase securities		5,039,431			3,832,182
Other short-term borrowings		611,102			610,064
Accrued interest and other liabilities		834,860			1,016,256
Long-term borrowings		5,715,508			5,535,425

Total liabilities		47,176,600			44,108,871

Stockholders' equity
Preferred stock, $1 par, 1,000,000 shares authorized, none outstanding		—			—
Common stock, $.50 par, 250,000,000 shares authorized, 120,396,611 shares issued at September 30, 2004; 120,106,490 shares issued at December 31, 2003		60,198			60,053
Common stock issuable, 108,140 shares at September 30, 2004; 124,303 shares at December 31, 2003		5,753			6,326
Additional paid-in capital		2,903,718			2,888,963
Retained earnings		3,125,018			2,736,215
Accumulated other comprehensive income, net		85			25,653
Treasury stock — common, at cost — 4,230,587 shares at September 30, 2004; none at December 31, 2003		(384,472	)		—

Total stockholders’ equity		5,710,300			5,717,210

Total liabilities and stockholders’ equity	$	52,886,900			49,826,081

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30				September 30
In Thousands, Except Per Share	2004		2003		2004		2003

Interest income
Loans and leases, including fees	$	499,462		503,902	$	1,451,631		1,407,663
Money-market assets
Deposits at banks		14		77		45		132
Federal funds sold and agreements to resell securities		27		25		83		1,815
Trading account		73		182		307		430
Investment securities Fully taxable		80,312		56,252		227,716		154,283
Exempt from federal taxes		3,164		3,699		10,003		11,769

Total interest income		583,052		564,137		1,689,785		1,576,092

Interest expense
NOW accounts		242		1,044		1,515		2,657
Savings deposits		22,037		25,154		67,032		76,422
Time deposits		40,121		39,625		112,752		122,561
Deposits at foreign office		11,940		3,203		25,767		9,208
Short-term borrowings		19,338		12,655		44,493		38,388
Long-term borrowings		50,093		51,858		145,846		149,401

Total interest expense		143,771		133,539		397,405		398,637

Net interest income		439,281		430,598		1,292,380		1,177,455
Provision for credit losses		17,000		34,000		67,000		103,000

Net interest income after provision for credit losses		422,281		396,598		1,225,380		1,074,455

Other income
Mortgage banking revenues		32,064		38,782		90,456		117,161
Service charges on deposit accounts		93,849		90,927		273,278		220,158
Trust income		33,713		32,314		101,875		80,153
Brokerage services income		13,360		13,320		40,458		37,729
Trading account and foreign exchange gains		3,325		4,666		12,292		10,996
Gain on sales of bank investment securities		—		58		2,512		541
Other revenues from operations		68,614		51,527		184,539		130,600

Total other income		244,925		231,594		705,410		597,338

Other expense
Salaries and employee benefits		205,003		214,118		608,400		543,673
Equipment and net occupancy		42,686		48,450		134,869		123,497
Printing, postage and supplies		8,103		9,092		26,489		27,031
Amortization of core deposit and other intangible assets		18,619		22,538		59,017		56,807
Other costs of operations		132,511		102,202		325,321		318,817

Total other expense		406,922		396,400		1,154,096		1,069,825

Income before taxes		260,284		231,792		776,694		601,968
Income taxes		73,843		75,329		246,378		194,927

Net income	$	186,441		156,463	$	530,316		407,041


Net income per common share
Basic	$	1.59		1.31	$	4.48		3.68
Diluted		1.56		1.28		4.39		3.59
Cash dividends per common share	$	.40		.30	$	1.20		.90

Average common shares outstanding
Basic		116,897		119,727		118,281		110,607
Diluted		119,665		122,593		120,874		113,441

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)


	Nine Months Ended September 30
In Thousands	2004			2003

Cash flows from operating activities
Net income	$	530,316			407,041
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses		67,000			103,000
Depreciation and amortization of premises and equipment		47,188			44,876
Amortization of capitalized servicing rights		43,482			37,151
Amortization of core deposit and other intangible assets		59,017			56,807
Provision for deferred income taxes		(106,164	)		(35,806	)
Asset write-downs		587			376
Net gain on sales of assets		(6,491	)		(609	)
Net change in accrued interest receivable, payable		(16,965	)		(4,797	)
Net change in other accrued income and expense		(22,845	)		116,740
Net change in loans held for sale		(55,088	)		201,695
Net change in trading account assets and liabilities		17,868			(18,995	)

Net cash provided by operating activities		557,905			907,479

Cash flows from investing activities
Proceeds from sales of investment securities
Available for sale		233,252			71,146
Other		19,518			146,573
Proceeds from maturities of investment securities
Available for sale		2,302,152			1,777,298
Held to maturity		112,657			76,461
Purchases of investment securities
Available for sale		(3,738,136	)		(2,550,587	)
Held to maturity		(104,620	)		(90,727	)
Other		(21,149	)		(149,327	)
Additions to capitalized servicing rights		(41,545	)		(46,938	)
Net increase in loans and leases		(2,183,748	)		(1,450,204	)
Acquisitions, net of cash and cash equivalents acquired:
Banks and bank holding companies		—			2,134,822
Capital expenditures, net		(19,771	)		(23,310	)
Other, net		37,484			86,512

Net cash used by investing activities		(3,403,906	)		(18,281	)

Cash flows from financing activities
Net increase (decrease) in deposits		1,871,998			(169,614	)
Net increase (decrease) in short-term borrowings		1,208,312			(136,941	)
Proceeds from long-term borrowings		700,660			1,299,568
Payments on long-term borrowings		(515,594	)		(823,611	)
Purchases of treasury stock		(458,642	)		—
Dividends paid — common		(141,376	)		(99,403	)
Other, net		40,930			37,642

Net cash provided by financing activities		2,706,288			107,641

Net increase (decrease) in cash and cash equivalents	$	(139,713	)		996,839
Cash and cash equivalents at beginning of period		1,899,782			1,284,131
Cash and cash equivalents at end of period	$	1,760,069			2,280,970

Supplemental disclosure of cash flow information
Interest received during the period	$	1,662,463			1,590,377
Interest paid during the period		416,952			432,003
Income taxes paid during the period		368,638			182,398

Supplemental schedule of noncash investing and financing activities
Real estate acquired in settlement of loans	$	12,212			13,755
Acquisition of banks and back holding companies:
Common stock issued		—			1,993,956
Fair value of:
Assets acquired (noncash)		—			14,355,837
Liabilities assumed		—			14,496,703


													Accumulated
					Common		Additional						Other
	Preferred		Common		Stock		Paid-in			Retained			Comprehensive			Treasury
In Thousands, Except Per Share	Stock		Stock		Issuable		Capital			Earnings			Income, Net			Stock			Total

2003
Balance — January 1, 2003	$	—		48,570		6,190		1,192,998			2,297,848			54,772			(391,899	)		3,208,479
Comprehensive income:
Net income		—		—		—		—			407,041			—			—			407,041
Other comprehensive income, net of tax:
Unrealized losses on investment securities, net of reclassification adjustment		—		—		—		—			—			(14,746	)		—			(14,746	)
Unrealized gains on cash flow hedges, net of reclassification adjustment		—		—		—		—			—			622			—			622

																				392,917
Acquisition of Allfirst Financial Inc. — common stock issued		—		10,969		—		1,617,034			—			—			365,953			1,993,956
Repayment of management stock ownership program receivable		—		—		—		22			—			—			—			22
Stock-based compensation plans:
Stock option and purchase plans:
Compensation expense		—		—		—		31,658			—			—			—			31,658
Exercises		—		324		—		17,600			—			—			25,288			43,212
Directors’ stock plan		—		3		—		485			—			—			175			663
Deferred compensation plans, net, including dividend equivalents		—		1		116		(98	)		(114	)		—			483			388
Common stock cash dividends — $.90 per share		—		—		—		—			(99,403	)		—			—			(99,403	)

Balance — September 30, 2003	$	—		59,867		6,306		2,859,699			2,605,372			40,648			—			5,571,892

2004
Balance — January 1, 2004	$	—		60,053		6,326		2,888,963			2,736,215			25,653			—			5,717,210
Comprehensive income:
Net income		—		—		—		—			530,316			—			—			530,316
Other comprehensive income, net of tax:
Unrealized losses on investment securities, net of reclassification adjustment		—		—		—		—			—			(25,568	)		—			(25,568	)

																				504,748
Purchases of treasury stock		—		—		—		—			—			—			(458,642	)		(458,642	)
Stock-based compensation plans:
Stock option and purchase plans:
Compensation expense		—		—		—		36,045			—			—			—			36,045
Exercises		—		144		—		(20,554	)


Table of Contents of Information Required in Report		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
	CONSOLIDATED BALANCE SHEET – September 30, 2004 and December 31, 2003		3
	CONSOLIDATED STATEMENT OF INCOME – Three and Nine Months Ended September 30, 2004 and 2003		4
	CONSOLIDATED STATEMENT OF CASH FLOWS – Nine Months Ended September 30, 2004 and 2003		5
	CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY – Nine Months Ended September 30, 2004 and 2003		6
	CONSOLIDATED SUMMARY OF CHANGES IN ALLOWANCE FOR CREDIT LOSSES – Nine Months Ended September 30, 2004 and 2003		6
	NOTES TO FINANCIAL STATEMENTS		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.			19
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			46
Item 4. Controls and Procedures.			46
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.			46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			46
Item 3. Defaults Upon Senior Securities.			47
Item 4. Submission of Matters to a Vote of Security Holders.			47
Item 5. Other Information.			47
Item 6. Exhibits.			47
SIGNATURES			48
EXHIBIT INDEX			48
Exhibit 31.1 Certification
Exhibit 31.2 Certification
Exhibit 32.1 Certification
Exhibit 32.2 Certification


New York (State or other jurisdiction of incorporation or organization)		16-0968385 (I.R.S. Employer Identification No.)


YES x		NO o


YES x		NO o

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