M&T Bank 10-Q/A 2023-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

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)

Registrant's telephone number, including area code:

(716) 635-4000

Securities registered pursuant to Section 12(b) of the Act:

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 ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Number of shares of the registrant's Common Stock, $0.50 par value, outstanding as of the close of business on May 1, 2023: 165,869,832 shares.

Explanatory Note

This Amendment No. 1 amends M&T Bank Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, which was filed on May 5, 2023. This Amendment No. 1 is being filed on May 15, 2023 solely for the purpose of correcting a typographical error in Item 1, note 12 of Notes to Financial Statements – Fair Value Measurements in the table included within the "Disclosures of fair value of financial instruments" section on page 38. The estimated fair value of time deposits in the table presenting the carrying amounts and estimated fair value, in thousands, for financial instrument assets (liabilities) as of March 31, 2023 was incorrectly presented without parentheses. The parentheses have been added for time deposits in both the Estimated Fair Value column and the Level 2 column and correctly presented as $(12,808,615) in each column. Except for these corrections, there have been no changes in any of the financial information or other information contained in the original Form 10-Q. This Amendment No. 1 speaks as of the original filing date of the Form 10-Q and does not reflect events that may have occurred subsequent to the original filing date.

The entire Form 10-Q as amended, is included herein.

M&T BANK CORPORATION

FORM 10-Q

For the Quarterly Period Ended March 31, 2023

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PART I. FINANCIAL INFORMATION

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (Unaudited)

See accompanying notes to financial statements.

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M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

See accompanying notes to financial statements.

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M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

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Overview

M&T Bank Corporation (“M&T”) recorded net income of $702 million in the first quarter of 2023, compared with $362 million in the corresponding quarter of 2022 and $765 million in the fourth quarter of 2022. Diluted and basic earnings per common share were $4.01 and $4.03, respectively, in the recent quarter, $2.62 and $2.63, respectively, in the first quarter of 2022 and $4.29 and $4.32, respectively, in the fourth quarter of 2022. M&T's first quarter 2023 and fourth quarter 2022 results each reflect a full-quarter impact of its April 1, 2022 acquisition of People's United Financial, Inc. ("People's United"). The after-tax impact of merger-related expenses was $13 million ($17 million pre-tax) or $.10 of basic and diluted earnings per common share in the year-earlier quarter and $33 million ($45 million pre-tax) or $.20 of basic and diluted earnings per common share in the fourth quarter of 2022. Merger-related expenses incurred in 2022 and associated with the People's United acquisition generally consisted of professional services, temporary help fees and other costs associated with actual or planned conversions of systems and/or integration of operations and the introduction of M&T to its new customers, costs related to terminations of existing contractual arrangements to purchase various services, severance, travel costs, and, in the second quarter of 2022, an initial provision for credit losses on loans deemed to be purchased credit deteriorated ("PCD") on the April 1, 2022 acquisition date of People's United. M&T and its consolidated subsidiaries (“the Company”) did not incur merger-related expenses in the first quarter of 2023.

Net income expressed as an annualized rate of return on average total assets for the Company in 2023's first quarter was 1.40%, compared with 0.97% in the year-earlier quarter and 1.53% in the fourth quarter of 2022. The annualized rate of return on average common shareholders’ equity was 11.74% in the recent quarter, compared with 8.55% in the first quarter of 2022 and 12.59% in the fourth quarter of 2022.

On April 1, 2022, M&T closed the acquisition of People's United resulting in the issuance of 50,325,004 common shares. Pursuant to the terms of the merger agreement, People’s United shareholders received consideration valued at .118 of an M&T common share in exchange for each common share of People’s United. The purchase price totaled approximately $8.4 billion (with the price based on M&T’s closing price of $164.66 per share as of April 1, 2022). Additionally, People’s United outstanding preferred stock was converted into new shares of Series H preferred stock of M&T.

The People's United transaction has been accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair value on the acquisition date. The Company recorded assets acquired of $64.2 billion, including $35.8 billion of loans and leases and $11.6 billion of investment securities, and liabilities assumed totaling $55.5 billion, including $53.0 billion of deposits. The transaction added $8.4 billion to M&T's common shareholders' equity and $261 million to preferred equity. In connection with the acquisition the Company recorded $3.9 billion of goodwill and $261 million of core deposit and other intangible assets. The acquisition of People's United formed a banking franchise with approximately $200 billion in assets serving communities in the Northeast and Mid-Atlantic from Maine to Virginia, including Washington, D.C.

In December 2022 the Company announced it had entered into an agreement to sell its Collective Investment Trust ("CIT") business to a private equity firm. The transaction was completed in April 2023. The Company will recognize a pre-tax gain on the sale of approximately $225 million in the second quarter of 2023. In the fourth quarter of 2022, M&T completed the sale of M&T Insurance Agency, Inc. ("MTIA"), a wholly owned insurance subsidiary of M&T Bank (M&T's principal bank subsidiary), resulting in a gain of $136 million recorded in other revenues from operations. Also in the fourth quarter, the Company made a $135 million contribution to The M&T Charitable Foundation, recorded in other costs of operations. The operations of those businesses did not have a material impact on M&T's net income.

M&T repurchased 3,838,157 shares of its common stock in accordance with its capital plan during the recent quarter at an average cost per share of $154.76 resulting in a total cost, including the share repurchase excise tax, of

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$600 million, compared with the repurchase of 3,664,887 shares at an average cost per share of $163.72 and total cost of $600 million in the previous three months. No share repurchases occurred in the first quarter of 2022.

Supplemental Reporting of Non-GAAP Results of Operations

M&T consistently provides supplemental reporting of its results on a “net operating” or “tangible” basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and gains (when realized) and expenses (when incurred) associated with merging acquired operations into the Company, since such items are considered by management to be “nonoperating” in nature. Although “net operating income” as defined by M&T is not a GAAP measure, M&T’s management believes that this information helps investors understand the effect of acquisition activity in reported results.

Net operating income aggregated $715 million in the first quarter of 2023, compared with $376 million in the year-earlier quarter. Diluted net operating earnings per common share for the first three months of 2023 and 2022 were $4.09 and $2.73, respectively. Net operating income and diluted net operating earnings per common share were $812 million and $4.57, respectively, in the fourth 2022 quarter.

Net operating income in the recent quarter expressed as an annualized rate of return on average tangible assets was 1.49%, compared with 1.04% in the first quarter of 2022 and 1.70% in 2022’s fourth quarter. Net operating income represented an annualized return on average tangible common equity of 19.00% in the first quarter of 2023, 12.44% in the year-earlier quarter and 21.29% in the fourth quarter of 2022.

Reconciliations of GAAP amounts with corresponding non-GAAP amounts are provided in table 2.

Taxable-equivalent Net Interest Income

Net interest income expressed on a taxable-equivalent basis was $1.83 billion in the first quarter of 2023, more than double the $907 million recorded in the year-earlier quarter. That increase reflects the impact of $45.4 billion in additional average earning assets, including assets obtained in the People's United transaction, and a 139 basis point (hundredths of one percent) expansion of the net interest margin, or taxable-equivalent net interest income expressed as an annualized percentage of average earning assets, to 4.04% in the recent quarter from 2.65% in the year-earlier quarter. That increase reflected a rising interest rate environment resulting from actions taken by the Federal Reserve to mitigate inflationary pressures on the U.S. economy. The Federal Reserve raised its target Federal funds rate through multiple hikes totaling 4.50% since the end of the first quarter of 2022 that led to higher yields on loans, deposits at the Federal Reserve Bank ("FRB") of New York and investment securities, partially offset by higher rates paid on interest-bearing deposits and borrowings. Taxable-equivalent net interest income in the recent quarter was little changed from $1.84 billion in the fourth quarter of 2022. The modest decline reflects two fewer days in the first quarter of 2023 as compared with 2022's final quarter while the impact of a sligh

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Incorporated by reference to the discussion contained under the caption “Taxable-equivalent Net Interest Income” in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

(a) Evaluation of disclosure controls and procedures. Based upon their evaluation of the effectiveness of M&T’s disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)), René F. Jones, Chairman of the Board and Chief Executive Officer, and Darren J. King, Senior Executive Vice President and Chief Financial Officer, concluded that M&T’s disclosure controls and procedures were effective as of March 31, 2023.

(b) Changes in internal control over financial reporting. M&T regularly assesses the adequacy of its internal control over financial reporting and enhances its controls in response to internal control assessments and internal and external audit and regulatory recommendations. No changes in internal control over financial reporting have been identified in connection with the evaluation of disclosure controls and procedures during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, M&T’s internal control over financial reporting. Management has excluded processes and controls of People’s United that have not yet been converted to M&T's systems or processes from its assessment of internal control over financial reporting for the quarter ended March 31, 2023. Assets and liabilities associated with the People's United transaction that have not yet been converted to M&T's systems or processes as of March 31, 2023 include loans and leases of $3.2 billion, other assets of $12 million and other liabilities of $59 million. Approximately $56 million of total revenues for the three months ended March 31, 2023 was contributed from business activities of People's United that have not yet been converted to M&T's systems or processes.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

M&T and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings and other matters in which claims for monetary damages are asserted. On an on-going basis management, after consultation with legal counsel, assesses the Company’s liabilities and contingencies in connection with such proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability, was between $0 and $25 million as of March 31, 2023. Although the Company does not believe that the outcome of pending legal matters will be material to the Company’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.

There have been no material changes in risk factors relating to M&T to those disclosed in response to Item 1A. to Part I of Form 10-K for the year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) – (b) Not applicable.

(c)

(1)

The total number of shares purchased during the periods indicated includes shares purchased as part of publicly announced programs and/or shares deemed to have been received from employees who exercised stock options by attesting to previously acquired common shares in satisfaction of the exercise price or shares received from employees upon the vesting of restricted stock awards in satisfaction of applicable tax withholding obligations, as is permitted under M&T’s stock-based compensation plans.

(2)

In July 2022, M&T's Board of Directors authorized a program under which $3.0 billion of common shares may be repurchased with the exact number, timing, price and terms of such repurchases to be determined at the discretion of management and subject to all regulatory limitations.

Item 3. Defaults Upon Senior Securities.

(None.)

Item 4. Mine Safety Disclosures.

(Not applicable.)

(None.)

The following exhibits are filed as a part of this report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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