M&T Bank Corporation — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; comparisons are principally with 2022. M&T is a regional banking and financial-services holding company headquartered in Buffalo, New York. Its businesses include commercial and retail banking, trust, wealth management, mortgage banking, and equipment finance. At year-end, consolidated assets were $208.3 billion and the company employed 22,223 people. The 2023 results include a full year of People’s United operations, compared with nine months in 2022.
Financial results and position
| Metric | 2023 | 2022 |
|---|---|---|
| Net interest income, GAAP | $7.115 billion | $5.822 billion |
| Net interest income, taxable-equivalent basis | $7.169 billion | $5.861 billion |
| Net interest margin | 3.83% | 3.39% |
| Other income | $2.528 billion | $2.357 billion |
| Net income | $2.741 billion | $1.992 billion |
| Diluted earnings per common share | $15.79 | $11.53 |
| Provision for credit losses | $645 million | $517 million |
| Other expense | $5.379 billion | $5.050 billion |
| Return on average assets | 1.33% | 1.05% |
| Return on average common equity | 11.06% | 8.67% |
Total revenue, calculated as GAAP net interest income plus other income, was $9.643 billion, up from $8.179 billion. The company’s non-GAAP net operating income was $2.789 billion, with diluted net operating EPS of $16.08; these measures exclude specified merger costs and intangible-asset amortization.
- Balance sheet: Total assets were $208.3 billion, versus $200.7 billion. Loans and leases, net, were $131.9 billion, versus $129.6 billion. Consolidated deposits were $163.3 billion, versus $163.5 billion, while shareholders’ equity was $27.0 billion, versus $25.3 billion.
- Funding and debt: Year-end short-term borrowings were $5.3 billion and long-term borrowings $8.2 billion, compared with $3.6 billion and $4.0 billion, respectively, in 2022. Average interest-bearing liability cost rose to 2.60% from 0.45%, reflecting higher rates and deposit competition.
- Liquidity: Available liquidity sources totaled $78.3 billion. Uninsured deposits were estimated at $67.0 billion, including $10.7 billion collateralized; available sources equaled approximately 139% of uninsured deposits not collateralized. Parent-company liquidity covered projected cash outflows for more than 24 months, without reliance on subsidiary dividends or external financing.
- Capital: Consolidated CET1 was 10.98% at year-end, versus an 8.5% effective requirement that includes the 4.0% stress capital buffer. M&T’s total equity-to-assets ratio was 12.94%. The company reported $459 million of accumulated other comprehensive losses, net of tax.
- Cash flows: Operating activities provided $3.905 billion; investing activities used $7.874 billion; financing activities provided $4.180 billion. Cash, cash equivalents, and restricted cash increased $211 million to $1.731 billion.
Material changes versus 2022
- Net income rose 38% and diluted EPS rose 37%. Higher rates widened net interest margin and increased asset yields, but also raised deposit and borrowing costs. The year-over-year comparison also benefited from an additional quarter of People’s United operations.
- Net interest income increased 22% on a taxable-equivalent basis. Average earning assets increased to $187.0 billion from $172.8 billion; average loans and leases rose 11% to $132.7 billion.
- Average noninterest-bearing deposits fell 19% to $55.5 billion. Management cited customer shifts to interest-bearing products and off-balance-sheet sweep accounts, as well as lower trust-related deposits. Average brokered deposits rose substantially, including brokered time deposits.
- Credit costs and charge-offs increased: provision for credit losses rose to $645 million, and net charge-offs increased to $441 million from $160 million. The allowance for credit losses was $2.129 billion, or 1.59% of loans and leases, compared with $1.925 billion, or 1.46%.
- Credit indicators were mixed. Nonaccrual loans declined to $2.166 billion from $2.439 billion, and nonperforming assets to 1.64% of loans and leases and foreclosed assets from 1.88%. However, criticized commercial and industrial and commercial real estate loans increased to $12.6 billion, or 14.0% of those loan balances, from $10.7 billion, or 12.3%. Criticized investor-owned CRE loans rose to $8.8 billion, 27% of that portfolio, from $7.9 billion, 22%.
- Other expense included a $197 million FDIC special assessment recorded in Q4. This partly offset a $225 million pre-tax gain from the April 2023 sale of the CIT business. M&T incurred no merger-related expenses in 2023; 2022 included $338 million of merger-related expense.
- In Q4 2023, M&T realigned reporting into Commercial Bank, Retail Bank, and Institutional Services and Wealth Management; prior segment results were recast. It also reclassified most owner-occupied CRE loans as commercial and industrial loans.
Outlook, commentary, risks, and unusual items
- No formal earnings or financial guidance is provided in the supplied filing text. Management’s year-end credit-loss assumptions included modestly higher unemployment, slower GDP growth, and declining residential and commercial real estate values. Management said it considered the allowance appropriate, while noting that actual outcomes may differ from forecasts.
- Commercial real estate is a key risk area. Management cited higher interest rates, property-value declines, vacancies, refinancing challenges, and pressure on borrower debt-service coverage, particularly for office, retail, healthcare, hotel, multifamily, and construction exposures. Investor-owned CRE criticized loans had a weighted-average LTV of approximately 61%.
- Interest-rate changes, deposit retention and pricing, and liquidity are material risks. Management’s year-end model estimated first-year net interest income would decrease $18 million under a +200-basis-point parallel rate shock and decrease $83 million under a -200-basis-point shock; these are scenario estimates, not forecasts.
- The company recorded the estimated $197 million FDIC special assessment in Q4 2023, with a $146 million after-tax impact, and a $225 million pre-tax CIT divestiture gain, with a $157 million after-tax impact. A prior-year MTIA sale generated a $136 million pre-tax gain in 2022.
- Regulatory proposals could raise capital, liquidity, compliance, or long-term-debt costs. M&T estimated the proposed capital rules could increase risk-weighted assets by a mid-single-digit percentage; the final effect and timing are uncertain.
- Legal proceedings are ongoing. Beyond recorded liabilities, the aggregate range of reasonably possible losses was estimated at $0–$25 million; management said outcomes could still materially affect results in a particular future period.
- The filing describes a 2023 MOVEit vendor incident in which certain customer information held by external service providers was compromised; M&T said its internal systems were not compromised or at risk from that incident. The filing states the company was not aware of material losses from cybersecurity incidents.
- PricewaterhouseCoopers LLP gave an unqualified opinion on the financial statements and internal control over financial reporting; management also concluded disclosure controls and internal control over financial reporting were effective at year-end.
Most important facts for investors to verify
- Whether deposit balances and mix stabilize, and how continued deposit repricing affects funding costs, net interest margin, and liquidity.
- Trends in criticized, nonaccrual, and charged-off CRE loans—especially office, retail, healthcare, multifamily, and construction—and the adequacy of related reserves.
- How much 2023 earnings depended on the CIT sale gain and the FDIC special assessment, and how recurring earnings compare with management’s non-GAAP measures.
- Actual capital ratios and distribution capacity relative to the stress capital buffer, including any effects of final regulatory capital or long-term-debt rules.
- Uninsured deposit levels, collateralization, liquidity availability, brokered-deposit maturities, and borrowing costs.
- Reconcile year-end subsidiary-bank deposit figures with consolidated deposits: the filing’s business discussion includes a subsidiary-bank deposit figure that does not align with the consolidated balance-sheet total.