Title: The Antithesis of Flash: "Consistent, Low-Profile, Disciplined." Hardly the Stuff to Make Wall Street Flutter, but Now Quiet M&T Bancorp Looks like the Right Stuff. (Management Profile)
Abstract: As the unintended inspiration for many a standup comic's jokes, Buffalo, N. Y. may be described as the Rodney Dangerfield of U.S. cities--it gets no respect. Indeed, as a banking headquarters city, it isn't exactly New York or Chicago, or even Charlotte, in terms of image or allure. But when it comes to financial savvy, Buffalo may have the last laugh yet. While some banks grabbed headlines for blockbuster deals or technological innovations during the past decade, Buffalo-based MT a management-as-owners mindset; and a commitment to customers and share-holders. Eschewing growth for growth's sake, M&T kept on its own designated course, nixing flashiness for consistency. As the high-flying 1990s ended and left some banks reeling from binge-buying sprees or botched integrations, M&T was unencumbered in its course. When circumstances were right to make the acquisitions it wanted, M&T did. In October 2000 M&T acquired Keystone Financial, Inc., which operated banking offices in Pennsylvania, Maryland, and West Virginia. In February 2001, M&T purchased Premier National Bancorp, which expanded its position in New York's mid-Hudson Valley region. Significantly, these acquisitions increased the size of M&T assets by a third. But while much of 2001 was focused on integration, M&T continued to post consistent financial results. Using the GAAP-basis method of reporting, M&T's diluted earnings per share for last year improved to $3.82, a rise of 11% from $3.44 in 2000. Net income was $378 million, a 32% increase from 2000's net income of $286 million. Expressed as a return on average total assets, the 2001 result came in at 1.23%, up from the 1.21% ratio in 2000. While GAAP-basis return on average stockholders' equity dipped to 12.78% compared to 14.07% in 2000, it was still respectable. Historically, M&T has reported cash earnings in order to allow comparability of its operating performance with other companies that completed bank acquisitions but which, unlike M&T, used the pooling-of-interests method of accounting. Expressed in this manner, 2001 diluted cash earnings rose 13% per share from $4.31 to $4.87-the eighth consecutive year of double-digit growth in percentage terms. In the aggregate, cash net income jumped 34% from $359 million in 2000 to $482 million in 2001. Cash net income, measured in relation to average tangible assets, improved to 1.63% from 1.56% one year earlier. As a percentage of average tangible equity, cash net income in 2001 was 28.50%, up from 27.65% in 2000. M&T officials say that the use of the purchase accounting method for acquisitions enabled the company to use part cash in its transactions rather than all stock, which minimizes the dilution of the company's stock and earnings per share. While economic uncertainty denoted much of 2002, M&T's second-quarter earnings further reflected the company's discipline. Earnings rose to $121 million or $1.26 per share, compared with $95 million or 94 cents per share a year earlier. Excluding amortization of goodwill, acquisition costs and other items, earnings rose to $130 million or $1.35 per share, compared with $120 million or $1.19 per share a year earlier. Growth in the consumer loan portfolio--particularly home equity lines of credit and automobile loans--contributed to favorable second-quarter results. While many uncertainties exist in the economies of the markets that M&T serves, chief financial officer Michael Pinto said that the company believes that full-year results will meet or exceed analysts' current estimates of $5.03 of diluted GAAP earnings per share. So how has M&T kept on track? …
Publication Year: 2002
Publication Date: 2002-09-01
Language: en
Type: article
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