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 M&T Bank Corporation Announces 2017 Fourth Quarter And Full-Year Results
   Thursday, January 18, 2018 7:04:00 AM ET

M&T Bank Corporation ("M&T") (MTB ) today reported its results of operations for 2017.

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GAAP Results of Operations. Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") for the fourth quarter of 2017 were $2.01, up 2% from $1.98 in the similar 2016 quarter. GAAP-basis net income in the recent quarter aggregated $322 million, compared with $331 million in the final quarter of 2016. Diluted earnings per common share and GAAP-basis net income were $2.21 and $356 million, respectively, in the third quarter of 2017. GAAP-basis net income for the fourth quarter of 2017 expressed as an annualized rate of return on average assets and average common shareholders’ equity was 1.06% and 8.03%, respectively, compared with 1.05% and 8.13%, respectively, in the year-earlier quarter and 1.18% and 8.89%, respectively, in the third quarter of 2017.

M&T’s financial results for the final quarter of 2017 reflected several notable items. The Tax Cuts and Jobs Act ("the Tax Act") was enacted on December 22, 2017, reducing the corporate Federal income tax rate from 35% to 21% and making other changes to U.S. corporate income tax laws. GAAP requires that the impact of the provisions of the Tax Act be accounted for in the period of enactment. Accordingly, the estimated incremental income tax expense recorded by M&T in the fourth quarter of 2017 related to the Tax Act was $85 million, representing $.56 of diluted earnings per common share. The additional expense was largely attributable to the reduction in carrying value of net deferred tax assets reflecting lower future tax benefits resulting from the lower corporate tax rate. Also during the recent quarter, M&T realized investment securities gains of $14 million (after-tax effect), or $.09 of diluted earnings per common share, largely resulting from the sale of a portion of M&T’s Fannie Mae and Freddie Mac preferred stock holdings. Finally, M&T contributed an additional $44 million to The M&T Charitable Foundation in the final 2017 quarter, reducing net income by $27 million, or $.18 of diluted earnings per common share. In the aggregate, these items lowered net income by $98 million, or $.65 per diluted common share.

Earnings Highlights
                                                                                        Change 4Q17 vs.
($ in millions, except per share data)                 4Q17       4Q16       3Q17       4Q16      3Q17
Net income                                             $  322     $  331     $  356        -2 %      -9  %
Net income available to common shareholders - diluted  $  302     $  308     $  336        -2 %      -10 %
Diluted earnings per common share                      $  2.01    $  1.98    $  2.21       2  %      -9  %
Annualized return on average assets                       1.06 %     1.05 %     1.18 %
Annualized return on average common equity                8.03 %     8.13 %     8.89 %

For the year ended December 31, 2017, diluted earnings per common share were $8.70, up 12% from $7.78 in 2016. GAAP-basis net income for 2017 aggregated $1.41 billion, 7% higher than $1.32 billion in 2016. Expressed as a rate of return on average assets and average common shareholders’ equity, GAAP-basis net income for 2017 was 1.17% and 8.87%, respectively, compared with 1.06% and 8.16%, respectively, in 2016.

Darren J. King, Executive Vice President and Chief Financial Officer, commented on M&T’s financial performance, "Financial results in 2017 highlight what was a successful year for M&T. Strong growth in net interest income, credit costs that were significantly below our historical norms, and well controlled expenses led to a 12% rise in earnings per common share for the year. Fourth quarter results were negatively impacted by the newly enacted tax legislation, but a lower corporate tax rate in the future should provide many benefits to M&T. We are proud to carry on the legacy of our long-time Chairman and Chief Executive Officer, Bob Wilmers, through investing in the communities we serve by contributing $50 million during 2017 to The M&T Charitable Foundation, the highest annual amount in our history."

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 expenses associated with merging acquired operations into M&T, since such items are considered by management to be "nonoperating" in nature. The amounts of such "nonoperating" expenses are presented in the tables that accompany this release. 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.

Diluted net operating earnings per common share were $2.04 in the fourth quarter of 2017, compared with $2.01 in the year-earlier quarter and $2.24 in the third quarter of 2017. Net operating income during the recent quarter was $327 million, compared with $336 million in the final quarter of 2016 and $361 million in 2017’s third quarter. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders’ equity, net operating income was 1.12% and 11.77%, respectively, in the recent quarter, compared with 1.10% and 11.93%, respectively, in the fourth quarter of 2016 and 1.25% and 13.03%, respectively, in the third quarter of 2017.

For the year ended December 31, 2017, diluted net operating earnings per common share were $8.82, up 9% from $8.08 in 2016. Net operating income in 2017 increased 5% to $1.43 billion from $1.36 billion in 2016. Expressed as a rate of return on average tangible assets and average tangible common shareholders’ equity, net operating income was 1.23% and 13.00%, respectively, in 2017 and 1.14% and 12.25%, respectively, in 2016.

Taxable-equivalent Net Interest Income. Net interest income expressed on a taxable-equivalent basis aggregated $980 million in the fourth quarter of 2017, up 11% from $883 million in the year-earlier quarter. That growth resulted predominantly from a widening of the net interest margin to 3.56% in the recent quarter from 3.08% in the final 2016 quarter. Taxable-equivalent net interest income in the recent quarter was 2% higher than $966 million in the third quarter of 2017. Contributing to that improvement were a 3 basis point widening of the net interest margin and an increase in average earning assets in the recent quarter as compared with the third quarter of 2017. Taxable-equivalent net interest income for the year ended December 31, 2017 aggregated $3.82 billion, up 9% from $3.50 billion in 2016. That improvement was predominantly the result of a widening of the net interest margin from 3.11% in 2016 to 3.47% in 2017.

Taxable-equivalent Net Interest Income
                                                                                    Change 4Q17 vs.
($ in millions)                           4Q17          4Q16          3Q17          4Q16      3Q17
Average earning assets                    $  109,412    $  114,254    $  108,642       -4 %      1  %
Net interest income - taxable-equivalent  $  980        $  883        $  966           11 %      2  %
Net interest margin                          3.56    %     3.08    %     3.53    %

Provision for Credit Losses/Asset Quality. The provision for credit losses was $31 million in the fourth quarter of 2017, compared with $62 million in the year-earlier quarter and $30 million in 2017’s third quarter. Net charge-offs of loans were $27 million during the recent quarter, compared with $49 million and $25 million in the fourth quarter of 2016 and the third quarter of 2017, respectively. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .12% and .22% in the final quarters of 2017 and 2016, respectively, and .11% in the third quarter of 2017. The provision for credit losses was $168 million for the year ended December 31, 2017, compared with $190 million in 2016. Net loan charge-offs during 2017 and 2016 totaled $140 million and $157 million, respectively, or .16% and .18%, respectively, of average loans outstanding.

Loans classified as nonaccrual totaled $883 million or 1.00% of total loans outstanding at December 31, 2017, compared with $920 million or 1.01% at December 31, 2016 and $869 million or .99% at September 30, 2017. Nonaccrual Hudson City-related residential real estate loans aggregated $215 million at December 31, 2017, compared with $190 million and $211 million at December 31, 2016 and September 30, 2017, respectively. Assets taken in foreclosure of defaulted loans totaled $112 million at December 31, 2017, compared with $139 million a year earlier and $111 million at September 30, 2017.

Allowance for Credit Losses. M&T regularly performs detailed analyses of individual borrowers and portfolios for purposes of assessing the adequacy of the allowance for credit losses. As a result of those analyses, the allowance for credit losses totaled $1.02 billion at December 31, 2017, compared with $989 million at December 31, 2016 and $1.01 billion at September 30, 2017. The allowance expressed as a percentage of outstanding loans was 1.16% at December 31, 2017, compared with 1.09% at December 31, 2016 and 1.15% at September 30, 2017.

Asset Quality Metrics
                                                                                           Change 4Q17 vs.
($ in millions)                                        4Q17        4Q16        3Q17        4Q16       3Q17
At end of quarter
Nonaccrual loans                                       $  883      $  920      $  869         -4  %      2  %
Real estate and other foreclosed assets                $  112      $  139      $  111         -20 %      1  %
Total nonperforming assets                             $  995      $  1,059    $  980         -6  %      1  %
Accruing loans past due 90 days or more (1)            $  244      $  301      $  261         -19 %      -6 %
Nonaccrual loans as % of loans outstanding                1.00  %     1.01  %     .99   %
Allowance for credit losses                            $  1,017    $  989      $  1,013       3   %      --
Allowance for credit losses as % of loans outstanding     1.16  %     1.09  %     1.15  %
For the period
Provision for credit losses                            $  31       $  62       $  30          -50 %      3  %
Net charge-offs                                        $  27       $  49       $  25          -45 %      9  %
Net charge-offs as % of average loans (annualized)        .12   %     .22   %     .11   %
(1) Excludes loans acquired at a discount.  Predominantly residential real estate loans.

Noninterest Income and Expense. Noninterest income totaled $484 million in the recent quarter, compared with $465 million in the fourth quarter of 2016 and $459 million in the third quarter of 2017. The recent quarter’s improvement as compared with the final 2016 quarter and 2017’s third quarter resulted largely from higher gains on investment securities and increased trust income.

Noninterest Income
                                                                       Change 4Q17 vs.
($ in millions)                             4Q17     4Q16     3Q17     4Q16       3Q17
Mortgage banking revenues                   $  96    $  98    $  97       -2  %      -1  %
Service charges on deposit accounts            108      105      109      3   %      -1  %
Trust income                                   130      122      125      6   %      4   %
Brokerage services income                      13       15       15       -16 %      -13 %
Trading account and foreign exchange gains     10       7        7        36  %      48  %
Gain on bank investment securities             21       2        --       --         --
Other revenues from operations                 106      116      106      -8  %      -1  %
Total other income                          $  484   $  465   $  459      4   %      5   %

Noninterest income aggregated $1.85 billion in 2017, up from $1.83 billion in 2016. Higher trust income, service charges on deposit accounts and credit-related fees in 2017 were the drivers of that increase.

Noninterest expense totaled $796 million in the fourth quarter of 2017, $769 million in the year-earlier quarter and $806 million in the third quarter of 2017. Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets and merger-related expenses, noninterest operating expenses were $789 million in the recent quarter, $760 million in the fourth quarter of 2016 and $798 million in 2017’s third quarter. The most significant factors for the rise in noninterest operating expenses in the recent quarter as compared with the final quarter of 2016 were increased contributions to The M&T Charitable Foundation and higher salaries and employee benefits expenses. The decline in noninterest operating expenses from the third quarter of 2017 resulted largely from the $50 million increase in the reserve for legal matters during the third quarter of 2017, largely offset by a $44 million increase in contributions to The M&T Charitable Foundation in 2017’s fourth quarter.

Noninterest Expense
                                                                                     Change 4Q17 vs.
($ in millions)                                           4Q17     4Q16     3Q17     4Q16       3Q17
Salaries and employee benefits                            $  403   $  393   $  399      2   %      1   %
Equipment and net occupancy                                  71       70       75       2   %      -6  %
Outside data processing and software                         50       44       46       14  %      9   %
FDIC assessments                                             24       29       24       -18 %      -1  %
Advertising and marketing                                    19       21       17       -8  %      11  %
Printing, postage and supplies                               9        9        9        -1  %      -2  %
Amortization of core deposit and other intangible assets     7        9        8        -23 %      -10 %
Other costs of operations                                    213      194      228      10  %      -7  %
Total other expense                                       $  796   $  769   $  806      3   %      -1  %

For the year ended December 31, 2017, noninterest expense aggregated $3.14 billion, compared with $3.05 billion in 2016. Noninterest operating expenses were $3.11 billion and $2.97 billion in 2017 and 2016, respectively. The higher level of such expenses in 2017 resulted largely from increased costs for salaries and employee benefits, higher charitable contributions and increases to the reserve for legal matters.

The efficiency ratio, or noninterest operating expenses divided by the sum of taxable-equivalent net interest income and noninterest income (exclusive of gains and losses from bank investment securities), measures the relationship of operating expenses to revenues. M&T’s efficiency ratio was 54.7% in the recent quarter, 56.4% in the year-earlier quarter and 56.0% in the third quarter of 2017. The efficiency ratio for the full year 2017 was 55.1%, improved from 56.1% in 2016.

Balance Sheet. M&T had total assets of $118.6 billion at December 31, 2017, compared with $123.4 billion at December 31, 2016. Loans and leases, net of unearned discount, aggregated $88.0 billion at the recent year-end, $2.9 billion or 3% below $90.9 billion a year earlier. Investment securities were $14.7 billion at the end of 2017, compared with $16.3 billion at December 31, 2016. Total deposits were $92.4 billion at the recent year-end and $95.5 billion at December 31, 2016.

Total shareholders’ equity was $16.3 billion at December 31, 2017 and $16.5 billion a year earlier, representing 13.70% and 13.35%, respectively, of total assets. Common shareholders’ equity was $15.0 billion, or $100.03 per share, at December 31, 2017, compared with $15.3 billion, or $97.64 per share, at December 31, 2016. Tangible equity per common share of $69.08 at December 31, 2017 was up 2% from $67.85 at December 31, 2016. Common shareholders’ equity per share and tangible equity per common share were $99.70 and $69.02, respectively, at September 30, 2017. In the calculation of tangible equity per common share, common shareholders’ equity is reduced by the carrying values of goodwill and core deposit and other intangible assets, net of applicable deferred tax balances. M&T estimates that the ratio of Common Equity Tier 1 to risk-weighted assets under regulatory capital rules was approximately 10.93% at December 31, 2017.

In accordance with its 2017 capital plan, M&T repurchased 1,343,356 shares of its common stock during the recent quarter at an average cost per share of $166.91, for a total cost of $224 million. During 2017, M&T repurchased a total of 7,369,105 shares of its common stock under the 2017 and 2016 capital plans at a total cost of $1.21 billion.

Conference Call. Investors will have an opportunity to listen to M&T’s conference call to discuss fourth quarter and full-year financial results today at 11:00 a.m. Eastern Time. Those wishing to participate in the call may dial (877) 780-2276. International participants, using any applicable international calling codes, may dial (973) 582-2700. Callers should reference M&T Bank Corporation or the conference ID #4178049. The conference call will be webcast live through M&T’s website at http://ir.mandtbank.com/events.cfm . A replay of the call will be available through Thursday, February 1, 2018 by calling (800) 585-8367, or (404) 537-3406 for international participants, and by making reference to ID #4178049. The event will also be archived and available by 7:00 p.m. today on M&T’s website at http://ir.mandtbank.com/events.cfm .

M&T is a financial holding company headquartered in Buffalo, New York. M&T’s principal banking subsidiary, M&T Bank, operates banking offices in New York, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia and the District of Columbia. Trust-related services are provided by M&T’s Wilmington Trust-affiliated companies and by M&T Bank.

Forward-Looking Statements. This news release contains forward-looking statements that are based on current expectations, estimates and projections about M&T’s business, management’s beliefs and assumptions made by management. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Future Factors") which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

Future Factors include changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; common shares outstanding; common stock price volatility; fair value of and number of stock-based compensation awards to be issued in future periods; the impact of changes in market values on trust-related revenues; legislation affecting the financial services industry as a whole, and M&T and its subsidiaries individually or collectively, including tax legislation; regulatory supervision and oversight, including monetary policy and capital requirements; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; increasing price and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of pending and future litigation and governmental proceedings, including tax-related examinations and other matters; continued availability of financing; financial resources in the amounts, at the times and on the terms required to support M&T and its subsidiaries’ future businesses; and material differences in the actual financial results of merger, acquisition and investment activities compared with M&T’s initial expectations, including the full realization of anticipated cost savings and revenue enhancements.

These are representative of the Future Factors that could affect the outcome of the forward-looking statements. In addition, such statements could be affected by general industry and market conditions and growth rates, general economic and political conditions, either nationally or in the states in which M&T and its subsidiaries do business, including interest rate and currency exchange rate fluctuations, changes and trends in the securities markets, and other Future Factors.

Financial Highlights
                                                                    Three months ended                           Year ended
                                                                    December 31                                  December 31
Amounts in thousands, except per share                              2017             2016             Change     2017            2016            Change
Performance
Net income                                                          $   322,403          330,571          -2  %  $  1,408,306       1,315,114        7   %
Net income available to common shareholders                             302,486          307,797          -2  %     1,327,517       1,223,481        9   %
Per common share:
Basic earnings                                                      $   2.01             1.98             2   %  $  8.72            7.80             12  %
Diluted earnings                                                        2.01             1.98             2   %     8.70            7.78             12  %
Cash dividends                                                      $   .75              .70              7   %  $  3.00            2.80             7   %
Common shares outstanding:
Average - diluted (1)                                                   150,348          155,700          -3  %     152,551         157,304          -3  %
Period end (2)                                                          150,112          156,213          -4  %     150,112         156,213          -4  %
Return on (annualized):
Average total assets                                                    1.06    %        1.05      %                1.17      %     1.06      %
Average common shareholders’ equity                                     8.03    %        8.13      %                8.87      %     8.16      %
Taxable-equivalent net interest income                              $   980,457          883,147          11  %  $  3,815,614       3,496,849        9   %
Yield on average earning assets                                         3.93    %        3.45      %                3.82      %     3.49      %
Cost of interest-bearing liabilities                                    .59     %        .57       %                .55       %     .56       %
Net interest spread                                                     3.34    %        2.88      %                3.27      %     2.93      %
Contribution of interest-free funds                                     .22     %        .20       %                .20       %     .18       %
Net interest margin                                                     3.56    %        3.08      %                3.47      %     3.11      %
Net charge-offs to average total net loans (annualized)                 .12     %        .22       %                .16       %     .18       %
Net operating results (3)
Net operating income                                                $   326,664          336,095          -3  %  $  1,427,331       1,362,692        5   %
Diluted net operating earnings per common share                         2.04             2.01             1   %     8.82            8.08             9   %
Return on (annualized):
Average tangible assets                                                 1.12    %        1.10      %                1.23      %     1.14      %
Average tangible common equity                                          11.77   %        11.93     %                13.00     %     12.25     %
Efficiency ratio                                                        54.65   %        56.42     %                55.07     %     56.10     %
                                                                    At December 31
Loan quality                                                        2017             2016             Change
Nonaccrual loans                                                    $   882,598          920,015          -4  %
Real estate and other foreclosed assets                                 111,910          139,206          -20 %
Total nonperforming assets                                          $   994,508          1,059,221        -6  %
Accruing loans past due 90 days or more (4)                         $   244,405          300,659          -19 %
Government guaranteed loans included in totals above:
Nonaccrual loans                                                    $   35,677           40,610           -12 %
Accruing loans past due 90 days or more                                 235,489          282,659          -17 %
Renegotiated loans                                                  $   221,513          190,374          16  %
Accruing loans acquired at a discount past due 90 days or more (5)  $   47,418           61,144           -22 %
Purchased impaired loans (6):
Outstanding customer balance                                        $   688,091          927,446          -26 %
Carrying amount                                                         410,015          578,032          -29 %
Nonaccrual loans to total net loans                                     1.00    %        1.01      %
Allowance for credit losses to total loans                              1.16    %        1.09      %
(1) Includes common stock equivalents.
(2) Includes common stock issuable under deferred compensation plans.
(3) Excludes amortization and balances related to goodwill and core deposit and other intangible assets and merger-related expenses which, except in the
    calculation of the efficiency ratio, are net of applicable income tax effects. Reconciliations of net income with net operating income appear herein.
(4) Excludes loans acquired at a discount.  Predominantly residential real estate loans.
(5) Loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are
    presented separately.
(6) Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.
Financial Highlights, Five Quarter Trend
                                                                    Three months ended
                                                                    December 31,      September 30,     June 30,        March 31,         December 31,
Amounts in thousands, except per share                              2017              2017              2017            2017              2016
Performance
Net income                                                          $      322,403           355,923         381,053         348,927             330,571
Net income available to common shareholders                                302,486           335,804         360,662         328,567             307,797
Per common share:
Basic earnings                                                      $      2.01              2.22            2.36            2.13                1.98
Diluted earnings                                                           2.01              2.21            2.35            2.12                1.98
Cash dividends                                                      $      .75               .75             .75             .75                 .70
Common shares outstanding:
Average - diluted (1)                                                      150,348           151,691         153,276         154,949             155,700
Period end (2)                                                             150,112           151,291         152,539         153,781             156,213
Return on (annualized):
Average total assets                                                       1.06    %         1.18    %       1.27    %       1.15      %         1.05      %
Average common shareholders’ equity                                        8.03    %         8.89    %       9.67    %       8.89      %         8.13      %
Taxable-equivalent net interest income                              $      980,457           965,962         946,936         922,259             883,147
Yield on average earning assets                                            3.93    %         3.89    %       3.79    %       3.67      %         3.45      %
Cost of interest-bearing liabilities                                       .59     %         .57     %       .52     %       .52       %         .57       %
Net interest spread                                                        3.34    %         3.32    %       3.27    %       3.15      %         2.88      %
Contribution of interest-free funds                                        .22     %         .21     %       .18     %       .19       %         .20       %
Net interest margin                                                        3.56    %         3.53    %       3.45    %       3.34      %         3.08      %
Net charge-offs to average total net loans (annualized)                    .12     %         .11     %       .20     %       .19       %         .22       %
Net operating results (3)
Net operating income                                                $      326,664           360,658         385,974         354,035             336,095
Diluted net operating earnings per common share                            2.04              2.24            2.38            2.15                2.01
Return on (annualized):
Average tangible assets                                                    1.12    %         1.25    %       1.33    %       1.21      %         1.10      %
Average tangible common equity                                             11.77   %         13.03   %       14.18   %       13.05     %         11.93     %
Efficiency ratio                                                           54.65   %         56.00   %       52.74   %       56.93     %         56.42     %
                                                                    December 31,      September 30,     June 30,        March 31,         December 31,
Loan quality                                                        2017              2017              2017            2017              2016
Nonaccrual loans                                                    $      882,598           869,362         872,374         926,675             920,015
Real estate and other foreclosed assets                                    111,910           110,515         104,424         119,155             139,206
Total nonperforming assets                                          $      994,508           979,877         976,798         1,045,830           1,059,221
Accruing loans past due 90 days or more (4)                         $      244,405           261,288         265,461         280,019             300,659
Government guaranteed loans included in totals above:
Nonaccrual loans                                                    $      35,677            34,687          39,296          39,610              40,610
Accruing loans past due 90 days or more                                    235,489           252,072         235,227         252,552             282,659
Renegotiated loans                                                  $      221,513           226,672         221,892         191,343             190,374
Accruing loans acquired at a discount past due 90 days or more (5)  $      47,418            56,225          57,498          63,732              61,144
Purchased impaired loans (6):
Outstanding customer balance                                        $      688,091           779,340         838,476         890,431             927,446
Carrying amount                                                            410,015           466,943         512,393         552,935             578,032
Nonaccrual loans to total net loans                                        1.00    %         .99     %       .98     %       1.04      %         1.01      %
Allowance for credit losses to total loans                                 1.16    %         1.15    %       1.13    %       1.12      %         1.09      %
(1) Includes common stock equivalents.
(2) Includes common stock issuable under deferred compensation plans.
(3) Excludes amortization and balances related to goodwill and core deposit and other intangible assets and merger-related expenses which, except in the
    calculation of the efficiency ratio, are net of applicable income tax effects. Reconciliations of net income with net operating income appear herein.
(4) Excludes loans acquired at a discount.  Predominantly residential real estate loans.
(5) Loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are
    presented separately.
(6) Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.
Condensed Consolidated Statement of Income
                                                          Three months ended                       Year ended
                                                          December 31                              December 31
Dollars in thousands                                      2017            2016          Change     2017           2016           Change
Interest income                                           $   1,074,139       982,901       9   %  $  4,167,795      3,895,871       7   %
Interest expense                                              102,689         107,137       -4        386,751        425,984         -9
Net interest income                                           971,450         875,764       11        3,781,044      3,469,887       9
Provision for credit losses                                   31,000          62,000        -50       168,000        190,000         -12
Net interest income after provision for credit losses         940,450         813,764       16        3,613,044      3,279,887       10
Other income
Mortgage banking revenues                                     96,235          98,504        -2        363,827        373,697         -3
Service charges on deposit accounts                           107,783         104,890       3         427,372        419,102         2
Trust income                                                  129,669         122,003       6         501,381        472,184         6
Brokerage services income                                     12,768          15,233        -16       61,445         63,423          -3
Trading account and foreign exchange gains                    10,468          7,692         36        35,301         41,126          -14
Gain on bank investment securities                            21,296          1,566         --        21,279         30,314          -30
Other revenues from operations                                105,834         115,571       -8        440,538        426,150         3
Total other income                                            484,053         465,459       4         1,851,143      1,825,996       1
Other expense
Salaries and employee benefits                                402,878         393,354       2         1,650,729      1,623,600       2
Equipment and net occupancy                                   71,363          69,976        2         295,084        295,141         --
Outside data processing and software                          50,033          43,987        14        184,670        172,389         7
FDIC assessments                                              23,722          28,991        -18       101,871        105,045         -3
Advertising and marketing                                     19,366          21,074        -8        69,203         87,137          -21
Printing, postage and supplies                                8,563           8,681         -1        35,960         39,546          -9
Amortization of core deposit and other intangible assets      7,025           9,089         -23       31,366         42,613          -26
Other costs of operations                                     212,863         193,951       10        771,442        682,014         13
Total other expense                                           795,813         769,103       3         3,140,325      3,047,485       3
Income before income taxes                                    628,690         510,120       23        2,323,862      2,058,398       13
Applicable income taxes                                       306,287         179,549       71        915,556        743,284         23
Net income                                                $   322,403         330,571       -2  %  $  1,408,306      1,315,114       7   %
Condensed Consolidated Statement of Income, Five Quarter Trend
                                                          Three months ended
                                                          December 31,       September 30,      June 30,         March 31,        December 31,
Dollars in thousands                                      2017               2017               2017             2017             2016
Interest income                                           $      1,074,139          1,057,210        1,030,413        1,006,033          982,901
Interest expense                                                 102,689            100,076          92,213           91,773             107,137
Net interest income                                              971,450            957,134          938,200          914,260            875,764
Provision for credit losses                                      31,000             30,000           52,000           55,000             62,000
Net interest income after provision for credit losses            940,450            927,134          886,200          859,260            813,764
Other income
Mortgage banking revenues                                        96,235             96,737           86,163           84,692             98,504
Service charges on deposit accounts                              107,783            109,356          106,057          104,176            104,890
Trust income                                                     129,669            124,900          126,797          120,015            122,003
Brokerage services income                                        12,768             14,676           16,617           17,384             15,233
Trading account and foreign exchange gains                       10,468             7,058            8,084            9,691              7,692
Gain (loss) on bank investment securities                        21,296             --               (17)             --                 1,566
Other revenues from operations                                   105,834            106,702          117,115          110,887            115,571
Total other income                                               484,053            459,429          460,816          446,845            465,459
Other expense
Salaries and employee benefits                                   402,878            399,089          398,900          449,862            393,354
Equipment and net occupancy                                      71,363             75,558           73,797           74,366             69,976
Outside data processing and software                             50,033             45,761           44,575           44,301             43,987
FDIC assessments                                                 23,722             23,969           25,353           28,827             28,991
Advertising and marketing                                        19,366             17,403           16,324           16,110             21,074
Printing, postage and supplies                                   8,563              8,732            8,957            9,708              8,681
Amortization of core deposit and other intangible assets         7,025              7,808            8,113            8,420              9,089
Other costs of operations                                        212,863            227,705          174,616          156,258            193,951
Total other expense                                              795,813            806,025          750,635          787,852            769,103
Income before income taxes                                       628,690            580,538          596,381          518,253            510,120
Applicable income taxes                                          306,287            224,615          215,328          169,326            179,549
Net income                                                $      322,403            355,923          381,053          348,927            330,571
Condensed Consolidated Balance Sheet
                                                  December 31
Dollars in thousands                              2017             2016             Change
ASSETS
Cash and due from banks                           $  1,420,888        1,320,549         8    %
Interest-bearing deposits at banks                   5,078,903        5,000,638         2
Trading account                                      132,909          323,867           -59
Investment securities                                14,664,525       16,250,468        -10
Loans and leases:
Commercial, financial, etc.                          21,742,651       22,610,047        -4
Real estate - commercial                             33,366,373       33,506,394        --
Real estate - consumer                               19,613,344       22,590,912        -13
Consumer                                             13,266,615       12,146,063        9
Total loans and leases, net of unearned discount     87,988,983       90,853,416        -3
Less: allowance for credit losses                    1,017,198        988,997           3
Net loans and leases                                 86,971,785       89,864,419        -3
Goodwill                                             4,593,112        4,593,112         --
Core deposit and other intangible assets             71,589           97,655            -27
Other assets                                         5,659,776        5,998,498         -6
Total assets                                      $  118,593,487      123,449,206       -4   %
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits                      $  33,975,180       32,813,896        4    %
Interest-bearing deposits                            58,278,970       62,478,053        -7
Deposits at Cayman Islands office                    177,996          201,927           -12
Total deposits                                       92,432,146       95,493,876        -3
Short-term borrowings                                175,099          163,442           7
Accrued interest and other liabilities               1,593,993        1,811,431         -12
Long-term borrowings                                 8,141,430        9,493,835         -14
Total liabilities                                    102,342,668      106,962,584       -4
Shareholders’ equity:
Preferred                                            1,231,500        1,231,500         --
Common                                               15,019,319       15,255,122        -2
Total shareholders’ equity                           16,250,819       16,486,622        -1
Total liabilities and shareholders’ equity        $  118,593,487      123,449,206       -4   %
Condensed Consolidated Balance Sheet, Five Quarter Trend
                                                  December 31,         September 30,        June 30,           March 31,          December 31,
Dollars in thousands                              2017                 2017                 2017               2017               2016
ASSETS
Cash and due from banks                           $      1,420,888            1,368,252          1,344,478          1,286,962            1,320,549
Interest-bearing deposits at banks                       5,078,903            6,306,484          5,023,829          6,945,149            5,000,638
Federal funds sold                                       --                   --                 1,000              --                   --
Trading account                                          132,909              170,516            174,646            174,854              323,867
Investment securities                                    14,664,525           15,073,926         15,816,060         15,968,415           16,250,468
Loans and leases:
Commercial, financial, etc.                              21,742,651           21,743,251         22,191,051         22,295,376           22,610,047
Real estate - commercial                                 33,366,373           32,914,288         33,348,991         33,071,654           33,506,394
Real estate - consumer                                   19,613,344           20,265,162         20,960,171         21,724,491           22,590,912
Consumer                                                 13,266,615           13,002,433         12,580,342         12,221,481           12,146,063
Total loans and leases, net of unearned discount         87,988,983           87,925,134         89,080,555         89,313,002           90,853,416
Less: allowance for credit losses                        1,017,198            1,013,326          1,008,225          1,001,430            988,997
Net loans and leases                                     86,971,785           86,911,808         88,072,330         88,311,572           89,864,419
Goodwill                                                 4,593,112            4,593,112          4,593,112          4,593,112            4,593,112
Core deposit and other intangible assets                 71,589               78,614             86,422             94,535               97,655
Other assets                                             5,659,776            5,899,092          5,784,690          5,848,652            5,998,498
Total assets                                      $      118,593,487          120,401,804        120,896,567        123,223,251          123,449,206
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits                      $      33,975,180           33,111,246         32,366,426         34,279,591           32,813,896
Interest-bearing deposits                                58,278,970           60,170,133         60,978,895         62,570,167           62,478,053
Deposits at Cayman Islands office                        177,996              232,014            195,617            192,763              201,927
Total deposits                                           92,432,146           93,513,393         93,540,938         97,042,521           95,493,876
Short-term borrowings                                    175,099              200,768            1,695,453          185,102              163,442
Accrued interest and other liabilities                   1,593,993            1,791,946          1,727,059          1,694,905            1,811,431
Long-term borrowings                                     8,141,430            8,577,645          7,649,580          8,087,619            9,493,835
Total liabilities                                        102,342,668          104,083,752        104,613,030        107,010,147          106,962,584
Shareholders’ equity:
Preferred                                                1,231,500            1,231,500          1,231,500          1,231,500            1,231,500
Common                                                   15,019,319           15,086,552         15,052,037         14,981,604           15,255,122
Total shareholders’ equity                               16,250,819           16,318,052         16,283,537         16,213,104           16,486,622
Total liabilities and shareholders’ equity        $      118,593,487          120,401,804        120,896,567        123,223,251          123,449,206
Condensed Consolidated Average Balance Sheet and Annualized Taxable-equivalent Rates
                                            Three months ended                                       Change in balance                Year ended
                                            December 31,         December 31,      September 30,     December 31, 2017 from           December 31                            Change
Dollars in millions                         2017                 2016              2017              December 31,    September 30,    2017                  2016             in
                                            Balance      Rate    Balance   Rate    Balance   Rate    2016            2017             Balance      Rate     Balance  Rate    balance
ASSETS
Interest-bearing deposits at banks          $   6,680    1.31 %  8,790     .54  %  4,740     1.25 %  -24          %  41            %  $   5,578    1.10 %   8,846    .51  %  -37 %
Trading account                                 87       1.31    70        2.05    73        1.92    23              18                   71       1.70     85       1.71    -16
Investment securities                           14,808   2.30    15,417    2.28    15,443    2.28    -4              -4                   15,538   2.34     15,009   2.44    4
Loans and leases, net of unearned discount
Commercial, financial, etc.                     21,562   4.06    21,936    3.47    21,734    3.98    -2              -1                   21,981   3.88     21,397   3.44    3
Real estate - commercial                        33,138   4.61    32,822    4.01    33,257    4.50    1               --                   33,196   4.40     30,915   4.06    7
Real estate - consumer                          19,974   4.03    23,096    3.88    20,609    3.96    -14             -3                   21,013   3.96     24,463   3.92    -14
Consumer                                        13,163   4.91    12,123    4.53    12,786    4.89    9               3                    12,625   4.82     11,841   4.54    7
Total loans and leases, net                     87,837   4.40    89,977    3.93    88,386    4.32    -2              -1                   88,815   4.25     88,616   3.96    --
Total earning assets                            109,412  3.93    114,254   3.45    108,642   3.89    -4              1                    110,002  3.82     112,556  3.49    -2
Goodwill                                        4,593            4,593             4,593             --              --                   4,593             4,593            --
Core deposit and other intangible assets        75               102               82                -27             -9                   86                117              -26
Other assets                                    6,146            6,785             6,198             -9              -1                   6,179             7,074            -13
Total assets                                $   120,226          125,734           119,515           -4           %  1             %  $   120,860           124,340          -3  %
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Interest-bearing deposits
Savings and interest-checking deposits      $   53,436   .29     54,055    .20     53,287    .28     -1           %  --            %  $   53,399   .25      52,194   .17     2   %
Time deposits                                   6,888    .70     10,936    .86     7,673     .72     -37             -10                  8,161    .75      12,253   .84     -33
Deposits at Cayman Island office                215      .61     206       .42     169       .73     4               27                   185      .64      199      .40     -7
Total interest-bearing deposits                 60,539   .34     65,197    .31     61,129    .34     -7              -1                   61,745   .32      64,646   .30     -4
Short-term borrowings                           178      .81     200       .30     244       .90     -11             -27                  205      .74      894      .41     -77
Long-term borrowings                            8,464    2.37    9,901     2.26    8,033     2.35    -15             5                    8,302    2.28     10,252   2.25    -19
Total interest-bearing liabilities              69,181   .59     75,298    .57     69,406    .57     -8              --                   70,252   .55      75,792   .56     -7
Noninterest-bearing deposits                    32,930           31,717            32,005            4               3                    32,520            30,160           8
Other liabilities                               1,844            2,046             1,803             -10             2                    1,793             1,969            -9
Total liabilities                               103,955          109,061           103,214           -5              1                    104,565           107,921          -3
Shareholders’ equity                            16,271           16,673            16,301            -2              --                   16,295            16,419           -1
Total liabilities and shareholders’ equity  $   120,226          125,734           119,515           -4           %  1             %  $   120,860           124,340          -3  %
Net interest spread                                      3.34              2.88              3.32                                                  3.27              2.93
Contribution of interest-free funds                      .22               .20               .21                                                   .20               .18
Net interest margin                                      3.56 %            3.08 %            3.53 %                                                3.47 %            3.11 %
Reconciliation of GAAP to Non-GAAP Measures
                                                                 Three months ended                  Year ended
                                                                 December 31                         December 31
                                                                 2017               2016             2017            2016
Income statement data
In thousands, except per share
Net income
Net income                                                       $   322,403            330,571         1,408,306       1,315,114
Amortization of core deposit and other intangible assets (1)         4,261              5,524           19,025          25,893
Merger-related expenses (1)                                          --                 --              --              21,685
Net operating income                                             $   326,664            336,095         1,427,331       1,362,692
Earnings per common share
Diluted earnings per common share                                $   2.01               1.98            8.70            7.78
Amortization of core deposit and other intangible assets (1)         .03                .03             .12             .16
Merger-related expenses (1)                                          --                 --              --              .14
Diluted net operating earnings per common share                  $   2.04               2.01            8.82            8.08
Other expense
Other expense                                                    $   795,813            769,103         3,140,325       3,047,485
Amortization of core deposit and other intangible assets             (7,025)            (9,089)         (31,366)        (42,613)
Merger-related expenses                                              --                 --              --              (35,755)
Noninterest operating expense                                    $   788,788            760,014         3,108,959       2,969,117
Merger-related expenses
Salaries and employee benefits                                   $   --                 --              --              5,334
Equipment and net occupancy                                          --                 --              --              1,278
Outside data processing and software                                 --                 --              --              1,067
Advertising and marketing                                            --                 --              --              10,522
Printing, postage and supplies                                       --                 --              --              1,482
Other costs of operations                                            --                 --              --              16,072
Total                                                            $   --                 --              --              35,755
Efficiency ratio
Noninterest operating expense (numerator)                        $   788,788            760,014         3,108,959       2,969,117
Taxable-equivalent net interest income                               980,457            883,147         3,815,614       3,496,849
Other income                                                         484,053            465,459         1,851,143       1,825,996
Less:  Gain on bank investment securities                            21,296             1,566           21,279          30,314
Denominator                                                      $   1,443,214          1,347,040       5,645,478       5,292,531
Efficiency ratio                                                     54.65     %        56.42     %     55.07     %     56.10     %
Balance sheet data
In millions
Average assets
Average assets                                                   $   120,226            125,734         120,860         124,340
Goodwill                                                             (4,593)            (4,593)         (4,593)         (4,593)
Core deposit and other intangible assets                             (75)               (102)           (86)            (117)
Deferred taxes                                                       26                 40              33              46
Average tangible assets                                          $   115,584            121,079         116,214         119,676
Average common equity
Average total equity                                             $   16,271             16,673          16,295          16,419
Preferred stock                                                      (1,232)            (1,492)         (1,232)         (1,297)
Average common equity                                                15,039             15,181          15,063          15,122
Goodwill                                                             (4,593)            (4,593)         (4,593)         (4,593)
Core deposit and other intangible assets                             (75)               (102)           (86)            (117)
Deferred taxes                                                       26                 40              33              46
Average tangible common equity                                   $   10,397             10,526          10,417          10,458
At end of quarter
Total assets
Total assets                                                     $   118,593            123,449
Goodwill                                                             (4,593)            (4,593)
Core deposit and other intangible assets                             (72)               (98)
Deferred taxes                                                       19                 39
Total tangible assets                                            $   113,947            118,797
Total common equity
Total equity                                                     $   16,251             16,487
Preferred stock                                                      (1,232)            (1,232)
Undeclared dividends - cumulative preferred stock                    (3)                (3)
Common equity, net of undeclared cumulative preferred dividends      15,016             15,252
Goodwill                                                             (4,593)            (4,593)
Core deposit and other intangible assets                             (72)               (98)
Deferred taxes                                                       19                 39
Total tangible common equity                                     $   10,370             10,600
(1)     After any related tax effect.
Reconciliation of Quarterly GAAP to Non-GAAP Measures, Five Quarter Trend
                                                                 Three months ended
                                                                 December 31,          September 30,         June 30,            March 31,           December 31,
                                                                 2017                  2017                  2017                2017                2016
Income statement data
In thousands, except per share
Net income
Net income                                                       $      322,403               355,923             381,053             348,927               330,571
Amortization of core deposit and other intangible assets (1)            4,261                 4,735               4,921               5,108                 5,524
Net operating income                                             $      326,664               360,658             385,974             354,035               336,095
Earnings per common share
Diluted earnings per common share                                $      2.01                  2.21                2.35                2.12                  1.98
Amortization of core deposit and other intangible assets (1)            .03                   .03                 .03                 .03                   .03
Diluted net operating earnings per common share                  $      2.04                  2.24                2.38                2.15                  2.01
Other expense
Other expense                                                    $      795,813               806,025             750,635             787,852               769,103
Amortization of core deposit and other intangible assets                (7,025)               (7,808)             (8,113)             (8,420)               (9,089)
Noninterest operating expense                                    $      788,788               798,217             742,522             779,432               760,014
Efficiency ratio
Noninterest operating expense (numerator)                        $      788,788               798,217             742,522             779,432               760,014
Taxable-equivalent net interest income                                  980,457               965,962             946,936             922,259               883,147
Other income                                                            484,053               459,429             460,816             446,845               465,459
Less:  Gain (loss) on bank investment securities                        21,296                --                  (17)                --                    1,566
Denominator                                                      $      1,443,214             1,425,391           1,407,769           1,369,104             1,347,040
Efficiency ratio                                                        54.65     %           56.00     %         52.74     %         56.93     %           56.42     %
Balance sheet data
In millions
Average assets
Average assets                                                   $      120,226               119,515             120,765             122,978               125,734
Goodwill                                                                (4,593)               (4,593)             (4,593)             (4,593)               (4,593)
Core deposit and other intangible assets                                (75)                  (82)                (90)                (98)                  (102)
Deferred taxes                                                          26                    32                  35                  39                    40
Average tangible assets                                          $      115,584               114,872             116,117             118,326               121,079
Average common equity
Average total equity                                             $      16,271                16,301              16,285              16,323                16,673
Preferred stock                                                         (1,232)               (1,232)             (1,232)             (1,232)               (1,492)
Average common equity                                                   15,039                15,069              15,053              15,091                15,181
Goodwill                                                                (4,593)               (4,593)             (4,593)             (4,593)               (4,593)
Core deposit and other intangible assets                                (75)                  (82)                (90)                (98)                  (102)
Deferred taxes                                                          26                    32                  35                  39                    40
Average tangible common equity                                   $      10,397                10,426              10,405              10,439                10,526
At end of quarter
Total assets
Total assets                                                     $      118,593               120,402             120,897             123,223               123,449
Goodwill                                                                (4,593)               (4,593)             (4,593)             (4,593)               (4,593)
Core deposit and other intangible assets                                (72)                  (79)                (86)                (95)                  (98)
Deferred taxes                                                          19                    31                  33                  38                    39
Total tangible assets                                            $      113,947               115,761             116,251             118,573               118,797
Total common equity
Total equity                                                     $      16,251                16,318              16,284              16,213                16,487
Preferred stock                                                         (1,232)               (1,232)             (1,232)             (1,232)               (1,232)
Undeclared dividends - cumulative preferred stock                       (3)                   (3)                 (3)                 (3)                   (3)
Common equity, net of undeclared cumulative preferred dividends         15,016                15,083              15,049              14,978                15,252
Goodwill                                                                (4,593)               (4,593)             (4,593)             (4,593)               (4,593)
Core deposit and other intangible assets                                (72)                  (79)                (86)                (95)                  (98)
Deferred taxes                                                          19                    31                  33                  38                    39
Total tangible common equity                                     $      10,370                10,442              10,403              10,328                10,600
(1)     After any related tax effect.

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