October 3, 2017 / 8:56 PM / a year ago

Fitch Affirms M&T Bank Corporation's Long-Term IDR at 'A'; Outlook Stable

(The following statement was released by the rating agency) NEW YORK, October 03 (Fitch) Fitch Ratings has affirmed M&T Bank Corporation's (MTB) Long-Term Issuer Default Ratings (IDRs) and Viability Rating (VR) at 'A' and 'a', respectively. The Rating Outlook is Stable. A full list of rating actions follows at the end of this release. The rating action follows a periodic review of the large regional banking group, which includes M&T Bank Corporation (MTB), BB&T Corporation (BBT), Capital One Finance Corporation (COF), Citizens Financial Group, Inc. (CFG), Comerica Incorporated (CMA), Fifth Third Bancorp (FITB), Huntington Bancshares Inc. (HBAN), Keycorp (KEY), MUFG Americas Holding Corporation (MUAH), PNC Financial Services Group (PNC), Regions Financial Corporation (RF), SunTrust Banks Inc. (STI), US Bancorp (USB), and Wells Fargo & Company (WFC). Company-specific rating rationales for the other banks are published separately, and for further discussion of the large regional bank sector in general, refer to the special report titled 'Large Regional Bank Periodic Review,' to be published shortly. KEY RATING DRIVERS IDRS, NATIONAL RATINGS AND SENIOR DEBT MTB's rating affirmation is supported by the company's core strengths and financial profile, such as consistently delivering solid performance through various economic downturns as well as its improved capital position. Additionally, Fitch views the company's strong franchise, veteran management team, and revenue diversification favorably. MTB's core earnings profile is considered to be one of the strongest of its peer group. MTB is one of the most consistent performers from an earnings perspective and its financial measures have seen less volatility than most of its large regional peers. As an example, MTB's ROA has one of the lowest 10-year standard deviations among its peers. More recently, MTB's results have benefited from recent rate increases with NIM rising 31bps on the back of net interest income growth of 9% for 2Q17 compared to 2Q16. Going forward, Fitch expects modest expansion of the NIM with some pressure expected in the 2H17 from loan spreads and refinancing of long-term debt. MTB's Written Agreement with the Federal Reserve was lifted in July 2017. Fitch recognizes that MTB could begin to pursue its long-established M&A strategy although not expected in the near-term given the recent Hudson City acquisition. In Fitch's view, given improvements to BSA/AML compliance areas, MTB would be well positioned to execute on future bank acquisitions. Further, MTB has proven its ability to successfully execute M&A transactions and integrate them effectively. Despite all of its acquisitions, MTB has typically put its management team into place, which has helped maintain its consistent strategy and direction over many decades. Strategically, the franchise seeks to add to its density in the corridor from NY to northern VA. Fitch believes the Hudson City acquisition should provide a solid platform for future commercial growth and deepens MTB's franchise in the Northeast, particularly in Northern New Jersey, where the company historically had a limited presence. The company has also indicated that the deal is still in-line to achieve many of its projected targets. The focus will be to transition HCBK from a residential mortgage lender to a commercial lender over the next few years. Credit performance is consistently solid, despite the company's large exposure to commercial real-estate assets (CRE), which stood at 35% of total loans versus the large regional peer average of 19% as of June 30, 2017. MTB's NCOs and NPAs have been superior versus most of its peer group through numerous economic and real estate downturns and indicative of the strong credit culture at the company. Fitch believes the company's reserve coverage also provides good support given loss history. Although MTB's CRE lending, particularly multi-family, has been growing rapidly, albeit slowing in recent periods and competition has been aggressive for the industry, Fitch's affirmation incorporates the expectation that MTB would continue to deliver superior credit performance. Fitch recognizes that MTB has continued to build capital in line with similarly-rated peers. MTB's tangible common equity ratio stood at 8.93% versus a 6.41% 10-year average. In Fitch's view, MTB's longer-term capital ratios will tend to fall on the mid to lower-end of the large regional peer group averages. However, Fitch's believes the company's strong equity generation, good asset quality performance through various credit cycles, solid reserves when compared to net charge-offs (NCOs) help offset the company's leaner capital position. Further, Fitch considers MTB's management team to be a rating strength given the stable, average tenure of 20+ years with the company. Further, despite a history of acquisitions, board composition has not changed dramatically. Fitch estimates 12% of MTB's ownership is held by management and employees of the company, which creates a strong alignment between management and shareholders interest. SUPPORT RATING AND SUPPORT RATING FLOOR MTB has a Support Rating of '5' and Support Rating Floor of 'NF'. In Fitch's view, MTB is not systemically important and therefore, the probability of support is unlikely. IDRs and VRs do not incorporate any support. ] SUBORDINATED DEBT AND OTHER HYBRID SECURITIES MTB's subordinated debt is notched one level below its VR for loss severity. MTB's preferred stock is notched five levels below its VR, two times for loss severity and three times for non-performance, while MTB's trust preferred securities are notched two times from the VR for loss severity and two times for non-performance. These ratings are in accordance with Fitch's criteria and assessment of the instruments non-performance and loss severity risk profiles and have been affirmed due to the affirmation of the VR. LONG- AND SHORT-TERM DEPOSIT RATINGS The uninsured deposit ratings of Manufacturers and Traders Trust Co, are rated one notch higher than MTB's IDR and senior unsecured debt because U.S. uninsured deposits benefit from depositor preference. U.S. depositor preference gives deposit liabilities superior recovery prospects in the event of default. HOLDING COMPANY MTB's IDR and VR are equalized with those of its operating companies and bank, reflecting its role as the bank holding company, which is mandated in the U.S. to act as a source of strength for its bank subsidiaries. Ratings are also equalized reflecting the very close correlation between holding company and subsidiary failure and default probabilities. RATING SENSITIVITIES IDRS, VR, AND SENIOR DEBT MTB's ratings are at the high end of its rating potential given its performance and credit profile. Although not envisioned over the rating horizon, MTB's ratings could have positive momentum should it develop a more diversified franchise by strengthening its consumer/retail penetration and product offerings along with further geographic diversification of its commercial lending book, while successfully integrating Hudson City. This would also entail maintaining peer leading profitability and asset quality measures. Conversely, negative rating drivers would be a more aggressive approach to capital management, and/or announcing an acquisition in the near term given the sizeable Hudson City transaction. In addition, unexpected changes to current business strategy or key executive management would also be viewed negatively. Although not expected, a material deterioration in credit performance could signal an increase in risk appetite and/or loosening underwriting, which would be viewed negatively. SUPPORT RATING AND SUPPORT RATING FLOOR Since MTB's Support and Support Rating Floors are '5' and 'NF', respectively, there is limited likelihood that these ratings will change over the foreseeable future. SUBORDINATED DEBT AND OTHER HYBRID SECURITIES The ratings for MTB and its operating companies' subordinated debt and preferred stock are sensitive to any change to MTB's VR. LONG- AND SHORT-TERM DEPOSIT RATINGS The long- and short-term deposit ratings are sensitive to any change to MTB's Long- and Short-term IDR. HOLDING COMPANY Should MTB's holding company begin to exhibit signs of weakness, demonstrate trouble accessing the capital markets, or have inadequate cash flow coverage to meet near-term obligations, there is the potential that Fitch could notch the holding company IDR and VR from the ratings of the operating companies. Fitch has affirmed the following ratings: M&T Bank Corporation --Long-term IDR at 'A'; Outlook Stable; --Short-term IDR at 'F1'; --Viability at 'a'; --Preferred stock at 'BB+'. --Support at '5'; --Support floor 'NF'. Manufacturers and Traders Trust Co --Long-term IDR at 'A'; Outlook Stable; --Long-term deposits at 'A+'. --Short-term IDR at 'F1'; --Short-term deposits at 'F1'; --Viability at 'a'; --Senior unsecured debt at 'A'; --Subordinated debt at 'A-'; --Support at '5'; --Support floor 'NF'. Wilmington Trust, N.A. (formerly M&T Bank, NA) --Long-term IDR at 'A'; Outlook Stable; --Long-term deposits at 'A+'. --Short-term IDR at 'F1'; --Short-term deposits at 'F1'; --Viability at 'a'; --Support at '5'; --Support floor 'NF'. Wilmington Trust Corporation --Long-term IDR at 'A'; Outlook Stable; --Short-term IDR at 'F1'; --Subordinated debt at 'A-'; --Viability at 'a'. --Support at '5'; --Support floor at `NF'. Wilmington Trust Company --Long-term IDR at 'A'; Outlook Stable; --Short-term IDR at 'F1'; --Viability at 'a'. --Support at '5'; --Support floor at 'NF' Provident (MD) Capital Trust I --Preferred stock at 'BBB-'. Contact: Primary Analyst Doriana Gamboa Senior Director +1-212-908-0865 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Bain Rumohr Director +1-312-368-3153 Committee Chairperson Joo-Yung Lee Managing Director +1-212-908-0556 Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: sandro.scenga@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below