M&T Bank Corporation
) fourth-quarter 2012 operating earnings of $2.23 per share beat
the Zacks Consensus Estimate of $2.17. However, it compared
unfavorably with the prior quarter earnings of $2.24 per
For full year 2012, operating earnings surged 20.3% year over
year to $7.88 per share. The figure surpassed the Zacks Consensus
Estimate of $7.55 per share.
Better-than-expected results were aided by increased net
interest and non-interest income. Mortgage banking revenues
posted a decent rise in the quarter. Moreover, capital ratios
showed improvement. However, an increase in expenses and
deterioration in credit quality metrics were the headwinds for
On a GAAP basis, M&T Bank reported net income of $296.2
million or $2.16 per share, compared with $293.5 million or $2.17
per share in the prior quarter. Results for both the quarters
included the impact of amortization of core deposits and other
For full year 2012, M&T Bank's net income available to
common shareholders came in at $1.0 billion or $7.54 per share,
up from $859.5 million or $6.35 per share in the prior year.
Quarter in Detail
M&T Bank's total revenue was recorded at $1.2 billion,
almost in line with the previous quarter. Moreover, revenues also
surpassed the Zacks Consensus Estimate of $1.1 billion.
For full year 2012, M&T Bank reported total revenue of
$4.6 billion, up 4.5% year over year and substantially above the
Zacks Consensus Estimate of $2.5 billion.
M&T Bank's net interest income came in at $674 million, up
0.7% from the previous quarter. The improvement was attributable
to a hike in average earning assets, notably a $1.6 billion rise
in average loans and leases. This was partly offset by a decline
of 3 basis points in net interest margin to 3.74% in the reported
quarter, compared with 3.77% in the prior quarter.
M&T Bank's non-interest income elevated 1.6% sequentially
to $453 million and included pre-tax losses on investment
securities. Also, included in non-interest income in the fourth
quarter of 2011 was the $55 million favorable litigation
settlement related to M&T's 2007 investment in certain
collateralized debt obligations.
Excluding losses from investment securities, non-interest
income came in at $468 million, up 3.8% from $451 million
reported in the previous quarter. The sequential hike was
primarily due to higher mortgage banking revenues.
M&T Bank's non-interest expense was $626 million, up 1.6%
from the prior quarter. Excluding non-operating expenses and
other merger-related costs, non-interest operating expenses came
in at $612 million, up 1.7% from the prior quarter. The
sequential rise primarily reflected hike in salaries and employee
benefits as well as other costs of operations. Efficiency ratio
improved to 53.6% from 53.7% in the previous quarter.
Loans and leases, net of unearned discount, were $66.6 billion
at the end of the fourth quarter, up 4.0% sequentially. Total
deposits increased 3.0% sequentially to $65.6 billion as of Dec
31, 2012 from $64.0 billion at the end of the prior quarter.
Credit quality deteriorated during the quarter under review.
Provision for credit losses increased 6.5% to $49 million and net
charge-offs increased 4.8% to $44 million. Net charge-offs, as a
percentage of average loans outstanding were 0.27%, up from 0.26%
in the preceding quarter. Moreover, the ratio of non-accrual
loans to total net loans increased to 1.52% from 1.44% in the
M&T Bank's net operating income, expressed as an
annualized rate of return on average tangible assets, and average
tangible common shareholders' equity was 1.56% and 20.46%,
respectively, compared with 1.56% and 21.53% recorded in the
M&T Bank's tangible common equity to tangible assets ratio
was 7.20% as of Dec 31, 2012 improving from 7.04% as of Sep 30,
2012. The company's Tier 1 common ratio stood at 7.57% as of Dec
31, 2012 compared with 7.46% as of Sep 30, 2012.
The company, with a solid business model and strategic
acquisitions, is well poised for future growth. While the
sluggish economic recovery, regulatory issues and low interest
rates remain the headwinds for M&T Bank, we believe that a
sound capital position, along with a growing core deposit will
uphold it in the long run.
M&T Bank currently retains its Zacks Rank #3 (Hold).
Among M&T Bank's peers,
Fifth Third Bancorp
), which carries a Zacks Rank #2 (Buy), is scheduled to
announce its fourth-quarter 2012 results on Jan 17.
FIFTH THIRD BK (FITB): Free Stock Analysis
M&T BANK CORP (MTB): Free Stock Analysis
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