Driven by lower provisions,
M&T Bank Corporation
) second-quarter 2014 net operating earnings of $2.02 per share
outpaced the Zacks Consensus Estimate of $1.90. However, this
compared unfavorably with $2.65 per share reported in the
The quarter reflected improved credit metrics and a strong capital
position. However, lower top line and increased expenses were the
On a GAAP basis, M&T Bank reported net income of $284.0 million
or $1.98 per share, compared with $348.0 million or $2.55 per share
in the prior-year quarter. Results for both the quarters included
certain non-recurring items.
M&T Bank Corporation - Quarterly EPS (BNRI)
Quarter in Detail
M&T Bank's total revenue was recorded at $1.19 billion, down
5.5% from the prior-year quarter. However, the figure outpaced the
Zacks Consensus Estimate of $1.12 billion.
M&T Bank's taxable-equivalent net interest income came in at
$675 million, down slightly on a year-over-year basis. Further, net
interest margin declined to 3.40% from 3.71% in the prior-year
M&T Bank's other income decreased 10.4% year over year to $456
million. Notably, prior-year quarter included net pre-tax gains of
$56 million from the sale of investment securities. Excluding these
gains, non-interest income was up around 1% in the reported
quarter, driven by increased mortgage banking revenues and trust
Non-interest expenses were $681 million, up 13.7% from the
prior-year quarter. Excluding certain non-operating items, expenses
came in at $672 million, up 16.3% from the prior-year quarter. The
rise in non-interest operating expenses was mainly due to an
increase in costs related to professional services along with
salaries associated with BSA/AML activities, compliance, capital
planning and stress test, risk management and other costs of
Efficiency ratio increased to 59.4% from 50.9% in the prior-year
quarter. A rise in efficiency ratio indicates a fall in
Loans and leases, net of unearned discount, dropped around 2% year
over year to $64.7 billion at the end of the quarter. However,
total deposits rose around 6% year over year to $69.8 billion.
M&T Bank's net operating income reflected an annualized rate of
return on average tangible assets and average tangible common
shareholder equity of 1.35% and 14.92%, respectively compared with
1.81% and 22.72% recorded in the prior-year quarter.
Credit quality exhibited continued improvement in the reported
quarter. Provision for credit losses decreased 47.4% year over year
to $30 million. Net charge-offs of loans came in at $29 million,
down 49.1% year over year.
Net charge-offs as a percentage of average loans outstanding were
0.18%, down from 0.35% in the year-ago quarter. Moreover, the ratio
of non-accrual loans to total net loans was 1.36%, down from 1.46%
in the prior-year quarter. Further, non-performing assets decreased
10.2% year over year to $939.9 million.
M&T Bank's capital ratios were strong during the quarter. The
company's estimated Tier 1 common ratio was 9.62%, up from 8.55% as
of Jun 30, 2013. Further, the company's estimated common equity
Tier 1 to risk-weighted assets ratio under the new capital rules,
approved in Jul 2013, on a fully phased-in basis was 9.35% as of
Jun 30, 2014.
Following the financial crisis, the market witnessed a rise in the
number of distressed banks ready to be taken over by their stronger
counterparts. M&T Bank capitalized on such opportunities. In
fact, strategic acquisitions have been a part of M&T Bank's
business expansion policy. The deal with
Hudson City Bancorp Inc.
) will expectedly provide upside to M&T Bank's top line by
leveraging the former's retail network as well as product and
balance sheet diversification.
The company, with its solid business model and strategic
acquisitions, is well poised for growth. While the sluggish
economic recovery, regulatory issues and low interest rate
environment remain headwinds for M&T Bank, we believe that its
sound capital position, improving credit quality and growing core
deposit bode well in the long run.
M&T Bank currently carries a Zacks Rank #3 (Hold).
Performance of Other Large Wall Street Firms
The second-quarter earnings season kick started with
Wells Fargo & Company
). Driven by prudent expense management, Wells Fargo earned $1.01
per share in second-quarter 2014, thereby surpassing 98 cents
earned in the year-ago quarter. However, the reported figure was in
line with the Zacks Consensus Estimate.
Continuing the positive note,
) reported impressive second-quarter 2014 results. Adjusted
earnings per share came in at $1.24, outpacing the Zacks Consensus
Estimate of $1.08. However, earnings were below the year-ago figure
by a penny.
Results in the reported quarter were impacted by credit valuation
adjustment (CVA) and debt valuation adjustment (DVA). Moreover,
results included charges worth $3.8 billion ($3.7 billion
after-tax) related to the aforementioned deal. Including these,
Citigroup reported net income of $181 million or 3 cents per share
in the second quarter compared with $4.2 billion or $1.34 per share
in the prior-year quarter.
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