M&T Bank Corporation (MTB): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
M&T Bank's fourth-quarter 2014 operating earnings came ahead of the Zacks Consensus Estimate and the prior-year quarter figure as well. Impressive results came on the back of top line growth, lower expenses and decline in provision for loan losses. Further, increased loans and deposits, continued improvement in credit metrics and a strong capital position were the tailwinds. After analyzing the company's results, we are maintaining our long-term Neutral recommendation on the stock.


Overview:

Headquartered in Buffalo, N.Y. and founded in 1969, M&T Bank Corporation (MTB) is the holding company for M&T Bank and Wilmington Trust, National Association. M&T Bank operates branch offices in New York, Maryland, Pennsylvania, Delaware, New Jersey, Virginia, West Virginia and the D.C. M&T holds a 20% interest in Bayview Lending Group LLC ("BLG"), a privately-held commercial mortgage company. M&T recognizes income or loss from BLG using the equity method of accounting. The carrying value of that investment was $51 million as of Sep 30, 2014.

In Aug 2012, the U.S. Treasury announced a public offering of preferred stock worth $381.5 million, which it held in M&T Bank. This allowed M&T Bank Corp. to exit the Troubled Assets Relief Program (TARP).

Back in 2008, M&T participated in TARP and took $600 million as the bailout money. In return, preferred stocks were issued to the Treasury. In the meantime, the acquisitions of two TARP recipients Provident Bankshares Corp. (acquired in 2009) and Wilmington Trust Corp. (2011) burdened the company with more TARP funds to be returned. M&T Bank already paid a part of its TARP dues ($700 million) in May 2011 and was left with the remaining $381.5 million in the TARP preferred stock.

The reportable segments are Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and Retail Banking. Details are as follows:

The Business Banking segment provides a wide range of services to small businesses and professionals through the company's branch network, business banking centers and other delivery channels such as telephone banking, Internet banking and automated teller machines. Services and products offered by this segment include various business loans and leases, business credit cards, deposit products and financial services such as cash management, payroll and direct deposit, merchant credit card and letters of credit.

The Commercial Banking segment provides a wide range of credit products and banking services for middle-market and large commercial customers. Services provided by this segment include commercial lending and leasing, letters of credit, deposit products, and cash management services.

The Commercial Real Estate segment provides credit and deposit services to its customers. Real estate securing loans in this segment is generally located in the New York City metropolitan area, upstate New York, Pennsylvania, Maryland, D.C., Delaware, Virginia, West Virginia, and the northwestern portion of the United States. Commercial real estate loans may be secured by apartment/multifamily buildings office, retail and industrial space or other types of collateral. Activities of this segment also include the origination, sales and servicing of commercial real estate loans through the Fannie Mae DUS program and other programs.

The Discretionary Portfolio segment includes investment and trading securities, residential mortgage loans and other assets short-term and long-term borrowed funds brokered certificates of deposit and interest rate swap agreements related thereto and Cayman Islands office deposits. This segment also provides foreign exchange services to customers.

The Residential Mortgage Banking segment originates and services residential mortgage loans and sells substantially all of those loans in the secondary market to investors or to the Discretionary Portfolio segment.

The Retail Banking segment offers a variety of services to consumers through several delivery channels, which include branch offices, automated teller machines, telephone banking and Internet banking. The segment also offers certain deposit products on a nationwide basis through the delivery channels of Wilmington Trust, N.A. Credit services offered by this segment include consumer installment loans, automobile loans, home equity loans and lines of credit and credit cards.

The All Other' category reflects other activities of the company that are not directly attributable to the reported segments.

As of Sep 30, 2014, the company had consolidated assets of $97.2 billion, net loans and leases of $64.7 billion and deposits of $74.3 billion.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Stocks

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