M&T Bank Corporation's
) first quarter 2012 operating earnings of $1.59 per share were
significantly above the Zacks Consensus Estimate of $1.47. Earnings
also surpassed the prior-quarter earnings of $1.20 per share.
Quarterly results were aided by an increase in net interest
margin and lower non-interest expenses. Moreover, improved credit
quality in the quarter was on the positive side, though a decrease
in non-interest income acted as a headwind. Improved capital ratios
also depict strong capital position of the company.
On a GAAP basis, M&T Bank reported net income of $206
million or $1.50 per share, up from $148 million or $1.04 per share
in the prior quarter. Quarterly results included a number of
special items such as the impact of amortization of core deposit
and other intangible assets as well as merger-related gains and
expenses along with other items.
Quarter in Detail
M&T Bank's net interest income came in at $627 million, up
0.3% sequentially. The growth stems from a 9 basis points hike in
the net interest margin that improved to 3.69% from 3.60% in the
Expansion in net interest margin reflects an increase in average
loans outstanding in the reported quarter, which was partially
offset by a fall in lower yielding balances with the Federal
M&T Bank's non-interest income decreased 5.3% sequentially
to $377 million, including pre-tax losses from investment
securities of $11 million. Excluding gains and losses from
investment securities in all periods and income recorded from the
litigation settlement in the prior quarter, non-interest income
came in at $388 million, showing an improvement of 5.4% from $368
million, reported in the previous quarter.
The sequential decline was attributable to appreciably lower
other revenues from operations, partly offset by a rise in mortgage
M&T Bank's non-interest expense was $640 million, down 13.5%
from the prior quarter. Excluding non-operating expenses and other
merger-related costs, non-interest operating expenses came in at
$620 million, down 12.2% sequentially, primarily due to lower other
costs of operations, partly offset by high salaries and employee
benefits expenses. Efficiency ratio improved to 61.1% from 67.4% in
the prior quarter.
Loans and leases, net of unearned discount, were $60.9 billion
at the end of the first quarter, up 1.5% sequentially from $60.1
billion. Total deposits increased 2.5% sequentially to $60.9
billion at March 31, 2012 from $59.4 billion at the end of the
Credit metrics improved during the quarter, witnessing a 34%
sequential decline in provision for credit losses to $49 million
and a 35% reduction in net charge-offs to $48 million. Net
charge-offs as a percentage of average loans outstanding were
0.32%, down from 0.50% in the last quarter. Moreover, the
ratio of nonaccrual loans to total net loans moved down to 1.75%
from 1.83% in the previous quarter.
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 1.18% and 16.79%, respectively,
compared with 0.89% and 12.36% in the prior quarter.
M&T Bank's tangible common equity to tangible assets ratio
was 6.51% as of March 31, 2012, improving from 6.44% as of December
31, 2011. The company's Tier 1 common ratio stood at 7.04% as of
March 31, 2012 compared with 6.86% as of December 31, 2011.
Among M&T Bank's peers,
JPMorgan Chase & Co.
) reported first-quarter earnings per share of $1.31, topping the
Zacks Consensus Estimate of $1.17. JPMorgan's better-than-expected
earnings signal appreciable performance of the sector as it has
exposure in almost all banking businesses. Marked recovery of the
bond and equity market as well as a consequent revenue growth,
which helped JPMorgan to bounce back, should lift the results of
other mega-banks during the quarter.
While the tepid economic recovery and regulatory issues remain
headwinds for the stock, a sound capital position, with a growing
core deposit will uphold the bank in the long run.
M&T Bank currently retains its Zacks #3 rank, which
translates into a short-term "Hold" rating. Considering the
fundamentals, we also maintain our long-term 'Neutral'
recommendation on the stock.
JPMORGAN CHASE (
): Free Stock Analysis Report
M&T BANK CORP (
): Free Stock Analysis Report
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