M&T Bank Corporation
) second quarter 2012 operating earnings of $1.82 per share were
significantly above the Zacks Consensus Estimate of $1.68. In
addition, this surpassed the prior-quarter earnings of $1.59 per
The results were aided by increased net interest and
non-interest income as well as lower operating expenses. Mortgage
banking revenues posted a decent rise in the quarter. Moreover,
improved capital ratios also reflected the company's strong capital
position. However, the mixed credit metrics were the dampeners.
On a GAAP basis, M&T Bank reported net income of $233
million or $1.71 per share, growing from $206 million or $1.50 per
share in the prior quarter. Results of the reported quarter
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.
Quarter in Detail
M&T Bank's net interest income came in at $655 million, up
4.5% from the previous quarter. The improvement was primarily due
to increases in average earning assets and average loans
outstanding. The growth also stems from a hike in the net interest
margin, which improved to 3.74% from 3.69% in the prior
Expansion in net interest margin reflected an additional $14
million of interest income as a result of enhanced cash flows,
which were expected to be collected on acquired loans.
M&T Bank's non-interest income increased 4.0% sequentially
to $392 million and included pre-tax losses on investment
securities. Excluding gains and losses from investment securities
in all periods and gain recorded in the prior-year quarter, related
to the Wilmington Trust acquisition, non-interest income came in at
$408 million, exhibiting an improvement of 5.2% from $388 million,
reported in the last quarter. The sequential hike was primarily
attributable to higher mortgage banking revenues and trust
M&T Bank's non-interest expense was $627 million, down 2.0%
from the prior quarter. Excluding non-operating expenses and other
merger-related costs, non-interest operating expenses came in at
$604 million, down 2.6% from the prior quarter. The sequential
decline primarily reflected decreases in salaries and employee
benefits, including stock-based compensation. Efficiency ratio
improved to 56.9% from 61.1% in the previous quarter.
Loans and leases, net of unearned discount, were $62.9 billion
at the end of the second quarter, up 3.3% sequentially from $60.9
billion. Total deposits increased 2.6% sequentially to $62.5
billion as of June 30, 2012 from $60.9 billion at the end of the
Credit metrics was a mixed bag during the quarter under review,
where provision for credit losses grew 22.4% to $60 million and net
charge-offs rose 8.3% to $52 million. Net charge-offs, as a
percentage of average loans outstanding, were 0.34%, up from 0.32 %
in the preceding quarter. However, the ratio of non-accrual loans
to total net loans moved down to 1.54% from 1.75% in the previous
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 1.30% and 18.54%, respectively,
compared with 1.18% and 16.79% recorded in the earlier quarter.
M&T Bank's tangible common equity to tangible assets ratio
was 6.65% as of June 30, 2012, improving from 6.51% as of March 31,
2012. The company's Tier 1 common ratio stood at 7.15% as of June
30, 2012 compared with 7.04% as of March 31, 2012.
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 #3 Rank, which
translates into a short-term Hold rating. Considering the
fundamentals, we also maintain our long-term Neutral recommendation
on the stock.
M&T Bank's close competitors,
Fifth Third Bancorp
), are scheduled to announce their second quarter 2012 results on
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M&T BANK CORP (MTB): Free Stock Analysis
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