On Feb 17, 2014, we issued an updated research report on
M&T Bank Corporation
). The company's fourth-quarter 2013 results reflected a sound
capital position, improving credit quality and growth in core
deposits. However, with in line revenues, on the whole, its
profit level lagged expectations. A low interest-rate
environment, elevated non-interest expenses and regulatory issues
along with litigation risks remain concerns.
The company posted operating earnings of $1.79 per share that
lagged the Zacks Consensus Estimate of $1.91. Notably, following
the recent settlement of the lawsuit of its Wilmington Trust
unit, M&T Bank restated GAAP net income of $221.4 million or
$1.56 per share, down from the previously reported net income of
$245.7 million or $1.74 per share.
For the resolution of the case, which was filed in Delaware
Chancery Court in Wilmington, the company increased litigation
reserves by $40 million as of Dec 31, 2013.
M&T Bank's total revenue, net of interest expense was
recorded at $1.1 billion, almost flat with the prior-year
quarter. Additionally, it was in line with the Zacks Consensus
With continuously rising non-interest operating expenses, M&T
Bank is exposed to operational risks. Expenses surged at a CAGR
of 8.1% over the last 4 years (2010-2013). Continuation of such a
trend will remain a hindrance for bottom-line growth.
However, credit quality significantly improved at M&T Bank in
the final quarter. Provision for credit losses decreased 14.3%
year over year to $42 million. Net charge-offs, as a percentage
of average loans outstanding were 0.26%, down from 0.27% in the
year-ago quarter. Further, non-performing assets decreased 16%
year over year to $938 million.
Lower-than-expected results triggered a downward revision in the
Zacks Consensus Estimates, as analysts become more bearish on the
stock's future performance. This is evident from the movement
witnessed in the Zacks Consensus Estimate that decreased 2.4% to
$7.70 for 2014 and 2.0% to $8.80 per share for 2015, over the
past 30 days.
M&T Bank currently carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Some better ranked stocks worth considering include
Fifth Third Bancorp
The PNC Financial Services Group, Inc.
). All 3 carry a Zacks Rank #2 (Buy).
BB&T CORP (BBT): Free Stock Analysis
FIFTH THIRD BK (FITB): Free Stock Analysis
M&T BANK CORP (MTB): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
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