Updated Research Report on M&T Bank - Analyst Blog


On Feb 17, 2014, we issued an updated research report on M&T Bank Corporation ( MTB ). 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 Estimate.

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 BB&T Corporation ( BBT ), Fifth Third Bancorp ( FITB ) and The PNC Financial Services Group, Inc. ( PNC ). All 3 carry a Zacks Rank #2 (Buy).

BB&T CORP (BBT): Free Stock Analysis Report

FIFTH THIRD BK (FITB): Free Stock Analysis Report

M&T BANK CORP (MTB): Free Stock Analysis Report

PNC FINL SVC CP (PNC): Free Stock Analysis Report

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Zacks Investment Research

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 , Business , Stocks

Referenced Stocks: BBT , FITB , MTB , PNC



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