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What's in the Cards for M&T Bank (MTB) This Earnings Season?
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M&T Bank Corporation (MTB - Free Report) is scheduled to report first-quarter 2022 results on Apr 20, before the opening bell. The company’s revenues and earnings are expected to have decreased year over year.
M&T Bank reported an earnings surprise of 30% in the prior quarter. A rise in non-interest income and recapture of provisions were tailwinds. Further, the results highlight the company’s strong capital position during the quarter. However, a fall in net interest income (NII) and net interest margin (NIM), and a rise in expenses were the key undermining factors.
M&T Bank has a decent earnings surprise history, having surpassed estimates in three of the last four quarters and missing in the other. The company has a trailing four-quarter earnings surprise of 5.4%, on average.
This April, M&T Bankcompleted the acquisition of People's United Financial, Inc. for $8.3 billion. The move is a strategic fit for M&T Bank since it increases footprints in 12 U.S. states, helping it reach more customers and expand into new regions. The combined company has created a $200-billion banking franchise, serving clients in the attractive banking markets of the Northeast and Mid-Atlantic regions, from Maine to Virginia and Washington, DC.
While this will offer M&T Bank additional growth prospects and strengthen the company's financials in the long term, the bank’s first-quarter results will not reflect benefits from the consolidation.
Key Factors to Note
NII: The overall lending scenario improved in the first quarter, as seen by growth in commercial and industrial loan, commercial real estate loan, and consumer loan portfolios, per the Fed’s latest data. Given M&T Bank’s substantial exposure to commercial and commercial real estate loans, (64% of the net loans as of 2021 end), the company is likely to have seen a decent acceleration in loan balances.
Also, M&T Bank operates as a solid and sustainable regional bank franchise, with a footprint spanning six Mid-Atlantic States. This is expected to have enabled the company to witness decent loan growth in the quarter.
Yet, high levels of pay downs and payoffs, and stiff loan pricing competition are likely to have hindered loan volumes. The Zacks Consensus Estimate of $142.2 billion for first-quarter average interest-earning assets suggests a 1.5% decline from the prior quarter’s reported number.
Though the Federal Reserve increased the interest rates by 25 basis points (bps) in mid-March, there is likely to be very less impact of the same on the company’s quarterly margins and NII.
NII is estimated to be $903 million, indicating a 3.3% fall from the prior quarter’s reported figure.
Fee Income: M&T Bankis anticipated to have witnessed a decline in trust revenues on disappointing equity market performance in the to-be-reported quarter. The Zacks Consensus Estimate of $166 million for the same implies a 1.8% sequential decline.
Unlike the last several quarters, deposit balance growth decelerated in the first quarter. This is likely to have had an adverse impact on revenues from service charges on deposits. The Zacks Consensus Estimate for the same of $102 million suggests a 2.9% decrease from the prior quarter’s levels.
Residential mortgage production continued to reduce in the first quarter as mortgage rates increased sequentially. Also, moderation in residential refinancing activity due to the rise in rates is expected to have weighed on mortgage banking income.
The company is expected to have retained a large majority of its originating mortgage loans. These are likely to have reduced residential gains on sale margins for MTB in the to-be-reported quarter. The Zacks Consensus Estimate for the same of $124 million suggests a slip of 10.8% from the prior quarter’s reported level.
Expenses: Given M&T bank’s ongoing investments in several areas, including operational infrastructure and technology, we expect the company’s expense base to have been under pressure in the first quarter.
Also, amid flaring inflation and a competitive labor market, compensation expenses are likely to have increased in the quarter. This is likely to have limited operational efficiency and bottom-line growth.
Here is what our quantitative model predicts:
M&T Bank has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat this time around.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for M&T Bank is +5.43%.
Zacks Rank: M&T Bank currently carries a Zacks Rank of 3.
Earnings and Revenue Estimates
Prior to the first-quarter earnings release, the company is witnessing downward estimate revisions, reflecting the bearish sentiment of analysts. The Zacks Consensus Estimate for first-quarter earnings has been revised marginally south to $2.30 in the past week. However, the figure suggests a year-over-year fall of 32.6%.
The consensus estimate for revenues of $1.46 billion suggests a decline of 1.5% from the year-ago quarter’s levels.
Key Developments During the Quarter
In February, MTB announced that it would remove non-sufficient funds fee, overdraft protection transfer charges from a linked deposit account, and reduce overdraft fees to $15 and limit daily fee assessment to once per day, effective second-quarter 2022.
In the same month, its board of directors re-authorized its stock repurchase program, which was suspended in 2021 until the closing of the People's United acquisition. The buyback allows up to $800 million of shares of common stock repurchases.
Other Bank Stocks Worth a Look
Associated Bancorp (ASB - Free Report) and IndependentBank Corporation (IBCP - Free Report) are a few other stocks that you might want to consider, as these too have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for Associated Bancorp is +0.81% and the company carries a Zacks Rank #2 (Buy) at present. ASB is slated to report first-quarter 2022 results on Apr 21.
The Zacks Consensus Estimate for Associated Bancorp’s first-quarter earnings has moved 2.7% south over the past week.
Image: Bigstock
What's in the Cards for M&T Bank (MTB) This Earnings Season?
M&T Bank Corporation (MTB - Free Report) is scheduled to report first-quarter 2022 results on Apr 20, before the opening bell. The company’s revenues and earnings are expected to have decreased year over year.
M&T Bank reported an earnings surprise of 30% in the prior quarter. A rise in non-interest income and recapture of provisions were tailwinds. Further, the results highlight the company’s strong capital position during the quarter. However, a fall in net interest income (NII) and net interest margin (NIM), and a rise in expenses were the key undermining factors.
M&T Bank has a decent earnings surprise history, having surpassed estimates in three of the last four quarters and missing in the other. The company has a trailing four-quarter earnings surprise of 5.4%, on average.
M&T Bank Corporation Price and EPS Surprise
M&T Bank Corporation price-eps-surprise | M&T Bank Corporation Quote
This April, M&T Bankcompleted the acquisition of People's United Financial, Inc. for $8.3 billion. The move is a strategic fit for M&T Bank since it increases footprints in 12 U.S. states, helping it reach more customers and expand into new regions. The combined company has created a $200-billion banking franchise, serving clients in the attractive banking markets of the Northeast and Mid-Atlantic regions, from Maine to Virginia and Washington, DC.
While this will offer M&T Bank additional growth prospects and strengthen the company's financials in the long term, the bank’s first-quarter results will not reflect benefits from the consolidation.
Key Factors to Note
NII: The overall lending scenario improved in the first quarter, as seen by growth in commercial and industrial loan, commercial real estate loan, and consumer loan portfolios, per the Fed’s latest data. Given M&T Bank’s substantial exposure to commercial and commercial real estate loans, (64% of the net loans as of 2021 end), the company is likely to have seen a decent acceleration in loan balances.
Also, M&T Bank operates as a solid and sustainable regional bank franchise, with a footprint spanning six Mid-Atlantic States. This is expected to have enabled the company to witness decent loan growth in the quarter.
Yet, high levels of pay downs and payoffs, and stiff loan pricing competition are likely to have hindered loan volumes. The Zacks Consensus Estimate of $142.2 billion for first-quarter average interest-earning assets suggests a 1.5% decline from the prior quarter’s reported number.
Though the Federal Reserve increased the interest rates by 25 basis points (bps) in mid-March, there is likely to be very less impact of the same on the company’s quarterly margins and NII.
NII is estimated to be $903 million, indicating a 3.3% fall from the prior quarter’s reported figure.
Fee Income: M&T Bankis anticipated to have witnessed a decline in trust revenues on disappointing equity market performance in the to-be-reported quarter. The Zacks Consensus Estimate of $166 million for the same implies a 1.8% sequential decline.
Unlike the last several quarters, deposit balance growth decelerated in the first quarter. This is likely to have had an adverse impact on revenues from service charges on deposits. The Zacks Consensus Estimate for the same of $102 million suggests a 2.9% decrease from the prior quarter’s levels.
Residential mortgage production continued to reduce in the first quarter as mortgage rates increased sequentially. Also, moderation in residential refinancing activity due to the rise in rates is expected to have weighed on mortgage banking income.
The company is expected to have retained a large majority of its originating mortgage loans. These are likely to have reduced residential gains on sale margins for MTB in the to-be-reported quarter. The Zacks Consensus Estimate for the same of $124 million suggests a slip of 10.8% from the prior quarter’s reported level.
Expenses: Given M&T bank’s ongoing investments in several areas, including operational infrastructure and technology, we expect the company’s expense base to have been under pressure in the first quarter.
Also, amid flaring inflation and a competitive labor market, compensation expenses are likely to have increased in the quarter. This is likely to have limited operational efficiency and bottom-line growth.
Here is what our quantitative model predicts:
M&T Bank has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat this time around.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for M&T Bank is +5.43%.
Zacks Rank: M&T Bank currently carries a Zacks Rank of 3.
Earnings and Revenue Estimates
Prior to the first-quarter earnings release, the company is witnessing downward estimate revisions, reflecting the bearish sentiment of analysts. The Zacks Consensus Estimate for first-quarter earnings has been revised marginally south to $2.30 in the past week. However, the figure suggests a year-over-year fall of 32.6%.
The consensus estimate for revenues of $1.46 billion suggests a decline of 1.5% from the year-ago quarter’s levels.
Key Developments During the Quarter
In February, MTB announced that it would remove non-sufficient funds fee, overdraft protection transfer charges from a linked deposit account, and reduce overdraft fees to $15 and limit daily fee assessment to once per day, effective second-quarter 2022.
In the same month, its board of directors re-authorized its stock repurchase program, which was suspended in 2021 until the closing of the People's United acquisition. The buyback allows up to $800 million of shares of common stock repurchases.
Other Bank Stocks Worth a Look
Associated Bancorp (ASB - Free Report) and IndependentBank Corporation (IBCP - Free Report) are a few other stocks that you might want to consider, as these too have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for Associated Bancorp is +0.81% and the company carries a Zacks Rank #2 (Buy) at present. ASB is slated to report first-quarter 2022 results on Apr 21.
The Zacks Consensus Estimate for Associated Bancorp’s first-quarter earnings has moved 2.7% south over the past week.
Independent Bank is scheduled to release first-quarter results on Apr 26. IBCP currently has a Zacks Rank #2 and an Earnings ESP of +10%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for IBCP’s first-quarter earnings has been flat over the past 30 days.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.