A month has gone by since the last earnings report for M&T Bank Corporation (MTB Quick QuoteMTB - Free Report) . Shares have added about 4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is M&T Bank Corporation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

M&T Bank Q3 Earnings Miss on Higher Costs, Provisions

M&T Bank reported net operating earnings per share of $3.83 in third-quarter 2022, which lagged the Zacks Consensus Estimate of $4.21. The bottom line compares favorably with $3.76 per share reported in the year-ago period.

The results were adversely impacted by an increase in credit costs, higher expenses and a fall in non-interest income. Yet, a rise in NII on net interest margin expansion, higher rates and balance sheet strength offered some support.

The net income available to common shareholders in the reported quarter was around $621 million, jumping 30% from the prior year.

Revenues Jump on Higher NII, Expenses Rise

M&T Bank’s quarterly revenues totaled $2.24 billion, missing the consensus mark of $2.30 billion. Nonetheless, the reported figure jumped 46% year over year.

NII, on a taxable-equivalent basis, surged 74% year over year to $1.7 billion. This was mainly driven by a higher net interest margin and the impact of earning assets from the People's United acquisition. The net interest margin (NIM) expanded 94 bps to 3.68%.

The company’s non-interest income was $563 million, down 1%. Lower mortgage banking revenues mainly led to the fall.

The non-interest expenses totaled $1.3 billion, flaring up 42%. The upsurge mainly stemmed from the impact of the acquisition of People's United. Excluding non-operating charges, the non-interest operating expenses were $1.2 billion.

The efficiency ratio was 53.6%, down from 57.7% in the year-earlier quarter. A lower ratio indicates a rise in profitability.

Loans and leases, net of unearned discount, were $128.2 billion at the end of the reported quarter, relatively stable from the prior quarter. The total deposits declined 4% to $163.8 billion.

Credit Quality Deteriorates

The net charge-offs increased 58% on a year-over-year basis to $63 million. The non-performing assets rose 9% to $2.5 billion. The company recorded a provision for credit losses of $115 million against a recapture of $20 million in the year-ago quarter.

Nonetheless, the ratio of non-accrual loans to total net loans was 1.89%, down from 2.40% year over year.

Capital & Profitability Ratios Strong

M&T Bank’s estimated Common Equity Tier 1 ratio was 10.7%, down from 11.1% as of Sep 30, 2020. The tangible equity per share was $84.28, down from $86.88 as of Sep 30, 2021.

M&T Bank's return on average tangible assets (annualized) and average tangible common shareholder equity were 1.44% and 17.89% compared with 1.34% and 17.54%, respectively, in the prior-year quarter.

Share Repurchase Update

The company repurchased 3.3 million shares of its common stock in the third quarter for $600 million.

Outlook

NII is expected to be $1.9 billion in the fourth quarter, plus or minus $25 million. NIM is expected to be 4.15% in the fourth quarter.

Management expects non-interest revenues to be flat in the fourth quarter.

Operating expense growth (excluding merger-related costs and intangible amortization) is estimated to be sequentially flat in the fourth quarter.

Management expects the net charge-off ratio to be 20 bps in the fourth quarter.

The CET1 ratio is anticipated to be slightly above 10.5%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -6.15% due to these changes.

VGM Scores

At this time, M&T Bank Corporation has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, M&T Bank Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

M&T Bank Corporation is part of the Zacks Banks - Major Regional industry. Over the past month, The PNC Financial Services Group, Inc (PNC Quick QuotePNC - Free Report) , a stock from the same industry, has gained 7.3%. The company reported its results for the quarter ended September 2022 more than a month ago.

The PNC Financial Services Group, Inc reported revenues of $5.55 billion in the last reported quarter, representing a year-over-year change of +6.8%. EPS of $3.78 for the same period compares with $3.75 a year ago.

The PNC Financial Services Group, Inc is expected to post earnings of $3.98 per share for the current quarter, representing a year-over-year change of +8.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.

The PNC Financial Services Group, Inc has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.