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M&T Bank (MTB) Disappoints on Q4 Earnings, Revenues Up
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M&T Bank Corporation’s (MTB - Free Report) net operating earnings of $2.01 per share for fourth-quarter 2016 lagged the Zacks Consensus Estimate $2.03. Also, the bottom line declined 3.8% year over year.
Results were impacted by higher provisions. However, top-line growth and lower expenses were recorded. Further, the company witnessed continued growth in loan and deposit balances and maintained a solid capital position.
Net operating income came in at $336 million, down around 1% year over year.
For the year ended 2016, operating earnings per share were $8.08, up 4% compared with the prior-year figure of $7.74. Results also outpaced the Zacks Consensus Estimate by 24 cents.
On a GAAP basis, M&T Bank’s earnings per share of $1.98 also jumped 20% year over year. Net income climbed 22% year over year to $331 million.
For the year-ended 2016, GAAP net income was $1.32 billion or $7.78 per share, up from $1.08 billion or $7.18 per share reported in the prior year.
NII & Fee Income Growth Boost Revenues, Expenses Fall
Revenues for the year-ended 2016 were $5.3 billion, which marked a year-over-year increase of 12.8%. Results were in line with the Zacks Consensus Estimate.
M&T Bank’s revenues came in at $1.34 billion, outpacing the Zacks Consensus Estimate of $1.32 billion. In addition, it compared favorably with the year-ago figure of $1.26 billion.
Taxable-equivalent net interest income increased 9% year over year to $883 million in the quarter, driven by increased average earning assets. However, net interest margin contracted 4 basis points year over year to 3.08%.
Supported by strong growth in mortgage banking revenues and rise in trust income, the company’s other income climbed 14% year over year to $465 million.
Non-interest expenses were $769 million, down 2% from the prior-year quarter. Excluding certain non-operating items, non-interest operating expenses came in at $760 million, improving 8.4% from the year-ago quarter. The rise reflected contribution to The M&T Charitable Foundation and higher FDIC assessments.
Efficiency ratio deteriorated to 56.4% in quarter from 55.5% in the prior-year quarter. Deterioration in ratio indicates decline in profitability.
Loans and leases, net of unearned discount, increased 4% year over year to $90.9 billion at the end of the quarter. Moreover, total deposits rose 4% year over year to $95.5 billion.
M&T Bank's net operating income highlighted an annualized rate of return on average tangible assets and average tangible common shareholder equity of 1.10% and 11.93%, respectively, compared with 1.21% and 13.26% recorded in the prior-year quarter.
Credit Quality Deteriorated
M&T Bank reflected a mixed credit quality in the reported quarter. Provision for credit losses increased 6.9% year over year to $62 million. Net charge-offs of loans came in at $49 million, up 37% year over year. Further, non-performing assets increased 7% year over year to $1.06 billion.
Further, the ratio of non-accrual loans to total net loans was 1.01%, up from 0.91% in the prior-year quarter. Additionally, allowance for credit losses to total loans was 1.09%, in line with the year-ago quarter.
Strong Capital Position
M&T Bank’s estimated Common Equity Tier 1 to risk-weighted assets under regulatory capital rules was around 10.96%. Tangible equity per share came in at $67.85, up 6% year over year.
Share Repurchase
During 2016, M&T Bank repurchased a total of 5.61 million shares of its common stock at an average cost per share of $114.37 for a total cost of $641 million. Notably, during the fourth quarter, the company repurchased 0.3 million shares of common stock for a total cost of $37 million at an average cost per share of $124.45.
Our Viewpoint
M&T Bank’s results reflect a decent performance in the quarter. We believe that the company, with its sturdy business model and strategic acquisitions, is well poised for growth. The Hudson City acquisition has, in all probability, provided an upside to M&T Bank’s top line by leveraging on the former’s retail network as well as product and balance-sheet diversification.
However, regulatory issues and margin pressure remain headwinds for M&T Bank.
Bank of America Corporation (BAC - Free Report) reported fourth-quarter 2016 earnings. Rise in trading revenue as well as mortgage banking fees led to earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents. Moreover, the figure was 48% higher than the year-ago quarter number.
Driven by interest income, Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2016 earnings recorded a positive surprise of about 3%. Adjusted earnings of $1.03 per share outpaced the Zacks Consensus Estimate by 3 cents. Moreover, it compared favorably with the prior-year quarter’s earnings of $1.00 per share.Including net hedge ineffectiveness accounting impact of 7 cents, earnings came in at 96 cents per share.
Among other banks,Citizens Financial Group, Inc. (CFG - Free Report) is scheduled to report fourth-quarter 2016 earnings on Jan 20.
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M&T Bank (MTB) Disappoints on Q4 Earnings, Revenues Up
M&T Bank Corporation’s (MTB - Free Report) net operating earnings of $2.01 per share for fourth-quarter 2016 lagged the Zacks Consensus Estimate $2.03. Also, the bottom line declined 3.8% year over year.
Results were impacted by higher provisions. However, top-line growth and lower expenses were recorded. Further, the company witnessed continued growth in loan and deposit balances and maintained a solid capital position.
Net operating income came in at $336 million, down around 1% year over year.
For the year ended 2016, operating earnings per share were $8.08, up 4% compared with the prior-year figure of $7.74. Results also outpaced the Zacks Consensus Estimate by 24 cents.
On a GAAP basis, M&T Bank’s earnings per share of $1.98 also jumped 20% year over year. Net income climbed 22% year over year to $331 million.
For the year-ended 2016, GAAP net income was $1.32 billion or $7.78 per share, up from $1.08 billion or $7.18 per share reported in the prior year.
NII & Fee Income Growth Boost Revenues, Expenses Fall
Revenues for the year-ended 2016 were $5.3 billion, which marked a year-over-year increase of 12.8%. Results were in line with the Zacks Consensus Estimate.
M&T Bank’s revenues came in at $1.34 billion, outpacing the Zacks Consensus Estimate of $1.32 billion. In addition, it compared favorably with the year-ago figure of $1.26 billion.
Taxable-equivalent net interest income increased 9% year over year to $883 million in the quarter, driven by increased average earning assets. However, net interest margin contracted 4 basis points year over year to 3.08%.
Supported by strong growth in mortgage banking revenues and rise in trust income, the company’s other income climbed 14% year over year to $465 million.
Non-interest expenses were $769 million, down 2% from the prior-year quarter. Excluding certain non-operating items, non-interest operating expenses came in at $760 million, improving 8.4% from the year-ago quarter. The rise reflected contribution to The M&T Charitable Foundation and higher FDIC assessments.
Efficiency ratio deteriorated to 56.4% in quarter from 55.5% in the prior-year quarter. Deterioration in ratio indicates decline in profitability.
Loans and leases, net of unearned discount, increased 4% year over year to $90.9 billion at the end of the quarter. Moreover, total deposits rose 4% year over year to $95.5 billion.
M&T Bank's net operating income highlighted an annualized rate of return on average tangible assets and average tangible common shareholder equity of 1.10% and 11.93%, respectively, compared with 1.21% and 13.26% recorded in the prior-year quarter.
Credit Quality Deteriorated
M&T Bank reflected a mixed credit quality in the reported quarter. Provision for credit losses increased 6.9% year over year to $62 million. Net charge-offs of loans came in at $49 million, up 37% year over year. Further, non-performing assets increased 7% year over year to $1.06 billion.
Further, the ratio of non-accrual loans to total net loans was 1.01%, up from 0.91% in the prior-year quarter. Additionally, allowance for credit losses to total loans was 1.09%, in line with the year-ago quarter.
Strong Capital Position
M&T Bank’s estimated Common Equity Tier 1 to risk-weighted assets under regulatory capital rules was around 10.96%. Tangible equity per share came in at $67.85, up 6% year over year.
Share Repurchase
During 2016, M&T Bank repurchased a total of 5.61 million shares of its common stock at an average cost per share of $114.37 for a total cost of $641 million. Notably, during the fourth quarter, the company repurchased 0.3 million shares of common stock for a total cost of $37 million at an average cost per share of $124.45.
Our Viewpoint
M&T Bank’s results reflect a decent performance in the quarter. We believe that the company, with its sturdy business model and strategic acquisitions, is well poised for growth. The Hudson City acquisition has, in all probability, provided an upside to M&T Bank’s top line by leveraging on the former’s retail network as well as product and balance-sheet diversification.
However, regulatory issues and margin pressure remain headwinds for M&T Bank.
M&T Bank Corp. Price, Consensus and EPS Surprise
M&T Bank Corp. Price, Consensus and EPS Surprise | M&T Bank Corp. Quote
Currently, M&T Bank carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Bank of America Corporation (BAC - Free Report) reported fourth-quarter 2016 earnings. Rise in trading revenue as well as mortgage banking fees led to earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents. Moreover, the figure was 48% higher than the year-ago quarter number.
Driven by interest income, Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2016 earnings recorded a positive surprise of about 3%. Adjusted earnings of $1.03 per share outpaced the Zacks Consensus Estimate by 3 cents. Moreover, it compared favorably with the prior-year quarter’s earnings of $1.00 per share.Including net hedge ineffectiveness accounting impact of 7 cents, earnings came in at 96 cents per share.
Among other banks,Citizens Financial Group, Inc. (CFG - Free Report) is scheduled to report fourth-quarter 2016 earnings on Jan 20.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>