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Improved Mortgage Activity to Aid M&T Bank (MTB) Q2 Earnings

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M&T Bank Corporation (MTB - Free Report) is scheduled to report second-quarter 2019 results on Jul 18, before the opening bell. The company’s revenues and earnings are expected to improve year over year.

M&T Bank’s first-quarter results surpassed the Zacks Consensus Estimate on top-line improvement supported by rising margins and loan growth. Improved credit quality and decline in expenses were other positive factors.

Notably, M&T Bank has an impressive earnings surprise history, having delivered positive earnings surprises in each of the trailing four quarters, the average beat being 5.2%.

M&T Bank Corporation Price and EPS Surprise

Why a Likely Positive Earnings Surprise?

Our proven model shows that M&T Bank has the right combination of the two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.

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 +0.20%.

Zacks Rank:The company currently carries a Zacks Rank of 3.

Notably, estimates for the to-be-reported quarter have been revised upward over the last seven days. Also, the Zacks Consensus Estimate for earnings of $3.70 suggests growth of 12.5% from the year-ago reported figure. The consensus estimate for sales of $1.53 billion indicates an increase of 4.6%. 

Factors to Drive Q2 Results

Muted Net Interest Income: The quarter witnessed slowdown in the lending scenario primarily in commercial and Industrial, and real estate front. Thus, soft loan growth, combined with little support from margins due to flattening of yield curve and the Fed’s accommodative policy stance is expected to limit top-line expansion to some extent.

Fee Income Growth Might Impress: The company might witness growth in trust revenues on the back of strong equity market in the second quarter. Further, given the lower mortgage rates, M&T Bank is likely to have witnessed an improvement in mortgage loan refinancing activity, leading to rise in fee income.

Also, it is likely to register a rise in service charge on deposits, as deposit balance is expected to increase. Thus, overall growth in other income is expected for the to-be-reported quarter.

Notably, management expects fee income to grow in low single-digit range with the exception of trust revenues, which might grow in mid-single-digits.

Expenses to Trend Higher: Expenses are projected to trend higher in the quarter due to higher compensation costs and M&T Bank’s continued investments in several areas, including operational infrastructure and technology.

The company expects nominal rise in total operating expenses for 2019, which will reflect in the second quarter as well. This includes the full-year benefit of approximately $40 million from the elimination of the FDIC surcharge.

Other Stocks to Consider

Here are some other stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.

BOK Financial Corporation (BOKF - Free Report) is scheduled to release results on Jul 24. The company has an Earnings ESP of +1.16% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Earnings ESP for BB&T Corporation (BBT - Free Report) is +1.24% and it carries a Zacks Rank of 3, currently. The company is scheduled to report earnings on Jul 18.

The Earnings ESP for SunTrust Banks (STI - Free Report) is +0.93% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Jul 18.

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