Yahoo Finance M&T Bank (MTB) Q1 Earnings Top Estimates on Higher Revenues
M&T Bank Corporation MTB has reported net operating earnings per share of $4.09 in first-quarter 2023, which surpassed the Zacks Consensus Estimate of $3.98. The bottom line compares favorably with the $2.73 reported in the year-ago quarter.Our estimate for earnings was $3.85 per share.
Results have benefited from decent loan demand and higher rates, which supported net interest income (NII) growth. Other income improved in the quarter. However, an increase in credit costs and higher expenses acted as headwinds.
The net income available to common shareholders was $676 million, soaring 99% from the prior-year quarter.Our estimate for the metric was $637.2 million.
Revenues Jump on Higher NII, Expenses Rise
M&T Bank’s quarterly revenues were $2.41 billion, outpacing the consensus estimate of $2.36 billion. Nonetheless, the reported figure jumped 66% year over year.Our estimate for the metric was $2.3 billion.
NII surged 101% year over year to $1.81 billion. Our estimate for the metric was $1.76 billion. The increase was mainly driven by a higher net interest margin and the impacts of earning assets from the People's United acquisition. The net interest margin expanded 139 basis points (bps) to 4.04%.
Total non-interest income was $587 million, up 9% year over year. Higher trading accounts, service charges on deposit accounts, and other revenues from operations mainly drove the rise.Our estimate for the metric was $608.3 million.
Total noninterest expenses totaled $1.35 billion, flaring up 42% year over year. The upsurge mainly stemmed from the impacts of the acquisition of People's United higher salaries and employee benefits expenses, outside data processing and software costs, advertising and marketing expenses, FDIC assessments, and professional services expenses. Our estimate for the metric was $1.36 billion.
The efficiency ratio was 55.5%, down from 64.9% in the year-earlier quarter. A lower ratio indicates a rise in profitability.
Loans and leases, net of unearned discount, were $132.93 billion as of Mar 31, 2023, rising 2% from the prior quarter. The total deposits declined 2.7% to $159.07 billion.
Credit Quality Deteriorates
The net charge-offs increased to $70 million from $7 million on a year-over-year basis. The non-performing assets rose 21% to $2.6 billion. The company recorded a provision for credit losses of $120 million compared with $10 million in the year-ago quarter. Higher provision reflects the impacts of weaker economic conditions and higher outstanding loan balances.
Nonetheless, the ratio of non-accrual loans to total net loans was 1.92%, down year over year from 2.32%.
Capital Position Mixed, Profitability Ratios Strong
M&T Bank’s estimated Common Equity Tier 1 ratio was 10.15%, down from 10.44% as of Dec 31, 2022. The tangible equity per share was $88.81, up from $86.59 as of Dec 31, 2022.
M&T Bank's return on average tangible assets (annualized) and average tangible common shareholder equity were 1.49% and 19% compared with 1.04% and 12.44%, respectively, in the prior-year quarter.
Share Repurchase Update
The company repurchased 3.8 million shares of its common stock in the first quarter for $600 million.
Our View
M&T Bank put up a decent performance in the first quarter. Loan and revenue growth was primarily driven by its acquisition of People's United. The solid loan balance will likely continue aiding organic growth in the days to come. However, worsening credit quality and elevated expenses were headwinds.
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 Major Banks
Wells Fargo’s WFC first-quarter 2023 earnings per share of $1.23 outpaced the Zacks Consensus Estimate of $1.15. The figure improved 35% year over year.
WFC’s results have benefited from higher NII, rising rates and solid average loan growth. The fall in non-interest expenses acted as another tailwind. Yet, dismal non-interest income, higher provisions and weakness in the mortgage business were the major undermining factors for Wells Fargo.
Citigroup Inc.’s C first-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.86 have outpaced the Zacks Consensus Estimate of $1.66. Our estimate for earnings was $1.40 per share.
Citigroup witnessed revenue growth in the quarter, backed by higher revenues in the Institutional Clients Group, and Personal Banking and Wealth Management segments. However, the higher cost of credit was a spoilsport for C.
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