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What's in the Cards for M&T Bank (MTB) This Earnings Season?

Zacks Equity Research

M&T Bank Corporation MTB is scheduled to report fourth quarter and 2019 results on Jan 23, before the opening bell. The company’s revenues and earnings are likely to have witnessed year-over-year decline.

M&T Bank’s third-quarter results missed the Zacks Consensus Estimate due to rise in expenses and deteriorating credit metrics. However, rise in net interest income and fee income was a driving factor.

Activities of the company in the to-be-reported quarter were adequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of $3.47 has been revised upward over the past 30 days. Nevertheless, the figure indicates 8.4% fall from the year-ago reported figure.

The consensus estimate for M&T Bank’s revenues for the quarter is pegged at $1.52 billion, which suggests 1.4% fall from the year-ago reported figure.

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M&T Bank Corporation Price and EPS Surprise

M&T Bank Corporation Price and EPS Surprise
M&T Bank Corporation Price and EPS Surprise

M&T Bank Corporation price-eps-surprise | M&T Bank Corporation Quote

Factors at Play

Soft Net Interest Income Growth: A dismal lending scenario, mainly in the areas of commercial and industrial, during the quarter is expected to have had an adverse impact on net interest income. However, decent consumer and commercial real estate loan growth might have been an offsetting factor.

Further, the Fed’s accommodative policy stance, decline in interest rates and steadily rising deposit betas are likely to have hurt its net interest margin.

Higher Fee Income: The company might have witnessed growth in trust revenues on the back of strong equity markets in the fourth 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 have registered a rise in service charge on deposits, as deposit balance is expected to have increased. Thus, other income is expected to have witnessed overall growth.

Notably, management expects fee income to increase in low single-digit range.

Rise in Expenses: While the absence of considerable legal expenses is encouraging, increased investments in technology to improve digital offerings might have escalated costs moderately.

Here is what our quantitative model predicts:

Our quantitative model doesn’t conclusively predict an earnings beat for M&T Bank this time around. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better increases the odds of an earnings beat, which is not the case here.

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 -0.83%.

Zacks Rank: M&T Bank currently carries a Zacks Rank of 3.

Stocks That Warrant a Look

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

Bank of Hawaii Corporation BOH is set to release results on Jan 27. The company has an Earnings ESP of +0.37% and carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Earnings ESP for Cullen/Frost Bankers CFR is +0.18% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Jan 30.

Synovus Financial Corp. SNV has an Earnings ESP of +0.86% and at present holds a Zacks Rank of 3. It is scheduled to report quarterly figures on Jan 24.

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M&T Bank Corporation (MTB) : Free Stock Analysis Report
 
Synovus Financial Corp. (SNV) : Free Stock Analysis Report
 
Cullen/Frost Bankers, Inc. (CFR) : Free Stock Analysis Report
 
Bank of Hawaii Corporation (BOH) : Free Stock Analysis Report
 
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Zacks Investment Research