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What's in the Cards for M&T Bank (MTB) This Earnings Season?
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M&T Bank Corporation (MTB - Free Report) is scheduled to report third-quarter 2022 results on Oct 19, before the opening bell. The bank’s earnings and revenues are expected to have improved from the year-ago reported figure.
M&T Bank met the consensus mark in the prior quarter. A rise in net interest income (NII) and the net interest margin (NIM) were tailwinds. However, increased expenses were the key undermining factors.
M&T Bank has a decent earnings surprise history, having surpassed estimates in three of the last four quarters and meeting in the other. The company has a trailing four-quarter earnings surprise of 8.50%, on average.
NII: While lending activity improved sequentially in the third quarter, the pace of loan growth across most categories slowed as the quarter progressed. Per the Fed’s latest data, commercial and industrial loans, real estate loans, and consumer loans slightly moderated in July and August from the second quarter. Encouragingly, commercial real estate loan growth accelerated in the quarter under review.
Given M&T Bank’s substantial exposure to commercial and commercial real estate loans, the company is likely to have seen a decent acceleration in loan balances.
Also, M&T Bankoperates as a solid and sustainable regional bank franchise, with a footprint spanning six Mid-Atlantic States. Substantial geographic coverage and the past acquisition of People’s United are likely to have been tailwinds for lending activities.
However, the Zacks Consensus Estimate for third-quarter average interest-earning assets of $185.6 billion suggests a 2.2% fall from the prior quarter’s reported number.
Decent lending aside, higher interest rates are expected to have supported MTB’s NII. In the third quarter, the Fed hiked interest rates by 150 basis points. With this, the level of the policy rate reached 3.0-3.25%, the highest since 2008.This is likely to have driven MTB’s asset yield and NII.
NII is estimated to be $1.73 billion, indicating a 22.7% jump from the prior quarter’s reported figure.
Fee Income: While muted equity market performance in the to-be-reported quarter is expected to have been a headwind for trust income, new business and recapture of money market fee waivers are expected to have buoyed the same. The Zacks Consensus Estimate of $191 million for trust income implies a marginal sequential rise.
The company is expected to see lower service charges on deposits, reflecting the past implementation of overdraft policy changes and fee waivers, along with a likely runoff in deposits. The Zacks Consensus Estimate for service charges on deposits of $118 million suggests a 4.8% decline from the prior quarter’s reported level.
Residential mortgage production continued to reduce in the third quarter, as mortgage rates increased sequentially and exceeded the 6% mark in September. Also, moderation in residential refinancing activity due to the rise in rates is expected to have weighed on mortgage banking income. Also, as the company is anticipated to have retained its mortgage originations in the quarter, minimal gain on sale income is expected to have been witnessed. Nonetheless, the Zacks Consensus Estimate for the same of $97 million suggests a rise of 16.9% from the prior quarter’s reported level.
Expenses: Given M&T bank’s ongoing investments in several areas, including operational infrastructure and technology, we expect the company’s expense base to have been under pressure in the third quarter. Also, amid flaring inflation, compensation expenses are likely to have increased in the quarter. This is expected to have limited operational efficiency and bottom-line growth.
Here is what our quantitative model predicts:
M&T Bank does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat this time around.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for M&T Bank is -1.29%.
Prior to the third-quarter earnings release, the company is witnessing upward estimate revisions, reflecting the bullish sentiments of analysts. The Zacks Consensus Estimate for third-quarter earnings has been revised marginally north to $4.24 in the past week. Also, the figure suggests a year-over-year rise of 12.8%.
The consensus estimate for revenues of $2.30 billion suggests a rise of 49.5% from the year-ago quarter’s levels.
Bank Stocks Worth a Look
BankUnited (BKU - Free Report) and Associated Banc-Corp (ASB - Free Report) are a few stocks that you might want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for BKU is +1.32% and the company carries a Zacks Rank #3 at present. BKU is slated to report third-quarter 2022 results on Oct 20.
Associated Banc-Corp is scheduled to release third-quarter 2022 earnings on Oct 20. ASB, with a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +2.39%.
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What's in the Cards for M&T Bank (MTB) This Earnings Season?
M&T Bank Corporation (MTB - Free Report) is scheduled to report third-quarter 2022 results on Oct 19, before the opening bell. The bank’s earnings and revenues are expected to have improved from the year-ago reported figure.
M&T Bank met the consensus mark in the prior quarter. A rise in net interest income (NII) and the net interest margin (NIM) were tailwinds. However, increased expenses were the key undermining factors.
M&T Bank has a decent earnings surprise history, having surpassed estimates in three of the last four quarters and meeting in the other. The company has a trailing four-quarter earnings surprise of 8.50%, on average.
M&T Bank Corporation Price and EPS Surprise
M&T Bank Corporation price-eps-surprise | M&T Bank Corporation Quote
Key Factors to Note
NII: While lending activity improved sequentially in the third quarter, the pace of loan growth across most categories slowed as the quarter progressed. Per the Fed’s latest data, commercial and industrial loans, real estate loans, and consumer loans slightly moderated in July and August from the second quarter. Encouragingly, commercial real estate loan growth accelerated in the quarter under review.
Given M&T Bank’s substantial exposure to commercial and commercial real estate loans, the company is likely to have seen a decent acceleration in loan balances.
Also, M&T Bankoperates as a solid and sustainable regional bank franchise, with a footprint spanning six Mid-Atlantic States. Substantial geographic coverage and the past acquisition of People’s United are likely to have been tailwinds for lending activities.
However, the Zacks Consensus Estimate for third-quarter average interest-earning assets of $185.6 billion suggests a 2.2% fall from the prior quarter’s reported number.
Decent lending aside, higher interest rates are expected to have supported MTB’s NII. In the third quarter, the Fed hiked interest rates by 150 basis points. With this, the level of the policy rate reached 3.0-3.25%, the highest since 2008.This is likely to have driven MTB’s asset yield and NII.
NII is estimated to be $1.73 billion, indicating a 22.7% jump from the prior quarter’s reported figure.
Fee Income: While muted equity market performance in the to-be-reported quarter is expected to have been a headwind for trust income, new business and recapture of money market fee waivers are expected to have buoyed the same. The Zacks Consensus Estimate of $191 million for trust income implies a marginal sequential rise.
The company is expected to see lower service charges on deposits, reflecting the past implementation of overdraft policy changes and fee waivers, along with a likely runoff in deposits. The Zacks Consensus Estimate for service charges on deposits of $118 million suggests a 4.8% decline from the prior quarter’s reported level.
Residential mortgage production continued to reduce in the third quarter, as mortgage rates increased sequentially and exceeded the 6% mark in September. Also, moderation in residential refinancing activity due to the rise in rates is expected to have weighed on mortgage banking income. Also, as the company is anticipated to have retained its mortgage originations in the quarter, minimal gain on sale income is expected to have been witnessed. Nonetheless, the Zacks Consensus Estimate for the same of $97 million suggests a rise of 16.9% from the prior quarter’s reported level.
Expenses: Given M&T bank’s ongoing investments in several areas, including operational infrastructure and technology, we expect the company’s expense base to have been under pressure in the third quarter. Also, amid flaring inflation, compensation expenses are likely to have increased in the quarter. This is expected to have limited operational efficiency and bottom-line growth.
Here is what our quantitative model predicts:
M&T Bank does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat this time around.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for M&T Bank is -1.29%.
Zacks Rank: M&T Bank currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Prior to the third-quarter earnings release, the company is witnessing upward estimate revisions, reflecting the bullish sentiments of analysts. The Zacks Consensus Estimate for third-quarter earnings has been revised marginally north to $4.24 in the past week. Also, the figure suggests a year-over-year rise of 12.8%.
The consensus estimate for revenues of $2.30 billion suggests a rise of 49.5% from the year-ago quarter’s levels.
Bank Stocks Worth a Look
BankUnited (BKU - Free Report) and Associated Banc-Corp (ASB - Free Report) are a few stocks that you might want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for BKU is +1.32% and the company carries a Zacks Rank #3 at present. BKU is slated to report third-quarter 2022 results on Oct 20.
Associated Banc-Corp is scheduled to release third-quarter 2022 earnings on Oct 20. ASB, with a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +2.39%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.