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M&T Bank (MTB) Q3 Earnings Beat Estimates on Higher Revenues
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M&T Bank Corporation’s (MTB - Free Report) third-quarter 2023 net operating earnings per share of $4.05 handily surpassed the Zacks Consensus Estimate of $3.94. The bottom line compared favorably with the $3.83 earned in the year-ago quarter.
Results have benefited from higher rates, which supported net interest income (NII) growth. A fall in expenses was supportive. However, a decrease in non-interest income and higher provisions acted as headwinds.
Net income available to common shareholders was $664 million, which increased 6.9% from the prior-year quarter.
Revenues Jump, Expenses Fall
M&T Bank’s quarterly revenues were $2.34 billion, beating the consensus estimate of $2.32 billion. Also, the reported figure increased 4% year over year.
NII (tax equivalent) rose 5.8% year over year to $1.79 billion. Our estimate for the metric was $1.74 billion. The increase was mainly driven by a higher net interest margin (NIM), which expanded 11 basis points (bps) to 3.79%.
Total non-interest income was $560 million, down marginally year over year. The fall was mainly attributable to a decline in trust income, while a rise in mortgage banking revenues, and favorable trading and non-hedging derivative gains aided. Our estimate for the metric was $552.4 million.
Total non-interest expenses totaled $1.27 billion, down marginally year over year. The fall was primarily due to lower salaries and employee benefits expenses, the amortization of core deposit and other intangible assets, and printing, postage and supplies costs.
The efficiency ratio was 53.7%, up from 53.6% in the year-earlier quarter. A higher ratio indicates a fall in profitability.
Loans and leases, net of unearned discount, were $132.6 billion as of Sep 30, 2023, down marginally from the prior quarter. Total deposits grew 1.3% to $164.1 billion.
Credit Quality Mixed
Net charge-offs increased to $96 million from $63 million in the prior-year quarter. The company recorded a provision for credit losses of $150 million compared with $115 million in the year-ago quarter.
Nonetheless, non-performing assets declined 3.5% year over year to $2.37 billion. Also, the ratio of non-accrual loans to total net loans was 1.77%, down year over year from 1.89%.
Capital Position Strong, Profitability Ratios Weaken
M&T Bank’s estimated Common Equity Tier 1 ratio was 10.94%, up from 10.75% as of third-quarter 2022. The tangible equity per share was $93.99, up from $84.28 as of third-quarter 2022.
M&T Bank's return on average tangible assets (annualized) and average tangible common shareholder equity were 1.41% and 17.41% compared with 1.44% and 17.89%, respectively, in the prior-year quarter.
Share Repurchase Update
The company did not repurchase any shares in the third quarter.
Our View
M&T Bank put up an impressive performance in the third quarter. Going forward, a diversified deposit base and loan growth will drive balance sheet strength. However, a deteriorating credit quality is worrisome.
M&T Bank Corporation Price, Consensus and EPS Surprise
Wells Fargo & Company’s (WFC - Free Report) third-quarter 2023 adjusted earnings per share of $1.39 outpaced the Zacks Consensus Estimate of $1.25. The figure improved 6.9% year over year. The adjusted figure excludes the impacts of discrete tax benefits related to the resolution of the prior-year period’s tax matters.
WFC’s results benefited from higher NII and non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, the worsening credit quality and a dip in loan balances were the undermining factors.
Citigroup Inc.’s (C - Free Report) third-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.52 outpaced the Zacks Consensus Estimate of $1.26.
In the third quarter, Citigroup witnessed a rise in revenues due to higher revenues in the Institutional Clients Group, as well as the Personal Banking and Wealth Management segments. The higher cost of credit was another spoilsport.
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M&T Bank (MTB) Q3 Earnings Beat Estimates on Higher Revenues
M&T Bank Corporation’s (MTB - Free Report) third-quarter 2023 net operating earnings per share of $4.05 handily surpassed the Zacks Consensus Estimate of $3.94. The bottom line compared favorably with the $3.83 earned in the year-ago quarter.
Results have benefited from higher rates, which supported net interest income (NII) growth. A fall in expenses was supportive. However, a decrease in non-interest income and higher provisions acted as headwinds.
Net income available to common shareholders was $664 million, which increased 6.9% from the prior-year quarter.
Revenues Jump, Expenses Fall
M&T Bank’s quarterly revenues were $2.34 billion, beating the consensus estimate of $2.32 billion. Also, the reported figure increased 4% year over year.
NII (tax equivalent) rose 5.8% year over year to $1.79 billion. Our estimate for the metric was $1.74 billion. The increase was mainly driven by a higher net interest margin (NIM), which expanded 11 basis points (bps) to 3.79%.
Total non-interest income was $560 million, down marginally year over year. The fall was mainly attributable to a decline in trust income, while a rise in mortgage banking revenues, and favorable trading and non-hedging derivative gains aided. Our estimate for the metric was $552.4 million.
Total non-interest expenses totaled $1.27 billion, down marginally year over year. The fall was primarily due to lower salaries and employee benefits expenses, the amortization of core deposit and other intangible assets, and printing, postage and supplies costs.
The efficiency ratio was 53.7%, up from 53.6% in the year-earlier quarter. A higher ratio indicates a fall in profitability.
Loans and leases, net of unearned discount, were $132.6 billion as of Sep 30, 2023, down marginally from the prior quarter. Total deposits grew 1.3% to $164.1 billion.
Credit Quality Mixed
Net charge-offs increased to $96 million from $63 million in the prior-year quarter. The company recorded a provision for credit losses of $150 million compared with $115 million in the year-ago quarter.
Nonetheless, non-performing assets declined 3.5% year over year to $2.37 billion. Also, the ratio of non-accrual loans to total net loans was 1.77%, down year over year from 1.89%.
Capital Position Strong, Profitability Ratios Weaken
M&T Bank’s estimated Common Equity Tier 1 ratio was 10.94%, up from 10.75% as of third-quarter 2022. The tangible equity per share was $93.99, up from $84.28 as of third-quarter 2022.
M&T Bank's return on average tangible assets (annualized) and average tangible common shareholder equity were 1.41% and 17.41% compared with 1.44% and 17.89%, respectively, in the prior-year quarter.
Share Repurchase Update
The company did not repurchase any shares in the third quarter.
Our View
M&T Bank put up an impressive performance in the third quarter. Going forward, a diversified deposit base and loan growth will drive balance sheet strength. However, a deteriorating credit quality is worrisome.
M&T Bank Corporation Price, Consensus and EPS Surprise
M&T Bank Corporation price-consensus-eps-surprise-chart | M&T Bank Corporation 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 Major Banks
Wells Fargo & Company’s (WFC - Free Report) third-quarter 2023 adjusted earnings per share of $1.39 outpaced the Zacks Consensus Estimate of $1.25. The figure improved 6.9% year over year. The adjusted figure excludes the impacts of discrete tax benefits related to the resolution of the prior-year period’s tax matters.
WFC’s results benefited from higher NII and non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, the worsening credit quality and a dip in loan balances were the undermining factors.
Citigroup Inc.’s (C - Free Report) third-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.52 outpaced the Zacks Consensus Estimate of $1.26.
In the third quarter, Citigroup witnessed a rise in revenues due to higher revenues in the Institutional Clients Group, as well as the Personal Banking and Wealth Management segments. The higher cost of credit was another spoilsport.