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M&T Bank (MTB) Q4 Earnings Miss Estimates, Provisions Rise
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M&T Bank Corporation’s (MTB - Free Report) fourth-quarter 2023 net operating earnings per share of $2.81 missed the Zacks Consensus Estimate of $3.67. Also, the bottom line compared unfavorably with the $4.57 earned in the year-ago quarter.
Shares of MTB gained nearly 2% in pre-market trading despite lower-than-anticipated earnings. A full day’s trading will depict a better picture.
Results were adversely impacted by the rise in provision for credit losses, a decline in net interest income (NII) and higher expenses. On the other hand, a rise in loans and leases, and higher rates offered some support.
Net income available to common shareholders was $457 million, which decreased 38.2% from the prior-year quarter.
In 2023, net operating earnings of $16.08 per share beat the Zacks Consensus Estimate of $15.98 and jumped 11.5% year over year. Net income available to common shareholders was $2.64 billion, rising 39.4%.
Revenues Down & Expenses Rise
M&T Bank’s quarterly revenues were $2.3 billion, beating the consensus estimate of $2.27 billion. However, the reported figure decreased 8.3% year over year.
In 2023, revenues grew 17.9% to $9.64 billion. The top line surpassed the consensus estimate of $9.50 billion.
NII (tax equivalent) fell 5.8% year over year to $1.74 billion. Our estimate for the metric was $1.71 billion. The decrease was due to a lower net interest margin (NIM), which shrunk 45 basis points to 3.61%.
Total non-interest income was $578 million, down 15.2% year over year. The fall was mainly attributable to a decline in trust income, trading account and non-hedging derivative gains and other revenues from operations. Our estimate for the metric was $555.4 million.
Total non-interest expenses came in at $1.45 billion, increasing 3% year over year. The rise was primarily due to higher salaries and employee benefits expenses, outside data processing and software, and FDIC assessments.
The efficiency ratio was 62.1%, up from 53.3% in the year-earlier quarter. A higher ratio indicates a fall in profitability.
Loans and leases, net of unearned discount, were $134.1 billion as of Dec 31, 2023, up 1.3% from the prior quarter. Total deposits declined marginally $163.3 billion.
Credit Quality Mixed
Net charge-offs increased substantially to $148 million from $40 million in the prior-year quarter. The company recorded a provision for credit losses of $225 million compared with $90 million in the year-ago quarter.
Nonetheless, non-performing assets declined 11.1% year over year to $2.21 billion. Also, the ratio of non-accrual loans to total net loans was 1.62%, down year over year from 1.85%.
Capital Position Strong, Profitability Ratios Weaken
M&T Bank’s estimated Common Equity Tier 1 ratio was 10.98%, up from 10.44% as of fourth-quarter 2022. The tangible equity per share was $98.54, up from $86.59 as of fourth-quarter 2022.
M&T Bank's return on average tangible assets (annualized) and average tangible common shareholder equity were 0.98% and 11.70% compared with 1.70% and 21.29%, respectively, in the prior-year quarter.
Share Repurchase Update
The company did not repurchase any shares of its common stock in the fourth quarter.
Our View
The rising provision for credit losses on account of the challenging operating backdrop is concerning. Also, elevated operating expenses can impede the bottom line going forward. However, the solid loan balance will likely continue aiding organic growth.
M&T Bank Corporation Price, Consensus and EPS Surprise
Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.29 surpassed the Zacks Consensus Estimate of $1.18. The figure improved 15% year over year. The adjusted figure excludes the impacts of expenses from an FDIC special assessment, severance expenses for planned actions and discrete tax benefits related to the resolution of the prior period’s tax matters.
Results have benefited from higher non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, the decline in NII, worsening credit quality and a dip in loan balances were the undermining factors.
Citigroup Inc.’s (C - Free Report) fourth-quarter 2023 earnings per share (excluding the impact of notable items) of 84 cents surpassed the Zacks Consensus Estimate of 73 cents. Including the impact of notable items in the quarter, C recorded a loss per share of $1.16. It registered earnings of $1.16 a year ago. Our estimate was pegged at $1.15.
It witnessed growth in total loans and deposits in the quarter. However, a decline in revenues and deteriorating credit quality are near-term woes.
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M&T Bank (MTB) Q4 Earnings Miss Estimates, Provisions Rise
M&T Bank Corporation’s (MTB - Free Report) fourth-quarter 2023 net operating earnings per share of $2.81 missed the Zacks Consensus Estimate of $3.67. Also, the bottom line compared unfavorably with the $4.57 earned in the year-ago quarter.
Shares of MTB gained nearly 2% in pre-market trading despite lower-than-anticipated earnings. A full day’s trading will depict a better picture.
Results were adversely impacted by the rise in provision for credit losses, a decline in net interest income (NII) and higher expenses. On the other hand, a rise in loans and leases, and higher rates offered some support.
Net income available to common shareholders was $457 million, which decreased 38.2% from the prior-year quarter.
In 2023, net operating earnings of $16.08 per share beat the Zacks Consensus Estimate of $15.98 and jumped 11.5% year over year. Net income available to common shareholders was $2.64 billion, rising 39.4%.
Revenues Down & Expenses Rise
M&T Bank’s quarterly revenues were $2.3 billion, beating the consensus estimate of $2.27 billion. However, the reported figure decreased 8.3% year over year.
In 2023, revenues grew 17.9% to $9.64 billion. The top line surpassed the consensus estimate of $9.50 billion.
NII (tax equivalent) fell 5.8% year over year to $1.74 billion. Our estimate for the metric was $1.71 billion. The decrease was due to a lower net interest margin (NIM), which shrunk 45 basis points to 3.61%.
Total non-interest income was $578 million, down 15.2% year over year. The fall was mainly attributable to a decline in trust income, trading account and non-hedging derivative gains and other revenues from operations. Our estimate for the metric was $555.4 million.
Total non-interest expenses came in at $1.45 billion, increasing 3% year over year. The rise was primarily due to higher salaries and employee benefits expenses, outside data processing and software, and FDIC assessments.
The efficiency ratio was 62.1%, up from 53.3% in the year-earlier quarter. A higher ratio indicates a fall in profitability.
Loans and leases, net of unearned discount, were $134.1 billion as of Dec 31, 2023, up 1.3% from the prior quarter. Total deposits declined marginally $163.3 billion.
Credit Quality Mixed
Net charge-offs increased substantially to $148 million from $40 million in the prior-year quarter. The company recorded a provision for credit losses of $225 million compared with $90 million in the year-ago quarter.
Nonetheless, non-performing assets declined 11.1% year over year to $2.21 billion. Also, the ratio of non-accrual loans to total net loans was 1.62%, down year over year from 1.85%.
Capital Position Strong, Profitability Ratios Weaken
M&T Bank’s estimated Common Equity Tier 1 ratio was 10.98%, up from 10.44% as of fourth-quarter 2022. The tangible equity per share was $98.54, up from $86.59 as of fourth-quarter 2022.
M&T Bank's return on average tangible assets (annualized) and average tangible common shareholder equity were 0.98% and 11.70% compared with 1.70% and 21.29%, respectively, in the prior-year quarter.
Share Repurchase Update
The company did not repurchase any shares of its common stock in the fourth quarter.
Our View
The rising provision for credit losses on account of the challenging operating backdrop is concerning. Also, elevated operating expenses can impede the bottom line going forward. However, the solid loan balance will likely continue aiding organic growth.
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) fourth-quarter 2023 adjusted earnings per share of $1.29 surpassed the Zacks Consensus Estimate of $1.18. The figure improved 15% year over year. The adjusted figure excludes the impacts of expenses from an FDIC special assessment, severance expenses for planned actions and discrete tax benefits related to the resolution of the prior period’s tax matters.
Results have benefited from higher non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, the decline in NII, worsening credit quality and a dip in loan balances were the undermining factors.
Citigroup Inc.’s (C - Free Report) fourth-quarter 2023 earnings per share (excluding the impact of notable items) of 84 cents surpassed the Zacks Consensus Estimate of 73 cents. Including the impact of notable items in the quarter, C recorded a loss per share of $1.16. It registered earnings of $1.16 a year ago. Our estimate was pegged at $1.15.
It witnessed growth in total loans and deposits in the quarter. However, a decline in revenues and deteriorating credit quality are near-term woes.