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M&T Bank (MTB) Q2 Earnings Top Estimates, NII Drops Y/Y
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M&T Bank Corporation’s (MTB - Free Report) second-quarter 2024 net operating earnings per share (EPS) of $3.79 topped the Zacks Consensus Estimate of $3.50. However, the bottom line compared unfavorably with $5.12 earned in the year-ago quarter.
Shares of MTB moved up marginally in pre-market trading on better-than-anticipated earnings. A full day’s trading will depict a better picture.
Results benefited from a rise in loans and leases and higher deposits. A decline in net interest income (NII) and higher expenses were spoilsport.
Net income available to common shareholders was $626 million, down 25.6% from the prior-year quarter’s tally.
Revenues Down & Expenses Rise
M&T Bank’s quarterly revenues were $2.32 billion, surpassing the consensus estimate of $2.27 billion. However, the reported figure declined 11.5% year over year.
NII (tax equivalent) fell 4.5% year over year to $1.73 billion. Our estimate for the metric was $1.67 billion. The downside was due to an increase in interest-bearing deposits, which rose 12% year over year.
Total non-interest income was $584 million, down 27% year over year. A decline in trust income and other revenues from operations mainly caused the downstick. Our estimate for the metric was $585.1 million.
Total non-interest expenses came in at $1.29 billion, increasing 0.3% year over year. The rise was primarily due to higher salaries and employee benefits expenses, outside data processing and software, and other costs of operations. We projected the metric to be $1.30 billion.
The efficiency ratio was 55.3%, up from 48.9% in the year-earlier quarter. A higher ratio indicates a fall in profitability.
Loans and leases, net of unearned discount, were $134.59 billion as of Jun 30, 2024, marginally up from the prior quarter. Total deposits rose 2.6% to $163.5 billion. Our estimate for the loans and leases was $136.28 billion, while deposits were projected to be $165.65 billion.
Credit Quality Mixed
Net charge-offs increased 7.9% to $137 million from $127 million in the prior year quarter. Our estimate for the metric was $137.6 million. The company recorded a provision for credit losses of $150 million same as the previous year's quarter.
Non-performing assets declined 17% year over year to $2.06 billion. Our estimate for the metric was $2.28 billion. Also, the ratio of non-accrual loans to total net loans was 1.50%, down year over year from 1.83%.
Capital Position Strong, Profitability Ratios Weaken
M&T Bank’s estimated Common Equity Tier 1 ratio was 11.44%, up from 10.59% as of second-quarter 2023. The tangible equity per share was $99.54, up from $88.81 as of second-quarter 2023.
M&T Bank's return on average tangible assets (annualized) and average tangible common shareholder equity were 1.31% and 15.27% compared with 1.80% and 22.73%, respectively, in the prior-year quarter.
Capital Distribution Update
On May 21, 2024, M&T's declared a quarterly cash dividend of $1.35 per share on its common stock, marking an increase of 4%, from the previous $1.30 dividend paid in first-quarter 2024.
The company did not repurchase any shares of its common stock in second-quarter 2024.
Our View
The rising loans and deposit balance will likely continue aiding M&T Bank’s organic growth. Strengthening capital position will support its financials in the long run. However, elevated operating expenses can impede the bottom line.
Citizens Financial Group (CFG - Free Report) reported second-quarter 2024 EPS of 78 cents, missing the Zacks Consensus Estimate of 79 cents. The bottom line declined from 92 cents reported in the year-ago quarter.
Results were adversely affected by lower NII and a rise in provisions. However, increased non-interest income and reduced expenses offered some support. Additionally, a strong capital position was a positive factor.
Northern Trust Corporation’s (NTRS - Free Report) second-quarter 2024 earnings per share of $4.34 surpassed the Zacks Consensus Estimate of $1.75. The bottom line increased from $1.56 reported in the year-ago quarter.
Results benefited from a rise in fee income. Also, an increase in total assets under custody (AUC) and assets under management (AUM) balances supported financials. Strong capital ratios were another positive. However, a rise in expenses and provisions were major headwinds.
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M&T Bank (MTB) Q2 Earnings Top Estimates, NII Drops Y/Y
M&T Bank Corporation’s (MTB - Free Report) second-quarter 2024 net operating earnings per share (EPS) of $3.79 topped the Zacks Consensus Estimate of $3.50. However, the bottom line compared unfavorably with $5.12 earned in the year-ago quarter.
Shares of MTB moved up marginally in pre-market trading on better-than-anticipated earnings. A full day’s trading will depict a better picture.
Results benefited from a rise in loans and leases and higher deposits. A decline in net interest income (NII) and higher expenses were spoilsport.
Net income available to common shareholders was $626 million, down 25.6% from the prior-year quarter’s tally.
Revenues Down & Expenses Rise
M&T Bank’s quarterly revenues were $2.32 billion, surpassing the consensus estimate of $2.27 billion. However, the reported figure declined 11.5% year over year.
NII (tax equivalent) fell 4.5% year over year to $1.73 billion. Our estimate for the metric was $1.67 billion. The downside was due to an increase in interest-bearing deposits, which rose 12% year over year.
Total non-interest income was $584 million, down 27% year over year. A decline in trust income and other revenues from operations mainly caused the downstick. Our estimate for the metric was $585.1 million.
Total non-interest expenses came in at $1.29 billion, increasing 0.3% year over year. The rise was primarily due to higher salaries and employee benefits expenses, outside data processing and software, and other costs of operations. We projected the metric to be $1.30 billion.
The efficiency ratio was 55.3%, up from 48.9% in the year-earlier quarter. A higher ratio indicates a fall in profitability.
Loans and leases, net of unearned discount, were $134.59 billion as of Jun 30, 2024, marginally up from the prior quarter. Total deposits rose 2.6% to $163.5 billion. Our estimate for the loans and leases was $136.28 billion, while deposits were projected to be $165.65 billion.
Credit Quality Mixed
Net charge-offs increased 7.9% to $137 million from $127 million in the prior year quarter. Our estimate for the metric was $137.6 million. The company recorded a provision for credit losses of $150 million same as the previous year's quarter.
Non-performing assets declined 17% year over year to $2.06 billion. Our estimate for the metric was $2.28 billion. Also, the ratio of non-accrual loans to total net loans was 1.50%, down year over year from 1.83%.
Capital Position Strong, Profitability Ratios Weaken
M&T Bank’s estimated Common Equity Tier 1 ratio was 11.44%, up from 10.59% as of second-quarter 2023. The tangible equity per share was $99.54, up from $88.81 as of second-quarter 2023.
M&T Bank's return on average tangible assets (annualized) and average tangible common shareholder equity were 1.31% and 15.27% compared with 1.80% and 22.73%, respectively, in the prior-year quarter.
Capital Distribution Update
On May 21, 2024, M&T's declared a quarterly cash dividend of $1.35 per share on its common stock, marking an increase of 4%, from the previous $1.30 dividend paid in first-quarter 2024.
The company did not repurchase any shares of its common stock in second-quarter 2024.
Our View
The rising loans and deposit balance will likely continue aiding M&T Bank’s organic growth. Strengthening capital position will support its financials in the long run. However, elevated operating expenses can impede the bottom line.
M&T Bank Corporation Price and Consensus
M&T Bank Corporation price-consensus-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 Banks
Citizens Financial Group (CFG - Free Report) reported second-quarter 2024 EPS of 78 cents, missing the Zacks Consensus Estimate of 79 cents. The bottom line declined from 92 cents reported in the year-ago quarter.
Results were adversely affected by lower NII and a rise in provisions. However, increased non-interest income and reduced expenses offered some support. Additionally, a strong capital position was a positive factor.
Northern Trust Corporation’s (NTRS - Free Report) second-quarter 2024 earnings per share of $4.34 surpassed the Zacks Consensus Estimate of $1.75. The bottom line increased from $1.56 reported in the year-ago quarter.
Results benefited from a rise in fee income. Also, an increase in total assets under custody (AUC) and assets under management (AUM) balances supported financials. Strong capital ratios were another positive. However, a rise in expenses and provisions were major headwinds.