Regional banks M&T Bank Corp. (MTB) and Northern Trust Corp. (NTRS) on Wednesday reported higher profits for the third quarter on higher revenues and improvement in credit quality.
Buffalo, New York-based M&T Bank reported a 66 percent increase in third-quarter profit on higher mortgage banking revenues and lower provision for credit losses.
M&T Bank's net income for the quarter rose to $273.90 million or $2.17 per share from $164.67 million or $1.32 per share in the prior-year period. Excluding items, net operating earnings per share were $2.24, compared to $1.53 in the prior-year quarter.
On average, 24 analysts polled by Thomson Reuters expected the company to earn $1.85 per share. Analysts' estimates typically exclude one-time items.
Net interest income for the quarter increased 7 percent from last year to $662.72 million, while total other income rose 21 percent to $445.73 million as mortgage banking revenues almost tripled. Analysts had a consensus revenue estimate of $1.07 billion.
Trust income rose 2 percent to $115.71 million, while brokerage services income increased 1 percent to $14.11 million. However, service charges on deposit accounts declined 6 percent to $114.46 million.
The company's net interest margin for the quarter was 3.77 percent, up from 3.68 percent in the prior-year quarter.
Provision for credit losses declined 21 percent from the year-ago period to $46 million. Net charge-offs to average total net loans on an annualized basis was 0.26 percent, compared to 0.39 percent in the year-ago quarter.
Meanwhile, Chicago-based custody bank Northern Trust reported a 5 percent increase in profit for the third quarter on higher trust, investment and other servicing fees that was partially offset by lower foreign exchange trading income.
The company's third-quarter net income was $178.8 million or $0.73 per share, up from $170.4 million or $0.70 in the year-ago period.
Consolidated revenue for the quarter edged up to $972.5 million from $971.5 million in the prior-year quarter.
On average, analysts polled by Thomson Reuters expected the company to earn $0.74 per share for the quarter on revenue of $988.47 million. Analysts' estimates typically exclude special items.
Frederick Waddell, Chairman and Chief Executive Officer of Northern Trust, said, "Trust, investment and other servicing fees, the largest component of our revenues, grew 8%. The continued headwinds posed by lower interest rates, market activity and volatility moderated these achievements."
Waddell added, "However, we continued to adapt to these macroeconomic challenges with effective expense management as exemplified by the decline in expenses both year-over-year and sequentially."
Noninterest income, which represented 75 percent of revenue, rose 2 percent from last year to $726.9 million. The increase primarily reflects higher trust, investment and other servicing fees due to new business as well as lower waived fees on money market mutual funds.
This was partially offset by a 49 percent decline in foreign exchange trading income to $44.0 million due to reduced currency market volatility and client volumes.
Net interest income on a fully taxable equivalent basis decreased 4 percent to $256.9 million, reflecting a decline in the net interest margin.
Net interest margin declined to 1.21 percent from 1.25 percent a year ago, primarily reflecting lower yields on earning assets, partially offset by a higher percentage of funding from noninterest-bearing sources.
Provision for credit losses declined 43 percent from last year to $10.0 million. Net charge-offs totaled $11.9 million for the quarter, compared to $28.6 million of net charge-offs in the prior year quarter. Total noninterest expense declined 1 percent to $696.4 million.
Total assets under custody rose 14 percent from last year to $4.761 trillion, while assets under management grew 16 percent to $749.7 billion.
In Wednesday's regular session, MTB is trading at $101.95, up $4.59 or 4.71 percent on a volume of 799,747 shares. NTRS is trading at $47.82, up $0.29 or 0.61 percent on a volume of 345,589 shares.
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