Tuesday, bank holding company M&T Bank Corp. (MTB), reported a 40% rise in profit for the third quarter, helped by acquisitions and higher net interest margin due to lower interest rates on deposits and long-term borrowings. As a result, earnings for the quarter came in well ahead of Street estimates.
The Buffalo, New York-based company's net income for the third quarter rose to $127.66 million from $91.18 million in the same quarter last year.
Net income available to common shareholders increased 25% to $113.89 million from $91.18 million in the year-earlier quarter. On a per share basis, earnings increased 18% to $0.97 per share from $0.82 per share last year.
Results for the third quarter include an after-tax gain of $18 million, and a $10 million reversal of taxes previously accrued for uncertain tax positions in various jurisdictions. Results also include a $29 million of after-tax other-than-temporary impairment charges on certain available-for-sale investment securities, which reduced net income and earnings per share by $9 million and $0.08, respectively.
Net operating income for the quarter increased 28% to $128.76 million from $101.00 million in the same quarter last year. Net operating earnings per share rose 8% to $0.98 from $0.91 reported in the corresponding quarter last year.
On average, 19 analysts polled by Thomson Reuters expected the company to earn $0.66 per share for the quarter. Analysts' estimate typically excludes one-time charges and gains.
Net interest income for the quarter increased 12% to $547.65 million from $488.24 million, while net interest income after provision for credit losses edged up 2% to $393.65 million from $387.24 million in the year-ago quarter.
Excluding gains and losses from investment securities and the recent quarter's gain on the Bradford transaction, noninterest income for the quarter increased to $296 million from $266 million in the year-earlier quarter. The improvement was mainly due to higher mortgage banking revenues, service charges on acquisition-related deposit accounts and credit-related fees. Analysts expected revenue of $819.76 million for the quarter.
In the sequentially preceding second quarter, M&T Bank reported net income available to common shareholders of $40.52 million or $0.36 per share, down 75% from $160.27 million or $1.44 per share in the year-ago quarter. Net interest income increased 3% to $501.6 million from $486.6 million in the prior-year quarter, while net interest income after provision for credit losses declined 8% to $354.6 million from $386.6 million in the same period last year.
Total other income for the recent third quarter surged to $278.22 million from $113.71 million in the prior-year quarter. Net interest margin expanded to 3.61% from 3.39% in the year-earlier quarter.
Provision for credit losses for the quarter was $154 million, up 52% from $101 million in the year-earlier period. The company's net loan charge-offs as a percent of average loans on an annualized basis for the quarter were 1.07%, compared to 0.77% last year.
At September 30, 2009, allowance for credit losses was $868 million, compared to $781 million as at September 30, 2008.
Including the Federal Deposit Insurance Corporation special assessment charge, noninterest expense for the quarter was $500 million, compared to $435 million in the year-earlier quarter.
Excluding the impact of the 2009 acquisitions, core customer deposits increased 18% to $38.4 billion at September 30, 2009 from $32.6 billion a year earlier. Excluding the impact of acquisitions, noninterest-bearing deposits jumped 42% to $11.8 billion from $8.3 billion in the prior-year quarter.
At September 30, 2009, M&T total net loans and leases were $51.33 billion, compared to $47.91 billion at September 30, 2008. Total deposits were $46.86 billion, compared to $42.50 billion, while total assets were $69.00 billion, compared to $65.24 billion last year.
For the nine-month period, net income slumped 46% to $243.07 million from $453.64 million in the same period last year. Net income available to common shareholders plunged 54% to $209.06 million from $453.64 million in the year-earlier quarter. On a per share basis, earnings decreased 55% to $1.84 per share from $4.12 per share last year.
Net operating earnings for the nine-month period slid 37% to $304.60 million from $486.76 million last year. Operating earnings slipped 46% to $2.37 per share from $4.39 per share in the same period last year.
Net interest income for nine months declined 13% to $1.03 billion from $1.19 billion in the same period last year.
Provision for loan losses for the period soared to $459.00 million from $261.00 million in the year-ago period.
Amongst others in the sector, Cleveland, Ohio-based KeyCorp (KEY), the holding company of KeyBank National Association is slated to release its third quarter results on Wednesday, October 21, before market open. On average, 24 analysts currently estimate the company to post a loss of $0.41 for the quarter.
MTB is currently trading at $68.28, up $2.01 or 3.03%, on a volume of 0.86 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $29.11 - $88.22, with a three-month average volume of 0.85 million shares.
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