Earnings rise for M&T, but miss estimates

CNY Business Journal (1996+), Jan 30, 2009 by Tampone, Kevin

Despite a three-month period that battered banks across the country, profit at M&T Bank Corp. (NYSE: MTB) actually rose during the final quarter of 2008.

The holding company for M&T Bank earned $102 million in the fourth quarter, up nearly 57 percent from a year earlier. Earnings per share in the period totaled 92 cents, up from 60 cents in the fourth quarter of 2007.

However, analysts had expected earnings of $1.10 per share in the latest period, according to Yahoo Finance.

Rene Jones, M&T's executive vice president and CFO, said during a Jan. 22 conference call on the bank's earnings that the current business climate is certainly a tough one.

M&T, however, has benefited from remaining relatively stable, especially when compared to some other banks, Jones said.

"We believe customers saw M&T as somewhat of a safe harbor," he said.

Deposits at the end of the year totaled $42.6 billion, up 3 percent from a year earlier. Net loans and leases were up 2 percent to $49 billion.

And average. loan balances increased 13 percent in the bank's commercial and financial portfolio, 13 percent in commercial real estate, and 3 percent in its consumer book. The bank's consumer real estate portfolio shrank 22 percent.

Total assets rose 1 percent to $65.8 billion as of the end of 2008.

M&T holds the number one market share of deposits in the Syracuse and Binghamton areas, according to June statistics from the Federal Deposit Insurance Corp.

M&T has more than half the deposit market in Binghamton and nearly 22 percent in Syracuse. The bank also holds the number two position in the Utica - Rome region with nearly 19 percent of the deposit market.

For the full year in 2008, M&T earned $556 million, or $5.01 a share, down 15 percent from $654 million, or $5.95 per share, in 2007.

During the fourth quarter, the bank recorded a $24 million charge on some securities and added $19 million to its valuation allowance for capitalized residential mortgage servicing rights. Together, those two items reduced net income by $26 million for the period, Jones said.

He added that M&T is staying focused on business within its footprint. In fact, the bank saw loan growth in all four of its main geographic regions, including 10 percent growth in upstate New York and the Mid-Atlantic regions.

Also in the fourth quarter, M&T announced plans to acquire Maryland-based Provident Bankshares Corp., which has 143 branches. The deal should close in the second quarter of 2009.

The move, according to M&T, will give the bank the second largest deposit share in Maryland and triple its presence in Virginia. The stock-for-stock transaction is valued at about $401 million.

For the fourth quarter, M&T's provision for credit losses was $151 million, compared with $101 million in the year-earlier quarter. The bank posted net charge-offs of $144 million in the latest quarter, up from $53 million in the fourth quarter of 2007.

Loans classified as nonaccruing totaled $755 million at the end of 2008, up from $431 million a year earlier.

The bank's net interest income (on a tax-equivalent basis) was $491 million in the fourth quarter, up 3 percent from a year earlier.

Noninterest expense was $447 million in the final quarter of 2008, up slightly from $445 million a year earlier.

Jones said that while across-the-board cost cuts aren't in line with M&T's philosophy, the bank is staying vigilant on expenses.