M&T Bank's Mortgage Revenue Jumps 24%
- M&T Bank reports first-quarter earnings per share of $1.50.
- Analysts were expecting EPS of $1.48.
- Mortgage banking revenue increased 24% year-over-year, to $56.2 million.
NEW YORK ( TheStreet) - M&T Bank (MTB) on Monday reported a 24% year-over-year increase in mortgage banking revenue and a four-fold increase in trust revenue, as it continued to integrate its Wilmington Trust acquisition.
The Buffalo, N.Y. lender reported net income available to common shareholders of $188.2 million during the first quarter, or $1.50 a share, compared to fourth-quarter earnings to common shareholders of $129.8 million, or $1.04 a share, and earnings to common shareholders of $190.1 million, or $1.59 a share, during the first quarter of 2011.
M&T's fourth-quarter results were boosted by a $55 million litigation settlement, it its results during the first quarter of 2011 included $39 million in pretax gains from the sale of securities, primarily guaranteed by Fannie Mae (FNMA) .
|M&T Bank Corp. CEO Robert Wilmers|
The first-quarter earnings came in slightly ahead of the $1.48 estimate among analysts polled by Thomson Reuters.
M&T reported first-quarter mortgage banking revenue of $56.2 million, increasing from $40.6 million the previous quarter, and $45.2 million a year earlier. The company said that its new strategy of holding more mortgage loans on its balance sheet reduced "mortgage banking revenues by approximately $21 million that would have been recognized had the loans been held for sale."
First-quarter trust income totaled $117.0 million, increasing from $113.8 million the previous quarter and $29.3 million a year earlier, reflecting "continued progress with the integration of Wilmington Trust," according to CFO Rene Jones.
Jones added that "average loans grew an impressive 10% on an annualized basis as compared with the fourth quarter of 2011." Average loans totaled $60.5 billion in the first quarter, growing 16% year-over-year, reflecting in part the Wilmington acquisition.
M&T's net interest margin -- the difference between a bank's average yield on loans and investments and its average cost for deposits and wholesale borrowings -- was 3.69%, improving from 3.60% during the fourth quarter, reflecting "the impact of a $1.41 billion increase in average loans outstanding in 2012's initial quarter, which largely offset a decline in lower yielding balances held at the Federal Reserve Bank of New York." In keeping with the industry trend in the prolonged low-rate environment, the net interest margin declined from 3.92% in the first quarter of 2011.
M&T's first-quarter return on average assets was 1.06%, improving from 0.75% the previous quarter, but down from 1.23% a year earlier. The ROA was a solid number, considering that the year-earlier results reflected the $39 pretax gain on securities sales. During the most recent quarter, M&T saw negligible gain on securities sales.
The first-quarter return on average common equity was 9.04%, compared to 6.12% in the fourth quarter and 10.16% during the first quarter of 2011.