M&T Bank Corporation

M&T Bank Corporation delivered an all-around beat in the previous quarter. The second quarter’s sales increased by 20%. Pre-provision net revenues were $1.1 billion, up 35% from the second quarter of last year on the same basis. Credit stayed steady. Although net charge-offs rose in the second quarter, they are still below the company’s historical long-term average for the year. The quarter’s net income was $867 million, a 24% increase over the previous quarter. For the second quarter, diluted GAAP earnings per share increased 26% sequentially to $5.05. The second quarter saw a rise in average investment securities to $28.6 billion, largely due to acquisitions tied to the conclusion of the first quarter. The average amount of commercial real estate loans fell due to reduced construction loan balances. Residential real estate loans, on average, totaled $23.8 billion, nearly unchanged from the year’s first quarter. Service fees on deposits totaled $119 million, an increase of 5% over the first quarter. Trust income dropped from $194 million in the first quarter to $172 million in the most recent quarter. This loss was primarily caused by $31 million less in fee income because of the sale of the CIT business, which was slightly offset by the impact of the seasonally higher tax preparation fees. We give the bank a ‘Hold’ rating with a revised target price.