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What's in the Cards for M&T Bank (MTB) This Earnings Season?

M&T Bank Corporation MTB is scheduled to report third-quarter 2021 results on Oct 20, before the opening bell. The company’s revenues and earnings are expected to have increased year over year.

M&T Bank reported a negative earnings surprise of 6.8% in the second quarter. Fall in net-interest income, net interest margin and a rise in expenses were the key undermining factors. Nevertheless, an increase in non-interest income and recapture of provisions were tailwinds. 

M&T Bank has a decent earnings surprise history, having surpassed estimates in three of the last four quarters and missing in the other. The company has a trailing four-quarter earnings surprise of 8.34%, on average.

M&T Bank Corporation Price and EPS Surprise


M&T Bank Corporation price-eps-surprise | M&T Bank Corporation Quote


Key Factors to Note

Net Interest Income (NII): The lending environment improved marginally during the third quarter.Per the Fed’s latest data, real estate, consumer loan, auto loan and card loan portfolio growth has supported the lending business. This along with the steepening of the yield curve is likely to have aided the company’s NII growth.

However, commercial and industrial loan portfolios remained weak as the low-interest rate environment has made borrowing through other avenues like capital markets more attractive. High levels of pay downs and payoffs as well as uncertainty surrounding tax, regulatory and economic backdrop have likely  to have dampened recovery in the lending space. 

Amid these, the Zacks Consensus Estimate of $135.9 billion for the third-quarter average interest-earning assets suggests a marginal decline from the prior quarter’s reported number. Also, NII is estimated to be stable at $942 million.

Fee Income: The company is anticipated to have witnessed growth in trust revenues on decent equity market gains in the to-be-reported quarter. The Zacks Consensus Estimate of $164 million for the same implies a marginal sequential improvement.

In the third quarter, deposit balance is likely to have been stable or grown modestly, supported by the government stimulus. Also, deposit service charges should have continued to normalize as the pandemic-related concessions continue to reduce. These are likely to have driven higher revenues from service charges on deposits. The Zacks Consensus Estimate for the same of $103 million suggests a rise of 4% from the prior quarter’s levels.

After being low since last year, mortgage rates have increased in the third quarter. Hence, incentive for refinancing activities is likely to have subsided after strong activity in 2020, while a solid housing market is anticipated to have supported purchase originations growth. These factors are expected to have limited M&T Bank’s mortgage banking fee growth in the to-be-reported quarter.

Overall, the Zacks Consensus Estimate for third-quarter other income is pinned at $535 million, indicating year-over-year growth of 4.1%.

Higher Expenses:  Given M&T bank’s ongoing investments in several areas, including operational infrastructure and technology, we expect the company’s expense base to have been under pressure in the third quarter. This is likely to have limited operational efficiency and bottom-line growth. Its efficiency ratio is expected to remain sequentially stable at 58% in the quarter under review.

Here is what our quantitative model predicts:

M&T Bank has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for M&T Bank is +1.89%.

Zacks Rank: M&T Bank currently carries a Zacks Rank of 3.

Earnings and Revenue Estimate

Prior to the third-quarter earnings release, the company is witnessing upward estimate revision, indicating the bullish sentiment of analysts. The Zacks Consensus Estimate for third-quarter earnings has been revised marginally upward to $3.45 in the past week. Also, the figure suggests a year-over-year increase of 24.6%.

The consensus estimate for revenues of $1.48 billion suggests a marginal improvement from the year-ago quarter’s levels.

Other Bank Stocks Worth a Look

Here are a few other bank stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:

KeyCorp KEY is slated to report quarterly results on Oct 21. The company has an Earnings ESP of +0.56% and a Zacks Rank of 3, currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BankUnited, Inc. BKU is scheduled to release third-quarter results on Oct 21. The company currently carries a Zacks Rank #3 and has an Earnings ESP of +1.90%.

Fifth Third Bancorp FITB is slated to report quarterly results on Oct 19. The company has an Earnings ESP of +0.46% and a Zacks Rank of 2 (Buy), currently.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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Fifth Third Bancorp (FITB): Free Stock Analysis Report
M&T Bank Corporation (MTB): Free Stock Analysis Report
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BankUnited, Inc. (BKU): Free Stock Analysis Report
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