M&T Bank Corporation MTB is slated to report fourth-quarter 2024 results on Jan. 16, before the opening bell. The company is expected to have registered a year-over-year increase in quarterly revenues and earnings.
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In the last reported quarter, M&T Bank’s results benefited from a rise in loans and leases and non-interest income (NII). A decline in NII and higher expenses were headwinds.
Quarterly earnings surpassed the consensus estimate in two of the trailing four quarters and missed twice, with an average negative earnings surprise of 0.77%.
M&T Bank Corporation Price and EPS Surprise
M&T Bank Corporation Price and EPS Surprise
M&T Bank Corporation price-eps-surprise | M&T Bank Corporation Quote
Let us discuss the factors that are likely to have impacted the company’s fourth-quarter performance.
Factors to Influence M&T Bank’s Q4 Results
Loans & NII: The clarity on the Fed’s rate cut path and the stabilizing macroeconomic backdrop will likely support the lending scenario. Per the Fed’s latest data, the demand for commercial and industrial loans (C&I) and Consumer loans was decent in the fourth quarter while commercial real estate loan demand (CRE) was subdued.
MTB’s lending book is likely to have been positively impacted by improvements in commercial loans and Consumer loans while the subdued real estate loan demand is expected to have offset growth to some extent.
Management expects fourth-quarter 2024 average loans to be $135.5 billion, higher than $132.7 billion reported in the fourth quarter of 2023, driven by sequential growth in C&I and Consumer loans, offset by a decline in CRE loans.
The improving lending scenario is likely to have supported average interest-earning assets growth during the fourth quarter. The Zacks Consensus Estimate for average interest-earning assets is pegged at $192.5 billion, indicating a 1% increase from the prior year’s figure. Our model estimate is pegged at $192.9 billion.
The Federal Reserve cut interest rates by 50 basis points to 4.25-4.5% in the fourth quarter. This, along with the rate cut in September, led the funding/deposit costs to stabilize. This is likely to have offered some support to MTB’s NII in the fourth quarter.
Management projects an NII of nearly $1.73 billion for the fourth quarter, higher than the $1.72 billion reported in the year-ago period. The Zacks Consensus Estimate for NII (on a tax-equivalent basis) is the same as company guidance, indicating a marginal increase from the prior year's number. We estimate NII to be $1.74 billion.
Fee Income: Management expects the average total deposit to be $164 billion compared with $162 billion in the fourth quarter of 2023. This is likely to have supported revenues from service charges on deposit accounts. The consensus estimate for the metric is pegged at $132.3 million, indicating an increase of 9.3% from the prior year's figure. Our estimate expects the metric to be $127 million.
Mortgage rates in the fourth quarter of 2024 were close to 6.8%, slightly higher than the 6.2% observed at the end of the third quarter. Despite the central bank's interest rate cuts, mortgage rates did not decline significantly. As a result, refinancing activities and origination volumes did not experience significant growth. This is likely to have limited the company's mortgage revenue growth.
The Zacks Consensus Estimate for mortgage banking is pegged at $108.1 million, indicating a 3.5% decline from the year-ago figure. We expect the metric to be $104 million.
The consensus estimate for brokerage services income of $31 million indicates a rise of 19.5% from the fourth quarter of 2023 figure. We expect the metric to be $26.7 million.
The Zacks Consensus Estimate for trust income of $174 million indicates an increase of 9.4% from the fourth quarter of 2023 figure. Our model suggests the metric to be $177.8 million.
Management expects non-interest income (excluding notable items) to be nearly $610 million, higher than the $578 million reported in the fourth quarter. The Zacks Consensus Estimate for the metric is pegged at $604 million, indicating 4.5% growth from the prior quarter’s actual. Our model suggests the metric to be $595.5 million.
Expenses: The company's expenses are likely to have flared up as it continues to invest in strengthening franchises. Management expects expenses (excluding notable items) to be in the range of $1.31-$1.33 billion for the fourth quarter. Our model projects the metric to be $1.32 billion.
What Our Quantitative Model Predicts for MTB
Per our proven model, the chances of M&T Bank beating estimates this time are low. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.
You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for M&T Bank is -0.61%.
Zacks Rank: M&T Bank currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for MTB’s fourth-quarter earnings of $3.70 per share has been revised downward over the past seven days. The figure indicates an increase of 31.7% from the year-ago number.
The consensus estimate for revenues is pegged at $2.33 billion, implying a rise of 1.4% from the prior-year level.
Stocks That Warrant a Look
Here are some bank stocks, which according to our model, have the right combination of elements to post an earnings beat this time around.
The Earnings ESP for Texas Capital Bancshares, Inc. TCBI is +2.04% and it carries a Zacks Rank of 3 at present. The company is slated to report its fourth-quarter 2024 results on Jan. 23. You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past seven days, the Zacks Consensus Estimate for TCBI’s quarterly earnings has moved marginally downward, indicating an increase of 64.6% from the year-ago figure.
First Horizon Corporation FHN has an Earnings ESP of +3.18% and a Zacks Rank of 2 at present. The company is scheduled to release its fourth-quarter 2024 earnings on Jan. 16.
FHN’s quarterly earnings estimates have remained unchanged in the past seven days, indicating an increase of 18.8% from the year-ago figure.
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