M&T Bank Corporation Has A Difficult Second Quarter As Earnings Per Share Drop 22%

Thanks to continued levels of high expenses, M&T Bank had a difficult second quarter as its earnings per share fell by 22%.

Patrick Morris
Patrick Morris
Jul 17, 2014 at 2:50PM

Thanks to heightened expenses, M&T Bank (NYSE:MTB) announced today its earnings per share dropped to $1.98 in the second quarter of 2014, down from $2.55 seen in the second quarter last year. Its total net income stood at $284 million in the most recent quarter, relative to $348 million in the 2013 second quarter.

M&T Bank did note it recognized a gain of $0.38 per share from a variety of one-time items in the period last year, and excluding for those its earnings per share fell by 9%.

The biggest reason for the decrease in its earnings resulted from its expenses increasing 14%, or $82 million, to stand at $681 million. It saw a 5% gain in its salaries and employee benefits, but the biggest increase in expenses at M&T Bank came from its other costs of operations rising by nearly $70 million, or 41%.

The bank noted this was the result of increased costs for professional services related to its efforts to surrounding the Federal Reserve citing it had internal problems surrounding its upholding of the Bank Secrecy Act (BSA) and other regulations related to Anti-Money Laundering (AML).

M&T Bank did see gains from its core operations, thanks to its provision for credit losses -- what it expects to lose on the loans it has written -- falling by $27 million, or 47%, its net interest income rose by 3% to $639 million. In addition, excluding the $56.5 million gain seen from investment securities recognized in the second quarter of last year, its non-interest income rose by 1% to $546 million.

"Results for the second quarter reflected an improvement in revenue from the first quarter in the areas of mortgage banking, trust and deposit services," noted Vice Chairman and CFO, René Jones, in the announcement. "M&T's credit quality measures were strong during the quarter. While operating expense levels continue to be elevated, significant progress has been made on several key initiatives related to BSA/AML activities, Compliance, Risk Management and Capital Planning."

The bank did note it saw improvements relative to the first quarter of this year, however that often is not the best comparison to gauge results.