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M&T's merger expenses fell 84% in the first quarter from the prior quarter, and the old Wilmington Trust operations contributed to a 3% gain in trust income.
April 16 -
Blue-collar M&T bought blue-blood Wilmington Trust last spring and won't finish absorbing it until June. Executives insist M&T's uncharacteristically slow approach to integration will pay off.
February 17
M&T Bank (MTB) reported a big drop in quarterly earnings Tuesday, but a close look shows that its
Profits fell 27% year over year to $233 million in the second quarter, largely because of securities and merger-related gains of more than $100 million booked in the second quarter of last year.
Yet higher fee and interest revenue from trust and brokerage services and mortgages, as well as lower operating expenses, helped drive up profits 13% from the first quarter.
That marked the first clear boost to M&T's top line from its purchase last year of the Wilmington Trust operation, which manages money for wealthy people and provides cash services for big corporations. A nearly 5% increase in trust revenue, and a 16% increase in brokerage services income, sent fee revenue up 4% to $391.7 million compared with the first quarter. (Fee revenue of $501.7 million in the second quarter of 2011 reflected big securities sales gains; M&T sold those securities as part of its Wilmington Trust-related balance sheet management.)
Fee and interest revenue gains offset a 22% increase in provisions for loan losses, to $60 million, and 160% increase in merger expenses, to $7.2 million, from the first quarter.
M&T, which has $80 billion of assets, continued to benefit from a decision last year to hold rather than sell off home loans it originates. It made that move to manage interest rates following its takeover in May 2011 of Wilmington Trust. Management felt the bank could generate better returns from holding the loans as investments rather than government-backed securities.
"We saw significant growth in our revenues in the areas of net interest income, mortgage banking and trust services," Rene F. Jones, the chief financial officer of M&T, said in a release. "We view this as a very solid quarter of performance."
An 11% quarter-to-quarter increase in consumer real estate loans helped boost loans and leases to $61.8 billion, or 2% higher from the first quarter and 11% higher than a year earlier.
M&T booked smaller quarterly increases in commercial real estate and non-business real estate loans. Non-real estate consumer loans fell slightly.
M&T, based in Buffalo, fared better than most banks during the financial crisis because it retreated early from subprime lending and does a lot of its business in places where real estate fared better than other markets. Today it has more than 700 branches from New York to Maryland.
