An expanded net interest margin, flat expenses, and stable credit quality made investors happy with M&T Bank Corp.'s third-quarter results.
The Buffalo company announced Wednesday that it earned $1.85 a share in the quarter, 2 cents better than analysts expected, according to Thomson Financial. Its shares rose 3.4%.
Mercantile Bank Corp. of Grand Rapids fell 3.4% after it reported its third-quarter results.
Mercantile met the average analyst estimate by posting net income of 64 cents a share, but it said its rivals' aggressive loan pricing would slow its loan growth and tighten its net interest margin.
Gerald R. Johnson Jr., Mercantile's chairman and chief executive, said in a press release that its "growth has moderated somewhat as our competition has demonstrated an increasing willingness to compromise on loan structure and pricing to retain market share, compromises which we have found unacceptable to the extent that we have declined a number of credit requests which we would have otherwise approved under normal circumstances."
Mercantile Bankshares Inc. of Baltimore rose 1.1%. It announced Monday that it was being sold to PNC Financial Services Group Inc. of Pittsburgh, which also gained 1.1% Wednesday.
The American Banker index of 225 bank stocks fell 0.89% and the thrift index fell 0.14%.
The Federal Reserve released the minutes Wednesday from the Federal Open Market Committee's Sept. 20 meeting, which showed that the committee still had concerns about inflation. That, coupled with news of a small airplane hitting a building on Manhattan's Upper East Side Wednesday afternoon, sent the broader markets down.
The Standard & Poor's 500 fell 0.26%. The Dow Jones industrial average fell 0.13%.
Washington Federal Inc., a thrift company based in Seattle, announced late Tuesday that it had agreed to buy First Federal Banc of the Southwest Inc. in Roswell, N.M., for $99 million.
Washington Federal fell 0.4% Wednesday; First Federal rose 29.3%.
Sovereign Bancorp Inc. gained 1% after the Philadelphia company announced early Wednesday morning that its chief executive and president, Jay S. Sidhu, had resigned for "family health related reasons."
Mr. Sidhu will remain as the nonexecutive chairman until Dec. 31. Vice chairman Joseph P. Campanelli was named interim CEO and president and is being considered for the full-time job.
Speculation that Mr. Sidhu would resign began late last week after directors convened a special meeting Tuesday. Wednesday's news drew upgrades for Sovereign from analysts at Morgan Stanley and Friedman, Billings, Ramsey & Co. Inc., though Citigroup Inc. downgraded the stock for the second time this week, saying that the management change makes a sale less likely.
Citigroup Inc. of New York slipped 0.9% after it was downgraded by an analyst to "market perform," from "outperform."
Diane Merdian of Keefe, Bruyette & Woods Inc. wrote in a research note that Citi "has some risk of disappointment" in its 2007 earnings, because, among other things, it has been relying too heavily of late on its capital markets business.
Other gainers included Center Bancorp of Union, N.J. (1.7%), and Fannie Mae of Washington (1.5%).
Other decliners included West Bancorp. Inc. of West Des Moines (2.7%) Northwest Bancorp Inc. in Warren, Pa. (2.5%), and Community Banks Inc. in Harrisburg, Pa. (also down 2.5%).
Shares of Legg Mason Inc., the Baltimore asset manager, closed down more than 17% a day after its earnings for its second fiscal quarter missed analyst estimates for the third straight quarter.
Bloomberg News said Legg Mason has also been affected by $5 billion in customer withdrawals and rising fund-sales costs since it acquired Citigroup's asset management business in December 2005. It is also struggling with subpar investment returns at its flagship fund, managed by Bill Miller, Bloomberg said.
