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Key Takeaways
- M&T Bank reduced its exposure to commercial real estate loans in the first quarter, and shares advanced in intraday trading Monday.
- The firm’s commercial real estate loan portfolio was down 2% sequentially and 7% year-over-year.
- M&T’s adjusted per-share earnings were slightly below forecasts, while net interest income was in line with estimates.
M&T Bank (MTB) shares rose in intraday trading Monday as the regional bank reduced its lending to the struggling commercial real estate market.
M&T reported its first-quarter real estate loans totaled $32.7 billion, a 2% drop from the fourth quarter and a 7% decline from a year ago.
Chief Financial Officer (CFO) Daryl Bible explained that the bank was “off to a solid start in 2024,” noting that it grew certain sectors of its commercial and consumer loan portfolios, “while continuing to shrink our commercial real estate exposure.”
M&T’s adjusted earnings per share (EPS) of $3.09 declined from $4.09 a year ago and narrowly missed the Visible Alpha consensus analysts’ estimate of $3.14. Net interest income of $1.68 billion was down from $1.82 billion last year but in line with forecasts.
The bank also set aside $200 million to cover bad loans, up from $120 million in the first quarter of 2023, which it said reflected “declines in commercial real estate values and higher interest rates contributing to a deterioration in the performance of loans to commercial borrowers.”
M&T also had an increase of $29 million in estimated expenses for a special assessment from the Federal Deposit Insurance Corporation (FDIC) to cover the costs of certain bank failures.
Shares of M&T Bank jumped 6.2% to $142.75 as of noon ET, moving into positive territory for 2024.