Shares of M&T Bank (MTB - Get Report) of Buffalo, N.Y., rose 6% to close at $103.07, after the company reported third-quarter net income available to common shareholders of $273.9 million, or $2.18 a share, blowing past the consensus EPS estimate of $1.85, and increasing from $1.71 in the second quarter, and $1.32 during the third quarter of 2011.
Tax-adjusted net interest income totaled $669 million in the third quarter, increasing from $655 million the previous quarter, and $616.7 million a year earlier. The company bucked the industry trend, with its net interest margin -- the difference between the average yield on loans and investments and the average cost for deposits and borrowings -- widening to 3.77% during the third quarter, from 3.74% in the second quarter, and 3.68% during September of last year.
M&T's noninterest income increased to $445.7 million during the third quarter, from $391.7 million the previous quarter and $368.4 million a year earlier, with a large increase in mortgage revenue and lower impairment charges. The year-over-year improvement was partially offset by a decline in service charges on deposits accounts, with the Federal Reserve making the Durbin Amendment's cap on debit card interchange fees effective during the fourth quarter of 2011. The quarter-over-quarter improvement was partially offset by a decline trust income.
With the wave of home refinancing continuing, M&T reported third-quarter mortgage banking revenue of $106.8 million, increasing from $69.5 million the previous quarter, and $38.1 million a year earlier.M&T's earnings improvement also reflected a significant reduction in expenses, "predominantly due to the integration of the operations obtained in the May 2011 acquisition of Wilmington Trust Corporation." Third-quarter noninterest expenses totaled $616.0 million, declining from $627.4 million during the second quarter, and $662.0 million, during the third quarter of 2011. The company's third-quarter return on average assets was 1.45% and its return on average common equity was 12.40%. The company in August agreed to acquire Hudson City Bancorp (HCBK) of Paramus, N.J., for about $3.7 billion in stock and cash. The deal valued Hudson City at $7.22 a share, or 80% of its reported June 30 tangible book value of $9.08. Jefferies analyst Ken Usdin rates M&T Bank a "Hold, " with a $96 price target, and said that the company's third quarter was "solid across the board, " as "most core drivers were better-than-expected. "Overall, it's tough to poke any holes in 3Q results," Usdin said, "as core EPS easily beat estimates on
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