) --

M&T Bank

(MTB) - Get Report

shares were falling despite third-quarter earnings widely beating Wall Street estimates.

M&T Bank recorded net income of $192 million and net income available to common equity holders of $179 million, or $1.48 a share, for the three months ending September 30. In the year-earlier quarter, M&T recorded a profit of $128 million, or 97 cents a share.

Analysts on average expected the Northeast regional bank to earn $1.37 a share on $845 million of revenue, according to

Thomson Reuters


"Revenues and net income held up nicely this quarter and were each improved from a year-earlier, despite lower fee income from deposit service charges resulting from the recently adopted changes in regulation," according to a statement by CFO Rene Jones. "Once again, credit costs remained well-controlled. Customer loan balances charged off during the recent quarter declined by $49 million, or 34%, from last year's third quarter. This represents a welcome sign of the improvement in economic conditions relative to a year ago."

M&T's third quarter vs. the year-earlier quarter reflected higher net interest income, a widening of the net interest margin and a lower provision for credit losses, the company said.

The bank also recorded lower other-than-temporary impairment (OTTI) charges on certain available-for-sale investment securities. M&T's OTTI charges amounted to $6 million in the third quarter vs. $29 million in the third quarter of 2009. The year-earlier quarter also had merger-related gains of $9 million, or 8 cents a share.

M&T said the gains in mortgage banking revenue and lower OTTI charges were "partially offset" by lower deposit service charges - primarily changes to overdraft regulation -- something that is likely to permeate many regional banks' earnings statements going forward.

Net interest income rose 4.1%, to $576 million, reflecting a 26 basis point widening of M&T's net interest margin from a year earlier and 3 basis points in the second quarter, to 3.87%, the bank said.

M&T's credit quality, which on a comparative basis was better than other regional banks throughout the financial crisis, continued to improve in the third quarter. M&T's provision for credit losses fell 40% to $93 million, equaling the bank's net charge-offs for the quarter.

M&T's nonaccrual loans continued to fall, however assets taken into foreclosure more than doubled to $193 million compared to a year earlier. However, M&T attributes that to a transfer of $98 million of collateral related to a single commercial real estate loan, it said.

Once again, M&T posted solid earnings results, which gives the bank and its management one more leg to stand on as many industry observers call the $68 billion-asset institution one of the best run regional banks in the U.S.

Still M&T shares were falling 0.6% to $75.27 shortly after the market opened. The stock has fallen 8.9% since Oct. 5, when

Allied Irish Banks (AIB)

announced that it would be selling its 22% stake in M&T through a secondary offering. The offering effectively took any potential acquisition of M&T off the table. M&T had been in on-again/off-again merger discussions with

Banco Santander

( STD) throughout the spring and summer, but the two banks likely could not agree on management control of the combined bank.

--Written by Laurie Kulikowski in New York.

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Laurie Kulikowski


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