BUFFALO, N.Y. ( TheStreet) -- M&T Bank Corp. ( MTB) on Friday reported fourth-quarter net income available to common shareholders of $189.7 million, or $1.59 a share.

The fourth-quarter results exceeded the consensus estimate of $1.45 a share among analysts polled by Thomson Reuters.

In comparison, M&T's earnings to common shareholders were $179.3 million, or $1.48 a share, the previous quarter and $122.9 million, or $1.04 a share, during the fourth quarter of 2008.

Earnings available to common shareholders exclude dividends on preferred shares, including $600 million held by the U.S. Treasury Department for bailout assistance received through the Troubled Assets Relief Program (TARP) in December 2008.

For the full year 2010, net income available to common shareholders was $675.9 million, or $5.69 a share, increasing from $332 million, or $2.89 a share, in 2009.

Earnings performance continued to improve as credit costs declined, with M&T setting aside $85 million in loan loss reserves during the fourth quarter, compared to $93 million in the third quarter and $145 million a year earlier. Fourth quarter net charge-offs - loan losses less recoveries - totaled $77 million, so the company was still building reserves. This ran counter to the industry trend, illustrated by JPMorgan Chase ( JPM), which released $1.9 billion during the fourth quarter.

M&T's net interest margin - essentially the difference between a bank's annualized yield on loans and investments and its average cost of funds -was 3.85% for the fourth quarter, declining slightly from 3.87% the previous quarter but improved from 3.71% in the fourth quarter of 2009.

M&T's fourth quarter return on average assets was 1.18% and its return on average common equity was 10.03%.

CFO Rene Jones said the company was "encouraged by the level of our credit costs, which remained well below recent industry experience and by late fourth quarter growth in our commercial loan and commercial real estate loan portfolios, which were up a combined $1.2 billion from September 30."

M&T's tangible common equity ratio was 6.19% as of December 31, increasing from 5.96% the previous quarter and 5.13% a year earlier. The company pays regular dividends on common shares of 70 cents - translating to a dividend yield of 3.25% at Thursday's closing price of $86.26 - and with the improved earnings performance, lowered its fourth-quarter dividend payout ratio to 44%.

Nonperforming assets totaled $1.6 billion or 2.15% of total assets, increasing from 1.89% the previous quarter and 2.07% a year earlier "due to the additions to nonaccrual status of two commercial real estate relationships."

Jones said the company was "pleased with the progress achieved to date," on its acquisition in November of the failed K-Bank from the Federal Deposit Insurance Corp., as well as its pending merger with Wilmington Trust ( WL), which is expected to be completed in mid-2011, with M&T taking on responsibility to repay Wilmington's $330 million in TARP money.

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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