Key Takeaways
M&T Bank reduced its exposure to commercial real estate loans in the first quarter, sending its shares higher in intraday trading on Monday. The bank's commercial real estate loan portfolio was down 2% from the previous quarter and 7% from a year ago. M&T's adjusted earnings per share were slightly below expectations, but net interest income was in line with expectations.
Shares of M&T Bank (MTB) rose in intraday trading Monday after the regional bank cut back on lending to the struggling commercial real estate market.
M&T said total real estate loans in the first quarter were $32.7 billion, down 2% from the fourth quarter and down 7% from the same period a year ago.
Chief Financial Officer Darryl Bible explained that the bank is “off to a strong start in 2024,” noting that it has grown certain areas of its commercial and consumer loan portfolio “while continuing to reduce our exposure to commercial real estate.”
M&T's adjusted earnings per share were $3.09, down from $4.09 a year ago and slightly below the $3.14 expected by analysts at Visible Alpha. Net interest income was $1.68 billion, down from $1.82 billion a year ago but in line with expectations.
The bank also set aside $200 million to cover bad loans, up from $120 million in the first quarter of 2023, as “declining commercial real estate values and rising interest rates have contributed to weakening lending performance to commercial borrowers.”
M&T also received special levies from the Federal Deposit Insurance Corporation (FDIC) to cover the costs of certain bank failures, increasing estimated costs by $29 million.
M&T Bank shares were up 6.2% to $142.75 as of noon ET, putting the company in positive territory heading into 2024.