UPDATE: This story now includes quotes from M&T's chief financial officer and commentary from an analyst who covers the bank.
M&T Bank outperformed second-quarter expectations, driven by a spike in noninterest income.
Noninterest income at the Buffalo, New York-based company rose by 17% in the second quarter compared with the same period a year ago.
The increase reflected a sharp rise in residential mortgage banking revenue, which swelled by 23%, and an increase in trust income, which grew 7.1%, due to higher revenues from the company's global capital markets and wealth advisory services businesses.
M&T's revenue totaled $2.4 billion, marginally surpassing analysts' expectations of $2.38 billion and marking a 4.1% increase from the second quarter of 2024. Net income for the three months that ended June 30 hit $716 million, up 9.3% from the same period a year prior.
Earnings per share came in at $4.26, easily clearing analysts' average estimate of $3.99, according to S&P Capital IQ.
Year-over-year loan growth was sluggish, while deposits were basically flat. The $210 billion-asset bank reported a 0.6% increase in loans and a 0.05% decrease in deposits compared with the second quarter of last year.
The bank's positive earnings report followed disappointing numbers in the first quarter, when M&T missed analysts' expectations regarding earnings per share an revenue. During the first quarter, M&T posted an 11.5% decrease in revenue compared with the same period a year earlier.
M&T has been eyeing a potential expansion in the Northeast, with its executives expressing hope in recent months that the arrival of the Trump administration would encourage bank deals. The company wants to become a "dominant player" in New England, Bible said earlier this year, much like it is in Baltimore, where it expanded in 2003.
In the first five months of the year, 57 bank M&A deals were announced, or just one more than in the same period last year, according to S&P Global Market Intelligence. But some analysts believe the second half of the year will yield better results.
"We believe bank M&A would have already picked up had it not been for the elevated uncertainty brought about by the recent tariff announcements," Manan Gosalia, Morgan Stanley's head of U.S. midcaps banks research, said in June. "With several ongoing tariff negotiations reducing macroeconomic risks, deal activity should begin to pick up in the second half of this year."
M&T's most recent acquisition was its purchase of Connecticut-based People's United Financial in 2022.
During a conference call with analysts on Wednesday, Bible said that M&T has found success in many of People's United's previous markets — Maine, Massachusetts, New York, Connecticut, New Hampshire and Vermont. He noted that Eastern Massachusetts was one of the fastest growing of M&T's 27 regions this past quarter.
M&T acquired various specialty businesses from People's United, such as fund banking, mortgage warehouse lending and corporate institutional banking. Bible said he expects those businesses to drive growth in the second half of the year.
In its second-quarter earnings presentation on Wednesday, M&T identified "building our New England and Long Island markets" as one of its four priorities.
Citibank analyst Keith Horowitz wrote in a research report that acquisitions have historically been a significant driver of M&T's growth.
"So, one positive risk for M&T is if the company is able to redeploy its excess capital in a large well-priced acquisition, which would significantly enhance its earnings power and stock price, in our view," Horowitz wrote.
M&T has been shedding commercial real estate loans this year. Bible said Wednesday that exposure to CRE will not affect the company's decision about a potential acquisition.
"You could potentially sell credits once you close the transaction. You could do risk transfer trades. You can do a lot of things," Bible said. "But first and foremost, to acquire somebody, we look for somebody that basically fits with us from a culture perspective, from a credit perspective."
