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Mortgage reductions dent M&T Bank earnings

Mirrors market trends

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M&T Bank Corporation (MTB) earnings per share for the first quarter of 2014 were $1.61, compared with $1.98 a year prior and $1.56 in the fourth quarter of 2013, as mortgage banking revenue recorded a heavy drop.  

The bank posted a net income of $229 million in the first quarter, down from $274 million in the initial 2013 quarter and $221 million in the final quarter of 2013.

In addition, noninterest income totaled $420 million in the first quarter of 2014, $433 million a year earlier and $446 million in the fourth quarter of 2013. 

As noninterest income trends for the recent quarter showed a slowdown in customer activity across most income categories for the first two months of the year, the largest factor contributing to the decline from a year prior was a $13 million decrease in mortgage banking revenues, resulting from lower originated loan volumes.

"Revenue trends for the quarter were dampened by lower than normal levels of customer activity during the first two months of the period followed by a rebound in March,” Rene Jones, vice chairman and chief financial officer, said.

“We received a non-objection to our capital plan and proposed capital actions from the Federal Reserve, successfully accessed the debt and preferred equity markets and continued to progress on our infrastructure projects related to BSA/AML compliance, risk management, and capital plan and stress testing efforts.  While these initiatives contributed to operating expenses that were higher than M&T's normal run rate, they position us well for the future."

And M&T Bank is not alone in this. 

Wells Fargo (WFC) and JPMorgan Chase (JPM) reported their first quarter earnings today and there were a lot of insights regarding mortgage operations.

Sterne Agee analyst Henry J. Coffey Jr. noted the sequential decline in mortgage volumes of 28% and a 17 basis point decline in revenue margins for Wells Fargo, and the 27% drop in volume for JPMorgan. Both banks wrote down the value of mortgage servicing rights held at fair value.

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