Earlier today, M&T Bank Corporation (MTB) reported earnings of $1.04 per share in the fourth quarter of 2009. Excluding a series of special items in the quarter, the company earned 83 cents per share. The results were well short of the Zacks Consensus estimate of 89 cents.

Taxable-equivalent net interest income came in at $565 million, up 15% year over year and up 2% sequentially. The sequential growth in such income was primarily due to a widening in the net interest margin, which improved to 3.71% from 3.61%. This improvement was attributed to lower interest rates paid on deposits and borrowings and continued growth in non-interest-bearing deposits.

Management stated that it continues to provide lending and banking services in local markets, which led to the increase in net income. Credit costs in the fourth quarter were down. Additionally, acquisitions of Provident and Bradford in the Mid-Atlantic region not only widened its customer base but added 16 cents per share to net income. The company acquired all deposits and certain assets of Bradford Bank in the third quarter, subsequent to the takeover of Provident Bankshares Corp. in the second quarter.

Provision for credit losses declined to $145 million in the quarter compared to $151 in the year-ago quarter. Credit quality continued to deteriorate in the quarter, reflecting the difficult economic environment faced by businesses and individuals.

Loans classified as nonaccrual totaled $1.33 billion, or 2.56% of total loans on December 31, 2009, compared to 1.54% on December 31, 2008 and 2.35% on September 30, 2009.

For 2009, taxable-equivalent net interest income was $2.08 billion, up 6% from 2008. The increase in income was driven by growth in average loans and leases outstanding, which grew 4% year over year to $51.0 billion along with a widening of the net interest margin, which rose to 3.49% from 3.38%. The increase in average loans and leases was attributed to acquisitions in 2009 and improvement in net interest margin resulting from lower interest rates paid on deposits and borrowings.

Earnings per share (EPS) for full year 2009 came in at $2.89. Excluding special items, EPS came in at $2.58.

The efficiency ratio (which measures the relationship of operating expenses to revenues) improved to 52.7% in the fourth quarter of 2009 from 57.0% in the year-ago quarter and 55.2% in the third quarter of 2009. The efficiency ratio for 2009 improved to 56.5% from 54.4% in 2008.

Coming to the balance sheet, M&T Bank Corporation had total assets of $68.9 billion on December 31, 2009, up from $65.8 billion at the end of the previous year. Total deposits were $47.4 billion, an increase of 11% from 2008. Excluding the impact of acquisitions in 2009, core customer deposits jumped 16% year over year to $39.9 billion largely driven by a 45% increase in noninterest-bearing deposits.

Headquartered in Buffalo, New York, M&T is a bank holding company whose banking subsidiaries, M&T Bank and M&T Bank National Association, operate branch offices in New York, Pennsylvania, Maryland, Virginia, West Virginia, Delaware, New Jersey and the District of Columbia.

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