NEW YORK (Reuters) - M&T Bank Corp <MTB.N>, the first large U.S. bank to report fourth-quarter results, said on Monday that profit tumbled 70 percent, hurt by debt write-downs and turbulence in residential real estate markets.
By Jonathan Stempel
NEW YORK (Reuters) - M&T Bank Corp <MTB.N>, the first large U.S. bank to report fourth-quarter results, said on Monday that profit tumbled 70 percent, hurt by debt write-downs and turbulence in residential real estate markets.
Shares of M&T fell to their lowest level in more than five years.
The mid-Atlantic U.S. bank, which counts Warren Buffett's Berkshire Hathaway Inc <BRKa.N> <BRKb.N> among its largest investors, said net income fell to $64.9 million, or 60 cents per share, from $213.3 million, or $1.88, a year earlier.
!ADVERTISEMENT!Operating profit totaled $83.7 million, or 77 cents per share, the Buffalo, New York-based bank said. According to Reuters Estimates, profit excluding items was $1.50 per share, 35 cents below the average analyst forecast.
"Turmoil in the residential real estate market" hurt results, Chief Financial Officer Rene Jones said on a conference call. "It is difficult to predict the depth and breadth of the current credit cycle."
Shares of M&T fell $2.14, or 2.9 percent, to $71.61 in morning trading on the New York Stock Exchange, and touched their lowest level since October 2002.
M&T Bank said it has $64.9 billion in assets and more than 650 branches in seven mid-Atlantic states and Washington, D.C.
It was one of the few large U.S. banks that had not cautioned investors in advance how credit and mortgage market turmoil would hurt fourth-quarter results. The bank's results may foreshadow those at rivals, most of which are expected to report lower earnings by the middle of next week.
M&T reduced profit by $78 million, or 71 cents per share, to write down collateralized debt obligations, which are complex securities composed of various forms of debt, including mortgages. Other banks have also tens of billions of dollars of CDO write-downs, and analysts expect more.
Results were also reduced by 27 cents per share for credit losses, as the amount set aside for credit losses more than tripled to $101 million.
They also reflected charges of 13 cents per share for M&T's exposure to antitrust litigation involving credit card network Visa Inc and American Express Co <AXP.N>, and 8 cents per share for acquisitions.
Berkshire owned a roughly 6.3 percent stake in M&T Bank as of Sept 30, according to Thomson ShareWatch. Only Allied Irish Banks Plc <ALBK.I> <ALBK.L> and M&T Bank Chief Executive Robert Wilmers held larger stakes, Thomson ShareWatch said.
Lending income rose 1 percent to $470.2 million, though net interest margin fell to 3.45 percent from 3.73 percent a year earlier, and 3.65 percent in the third quarter.
Fee and other income fell 37 percent to $160.5 million, but would have risen 12 percent absent the CDO write-down. Expenses rose 16 percent to $445.5 million.
Through Friday, M&T shares had fallen 38 percent in the last year, compared with a 28 percent drop in the Philadelphia KBW Bank Index <.BKX>.
(Reporting by Jonathan Stempel; Editing by Dave Zimmerman)
