Analyst expectations aside, M&T Bank enjoyed a profitable second quarter. The same can’t be said for the homeowners who count the firm as their lender.
M&T posted adjusted earnings of $3.41 per share, shy of estimates, but nearly double the $1.74 per share in the same quarter last year. Second-quarter revenue, excluding brokerage services, hit $1.46 billion, beating consensus and topping the $1.1 billion in Q2 sales the bank posted in 2020.
Yet over the past year, M&T reported that late-stage delinquent loans — composed predominantly of residential real estate debts — more than doubled. As of June 30, 2020, M&T held $535 million in loans over 90 days past due; this year the firm reported $1.1 billion.
The surge brings the number of late-stage delinquent loans serviced by M&T to a level four times as high as it was before the pandemic.
As of March 2021, about 5 percent of mortgages had reached some stage of delinquency, data from CoreLogic shows. While rates of early-stage delinquencies slipped over the past year; the number of mortgages that have received no payments in 90 or more days climbed 1.2 percent, growth that reflects M&T’s increase.
In 10 days, the expiration of a federal moratorium is expected to send the relatively low level of foreclosures — just 0.3 percent of all mortgages in March, per CoreLogic’s estimate — spiking.
On the commercial side, M&T reported real estate loan totals consistent with figures seen through the pandemic.
The bank lent $37.6 billion in CRE loans during the second quarter, about 1.1 percent more than the same period last year, and within tenths of a percentage point of prior quarters.
For most banks, lending trends ebbed during the early months of the pandemic. Commercial lending plummeted 30 percent from the first quarter of 2020 to the second, according to a report by CBRE. M&T, meanwhile, maintained its pace, underwriting 1 percent more commercial real estate loans during the same period.
M&T’s Chief Financial Officer, Darren King, said he expects CRE loan growth to flatline or dip slightly over the coming quarters.
“When you look in the real estate space, not surprisingly, there’s not a lot of activity going on,” said Chief Financial Officer Darren King.
King said clients are not selling or paying off their loans — which would be a growth detractor — but the firm has also seen fewer construction starts and said developers don’t have the appetite, currently, to grow their portfolios.