M&T Bank, Buffett Holding, Says Alt-A Home Loans to Hurt Profit

Discussion in 'Wall St. News' started by blast19, Mar 30, 2007.

  1. blast19



    The funny thing is the true value of something is only what you can sell it for.


    M&T Bank, Buffett Holding, Says Alt-A Home Loans to Hurt Profit

    By Erik Schatzker

    March 30 (Bloomberg) -- M&T Bank Corp., the western New York bank partly owned by Warren Buffett's Berkshire Hathaway Inc., said low bids for the Alt-A mortgages it planned to sell will cut first-quarter earnings by $7 million.

    Earnings per share will be $1.50 to $1.60, in part because M&T expects that rising default rates will require it to repurchase some Alt-A loans it previously sold, the company said in a statement on PRNewswire. Analysts' estimates for net income currently range from $1.82 a share to $1.90, according to a Bloomberg survey.

    The loans didn't attract the offers M&T expected at a recent auction. M&T cut their carrying value, resulting in after-tax costs of 7 cents a share. The loss on the loan buyback will cut profit by 3 cents a share.

    ``Unfavorable market conditions and lack of market liquidity impacted M&T's willingness to sell Alt-A loans in the first quarter,'' the Buffalo, New York-based company said in the statement.

    Alt-A loans, short for Alternative-A, typically are made to borrowers with good credit ratings who supply less documentation than for prime mortgages.

    M&T said it plans to keep $883 million of Alt-A home loans instead of selling them because management believes the bids don't reflect their value.
    Last Updated: March 30, 2007 17:43 EDT