M&T Bank frees to trade; Schwab slips; People’s deal still firm; Ally declines on earnings

By Stephanie N. Rotondo

Seattle, Oct. 26 – The preferred stock market was losing ground in midweek trading, though a market source noted that the weakness came on light volume.

“The market kind of bounced around in a narrow range,” he said. As for volume, he said it was “lighter than yesterday, but not as bad as it was a week ago.”

The Wells Fargo Hybrid and Preferred Securities index declined 12 basis points. The index was off 6 bps at mid-morning.

Among recently priced issues, a trader said M&T Bank Corp.’s $500 million of 5.125% $1,000-par series F fixed-to-floating rate noncumulative preferreds – a deal priced Tuesday – had freed to trade early in the day.

He pegged the paper at 101.125 bid, 101.375 offered.

By the bell, the preferreds were seen at 101, which a source deemed up a quarter of a point.

Price talk was 5.25%.

J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, RBC Capital Markets and UBS Securities LLC are running the books.

When declared, dividends will be fixed and payable semiannually through Nov. 1, 2026. After that date, the rate will begin to float at Libor plus 352 bps and will be paid on a quarterly basis.

The Buffalo, N.Y.-based bank plans to use the proceeds for general corporate purposes, which may include the redemption of the 6.875% series D noncumulative perpetual preferred stock.

From Monday’s business, Charles Schwab Corp.’s $600 million of 4.625% $1,000-par series E fixed-to-floating rate noncumulative preferreds were pegged at 100.125 bid, 100.25 offered at mid-morning and at 100.125 at the close.

That compared to levels around 100.5 at Tuesday’s close.

People’s United Financial Inc.’s $250 million offering of 5.625% $25-par series A fixed-to-floating rate noncumulative preferreds were meantime quoted at $26.15 bid, $26.35 offered early in the session. By day’s end, the preferreds were seen at $26.26.

Ally misses on EPS

As for more established issues, Ally Financial Inc.’s 8.125% series 2 fixed-to-floating rate trust preferred securities (NYSE: ALLYPA) were trading off a little in the wake of the company’s earnings release.

The preferreds were down a nickel at $25.54 in mid-morning trading, eventually ending down 9 cents at $25.50.

For the quarter, the Detroit-based bank reported a profit of $209 million, or 43 cents per share. That compared to a profit of $230 million, or 47 cents per share, the year before.

On an adjusted basis, EPS was 56 cents, up from 51 cents the previous year.

Revenue increased 6.3% to $1.38 billion. Net financing revenue improved 2.7% to $996 million.

Analysts polled by Thomson Reuters, however, had expected EPS of 59 cents per share. The company did beat on revenue, though, as forecasts were for $1.37 billion.

The former financing arm of General Motors noted that its auto-lending side remained under pressure. Auto originations fell 16% to $9.3 billion.

That being said, retail deposits gained 19% to $63.9 billion.

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