M&T Bank Stays Neutral - Analyst Blog
January 05 2012 - 12:26PM
Zacks
We are reiterating our Neutral recommendation on the
M&T Bank Corp.’s (MTB) stock following a detailed analysis of
the company’s fundamentals in light of the current economic and
regulatory environment.
M&T Bank Corporation’s third-quarter 2011 operating earnings
of $1.53 per share were significantly below the
Zacks
Consensus Estimate of $1.67. Results also lagged the $2.16 per
share earned in the prior quarter and $1.55 per share in the
year-ago period.
Results reflected an increase in expenses and a reduction in net
interest margin. However, on the positive side, the company
reported an increase in net interest income and non-interest income
coupled with a substantially lower provision for credit losses.
M&T Bank managed to put solid quarters even during the
financial crisis. The company has been increasing its net interest
income for the past couple of years. Strategic acquisitions have
been a part of the company’s endeavor to grow its business.
The acquisitions of Provident and Bradford in the Mid-Atlantic
region have proved to be meaningful, both in terms of the customer
base and profitability. During the fourth quarter of 2010, the
company purchased K Bank, Randallstown, Maryland through an FDIC
assisted deal.
The deal would help the company in expanding its network in the
Mid-Atlantic region. Besides M&T Bank, U.S.
Bancorp (USB) and Fifth Third Bancorp
(FITB) have
also expanded their businesses through FDIC assisted
acquisitions.
In 2011, the company also completed the acquisition of
Wilmington Trust. The deal added 55 branch locations, 225 ATMs and
$10.7 billion in assets to M&T, and is expected to help in
boosting the company’s future earnings.
While the tepid economic recovery, modest loan
growth, pressure on net interest
margin and regulatory issues remain
headwinds for the stock, a
sound capital position, strategic acquisitions
with a growing core deposit will
uphold the bank in the long
run. Hence, our Neutral recommendation on the stock remains in
place.
Additionally, M&T Bank currently retains its
Zacks #3
Rank, which translates into a short-term Hold rating.
FIFTH THIRD BK (FITB): Free Stock Analysis Report
M&T BANK CORP (MTB): Free Stock Analysis Report
US BANCORP (USB): Free Stock Analysis Report
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