Stock (Symbol) |
M&T Bank (MTB) |
Stock Price |
$110 |
Sector |
| Finance |
Data is as of |
| January 31, 2016 |
Expected to Report |
| Apr 18 – Apr 22 |
Company Description |
 M&T Bank Corporation (M&T) is a bank holding company. As of December 31, 2012, M&T had two wholly owned bank subsidiaries: M&T Bank and Wilmington Trust, National Association (Wilmington Trust, N.A.). The banks collectively offer a range of retail and commercial banking, trust, wealth management and investment services to their customers. The Company conducts lending activities in various states through other subsidiaries. M&T Bank and certain of its subsidiaries also offer commercial mortgage loans secured by income producing properties or properties used by borrowers in a trade or business. Additional financial services are provided through other operating subsidiaries of the Company. Its segments include Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and Retail Banking. Source: Thomson Financial |
Sharek’s Take |
 M&T Bank (MTB) closed its deal with Hudson City Bancorp and will have a bigger presence in the New York City surrounding area. M&T was founded in 1856 and has a heavily concentrated presence of more than 700 branches in the New York/Maryland surrounding area, where it is the number one small business lender. Berkshire Hathaway owns around 5% of the company and management puts profits to shareholders first. MTB has been profitable in every quarter the past 36 years and during the last 30 years a third of profits have gone to dividends, another third to repurchase shares, and the rest for retained capital. It’s the only commercial bank in the S&P 500 to weather the financial crisis without cutting its dividend or raising capital. What fueled growth is acquisitions, as the company closed around 25 in the last 25 years. This stock has been stuck in neutral the past decade, but from 1985 to 2005 MTB went from $2.50 to $100. This conservative stock has an expected long-term growth rate of 10% a year plus a 2.5% yield and sells for just 13x earnings. The combination of Hudson City, higher interest rates, and a rebound from a poor 2015 could have a big impact on 2016 profits – analysts predict a 18% jump for the year. |
One Year Chart |
 MTB disappointed big time last qtr with profit growth of -14% vs. the estimate of 4% growth. But when we take a closer look, the company says it had 7% profit growth, excluding one-time charges. Who’s right? Thomson Financial is going with the lower number, thus I am too. But, the stock didn’t drop after earnings, so it couldn’t have been that bad. I think Thomson might revise this figure. The stock fell hard last month, but that was before the company reported, as the stock market was in a wicked correction. |
Fair Value |
 During the last decade the stock has usually sold for 15 to 17 times earnings. Sometimes its gotten cheap, like during 2011-2012 when it sold for 12x earnings. My Fair Value is 15x earnings, which means good upside from here but really isn’t that great as the stock just dropped from $125 to $110 the last two months. |
Bottom Line |
 M&T Bank is a conservative bank stock with an estimated long-term growth rate of 10% plus a 2.5% yield. At 13x earnings the price is also right for an investment at this time. There’s a wave of good fortune coming MTB’s way including growth via Hudson City and possibly higher interest rates. MTB ranks 22nd in the 34 stock Conservative Growth Portfolio. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 22 of 34 |
