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M&T Bank Lowers Estimates for the Eighth Straight Quarter

Stock (Symbol)

M&T Bank (MTB)

Stock Price

$118

Sector
Finance
Data is as of
August 22, 2016
Expected to Report
Oct 17 – 21
Company Description
mandtbank_logoM&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
David SharekM&T Bank (MTB) is a solid regional bank, with a large presence in my hometown of Buffalo. The bank 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. MTB was stuck in neutral the past decade, but from 1985 to 2005 it went from $2.50 to $100. M&T just acquired Hudson City Bancorp and will now have a bigger presence in the New York City surrounding area, but the profit figures didn’t increase from the deal. Low interest rates make it hard for banks to grow profits. MTB has lowered 2016 estimates for — get this — eight straight qtrs. Two years ago the company was expected to make $10.07 in 2016. Now? $7.99. Like a dollar store item hahaha. The company has had qtrly estimates lowered each qtr during the last year then still missed at the end. Previously I felt the Fed would raise rates. Now I don’t think so. Still, what’s a quarter of a point gonna do? Not much. I’ll sell MTB from the Conservative Growth Portfolio today.
One Year Chart
MTB_2016_Q3From the looks of this chart it seems profits are growing good. But we can’t trust those qtrly Estimates as the bank hasn’t been able to meet estimates in quite a while. The Estimated Long Term Growth Rate just got cut from 9% per year to 5% a year. Luckily, investors get a 2% yield. 
Fair Value
MTB_2016_Q3_PHI think this stock’s worth 15x earnings and that’s what it’s selling for. Looks to be decent upside into 2017 but what if that $8.61 figure falls to $8 and MTB continues to sell for 15x earnings? Then the stock is where it is now.
Bottom Line
MTB_2016_Q3_10yrM&T Bank is a conservative bank stock that was great to own 20-30 years ago. Now in a low interest rate environment we can find better use of our money — like in companies that thrive off low interest rates. I will sell MTB from the Conservative Growth Portfolio but will keep it on the radar.
Power Rankings
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