On Jun 4, 2013, we reiterated our long-term recommendation on
M&T Bank Corporation
) at Neutral based on its well-managed global franchise, strong
capital base and strategic acquisitions. However, regulatory
issues coupled with fundamental pressures on the banking sector
might act as deterrents to the company's fundamentals.
M&T Bank's first-quarter 2013 operating earnings of $2.06 per
share beat the Zacks Consensus Estimate of $1.94. However, this
compares unfavorably with the prior-quarter earnings of $2.23 per
Better-than-expected earnings were primarily aided by reduced
provision for credit losses. Moreover, capital ratios showed
improvement. However, an increase in expenses and declining net
interest and non-interest income were the headwinds.
We view M&T Bank as a sound asset for yield-seeking
investors. In Mar 2013, following the release of the Federal
Reserve's 2013 Capital Plan Review (CapPR 2013) process results,
the company received no objection to the capital distributions
reflected in its 2013 Capital Plan. M&T bank maintained its
common stock dividend at its current annual rate of $2.80 per
share. Notably, it is the only commercial bank in S&P 500
which has not slashed dividend or executed dilutive equity
offering during the financial crisis.
However, low short-term interest rates along with persistent
narrow spreads at the short end of the yield curve continue to
negatively impact the net interest income for M&T Bank.
Though the U.S. economy posted stable to improving economic data
during the quarter, including favorable developments in
unemployment and housing, concerns about the outlook for the
global economy and continued political uncertainty persist.
For M&T Bank, the Zacks Consensus Estimate for 2013 inched up
0.1% to $8.23 per share, over the last 30 days. For 2014, the
Zacks Consensus Estimate remained stable at $8.85, over the same
time frame. Hence, M&T Bank carries a Zacks Rank #3 (Hold).
Other Major Banks to Consider
Some major regional banks that are worth considering include
The PNC Financial Services Group, Inc.
JPMorgan Chase & Co.
). All the 3 banks hold a Zacks Rank #2 (Buy).
COMERICA INC (CMA): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
M&T BANK CORP (MTB): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
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