M&T Bank Posts Better Margins, But Loan Growth Remains Pressured And The Valuation Isn't Skimpy

In a market where larger banks are still struggling to generate strong loan growth, banks with strong leverage to higher rates like M&T Bank (MTB) can do a little better, and particularly if and when they can keep their costs down. What’s more, while M&T Bank’s reported loan growth is being weighed down by merger-related run-offs and 2018 reported growth is unlikely to look great, underlying originations suggest a little more momentum in the business and the betas still look good.

I wasn’t crazy about M&T’s valuation after first-quarter results, and the company has since underperformed not only regional bank indices, but also peers/competitors like JPMorgan (JPM), PNC (PNC), Bank of America (BAC), and Wells Fargo (WFC) even with a nice little post-earnings pop in the stock. Stretch that comparison out to a year and M&T is still an underperformer, lagging all of those aforementioned peers (including Toronto-Dominion (TD)) except Wells Fargo. While the valuation is more reasonable now, I think there are better ideas out there with not only better growth drivers but stronger underlying served markets.

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M&T Bank Posts Better Margins, But Loan Growth Remains Pressured And The Valuation Isn't Skimpy