M&T Bank Battered And Bruised As Pre-Provision Earnings Disappoint

 

It’s been a rough and disappointing road for M&T Bank (MTB) since this large Northeastern bank announced its acquisition of People’s United (PBCT). Down more than 15% since then, the shares have lagged bank indices by a wide margin, as investors have sold off the shares on concerns about weaker near-term spreads and higher expenses, as well as no real prospects for higher capital returns to shareholders until the People’s United deal is done.

M&T Bank has a history of volatile quarterly results, and that leads me towards being a little more calm about a bad quarter here and there (and the second quarter certainly was poor). Moreover, while many management teams try to excuse higher expenses as “investments” into the business, with M&T I’m actually inclined to believe them, and I believe the higher expenses today can drive better revenue down the road.

Though this is a harder stock to like for the near term, I think value-oriented investors should take a look. Not only will the People’s United deal create some attractive operating synergies, M&T has some under-appreciated opportunities to gain share in its core operating region and leverage higher rates in the future.

 

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M&T Bank Battered And Bruised As Pre-Provision Earnings Disappoint