Writing about M&T Bank (MTB) back in September, I thought that like almost every bank, M&T Bank was being undervalued by the Street, but that the prospect of weaker-than-peer pre-provision profit growth over the next few years could be a roadblock to outperformance. Since then, M&T has participated in the bank stock rally, but the nearly 40% move lags the broader regional bank indices, not to mention alternatives I suggested like Citizens (CFG), Huntington (HBAN), and KeyCorp (KEY).
About five months later, with better visibility on credit and the economy, and much better sentiment around bank stocks, my feelings haven't changed all that much. M&T unquestionably has one of the best management teams in the business, and I like the focused IT spend (spending where it will matter, not just throwing money at every option). What I still don't like is what is likely to be a below-peer level of core growth that could continue to lead to underperformance. With what I see as sub-double-digit total annualized return performance, I think you need to have a more bullish outlook on M&T's leverage to the economic recovery to prefer these shares as a new buy.
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M&T Bank's Quality And Growth Challenges Both Fairly Represented Today
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