M&T Bank: A Buy Rating Based on Strong NII Growth and Solid Credit Quality

M&T Bank (MTB – Research Report), the Financial sector company, was revisited by a Wall Street analyst today. Analyst David Chiaverini from Wedbush maintained a Buy rating on the stock and has a $170.00 price target.

David Chiaverini’s rating is based on a thorough analysis of M&T Bank’s recent financial performance and future prospects. Key to his positive outlook is the bank’s net interest income (NII), which exceeded expectations and is now projected to grow further in the upcoming fiscal year. Chiaverini observed that M&T Bank has managed to achieve solid loan growth, particularly in the commercial and industrial (C&I) and consumer segments, despite a downturn in residential mortgage and commercial real estate lending. Moreover, the bank experienced better than anticipated deposit growth, which allowed it to improve its funding mix by letting go of costlier brokered certificates of deposit (CDs). This, combined with a marginal increase in deposit costs and positive trends in credit metrics for commercial real estate, underpins the analyst’s confidence in the bank’s financial health.

Furthermore, Chiaverini’s optimism is bolstered by M&T Bank’s updated net interest income guidance for fiscal year 2024, which has been modestly increased. The bank’s conservative approach to managing its net interest margin (NIM), along with expectations of a stabilizing NIM moving forward, also contribute to the positive assessment. Additionally, M&T Bank has shown a proactive stance in reviewing its construction loan portfolio, with minimal downgrades observed, reinforcing the bank’s credit quality. All of these factors, along with steady fee income and cost management, support the bank’s potential for consistent earnings growth. Chiaverini’s belief in the bank’s business model and its ability to maintain solid credit quality amidst economic challenges also plays a crucial role in the Buy rating.

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M&T Bank (MTB) Company Description:

M&T Bank Corp. operates as a bank holding company, which engages in the provision of retail and commercial banking, trust, wealth management and investment services. It operates through following segments: Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking, and Retail Banking. The Business Banking segment provides services to small businesses and professionals through the company’s branch network, business banking centres and other delivery channels such as telephone banking, Internet banking and automated teller machines. The Commercial Banking segment offers credit products and banking services for middle-market and large commercial customers. The Commercial Real Estate segment includes credit and deposit services to its customers. The Discretionary Portfolio segment consists of investment and trading securities, residential mortgage loans and other assets, short-term and long-term borrowed funds, brokered certificates of deposit and interest rate swap agreements related thereto, and Cayman Islands branch deposits. The Residential Mortgage Banking segment comprises of residential mortgage loans and sells substantially all of those loans in the secondary market to investors. The Retail Banking segment offers services to consumers through several delivery channels which include branch offices, automated teller machines, telephone banking, and Internet banking. The company was founded on August 30, 1856 and is headquartered in Buffalo, NY.