Northeast regional bank holding company M&T Bank Corporation (MTB) has shown it has recovered from the financial crisis by posting surprisingly positive earnings. With an attractive dividend yield and continued projected growth, investors looking for a banking stock may want to consider M&T Bank.
M&T Bank is a full service banking company with more than 700 branches in the eastern United States. The bank's territory stretches from New York State southward to Virginia and Washington, D.C. At the end of the second quarter, the bank holding company reported total assets of $78 billion.
The second quarter was a standout for M&T Bank. The company reported net income of $2.42 per share, up from $1.46 a year earlier, a 66 percent improvement. The Wall Street consensus earnings for the quarter was $1.55, putting the actual results 50 percent better than the expectation. For the first quarter of 2011, the $1.59 of reported earnings was 19 cents better than the consensus.
The Wall Street estimate for full year 2011 earnings is $7.18 and the analysts are looking for $7.44 in 2012.
Several important items occurred for M&T Bank in the second quarter. The company completed the acquisition of Wilmington Trust Corporation, adding $11 billion to the banking company's assets. One time benefits from the purchase did chip in about 33 cents per share net income for the quarter.
M&T also paid $700 million to the U.S. Treasury to buy back and retire preferred shares issued to the Treasury under the Troubled Asset Relief Program (TARP). Repurchasing the TARP shares reduces regulatory interference in the operations of the bank.
Recently, the analysts at JP Morgan reduced their target price on MTB by $15 to $85 and maintained a neutral rating on the stock. The August swoon of financials across the board resulted in a similar $15 price decline for the MTB shares.
At current share prices, the quarterly dividend puts the yield for M&T Bank at close to 4 percent, provided some protection against a further price decline. The company next reports on Oct. 20.
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