Deutsche Bank has upgraded M&T Bank (MTB, Financial) from Hold to Buy, setting a bullish price target of $210. This optimistic shift comes as the bank demonstrates promising potential for growth after recent financial disclosures.
The upgrade reflects Deutsche Bank's belief that banking stocks have reached their lowest point, particularly noticeable after the first quarter's earnings reports. The firm anticipates that large regional banks, like M&T Bank, offer more growth potential compared to larger conventional banks, largely due to their attractive valuations.
MTB Key Business Developments
Release Date: April 14, 2025
- Net Interest Margin: Increased by 8 basis points to 3.66%.
- Share Repurchases: Executed $662 million in share repurchases.
- Tangible Book Value Per Share: Grew by 2%.
- Fee Income Growth: Increased by 5% year-over-year, or 10% excluding last year's BLG distribution.
- Net Charge-Offs: 34 basis points, below full-year expectations of 40 basis points.
- Diluted GAAP Earnings Per Share: $3.32, down from $3.86 in the prior quarter.
- Net Income: $584 million, compared to $681 million in the linked quarter.
- Return on Assets (ROA): 1.14%.
- Return on Common Equity (ROCE): 8.36%.
- Net Operating Income: $594 million, compared to $691 million in the linked quarter.
- Taxable-Equivalent Net Interest Income: $1.71 billion, a decrease of $33 million or 2% from the linked quarter.
- Average Loans and Leases: Decreased by $0.9 million to $134.8 billion.
- Average Total Deposits: Declined by $3.4 billion or 2% to $161.2 billion.
- Noninterest Income: $611 million, compared to $657 million in the linked quarter.
- Noninterest Expenses: $1.42 billion, an increase of $52 million from the prior quarter.
- Efficiency Ratio: 60.5%, compared to 56.8% in the linked quarter.
- Nonaccrual Loans: Decreased by $150 million or 9% to $1.5 billion.
- CET1 Ratio: Estimated at 11.5%, compared to 11.68% at the end of the fourth quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- M&T Bank Corp (MTB, Financial) reported a strong start to the year with an increase in net interest margin by 8 basis points, reflecting an efficient balance sheet and strong deposit franchise.
- The bank executed $662 million in share repurchases, contributing to a tangible book value per share growth of 2%.
- Asset quality improved with a $516 million reduction in commercial criticized balances and a $150 million reduction in nonaccrual loans.
- M&T Bank Corp (MTB) received notable recognition, including 13 Greenwich Coalition awards and inclusion in Fortune's Most Admired and Most Innovative Company list.
- The bank's liquidity remains strong, with investment securities and cash totaling $57.9 billion, representing 28% of total assets.
Negative Points
- Diluted GAAP earnings per share decreased to $3.32 from $3.86 in the prior quarter, with net income falling to $584 million from $681 million.
- Average loans and leases decreased by $0.9 million, with lower CRE balances partially offsetting growth in other areas.
- Noninterest income declined by $46 million compared to the linked quarter, with a notable decrease in commercial mortgage banking revenues.
- Noninterest expenses increased by $52 million from the prior quarter, driven by seasonally higher compensation expenses.
- The allowance to loan ratio increased by 2 basis points to 1.63%, reflecting a modest deterioration in the macroeconomic forecast.
