M & T Bank is well positioned for a downturn and is a bargain for investors looking to take advantage of its selloff this year, Bank of America said in a note Thursday. Regional banks have been slammed since the banking crisis began in March with the collapse of Silicon Valley Bank. Stocks sank as deposit outflows ramped up. Recent earnings reports show those outflows are stabilizing , but a number of banks cut their full-year guidance. While M & T Bank isn’t immune to headwinds from worsening credit quality, rising fund costs and increased regulation, its management team is operating from a position of strength, Bank of America analyst Ebrahim Poonawala said. “We view M & T on relatively solid footing vs. peers given cash liquidity, excess capital, a relatively stickier deposit base, and a history of conservative credit underwriting,” he wrote. MTB YTD mountain M & T Bank’s year-to-date performance The bank’s CEO, René Jones, and members of its senior management team recently sat down with Bank of America and said consumer demand continues to be healthy. “Deposit repricing was a recurring topic with mgmt. indicating expectations for M & T to outperform given its historical focus on primacy of client relationship which makes both commercial/consumer deposits stickier,” Poonawala said. The team also said it wasn’t expecting overall credit losses in its commercial real estate exposure to meaningfully exceed the 33 basis point historical loss rate for any sustained period, he added. “In an industry where market share consolidation (organic or via M & A) is likely to continue, we view the bank as a relative winner,” Poonawala said. The institution is also trading at a 50% discount, he said. Shares are trading at 7.7 times price-to-earnings for 2023 and 7.9 times for 2024, he pointed out. Yet it had a 14.7 times five-year pre-pandemic median, he said. His price target of $145, which incorporates recession risk, implies nearly 21% upside from Wednesday’s close. Shares are down about 18% so far this year. — CNBC’s Michael Bloom contributed reporting.
Buy this resilient regional bank trading at a 50% discount, Bank of America says
