Is M&T Bank Stock a Buy?
The $138 billion asset M&T Bank (NYSE: MTB) based in Buffalo, New York, has had a challenging year as the coronavirus pandemic has hammered several of the industries and markets it lends in. Until recently, the stock was down more than 40% since the end of 2019. However, the recent news by Pfizer that its coronavirus vaccine has been more than 90% successful in early trials sent M&T's stock soaring more than 25% on the same day. While it's a tricky investment right now, the bank may have turned the corner. Here's why.
Prior to the pandemic, M&T Bank was considered a top-performing bank stock. It regularly produced strong returns for investors and was very good at managing expenses. It also has a strong deposit franchise with more than 36% of its deposits from non-interest-bearing sources, meaning the bank doesn't have to pay out any interest on them. At the start of the year, the bank was trading at 226% of tangible book value.
But when the coronavirus hit in March, it struck New York City and several of M&T Bank's large markets hard. It also hurt sectors where M&T had a decent amount of loan exposure. The bank currently has 4% of its total loan book in the struggling hotel sector, 5% in retail, and another 5% in office space loans, which are holding up OK right now but could have a tough path forward if the work-from-home trend and coronavirus continue long term.
Source Fool.com
