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Is M&T Bank A Safe Bank?

Is M&T Bank A Safe Bank?

Every depositor around America asks the same question these days: Is my savings safe in the bank?

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Map of M&T Bank branches, as of February 2021

Lately all we can read about these days are banks failing everywhere! Are we in a financial crisis? Now some worry Will Bank of America Collapse? And many others worry whether or not there is a Hawaii Bank Run? And of course, many others worry about the more local establishments. Will First Republic Bank Fail ?

And yes we all know about the FDIC: Federal Deposit Insurance Corporation‘s guarantee of $250,000 per US bank account and President Biden’s guarantee of all accounts. However, knowing your bank is safe still allows us all to sleep at night much better. That’s for sure!

Let’s jump into some important financials for the Buffalo Bank!

Firstly, M&T Bank grew earnings well despite a poor economy, according to their recent earnings release:

“Diluted earnings per common share measured in accordance with generally accepted accounting principles (“GAAP”) were $4.29 in the fourth quarter of 2022, up from $3.37 in the year-earlier quarter and $3.53 in the third quarter of 2022.”M&T BANK CORPORATION ANNOUNCES FOURTH QUARTER AND FULL-YEAR RESULTS | M&T Bank Corporation (mtb.com)

Now we find more good information:

“Provision for Credit Losses/Asset Quality.  The provision for credit losses was $90 million in the fourth quarter of 2022 and $115 million in the third quarter of 2022.”

Additionally, more good news!

M&T also grew equity!

“Total shareholders’ equity was $25.3 billion or 12.61% of total assets at December 31, 2022, $17.9 billion or 11.54% at December 31, 2021.”

“Nonaccrual loans as a percentage of total loans were 1.85% at December 31, 2022, improved from 2.22% a year earlier and 1.89% at September 30, 2022.”

Ok, so now let’s take a look at the broader US Banking sector. As a result, we can get an idea how M&T stacks up against other lenders!

Below we have a chart showing unrealized depreciation on Hold to Maturity Securities (HTM) for top 100 banks versus equity. 

These unrealized losses are NOT reflected in profits or a deduct to equity via Other Comprehensive Income (OCI) – only in the footnotes! Moreover, we don’t find these losses reflected in stress tests or measures of capital adequacy. 

Furthermore a 25 bp (1/4 of 1 percent) increase in rates for a 10-year security causes approximately 2 points in losses (100 par to 98 to reflect yield discount). 

Moreover, great news, thus, M&T’s loan losses can’t be too bad, they are not on the above list!

JPMorgan’s Head of Equity Lee Spelman on Active Vs Passive Investing

“M&T Bank traces its origins to the founding of Manufacturers and Traders Bank in Buffalo, New York.” Company Profile | M&T Bank Corporation (mtb.com)

M&T Bank, also known as Manufacturers and Traders Trust Company, is a financial institution based in Buffalo, New York. It is one of the oldest and largest banks in the United States, with a history dating back to 1856.

Founded by John Jacob Astor and George W. Schuyler as the Manufacturers and Traders Bank.

John Jacob Astor
John Jacob Astor

Astor himself became a highly impressive and notable individual! Moreover, the wealthiest American at death! His great-grandson Jack famously went down on the Titanic! For further reading on the great ship disaster, see our piece: Why did Titanic Sink : A Scientific Analysis

John Jacob Astor (1763-1848), an American business magnate and investor. Who became one of the wealthiest men in the United States during the 19th century. He made his fortune in the fur trade and real estate. In addition, his legacy continues to this day through the Astor family and their various philanthropic endeavors.

Astor was born in Waldorf, Germany in 1763, and emigrated to the United States in 1784. He started out as a trader in furs, eventually establishing the American Fur Company in 1808, which became the largest and most profitable fur trading business in the United States. Astor’s business interests extended to real estate as well, and he invested heavily in property in New York City, becoming the city’s first multi-millionaire.

Astor’s wealth and business savvy earned him a prominent place in American society, and he was known for his extravagant lifestyle and philanthropic endeavors. He was a major supporter of the arts, helping to establish the New York Public Library and the Metropolitan Museum of Art.

Despite his success, Astor faced controversy during his lifetime. He was accused of engaging in unethical business practices, such as monopolizing the fur trade and exploiting Native American tribes. He was also criticized for his involvement in the opium trade, which was then legal. However, later became a major public health issue.

John Jacob Astor died in 1848, leaving behind a fortune estimated at $20 million. As a result, making him the wealthiest person in the United States at the time!

Astor’s legacy continues to be felt today, both through the various philanthropic efforts of the Astor family and through the numerous landmarks and institutions that bear his name.

Back to the bank!

At the time of its founding, Buffalo was a booming industrial city. And the bank’s primary customers were the manufacturers and traders of the region. The bank quickly established a reputation for sound financial management and conservative lending practices.

In the late 1800s and early 1900s, the bank expanded its reach by opening branches throughout upstate New York. It also began to offer new services, such as trust and investment management. As well as consumer banking products like savings accounts and mortgages.

Moreover, during the Great Depression, M&T Bank weathered the economic storm by staying focused on its core business and maintaining strict lending standards. For more reading on the Great Depression, see our piece: Great Depression & The Federal Reserve!

In the years that followed, the bank continued to grow, acquiring several smaller banks and expanding into new markets.

In the 1980s and 1990s, M&T Bank began to shift its focus from traditional banking to commercial lending and investment banking. It also made a major push into the Mid-Atlantic region, acquiring several banks in Maryland and Pennsylvania.

In 2002, M&T Bank made a major acquisition when it purchased Allfirst Financial, a Maryland-based bank with operations in several states.

The acquisition gave M&T Bank a significant presence in the Mid-Atlantic region and greatly expanded its commercial lending and investment banking operations.

Today, M&T Bank is one of the largest banks in the United States. Moreover, with assets of more than $140 billion and a network of more than 700 branches in eight states and Washington, D.C. The bank continues to focus on providing excellent service to its customers. And maintaining a strong financial position through conservative lending practices and strategic acquisitions.

Lastly, the history of M&T Bank is one of steady growth, conservative management. In addition, a commitment to serving the needs of its customers. Furthermore, as the bank continues to expand and adapt to changing market conditions, it remains a trusted and respected institution in the world of finance.

Is M&T Bank A Safe Bank?