) -- The timing of

M&T Bank's

(MTB) - Get M&T Bank Corporation (MTB) Report

full repayment to the U.S. Treasury's Troubled Asset Relief Program (TARP) depends on the pressure shareholders or regulators put on company and how management can achieve the goal without diluting shares, industry analysts say.

"In terms of paying back TARP, they are kind of laggards," says Whitney Young, analyst at

Raymond James

. "It would be nice to see them get rid of it. They have to do this to raise the dividend."

This week M&T Bank announced that it had repaid $370 million in TARP, bringing the grand total of TARP funds repaid to $700 million. That includes $330 million tied to its

Wilmington Trust

( WL) acquisition, $151.5 million from the 2009 purchase of

Provident Bankshares

and $218.5 million the bank owes from its own TARP bailout.

This leaves the bank with $381.5 million left in TARP to repay.

M&T declared a quarterly cash dividend of 70 cents per share on its common stock and maintained a dividend throughout the financial crisis, but Young believes that M&T still faces pressure to raise the dividend higher.

"In 2012 investors are going to be looking for a higher dividend," Young says. "They have had a consistent dividend, but have not raised it and certainly some investors are going to want to see higher returns."

Sandler O'Neill

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analyst Joseph Fenech adds that the bank may also be facing some pressure from regulators to pay back TARP.

"I would think they would do it by the end of this year," said Fenech. "It is really more of a political question, though, if regulators will let them do it without having to raise capital in the equity markets," said Fenech.


analyst Matthew Clark says that M&T is not under pressure to rush a repayment because it is one of the few banks that weathered the financial crisis and maintained its dividend. He believes that the bank can repay TARP without raising common equity.

"They are more likely to shrink the balance sheets by selling securities. I would expect they would do that in this upcoming quarter," said Clark.

Clark says that the fact M&T announced that it would repay TARP ahead of second quarter results suggests that the bank's earnings are ahead of expectations.

"They have good graces with regulators for buying banks like Wilmington," said Clark. "They are not under pressure by regulators so it doesn't necessarily mean they will pay it off this year."

M&T Bank was trading down 41 cents at $88.97.

--Written by Maria Woehr in New York.

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