M&T BankShares of M&T Bank have returned 19% this year, following a 33% return during 2012. The shares trade for 13.6 times the consensus 2014 earnings estimate of $8.45 a share, among analysts polled by Thomson Reuters. Based on a quarterly payout of 70 cents, the shares have a dividend yield of 2.44%. M&T in August 2012 agreed to acquire Hudson City Bancorp of Paramus, N.J, in a deal originally valued at about $3.7 billion in cash and stock. The merger was expected to be completed during the second quarter, but the two companies in April announced that the time needed to gain regulatory approval of the deal would be "extended substantially," because M&T had "learned that the Federal Reserve has identified certain regulatory concerns with M&T's procedures, systems and processes relating to M&T's Bank Secrecy Act and anti-money-laundering compliance program." The two companies extended the date after which either company could walk away from the deal until January 31, 2014, but also said in April "there can be no assurances that the merger will be completed by that date." Meanwhile, M&T continues to perform well, with a third-quarter return on average tangible equity (ROTCE) of 18.03%, according to Thomson Reuters Bank Insight. That's a very strong return relative to peers, but it was down from 22.39% the previous quarter and 21.65% a year earlier. M&T on Oct. 17 reported third-quarter net operating income of $301 million, or $2.16 a share, declining from $361 million or $2.65 a share, during the second quarter and $302 million, or $2.24 a share, during the third quarter of 2012. The sequential decline reflected lower net interest income, as the bank's net interest margin narrowed to 3.61% in the third quarter from 3.71% in the second quarter. The bank also saw an increase in operating noninterest expense to $648 million in the third quarter from $602 million the previous quarter and $578 million a year earlier. Jefferies analyst Ken Usdin in a client note on Oct. 24 expressed confidence that M&T's acquisition of Hudson City will eventually be completed, but wrote "we push back our modeled close date to 4/1/14 (from 1/1/14). This modestly weighs on pro forma EPS and we trim estimates further to $8.45 and $9.15 for '14/'15, following downward adjustments to core MTB EPS after soft results last week." Usdin rates M&T a "hold," with a price target of $113.00. MTB data by YCharts
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