NEW YORK (TheStreet) -- The financials have had a rocky start to 2014 after starting the year strong out of the gate. I like the sector because I think the U.S. economy is on the mend and as the data improves, so will loan growth. Plus, a better economy should lead to a steeper yield curve, helping to lift Net Interest Income and Net Interest Margins - in turn, helping profitability levels.
We own and like several financials in Action Alerts Plus - like J.P. Morgan (JPM), Bank of America (BAC), KeyBank (KEY), U.S. Bancorp (USB) and Hartford Financial (HIG). One that I've kept my eye on for a while is M&T Bank (MTB). It's one of the 20 largest banks in the U.S. with $84 billion in total assets and branches in New York, Pennsylvania, West Virginia, Virginia, Maryland, Delaware and New Jersey. Its portfolio is well balanced, with Commercial Real Estate accounting for 41% of its lending portfolio, its Residential real estate segment is 14% and C&I is 28%. The management team is strong and I've always liked their methodical approach to the business - they know it's a commodity business, and a competitive one, so they've focused on providing exceptional service, expense management, excellent underwriting and an emphasis on quality growth.
Its conservatism has enabled the company to maintain its dividend since 2008 - no small feat considering the crisis the industry just went through, as well as the ability to pursue tuck-in growth acquisitions and to generate sector leading returns. They've consistently been able to produce above industry loan growth and I expect this to continue - low single digits this year, but should be able to put up sequential growth in each quarter this year, with a higher bump next year as it integrates the $3.7 billion Hudson City acquisition that it announced in August of 2012.