Todd Hagerman, Analyst with Sterne Agee, says M&T Bank Corporation’s (MTB) acquisition of Hudson City has been disrupted by regulatory risk. He says M&T Bank received a consent order from bank regulators related to bank secrecy and anti-money laundering. But, Hagerman is confident that M&T Bank has taken the necessary steps to address the outstanding regulatory issues.
“My belief on the stock is we are talking about a company that consistently ranks among the most profitable companies within the top 50 banks in the United States, a top-tier management team that I’m quite confident will put together a best-in-class risk management and compliance program, which is going to position them well to complete the acquisition by the end of the year,” Hagerman says.
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Investors have not yet factored in potential earnings accretion from the Hudson City acquisition, Hagerman says. As a result, he sees upside in terms of estimates, as well as cost savings related to the transaction and compliance activities.
“So M&T is really my top pick among the regional banks,” Hagerman says. “It’s been trending higher, it’s still a relative underperformer at this point, but the catalysts have yet to kick in to the name.”
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