M&T Bank Corporation ( MTB - Analyst Report ) has delivered positive earnings surprises in three of the last four quarters; most recently beating by nearly 17.9% in the third quarter. This Zacks #1 Rank (Strong Buy) commercial bank hit its 52-week high on October 18, a day after its results were announced. The company pays a regular quarterly dividend that yields a decent 2.7% and the stock has gained 37.6% since the beginning of this year.

Impressive Third Quarter Earnings

On October 17, M&T Bank Corporation reported third quarter earnings per share of $2.17, topping the Zacks Consensus Estimate of $1.84 by 17.9% and the year-ago earnings of $1.32 by 64.0%. The improvement was primarily due to revenue growth, prudent expense management and a lower provision for credit losses.

Net interest income climbed 7.5% year over year to $663 million, driven by an increase in average earning assets and a widening of the net interest margin. The net interest margin expanded nine basis points on a year-over-year basis to 3.77%. Non-interest income rose 21.0% to $446 million over the same period. The company's non-interest expenses decreased 7.0% year over year to $616 million.

Credit quality reflected an improvement at M&T Bank Corporation. Provision for credit losses waned 21.0% year over year to $46 million and net charge-offs dipped 26.3% to $42 million. Net charge-offs, as a percentage of average loans outstanding, were 0.26%, down from 0.39% in the prior-year quarter.

Earnings Estimate Revisions Moving Higher

The Zacks Consensus Estimate for 2012 is up 7.9% to $7.48 in the past 30 days as 19 of 20 total estimates moved higher. The Zacks Consensus Estimate for 2013 advanced 6.5% to $8.21 on upward revisions from 17 of 20 estimates.

The Zacks Consensus Estimate for 2012 reflects year-over-year growth of about 15.4%, while the expected growth rate for 2013 is 9.8%.

Dividend Payment

M&T Bank Corporation is one of the few banks that maintained its dividend payment throughout the financial crisis. Currently, the company pays a quarterly dividend of 70 cents per share, affirming an annual yield of 2.7%.

Valuation Looks Reasonable

Shares of M&T Bank Corporation currently trade at 14.0x 12-month forward earnings, a 20.0% premium to the peer group average of 11.7x. Its price to book ratio of 1.5 is at a 36% premium to the industry median of 1.1. The company has a trailing 12-month ROE of 10.4% compared with the peer group average of 9.8%.

Chart Shows Strength

M&T Bank Corporation has witnessed sturdy price momentum since August 2012. Moreover, the company has been continuously outperforming its 200-day and 50-day moving averages over the last three months, exhibiting a steady growth trend. The year-to-date return for the stock came in at 37.6% compared with the S&P 500’s return of 13.6%.

With rising estimates, strong growth projections, a reasonable valuation and a decent dividend yield, M&T Bank Corporation looks like a promising pick for investors seeking both growth and income.

Headquartered in Buffalo, New York, M&T Bank Corporation, operating as the holding company for M&T Bank, provides various banking products and services. The company was founded in 1856 and conducts business through 780 retail and commercial branches and 2,000 ATMs located in 8 states, the District of Columbia, and Ontario, Canada. With a market cap of about $13.3 billion, M&T Bank Corporation competes with SunTrust Banks, Inc. (STI), among others.

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