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In an effort to add impetus to the economic recovery, M&T Bank Corporation (MTB - Analyst Report) has augmented its lending to small-business owners by $196 million from the last year’s level. This was almost four times the previous year’s target of increasing small-business loans by $50 million.

Earlier, in September 2011, M&T had committed to the Small Business Administration (SBA) that it would increase small business lending by $50 million from 2010 levels for each of the next three years.

M&T’s announcement related to the year-over-year hike in lending comes on the back of the declaration made by the SBA earlier this week. The SBA stated that thirteen of U.S. banks – such as KeyCorp (KEY - Analyst Report), JPMorgan Chase & Co. (JPM - Analyst Report) and Citizens Financial Group, Inc., a fully owned subsidiary of The Royal Bank of Scotland Group plc (RBS - Snapshot Report) – have hiked lending to small-business by roughly $11 billion in a year’s time. Further, these banks have committed to hike small business loans by a minimum of $20 million annually in the following three years.

M&T is the leader in SBA lending in the Buffalo, Rochester, Syracuse, Philadelphia, Wilmington, Baltimore and Washington, D.C. markets. The company issued 1,227 of the SBA’s primary 7(a) loans totaling $174.5 million during fiscal year 2011, which made it the sixth-largest SBA lender in the U.S.

Management at M&T believes that the development of small-business would lead to creation of new jobs, which would further add momentum to the economic recovery. Moreover, according to the company, although it has surpassed its target of enhancing small-business loans, it will continue working on its efforts to collaborate with small-businesses that will help increase the pace of economic recovery.

M&T currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we also maintain our long-term Neutral recommendation on the stock.

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