Buffett Stocks In Focus: M&T Bank

Warren Buffet is a big fan of bank stocks.

Several of the top 20 highest yielding stocks held by Berkshire Hathaway (BRK-A) come from the financial sector, including banks and insurance companies.

One of Buffett’s bank stock holdings is M&T Bank (MTB).

As of Dec. 31, 2016, Berkshire owned roughly 5.3 million shares of M&T, amounting to a $842 million investment.

M&T Bank is a financial holding company based in Buffalo, New York. At the end of 2016, it had $123.4 billion of total assets. It has 3.7 million customers, representing 5.9 million accounts.

There are many reasons why Buffett would own M&T. It is a pillar of stability, in what is frequently a highly volatile sector.

M&T generated steady quarterly profits like clockwork, for more than four decades running.

It has several advantages that give M&T a wide economic ‘moat’, a term frequently used by Buffett to describe a company’s ability to stave off competition.

This article will discuss why M&T Bank is a classic Buffett stock.

Business Overview

M&T is a regional bank. It operates more than 800 branches, primarily in eight states in the Northeast and Washington, D.C.

Its core business functions include commercial, retail, and business banking. It also has an investment banking and mortgage banking business.

The biggest reason why Warren Buffett owns M&T Bank is arguably its reliability.

M&T Bank has an entrenched industry position and earned a reputation for consistency. It has $95.5 billion of deposits, and is No. 1 or No. 2 in deposits in seven of its 10 largest markets.

Its geographic focus has allowed M&T Bank to dominate its specific regions, including upstate New York.

Source: BancAnalysts Association of Boston Conference, page 13

In fact, M&T has not lost money in a quarter since 1976. This has provided the company the ability to grow earnings-per-share and dividends steadily over the past three decades.