Regulatory Nod to M&T-WL Merger - Analyst Blog

M&T Bank Corporation (MTB) went a step ahead in realizing the Wilmington Trust Corporation (WL) acquisition. The company has received all regulatory approvals that are needed to materialize this acquisition. The deal is expected to be closed on May 16.

Approval from the New York State Banking Department, the Delaware Banking Commissioner and the Office of Thrift Supervision were recently granted to M&T. It had previously received approval from the Board of Governors of the Federal Reserve System.

The Wilmington Trust merger, which was announced last November, received Wilmington's shareholder approval this March. According to the agreement, upon closure of the merger, shareholders of Wilmington Trust will receive 0.051372 shares of M&T common stock in exchange for each share of Wilmington Trust common stock they own.

Moreover, though all Wilmington Trust bank customer accounts will become M&T Bank accounts, the Wilmington Trust bank branches and ATMs will continue to bear the Wilmington Trust name until the conversion is completed. Currently, M&T expects to accomplish the conversion during the third quarter.

Our Take

M&T managed to deliver solid quarters even during the financial crisis and continues to enjoy growth in net interest margin. Strategic acquisitions also augur well. Provident and Bradford acquisitions in the Mid-Atlantic region have proved meaningful, both in terms of customer base and profitability. Recently, the company also purchased K Bank, Randallstown, Maryland through an FDIC assisted deal. This deal will help the company to expand its network in the Mid-Atlantic region.

The merger of Wilmington Trust, which operates 55 branches and 225 ATMs with $10.9 billion in assets, is also projected to be accretive to the company's earnings in 2012.

Credit quality challenges also seem to have lessened. Though the tepid economic recovery and challenges from legislative actions remain headwinds for the stock, a sound capital position with a growing core deposit should benefit the bank in the long run.

M&T shares are maintaining a Zacks #3 Rank, which translates into a short-term Hold recommendation.