Intrinsic value of M&T Bank - MTB

Previous Close

$168.12

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$168.12

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

Our model is not good at valuating stocks of financial companies, such as MTB.

We calculate the intrinsic value of MTB stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -100.00
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
Revenue, $m
  0
  5,846
  6,244
  6,657
  7,087
  7,535
  8,000
  8,485
  8,991
  9,518
  10,068
  10,641
  11,240
  11,865
  12,519
  13,202
  13,917
  14,664
  15,446
  16,265
  17,122
  18,020
  18,960
  19,946
  20,978
  22,061
  23,195
  24,385
  25,633
  26,941
  28,314
Variable operating expenses, $m
 
  1,549
  1,655
  1,764
  1,878
  1,997
  2,120
  2,249
  2,383
  2,522
  2,668
  2,820
  2,979
  3,144
  3,318
  3,499
  3,688
  3,886
  4,093
  4,310
  4,537
  4,775
  5,024
  5,286
  5,559
  5,846
  6,147
  6,462
  6,793
  7,139
  7,503
Fixed operating expenses, $m
 
  1,435
  1,466
  1,499
  1,532
  1,565
  1,600
  1,635
  1,671
  1,708
  1,745
  1,784
  1,823
  1,863
  1,904
  1,946
  1,989
  2,033
  2,077
  2,123
  2,170
  2,217
  2,266
  2,316
  2,367
  2,419
  2,472
  2,527
  2,582
  2,639
  2,697
Total operating expenses, $m
  0
  2,984
  3,121
  3,263
  3,410
  3,562
  3,720
  3,884
  4,054
  4,230
  4,413
  4,604
  4,802
  5,007
  5,222
  5,445
  5,677
  5,919
  6,170
  6,433
  6,707
  6,992
  7,290
  7,602
  7,926
  8,265
  8,619
  8,989
  9,375
  9,778
  10,200
Operating income, $m
  0
  2,862
  3,123
  3,394
  3,677
  3,973
  4,280
  4,602
  4,937
  5,288
  5,654
  6,037
  6,438
  6,858
  7,297
  7,758
  8,240
  8,746
  9,276
  9,832
  10,415
  11,027
  11,670
  12,344
  13,052
  13,796
  14,576
  15,396
  16,258
  17,163
  18,113
EBITDA, $m
  150
  15,811
  16,952
  18,139
  19,375
  20,660
  22,000
  23,395
  24,850
  26,368
  27,952
  29,605
  31,333
  33,138
  35,025
  36,998
  39,063
  41,224
  43,486
  45,855
  48,337
  50,938
  53,663
  56,520
  59,515
  62,656
  65,949
  69,405
  73,029
  76,832
  80,822
Interest expense (income), $m
  499
  5,515
  5,320
  5,648
  5,988
  6,342
  6,711
  7,094
  7,494
  7,910
  8,344
  8,797
  9,270
  9,763
  10,278
  10,816
  11,379
  11,968
  12,583
  13,228
  13,902
  14,608
  15,348
  16,122
  16,934
  17,785
  18,676
  19,611
  20,591
  21,619
  22,696
Earnings before tax, $m
  2,058
  -2,653
  -2,197
  -2,253
  -2,311
  -2,370
  -2,430
  -2,493
  -2,557
  -2,622
  -2,690
  -2,760
  -2,831
  -2,905
  -2,981
  -3,059
  -3,139
  -3,222
  -3,308
  -3,396
  -3,487
  -3,581
  -3,678
  -3,778
  -3,882
  -3,989
  -4,100
  -4,214
  -4,333
  -4,456
  -4,583
Tax expense, $m
  743
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  1,315
  -2,653
  -2,197
  -2,253
  -2,311
  -2,370
  -2,430
  -2,493
  -2,557
  -2,622
  -2,690
  -2,760
  -2,831
  -2,905
  -2,981
  -3,059
  -3,139
  -3,222
  -3,308
  -3,396
  -3,487
  -3,581
  -3,678
  -3,778
  -3,882
  -3,989
  -4,100
  -4,214
  -4,333
  -4,456
  -4,583

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  123,449
  99,093
  105,831
  112,837
  120,124
  127,707
  135,600
  143,822
  152,388
  161,320
  170,636
  180,357
  190,507
  201,109
  212,187
  223,767
  235,877
  248,545
  261,801
  275,677
  290,205
  305,421
  321,361
  338,062
  355,564
  373,909
  393,142
  413,307
  434,453
  456,630
  479,892
Adjusted assets (=assets-cash), $m
  123,449
  99,093
  105,831
  112,837
  120,124
  127,707
  135,600
  143,822
  152,388
  161,320
  170,636
  180,357
  190,507
  201,109
  212,187
  223,767
  235,877
  248,545
  261,801
  275,677
  290,205
  305,421
  321,361
  338,062
  355,564
  373,909
  393,142
  413,307
  434,453
  456,630
  479,892
Revenue / Adjusted assets
  0.000
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
  0.059
Average production assets, $m
  790
  129,488
  138,293
  147,448
  156,970
  166,878
  177,193
  187,936
  199,131
  210,802
  222,975
  235,679
  248,942
  262,795
  277,271
  292,403
  308,227
  324,781
  342,103
  360,236
  379,221
  399,104
  419,932
  441,756
  464,627
  488,599
  513,731
  540,081
  567,713
  596,693
  627,090
Working capital, $m
  0
  -104,512
  -111,618
  -119,008
  -126,693
  -134,690
  -143,015
  -151,686
  -160,722
  -170,141
  -179,967
  -190,220
  -200,925
  -212,106
  -223,790
  -236,003
  -248,775
  -262,136
  -276,117
  -290,752
  -306,075
  -322,123
  -338,934
  -356,548
  -375,008
  -394,356
  -414,640
  -435,908
  -458,210
  -481,601
  -506,134
Total debt, $m
  9,657
  98,521
  104,585
  110,891
  117,449
  124,273
  131,377
  138,776
  146,487
  154,525
  162,909
  171,659
  180,794
  190,335
  200,305
  210,727
  221,626
  233,027
  244,958
  257,446
  270,522
  284,216
  298,562
  313,593
  329,345
  345,856
  363,165
  381,313
  400,345
  420,304
  441,240
Total liabilities, $m
  106,963
  89,184
  95,248
  101,554
  108,112
  114,936
  122,040
  129,439
  137,150
  145,188
  153,572
  162,322
  171,457
  180,998
  190,968
  201,390
  212,289
  223,690
  235,621
  248,109
  261,185
  274,879
  289,225
  304,255
  320,008
  336,518
  353,828
  371,976
  391,008
  410,967
  431,903
Total equity, $m
  16,487
  9,909
  10,583
  11,284
  12,012
  12,771
  13,560
  14,382
  15,239
  16,132
  17,064
  18,036
  19,051
  20,111
  21,219
  22,377
  23,588
  24,854
  26,180
  27,568
  29,021
  30,542
  32,136
  33,806
  35,556
  37,391
  39,314
  41,331
  43,445
  45,663
  47,989
Total liabilities and equity, $m
  123,450
  99,093
  105,831
  112,838
  120,124
  127,707
  135,600
  143,821
  152,389
  161,320
  170,636
  180,358
  190,508
  201,109
  212,187
  223,767
  235,877
  248,544
  261,801
  275,677
  290,206
  305,421
  321,361
  338,061
  355,564
  373,909
  393,142
  413,307
  434,453
  456,630
  479,892
Debt-to-equity ratio
  0.586
  9.940
  9.880
  9.830
  9.780
  9.730
  9.690
  9.650
  9.610
  9.580
  9.550
  9.520
  9.490
  9.460
  9.440
  9.420
  9.400
  9.380
  9.360
  9.340
  9.320
  9.310
  9.290
  9.280
  9.260
  9.250
  9.240
  9.230
  9.210
  9.200
  9.190
Adjusted equity ratio
  0.134
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,315
  -2,653
  -2,197
  -2,253
  -2,311
  -2,370
  -2,430
  -2,493
  -2,557
  -2,622
  -2,690
  -2,760
  -2,831
  -2,905
  -2,981
  -3,059
  -3,139
  -3,222
  -3,308
  -3,396
  -3,487
  -3,581
  -3,678
  -3,778
  -3,882
  -3,989
  -4,100
  -4,214
  -4,333
  -4,456
  -4,583
Depreciation, amort., depletion, $m
  150
  12,949
  13,829
  14,745
  15,697
  16,688
  17,719
  18,794
  19,913
  21,080
  22,298
  23,568
  24,894
  26,280
  27,727
  29,240
  30,823
  32,478
  34,210
  36,024
  37,922
  39,910
  41,993
  44,176
  46,463
  48,860
  51,373
  54,008
  56,771
  59,669
  62,709
Funds from operations, $m
  719
  10,296
  11,632
  12,492
  13,386
  14,318
  15,289
  16,301
  17,356
  18,458
  19,607
  20,808
  22,063
  23,375
  24,746
  26,182
  27,684
  29,256
  30,903
  32,628
  34,435
  36,329
  38,315
  40,397
  42,581
  44,871
  47,273
  49,794
  52,438
  55,213
  58,126
Change in working capital, $m
  -464
  -6,837
  -7,107
  -7,389
  -7,686
  -7,997
  -8,325
  -8,671
  -9,035
  -9,420
  -9,825
  -10,253
  -10,705
  -11,181
  -11,684
  -12,213
  -12,772
  -13,361
  -13,981
  -14,635
  -15,323
  -16,048
  -16,811
  -17,614
  -18,459
  -19,349
  -20,284
  -21,268
  -22,302
  -23,390
  -24,534
Cash from operations, $m
  1,183
  17,133
  18,739
  19,881
  21,072
  22,315
  23,614
  24,972
  26,392
  27,878
  29,433
  31,062
  32,768
  34,556
  36,430
  38,395
  40,455
  42,617
  44,884
  47,262
  49,758
  52,377
  55,126
  58,012
  61,040
  64,220
  67,557
  71,061
  74,741
  78,604
  82,660
Maintenance CAPEX, $m
  0
  -12,102
  -12,949
  -13,829
  -14,745
  -15,697
  -16,688
  -17,719
  -18,794
  -19,913
  -21,080
  -22,298
  -23,568
  -24,894
  -26,280
  -27,727
  -29,240
  -30,823
  -32,478
  -34,210
  -36,024
  -37,922
  -39,910
  -41,993
  -44,176
  -46,463
  -48,860
  -51,373
  -54,008
  -56,771
  -59,669
New CAPEX, $m
  -108
  -8,466
  -8,805
  -9,155
  -9,522
  -9,908
  -10,315
  -10,743
  -11,195
  -11,671
  -12,173
  -12,704
  -13,263
  -13,853
  -14,476
  -15,132
  -15,824
  -16,554
  -17,322
  -18,132
  -18,985
  -19,883
  -20,829
  -21,824
  -22,871
  -23,973
  -25,131
  -26,350
  -27,632
  -28,980
  -30,397
Cash from investing activities, $m
  -721
  -20,568
  -21,754
  -22,984
  -24,267
  -25,605
  -27,003
  -28,462
  -29,989
  -31,584
  -33,253
  -35,002
  -36,831
  -38,747
  -40,756
  -42,859
  -45,064
  -47,377
  -49,800
  -52,342
  -55,009
  -57,805
  -60,739
  -63,817
  -67,047
  -70,436
  -73,991
  -77,723
  -81,640
  -85,751
  -90,066
Free cash flow, $m
  462
  -3,436
  -3,015
  -3,103
  -3,195
  -3,290
  -3,388
  -3,490
  -3,596
  -3,706
  -3,821
  -3,940
  -4,063
  -4,192
  -4,325
  -4,464
  -4,609
  -4,760
  -4,917
  -5,080
  -5,250
  -5,428
  -5,613
  -5,805
  -6,006
  -6,216
  -6,434
  -6,662
  -6,900
  -7,148
  -7,406
Issuance/(repayment) of debt, $m
  -3,057
  -3,612
  6,064
  6,305
  6,558
  6,824
  7,104
  7,399
  7,710
  8,038
  8,384
  8,750
  9,135
  9,541
  9,970
  10,422
  10,899
  11,401
  11,931
  12,488
  13,076
  13,694
  14,345
  15,031
  15,752
  16,511
  17,309
  18,149
  19,031
  19,960
  20,936
Issuance/(repurchase) of shares, $m
  -646
  12,926
  2,871
  2,954
  3,039
  3,128
  3,220
  3,315
  3,413
  3,516
  3,622
  3,732
  3,846
  3,965
  4,088
  4,217
  4,350
  4,489
  4,633
  4,784
  4,940
  5,103
  5,272
  5,448
  5,632
  5,824
  6,023
  6,231
  6,448
  6,674
  6,909
Cash from financing (excl. dividends), $m  
  13
  9,314
  8,935
  9,259
  9,597
  9,952
  10,324
  10,714
  11,123
  11,554
  12,006
  12,482
  12,981
  13,506
  14,058
  14,639
  15,249
  15,890
  16,564
  17,272
  18,016
  18,797
  19,617
  20,479
  21,384
  22,335
  23,332
  24,380
  25,479
  26,634
  27,845
Total cash flow (excl. dividends), $m
  476
  5,878
  5,920
  6,156
  6,403
  6,662
  6,935
  7,223
  7,527
  7,847
  8,185
  8,542
  8,918
  9,315
  9,733
  10,175
  10,640
  11,130
  11,647
  12,192
  12,765
  13,369
  14,005
  14,674
  15,378
  16,119
  16,898
  17,718
  18,579
  19,486
  20,438
Retained Cash Flow (-), $m
  -314
  -12,926
  -2,871
  -2,954
  -3,039
  -3,128
  -3,220
  -3,315
  -3,413
  -3,516
  -3,622
  -3,732
  -3,846
  -3,965
  -4,088
  -4,217
  -4,350
  -4,489
  -4,633
  -4,784
  -4,940
  -5,103
  -5,272
  -5,448
  -5,632
  -5,824
  -6,023
  -6,231
  -6,448
  -6,674
  -6,909
Prev. year cash balance distribution, $m
 
  364
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -6,684
  3,049
  3,202
  3,363
  3,534
  3,716
  3,909
  4,114
  4,332
  4,564
  4,810
  5,072
  5,350
  5,645
  5,958
  6,290
  6,641
  7,014
  7,408
  7,825
  8,267
  8,733
  9,226
  9,746
  10,295
  10,875
  11,487
  12,132
  12,812
  13,529
Discount rate, %
 
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
  32.85
  34.49
  36.21
  38.02
  39.93
  41.92
  44.02
  46.22
  48.53
  50.96
  53.50
  56.18
  58.99
  61.94
  65.03
PV of cash for distribution, $m
 
  -5,772
  2,243
  1,978
  1,718
  1,468
  1,234
  1,019
  826
  656
  510
  387
  287
  208
  147
  100
  67
  43
  27
  16
  9
  5
  3
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  38.8
  30.3
  23.9
  18.9
  15.1
  12.2
  9.8
  8.0
  6.5
  5.4
  4.4
  3.7
  3.0
  2.5
  2.1
  1.8
  1.5
  1.3
  1.1
  0.9
  0.8
  0.7
  0.6
  0.5
  0.4
  0.4
  0.3
  0.3
  0.2

M&T Bank Corporation (M&T) is a bank holding company. As of December 31, 2016, M&T had two bank subsidiaries: Manufacturers and Traders Trust Company (M&T Bank) and Wilmington Trust, National Association (Wilmington Trust, N.A.). The Company, along with its subsidiaries, offers a range of retail and commercial banking, trust and wealth management, and investment services. Its segments are Business Banking, which provides a range of services to small businesses and professionals; Commercial Banking, which provides a range of credit products and banking services; Commercial Real Estate, which provides credit and deposit services; Discretionary Portfolio, which includes investment and trading account securities, residential real estate loans and other assets, and short-term and long-term borrowed funds; Residential Mortgage Banking, which originates and services residential mortgage loans, and Retail Banking, which services to consumers through various delivery channels.

FINANCIAL RATIOS  of  M&T Bank (MTB)

Valuation Ratios
P/E Ratio 20
Price to Sales 0
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 22.2
Price to Free Cash Flow 24.4
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 31.7%
Cap. Spend. - 3 Yr. Gr. Rate -3.6%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 58.6%
Total Debt to Equity 58.6%
Interest Coverage 5
Management Effectiveness
Return On Assets 1.3%
Ret/ On Assets - 3 Yr. Avg. 1.3%
Return On Total Capital 4.8%
Ret/ On T. Cap. - 3 Yr. Avg. 4.9%
Return On Equity 8.1%
Return On Equity - 3 Yr. Avg. 8.2%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 36.1%
Eff/ Tax Rate - 3 Yr. Avg. 35.6%
Payout Ratio 39.8%

MTB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MTB stock intrinsic value calculation we used $5464 million for the last fiscal year's total revenue generated by M&T Bank. The default revenue input number comes from 2016 income statement of M&T Bank. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MTB stock valuation model: a) initial revenue growth rate of 7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 15.8%, whose default value for MTB is calculated based on our internal credit rating of M&T Bank, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of M&T Bank.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MTB stock the variable cost ratio is equal to 26.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1404 million in the base year in the intrinsic value calculation for MTB stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for M&T Bank.

Corporate tax rate of 27% is the nominal tax rate for M&T Bank. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MTB stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MTB are equal to 2214.8%.

Life of production assets of 10 years is the average useful life of capital assets used in M&T Bank operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MTB is equal to -1787.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $0 million for M&T Bank - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 151 million for M&T Bank is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of M&T Bank at the current share price and the inputted number of shares is $25.4 billion.

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COMPANY NEWS

▶ M&T Bank directors approve stock buy-back program   [Jul-19-18 06:04AM  American City Business Journals]
▶ M&T Bank's Darren King on bank deals: 'Everyone wants to be the buyer'   [02:07PM  American City Business Journals]
▶ Day Ahead: Top 3 Things to Watch   [Jul-17-18 07:37PM  Investing.com]
▶ M&T Bank Earnings Preview   [04:09PM  Benzinga]
▶ M&T, KeyBank file 'living wills' with regulators   [06:03AM  American City Business Journals]
▶ 4 Top Bank Stocks to Buy Ahead of Q2 Earnings   [Jul-10-18 01:40PM  InvestorPlace]
▶ Bank Notes: KeyCorp's branch closing plan hits Greater Philadelphia   [07:32AM  American City Business Journals]
▶ Washington executive picked to lead M&T Insurance   [Jun-20-18 10:53AM  American City Business Journals]
▶ M&T remains Buffalo's top mortgage provider   [Jun-16-18 08:08AM  American City Business Journals]
▶ M&T Increases Prime Rate   [Jun-13-18 02:39PM  PR Newswire]
▶ Why M&T Bank agrees with Buffett and Dimon   [Jun-11-18 12:35PM  American City Business Journals]
▶ SBA loan approvals, total dollars surge in May   [Jun-05-18 01:47PM  American City Business Journals]
▶ Bank Notes: Sale of Chesco bank earns regulatory approval   [Jun-04-18 07:37AM  American City Business Journals]
▶ M&T Bank (MTB) Enters Oversold Territory   [May-30-18 08:29AM  Zacks]
▶ KeyBank makes management changes   [May-22-18 12:23PM  American City Business Journals]
▶ A little extra money could ensure a good insurance experience, agencies say   [May-13-18 09:05AM  American City Business Journals]
▶ 800 is the key mark for Buffalo SBA office   [May-11-18 12:12AM  American City Business Journals]
▶ East Side preschool funded by M&T Bank to open in the fall   [May-01-18 07:33AM  American City Business Journals]
▶ JPMorgan Chase vows a regional expansion. Does an acquisition make sense?   [Apr-24-18 04:48PM  American City Business Journals]
▶ Ready, set, lights: M&T to install sign in Larkinville   [Apr-18-18 06:05AM  American City Business Journals]
▶ Exclusive: M&T Bank has a new Greater Washington president   [02:15PM  American City Business Journals]
▶ M&T CEO Jones: Bank must change to stay successful   [01:39PM  American City Business Journals]
▶ M&T Bank keeps waiting for the right deal   [02:00AM  American City Business Journals]
▶ M&T Bank to pay $2.5M to settle overtime complaint   [Apr-13-18 06:06AM  American City Business Journals]
▶ Mid-sized companies think the future looks bright, M&T Bank survey says   [Apr-05-18 06:06AM  American City Business Journals]
▶ M&T Bank drives local upturn in SBA dollar volume   [Apr-04-18 12:06PM  American City Business Journals]
▶ Paychex Appears Poised to Beat on Economic Growth   [Mar-23-18 06:00AM  Investopedia]
▶ M&T Increases Prime Rate   [Mar-21-18 02:24PM  PR Newswire]
▶ Bank Notes: CEO pay gaps disclosed; TD expands auto financing business   [Mar-19-18 07:00AM  American City Business Journals]
▶ M&T Bank CEO Jones continues Wilmers' tradition of "The Letter"   [Mar-08-18 10:26AM  American City Business Journals]
▶ M&T Bank Finances New England's Largest Solar Array   [Feb-28-18 10:47AM  PR Newswire]
▶ Equities reset, bank stocks look attractive   [Feb-20-18 03:25PM  Yahoo Finance]
▶ M&T Bank Tops in Business Customer Service   [Feb-12-18 08:45AM  PR Newswire]
▶ Paychex denies report about merger talks with M&T Bank   [Jan-24-18 09:38AM  American City Business Journals]
▶ Company News For Jan 19, 2018   [Jan-19-18 09:05AM  Zacks]
▶ M&T Bank gets ready to boost minimum wage for hourly workers   [02:03PM  American City Business Journals]
Financial statements of MTB
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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