M&T Bank (NYSE:MTB) versus Northeast Community Bancorp (NASDAQ:NECB) Critical Review

M&T Bank (NYSE:MTB) and Northeast Community Bancorp (NASDAQ:NECB) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitability, valuation and earnings.

Dividends

M&T Bank pays an annual dividend of $6.00 per share and has a dividend yield of 2.7%. Northeast Community Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 3.4%. M&T Bank pays out 31.3% of its earnings in the form of a dividend. Northeast Community Bancorp pays out 32.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Northeast Community Bancorp has increased its dividend for 2 consecutive years. Northeast Community Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

84.7% of M&T Bank shares are owned by institutional investors. Comparatively, 53.2% of Northeast Community Bancorp shares are owned by institutional investors. 0.4% of M&T Bank shares are owned by company insiders. Comparatively, 7.1% of Northeast Community Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for M&T Bank and Northeast Community Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
M&T Bank	2	13	8	0	2.26
Northeast Community Bancorp	0	1	2	2	3.20

M&T Bank currently has a consensus price target of $244.89, indicating a potential upside of 11.41%. Northeast Community Bancorp has a consensus price target of $30.25, indicating a potential upside of 4.31%. Given M&T Bank’s higher possible upside, research analysts clearly believe M&T Bank is more favorable than Northeast Community Bancorp.

Profitability

This table compares M&T Bank and Northeast Community Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
M&T Bank	22.63%	11.86%	1.40%
Northeast Community Bancorp	27.21%	11.55%	1.99%

Earnings & Valuation

This table compares M&T Bank and Northeast Community Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
M&T Bank	$13.23 billion	2.40	$2.85 billion	$19.16	11.47
Northeast Community Bancorp	$102.59 million	3.89	$44.41 million	$3.04	9.54

M&T Bank has higher revenue and earnings than Northeast Community Bancorp. Northeast Community Bancorp is trading at a lower price-to-earnings ratio than M&T Bank, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

M&T Bank has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500. Comparatively, Northeast Community Bancorp has a beta of 0.37, meaning that its share price is 63% less volatile than the S&P 500.

Summary

M&T Bank beats Northeast Community Bancorp on 10 of the 18 factors compared between the two stocks.

About M&T Bank

M&T Bank Corp. operates as a bank holding company, which engages in the provision of retail and commercial banking, trust, wealth management, and investment services. It operates through the following segments: Commercial Bank, Retail Bank, Institutional Services and Wealth Management, and All Other. The Commercial Bank segment offers a wide range of credit products and banking services to middle-market and large commercial customers, mainly within the markets served by the company. The Retail Bank segment refers to the services to consumers and small businesses through the company’s branch network and several other delivery channels such as telephone banking, internet banking, and ATMs. The Institutional Services and Wealth Management segment relates to helping high net worth individuals, institutions, and families grow, preserve, and transfer wealth. The All Other segment reflects other activities of the company that are not directly attributable to the reported segments. The company was founded on August 30, 1856 and is headquartered in Buffalo, NY.

About Northeast Community Bancorp

Northeast Community Bancorp, Inc. operates as the holding company for NorthEast Community Bank that provides financial services for individuals and businesses. It accepts various deposit instruments, including checking accounts, money market accounts, regular savings accounts, and non-interest bearing demand accounts, as well as certificates of deposits. The company also offers construction, commercial and industrial, multifamily and mixed-use real estate, non-residential real estate loans, and consumer loans. In addition, it invests in various types of liquid assets, including U.S. Treasury obligations, municipal securities, deposits at the Federal Home Loan Bank of New York, and certificates of deposit of federally insured institutions, as well as securities of various federal agencies, and of state and municipal governments. Further, the company offers financial planning and investment advisory services; and life insurance products and fixed-rate annuities. It operates full-service branches located in Bronx, New York, Orange, Rockland, and Sullivan Counties in New York and Essex, Middlesex, and Norfolk Counties in Massachusetts; and loan production offices located in White Plains, New York, and New City counties in New York and Danvers, Massachusetts. Northeast Community Bancorp, Inc. was founded in 1934 and is headquartered in White Plains, New York.