USB vs. MTB: Which Regional Banking Stock Holds More Upside?

Globe and Mail

3 days ago

Both U.S. Bancorp USB and M&T Bank Corporation MTB are U.S. regional banks, offering similar banking services and exposed to the same interest-rate and credit-cycle pressures. Their performance often mirrors sector-wide trends in net interest margins, deposit competition, and loan defaults.
However, both have different growth strategies and geographic exposures. Let us delve deeper into the financial outlook, valuation, and risk profiles of USB and MTB to determine which stock offers better value.
The Case for USB
U.S. Bancorp has been making several strategic initiatives to strengthen its market position, digital capabilities, and diversify revenue streams. In the past few years, USB has acquired Salucro Healthcare Solutions LLC, MUFG Union Bank's core franchise and fintech platforms. In June 2025, USB partnered with Fiserv to integrate its Elan Financial Service credit card program into Fiserv's Credit Choice Solution. These efforts will continue to strengthen the company's fee-based businesses.
Over the past few years, the company has been witnessing a rise in net interest income (NII). Going forward, investment portfolio repositioning, less deposit migration, relatively lower rates, and stabilizing funding costs will continue to support its NII growth.
Organic growth and diverse revenue sources are key strengths of U.S. Bancorp. Hence, the company is well-positioned to improve its revenue trend, backed by growth in non-interest income and NII. The company has been experiencing solid growth in average loans and deposits in recent years as it expands relationships with existing customers and acquires new ones. Also, stabilizing deposit trends will continue to support deposit growth. These favorable factors will continue to aid its top line. Management projects total revenues for 2025 to grow in the range of 3–5% from the $27.6 billion reported in 2024.
USB Sales Estimates
The company enjoys a decent balance sheet. As of March 31, 2025, the company had long-term debt of $59.9 billion and $17 billion in short-term borrowings. Cash and due from banks was $50 billion as of the same date, reflecting a decent liquidity position.
Furthermore, USB has cleared the 2025 stress test result and announced plans to increase its quarterly dividend by 4% to 52 cents per share, subject to the board's approval. It also intends to continue buybacks under its existing $5 billion share repurchase program. As of March 31, 2025, $4.9 billion remains available under the company's repurchase program. Given its decent liquidity and strong capital position, its capital deployment activities are sustainable.
The Case for MTB
M&T Bank has shown remarkable revenue growth over the past few years. Going forward, higher NII, driven by modest lending demand and the Fed's rate cuts, will support its revenue growth. The company's initiatives to strengthen non-interest income will further bolster the top-line growth.
The company has a solid balance sheet position. It has been focused on acquiring the best deposit franchise. The company recorded solid loan and deposit growth in the past few years. Growth was supported by the acquisition of People's United in 2022, which increased M&T Bank's loans by $36 billion and deposits by $53 billion. Its deposits are well diversified in terms of clients and offerings, which will support growth in the upcoming period. Additionally, improvements in consumer, commercial, and industrial (C&I) and residential mortgage lending will support loan growth.
Management expects 2025 average loans and leases to be between $135 billion and $137 billion, while average total deposits are projected to be in the range of $162–$164 billion in 2025. Last year, total loans and leases amounted to $135.5 billion, while total deposits reached $161 billion. NII is also anticipated to be between $7.05 billion and $7.15 billion for 2025. Additionally, non-interest income is expected to be between $2.5 billion and $2.6 billion. Last year, NII was $6.85 and non-interest income was $$2.4 billion. These favorable projections will likely support the company's top line.
MTB Sales Estimates
The financial position of M&T Bank remains healthy, backed by strong liquidity and manageable debt levels. As of March 31, 2025, the company had total borrowings of $12.1 billion, comprising both short-term and long-term debt, which was lower than the $22.8 billion held in cash and interest-bearing deposits at banks as of the same date.
The company has also passed this year's stress test, although it is yet to announce any changes to its capital plans. M&T Bank hiked its quarterly dividends by 4% to $1.35 per share in May 2024. This followed an 8.3% increase in February 2023. Further, in January 2025, its board of directors authorized a share repurchase program to repurchase up to $4 billion of the company's common stock, with no expiration date. As of March 31, 2025, $3.3 billion worth of shares were available under the plan.
USB & MTB: Price Performance and Valuation
Over the three months, shares of USB and MTB rallied 19.9% and 20.9% outperforming the industry 's growth of 18.8% and the S&P 500 Index's increase of 15.1%.
Price Performance
Image Source: Zacks Investment Research
In terms of valuation, USB currently trades at a forward 12-month price-to-earnings (P/E) ratio of 10.33 times, which is lower than its five-year median of 10.75 times. MTB stock is currently trading at a 12-month forward P/E of 11.42X, which is higher than its five-year median of 10.56X.
Price-to-Earnings F12M
Further, USB is trading at a discount compared with the industry average of 11.13X, while MTB is trading at a premium. Hence, USB is a better choice for value investors.
How Do Earnings Estimates Compare USB & MTB?
The Zacks Consensus Estimate for USB's 2025 and 2026 earnings indicates an 8% and 9.6% rise for 2025 and 2026, respectively. Earnings estimates for 2025 have been revised downward, while the same have been revised upward for 2026 over the past month.
USB Estimates Revision Trend
Image Source: Zacks Investment Research
The consensus mark for MTB's 2025 and 2026 earnings indicates an 8.5% and 14.7% rise for 2025 and 2026, respectively. Earnings estimates for both years have been revised upward over the past month.
MTB Estimates Revision Trend
Image Source: Zacks Investment Research
USB or MTB: Which Bank Stock Is More Compelling?
While both USB and MTB are fundamentally strong regional banks with robust balance sheets and consistent capital returns, USB stands out as the more compelling investment choice for value-oriented investors and those seeking long-term growth.
USB is trading below both its five-year median and the industry average, which signals an attractive valuation entry point. Its strategic acquisitions, fintech partnerships, and diversified revenue mix position it well capitalized on for long-term growth.
Moreover, its strong capital position, planned dividend increase, and active buyback plan underscore management's confidence in delivering sustainable shareholder returns.
While MTB offers appealing earnings momentum, USB's lower valuation, broader strategic initiatives, and balanced revenue sources give it the edge in terms of total return potential and long-term upside.
At present, USB and MTB carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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U.S. Bancorp (USB): Free Stock Analysis Report
M&T Bank Corporation (MTB): Free Stock Analysis Report