The other banks

Earnings season may seem like it just ended, but the reality is that a new one is set to kick off in just over three weeks.

Of course, earnings never really stop in a given quarter, but the window crowded with the highest-profile stocks lasts only a few weeks. That “season” traditionally kicks off with banks—specifically, big banks—even though they are outnumbered by the mid-sized institutions that mostly fly below the radar.

Morgan Stanley & Co. recently highlighted one of those companies, M&T Bank (MTB), which on Wednesday fell to its lowest low since June 10, down around 11% from its August record close:

At that time, MTB was testing the upper boundary of the consolidation that formed after shares jumped to consecutive record highs after the company’s July 15 earnings announcement. Although MTB came up short on revenue, it topped earnings estimates by a wide margin—$5.35 vs. $4.66.

So far, this year hasn’t been particularly strong for financial stocks, which represent the S&P 500’s third-weakest sector, although it still has a positive return. But commercial banks have been a relative bright spot, up more than 6% year to date. Despite its recent pullback, as of Thursday MTB was up more than 12% for the year.

Morgan Stanley & Co. analysts, who earlier this month upgraded MTB from Equal Weight to Overweight, described potentially “attractive upside” over the next 12 to 18 months, with next month’s earnings providing a possible springboard for multiple catalysts. Chief among them: Strong net interest income as loan growth accelerates, and higher buybacks in 2027.¹

Looking ahead to next month’s earnings, the analysts see the potential for a “beat-and-raise” on net interest income. Also, they note MTB has a strong M&A track record and is viewed by many investors as a likely acquirer. As they explain, a “disciplined” bank deal that aligns with the company's strategy and conservative underwriting culture could be a “clearing event” for the stock.

Given long-term Treasury yields recently hit their highest levels in nearly two decades, it’s worth noting that the analysts view higher long-end rates as more of a tailwind than a headwind: The potential benefit to net interest income as Midcap Banks reinvest cash flows into higher-yielding loans and securities outweighs the challenges. They add that this dynamic has been particularly strong when loan growth is accelerating—since 1990, Regional Banks have generated their strongest quarterly returns when both Purchasing Managers Indexes (PMI) and the 10-year rates are rising.²

Finally, after moves that resemble MTB’s path over the past five weeks—an 11%-or-larger decline from a six-week (or longer) high that sets a six-week (or longer) low—the stock closed lower the following week in 18 of 31 cases, but was higher after four weeks in 16 cases.³

Note: MTB is currently scheduled to release earnings on October 16, 2026.

Market Mover Update: Turning to shorter-term interest rates, in the wake of the Federal Reserve’s first rate hike in more than three years, Morgan Stanley & Co. economists expect two additional 0.25% increases (in December and March), bringing the fed funds target range to 4.25%-4.5%.⁴

Today’s numbers include (all times ET): Industrial Production and Capacity Utilization (9:15 a.m.), Leading Economic Indicators Index  (10 a.m.), Quarterly (“Quadruple Witching”) expiration.

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¹ MorganStanley.com. Adding M&T Bank Corp to Our Banks Financials’ Finest list. 9/8/26.
² MorganStanley.com. Field Notes—A Steeper Curve Is a Tailwind, Not a Headwind. 9/13/26.
³ Reflects M&T Bank (MTB) weekly prices, 1980-2026. Supporting document available upon request.
⁴ MorganStanley.com. September FOMC Reaction: Further hikes ahead. 9/17/26.