The roughly $125 billion-asset M&T Bank Corporation (NYSE:MTB) is a large regional bank headquartered in Buffalo, New York that mainly operates in the mid-Atlantic region. The bank has performed incredibly well over the last decade, with its stock rising from about $67 per share at the beginning of 2010 to almost $170 per share at the end of 2019, delivering more than 150% growth in the decade.

Unfortunately, the novel coronavirus pandemic has hit some of the bank's main business areas such as New York incredibly hard, making this stock a tricky potential investment.

M&T Bank branch at dusk

Image Source: Getty Images.

Strong performance

Look at all of the classic metrics that bank investors tend to focus on, and it's easy to see the strength of M&T. The bank delivered a return on assets (ROA), a measure showing how well the company used assets to generate profits, of 1.61% in 2019 and 1.64% in 2018. Generally, bank investors are happy to see an ROA anywhere over 1%.

The bank also delivered a return on equity (ROE), a measure of potential return equity investors could see on their investment, of 12.87% in 2019 and 12.82% in 2018. Generally, bank investors are very happy if a bank can deliver an ROE of 10% or higher.

M&T Bank also turned in an excellent efficiency ratio, a measure of a bank's expenses relative to its revenue. Investors want to see a lower efficiency ratio because it shows a bank is spending less and earning more. M&T delivered an efficiency ratio of 55.66% in 2019 and 54.79% in 2018. You might see smaller, faster-growing banks dip into the 40th percentile, but for a bank of its size, this is a great efficiency ratio.

Wrong place, wrong time

Call it bad luck, but M&T is in some markets such as New York and New Jersey that have been absolutely hammered by the coronavirus pandemic. As one analyst put it on the company's most recent earnings call, "Unfortunately, New York City and Westchester are kind of ground zero for the virus and they're big markets for you." M&T Bank CFO Darren King said hotels make up 20% of the bank's New York City portfolio. King added that he thinks the value of those properties should hold up over time, and that people in the bank's multifamily portfolio were paying rent, but it's hard to know what those parts of the portfolio will look like after the second quarter.

Disclosures in its quarterly filing show the bank has 22% of its commercial loan book dedicated to the construction, retail, transportation, and health services industries, all of which could be significantly hurt by the pandemic. It has other industries like manufacturing, too. It has material exposure in its commercial real estate loan book as well to industries like office space, retail, and health facilities, among others. The bank also broke down its outstanding residential mortgage, residential construction, and home equity loans by state; New York is the leader in almost every category, with New Jersey often the second-largest state in terms of the bank's exposure.

Wait and see

M&T Bank is overall a very strong bank, and investors clearly still like the company -- even at M&T's low point in late March when its stock was at $88.10 per share, it still traded at 78% of book value . But there is no denying the company's exposure when you look at its loan book and the geography of those loans.

Before investing in the stock, I'd like to see how the bank's credit quality holds up and how government stimulus impacted borrowers. Investors in general feel this way about a lot of banks with all of the economic uncertainty. That's probably why the banking sector hasn't rebounded as much as some other industries.