What happened

M&T Bank (MTB 0.21%) had a rough week, as its stock price plummeted 13% -- from $185.56 per share when the market closed last Friday to $161.40 per share at the closing bell on Thursday. It was up about 1% on Friday as of 1:30 p.m. ET and is up about 6% year to date.

The bank was well off the pace of the major indexes, which were all up this week. The S&P 500 and the Dow Jones Industrial Average jumped about 2.2% over that same time frame, while the Nasdaq was up 3.2%.

So what

While many of the large banks posted better-than-anticipated earnings over the past few weeks, the same has not been true for some smaller banks. That certainly was the case for M&T, a Buffalo, N.Y.-based regional bank.

In the third quarter, M&T posted $621 million in diluted net income, up 31% year over year, but the $3.53 diluted earnings per share was 4% lower than a year ago and well below estimates of $4.04 per share.

Revenue was up 46% year over year to $2.2 billion, but it was lower than the analysts' consensus of $2.3 billion.

Earnings were down, in part, on higher provision for credit losses -- $115 million compared with a $20 million reserve a year ago. However, the bank also had a $242 million provision on loans carried over from the acquisition of People's United Financial earlier this year. Also, $53 million in expenses associated with the People's United acquisition had a drag on earnings.

Now what

Loan balances, at $126.3 billion, were down slightly from the previous quarter, but up 37% year over year. The slight dip in loans may have also weighed on investors, since many of the large banks reported loan increases. Still, net interest income, due to higher rates, was up 19% from the previous quarter and 74% year over year.

Also, net charge-offs were up 58% year over year to $63 million, while nonperforming assets were up 9% year over year, but down 7% from the previous quarter.

Overall, the earnings report is not nearly as bad as the market's reaction. Much of it is related to the costs associated with the integration of People's United.

The economy remains a concern, but the bank should continue to generate high net interest income and has improved its efficiency ratio to 53.6% from 57.7% a year ago. M&T stock is attractively valued with a low forward price-to-earnings ratio of around 8 and thus remains a pretty good buy.