M&T Bank Corporation Q2 FY2025 earnings call

• Supported entrepreneurs with small business accelerator labs and invested in communities via the Amplify fund. - Notable recognition from customers and the industry. - Stress test SCB declined to 2.7% reflecting earnings power and risk management. - Executed $1.1 billion in share repurchases and grew tangible book value per share 1%. - Fee income grew 11% excluding certain items. - Expenses controlled with an efficiency ratio of 55.2%. - Net charge-offs were 32 basis points, and criticized loans decreased. - Liquidity was strong with investment securities and cash at the Fed totaling $54.9 billion.

Average loans and leases increased $600 million to $135.4 billion. Commercial loans were unchanged at $61 billion but ended the period up $1.1 billion. CRE loans declined 4% to $25.3 billion. Residential mortgage loans rose 2% to $23.7 billion, and consumer loans grew 4% to $25.4 billion. Average total deposits rose $2.2 billion to $163.4 billion. Non-interest income was $683 million, up from $611 million in the prior quarter. Net interest income was $1.72 billion, an increase of $15 million from the linked quarter.

• Expect taxable equivalent net interest income excluding notable items to be $7 billion to $7.15 billion with net interest margin in the mid to high 360s. - Lowered the loan growth range due to softness in commercial and CRE loan growth. - Fee income expected at the high end of the $2.5 billion to $2.6 billion range. - Non-interest expenses anticipated to be $5.4 billion to $5.5 billion. - Net charge-offs for the full year expected to be less than 40 basis points. - CET1 ratio expected to operate in the 10.75% to 11% range for the remainder of the year.

• Economic slowdown risk. - Impact of tariffs on certain categories. - Geopolitical uncertainty. - Potential CRE risks, including ongoing monitoring of criticized loans. - Uncertainty in deposit costs and loan growth dynamics.

Q: Expand on loan dynamics, especially CRE.

A: The CRE pipeline continues to build, with the best month in June having over $5 billion in the pipeline. While CRE loans declined in the quarter, the pipeline is expected to lead to growth later in the year.

Q: Capital balance, right level of capital.

A: There is uncertainty in the market, with a target CET1 ratio of 10%, but currently operating in the 10.75% to 11% range due to market uncertainties.

Q: Fee income growth, especially trust.

A: The corporate trust business is growing well, with investments in Europe and strong performance in treasury management, which saw a 12-13% year-over-year increase.

Q: Expense guide and M&A.

A: The GL project was not related to the guidance change; leadership is focused on positive operating leverage. M&A is open to when the time is right, as the bank is always looking at potential opportunities.

Q: Margin outlook, loan growth impact.

A: NIM is expected to be in the mid to high 360s, reliant on commercial and CRE loan growth. Fixed asset repricing and swap book are positive factors but loan growth is key.

Q: Consumer loan growth, deposit guidance.

A: Consumer loans have been strong, with HELOC growth, and deposits are expected to be in the upper end of the $162 billion to $164 billion range as the bank focuses on growing deposits at reasonable costs.

Q: Capital buybacks, M&A.

A: Buybacks have been at the $1.1 billion level, and the bank is always looking at M&A, with the pace depending on economic conditions.

Q: NIM, deposit cost increase.

A: Deposit cost increase was due to timing, with marginal deposits under the funding curve, which is beneficial for the balance sheet in the long run.

Q: Capital target, deposit competition.

A: The target CET1 ratio is 10%, and the bank focuses on core deposits and attracting operating accounts to maintain a strong deposit franchise.

Q: Criticized loans, MIOS reserve.

A: Criticized loans have decreased, and the MIOS reserve for the Fannie Mae program is due to specific client situations, with minimal losses historically in that portfolio.

Q: Stablecoins, net charge-off guidance.

A: The bank is monitoring stablecoins, and net charge-offs are expected to be less than 40 basis points, but there is caution due to market uncertainties.