M&T BANK CORP Q1 FY2025 earnings call

• Purpose: To make a difference in people's lives, serving customers, communities, employees, and shareholders.
• Recognition: Received 13 Greenwich Coalition awards for small business and middle market segments, and included in Fortune's most admired and most innovative company list.
• First quarter results: Net interest margin increased 8 basis points, $662 million in share repurchases, fee income grew 5%, asset quality improved with reduction in criticized balances and nonaccrual loans, net charge-offs below expectations.
• Detailed breakdown: Taxable equivalent net interest income details, net interest margin drivers including securities growth and deposit costs, average loans and leases trends, liquidity with investment securities and cash at $57.9 billion, deposits with average total deposits down $3.4 billion, non-interest income with $611 million, expenses with non-interest expenses up $52 million, credit metrics with net charge-offs and nonaccrual loans trends, criticized loans at $9.4 billion, and capital with CET1 ratio at 11.5%.

In the first quarter, M&T Bank's net interest margin increased 8 basis points. Taxable equivalent net interest income was $1.71 billion, a decrease of $33 million or 2% from the prior quarter. Fee income grew 5% since the first quarter of 2024, or 10% if excluding last year's BOG distribution. Asset quality improved with a $516 million reduction in commercial criticized balances and a $150 million reduction in nonaccrual loans. Net charge-offs were 34 basis points, below full year expectations of 40 basis points. Diluted GAAP earnings per share were $3.32, down from $3.86 in the prior quarter. Net income was $584 million compared to $681 million in the prior quarter. M&T's first quarter results produced an ROA of 1.14% and ROCE of 8.36%. Net operating income was $594 million, with diluted net operating earnings per share of $3.38, ROTA of 1.21% and ROTCE of 12.53%.

• Net interest income: Expected taxable equivalent net interest income to be $7.05 billion to $7.15 billion, net interest margin mid-to-high 3.60s, average loan and lease balances $135 billion to $137 billion, average deposit balances $162 billion to $164 billion.
• Fee income: Expected noninterest income to be at the high end of the $2.5 billion to $2.6 billion range.
• Expenses: Anticipate total noninterest expense, including intangible amortization, to be $5.4 billion to $5.5 billion.
• Credit: Expect net charge-offs for the full year to be near 40 basis points, with criticized loans expected to continue to decline in 2025.
• Capital: Expect the CET1 ratio to reach 11% in 2025, monitoring the economic backdrop and adjusting as needed.

• Macro uncertainty: Economic backdrop remains dynamic with mixed data, tariff uncertainties affecting market and interest rates.
• Customer sentiment: Weakening business and consumer sentiment due to tariff uncertainties impacting C&I growth and CRE portfolio.
• Regulatory and economic: Uncertainties affecting capital allocation, business operations, and potential impact on stress testing and capital buffers.

Q: Ken Houston from Autonomous Research on NII and deposits.

A: Daryl Bible on deposit flow being positive, expecting to be at the higher end of the deposit range, and fee growth being positive with momentum across businesses.

Q: Ebrahim Poonawala from Bank of America on tariffs and C&I growth.

A: Daryl Bible on customer sentiment being weak, consumer spending patterns intact but business on pause due to tariff uncertainties, impacting C&I growth.

Q: Gerard Cassidy from RBC on regulatory environment.

A: Daryl Bible on regulatory environment being pro-business with opportunities for tailoring regulations and improving efficiency.

Q: Matt O'Connor from Deutsche Bank on loan loss reserves and interest rate assumptions.

A: Daryl Bible on tweaking macro outlook for reserves due to market uncertainty and neutral interest rate sensitivity impact on NII.

Q: Manan Gosalia from Morgan Stanley on securities duration and loan growth credit.

A: Daryl Bible on disciplined security investment with government-backed securities and positive CRE and C&I loan growth outlooks with careful underwriting.

Q: John Pancari from Evercore ISI on loan growth and deposits.

A: Daryl Bible on CRE portfolio expected to bottom out by fourth quarter, C&I growth momentum, and deposit seasonality factors.

Q: Christopher Spahr from Wells Fargo on long-term debt and expenses.

A: Daryl Bible on managing long-term debt and expense flexibility with strategic projects and operational leverage.

Q: Peter Winter from D.A. Davidson on loan portfolios and underwriting.

A: Daryl Bible on monitoring certain loan portfolios and no significant precautionary line drawdowns.

Q: Erika Najarian from UBS on stress testing and CECL.

A: Daryl Bible on stress testing process, CECL unemployment assumptions, and impact on capital allocation.