M&T(MTB) - 2025 Q2 - Quarterly Results

Earnings Release Summary Q2 2025 Earnings Highlights M&T Bank reported strong Q2 2025 earnings with net income of $716 million and diluted EPS of $4.24, driven by stable NII and higher noninterest income | (Dollars in millions, except per share data) | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Net income | $716 | $584 | $655 | | Net income available to common shareholders - diluted | $679 | $547 | $626 | | Diluted earnings per common share | $4.24 | $3.32 | $3.73 | | Net interest income | $1,713 | $1,695 | $1,718 | | Noninterest income | $683 | $611 | $584 | | Noninterest expense | $1,336 | $1,415 | $1,297 | | Return on average assets - annualized | 1.37 % | 1.14 % | 1.24 % | | Return on average common shareholders' equity - annualized | 10.39 % | 8.36 % | 9.95 % | | CET1 capital ratio (estimated) | 10.98 % | 11.50 % | 11.45 % | - M&T significantly increased its share repurchase activity, buying back 6.1 million shares for $1.1 billion in Q2 2025, compared to 3.4 million shares for $662 million in Q1 2025[5] - The Common Equity Tier 1 (CET1) capital ratio decreased by 52 basis points to an estimated 10.98% at the end of Q2 2025, primarily reflecting the accelerated share repurchases[5] CFO Commentary CFO Daryl N. Bible emphasized consistent profitability, significant capital returns, reduced stress capital buffer, and prudent risk management - The CFO highlighted that consistent profitability supported significant capital return to shareholders[3] - A key positive development was the reduction of M&T's stress capital buffer, reinforcing the bank's financial strength[3] - The bank remains focused on prudent risk management and active community involvement[3] Financial Performance Analysis Taxable-equivalent Net Interest Income Taxable-equivalent net interest income increased 1% QoQ to $1,722 million, driven by asset repricing and lower hedging costs, with a slight NIM decrease | (Dollars in millions) | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Average earning assets | $190,535 | $189,116 | $193,676 | | Net interest income - taxable-equivalent | $1,722 | $1,707 | $1,731 | | Net interest margin | 3.62% | 3.66% | 3.59% | - QoQ NII increased by $15 million, or 1%, driven by an extra day of earnings, favorable asset repricing, and lower negative impact from interest rate swaps, partially offset by a $20 million reduction in interest income due to an alignment of amortization periods for certain municipal bonds[5][8] - YoY NII decreased by $9 million, or 1%[9] Average Earning Assets Average earning assets grew 1% QoQ to $190.5 billion, driven by consumer and residential real estate loans, partially offset by a 2% YoY decrease | (Dollars in millions) | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Total earning assets | $190,535 | $189,116 | $193,676 | | Interest-bearing deposits at banks | $19,698 | $19,695 | $29,294 | | Investment securities | $35,335 | $34,480 | $29,695 | | Total loans | $135,407 | $134,844 | $134,588 | - QoQ average loans increased by $563 million, driven by higher consumer and residential real estate loans, partially offset by a decline in commercial real estate loans, which included the sale of a loan portfolio[13] - YoY average loans increased by $819 million, reflecting growth in commercial & industrial (+$2.9 billion) and consumer loans (+$3.4 billion), which was largely offset by a $6.1 billion decline in commercial real estate loans[13] Average Interest-bearing Liabilities Average interest-bearing liabilities increased 2% QoQ to $132.5 billion, driven by growth in savings and interest-checking deposits, remaining flat YoY | (Dollars in millions) | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Total interest-bearing liabilities | $132,516 | $129,938 | $132,209 | | Total interest-bearing deposits | $118,253 | $115,784 | $115,757 | | Short-term borrowings | $3,327 | $2,869 | $4,962 | | Long-term borrowings | $10,936 | $11,285 | $11,490 | - QoQ, average interest-bearing liabilities increased by $2.6 billion, reflecting growth in savings and interest-checking deposits[14] - YoY, average interest-bearing deposits rose $2.5 billion, while average borrowings decreased $2.2 billion[15] Provision for Credit Losses/Asset Quality Provision for credit losses decreased to $125 million in Q2 2025, reflecting improved asset quality with lower loan loss allowance and reduced nonaccrual loans | (Dollars in millions) | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Total provision for credit losses | $125 | $130 | $150 | | Net charge-offs | $108 | $114 | $137 | | Nonaccrual loans | $1,573 | $1,540 | $2,024 | | Allowance for loan losses as % of loans | 1.61% | 1.63% | 1.63% | | Net charge-offs as % of average loans | 0.32% | 0.34% | 0.41% | - The allowance for loan losses as a percentage of loans outstanding decreased to 1.61% at June 30, 2025, from 1.63% at March 31, 2025, reflecting lower levels of criticized commercial real estate loans[17] - Nonaccrual loans decreased significantly to $1.6 billion at June 30, 2025, compared to $2.0 billion at June 30, 2024, predominantly due to decreases in commercial real estate nonaccrual loans[18] Noninterest Income Noninterest income significantly increased to $683 million in Q2 2025, up 12% QoQ and 17% YoY, driven by mortgage banking, trust income, and sales gains | (Dollars in millions) | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Total Noninterest Income | $683 | $611 | $584 | | Mortgage banking revenues | $130 | $118 | $106 | | Service charges on deposit accounts | $137 | $133 | $127 | | Trust income | $182 | $177 | $170 | | Other revenues from operations | $191 | $142 | $152 | - QoQ, other revenues from operations increased by $49 million, which included a $15 million gain on the sale of a loan portfolio and a $10 million gain on the sale of a subsidiary[22] - YoY, noninterest income rose $99 million (17%), with mortgage banking revenues up $24 million, service charges up $10 million, and trust income up $12 million[20][22] Noninterest Expense Noninterest expense decreased 6% QoQ to $1,336 million due to lower salaries, while increasing 3% YoY from higher staffing and software costs, improving efficiency | (Dollars in millions) | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Total Noninterest Expense | $1,336 | $1,415 | $1,297 | | Salaries and employee benefits | $813 | $887 | $764 | | Outside data processing and software | $138 | $136 | $124 | | FDIC assessments | $22 | $23 | $37 | - QoQ expenses decreased by $79 million, mainly due to a $74 million drop in salaries and benefits expense, which reflected seasonally higher costs (stock-based compensation, payroll taxes) in Q1[23] - YoY expenses increased by $39 million, driven by a $49 million rise in salaries and benefits and a $14 million increase in software costs, partially offset by lower FDIC assessments[24][29] Capital Management Capital Ratios and Share Repurchases M&T's CET1 ratio declined to 10.98% due to $1.1 billion in share repurchases, but capital flexibility is enhanced by a reduced stress capital buffer | Capital Ratios | 2Q25 (Est.) | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | CET1 | 10.98% | 11.50% | 11.45% | | Tier 1 capital | 12.50% | 13.04% | 13.23% | | Total capital | 13.96% | 14.50% | 14.88% | - M&T repurchased 6,073,957 shares of common stock for a total cost of $1.1 billion during Q2 2025[30] - Based on recent supervisory stress test results, M&T's stress capital buffer is estimated to decrease from 3.8% to 2.7% effective October 1, 2025[27] Financial Statements Financial Highlights This section presents M&T's financial performance via YoY and five-quarter trends, highlighting solid net income and EPS growth, and a strong Q2 2025 rebound Financial Highlights (YTD and YoY Comparison) | (Dollars in millions, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $716 | $655 | $1,300 | $1,186 | | Diluted earnings per common share | $4.24 | $3.73 | $7.55 | $6.76 | | Return on average total assets | 1.37% | 1.24% | 1.25% | 1.13% | | Return on average common equity | 10.39% | 9.95% | 9.37% | 9.05% | Financial Highlights (Five Quarter Trend) | (Dollars in millions) | 2Q25 | 1Q25 | 4Q24 | 3Q24 | 2Q24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net income | $716 | $584 | $681 | $721 | $655 | | Diluted earnings per common share | $4.24 | $3.32 | $3.86 | $4.02 | $3.73 | | Net interest margin | 3.62% | 3.66% | 3.58% | 3.62% | 3.59% | | Efficiency ratio | 55.2% | 60.5% | 56.8% | 55.0% | 55.3% | Condensed Consolidated Statement of Income M&T's Q2 2025 income statement shows stable net interest income, a 17% decrease in provision for credit losses, and a 17% increase in other income, driving a 9% net income rise Condensed Consolidated Statement of Income (YoY) | (Dollars in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Net interest income | $1,713 | $1,718 | —% | | Provision for credit losses | $125 | $150 | -17% | | Total other income | $683 | $584 | 17% | | Total other expense | $1,336 | $1,297 | 3% | | Net income | $716 | $655 | 9% | Condensed Consolidated Balance Sheet M&T's total assets reached $211.6 billion as of June 30, 2025, driven by increased investment securities and net loans, funded by 3% growth in total deposits Condensed Consolidated Balance Sheet (YoY) | (Dollars in millions) | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | ASSETS | | | | | Investment securities | $35,568 | $29,894 | 19% | | Net loans | $133,919 | $132,798 | 1% | | Total assets | $211,584 | $208,855 | 1% | | LIABILITIES AND EQUITY | | | | | Total deposits | $164,453 | $159,910 | 3% | | Total borrowings | $14,451 | $16,083 | -10% | | Total shareholders' equity | $28,525 | $28,424 | —% | Condensed Consolidated Average Balance Sheet This schedule details average balances and annualized rates for interest-earning assets and liabilities, showing a Q2 2025 net interest spread of 2.80% and margin of 3.62% Average Balances and Rates (Q2 2025) | (Dollars in millions) | Balance | Rate | | :--- | :--- | :--- | | Total earning assets | $190,535 | 5.51% | | Total interest-bearing liabilities | $132,516 | 2.71% | | Net interest spread | | 2.80% | | Net interest margin | | 3.62% | Reconciliation of GAAP to Non-GAAP Measures M&T presents non-GAAP measures, including net operating income of $724 million and 15.54% return on average tangible common equity, for core operational insights - Management uses non-GAAP measures like "net operating" or "tangible" results, which exclude the after-tax effects of amortization of intangible assets and merger-related expenses, to assess core performance[7] Key Non-GAAP Measures (Q2 2025 vs Q2 2024) | (Dollars in millions, except per share data) | 2Q25 | 2Q24 | | :--- | :--- | :--- | | Net operating income | $724 | $665 | | Diluted net operating earnings per common share | $4.28 | $3.79 | | Annualized return on average tangible common equity | 15.54% | 15.27% | | Efficiency ratio | 55.2% | 55.3% | | Tangible equity per common share | $112.48 | $102.42 | - The detailed reconciliation tables show the specific adjustments made to GAAP figures, such as adding back amortization of core deposit and other intangible assets to calculate net operating income and noninterest operating expense[50][51] Other Information Conference Call Information M&T will host an investor conference call on July 16, 2025, at 11:00 a.m. ET to discuss Q2 financial results, with dial-in and webcast details - An investor conference call to discuss Q2 results is scheduled for 11:00 a.m. Eastern Time on July 16, 2025, with dial-in and webcast information provided for participation[31] Forward-Looking Statements This section contains forward-looking statements subject to various risks and uncertainties, including economic and regulatory changes, detailed in SEC filings - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[34][35] - A non-exhaustive list of important risk factors includes economic conditions, interest rate changes, competition, and regulatory changes[37] - M&T directs stakeholders to its Form 10-K for a more detailed description of risks and uncertainties and states it has no duty to update forward-looking statements[39]