M&T Bank (MTB) Q2 2025 Earnings Call July 16, 2025 11:00 AM ET Speaker0morning, everyone. Welcome to the M and T Bank Second Quarter twenty twenty five Earnings Conference Call. All lines have been placed on a listen only mode and the floor will be open for your questions following the presentation. And please be advised that today's conference is being recorded. I would now like to hand the conference over to Mr.Steve Windleboe, Senior Vice President, Investor Relations. Please go ahead, sir.Speaker1Thank ...

M&T Bank (MTB) Q2 2025 Earnings Call July 16, 2025 11:00 AM ET Company ParticipantsSteven Wendelboe - SVP - Market & IRDaryl Bible - CFOChristopher Mcgratty - MD & Head of U.S. Bank ResearchEbrahim Poonawala - MD & Head - North American Banks ResearchManan Gosalia - Head - U.S. Midcaps Banks ResearchGerard Cassidy - Managing DirectorConference Call ParticipantsKen Usdin - Co-Head - Autonomous US & Senior Analyst - US Large-Cap BanksSteven Alexopoulos - Senior Analyst - U.S. Large Cap BanksPeter Winter - MD ...

The ECB's next stress test will ask banks to come up with hypothetical situations in which risks like trade disruptions or wars could hit their financial strength https://t.co/lKkXyt0mXE ...

Core Viewpoint - Citigroup Inc. shares reached a new 52-week high of $88.82, closing at $87.60, with a 35.3% increase over the past year, compared to the industry's 41.2% growth [1][9] Financial Performance - Citigroup passed the Federal Reserve's 2025 stress test, indicating strong capital to absorb significant losses [4] - The company plans to increase its quarterly dividend by 7% to 60 cents per share starting in Q3 2025, pending board approval [5] - Citigroup's current dividend yield is 2.56%, higher than Wells Fargo's 1.94% and Bank of America's 2.14% [6] Capital Management - Citigroup has a $20 billion stock repurchase program, with $1.75 billion in shares bought back in Q1 2025 and a similar target for Q2 [7] - As of March 31, 2025, Citigroup's cash and investments totaled $761 billion, with total debt at $317.5 billion, indicating a strong liquidity position [8] Business Restructuring - The company is simplifying its governance structure, reducing management layers from 13 to eight, and has announced plans to eliminate 20,000 jobs over two years, saving $2-2.5 billion annually by 2026 [10][11] - Citigroup is exiting consumer banking operations in 14 markets, having successfully exited in nine countries, which is expected to free up capital for higher-return segments [12][16] Revenue Growth - Citigroup's net interest income (NII) has a CAGR of 8.4% from 2020 to 2024, with expectations of a 2-3% increase in 2025 [16][17] - The company is expanding its presence in private credit through partnerships, including a $25 billion direct lending initiative with Apollo Global Management [18][19] Estimates and Valuation - Consensus estimates suggest a 3.5% and 3.2% increase in sales for 2025 and 2026, respectively, with earnings expected to rise by 23.2% and 27.6% [20] - Citigroup's current P/E ratio is 10.46x, lower than the industry average of 15.06x, indicating a potentially undervalued stock [22][25] Strategic Outlook - Citigroup's strong capital levels, operational efficiency improvements, and strategic exits position it for long-term growth, despite rising expenses and a complex overhaul plan [26][27]

Core Viewpoint - PNC Financial Services Group, Inc. has increased its quarterly cash dividend by 6% to $1.70 per share, reflecting the company's financial strength and confidence in its strategy and outlook [1][6]. Dividend Increase - The dividend will be paid on August 5, 2025, to shareholders of record as of July 15, 2025 [1]. - This increase follows the successful completion of the Federal Reserve's 2025 stress test, with PNC's projected CET1 ratio remaining well above the regulatory minimum [2][9]. - Prior to this increase, PNC raised its dividend by 3% to $1.60 per share in July 2024, with a five-year annualized dividend growth rate of 8.49% [3]. Financial Metrics - PNC's current payout ratio stands at 45% of its earnings, and its current dividend yield is 3.26%, significantly higher than the industry average of 1.87% [3][9]. - As of March 31, 2025, PNC had $38.4 billion in total available liquidity and $60.7 billion in total borrowed funds [7]. Capital Distribution Actions - PNC has an ongoing share repurchase program, with 40.5 million shares available for repurchase under a previously authorized plan of 100 million shares [6][9]. - The company anticipates maintaining a similar level of share repurchases in the upcoming quarters of 2025 [6]. Market Performance - PNC's shares have gained 23.7% over the past year, although this is lower than the industry's growth of 41.1% [8].

Core Viewpoint - Citizens Financial Group's share price increased by nearly 11% in June due to a significant share repurchase plan and favorable results from the Federal Reserve's banking industry stress test [1][2]. Group 1: Share Repurchase Plan - Citizens Financial announced a $1.2 billion increase to its existing stock buyback program, bringing the total to $1.5 billion, which is substantial for a company with a market cap under $21 billion [2][4]. Group 2: Stress Test Results - The Federal Reserve's annual stress tests showed that all 22 major U.S. banks, including the "big four" (Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup), passed their evaluations, indicating that mid- and large-sized banks are generally in good health [5][6]. - Citizens Financial is tested every two years and was not part of this year's stress test, but the positive results for other banks suggest resilience in the banking sector [6][8]. Group 3: Financial Performance - Despite the positive market reaction, Citizens Financial's first-quarter revenue was stagnant, with a decline in average loans and leases, although net profit increased by 12% to $374 million due to a rise in non-interest income [9].

Core Insights - Bank of America (BAC) plans to increase its quarterly common stock dividend by 7.7% to 28 cents per share starting in the third quarter of 2025 after passing the Federal Reserve's 2025 stress test [1][10] - All 22 banks tested in the stress test passed, with the scenario being less severe than the previous year [1] Financial Performance and Capital Deployment - The stress test modeled a 10% unemployment rate, a 33% drop in home prices, a 30% decline in commercial real estate prices, an 8% contraction in GDP, and a 50% equity market decline, resulting in aggregate simulated losses exceeding $550 billion [2] - BAC's preliminary stress capital buffer (SCB) is expected to improve by 70 basis points to 2.5%, with a CET1 minimum requirement of 10% effective October 1, 2025 [3] - If the Fed's proposed changes to the SCB calculation are adopted, BAC's SCB would be 2.7% and its CET1 minimum requirement would be 10.2% effective January 1, 2026 [3] - As of March 31, 2025, BAC had total debt of $721.9 billion and cash and cash equivalents of $273.6 billion, indicating a strong liquidity position [5] Dividend and Share Repurchase Plans - Following the 2024 stress test, BAC had previously increased its quarterly dividend by 8.3% to 26 cents per share, with a history of dividend increases over the past years [4] - BAC has a share repurchase plan with $14.4 billion remaining as of March 31, 2025, supporting continued capital returns to shareholders [10] Peer Comparison - JPMorgan (JPM) plans to increase its quarterly common stock dividend by 7.1% to $1.50 per share for the third quarter of 2025 and has authorized a $50 billion share repurchase program [6] - Morgan Stanley (MS) will increase its quarterly dividend from 92.5 cents to $1.00 and has reauthorized a multi-year share repurchase program of up to $20 billion [8] Valuation and Earnings Estimates - BAC shares have gained 9.6% year-to-date, compared to the industry's 18% growth [9] - BAC trades at a price-to-tangible book ratio of 1.82, below the industry average of 2.85 [12] - The Zacks Consensus Estimate for BAC's earnings indicates year-over-year growth rates of 11.9% for 2025 and 16.7% for 2026, with slight downward revisions in estimates over the past week [15]

And another catalyst could come after the bell. Leslie Picker has got that story for us. So, what are we talking about there, Leslie.Hey, well, you remember these days after the close today. We're expecting announcements from each of the largest banks about how last week's stress test impacts their capital return plans. The Fed asked the 22 bank study to wait 48 business hours or so after the results to share their dividend and buyback changes with the markets.And given the relative ease of this year's exam ...

The annual stress test is designed to examine whether big banks could survive a hypothetical downturn without government assistance. https://t.co/m9HNE5xQBp ...

Bank Stress Test Results & Regulatory Outlook - The Federal Reserve's bank stress test results were positive across the board, with all banks passing [1][2] - Pre-tax pre-provision net revenue (PPNR) was more robust due to industry profitability driven by strong capital markets revenues and resilient net interest margin [2] - The decline in capital wasn't as severe despite severe stress scenarios [2] - Investors are positive due to a deregulation outlook, with Michelle Bowman addressing Basel 3 endgame with a more realistic approach [5] - Treasury Secretary Besson suggests loosening regulations to allow banks to contribute more to economic growth [5] Top Bank Picks & Growth Opportunities - Wells Fargo is a top pick due to the lifting of its asset cap, allowing balance sheet growth [6] - Wells Fargo had about 13 cease and desist orders since 2019, with 12 having been lifted, reducing regulatory adherence costs of approximately $12 billion [6][7] - Bank of America is expected to show strong net interest income growth [8] - Opportunities exist for money center and regional banks like Fifth Third, Regions, and M&T to return excess capital [9]