M&T(US:MTB)2023-07-19 16:35Financial Data and Key Metrics Changes - Net income for the quarter was $867 million, up 24% from the linked quarter, with diluted GAAP earnings per share at $5.05, up 26% sequentially [28] - On a GAAP basis, the annualized return on average assets was 1.7% and return on average common equity was 14.27% [7] - Capital levels remained strong with the CET1 ratio at 10.58%, an increase from 10.16% at the end of the first quarter [35] Business Line Data and Key Metrics Changes - Non-interest income totaled $803 million in the second quarter, compared to $587 million in the linked quarter, including a $225 million gain from the sale of the CIT business [10] - Average commercial real estate loans decreased 1% to $44.9 billion, while average residential real estate loans were essentially flat at $23.8 billion [30] - Average consumer loans decreased 1% to $20.3 billion due to lower activity from rising interest rates [30] Market Data and Key Metrics Changes - Deposit outflows during the second quarter averaged $2.1 billion, or 1.3%, consistent with industry trends [9] - Deposits grew by $3 billion, or 1.9%, from the end of the first quarter, driven largely by brokered CD balances [31] - Service charges on deposits increased by 5% to $119 million compared to the first quarter [32] Company Strategy and Development Direction - The company aims to maintain strong liquidity on its balance sheet and is focused on growing and retaining deposits [39][40] - M&T Bank is committed to its purpose of making a difference in people's lives, emphasizing community support and affordable housing projects [27] - The company anticipates continued intense competition for deposits and expects full-year average deposit balances to increase by low single digits compared to 2022 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's performance despite economic uncertainty, noting that M&T has historically outperformed its peers during such times [17] - The outlook for non-interest income is projected to be in the range of $2.25 billion to $2.3 billion, reflecting lower trust revenues due to the CIT business sale [16] - Management highlighted the importance of managing expenses diligently in light of slowing revenue growth [33] Other Important Information - The allowance for credit losses was $2 billion at the end of the second quarter, up $23 million from the linked quarter, with a provision for credit losses of $150 million recorded in the second quarter [12] - The company is focused on maintaining a strong balance sheet and differentiating itself with clients, communities, and regulators [38] Q&A Session Summary Question: How does the company view its liquidity and funding sources? - Management emphasized the importance of maintaining strong liquidity and the strategic use of various funding sources, including broker deposits and Federal Home Loan Bank advances [39][40] Question: What are the expectations for non-interest-bearing deposits? - Management indicated that the non-interest-bearing deposit mix is expected to continue to shift, with a current percentage of 34% and potential for further decline [160] Question: What is the outlook for loan growth and commercial real estate? - Management projected that total loans would remain relatively flat, with commercial and industrial loans expected to grow, while commercial real estate lending would become a smaller percentage of the balance sheet [76] Question: How is the company managing its capital in light of regulatory changes? - Management stated that they are keeping extra capital as a prudent measure while awaiting new regulatory rules, with a focus on maintaining strong dividends and share buybacks [68][69] Question: What is the company's approach to commercial real estate appraisals? - Management noted that they are conducting thorough reviews and stress tests of their commercial real estate portfolio, with a focus on client selection and long-term relationships [120][143]