Financial Data and Key Metrics - Diluted GAAP earnings per share improved to $4.02 in Q3 2024 from $3.73 in Q2 2024, reflecting a 10% increase in net income to $721 million [7] - Return on Assets (ROA) and Return on Common Equity (ROCE) were 1.37% and 10.26% respectively, with a CET1 ratio growing to 11.54% [7] - Net interest margin increased by 3 basis points to 3.62%, driven by fixed asset repricing and earning asset mix [9] - Non-interest income reached $606 million, up from $584 million in the linked quarter, driven by trust income and commercial mortgage fees [14] Business Line Performance - Average loans and leases increased slightly to $134.8 billion, with C&I loans growing 3% to $59.8 billion, while CRE loans declined 8% to $29.1 billion [10][11] - Consumer loans grew 4% to $22.9 billion, driven by recreational finance and indirect auto loans [11] - Loan yields remained unchanged at 6.38%, with lower non-accrual interest offset by fixed-rate loan repricing [11] Market Performance - The company maintained strong liquidity with $59 billion in investment securities and cash, representing 28% of total assets [12] - Average total deposits declined by $2 billion to $161.5 billion, with a $1.6 billion decline in non-interest-bearing deposits [13] - Interest-bearing deposit costs decreased by 2 basis points to 2.88% [13] Strategic Direction and Industry Competition - The company continues to reduce CRE concentration, growing C&I and consumer loans while managing funding costs effectively [6] - M&T Bank remains a top SBA lender, ranking 1 in several key markets, and has launched a $25 million initiative for financial inclusion and economic growth [4] - The company updated environmental goals, aiming to offset 100% of electricity use with renewable energy by 2030 [4] Management Commentary on Operating Environment and Future Outlook - The economy remains resilient, with GDP growth expected to be stronger than projected, though a mild recession remains possible [18] - The company expects taxable-equivalent NII to be at least $1.73 billion in Q4, with a net interest margin in the low 3.60s [19] - Loan growth is expected to continue, with average total loans projected at $136 billion, driven by C&I and consumer loans [20] Other Important Information - The company restarted its share repurchase program, executing $200 million in Q3 and planning another $200 million in Q4 [6][21] - Non-accrual loans decreased by $98 million or 5% to $1.9 billion, with the non-accrual ratio dropping to 1.42% [15] - The allowance to loan ratio decreased by 1 basis point to 1.62%, reflecting improvements in asset quality and macroeconomic outlook [16] Q&A Session Summary Question: Optimal CET1 Ratio and Share Repurchases - The company aims to maintain a CET1 ratio above 11%, with potential for increased share repurchases in 2025 depending on economic conditions [23][24] Question: Net Interest Income and Margin Outlook - The company expects continued improvement in NII and net interest margin, driven by positive repricing of fixed-rate assets and strong deposit management [25][26] Question: Criticized Loans and CRE Exposure - Criticized loans have declined for two consecutive quarters, with further reductions expected in Q4 and 2025, particularly in CRE [29][30] Question: Loan Growth and Deposit Beta - Loan growth is expected to accelerate in 2025, with a focus on growing core customer deposits and managing deposit beta around 40% [33][35] Question: Expense Management and Operating Leverage - The company expects positive operating leverage in 2025, with expenses projected to increase due to ongoing projects and corporate incentives [55][56] Question: Credit Quality and Loan Loss Reserves - The loan loss reserve ratio is expected to trend modestly lower, with improvements in criticized loans and a shift in loan portfolio mix [57][58] Question: NIM Trajectory and Other Revenue - The company expects NIM to remain in the low 3.60s for Q4, with other revenue driven by strong loan syndications and card fees [60][61] Question: Expense Projects and Through-the-Cycle Charge-offs - Some expense projects in Q4 will impact run rate, while through-the-cycle charge-offs are expected to be around 34 basis points, with potential increases due to portfolio mix changes [62][63]
M&T(MTB) - 2024 Q3 - Earnings Call Transcript