M&T(MTB) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - M&T Bank reported diluted GAAP earnings per share of $4.82, up from $4.24 in the prior quarter, with net income increasing to $792 million from $716 million [6][8] - The operating return on tangible assets (ROTA) and return on tangible common equity (ROTCE) were 1.56% and 17.13%, respectively [5] - The net interest margin expanded to 3.68%, reflecting well-controlled deposit and funding costs [5][8] - Non-interest income reached $752 million, compared to $683 million in the linked quarter, indicating strong performance across all fee income categories [12] Business Line Data and Key Metrics Changes - Average loans and leases increased by $1.1 billion to $136.5 billion, with commercial loans rising by $0.7 billion to $61.7 billion [9] - Residential mortgage loans increased by 3% to $24.4 billion, while consumer loans also grew by 3% to $26.1 billion [9] - Non-interest expenses rose to $1.36 billion, an increase of $27 million from the prior quarter, primarily due to higher salaries and benefits [13] Market Data and Key Metrics Changes - Average total deposits declined by $0.7 billion to $162.7 billion, with non-interest-bearing deposits decreasing by $1.1 billion [11] - The liquidity position remained strong, with investment securities and cash held at the Federal Reserve totaling $53.6 billion, representing 25% of total assets [10] Company Strategy and Development Direction - M&T Bank aims to grow its New England and Long Island markets while optimizing resources through simplification and enhancing risk management capabilities [20] - The company remains focused on shareholder returns and consistent dividend growth, with a quarterly dividend increase of 11% to $1.50 [6][20] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the economic environment, noting resilience in consumer spending despite potential risks from a weakening labor market [17] - The outlook for the fourth quarter includes expectations for taxable equivalent net interest income of approximately $1.8 billion and continued loan growth [18] Other Important Information - M&T Bank's CET1 ratio was estimated at 10.99%, unchanged from the second quarter, reflecting strong capital generation [16] - The company executed $409 million in share repurchases during the quarter [6][16] Q&A Session Summary Question: Loan growth and CRE book status - Management noted a rebound in commercial real estate (CRE) approvals, with production and approval rates significantly higher than in prior quarters, particularly in multifamily and industrial sectors [24][25] Question: M&T's position in the consolidating regional environment - The company plans to continue growing share in existing markets and may consider acquisitions within its footprint when opportunities arise [26] Question: Changes in regulatory environment - Management highlighted a shift in how regulatory observations are treated, allowing for quicker resolutions and less resource allocation to remediation [30][31] Question: NDFI exposure and credit risk assessment - M&T Bank maintains a conservative approach to its non-depository financial institution (NDFI) exposure, focusing on lower-risk businesses and avoiding higher-risk lending practices [39][40] Question: Capital targets and share repurchase strategy - The CET1 target remains at 10.75% to 11%, with discussions ongoing about potential adjustments based on performance and regulatory clarity [44][46] Question: Competition and loan spreads - The competitive landscape has intensified, with loan spreads down approximately 10 to 15 basis points, but M&T Bank remains efficient in its pricing [47] Question: Credit environment and one-off events - Management acknowledged stress in certain market segments but emphasized a focus on sound underwriting practices to mitigate risks [66]