M&T(MTB) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - M&T Bank achieved record net income of $2.85 billion and record EPS of $17, with a top quartile return on tangible assets exceeding 1.4% [7] - The quarterly dividend was increased by 11%, and 9% of outstanding shares were repurchased, while tangible book value per share grew by 7% [7] - Non-accruals decreased by 26%, with the non-accrual percentage of total loans reaching 90 basis points, the lowest since 2007 [7] - The efficiency ratio improved from 56.9% to 56% [7] Business Line Data and Key Metrics Changes - Fee income grew by 13%, reaching a record of $2.7 billion, with the fee mix as a percentage of revenue increasing from 26% to over 28% [7] - Average loans and leases increased by $1.1 billion to $137.6 billion, with commercial loans rising by $0.5 billion to $62.2 billion [9][10] - Non-interest income for the quarter was $696 million, down from $752 million in the linked quarter, with mortgage banking revenues increasing to $155 million [13] Market Data and Key Metrics Changes - Investment securities and cash held at the Fed totaled $53.7 billion, representing 25% of total assets [11] - Average total loans rose by $2.4 billion to $165.1 billion, with non-interest-bearing deposits increasing by $0.1 billion to $44.2 billion [12] Company Strategy and Development Direction - M&T Bank's strategy focuses on "Operational Excellence" and "Teaming for Growth," aiming to enhance efficiency and unify operations across regions [18][19] - The company is committed to creating economic opportunities and expanding access to banking services in key markets [5][6] Management's Comments on Operating Environment and Future Outlook - The economy remains resilient despite uncertainties, with expectations for net interest income to be between $7.2 billion and $7.35 billion in 2026 [20][21] - The company anticipates full-year average loans to be $140 billion to $142 billion, with a focus on growing relationship customers [21][22] Other Important Information - M&T Bank's CET1 ratio was estimated at 10.84%, reflecting a decline due to share repurchases and increased risk-weighted assets [17] - The company plans to continue returning excess capital to shareholders while monitoring economic conditions and asset quality trends [24] Q&A Session Summary Question: Capital ratios and Basel III Endgame proposal - Management is open to potentially lowering the CET1 ratio if regulatory requirements decrease, indicating flexibility in capital management [30][31] Question: Loan growth and commercial real estate - Management expects loan growth across all portfolios, with a positive outlook for commercial real estate starting in the second quarter of 2026 [36][37] Question: Deposit environment and competitive landscape - The company aims to grow customer deposits while managing competitive pressures, focusing on net new checking accounts [46][47] Question: Fee and expense growth expectations - Management projects a core growth rate of about 4% for fees, driven by various business lines, while maintaining disciplined expense management [55] Question: Credit quality and delinquency rates - The increase in 90-day past dues is attributed to administrative delays and Ginnie Mae repurchases, with overall credit quality remaining strong [64][65]