M&T Bank Corp at Goldman Sachs U.S. Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ryan Nash - Goldman Sachs - Analyst : So with that, Daryl, maybe to start off, 2024 was an encouraging year for the industry despite all the uncertainty, for M&T as I highlighted, it's another outstanding year. Credit showed signs of improving, balance sheet is in a better place from a risk perspective, and you began returning capital. So maybe just talk about some of the key things that led to such a strong outcome once again and how this positions you to succeed into '25?

Question: Ryan Nash - Goldman Sachs - Analyst : Great. So Daryl, while it's only been a few weeks, I know you and the team are probably out talking to clients, what are they saying about the environment that they think we're about to move into?

Question: Ryan Nash - Goldman Sachs - Analyst : So maybe switching a little bit to the near to intermediate term. In the slides, you gave an update on the fourth quarter, where you highlighted loan growth as an example. The market has gotten excited that we're going to see loan growth return at some point in '25. How are you just broadly thinking about growth? What are clients saying? And what do you see as you look into next year?

Question: Ryan Nash - Goldman Sachs - Analyst : Maybe just a two-part question. First, for the fourth quarter NII outlook, I think you're saying $1.73 billion, plus or minus, I think in the prior it had been plus. Maybe just talk through what are some of the moving pieces that have impacted the NII this quarter before we talk more broadly about it?

Question: Ryan Nash - Goldman Sachs - Analyst : Got you. So maybe just to build on that, I know we'll get formal NII guidance in January. But maybe you could just discuss some of the drivers of NII for you and could 2025 be a record year like every bank seems to be out there highlighting?

Question: Ryan Nash - Goldman Sachs - Analyst : So just to wrap up the views on the fourth quarter, we talked about the NII, the outlook for loan growth. Anything else, in particular, you wanted to highlight whether fee income, expense, credit or it sounds like deposits is coming better? Anything else that you wanted to make sure that we were aware of?

Question: Ryan Nash - Goldman Sachs - Analyst : Got you. And maybe shifting gears a little bit. So it may have started a little bit before you arrived, but really accelerated in your time, just the transformation. Over the past few years of the balance sheet, you talked about rightsizing CRE, holding on to more cash, investing in more securities. I mean you had taken on some more wholesale funding, added hedges, talked just before about rightsizing some things on the balance sheet. Are we now complete with the transformation or is there more work to be done on the balance sheet, recognizing there's always more work to be done?

Question: Ryan Nash - Goldman Sachs - Analyst : Yes. And just to add on to the point that you said cash coming down to $20 billion and securities in the mid-30s. You've obviously been adding to the securities portfolio, and it sounds like you're likely to continue. I guess given the movement of rates, you guys are in a very short duration portfolio. Has there been any consideration to extending at this point, just given the opportunities that the market's presented?

Question: Ryan Nash - Goldman Sachs - Analyst : Daryl, the fourth quarter guide's at a NIM in the high 350s, you've sort of outlined a handful of different pieces across some of your remarks, changes that are coming in the second quarter, neutral stance on rates, success repricing, deposits, fixed rate asset repricing. Can you maybe kind of bring these things together and what do you expect this means for the trajectory of the margin over the medium term? And where do you think it can inevitably operate?

Question: Ryan Nash - Goldman Sachs - Analyst : And NIM could set you up well for exiting '25 given all the things that you're going to be doing. All right. No, that was great. I appreciate all the color on that, Daryl. Maybe to spend a minute on deposits. So you talked on the slide -- on your remarks about having greater -- having faster-than-expected growth, which is obviously, great to hear. We've been watching noninterest-bearing deposits or disintermediation, as you refer to it, has been happening at a slower pace. You've been bringing down brokered. So as you think about the potential for loan growth coming back, what are the strategies in place to replace wholesale funding as you talked about happening in the late first quarter, second quarter and also to grow core deposits? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 1:40PM, MTB.N - M&T Bank Corp at Goldman Sachs U.S. Financial Services Conference

Question: Ryan Nash - Goldman Sachs - Analyst : Daryl, you talked about the deposit repricing, thinking you would at 46%, but obviously, you've had some solid growth that has brought that down a little bit. As you think about over the last two months, how the rate cycle has evolved, so less cuts steepness in the curve. How does that at all impact the way you think about the ability to reprice deposits not just for the near term but over what could be a shallower easing cycle?

Question: Ryan Nash - Goldman Sachs - Analyst : So you mentioned earlier that there's going to be a shift in CRE, which has been shrinking, 31% down to 20%, you got the concentration level below 150, which I know was a goal of yours. And then I think you made a comment before that we should be down in the near term and then start to level off. Can you maybe just talk about the lessons learned from the past cycle and how that impacts the strategy of where you want to grow in CRE? Obviously, office has been through lots of trouble and there were some issues in parts of multifamily. How does this formulate where you want to grow in commercial real estate moving forward?

Question: Ryan Nash - Goldman Sachs - Analyst : And Daryl, so I think the markets have gotten excited post the election that we've seen some changes. We could see some changes regulatorily wise, either the way the banks are supervised or whatever rules are going to come into play. I guess what are your expectations. Obviously, we're talking about AOCI, but obviously, there's a lot of other things lingering out there. I know we need to see what people get put in, in what seats. But I guess just broadly speaking, what are your expectations regulatory-wise?

Question: Ryan Nash - Goldman Sachs - Analyst : So Daryl, you recently announced that you plan to participate in CCAR 2025, it's like torturing yourself. You're one of the few banks who had a very successful 2024 with your SCB actually coming down. Most others went in the opposite direction. Maybe just talk about the decision to participate. I know you recently highlighted the hope is that it could bring it down further, but maybe dig in a little bit deeper where you think are the opportunities for the optimization, inevitably, where would you like to see the SCB get to?

Question: Ryan Nash - Goldman Sachs - Analyst : And obviously impacts the level of capital that you run and your ability to distribute, you have one of the healthiest capital ratios in the industry north of 11.5%, highest adjusted ratio -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 1:40PM, MTB.N - M&T Bank Corp at Goldman Sachs U.S. Financial Services Conference

Question: Ryan Nash - Goldman Sachs - Analyst : Yes. Highest adjusted ratio in the industry. Two quarters ago, you began repurchasing shares. You highlighted on the fourth quarter that you repurchased $200 million. I think you recently said you can repurchase $2 billion and stay above 11%. So can you maybe just talk about what you need to see to start that journey towards 11%? And where would you ideally like to operate the capital ratios of the company?

Question: Ryan Nash - Goldman Sachs - Analyst : So obviously, in addition to buying back stock, M&A has been a core competency for the bank. You sound a little bit more upbeat on considering M&A. So a couple of questions. Talk about maybe like what you would look for in a partner if you are interested? And how do you think about accelerating some of the investments that you talked about over the course of 2025 across the four pillars and your technology upgrades versus considering doing M&A? And what are the impediments for doing a transaction while you're accelerating those investments?

Question: Ryan Nash - Goldman Sachs - Analyst : And in the last regulatory regime. If you did a deal, it had to be of size because there wasn't the opportunity to do multiple. Is there a certain size threshold you'd like to keep it below? Is there a willingness to look at multiple transactions? How would you think about that?

Question: Ryan Nash - Goldman Sachs - Analyst : We made it 35 minutes without asking a question on credit. It seems like things have really evolved over the last couple of quarters. You did make a comment that criticized have come down. I think they were at $13 billion, now they're below $11 billion, it sounds like you expect them to improve further. Maybe just talk broadly about how you were feeling on credit? How much more improvement could there be in the criticized? And how does that impact your thoughts on losses into '25?