M&T Bank Corp Q1 2025 Earnings Call Transcript

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

Question: Ken Usdin - Autonomous Research - Analyst : Thank you very much. Good morning, Daryl. So one question just on the NII. You mentioned that the environment has meaningfully changed. And we see a smaller balance sheet here, offset by a little bit better of a NIM output. Are you noticing anything in terms of the deposit flow activity, more specifically in terms of how much more mix shift you might expect and how much more you might be able to also continue to work down that higher cost liability side? Thanks.

Question: Ken Usdin - Autonomous Research - Analyst : Okay. And second one on fees. The first quarter, $611 million or so, but you're still talking about the high end of $2.6 billion. I noticed that -- I don't believe -- was there a Bayview distribution in the first quarter? Was that pushed? And can you just talk about the ramp that you get from here going forward and your confidence in getting towards that higher end on fees? Thanks.

Question: Ken Usdin - Autonomous Research - Analyst : Okay. Thanks, Daryl.

Question: Ebrahim Poonawala - BofA Global Research - Analyst : Good morning, Daryl. I guess, in your remarks, you mentioned tariff uncertainties were reflected in the stock markets and in interest rates. Just, if you don't mind, talk to us about any anecdotal sort of feedback from your customers over the last week or two around tariffs? Are you seeing CapEx decisions being pulled back? Just would love any color there. And then how is that informing your outlook on C&I growth?

Question: Ebrahim Poonawala - BofA Global Research - Analyst : That's helpful. And I guess, maybe the other thing on capital. You mentioned CET1 to 11% depending on RWA growth. Just give us -- how price sensitive you are. I mean, I think the stock's come down a fair bit relative to where you repurchased during the first quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 14, 2025 / 12:00PM, MTB.N - Q1 2025 M&T Bank Corp Earnings Call Like how quickly could we see if customers remain on pause, that M&T gets to 11%? Yeah. And you mentioned also opportunistic buyer as regards to capital. Like are there any deals to be done and given just all the macro uncertainties right now? Thanks.

Question: Ebrahim Poonawala - BofA Global Research - Analyst : Got it. Thank you.

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Hi, Daryl.

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Good. Thank you. Can you give us some color on your insights regarding the regulatory environment? We're reading a lot about the regulators look to ease up, if you will, on some of the regulatory requirements. There's a lot of talk about the supplementary leverage ratio and the leverage ratio. But they seem to pertain to our biggest banks, the trillionaire banks. Are you seeing anything on the horizon that would be very beneficial to the regional banks like yourself from the regulatory stuff that you're hearing and seeing?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Very good. Thank you. And then as a follow-up to your comment about loan growth and how the commercial real estate portfolio is making it more challenging, can you dive into that a little further? Is it your choice to kind of continue to shrink it? Or is there just not -- your customers are paying off, and you can't grow it? What's some of the color behind the challenges within the commercial real estate portfolio?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : And, Daryl, just quickly on those maturities that were being pulled forward in '25 and '26 that were paid off, was that due to that competition that you referenced?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Okay, good. Thank you.

Question: Matt O'Connor - Deutsche Bank Securities Inc. - Analyst : Good morning. You guys added a little bit to the loan loss reserves, even though the loans were down and the credit metrics were better. Can you just talk about how you tweak your macro outlook to support the higher reserves?

Question: Matt O'Connor - Deutsche Bank Securities Inc. - Analyst : Okay. That's helpful. And then separately, maybe I missed it, but what are the interest rate assumptions that you have within your net interest income guide? And just remind us your sensitivity to rate changes on both the short and long end of the curve? Thank you.

Question: Matt O'Connor - Deutsche Bank Securities Inc. - Analyst : Okay. And then just to summarize that, though, like as we think about the net interest income dollars, are you asset sensitive? Are you relatively neutral? Again, all things else being equal, but if rates are a little bit lower than you expect, how does that impact the dollars? Just calling a parallel shift down to keep it simple. Thanks.

Question: Matt O'Connor - Deutsche Bank Securities Inc. - Analyst : Thank you.

Question: Manan Gosalia - Morgan Stanley - Analyst : Hi, good morning, Daryl. Just a follow-up on your point on the security side. Just given that the long end of the curve has been so volatile, how are you thinking about putting on more securities here? And what kind of duration would you be willing to take?

Question: Manan Gosalia - Morgan Stanley - Analyst : Got it. And maybe on loan growth -- or actually, the other side of the loan growth question is credit. And you've had some nice loan growth in C&I over the past few quarters. I think C&I is up 7% year on year, and that's clearly well above peers. So how are you thinking about the credit performance of that book if we get a weakening macro environment from here? And I ask because I noticed that the declines in CRE criticized were actually in line with last quarter, but then you had some offsets on the C&I side.

Question: Manan Gosalia - Morgan Stanley - Analyst : Great. Thank you.

Question: John Pancari - Evercore ISI - Analyst : Morning, Daryl. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 14, 2025 / 12:00PM, MTB.N - Q1 2025 M&T Bank Corp Earnings Call

Question: John Pancari - Evercore ISI - Analyst : Just back to the loan growth. I know you gave some good color on the commercial real estate balances that are coming down and also seeing some growth selectively in C&I. Within that average loan guidance of $135 billion to $137 billion, can you talk to us maybe -- can you break down the incremental CRE decline that you expect and where you expect that could bottom just given what you're seeing right now? And then perhaps maybe help us with how we should think about the pace of C&I loan growth as we look out through the remainder of the year? Thanks.

Question: John Pancari - Evercore ISI - Analyst : Okay. Great. And then it sounds like it's probably not the case, but are you seeing -- on that loan topic -- are you seeing any line utilization or line drawdowns out of precautionary concerns by borrowers given the recessionary environment? Any evidence of that at this point?

Question: John Pancari - Evercore ISI - Analyst : Right. Well, that's good to hear. And then I'm sorry, just one more on deposits. It looks like you saw some pretty good end-of-period growth where balances were above the average and particularly in noninterest-bearing. Any read into that, or should we pay attention more so to the average deposit trajectory?

Question: John Pancari - Evercore ISI - Analyst : Okay, great. Thanks, Daryl.

Question: Christopher Spahr - Wells Fargo Securities, LLC - Analyst : Hi. Good morning. Thanks. Just a quick question. On long-term debt, just what is your perspective on like with sluggish loan growth? And I guess, you seem to be somewhat optimistic on deposits, like long-term loan-to-deposit ratio. And where do you see long-term debt kind of settling out?

Question: Christopher Spahr - Wells Fargo Securities, LLC - Analyst : Okay. Thank you. And as a follow-up on the expenses and what degree of flexibility on your guide range, like there's low-hanging fruit with some specific examples of your simplification efforts and maybe also then some potential settings on regulation? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 14, 2025 / 12:00PM, MTB.N - Q1 2025 M&T Bank Corp Earnings Call

Question: Christopher Spahr - Wells Fargo Securities, LLC - Analyst : Okay. Thank you.

Question: Peter Winter - D.A. Davidson & Company - Analyst : Thanks. Good morning. Daryl, I was just wondering, given the increase in uncertainty, are there any loan portfolios maybe you're watching a little bit more closely? Or any portfolios causing you to tighten underwriting standards a little more?

Question: Peter Winter - D.A. Davidson & Company - Analyst : Got it. And just one housekeeping on the margin. I just want to clarify, you said that the exit rate should be around [3.70] this year. Is that correct?

Question: Peter Winter - D.A. Davidson & Company - Analyst : Okay. Thanks, Daryl.

Question: Erika Najarian - UBS Equities - Analyst : Hi there. Yes, hi. Sorry, they just took away our physical phones. And so old people like me have to figure out how to unmute more quickly. Just a few follow-up questions, Daryl. So clearly, there are near-term sort of headwinds to growth. But as we think about everything that you described your balance sheet to be positioned and everything that you've said about growth, it does feel like -- again, just a follow-up to the questions on the exit rate, it does feel like the NII trajectory should be upward from here, if we just sort of dissect your guide and what you reported? Because you'll get the day count back in the second quarter, then it feels like we'll get to the [one-eighths] -- we have to get to the [one-eighths] for the low end of your guidance to be achieved. And if you have a smaller balance sheet that would imply a [3.70s] exit NIM as well?

Question: Erika Najarian - UBS Equities - Analyst : Fair enough. We've gotten whipsawed by the curve and the [foray curve], for sure. And then a follow-up question. First is, if you could tell us in sort of in the CECL model, what your unemployment assumption is underpinning your current reserve? And then as a follow-up, somewhat related question, you are participating in the stress test this year. You did opt in. I'm wondering, since the Fed had put out the -- their own language and their own press release indicating that changes to administrative law is requiring them to reexamine the test itself, have you noticed any changes in the process yet in terms of the stress test, in terms of more transparency, more feedback? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 14, 2025 / 12:00PM, MTB.N - Q1 2025 M&T Bank Corp Earnings Call And additionally, does the -- if you receive a smaller or a lower stress capital buffer, does that change the way you're also thinking about capital allocation in the go-forward?

Question: Erika Najarian - UBS Equities - Analyst : Great. Thank you.