M&T Bank Corp Q2 2025 Earnings Call Transcript

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

Question: Ken Usdin - Autonomous Research - Analyst : Okay. Yeah, there you go. Hey, Daryl, good morning. How are you?

Question: Ken Usdin - Autonomous Research - Analyst : Got it. And you mentioned on capital the good stress test results, and it's nice to see that you're kind of moving that buyback activity a little forward. So 10.75% to 11% is still way above where you need to sit, and you said that maybe you'd get towards 10% over time. But what's the right level of capital for M&T to hold and how do you think about this balancing act of all the access you have versus your potential uses of it?

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

Question: Steven Alexopoulos - TD Cowen - Analyst : Hey, Daryl, how's everything?

Question: Steven Alexopoulos - TD Cowen - Analyst : Right, that's great. And Daryl, I'd love to get your reaction to this. So we just wrapped a PNC call and I had asked Bill about the argument that they need more scale. And the comment was competing against the mega banks in order to drive retail deposit growth, you do need more scale. You're in a pretty unique position because you came from a much larger bank and now, you're in M&T. I mean, what's your take on this? I mean, you guys have always done a good job of -- M&T of growing retail deposits, lower cost, commercial deposits. But do you feel more of a burning need just to get larger to compete against the megabanks, which are net growing checking accounts pretty well here?

Question: Steven Alexopoulos - TD Cowen - Analyst : Okay. I'm with you. Thanks for that color. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 3:00PM, MTB.N - Q2 2025 M&T Bank Corp Earnings Call

Question: Chris McGratty - KBW - Analyst : Oh great, thanks for the question. (inaudible) want to ask that tech that topic from a different angle. The expense guy for the back half of the year, I know you've had this [GO] cost that's been nearing completion. I guess, number one is that a part of the reason for the expense improvement. And two, I believe in the past, you've talked about needing to get that done before you consider perhaps a tuck in, not a large-scale acquisition, but any thoughts about timing where you might be ready to do a deal if it afforded you? Thank you.

Question: Chris McGratty - KBW - Analyst : Okay. Thank you for that, Daryl. And it's a follow up, you've done a lot of progress on the CRE diversification. Does -- do acquisitions -- a lot of the small and community banks that you might be talking to. They have a lot of commercial real estate. Does that stop the conversation or is there perhaps ways to work around not trying to go backwards on the improvement and create concentrations? Thanks.

Question: Chris McGratty - KBW - Analyst : Understood. Thanks so much.

Question: Ebrahim Poonawala - Bank of America - Analyst : Hey, Daryl, good morning. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 3:00PM, MTB.N - Q2 2025 M&T Bank Corp Earnings Call

Question: Ebrahim Poonawala - Bank of America - Analyst : But you still maybe -- one on the margin outlook as we think about it. It's kind of in the range where you expect it to be for the full year in the mid-to-high 3.60s%. It just remind us X any changes to interest rates? Are we at a point where incremental assets repricing is offset by funding cost? Like how do you think about just mechanically how the margin should operate like what brings it -- what could take it above 3.70% versus below 3.60%, I guess, X-rate changes?

Question: Ebrahim Poonawala - Bank of America - Analyst : That's helpful. Thanks for that. And I guess maybe just on CNI loan growth -- and sorry if I missed it but remind us when we think about the opportunity within the People's market in Long Island, et cetera. Just how big is that pipeline like is it a multi-year thing? Means -- it's been helpful to the bank over the last year or two. So if you don't mind just double clicking on CNI loan growth in some of these markets we acquired through People's. Thanks.

Question: Ebrahim Poonawala - Bank of America - Analyst : It's helpful. Thanks, Daryl.

Question: Peter Winter - D.A. Davidson & Co - Analyst : Hi, good morning. Daryl, the consumer loan growth has really been consistently strong. I'm just wondering, would you expect some of that growth maybe to moderate just as discretionary expending is slowing and consumer prices are starting to rise as some of these tariff pass throughs are just starting?

Question: Peter Winter - D.A. Davidson & Co - Analyst : Got it, thank you. And then separately, last quarter, you lowered the average deposit range but mentioned that you expected to be at the high end of that new range. And I was just wondering with average deposits at $162 billion in the first half of the year, do you still expect to be at that upper end of that range of $162 billion to $164 billion?

Question: Peter Winter - D.A. Davidson & Co - Analyst : Got it. Okay. Thanks, Daryl.

Question: John Pancari - Evercore Inc - Analyst : Good Morning, Daryl.

Question: John Pancari - Evercore Inc - Analyst : Just to go back to capital, a couple of things there. Good to see the acceleration and the buybacks to the $1.1 billion level up from the $600 million to $700 million before that. Can you maybe give us your thoughts on the pace of buybacks through the remainder of the year? I believe you had indicated the $4 billion authorization could be completed over six quarters. Are you still on that type of pace as you look at it? And then separately, I know M&A has been brought up a couple times. And you mentioned that you may be interested when the time is right. I guess, if you could just talk about it. Anything about the evolving backdrop with the other regional starting to do deals that's made whole bank M&A any more interesting to you, or would you say you're no change in your outlook on that perspective today? Thanks.

Question: John Pancari - Evercore Inc - Analyst : Okay, got it. All right, thanks, Daryl. And then just separately back to the NII guide and then you -- regarding the lowering of the lower bound of that guide that you discussed, CRE is a factor and mentioned that already. You also mentioned CNI. Can you just give us a little bit more detail in REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 3:00PM, MTB.N - Q2 2025 M&T Bank Corp Earnings Call terms of what you're seeing on the CNI front that's contributing still to the sluggishness or are you beginning to see some green shoots there? Thanks.

Question: John Pancari - Evercore Inc - Analyst : Great. All right, thank you, Daryl.

Question: Mananga Hasalia - Morgan Stanley - Analyst : Hey, good morning. Daryl. Just a follow up on the capital return question is we think about the back half of the year. How much of a priority is raising the dividend? So I know it's a Board decision, but M&T's dividend yield is below [Pears]. So is that more of a focus than buybacks?

Question: Mananga Hasalia - Morgan Stanley - Analyst : Got it. Very helpful. And then on NIM. Can you talk about what drove that 5-basis-point headwind to NIM from higher liability costs? And I know you spelled out a few categories in on the deposit side where cost went up Q-on-Q, but I was hoping you would -- you could give us some more color on that. How much of that is one time in nature versus what could be some more sticky, I guess, pressure on those funding costs? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 3:00PM, MTB.N - Q2 2025 M&T Bank Corp Earnings Call

Question: Mananga Hasalia - Morgan Stanley - Analyst : So from a total funding cost perspective, it sounds like it's a little bit more of a timing difference than anything else?

Question: Mananga Hasalia - Morgan Stanley - Analyst : Got it, thank you.

Question: Bill Carcache - Wolfe Research LLC - Analyst : Hey, good morning, Daryl. I'm following up on your diversification strategy as your CRE mix falls and you get bigger in CNI and consumer, how much room is there to increase your CNI and consumer mix from here as we look ahead?

Question: Bill Carcache - Wolfe Research LLC - Analyst : Thanks, that's helpful, they're all. And then following up on your comments around the increase in your interest-bearing deposit cost to the extent that loan growth were to further accelerate from here, is there room to let your loan growth outpace your deposit growth for a time or do you envision having to pay up a little bit more for deposits?

Question: Bill Carcache - Wolfe Research LLC - Analyst : Helpful. Thanks, thanks very much.

Question: Erika Najarian - UBS AG - Analyst : Hi, good morning or afternoon. Just following up with the question on capital. You mentioned you'd like to operate around 11% and cited some economic and macro factors. As we think about the difference between you guys operating around 11% and like [BVA] operating around 11%. How much are the ratings agencies versus the regulators playing a part in how regional banks like M&T are setting their targets?

Question: Erika Najarian - UBS AG - Analyst : Got it. And just to clarify your deposit cost that increase in your response to Mananga. You mentioned that you did gather deposits at more wholesale rates that were under your funding costs. In terms of core deposit competition, how is that faring underneath the surface? And we clearly just had some headlines as you guys are running this call about Chair, Powell. How should we think about deposit competition in the scenario of more cuts versus scenario of maybe a prolonged hold from the Fed. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 3:00PM, MTB.N - Q2 2025 M&T Bank Corp Earnings Call

Question: Erika Najarian - UBS AG - Analyst : Got it thanks.

Question: Matt O-Connor - Deutsche Bank AG - Analyst : Good morning. Most of the questions have been answered. But just looking at the criticized CNI and CRE loans on $516 million. Obviously, this is one of the things that rating agencies look at, one of the things you look at. This big drop that you're down to $8.5 billion or $8.4 billion. How does that compare to a few years ago? I don't know if you have anything handy. I'm just trying to figure out like are we back to more normalized levels or pre-Fed hike levels or trying to frame the current levels. Thanks.

Question: Matt O-Connor - Deutsche Bank AG - Analyst : Yeah, okay. And then the -- [Maya's] reserve, the $20 million for unfunded credit commitments, did you comment on what that related to or is that maybe a little conservatism expecting growth in the future? What's that for?

Question: John Pancari - Evercore Inc - Analyst : Oh Daryl. Hey.