M&T Bank Q4 2024 Earnings Report

M&T Bank EPS Results

• Actual EPS: $3.92
• Consensus EPS: $3.70
• Beat/Miss: Beat by +$0.22
• One Year Ago EPS: $2.74

M&T Bank Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $2.34 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

M&T Bank Announcement Details

• Quarter: Q4 2024
• Date: 1/16/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, January 16, 2025
• Conference Call Time: 8:00AM ET

M&T Bank (NYSE:MTB) Corp. operates as a bank holding company, which engages in the provision of retail and commercial banking, trust, wealth management, and investment services. It operates through the following segments: Commercial Bank, Retail Bank, Institutional Services and Wealth Management, and All Other. The Commercial Bank segment offers a wide range of credit products and banking services to middle-market and large commercial customers, mainly within the markets served by the company. The Retail Bank segment refers to the services to consumers and small businesses through the company’s branch network and several other delivery channels such as telephone banking, internet banking, and ATMs. The Institutional Services and Wealth Management segment relates to helping high net worth individuals, institutions, and families grow, preserve, and transfer wealth. The All Other segment reflects other activities of the company that are not directly attributable to the reported segments. The company was founded on August 30, 1856 and is headquartered in Buffalo, NY.

M&T Bank Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to Brian Clock, Head of Corporate Development and Investor Relations. Please go ahead.

[Brian Klock, Senior VP and Head of Markets & Investor Relations at M&T Bank]

Thank you, Todd, and good morning. I'd like to thank everyone for participating in M&T's Q4 2024 earnings conference call, both by telephone and through the webcast. If you have not read the earnings release we issued this morning, you may access it along with the financial tables and schedules by going to our website, www.mtb.com. Once there, you can click on the Investor Relations link and then on the Events and Presentations link. Closed captioning has also been provided for webcast participants.

[Brian Klock, Senior VP and Head of Markets & Investor Relations at M&T Bank]

Also, before we start, I'd like to mention that today's presentation may contain forward looking information. Cautionary statements about this information are included in today's earnings release materials and in the investor presentation as well as our SEC filings and other investor materials. The presentation also includes non GAAP financial measures as identified in the earnings release and in the investor presentation. The appropriate reconciliations to GAAP are included in the appendix. Joining me on the call this morning is M and T's Senior Executive Vice President and CFO, Daryl Bible.

[Brian Klock, Senior VP and Head of Markets & Investor Relations at M&T Bank]

Now I'd like to turn the call over to Daryl.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Thank you, Brian, and good morning, everyone. First, I'd like to begin with our purpose on Slide 3. M and T's success continues to be driven by our purpose, making a difference in people's lives. We do this by not only empowering our customers to meet their financial needs, but by supporting the communities where we live and work. As M and T continues to grow, we remain committed to our relationship based model.

[Daryl Bible, Chief Financial Officer at M&T Bank]

We believe our unique knowledge of customers, capital and community allows us to deliver customized solutions that make an impact. In 2024, this impact was evident across the footprint. In addition to the positive social, environmental and governance accomplishments highlighted on Slide 4. This December, M and T issued our 1st sustainability bond in conjunction with the publication of our sustainability financing framework, which will guide future issuances. As highlighted on Slide 5, M and T continues to garner awards for the work in 2024, including recognition from industry of our talent achievements and local charitable efforts.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Now let's turn to Slides 7 and 8. Before we get into the Q4, I want to pause and reflect on some of the highlights for 2024. First, I want to take a moment to recognize the hard work and dedication of our 22,000 colleagues who've allowed us to have such a successful year. In 2024, we focused on 4 priorities, including building our New England and Long Island markets, optimizing our resources through simplification, making our systems and processes resilient and scalable and continuing to develop and scale our risk management. The progress we made on these priorities related enterprise initiatives will allow the bank to continue to grow and scale in coming years.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Our focus on fundamentals is reflected in several of our financial accomplishments in 2024. We executed our financial plan for the year and the results met or exceeded the outlook we discussed last January for NII, fee income, expenses and average loans and deposits. We made significant progress on our CRE concentration, reaching what we believe is a target level. Our capital levels continue to grow through the year and remain strong as we restarted our share repurchase program in the Q3. We actively managed our interest rate sensitivity through our hedging program and securities portfolio to shift our balance sheet toward a more rate neutral position.

[Daryl Bible, Chief Financial Officer at M&T Bank]

We manage credit risk, meaningfully reducing non accrual and commercial criticized balances and having net charge offs come in largely in line with our expectations. This focus on the fundamentals positions M and T for 2025 and beyond and is reflected in our 2024 results with net operating earnings per share of $14.88 ROTA and ROTCE of 1.3% 14.54 percent and 11% growth in tangible book value per share. Turn to Slide 9, which shows the results for the Q4. Our 4th quarter results reflect a continuation of a strong performance we have through the year. There are several successes to highlight.

[Daryl Bible, Chief Financial Officer at M&T Bank]

NII was largely stable compared to the 3rd quarter, even considering 100 basis points in rate cuts since the start of the easing cycle in September. Average total loans grew for the 5th consecutive quarter, demonstrating our ability to more than offset the planned reduction in our CRE concentration. Average total deposits grew by over $3,000,000,000 sequentially, while interest bearing deposit costs declined 24 basis points, reflecting the quality of our deposit franchise. We excluded 200 we executed $200,000,000 in share repurchases and grew CET1 ratio to 11.67%. Fee income excluding notable items reached another high point for the 4th quarter aided by the strength in mortgage and trust.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Asset quality continued to improve with a $1,000,000,000 reduction in commercial criticized loans and $236,000,000 reduction in non accrual loans. Now let's look at the specifics for the Q4. Diluted earnings per share were $3.86 down from $4.02 in the prior quarter. Net income for the quarter was $681,000,000 compared to $721,000,000 in the linked quarter. M and T's 4th quarter results produced an ROA and ROCE of 1.28% and 9 point 7 5%, respectively.

[Daryl Bible, Chief Financial Officer at M&T Bank]

CET1 ratio remained strong, growing to 11.67% at the end of the 4th quarter and tangible book value per share grew 1%. The 4th quarter included several notable items. A securities gain of $18,000,000 or $0.08 per share related to the sale of non core investments. Expense associated with redemption of certain M and T trust preferred obligations amounting to $20,000,000 or $0.09 per share. This action has a 3 year earn back.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Corporate real estate optimization related to expenses amounting to $27,000,000 or $0.12 per share and a pension related credit within expenses amounting to $12,000,000 or $0.05 per share benefit. Slide 10 includes supplemental reporting of M and T's results on net operating or tangible basis. M and T's net operating income for the Q4 was $691,000,000 compared to $731,000,000 in the linked quarter. Diluted net operating earnings per share were $3.92 for the recent quarter, down from $4.08 in the prior quarter. Net operating income yield an ROTA and ROTCE of 1.35 percent and 14.66 percent for the recent quarter.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Next, we look a little deeper into the underlying trends that generated our 4th quarter results. Please turn to Slide 11. Taxable equivalent net interest income was $1,740,000,000 largely unchanged from the linked quarter. NII for the 4th quarter was 25,000,000 dollars in non accrual interest compared to $12,000,000 in the 3rd quarter. The net interest margin was 3.58%, a decrease of 4 basis points from the prior quarter.

[Daryl Bible, Chief Financial Officer at M&T Bank]

And the primary drivers of the decrease to the margin were a negative 10 basis points related to lower contribution of free funds, partially offset by a positive 3 basis points from the fixed asset fixed rate asset repricing and a positive 3 basis points from higher non accrual interest. Turning to Slide 13 to talk about average loans. Average loans and leases increased $1,000,000,000 to $135,700,000,000 C and I and consumer growth continued to outpace the decline in CRE similar to the trend in the past several quarters. C and I loans grew 2% to $60,700,000,000 driven by strength in dealer commercial services, fund banking and corporate and institutional. CRE loans declined 4% $27,900,000,000 CRE as a percent of Tier 1 capital and the allowance is estimated to be 136% at the end of the 4th quarter.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Residential mortgage loans were relatively unchanged at $23,100,000,000 Consumer loans grew 5% to $24,000,000,000 reflecting increases in recreational finance and indirect auto loans. Loan yields decreased 21 basis points to 6.17 percent as lower rates on variable loans were partially offset by fixed rate loan repricing, a smaller drag related to cash flow hedges and higher non accrual interest. Turning to Slide 14. Our liquidity remains strong. At the end of the Q4, investment securities and cash, including cash held at the Fed, totaled $54,800,000,000 representing 26 percent of total assets.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Average investment securities increased $2,700,000,000 The yield on investment securities increased 18 basis points to 3.88 percent as the yield on new purchases exceeded the yield on maturing securities. In the 4th quarter, we purchased over $3,300,000,000 in securities at an average rate of 4.96%. The duration of the investment portfolio at the end of the quarter was 3.7 years and the unrealized pretax loss on the available for sale portfolio was $205,000,000 or 10 basis points CET1 drag if included in regulatory capital. Turning to Slide 15. We remain focused on growing customer deposits and saw a solid deposit growth in the 4th quarter.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Average total deposits rose $3,100,000,000 or 2 percent to $164,600,000,000 reflecting $2,600,000,000 increase in non broker deposits. Deposit growth was concentrated in commercial, business banking and institutional services, while consumer deposits declined reflecting lower time deposit balances. Average non interest bearing deposits rose $400,000,000 to $46,500,000,000 primarily related to trust demand deposits within our Institutional Services segment. Non interest bearing deposits were largely stable in our other segments. Excluding broker deposits, the average non interest bearing deposit mix in the 4th quarter was 30.4%.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Interest bearing deposit costs decreased 24 basis points to 2.64 percent. Continuing on Slide 16. Non interest income was $657,000,000 compared to 606,000,000 dollars in the linked quarter. Trust income increased $5,000,000 to $175,000,000 from higher sales and fees in corporate trust and agency services. Mortgage banking revenues were $117,000,000 compared to $109,000,000 in the 3rd quarter.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Commercial Mortgage Banking revenues were the main driver increasing $7,000,000 on the linked quarter to $41,000,000 reflecting higher gains on the sale of commercial mortgage loans. Other revenues from operation increased $24,000,000 to $176,000,000 from a $23,000,000 distribution from M and T's investment in BLG and strong syndication and other loan and letter of credit fees, which increased $5,000,000 Security gains of $18,000,000 mostly reflect the realized gains on the sale of non core investments. Turning to Slide 17. Non interest expenses were $1,360,000,000 an increase of $60,000,000 from the prior quarter. Salaries and benefits increased $15,000,000 to $790,000,000 inclusive of higher incentive compensation.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Equipment and occupancy increased $8,000,000 to $133,000,000 from our new data centers starting to come online. Other costs from operations increased $40,000,000 to $168,000,000 reflecting the redemption of certain M and T trust preferred obligations and expenses associated with corporate real estate optimization, partially offset by pension related credit. The efficiency ratio was 56.8% compared to 55% in the 3rd quarter. On an adjusted basis, when excluding notable items, the efficiency ratio was 55.3%. Next, let's turn to Slide 18 for credit.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Net interest charge offs for the quarter totaled $160,000,000 or 47 basis points, up from 35 basis points in the linked quarter. The 2 largest charge offs totaled $34,000,000 and were C and I loans in unrelated industries, 1, a marine dealer and the other in manufacturing. Overall CRE related charge offs remain modest. Net charge offs for the full year were 41 basis points, which is in line with our expectations. Non accrual loans decreased $236,000,000 or 12 percent to 1 point $7,000,000,000 Non accrual ratio decreased 17 basis points to 1.25 percent driven largely by upgrades out of non accrual as well as payoffs and charge offs.

[Daryl Bible, Chief Financial Officer at M&T Bank]

In the Q4, we recorded a provision of $140,000,000 compared to net charge offs of $160,000,000 The allowance to loan ratio decreased 1 basis point to 1.61%, partially related to the reduction in criticized loans, including those in non accrual status. Please turn to Slide 19. When we file our 10 ks in February, we estimate that the level of criticized loans to be $9,900,000,000 compared to $10,900,000,000 at the end of September. The improvement from the linked quarter was driven by a $302,000,000 decline in C and I and $691,000,000 decline in CRE criticized balances. Within C and I, the decline in criticized was concentrated in services, health services and dealer segments.

[Daryl Bible, Chief Financial Officer at M&T Bank]

The CRE criticized decline was primarily within office, retail, healthcare, hotel and construction. Improved cash flows in many of the portfolios that were impacted by COVID, namely healthcare, hotel and retail and active refinance markets helped drive the improvement in CRE criticize. Turning to Slide 22 for capital. M and T's CET1 ratio at the end of the 4th quarter was an estimated 11.67% compared to 11.54% at the end of the 3rd quarter. The increase was due to continued strong earnings net of $200,000,000 in share repurchases.

[Daryl Bible, Chief Financial Officer at M&T Bank]

At the end of the year, the negative AOCI impact in the CET1 ratio from the available for sale portfolio and the pension related components combined would be approximately 4 basis points. Now turning to Slide 24 for outlook. Let's begin with the economic backdrop. The economy again remained resilient to the end of the year and we estimate GDP growth will come in at 2.8% for 2024, once the 4th quarter data is published. Consumer spending remains solid, though we know challenges for some segments reflected by increasing credit delinquency.

[Daryl Bible, Chief Financial Officer at M&T Bank]

The labor market remained sturdy in the 4th quarter, while job growth and wage growth supportive of consumer spending continued economic expansion. We continue to see a soft landing as a most likely outcome for the U. S. Economy. Inflation ticked up a bit in the Q4, but we expect it will deaccelerate going forward.

[Daryl Bible, Chief Financial Officer at M&T Bank]

With the economic backdrop, let's review our net interest income outlook. We expect tangible equivalent net interest income to be $7,100,000,000 to $7,200,000,000 with the net interest margin increasing through the year and averaging in the mid-360s. Our interest rate sensitivity remains relatively neutral aided by the balance sheet actions we took in 2024, including adding forward sorting hedges and building our securities portfolio. However, shifts in the shape of the yield curve will drive variability in the NII outlook. We expect full year average loan and lease balances to be $137,000,000,000 to $139,000,000,000 This reflects continued growth in C and I and consumer with more modest growth in residential mortgages.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Full year average commercial real estate balances are expected to decline in 2024, but we expect the balances to grow modestly in the second half of the year as we build the pipeline and begin to offset payoffs and paydowns with new originations. Full year average deposit balances are expected to be $164,000,000,000 to $166,000,000,000 We remain focused on growing customer deposits at a reasonable cost and expect to reduce our reliance on non customer funding sources. Turning to fee income. We expect non interest income to be $2,500,000,000 to $2,600,000,000 The continued growth in non interest income is driven by growth in our core businesses, which we expect will drive higher revenues in mortgage banking, merchant trust and service charges. Additional mortgage subservicing, which is included in our outlook, adds to our ongoing growth.

[Daryl Bible, Chief Financial Officer at M&T Bank]

The interest rate environment remains dynamic. However, our diversified product set should help provide relative stability from our fee income businesses. Continuing with expenses. We anticipate total non interest expense including intangible amortization to be $5,400,000,000 to $5,500,000,000 The outlook includes our Q1 seasonal salary and benefit increase, which is estimated to be $110,000,000 Also included in the outlook is approximately $43,000,000 for intangible amortization. Our business lines remain focused on closely managing their expenses, allowing the bank to make targeted investments in projects and business opportunities that support our enterprise priorities.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Regarding credit, we expect net charge offs for the full year to again be near 40 basis points with continued normalization in the consumer portfolio and improvements in commercial credit costs. We expect taxable equivalent tax rate to be approximately 24.5%. As it relates to capital, we expect to reach 11% CET1 ratio in 2025. With our 11.67% CET1 ratio at the end of 20 24 the expectation for continued strong capital generation, quarterly share repurchases are expected to be higher than the 3rd Q4 of 2024. In 2025, we remain committed to our 4 priorities, including growing our New England and Long Island markets, optimizing resources through simplification, making our systems resilient and scalable, continuing to scale and develop our risk management capabilities.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Continued progress and completion of these priorities will enable the bank to continue to grow in the future both organically and inorganically. To conclude on Slide 25, our results underscore an optimistic investment thesis. M and T has always been a purpose driven organization with successful business model that benefits all stakeholders, including shareholders. We have a long track record of credit outperforming through all economic cycles, while growing within the markets we serve. We remain focused on shareholder returns and consistent dividend growth.

[Daryl Bible, Chief Financial Officer at M&T Bank]

And finally, we are disciplined acquirer and prudent steward of shareholder capital. Now let's open the call to questions before which Todd will briefly review the instructions.

[Operator]

The floor is now open for your questions. Our first question will come from Manan Gossalia with Morgan Stanley. Please go ahead.

[Manan Gosalia, Equity Analyst at Morgan Stanley]

Hi, good morning.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Good morning, Manav.

[Manan Gosalia, Equity Analyst at Morgan Stanley]

Daryl, can you unpack your comments on capital and buybacks? I think you've said previously that you can stay above an 11% CET1 ratio and do about $2,000,000,000 in buybacks. I don't know if I should be reading too much into the tilde 11% guide on CET1. Does that imply you could do more than $2,000,000,000 this year and bring that capital ratio down from 11.7 percent?

[Daryl Bible, Chief Financial Officer at M&T Bank]

Manav, we feel comfortable that we can basically operate our company at 11% where we are today and what the economy looks like and all that. So our plans are to bring our ratios down throughout the year. We'll be opportunistic from that, but it's also going to be driven by our RWA growth, how much our loan growth is and all that. We aren't going to push and make loans that don't make sense. We're going to do what is what we always do, serve our customers and communities.

[Daryl Bible, Chief Financial Officer at M&T Bank]

But it's fluid right now whether we're going to have a strong loan growth in 2025 or something maybe not as strong. So we'll have a lot of flexibility there to do that. But if the plan came out and we actually hit our plan that we expect for 2025, we'd probably do a little bit over $2,000,000,000 with that loan growth. If we have less loan growth, we'll do more share repurchase. If we have more loan growth, we'll do less share repurchase.

[Manan Gosalia, Equity Analyst at Morgan Stanley]

Great. Very clear. Thank you. And on criticized loans, they were down nicely about $1,000,000,000 The question is what is driving that the most right now? And what matters most for that to continue to come down in 2025?

[Manan Gosalia, Equity Analyst at Morgan Stanley]

Is it the short end, the long end? Is it getting updated financials from your borrowers and the upgrades that come from that? What's most important from here?

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. So for the Q4, what really drove it was, if you remember, the yield curve really dropped in August, September timeframe and we were able to get a lot of placements with a lot of our customers through our RCC business. So the highest percentage of reduction in our criticized balances was basically full payoffs. The next largest high was upgrades. So we still have a lot of businesses still curing and getting better.

[Daryl Bible, Chief Financial Officer at M&T Bank]

We talked about it in prepared remarks. Some of the COVID industries that were impacted now have much stronger P and Ls and that's impacting. And then finally, we did have some partial pay downs and some charge offs. But the biggest driver was that the yield curve. Now as you look into 2025, right now the yield curve is a lot steeper than it was back at the end of Q3.

[Daryl Bible, Chief Financial Officer at M&T Bank]

So if it stays in that neighborhood, we're up 90 plus basis points, we'll probably have less loans being cured by permanent placements from that perspective. So I think some of the curing and the criticized might slow down a bit. The pace of Fed reductions, right now, it's 1 or 2 reductions in 2025. That really helps our C and I portfolio mainly in the leverage lending area. And if that continues to come down more than that, that would be more positive.

[Daryl Bible, Chief Financial Officer at M&T Bank]

So we still expect to have improvement in our criticized commercial loans. But from what we see today based upon the projections of the Fed and based upon where the yield curve is today, we'll have a much more modest reduction than what we had in 2024. But the good news is we got basically out of a lot of credits that were higher risk and our criticized balances that we have left on the books right now are a better quality criticized book. So we feel really good at where we are.

[Manan Gosalia, Equity Analyst at Morgan Stanley]

So it

[Manan Gosalia, Equity Analyst at Morgan Stanley]

sounds like from a credit perspective, from a charge off perspective, your outlook hasn't really changed. And I know in the past, you've said that you've been a lot more punitive on classifying those criticized loans. So as the base of decline in the criticized loans slows, does that change how you're thinking about the actual impact to the income statement from the credit of the portfolio? Or is that still pretty much in line with how you thought about it before?

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. So from a charge off perspective, I know that's not through the income statement. Our retail consumer portfolios are normalizing. So we think that's going to be a little bit higher than what it was in 2024. But we believe that our commercial credits, both C and I and CRE, will continue to come down in net charge offs.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Now from a provision perspective, I think provision wise, we feel really good at our current allowance levels. And when you look at what we could see in the future, we would expect allowance levels to basically based upon the growth that we have in loans, coupled with the economic conditions that basically impact these industries. Right now, the economic conditions from what we're seeing from the models and the projections are pretty tame, but we're having some loan growth, so we're providing to it from that perspective. Depending on loan growth, we'll provide more on day 1. If we have less loan growth, we'll have less provision.

[Manan Gosalia, Equity Analyst at Morgan Stanley]

Great. Thank you.

[Operator]

Thank you. Our next question will come from Bill Carcache with Wolfe Research. Please go ahead.

[Bill Carcache, Equity Research Analyst at Wolfe Research]

Thanks. Good morning, Daryl.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Good morning, Bill.

[Bill Carcache, Equity Research Analyst at Wolfe Research]

I wanted to start off on the progress you've made in reducing your CRE exposure. It's been well reflected in your declining stress capital buffer. But as you reflect on that improvement, what's been the response from the client side? You're there for them, but have they noticed a difference as you've actively taken that concentration ratio from 136% down to 136% from 183%.

[Daryl Bible, Chief Financial Officer at M&T Bank]

I would say, Peter Dorsey and his team have done a tremendous job really managing through what we've been going through the last couple of years. We have been basically doing some more placements with some of our customers. We did some few sales as well over the last couple of years. But those have been more, what I would call, non core customer related relationships for the most part. So our core customer base is still intact.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Even though we weren't really lending much in CRE over the last couple of years, they are now know that the pipeline is open and we're now working with them. We actually look at the pipeline in CRE. We have about $1,500,000,000 in pipeline now there, which is starting to build, which is nice. But I'd say overall, I think our core customers are still very loyal and support M and T and the ones that haven't been supportive of their credits or more financial oriented were the ones that we kind of were more aggressive on trying to put them out of the bank.

[Bill Carcache, Equity Research Analyst at Wolfe Research]

As a follow-up on your earlier credit comments, Daryl, could you frame the stress in the portfolio if we were to get no more cuts from here versus 2 to 3 more? Is it going to be enough relief for some of your borrowers if we didn't get any more cuts from here?

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. Bill, I mean, obviously, if rates stay where they are, there will be some stress in the system. We know we still are concerned with office, but office is going to play out over a longer time period. We had a nice reduction in our office criticized this quarter, but that doesn't remove all the risks that you have out there. But the fundamentals are still really getting better.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Our construction book seems to be on track, doing really well. Our other parts of CRE, if you look at it from a hotel, retail, multifamily basis, all seem to be performing well and as expected. So I'm not going to say we aren't going to have any more increases to criticize or no more charge offs. But from what we see today and what we've basically were able to move off the balance sheet already, we think a much better criticized book than we have and it will have less of an impact moving forward on our financials.

[Bill Carcache, Equity Research Analyst at Wolfe Research]

And if I could squeeze in one last one, your comments on capital return are very clear and the relationship between whether we get faster or slower loan growth being a driver of the level of a buyback. But if we did get any kind of acceleration in loan growth, how much of that would you expect to drop to the bottom line and ultimately drive greater positive operating leverage versus the level that you'd look to reinvest in the business?

[Daryl Bible, Chief Financial Officer at M&T Bank]

I'm basically just going to tell you, we're going to basically be at 11% CET1 ratio. It's going to be driven by our RWA growth. And depending on that, we'll determine how many share repurchases we do this year.

[Bill Carcache, Equity Research Analyst at Wolfe Research]

Very helpful. Thanks for taking my questions, Daryl.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Thank you.

[Operator]

Thank you. Our next question will come from Ebrahim Poonawala with Bank of America. Please go ahead. Hey, good morning.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Good morning.

[Ebrahim Poonawala, Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch]

I guess

[Ebrahim Poonawala, Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch]

a couple of

[Ebrahim Poonawala, Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch]

follow-up questions. When we think about the margin outlook and your margin guidance, if we don't see any move from the Fed and if you can remove loan growth, like how do you think the trajectory of the NIM plays itself out from here? Like should we think about it as the back book repricing should continue to be a tailwind and deposit costs are stable to lower? Or is that not the right framework and how to think about what NIM would do in a static balance sheet?

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. So high level, Ebrahim, we feel pretty good that our net excess margin should continue to increase throughout 2025. If you look at where we are and what makes us say that, when you look at our receive swap portfolio, we've already have locked in and it's going to increase. You start with the Q4 of 2024 and look at Q4 of 2025, we have over a 50 basis point increase in that book and that's a given. If you look at our fixed rate repricing assets on the asset side of the balance sheet, the investment portfolio, consumer loans and residential mortgage loans, it's going to be dependent on what the shape of the curve is there.

[Daryl Bible, Chief Financial Officer at M&T Bank]

But I feel pretty good that the investment portfolio from point to point from Q4 to Q4 should be up 20 to 25, 30 basis points depending on the shape of the curve. Consumer loans and residential mortgage loans up maybe 10 to 20 basis points over that time period. So that's all really good. If you look at the other side of the balance sheet, we ran our models with 2 Fed cuts out there. So these are really driven by Fed actions.

[Daryl Bible, Chief Financial Officer at M&T Bank]

We still believe that we will have good repricing going down in our non maturity deposits. Successfully, we think our deposit betas will reach 50% in 2025. Time deposits will have almost 100 basis point improvement point to point in that cost, which is really positive. And wholesale funds will also have a nice large improvement. So I feel pretty good with the trends that we see and this trajectory of where our net interest margin is going to go.

[Daryl Bible, Chief Financial Officer at M&T Bank]

But a lot depends on the shape of the curve. And you saw yesterday, there's a big move back down on all that. So it's a volatile environment. But we're really neutral from a short end perspective, from a Fed move and really just really looking at the longer end. But it's really trying to manage through and do things that make sense for our balance sheet and our customers.

[Ebrahim Poonawala, Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch]

That's helpful. And then a separate question on the four priorities you lay out on Slide 23. As we think about the expense outlook for this year, you have some larger tech projects going on. Does that set the stage for sort of lower expenses, more efficiencies over the next few years? Or do you think the level of investment spend is likely to continue for the medium term as we think about where efficiency ratio or op lev are headed?

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. So when you look at our expenses, first, I want to just thank all my colleagues in the company. We had 2024 and we spent a fair amount of money on some significant projects. We're doing the same thing again in 2025. But we're very disciplined here and doing what's best for the corporate good of the company.

[Daryl Bible, Chief Financial Officer at M&T Bank]

So I really appreciate everybody taking that settlement and doing that. When I look at 2025 and beyond, right now we have 6, I would say, major investments going on in the company. Out of those 6 investments, I call 3 of them as really big investments that will happen once every several decades. So if you look at cloud and data center, but then 3 new data centers, you don't do that very often, that's probably every 10 to 20 years. We're putting in a new general ledger system, a financial system that's also probably every 10 or 20 years.

[Daryl Bible, Chief Financial Officer at M&T Bank]

From a commercial perspective, we're really close to finishing up our corporate services and fulfillment of how we manage risk in that area, still working on commercial services. But once we get that done and completed, that won't get changed probably for another decade or so. So those are really big investments. But once we get them done, I think those will fall off. I think you have other investments that we're making as well at the same time as we invest in data analytics.

[Daryl Bible, Chief Financial Officer at M&T Bank]

We're always going to be investing in data analytics. That's just core to the customers, how we serve our customers and all that, that is critical of what we do. Our digital is basically table stakes. We have to continue to improve and offer really good digital services and all of that. So that's good.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Treasury management and other things that support our clients are things we will continue to invest in over time. So when I look at it is, we got a big hump we're going through right now with some major projects and there's other projects we're also doing at the same time that will probably linger on into the expense run rate.

[Ebrahim Poonawala, Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch]

Understood. Thanks for taking my questions.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Thank you.

[Operator]

Thank you. Our next question will come from Gerard Cassidy with RBC. Please go ahead.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Hey, Gerald.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Hey, Gerard. How are you doing?

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Good. Thanks.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

I'd like you to see

[Gerard Cassidy, Managing Director at RBC Capital Markets]

if you could frame out first the expansion. You talked about the focus on New England and Long Island. And through organic growth, how long do you think it will take you to get to the levels or the contribution to the consolidated numbers that these areas that you've targeted for these areas? And that and saying that, how big do you think they could get as a percentage of the total pie? What's the ideal kind of exposure?

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. Well, Gerard, what I would look at is what we had in Baltimore. We got into the Baltimore market with the All First transaction about 20 years ago. And if you look at that and where we are today 20 years later, we're a dominant player in the city of Baltimore. So our plans are to be very similar to that in the markets in New England.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Whether it takes 20 years or whether it's something shorter, that really depends on if we have inorganic growth in those periods. But right now, we're increasing our business bankers, we're increasing commercial lenders, increasing wealth managers and people are starting to notice us there. We actually were one of the larger players in SBA in 2024 even with a really small branch distribution. So we're having an impact, but I think our impact will continue to increase and grow as we continue to put more investments there. And then if we have opportunities at some point to do inorganic that would just speed up the process here as well.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Very good. And then obviously you've got some great years of experience and you've seen how regulatory changes have taken place over the years. Any thoughts on what to expect as we all know with the incoming administration there will be a new controller of the currency, new head of the FDIC as well as the Consumer Financial Protection Bureau and then the big news in my view at least was the resignation and the Vice Chair of Safety and Soundness at the Fed. Any thoughts or comments on the way you guys are looking at all of this?

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes, Gerard. I think we're very optimistic. I think we're hopeful that the administration puts people in place that basically are more balanced, really focused on their true risks of the industry. If you look at Governor Bowman's speech that she gave last week in California, she her priorities that she believes right now is prioritizing safety and soundness risks, which is really critical and important, committing to tailoring and still making sure that happens and also making sure we have increased transparency throughout the industry and how things are done, specifically stress testing, but other things there. So I think if we at M and T, we have our fundamentals of how we run the company.

[Daryl Bible, Chief Financial Officer at M&T Bank]

We're very, very much aligned with that type of thinking. And we think you can run a really good successful bank if you just focus on the fundamentals. And that's what we try to do each and every day. And we think that's really important. So we're optimistic and feel really good about it and we'll just see what happens when President gets in office Monday and starts making some decisions on regulatory people in these spots.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Great. Appreciate the color. Thank you, Jarrod.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Thanks.

[Operator]

Thank you. Our next question will come from John Pancari with Evercore. Please go ahead.

[John Pancari, Senior Managing Director & Senior Research Analyst at Evercore ISI]

Good morning, Daryl.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Good morning, John.

[John Pancari, Senior Managing Director & Senior Research Analyst at Evercore ISI]

On

[John Pancari, Senior Managing Director & Senior Research Analyst at Evercore ISI]

just on credit, if I could just go back to that, I appreciate the color you gave on that front. Just based upon your outlook, if credit trends play out as you had noted, you expect a bit more stress in office, but some improvement elsewhere. Do you expect that you could see continued reserve releases through 2025? I know you put the reserve declined about a bps this quarter and very modest, but could you expect continued release if credit plays out as you had described?

[Daryl Bible, Chief Financial Officer at M&T Bank]

We definitely believe from a commercial CRE perspective, as things continue to improve and we have less criticized loans, less non accrual loans out there that you're going to see improvement in the allowance. On the other end, though, we are changing the mix of our investment loan portfolio and that mix of the loan portfolio has more consumer assets associated to it. But those consumer assets with that has a little bit higher allowance numbers. And we're really basically building a very diversified balance sheet, diversified revenue stream from that perspective. So I'm not going to say we can definitely release a lot of allowance because of that mix change that's happening.

[Daryl Bible, Chief Financial Officer at M&T Bank]

But I think within that mix change, you're seeing the commercial side of it definitely improving, get better. But on the consumer side, we get paid for these higher yields and higher returns that we're going to receive on that. So it makes sense all in all in the long run.

[John Pancari, Senior Managing Director & Senior Research Analyst at Evercore ISI]

Okay. Thank you. And then just separately back to the capital and M and A topic. I know you did mention that when you're looking at your markets of interest and broader expansion inorganic would be an opportunity to speed up the process as you look at your markets. Could you maybe just give us a more broadly your view, your updated view on whole bank deals, particularly given the evolving regulatory

[John Pancari, Senior Managing Director & Senior Research Analyst at Evercore ISI]

backdrop that you just mentioned in terms

[John Pancari, Senior Managing Director & Senior Research Analyst at Evercore ISI]

of the upcoming drop that you just mentioned in terms of the upcoming Trump administration? Thanks.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. I think we're optimistic. We'll see what happens when people get into the seats. And I think for us, we are really focused on our 4 priorities. And I firmly believe as we execute on these priorities and we get things accomplished, people will want us to actually be more important or grow into other markets.

[Daryl Bible, Chief Financial Officer at M&T Bank]

I think we'll have basically people pushing us or pulling us into those markets and there will be demand for an M and T Bank. When you look at M and T, where I kind of think of us kind of more is in the sweet spot, you have smaller banks in many of the markets that are also community oriented, but they don't have the platform or the scale to really offer what we can offer over that time period and what we do, how we go to market. And then you have the bigger banks, bigger banks while they have the scale and the products and services, they tend to be more line of business oriented. And we feel M and T being community bank oriented is really a great fit for the New England markets. We think that's a great bank there and we'll have a lot of success, in how that actually plays out.

[Daryl Bible, Chief Financial Officer at M&T Bank]

So we're excited to continue to grow and we actually believe the markets will basically push us into those other markets to make us be successful.

[John Pancari, Senior Managing Director & Senior Research Analyst at Evercore ISI]

Got it. All right. Thanks, Daryl.

[Operator]

Thank you. Our next question will come from Peter Winter with D. A. Davidson. Please go ahead.

[Peter Winter, Managing Director - Senior Research Analyst at D.A. Davidson]

Good morning.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Good morning.

[Peter Winter, Managing Director - Senior Research Analyst at D.A. Davidson]

Daryl, can you talk about borrower sentiment today in terms of loan demand and what you think it will take to get them to be more aggressive in terms of demand?

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. So if you look from a borrower perspective, what we're seeing right now in the marketplace is kind of a mixed bag, to be honest with you. If you look at our specialty businesses that we have and look specifically like in corporate institutional, fund banking, dealer financial services, all those seem to be pretty robust and going very strong. If you look at our middle market businesses that we have throughout our footprint, not as much so there. It tends to be a little bit more soft, I think, waiting for more certainty to come out from the administration and how things play out.

[Daryl Bible, Chief Financial Officer at M&T Bank]

When you look from our perspective, we actually think 2025 and 2026 are going to be really good years. The administration seems to be very much grow business, growing the economy. And we think as the economy and they're successful doing that, loan demand will follow at some point down the road. So we're optimistic, but right now I would say it's probably a mixed bag.

[Peter Winter, Managing Director - Senior Research Analyst at D.A. Davidson]

Got it. And then just as a follow-up, can you talk about deposit competition? And would you say DDA migration has stabilized and actually could start growing in 2025?

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. So we definitely saw all of our business lines with the exception of ICS were pretty flat. So the disintermediation seem to have basically gone away and I think that's run its course. ICS had a really great quarter and should have a great 2025 and actually contributed and we had positive growth in our non interest bearing deposits. So we feel very positive from that perspective.

[Daryl Bible, Chief Financial Officer at M&T Bank]

When you look at the growth that we had in deposits for the quarter, in quarter we were up over $3,000,000,000 in deposits. That is really good. It was all customer oriented growth. It is very competitive in the marketplace. But I think it comes back to when I got the question earlier, I just M and T's model and how we go to market and how we serve our clients.

[Daryl Bible, Chief Financial Officer at M&T Bank]

People want to have relationships all with one place that can basically fully serve their needs. And I think we're basically being very successful at accomplishing that and we're seeing really good traction there. We expect our core deposit growth to be up a couple percent, 2% or 3% this next year. And I'm not saying it's not competitive, but we think that we can win with our services and competitive rates that we will pay out in the marketplace.

[Peter Winter, Managing Director - Senior Research Analyst at D.A. Davidson]

Got it. Thanks, Daryl.

[Operator]

Thank you. Our next question will come from Frank Schiraldi with Piper Sandler. Please go ahead.

[Frank Schiraldi, Managing Director at Piper Sandler Companies]

Hey, good morning, Daryl.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Good morning, Frank.

[Frank Schiraldi, Managing Director at Piper Sandler Companies]

Just trying to work through some of the numbers you talked about just on the call here in terms of margins such as the pickup in swaps and repricing securities and loan book and deposit betas. And just wondering if we think about exit rate for 2025. Just curious, you'd be willing to talk about any guardrails there. It seems like you could perhaps get to the sort of a 3.80 number. And so just curious there or maybe just updated thoughts on more normalizing them as we move through the year.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. I would love to tell you that Frank, but it really depends on the shape of the curve and what's going on in the marketplace. Like I said earlier, we're pretty neutral on the short end of the curve. We have an upward sloping yield curve. I think we'll have a much higher net interest margin.

[Daryl Bible, Chief Financial Officer at M&T Bank]

That's a good environment for margins. If it stays more flattish, it'll be less so from that perspective. So it's really hard to tell from that. But I'm optimistic, as we start 2025, I feel that we have a lot of good things in place and have a lot of confidence in my teammates out there that are going to make things happen and really make us be successful. So I'm optimistic all that's going to play out.

[Daryl Bible, Chief Financial Officer at M&T Bank]

And whether it's going to be 380 or some other number, I can't really tell you today, but feel really good about how it's going.

[Frank Schiraldi, Managing Director at Piper Sandler Companies]

Okay. And then just follow-up on stock buybacks. Presumably still going through CCAR again. You seem pretty comfortable with that 11% CET1 sort of regardless. But I'm just wondering aside from whether loan growth throughout the year turns out stronger or weaker than anticipated, is there otherwise any back loading anticipated in repurchase activity holding some back for later in the year?

[Frank Schiraldi, Managing Director at Piper Sandler Companies]

Or do you think it should be should we expect pretty consistent throughout 2025?

[Daryl Bible, Chief Financial Officer at M&T Bank]

So what I would tell you is, we feel comfortable operating the company 11% of where we are today. That's kind of a short term capital target. What I believe is our long term capital target is probably going to be around 10% And I think that's probably going to play out over the next year or 2 from that. As far as when we repurchase shares and all that is really going to be dependent on what we think the timing is and whether we're opportunistic or not and whatever. So we aren't going to basically tell you guys.

[Daryl Bible, Chief Financial Officer at M&T Bank]

You guys can calculate what we're going to how much we're going to buy back. I don't really know when we're going to buy back. We're going to be opportunistic and to see how it plays out from that. But I don't think the 11% is done in 2026 and 2027, things continue to improve and all that. We can continue to push our capital ratios down closer to 10%.

[Frank Schiraldi, Managing Director at Piper Sandler Companies]

Okay, great. I appreciate it. Thanks.

[Operator]

Thank you. Our next question will come from Erika Najarian with UBS. Please go ahead.

[Erika Najarian, Managing Director & Equity Research Analyst at UBS Group]

Hi, good morning. And just a follow-up on that line of questioning, Daryl. I think it's an off cycle year this year for DFAST for Category 4 banks. Are you planning to maybe address that stress capital buffer this year by opting to participate? And also maybe I'll ask the second question here.

[Erika Najarian, Managing Director & Equity Research Analyst at UBS Group]

Like how should we read into the Federal Reserve press release that was issued in December 23 essentially saying that they were going to look to improve the transparency of the stress test and also sort of the bank lawsuit and how that could sort of impact your path from you mentioned like 11% this year to over the long term 10%.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. So we actually did already opt in to the stress test. We notified the Fed and it was approved. So we are doing the stress test again. We firmly believe that with the reduction that we've had in CRE and with reduction that we've had in our criticized and non accrual balances and the performance we've had in PPNR that we should stress test better than what we had did in 2024.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Remember in 2024 though, we were only 1 of 3 banks that dropped out of 30 banks that we look at from that perspective. But we're hopeful that we can continue to drive it down. Our stress capital buffer is still too high from how we look at it and we need to bring it down some more. So hopefully, we'll make progress on that this year. As far as what the Fed came out, I think we applaud Governor or Chairman Powell on for being transparent and things to work on.

[Daryl Bible, Chief Financial Officer at M&T Bank]

We all work on things to get better and I think all that is really important. So I think that is definitely in the right direction and look forward to having them do and move forward and making it a better process from that perspective.

[Erika Najarian, Managing Director & Equity Research Analyst at UBS Group]

Great. That's helpful. Thanks, Daryl.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Thanks, Erica.

[Operator]

Thank you. Our next question will come from Christopher Spahr with Wells Fargo. Please go ahead.

[Christopher Spahr, Analyst at Wells Fargo]

Hi, good morning. So Daryl, you have a lot of comments about the investments you're putting into the company. And yet when I kind of look at the expense guide, it seems to be relatively measured. So I'm just wondering what are the sources of the cost savings or the offsets that you're getting within the franchise and how repeatable those may

[Christopher Spahr, Analyst at Wells Fargo]

be? Thanks.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes, Chris, what I would tell you is, is one of the things when I joined M and T and I knew the company pretty well from outside looking in, but one of the gems that you have here that I think is really, really important is our business leaders that we have and throughout the company that run their groups, they are all really entrepreneurial. And they don't like to be told what to do, but they are really good at executing what and how they do it. So I give all the credit to my peers and how they look and restructure their groups and how they make them more efficient, more automated and how that all works. So I think that's really important and we don't want to lose that. I think that's what makes us really unique and how successful when we go to market.

[Daryl Bible, Chief Financial Officer at M&T Bank]

Because if you look at our performance in 2024, I mean, what we were able to accomplish was pretty amazing. And I think 2025 will be better than 2024 as I look out. So I feel really good. And definitely, we definitely have more opportunities, Chris, to optimize throughout the company and we will continue to execute and do that. And I know my peers around the company will help make that happen.

[Christopher Spahr, Analyst at Wells Fargo]

Is

[Christopher Spahr, Analyst at Wells Fargo]

that the big areas? Is it just less headcount over time, less manual operations? Just again, what are the underlying drivers for the savings?

[Daryl Bible, Chief Financial Officer at M&T Bank]

I mean, with headcount obviously being the highest cost on our expense base that would definitely have to have some type of impact, but automation, new ways of doing things. What we've done in the company and it's I don't know how many other entities have done this, but we have trained now people throughout our whole company to work in an agile form. When I was in other places where I worked, agile was more of a technology thing. And as technology people go off and do this stuff. We've trained all of our business leaders throughout the whole company.

[Daryl Bible, Chief Financial Officer at M&T Bank]

We call it the way we work and how they basically work with technology and with other drivers of how the company works and really works together as teams to make us better each and every day. And everybody is empowered to improve how they operate. It could be as simple as moving things from an Excel worksheet onto Alteryx and all that. We've had dozen of those things in our finance area where we save 100 of hours doing that. Or it could be more complex where we're offshoring some people out into other jobs from lower skilled or whatever.

[Daryl Bible, Chief Financial Officer at M&T Bank]

So we do a whole mixture of things, Chris. I'm not going to be too specific about that. I'm just going to hope that we continue to deliver really good numbers for you and you're satisfied with that.

[Christopher Spahr, Analyst at Wells Fargo]

Okay, thanks. And then one last follow-up. Your office count shrunk a little bit over the last year. Do you expect that to expand going forward?

[Daryl Bible, Chief Financial Officer at M&T Bank]

From an office account perspective, I think we're kind of real close. It's I mean, it was within 100 FT feet feet

[Daryl Bible, Chief Financial Officer at M&T Bank]

feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet

[Daryl Bible, Chief Financial Officer at M&T Bank]

Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet when you look at just how much our vacancy rate is, our vacancy rate is much larger than that. So we could have some volatility in those numbers. And I really look at what expenses that they're going to hit for the year and not so much the FTE.

[Christopher Spahr, Analyst at Wells Fargo]

All right. Thank you.

[Operator]

Thank you. Our next question will come from Matt O'Connor with Deutsche Bank. Please go ahead.

[Matt O'Connor, Analyst at Deutsche Bank]

Thanks for squeezing me in. Just a question on fees. I mean, the trends have been good. The outlook is solid. But do you feel like you need maybe a broader product set, both to boost kind of the contribution of fees to overall revenue?

[Matt O'Connor, Analyst at Deutsche Bank]

And then I guess I'm thinking specifically like in Capital Markets where more of your peers have kind of veered into that over the last several years and you're still relatively small and some of the hedging services you provide and things like that?

[Daryl Bible, Chief Financial Officer at M&T Bank]

Yes. So we actually are growing out in that area. Peter Darcy and his team have put some investments in talent over the last couple of years and we'll probably continue to do that in the next couple of years. But we are really focused at growing out the capital markets, investment banking pieces that make sense to serve our customers and the communities that we serve from that perspective. We also see some nice growth within our CRE platform.

[Daryl Bible, Chief Financial Officer at M&T Bank]

One of our people that works for Peter has really done amazing things, given us relationships with other non bank entities out there. We have a relationship now with Blackstone, and it's connected to our RCC business so that Blackstone can originate and actually do placements through the agencies now. And we're going to continue to do more of those things throughout that will generate more fee income. We will plan to continue to serve our CRE customers, but we think that our choices and options that we have now won't be just on balance sheet. We have a lot of off balance sheet and growing off balance sheet alternatives that can really help drive and serve them as well as to serve our fee income.

[Daryl Bible, Chief Financial Officer at M&T Bank]

So I think we're headed in really good direction. As far as mortgage goes, Matt, we've continued to hire producers both in commercial and residential. And one of the things you may not know about us, but we have a really strong subservicing sector. We do subservicing for some of the largest mortgage originators in the industry, and we're really good at it. We actually love the more challenging stuff from a servicing perspective because of our expertise there.

[Daryl Bible, Chief Financial Officer at M&T Bank]

And then if you look at our ICS business, they've had tremendous growth the last couple of years, expect to have really good growth. We're expanding in Europe now. So that's something we're following our customers. Our customers have asked us to follow them to Europe and we're following them and serving their needs there. So I think our fee income area is actually very positive, has a lot of good momentum and will continue to grow and be a good positive revenue source.

[Daryl Bible, Chief Financial Officer at M&T Bank]

That said, I think net interest margins are also going to go up. So maybe from a mix perspective, you may not see the benefit, but I think we got a lot of good revenue momentum going on at M and T right now.

[Matt O'Connor, Analyst at Deutsche Bank]

That's helpful. Thanks for the detail.

[Operator]

Thank you. At this time, we have no further questions in queue. I would like to turn the call back to Brian Klonk for any additional or closing remarks.

[Brian Klock, Senior VP and Head of Markets & Investor Relations at M&T Bank]

Again, thank you all for participating today. And as always, if clarification of any of the items in the call or news release is necessary, please contact our Investor Relations department at area code 716-842-5138, and have a great day.

[Operator]

This does conclude the M and T Bank 4th quarter and full year 2024 earnings conference call. Please disconnect your line at this time and have a wonderful day.

Participants

Executives

• Brian Klock, Senior VP and Head of Markets & Investor Relations
• Daryl Bible, Chief Financial Officer

Analysts

• Manan Gosalia, Equity Analyst at Morgan Stanley
• Bill Carcache, Equity Research Analyst at Wolfe Research
• Ebrahim Poonawala, Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch
• Gerard Cassidy, Managing Director at RBC Capital Markets
• John Pancari, Senior Managing Director & Senior Research Analyst at Evercore ISI
• Peter Winter, Managing Director - Senior Research Analyst at D.A. Davidson
• Frank Schiraldi, Managing Director at Piper Sandler Companies
• Erika Najarian, Managing Director & Equity Research Analyst at UBS Group
• Christopher Spahr, Analyst at Wells Fargo
• Matt O'Connor, Analyst at Deutsche Bank