M&T Bank Q2 2025 Earnings Report

M&T Bank EPS Results

• Actual EPS: $4.28
• Consensus EPS: $4.04
• Beat/Miss: Beat by +$0.24
• One Year Ago EPS: $3.73

M&T Bank Revenue Results

• Actual Revenue: $2.40 billion
• Expected Revenue: $2.39 billion
• Beat/Miss: Beat by +$10.59 million
• YoY Revenue Growth: N/A

M&T Bank Announcement Details

• Quarter: Q2 2025
• Date: 7/16/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 16, 2025
• Conference Call Time: 11:00AM 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 Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: M&T’s latest Federal stress test showed its Stress Capital Buffer fall from 3.8% to 2.7%, underscoring the bank’s resilient earnings power and risk-management progress.
• Positive Sentiment: The bank executed $1.1 billion in share repurchases during Q2 and still delivered 1% growth in tangible book value per share.
• Positive Sentiment: Average residential mortgage and consumer loans rose by $1.1 billion sequentially, reflecting strong demand and M&T’s diversified business model.
• Neutral Sentiment: Net interest margin was 3.62%, down 4 basis points on premium amortization and higher funding costs, though it held at 3.66% when excluding the amortization impact.
• Negative Sentiment: Full-year taxable equivalent net interest income guidance was lowered to $7.00 billion–$7.15 billion amid continued softness in commercial and CRE loan growth.

Presentation

[Operator]

morning, everyone. Welcome to the M and T Bank Second Quarter twenty twenty five Earnings Conference Call. All lines have been placed on a listen only mode and the floor will be open for your questions following the presentation. And please be advised that today's conference is being recorded. I would now like to hand the conference over to Mr. Steve Windleboe, Senior Vice President, Investor Relations. Please go ahead, sir.

[Steven Wendelboe, SVP - Market & IR at M&T Bank]

Thank you, Bo, and good morning. I'd like to thank everyone for participating in M and T's second quarter twenty twenty five earnings conference call. If you've not read the earnings release we issued this morning, you may access it, along with the financial tables and schedules, by going to our new and improved Investor Relations website at ir.mtv.com. 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.

[Steven Wendelboe, SVP - Market & IR at M&T Bank]

The presentation also includes non GAAP financial measures as identified in the earnings release and investor presentation. The appropriate reconciliations to GAAP are included in the appendix. Joining me on the call this morning is M and Senior Executive Vice President and CFO, Daryl Bible. Now, I'd like to turn the call over to Daryl.

[Daryl Bible, CFO at M&T Bank]

Thank you, Steve, and good morning, everyone. Our purpose continues to drive M and T's bank success. We strive to make a difference in people's lives, serving our communities with dedication and integrity. This quarter, we continued to deliver on our purpose as we supported entrepreneurs with our small business accelerator labs, invested in our New England and Long Island communities through our third and final round of our Amplify fund and announced several high visibility sponsorships. We remain optimistic about the ability to deliver shareholder value and continue serving our communities with excellence.

[Daryl Bible, CFO at M&T Bank]

Turning to slide four, we continue to enjoy notable recognition from our customers and the industry. I want to thank our teams in commercial, business banking, corporate trust and wealth that made these recognitions possible. Turn to Slide six, which shows the results for the second quarter. Our second quarter results reflect M and T's continued momentum with several successes to highlight. First, we are pleased with the recent stress test outcome.

[Daryl Bible, CFO at M&T Bank]

Our SCB declined from 3.8% to 2.7%, reflecting the resiliency and strength of our earnings power and continued risk management efforts. We started this effort five years ago to reduce our on balance sheet CRE exposure and still serve our customers. We are also focused on reducing our criticized loans. I want to thank both our commercial and credit teams for a great job they have done to make this happen. We executed $1,100,000,000 in share repurchases in the second quarter, while also growing tangible book value per share by 1%.

[Daryl Bible, CFO at M&T Bank]

We grew average residential mortgage and consumer loans by $1,100,000,000 combined, reflecting our diversified business model. Fee income continues to perform well. Excluding security gains and losses and other notable items, fee income grew 11% since the second quarter of twenty twenty four. Our expenses remain well controlled, reflected in our second quarter efficiency ratio of 55.2%. Asset quality continues to improve with a $1,000,000,000 or 11% reduction in commercial criticized balances.

[Daryl Bible, CFO at M&T Bank]

Net charge offs of 32 basis points also remain below our full year expectations, as we discussed in January. Now let's look at the specifics for the second quarter. Diluted GAAP earnings per share were $4.24 up from $3.32 in the prior quarter. Net income was $116,000,000 compared to $584,000,000 in the linked quarter. M and T's second quarter results produced an ROA and ROCE of 1.3710.39%, respectively.

[Daryl Bible, CFO at M&T Bank]

There were three notable items in the second quarter, including $17,000,000 in catch up premium amortization on tax exempt bonds obtained from the Peoples United acquisition. The corresponding impact of that item on a taxable equivalent basis was $20,000,000 This item reduced EPS by $09 We also had two gains reported within fee income, which included a $15,000,000 pretax gain on sale of our out of footprint CRE loan portfolio and a $10,000,000 pretax gain on the sale of an ICF subsidiary. Those two gains impacted EPS by $07 and zero four dollars respectively. Slide seven includes supplemental reporting of M and T's results on a net operating or tangible basis. M and T's net operating income was $724,000,000 compared to $594,000,000 in the linked quarter.

[Daryl Bible, CFO at M&T Bank]

Diluted net operating earnings per share were $4.28 up from $3.38 in the prior quarter. Net operating income yielded an ROTA and ROTCE of 1.4415.54%. Next, we'll look a little deeper into the underlying trends that generated our second quarter results. Please turn to Slide eight. Taxable equivalent net interest income was $1,720,000,000 an increase of $15,000,000 or 1% from the linked quarter.

[Daryl Bible, CFO at M&T Bank]

The net interest margin was 3.62%, a decrease of four basis points from the prior quarter. The net interest margin decline was primarily driven by a negative four basis points related to the premium amortization impact, negative five basis points related to higher costs and interest bearing deposits and long term debt, negative two basis points from lower net free funds contribution, partially offset by a seven basis point benefit related to fixed asset repricing, including reduction in negative carry on our interest rate swaps. Excluding the notable premium amortization, the net interest margin would be 3.66%, unchanged from the first quarter. Turn to Slide 10 to talk about average loans. Average loans and leases increased $600,000,000 to $135,400,000,000 Higher consumer and residential mortgage loans were partially offset by a decline in CRE balances.

[Daryl Bible, CFO at M&T Bank]

Commercial loans were unchanged at $61,000,000,000 with continued growth in certain specialty segments such as C and I and mortgage warehouse, offset by a decline in dealer floor plan balances. However, at the end of the period, commercial loans increased $1,100,000,000 driven by growth in our specialty segments, including C and I, mortgage warehouse and fund banking. Similarly, we saw strong growth in total commitments. The CRE loans declined 4% to $25,300,000,000 reflecting continued payoffs and paydowns. However, we continue to see our CRE pipeline build.

[Daryl Bible, CFO at M&T Bank]

Residential mortgage loans increased 2% to 23,700,000,000.0 Consumer loans grew 4% to $25,400,000,000 reflecting increases in recreational finance and indirect auto loans. Combined, average residential mortgage and consumer loans grew $1,500,000,000 3% sequentially, representing the strength of our diversified loan portfolio and business model. Loan yields increased five basis points to 6.11%, aided by the reduction in negative carry on our interest rate swaps. Regarding commercial loan growth, earlier this year, we implemented enhancements to our commercial credit and sales processes to improve the ability to serve customers through market cycles, become more responsive to customer needs, scale our risk management and position ourselves for future growth. We have taken the time to assimilate both our employees and customers to this new process, and we enter the second half of the year in a strong position to support our growing pipeline.

[Daryl Bible, CFO at M&T Bank]

Turning to slide 11. Our liquidity remains strong. At the end of the second quarter, investment securities and cash held at the Fed totaled $54,900,000,000 representing 26% of total assets. Average investment securities increased $900,000,000 to $35,300,000,000 The yield on investment securities decreased 19 basis points to 3.81%, primarily from the catch up premium amortization on certain securities. Excluding that item, the securities yield would be 4.03%, reflecting continued fixed rate repricing in the investment portfolio.

[Daryl Bible, CFO at M&T Bank]

The duration of the investment portfolio at the end of the quarter was three point six years, and the unrealized pretax gain on available for sale portfolio was $82,000,000 or four basis points CET1 benefit if included in regulatory capital. Turning to slide 12. Average total deposits rose 2,200,000,000 or 1% to $163,400,000,000 Deposit growth was across most segments, including commercial, business banking, consumer, mortgage and corporate trust, while average broker deposits declined $300,000,000 to $10,500,000,000 Average non interest bearing deposits declined $300,000,000 to $45,100,000,000 primarily from lower trust demand deposits. Interest bearing deposit costs increased one basis point to 2.38%. Growth in certain high cost deposits, particularly within commercial, mortgage and corporate trusts contributed to the deposit cost increase.

[Daryl Bible, CFO at M&T Bank]

That was partially offset by time and broker deposits. Continuing on Slide 13, noninterest income was $683,000,000 compared to $611,000,000 in the linked quarter. We saw continued strength across many fee income categories, with increases in mortgage banking, service charges, trust and other revenues. Mortgage banking revenues were $130,000,000 up from $118,000,000 in the first quarter. Residential mortgage banking revenues increased $15,000,000 sequentially to $97,000,000 from higher servicing fee income, aided by the full quarter benefit of subservicing, which started in February.

[Daryl Bible, CFO at M&T Bank]

Trust income increased $5,000,000 to $182,000,000 largely driven by higher seasonal tax preparation fees. Other revenues from operations increased $49,000,000 to $191,000,000 reflecting $25,000,000 in notable items mentioned earlier, along with higher loan syndication fees and merchant and credit card revenue. Turning to Slide 14. We continue to execute our expense plan. Noninterest expenses for the quarter were $1,340,000,000 a decrease of $79,000,000 from the prior quarter.

[Daryl Bible, CFO at M&T Bank]

Salaries and benefits decreased $74,000,000 to $813,000,000 mostly reflecting the seasonal decline from the first quarter, partially offset by the full quarter impact of annual merit increases. Other non compensation expenses items changed relatively modestly from the first quarter. The efficiency ratio was 55.2% compared to 60.5% in the linked quarter. Now let's turn to slide 15 for credit. Net charge offs for the quarter totaled $108,000,000 or 32 basis points, decreasing from 34 basis points in the linked quarter.

[Daryl Bible, CFO at M&T Bank]

Net charge offs were relatively granular, with the five largest charges amounting to less than $35,000,000 in total, representing both C and I and CRE credits. Non accrual loans increased $33,000,000 or 2% to $1,600,000,000 The non accrual ratio increased two basis points to 1.16%, driven largely by higher C and I non accruals, concentrated in recreational finance dealers. In the second quarter, we reported a provision for credit losses of $125,000,000 compared to the net charge offs of $108,000,000 Included within the provision for credit losses is a $20,000,000 provision for unfunded credit commitments related to credit recourse obligations for certain CRE loans sold by MTRCC under the Fannie Mae DUS program. The allowance for loan losses as a percent of total loans decreased two basis points to 1.61%, reflecting lower levels of criticized loans. Please turn to slide 16.

[Daryl Bible, CFO at M&T Bank]

The level of criticized loans was $8,400,000,000 compared to $9,400,000,000 at the March. The improvement from the linked quarter was driven by an $813,000,000 decline in CRE criticized balances and $226,000,000 decline in commercial. The CRE decline was primarily within multifamily, office, healthcare and construction, and was driven by payoffs, paydowns and upgrades to past status. Turning to slide 19 for capital. M and T's CET1 ratio at the end of the second quarter was an estimated 10.98% compared to 11.5% at the end of the first quarter.

[Daryl Bible, CFO at M&T Bank]

The decline in the CET1 ratio reflects increased capital distributions, including 1,100,000,000 in share repurchases, partially offset by continued strong capital generation. The AOCI impact on the CET1 ratio from AFS securities and pension related components combined would be approximately a positive 10 basis points if included in regulatory capital. Now turning to slide 20 for the outlook. First, let's begin with the economic backdrop. The economy fared better than fuel, given the market volatility and uncertainty regarding tariffs and other policies.

[Daryl Bible, CFO at M&T Bank]

The economy contracted in the first quarter as domestic production gave way to a surge of imports of consumer and business goods. We expect a positive figure in the second quarter, thanks in part to lower imports, but also do see slowing in domestic spending, which is a risk worth watching. We see the impact of tariffs hitting categories that are most exposed to imports, but consumers are cutting back on service spending, such as travel and recreation, reducing price pressure on service side and is the counterweight to tariffs. We acknowledge the potential for a slowing in the economy and are attuned to downside risks and uncertainty. We ended the second quarter well positioned for a dynamic economic environment with strong liquidity, strong capital generation and a CET1 ratio of nearly 11%.

[Daryl Bible, CFO at M&T Bank]

With that economic backdrop, let's review our net interest income outlook. We expect taxable equivalent net interest income, excluding notable items, to be 7,000,000,000 to $7,150,000,000 with net interest margin averaging in the mid to high 360s. We lowered the range due to continued softness in commercial and CRE loan growth. We expect full year average loan growth to be $135,000,000,000 to $137,000,000,000 Full year average deposit balances are expected to be 162,000,000,000 to $164,000,000,000 We remain focused on growing customer deposits at a reasonable cost and reducing non core funding. Turning to fee income.

[Daryl Bible, CFO at M&T Bank]

We continue to expect non interest income, excluding notable items, to be at the high end of our 2,500,000,000 to $2,600,000,000 range. Our strong quarter provides increased confidence in achieving the high end of the range. Continuing with expenses. We anticipate total non interest expenses, including intangible amortization, to be 5,400,000,000.0 to $5,500,000,000 trending toward the lower end of the range. Our business lines remain focused on closely managing their expenses, allowing the bank to continue to make targeted investments in projects and business opportunities that support our enterprise priorities and also achieve positive operating leverage.

[Daryl Bible, CFO at M&T Bank]

Regarding credit, net charge offs for the first half of the year were below our initial expectations. With that positive start to the year, we now expect net charge offs for the full year to be less than 40 basis points. We also expect criticized loans to continue to decline through 2025, though at a more moderate pace. As it relates to capital, we expect to operate in a 10.75% to 11% range for the remainder of the year. We will be opportunistic with share repurchases, while also continuing to monitor the economic backdrop and asset quality trends.

[Daryl Bible, CFO at M&T Bank]

As shown on slide 21, we remain committed to our four priorities, including growing our New England and Long Island markets, optimizing our resources through simplification, making our systems resilient and scalable, and continuing to scale and develop our risk management capabilities. To conclude on Slide 22, our results underscore an optimistic investment thesis. M and T has always been a purpose driven organization with a successful business model that benefits all stakeholders, including shareholders. We have a long track record of credit outperforming through all economic cycles or growing within the markets we serve. We remain focused on our shareholder returns and consistent dividend growth.

[Daryl Bible, CFO at M&T Bank]

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

[Operator]

Thank you very much, question. We'll go first this morning to sir. Ken Usdin of Autonomous Research. Ken, please go ahead.

[Daryl Bible, CFO at M&T Bank]

Ken?

[Ken Usdin, Co-Head - Autonomous US & Senior Analyst - US Large-Cap Banks at Autonomous Research]

Yeah, there you go. Hey Darrell, good morning, how are you? Good.

[Ken Usdin, Co-Head - Autonomous US & Senior Analyst - US Large-Cap Banks at Autonomous Research]

Daryl, I wanted to ask you to expand on the loan dynamics. I think you did sell a portfolio of out of footprint CRE. I'm just wondering how close are we to getting to that bottom in CRE? And are you seeing any change in terms of the underlying originations that just keeps getting taken out by payouts and the like?

[Daryl Bible, CFO at M&T Bank]

Yeah, thanks for the question on that, Ken. What I would tell you is the CRE portfolio, I think the pipeline continues to build. We had our best month in June that we've had this year so far. We had over $5,000,000,000 in the pipeline right now. So we feel pretty good that we're headed in a good direction from that perspective.

[Daryl Bible, CFO at M&T Bank]

If you look at when it's going to grow because of the runoff that we had this past quarter, the chances of growing linked quarter in CRE would be pretty challenging. But as we get towards the end of the year, I think as the pipeline continues to build and still serve clients and all that, I think we have a chance for maybe later of the year for that to happen.

[Ken Usdin, Co-Head - Autonomous US & Senior Analyst - US Large-Cap Banks at Autonomous Research]

Got it. And you mentioned on capital the good stress test result, 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've said that maybe you'd get towards $10 over time. But what's the right level of capital for M and T to hold? And how do you think about this balancing act of all the excess you have versus your potential uses of it?

[Daryl Bible, CFO at M&T Bank]

Yeah, so I think it first starts with right now, there's still a lot of uncertainty in the marketplace. We did really well with our stress capital buffer, we did a great job bringing down our criticized loans, but we still have more wood to chop, you know, in getting our criticized loans down further and, you know, hopefully next year, we'll get down to 2.5% on a stress capital buffer. But if you look at what's in the marketplace right now, there's a lot of uncertainty with tariffs, which create a lot of trade uncertainty. You have worsening geopolitical conditions, high fiscal deficits and elevated asset prices. I think those risks right now, just way out there.

[Daryl Bible, CFO at M&T Bank]

Our long term target that the board approved in January is 10%. But I think given the risk that we have right now, we think the range of 11 ten seventy five is the right place to operate.

[Ken Usdin, Co-Head - Autonomous US & Senior Analyst - US Large-Cap Banks at Autonomous Research]

Okay, got it. All right, thanks Darryl.

[Operator]

Thank you. We'll go next now to Steven Alexopoulos at TD Cowen.

[Steven Alexopoulos, Senior Analyst - U.S. Large Cap Banks at TD Securities]

Hey Darryl, how's everything?

[Daryl Bible, CFO at M&T Bank]

Good. And you, Steve?

[Steven Alexopoulos, Senior Analyst - U.S. Large Cap Banks at TD Securities]

Good. Good. I wanted to start, so I saw you're guiding to the high end of the fee income range. And when I look at trust, it was a nice positive surprise this quarter again, 182,000,000. Can you give some color what's driving that?

[Steven Alexopoulos, Senior Analyst - U.S. Large Cap Banks at TD Securities]

And do we think of that as back to being high single digit, low double digit grower from here?

[Daryl Bible, CFO at M&T Bank]

It's had a tremendous last year and it's had a tremendous this year. We are actually investing in Europe. We started operations there and it's starting to grow now. We had some big wins this past quarter in that space. So and we were asked by our customers to support them in Europe.

[Daryl Bible, CFO at M&T Bank]

So we're just following where our customers are from that perspective. So we're very positive in our corporate trust business, I think it's growing really well and have a lot of potential. But if you look at the other fees that we have on the mortgage side, we have a great subservicing business that's growing really well. And we have from origination perspective, we've been investing in producers and the resi, you can't see it because rates aren't really down yet, but that will happen at some point down the road. And then our commercial mortgage business, RCC is really doing well, really core to our businesses as we operate, and we'll have a lot of potential.

[Daryl Bible, CFO at M&T Bank]

But I think the highlight that we have right now, Steve, is really in treasury management. You look at treasury management revenues year over year, we're up 12%, 13%, which is really strong.

[Steven Alexopoulos, Senior Analyst - U.S. Large Cap Banks at TD Securities]

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 you know 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 an M and T. What's your take on this? I mean, you guys have always done a good job of, you know, M and 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 mega banks which are net growing checking accounts pretty well here?

[Daryl Bible, CFO at M&T Bank]

Absolutely not, Steve. I mean, if you look at our business model, we are basically serving our communities and we bring our full bank to those customers within those communities. I think that's a huge advantage for us. I think that's very successful. We also look at efficiency ratios and all that.

[Daryl Bible, CFO at M&T Bank]

We operate with one of the best efficiency ratios in the industry. While we will continue to grow in size, one of the advantages we have and what we focus on is being simple, less complexity in the company, so we can manage the company as we get bigger and all that. And I think that's really key. You know, we don't have to be the biggest bank to serve our communities and all that. We just do a really great job doing that.

[Daryl Bible, CFO at M&T Bank]

I think everybody's happy from that. You know, we will probably grow and market maybe contiguous markets over time when it's right. But here again, we're real compact in one area. So you get a lot of advantages of scale in those areas, too. So we love our business model is very successful.

[Daryl Bible, CFO at M&T Bank]

Our communities customers love us. So I think it's going to continue to stay with that.

[Steven Alexopoulos, Senior Analyst - U.S. Large Cap Banks at TD Securities]

I'm with you. Thanks for that color.

[Operator]

Thank you. We'll go next now to Chris McGratty with KBW.

[Christopher Mcgratty, MD & Head of U.S. Bank Research at Keefe, Bruyette & Woods (KBW)]

Great. Thanks for the question.

[Christopher Mcgratty, MD & Head of U.S. Bank Research at Keefe, Bruyette & Woods (KBW)]

Maybe I want to ask that tech topic from a different angle. The expense guide for the back half of the year, I know you've had this GL 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.

[Daryl Bible, CFO at M&T Bank]

Yeah, so we had about a half a dozen major projects going on in the company. The GL was one of them. That had nothing to do with a change in guidance. It really was at the end of the day, we want to make sure we can contribute and have positive operating leverage, you know, and our leadership team decided that we could bend the expense curve down a little bit and flatten it out, so that we can still generate positive operating leverage. Our loan growth isn't as much as we thought it would be for this plan year.

[Daryl Bible, CFO at M&T Bank]

We're still doing really well and hope that we finish the year out stronger. But it's the unselfishness and the leadership that we have on our leadership team that actually made that happen.

[Christopher Mcgratty, MD & Head of U.S. Bank Research at Keefe, Bruyette & Woods (KBW)]

Okay. Thank you for that, Daryl. And just a follow-up. You've done a lot of progress on the CRE diversification. 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 in CREE concentration? Thanks.

[Daryl Bible, CFO at M&T Bank]

Yeah, Chris, there's a lot of optionality and things you can do with what's been developed. I mean, you could potentially sell credits once you close the transaction. You could do risk transfer trades, you can do a lot of things, but first and foremost, you know, to acquire somebody, we'll look for somebody that basically fits with us from a culture perspective, from a credit perspective. So the hope is that we would maintain most of those relationships, but for if we wanted to reduce some of them or exit some of them, we do have ways of doing that or minimizing the risk now. So that's not a concern whatsoever, it's just the cost of doing the transaction.

[Christopher Mcgratty, MD & Head of U.S. Bank Research at Keefe, Bruyette & Woods (KBW)]

Understood. Thanks so much.

[Operator]

We'll go next now to Ebrahim Poonawala of Bank of America.

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

Hey, Donald. Good morning.

[Daryl Bible, CFO at M&T Bank]

Good morning.

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

Just 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 three sixty. Just remind us ex any changes to interest rates, are we at a point where incremental asset repricing is offset by funding costs? 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 three sixty, I guess, ex rate changes?

[Daryl Bible, CFO at M&T Bank]

Yes. So we've kept the guidance in the mid to high 360s. It's really it depends on how much commercial and CRE growth that we get is really the biggest driver, Ebrahim, at the end of the day. Yes, I think we're optimistic that we will be growing our commercial C and I balances third and fourth quarter that will turn positive. And we're hoping that we end the year strong with CRE as well, so we can start '26 really strong.

[Daryl Bible, CFO at M&T Bank]

As far as getting to three seventy, we have a lot of positives going on in the balance sheet still. That fixed asset repricing was really huge for us this quarter with our auto loans and RV loans that we put on. And we put on a lot of those loans and priced higher in those areas. Even our residential mortgages that we booked also repriced higher if you look at the yields. So all that's really positive.

[Daryl Bible, CFO at M&T Bank]

The investment portfolio, as we continue to invest, we're probably averaging about 150 basis points on what's rolling off to what's rolling on. We've been adding a little bit to the portfolio as well, which has been a positive. And then our swap book. Our swap book, I've mentioned it a couple of times in the prepared remarks, but we are getting positive repricing in the swap book, and you're going to continue to see that drag on for the next four quarters. So that's a positive.

[Daryl Bible, CFO at M&T Bank]

So, wow, is it possible to get to three seventy this year? Yes, but it's really going to rely on loan growth. Ebrahim, and right now, I'm just a little cautious, which is why we're keeping it in the mid to high 360s.

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

That's helpful. Thanks for that. And I guess maybe just on C and I loan growth, and sorry if I missed it, but remind us when we think about the opportunity within sort of the people's market in Long Island, etcetera, Just how big is that pipeline? Like is it a multiyear thing? I mean, it's been helpful to the bank over the last year or two. So if you don't mind just double clicking on C and I loan growth in some of these markets we acquired through Peoples. Thanks.

[Daryl Bible, CFO at M&T Bank]

Yeah, Ebrahim, we've put lots of people, new leaders into those markets. If you look at this past quarter, Eastern Mass was one of the fastest growing regions of our 27 regions that we had this quarter. So it has a lot of momentum. Connecticut is also a great market for us. We have a lot of share in that space.

[Daryl Bible, CFO at M&T Bank]

So that's a positive. So I think all that's really good. The key thing though that we got from Peoples, which is kind of the whenever you do acquisitions, sometimes you get some positive intangibles, is that we got a lot of specialty businesses like fund banking, mortgage warehouse, corporate institutional, And we didn't have those businesses at M and T. So we've been able over the last couple of years to scale those businesses, invest in those businesses, because they're really good sound businesses that we have, and we're growing them very nicely. And that's really, I think, where the growth of second half of the year is going to come from, is from these businesses that we've acquired from Peoples and they continue to grow and really pay dividends for us.

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

That's helpful. Thanks, Adam.

[Operator]

Thank you. We'll go next now to Peter Winter of D. A. Davidson.

[Peter Winter, MD & Senior Research Analyst at D.A. Davidson]

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 spending is slowing and consumer prices are starting to rise as some of these tariff pass throughs are just starting?

[Daryl Bible, CFO at M&T Bank]

Yeah, so the big amount of loans that we had in indirect RV and in our auto was basically just people buying ahead of before higher car prices or RV prices came on board. So that was a pull forward. But I think in the RV space, talking to our leader, Mike Drury in that space, he's pretty optimistic that RV will continue. Auto as well, auto, it really depends on which manufacturers and what's going on the lots. That's actually hurt us on the commercial side beyond floor planning because our utilization is down.

[Daryl Bible, CFO at M&T Bank]

But as manufacturers figure out where to make the cars and put them on the lots, I think that will be a positive for both sides of us as we move forward. So I think that's good. One of the nice surprises though that we have and I really give a call out to Rich McCarthy, who ran the branches and all that is, we actually grew HELOC for the first time in a while in our credit card book this past quarter, and they believe they're pretty optimistic for the rest of the year. So that's a huge positive for us. So we have a lot of really good things going on in that space today.

[Peter Winter, MD & Senior Research Analyst at D.A. Davidson]

Got it. Thank you. And then separately, last quarter, you lowered the average deposit range, but you mentioned that you expected to be at the high end of that new range. And I was just wondering with average deposits at $162,000,000,000 in the first half of the year, do you still expect to be at that upper end of that range of 162 to 164?

[Daryl Bible, CFO at M&T Bank]

Peter, we will we have an always on, we're always paying competitive rates to our customers as they come in, we'll get our share from that perspective. We had a great quarter this quarter, we grew 2,200,000,000.0, you know, of what we brought in, it was from mortgage, our corporate trust business, as well as commercial, But it was really nice growth, it allowed us to pay off some broker deposits and some other non core funding, which is what I'm all about. So I would continue to focus and growing as much as we can, as long as we grow it at a competitive reasonable rate, at that sense, and we'll fund loans with it, and then if we have not more than what we need there, we will pay down non core funding, which is what we've been doing. So it's a positive, and I think we will continue to see growth in that sector.

[Peter Winter, MD & Senior Research Analyst at D.A. Davidson]

Got it. Okay. Thanks, Daryl.

[Operator]

Thank you. We'll go next now to John Pancari at Evercore ISI.

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

Good morning, Daryl.

[Daryl Bible, CFO at M&T Bank]

Hey, good morning, John.

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

Just to go back to capital, a couple of things there. Good to see the acceleration in the buybacks to the $1,100,000,000 level up from the 600 to 700,000,000 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 $4,000,000,000 authorization could be completed over six quarters. Are you still on that type of pace as you look at it?

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

And then separately, I know M and A has been brought up a couple of times, and you mentioned that you may be interested when the time is right. I guess, if you could just talk about anything about the evolving backdrop with the other regional starting to do deals that's made whole bank M and A any more interesting to you? Or would you say no change in your outlook on that perspective today? Thanks.

[Daryl Bible, CFO at M&T Bank]

Yeah, so John, I mean, we're always looking and talking to people and all that. So I mean, that's just part of what we do. We don't really have anything known. Obviously, we wouldn't say anything, but when opportunities are right, and when we find a partner that really fits us for all the various reasons, that will happen when it happens. It's happened 27 times since the early 80s, so I'm sure it will happen at some point down the road from that perspective.

[Daryl Bible, CFO at M&T Bank]

As far as the pace goes, I would say we will probably operate at eleven, and if the economy, if we get more constructive on the economy and feel good about it, we could go down to 10.75 at some point down the road. If you look at what we've done, you know, for the first half of the year, John, and we bought 5.7% of our shares outstanding in the first and second quarter. So we're buying a fair amount of stock back from that perspective. And I think our investors are would be happy that we would continue to do that, you know, when it makes sense from that perspective.

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

Okay, got it. All right, thanks, Darrel. And then just separately, back to the NII guide, I know you regarding the lowering of the lower bound of that guide, you discussed CRE as a factor mentioned that already. You also mentioned C and I. Can you just give us a little bit more detail in terms of what you're seeing on the C and I front that's contributing still to the sluggishness or are you beginning to see some green shoots there? Thanks.

[Daryl Bible, CFO at M&T Bank]

Yeah, I think if you look at C and I, I mean, our fastest growth regions besides Eastern Mass was in Jersey and York, they were all really positive, which is really good. I would say if we have a really good growth among many of our portfolios, pipeline and middle market continues to be robust. You know, as far as line utilization and dealer commercial services, that's low now, that could start to drift back up towards the end of the year, that could be a positive for us, I think that would be good. And then as far as uncertainty of pay downs and all that, it's been relatively strong to date, that pace will probably moderate at some point, you know, whether it's this quarter or next quarter, it's hard to call when that moderates, but it's going to happen at some point, and then that will bring more natural growth to the portfolio. But our specialty businesses, specifically C and I, mortgage warehouse and fund banking are operating really strong.

[Daryl Bible, CFO at M&T Bank]

And, you know, our RMs are out there calling and, with our customers and very active in our pipelines, both in commercial and CRE are building and continuing to get stronger. So I think we're optimistic. I'm just a little bit cautious, to be honest with you. I think you know that about me, John, so, but I think we will have some good green shoots and it will actually pay dividends.

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

Great, all right, thank you, Darrell.

[Operator]

Thank you. We'll go next now to Manon Ghisalia at Morgan Stanley.

[Manan Gosalia, Head - U.S. Midcaps Banks Research at Morgan Stanley]

Hey, good morning.

[Daryl Bible, CFO at M&T Bank]

Good morning.

[Manan Gosalia, Head - U.S. Midcaps Banks Research at Morgan Stanley]

Daryl, just a follow-up on the capital return question. As 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 and T's dividend yield is below peers. Is that more of a focus than buybacks?

[Daryl Bible, CFO at M&T Bank]

They're both really important. I mean, when I look at how we allocate capital, first and foremost, we allocate to our customers organically. Secondly, I put dividends in there to make sure we can pay a strong growing dividend and make it repeatable over time. You'll see some action out of our board this quarter. So I think you will be pleased when the board votes on that and we make our public press release on it.

[Daryl Bible, CFO at M&T Bank]

Then after dividends, we look at organic, and then after that, we buy back. Buy back is probably at the end.

[Manan Gosalia, Head - U.S. Midcaps Banks Research at Morgan Stanley]

Got it. Very helpful. And then on NIM, can you talk about what drove that five basis point headwind to NIM from higher liability costs? I know you spelled out a few categories on the deposit side where costs went up Q on Q, but I was hoping 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?

[Daryl Bible, CFO at M&T Bank]

So it really wasn't sticky funding costs and all that. We actually asked for and brought in these deposits. Average cost came in at around $3.90 to $4.40. We view that as something less than our marginal funding curve. So we aren't fluid in that when you bring a deposit in, you just can't pay off a borrowing.

[Daryl Bible, CFO at M&T Bank]

You have to do it over time to right size it. But it came in and made sense to come on our balance sheet because it's under the funding curve. And we don't need it to fund loans, we will pay off more non core funding with that growth. So it's the right thing to do. We're always taking it from our customers and, you know, paying fair rates, reasonable rates from that perspective.

[Daryl Bible, CFO at M&T Bank]

So I think this was a great quarter for us for our ability to attract these good funds and we got them at a really good cost. It's just it's higher than the average of interest bearing costs that we have just because we have a lot lower rates in certain categories, but these marginal deposits actually were good for us.

[Manan Gosalia, Head - U.S. Midcaps Banks Research at Morgan Stanley]

So from a total funding cost perspective, it sounds like it's a little bit more of a timing difference than anything else.

[Daryl Bible, CFO at M&T Bank]

It is. That's exactly right, Manon.

[Manan Gosalia, Head - U.S. Midcaps Banks Research at Morgan Stanley]

Got it. Thank you.

[Operator]

Thank you. We'll go next now to Bill Carcache at Wolfe Research.

[Bill Carcache, Equity Research Analyst at Wolfe Research]

Hey, good morning, Daryl. Following up on your diversification strategy as your CRE mix falls and you get bigger in C and I and consumer, how much room is there to increase your C and I and consumer mix from here as we look ahead?

[Daryl Bible, CFO at M&T Bank]

Yeah, Bill, we will continue to grow and our C and I and right now our CRE businesses have been shrinking. We're trying to stabilize that and grow that. We actually like the mixes that we have today. Right now, if you look at CRE, it's, I think it's under 20%, closer to 18% or 19%. So that actually has room to maybe grow a little bit from that perspective.

[Daryl Bible, CFO at M&T Bank]

C and I, you know, we are obviously trying to grow that as much as we can, you know, in our markets that we serve as well as in our specialty businesses that we operate in. I think that's really good. And we also want to continue to grow our consumer portfolios. We like the diversification that we have, and what it gives us and I think it's a good mix for us. And, you know, we'll be tilted a little bit more on the consumer side.

[Daryl Bible, CFO at M&T Bank]

So you might see us run with a little bit higher allowance ratios just because of charge offs. But net net overall, the risk adjusted spreads are strong.

[Bill Carcache, Equity Research Analyst at Wolfe Research]

Thanks. That's helpful, Daryl. And then following up on your comments around the increase in your interest bearing deposit costs, 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?

[Daryl Bible, CFO at M&T Bank]

I would say we will always continue to be consistent in trying to attract deposits at the right price from that perspective. And we've been very successful, I think we can do that and manage that with the loan growth that we're going to have. I don't view that as an issue one way or the other. Pricing up isn't really something we really do at M and T that much, to be honest with you. We give fair prices more consistently.

[Bill Carcache, Equity Research Analyst at Wolfe Research]

Helpful, thanks very much.

[Operator]

We'll go next now to Erika Najarian of UBS.

[Erika Najarian, MD & Equity Research Analyst - Large-Cap Banks & Consumer Finance at UBS Group]

Hi, good morning or afternoon. Just following up to 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 BofA operating around 11%, how much are the ratings agencies versus the regulators playing a part and how regional banks like M and T are setting their targets?

[Daryl Bible, CFO at M&T Bank]

Ratings definitely have some say in that as well as the regulators and other constituencies too. From our perspective, though, we've been on a journey to de risk the company. I think our stress capital buffer that came out really showed the progress that we made with that. And with us still continuing to shrink our criticized book, we have a shot at even improving from where we are next year. So I think we're getting more aligned with where we want to operate with and feel more comfortable.

[Daryl Bible, CFO at M&T Bank]

And when you do that, you know, the rating agencies take notice of that and acknowledge that because this is the one test that all banks take at the same time, and they can compare you against everybody else from that perspective. So that's why it's a good test out there. And I think we will continue to make great progress from that.

[Erika Najarian, MD & Equity Research Analyst - Large-Cap Banks & Consumer Finance at UBS Group]

Got it. And just to clarify, your deposit cost did increase in your response to Manon. You mentioned that you did, you know, gather, deposits at more wholesale rates that were sort of under your your funding costs. In terms of core deposit competition, how is that faring underneath the surface? And, you know, we clearly just had some headlines as you guys are running this call about, Chair Powell.

[Erika Najarian, MD & Equity Research Analyst - Large-Cap Banks & Consumer Finance at UBS Group]

You know, how should we think about deposit competition, in the scenario of more cuts versus a scenario of maybe a prolonged hold from the Fed?

[Daryl Bible, CFO at M&T Bank]

Yeah, so Erica, I mean, we have six businesses, and all of our businesses, first and foremost, come with the mindset that to attract new customers, want to get operating accounts. And that's first and foremost to us. When you look at the tracking of what our businesses do and what we generate, we generate lots of new operating accounts each and every month and every quarter that we have. And we track that and we really value that. And once you get the operating account, opens up other channels so you can get other services, other deposit products, other loan products and all that.

[Daryl Bible, CFO at M&T Bank]

But that is first and foremost the core to us. So I mean, the value of M and T, one of the biggest things we have is our core deposit franchise, and it starts with the operating accounts that we have from that. So I think that's really what we focus on. And then we pay competitive rates, you know, to our customers to get more share of the wallet over time. But getting the operating account is really first and foremost, and we've been very successful and will continue to be successful in accomplishing that.

[Erika Najarian, MD & Equity Research Analyst - Large-Cap Banks & Consumer Finance at UBS Group]

Got it. Thanks.

[Operator]

Thank you. We'll go next now to Matt O'Connor with Deutsche Bank.

[Matthew O'Connor, Analyst at Deutsche Bank]

Good morning. Most of the questions have been answered, but just looking at the criticized C and I and CRE loans on Slide 16, obviously, 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 8,500,000,000.0 or $8,400,000,000 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.

[Daryl Bible, CFO at M&T Bank]

Yeah, I would say we probably peaked a few years ago at our highest level, at least in the history that I've seen here at M and T. And we've been coming down for the last couple of years nicely. I think our goal is to continue to come down over the next year or two to levels that maybe be a little bit lower than where we operate today. But we're making great progress and doing really well from that. So I think that has been really good.

[Daryl Bible, CFO at M&T Bank]

But I think overall, we'll be back down in the next couple of years to something that's probably half of where we peaked.

[Matthew O'Connor, Analyst at Deutsche Bank]

Yes, okay. And then the modest reserve, the $20,000,000 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?

[Daryl Bible, CFO at M&T Bank]

Yeah, so we have our MTRCC business, has relationships with all the agencies. Specifically, there's one program with Fannie Mae that we have where we sell loans to them, we remain a third of the risk is on our balance sheet and two thirds is on their balance sheet. And we've been in this business since 02/2003. And to date, we have until this quarter had very minimal losses at all in this portfolio. I think over that twenty two year time period, we had 7,000,000 of net charge offs this quarter, and up until this quarter.

[Daryl Bible, CFO at M&T Bank]

This quarter, we had four clients come through, you know, and the provision is 20, but the charge off we took is closer to 15 or 16,000,000 so far that we have. And they're all very unique clients. One client focuses on manufactured housing with pads. Fannie Mae actually had a special program called pilot, where they were targeting these customers. They've now discontinued that program, and we are just basically sharing the losses with the agency on this transaction.

[Daryl Bible, CFO at M&T Bank]

Another one involved a multifamily project with a university, and the university was housing students, and it was for foreign students. And now that the need for foreign students isn't there anymore, that project isn't as profitable as it was before. And then another one is a senior living facility. And the other one was just a renovation that had bad luck and had fire and flood issues and behind schedule. So I think they're one offs.

[Daryl Bible, CFO at M&T Bank]

I think we expect to have our allowance and reserves for this business to go back to where it was before on a go forward basis. MTRCC is really important to our strategy in the CRE space. We can serve a lot of clients with permanent financing. I sell into the agencies and keep it off our balance sheet and just make it a fee income perspective for us. So we love the business.

[Daryl Bible, CFO at M&T Bank]

One quarter doesn't mean much, and we had some losses here, but long term it's been a great business and will be a great business for M and T as we move forward.

[Matthew O'Connor, Analyst at Deutsche Bank]

Okay, thank you.

[Operator]

And we'll go next now to Gerard Cassidy of RBC Capital Markets.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Hi, Daryl.

[Daryl Bible, CFO at M&T Bank]

Hey, Gerard.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Daryl, can you give us some thoughts on how you guys are looking at the expectation that stablecoins, once the Coin Act is passed down in Washington, may impact your payments business or deposit gathering. How are you guys approaching adopting a digital currency as part of your offerings for your customers?

[Daryl Bible, CFO at M&T Bank]

Yeah, so we have a group of people that are looking at this. And obviously, a stablecoin could be a payment rail that people could use potentially, and maybe do it for cross border trading if you want to. I think from our perspective, for people to adopt that, it's got to be something that's easier than what we have today, and then it's less expensive to move the money than what we have today. Some of the usage that you see happening right now is doing the off hours when banking hours are closed. So late at nights or on weekends, I think people are using this type of payment rail for that piece.

[Daryl Bible, CFO at M&T Bank]

We'll see how much it develops over time. Obviously, we will continue to monitor this, probably partner with some folks over time to participate in this space. If our customers want this product, we will be there to service and serve it to them.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Very good. And then circling back to the net charge off guidance, if I heard it correctly, it's less than 40 basis points, which is a modest improvement from the beginning of the year. And you guys pointed out that charge offs are coming in less than expected. Any color on where you're seeing the charge offs today versus what you expected at the beginning of the year? What segments of the portfolio are doing better than expected?

[Daryl Bible, CFO at M&T Bank]

Yeah, so year to date, we're 33 basis points right now. So, can it be 40? Yes, but I think that we're just very cautious right now, just because the uncertainty in the marketplace. The tariff issues are still out there. I talked about all these other risks that are still out there that could impact, and we're just being a little cautious with some of our guidance.

[Daryl Bible, CFO at M&T Bank]

We may come in and be much better than that, but right now we feel comfortable that it's under 40,000,000 but we don't really know how much under 40,000,000 yet.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

I see. And then just a quick follow-up on the sale of the commercial real estate that you guys had, the $15,000,000 gain. Any color there on the buyer or the types of loans that were sold?

[Daryl Bible, CFO at M&T Bank]

I mean, it was an out of footprint business. It was really a business decision because we really didn't have relationships with these customers. We just had loans with them because it wasn't in our footprint. And from a credit perspective, they performed very well, credit sets where we had a gain on the sale from that. But it was in the CRE space from that perspective, but we think long term, we can deploy that capacity that we sold out to our core clients within our footprint and have more wholesome relationship with that space.

[Daryl Bible, CFO at M&T Bank]

So it's an M and T thing, it's a long term trade to do the right thing.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Very good, thank you.

[Daryl Bible, CFO at M&T Bank]

Yep.

[Operator]

Thank you. And gentlemen, it appears we have no further questions today. Mr. Windlebo, I'd like to turn things back to you for any closing comments, sir.

[Steven Wendelboe, SVP - Market & IR at M&T Bank]

Again, thank you all for participating today. And as always, if clarification is needed, please contact our Investor Relations department at (716) 842-5138. Thanks.

[Operator]

Thank you. Again, ladies and gentlemen, this will conclude the M and T Bank second quarter twenty twenty five earnings conference call. Again, thanks so much for joining us, everyone, and we wish you all a great day. Goodbye.

Participants

Executives

• Steven Wendelboe, SVP - Market & IR
• Daryl Bible, CFO

Analysts

• Ken Usdin, Co-Head - Autonomous US & Senior Analyst - US Large-Cap Banks at Autonomous Research
• Steven Alexopoulos, Senior Analyst - U.S. Large Cap Banks at TD Securities
• Christopher Mcgratty, MD & Head of U.S. Bank Research at Keefe, Bruyette & Woods (KBW)
• Ebrahim Poonawala, MD & Head - North American Banks Research at Bank of America Merrill Lynch
• Peter Winter, MD & Senior Research Analyst at D.A. Davidson
• John Pancari, Senior MD & Senior Research Analyst at Evercore ISI
• Manan Gosalia, Head - U.S. Midcaps Banks Research at Morgan Stanley
• Bill Carcache, Equity Research Analyst at Wolfe Research
• Erika Najarian, MD & Equity Research Analyst - Large-Cap Banks & Consumer Finance at UBS Group
• Matthew O'Connor, Analyst at Deutsche Bank
• Gerard Cassidy, Managing Director at RBC Capital Markets