Q2 2025 M&T Bank Corp Earnings Call
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Good morning everyone, welcome to the M&T Bank second quarter 2025 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. If you would like to ask a question at that time, please press star, then the number one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. In posing your question, we ask that you please pick up your handset to allow for optimal sound quality. Lastly, if you should require operator assistance today, please press star zero.
We Stand by, we're about to begin.
Speaker Change: Good morning everyone. Welcome to the MNT Bank. Second quarter 2025 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. If you would like to ask a question at that time, please press star then the number 1 on your telephone keypad. If at any point, your question has been answered. You may remove yourself from the queue, by pressing star 2.
Please be advised that today's conference is being recorded.
I would now like to hand the conference over to Mr. Steve Wendelboe, Senior Vice President, Investor Relations. Please go ahead.
Thank you, Bo, and good morning. I'd like to thank everyone for participating in M&T's second quarter 2025 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.
Speaker Change: When posing your question, we ask that. You please pick up your handset to allow for optimal, sound quality. Lastly, if you should require operator assistance, today, please, press star. Zero and please be advised that today's conference is being recorded. I would now like to hand the conference over to Mr. Steve wendelbo, senior vice president investor relations. Please go ahead sir.
Thank you, Bo and good morning. I'd like to thank everyone for participating. In mnt's second quarter 2025 earnings conference call.
Also, before we start, I'd like to mention that today's presentation may contain forward-looking information. Questionary 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 investor presentation. The appropriate reconciliations to GAAP are included in the appendix.
Cam.
Also, before we start, I'd like to mention that today's presentation may contain forward-looking information
Speaker Change: 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.
Joining me on the call this morning is M&T's Senior Executive Vice President and CFO, Daryl Bible.
Speaker Change: 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.
Now I'd like to turn the call over to Daryl. Thank you, Steve. And good morning, everyone. Our purpose continues to drive M&T's bank's success. We strive to make a difference in people's lives, serving our communities with dedication and integrity. This quarter, we continue 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.
Speaker Change: Joining me on the call. This morning is MNT senior Executive Vice President and CFO Daryl Bible.
Sterile: Now, I'd like to turn the call over to sterile.
Daryl Bible: Thank you, Steve. And good morning everyone. Our purpose continues to drive mnt's Bank success. We strive to make a difference in people's lives, serving our communities with dedication and integrity.
Daryl Bible: This quarter, we continue 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 Amplified fund and announced several high visibility sponsorships
Turning the slide forward, 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.
Daryl Bible: We remain optimistic about the ability to deliver shareholder value, and continue serving our communities with excellence.
Turn to slide 6, which shows the results for the second quarter. Our second quarter results reflect M&T's continued momentum, with several successes to highlight. First, we are pleased with a recent stress test outcome. Our SCB declined from 3.8 to 2.7%. reflecting the resiliency and strength of our earnings power and continued risk management effort. 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 credit size loss. I want to thank both our commercial and credit teams for the great job they have done to make this happen.
Daryl Bible: Turning this light for 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 6, which shows the results for the second quarter.
Our second quarter results. Reflect mnt's continued momentum with several successes to highlight
First, we are pleased with a recent stress, test outcome.
Daryl Bible: Our SCB declined from 3.8, to 2.7%.
Daryl Bible: Reflecting a resiliency and strength of our earnings power and continued risk, management efforts.
We started this effort 5 years ago to reduce our on-balance sheet CRA exposure and still serve our customers.
Daryl Bible: We are also focused on reducing our criticized loans.
We executed $1.1 billion in share repurchases in the second quarter while also growing tangible book value per share by 1%. We grew average residential mortgage and consumer loans by $1.1 billion 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 2024. Our expenses remain well controlled. We reflected in our second quarter efficiency ratio of 55.2%. as the quality continues to improve. with a $1 billion or 11% reduction in commercial credit size balance. Net charge-offs of 32 basis points also remain below our full-year expectations as we discussed in January.
Daryl Bible: I want to thank both our commercial and credit teams for a great job. They have done to make this happen.
Daryl Bible: We executed 1.1 billion in share repurchases. In the second quarter. While also going growing tangible book, value per share by 1%
We grew average Residential Mortgage and Consumer loans. By 1.1 billion combined, reflecting our Diversified business model.
Daryl Bible: Fee income continues to perform well.
Daryl Bible: Excluding security gains and losses and other notable items fee income, grew 11%. Since the second quarter of 2024,
Our expenses. Remain? Well, controlled
Daryl Bible: Reflected in our second quarter, efficiency ratio of 55.2%.
Daryl Bible: After quality continues to improve.
Daryl Bible: With a 1 billion or 11% reduction in commercial criticized balances.
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 million compared to $584 million in the late quarter. M&T's second quarter results produced an ROA and ROCE of 1.37% and 10.39% respectively. There were three notable items in the second quarter, including $17 million in catch-up premium amortization on tax exempt on obtained from the People's United Acquisition. Corresponding impact of that item on a taxable equivalent basis. This item reduced EPS by $0.09. We also had two gains reported within fee income.
Daryl Bible: Net charge offs of 32 basis points. Also remained below our full year expectations as we discussed in January.
Daryl Bible: Now, let's look at the specifics for the second quarter.
Daryl Bible: Diluted Gap earnings per share were $4.24, Optum $3.32 in the prior quarter.
Daryl Bible: Net income was 116. Million compared to 584 million in the link quarter.
Daryl Bible: Mnt's second quarter results. Produced an Roa and roce of 1.37% and 10.39% respectively.
Daryl Bible: There were 3, notable items in the second quarter, including 17 million. In ketchup, premium amortization on tax exempt, on obtained, from The People's United acquisition.
Daryl Bible: The corresponding impact of that item on a taxable equivalent basis was 20 million.
This item reduced EPS by 9 cents.
which included a $15 million pre-tax gain on sale of our Out of Footprint CRE loan portfolio and a $10 million pre-tax gain on the sale of an ICF subsidiary. Those two gains impacted EPS by seven and four cents respectively.
We also had 2 gains reported within fee income.
Daryl Bible: Which included a 15 million pre-tax gain on sale of our out of footprint, CRA loan portfolio, and a 10 million pre-tax gain on the sale of an ICS subsidiary.
Slide 7 includes supplemental reporting of M&T's results on an operating or tangible basis. M&T's net operating income was $724 million compared to $594 million in the Wink quarter. Diluted net operating earnings per share were $4.28, up from $3.38 in the prior quarter. Net operating income yielded an ROTA and an ROTCE of 1.44% and 15.54%.
Daryl Bible: Those 2 Gaines impacted the EPS by 7 and 4 cents. Respectively.
Daryl Bible: Slide 7 includes supplemental reporting of mnt's results on a net operating or tangible basis.
Daryl Bible: Mnt's net, operating income was 724 million compared to 594 million in the link quarter.
That operating earnings per year, share or $4.28 up from $3.38 in the prior quarter.
Next, we'll look a little deeper into the underlying trends that generated our second quarter results. Please turn the sliding. Taxable Equivalent Net Interest Income was $1.72 billion, an increase of $15 million, or 1%, from the late quarter. The Net Interest Margin was 3.62%, a decrease of 4 basis points from the prior quarter. Bananatrace 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 swap.
Net, operating income yielded, an Rota, and an rotce of 1.44% and 15.54%.
Next, we'll look a little deeper into the underlying trends that generated our second quarter results.
Daryl Bible: Please turn this Friday.
Daryl Bible: Taxable equivalent net. Interest income was 1.72 billion. An increase of 15 million or 1% from the link quarter.
And net interest margin was 3.62%. A decrease of 4 basis points from the prior quarter.
Daryl Bible: Banana interest margin decline was primarily driven by a negative -4 basis points related to the premium amortization impact.
Daryl Bible: -5 basis, point 3, related to higher costs, and interest bearing, deposits, and long-term debt.
Daryl Bible: -2 basis points from lower net. Free funds contribution.
Excluding the notable premium amortization, the net interest margin would be 3.66%, unchanged from the first quarter.
Daryl Bible: Partially offset by a 7 basis. Point benefit related to fixed asset repricing, including the reduction in negative carry, on our interest rate swaps.
Turn to slide 10 to talk about average loans. Average loans and leases increased $0.6 billion to $135.4 billion. Higher consumer and residential mortgage loans were partially offset by a decline in CRE balance. Commercial loans were unchanged at $61 billion, with continued growth in certain specialty segments such as C&I and Mortgage Warehouse, offset by a decline in dealer floor plan balance. However, at the end of the period, commercial loans increased $1.1 billion, driven by growth in our specialty segments, including C&I, Mortgage Warehouse, and FundBank. Similarly, we saw strong growth and total commitment. The CRE loans declined 4% to $25.3 billion, reflecting continued payoffs and paydowns.
Daryl Bible: Exploding the notable premium amortization. Bananas margin would be 3.66% unchanged from the first quarter.
Daryl Bible: Turn to slide. 10 to talk about Aboriginal loans, average, loans and leases increased 06 billion to 135.4 billion.
Daryl Bible: Higher consumer and Residential Mortgage Loans were partially offset by a decline in CRA balances.
Commercial loans were unchanged at 61 billion with continued growth. In certain special segments such as cni and mortgage Warehouse.
Daryl Bible: offset by a decline in dealer floor, plan balances
Daryl Bible: However, at the end of the period commercial loans increase 1.1 billion driven by growth and our specialty segments, including cni, mortgage warehouse and fund banking.
Daryl Bible: Similarly, we saw strong growth in total commitments.
However, we continue to see our CRE pipeline build. Residential mortgage loans increased 2% to $23.7 billion. Consumer loans grew 4% to $25.4 billion, reflecting increases in recreational finance and indirect audit loans. Combined, average residential mortgage and consumer loans grew $1.5 billion, or 3% sequentially, representing the strength of our diversified loan portfolio and business model. Loan yields increased 5 basis points to 6.11% aided by the reduction in negative carry on our interest rate swap. regarding commercial loan. Earlier this year, we implemented enhancements to our commercial credit and sales process. to improve the ability to serve customers through market sites.
Daryl Bible: The CRA Williams declined 4% to 25.3 billion, reflecting continued payoffs and paid outs.
Daryl Bible: However, we continue to see our CRA pipeline build.
Residential Mortgage Loans increased 2% to 23.7 billion.
Daryl Bible: Consumer loans, grew 4% to 25.4 billion reflecting increases in recreational, finance and indirect auto loans.
Daryl Bible: Combined, average rental mortgage, and Consumer loans, grew 1.5 billion or 3%. Sequentially representing the strength of our Diversified loan portfolio and business model loan yields increased 5 basis points to 6.11% aided by the reduction in negative carry on our interest rate swaps,
Daryl Bible: Regarding commercial loan growth.
become more responsive to customer needs. scale our risk management, and position ourselves for future growth.
Daryl Bible: Earlier this year, we implemented enhancements to our commercial credit and sales processes to improve the ability to serve customers through Market Cycles.
Daryl Bible: Become more responsive to customer needs.
Daryl Bible: Scale, our risk management.
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.
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.
Turning to slide 11. Our liquidity remains strong. At the end of the second quarter, investment securities and cash held at the Fed totaled $54.9 billion, representing 26% of total assets. Average investment securities increased $0.9 billion to $35.3 billion. The yield on investment securities decreased 19 basis points. 3.81%, primarily from the catch-up premium amortization on certain securities. Exploiting that item, the securities yield would be 4.03%, reflecting continued fixed rate repricing in the investment portfolio. The duration of the investment portfolio at the end of the quarter was 3.6 years. and the unrealized pre-tax gain on available sale portfolio was $82 million.
Daryl Bible: Turning to slide 11.
Daryl Bible: Our liquidity remains strong.
Daryl Bible: At the end of the second quarter investment security is in cash held at the FED totaled 54.9 billion.
Representing 26% of total assets.
Daryl Bible: Average investment Securities increased 0.9 billion to 35.3 billion.
The yield on investment, Securities decreased 19 basis points.
Daryl Bible: The 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: The duration of the Investment Portfolio, at the end of the quarter was 3.6 years.
four basis points to ET1 benefit, if included in regulatory capital.
Turning to slide 12, average total deposits rose $2.2 billion or 1% to $163.4 billion. Project Growth. Business Banking, Consumer, Mortgage, and Corporate Trust while average brokerage deposits declined $0.3 billion to $10.5 billion. Average non-interest bearing deposits declined $0.3 billion. $45.1 billion 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. That was partially offset by time and broker deposits.
Daryl Bible: And the unrealized pre-tax gain on available for sale. Portfolio was 82 million or 4 basis points. C1 benefit if included in regulatory capital,
Turning to slide 12.
Daryl Bible: Deposit growth.
Was across most segments, including commercial business, banking consumer, mortgage, and corporate Trust.
Wow. Average broker deposits decline 0.3 billion to 10.5 billion.
Daryl Bible: Average 9 interest bearing deposits declined. 0.3 billion.
To 45.1 billion primarily from lower. Trust demand deposits.
Daryl Bible: Interest bearing deposit costs, increase, 1 basis. Point to 2.38%.
Daryl Bible: Growth in certain high cost deposits, particularly within commercial.
Daryl Bible: Mortgage and corporate trust contributed to the deposit cost increase.
Continuing on slide 13. Non-interest income was $683 million compared to $611 million in the late 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 million, up from $118 million in the first quarter. Residential mortgage banking revenues increased $15 million sequentially to $97 million from higher servicing fee income aided by the full quarter benefit of subservicing which started in February. Trust income increased $5 million to $182 million, largely driven by higher seasonal tax preparation. Other revenues from operations increased $49 million to $191 million, reflecting $25 million in notable items mentioned earlier, along with higher loan syndication fees and merchant and credit card revenues.
That was partially offset by a time and broker deposits.
Daryl Bible: Continuing on slide 13.
Daryl Bible: Not interest income was 683 million compared to 611 million in the link quarter.
Daryl Bible: We saw a continued strength across many feet income categories.
Daryl Bible: With increases in Mortgage Banking, service charges trust and other revenues.
Daryl Bible: Mortgage Banking revenues were 130 million up from 118 million in the first quarter.
Daryl Bible: Residential Mortgage Banking revenue is increased 15 million sequentially to 97 million from higher servicing fee income. Aided by the full quarter benefit of sub-servicing which started in February
Trust income increased 5, million to 182 million. Largely driven by higher seasonal tax preparation fees.
Daryl Bible: Other revenues from operations, increased 49 million to 191 million.
Turning to slide 14. We continue to execute our expense plan. Non-interest expenses for the quarter were $1.34 billion, a decrease of $79 million from the prior quarter. Salaries and benefits decreased $74 million to $813 million, 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 link quarter.
Daryl Bible: Reflecting 25 million in notable items mentioned earlier along with higher loan, syndication fees and Merchants and credit card Revenue.
Daryl Bible: Turning to slide 14, we continue to execute our expense plan, not interest expenses for the quarter or 1.34 billion. A decrease of 79 million from the prior quarter.
Daryl Bible: Salaries and benefits decrease 74 million to 813 million.
Daryl Bible: 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, change relatively modestly from the first quarter.
Now let's turn to slide 15 for credit. Net charge-offs for the quarter totaled $108 million of 32 basis points, decreasing from 34 basis points in the late quarter. That charge-offs were relatively granular, with the five largest charges. amounting to less than $35 million in total, representing both C&I and CRE credits. Non-accrual loans increased 33 million, or 2%, to $1.6 billion. A non-accrual ratio increased two basis points to 1.16%, driven largely by higher C&I non-accruals. Concentrated in Recreational Finance Deals. In the second quarter, we reported a provision for credit losses of $125 million. compared to the net charge-offs of $108 million.
Daryl Bible: The efficiency ratio is 55.2% compared to 60.5% in the link quarter.
Now, let's turn to slide 15 for credit.
Net charge offs for the quarter totaled 108 million or 32 basis points. Decreasing from 34, basis points in the link quarter,
Daryl Bible: That charge offs were relatively granular with the 5G.
Amounting to Less Than 3 to 5 million in. Total representing both cni and CRA credits.
Daryl Bible: Not a cruel loans, increase 33 million or 2% to 1.6 billion.
The non acral ratio increased 2 basis points to 1.16%,
Daryl Bible: Driven largely by higher cni, non across.
Daryl Bible: Concentrated and recreational Finance dealers.
In the second quarter, we recorded a provision for credit, losses of 125 million.
Included within the provision for credit losses is a $20 million 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.
Daryl Bible: Compared to the net charge off of 108 million.
Daryl Bible: Included within the provision for credit losses, is a 20 million provision for unfunded credit. Commitments related to credit recourse obligations for certain. CRA loans, sold by MTR CC under the Fannie Mae dust program
Please turn to slide 16. The level of criticized loans was $8.4 billion compared to $9.4 billion at the end of March. The improvement from the link quarter was driven by an $813 million decline in CRE criticized balances. $226 million 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.
The allowance for loan losses. As a percent of total loans decreased 2 basis points to 1.61% reflecting lower levels of criticized loans.
Please turn to slide 16.
Daryl Bible: The level of criticized loans was 8.4 billion compared to 9.4 billion at the end of March.
Daryl Bible: The improvement from the link quarter was driven by 813 million declined in CRA criticized balances.
And 226 million declined in commercial.
Daryl Bible: The CRA decline was primarily within multi family, office Healthcare and construction and was driven by payoffs.
Turning to slide 19 for capital, M&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. A decline in the CET1 ratio reflects increased capital distribution. including $1.1 billion 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.
Daryl Bible: Pay downs and upgrades to pass status.
Daryl Bible: According to slide 19 for Capital MNT. Cet1 ratio at the end of the second quarter, with an estimated 10.98% compared to 11.5% at the end of the first quarter.
The decline in the cet1 ratio, reflects increased Capital distributions.
Daryl Bible: 1 billion in share repurchases. Partially offset by continued strong Capital generation.
Now turning to slide 20 for the outline. First, let's begin with the economic backdrop. The economy fared better than feared, given the market volatility and uncertainty regarding tariffs and other policies. 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 due to slowing in domestic spending, which is a risk worth watching. We see the impact of tariffs hitting categories that are most exposed to imports. Consumers are cutting back on service spending such as travel and recreation, reducing price pressure on service side, and is the counterweight to tariff.
Daryl Bible: 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,
Daryl Bible: now, turning to slide 20 for the Outlook.
Daryl Bible: First, let's begin with the economic backdrop.
Daryl Bible: The economy, fared better than feared given the market volatility and uncertainty regarding tariffs and other policies.
Daryl Bible: The economy contracted in the first quarter as domestic production gave way to a surge of imports of consumer and business Goods.
Daryl Bible: We expect a positive figure in the second quarter. Thanks import to lower Imports but also do see slowing and domestic spending which is a risk worth watching.
Daryl Bible: We see the impact of tariffs fitting categories.
Daryl Bible: 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.
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: And is the counterweight to tear us?
We acknowledge the potential for a slowing in the economy and are attuned to downside risks and uncertainty.
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 to $7.15 billion, with net interest margin averaging in the mid to high $3.6 billion. We lowered the range due to continued softness in commercial and CRE loan. We expect full year average loan growth to be $135 to $137 billion. For your average deposit, balances are expected to be $162 to $164 billion. remain focused on growing customer deposits at a reasonable cost and reducing non-core funds.
Daryl Bible: 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: With that economic backdrop, let's review our net, interest income Outlook.
We expect taxable equivalent and interest income excluding notable items to be 7 to 7.15 billion.
With net interest margin averaging in the mid to high 360s.
We lowered the range due to continued softness in commercial and CRA long growth.
We expect full year average long growth to be 135 to 137 billion.
Daryl Bible: For your average deposit. Balances are expected to be 162 to 164 billion.
Turning to Fee Income, we continue to expect non-interest income excluding notable items . . to be at the high end of our $2.5 to $2.6 billion range. A strong quarter provides increased confidence in achieving the high end of the range.
We remain focused on growing customer deposits at a reasonable cost and reducing non-core funding.
Daryl Bible: Turning to fee income.
We continue to expect non-interest income excluding notable items.
To be at the high end of our 2.5 to 2.6 billion range.
Continuing with expense. We anticipate total non-interest expenses, including intangible amortization, to be $5.4 to $5.5 billion, 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.
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 5.4 to 5.5 billion, trending toward the lower end of the range.
Regarding credit, net chargeoffs for the first half of the year were below our initial expectations. With that positive start to the year, we now expect net charge us for the full year to be less than $40,000. 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. will be opportunistic with share repurchases are also continuing to monitor the economic backdrop and asset quality trend.
Daryl Bible: 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: Regarding credit net charge offs for the first half of the Year. We're below our initial expectations.
Daryl Bible: With that positive historic to the year. We now expect net charge us for the full year to be less than 40 basis points.
Daryl Bible: 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.
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.
Daryl Bible: Where we opportunistic with share. Repurchases are also continuing to monitor the economic backdrop and asset quality trends.
To conclude on slide 22, our results underscore an optimistic investment decision. M&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. remain focused on our shareholder returns and consistent dividend growth. Finally, we are a disciplined acquirer and prudent steward of shareholder capital.
Daryl Bible: As shown on slide 21. We remain committed to our for 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.
Daryl Bible: To conclude on slide 22.
Daryl Bible: Our results underscore and optimistic investment thesis.
Daryl Bible: MNT has always been our purpose-driven organization with a successful business model that benefits, all stakeholders, including shareholders.
Daryl Bible: 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 share order returns and consistent dividend growth.
Now let's open the call to questions, before which Bo will briefly review the instructions. Thank you very much, sir.
Finally, we are disciplined Enquirer and prudent Steward of shareholder capital.
Now, let's open the call to questions before, which Bo were briefly review the instructions.
Ladies and gentlemen, at this time, if you would like to ask a question, please press star 1 on your telephone at this time. Again, if you do find that your question has been addressed, you may remove yourself from the queue at any time by pressing star 2. And we do ask that you please limit yourself to one question and one follow-up.
We'll go first this morning to Ken Usdin of Autonomous Research. Ken, please go ahead. Yeah, there you go. Hey, Daryl. Good morning. How are you?
Please press star 1 on your telephone at this time. Again, if you do find it your question has been addressed. You may remove yourself from the Queue at any time by pressing star 2 and we do ask that you please limit yourself to 1 question and 1. Follow-up question. We'll go first this morning to Ken of autonomous research Ken. Please go ahead.
There you go. Hey Daryl. Good morning.
How are you?
Daryl, I wanted to ask you to expand on the On the loan dynamics, you know, I think you did sell a portfolio of out-of-footprint CRE. I'm just wondering, you know, 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, you know, getting taken out by payouts and the like? Yeah, thanks for the question on that. And 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.
Daryl Bible: Good.
Daryl wanted to ask you to expand on the um on the loan Dynamics. Um you know, and I think you did sell a portfolio of out of footprint CRA. I'm just wondering what, you know, how close are we to getting to that bottom in CRA and and and, and are you seeing any change in terms of the, you know, underlying originations that just keeps, you know, getting taken out by, by payouts and this and like,
We had over 5 billion in the pipeline right now. So we feel pretty good that we're headed in a good direction from that perspective. If you look at when it's going to grow because of the runoff that we had this past quarter, the chances of growing late quarter in CRA would be pretty challenging. 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 in the year for that to happen.
Daryl Bible: Yeah, thanks for the question on that again. What I would tell you is, um, the CRA portfolio. I think the pipeline continues to build. We had our best month in June that we've had this year so far.
Daryl Bible: We had over 5 billion um in the pipeline right now, so we feel pretty good that we're headed in a good direction, um, from that perspective.
Daryl Bible: If you look at when it's going to grow because of the runoff that we had, you know, this past quarter the chances of growing link quarter and CRA would be pretty challenging.
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 1075 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, you know, what's the right level of capital for M&T to hold? And, you know, how do you think about this balancing act of all the excess you have versus your potential uses of Yeah, so I think it first starts with right now, you know, there's still a lot of uncertainty in the marketplace.
Daryl Bible: 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. And, and of the year to, for that to happen.
Got it and um you mentioned on Capital the good stress test results and it's nice to see that you're kind of moving that buyback activity a little forward still 1075 to 11 is still way above where you need to sit and you said that maybe you'd get towards 10 over time but you know what's the right level of capital for MNT to hold. And um you know how do you think about this Balancing Act of all the excess? You have versus your potential uses of it?
You know, 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 farther. And, you know, hopefully next year we'll get down to two and a half percent 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 are just way out there.
Daryl Bible: Yeah. Um, so I think at first starts with right now, you know, there's still a lot of uncertainty in the marketplace.
Daryl Bible: You know, we 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, and getting our criticized loans down further and you know, hopefully next year we'll get down to 2 and a half percent on a stress Capital buffer.
Daryl Bible: Um, but if you look at uh, 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.
Our long-term target that the board approved in January this year is 10%, but I think given the risks that we have right now, we think the range of $11 to $10.75 is the right place to operate.
Daryl Bible: I think those risks right now just way out there. You know, our long-term Target that the board approved in January. This year is 10%, but I think given the risk that we have right now, you know, we think the range of 11 to 1075 is the right place to operate.
Okay, got it. All right. Thanks, Daryl. Thank you.
Okay. Got it. All right, thanks Aaron.
Daryl Bible: Yeah.
We'll go next now to Stephen Alexopoulos at TD Cal. Hey Daryl, how's everything? Good, and you see... Good, good.
Speaker Change: Thank you. We'll go next now to Stephen, Alex opulus at TDC Callen.
Speaker Change: Hey Daryl, how's everything?
I wanted to start, I saw you were guiding to the high end of the fee income range. And when I look at trust, there's a nice positive surprise this quarter again, $182 million. Can you give some color what's driving that? And do we think of that as back to being high single digit, low double digit grower from here? You know, it's had a tremendous last year and it's had a tremendous this year. We are actually investing in Europe. We've started operations there and it's starting to grow now. We had some big wins this past quarter in that space.
Speaker Change: Good and you Steve.
Steve Wendelbo: Good, good good. I wanted to start just saw your guiding to the high end of the fee income range and when I look at trust, it's a nice positive surprise. This quarter again, 1082 million. Did you get some color? What's driving that? And do we think of that as back to being high single digit, low, double digit, grower from here,
And we were asked by our customers to support them in Europe. So we're just following where our customers are from that perspective. So we're very positive in our corporate trust business. I just 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. You know, and we have from origination perspective, you know, we've been investing in producers and resi. You can't see it because rates aren't really down yet, but that will happen at some point down the road.
Steve Wendelbo: You know, it it's had a tremendous last year and it's had a tremendous this year. Um, we are actually investing in Europe. Um, we've started that operations there and it's starting to grow now, but we had some big wins this past quarter in that space. So, um, and we were asked by our customers to support them in Europe. So we're just following for our customers are from that.
Steve Wendelbo: Perspective. So we're very positive in in our corporate trust business. I think it's growing really well and I have a lot of potential.
Steve Wendelbo: But if you look at the other fees that we have on the mortgage side, we have a great uh, sub-servicing business that's growing really well.
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.
But I think the highlight that we have right now, Steve, is really in treasurer management. If you look at treasurer management revenues year over year, we're up 12, 13%, which is really strong. Great.
You know, and we we have from origination perspective. You know, we've been investing in producers and 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 poor to our businesses as we operate and we'll have a lot of potential. Um but I think the Highlight that we have right now, Steve is really in treasury management. If you look at treasury management revenues year-over-year for up to 12 13%, which is really strong
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. I know you're an M&T. What's your take on this? I mean, you guys have always done a good job of, you know, M&T of growing retail deposits, lower cost commercial deposits. But do you feel more of a burning need just to get larger to compete against the mega banks, which are net growing checking counts pretty, pretty well here?
That's great and Daryl. I'd love to get your reaction to this. So we just wrapped up the PNC.
Speaker Change: The 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. I know you're at MNT.
Absolutely not, Steve. I mean, if you look at our business model, you know, 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 You know, efficiency ratios and all that, you know, we operate with one of the best efficiency ratios in the industry. You know, and 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.
What's your take on this? I mean you guys have always done a good job of you know MNT 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 pretty well here?
Speaker Change: Absolutely. Not Steve. I mean, if you look at our business model, you know, 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.
So I think that's very successful. We also look at um,
Speaker Change: You know, efficiency ratios and all that, you know, we operate with 1 of the best efficiency, ratios in the industry.
You know, we don't have to be the biggest bank to serve in our communities and all that, we just do a really great job doing that, I think everybody's happy from that. We will probably grow in 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, it's very successful, our community's customers love us, so I think it's going to continue to stay with us. I'm with you. Thanks for that color.
Speaker Change: You know and and you know while we will continue to grow in size 1 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. Um, and I think that's really key, you know, we don't have to be the biggest bank to serve and our communities and all that. We just do a really great job doing that. I think everybody's Happy from that, you know, we will probably grow in Market, maybe contiguous markets.
Over time when it's right. Um, but here again we're real compact in 1 area. Um, so you get a lot of advantages of scale in those areas too, so I we, we love our business model, it's very successful, our community's customers love us. So I, I think it's going to continue to stay with that.
I like you, thanks for that caller.
Thank you.
We'll go next now to Chris McGrady with KBC. Oh, great. Thanks for the question.
Speaker Change: Thank you. We'll go next now to Chris McGrady with KBW.
People 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 Yeah, yeah. So we got about a half a dozen major projects going on in the company. The GL is one of them. It 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.
Oh, great. Thanks for the question. Um, moving on to that Tech, that topic from a different angle, the, the expense guide, for the back, half of the year, I, I know you've had this GL cost that's, um, that's been, you know, nearing completion. I guess number 1, is that a part of the reason for the expense Improvement and 2, I believe in the past, you've talked about needing to get that done before you consider perhaps a tuck in not a not a large scale acquisition. But any any thoughts about timing where you might be ready to do a deal with it, it afforded you. Thank you.
Our loan growth isn't as much as we thought it would be for this plan year. We're still doing really well and hope that we finish the year out stronger, but it's the unselfishness and leadership that we have, our leadership team that actually made that happen.
Speaker Change: Yeah, yeah. So we got about a half, a dozen major projects going on in the company. The ghee is 1 of them, I had nothing to do with a change in guidance. It, 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 spend the expense curve down a little bit and flatten it out, um, 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. Yeah.
Speaker Change: There. Uh, we're still doing really well and hope that we finish the year out stronger. Uh but it's the unselfishness and the leadership that we have on our leadership team that actually made that happen.
Okay, thank you for that, Daryl. And just a follow-up, you know, 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, you know, not trying to go backwards on the improvement and increase the concentration of real estate? Yeah, Chris, there's a lot of optionality and things you can do with what's been developed. I mean, obviously, you could potentially sell credits, you know, once you close the transaction, you could do risk transfer trades, you can do a lot of things.
Speaker Change: Okay, thank you for that Daryl and it's a follow up. You know, you've done a lot of progress on the uh, on the CRA diversification. Just
Just do Acquisitions, uh, a lot of the small and Community Banks, that you might be talking to. They have a lot of commercial. Real estate does that um does that stop the conversation or is there perhaps ways to work around? You know not trying to go backwards on on the Improvement in increased concentration. Thanks.
But first and foremost, you know, to acquire somebody, we'll look for somebody that basically fits from with us from a culture perspective, from a credit perspective. So the hope is that, you know, 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 I that's not a concern whatsoever. It's just the cost of doing the transaction. Understood.
Speaker Change: Yeah, Chris there, there. There's a lot of optionality and things you can do, um, with, what's been developed? I mean, obviously, you could potentially sell credits, you know, once you close the transaction, you could do risk, transfer trades.
Speaker Change: Um, you can do a lot of things but first and foremost, you know, to acquire somebody will look for somebody that basically fits from with us, from a culture perspective, from a credit perspective.
Speaker Change: So the help is that, you know, we would maintain most of those relationships
Speaker Change: 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 I that's not a concern whatsoever, it's just the cost of doing the transaction.
Thanks so much.
Speaker Change: Understood. Thanks so much.
Next now to Ebrahim Poonawala of Bank of America. Hey Donald, good morning. Good morning.
Unidentified Moderator: We'll go next. Now, to Ibrahim poonawalla of Bank of America.
Ibrahim Poonawalla: Good morning.
which is still meeting. 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 360s. Just remind us, X, any changes to interest rates? Are we at a point where? incremental asset repricing is offset by funding costs like how do you Transcribed by Dylan Road heightened on September 8, 2018 Yes, so we've kept the guidance in the mid to high 360s. You know, 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.
Ibrahim Poonawalla: Good morning.
This is Maybe.
1 on, uh, the margin Outlook as we think about it.
are we at a point where
Ibrahim Poonawalla: Incremental assets repricing is offset by funding costs. Like how how do you?
Ibrahim Poonawalla: Uh, think about just uh uh mechanically how the margin should operate. Like what brings it, what could take it about 370 versus below 360? I guess X rate changes.
Yeah, I think we're optimistic that we will be growing our commercial CNI balances, you know, 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. As far as getting to 370, you know, 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, we put on a lot of those loans. And, you know, we priced higher in those areas.
Speaker Change: Yeah, so so we've kept the guidance in the mid to high 360s, you know, it's really it depends on how much commercial and CRA growth that we get is really the biggest driver even at the end of the day. Yeah, I think we're optimistic that we will be growing. Our commercial cni balances, you know, third and fourth quarter that will turn positive and we're hoping that we end the year strong with CRA as well. So we can start 26, really strong.
Speaker Change: Um, as far as getting to 370, you know, we have a lot of positives going on in the balance sheet still, um, that fixed asset repricing was really huge for us this quarter, you know, with our auto loans and RV loans that we put on and we put on a lot of those loans.
Even our residential mortgages that we booked also repriced higher if you look at the yields. So all that's really positive. For more information visit www.FEMA.gov 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 a couple of times in the prepared remarks, but we are getting positive repricing in the swap book, and you're gonna continue to see that drag on for the next four quarters.
Speaker Change: Um, and you know, we we priced higher in in those areas, even our Residential Mortgages, that we booked also are repriced higher if you look at the year olds, so, all that's really positive. The Investment Portfolio is we continue to invest, we're probably averaging about 150 basis points.
Speaker Change: On what's rolling off to, what's rolling on. We've been adding a little bit to the portfolio as well, and that which has been a positive
Speaker Change: And then our swap book.
So that's a positive. So, wow, is it possible to get to 370 this year? Yes, but it's really gonna rely on Lone Grove. Ebrahim, and right now I'm just a little cautious, which is why we're keeping it in the mid to high 360. That's helpful. Thanks for that. And I guess maybe just on CNI loan growth, and sorry if I missed it, but remind us when we think about the opportunity within sort of the people's market in Long Island, etc. Just how big is that pipeline? Like, is it a multi-year thing? I mean, it's been helpful to the bank over the last year or two.
Speaker Change: Our swap book, you know, I've mentioned in a couple of times and 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 4 quarters. So that that's a positive.
Speaker Change: So wow. Is it possible to get to 370 this year? Yes but it's it's really going to rely on loan growth Ibrahim and right now I'm just a little cautious which is why we're keeping it in the mid to high 360s.
That's hopefully, thanks for that and I guess maybe just on cni loan growth.
So if you don't mind just double clicking on CNI loan growth in some of these markets we acquired through people's. Thanks. Yeah, Ebrahim, we put, you know, 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, it's also a great market for us. We have a lot of share in that space. So that's a positive. So I think all that's really good. The key thing, though, that we got from People's, 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.
Speaker Change: And sorry if I missed it. But the remind us when we think about the opportunity within sort of the, uh, People's Market in Long Island, Etc. Just how big is the pipeline like is it a multi-year thing means? Uh it's been helpful to the bank over the last year or 2. So if you don't mind just double clicking on cni loan growth in some of these markets we acquired through people's. Thanks.
Speaker Change: Yeah, Abraham. We've put, you know, lots of people, new leaders into those markets.
If you look at this passcode or Eastern Mass was 1 of the fastest growing regions of our 27 regions that we had this quarter so it has a lot of momentum you know. Connecticut it's also a great market for us. We have a lot of share in that space so that that's a positive
And we didn't have those businesses at M&T. So we've been able over the last couple 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 people's and they continue to grow and really pay dividends for us. It's helpful.
Speaker Change: So I think all that's really good. That the key thing though that we got from people's which is kind of the whenever you do Acquisitions sometimes you get some positive and tangibles is that we got a lot of specialty businesses, like fun banking, mortgage Warehouse, corporate institutional,
Speaker Change: And we didn't have those businesses at MNT. So, we've been able over the last couple 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 people's and they continue to grow and really pay dividends for us.
Thanks, Daryl.
Speaker Change: That's helpful, thanks.
Thank you.
We'll go next now to Peter Winter, D.A. Davis. Good morning. Daryl, the consumer loan growth has really been consistently strong. I'm just wondering, would you expect some of that growth maybe to moderate just as discretionary expending is slowing and consumer prices are starting to rise as some of these tariff pass-throughs are just starting? Yeah, so, you know, the big amount of loans that we had in indirect ROV in our auto, you know, was basically just people buying ahead of before higher car prices or RV prices came on board. So that was a pull forward. But you know, I think in the RV space, talking to our leader, Mike Drury in that space, he's pretty optimistic that RV will continue.
Thank you. We'll go next now to Peter winter uh da Davidson.
Uh, good morning. Daryl. The consumer loan growth has really been consistently strong. I'm just wondering.
Speaker Change: Would you expect some of that growth maybe to moderate just as discussion, expending is slowing and consumer prices are starting to rise. Some of these terrorists are just starting.
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's down. But as manufacturers, you know, figure out where to make the cars and put them on the lots, I think that will be 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, you know, 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.
Speaker Change: Yeah. So you know the the big amount of loans that we had in indirect RV and in our Auto you know, was basically just people buying ahead of before higher car prices or RV prices came on board. So that was a pull forward. Um, but you know, I think in the RV space, I'm talking to our leader, uh, Drew Mike Drury in that space. He's pretty optimistic, that RV will continue Otto as well. Auto, it really depends on which manufacturers and what's going on on the Lots. Um, that's actually hurt us on the commercial side. Be on the floor planning because our utilization down
So that's a huge positive for us. So we have a lot of really good things going on in that space today. Got it. Thank you.
I really give a call out to um Rich McCarthy who who ran the the branches and all that is you know we actually grew HELOC for the first time in a while and our credit card book, this past quarter and they believe they're pretty optimistic for the rest of the year. So that that's a huge positive for us. So we have a lot of really good things going on in that space today.
And then separately, last quarter, you lowered the average deposit range, but mentioned that you expected to be at the high end of that new range. And I was just wondering with average deposits at $162 billion in the first half of the year, do you still expect to be at that upper end of that range of $162 to $164? You know, Peter, we were all. You know, we haven't 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 $2.2 billion.
Speaker Change: Thank you, and then separately last quarter. You've lowered the average deposit range, but mentioned that you expected to be at the high end of that new Range. Uh, and I was just wondering with average deposits.
At 162 billion, in the first half of the year, do you still expect to be at that upper end of that range of 162 to 164.
Speaker Change: You know, if Peter we will
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 on 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, you know, more than what we need there, we will pay down non-core funding, which is what we've been doing.
You know, we I I we haven't always on. We're always pay competitive rates to our customers. As they come in, we get our share from that perspective. We had a great quarter this quarter, we grew a 2.2 billion you know, of what we brought in. It was from mortgage, um, 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 I'm all about. So I I would continue to focus and and growing as much as we can as long as we grow, grow it at a competitive reasonable rate at that sense and we'll fund loans with it and then if we have not
So it's a positive, and I think we will continue to see growth in that sector. Got it. Okay. Thanks, Daryl.
That you know, more than what we need there. We will pay down non-core funding which is what we've been doing. So I it's it's a positive and I think we will continue to see growth in that sector.
Got it. Okay. Thanks Daryl.
We'll go next now to John Pancari at Evercore ISD. Morning, Daryl. Good morning, John. You know, just to go back to capital, a couple things there, good to see the acceleration in the buybacks to the $1.1 billion level up from the $600 to $700 before that. Can you maybe give us your thoughts on the... More interesting to you or would you say you're no change in your outlook on that perspective today? 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.
Thank you, we'll go next now to John pencari at evercore isi.
John Pencari: Morning Daryl.
Speaker Change: hey, good morning, John
Um, you know, just to uh, go back to Capital a couple things there, I, um, good to see the acceleration in the BuyBacks to the 1.1 billion level up from the 6 to 700 before that. Um, can you maybe give give us your thoughts on the
Speaker Change: Piece of BuyBacks through the remainder of the year. I believe you had indicated the 4 billion. Authorization could could be completed over 6 quarters, are you still on that type of pace as you look at it and then separately, I know, m&a's been brought up a couple times, and you mentioned that, uh, you may be interested when the time is right? I guess if you could just talk about, is anything about the evolving backdrop with the other regionals starting to do deals, that's made whole Bank m&a. Any more interesting to you, or would you say your no change in your outlook on that perspective? Um, today, thanks.
We don't really have anything known. Obviously, we wouldn't say anything. But, you know, when opportunities are right, and when we find a partner, you know, that really fits us for all the various reasons, you know, 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. You know, as far as the pace goes, you know, I would say we will probably operate, you know, at 11. You know, and if the economy, you know, if we get more constructive on the economy and feel good about it, we could go down to 1075 at some point down the road.
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
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 Transcripts provided by Transcription Outsourcing, LLC. Okay, got it. All right. Thanks.
Speaker Change: Anything known? Um obviously we wouldn't say anything but you know, it when opportunities are right and when we find a partner, you know, that really fits us for all the various reasons. You know, 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, you know, as far as the pace goes, you know, I would say we will probably operate you know, at 11 you know and if the economy you know if we get more constructive on the economy and feel good about it and we could go down to 107.75% of our shares outstanding in the first and second quarter. So we're buying fair amount of of stock back from that perspective and I think our investors are would be happy that we would you know, continue to do that. You know, when it makes sense from from that perspective.
And then just separately, back to the NII guide regarding the lowering of the lower bound of that guide. You discussed CRE as a factor and mentioned that already. You also mentioned CNI. Can you just give us a little bit more detail in terms of what you're seeing on the CNI front that's contributing still to the sluggishness or are you beginning to see some green shoots there? Yeah, I think if you look at CNI, I mean, our fastest growth regions, besides Eastern Mass was in Jersey and York, they were all really positive, which is really good.
Speaker Change: Okay, got it. All right. Thanks Carl. And then just separately back to the um, the knee guide. And the you regarding the lowering of the lower bound um of that guy that you discussed, CRA is a factor in mentioned that already. You also mentioned cni, if you could just give us a little bit more detail.
Speaker Change: In terms of what you're seeing on the cni front, that's contributing still to the sluggishness or you'd be getting to see some green shoots there. Thanks.
Speaker Change: Yeah, I think.
You know, I would say if we have a really good growth among many of our portfolios, pipeline and middle market continues to be robust. 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. You know, and then as far as uncertainty of paydowns and all that, you know, 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.
And I, I mean, our fastest growth regions besides eastern Mass was in Jersey and New York, they were all really positive, which is really good.
Speaker Change: you know, I would say if, if we have a really good growth among many of our portfolios Pipeline and Middle Market continues to be robust,
Speaker Change: Now.
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, and specifically C&I, Mortgage Warehouse, and Fund Banking are operating really strong, and, you know, our RMs are out there calling 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. You know, I'm just a little bit cautious, to be honest with you. I think you know that about me, John, so, but, you know, I think we will have some good green shoots, and we'll actually pay dividends.
Speaker Change: That could start to drift back up towards the end of the year. That could be a positive for us. I think that that would be good, you know? And then as far as uncertainty and pay downs and all that, you know, it's been relatively strong to date, you know, 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 business is specifically cni, or reach warehouse, and fund banking or operating really strong. And and, you know, our our, our MMS are out there calling and you know, with our customers and very active in our pipelines, both in commercial and CRA or or building and continue to to get stronger. So I think we're optimistic, you know, I'm just a little bit cautious, to be honest with you. I think you know that about me John so, but, you know, I think we will have some good green shoots.
And it will actually pay dividends.
Great. All right.
Thank you, Daryl. Thank you.
Great. All right. Thank you, Daryl.
Yeah.
We go next now to Manan Gosalia at Hey, good morning. 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&T's dividend yield is below peers. Is that more of a focus than buyback? They're both really important. I mean, when I look at, you know, how we allocate capital, you know, 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.
Unidentified Moderator: Thank you, we'll go next now to Menan gosalia at Morgan Stanley.
Menan Gosalia: Hey, good morning.
Daryl just a follow up on um, on the capital. Return question is is we think about the back half of the uh how much of a priority is raising the dividend. So I I know the board decision but mnt's dividend yield is uh below PS, is that more of a focus than BuyBacks
Uh they're both really important. I mean when when I look at, you know how we allocate Capital, you know, first and foremost we allocate to our customers organically
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. Then after dividends, we look at organic. And then after that, we buy back, buy back is probably at the end. Got it, very helpful.
Secondly um I put dividends in there to make sure we can pay a a strong growing dividend and make it repeatable over time. Um you're seeing some action out of our board this quarter. Um, so I think you will be pleased, um, when the board votes on that and we make our public, um, you know, press release on it.
Menan Gosalia: Then uh, after dividends, we will look at organic and then after that it will be buyback. Buyback is probably at the end.
And then on NIM, can you talk about what drove that five basis point headwind to NIM from higher liability costs? You know, I know you spelled out a few categories on the deposit side where costs went up queue on queue. But I was hoping you could give us some more color on that, you know, how much of that is one time in nature versus what could be some more sticky, I guess, pressure on those fund So it really wasn't sticky funding costs and all that we actually, you know, asked for and brought in these deposits.
Speaker Change: Got it uh, very helpful um and then on Nim, can you talk about what drove that 5 basis point headwind to them from higher liability costs? Um, you know, I know you you spelled out a few categories on the deposit side where costs went up uh Q on Q but I was hoping you would you could give us some more color on that. You know how much of that is 1 time in nature of
What could be some more sticky uh I guess pressure on those funding costs?
The average cost came in at around 390 to 440. You know, we do 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. 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 if 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 take it from our customers and pay them fair rates, reasonable rates from that perspective.
Speaker Change: So it it really wasn't sticky funding costs and all that we actually you know asked for and and brought in these deposits. Um they the average costs came in at around 3. 9 0 4.
So if we aren't fluid in that when you bring a deposit in, you just can't pay off a borrowing. You have to do it over time to rightsize it.
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 the 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. So from a total funding cost perspective, it sounds like it's a little bit more of a time. It is. That's exactly right, Manan. Got it.
Speaker Change: But it it came in and made sense to come out our balance sheet because it's under the funding curve. And if 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. Um we're always take it from our customers and you know, pay them Fair rates, reasonable rates from that perspective. So I think this was a great quarter for us for our ability to attract these good funds in. And we got them at a really good cost. It just it's higher than the average of the interest bearing costs that we have. Just because we have, you know, a lot lower rates in certain categories, but these marginal deposits are actually. We're we're good for us.
Thank you.
So from a total funding cost perspective, it sounds like it's a little bit more of a timing difference than anything else. It is. That's exactly right when on
Speaker Change: Got it. Thank you.
We'll go next now to Bill Carcache at Hey, good morning, Daryl. Following up on your diversification strategy as your CRE mix falls and you get bigger in C&I and consumer, how much room is there to increase your C&I and consumer mix from here as we look ahead? Yeah, Bill, you know, we will continue to. Rowan You know, our CNI and, you know, right now our CRE businesses have been shrinking. We're trying to stabilize that and grow that. You know, 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%, you know, so that actually has room to maybe grow a little bit from that perspective.
Thank you. We'll go next now to bill karate at Wolfe research.
Hey, good morning, Daryl. Um, following up on your diversification strategy as your CRA mix Falls and you get bigger and and cni and consumer, how much room is there to increase your cni and consumer mix from here as as we look ahead.
yeah, bill, you know, we will continue to
Speaker Change: To grow. And, um,
CNI, 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, so you might see us run with a little bit higher allowance ratios just because of charge-offs.
But net overall, the risk-adjusted spreads are strong. Thanks. That's helpful, Daryl.
Speaker Change: %. You know, so that actually has room to maybe grow a little bit from that perspective. Cni, 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 uh that we operate in and 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 it's a good mix for us and you know we'll be tilted a little bit more on the consumer side so you might see us run with a little bit higher allowance ratios just because the charge offs.
Speaker Change: but net, net overall, the risk adjusted spreads are are are are strong
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? 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 and I think we can do that and manage that with the loan growth that we're going to have.
Speaker Change: Thanks, that's helpful. They're all and then following up on your comments, around the increase in your interest bearing deposit cost to the extent that loan growth. We're the further Accelerate from here, is there room to let your loan growth, outpace, your deposit growth for time? Or do you envision having to pay up a little bit more for deposits?
Speaker Change: Need to be consistent and trying to attract deposits at the right price.
I don't view that as an issue one way or the other. Pricing up isn't really... Something we really do at M&T that much, to be honest with you. We give fair prices, more... Helpful. Thanks. Thanks very much.
Speaker Change: From that perspective and you know we've been very successful and I think we can do that and manage that with the loan growth that we're going to have. I I don't view that as an issue 1 way or the other um pricing up. You know is it really?
Speaker Change: Something we really do at MIT that much to be honest with you, we we we give fair prices more consistently.
Helpful. Thanks. Thanks very much.
We'll go next now to Erika Najarian of UBS. Hi, good morning, or afternoon. Just following up with a question on capital. You know, you mentioned you'd like to operate around 11%, and cited some economic and macro factors.
We'll go next now to Erika najarian of UBS.
As we think about the difference between you guys operating around 11 and like B of A operating around 11, how much are the ratings agencies versus the regulators playing a part in how regional banks like M&T are setting their, their target? You know, Brady and his team 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.
Hi, good morning or afternoon. Um, just following up to the question on Capitol, you know, you mentioned you'd like, to operate around 11% and cited some economic and macro factors. Um, as we think about the difference between you guys operating around 11 and like be of a operating around 11, how much are the ratings agencies versus the um, Regulators playing a part in how Regional Banks like MNT are setting their their targets.
So I think we're getting more aligned with where we want to operate with and feel more comfortable. And when you do that, 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. Got it.
Speaker Change: Um, you know, is it rating issues? Definitely have some say in in that as well as the regulators and, you know, other constituencies too. You know, from, uh, for our perspective, though, you know, we've been on a journey to be risk. The company. I think our stress Capital buffer that came out really shows the progress that we made with that. And, you know, with us still continuing to shrink our criticized book. Um, you know, we have a shot, you know, if even an improving from where we are, you know, next year. Um, so I I think we're getting more aligned with, you know, where we want to operate with and feel more comfortable. And when you do that, you know, the radiation, she's taking notice of that and acknowledge
Because this is the 1 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 you know, I think we will continue to make great progress from that.
And just to clarify, you know, your deposit costs did increase in your response to Manan. You mentioned that you did, you know, gather deposits at more wholesale rates that were sort of under 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. You know, how should we think about deposit competition in the scenario of, you know, more cuts versus, you know, a scenario of maybe a prolonged hold from the Fed? Yeah, so Erika, I mean...
Speaker Change: Got it and just to clarify. Um you know your your deposit costed increase in your response to Menan, you mentioned that you did, uh, you know, gather, um, deposits more wholesale rates that were sort of under your your funding costs in terms of core deposit. Competition, how is that fairing underneath the surface? And you know we clearly just had some headlines as you guys were running this call about um chair Powell. You know how should we think about deposit competition um in the um scenario of, you know, more Cuts uh versus you know, scenario of maybe a prolonged hold from the Fed.
We have six businesses, and all of our businesses, first and foremost, come with the mindset that, you know, to attract new customers, we 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, you know, 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, that opens up other channels so you can get other services, other deposit products, other loan products, and all that.
Yeah, so Erica. I mean
Speaker Change: We have 6, you know, businesses, you know, and all of our businesses first and foremost.
Speaker Change: Come with the mindset that you know, to attract new customers. We want to get operating accounts
But that is first and foremost the core to us. So, I mean, the value of M&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. Got it.
Speaker Change: And that's first and foremost to us, when you look at the tracking of what our businesses do. And, you know what we generate, we generate lots of new operating accounts each and every month and every quarter that we have, um, and we track that and we, we really value that. And once you get the operating account that opens up other channels, so you can get other services, other deposit products, other loan products, and all that, but that is first and foremost, the, the core to us.
Speaker Change: Our customers to get more share of the wallet over time. Uh, 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.
Speaker Change: Got it, thanks.
Thank you.
We go next now to Matt O'Connor.
Unidentified Moderator: Thank you, we'll go next. Now to Matt o'conor with Deutsche Bank.
Good morning. Most of the questions have been answered, but just looking at the criticized C&I and CRE loans on slide 16, obviously, this is, you know, one of the things that rating agencies look at, one of the things you look at. This big drop that you're down to 8.4 billion, how does that compare to a few years ago? I don't know if you have anything handy. I'm just trying to figure out, like, are we back to more normalized levels or pre-FedHike levels or trying to frame the current levels? Yeah, so I would say we probably peaked a few years ago, you know, at our highest level, at least in the history that I've seen here at M&T.
Good morning. Uh, most of my questions have been answered but just, uh, looking at the criticized cni and CRA loans on slide 16, obviously this is, you know, 1 of the things that rating agencies. Look, at 1 of the things we look at. Um, this big drop that you're down to, uh, 8 and a half or 8.4 billion. How does that compare to a few years ago? I don't know if you have anything handy. I'm just trying to figure out like, are we back to more normalized levels or pre-fed hike levels or trying to frame? Um, uh, the current levels. Thanks.
Speaker Change: yeah, so I would say we probably peaked a few years ago
and we've been coming down for the last couple of years nicely. I think our goal is to continue to come down, you know, over the next year or two to levels that, you know, 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 is. and really good.
Speaker Change: um you know at our highest level at least in the history that I've seen here at MNT.
Speaker Change: Um and we've been coming down for the last couple years nicely. I think our goal is to continue to come down, you know, over the next year or 2 um to levels that you know, maybe
But, you know, I think Overall, you know, we'll be back down in the next couple years to something that's probably half of where we Yeah, okay.
Be a little bit lower than where we operate today, uh, but we're making great progress and doing really well from that. So I think that is been really good.
Speaker Change: but, you know, I think
Speaker Change: Overall uh you know we'll be back down in the next couple years to something. That's probably half of our repeat.
And then the Miles Reserve, the $20 million for unfunded credit commitments, did you comment on what that related to? Or is that maybe a little conservatism, expecting growth in the future? What's that for? Yeah, so we have our MTRCC business, you know, 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. We've been in this business since 2003. And, you know, to date, we have, until this quarter, had very minimal losses at all in this portfolio.
Speaker Change: Yeah. Okay uh and then the uh minus reserve the 20 million for unfunded credit commitments. Uh, did you comment on what that related to or is that maybe a little conservatism expecting growth in the future? What's that for
Speaker Change: yeah, so we have our
Speaker Change: business and um, you know, has relationships with
Speaker Change: Specifically, there's 1 program with Fannie Mae that we have where, you know, we sell loans to them, we remain a third of the risk is, on our balance sheet, in 2 sources on their balance sheet. And we've been in this business since 2003,
I think over that 22-year time period, we had 7 million of net charge-offs this quarter, up until this quarter. This quarter, we had four clients come through, you know, and the provision's 20, but the charge-off we took is closer to 15 or 16 million 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 They've now discontinued that program, and, you know, we are just, you know, basically sharing the losses with the agency on this transaction.
Speaker Change: And you know, today we have until this quarter had a very minimal losses at all. In this portfolio. I think over that 22 year time, period. We had 7 million of net, charge offs that this quarter right? And up until this quarter, this quarter, we had 4 clients come through, you know, in the provisions 20. But the charge off we took is closer to 15 or 16 million so far that we have
Another one involved a multifamily project with a university, and the university, you know, was targeting 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 of the 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. I think we expect to have, you know, our Allowance and Reserves for this business to go back to where it was before on a go-forward basis.
Speaker Change: And they're all very unique clients. Uh, 1 client focuses on manufactured housing with paths, Fannie Mae actually had a special program called pilot where they were targeting these customers. They've now discontinued that program, um, and you know, we are just, you know, basically sharing the losses with the agency on this transaction, another 1 involves a multi-family um project with a university.
Speaker Change: And the university you know was housing students and it was for foreign students and now that the need for foreign students isn't there anymore.
MTRCC is really important to our strategy in the CRE space. You know, we can serve a lot of clients with permanent financing by selling to the agencies and keep it off our balance sheet and just make it a fee income perspective for us. So we love the business, you know, one quarter doesn't mean much and that, you know, we had some losses here, but long-term it's been a great business and will be a great business for M&T as we move forward.
Speaker Change: That project isn't as profitable as it as it was before. And then another 1 of the senior living living living facility, um and the other 1 was just a renovation that had bad luck and had fire and flood issues and behind schedule. So I think they're 1 off, I think we expect to have, you know, our um, allowance and reserves for this business, to go back to where it was before on a go forward basis. Mt RCC is really important to our strategy in the CRA space. You know, we can serve a lot of clients with permanent financing. I saw into the agencies, um, and keep it off our balance sheet and just make it a fee income perspective for us. So we love the business, you know, 1 quarter, doesn't mean it much. And and the, you know, we had some losses here but
Okay, thank you.
Long term. It's been a great business and will be a great business for M and T as we move forward.
Speaker Change: Okay, thank you.
Thanks now to Gerard Cassidy of RBC Capital. or Daryl.
and we'll go next now to Gerard Cassidy of RBC Capital markets,
Speaker Change: Daryl.
Daryl, can you give us some thoughts on how you guys are looking at the expectation that stable coins, once the Coin Act is passed down in Washington, may impact your payments business or deposit gathering? How are you guys approaching, you know, adopting, you know, a digital currency as part of your offerings for your customers? Yeah, so we have a group of people that are looking at this. And, you know, obviously, you know, stablecoin could be a payment rail that people could use potentially, you know, and maybe do it for cross-border trading, if you want to.
Speaker Change: Hey Jared.
Speaker Change: Opting, you know, a digital currency is part of your offerings for your customers.
Speaker Change: Yeah, so so we have a group.
Speaker Change: That are looking. I mean,
Speaker Change: This.
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 that it's less expensive to move the money than what we have today. You know, some of the usage that you see happening right now is doing the off hours when banking hours are closed. So late at night, or on weekends, I think people are using 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.
Obviously, you know, it sample coin could be a payment rail on that people could use potentially, you know, and you 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 that it's less expensive to move the money than what we have today. You know, some of the usage that you see happening right now is doing in the off hours, when banking hours are closed. So late at nights or on weekends. I think people are using, um, this type of payment rail for that piece.
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, you know, the charge-offs today versus what you expected at the beginning of the year? What segments of the portfolio are doing better than expected? Yeah, so year to date, we're 33 basis points right now. So, you know, you know, can it be 40? Yes. But I think we're just very cautious right now, just because the uncertainty in the marketplace, you know, the tariff issues are still out there.
Speaker Change: You know, we'll see how much it develops over time, obviously, you know, we will continue to monitor this probably partner with some folks. Over time to participate, in this space, if our customers want this product, uh, we will be there to service and, and serve it to them.
Speaker Change: Very good and then circling back, um, to the net charge of guidance. Um, if 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 the charge offs are coming in less than expected. Any color on where you're seeing, you know, the charge of safe.
Speaker Change: Versus what you expected at the beginning of the year, what segments of the portfolio are doing better than expected.
Speaker Change: 33 pace.
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. We may come in and, you know, be much better than that. But right now, we feel comfortable that it's under 40. But we don't really know how much under 40 yet.
I see.
Speaker Change: You know, you know, can it be 40? Yes. But I I think it's we're just very cautious right now. Just because the uncertainty in the marketplace, you know, the Tariff issues are still out there. I talked about all these other risks that are still out there that could impact. Um, and we're just being a little cautious with some of our guidance, uh, we may come in and, you know, be much better than that. But right now, we feel comfortable that it's under 40 but we don't really know how much under 40 yet.
Just a quick follow-up on the sale of the commercial real estate that you guys had, the $15 million gain. Any color there in the buyer or the types of loans that were sold? 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 in our footprint. And, you know, from a credit perspective, you know, they perform very well credits, that's what we got to gain on the sale from that, but it was in the CRE space.
Speaker Change: I see, and then just, uh, just just a quick follow-up on the sale of the commercial real estate that you guys had the 15 million dollar gain, um, any color there and the buyer, or the types of loans that were sold.
Speaker Change: I mean it was an out of footprint business, it was really a business decision.
Speaker Change: Um, because we really didn't have relationships with these customers, we just had loans with them.
from that perspective. But we think long term, we can deploy that Transcript by Rev.com Page of 1 Very good.
Speaker Change: Um, because it wasn't in our on our footprint and, um, you know, from other credit perspective, you know, they performed very well credits. That's why we got to gain on the sale from that, but it was in the CRA space.
Thank you.
Speaker Change: From that perspective. But we think long term we can deploy that um capacity that we sold out to our core clients. You know, within our footprint and have more wholesome relationship with that space. So it's it's, it's an M&T thing. It's a long-term trade to do the right thing.
Very good. Thank you.
Ladies and gentlemen, it appears we have no further questions today. Mr. Wendelboe, I'd like to turn things back. 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. Thank you again ladies and gentlemen. M&T Bank.
Thank you and gentlemen, it appears, we have no further questions today, Mr. Wendelbo, I'd like to turn things back to you for any closing comments, sir.
Speaker Change: 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.
Earnings Conference Call.
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Speaker Change: Thank you again, ladies and gentlemen. This will conclude the mighty Bank second quarter 2025 earnings conference call. Again, thanks so much for joining us everyone and we wish you all a great day. Goodbye.