M&T BANK CORP (MTB)·Q2 2025 Earnings Summary

Executive Summary

• EPS beat with cleaner expense control and fee strength; revenues (S&P definition) missed on premium amortization and slight funding cost pressure. Diluted EPS was $4.24 vs S&P consensus $4.01 (+5.7% surprise), while S&P-defined revenue of ~$2.27B came in below ~$2.39B consensus (−4.9%); company-reported revenues (NII + fees) were $2.40B .
• Mix improved: noninterest income rose 12% q/q and 17% y/y on mortgage servicing, trust, and one-time gains; efficiency ratio improved to 55.2% from 60.5% in Q1 .
• Credit trends positive: criticized loans down ~$1.0B q/q; NCOs at 0.32% (vs 0.34% in Q1; 0.41% y/y); allowance ratio edged down to 1.61% on improved CRE quality .
• 2025 outlook updated: NII range trimmed to $7.0–$7.15B (mid–high 3.60s NIM), fee income expected at high end of $2.5–$2.6B, expenses trending to low end of $5.4–$5.5B, NCOs now “<40 bps”; CET1 operating range 10.75%–11.0% .
• Capital return remains a catalyst: SCB cut to 2.7% effective Oct 1, enabling $1.1B buybacks in Q2; subsequent to quarter, MTB raised its quarterly common dividend to $1.50 (+11%) on Aug 19 .

What Went Well and What Went Wrong

What Went Well

• Strong fee momentum and mix: noninterest income +$72M q/q (+12%) on mortgage servicing, trust, and gains ($15M CRE portfolio sale; $10M subsidiary sale) .
• Cost discipline: total noninterest expense fell $79M (−6%) q/q, driving efficiency to 55.2% (from 60.5% in Q1) as seasonal comp normalized .
• Credit and criticized exposure: criticized loans −$1.0B q/q; NCO ratio at 0.32% with allowance/loans modestly lower on improved CRE quality .
• Management tone: “Net operating EPS increased +27% q/q… Net operating ROTCE +301 bps q/q” and TBVPS +1% q/q .

Example management quote: “We executed $1.1 billion in share repurchases… grew average residential mortgage and consumer loans… Fee income continues to perform well… Asset quality continues to improve with a $1 billion reduction in commercial criticized balances.”

What Went Wrong

• Headwind to NII/NIM: a $17M premium amortization catch-up on acquired munis reduced EPS by ~$0.09 and NIM by 4 bps; higher liability costs added 5 bps of NIM pressure .
• Revenue under S&P taxonomy below consensus: S&P-defined revenue fell short despite company revenues of $2.40B (NII + fee) .
• CET1 dipped 52 bps q/q to 10.98% on sizable buybacks (still robust), and guidance cut the low end of NII on softer commercial/CRE balances .

Financial Results

Summary P&L and Ratios

Noninterest Income Breakdown ($M)

Notes: Q2 included gains of $15M (out-of-footprint CRE portfolio sale) and $10M (subsidiary sale) in “Other Revenues” .

Balance and Credit KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Taxable equivalent net interest income increased +$15 million… partially offset by $20 million lower taxable-equivalent interest income resulting from an alignment of amortization periods for certain municipal bonds” .
• “We executed $1.1 billion in share repurchases… grew average residential mortgage and consumer loans… Fee income continues to perform well… Asset quality continues to improve with a $1 billion… reduction in commercial criticized balances” .
• “Excluding the notable premium amortization, the net interest margin would be 3.66%, unchanged from the first quarter” .
• “We expect TE NII… $7.0–$7.15B… Fee income… high end of $2.5–$2.6B… expenses $5.4–$5.5B trending to the low end… NCOs less than 40 bps” .

Q&A Highlights

• CRE bottoming/pipeline: ~$5B pipeline; growth later in year; out-of-footprint CRE sale was strategic redeployment toward core relationships .
• Capital & buybacks: Operate 10.75–11% CET1 given macro uncertainty; long-term target 10%; buybacks continue opportunistically .
• NIM mechanics: Mid–high 3.60s guide; path to ~3.70% depends on loan growth; fixed asset repricing and swap drag improvement are tailwinds .
• Deposits & pricing: Brought in deposits under the funding curve; cost uptick timing related; focus on operating accounts across six businesses .
• Fee engines: Trust (Europe build-out), treasury management +12–13% y/y, mortgage sub-servicing scaling .
• Credit: MTRCC/Fannie Mae DUS loss-sharing led to ~$15–16M charge-offs, $20M provision for unfunded commitments; viewed as one-offs .
• Digital payments: Monitoring stablecoin as potential rail; would partner if customer-demanded and cost-effective .

Estimates Context

Notes: Company-reported revenues (NII + fees) were $2.396B . S&P revenue taxonomy may differ from company presentation.
Values retrieved from S&P Global.

Key Takeaways for Investors

• Underlying earnings quality improved: fee engines (trust, mortgage servicing, treasury) are driving mix and efficiency; adjusted NIM held stable despite funding headwinds .
• Credit normalization remains benign: criticized loans fell ~$1B; NCOs trending below initial plan; allowance stable with CRE risk down .
• 2025 guide: modest NII trim offset by better expense and fee outlook; bias now “high end” for fees and “low end” for expense; NCO guide improved (<40 bps) .
• Capital return runway: SCB to 2.7% Oct 1 and CET1 ~11% framework support continued buybacks/dividend growth (dividend raised post-Q2) .
• Near-term stock drivers: execution on commercial/C&I growth and CRE pipeline conversion; maintaining NIM in mid–high 3.60s; continued fee momentum and expense discipline .
• Watch items: funding costs vs growth (timing effects), any macro drag from tariffs, and performance of agency CRE risk-sharing exposures .

Appendix: Additional Data Points

• One-time items in Q2: ($17M) premium amortization (−4 bps NIM; −$0.09 EPS); +$15M gain on loan portfolio sale; +$10M gain on subsidiary sale .
• Average deposits rose $2.2B q/q; interest-bearing deposit cost +1 bp q/q to 2.38% .
• Share repurchases: 6.07M shares at $175.93 avg; total cost $1.1B .