Sign in

You're signed outSign in or to get full access.

MB

M&T BANK CORP (MTB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered resilient performance: diluted EPS rose 41% year over year to $3.86, while net interest income held essentially flat sequentially at $1.728B and net interest margin compressed 4 bps to 3.58% due to lower contribution from free funds .
  • Noninterest income increased 8% qoq to $657M on stronger mortgage banking, trust, and realized gains on sales of Fannie Mae/Freddie Mac preferreds; efficiency ratio was 56.8% vs 55.0% in Q3 and 62.1% a year ago .
  • Capital strengthened: CET1 rose to an estimated 11.67%, with $200M in Q4 repurchases (958K shares at ~$206.70); criticized C&I+CRE loans fell ~$1B qoq to $9.9B and nonaccrual loans declined to 1.25% of loans .
  • 2025 outlook: taxable-equivalent NII $7.1–$7.2B, NIM in mid-3.60s, fees $2.5–$2.6B, expenses $5.4–$5.5B, NCOs ~40 bps, tax rate ~24.5%; management expects buybacks higher than Q3/Q4 2024 and is comfortable operating around 11% CET1 .

What Went Well and What Went Wrong

What Went Well

  • Fee momentum: noninterest income rose 8% qoq on stronger commercial mortgage gains, trust fees, and a $23M distribution from BLG; securities gains of $18M added ~$0.08 EPS .
  • Deposit franchise quality: average deposits grew $3.1B qoq, with interest-bearing deposit costs down 24 bps (total deposit cost down 16 bps) and mix improvement from lower time deposits .
  • Risk metrics improved: criticized loans down ~$1B qoq (to $9.9B), nonaccruals down 12% qoq to 1.25% of loans; CRE concentration reduced to ~136% of Tier 1+allowance .
  • Management quote: “NII was largely stable… Average total deposits grew by over $3B… Fee income… reached another high point… Asset quality continued to improve” – CFO Daryl Bible .

What Went Wrong

  • Margin pressure and expense headwinds: NIM fell 4 bps qoq to 3.58% as contribution of free funds declined; noninterest expense rose 5% qoq on trust preferred redemption loss ($20M) and facility write-downs ($27M), partly offset by a pension-related credit ($12M) .
  • Net charge-offs increased to 47 bps (from 35 bps in Q3), driven by two larger C&I charge-offs ($34M combined) .
  • Q3 guidance vs actual: Q4 NIM came in at 3.58% vs “low 3.60s” guided; expenses were $1.363B vs ~$1.32B guided, while NII was slightly below the “at least $1.73B” Q3 outlook (actual $1.728B) .

Financial Results

Headline metrics vs prior periods and prior quarter

MetricQ4 2023Q3 2024Q4 2024
Revenues ($USD Millions)$2,300 $2,332 $2,385
Net Interest Income ($USD Millions)$1,722 $1,726 $1,728
Noninterest Income ($USD Millions)$578 $606 $657
Provision for Credit Losses ($USD Millions)$225 $120 $140
Net Income ($USD Millions)$482 $721 $681
Diluted EPS ($USD)$2.74 $4.02 $3.86
Net Interest Margin (%)3.61% 3.62% 3.58%
Efficiency Ratio (%)62.1% 55.0% 56.8%
CET1 Ratio (%)10.98% 11.54% 11.67%

Noninterest income breakdown

Category ($USD Millions)Q4 2023Q3 2024Q4 2024
Mortgage banking revenues$112 $109 $117
Service charges on deposits$121 $132 $131
Trust income$159 $170 $175
Brokerage services$26 $32 $30
Trading & other non-hedging derivatives$11 $13 $10
Securities gains (losses)$4 $(2) $18
Other revenues from operations$145 $152 $176
Total Noninterest Income$578 $606 $657

Key performance indicators (KPIs)

KPIQ4 2023Q3 2024Q4 2024
Average Deposits ($USD Billions)$164.7 $161.5 $164.6
Interest-bearing Deposit Cost (%)2.90% 2.88% 2.64%
Total Deposit Cost (%)2.01% 2.06% 1.90%
Average Loans ($USD Billions)$132.8 $134.8 $135.7
Total Loan Yield (%)6.33% 6.38% 6.17%
Nonaccrual Loans / Total Loans (%)1.62% 1.42% 1.25%
Allowance for Credit Losses / Loans (%)1.59% 1.62% 1.61%
Net Charge-offs / Avg Loans (annualized, %)0.44% 0.35% 0.47%
Shares Repurchased (units)0 1,190,054 957,988
Share Repurchase Cost ($USD Millions)$0 $200 $200

Guidance Changes

Q4 2024 guidance (from Q3 call) vs actual results

MetricPeriodPrevious GuidanceActualChange
Taxable-equivalent NII ($USD Billions)Q4 2024≥ $1.73 $1.728 Slightly below
NIM (%)Q4 2024Low 3.60s 3.58 Lower
Total Noninterest Income ($USD Millions)Q4 2024~ $600 $657 Raised
Total Noninterest Expense ($USD Millions)Q4 2024~ $1,320 $1,363 Higher
Total Deposits ($USD Billions)Q4 2024≥ $160 $161.10 (period end) Above
Tax Rate (%)Q4 2024~24.25 22.8 Lower
Share Repurchases ($USD Millions)Q4 2024$200 $200 Maintained

2025 outlook introduced (new guidance)

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Taxable-equivalent NII ($USD Billions)FY 2025N/A$7.1–$7.2 Initiated
NIM (%)FY 2025N/AMid-3.60s Initiated
Fee Income ($USD Billions)FY 2025N/A$2.5–$2.6 Initiated
GAAP Expense ($USD Billions)FY 2025N/A$5.4–$5.5 Initiated
Net Charge-offs (% of Avg Loans)FY 2025N/A~40 bps Initiated
Tax Rate (taxable-equivalent) (%)FY 2025N/A~24.5 Initiated
Average Loans ($USD Billions)FY 2025N/A$137–$139 Initiated
Average Deposits ($USD Billions)FY 2025N/A$164–$166 Initiated
CET1 Ratio Target (%)FY 2025N/A~11 Initiated
Buybacks cadenceFY 2025$200M/quarter in H2 2024 Quarterly repurchases “higher than” Q3/Q4 2024 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Net interest margin trajectoryNIM inflected to 3.59% in Q2 on fixed-rate repricing and nonaccrual interest; guided to low 3.60s in Q4 NIM 3.58%; CFO expects NIM to increase through 2025; swap book and fixed assets repricing tailwinds Upward bias in 2025 despite Q4 dip
Deposit betas and costsDownside betas 30–40% for first cuts (Q2); cost rationalization Interest-bearing deposit costs fell 24 bps qoq; CFO sees betas reaching ~50% in 2025 Improving funding costs
CRE exposure and criticized loansCriticized CRE down $987M in Q2; $10.9B total criticized in Q3 Criticized down ~$1B to $9.9B; CRE concentration ~136%; improvement broad-based Continuing improvement, pace may moderate
Capital & buybacksAnnounced $200M per quarter repurchases in H2 2024; CET1 >11.4% Comfortable at ~11% CET1; buybacks could exceed $2B in 2025 depending on RWA/loan growth More capital return likely
Technology/investmentsElevated tech/pro services expected in H2 2024 Six major investments (data centers, cloud, GL); some are once-in-a-decade; efficiency benefits longer term Near-term spend, long-term leverage
Regulatory/stress testingSCB down 20 bps to 3.8% (Q2) Opted into 2025 stress test; aiming to reduce SCB further; supportive of transparency/tailoring Potential SCB relief
Fee businessesNoninterest income high point in Q3 ex-divestitures Trust/mortgage strong; ICS expanding to Europe; capital markets build-out Positive momentum

Management Commentary

  • Strategic focus: “M&T enters 2025 with resolute focus on enhancing capabilities… optimizing our business processes and building more scale and resiliency for continued growth.” – CFO Daryl Bible .
  • Q4 performance drivers: “Taxable equivalent net interest income was $1.74B, largely unchanged… NIM decreased 4 bps… lower contribution of free funds offset by fixed-rate repricing and higher nonaccrual interest.” – CFO .
  • Risk outlook: “We continue to see a soft landing… expect net charge-offs ~40 bps in 2025 with commercial improvement and consumer normalization.” – CFO .
  • Capital return: “We expect to reach ~11% CET1 in 2025… quarterly share repurchases are expected to be higher than the third and fourth quarter of 2024.” – CFO .

Q&A Highlights

  • Capital and buybacks: Management comfortable operating at ~11% CET1; with plan hitting expectations, buybacks could be “a little bit over $2B” in 2025, flexing with loan growth/RWA .
  • Criticized loans drivers: Q4 reduction driven mainly by payoffs/placements amid yield curve moves, plus upgrades; 2025 reductions expected to be more modest but continue; criticized base now higher quality .
  • NIM exit rate: Management reiterated upward trajectory for 2025 but declined to set a “380 bps” exit guardrail given curve uncertainty; positive repricing and swaps support .
  • Expense and investment cadence: Three once-in-decades projects (data centers, GL, commercial services/fulfillment) near completion; ongoing investment in data/analytics and digital; efficiency benefits expected over time .
  • Deposits and competition: DDA disintermediation has “run its course”; ICS drove positive noninterest-bearing growth; expect core deposit growth of 2–3% in 2025 despite competitive environment .

Estimates Context

  • Wall Street consensus estimates from S&P Global for Q4 2024 EPS/revenue were unavailable at time of analysis due to data access limits; as a result, formal beat/miss vs consensus cannot be assessed.*
  • Relative to Q3 management outlook: Q4 noninterest income and deposits exceeded guidance, while NIM and expenses came in below/above guidance, respectively .

*Values retrieved from S&P Global

Key Takeaways for Investors

  • Fee strength and deposit cost relief supported earnings quality: noninterest income +8% qoq to $657M; interest-bearing deposit cost down 24 bps and total deposit cost down 16 bps qoq .
  • Margin pressure was modest and should turn in 2025: NIM dipped to 3.58% on lower free funds; management expects NIM to increase through 2025 via swaps and fixed-asset repricing .
  • Credit improving with manageable normalization: criticized loans fell ~$1B qoq to $9.9B; nonaccruals down to 1.25%; full-year NCOs guided ~40 bps in 2025 (consumer normalization, commercial improvement) .
  • Capital return likely steps up: CET1 11.67% with $200M Q4 buybacks; management comfortable at ~11% CET1 and expects higher repurchases in 2025, potentially >$2B depending on loan growth/RWA .
  • CRE risk better contained: CRE concentration ~136%; pipelines rebuilding with anticipated modest CRE balance growth in H2 2025; key property types (hotel/retail/multifamily) performing per expectations, office remains watchlist .
  • 2025 guide implies positive operating leverage: NII $7.1–$7.2B, fees $2.5–$2.6B, expenses $5.4–$5.5B, NIM mid-3.60s; tax ~24.5%; suggests margin and fee tailwinds vs controlled cost growth .
  • Near-term trading lens: Watch for NIM trajectory vs curve, deposit beta realizations, fee durability (mortgage/trust), and clarity on buyback cadence; Q1 seasonal comp pressure noted (+$110M) before benefits of tech investments accrue .