M&T Bank Corporation
CEO : Mr. Rene F. Jones CPA
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 56.9% YoY | 101.0% | 21.7% | 2023-01-19 |
Darren King says,
Completion of People’s United Acquisition
- M&T closed the acquisition of People’s United, the largest in its history.
- The financial benefits of this combination are consistent to slightly better than expectations at announcement.
Balance Sheet Repositioning
- M&T repositioned the balance sheet to deploy excess liquidity, reducing interest-bearing deposits held at banks from $41.9B in 2021 to under $25B in 2022.
- Deploying excess liquidity led to a reduction in asset sensitivity and protected M&T’s net interest margin from future rate shocks.
Capital Distribution
- M&T resumed common share repurchases in 2022 and has repurchased $1.8B in common stock, representing 6% of outstanding shares.
- Common dividend grew by 7% in 2022 representing the sixth year of consecutive increases.
Financial Results
- Diluted GAAP earnings per common share were $11.53 in 2022, down 16% compared to $13.80 in 2021.
- Net income was $1.99B compared with $1.86B in the prior year, improved by 7%.
- Net operating income which excludes the after-tax impact from the amortization of intangible assets as well as merger-related expenses was $2.47B during 2022, up 30% compared to $1.9B in the prior year.
Fourth Quarter Results
- Diluted GAAP earnings per common share were $4.29 in the fourth quarter of 2022, up 22% compared to $3.53 in the third quarter of 2022.
- M&T’s net operating income for the fourth quarter was $812M, up 16% from the $700M in the linked quarter.
- Taxable equivalent net interest income was $1.84B in the fourth quarter of 2022, an increase of $150M or 9% from the linked quarter.
Darren King says,
Long-Term Outlook for Net Interest Margin
- The long-term outlook for the net interest margin has not changed.
- The mix of funding that is deposits or wholesale funding drives the margin over the long run.
- Deposit pricing has not kept up to rates on loans, which is a unique time right now.
- The margin is expected to move back down into normal historic ranges by ’24 and ’25.
Expense Structure
- The bank does not want to set up the expense structure assuming that margins like that are going to hold.
- Recent history suggests that those kinds of margins are not likely.
- The bank does not want to build the bank so that it’s counting on those kinds of margins for the expense run rate that they have.
Q & A sessions,
Strategies to protect NIM
- Increase size of securities portfolio
- Shift the duration by slowing down taking duration in mortgage portfolio and taking duration in securities portfolio
- Term funding to lock in rates
- Repricing of deposits to combat declining rates
Commercial Real Estate Portfolio
- Reduction in construction portfolio
- Hotel criticized balances peaked two or three quarters ago, but has now reduced below 50%
- Healthcare and office categories are being watched, with occupancy rates in healthcare affected by the lack of staff
- Office portfolio at around 20% criticized, with leasing renewals and sign-ups being observed
Expectations for Charge-Offs
- Concerns for charge-offs in some portfolios
- Commercial and consumer mortgage portfolios expected to slow down due to interest rates and pace of activity
Growth in 2023
- Strong growth expected in C&I portfolio with People’s impact
- Equipment finance business continues to show steady growth
- Small business and business banking segment being focused on for growth opportunities
Net Interest Margin Outlook
- Outllook for the long term margin has not changed
- Deposit pricing has not kept up with rates on loans, and will eventually close
- Margin expected to move back down into normal historic ranges by 2024-2025
No bad stock 