Why is M&T pausing share repurchases?

The presentation states that share repurchases were paused during 1Q24. M&T will consider resuming them after the 2024 stress test results, further clarity on Basel III Endgame regulations, and a stabilizing economic outlook.

How are deposit trends and funding costs expected to affect net interest income?

Through February 2024, average total deposits were down $1.3 billion from the linked quarter to $163.4 billion, driven primarily by lower brokered deposits. The company expects the pace of interest-bearing deposit cost increases to level off, and 2024 net interest income guidance reflects higher deposit funding costs and the impact of Fed rate cuts. M&T also cites potential additional hedging actions to protect net interest income as rates decline.

What is M&T's exposure to commercial real estate and office loans?

Commercial real estate is 25% of total loans, down from 31% in 2019. Permanent office CRE represents 4% of total loans, with approximately 80% of that portfolio maturing in 2025 or later. The presentation states the portfolio's weighted average LTV is 57%, and that the New York City concentration is approximately 0.5% of total loans.

How much would a change in interest rates affect M&T's net interest income?

The presentation shows an estimated sensitivity of net interest income to a parallel rate shift during the first modeling year. For the December 2023 +200 basis point scenario, the estimated net change in net interest income is negative $18 million. The company notes it has increased its swap hedges to $27.0 billion in notional value at December 31, 2023, compared with $17.4 billion at December 31, 2022.

M&T Bank 8-K: Regulation FD

01—Abstract

Summary

Summary of the 8-K filed March 5, 2024. Cited figures are marked; the original filing is the authoritative source.

M&T Bank Corporation filed this Form 8-K on March 5, 2024 under Item 7.01 (Regulation FD Disclosure) to furnish an investor presentation posted to its Investor Relations website, attached as Exhibit 99.1.

The filing states that M&T may use the presentation in conversations with investors and analysts, and that the information is furnished rather than filed for purposes of Section 18 of the Exchange Act. The presentation, titled "Investor Update, 1st Quarter 2024," outlines 1Q24 trends and 2024 guidance. For 1Q24 through February, average total deposits were down $1.3 billion from the linked quarter to $163.4 billion^a, and average loans were up $0.8 billion to $133.5 billion.

For full-year 2024, M&T guides to taxable-equivalent net interest income of $6.7 billion to $6.8 billion^b with a net interest margin in the 3.50s, fee income of $2.3 billion to $2.4 billion, and GAAP expenses of $5.25 billion to $5.30 billion. Net charge-offs are expected at approximately 40 basis points, and share repurchases are currently paused.

The presentation also details credit and capital positioning: Common Equity Tier 1 ratio of 10.98% at December 31, 2023, with an expected build to over 11% in 1Q24, permanent commercial real estate loans of $25.3 billion^c with a weighted average LTV of 55%, and a securities portfolio of $26.9 billion. It reports 2023 net operating return on tangible common equity of 17.60% and GAAP net income of $2.741 billion for 2023.

02—Key points

Key Highlights

2024 outlook: taxable-equivalent net interest income of $6.7 billion to $6.8 billion, with NIM in the 3.50s, reflecting higher deposit funding costs and the impact of Fed cuts
2024 fee income guided to $2.3 billion to $2.4 billion, with lower rates expected to drive stronger mortgage banking revenues
2024 GAAP expense guided to $5.25 billion to $5.30 billion, including intangible amortization in the $53 million range
Share repurchases are currently paused, with resumption to be considered after 2024 stress test results, further clarity on Basel III Endgame rules, and a stabilizing economic outlook
CET1 ratio was 10.98% at December 31, 2023, and is expected to build to over 11% in 1Q24
Permanent CRE loans total $25.3 billion, a 55% weighted average LTV, with CRE at 25% of total loans, down from 31% in 2019
Full-year 2024 net charge-offs are expected at approximately 40 basis points, with 1Q24 charge-offs expected to be lumpy

03—Questions

Frequently Asked Questions

Why is M&T pausing share repurchases?
The presentation states that share repurchases were paused during 1Q24. M&T will consider resuming them after the 2024 stress test results, further clarity on Basel III Endgame regulations, and a stabilizing economic outlook.
How are deposit trends and funding costs expected to affect net interest income?
Through February 2024, average total deposits were down $1.3 billion from the linked quarter to $163.4 billion, driven primarily by lower brokered deposits. The company expects the pace of interest-bearing deposit cost increases to level off, and 2024 net interest income guidance reflects higher deposit funding costs and the impact of Fed rate cuts. M&T also cites potential additional hedging actions to protect net interest income as rates decline.
What is M&T's exposure to commercial real estate and office loans?
Commercial real estate is 25% of total loans, down from 31% in 2019. Permanent office CRE represents 4% of total loans, with approximately 80% of that portfolio maturing in 2025 or later. The presentation states the portfolio's weighted average LTV is 57%, and that the New York City concentration is approximately 0.5% of total loans.
How much would a change in interest rates affect M&T's net interest income?
The presentation shows an estimated sensitivity of net interest income to a parallel rate shift during the first modeling year. For the December 2023 +200 basis point scenario, the estimated net change in net interest income is negative $18 million. The company notes it has increased its swap hedges to $27.0 billion in notional value at December 31, 2023, compared with $17.4 billion at December 31, 2022.

04—Continue

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