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Chief Financial Officer Commentary

"I would like to close out 2024 by thanking our customers for their business and our fellow colleagues at M&T for making a difference in people's lives and the communities we serve. M&T enters 2025 with resolute focus on enhancing capabilities to better serve our customers by optimizing our business processes and building more scale and resiliency for continued growth."

- Daryl N. Bible, M&T's Chief Financial Officer

 

M&T consistently provides supplemental reporting of its results on a "net operating" or "tangible" basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill and core deposit and other intangible asset balances, net of applicable deferred tax amounts) and expenses associated with merging acquired operations into M&T (when incurred), since such items are considered by management to be "nonoperating" in nature.

For the year ended December 31, 2024, diluted net operating earnings per common share were $14.88, compared with $16.08 in 2023. Net operating income was $2.63 billion and $2.79 billion in 2024 and 2023, respectively. Expressed as an annualized rate of return on average tangible assets and average tangible common shareholders' equity, net operating income in 2024 was 1.30% and 14.54%, respectively, compared with 1.42% and 17.60%, respectively, in 2023.

Taxable-equivalent net interest income increased $1 million from the third quarter of 2024.

• Average interest-bearing deposits at banks decreased $1.9 billion and the yield received on those deposits declined 63 basis points.

• Average investment securities increased $2.7 billion and the rates earned on those securities increased 18 basis points.

• Average loans and leases increased $972 million while the yield received on those loans and leases decreased 21 basis points.

• Average interest-bearing deposits increased $2.7 billion while the rates paid on such deposits declined 24 basis points.

• Average borrowings declined $1.2 billion and the rates paid on such borrowings declined 32 basis points.

Taxable-equivalent net interest income increased $5 million compared with the year-earlier fourth quarter.

• Average interest-bearing deposits at banks decreased $6.6 billion and the yield received on those deposits declined 68 basis points.

• Average investment securities and average loans and leases increased $6.2 billion and $3.0 billion, respectively.

• The yield earned on average investment securities increased 75 basis points while the yield received on average loans and leases decreased 16 basis points.

• Average interest-bearing deposits rose $3.5 billion while the rates paid on those deposits decreased 26 basis points.

• Average borrowings increased $1.2 billion while the rates paid on such borrowings declined 8 basis points.

Taxable-equivalent net interest income was $6.90 billion in 2024, a decrease of $267 million, or 4%, from $7.17 billion in 2023.

• Average earning assets increased $5.8 billion to $192.8 billion in 2024 from $187.0 billion in 2023, reflecting purchases of investment securities and loan growth.

• Yields earned on average investment securities and average loans and leases increased 55 and 24 basis points, respectively.

• Average interest-bearing liabilities increased $12.0 billion reflecting a rise in interest-bearing deposits of $9.5 billion and borrowings of $2.5 billion.

• Rates paid on average interest-bearing deposits and borrowings increased 57 and 37 basis points, respectively.

Average earning assets increased $1.7 billion, or 1%, from the third quarter of 2024.

• Average interest-bearing deposits at banks decreased $1.9 billion reflecting purchases of investment securities, maturities of short-term FHLB advances and increases in average loans, partially offset by increases in average deposits.

• Average investment securities increased $2.7 billion primarily due to purchases of fixed rate agency mortgage-backed and U.S. Treasury securities during the third and fourth quarters of 2024.

• Average loans and leases increased $972 million primarily reflective of higher average consumer loans of $1.1 billion and average commercial and industrial loans and leases of $925 million, reflecting lending activities to financial and insurance industry customers and motor vehicle and recreational finance dealers, partially offset by a decrease in average commercial real estate loans of $1.2 billion.

Average earning assets increased $2.6 billion, or 1%, from the year-earlier fourth quarter.

• Average interest-bearing deposits at banks decreased $6.6 billion reflecting purchases of investment securities and loan growth, partially offset by higher average deposits and borrowings.

• Average investment securities increased $6.2 billion primarily reflecting purchases of fixed rate agency mortgage-backed and U.S. Treasury securities in 2024.

• Average loans and leases increased $3.0 billion predominantly due to higher average commercial and industrial loans and leases of $5.3 billion, reflecting growth spanning most industry types, and average consumer loans of $3.5 billion, reflecting higher average recreational finance and automobile loans, partially offset by a $5.6 billion decline in average commercial real estate loans.

Average interest-bearing liabilities increased $1.5 billion, or 1%, from the third quarter of 2024.

• Average interest-bearing deposits rose $2.7 billion, reflecting an increase of $2.3 billion in average non-brokered deposits and $485 million in average brokered deposits.

• Average borrowings decreased $1.2 billion reflecting lower average short-term borrowings from the FHLB of New York in the recent quarter.

Average interest-bearing liabilities increased $4.7 billion, or 4%, from the fourth quarter of 2023.

• Average interest-bearing deposits rose $3.5 billion reflecting a $6.0 billion increase in average non-brokered deposits, partially offset by a $2.5 billion decrease in average brokered deposits.

• Average borrowings increased $1.2 billion reflecting the issuances of senior notes and other long-term debt in 2024, partially offset by lower average short-term borrowings.

The provision for credit losses was $610 million in 2024 as compared with $645 million in 2023. That decrease reflects a decline in commercial real estate criticized loans, partially offset by growth in certain sectors of M&T's commercial and industrial and consumer loan portfolios. For 2024 and 2023, net charge-offs were $555 million and $441 million, respectively, representing .41% and .33%, respectively, of average loans outstanding. The increased level of net charge-offs in 2024 was predominantly comprised of higher commercial and industrial and consumer loan net charge-offs.

Nonaccrual loans were $1.7 billion at December 31, 2024, $236 million lower than at September 30, 2024 and $476 million lower than at December 31, 2023. The lower level of nonaccrual loans at the recent quarter end as compared with September 30, 2024 and December 31, 2023 was predominantly attributable to a decrease in commercial real estate nonaccrual loans.

Noninterest income in the fourth quarter of 2024 increased $51 million, or 8%, from 2024's third quarter.

• Mortgage banking revenues rose $8 million predominantly due to higher gains on sales of commercial mortgage loans.

• The gain on bank investment securities in the fourth quarter of 2024 reflects realized gains on the sales of Fannie Mae and Freddie Mac preferred securities.

• Other revenues from operations increased $24 million reflecting a $23 million distribution from M&T's investment in Bayview Lending Group LLC ("BLG") received in the recent quarter.

Noninterest income rose $79 million, or 14%, as compared with the year-earlier fourth quarter.

• Service charges on deposit accounts increased $10 million reflecting a rise in commercial service charges.

• Trust income increased $16 million predominantly due to higher sales and fees from the Company's global capital markets business and improved market performance in the wealth management business.

• The higher gain on bank investment securities in the fourth quarter of 2024 as compared with the fourth quarter of 2023 reflects realized gains on the sales of Fannie Mae and Freddie Mac preferred securities in the recent quarter.

• Other revenue from operations increased $31 million reflecting a $23 million distribution from M&T's investment in BLG.

Noninterest income declined $101 million, or 4%, to $2.43 billion in 2024 as compared with $2.53 billion in 2023, reflecting the sale of the Collective Investment Trust ("CIT") business in April 2023, partially offset by higher service charges on deposit accounts, non-CIT business related trust income, mortgage banking revenues, brokerage services income and distributions from M&T's investment in BLG.

Noninterest expense rose $60 million, or 5%, from the third quarter of 2024.

• Salaries and employee benefits expenses increased $15 million, inclusive of higher incentive compensation.

• Other costs of operations increased $40 million reflecting a $20 million loss on the redemption of certain of M&T's trust preferred obligations and a $27 million write-down of two vacated office facilities in the fourth quarter of 2024. Offsetting these charges was a $12 million benefit associated with the solicited election of certain participants in M&T's pension plan to accept a lump-sum distribution in the fourth quarter of 2024 in lieu of future retirement benefit payments. Other costs of operations in the third quarter of 2024 included costs incurred due to the Company's obligation under various agreements to share in losses stemming from certain litigation of Visa, Inc.

Noninterest expense decreased $87 million, or 6%, from the fourth quarter of 2023.

• Salaries and employee benefits expenses increased $66 million reflecting higher salaries expense from annual merit and other increases and a rise in incentive compensation, partially offset by lower average employee staffing levels.

• Outside data processing and software rose $11 million reflecting higher software maintenance and data processing expenses.

• Professional and other services decreased $19 million largely due to lower consulting expenses.

• The decline in FDIC assessments reflects a $197 million special assessment recorded in the fourth quarter of 2023.

• Other costs of operations increased $58 million reflecting, in the fourth quarter of 2024, the redemption of certain of M&T's trust preferred obligations and vacated facility write-downs, partially offset by a benefit related to voluntary lump-sum distributions to certain M&T pension plan participants.

For the year ended December 31, 2024, noninterest expense aggregated $5.36 billion, compared with $5.38 billion in 2023. The $20 million decrease in noninterest expenses reflected FDIC special assessments of $197 million in 2023 and $34 million in 2024, lower professional and other services expense, reflecting lower sub-advisory fees resulting from the sale of the CIT business in April 2023 and a decline in management consulting fees, partially offset by higher salaries and employee benefits expenses, reflecting annual merit and other increases and a rise in incentive compensation, and higher outside data processing and software costs.

Income Taxes

The Company's effective income tax rate was 22.8% in the fourth quarter of 2024, compared with 20.7% and 22.9% in the third quarter of 2024 and fourth quarter of 2023, respectively. Income tax expense in the third quarter of 2024 reflects a discrete tax benefit related to certain tax credits claimed on a prior year tax return. The Company's effective tax rates were 21.8% and 24.3% in 2024 and 2023, respectively. Income tax expense in 2024 as compared with 2023 reflects a discrete tax benefit claimed on a prior year tax return and a net discrete tax benefit related to the resolution of an income tax matter inherited from the acquisition of People's United.

M&T's capital ratios remained well above the minimum set forth by regulatory requirements. Cash dividends declared on M&T's common and preferred stock totaled $226 million and $35 million, respectively, for the quarter ended December 31, 2024.

The CET1 capital ratio for M&T was estimated at 11.67% as of December 31, 2024. M&T's total risk-weighted assets at December 31, 2024 are estimated to be $156.7 billion.

M&T repurchased 957,988 shares of its common stock in accordance with its capital plan during the recent quarter at an average cost per share of $206.70 resulting in a total cost, including the share repurchase excise tax, of $200 million, compared with 1,190,054 shares at an average cost per share of $166.40 and a total cost, including the share repurchase excise tax, of $200 million in third quarter of 2024. No share repurchases occurred in the fourth quarter of 2023.

Conference Call

Investors will have an opportunity to listen to M&T's conference call to discuss fourth quarter financial results today at 8:00 a.m. Eastern Time. Those wishing to participate in the call may dial (800) 347-7315. International participants, using any applicable international calling codes, may dial (785) 424-1755. Callers should reference M&T Bank Corporation or the conference ID #MTBQ424. The conference call will be webcast live through M&T's website at https://ir.mtb.com/events-presentations. A replay of the call will be available through Thursday January 23, 2025 by calling (800) 727-6189, or (402) 220-2671 for international participants. No conference ID or passcode is required. The event will also be archived and available by 3:00 p.m. today on M&T's website at https://ir.mtb.com/events-presentations.

About M&T

M&T is a financial holding company headquartered in Buffalo, New York. M&T's principal banking subsidiary, M&T Bank, provides banking products and services with a branch and ATM network spanning the eastern U.S. from Maine to Virginia and Washington, D.C. Trust-related services are provided in select markets in the U.S. and abroad by M&T's Wilmington Trust-affiliated companies and by M&T Bank. For more information on M&T Bank, visit www.mtb.com.

Forward-Looking Statements

This news release and related conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the rules and regulations of the SEC. Any statement that does not describe historical or current facts is a forward-looking statement, including statements based on current expectations, estimates and projections about M&T's business, and management's beliefs and assumptions.

Statements regarding the potential effects of events or factors specific to M&T and/or the financial industry as a whole, as well as national and global events generally, on M&T's business, financial condition, liquidity and results of operations may constitute forward-looking statements. Such statements are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond M&T's control.

Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "target," "estimate," "continue," or "potential," by future conditional verbs such as "will," "would," "should," "could," or "may," or by variations of such words or by similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict and may cause actual outcomes to differ materially from what is expressed or forecasted.

While there can be no assurance that any list of risks and uncertainties is complete, important factors that could cause actual outcomes and results to differ materially from those contemplated by forward-looking statements include the following, without limitation: economic conditions and growth rates, including inflation and market volatility; events and developments in the financial services industry, including industry conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, loan concentrations by type and industry, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; levels of client deposits; ability to contain costs and expenses; changes in M&T's credit ratings; domestic or international political developments and other geopolitical events, including international conflicts and hostilities; changes and trends in the securities markets; common shares outstanding and common stock price volatility; fair value of and number of stock-based compensation awards to be issued in future periods; the impact of changes in market values on trust-related revenues; federal, state or local legislation and/or regulations affecting the financial services industry, or M&T and its subsidiaries individually or collectively, including tax policy; regulatory supervision and oversight, including monetary policy and capital requirements; governmental and public policy changes; political conditions, either nationally or in the states in which M&T and its subsidiaries do business; the outcome of pending and future litigation and governmental proceedings, including tax-related examinations and other matters; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board, regulatory agencies or legislation; increasing price, product and service competition by competitors, including new entrants; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products and services; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; continued availability of financing; financial resources in the amounts, at the times and on the terms required to support M&T and its subsidiaries' future businesses; and material differences in the actual financial results of merger, acquisition, divestment and investment activities compared with M&T's initial expectations, including the full realization of anticipated cost savings and revenue enhancements.

These are representative of the factors that could affect the outcome of the forward-looking statements. In addition, as noted, such statements could be affected by general industry and market conditions and growth rates, general economic and political conditions, either nationally or in the states in which M&T and its subsidiaries do business, and other factors.

M&T provides further detail regarding these risks and uncertainties in its Form 10-K for the year ended December 31, 2023, including in the Risk Factors section of such report, as well as in other SEC filings. Forward-looking statements speak only as of the date they are made, and M&T assumes no duty and does not undertake to update forward-looking statements.

 

 

 

 

 

 

 

 

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SOURCE M&T Bank Corporation