M&t Bank Corporation · NYSE:MTB
M&t Bank — Q4 2022 Earnings Presentation
35 slides from M&t Bank's earnings presentation, Jan 19, 2023
Slide 1: Investor Update | Fourth Quarter 2022
Investor Update | Fourth Quarter 2022
Slide 2: Disclaimer
Disclaimer This presentation may contain f orward-looking statements regarding M&T Bank f uture businesses; and material dif f erences in the actual f inancial results of merger, Corporation (“M&T”) within the meaning of the Priv ate Securities Litigation Ref orm Act of acquisition and inv estment a
Slide 3: M&T – A High Performing Community-Focused Bank
M&T – A High Performing Community-Focused Bank • Top 15 U.S.-based, commercial bank holding company, with Financial Highlights 3Q22 national capabilities from our suite of specialty businesses and Symbol MTB Wilmington Trust Stock Price * $169.10 • Seasoned management team and deeply embedded cultur
Slide 4: The M&T Story: Our Operating Principles
The M&T Story: A High Performing Community-Focused Bank… ….Our Operating Principles Our purpose - To make a difference in people’s lives Our mission - We are a bank for communities ─ committed to improving the lives of our customers and all the communities we touch. Local Scale Credit Discipline Ope
Slide 5: Strong Financial Results Over the Long-Term
Strong Financial Results Over the Long-Term ROTCE (average) GAAP EPS Growth – 20 Years (CAGR) 10.8% 19.3% 15.1% 15.8% 15.9% 16.1% 14.1% 4.8% 4.2% 4.2% 3.6% 2.7% 2.5% Peer Median, 2.6% 1.4% 0.0% MTB Peer MTB Peer MTB Peer (0.3%) Median Median Median (2.2%) Peer 9 Peer 6 Peer 5 Peer 3 Peer 1 Peer 4 Pe
Slide 6: Delivering Superior Financial Results Over Decades
Delivering Superior Financial Results Over Decades Earnings & Dividend Growth: 1983 – 2021 6 Notes: CAGRs are from 1983 to 2021. FY 2021 operating EPS of $14.11 equals GAAP EPS of $13.80 plus the after-tax impact of amortization and merger-related expenses. See appendix for GAAP to non-GAAP reconcil
Slide 7: M&T's Business Model – Focus on Four Key Performance Indicators
M&T’s Business Model – Focus on Four Key Performance Indicators Net Interest Margin Operating Efficiency Ratio 5.0% 90% 3Q 2022 3Q 2022 MTB 3.68% Peer Min 50.2% 4.5% Peer Max 3.64% 80% MTB 53.6% Peer Median 3.24% Peer Median 56.2% Peer Min 2.80% Peer Max 61.5% 4.0% 70% 3.5% 60% 3.0% 2.5% 50% 2.0% 40
Slide 8: Prudent Stewards of Shareholders' Capital
Prudent Stewards of Shareholders’ Capital How we think about capital allocation Results Disciplined return criteria – lending Higher return earning asset mix and investments One of two S&P 500 banks to maintain dividend Moderate dividend payout through the Great Financial Crisis Acquisitions that cl
Slide 9: Delivering Growth Over Decades
Delivering Growth Over Decades EOP Loan and Deposit Growth per Share (2001-3Q22, CAGR) Loans: MTB Peer Median Quartile Commercial Real Estate 5% > 2% Top Commercial & Industrial 6% > 4% Top Residential Real Estate 6% > 3% Top Consumer 3% > 2% 2nd Total Loans 5% > 3% Top Deposits: Noninterest-Bearing
Slide 10: Superior Credit Losses Through Multiple Economic Cycles
Superior Credit Losses Through Multiple Economic Cycles M&T Credit Philosophy • Consistent credit standards through economic cycles • Emphasis on secured lending: cash flow + collateral + guarantees • Customer selection, supported by local market knowledge • Working with customers to achieve best lo
Slide 11: Best-In-Class Credit NCO Ratios Across All Portfolios
Best-In-Class Credit NCO Ratios Across All Portfolios C&I Construction 6.0% Avg Max Range 12.0% Avg Max Range 5.0% MTB 0.39% 1.27% 1.09% 10.0% MTB 0.46% 2.47% 2.70% Peer Median 0.53% 1.79% 1.64% Peer Median 1.20% 7.11% 7.27% 4.0% 8.0% 3.0% Peer Range 6.0% 2.0% Peer Median 4.0% 1.0% M&T 2.0% 0.0% 0.0
Slide 12: Local Scale in Key Markets in M&T Footprint
Local Scale in Key Markets in M&T Footprint Contiguous Branch Footprint… …With Market Leading Franchises… Top 10 MSAs by Deposits Top Northeast Banks by Branches(1) Rank Branches Buffalo 1 1 Bank of America Corp. 1,094 Rochester 1 2 JPMorgan Chase & Co. 1,027 Rochester Bridgeport 2 3 M&T Bank Corp.
Slide 13: Local Scale Leads to Superior Deposit Franchise
Local Scale Leads to Superior Deposit Franchise Noninterest Bearing Deposits / Total Deposits Total Cost of Deposits 60% 3.5% 2002-3Q22 Average M&T 0.73% Peer Median 0.89% 50% 3.0% Difference -0.16% 2.5% 40% 2.0% 30% 1.5% 20% 1.0% Peer Range 10% Peer Median 0.5% M&T 0% 0.0% 2003 2005 2008 2010 2012
Slide 14: Higher Returns Relative to Risk
Higher Returns Relative to Risk Risk Adjusted Net Interest Margin (NII less NCO % of AEA) 4.0% 3.5% 3.0% MTB Peer Median Peer Range 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD 2022 14 Source: S&P Global Market Intelligence and company
Slide 15: Meeting Evolving Needs: Talent Is the Greatest Differentiator
Meeting Evolving Needs: Talent Is the Greatest Differentiator Seasoned, Skilled, and Stable Increasingly Diverse New Capabilities • 19-year average tenure for executive • More than 40% of our Board of • Digitally forward, locally focused management Directors team is diverse • Enhanced team with new
Slide 16: Delivering Innovative Capabilities as Technology Transformation Continues
Delivering Innovative Capabilities… …as Technology Transformation Continues Our Technology transformation is centered around Three Key Dimensions {Talent} •Pivoted to mostly insourced technologists •Increasing Technology Development Program (TDP) hires •Perpetually upskilling and reskilling our tech
Slide 17: Our Focus on Customers, Communities and Innovation Pays Dividends
Our Focus on Customers, Communities and Innovation Pays Dividends When our customers and communities succeed, we all succeed Customer Focused Community Engagement • Long lasting relationships • $1.5 billion in community development • Offered pandemic-related mortgage loan loans, lines of credit, & i
Slide 18: A Bank for Communities & Making a Difference – Our ESG Commitment
A Bank for Communities & Making a Difference – Our ESG Commitment ESG Accomplishments and Highlights since Last Year Established Renewable Energy and Defined Board and Management Carbon Reduction Targets ESG Governance 2021 ESG report included • Inaugural TCFD(1) disclosure • Second SASB(2) report J
Slide 19: M&T – A High Performing Community-Focused Bank
M&T – A High Performing Community-Focused Bank • Top 15 U.S.-based, commercial bank holding company, with national capabilities from our suite of specialty businesses and Wilmington Trust • Seasoned management team and deeply embedded culture • Superior profitability and earnings and dividend growth
Slide 20: Current Themes & Key Messages
Current Themes & Key Messages 20
Slide 21: Performance Through Unprecedented Environment Over Last 3 Years
Performance Through Unprecedented Environment Over Last 3 Years Environmental Challenges M&T’s Response (2020/2021) Outperformance (1) ROTCE People’s United Excluding AOCI Low Supply Chain Acquisition 15.2% 15.6% 15.1% 14.9% Rates Disruptions MTB Peer Median MTB Peer Median Built Capital PPNR / RWA
Slide 22: Managed Through Pandemic; Work Deploying Dry Powder Continues
Managed Through Pandemic; Work Deploying “Dry Powder” Continues 2020 and 2021 2022+ Status • Closed merger on April 1 People’s • Announced acquisition of like-minded • Completed system conversion over Labor Day banking franchise with contiguous weekend United footprint • Cultural integration Acquisi
Slide 23: Work Toward Building Optimal Balance Sheet Structure Continues
Work Toward Building Optimal Balance Sheet Structure Continues Optimizing Balance Sheet to Align with Operating Principles % of Interest Earning Assets Const. & Reducing Capital Intensive CRE 7% (2%) 5% Dev. ▪ Reduced legacy Construction and Investment Real Estate 15% CRE Perm anent 15% ▪ People’s c
Slide 24: Prudent Liquidity Management Protected Tangible Common Equity
Prudent Liquidity Management Protected Tangible Common Equity Lower AOCI Hit Drives Measured and Thoughtful Deployment of Excess Liquidity TBV Per Share Outperformance Securities and Short-Term Investments % of Earning Assets Decline in TBV Per Share since 2021 2Q 2020 3Q 2022 (10%) (30%) (50%) MTB
Slide 25: Solid Performance in Key Metrics against Peers
Solid Performance in Key Metrics against Peers ROTCE % (ex-AOCI) Net Interest Margin Efficiency Ratio PPNR / RWA NCO / Loans 3Q22 3Q22 3Q22 3Q22 3Q22 Peer 1 MTB 3.7% Peer 7 MTB 2.6% Peer 7 Peer 2 Peer 3 Peer 3 Peer 3 Peer 3 MTB 17.2% Peer 9 Peer 4 Peer 2 Peer 10 Peer 3 Peer 7 MTB 53.6% Peer 4 Peer 2
Slide 26: Q4 2022 Trends
Q4 2022 Trends Customer Deposit Rate Sensitivity Accelerates ▪ Customer rate sensitivity behavior changing rapidly, driving betas higher ▪ Commercial customers shifting mix to higher yielding sweep products from demand deposits ▪ Consumer customers shifting mix to higher yielding CD's from savings/M
Slide 27: Q4 2022 Outlook
Q4 2022 Outlook 3Q22 4Q22 Actual Outlook Comments - Q/Q int. bearing deposit beta at higher end of 20% to 30% range Net Interest Income Up 8% to 10% $1,691 Million - Higher wholesale funding levels Taxable Equivalent Q/Q - NIM near 4.05% Income / Expense - Discontinuation of M&T Insurance Agency ("M
Slide 28: Appendix
Q3 2022 (Appendix Ma&mT Bank Corporation
Slide 29: Key Ratios
Key Ratios 3Q '21 3Q '22 2016 2017 2018 2019 2020 2021 YTD YTD Superior Pre-Credit Earnings Net Interest Margin 3.11% 3.47% 3.83% 3.84% 3.16% 2.76% 2.83% 3.15% (1)(2) Efficiency Ratio – Operating 56.10% 55.07% 54.79% 55.66% 56.35% 59.02% 58.79% 58.11% (1) PPNR 2,248 2,492 2,640 2,723 2,570 2,380 1,7
Slide 30: Net Interest Margin Benefitting from Higher Rates
Net Interest Margin Benefitting from Higher Rates Net Interest Margin 3.68% • M&T managed a relatively stable NIM, excluding PPP and excess liquidity, during low-rate environment 3.01% • Higher rates and patient liquidity deployment aided M&T in 2022 with 3Q NIM expansion of 2.74% 2.65% 67 bps – top
Slide 31: Mortgage Banking Servicing Adds Stability to Revenues
Mortgage Banking Servicing Adds Stability to Revenues Total Mortgage Fee Mix – 3Q22 (TTM) Highlights • Mortgage banking revenues serve as a natural hedge in Com m ercial: 34% different environments and can offset reductions in spread Servicing revenues 17% • Residential and commercial mortgage servi
Slide 32: Reconciliation of GAAP and Non-GAAP Measures
Reconciliation of GAAP and Non-GAAP Measures 3Q '21 3Q '22 Net Income 2016 2017 2018 2019 2020 2021 YTD YTD $ in millions Net income $ 1,315.1 $ 1,408.3 $ 1,918.1 $ 1,929.1 $ 1,353.2 $ 1,858.7 $ 1,400.8 $ 1,226.3 Intangible amortization* 25.9 19.0 18.1 14.4 11.0 7.5 6.1 29.2 Merger-related items* 21
Slide 33: Reconciliation of GAAP and Non-GAAP Measures
Reconciliation of GAAP and Non-GAAP Measures 3Q '21 3Q '22 Average Assets 2016 2017 2018 2019 2020 2021 YTD YTD $ in millions Average assets $ 124,340 $ 120,860 $ 116,959 $ 119,584 $ 135,480 $ 152,669 $ 150,967 $ 187,395 Goodwill (4,593) (4,593) (4,593) (4,593) (4,593) (4,593) (4,593) (7,214) Core d
Slide 34: Reconciliation of GAAP and Non-GAAP Measures
Reconciliation of GAAP and Non-GAAP Measures Average Common Equity ex AOCI 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 $ in millions Average Common Equity $14,582 $14,470 $14,703 $14,823 $14,963 $15,077 $15,321 $15,614 $15,863 $16,144 $24,079 $23,6
Slide 35: M&T Peer Group
M&T Peer Group Citizens Financial Group, Inc. M&T Bank Corporation Comerica Incorporated PNC Financial Services Group, Inc. Fifth Third Bancorp Regions Financial Corporation First Horizon National Corporation Truist Financial Corporation Huntington Bancshares Incorporated U.S. Bancorp KeyCorp Zions