M&t Bank Corporation · NYSE:MTB
M&t Bank — Q3 2021 Earnings Presentation
45 slides from M&t Bank's earnings presentation, Oct 20, 2021
Slide 1: Investor Update | Third Quarter 2021
Investor Update | Third Quarter 2021
Slide 2: Disclaimer
Disclaimer This presentation may contain forward-looking statements regarding M&T Bank In addition, future factors related to the proposed transaction between M&T and People's Corporation (“M&T”) within the meaning of the Private Securities Litigation Reform Act of United, include, among others: the
Slide 3: M&T - A High Performing Community-Focused Bank
M&T - A High Performing Community-Focused Bank • Top 20 U.S.-based, commercial bank holding company, with Financial Highlights 2Q21 national capabilities from our suite of specialty businesses and Symbol MTB Wilmington Trust Stock Price * $135.76 • 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 Oper
Slide 5: Strong Financial Results Over the Long Term
Strong Financial Results Over the Long Term ROTCE (average) GAAP EPS Growth – 20 Years (CAGR) 20.0% 5.8% 15.8% 15.2% 13.6% 12.5% 13.2% 3.9% 3.6% 2.5% 2.5% 1.2% 0.0% Peer Median, 0.6% MTB Peer MTB Peer MTB Peer Median (1.1%) Median Median (2.9%) (3.1%) (3.2%) 20 Years 10 Years 5 Years MTB Peer Peer P
Slide 6: Delivering Superior Financial Results Over Decades
Delivering Superior Financial Results Over Decades Earnings & Dividend Growth: 1983 – 2021 YTD Notes: CAGRs are from 1983 to full year 2020. 6
Slide 7: Strong Financial Results in Recent Years
Strong Financial Results in Recent Years 2017 2018 2019 2020 1H2021 Peer 1 18.3% Peer 6 24.0% MTB 19.1% Peer 2 16.8% Peer 10 25.0% Peer 11 17.5% Peer 1 20.3% Peer 2 18.7% Peer 1 13.3% Peer 1 23.1% Peer 7 16.7% Peer 2 20.2% Peer 1 18.5% Peer 6 12.8% Peer 6 21.7% Peer 4 15.8% MTB 19.1% Peer 7 18.4% MT
Slide 8: Delivering Growth Over Decades
Delivering Growth Over Decades EOP Loan and Deposit Growth per Share (2000-2Q21, CAGR) Loans: MTB Peer Median Quartile Commercial Real Estate 6% > 4% Top Commercial & Industrial 7% > 5% 2nd Residential Real Estate 5% > 3% Top Consumer 5% > 2% 2nd Total Loans 6% > 3% 2nd Deposits: Noninterest-Bearing
Slide 9: Local Scale in Key Markets in M&T Footprint
Local Scale in Key Markets in M&T Footprint People’s United transaction adds a leading market position in New England while increasing density in attractive New York markets Contiguous Branch Footprint… …Combining Market Leading Franchises… Top 10 MSAs by Deposits Top Northeast Banks by Branches(2)
Slide 10: Local Scale Leads to Superior Deposit Franchise
Local Scale Leads to Superior Deposit Franchise Noninterest Bearing Deposits / Total Deposits Total Cost of Deposits 60.0% 5.0% 2000-2021YTD Average M&T 0.99 4.5% Peer Median 1.13 50.0% Difference -0.15 Peer 4.0% Range 3.5% 40.0% M&T 3.0% Peer Median 30.0% 2.5% 2.0% 20.0% 1.5% 1.0% Peer 10.0% Range
Slide 11: Superior Growth and Pricing
Superior Growth and Pricing Total Loan Growth1 – 2Q21 YoY Deposit Growth1 – 2Q21 YoY Including PPP Excluding PPP Total Deposits Non-interest Bearing Deposits 0.8% 26% 25% (0.0%) 15% 10% (6.9%) (7.6%) MTB Peer Median MTB Peer Median MTB Peer Median MTB Peer Median Loan Yield – 2Q21 Cost of Funding Ea
Slide 12: 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 2.5% Peer Median Peer Range 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 2Q21 YTD Source: S&P Global Market Intelligence and company filings
Slide 13: 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 + guarantors • Customer selection, supported by local market knowledge • Working with customers to achieve best lo
Slide 14: 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% 1.63% Peer Median 1.20% 7.11% 7.27% 4.0% 8.0% 3.0% 6.0% 2.0% Peer Range 4.0% MTB 1.0% 2.0% Peer Median 0.0% 0.0
Slide 15: Superior Credit Performance Relative to Peers and Industry
Superior Credit Performance Relative to Peers and Industry MTB Top 4 Banks Peer Group Total Assets ($B) $3,684 $3,030 $2,328 $1,946 $559 $555 $522 $205 $186 $182 $175 $156 $151 $89 $88 $87 1991 268% 193% na 84% 92% 106% 53% 69% 111% 68% 46% 28% 66% 46% 103% 101% 1992 154% 94% na 62% 100% 99% 40% 62%
Slide 16: Efficient Operator Through the Cycles
Efficient Operator Through the Cycles Operating Efficiency Ratio 100% 2Q 2021 TTM 50.0% 55.0% 60.0% 65.0% 90% Peer 10 Peer 6 80% MTB Peer 2 70% Peer 1 Peer Peer 11 Range 60% Median Peer 5 MTB Peer 9 50% Peer 3 Peer 7 40% Peer 4 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2Q21 TT
Slide 17: 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 banks to maintain dividend Moderate dividend payout through the Great Financial Crisis Acquisitions that clearl
Slide 18: Meeting Evolving Needs: Talent Is the Greatest Differentiator
Meeting Evolving Needs: Talent Is the Greatest Differentiator Seasoned, Skilled, and Stable Increasingly Diverse New Capabilities • 24-year average tenure for executive • More than 40% of our senior • Digitally forward, locally focused management management team is diverse • Enhanced team with new s
Slide 19: 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 20: Leveraging The Tech Hub at Seneca One
Leveraging The Tech Hub at Seneca One … And Buffalo’s Burgeoning “Innovation Corridor” Job Creation & Talent Attraction About 1,500 employees will be located in the Tech Hub, with Fostering Collaboration another 500 technologists in close Designed to attract talent to Western proximity to Innovation
Slide 21: Powering Community Banking with Innovation & Digital Capabilities
Powering Community Banking with Innovation & Digital Capabilities How Customers How Customers Shop How Customers Join How Customers Bank Strive HUMAN Consideration Onboarding Servicing Growth Virtual Communication Tools: Digital Appointment Setting, Virtual Conferencing, Live Chat New Wealth Dash Cl
Slide 22: 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 Investment • Long lasting relationships • $1.8 billion in community development • Offered mortgage loan relief to >123,000 loans & investments custo
Slide 23: A Bank for Communities & Making a Difference – Our ESG Commitment
A Bank for Communities & Making a Difference – Our ESG Commitment At M&T and Wilmington Trust, our purpose has always been to make a difference in people’s lives. Serving all of our stakeholders: customers, employees, communities, vendors and shareholders is just what we do. What’s new is that now w
Slide 24: A Bank for Communities & Making a Difference – Our ESG Commitment
A Bank for Communities & Making a Difference – Our ESG Commitment 24
Slide 25: M&T – A High Performing Community-Focused Bank
M&T – A High Performing Community-Focused Bank • Top 20 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 26: Current Themes & Key Message
Current Themes & Key Message 26
Slide 27: Highly Profitable Business Model with Upside Potential from Dry Powder
Highly Profitable Business Model with Upside Potential from “Dry Powder” Despite challenging economic environment………. ………Franchise remains highly profitable Environmental Challenges ROTCE PPNR/RWA Excess Supply Chain Low Rates Cash Disruptions 10Y Avg 2021 TTM 10Y Avg 2021 TTM COVID Elevated Low Uti
Slide 28: Strong Core Profitability
Strong Core Profitability Operating Pre-tax Pre-provision Net Revenue as a % of Risk Weighted Assets – 2021 Q2 TTM 2.61% 2.36% 2.35% 2.10% 2.08% Peer Median, 1.90% 2.03% 1.90% 1.88% 1.88% 1.87% 1.87% 1.61% Peer 10 MTB Peer 1 Peer 3 Peer 7 Peer 9 Peer 4 Peer 2 Peer 6 Peer 5 Peer 11 Peer 8 Source: S&P
Slide 29: Powerful Combination with Peoples United Creates Shareholder Value
Powerful Combination with Peoples United Creates Shareholder Value (As of February 22, 2021 Announcement Date) Shared community banking purpose and commitment, with deep local presence and strong core deposit funding Scale entry into attractive New England markets similar to M&T’s Compact foot
Slide 30: Compelling Pro Forma Financial Impact
Compelling Pro Forma Financial Impact (As of February 22, 2021 Announcement Date) Immediately +0.4% Accretive to Tangible Tangible Book Value Per Share Accretion at Close Book Value The only large bank deal accretive to tangible book value since 2018 (1) 10 – 12% 7 – 8% 5 – 6% Strong, Growing EPS Ac
Slide 31: Peoples United Financial Acquisition Update Key Milestones
Peoples United Financial Acquisition Update Key Milestones Progress to • Filed all key regulatory applications • Joint proxies filed and S-4 declared effective Date • Received MTB & PBCT Shareholder approvals • Expect to close transaction in 4Q21 after regulatory approval • Systems conversions plann
Slide 32: Dry Powder from Above Peer Excess Liquidity
“Dry Powder” from Above Peer Excess Liquidity Int-Earning Deposits at Banks and Fed Funds Sold as a % of Securities as a % of Total Earning Assets Total Earning Assets 35% 33% 24% 31% 29% 27% 26% 19% 26% Peer Median 26% 24% 24% 17% 17% 17% 14% 14% Peer Median: 14% 18% 12% 14% 8% 8% 7% 5% 7% MTB Peer
Slide 33: Meaningful Dry Powder and Upside from Higher Rates
Meaningful “Dry Powder” and Upside from Higher Rates Benefit from Gradual +100 Basis Points Increase as of June 30, 20211 11.7% 10.0% 7.0% 6.3% 6.0% 5.6% 5.4% Peer Median: 5.4% 5.2% 4.7% 4.6% 3.9% 2.9% Peer 3 Peer 8 MTB Peer 10 Peer 6 Peer 7 Peer 5 Peer 4 Peer 9 Peer 1 Peer 2 Peer 11 • Strong deposi
Slide 34: Dry Powder from Reserves Above CECL Day 1
“Dry Powder” from Reserves Above CECL Day 1 Allowance for Loan and Lease Losses as a % of Loans Above CECL Day 1(1) 0.60% 0.44% 0.42% 0.32% 0.31% 0.27% 0.15% Peer Median, 0.15% 0.13% 0.13% 0.07% 0.03% 0.02% Peer 4 Peer 6 Peer 11 MTB Peer 10 Peer 2 Peer 5 Peer 7 Peer 1 Peer 8 Peer 9 Peer 3 • M&T has
Slide 35: Dry Powder from Above Peer Capital Levels
“Dry Powder” from Above Peer Capital Levels CET1 Ratio as of June 30, 2021 11.3% 10.7% 10.4% 10.4% 10.4% Peer Median: 10.3% 10.3% 10.3% 10.2% 10.2% 10.0% 9.9% 9.9% Peer 3 MTB Peer 10 Peer 7 Peer 8 Peer 6 Peer 5 Peer 2 Peer 4 Peer 11 Peer 9 Peer 1 Change in Common Equity Tier 1 Common Ratio since Dec
Slide 36: Q3 2021 Appendix
Q3 2021 Appendix M&q Bank Corporation
Slide 37: Strong Financial Results in Recent Years
Strong Financial Results in Recent Years 2015 2016 2017 2018 2019 2020 2Q '20 1Q '21 2Q '21 Superior Pre-Credit Earnings Net Interest Margin 3.14% 3.11% 3.47% 3.83% 3.84% 3.16% 3.13% 2.97% 2.77% (1) Efficiency Ratio – Operating 57.98% 56.10% 55.07% 54.79% 55.66% 56.35% 55.71% 60.33% 58.40% (1) PPNR
Slide 38: Stable Adjusted Net Interest Margin Trends
Stable Adjusted Net Interest Margin Trends Net Interest Margin • In addition to low rates, excess cash1 3.13% 3.06% balances, PPP, and swaps have been the 3.02% 3.08% 3.01% main drivers of NIM volatility during the crisis 2.97% 3.00% 2.95% 2.97% • Adjusted2 NIM has been fairly stable over the last f
Slide 39: Mortgage Banking Revenues – A Steady Contributor to Fee Income
Mortgage Banking Revenues – A Steady Contributor to Fee Income Total Mortgage Fee Mix – 2021 Q2 TTM Highlights • While M&T has benefitted from a favorable residential origination environment, more than half of our mortgage Origination Commercial: 26% revenue is comprised of fees from servicing resid
Slide 40: Total Loan Portfolio and Criticized Loan Mix – June 30, 2021
Total Loan Portfolio and Criticized Loan Mix – June 30, 2021 (Loans in $ Billions and ALLL in $ millions) $97.1 $1,575 , (1.62%) $17.4, Consumer (18%) $502 , Consumer (2.88%) RRE $16.7, (17%) $63.0 $9.7 $78 , RRE (0.47%) Investor $30.2, CRE (31%) $680 , 85%, CRE $8.2 (1.81%) Pass $53.2 Accruing Owne
Slide 41: COVID Impacted Property Types
Commercial Real Estate Performance Total Investor CRE (Permanent & Construction) as of June 30, 2021 Total CRE Criticized CRE by Property Type ($B) $8.0 Other 25% $5.2 $5.1 $4.2 $4.1 $30.2B $3.7 $7.6 $0.6 $4.0 $4.1 $2.7 75% $3.8 $3.1 $1.4 $1.2 $1.0 $0.4 $0.3 Criticized Other Hotel Health facilities
Slide 42: Reconciliation of GAAP and Non-GAAP Measures
Reconciliation of GAAP and Non-GAAP Measures 2Q21 2Q20 2Q21 Net Income 2015 2016 2017 2018 2019 2020 TTM YTD YTD $ in millions Net income $ 1,079.7 $ 1,315.1 $ 1,408.3 $ 1,918.1 $ 1,929.1 $ 1,353.2 $ 1,748.6 $ 509.9 $ 905.3 Intangible amortization* 16.2 25.9 19.0 18.1 14.4 11.0 9.3 5.8 4.1 Merger-re
Slide 43: Reconciliation of GAAP and Non-GAAP Measures
Reconciliation of GAAP and Non-GAAP Measures Average Assets 2015 2016 2017 2018 2019 2020 2Q20 YTD 2Q21 YTD $ in millions Average assets $ 101,780 $ 124,340 $ 120,860 $ 116,959 $ 119,584 $ 135,480 $ 128,513 $ 149,406 Goodwill (3,694) (4,593) (4,593) (4,593) (4,593) (4,593) (4,593) (4,593) Core depos
Slide 44: Reconciliation of GAAP and Non-GAAP Measures
Reconciliation of GAAP and Non-GAAP Measures Six Months Ended Risk Adjusted Net Interest Margin 2014 2015 2016 2017 2018 2019 2020 June 30, 2021 $ in millions Net interest income ̶ taxable-equivalent $ 2,700 $ 2,867 $ 3,497 $ 3,816 $ 4,094 $ 4,153 $ 3,884 $ 1,931 Less Net charge-offs 121 134 157 140
Slide 45: 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