M&T Bank's Q1 2025 Earnings Call: Key Contradictions on Deposits, Margins, and Share Repurchases

These are the key contradictions discussed in M&T Bank Corporation's latest 2025 Q1 earnings call, specifically including: Deposit Growth and Mix, Net Interest Margin, Share Repurchase Plans and Economic Conditions, and CRE Loan Stability and Growth:



Strong Financial Performance:
- M&T Bank reported diluted GAAP earnings per share of $3.32 for Q1, down from $3.86 in the prior quarter.
- The decrease in earnings was primarily due to lower net interest income, which decreased by $33 million or 2% from the linked quarter.
- The decline in net interest income was primarily driven by 2 fewer days and lower average returning assets, partially offset by favorable deposit costs.

Deposit Trends and Funding Strategy:
- Average total deposits declined $3.4 billion or 2% to $161.2 billion, with a sequential decline including $0.7 billion in broker deposits.
- The decline in broker deposits was partially offset by growth in commercial and business banking, reflecting seasonal lower balances.
- The bank is focused on growing customer deposits at a reasonable cost, which can be used to pay off higher liability funding or increase liquidity.

Credit Quality and Loan Portfolio:
- Nonaccrual loans decreased $150 million or 9% to $1.5 billion, with the nonaccrual ratio decreasing by 11 basis points to 1.14%.
- The decline was driven by payoffs, charge-offs, and upgrades out of nonaccrual, reflecting improved credit quality.
- The allowance to loan ratio increased slightly, at 2 basis points to 1.63%, due togrowth in consumer loan portfolios and macroeconomic forecasting adjustments.

Fee Income Growth and Diversity:
- Fee income grew by 5% from the prior year's quarter, or 10% if excluding last year's BOG distribution.
- Growth was driven by increases in mortgage banking, service charges, trust, and brokerage fee income, demonstrating diversification across fee income categories.