MTB - Earnings call transcript Q2 2019

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Operator

Good morning. My name is Samantha, and I will be your conference operator today. At this time, I would like to welcome everyone to the M&T Bank Q2 2019 Earnings Call. [Operator Instructions] Thank you.

I would now like to turn the call over to Don MacLeod, Director of Investor Relations. ahead. go Please

Don MacLeod

webcast. and you Samantha, XXXX everyone. like through I'd conference Thank for good participating thank the and telephone, all both quarter in to call you, by morning M&T's earnings second

this and If you have from financial may link read the today's our the then Presentations website, it with the and by and morning, clicking Investor we along on earnings access tables you release not link. issued Events schedules www.mtb.com, on and Relations

that mention the to made like statements. forward-looking to a I'd SEC start, we those on forward-looking participants to before call filings, this relating M&T encourages found for contain complete our Forms banking comments discussion might refer M&T Also during and to X-K, of to including XX-Q Bank XX-K statements Corporation. industry and

to introduce Chief our Darren Financial King. I'd Now like Officer,

Darren King

Thanks Don, everyone. good and morning

M&T's this low mortgage We to the of growth particularly favorable banking trends. release, As prior Loan the in income with quarter quarter. saw with and noted expectations both quarter press line continuation the continues results and in compared in fees XXXX. include aggregate in growth year-ago our several for growth healthy morning's trust second single-digit be for

of remains we the net just quality our first increase in charge-offs Credit quarter. an long-term the unusually over with notwithstanding saw half average level solid from low

of balance million We continue $XXX $XXX including sheet, million the stock to to and of of paying return excess share growth capital needed beyond dividends. what support common repurchases is common

servicing mortgage non-maturity mortgage fee as During portfolios to sub-servicing. as non-interest of the deposits. billion expenses, $XX These of $XX of owned quarter, successfully well interest-bearing related mortgage loans servicing onboarding we completed of the added and purchases revenue, billion

spread few than point which a rate we time, discuss and more become more recent impacting for in moments. will margin net at same the memory, environment in has the outlook our detail At revenues, any interest in interest volatile

second for second in share compared quarter first per of Now $X.XX a XXXX. numbers. Diluted earnings in of GAAP the $X.XX specific take were the to let's $X.XX quarter the the common quarter of and look at XXXX, XXXX,

for and M&T's income on the an $XXX XX.XX%. compared million in quarter $XXX On basis, of annualized an average GAAP results $XXX return X.XX% on linked in quarter the rate of year produced average assets Net was million ago a the second in common equity quarter. quarter million with of annualized return

This XX.XX% and common quarter change or million compares $X.XX respectively of recent the $X from little of GAAP to with prior X.XX% expenses the quarter. intangible after-tax share, results per in the previous the in amounting Including from amortization the rates were assets quarter.

our with of basis as the after-tax M&T on gains well acquisitions, associated any results long-term have tangible and from effect of when they Consistent practice, we or intangible a only supplemental ever which reporting expenses as with net or amortization operating mergers assets, excluded provides of its occur.

income compared quarter, year's second quarter operating $XXX intangible the million $XXX last which includes net for M&T's second linked the with was $XXX and in quarter. in million amortization million

returns of XXXX. shareholders' and of recent quarter return and common X.XX% XX.XX% tangible first tangible were assets the in XXXX’s The in common $X.XX earnings Net the quarter XXXX. quarter quarter $X.XX second operating yielded first of share were income the for rates compared per recent net $X.XX of average in on equity quarter. average Diluted annualized the and XX.XX% comparable and with X.XX% in operating

for and the quarters contains morning's tabular non-GAAP a first accordance and of the operating equity. XXXX noteworthy were earnings and Both guidelines, GAAP assets including tangible SEC's press impacted In second GAAP net release reconciliation with items. of this by results, and certain

other Group cash distribution included from XXXX Bayview from for the in reflected results a Our of revenues million Lending first operations. quarter $XX

to for This after-tax for million common $XX This the ownership as legal effect our Also plans. of results employee common reserves role to diluted customers after-tax a relating subsidiaries an affecting trustee $X.XX diluted addition to $X.XX per million share. share. per amounted million stock $XX $XX was or effect to first amounted quarter or

XXXXs M&T's which quarter is $XX investment accounting. second effect million was the asset results common method using per manager, of That to an write-down $XX of in a accounted equity $X.XX the amounted or million in after-tax Reflected of for share.

had M&T in obtained the Corporation. investment Wilmington asset sell Trust of XXXX, its July the In to XXXX been acquisition agreed in the manager, which

interest total by billion down partially million growth net This Turning X.XX% $X quarter offset to reflects quarter. basis and in The income a points XX second and the down interest Taxable net the sheet quarter quarter. $X.XX by margin the statement. of linked in balance was the loans linked or assets. income XXXX the equivalent was from X.XX%, both in earning narrow margin, the for from X%

day in opposite of recent advance the primarily that to to an accounted by accounted two for margin, now that it three which basis level some Reserve estimate accounted of cut decline, count quarter contributing the higher moves the of at We moving has for this include for - of point direction. which funds, which points Factors lower estimated on points anticipated consistent cash deposit first higher with the Fed experience Federal in the from advance X an the decline in only rates decline. LIBOR of market where been of compared the in in the Fed, decline our is basis quarter, rates a that basis in LIBOR short-term

servicing of growth approximately that which cost the of increase. LIBOR decline, The deposits driver primary in a in for higher basis are deposits to much are higher sharply points interest funds of with and of Fed mix accounted escrow mortgage the of indexed mortgage bearing X conjunction our

higher yielding factors. certificates rates notably, continued time issued on [ph], deposits higher categories, as and a migration cost into deposits sheet deposits are than as new were into expected checking well of as The interest at commercial loans that [sweep] balance of maturing also higher

compared the quarter first below Originations of half but previous second quarter. up paydowns with remain compared to solid, a the and X% remain in payoffs by the our grew loans while Average little XXXX. experience picked

quarter, the the estate construction linked with and compared of linked X% also Looking on basis with increased first lower by loans loans grew real with with loans commercial at quarter average the permanent Commercial quarter. the compared loans compared slightly with proportion compared industrial category, X% a an financing.

offset servicing Residential Hudson out real of planned the quarter. loans mortgage X% the compared to government transaction loans pace continued downs steady acquired guaranteed was estate The declined mortgage of by of pools. of recently acquired purchase the about comparatively in linked the partially loans by City pay

onboarding mortgage servicing, it this the we elevated continue, will somewhat with quarter acquired. practice that While was the in connection of

portfolio rate double-digit amortization principal future the aggregate to resume We in low its expect of quarters.

lines loans. Consumer as Growth declines was the Regionally, loans about Mid-Atlantic. growth finance X%. as in recreation and loan in and loans stronger somewhat Philadelphia, were our to outpace York region, well home in equity which metro New in up includes continue

Jersey New to show low off base. continues a solid growth

Average an deposits we the certificates X% core received and $XXX,XXX the estimated compared of quarter. earlier. Islands over customer first This with which deposits, exclude deposits escrow grew Cayman reflects deposit referenced at M&T's office primarily

by office the Deposits $XXX Islands Cayman million. increased received at

deposits. that quarter, funds in by seek last customers excess interest-bearing a accounts achieve yield the on short-term As often demand sweeping and to noted around in higher continue commercial

seasonal the quarter. the second totaled with $XXX $XXX $XXX in Non-interest Mortgage million linked $XXX to revenues in quarter with non-interest $XX compared as recent the substantially were the million quarter. the originated the from rate in as lower, Residential income. million banking million quarter, $XXX million strength. for well in in loans reflecting Turning quarter, compared mortgage environment, sale income the were the million up interest prior quarter first long-term in

mortgage primarily in the and The and residential higher the million servicing result of $XX banking the additional that acquire quarter, loan residential including Total on is revenues. servicing activities in $XX were sale improved revenues gain origination second sub-servicing we increase from combined prior quarter. with the million

million recent $XXX $XX in quarter. Commercial $XX the origination mortgage in improved compared reflecting in activity. quarter, from linked was second income million quarter with the the $XXX banking million in million stronger the revenues seasonally quarter Trust previous were

their This in also filings. seasonal include the quarter sell-off growth. clients quarter's the $X of the linked markets rebound to The equity with tax XXXX in of quarter fourth in the fees from earned contributed million results assisting

gains. the were the million in million, activity Service first what quarter, a charges is on representing included seasonally securities, $XXX usually of million of gains, deposit $XX reflecting $X of while similar from slower gains XXXX, first levels valuation up also higher equity in $XXX securities from quarter valuation quarter. accounts the including million first recent The on quarter

which Operating expenses. second for of intangible expenses to quarter, were $XXX the exclude million. assets the Turning amortization

reserve valuation long-term recent results, reflecting our in Trust noted, a the results our the manager was interest merger. acquired quarter's of in rates. asset decline included As write-down investment in $XX quarter's million servicing mortgage the include $X recent in a the million Wilmington an Also rights, previously on

the million Act, in million Tax we benefits were as the adds and Salaries from annual talents. and adjustments The staff made our quarter. seasonally $X.X as pool of in higher Jobs expand well as quarter, $XXX Cuts with further level increases, in to the the increase the merit reflects year-over-year salary IT prior connection down we

consultants time We our to use this by hiring continue reducing and over offset of to expect contractors.

earlier. quarter. numerator recent efficiency the from accrual amortization Those write-down, to XX.X% which quarter gains was the we ratio, The reflect related and XX% compared from securities first the noted in XXXX's excludes and intangible losses denominator or ratios legal in

in turn credit our quality commercial points charge-offs a credit. with were Overall, reflects with total basis expectations. higher quarter second XX to remains compared basis let's net points loans percentage net quarter. line Next, portfolios. the of Annualized as That charge-offs, in in loan XX our first the for

recent allowance end allowance The billion charge-offs the to was of million. credit losses primarily the $XX loans net loan The end at June of X.XX%. unchanged provision The $XX previous of at compared for quarter. reflects in growth. to was provision ratio excess $X.XX the total losses increased with The billion the at exceeding the million $X.XX by credit for quarter,

of by we ratio Non-accrual those total or fair to loans accrue interest, loans, million been $XXX a Of guaranteed loans value improved loans acquired quarter. million by $XX end XX March. XX $XXX were which marked with compared continue the basis had recent were the on non-accrual to at ending that X.XX%. quarter entities. declined Loans at past due of by government-related end XX% The acquisition excluding discounted of the loans at June the days points X to million

estimated XX capital. compared basis higher reflects distributions. X end XX the to the retention balances, ratio June common M&T's point quarter. The first the earnings at of at equity of XX.XX% loan was Tier Turning impact an with X.XX% and capital decline

beginning period stock late announced $X.X last XXXX plan month. During cost month the $XXX of over shares capital the net four billion repurchased million quarter The distributions an at aggregate common contemplates quarter, this of X.X M&T of second capital million.

our components Our reference reflects of current, regulatory the months. capital our structure to net non-common distributions coming equity to intention the examine in

the turning Now to outlook.

we XX of materially the changed as has noted the outlook impacting well. the beginning interest outlook As days, call, at the over for rate past M&T the

growth run-off rates, possibly the in We low in expect to categories. as starting continue be early implying as and at residential in loan aggregate this the offset mortgages loans single-digit continued curve to of end reductions quarters. other over by continuing in in growth a with is The than few total next interest pace forward month XXXX more short-term

hedge floating action fixed to layering raise swaps. following further took asset paced by rates, steps Recall liability December interest received position to rate Fed's additional that, we on the our

previously, less asset growth we in thought. much sheet than interest we sensitive While was income expect previously lower than net is result less rates it our in to balance

in At of hypothetical certain the pressure to target each basis should categories, in ensuing Fed of basis aside X else the points margin in all result XX reduction over that months. being funds volatility holding and this we point, points points deposit XX estimate basis X equal

income growth interest With in XXXX. for expect we these year-over-year mind, changes still in net

the loan a servicing previously revenues acquisitions in our have to call. The mortgage have servicing not of Lower mortgage and impact led on increased we banking above further but originations, change residential beyond sub-servicing pickup long-term outlook addition. the our to January outlook that enough shared rates the announced interest

remains remains Our remaining income, market unchanged for vulnerable with in growth to should which fee single-digit outlook in categories except but for the be low range, range, volatility. mid the trust the single-digit

our the The the investment write-down guidance. in obviously manager expense of contemplated not in was earlier asset

expenses earlier, on noted of over by over salaries half, should payroll talent consulting offset contractor in benefits and the coming lower As quarters. first be the reflected and IT we the acquisition

more outlook that, subdued look Beyond with we the our spending, revenue are than previously we being as examining thought, forward. we

level, will level cost quarter. end remains loans, look well they which outlook still first quarter from quarter like Our unsustainably in for the from to second watching low an March. credit during be the down a the changed, below little credit averages of this We're criticized moved long-term

summarize, capital levels our and is history M&T's than and to allocation a underwriting with we previous are and volatility. consistent believe that credit remain our given what higher our operate To of manner policies safe thoughts. earnings philosophy necessary low in capital current sound solid

As such, level intention time. remains to to capital over our a our appropriate more manage

The the fact Fed template reflecting XX than combined with used for losses XXXX the were XXXX, test plan for start XXXX, the the the CCAR at stress basically capital plan by is which Fed's year-end capital exercise. the lower year-end that lower some XXXX levels point basis points XXXX than calculated

our we higher plan capital XXXX and risk-weighted of the contemplates capital As $X.X distributions monitor assets. loans components and net in growth as earlier, potentially with noted of regulatory non-common some billion distributions gross examine the

continue testing stress plans capital develop buffer we coverage beyond Lastly, capital on including XXXX. rulemaking levels we'll and Fed's ratio stress our the liquidity to as watch capital

rates, you're from what events as regarding factors, may a regional in growth, national course, unfolds our in and various materially interest and changes political economic projections the Of macroeconomic actually and are other of aware differ assumptions uncertainties which future. subject number to

up open will the instructions. which questions, Now, briefly let's the call before for Samantha review

Operator

Pancari Your first of with from line John question Instructions] [Operator the comes Evercore.

John Pancari

Bayview Just little also legal around $XX line if also I item? bit get - a the was $XX you originally that that I had expense and the other line, - to know bit of that million then a color is charge include million indicated the of in little and

Darren King

of In the servicing quarter, mortgage as as as other addition asset second the the Yes. the to $X the well included quarter, first in of write-down manager, was reserve reserve, there included and expense the well. litigation the it million

John Pancari

Right.

as should go we to the that, about into Okay, we half line? so good how of on a that grow second basis excluding think off

Darren King

the other little where see XXX, in it and I guess a investment, we five IT what our up and the line related and is that quarters, equity so write-down if of it spend. down consistent bit in line moves place to you describe at expense addition, a you litigation look to XXX, some that's time the decrease you'll relatively of will around excluding as over see services last and the that - expect the kind look the the would at professional I special, over the

a those start and will last play come effect to to there projects, while of the bit XXXX into XXXX, And to for that as of but doesn’t half professionals for to bring a sense it of them new on make they're tail doing, a is to and into deploy midstream. that over ramp and IT it little a the expenses staff we takes down will time finish take outside them where replace train the bit work on the

added to of that also of some quarter, is still that's cost in while some or show for the that we there services see in the ongoing up and professional case in the of first that line so operations expense in some other as litigation where that well. And will you'll reserve

the probably So and - things decline more at last you look has and kind about point of than it start the be that's a if XXXX as those should way that where been think XXXX, at start use for to it. the in few exclude quarters average in I

John Pancari

about environment, able a then and to And - or XXXX, achieve how the acknowledged the look the that that do into that given you'll risk high to you backdrop? can that, you is is expense expectation that there the around still leverage front, for we a be given on also out think ray operating backdrop as you rate XXXX

Darren King

also business a it to wildly we're sake look It's the think question, we given XXXX expense of the to of picture not a we've leverage, that and the do on and we'll think a couple for income forecasting a what positive little a makes where be, great the make achieve XXXX of it process mean obviously but but operating what probably short in January looks, handicap on little investments be XXXX quarters will operating leverage. you where be if positive in work before I through negative, an will to obviously, change to need net of don't interest we're guys John. to to early comment is, got and We're slower that going in starting that. we a tougher growth give we update for might revenue and obviously growth will at going

Operator

of line Your next comes from the Usdin Jefferies. Ken question from

Ken Usdin

on your a annually? commentary XX million the on the for about means, XX point on what follow-up like a basis to I the right. what X math guess points Just XX doing Thanks million that's rate. basis XX-cut, I'm on X comments each if to depending

Darren King

Yes.

Ken Usdin

I your year little So NII into what's and forecast into your baked the new cuts guess formally - grow Thank forecast to then you question will in that this Have terms relative built that that expectations. expectation prior so that you. bit if into a forecast many? how of is

Darren King

run we of our curves. off forward models ALCO usually and the Yes,

curves we rest for so as June NII at forecasting and for the our end the the basis use forward look And that at of of will the the year.

LIBOR’s where some to in move that's already started see of kind can You that of happen.

there is question the much and is incremental LIBOR guess in moves. the actually if I movement when how So Fed

happened is, of the and forward to the things a think end curves run see question kind answer I then where of and your at little it's off but we'll of So based direct bit already up, June. end the

Ken Usdin

the customers ALCO in what I shift, mix are what to view deposits was then the costs are and control getting at in terms you deciding you're you ability what about relative on is and how the seeing to curve? deposits pricing of of Thanks. that that Okay, understood anticipate And thanks.

Darren King

second on two there so is things. really quarter Yes, when pricing, deposit the look you underneath activity

So, to quarter in expect came and the them sweep. to is balances some saw with those the we balances one the actually on-balance where the continuation well. grow escrow we trends into first, quarter and the we through the third hold still see grew we that addition sheet did was in what actually excess into commercial checking a moving as the second saw that side, When the you servicing of that that the quarter into and we interest of

to although And consumer down at and continue in migration where were second were still we really some a renewals CDs little see the that bit slowed than into driven increases were of time that actually lower rates rate the greater off a and quarter one time coming by deposits in it than in in the in did lot the two If two year space. quarter, the fourth it look like what in the increase looked we second at quarter. was the to first less more time it a and than year was and

most so and space early and that in was in the space in on happened of wealth of and And accounts commercial many pricing the the institutional index. in to are tied space the deposit an reactivity those

those as down so comes faster. will the index And down move

fully way they cycle, that money side tends for those cycle people market consumer then tend is to once second little didn't probably stabilize, back money happen. liquidity the bit move it into be slower, the step and a they’ll just never first move because and work the CDs into look On the to rate matured they and repricing

a is in And down. the [indiscernible]. - for up rates there of go news they for deposits come the be It will probably I here those will shouldn’t to that renewals much that from either lot of money so sits a consumer good take guess while. certificates

Operator

from Bank Najarian question comes next line Your of of Erika with the America.

Erika Najarian

on for beta as assumptions wider on the could it side deposit Ken's and naturally you first the points you're each reverse what us have the the know for that some giving basis let's the assuming specifically you third points cut the I'm - compression. I cut? follow-up say does for basis you that to it the, - wondering eight versus XX If thank question for of of five is is

Darren King

disclosed when see point XX. it for continue Usually so increments, to runs Sure or the they in obviously And Q, three we affect we slowdown in two what lag third our expect quarters are takes work our we is to ALCO Fed repricing basis do of that quarter. the XXX do when continued into deposit the stops. the after we

see in consistent So even XXX% a indexed July as movement if of of of decrease down, see and bit to we’re we'll And deposits before then rates. we to rates there'll that’s will Ken what decrease the them end the be with the at go start obviously be of come in there, deposit for from they likely still rate I the deposits mentioned kind with reactive. little

for continue our and of to there. of CDs as on movement of come I a the pressure will sure side, And slightly be Not rate, And we'll is will we’ll a books at pricing think why remixing obviously the I be on paying DDA, which attention the function the see bit hope other and to to see repricing a little it'll then older change, a into out flow. think cash there. be higher consumer businesses customer back mature then slowdown we’ll of that suite deposits but customers’ quickly how the

and it increase just third specifically, expecting to remind you - as the cost continued escrow think relates in deposit I'll again that we're I quarter balances.

funds, there it is a depending which little either And LIBOR those different portfolio of is. or are to to Fed to bit linked pricing index an on

on And specifically in or so, impact quarter. pricing those will deposit third have the deposit costs an

Erika Najarian

you. reprice swaps immediately. total since us and please. life follow some deposits the and the a with of notional indexed remind of new quarter? size interest added and please could Could up. you as swap And your you - much just sense give in a bearing you us your Thank of The are average would on how And the book

Darren King

is of around Sure, that notional. show And $XX currently million out - think swap will are in you so I the that's effect there, starting. million, if which book at in $XX look our Q $XX.X remainder is the billion swaps the forward about the

those that question. down you swaps right again should first where your where on should your give should a years now. I quarter to Remind out two And the are go approximately so, And we are. two a in of me first sense question. based wrote

Erika Najarian

percentage to Apologies, deposits immediately of would interest-bearing and are tied index when an goes your what therefore reprice fund down? Fed

Darren King

approximately XX%. It's

Erika Najarian

Got it, you. thank

Darren King

deposits. total Of

Erika Najarian

Got it. Thank you.

Darren King

deposits, Total it interest percent plays obviously bigger a checking. of

Erika Najarian

you. Thank

Operator

next Your the Frank Schiraldi line with from question O'Neill. comes Sandler of

Frank Schiraldi

just on Just points the is just the, - like to that wondering more seems expectation margin deposit one is on this a drag Darren - the be that's to in five basis pricing to eight for the in continue going going here baking we hikes outlook of If cut hike or cuts margin bit. - going baked or would and your rate look wondering of rate without what get I'm forward? sort rate don't rate like little those rather expectation margin the in a

Darren King

in that within the to important keep a there so things the Sure, margin is couple go-forward, are mind. and in

other categories to we were talk the five eight, that about volatility market. - deposit specific the in some saying we when constant So about holding creates

were obviously quarter. the three basis balances, points. we've by by a about the worth contracted basis margin first the of five decrease expansion. in they points talked balances cash quarter past expanded They this So basis lot, as five points cash in margin The

because and margin, but kind so they affect income. we of they much the and around not move aside so the net can hold And interest those

we around on we'll a what escrow moving is we escrow. little to give now so And think on is our bit guidance that able be a is and expectations roll more balances. those just get the right mortgage stable as of on impact better other balance, the The thing

balances. second compression changed quarter if quarter, the some of margin because those probably escrow there’s So third in nothing

top excluding the cash what's balances that, And been didn't and didn't on see constant, If from you priced already I so have in the any we and in. movement a held mean, would balances, rates Fed. change of be escrow

then just see margin the X like pretty pricing of plus in some margins the X points, of stable deposit natural because extension some of I or roll-on, book. and because the basis to minus loan think we'd roll-off

Frank Schiraldi

about And the the areas then some modernizing there's recent into reinvesting been and Philadelphia guess remaining and tech out some in reduction branches. talking the some and reports consolidation media I branch

of more brand Just broadly? little but about kind curious, your strategy just here a talk more generally you if that, maybe bit could

Darren King

Sure.

So now talk I'll specifically Philadelphia. about

So about fairly brand in move customers our have position still Philadelphia, as as security, branches they for and as market X% sense solve and as well that period things which - if of there and value it a that share similar electronic, go a place of you in even we and time. are a can long advice share, they I look at problems deposit find think we get a provides

aggregating in And that small in strength customers our efforts where focus there, customers. been commercial we'll success but has markets where those and business concentration small orient or in in activities there to the really of small the Philadelphia of by is the things, had there our the activities and the we've Philadelphia business shrinking, support commercial there a ignore and space recognize we're in really to isn't some our in concentrating more to our and particular with business customers and branch

- been to to tends be Our has to is while only close tend use and that customers experience this one the branch their one business.

it that's that some think of the we'll a in to we So invest way as And branches. better and savings the remaining footprint, for the compete reduce we us there. take

goes, bit We're we we where depending to from see into there, making Philadelphia rollout we you little - other digital it that our strategy at we're deposits to have we in and and When combination of on looking few geographies. branches probably works and what and will look and see learn works and that where we in a it, do have less. at more will will markets high the with going in a like we investments adjust have how be terms really markets if how both share that broadly, how that

at And are the adjustments prior with look network which the total both dense, we our branch each given make the and network we're then would that as by our a little - markets branches look ATMs year. We locations thoughts we bit more at customers and describe each information. our at practices then where when consistent I you year to look favored whereby given

We're always cost we and and always we've day that's our the and managing to network distribution sure way that of with we in thought we'll use results trying to customers the customers vote help that so be and make their vote feet to continue banking about while is and us every competitive. we can get structure, our to access convenience The nice provide part that shape to. the

Frank Schiraldi

But this cuts, Is as a initiative. to cost fair is thought more opposed as or opportunity reinvestment of both? that maybe cutting cost

Darren King

it's Yes, think both. I really

We not end be locations over safe. be of the will a will in in of some replaced is a will But those our that offices in be that usually that will placed branches saving remains existing busy that there of some save. bit in occupancy in have one will whether of time the of turnover geography, is little that some open, clearly of the function we or locations reinvest but the the in all for are, over how they will colleagues of time, expense,

Operator

of Saul question next line from UBS. comes Martinez Your the with

Saul Martinez

exact income billion versus reduction by I math? year may, clarifications more second rate but neighborhood the anything, questions I'll growth rate, or in quarterly something correct you in of baking is the basically expect the that then Couple XXXX run think it XXXX, in forget some interest half said but the use, that in income that place in, terms some net that on in run just obviously guide change calculations, interest the less full net my and of is first see I the you more you're of to year you $X

Darren King

probably current but that's the bit quarter, on is forward probably Yes, correct, little little based curves. down bit a $X billion. It be Yes. comes each a over we'll

Saul Martinez

but bearing interest overall that, then clarification. as you're why you looking the of I'm your even all clear could what stickier saying? again deposits least, color quarter cost actually on would guess, a all the of deposit basically at putting that's the to expect if me be it in parts wasn't what that rise And you think if on that cut, that's together, to quarter third is second Okay. the and versus costs, at if is deposit cost I Great moving Fed

Darren King

Sure.

in yes, the bit there, it's, on answer stops. little expect that I'll you bit last of we a is, two anticipate. give little the quarters of of to So short the balances after because would mortgage If the in our tends those weren't color the cost remixing that, happen yes. growth for escrow because of just to Fed that increase three deposit And we

time when lower it you - the by quarter quarter that at would kind second done was quarter. be lower be and then that it When the still anticipate just quarter look in in that and you look at the to we than effect, first get of third the the we would fourth

bit about at the they off that's, it want make they're there's five that zero Will will push the but onto than reduces to elements. eight of XX Fed more to one repricing and and rolling is a a the the rate given little to driving up. and to in of sure probably kind explicit what's things And fact the slow are hard the of I'm those just handicap of other it, if I quickly one two the still there, because that's CDs in lower some the roll quarter, third

Saul Martinez

Okay.

come think it of to cuts, down, start October, that think is we and see for in about let's So cycle? this in next one you see how do if to of deposit lag actually sort part September, July would early to year late and were you when would years start two say, you

Darren King

escrow guess, side. so nuance whole onto think with the the I again and I balances, holding to of the again Yes, the

like would categories a increase decrease the fact the think interest you'll a still because quarter our several into fourth would as in that bearing other see that well of categories deposits, to if cuts in are quarter in deposit suite. shifting bearing non-interest those You costs and you from as third modest with see just out people index, the give or and them time and either right just there flatten the those benefit, are I away start the

to decrease. level fourth would in quarter the that probably or see start I third get little bit on out you it. see we the modest quarter, put But, pressure no time it by the a expect and you upward I to

Operator

from the question KSP comes St. next Kevin Research. of line with Pierre Your

Kevin St. Pierre

Just strategy. you from circling maybe timeline perspective both are where up, have mobile you think you could Rene with needing competitors somewhat along and digital for behind and - being that characterize in is overall to to up you conjunction catching us from in back and to tax expenses a and you Darren, the perspective? characterized M&T from catch a perspective

Darren King

Sure.

the really most coming, new by great basis So months, a the spot. it's we've functionality last every with technical our that at six I look sooner. not good used mobile continues in our to feature months, environment, in get we strides a functionality customers. basically updated the And feature XX if regular over on app made pretty think is some When

pretty feel about good We we what have.

commercial is self-service focus security next we there I look just with at origination production security think into the is features. our system. the gone bank, on and the more in part features loan we've of When and

so we're running And and speed. up that getting up team the to and

lot capabilities. we and our in the our make in merchant investments management with our things us make for treasury bring group to making investments of some and our for we're not our will if which players. to easier, should employees both customers a larger And peer closer parity platform, continue And towards

protect to like Within we the bank invest bank, security in in and we the well data. things continue in the as and cyber customers, We our how securities, infrastructure. as invest

progress, of categories target all think I investing we bit a and along you of moving as it's make continue too. a we're know those but know and to we all that So

I some and time get little you there and bit about continually and is nature ahead bar that, something catch you're think So each never to you're the because always a up of comments that's really moving investing. Rene's my comments of the

got And whether to spend the game in that our we've life. the tech way keep tech of bigger the of business, private spend part our are a wealth in banking changes be investments that, the the of businesses, the and the of react that's as all and in hub happening become because business, to team, of And are commercial think to or IT it's the adding business, because making professionals to consumer we that's to why is about kind and just just technology on-staff institutional business stay in our competitive banking. to in to we're going we a continues to and

that our out not to a get have door skill want are The they there if walk the asset someone into outside set over have in help quickly contractor. you bring resource that next investments. and else's and you the outside control contract making a short-term. the the such why and Then, and day because operations us an you would that's long-term it control rather don't but strategic But those - you you we see can

Kevin St. Pierre

as so Great, invest as the have the going people? impact the to and you is upward benefits continue can expect we drift to we and on this think about income that in statement, salaries natural

Darren King

that see happen. you’ll Yes,

of that we is the The line the and in the offset as operations is that the see You’ll help will over be timing brought just thing in that. full effect about. on keep of servicing second people the well trick of that right. mind that some mortgage cost half because the the that other we to The half, with time first that, as talked and to from just of

we get will to other and if if we have and states it have then you can we period. add time build have some consolidate to, we there double people counting, out new the that And in before facility

on or team professionals be they’re new could them and recruits. they up focus with the - come faster up and we they new bring train As sometimes to experienced to speed

going any in quarters. that's be the that well bit also over of a increments. take as we'll don't got to up get something we the better that the way next the reduce consistent side. speed, take a by you've to new other they be this expense millions where overlap you time hundreds before change as of the as can that you the stretch manage that it's cost, And it will dollars longer because expect is several ones but think period little on And We to

Operator

comes the Cassidy next line RBC. Your question of from with Gerard

Gerard Cassidy

of guys questions quarter, seem of smaller credit underwriting numbers see of be this offset pressure? couple as aggressive report A some up sheets Are Is to that more balance loan their these banks one-off the to seeing popping this again. you events the margin trend pressure of we banks now evidence to the yet picking is by everyone. for there any grow up margin

Darren King

payoffs banks And payoff source point, by private the for question. to been and your look far is or paydowns bigger at interesting have or been of it equity an track than what's of that, was. this interesting source a funds talk payoffs it insurance. year we has been other about It's so and we us, and And or what the paydown when of paydowns kind we

from our be. want might price, there we I perspective, that. we and structure to on bit lower guess, to then So the little would when like are a market in compete losers we be And always others feel

but that a higher proportion that bit is hard going when And were and so see payoffs little we through the did year. we a half as this source for it's say it banks there me in the specific other change, of a numbers, to of notable paydowns of first was

Gerard Cassidy

then accurate six is would to days your so, forecast curves go months are very XX where accurate? experience, at actually Very have based forward XX pointed a course, out new this when I to of rates have very out your the months. good, XX of your they're rate forecast in they’re periods new - that you kind and guys you but forward environment accurate the if how used we're into this short the in over This not and your go something or very predicting on experience out in, opinion, curves margins. think in you How you about out in

Darren King

loaded Gerard know question me. sounds that a don't I like to

been predictors experience against what guess are we've - not think been forward they're in I I if that but actuals. curves. the of actuals curves seen has the of very that all But good have my always as together put moment the the time good charts direction. predictors forward the the and the show At

Gerard Cassidy

with agree that. I Yes,

Darren King

use that's use obviously but that way margin into better reactivity. we then a the is we the to and take why forecast, not we just volatility how a volatile whereabouts try the to compares shape on why our that what like things the of absence out we - and look that use and that's earnings get that's the be they've little sheet right. of draconian long-term And overly so, have we where hedges average And did gives also, and hedging some the of we late at expenses. the been balance and of the take deposit that to in to to Is us account when

sure maintain that asking invest us the was allows our ability we back to can question, Kevin the And investments to about in that make particular in to technology.

Operator

of Your Keefe, next the question Klock Brian comes & with from line Woods. Bruyette

Brian Klock

there's know I the One a conversation lot of real quick expenses. question, around

everything. mean, to going the with if it to up like keep take want that second to trying some you sounds be higher directionally was you expense I before that you that's is said, the does see, come in have right way in double spend I XXXX, like So base quarter, to from that's operating you it? to out of about start the third think the and fourth But quarter

Darren King

the is, Yes, that the our I the if at and you way asset reserve. take look I manager big things litigation the and in guess write-down first and half half, out you the expenses second at look the would the so

Brian Klock

Yes.

Darren King

similar a that The colleagues we that we're full-year the foresee investments the the into some of up, pretty of that mortgage servicing show we the expenses half tech half. account, that good probably know the to it's where the should and That's other that will be takes in hub. making guide second cost second in added for you

Brian Klock

when that buyback. a yeah, discussion in billion it the approved plan look about, the to what at you yesterday, billion another X.X just $X.XXX like the having the does up capital and now sound on And Board follow-up capital you talked and net

of about Is a that does issuance in neighborhood something what XXX that million XXX possible you're So of you're you preferred or future. that the mentioned as thinking? the imply million in

Darren King

thought process Yes that ballpark of where that's was. was, in our the

there you last look when CCAR, logic several of constraint as binding the Tier has the our as think much become Capital X I years over CETX. is,

and we and And are year, the into good at bit there looking plan going ratios contemplated X a make this re-stack little for us capital mix of as is Tier CCAR to just CETX, opportunity an in XXXX. think the the shape the to that so, to we sure we're

Operator

at questions time. this There no further are

Don MacLeod

necessary, Again, thank news you or the call the of on XXX-XXX-XXXX. all always, release please reach for Department Relations participating today. at is any out And as of to items our Investor

Operator

call. conclude today's This conference does

now may You your disconnect lines.

M&T Bank (MTB) 18 Jul 192019 Q2 Earnings call transcript