MTB - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the M&T Bank Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions]. I will now turn the call over to Don MacLeod, Director of Investor Relations, to begin.

Donald MacLeod

Thank you, Lorrie, and good morning. I'd like to thank everyone for participating in M&T's fourth quarter and full year 2019 earnings conference call, both by telephone and through the webcast.

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

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

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

Darren King

and Thank good morning, you, Don, everyone.

quarter on on X% year environment a tangible capital, which a experienced in a As and solid year. net and common fees performance, in closed basis growth although noninterest of slightly, for we increased second points; loans XX% below consecutive banking trust the favorable, industry-leading on noted credit the remains consecutive share; the rate interest improve this sixth the leading out revenues, and slightly release, in year XX% returns included XXXX; morning's volatility in per M&T's to nonaccrual reflected year earnings return interest XX the which, the with improvement; common of results mortgage margin that growth equity notwithstanding return year-over-year credit for losses shareholder XX.XX% with equity exceeding fourth stable for

GAAP XXXX share and with our quarter attention $X.XX quarter XXXX the in results fourth the for share but a the let's of third We'll fourth earnings in turn of compared moment, of were common for numbers quarter fourth $X.XX year in share per the XXXX. per per the for $X.XX the the review quarter. Diluted full to first,

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

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

only its supplemental with from M&T $XXX associated $XXX on fourth quarter, Consistent basis with of million per share intangible the and and million quarter in with XXXX. fourth intangible Diluted in linked were a $XXX the XXXX's was gains any after-tax assets the compared net $X.XX million reporting effect amortization of income quarter for long-term operating which which amortization we third M&T's quarter $X.XX quarter operating our ever practice, XXXX's have compared fourth earnings common recent results of acquisitions when expenses tangible they for with $X.XX well quarter. in occur. provides or the excluded operating the or net and excludes as in net as mergers of

of in Net XX.XX% in tangible tangible and of third X.XX% operating XXXX. quarter. average average common annualized were on the rates returns shareholders' and and return comparable income assets X.XX% yielded equity The XX.XX% the of quarter recent

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

charitable IRS $XX an M&T's in was arising XXXX. certain share. contribution from quarter the treatment foundation, loan $XX per effect fourth fees, in Also tax million reduction to to was that amounted the in results in fourth which to quarter common XXXX's a a included or for was retroactive million Included approved XXXX after-tax provision the million M&T change taxes $XX of $X.XX income

This also per to share. amounted $X.XX common

equivalent deposit statement. down balance basis $XX declined net effect interest an The income interest quarter margin placed average Fed X.XX% to points dilutive of Turning to X fourth of Taxable $X.XX quarter. points quarter. XXXX, X.XX%, balance down had in on in in XX was the funds the estimated the linked and from A billion basis net million higher $X.XX billion linked sheet the income on margin. with from the

that of declined the points. estimate X-month XX Higher trust with decline quarter another and a cost was short-term the linked which in demand pressured provided Fed's basis interest a factor margin result rate as decline increased deposits, October rates basis decline. Included LIBOR impact points. the the point of X were and deposits in a commercial the XX basis by by cost XX points as basis was basis which on linked X September point actions benefit in cash in about escrow the lower lower balances deposits. the much The rates elevated compared high to margin of interest-bearing We seasonally the that deposits, quarter, of of overall July,

City runoff total Hudson primarily Average in increased loan offset than with The million loans loans, of the which $XXX quarter. acquired other third the more residential X.X% from by in increased previous loans, ongoing compared million real mortgage planned categories, growth was quarter. by $XXX and estate or

in with seasonal linked vehicle about loans the an average This by equal almost $XXX loans. on with inventories, higher basis in finance loans the dealers were loans their combined industrial an than X% category commercial increase to quarter. the C&I at and other in prior to compared million quarter, increase Looking included

compared the by estate X% of with transaction, the pace and $XXX pay as sale. approximately which a million. that declined into than well City lower over of real for third permanent half down X% construction downs held roll mortgage less estate of level the loans continued loans reflecting expected as not did were real payoffs quarter Commercial in or commercial acquired about loans, completed and were Hudson Residential loans, which portfolio financing

growth and finance a X% equity in was further loans and the about up the basis, with loans, end-of-period Consumer higher auto in were lines commercial home extent, than industrial growth an with outpacing in to loans prior loans, were in loans. loans, declines estate portfolios, stronger of commercial On up while at and real recreation lesser X% about the end loan quarter, commercial X%. direct

Cayman out X% with during compared There quarter. in as quarter. industries deposits, up Average of particular loan exclude CDs M&T's growth over that office as third regions about which the were stood well no the at were terms deposits Islands $XXX,XXX received fourth consumer or

escrow demand As deposits elevated deposits seasonally commercial the that levels deposits, drivers higher noted high and earlier, of increase. were trust of

million -- $XXX on with banking preferred million losses stock quarter to $XXX revenues securities portfolio million fourth the million with million our third included income. were gain compared prior in of Turning the quarter. Noninterest the $X in noninterest remaining quarter. with valuation The quarter's $X of quarter. million $XXX million a a $XXX recent income Mortgage GSE or $X quarter compared results totaled included in in compared linked in the the

the on total million margin. sale the little originated million revenues servicing third loans residential $X a servicing quarter, about income both what in compared the including $XXX compared revenues $XX to by $XX quarter. Total Residential in were with $XXX previous were quarter. origination of down higher $XXX improved were banking for mortgage fourth mortgage was million a from $XX changed XXXX's as in quarter. quarter. Residential the activities, prior the with $XXX million million compared XX% from quarter the Trust gain improved origination and result million from with were $XX up mortgage sale in revenues, Nonetheless, the fourth $XX previous and the in record recent million Commercial was in million in million banking quarter, quarter. million revenues linked XX% quarter, a of

while activity business the primarily markets commercial on FX with in the interest generation be strong, improved during the quarter. tailwind. Service and accounts prior million done gains Trading were in deposit of quarter, behalf $XX continues equity million, loan unchanged previous customer customers quarter. were New essentially $XX million, a rate from reflecting modest the swap in originations from strength charges been $XXX on has to connection

allowance costs. our to which on million lower recent fourth headcount Turning $XX $XXX the by third the to valuation million servicing to and benefit reduction $X $XX was million, for $XXX the $XXX quarter, the the the third benefits quarter. that rights. a expenses. assets, addition amortization allowance in were down intangible for from a reflect million from Other in there lower costs Recall the million the exclude in of quarter, seasonally prior Operating quarter. a declined million expenses mortgage of operation Salaries and reflecting quarter

efficiency services securities or from XX.X% costs of other by in Excluding intangible $XXX which improved ratio, valuation driven amortization XX.X% excludes the quarter, professional recent gains from declined the in allowance, was The largely and numerator previous lower from million, changes denominator, in the the operations the by quarter. expense. losses the

turn let's credit. Next, to

billion growth. at and with at The third point end primarily allowance continues fourth for while. XX net we've from $XX end been line quarter the Our XXXX, credit in XXXX $XX third of total million. were provision ratio quarter. with in X.XX% by quite quarter the December. points the be of from in basis compared basis net the $X.XX recent the of total the percentage of Annualized in for pretty end the reflects credit of charge-offs a million for basis exceeding trends much end was as X the allowance provision quarter, was losses was credit a the loans quality The to of seeing to up unchanged charge-offs XXXX. of XX points The losses the loan excess loans The

the points the Of moments interest, $XXX by at due for the those address the loans loans, end. during loans CECL $XXX government-related fell loans on loans prior continue accrue that we XX XXXX. Loans days end We'll have which past $XX to of outlook guaranteed quarter our X.XX%. the compared excluding XX ratio Nonaccrual discussion declined end of X or acquired at a with to The quarter. million were been to basis value a fair to of are entities. nonaccrual December total by at million discounted XX% few in million acquisition, quarter marked

higher and the in slightly turn, of end compared X.XX% repurchased the X the $XXX quarter. impact the growth, to ratio Turning end of shares of the during its M&T which, led the at M&T's quarter, aggregate Tier capital. estimated stock quarter, earnings X.XX% equity of past repurchases share retention costing an with reflects The XXXX, decline to end-of-period an was risk-weighted million. common during at assets. loan third common million X.X

were share take average like year common full income $XX.XX assets the moment to Net $XX.XX, to results. the returns billion, X% equity XXXX's average $X.XX of cover from Next, up GAAP-based XXXX. $X.XX results of produced in year. I'd and was a common improved earnings prior diluted on XX.XX%, in respectively. and from X.XX% highlights billion key These per

prior intangible expressed common XXXX, repurchase diluted of result Net tangible the for income declined operating and excludes $X.XX common income, respectively. shareholders' assets ratio, a as a average return payout shares Average slightly amortization, XX.XX%, billion, by year. was X.XX% was common XXX%. on total equity which activity, tangible Net operating up stock and average dividends, of while from including X% was as the rate

share the end of of grew XXXX, value per book from up the $XX.XX at XXXX. X% end Tangible to

performance per large our gratified common top our relative on through of group, of banks, common particularly we return or peer interest absolute growth equity near remains are which at lens the our net the level in tangible our peers. As reflect on and XXXX share, the earnings against of our margin, regional by performance we the

Donald MacLeod

for just backtrack a a me Darren. Let second minute,

cost back $XX of was of to is $XXX decline misspoke the said, Darren million. and Going other a It there operations, million.

Darren King

not Don. clarification. I that, looking what thank when you at sure was but Thank the for I I'm you, read

Okay.

So outlook. to let's the turn

our Looking the over last as quarter. been trends outlook we past with January fairly seeing consistent the on forward we've into was as shared the call well XXXX, with what

seen expect average consistent rate pace it the with the While we recession to XXXX, may be the GDP growth last ended. level from growth seen at a still in slow since of annual

for positions global and as financial including although remains confidence Unemployment customers' relatively remains remained unpredictable customers healthy. have high, the uncertainty. levels to and very capital see to systemic commercial have cautious Consumer sustained the liquidity U.S. were low to regulations both and disagreements events, progress tailoring of tariffs ongoing consumer based toward economy. pleased over commercial on are of led banks We and regional risk

like for will buffer place stress final CCAR Category be the process. awaiting regulations, for M&T. those the are capital rules IV We Fed's capital It's still approval banks including XXXX whether for in the in the unclear

expect, usual coming the the caveat a manners never here in unfold entirely However, the you are that few events year. for thoughts with

the the markets an towards rate be XXXX, X.XX% rates. net XXXX. unfolds the currently about point headed the by that income Reserve additional margin have Federal interest we we'll As the caveat year we're outlook by think starting share short-term the of quarter calmed The fourth where in margin, The and are the interest X course interest markets XXXX signaling with on the our as to volatility, end impacted over net will cuts good start actions of cut one of interest likely of rate a year. After taken net is a somewhat. including to for

we of effective. up similar result outstanding a becomes in beneficial liquidity the grew the The and Loans as cash to which assets year. as the the with reported basis over fourth persist on This quarter rule XX well quarter full in of combination points. in of our a impact the be first investment escrow, as course level as enter margin reflects compared decline basis. lower and year a deposits quarter that securities lower commercial trust Fed's a a of portfolio the be repositioning on a from basis could were as demand expect fourth at a highs X.X% further average on yearend X.X% the seasonal We for and for much XXXX and Fed liquid tailoring as the will

was aggregate few has past been mortgage this in other loan residential reflected X.X% years, As growth full decline activity in a Estate on XXXX, a Lending and case for and a average year Real the the offset X.X% was Industrial, case portfolios. originations in the characterized payoffs commercial of loans bank than basis, in by both level and by in XXXX. the better Commercial Commercial reduced and paydowns

trends those to We expect continue XXXX. in

the has off run will to we real past case portfolio as reposition years, the we sheet been higher assets. for allow Residential to the several balance to As continue the returning estate

as with rate dollar years percentage decline compared the becomes the to total. the will prior and of the both slow a acquired basis City of of on percentage absolute Hudson smaller portfolio However, loans

year what or will pace, in we factors, XXXX. these for expectation a a on Given basis than single average better at loans our grow XXXX saw little low that is a digit full in with perhaps total line

a Taking which profile. aggregate, XXXX, in of improvement outlook in our lower of decline higher rate a on the low flat a in some we for XXXX Combined and expect level a proportion we net -- reported the than reflects our margin return earning assets improves with in single-digit but basis. a with quarter from low income interest year-over-year fourth what scenario, loans

banking baked to in sort residential We originations of clear The in. beating enter our higher be is point the volumes the in past is and had XXXX. additions commercial residential Thus, following summer. seen XXXX with for year-over-year difficult, long-term our revenues less will with servicing XXXX. rate for mortgage goal year a The a that servicing run record for both business subservicing this mortgage above portfolios but in Matching XXXX. rates and or growth that's revenues outlook low

low modeling single-digit have allowance in MSR mid-single-digit a businesses operating good XXXX. a starting remains range, quarter's the with run in excluding for indication reduction are exception revenues, growth of outlook The been fee the pace. remaining a consistent rate the the experience at with which XXXX the expenses, The trust our for valuation in fourth solid with growing of

coming The on in professional expect the and results our capabilities a investment asset well. year enable the in XXXX write-down litigation. basis to The Last over total IT course added recur approximately that to implies GAAP expenses items we services should the of included to in year-over-year. million of settlement of do the our manager XXXX. as the reduce of down be to year's not $XXX should us we division GAAP continue That eSoft

the Other reflects which rate. the accelerate costs was items. of year, increase compensation remind handful the a of the and we don't to we Based equity operating run as to other proceeding, usual positive the slightly Last we expect XXXX, annual able incentive on be approximately year. quarter salaries seasonal than our increase million. well foresee that as primarily in $XX benefits you beyond for expect normal We'd wage neutral expenses in current to produce need growth, that first to leverage

Our outlook for balanced. credit remains

XX like below the I'll year below completed experience At sounding you Just charge-off points. consecutive net -- as broken caution we sixth risk me, basis points our record, that XX again excuse of a continue, be but and there trend geographies. are There losses that and some criticized apparent to weaknesses tick particular modest this no in or upward. can nonperforming continue will any on loans pressures eventually industries of

loan the Our X, XXXX. effective was known new January as of accounting adoption CECL loss standard

expectation, the maturities. and balances XXXX, mortgage our an or as increase With to consumer dated total maturities of million result increasing adoption reserves due on down Our $XXX portfolio substantially overall and is slightly, contractual and forecasted their shorter that long to will reflecting XX, reserves. approximately December commercial economic based conditions in residential reserves XX% being of

accounting on acquired X X discount also sheet. over to those in have ratios will to the regulatory transitional in over we effect CECL by are phase years.CECL impacts a the Therefore, capital a in a each purposes, the adoption points amount that reduction approximately the balance be on previously elected for resulting basis of our uniform manner, at X-year For the the CETX a of period. ratio recognized loans capital

loans and current $XXX will will income The status, recognized from as of impaired is performance nonaccrual. loans million impaired status. loans. on to accrual loans consistent whether originated transition or to only be these past Approximately their transition with the received days nonaccrual acquired Acquired basis, cash an will from due nonaccrual accruing XX

provision reflect minus future, reserves, expected for loan in and in charge-off by category, growth supportable loss reasonable our Lastly, will our net changes or the plus plus CECL activity forecast.

the in would in don't for of different the horizon it area lead that rate believe We anything will from meaningful significantly XX%. see on XXXX to XXXX was what be that us the tax

As capital of continue second to year's XXXX to the execute this end our we'll plan quarter. capital, through

being paying but Our seek to reach we capital customers while through our investments acquisitions high shareholders. returns communities. priority, return that, dividend that our cycles. our When don't philosophy remains economic in and allocation value and that's first After capital make unchanged forthcoming, at sustainable with we for add those to aren't business sense our our a shareholders,

for appetite indeterminant themselves. until little warehousing over have timeframe We capital opportunities an present those

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

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

Operator

[Operator Instructions].

of Our of first Jefferies. Ken question from the Usdin line comes

Kenneth Usdin

expense expenses just growth GAAP the mentioned on core, on it the is. I'm expect you little you point from the really $XXX that see just clarify you don't million. down bit you if And Darren, a changing rate front, had because the they wondering can what to be that that

you of should us expenses the rate understand can growth just core you core, underlying expect? help that as to you without having accelerate investments, the what see So

Darren King

Sure.

about X% the when you guess, of And GAAP there, of at expenses at and I Xx reserve on from number the in on then or litigation, year full as the we $XXX that you got So look where as the write-down basis, the look you've million addition grow look you less. manager. litigation asset it's well if at a

Kenneth Usdin

in it, X% of couple, you're seen the and to And that relative are then out about confidence you've talk Got in So less you that in where saves we've can the puts last the takes some years? it. X% getting of making or or just that growth you that that talked last about investments less? can you couple the keep the and

Darren King

a that business see IT that benefits. into rest happening was from and at year's support come subservicings. started related capabilities When those and that down quarter, in expense Yes. been revenue. what trend to portion And services of was we Yes. Remember expect mortgage of then took the and and expenses which professional on salary both trajectory professional this transition that we've we of We we the our the we had on. to was continue in big last And the the to to look services fourth acquired of the expected, growth we form to that servicing XXXX.

gains or that -- forward, as efficiency salaries and services itself. and we offset from so the go will expenses as continues that benefits And reducing we cycle professional get will

the rate at run we So a we and you that and run ex basically self-funding, we're benefits in that year-to-year. go we increases can as at we're we're confident why at think point now, normal where happened that that's feel that salaries from

Operator

question from next line of Your of John Evercore. comes Pancari the

John Pancari

same on -- positive questioning, line that's of leverage, confirm, leverage operating the that so basis, correct? just to On you comment GAAP that operating a your expect

Darren King

correct. is That

John Pancari

Okay.

So -- in you basis then? what and at that through looking of from walk terms imply a modest core, on core just negative it would would then

Darren King

On a would, basis, core that yes.

John Pancari

indicated are -- change viewing you're investments, largely is last complete. the IT you're in Is ongoing making? to And quarter infrastructure had of there I terms still know how and investments they the you and it? that then franchise that Or your Okay. ongoing any that

Darren King

those making professional up of kind we is seeing that we're we're self-funding. And come started. that investments now where continuing And and our from where place building costs end IT we're the adding down got now benefits internal on and at as think But XXXX, we've about that uptick really services they we're offset the place we're conversions. in year, Well, that those the the is the that a had we're transition in process salaries that are we talked we capability. that

having growth. that base we to we're continue that have at And the transition so with without expense now, that meaningful can

that our continue on the XXXX, end now at But details purposes it's some of here. the run with growth those we'll improve of that the operate members can more we you the team level give basically obviously, when XXXX we'll expense where we're rate other use it, there. internal we to to think get XXXX. a obviously, to into and from expectation But in modest we we're at we for that place As get

Operator

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

Erika Najarian

inquire I a bit about the accretive potential curve margin margin beyond wanted more the balance quarter? stays the is clear think Heard or first the first to you trajectory forecast that and how sheet little action net for the loud quite in If quarter. should beyond the the going stays curve first quarter. about to interest static, be the we

think the also, And taking? relative to we actions expect growth growth, to as shrinkage? flat earning asset expect that should some we we asset should balance sheet earning be you're of Or

Darren King

Sure.

the levels the persist you that first least and the because is net at cash in of what So quarter, kind in period. securities, of see printed and we interest expect change lower the see of And end to the can the we you'll to expect those throughout at margin increase, year. investment that margin

the but way, year, in the stable. plus assuming minus fairly fairly relatively be the you when rate points out, to quarter and throughout you So would along a margin, first expect the consistent margin we fact, maybe that that and stable pointed or that forward end occurs, to we curve, get of couple with as that, assuming, first environment, basis a -- quarter

growth will kind up earning of average we the the overall, and that, year the lower, through it's that along as XXXX low XXXX. about as we anticipate in loan single as in come start assets lines and forecast on that the go digits, saw the the goes year what of see we we We then talked

Erika Najarian

my want I And you're we're it. but to Got get it follow-up apologize, expense make to just question, questions, getting we right. sure going X,XXX and probably

That any rate So you're $X.XXX XXXX. If or the of includes benefits. as and of GAAP, out and we X% saying nominal growth million run increase for less. in billion, think we $XXX take about that's salaries

So core in billion less go from total, $X.XXX X% that up should or base.

Darren King

Yes. right. That's

Operator

comes from of question Securities. Winter of Peter Wedbush next Your line the

Peter Winter

was capital. I curious the just on

to authorization? X.XX%. I'm your think stock year in ended is going XXXX. how secondly, much the You it's in at end where you And left buyback wondering then just

Darren King

and course the $XXX of some below slightly for environment July. being we've a and in we CETX from above thoughtful terms where move left now. to over attention this is impact, So we're over the might to we'll happens the with bring we the what have SCB measured ratios, that just little or end slightly an which that outstanding And disclosed we'll end depending if Obviously that we down tough median million, CCAR into obviously, towards rules will believe, the on then loan as in going low on been year, peer the predict, points and to down But peer on the is risk-weighted group. bit a we the towards in XXXX what's in year, other around the capital gone million. and ratio what's and down in $XXX with of of time range where paying too. look last, And of I the last attention thing you macro growth X to movement look It's a measured at in we've median, where XX just capital growth. loan if continue particular, tailoring around paying go we've of discussed and, the coming It's the of at kind assets. you X quarters. pace the X discussed quarter, been course continue to what's actually, happening basis or plan And our a our the

Peter Winter

work given just updated remixing the And doing help the Okay. just strategy? thoughts the of on balance hedging wondering, on margin. sheet to the any you're I'm some

Darren King

what we the talked from about different have past. is that Nothing in

we've actually at been look If amount but outstanding relatively what's notional been, where grown, has our you has consistent.

some In been what dollars, of those years a plus protection just $X longer. billion of $XX billion $X amount same debt. future little of cash billion, place extending of flow hedges, it's billion, we've doing terms $XX have of in into for to And another out bit that notional is

Operator

Your next of question comes Schiraldi from Sandler. the line Piper Frank of

Frank Schiraldi

Just on way. try question capital -- the to another to ask

return know capital thoughts or Just to you CECL you how the got plus for -- don't the CCAR I cycle curious, Is But would list impact curious, little earnings? wish back on it half of the expectation, of return capital continue sort overall that the levels to just and your coming impact little up. of given year. the regulatory XXX% know, here, capital the has I

Darren King

we growth don't will loan growth need it ratio loan that running we're growth forward think what projecting sure peg looking our achieve. I what and an to our capital what that looking and that payout at fund and asset risk-weighted is be very But we make will organization be sound. as that we're number and we're guess, think safe a more support to we we to

current several down. in We continue to And last quarters, of been we'll move that consistent ratio the do that is. for we being what to believe at can we've that pace on terms continue the decline it the

over in steady the over ratio is pretty Any last might the between based difference quarters, some see in on growth quarter, when you term, we've asset what on a But been quarter. change you few the look the primarily the pace. long

to returns. earnings impacted go on loan methodology I in by growth just that CECL sure making of mix through of of is that with the how XXXX, going be things which thoughtful and the just will we the the at we're least given those think one any also first impacts quarter, part, quarter we're as capital that new watching be

from we that where fairly as But on can been on you continue capital out, on. we CECL the was we that and ratios given nominal, our are, we've were so impact pleased point trajectory

Frank Schiraldi

a provision. And question ticky-tack of Okay. sort just then the on

Given -- is stays if if credit for the hope. the environment, environment as XXXX, let's

Given the that is up lot day goes this, for fair assume just goes CECL more of and equal? I is it know number, than X adjustment, -- it else to of modeling by XX% into sort provisioning it but all a sort

Darren King

quarter, look in the But give you And you full that wouldn't coming course, on growth way happen. provision. of of it allowance around. terms a tend you guess, the to of can gets percentage new from, I reasonable rate we net that look is that, look any excess percentage anticipate loans loans a meaningful if you've course you that move X, the The that done those at shift is way. over and that the allowance I that and think got in a you which mix charge-offs would haven't at the starting point. where is multiply any if growth that basis, I look portfolio year, if of probably in shift will about then in drive And mix

would number. As points around I it of that basis the but I of course said, it the few to year, quarter, over could little expect a that within within move bit be a

Operator

Your of question JPMorgan. from Steven next line comes the Alexopoulos of

Steven Alexopoulos

decline in to So a have it think regarding look more you're you liquidity recently. larger in 'XX. Do how given growth 'XX? quarter-over-quarter, the much just 'XX, had going deposit than you decline XQ anticipated is at similar $X.X much XQ you've you're we that, in -- XQ Or If down billion.

Darren King

tend little given to in plus if back that probably fourth see down primary trust than to them prior be going prepare look owners. and demand larger driver, then their make the you balances probably first why come bit in commercial. Commercial the in business That's these as quarter, distributions years, up to the the to the companies a It's was you quarter. they move in their

typical. And so that's pretty

of still the seasonality bit us, those. is balances, to some then year a are and businesses in this escrow in versus increased happened cash having operating more for accounts that's their other there think And bearing. obviously, we've as thing little I the interest sitting

decrease those the will So react you'd factors too, down a and when probably to a be as looking there, put probably changes get securities bigger together, the you all bit, that and in portfolio little in the LCR. aggregate, we'll new we at then come

Steven Alexopoulos

guidance Okay. that It a in call like this strong market Got year. you. didn't sound which was And part. the then big income, on color more original came on than Give why so much factor. appreciation was the trust stronger

Darren King

So things of there's happened a couple that there.

big helped there, can half as also because retirement -- big add the they our, talked with trust in funds of you well the in that when fees. retirement with We is business. that, year. helped stuff assets about add assets. as And little that the to a services the of on which you kind our as you predict, that fees the is business, hard bit activity that have, in clients And That in olds' to markets. that on X institutional business client of came chunks, what a of to trust course we year grew the came can went had come when I of obviously, retirement the to call, the we There and within seem more when back -- some that be business during and

And strong the and so members to year. markets help had business add continues add but the clients, there and some sure from team this was a to be

Steven Alexopoulos

saves. X% of color given of helpful. Maybe expenses? one on the natural days cost on M&T cost rate these at the expenses. of without just at growth growth expense That's saves? one final expense organic the I XXXX, growth Okay. what the some running reinvestment But the appreciate What's is in

Darren King

of year-over-year. grower, hold natural time, about look expenses with you and or to and think We're litigation had. I When our mainly or us through various it's happened have and at servicing single-digit compensation the rate low things by the some growth we that of costs write-off mortgage you a rights side driven the kind that organic

of for our in lot how expenses the bank, tough Last technology. look mortgage at the of the growth -- you mortgage attention business, we're year just and our we step transformation kind we then of because a But generally, to in when in rate was growth because we pay servicing run know X the a outside in industry.

And to changed. that growing aggregate, that so hasn't pace. we're the investments at cover philosophy and and at to it single offsets and to looking manage digits making finding always keep low for And cost those them ways keep in

Operator

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

Gerard Cassidy

Can residential think, portfolio? was about it mortgage I you X%. give the us is, some down, runoff color indicated down that that You on

You total loans. bottoming of just do runoff you've a expect done? the out? It are Where XX% this we portfolio. eventually $XX that year. end see resi the looks your over deal or to that stabilized it from have of number the When you at less the does year be And mortgages billion like from that

Darren King

Sure. Gerard. It's a question, good

the look in Hudson Hudson to M&T City pledgeable the of The just business. those a continue run XXXX. state little portfolio a some in mortgages short-term a mortgage and the rate funding hit probably what Federal plus in especially As Legacy loans. Hudson new X/X the role business, but mortgages We'll And contemplating are to plays because decline you a Loan run down to But the basis. that servicing -- We're to likely slowing on liquidity rules that we'll the continue see Bank -- with City going the mortgage return allowing for steady in is bit becoming you're watch new to growth as Legacy legacy only we'll overall that business, tailoring down, we smaller originations. down. of we in we're growth Hudson's comes not since more underneath the it it's the the work of you'll When portfolio City Home of that after profile of the see the about the funding are X/X through at portfolio there, residential thing because from mortgage of the rate portfolio aggregate mortgage mortgages just or percentage. and

there's of smaller number ultimately considerations go dollar move amount but ends, the but a over probably we it that in down, into of continue seeing that a So where portfolio XXXX. course

Gerard Cassidy

SCB, from and of the understand. from what in the if are they dramatically vary don't year? what the any SEB not we come today And I all know you meaningful rules good. they -- you impact then because Very set assuming CCAR expect understand but CCAR Do kind yet incorporate of this on

Darren King

positive. I assumption things pre-fund of growth because will not opportunity dividend to and of would to the it's NPR that that are the like. meet there. the that they it and the not would will of obviously offset. in be in be look talk guess threshold and is to particular, an incorporate mix us. this and be be there also of those have the implemented some will will be an seen by under helpful the risk-weighted there having Fed, if offset stress, an -- are our been it, to given it all There's be is assumptions you assumptions The provided that remains -- which growth that assets having loan how what asset be what to And But the rules is terms handled all to before, be unlikely through lower,

Operator

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

Saul Martinez

just have roughly calculations, I minutes. XXX about your about One, A goes more guess, to basis we By follow-up couple XX CECL. XXX my of points. on questions. ratio a ACL from

on the your on I losses do How lot there about loss the net your to growth loss know your on relative in in think lifetime content, back any I the book? upwards the going going your XXX changes of resi net given basis in As loss about I loss remixes? over all as growth there's a obviously we mix because but up. growth, much, time change above loan in doesn't content think think down, that sheet with your coming the that lifetime with points. should Is -- quarter naturally ratio loans, it ACL balance those gravitate consumer

Darren King

if to do true. various growth probably rates guess, I is time years, horizon portfolios, XX and anything change that's your we the of the don't

the the months, resi and of XX the short-term. that, in start term, compared point see the if XX look over much In and portfolios, in the change meaning case, this those because don't commercial just small consumer, mortgage, be other to the as think a C&I. relatively percentage in estate some real would you you on other next probably is short the I like

we alternatives, And don't seen to portfolios and you've for thinking securitizations, at like look instance. auto for look other that that do organizations assumes some those about of the anything

impact an would those have there, do allowance off. in come portfolio one, that on, that in but to you not we and We would a obviously, because going haven't that a the are I'm while. securitization done if suggesting did the one allowance of

So And ours. couple short consistent of with the go years number think we're least guess there I at take But the up. of see I to at that your at of question is, would a your factors. to of are it change couple moving with number running rate that math is answer -- a no

Saul Martinez

a gears Okay. conference. conference little bit. No, November, a it Banc was right. think that's At helpful. early change I just I'll a All in

than was And the your -- highlighted higher You some premium NIM were substantially think of NIM, and you I up been metrics key the than delta of your averages. your it NIM, peer your higher -- substantially versus between the median your what long-term at your today has historically.

a is right? think too conference today. something time. I think November obviously, than, is premium that. am changed that I peers points will think your to And in the I what's since seems over XX high? outlook, peer I historically NIM other historically, to -- not you gravitate your you it's But versus X down group maintain like it mean, I and outlook. like reading or right far be with Am from It that that like that should maybe reading rate that that NIM the it kind excess will hinting elevated remain you were basis neighborhood. your you was that that delta think at NIM, able from that something where And really of

Darren King

Do run pricing on kind I think of because over But on has come book. funding peer That's down guess, in than what premium last we not able this that mix, the two period. cost into one see median be bit higher especially It's that a deposits look is. would down compress. pieces. slightly of on I'll our returns, you and consistent. in categories, performance bit expenses the each period outsized We a but rates to bit. consistent expect quarters, we come manage over between little bank us a you that break can little expect, try time it's slightly of over the been to to our next would and NIM? loans nature adds Yes. apart see It's what of a loan higher objective to delta fairly a and that closest But any further our the of portfolio, we'll gap And been little is when because the little in kind have the we of little been objective also yield time couple of really, our normally of of your need And bit to time, to lower in our up always to credit. better one. largely a better those long our statement a a our be which we but maintain and really see

be little quarter them period, may a bit year. or a And some a of one-time in any move that

that of that's how the try periods kind time, over of But to we to we returns do. bank the achieve long run

that depending to the expect -- earlier stable a margin given in the obviously, expect this the be we relatively we rate margin year. comments environment, stable So

the premium in maintain ending we see expect median. a road, would we to next that, GAAP the in down, up the but bit the back closest median. any movement to GAAP, positive compared Given But probably little we our that our see don't our -- over of and

Saul Martinez

Right.

reason progress. no why So historically, that as long there's as doubt I the rate environment shouldn't remains stable, that that

Darren King

you was From thought your can see, minutes? Wait, use believe that, Yes. XX. about that we going persist. I will were to all what XX comment we

Operator

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

Brian Klock

We're for next good year, right? set a up

Darren King

afraid so. not sure planning we're yet, hopeful. but certainly We're hope We

Brian Klock

is mean, do on But think muffle hope springs eternal I minutes every I bring hope Well, so. morning. year, I left in have the let's So hope let's right? X

questions had good today you've I both few know say these think to that's of before was kinds just we on Saul topics. follow-ups. what referring all afternoon. had of But I quick real

little points, just XX clarify bit I the guidance basis margin of a wanted So Darren? to on

Darren King

Yes.

Brian Klock

whether points? late basis you redeemed I you So is I January, liquidity-driven think XX think was December, all Or early that it guide, some debt.

early that basis sort kind part that XX NIM into So factored improvement point into XXXX? the of of is of

Darren King

is, grand things, the are main It's small is. on in drivers impact. the NIM of cash securities. scheme and impact relatively The It the

Brian Klock

expenses it And those expense it. X% expense inflation expenses. of like Or those normal out, again, XXXX rate, with core it, said, This and sense. mentioned where it And But one call maybe XXXX? than XXXX Got less like are just flat? here, core into XXXX Got consolidated is the out think you makes is a on a basis. in it recycling, M&T is tax all expenses you kind in on do coming run like inflation you question. of feels

Darren King

let I'm the doing Well, recovering from just your plan -- XXXX. for XXXX, alone,

there's and far that I'll I our yet. we year. business of looked that sure how is quite investments Like who growth make we to If and with you bring it a we we those to careful to haven't that be make But expense back run or that remind we bank, the offsetting guess, see very path. revenue. down with So the did mortgage ahead are this

in inflation as believe I mentioned is The where end business, ends matters. this before, up. increase, that unemployment to who of efficiency we'll continue XXXX. banking the low, where stay primarily matters single-digit wage low rates cost-effective The result and But knows we up inflation, being knows through salary

will But where negative, than can early of if to to in less down that And attention So or comments even XXXX. be growth we to that make we will to drive that. of pay a for look do too really me that. lot about course, we something X%

Operator

call MacLeod Thank Don you. comments. return the now closing for will I to

Donald MacLeod

of Thank always, you, news please you the any at or call contact department XXX-XXX-XXXX. as for the goodbye. And participating our thank today. items and necessary, on Relations clarification all if Again, is of any release Investor

Operator

you Conference in the XXXX Thank participating Bank Call. for Earnings Fourth Quarter M&T

now disconnect. may You

M&T Bank (MTB) 23 Jan 202019 Q4 Earnings call transcript