Specialist
Former executive at M&T Bank Corp
Agenda
- Operating environment and positioning for M&T Bank (NYSE: MTB) relative to competitors
- Assessment of commercial vs retail banking verticals, with thoughts on ability to grow deposits and maintain healthy credit quality in each
- Commentary on possibility of cost-cutting and restructuring
- Outlook for 2023, including projections for M&A following 2022 acquisition of People's United Bank
Questions
1.
Could you give us an overview of the current operating environment for M&T and other northeast business banking-oriented institutions in the US, extracting key trends or drivers that you think we should monitor?
2.
How would you describe the evolution of M&T’s business in recent years? Where is the bank coming from, where is it going and how do you think it is positioned to get there?
3.
How do you expect the broader macroeconomic environment – the establishment of a high terminal rate and concurrent inflation – to influence M&T’s business banking NIM’s performance?
4.
We’ve heard about M&T’s difficulties in retaining talent and part of that challenge, we hear, is that the company generally does not provide competitive enough commissions. Would you agree with that narrative?
5.
If progressing means attracting better talent, that must then weigh down on M&T’s overall OPEX. Generally, should we expect an overall negative expense ratio?
6.
Do you expect any other cost-cutting measures for M&T to undertake, given other cost pressures now and in the next coming years as we expect further pressure on the banking sector?
7.
You mentioned that M&T is losing a lot of its talent, but can you comment on whether or not you think NIMs have peaked for the bank, given increasing interest rates?
8.
What’s your assessment of the current state of business banking deposit pricing and growth at M&T?
9.
The overall community and regional banking subsect is expected to seep up in competition regarding deposit pricing as banks look to really attract deposits as much as possible. Would you place M&T in the bucket of being a deposit chaser?
10.
Banks of this scale generally have a stigma of being slow-moving in terms of the deposit pricing. How reactive do you think M&T is going to be? What you would expect a reasonable percent change in the deposit pricing to be in Q2 and Q3 2023 as the bank looks to attract more of those deposits?
11.
Can you give us a bit of colour on the typical target market for M&T’s business banking? Who does the company look to attract the most from? Who is its clientele?
12.
How would you assess M&T’s capability to target the higher end of the business banking spectrum, in terms of clients? You mentioned the company targets the middle-tier banking groups, so professionals rather than your mom-and-pops.
13.
What’s stopping M&T, given its current capabilities and besides talent, from tapping into the higher end of the market? Is it just that the rates and programmes aren’t appealing? Is it that the tech doesn’t attract customers? Why isn’t the company able to break into the commercial- or middle-market space?
14.
Given the target audience you’ve outlined, do you expect deposit beta movement at all over the next year? Is there any risk to this client base group?
15.
What churn could you imagine unfolding in the next 1-2 years if M&T doesn’t solve its talent problem?
16.
Do you see M&T reducing its exposure to any particular client base that may pose a risk of jumping ship?
17.
You mentioned how the loan-to-deposit ratio has always been a key metric for M&T in measuring performance, at least in the business banking end. How has that ratio evolved over the last years? If the bank was comfortable with a certain amount before, where do you expect it to be comfortable now? Do you expect it on the higher end of the spectrum or lower end?
18.
What are your thoughts on M&T’s historical business banking credit culture and how might you expect that to have changed in the past year, following the acquisition of People?
19.
Can you comment on the typical loan-to-value range M&T aims for when lending, keeping in mind that conservative vein you mentioned?
20.
How would you assess the ratio in M&T’s lending, between commercial real estate and other business banking – you mentioned the professional segment? What is the typical lending profile in the business banking unit?
21.
What is the proportion of lending in the real estate vs professional – doctors, lawyers – segment? How much of M&T’s lending is going to real estate?
22.
Does M&T have more of a focus on bridge loans or financing now?
23.
How do you expect business banking loan growth to play out in 2023?
24.
Would you say M&T’s talent retention challenge is as big of a hurdle as the lending and deposit-gathering challenges the company faces?
25.
How do you expect provisions to loan loss reserves to play out in 2023? Do you expect M&T to continue allocating capital there which affects its net income?
26.
Can you walk us through M&T’s current competitive landscape for business banking, highlighting the players that you think pose the most risk? You mentioned it might be the community banks.
27.
How would you grade M&T’s ability to remain competitive in the upper end of the business banking market, relative to larger competitors’?
28.
How would you assess the level of M&T’s digital capabilities compared to regional peers’?
29.
Do you see any challenges in the integration of People’s United?
30.
Given the setbacks of this past deal and a vacuum in talent, what’s your outlook for M&T in conducting any further M&A, at least in the next five years? Will the company go quiet for a while or could an acquisition possibly be the solution to its talent vacuum?
31.
Where do you expect M&T to grow further? You mentioned that the company is traditionally keen on staying local and only growing geographically marginally. We’ve heard that a limit for the company is being so footprint-bound and there’s no sense in doubling down the US Northeast market, and therefore it should be going South. Would you agree? Do you think that the company is not expanding in the right places, when it does decide to expand?
32.
What’s your take on M&T’s overall company culture? There was a leadership change just a couple of years back. How has that impacted the rest of the organisation?
33.
What’s your 1-3-5-year outlook for M&T, particularly the business banking segment? Can you walk us through some best-, base- or worst-case scenarios?
