M&T Bank 1Q17 Earnings Call Notes

Darren King – Executive Vice President and Chief Financial Officer

Still reason for optimism, but loan growth has not materialized

“Now turning to the outlook. As we’re now three months into 2017, there’s still reason for optimism. The Fed’s actions on interest rates came faster than we and the market were expecting back in January. The result was that margin expansion happened somewhat earlier than we expected, which in turn led to better growth in net interest income. Loan growth, despite the optimism for change in a more business-friendly administration, has yet to materialize in a meaningful way. And while the pace of loan growth in commercial and consumer categories has slowed somewhat as expected, the pace of pay-downs in residential real estate hasn’t slowed as customers look to lock in current rates in advance of any further increases in rates. The net result is that our outlook for loan growth for the full year of 2017 is a little lower than it was in January in the lower single-digits area, the lower end of our range. Absent any further rate actions by the Fed, there is modest upside to the net interest margin due to the fact that rates move late in the first quarter. ”

Higher interest rate environment challenges mortgage banking

“The higher interest rate environment continues to challenge mortgage banking, specifically with respect to residential mortgage loan originations. Consistent with other mortgage originators, we relaxed margins in the past quarters to sustain volume, which impacted gain on sale revenue. As we’ve noted previously, we have the capacity and the appetite for additional servicing or subservicing business should any opportunities present themselves. This could offer a potential offset for slower originations.”

Credit more of a downside risk than opportunity

“Our outlook for credit remains little changed. However, we must constantly remind ourselves that credit has been benign for several years and that we should view credit more as a downside risk than an upside opportunity. Despite some modest pressure on nonperforming and criticized loans, our outlook for credit losses remains relatively stable.”

Consumer transactions at banks have decreased at an 8-10% rate

“Sure. So if you look at what’s been going on, just to kind of step back and talk about what’s happening with customer behavior and transaction patterns at branches, we’ve seen a slowdown in teller-assisted transactions primarily for consumers over the course of the last four years. And that migration started actually four years ago, five years ago when we started to deploy image enabled ATMs. And the pace of decline for consumer transactions has averaged kind of 8% to 10% per year decrease for consumer teller-assisted transactions.”

Customers are in a wait and see mode

“Our pipeline of approved loans is approximately where it was in the first quarter of last year. So we haven’t seen the pipeline deteriorate materially, but we’ve seen people not following through to date and accepting those loans and moving forward. In general, when we talk to our RMs and talk to the customers, I think the general sentiment is one of optimism, but they’re in kind of a wait-and-see mode. And they’re just waiting, I think, for more certainty about which direction the administration is going to go and their ability to follow through on some of the promises around managing the costs of employees through things like the Affordable Care Act, but also some of the changes to minimum wage and overtime benefits from the FLSA. We are hearing things about fiscal policy and whether that will pull through and when, which I think it’s more a question of when and less a question of if. And it’s those kinds of things that tend to be on the minds of – the tax reform is another thing that’s on our customers’ minds. So it’s all the things that tend to be in the news. And the issue is – it isn’t that optimism has waned, maybe a little bit, but it’s more wait-and-see is kind of the feel that we get from our customers.”

Miscellaneous Earnings Call Notes 10.21.16

Hasbro’s (HAS) CEO Brian Goldner on Q3 2016 Results

Strong POS trends

“So you’re right, Drew. We are in fact seeing really strong POS trends entering the fourth quarter, particularly in the US. We saw a little bit of softness in POS in the late summer, July, August period. And then in September given the shift in Star Wars as well as the impact from Jurassic, that impacted our US POS. Internationally, we’re seeing very strong POS, up double digits, in Europe, up in Latin America, up year to date in Asia-Pacific. And then in the quarter in Asia Pacific, particularly in Australia, recently we’ve seen some retail issues with a retailer where there was just less inventory taken, and a little bit less of a sell-through and therefore impacted that HAPM number, the Asia-Pacific number because of Australia. So overall we feel very good about the POS trends year to date, and the POS trends going into fourth quarter, with a little bit of a note in the third quarter due to some of those timing shifts and some of the brands that have come down significantly versus year ago.”


Kansas City Southern’s (KSU) CEO Patrick Ottensmeyer on Q3 2016

Brian Hancock

Mexican customers very aware of peso changes

Chris, this is Brian. I would tell you that for the customers in Mexico, as they look at the peso, that impacts them significantly. And many of them have asked us price in peso and we have done over the last 18 months. There is still a significant portion of our businesses that is priced in dollars because it’s more of a global basis. But we watch that as they do as well. And we’ve tried to do everything we can to make sure that each other understand where the peso is, how it’s impacting the business.”


UnitedHealth Group’s (UNH) CEO Stephen Hemsley on Q3 2016 Results

Medicaid has been ACA’s biggest success

“Medicaid has been a very significant success of the ACA and wherever that has played out, those markets have actually been more stable and better performing. And Medicare continues to be a core program of the country and that funding for both Medicare and Medicaid is something that we have been advocating consistency and stability of it. Kind of those themes are what we have stayed with. I think commenting beyond that, particularly as new administrations take hold and so forth, our posture is to be very constructive about making the marketplace work most effectively and serving the most number of individuals and making that system simpler and more usable for everybody. So I think beyond commenting on that level, I don’t think we are going to get into what’s going to happen going forward on either a state basis or federal.”


Regions Financial’s (RF) CEO Grayson Hall on Q3 2016 Results

Large customers accessing capital markets to pay down bank debt

“Regarding business lending, average loans are down modestly on a year-over-year basis. We continue to experience muted customer demand and heavy competition in the business segment, particularly in the middle market commercial and small business sectors. We are also seeing some large corporate customers’ accessing the capital markets and are using these proceeds to pay down bank debt”

Barbara Godin

Mortgage delinquencies getting back to all time lows

“Yes firstly they’re all within our risk appetite so we’re very comfortable with what’s happening in the consumer book. What we see is real estate continues to improve in particularly we see home equity was down significantly this quarter. Mortgage is really back to with all-time low tracking along the bottom. Some of the other portfolios that we see indirect is pretty stable.”


Burberry FY 2Q17 Carol Fairweather – Chief Financial Officer

Did see a slight improvement in US but still challenging

“In terms of the U.S., in terms of our plans to turnaround, clearly the U.S. market does remain very challenging. It’s an 80% domestic market for us and both domestic and tourist remain down. That said, we did see, and I said just now, we did see a slightly improvement in Q2, but we are still down low single digit.”

Did see improvement in China

“Okay, so in terms of Chinese trends, Luca, what we are seeing is we just seeing an improvement in our second quarter, both at home and when they were travelling. So China, as I said was up mid-single digit or up double digit excluding the rationalization or evolution of the portfolio. ”


Morgan Stanley’s (MS) CEO James Gorman on Q3 2016 Results

I don’t think I’ve ever seen transaction levels lower than this. It has to change

“I think as having watched this business over two or three decades, I don’t think I’ve seen transaction levels lower than this. And just supposed against that that the business had record revenues is a testament to the managed money side of it, the banking side of it, the deposit side of it, things that frankly 15 years ago really didn’t exist to a highly dependent transaction activity. And the world has changed, investors have changed but we’re sitting on $2.1 trillion of assets. And their behavior has changed whether the transaction stuff picks up; I don’t know post the election, post the Fed moving it remains to be seen. My guess is over time it does, I feel just intuitively, it feels like a low but can it go low, I guess it could go low but probably there is a bias to moving up rather than moving down of the next couple of years that said more and more money is going to fee based accounts.”


SUPERVALU’s (SVU) CEO Mark Gross on Q2 2017 Results

Eric Claus

22 states lowered SNAP benefits

“In addition to deflation, Save-A-Lot has been adversely impacted by the reduction of SNAP benefits in 22 states in which we operate, the factor that is compounded by the fact that our level of SNAP sales is meaningfully higher than other retailers. These states have either lowered the amounts paid to individuals or barred them completely from receiving benefits, a fact that has negatively impacted customer accounts and basket size among our customers using SNAP. ”


M&T Banks’ (MTB) on Q3 2016 Results

You’re certainly starting to hear more people worry about concentration limits in CRE

“Well, I think you’re certainly hearing more people worry about the concentration limits. And I think that’s certainly a concern. I read through some of the other comments from other calls and I recognize that’s a concern. We obviously pay attention to that as well. And when we look at where we stand today, we feel pretty good about the headroom that we have there. But I guess the important thing for us is that we try to do business, particularly in the commercial real estate space, with customers with whom we have a long history of doing business. The equity that’s in the deals is still very strong and as strong as it was pre- the last recession or stronger than that.”

Commercial bankers feeling good about the demand that’s out there

“I guess from speaking with our commercial bankers across the region before coming on the call, they are feeling good about the demand that’s out there. You know, as I mentioned before, our pipeline is very, very strong. It’s in line with what we’ve seen in prior quarters. I think there is a little bit of a pause and I expect there will be a pause this quarter, as we go through the election cycle and people digest what that means and with the change in administration.”


Tupperware Brands’ (TUP) CEO E.V. Goings on Q3 2016 Results

Tupperware’s global sales force is 3.1m people

“We are holding our sales force size at 3.1 million. There is really no change from the second quarter.”


Danaher’s (DHR) CEO Tom Joyce on Q3 2016 Results

We have not seen another leg down in industrials

“Yes. Well, first of all, I think we have seen – while not the beginnings of growth on the industrial side, I think we haven’t seen – we have not seen another leg down. In other words, we have seen some stability. ”


M&T Bank 2Q16 Earnings Call Notes

M&T Bank (MTB) Q2 2016 Results

Darren J. King – Chief Financial Officer & Executive Vice President

The interest rate outlook has shifted

“While our outlook is mostly unchanged from the previous calls, one factor that has changed is the outlook for increases in the Fed funds rate. At the time of our January call, the forward rate curve was implying two actions by the Fed in calendar year 2016. There now appears to be a little prospect for even one increase this year, perhaps not even until mid-next year to late next year. But even without any Fed action, the curve has flattened with the yield on 10-year Treasuries touching an all-time low recently. Our ability to maintain a stable year-over-year margin will be impacted by that changed interest rate outlook, but that could be somewhat offset by our ability to reposition the balance sheet, particularly with respect to trust deposits and the pricing on Hudson City time deposits.”

The only time we see things that look a little crazy is when we see non-bank lenders

“I think when we do see things that look a little crazy to us, either in terms of pricing or structure, it tends to be the non-bank lenders that are in that space, and we would tend to shy away from that and keep our powder dry.”

Thoughts on appetite for acquisition

“That said – and obviously with our capital levels, we’re in a good capital position to do deals. All that said, we’re not interested in doing a deal for a deal’s sake. We’re interested in doing things that are positive for our shareholders. And to us, that means accretive to earnings and capital and we’ll be patient.”

M&T Bank 4Q15 Earnings Call Notes

M&T Bank (MTB) Q4 2015 Results – Earnings Call Transcript

René Jones — CFO

Merger with HCBK finally completed

“we completed the merger with Hudson City Bancorp, which was immediately accretive to M&T’s net operating earnings, risk-based capital ratios and tangible book value per share in-sync with our earlier projection.”

Lending conditions competitive, but demand healthy

“While lending conditions on the commercial side remains very competitive with pressures from both bank- and non-bank-lenders, loan demand remains healthy, bolstered by repeat business with existing customers, who value our relationship approach to lending. ”

Pricing is actually still coming down has smaller banks compete

“In terms of the market it’s kind of interesting. So we characterize it to still be intensely competitive, as other banks are really offering better pricing and then sometimes structure than we’re able to. But on the whole, pricing in lowest market like it’s still coming down slightly, it’s not stable but still coming down. Smaller banks are routinely below 200 basis points in terms of margin, maybe 150 to 160 basis points. We’re seeing places where there is no recourse, limited covenants, and in some cases people waiving due diligence.”

CRE trends are a concern, but there is not yet an oversupply

“We had an annual update that we do on our real estate in our board meeting in November, before all that stuff came out. And it’s sort of mirrored everything we said and talked about, sort of mirrored what the Fed is saying. So those trends are definitely out there. I think one of the things that’s clearly happening at this point in time is that there is still not – in the overall market, some markets may be different, but there is not yet an oversupply. And to us it’s a bit of a warning that you got to keep – you got to watch out for your underwriting.”

Loan growth trends have been really solid

“It’s really clear now that the loan growth trends have been really consistent and very solid. So my sense is, we don’t see any signs of them abating. And quite frankly, as I said, our production in the fourth quarter was relatively high, so slightly positive in my mind in terms of confidence.”

The only place where you see higher spreads/delinquencies is in indirect auto

“The only place and it’s not in M&T’s book, on a national level where you see both higher spreads and higher delinquencies, is in the indirect auto space. When we look at our book, maybe because it’s so concentrated in the 700 FICO space plus, we’ve actually seen no deterioration there. So those are some of the things we’ve been looking at lately.”

We think our optimal capital structure is lower than where it is today, but we’ll have to prove it to regulators

“our thought process is that our optimal capital structure is definitely lower than where it is at today. But we’ll have to work our way through the CCAR and go through that process. Having said that, when you look at this, to us it’s one of the more important things, I mean, it’s why we would go to pretty heavy length to continue to invest and make the CCAR process like perfectly linked with the rest of our processes in the bank, because it’s so important to be able to do well and to be able to show your risk profile, so you can return that capital.”

M&T Bank 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Credit quality remains extremely strong

“Next, let’s turn to credit. Our credit quality remains extremely strong. Non-accrual loans declined further from the end of the third quarter. The ratio of non-accrual loans to total loans declined by 9 basis points to 1.20% at the end of the fourth quarter.”

Both parties remain committed to the HCBK merger

“the merger with the Hudson City Bancorp. As we’ve noted, we feel we have made tremendous progress on all of our initiatives and milestones across our most important work streams. Both parties remain committed to the merger and as you know, agreed to extend the date after which either party may terminate the merger agreement to April 30, 2015.”

There’s consistent competitive pressure

“as I look at this quarter, talking to every single region, the one thing that’s become common is that there is consistent competitive pressure…enerally speaking, the big issue that we are seeing — one of the big issues that we are seeing across the board is that people are moving out in terms of term, 10-year deal structures on commercial real estate.”

A lot of the pressure we’re seeing is coming from small community banks

“a lot of pressure that we’re seeing is coming from the smaller community banks but they just don’t have the breadth of services. So if you’re getting a larger more mature client, we tend to have a bit of an advantage there.”

Non-bank lenders competing in commercial real estate

“We are seeing it mostly in Commercial Real Estate. So you get life companies that have been in the game for quite some time now looking for yield and that’s made things pretty competitive. You’ve also had conduits back in that space. And then the thing that’s little different this cycle is obviously you’ve got non-bank lenders in the form of private equity.

And I think in particular spaces like leverage lending and some spaces like that where the regulation has been tightened up and there is higher scrutiny.”

M&T Bank 3Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

We feel like we’ve made a lot of progress on the items that regulators asked for

” first on the list was improving M&T’s risk governance, our infrastructure, and then all of the training associated with our frontline employees.

Second was that we build a comprehensive risk rating model to better identify potential money laundering risk and that’s been up and running since this spring and so there has been several months to kind of work the kinks out of there and show how that’s working for all the new customers that we have on-boarded since those dates.

Third we have sort of begun a bank wide effort to update our customer information to better understand our customers and how they plan to use the product and services and we have made substantial progress there. Of course that has been going on for almost a year now, maybe just over a year. We have made some substantial progress there.

Fourth was we improved our process for monitoring and reporting suspicious activity reporting and then finally we have sort of implemented a review by a third party to sort of determine whether certain transactions undertaken in the past by our customers were properly identified and reported and of course that’s ongoing.”

“So the way I would characterize it is that we really have made a lot of progress. We feel that we are on track with all the requirements that were outlined in the written agreement that and the plans that we conveyed to our regulators but having said that of course as is typical for these types of things, they take a long time and there is a fair amount of work that obviously would go on beyond the end of 2014 and 2015 to meet the full requirements but at the same time, we believe our progress to date has been substantial.”

We can’t provide a lot of clarity over whether the HCBK deal will finally get through

“So all we can really say is that there is nothing sort of in the timeline that we kind of that has surprised us. We think we’ve met all our milestones in that process and at the point where we are sitting here today I guess we sort of always envisioned that we were going to be – there was very – we still wouldn’t be able on the October call to be able to provide any clarity other than the fact that whether or not we have done what we tried to do and we have done that. And so I think what has to happen is you just have to let that process take its course and give the regulators time to make their assessments and do what they feel is appropriate thing to do. But we feel good about the work we have done. That’s sort of the best I can share with you.”

There’s so much excess liquidity, we don’t have use for it

“And so given where we are now where we have got more deposits because of the – quite frankly us but also the industry has just flushed with the excess liquidity that exists nationally there is no really use for that. We put it aside and it goes into the Fed and we earn interest income but it tends to dampen a bit of our tangible ratio and it of course dampens the printed net interest margin. ”

We are hearing that economic conditions are slowly improving

“The good news is that what we are hearing is that sort of several of our regions are suggesting that the actual – there is a slowly improving underlying economic condition and we are hearing that almost across each of the footprint.”

People are stretching on terms and deal structure

“The down side is for us is that people are stretching on terms, they are stretching on particular stuff deal structures and the one of that strikes me the most is that when we are stretching out going past ten years, or going out to ten years in terms of term structure. And particularly if you think about the idea that there is huge amounts of liquidity in the system, indirectly that means that asset prices are very, very high. And if that liquidity were to not be around, you start to wonder about looking at deals with the ten year structure and really whether they can sustain those higher rates and so forth.”

M&T Bank 1Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$MTB Earnings Call Notes

“industry as a whole is subject to a heightened regulatory environment and expectations”

“if you look at recent merger activity in the banking sector, the trend seems to be that it’s taking notably longer to get regulatory approvals.”

“We recently were made aware of the fact that certain deficiencies in our BSA/AML [Bank Secrecy Act and anti-money laundering] compliance program rose to a level of significance such that they would impact our ability to close the merger with Hudson City in the near term”

“Both companies remain strongly committed to this merger as it is a highly beneficial transaction for each of us”

“We have no reason to believe that the issues involve any wrongdoing or illegal conduct by anyone in M&T work or any identifiable instances of actual money laundering activity using our bank.”

“we should be helped by who we are — who and what we are. Compared to some other institutions that have had these issues, M&T is relatively uncomplicated and locally focused business. We don’t have any significant international operations and don’t have the kinds of diverse complex businesses that the larger money center banks are engaged in.”

“return on average tangible assets and average tangible common shareholders’ equity, was 1.48% and 18.71%”

“loan growth for the first quarter was pretty much in line with our outlook…annualized 5%”

“Consumer loans declined an annualized 5%”

“Average core customer deposits, which excludes deposits received at M&T’s Cayman branch and CDs over $250,000, grew at an annualized 2%”

“Annualized net charge-offs as a percentage of total loans were 23 basis points”

“in upstate New York, as we talk to people and actually all the way across through Albany, we’re seeing that some of the clients are actually — have more utilization in their lines, that we’re hearing stories of people looking to make capital investment, a few capital investments. When you flip all the way down to the other end of the franchise, in Washington D.C., it’s more reserved, people are worried about the sequester, the competition has picked up.”

“You’ve got to keep making investments [in compliance]. A huge change is going on in the industry. And it’s not a matter of sort of saying, well, I was okay last year, so I’ll be okay this year. You’ve got to make those investments”