M&T Bank Earnings: Solid Q4 Results, 2025 Guidance Mostly In Line with Expectations

Key Morningstar Metrics for M&T Bank

• Fair Value Estimate: $170.00
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High

What We Thought of M&T Bank’s Earnings

M&T Bank MTB reported decent fourth-quarter results. Adjusted earnings per share came in at $3.94, inclusive of positive notables arising from noncore securities gains ($0.08) and pension distribution benefits ($0.05), as well as negative notables arising from trust-preferred obligation redemptions ($0.09) and corporate real estate optimization expenses ($0.12). Adjusted EPS was flat sequentially from $3.94 (excluding discrete tax benefits) in the prior quarter and up from $3.62 (excluding FDIC special assessment charges) in the year-ago quarter. The firm’s revenue outlook at the midpoint for 2025 implies $9.7 billion, slightly above our estimate. As we incorporate the results from the quarter, we continue to view the stock as modestly overvalued, as our fair value estimate of $170 per share remains unchanged.

Net interest income of $1.74 billion was sequentially flat (increased less than 1%), as balance sheet growth was offset by net interest margin compression (to 3.58% from 3.62%). The net interest margin compression was driven by the 16-basis-point reduction in the yield received on the loan book, which composes around 70% of earning assets. We view this as a generally positive outcome, as the Fed cut rates by 100 basis points in the back half of 2024. Total deposit costs declined to 1.90% from 2.06% in the prior quarter, as non-interest-bearing deposits increased by 1% and interest-bearing deposit costs declined by 24 basis points.

Fee income performed solidly in the fourth quarter. Fee revenue of $657 million was up 8% sequentially and 14% from the prior-year quarter, driven by increased mortgage banking revenue and trust income. M&T’s fiscal-year 2025 outlook for fee income of $2.5 billion-$2.6 billion reflects continued strength in trust income and mortgage banking.