M&T Bank CFO says 'soft landing' more likely than recession

Daryl Bible, M&T Bank’s chief financial officer, says the national economy appears to have more of a chance of making a “soft landing” than slipping into a mild recession.

“The economy is slowing a bit but remains in good health,” Bible said Thursday, as the Buffalo-based bank released its second-quarter earnings. “Job growth, wage growth and spending have slowed to more sustainable levels. We see the so-called soft landing scenario as having the highest probability, but the possibility remains for a mild recession, brought on by the lagged impact of rate hikes.”

Daryl Bible

Daryl Bible, M&T Bank's chief financial officer.

M&T forecasts the Federal Reserve will make two interest rate cuts this year, one each in September and December.

Bible said “pockets” of the economy remain under stress, brought on by the Federal Reserve’s rate hikes over the past couple of years. Consumer spending “has slowed to a pace consistent with job and wage growth, alleviating inflation pressure for many goods and services,” he said.

“The labor market remains positive but has clearly slowed, in turn keeping a lid on wage pressure and leading to longer spells of unemployment,” Bible said. “We expect that to continue for the rest of 2024.”

Bible said inflation remains above the Federal Reserve’s target of 2%, “chiefly because of rent and home prices. We expect the weaknesses seen in rent listings to play through the official inflation data, helping bring the headline inflation figures down.”

In other areas of M&T’s business:

Commercial real estate. In total dollars, criticized loans in M&T’s commercial real estate portfolio dropped by about $1 billion in the second quarter from the first quarter, a sign of progress, Bible said.

Office properties are coping with not only higher interest rates, but also leasing issues, at a time when remote and hybrid work have prompted many employers to scale back their office space.

“We’re very fortunate at M&T where the majority of our leases really mature out (in 2026) and beyond, so we have a much longer time period than maybe other borrowers do,” Bible said.

Potential acquisitions. On a conference call, an analyst asked Bible about M&T’s interest in acquiring another bank.

“To be honest with you, we haven’t really been talking about acquisitions,” Bible said. He added that M&T is focusing on priorities including building out its presence in markets that M&T expanded to through acquiring People’s United Financial in 2022, and optimizing M&T’s revenues and expenses.

Employees. Bible said M&T’s headcount is down “a couple hundred” full-time equivalent employees from the start of the year. The bank has about 22,000 employees across its operations.

“I don’t view it as any specific action or major program of shrinking employees,” Bible said. M&T is looking to hire branch personnel in New England and has numerous job openings posted on LinkedIn, he said.

“We are definitely in the mode of attracting really good talent for the bank,” Bible said.

From 2011 through 2023, M&T said its Western New York employment was up 52%.

Second quarter results. M&T reported net income of $655 million, down 24% from $867 million a year ago. In the second quarter of 2023, M&T recorded a $225 million gain from the sale of a specialty retirement plan investment division within its Wilmington Trust business.

M&T reported second quarter earnings per share of $3.73, down from $5.05 a year earlier.

Stock price. M&T’s stock price has soared lately, climbing above $170 per share on Thursday. As recently as July 5, the stock closed at $146.49.

M&T said it will spend $200 million per quarter on share repurchases in the third and fourth quarters.

Looking ahead. “We are doing a lot of things in this company, serving our clients and communities,” Bible said. “We are also changing how we run the company. We’ve got a couple transformations going on inside. I am so pleased at how well we’re doing that.”

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