M&T BANK CORP MTB

M&T Bank has outlined two key priorities for 2026: 'Operational Excellence' and 'Teaming for Growth'. Operational Excellence focuses on building an enterprise that can operate at scale with greater consistency, efficiency, and transparency, streamlining processes, and maturing capabilities like automation. Teaming for Growth emphasizes a unified, enterprise-wide approach to growth, integrating market insights with the scale of M&T and Wilmington Trust to deepen client relationships and coordinate planning across retail, commercial, and wealth segments. These initiatives are expected to drive consistent value and long-term performance.

Average loans and leases increased by $1.1 billion to $137.6 billion in Q4 FY25, driven by commercial, residential mortgage, and consumer loans, partially offset by a nominal decline in CRE. Commercial loans increased $0.5 billion to $62.2 billion, aided by growth in dealer commercial services, REIT lending, business banking, and fund banking. CRE loans declined 1% to $24.1 billion, but the pace of decline is slowing. Management expects full-year average loans to be $140 billion to $142 billion in FY26, with point-to-point growth across all four main loan portfolios, and CRE balances expected to inflect positively in Q2 FY26.

Average total deposits rose $2.4 billion to $165.1 billion in Q4 FY25, with interest-bearing deposits increasing $2.2 billion and noninterest-bearing deposits increasing $0.1 billion. Interest-bearing deposit costs decreased 19 basis points to 2.17%. The bank remains focused on growing customer deposits at a reasonable cost, with broad-based growth expected across all business lines in FY26. Management believes DDA balances will bottom out and begin to grow when the Fed funds rate reaches around 3%, and they are investing heavily in treasury management services to support this growth.

Noninterest income was $696 million in Q4 FY25, with mortgage banking revenues up to $155 million and trust income increasing to $184 million. For FY25, fee income grew 13% to a record $2.7 billion. For FY26, noninterest income is guided to be $2.675 billion to $2.775 billion, with core fee growth of about 4% excluding the impact of an accounting change. Effective January 1, M&T elected to carry residential MSRs at fair value, netting MSR amortization against mortgage banking revenues, which has minimal impact on net income but reduces both reported fee income and expenses by approximately $75 million.

M&T's CET1 ratio was an estimated 10.84% in Q4 FY25, a 15 basis point decline from Q3 due to $507 million in share repurchases and increased risk-weighted assets. The MSR fair value election adds $197 million in regulatory capital, an 8 basis point benefit to the CET1 ratio. Management expects to operate with a CET1 ratio of 10.25% to 10.5% in FY26, noting significant flexibility to support lending, pursue opportunistic inorganic growth, and return excess capital to shareholders, including being opportunistic with share repurchases.