M&T Bank · 10-Q · Item 2 MD&A

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and other information included in this Quarterly Report on Form 10-Q as well as with M&T's 2025 Annual Report. Information regarding the Company's business, its supervision and regulation and potential risks and uncertainties that may affect the Company's business, financial condition, liquidity and results of operations are also included in the 2025 Annual Report.

In conjunction with the implementation of a new general ledger platform during the second quarter of 2026, the Company modified its methodology for calculating annualized taxable-equivalent rates for certain earning assets and interest-bearing liabilities, including certain average deposit balances. Previously reported amounts have been adjusted to conform to the current presentation.

Financial Overview

A summary of financial results for the Company is provided below.

SUMMARY OF FINANCIAL RESULTS

Three Months Ended

Change

Six Months Ended

Change

(Dollars in millions, except per share)

Amount

%

Amount

%

Net interest income

$

$

$

2

%

$

$

$

4

%

Taxable-equivalent adjustment (a)

1

1

2

Net interest income (taxable-equivalent basis) (a)

2

4

Provision for credit losses

5

2

Other income

8

Other expense

-6

1

Net income

Per common share data:

Basic earnings

Diluted earnings

Performance ratios, annualized

Return on:

Average assets

%

%

%

%

Average common shareholders’ equity

Net interest margin

__________________________________________________________________________________

(a)Net interest income data are presented on a taxable-equivalent basis which is a non-GAAP measure. The taxable-equivalent adjustment represents additional income taxes that would be due if all interest income were subject to income taxes. This adjustment, which is related to interest received on qualified municipal securities, industrial revenue financings and preferred equity securities, is based on the statutory federal income tax rate.

Effective January 1, 2026, the Company elected to prospectively measure its residential mortgage loan servicing right assets at fair value with changes in fair value reflected in mortgage banking revenues. As a result, amortization associated with residential mortgage loan servicing right assets previously recognized in other costs of operations is no longer recorded. Instead, beginning in 2026, fair value changes in the mortgage loan servicing right assets, inclusive of the realization of expected net servicing revenues over time, are included in mortgage banking revenues. On December 31, 2025, the Company began economically hedging the risk of fair value changes in these assets through the use of various interest rate and other derivative contracts, for which changes in fair value are also reflected in mortgage banking revenues.

As a result of the Company's election on January 1, 2026 to prospectively measure residential mortgage loan servicing right assets at fair value, the Company recorded an increase in capitalized servicing assets included in accrued interest and other assets of $263 million and a corresponding after-tax increase to retained earnings of $197 million, representing an 8 basis-point increase to the CET1 capital ratio on the election date.

The increase in net income in the recent quarter as compared with the first quarter of 2026 resulted from the following:

•Net interest income on a taxable-equivalent basis increased $41 million reflecting an additional calendar day in the recent quarter, higher interest income on nonaccrual loans and growth in average earning assets. The Company's net interest margin was unchanged.

•The provision for credit losses decreased $20 million reflecting a decrease in the level of criticized loans in the recent quarter and a provision for unfunded credit commitments in the first quarter of 2026, partially offset by loan growth in the second quarter of 2026.

•T1Noninterest income increased $51 million resulting from a higher distribution from M&T's investment in BLG in the recent quarter and increases in trust income and revenues from interest rate swap agreements entered into for commercial customers.

•Noninterest expense declined $89 million reflecting seasonal salaries and employee benefits expense in the first quarter of 2026.

The increase in net income in the six months ended June 30, 2026 as compared with the same 2025 period reflected the following:

•Net interest income on a taxable-equivalent basis increased $138 million reflecting higher average earning assets and a 6 basis-point expansion of the net interest margin as reductions in deposit and borrowing costs outpaced a decline in yields received on earning assets.

•The provision for credit losses rose modestly as loan growth and the potential negative impact of global conflicts on economic forecasts was largely offset by a decline in the level of criticized loans.

•Noninterest income increased $135 million reflecting distributions of $80 million from M&T's investment in BLG in the first half of 2026, higher trust income and an increase in revenues from interest rate swap agreements entered into for commercial customers. Mortgage banking revenues in the first half of 2026 reflected the impact of the Company's accounting election described herein.

•Noninterest expense increased $36 million reflecting higher levels of salaries and employee benefits expense, outside data processing and software costs and professional and other services expense, partially offset by lower other costs of operations. Other costs of operations in the first half of 2025 included amortization of residential mortgage loan servicing right assets of $51 million.

The Company's effective income tax rate was 23.1% for each of the second quarter of 2026 and the six months ended June 30, 2026, compared with 23.0% and 23.3% for the first quarter of 2026 and the six months ended June 30, 2025, respectively.

Under programs authorized by the Board of Directors, T2M&T repurchased 2.1 million shares of its common stock during the recent quarter at a total cost of $465 million, compared with 5.5 million shares at a total cost of $1.25 billion in the first quarter of 2026. During the six months ended June 30, 2026, M&T repurchased 7.6 million shares of its common stock at a total cost of $1.71 billion, compared with 9.5 million shares at a total cost of $1.74 billion during the first six months of 2025.

Supplemental Reporting of Non-GAAP Results of Operations

M&T consistently provides supplemental reporting of its results on a “net operating” or “tangible” basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and gains (when realized) and expenses (when incurred) associated with merging acquired or to be acquired operations into the Company, since such items are considered by management to be “nonoperating” in nature. Although “net operating income” as defined by M&T is not a GAAP measure, M&T’s management believes that this information helps investors understand the effect of acquisition activity in reported results.

SUPPLEMENTAL REPORTING OF NON-GAAP RESULTS OF OPERATIONS

Three Months Ended

Change

Six Months Ended

Change

(Dollars in millions, except per share)

Amount

%

Amount

%

Net operating income

$

$

$

%

$

$

$

%

Diluted net operating earnings per share

Annualized return on:

Average tangible assets

%

%

%

%

Average tangible common equity

Efficiency ratio

Tangible equity per common share (a)

$

$

1

$

$

4

__________________________________________________________________________________

(a)At the period end.

The efficiency ratio measures the relationship of noninterest operating expenses, which exclude expenses M&T considers to be "nonoperating" in nature consisting of amortization of core deposit and other intangible assets and merger-related expenses, to revenues. The calculations of the Company’s efficiency ratio, or noninterest operating expenses divided by the sum of taxable-equivalent net interest income and noninterest income (exclusive of gains and losses from bank investment securities), and reconciliations of GAAP amounts with corresponding non-GAAP amounts are presented in Table 2.

Taxable-equivalent Net Interest Income

Interest income earned on certain of the Company's assets is exempt from federal income tax. Taxable-equivalent net interest income is a non-GAAP measure that adjusts income earned on a tax-exempt asset to present it on an equivalent basis to interest income earned on a fully taxable asset. The Company's average balance sheets accompanied by the taxable-equivalent interest income and expense and the annualized average rate on the Company's earning assets and interest-bearing liabilities are presented as follows.

AVERAGE BALANCE SHEETS AND ANNUALIZED TAXABLE-EQUIVALENT RATES

Three Months Ended

(Dollars in millions)

Average

Balance

Interest

Average

Rate

Average

Balance

Interest

Average

Rate

Assets

Earning assets:

Loans (a):

Commercial and industrial

$

$

%

$

$

%

Real estate - commercial

Real estate - residential

Consumer

Total loans

Interest-bearing deposits at banks

Investment securities (b):

U.S. Treasury

Mortgage-backed securities (c)

State and political subdivisions

Other

Total investment securities

Other

—

—

—

—

Total earning assets

Goodwill

Core deposit and other intangible assets

Other assets

Total assets

$

$

Liabilities and shareholders’ equity

Interest-bearing liabilities:

Interest-bearing deposits:

Savings and interest-checking deposits

$

$

%

$

$

%

Time deposits

Total interest-bearing deposits

Short-term borrowings

Long-term borrowings

Total interest-bearing liabilities

Noninterest-bearing deposits

Other liabilities

Total liabilities

Shareholders’ equity

Total liabilities and shareholders’ equity

$

$

Net interest spread

Contribution of interest-free funds

Net interest income/margin on earning assets

$

%

$

%

Total deposits

$

$

%

$

$

%

__________________________________________________________________________________

(a)Includes nonaccrual loans.

(b)Includes available-for-sale securities at amortized cost.

(c)Primarily government issued or guaranteed.

AVERAGE BALANCE SHEETS AND ANNUALIZED TAXABLE-EQUIVALENT RATES (continued)

Six Months Ended

(Dollars in millions)

Average

Balance

Interest

Average

Rate

Average

Balance

Interest

Average

Rate

Assets

Earning assets:

Loans (a):

Commercial and industrial

$

$

%

$

$

%

Real estate- commercial

Real estate - residential

Consumer

Total loans

Interest-bearing deposits at banks

Investment securities (b):

U.S. Treasury

Mortgage-backed securities (c)

State and political subdivisions (d)

Other

Total investment securities

Other

—

—

2

Total earning assets

Goodwill

Core deposit and other intangible assets

Other assets

Total assets

$

$

Liabilities and shareholders’ equity

Interest-bearing liabilities:

Interest-bearing deposits:

Savings and interest-checking deposits

$

$

%

$

$

%

Time deposits

Total interest-bearing deposits

Short-term borrowings

Long-term borrowings

Total interest-bearing liabilities

Noninterest-bearing deposits

Other liabilities

Total liabilities

Shareholders’ equity

Total liabilities and shareholders’ equity

$

$

Net interest spread

Contribution of interest-free funds

Net interest income/margin on earning assets

$

%

$

%

Total deposits

$

$

%

$

$

%

__________________________________________________________________________________

(a)Includes nonaccrual loans.

(b)Includes available-for-sale securities at amortized cost.

(c)Primarily government issued or guaranteed.

(d)The yield on state and political subdivision investment securities for the six-month period ended June 30, 2025 reflects $18 million of lower taxable-equivalent interest income resulting from an alignment of amortization periods for certain municipal bonds obtained from the acquisition of People's United Financial, Inc.

Taxable-equivalent net interest income can be impacted by changes in the composition of the Company's earning assets and interest-bearing liabilities, as discussed herein, as well as changes in interest rates and spreads. The FOMC lowered its federal funds target interest rate by a total of 75 basis points in the last four months of 2025 and maintained its target through the second quarter of 2026.

Taxable-equivalent net interest income increased $41 million in the recent quarter as compared with the first quarter of 2026 reflective of an additional calendar day in the recent quarter, an increase in interest income on nonaccrual loans and higher average earning assets. The net interest margin remained unchanged at 3.70% reflecting a 5 basis-point increase in yields received on earning assets offset by a 4 basis-point increase in rates paid on interest-bearing liabilities and a 1 basis-point decrease in the contribution of interest-free funds.

Taxable-equivalent net interest income for the first six months of 2026 increased $138 million as compared with the same 2025 period. That increase reflects a 6 basis-point widening of the net interest margin driven by a 35 basis-point decrease in the cost of interest-bearing liabilities, partially offset by a 13 basis-point decline in yields received on earning assets. Contributing to those changes was the aforementioned FOMC interest rate reductions in 2025. The yields received on earning assets in the first six months of 2026 reflect a comparatively favorable impact from interest rate swap agreements entered into for interest rate risk purposes on yields received on commercial and industrial and commercial real estate loans.

Partially offsetting the overall decline in yields received on earning assets was an increase in the yields received on investment securities from the deployment of liquidity into fixed rate investment securities throughout 2025 and the first six months of 2026 that yielded higher rates than investment securities that matured or were sold. The 22 basis-point increase in net interest spread was partially offset by a 16 basis-point reduction in the contribution of interest-free funds, reflecting a lower rate environment.

Future changes in market interest rates or spreads, as well as changes in the composition of the Company’s portfolios of earning assets and interest-bearing liabilities that result in changes to spreads, could impact the Company’s net interest income and net interest margin. Future changes in the levels of net interest-free funds and the interest rates used to value such funds could also impact the Company's net interest margin.

Interest rate swap agreements

Management assesses the potential impact of future changes in interest rates and spreads by projecting net interest income under several interest rate scenarios. In managing interest rate risk, T3the Company has utilized interest rate swap agreements to modify the repricing characteristics of certain portions of its earning assets and interest-bearing liabilities. Under the terms of those interest rate swap agreements, the Company generally received payments based on the outstanding notional amount at fixed rates and made payments at variable rates. Periodic settlement amounts arising from these agreements are reflected in either the yields received on earning assets or the rates paid on interest-bearing liabilities. The Company enters into forward-starting interest rate swap agreements predominantly to hedge interest rate exposures expected in future periods. The following table summarizes information about interest rate swap agreements entered into for interest rate risk management purposes at June 30, 2026 and December 31, 2025.

INTEREST RATE SWAP AGREEMENTS - DESIGNATED AS HEDGES

Notional Amount

Weighted-Average

Maturity

(In years)

Weighted-

Average Rate

(Dollars in millions)

Fixed

Variable

Fair value hedges:

Fixed rate long-term borrowings — active

$

%

%

Total fair value hedges

Cash flow hedges:

Variable rate commercial real estate and commercial and industrial loans:

Active

Forward-starting

Total cash flow hedges

Total

$

Fair value hedges:

Fixed rate long-term borrowings — active

$

%

%

Fixed rate long-term borrowings — forward-starting

Total fair value hedges

Cash flow hedges:

Variable rate commercial real estate and commercial and industrial loans:

Active

Forward-starting

Total cash flow hedges

Total

$

Information regarding the fair value of interest rate swap agreements designated as fair value hedges and cash flow hedges is presented in note 11 of Notes to Financial Statements. The average notional amounts of interest rate swap agreements entered into for interest rate risk management purposes (excluding forward-starting interest rate swap agreements not in effect during the quarter), the related effect on net interest income and margin, and the weighted-average interest rates received or paid on those swap agreements are presented in the table that follows.

INTEREST RATE SWAP AGREEMENTS - EFFECT ON NET INTEREST INCOME

Three Months Ended

Six Months Ended

(Dollars in millions)

Amount

Rate (a)

Amount

Rate (a)

Amount

Rate (a)

Amount

Rate (a)

Increase (decrease) in:

Interest income

$

8

%

$

5

%

$

%

$

%

Interest expense

3

4

7

Net interest income/margin

$

5

%

$

1

—

%

$

6

%

$

%

Average notional amount (b)

$

$

$

$

Rate received (c)

%

%

%

%

Rate paid (c)

__________________________________________________________________________________

(a)Computed as an annualized percentage of average earning assets or interest-bearing liabilities.

(b)Excludes forward-starting interest rate swap agreements not in effect during the period.

(c)Weighted-average rate received or paid on interest rate swap agreements in effect during the period.

Lending activities

The following table summarizes changes in the components of average loans.

AVERAGE LOANS

Three Months Ended

Six Months Ended

(Dollars in millions)

Percentage Change

Percentage Change

Commercial and industrial

$

$

4

%

$

$

6

%

Real estate - commercial

—

-9

Real estate - residential

1

6

Consumer:

Home equity lines and loans

1

5

Recreational finance

3

Automobile

-2

—

Other

2

7

Total consumer

2

7

Total

$

$

2

%

$

$

4

%

T4Average loans totaled $141.4 billion in the second quarter of 2026, up $3.0 billion from the first quarter of 2026.

•Average commercial and industrial loans increased $2.3 billion reflecting growth that spanned most industry types.

•Commercial real estate loans increased $57 million, reflecting an increase of $243 million in average permanent commercial real estate loans, partially offset by a reduction of $186 million in average construction commercial real estate loans.

•Average residential real estate loans increased $269 million reflecting purchases in the second quarter of 2026 and the retention of originated residential mortgage loans.

•Average consumer loans increased $413 million reflecting higher average balances of recreational finance loans of $408 million.

In the first six months of 2026, average loans increased $4.8 billion from the corresponding 2025 period.

•Average commercial and industrial loans increased $3.9 billion reflecting growth that spanned most industry types.

•Average commercial real estate loans declined $2.3 billion as the Company executed various strategies to reduce its relative concentration of such loans designated as criticized. Average permanent and construction commercial real estate loans decreased by $134 million and $2.1 billion, respectively. The decline in average commercial real estate construction loans reflects the sale of $661 million of out-of-footprint residential builder and developer loans in June 2025.

•Average residential real estate loans increased $1.5 billion reflecting the retention of originated residential mortgage loans and purchases.

•Average consumer loans increased $1.7 billion reflecting growth in average recreational finance loans of $1.3 billion and home equity loans and lines of credit of $237 million.

Commercial and industrial borrowers in the financial and insurance industry include real estate investment trusts and other specialty lending businesses including fund banking companies and mortgage warehouse lending businesses. At June 30, 2026 and December 31, 2025, approximately 91% and 89% of loans to the financial and insurance industry, respectively, and 7% of loans to the services industry, at each of those dates, were designated as loans to NDFIs as prescribed in regulatory guidance applicable to the Company. The following table presents commercial and industrial commitments and outstanding balances of loans to NDFIs at June 30, 2026 and December 31, 2025.

COMMERCIAL AND INDUSTRIAL COMMITMENTS AND LOANS TO NDFIs

(Dollars in millions)

Commitment Amount

Outstanding Balance

Commitment Amount

Outstanding Balance

Mortgage credit intermediaries (a)

$

$

$

$

Private equity funds (b)

Business credit intermediaries (c)

Consumer credit intermediaries (d)

Other

Total

$

$

$

$

__________________________________________________________________________________

(a)Includes real estate investment trust credit facilities, residential mortgage warehouse lines of credit and mortgage loan servicing rights secured financing.

(b)Primarily subscription credit facilities.

(c)Includes credit facilities to wholesale lender finance and leasing companies and business development companies.

(d)Includes credit facilities to consumer lender finance and leasing companies.

Investing activities

The Company's investment securities portfolio is primarily comprised of government-issued or guaranteed residential and commercial mortgage-backed securities and U.S. Treasury securities, but also includes municipal and other securities. When purchasing investment securities, the Company considers its liquidity position and its overall interest rate risk profile as well as the adequacy of expected returns relative to risks assumed, including prepayments. The Company may occasionally sell investment securities as a result of movements in interest rates and spreads, changes in liquidity needs, actual or anticipated prepayments, credit risk associated with a particular security, or as a result of restructuring its investment securities portfolio. The amounts of investment securities held by the Company are influenced by such factors as available yield in comparison with alternative investments, demand for loans, which generally yield more than investment securities, ongoing repayments, the levels of deposits, and management of liquidity and balance sheet size and resulting capital ratios. Information about the Company's average investment securities portfolio is presented in the following table.

AVERAGE INVESTMENT SECURITIES

Three Months Ended

Six Months Ended

(Dollars in millions)

Percentage Change

Percentage Change

Investment securities available for sale:

U.S. Treasury

$

$

%

$

$

%

Mortgage-backed securities (a)

Other

1

1

—

1

3

Total available for sale

4

Investment securities held to maturity:

U.S. Treasury

-2

Mortgage-backed securities (a)

-2

-9

State and political subdivisions

-2

-9

Other

1

1

-3

1

1

Total held to maturity

-2

Equity and other securities

8

Total investment securities

$

$

2

%

$

$

%

__________________________________________________________________________________

(a)Primarily government issued or guaranteed.

The investment securities portfolio averaged $38.7 billion in the second quarter of 2026, up $883 million from the first quarter of 2026, and $38.3 billion for the six months ended June 30, 2026, an increase of $3.4 billion from the similar 2025 period. Those increases reflect the Company's deployment of liquidity into primarily fixed-rate mortgage-backed investment securities classified as available for sale. In the first quarter of 2026 the Company sold $2.5 billion of U.S. Treasury securities, all of which had maturity dates in 2026. There were no significant sales of debt investment securities in the second quarter of 2026. As a result of the purchases of higher-yielding securities and sales, paydowns and maturities of lower-yielding securities, the weighted-average current yield for total investment securities available for sale increased to 4.73% and 4.71% at June 30, 2026 and March 31, 2026, respectively, from 4.50% at June 30, 2025.

The weighted-average duration of that portfolio was 3.1 years at each of June 30, 2026 and March 31, 2026 as compared with 2.6 years at June 30, 2025. The increase in the weighted-average duration from June 30, 2025 reflects the sale of U.S. Treasury securities near maturity and purchase of fixed-rate mortgage-backed investment securities with longer maturity dates. In July 2026, the Company transferred $8.3 billion of residential mortgage-backed securities from the available-for-sale portfolio to the held-to-maturity portfolio with gross unrealized gains of $32 million and gross unrealized losses of $24 million at the time of transfer. The Company routinely adjusts its holdings of capital stock of the FHLB of New York and the FRB of New York based on amounts of outstanding borrowings and available lines of credit with those entities.

The Company regularly reviews its debt investment securities for declines in value below amortized cost that might be indicative of credit-related losses. There were no credit-related losses on debt investment securities recognized in each of the six months ended June 30, 2026 and June 30, 2025. Additional information about the investment securities portfolio is included in notes 3 and 13 of Notes to Financial Statements.

Other earning assets are comprised primarily of interest-bearing deposits at banks. Other earning assets averaged $15.1 billion and $16.3 billion during the three months ended June 30, 2026 and March 31, 2026, respectively, and $15.7 billion and $19.8 billion during the six months ended June 30, 2026 and 2025, respectively. The amounts of other earning assets at those respective dates were primarily comprised of deposits held at the FRB of New York. The Company considers such deposits to be an immediate source of funds in its liquidity management processes. In general, the levels of those deposits often fluctuate due to changes in deposits of retail and commercial customers, trust-related deposits and brokered deposits, lending activities and additions to or maturities of investment securities or borrowings.

Funding activities - deposits

The most significant source of funding for the Company is core deposits from its customer base. The Company considers noninterest-bearing deposits, savings and interest-checking deposits and time deposits of $250,000 or less as core deposits. The Company’s domestic banking network is its principal source of core deposits, which generally carry lower interest rates than wholesale funds of comparable maturities. Average core deposits represented 79% of average earning assets for each of the quarters ended June 30, 2026 and March 31, 2026 and for the six months ended June 30, 2026 and 78% for the six months ended June 30, 2025. The Company also utilizes brokered deposits as a component of its wholesale funding strategy.

Depending on market conditions, including demand by customers and other investors, and the cost of funds available from alternative sources, the Company may change the amount or composition of brokered deposits in the future. The following table provides an analysis of changes in the components of average deposits.

AVERAGE DEPOSITS

Three Months Ended

Six Months Ended

(Dollars in millions)

Percentage Change

Percentage Change

Noninterest-bearing deposits

$

$

-1

%

$

$

-2

%

Savings and interest-checking deposits (a)

3

6

—

-5

Total core deposits (a)

2

3

2

-5

Brokered savings and interest-checking deposits (a)

Brokered time deposits

-5

Total deposits

$

$

—

%

$

$

1

%

__________________________________________________________________________________

(a)During the second quarter of 2026, certain savings and interest-checking deposit arrangements were redesignated as core deposits consistent with regulatory presentation. The resulting increase in average core deposits and decrease in average brokered deposits was $3.5 billion for the quarter ended June 30, 2026 and $1.8 billion for the six months ended June 30, 2026.

T5Total deposits averaged $163.5 billion in the recent quarter, down $652 million from the first quarter of 2026. Lower average noninterest-bearing deposits of $583 million and average brokered savings and interest-checking deposits were partially offset by an increase in average brokered time deposits of $682 million.

In the first six months of 2026, total average deposits increased $1.7 billion from the corresponding 2025 period. Average core deposits increased $4.3 billion reflecting growth in average savings and interest-checking deposits from commercial customers and the redesignation of certain deposit arrangements in the second quarter of 2026. Partially offsetting that increase was lower average noninterest-bearing deposits predominantly from commercial customers.

The accompanying table summarizes the components of average total deposits by reportable segment for the three months ended June 30, 2026 and March 31, 2026 and the six months ended June 30, 2026 and 2025.

AVERAGE DEPOSITS BY REPORTABLE SEGMENT

(Dollars in millions)

Commercial Bank

Retail Bank

Institutional Services and Wealth Management

All Other

Total

Noninterest-bearing deposits

$

$

$

$

$

Savings and interest-checking deposits

Time deposits

Total

$

$

$

$

$

Noninterest-bearing deposits

$

$

$

$

$

Savings and interest-checking deposits

Time deposits

Total

$

$

$

$

$

Noninterest-bearing deposits

$

$

$

$

$

Savings and interest-checking deposits

Time deposits

Total

$

$

$

$

$

Noninterest-bearing deposits

$

$

$

$

$

Savings and interest-checking deposits

Time deposits

Total

$

$

$

$

$

Funding activities - borrowings

The following table summarizes the average balances utilized from the Company's short-term and long-term borrowing facilities and note programs.

AVERAGE BORROWINGS

Three Months Ended

Six Months Ended

(Dollars in millions)

Short-term borrowings:

Federal funds purchased and repurchase agreements

$

$

$

$

FHLB advances

Total short-term borrowings

Long-term borrowings:

Senior notes

FHLB advances

3

3

3

Subordinated notes

Junior subordinated debentures

Asset-backed notes

Other

Total long-term borrowings

Total borrowings

$

$

$

$

The Company uses borrowing capacity from banks, the FHLBs, the FRB of New York and others as sources of funding. Short-term borrowings represent arrangements that at the time they were entered into had a contractual maturity of one year or less. The higher levels of short-term borrowings in the second quarter of 2026 as compared with the first quarter of 2026, as well as for the six months ended June 30, 2026 as compared with the similar 2025 period reflect the Company's management of liquidity and growth in its earning assets.

The levels of long-term borrowings reflect the Company's strategies to diversify its wholesale funding sources to provide long-term funding stabilization. The following table provides a summary of the Company's issuances, maturities and redemptions of long-term borrowings in the recent quarter as well as for the six months ended June 30, 2026.

LONG-TERM BORROWING ISSUANCES, MATURITIES AND REDEMPTIONS

(Dollars in millions)

Issuances (a):

Senior notes of M&T Bank

$

$

Subordinated notes of M&T

Asset-backed notes

Maturities/Redemptions (b):

__________________________________________________________________________________

(a)At par value.

(b)Excludes paydowns of asset-backed notes. There were no significant maturities or redemptions of long-term borrowings in the first six months of 2026.

Additional information regarding borrowings is provided in notes 5 and 12 of Notes to Financial Statements.

Provision for Credit Losses

A provision for credit losses is recorded to adjust the level of the allowance to reflect expected credit losses that are based on economic forecasts as of each reporting date. A provision for credit losses of $120 million was recorded in the second quarter of 2026, compared with $140 million in the first quarter of 2026. The provision for credit losses included $15 million of provision for unfunded credit commitments in the first quarter of 2026. There was no provision for unfunded credit commitments in the recent quarter. The lower provision for credit losses in the second quarter of 2026 as compared with the first quarter of 2026 reflects improved performance of loans to commercial customers. For the six months ended June 30, 2026 and 2025, the Company recorded a provision for credit losses of $260 million and $255 million, respectively.

A summary of the Company's net charge-offs by loan type and as an annualized percent of such average loans is presented in the table that follows.

NET CHARGE-OFF (RECOVERY) INFORMATION

Three Months Ended

(Dollars in millions)

Net Charge-Offs (Recoveries)

Annualized Percent of Average Loans

Net Charge-Offs (Recoveries)

Annualized Percent of Average Loans

Commercial and industrial

$

%

$

%

Real estate:

Commercial

6

Residential builder and developer

—

—

—

—

Other commercial construction

—

—

—

—

Residential

—

—

(1)

Consumer:

Home equity lines and loans

—

—

—

—

Recreational finance

Automobile

5

6

Other

Total

$

%

$

%

Six Months Ended

(Dollars in millions)

Net Charge-Offs (Recoveries)

Annualized Percent of Average Loans

Net Charge-Offs (Recoveries)

Annualized Percent of Average Loans

Commercial and industrial

$

%

$

%

Real estate:

Commercial

Residential builder and developer

—

—

—

—

Other commercial construction

—

—

2

Residential

(1)

—

—

Consumer:

Home equity lines and loans

—

—

(1)

Recreational finance

Automobile

Other

Total

$

%

$

%

Asset quality

A summary of nonperforming assets and certain past due loan data and credit quality ratios is presented in the accompanying table.

NONPERFORMING ASSET AND PAST DUE LOAN DATA

(Dollars in millions)

Nonaccrual loans

$

$

$

$

Real estate and other foreclosed assets

Total nonperforming assets

$

$

$

$

Accruing loans past due 90 days or more

$

$

$

$

Government-guaranteed loans included in totals above:

Nonaccrual loans

Accruing loans past due 90 days or more (a)

Nonaccrual loans as a percent of total loans

%

%

%

%

Nonperforming assets as a percent of total loans and

real estate and other foreclosed assets

Accruing loans past due 90 days or more as a percent of total loans

Loans 30-89 days past due as a percent of total loans

__________________________________________________________________________________

(a)Primarily government-guaranteed residential real estate loans.

T6Nonaccrual loans at June 30, 2026 decreased modestly from March 31, 2026 and $365 million from June 30, 2025, primarily driven by a $217 million reduction in commercial and industrial nonaccrual loans and a $148 million reduction in commercial real estate nonaccrual loans. Approximately 56% of nonaccrual commercial and industrial and commercial real estate loans were considered current with respect to their payment status at June 30, 2026.

Government-guaranteed loans designated as accruing loans past due 90 days or more included one-to-four family residential mortgage loans serviced by the Company that were repurchased to reduce associated servicing costs, including a requirement to advance principal and interest payments that had not been received from individual mortgagors. Despite the loans being purchased by the Company, the insurance or guarantee by the applicable government-related entity remains in force. The outstanding principal balances of the repurchased loans that are guaranteed by government-related entities included in accruing loans past due 90 days or more totaled $489 million at June 30, 2026, $537 million at March 31, 2026, $459 million at December 31, 2025 and $377 million at June 30, 2025.

Accruing loans past due 90 days or more not guaranteed by government-related entities were loans considered to be with creditworthy borrowers that were in the process of collection or renewal. Additional information about past due and nonaccrual loans is included in note 4 of Notes to Financial Statements.

The Company utilizes a loan grading system to differentiate risk amongst its commercial and industrial loans and commercial real estate loans. Loans with a lower expectation of default are assigned one of ten possible "pass" loan grades while specific loans determined to have an elevated level of credit risk are designated as "criticized." A criticized loan may be designated as "nonaccrual" if the Company no longer expects to collect all amounts owed under the terms of the loan agreement or the loan is delinquent 90 days or more. Targeted reviews are periodically performed over segments of loan portfolios that may be experiencing heightened credit risk due to current or anticipated economic conditions.

The intention of such reviews is to identify trends across such portfolios and inform portfolio risk limits and loss mitigation strategies. In the recent quarter, the Company continued to monitor commercial borrowers in certain industry sectors that may be affected by higher energy and transportation costs, international trade policy changes, such as tariffs, including retail and wholesale trade, manufacturing, packaging and engineering companies. The Company has considered the information gathered in such reviews in the assignment of loan grades.

T7The Company continues to monitor its commercial real estate loan portfolio. The primary source of repayment of these loans is typically tenant lease payments to the investor/borrower. Elevated vacancies impacting some property types have contributed to lower current and anticipated future debt service coverage ratios, which have and may continue to influence the ability of borrowers to make existing loan payments. Lower debt service coverage ratios and reduced commercial real estate values also impact the ability of borrowers to refinance their obligations at loan maturity. Despite these challenges, the ability of borrowers to service loans secured by investor-owned real estate has generally improved in recent quarters. The LTV ratio is one of many factors considered in assessing overall portfolio risks and loss mitigation strategies for the investor-owned commercial real estate portfolio.

In determining the LTV ratio, the Company considers cross-collateralization of all exposures secured by the supporting collateral and the estimated value of such collateral. Subsequent to the origination of commercial real estate loans, updated appraisals are obtained in the normal course of business for renewals, extensions and modifications to commitment levels. As the quality of a loan deteriorates to the point of designating the loan as "criticized nonaccrual," the process of obtaining updated collateral valuation information is usually initiated, unless it is not considered warranted given factors such as the relative size of the loan or the age of the last valuation. In those cases where current appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed necessary, for estimates of subsequent declines in values as determined by line of business and/or loan workout personnel.

Those adjustments are reviewed and assessed for reasonableness by the Company’s credit risk personnel. Accordingly, for real estate collateral securing larger nonaccrual commercial and industrial loans and commercial real estate loans, estimated collateral values are generally based on current estimates of value.

The Company monitors its concentration of commercial real estate lending as a percent of its Tier 1 capital plus its allowable allowance for credit losses, consistent with a metric utilized to differentiate such concentrations amongst regulated financial institutions. This metric, as prescribed in supervisory guidance, excludes loans secured by commercial real estate considered to be owner-occupied, but includes certain other loans, such as loans to real estate investment trusts, that are classified as commercial and industrial loans. The Company's commercial real estate loan concentration approximated 134% of Tier 1 capital plus its allowable allowance for credit losses at June 30, 2026, compared with 124% at December 31, 2025 and 129% at June 30, 2025. The Company executed various strategies to reduce the amount of criticized loans in this category throughout 2025.

The accompanying tables summarize the outstanding balances, and associated criticized balances, of commercial and industrial loans by industry and commercial real estate loans by property type, respectively, at June 30, 2026 and December 31, 2025.

CRITICIZED COMMERCIAL AND INDUSTRIAL LOANS

(Dollars in millions)

Outstanding

Criticized Accrual

Criticized Nonaccrual

Total Criticized

Outstanding

Criticized Accrual

Criticized Nonaccrual

Total Criticized

Commercial and industrial excluding

owner-occupied real estate by industry:

Financial and insurance

$

$

$

7

$

$

$

$

4

$

Services

Motor vehicle and recreational

finance dealers

5

Manufacturing

Wholesale

Transportation, communications,

utilities

Retail

Construction

Health services

Real estate investors

5

6

Other

Total commercial and industrial

excluding owner-occupied real estate

Owner-occupied real estate by industry:

Services

Motor vehicle and recreational

finance dealers

1

1

Retail

Health services

Wholesale

3

Manufacturing

8

Real estate investors

8

Other

Total owner-occupied real estate

Total

$

$

$

$

$

$

$

$

Criticized loans as a percent of total commercial and industrial loans

%

%

CRITICIZED COMMERCIAL REAL ESTATE LOANS

(Dollars in millions)

Outstanding

Criticized Accrual

Criticized Nonaccrual

Total Criticized

Outstanding

Criticized Accrual

Criticized Nonaccrual

Total Criticized

Permanent finance by property type:

Apartments/Multifamily

$

$

$

$

$

$

$

$

Retail/Service