M&T BANK CORP (MTB)

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.

Financial Overview

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

SUMMARY OF FINANCIAL RESULTS

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(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 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 CET1 capital on the election date.

The decrease in net income in the recent quarter as compared with the fourth quarter of 2025 resulted from the following:

•Net interest income on a taxable-equivalent basis decreased $27 million reflective of two less calendar days in the recent quarter. The Company's net interest margin widened by 2 basis points as a reduction in rates paid on interest-bearing liabilities outpaced the decline in yields received on earning assets. The higher net interest spread was partially offset by a lower contribution of interest-free funds.

•The provision for credit losses increased $15 million reflecting the potential negative impact of global conflicts on economic forecasts and a higher provision for unfunded credit commitments, partially offset by a decrease in the level of criticized loans.

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•Noninterest income decreased $7 million resulting from lower mortgage banking revenues, inclusive of the effects of the Company's accounting election discussed herein, and a decline in trading account and other non-hedging derivative gains, partially offset by higher other revenues from operations that included a $33 million distribution from M&T's investment in BLG in the recent quarter.

•Noninterest expense rose $59 million reflecting higher salaries and employee benefits expense, including $115 million of seasonal salaries and employee benefits expense in the recent quarter, partially offset by declines in professional and other services expense and advertising and marketing costs. The impact of a reduction of FDIC special assessment expense and a contribution to The M&T Charitable Foundation each in the fourth quarter of 2025 was largely offsetting. Other costs of operations in the fourth quarter of 2025 included amortization of residential mortgage loan servicing right assets.

The increase in net income in the first quarter of 2026 as compared with 2025's initial quarter reflects the following:

•Net interest income on a taxable-equivalent basis increased $56 million reflecting growth in average loans and investment securities and favorable earning asset and interest-bearing liability repricing, including an improved impact from interest rate swap agreements. The Company's net interest margin expanded 5 basis points as reductions in deposit and borrowing costs outpaced a decline in yields received on earning assets.

•The provision for credit losses increased $10 million reflecting a higher provision for unfunded credit commitments in the recent quarter.

•Noninterest income increased $78 million reflecting a rise in other revenues from operations, including a distribution from M&T's investment in BLG in the recent quarter and an increase in letter of credit and other credit-related fees, and higher mortgage banking revenues, service charges on deposit accounts and trust income. The Company's accounting election described herein partially offset the increase in mortgage banking revenues.

•Noninterest expense increased $23 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 quarter of 2025 included amortization of residential mortgage loan servicing right assets.

The Company's effective income tax rates were 23.0%, 21.8% and 23.2% for the quarters ended March 31, 2026, December 31, 2025 and March 31, 2025, respectively.

Under programs authorized by the Board of Directors, M&T repurchased 5.5 million shares of its common stock during the recent quarter at a total cost of $1.25 billion, compared with 2.7 million shares at a total cost of $507 million in the fourth quarter of 2025 and 3.4 million shares of its common stock at a total cost of $662 million during the first three months of 2025. On March 30, 2026, M&T's Board of Directors authorized a program under which $5.0 billion of common shares may be repurchased. That authorization replaced and terminated the previous authorized share repurchase program effective as of the same date. On February 1, 2026, M&T redeemed all 40,000 outstanding shares of its Perpetual Fixed Rate Reset Non-Cumulative Preferred Stock, Series G, for $400 million.

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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

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(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.

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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

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Item 7.         Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Corporate Profile

M&T is a BHC headquartered in Buffalo, New York with consolidated assets of $213.5 billion at December 31, 2025. M&T’s wholly-owned bank subsidiaries are M&T Bank and Wilmington Trust, N.A. Those bank subsidiaries offer a wide range of retail and commercial banking, wealth management, trust and institutional services to their customers.

M&T Bank, with total consolidated assets of $212.9 billion at December 31, 2025, is a New York-chartered commercial bank with 942 domestic banking offices primarily located in the Northeastern and Mid-Atlantic regions of the U.S., including the District of Columbia, and a full-service commercial banking office in Ontario, Canada. M&T Bank and its subsidiaries offer a broad range of financial services to a diverse base of consumers, businesses, professional clients, governmental entities and financial institutions located in their markets.

Wilmington Trust, N.A. is a national bank with total consolidated assets of $773 million at December 31, 2025. Wilmington Trust, N.A. and its subsidiaries offer various institutional client and wealth management services. Further information about the Company's business, its legal entity structure and its significant subsidiaries is included in Part I, Item 1, "Business" and Exhibit 21.1 of this Form 10-K.

Financial Overview

For a discussion of 2024 results as compared with 2023 results, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the M&T Annual Report on Form 10-K for the year ended December 31, 2024. A comparative summary of financial results for the Company is provided in Table 1 that follows.

Table 1

SUMMARY OF FINANCIAL RESULTS

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(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 a composite income tax rate of approximately 25% in each of 2025 and 2024 and 26% in 2023.

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The increase in net income in 2025 as compared with 2024 reflects the following:

•Net interest income on a taxable-equivalent basis increased $90 million reflecting loan growth and favorable net repricing of earning assets and interest-bearing liabilities, including a reduction of the negative impact from interest rate swap agreements, as net interest margin widened by 9 basis points.

•The provision for credit losses declined $105 million mainly reflecting improved levels of criticized loans.

•Noninterest income increased $315 million reflecting higher mortgage banking revenues, service charges on deposit accounts, trust income and other revenues from operations.

•Noninterest expense rose $134 million reflecting higher salaries and employee benefits expense and outside data processing and software costs, partially offset by lower FDIC special assessments that included a $37 million reduction of expense in 2025 as compared with $34 million of expense in 2024.

•The Company’s effective tax rates were 22.8% in 2025 and 21.8% in 2024, reflective of $8 million and $31 million of discrete tax benefits in each of those respective years.

On October 31, 2025, M&T issued 45,000 shares of Perpetual Fixed Rate Non-Cumulative Preferred Stock, Series K, with a liquidation preference of $10,000 per share. Additional information about the issued and outstanding preferred stock of M&T is included in note 9 of Notes to Financial Statements.

Under approved capital plans and programs authorized by the Board of Directors, M&T repurchased 14.3 million shares of its common stock in 2025 at a total cost of $2.66 billion. In 2024, M&T repurchased 2.1 million shares of its common stock at a total cost of $400 million.

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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. The following table represents a comparative summary of certain non-GAAP results of operations.

Table 2

SUPPLEMENTAL REPORTING OF NON-GAAP RESULTS OF OPERATIONS

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(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 3.

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Table 3

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

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(a)After any related tax effect.

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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.

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 100 basis points in the last four months of 2024 and by a total of 75 basis points in the last four months of 2025.

Net interest income on a taxable-equivalent basis totaled $6.99 billion in 2025, an increase of $90 million from $6.90 billion in 2024. That increase reflects a 9 basis-point widening of the net interest margin driven by a decrease of 51 basis points in the cost of interest-bearing liabilities, partially offset by a 22 basis-point decline in the yield received on earning assets and a 20 basis-point reduction in the contribution of net interest-free funds. Contributing to lower yields on earning assets and rates paid on interest-bearing liabilities in 2025 was the impact of the aforementioned FOMC interest rate reductions. The yields received on earning assets reflect a reduction of the negative impact from interest rate swap agreements entered into for interest rate risk management 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 yields received on investment securities from the deployment of liquidity into fixed rate investment securities throughout 2024 and 2025 that yielded higher rates than maturing investment securities.

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.

The Company's average balance sheets accompanied by the taxable-equivalent interest income and expense and the average rate on the Company's earning assets and interest-bearing liabilities are presented in Table 4 that follows.

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Table 4

AVERAGE BALANCE SHEETS AND TAXABLE-EQUIVALENT RATES

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(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 subdivisions investment securities for 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.

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The total changes in interest income and expense, including the changes attributable to volume and rate are presented in Table 5.

Table 5

CHANGES IN INTEREST INCOME AND EXPENSE

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(a)The apportionment of changes resulting from the combined effect of both volume and rate was based on the separately determined volume and rate changes.

(b)Interest income data are presented on a taxable-equivalent basis.

(c)Primarily government issued or guaranteed.

(d)The change in interest income on state and political subdivisions investment securities for 2025 compared with 2024 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. The impact of this reduction is primarily included in the "Rate" column.

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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, the 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. Table 6 summarizes information about interest rate swap agreements entered into for interest rate risk management purposes at December 31, 2025 and 2024.

Table 6

INTEREST RATE SWAP AGREEMENTS - DESIGNATED AS HEDGES

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Information regarding the fair value of interest rate swap agreements designated as fair value hedges and cash flow hedges is presented in note 17 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 year), the related effect on net interest income and margin, and the weighted-average interest rates paid or received on those swap agreements are presented in Table 7 that follows.

Table 7

INTEREST RATE SWAP AGREEMENTS - EFFECT ON NET INTEREST INCOME

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

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

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

Lending activities

The Company's lending activities reflect a shift in portfolio composition as it executed various strategies to lessen its relative concentration of commercial real estate loans and to reduce the amount of criticized loans in this category throughout 2024 and 2025. The following table summarizes changes in the components of average loans.

Table 8

AVERAGE LOANS

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Average loans grew $1.4 billion from 2024.

•Average commercial and industrial loans grew $2.6 billion reflecting higher average balances of loans to financial and insurance companies and motor vehicle and recreational finance dealers.

•Average commercial real estate loans declined $5.3 billion as the Company executed various strategies to reduce its relative concentration of such loans. Average permanent and construction commercial real estate loans decreased by $3.2 billion and $2.1 billion, respectively.

•Average residential real estate loans grew $945 million reflecting the retention of originated residential mortgage loans and purchases.

•Average consumer loans increased $3.1 billion reflecting recreational finance and automobile average loan growth of $2.2 billion and $638 million, respectively.

Table 9 presents the geographical composition of the Company’s loan portfolio at December 31, 2025.

Table 9

LOANS

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(a)Includes Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia and the District of Columbia.

(b)Includes Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.

Commercial and industrial loans, including leases, represented 46% of total loans at December 31, 2025. Owner-occupied loans secured by real estate included in commercial and industrial loans at December 31, 2025 totaled $11.2 billion. The real estate securing such loans is typically used in the primary business operations of the borrower and is not predominantly dependent on rental income from tenants. The Company also provides financing for leases to commercial customers. Commercial leases included in total commercial and industrial loans at December 31, 2025 aggregated $2.7 billion.

Commercial and industrial loans increased $2.1 billion from December 31, 2024 to December 31, 2025 reflecting growth that spanned several industry types. Loans to customers in the financial and insurance, services and wholesale industries increased $1.3 billion, or 11%, $524 million, or 5%, and $450 million, or 9%, respectively, from the end of 2024.

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Table 10 presents information on commercial and industrial loans as of December 31, 2025 relating to borrower industry, geographic area, size and whether the loans are secured by collateral or unsecured.

Table 10

COMMERCIAL AND INDUSTRIAL LOANS

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(a)Includes Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia and the District of Columbia.

(b)Includes Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.

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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. Approximately 89% of loans to the financial and insurance industry and 7% of loans to the services industry were designated as loans to NDFIs as prescribed in regulatory guidance applicable to M&T Bank at December 31, 2025. Table 11 presents commercial and industrial commitments and outstanding balances of loans to NDFIs at December 31, 2025.

Table 11

COMMERCIAL AND INDUSTRIAL COMMITMENTS AND LOANS TO NDFIs

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(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.

Commercial real estate loans originated by the Company are generally secured by investor-owned real estate and include both fixed and variable rate instruments with monthly payments and a balloon payment of the remaining unpaid principal balance at maturity. Maturity dates generally range from three to ten years and, for borrowers in good standing, the terms of such loans may be extended by the customer following maturity at the then-current market rate of interest. Adjustable-rate commercial real estate loans represented approximately 83% of the commercial real estate loan portfolio at the 2025 year end.

Commercial real estate construction and development loans totaled $3.6 billion at December 31, 2025, or 3% of total loans. Approximately 97% of those construction loans had adjustable interest rates. Included in such loans at December 31, 2025 were loans made for various purposes, including the construction of multifamily residential housing, office buildings, health services facilities and other commercial development. In June 2025, the Company sold $661 million of out-of-footprint residential builder and developer loans and recognized a gain on sale of $15 million, which is included in Other revenues from operations in the Consolidated Statement of Income.

M&T Realty Capital, a commercial real estate lending subsidiary of M&T Bank, participates in the DUS program of Fannie Mae, pursuant to which commercial real estate loans are originated in accordance with terms and conditions specified by Fannie Mae and sold. Under this program, loans are sold with partial credit recourse to M&T Realty Capital. The amount of recourse is generally limited to one-third of any credit loss incurred by the purchaser on an individual loan, although in some cases the recourse amount is more or less than one-third of the outstanding principal balance. The Company’s contractual credit recourse associated with sold commercial real estate loans was approximately $4.6 billion at December 31, 2025, compared with $4.2 billion at December 31, 2024. Should Fannie Mae determine that loans originated through its DUS program were not originated or serviced in accordance with the terms and conditions of the program, M&T Realty Capital may be required to repurchase such loans or may incur credit losses that exceed the stated recourse amount of the program.

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Table 12 presents commercial real estate loans by type of collateral, geographic area and size of the loans outstanding at December 31, 2025.

Table 12

COMMERCIAL REAL ESTATE LOANS

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(a)Includes Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia and the District of Columbia.

(b)Includes Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.

(c)Total includes $203 million of owner-occupied construction loans.

Investing activities

The Company's investment securities portfolio is largely 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

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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.

Table 13

AVERAGE INVESTMENT SECURITIES

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(a)Primarily government issued or guaranteed.

The investment securities portfolio averaged $35.8 billion in 2025, up $5.0 billion from 2024. That increase reflects the deployment of liquidity into primarily fixed rate mortgage-backed investment securities designated as available for sale. As a result of the purchases of higher-yielding securities and paydowns and maturities of lower-yielding securities, the weighted-average current yield for total investment securities available for sale increased to 4.64% at December 31, 2025 compared with 4.30% at December 31, 2024, while the weighted-average duration of that portfolio decreased to 2.4 years from 2.6 years at each of those respective dates. 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 2025, 2024 and 2023. Additional information about the investment securities portfolio is included in notes 3 and 19 of Notes to Financial Statements.

Other earning assets include interest-bearing deposits at banks and trading account assets. Those other earning assets in the aggregate averaged $18.9 billion in 2025 and $27.3 billion in 2024 and 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.

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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 78% of average earning assets in 2025, compared with 77% in 2024. 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. Table 14 provides an analysis of changes in the components of average deposits.

Table 14

AVERAGE DEPOSITS