M&T Bank Corp’s Q4 Earnings Call: Share Buyback Shifts, CRE Timing Delays, CET1 Ratio Flexibility Contradict Prior Guidance

Date of Call: Jan 16, 2026

Financials Results

• EPS: Diluted GAAP earnings per share were $4.67, down from $4.82 in the prior quarter.
• Operating Margin: Net operating income yielded an ROTA and an ROTCE of 1.49% and 16.24% for the recent quarter.

Guidance:

• Taxable equivalent net interest income expected to be $7.2-$7.35 billion, with net interest margin in the low three seventies.
• Full-year average loans expected to be $140-$142 billion.
• Full-year average deposits expected to be $165-$167 billion.
• Non-interest income expected to be $2.675-$2.775 billion.
• Total non-interest expense, including intangible amortization, expected to be $5.5-$5.6 billion.
• Charge-offs for the full year expected to be near 40 basis points.
• CET1 ratio expected to be 10.25%-10.5% in 2026.

Business Commentary:

Record Financial Performance in 2025:

• M&T Bank reported record net income of $2.85 billion and record EPS of $17 for 2025, maintaining a top quartile return on tangible assets of over 1.4%.
• The growth was driven by disciplined focus on fundamentals, fee income growth, and improved asset quality.

Loan and Deposit Dynamics:

• Average loans and leases increased by $1.1 billion to $137.6 billion, with notable growth in commercial, residential mortgage, and consumer loans, while CRE balances declined.
• This trend was supported by strong commercial loan growth in dealer commercial services and REIT lending, and a strategic focus on customer deposit growth across business lines.

Capital Management and Shareholder Returns:

• M&T increased its quarterly dividend by 11%, repurchased 9% of outstanding shares, and grew tangible book value per share by 7%.
• The strong capital generation allowed for significant shareholder returns while maintaining a solid CET1 ratio of 10.84%.

Fee Income and Expense Control:

• The bank achieved record fee income of $2.7 billion, with a 13% increase, and improved its fee mix as a percentage of revenue from 26% to 28%.
• Effective expense control was maintained, with the efficiency ratio improving from 56.9% to 56%.

Credit Quality Improvement:

• Non-accruals decreased by 26%, reaching a low of 90 basis points, and criticized commercial loans were reduced by 27%.
• The improvement in credit quality was due to effective credit risk management and favorable macroeconomic factors.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'record net income,' 'record EPS,' and 'consistent and continued growth.' They noted 'strong performance' with 'improved asset quality' and 'strong capital generation.' The outlook is described as 'optimistic' with 'confidence' in growth across loan portfolios and fee income, and they feel 'really good about operating leverage' and returning to shareholders.

Q&A:

• Question from Gerard Cassidy (RBC Capital): Assuming favorable regulatory capital developments, would you look to bring down the CET1 ratio below 10%?
  Response: Management sees regulatory capital limits as not a binding constraint and could potentially lower the CET1 ratio below 10%, but the decision depends on broader market conditions and evaluation with other factors.

• Question from Gerard Cassidy (RBC Capital): Which regions or property types are expected to drive the CRE loan growth inflection in Q2 2026?
  Response: Growth is expected across all CRE sectors, driven by strong performance in regional CRE, M&T RCC, and institutional CRE businesses, with record production levels in Q4 2025 providing confidence.

• Question from Scott Seifers (Piper Sandler): What are the best demand areas and lending willingness in non-CRE categories for 2026?
  Response: Growth will continue in specialty C&I portfolios (fund banking, mortgage warehouse) and be further enhanced by the 'Teaming for Growth' initiative, which leverages regional presidents' local knowledge to grow customer relationships across all business lines.

• Question from Scott Seifers (Piper Sandler): What are updated thoughts on M&A aspirations for this year?
  Response: M&A will occur when it happens; the focus is on organic growth in existing markets, deploying capital to customers, maintaining a strong dividend, and continuing share repurchases, as no suitable targets are currently known.

• Question from Matt O’Connor (Deutsche Bank): Can you elaborate on the deposit environment, net checking account growth, and competitive landscape?
  Response: The focus is on growing customer deposit bases, especially checking accounts, while managing competition effectively with tailored pricing strategies. The goal is to grow deposits in sync with loans and improve net new checking account growth.

• Question from Matt O’Connor (Deutsche Bank): Why have trading revenues increased each quarter recently?
  Response: The increase is driven by the customer swap book, with broader capital markets and investment banking revenue expected to grow nicely, potentially setting another record in 2026, and will be better disclosed post-general ledger conversion.

• Question from Manan Gosalia (Morgan Stanley): What drives the slower fee and expense growth guidance for 2026, and what are the core growth rates?
  Response: The accounting change for residential MSRs (netting $75M of expense against revenue) is a factor. Excluding this, fee income is expected to grow about 4% broad-based, while expenses will see positive operating leverage of around 150 basis points.

• Question from Manan Gosalia (Morgan Stanley): What is the trajectory and medium-term goal for ROTCE?
  Response: ROTCE is expected to remain around 16% in 2026, with a goal to reach 17% by 2027, supported by strong fee growth, loan growth, and capital normalization.

• Question from John Pancari (Evercore): Can you elaborate on underlying commercial C&I growth and what's influencing it?
  Response: Commercial C&I growth is supported by middle market utilization and overall competitive growth, with expectations for 3%-5% total loan growth across the company, including high single-digit consumer growth in indirect and HELOCs.

• Question from John Pancari (Evercore): What drove the 30% increase in 90-day past dues, and could it affect future non-performers?
  Response: The increase was due to genuine consumer repurchases and administrative delays in commercial payments, with nothing concerning for credit quality, as the commercial delinquencies would reverse with timely payments.

• Question from David Chiaverini (Jefferies): What is the deposit beta assumption for the next 50 basis points of rate cuts?
  Response: The beta is expected to remain in the low 50s, and the bank is prepared to offer competitive rates while growing operating accounts in line with loan growth, with no disconnect anticipated.

• Question from Erica Najarian (UBS): How do you balance optimizing ROTCE versus growth over the next few years?
  Response: It's a combination; the focus is on disciplined returns on new loans and capital deployment while also distributing capital to shareholders (e.g., 9% share repurchase in 2025), balancing growth and returns.

• Question from Erica Najarian (UBS): How important is the shape of the yield curve versus growth trends for the NII guide, and what earning asset growth is embedded?
  Response: Curve shape impacts NII, with a steeper curve providing benefit and a flattening causing less. Growth is a key value add, with earning assets expected to grow about 3% point-to-point.

• Question from Chris McGratty (KBW): Can you provide more meat on checking account traction and non-interest bearing deposit outlook?
  Response: Business banking, consumer, and commercial lines all focus on checking account growth, with specific account numbers to be provided in the next investor deck; the strategy is to grow deposits in sync with loans.

• Question from Chris McGratty (KBW): Within the P&L ranges, which area are you most optimistic about?
  Response: Fee income momentum, NII performance, and disciplined expense management are all positive, with strong team alignment and management supporting confidence for 2026.

• Question from Ken Usdin (Autonomous Research): How much more room is there to remix wholesale borrowings, and have DDA balances bottomed?
  Response: Potential to shrink wholesale borrowings by a couple of billion more if cheaper core deposits aren't deployed. DDA balances are expected to bottom around 3% and start growing again after approximately 50 basis points of further rate cuts.

• Question from Ken Usdin (Autonomous Research): What is CRE's percentage of equity today, and where would you be comfortable taking it?
  Response: CRE is at 124% of equity, with a comfort limit of 160%, providing significant room for growth at the right returns, supported by strong team performance and no start-point issues.

• Question from Steven Chubak (Wolfe Research): How are you thinking about consumer versus wholesale deposit growth in 2026 guidance?
  Response: Focus is on growing consumer deposits across all businesses, with intentional management of time deposits, while commercial deposits are key for client relationships and treasury management services.

• Question from Steven Chubak (Wolfe Research): Can the tailwinds in mortgage banking, especially subservicing, persist into 2026?
  Response: Subservicing revenue may bounce around due to portfolio changes but is expected to finish the year strong, leveraging M&T's strength in servicing hard-to-service loans like FHA.

• Question from Ebrahim Poonawalla (Bank of America): Is organic deposit growth dilutive to the net interest margin, and is there upside to ~380?
  Response: The bank evaluates the entire customer relationship (loans and deposits) for returns; while margin could decrease with growth, the peer-leading margin and competitive positioning allow operating in the low 370s for 2026.

Contradiction Point 1

Capital Return Strategy and Share Repurchase

Guidance on capital deployment shifts from cautious to more active, impacting shareholder expectations and investment strategy.

How should shareholders balance capital optimization and growth against ROTCE in the long-term investment strategy? - Erica Najarian (UBS)

2025Q4: The bank is actively returning capital to shareholders (e.g., 9% share repurchase in 2025). The new priorities... aim to enhance performance and execution. - [Daryl Bible](CFO)

Given a 10.99% CET1 ratio, what is your updated view on the 10.75-11% target range, factors that might lower it, and the potential long-term operating level? - John Pancari (Evercore ISI Institutional Equities)

2025Q3: Comfortable with share repurchases but was cautious in Q3 due to market conditions and stock price. Buyback amount... is price-sensitive. - [Daryl Bible](CFO)

Contradiction Point 2

Outlook on CRE Loan Growth Inflection

Timing for CRE loan growth bottom shifts from Q4 2025 to Q1 2026, affecting earnings forecasts and loan portfolio strategy.

What regions or property types will drive the CRE loan growth inflection in Q2 2026? - Gerard Cassidy (RBC Capital)

2025Q4: Growth in 2026 will be point-to-point across all four loan portfolios... providing confidence in earnings power. - [Daryl Bible](CFO)

With rates declining, is Q4 the turning point for CRE balances to bottom and grow? - L. Erika Penala (UBS Investment Bank)

2025Q3: CRE is likely bottoming in Q1 2026 at the latest, given production growth and moderating payoffs. - [Daryl Bible](CFO)

Contradiction Point 3

Capital Ratio Target

Contradiction on the target and rationale for CET1 capital ratio, influencing regulatory compliance and capital management strategy.

Given favorable outcomes from the Basel III Endgame proposal and stress tests, would M&T consider reducing its CET1 ratio below 10%? - Gerard Cassidy (RBC Capital)

2025Q4: The CET1 ratio is not currently a binding constraint. The bank could potentially go below 10% in the future... - [Daryl Bible](CEO)

What is the current outlook for CRE market recovery and changes in loan originations? What is the optimal capital level for M&T, and how is excess capital being balanced against strategic uses? - Kenneth Usdin (Autonomous Research)

2025Q2: ...the Board has decided to operate in the 10.75%-11% range for the remainder of 2025. - [Daryl Bible](CEO)

Contradiction Point 4

Deposit Beta Assumption

Contradiction on the sensitivity of deposit rates to Federal Reserve policy, impacting net interest margin forecasts and liability cost management.

What deposit beta assumption is used for the next 50 bps rate cuts? - David Chiaverini (Jefferies)

2025Q4: The beta is expected to remain in the low 50s for the next 50 bps of cuts. - [Daryl Bible](CEO)

How are dividend growth and buybacks prioritized in the back half, and what caused the 5 bps NIM headwind from higher liability costs, and is it sticky? - Manan Gosalia (Morgan Stanley)

2025Q2: The NIM headwind was due to higher-cost deposits (avg. $3.90-$4.40) brought in during the quarter... This is a timing difference, not a permanent funding cost increase. - [Daryl Bible](CEO)

Contradiction Point 5

Credit Portfolio Outlook and Growth

Contradiction on CRE portfolio decline drivers and future growth, affecting loan strategy and credit risk assessment.

Which regions or property types will drive the anticipated CRE loan growth inflection in Q2 2026? - Gerard Cassidy (RBC Capital)

2025Q4: CRE performance is strong across all three sectors... Production levels in Q4 were the highest in a long time... - [Daryl Bible](CEO)

What challenges are impacting the CRE portfolio, and is the decline due to strategic decisions or customer payoffs? - Gerard Cassidy (RBC)

2025Q1: The CRE decline is driven by increased competition and market saturation... The pipeline is building, and the portfolio is being remixed to reduce exposure... - [Daryl Bible](CEO)