Q4 2025 Earnings Call Transcript

Thank you for your continued patience. The meeting will begin shortly. If you need assistance at any time, please press 0, and a member of our team will be happy to help you.

Please stand by. Your meeting is about to begin. Morning, everyone. Welcome to today's M&T Bank Corporation Fourth Quarter and Full Year 2025 Earnings Conference Call.

All lines have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question, you may remove yourself from the queue by pressing star 2. When posing your question, we ask that you please pick up your handset to allow for optimal sound quality. Lastly, if you should require operator assistance today, please press star 0. And please be advised that today's conference is being recorded. I would now like to hand the conference over to Rajeev Ranjan, Head of Investor Relations and Corporate Development.

Please go ahead, sir.

Thank you, Bo, and good morning. I would like to thank everyone for participating in M&T Bank Corporation's fourth quarter 2025 earnings conference call. If you have not read the earnings release we issued this morning, you may access it along with the financial tables and schedules by going to our investor relations website at ir.ngb.com. Also, before we start, I would like to mention that today's presentation may contain forward-looking information.

Cautionary statements about this information are included in today's earnings release materials, and in the investor presentation as well as our SEC filings and other investor materials. The presentation also includes non-GAAP financial measures, as identified in the earnings release and investor presentation. The appropriate reconciliations to GAAP are included in the appendix. Joining me on the call this morning is M&T Bank Corporation's Senior Executive Vice President and CFO, Daryl Bible.

Now I would like to turn the call over to Daryl.

Thank you, Rajeev, and good morning, everyone. I'm excited to share our full year 2025 results. M&T Bank Corporation has continued to deepen our presence in key markets, expand access in new communities, and build innovative offerings that empower our customers and businesses alike. In the last quarter alone, we delivered on our commitment to expand access to banking in Bridgeport, Connecticut's East End, opening our new full-service Honey Locust branch, the community's first new bank branch in decades.

We partnered with the Baltimore Ravens and wide receiver Zay Flowers to launch our Financial Fitness Academy, giving young people dynamic real-world tools to build financial confidence. We also launched our new Banking Made for Business suite of business banking solutions tailored to support small and mid-sized businesses throughout the growth of their life cycle. These efforts reflect our long-term commitment to creating economic opportunities and our purpose to make a difference in people's lives. Turning to slide four, we continue to garner recognition for our businesses and our people, including those who lead the engagement with you, our investors and analysts.

Now let's turn to slides six and seven. Before getting into the details of the fourth quarter, I want to pause and reflect on some of the highlights for 2025. The progress we made against our 2025 priorities and related enterprise initiatives will allow us to grow and scale in the coming years. I look forward to executing against our updated priorities in 2026. Our focus on the fundamentals drove our continued success in 2025. In 2025, M&T Bank Corporation realized consistent and continued growth while also remaining disciplined and return-focused. We earned record net income of $2.85 billion and record EPS of $17 while also maintaining our top quartile return on tangible assets of over 1.4%.

We increased our quarterly dividend by 11%, repurchased 9% of our outstanding shares, and grew tangible book value per share by 7%. We made great progress on improving our asset quality with nonaccruals decreasing 26% and the nonaccrual percentage of total loans reaching 90 basis points, the lowest since 2007. We also reduced criticized commercial loans by 27% over the course of the year. We grew fee income by 13%, reaching a record of $2.7 billion, and increased our fee mix as a percentage of revenue from 26% to over 28%. Expenses remain well controlled.

The efficiency ratio improved from 56.9% to 56% while making significant enterprise investments that will allow M&T Bank Corporation to thrive in the years to come. Turn to slide eight, which shows the results for the fourth quarter. Diluted GAAP earnings per share were $4.67, down from $4.80 in the prior quarter. Net income was $759 million compared to $792 million in the linked quarter.

M&T Bank Corporation's fourth quarter results produced an ROA and ROCE of 1.41% and 10.87%, respectively. The fourth quarter included two notable expense items: a $29 million reduction in FDIC expense related to the lower estimated special assessment, adding $0.14 to EPS, and a $30 million charitable contribution which reduced EPS by $0.15. Slide nine includes supplemental reporting of M&T Bank Corporation's results on a net operating or tangible basis. M&T Bank Corporation's net operating income was $767 million compared to $798 million in the linked quarter. Diluted net operating earnings per share were $4.72, down from $4.87 in the prior quarter.

Net operating income yielded an ROTA and an ROTCE of 1.49% and 16.24% for the recent quarter. Next, we'll look a little deeper into the underlying trends that generated our fourth quarter results. Please turn to slide 10. Taxable equivalent net interest income was $1.79 billion, an increase of $17 million or 1% from the linked quarter. Our net interest margin was 3.69%, an increase of one basis point from the prior quarter.

This improvement was driven by a positive four basis points from higher asset liability spread driven by continued fixed asset repricing and favorable funding mix, positive three basis points from a reduction and negative impact of our interest rate swaps, partially offset by negative six basis points from the lower contribution of net free funds. Turning to slide 12, to talk about average loans. Average loans and leases increased $1.1 billion to $137.6 billion. Higher commercial residential mortgage and consumer loans were partially offset by a nominal decline in CRE balances.

Commercial loans increased $500 million to $62.2 billion, aided by growth in dealer commercial services, and, to a lesser extent, reblending business banking, and fund banking. CRE loans declined 1% to $24.1 billion, reflecting a slowing pace of decline in the portfolio with continued payoffs and paydowns and higher originations. Residential mortgage loans increased 2% to $24.8 billion. Consumer loans grew 1% to $26.5 billion, reflecting growth in recreational finance and HELOC.

Loan yields decreased 14 basis points to 6%, reflecting lower rates on variable rate loans, partially offset by continued fixed rate loan repricing including the reduction of the negative impact on our interest rate swaps. Turning to slide 13, our liquidity remains strong. At the end of the fourth quarter, investment securities and cash held at the Fed totaled $53.7 billion, representing 25% of total assets. Average investment securities increased slightly to $36.7 billion.

In the fourth quarter, we purchased a total of $900 million in debt securities with an average yield of 4.9%. The yield on the investment securities increased four basis points to 4.17%, reflecting continued fixed rate securities repricing benefit. The duration of the investment portfolio at the end of the quarter was 3.4 years, and the unrealized pretax gain on available-for-sale portfolio was $208 million or a 10 basis point CET1 benefit if included in regulatory. While not subject to the LCR requirements, M&T Bank Corporation estimates that its LCR on December 31 was 109%, exceeding the regulatory minimum standards that would be applicable if we were a category three institution.

Turning to slide 14. Average total loans rose $2.4 billion to $165.1 billion. Non-interest bearing deposits increased $100 million to $44.2 billion. Interest-bearing deposits increased $2.2 billion to $120.9 billion, driven by growth in commercial and business banking, partially offset by smaller declines in consumer corporate trust deposits. Interest-bearing deposit costs decreased 19 basis points to 2.17%, aided by lower time retail time deposit costs and lower interest checking and savings costs across our business lines.

Continuing on slide 15, non-interest income was $696 million compared to $752 million in the linked quarter. Mortgage banking revenues were $155 million, up from $147 million in the third quarter. Residential mortgage banking revenues decreased $3 million to $105 million. Commercial mortgage banking increased $11 million to $50 million, driven by higher gains on the sale of commercial mortgage loans.

Trust income increased $3 million to $184 million from higher institutional services fee income. Other revenues from operations decreased $67 million to $163 million, primarily from prior quarter items including the $28 million distribution of an earn-out payment, a $20 million day view distribution, and a $12 million gain on the sale of equipment leases. Turning to slide 16. Non-interest expenses for the quarter were $1.38 billion, an increase of $16 million from the prior quarter. Salary and benefits decreased $24 million to $809 million from lower severance and other benefit-related expenses.

Professional services increased $24 million to $105 million, reflecting higher legal and review costs. FDIC expense decreased $21 million, mostly related to the reduction in the estimated special assessment expense. Other costs of operations increased $15 million to $151 million from the $30 million contribution to the M&T Charitable Foundation, partially offset by the settlement gain from the pension annuity purchase and the prior quarter impairment of renewable energy tax credit investment. The efficiency ratio was 55.1% compared to 53.6% in the linked quarter.

Next, let's turn to slide 17 for credit. Net charge-offs for the quarter totaled $185 million or 54 basis points, increasing from 42 basis points in the linked quarter. Net charge-offs reflect resolution of three previously identified credits totaling over $100 million. Non-accrual loans decreased 17% to $1.3 billion.

The non-accrual ratio decreased 20 basis points to 90 basis points, driven largely by payoffs and charge-offs of the commercial NCRE non-accrual loans. In the fourth quarter, we reported a provision for credit losses of $125 million compared to net charge-offs of $185 million. The allowance for loan losses as a percent of total loans decreased five basis points to 1.53%, from improved asset quality and macroeconomic factors. Slide 18 has a summary of our NDFI portfolio.

The NDFI portfolio increased $1.3 billion from the third quarter to $12.6 billion. The increase was driven by both net new loan growth and a recategorization of certain C&I loans as NDFI. Please turn to slide 19. The level of criticized loans was $7.3 billion compared to $7.8 billion at the September. The improvement from the linked quarter was largely driven by a $429 million decline in CRE criticized balances.

The CRE decline was broad-based with lower criticized levels across nearly all property types. Given the consistent improvement in criticized, we will likely exclude the detailed criticized information on slides 20 and 21 in future earnings presentations. But the detail will continue to be available in our 10-K and 10-Q reporting. Turning to slide 22 for capital.

M&T Bank Corporation's CET1 ratio was an estimate of 10.84%, a decline of 15 basis points from the third quarter. The lower CET1 ratio reflects a $507 million in share repurchases and an increase in risk-weighted assets, largely from higher end-of-period commercial loans, partially offset by continued strong capital generation. The AOCI impact on the CET1 ratio from AFS securities and pension-related components combined would be approximately a positive 13 basis points included in regulatory capital. On slide 23, we have our employee directions for 2026, which is shaped by two priorities, drawn from the work across the company.

The first is what we call operational excellence. We are building an enterprise that can operate at scale with greater consistency, efficiency, and transparency. Our focus is on creating intelligent, simplified operations that make it easier for customers to do business with us and easier for our teams to deliver. This includes strengthening our shared standards, streamlining processes, equipping colleagues with better tools, and maturing capabilities such as automation and enterprise-wide control processes.

These steps help reduce risk, improve performance, and free our people to focus on the work that matters most. The second priority is teaming for growth. We are leaning into a more unified enterprise-wide approach to growth, bringing together markets, business lines, and capabilities so clients experience us as one bank. When we integrate the strengths across regions, and when we match local insight with the scale of M&T Bank Corporation and Wilmington Trust, we unlock opportunities we cannot reach in silos.

This focus is about deepening relationships, more coordinated planning, and a shared approach to serving clients across the spectrum, from retail to commercial to wealth. Together, these priorities help deliver consistent value, position the bank for long-term performance, and strengthen how we serve the communities that rely on us. Now turning to slide 24 for the outlook. First, we begin with the economic backdrop.

The economy continues to hold up well despite the ongoing concerns and uncertainty regarding tariffs and other policies. Private data sources reported decent spending growth in the holiday season, and roughly a 4% through price increases have driven some of that growth. The economy bounced back in the third quarter with the strongest expansion in two years, but we are cautious of possible revisions and a slowdown once the fourth quarter data is collected. Businesses continue engaging in CapEx and equipment while spending on new buildings remains in decline.

Although overall economic activity was resilient, we remain attuned to the risk of a slowdown in coming quarters due to a weakening labor market. We remain well-positioned for a dynamic economic environment. Now turning to the outlook. Starting with net interest income.

We expect taxable equivalent net interest income to be $7.2735 billion as net interest margin in the low 370s. Our outlook includes 50 basis points of rate cuts in 2026. Though our sensitivity to the short end of the curve remains relatively neutral. That said, shifts in the shape of the curve could drive variability in the NII outlook. We expect full-year average loans to be $140 billion to $142 billion, reflected in the priority discussed earlier.

We have renewed focus on growing relationship customers in our community bank regions across all business lines. This outlook includes point-to-point growth in each of the four main loan portfolios, though we expect the full-year CRE balances to be lower than the 2025 full-year average. The full-year average deposits are expected to be $165 billion to $167 billion. We remain focused on growing customer deposits at a reasonable cost and expect broad-based growth across each of the business lines.

Turning to fee income. We expect non-interest income to be $2.675 billion to $2.775 billion. We expect growth to be broad-based across our fee income categories and business lines. Continuing with expenses, we expect total non-interest expense including intangible amortization to be $5.5 billion to $5.6 billion.

Our expense outlook includes continued investment in enterprise initiatives while also closely managing non-investment spend. This outlook includes our usual first-quarter seasonal salary and benefit increase, which is estimated to be $110 million. We also included in the outlook approximately $31 million in intangible amortization. As of January 1, we elected to carry our own residential MSRs at fair value rather than the prior treatment of lower of cost or market.

We have also begun hedging the changes in fair value of those MSRs. Along with this election, MSR amortization is no longer to be recognized as an expense and instead the impact of the MSR time decay and related hedging will be net with mortgage banking revenues. These changes are included in the fee and expense guidance ranges but have minimal impact on net income or PPNR. The MSR fair value election also adds $197 million in regulatory capital or an eight basis point benefit to the CET1 ratio.

Regarding credit, we expect charge-offs for the full year again to be near 40 basis points. We expect the taxable equivalent tax rate to be 24% to 25% in the 24.5% range. As it relates to capital, we expect to operate with a CET1 ratio of 10.25% to 10.5% in 2026. We always run a bank to generate the best returns for our shareholders, offer appropriate capital levels, and return excess capital to shareholders. Given the current capital levels and continued strong capital generation, we have significant flexibility to continue to support lending, pursue opportunistic inorganic growth, and return excess capital to shareholders.

Or be opportunistic with share repurchases. We're also monitoring the economic backdrop and asset quality trends. To conclude, on slide 25, our results underscore our optimistic investment thesis. M&T Bank Corporation has always been a purpose-driven organization with a successful business model that benefits all stakeholders, including shareholders.

We have a long track record of credit outperforming through all economic cycles while growing within the markets we serve. We remain focused on our shareholder returns and consistent dividend growth. And finally, we are a disciplined acquirer and prudent steward of shareholder capital. Last, I would like to thank Brian Clark for his leadership in M&T Bank Corporation's investor relations since he rejoined the bank in 2021. I look forward to his continued impact as he leads the bank strategy function.

I'd also like to welcome Rajeev Ranjan, a twenty-year-plus M&T finance veteran, who will be leading M&T Bank Corporation's investor relations along with several other finance functions. As we close, I want to thank my M&T colleagues for serving our customers and communities. It was because of all of you that M&T Bank Corporation continues to be the top-performing community bank. Now with that, let's open up the call to questions before which Bo will briefly review the instructions.

Certainly, Mr. Bible. Thank you very much. Ladies and gentlemen, at this time, if you do have any questions, again, please press 1. If you find your question has been addressed, you may remove yourself from the queue by pressing 2. Additionally, we do ask that you please limit yourself to one question and one follow-up. We'll go first to Gerard Cassidy of RBC Capital.

Hi, Daryl.

Hey, Gerard.

Circling back to the capital ratios, obviously, we're going to get the Basel III endgame proposal, hopefully, sometime in the first quarter, as well as, you know, another stress test. Assuming those are favorable to you and your peers, and bring down your required regulatory capital CET1 ratio. How do you then approach where you are today with the CET1 around 10.25% to 10.5%? Is that something you guys would look to maybe bring down if your required number fell with what's coming with those two, the stress test and Basel III endgame?

Yeah. Thanks for the question, Gerard. I would just tell you that, you know, we are always looking at, you know, what position we have on our balance sheet and what's going on in the economy. You know?

And we feel good about bringing it down to 10.25% right now, and potentially, we could go lower. I don't view the regulatory capital limits of where they are now as a binding constraint right now. We can go a lot lower with where we are today, and we may actually improve that. But, you know, I think it really depends on what other things are going on in the marketplace.

But could we go below 10% at some point? Possibly. And we will evaluate it and consider that with everything else we do as we move forward.

And you mentioned binding constraint. What would you point to as your binding constraint if you don't look at it as the CET1 ratio?

We have other constituencies out there that have other limitations, including rating agencies and, you know, working with the rating agencies and getting them comfortable with how we're performing. I mean, when I look at our asset quality now, it's probably been the best it's been in the last couple of decades. So we are in really strong condition. Our capital generation is probably the best we've been.

So we're really strong there. So we have a lot of positives going forward. You know, I love the page when I started out with the statistics. We grew dividends 11%.

You know, we retired 9% of shareholders. We grew tangible book 7%. We had record income, net income, EPS, our ROTA is over 1.4. And our efficiency ratio went down from 56.9 to 56. I mean, we are performing at a very high level. And the risk that we're taking on our balance sheet is the right risk for us, and we feel really good with it, and we're getting great returns on that.

Great. And then just as a follow-up question, regarding the loan growth, you gave us some clarity on where you are today. And where you hope to be moving forward. On the commercial real estate side, I think you pointed out that you think it will start to inflect in '26. Are there regions of the franchise or property types you're anticipating will be the driver behind this inflection?

Yeah. I would say when you look at our teams and the CRA team run by Tim Gallagher and all the credit folks in Rich Berry's area. They've been working all 2025 to get us back on track. And if you look at the fourth quarter, our production levels are the strongest they've been for a very long time.

December, we closed over $900 million loans in CRE. So we are performing on all cylinders. If you look at our three sectors, we have a large regional CRE portfolio. That is hitting all cylinders.

We have a strong M&T RCC business that is also hitting record returns and record outstandings. We have an institutional CRE that is also performing very well. So our CRE businesses are really strong and productive, and we will have growth, you know, as we said, starting in the second quarter on an average to average basis. So we're going to have four of our loan portfolios.

All of our four loan portfolios should have point-to-point loan growth for us in 2026, which would be really, really strong and gives us a lot of confidence with our earnings power.

Great. And Brian, good luck in the enhanced role. Thank you, Daryl.

Thanks, Gerard.

Thank you. We'll go next now to Scott Siefers with Piper Sandler.

Good morning, guys. Thanks for taking the question. Daryl, actually, just hoping you can expand upon just what you said about some of those non-CRE drivers. As we look at CRE having come down the last couple of years, you've had pretty good momentum in some of those other main categories.

Where do you see the best demand and sort of your willingness to lend in those kind of non-CRE categories as we look out into the course of the year?

So, Scott, when you look at where we've had growth for the last couple of years, it's been in our C&I but mainly in our specialty businesses, fund banking, mortgage warehouse, and other portfolios like corporate institutional. And that will continue to grow and do really nicely. But when we talked about our new priorities that we have for 2026, one of them is called teaming for growth. Teaming for growth simply is basically bringing the whole bank together in the regions that we operate in.

We operate in 27 regions where we have regional presidents. Regional presidents have the local knowledge to how we go to market in those markets. We're trying to combine the regional presence local knowledge with the scale and how we deliver our products and services of a larger company together. And we're really focused on growing our regional regions this year.

And then do that. We are planning to grow in that area and think we'll be very successful there.

Perfect. Okay. Thank you. And then, you know, you all have been just, you know, quite transparent about sort of M&A aspirations. Just curious to hear any updated thoughts you might have about how you're thinking about the landscape this year.

You know, M&A will come our way when it happens, Scott. You know, we aren't aware of anybody and, you know, we want scale and dense in the markets we serve. We serve we're in 12 states plus the District of Columbia. That's where we want to continue to get more density.

We are not aware if anybody wants to sell in those markets. We will continue to reach out and have good relationships with them. Renee knows all the appropriate people and all that. And we'll happen when it happens.

We aren't gonna force anything from that perspective. And you know, it will happen at some point down the road. But right now, we have a lot of capital. We want to deploy that capital to our markets, to our customers, first and foremost, continue to pay a great strong dividend, and we're going to buy back a ton of stock.

Perfect. Okay. Great. Thank you very much. And, yeah, Brian, good luck in the new role as well.

Thank you. We'll go next now to Matt O'Connor with Deutsche Bank.

Good morning. I was hoping you could elaborate on the deposit environment. Obviously, you've been kind of running off in CDs and growing other deposits. But maybe some color in terms of net checking account growth, what you're seeing from a competitive landscape and, you know, any changes in the brand strategy as you think about driving organic growth? Thanks.

Yeah. Definitions are really key. One of my famous sayings that I have, Matt, is that we want to have both oars in the water. So, you know, as we grow loans, we also want to grow our customer deposit base.

We've done a good job the last couple of years growing that and retiring a lot of non-core funding in the wholesale book. I think we will continue to do that. As far as, you know, competitive-wise, you know, all of our businesses have their plans to grow customer deposits. And we're really focused on doing that so we complete and really manage both sides of the balance sheet very well.

As far as competition goes, I would say the competition is the same as it's been for the last couple of years. Not any worse or any easier. What it is, it's competitive. We have different pricing strategies depending on the scale and density market share that we have in those markets, and it seems to be successful.

Our teams are really good at going to market. But first and foremost, you know, we really focus on getting the operating account, the checking account, you know, whether you're in the consumer bank, business banking, commercial, wealth, that is really critical to us. And from that, other revenues and products and services come off of that. And we've always done that, and we will continue to do that.

Really focused on growing net new checking accounts, which is really important.

Okay. That's helpful. And then just separately, I know it's not a big category for you, but the trading revenues have stepped up each of the last two quarters to $18 to $19 million. Remind me, like, has there been a change in kind of the efforts there or any small deal that would reset this level higher versus just kind of quarter-to-quarter volatility?

Yeah. No. I appreciate you breaking that out. I mean, that specifically is our customer swap book.

You know, but what you see there is really just a precursor of something that's greater overall. We have Hugh Giorgio who runs our 2026. We will actually once we get through our general ledger conversion, shortly, we're gonna break out actually show our capital markets and investment banking so you can see it together. It's growing really nicely. And our teams are executing really well.

And I think it's been a really strong business, and we'll continue to grow well for our fee income categories.

Okay. Thank you very much.

Thank you. We go next now to Manan Gosalia at Morgan Stanley.

Hey. Good morning, Daryl.

Morning.

When I look at the guide for 2026 for both fees and expenses relative to what you did in 2025 and even the 4Q run rate, it feels like, you know, both growth rates are significantly slower. I know you called out the impact of the MSR. Oh, well, you called out the MSR fair value and hedge will impact those two lines. Is that a big driver for both lines?

And what is the core growth rate that you expect for both fees and expenses next year?

Yeah. I know. Thank you for the question. I would say that the accounting change is part of it.

It's $75 million that would normally be in amortization expense is gonna be now netted against revenues. So that's basically just a shrink of both expenses and revenues by adopting this mark-to-market accounting on the residential MSR. When you look at kind of our projections for fee income and you kind of back out notable items, we should be about 4% in fee growth. That's kind of what we're looking at there.

And it's pretty broad-based when you look at the fee growth. You know, we're growing our treasury management. That was up double-digit year over year. We expect to be close to that again in '26. We're growing trust revenues.

We're growing in the mortgage area. Potentially, our commercial mortgages are off to a good start. So they're doing really well. Residential mortgages, if rates come down on the long run, we'll be able to do well there.

Could have potential more subservicing growth there. Then what I just talked about in our capital markets investment banking. So we have momentum on the fee side and feel good about hitting the full. We have.

If you look at put it all together, we are generating positive operating leverage in '26, you know, probably 150 basis points plus or minus. So we feel good about that like we did this past year.

Got it. And then in the deck, you spoke about operational excellence and teaming for growth and how the outcome of that should drive better revenues and profitability. You know, when you think about the environment, loan growth is improving. Fee income is growing, capital is normalizing.

How do you think about the trajectory for ROTCE over the next twelve to eighteen months and, you know, what's a good end goal for Roxy as we look out, you know, in the medium term?

Yeah. Thank you for the question. So we had a really strong finish in 2025 with our returns approaching 16%. We think that will kind of continue in 2026. Be in the 16% range. And our goal is to get it to 17% by 2027. So I think we're on a great trajectory, and I think we can get there.

Got it. Thanks so much. And, Brian, we will miss you all the very best. And, Rajeev, looking forward to working with you.

Thank you. We go next now to John Pancari of Evercore.

Thanks, Rajeev. Welcome. I look forward to working with you and Brian. Best of luck in your role.

It's gonna feel kinda weird now seeing you bouncing around at the conferences and cracking some jokes. I guess, on the loan growth front, Daryl, I wanted to see I know Scott asked you a question just a little bit around the other areas. Could you elaborate a little bit more on what you're seeing in underlying commercial C&I growth more specifically? Are you seeing you mentioned CapEx in your prepared remarks.

Are you seeing some drawdowns tied to CapEx? Are you seeing line utilization tied to that? You could just give us a little bit more color on what's actually beginning to take shape and influencing your growth expectations?

In the fourth quarter, our middle market commercial actually had an increase in utilization. So that was a positive. So I think that was something really good to see that dormant for a while from that perspective. I think net net overall, we're seeing good growth.

It's competitive, obviously, in the commercial space. But feel that we're gonna have good growth overall. Both in specialty and in our regions as we kinda launch with our new priorities. From that perspective.

So I think we're confident we're gonna have good loan growth. I mean, if you look at loan growth, you know, for the whole company, it's, you know, in total, probably be in the 3% to 5% range. You know, and C&I will be kinda right in that same similar range. But we got CRE still shrinking year over year, but starting to grow point to point.

We got commercial real estate. We ended up sort of just talked about. And then real estate, consumer real estate and consumer growth also growing nicely. Consumer actually in the indirect space and HELOCs, you know, will approach high single digit.

So we have good overall broad-based growth in all portfolios.

Got it. Alright. Thanks, Daryl. And then separately, on the credit side, I know you indicated you the charge-offs related to this resolution of the charge-offs of some of the previously identified credits.

But your non-negate past dues jumped about 30% in the quarter. Can you give us a little bit of color what drove that? And if that could influence non-performers and losses in coming quarters at all?

Yep. So on the consumer delinquencies, that's really just a result of more Ginnie Mae repurchases going on the balance sheet. Which is an attractive trade for us, and we actually make more fee income doing that. On the commercial side, it was more administrative delays.

People basically missed payments in the first week or so. If you just if you move from year-end, go back, you know, forward seven days, you know, we had $250 million more come in in payments and all that that wouldn't have been delinquent. So I think there's nothing there to say in the delinquency per se. I think we feel good about our credit quality and performance there.

It's just kind of one administrative on the commercial side and consumer is just on the Ginnie Mae growth side.

Got it. Alright. Thanks, Daryl. Very helpful.

Thank you. We'll go next now to David Gevirini of Jefferies.

Hi. Thanks for taking the question. I wanted to ask about your deposit beta on the next 50 basis points of cuts. What's your assumption there?

We've been holding pretty good to the low 50s, David. So far. And, you know, we feel really good in the down 50 that you asked for. Still staying in the low fifties.

I think that that's definitely doable. I think at some point, if you continue to go down more, you're going to start heading forwards on the consumer portfolios. But definitely feel confident we can stay in low 50s going down another 50 basis points.

And as you inflect higher on loan growth, do you expect increased competitiveness on the deposit cost front?

You know, our mindset first is to grow operating accounts. We're also, I believe, in, like, always on strategy where we always will offer competitive rates for our customers. We won't be the highest. We won't be the lowest.

But we'll get our market share. I think that's what you're seeing come through from the business lines. We grew $2.2 billion this past quarter. Was in business banking and commercial.

So I feel that we're pretty much hitting stride there and doing really well. So I feel that our deposit growth will stay intact with our loan growth. Don't think you're gonna have any disconnect there.

Great. Thank you. And, Brian, thank you, and good luck in the new role.

We'll go next now to Erika Najarian with UBS.

Hi. Good morning. Just wanted to take a step back, Daryl, as we think about how longer-term shareholders should sort of frame the M&T Bank Corporation investment case. As we think about your capital position and as we think about, you know, some of these initiatives and, you know, sort of the, you know, the CRE optimization strategy.

You know, as you think about 2026 and maybe the next three years, what is more important to this management team and board? Optimizing ROTCE or optimizing growth?

That sounds like a familiar question.

It was a good discussion.

It was a good discussion. You know, Erika, you know, believe it's really a combination of both of that, to be honest with you. You know, we really have capital out there, and we want to use it for our customers and make sure we get good returns on that. So we're pretty disciplined in the returns we're getting when we're putting loans on the books and getting those returns.

You know, we also will distribute capital to our shareholders and think you're seeing us do that. I think we're probably the only large bank that basically retired 9% of their shares this past year. They're probably due amount most of that this next year, maybe a little bit lower because of higher stock price, but we are, you know, giving back lots of capital to our investors and shareholders. So, I think we feel good.

We're a balancing act. We generate a lot of capital, do a lot of good for this community, which is really important for us and our customers who make their meet their financial needs. So our company is, I think, doing well on all cylinders right now, and, you know, our new two new priorities are tweaking us to get even better in the things that we do and how we execute. Which is really exciting from the teaming for growth and operational excellence.

We just try to keep notching it up and keep setting the standard as we kind of improving it better.

Got it. And just a more localized question on the net interest income guide, Daryl. Daryl, you mentioned neutrality on the short end. How much of those three components that you mentioned that would be telling of where you are in the range.

How much is the shape of the curve important versus the gross trends? And, additionally, thanks for giving us the average balances. I'm wondering, you know, if you could give us a sense of the size of your overall balance sheet in terms of earning asset growth embedded in that NII number?

Yes. So I'll start with the shape of the curve. Obviously, the shape of the curve will have an impact because we still are getting benefit from kind of our fixed rate loans, our investment securities, and sometimes our swap book all that so that if the curve flattens out, we will definitely have less NII. If it stays steeper, we'll have a little bit of a benefit there.

It's really hard to hedge the yield curve, and it keeps moving back and forth. So I don't recommend trying to do that on a regular basis, to be honest with you. But feel pretty good, though, that we're pretty neutral on the short end. Which is really good.

Because, yeah, as you know, we're really asset sensitive without the hedges that we have right now. I mean, if we didn't hedge right now, if we stop hedging now and you go a year forward, we'd be much more asset sensitive just by what's rolling off. So we have to hedge to stay relatively neutral. Growth will be a good key component.

It's gonna be a good value add for us. This year. Having more growth consistently across all of our portfolios. You know, being able to grow deposits and loans in sync is really good.

As far as, yeah, earning assets, it's growing about 3% if you look at it on a point-to-point basis.

Great. And welcome, Rajeev, and congratulations, Brian. On your new role. We'll always have Denver.

Thanks, Erika.

Thank you. We'll go next now to Chris McGratty at KBW.

And, Mr. McGratty, your line is open, sir. You might be on mute.

Yep. Sorry about that. Earlier in your remarks there, you talked about checking account growth. As a priority in terms of mix shift within the deposit. Can you put a little meat on, like, checking account traction, you know, whether maybe accounts opened in 2025, outlook for non-interest bearing, anything you could provide there would be great.

You know, I'd probably start with my favorite business that I have is business banking. When you look at business banking, we have three times more deposits than loans. You know, their go-to-market strategy is always to get the checking account first and foremost. In the consumer bank, you know, we definitely, you know, we try to grow and we monitor those statistics every month to try to get to that account growth.

From that perspective. And then commercial and wealth, you know, it's definitely important from that. You know, and we are investing heavily in our treasury management products and services. Are helping the growth in business banking as well as commercial.

You know, as far as specific numbers of account growth, I'll probably be able to give you that maybe at the next conference and all that. I don't have that handy with me right now, Chris. But we'll share that information in our next investor deck for the first quarter. That's okay.

That'd be great. Thank you. And as my follow-up, I'm looking at slide 24 in the ranges that you've provided. If you take a step back, is there a piece of the P&L where you're, I guess, most optimistic about? Within the ranges? You talked about loan growth by each category, point-to-point growing. Any kind of elaboration there would be great.

You know, we've had a lot of strong momentum in the fee area in the last couple of years. So we still have momentum there. So that would be one that I'd probably be most bullish on. You know, NII, I think we're going to do well in that space.

You know, expenses, you know, we have a very disciplined company. One of the favorite things I like being part of M&T Bank Corporation is once we set our plan and move forward, you know, people follow the plan and move get the job done. So I have all the confidence that we'll get our operating leverage that we have and move forward. So I feel good about it.

I mean, I feel more positive entering '26 than I have the first couple of years I've been here. I think we're moving together, and working together much better as a team. Renee, I think, has probably the strongest management team he's had, you know, under his tenure running the company. And are starting to perform like that as well.

I feel really good about that.

Alright. Great. Thank you very much.

Thank you. We'll go next now to Ken Usdin with Autonomous Research.

Hey, Daryl. Just two quick ones. On the deposit side, growth allowed you to remix a little bit on the wholesale borrowings. Just wondering how much more room you might have there? And if do you believe we've seen the bottom here of the DDA balances?

So on the first question, we can probably still shrink, you know, whether it's broker or some of our funds or other areas, maybe a couple billion more so we can, you know, if we, a, get cheaper core deposits and don't can't deploy it in the lending side, we'll be able to shrink and still optimize there. Definitely want to continue to run as efficient optimal balance sheet as possible. That's really important to us. Your second question, what was that again?

Just about the DDA balances. And do you think we've hit an absolute bottom in do you expect any growth from here?

We think when we hit around 3% DDA, should bottom out and start to actually grow. So we aren't that far away from that. If we hit those two more down 50 basis points, we think at that point, it should start to level off and start to grow again. From that perspective is our opinion.

That and, you know, we're investing heavily in treasury management services. We have a great leader there that's doing a great job, and, you know, and our businesses are really good going to market with all that. So we're launching with good products and services, and will also benefit. But I think down about 50 more points, and I think you're gonna start to see it bottom out and grow.

Okay. And one on the loan side, I haven't done the calc this morning, but, you know, I see a rebottom just can you just remind us where CRE is as a percentage of your equity today? And as you start to grow it again, where would you be comfortable taking that back to? If in fact you, you know, you kinda you know, the reduction ended up being any different than where you would comfort level would be.

Yeah. So we're at 124%. Our limit is, I think, 160%. So we have a ton of room to grow.

And, you know, we'll grow, you know, serving our clients, getting the right returns on the growth that we're getting. We really have a large amount of capacity to just be able to grow and add to that portfolio. As needed. And I think the teams are excited.

Tim Gallagher, who runs that group, is, you know, really excited. He said, you know, he had all three businesses performing at top levels and at an unbelievably strong finish to the end of the year, and that's gonna carry us really well. One of the things that I always watch for, you know, going into a new year is start point issues and all that. And when we put our plan together in the third quarter, you know, we didn't know if we'd have any start point problems or issues.

And lo and behold, as we the year of fourth quarter played out, all of our loan portfolios performed really well, we have no start point problems. So we're starting where we thought we would be and we aren't behind that gives us a lot of momentum to actually lift off and grow. From that perspective.

Got it. Thanks, Daryl.

We'll go next now to Steven Chubak of Wolfe Research.

Hi. Good morning, and thanks for taking my questions. Sure. Hey, Daryl.

So wanted to ask just on consumer deposit growth. Just within the guidance that you offered up for 2026, how you're thinking about the growth in consumer versus wholesale, I know we don't have the explicit disclosure within the supplement by the last quarter year on year retail deposit growth. It was beginning to recover back towards that flat year on year level. As you continue to build density in some of these markets like New England and Long Island, are you nearing a sustainable inflection in retail deposits as we look out to the coming year?

Yes. We are really focused on growing our consumer deposits and believe that is kind of the real value that you have by having a strong consumer threshold. All the businesses that we plan for, whether it's consumer, business banking, commercial wealth, all plan for their deposits to grow, both their operating and total deposits. Which is really positive.

If we did shrink some of our time deposits this past year. Was intentional because we didn't have a use for a higher cost. We can get that back very easily by just going out and doing that. That was a conscious decision.

But net net, overall, we feel good about the growth and what we can achieve in the consumer side. As far as commercial goes, they're a machine. They're important when we go and serve our clients. You know, it's not just loans, deposits, treasury management, other fee income services.

They deliver and bring the whole bank to them and all that. So we're really good about getting the right wallet share on the commercial side.

And for my follow-up, just on mortgage banking, revenues continue to grow at a healthy clip. I know that's primarily been driven by the extension in the subservicing business. Do you believe the tailwinds from 2025 could persist into '26? What's a reasonable expectation for growth within that subservicing business at the current clip?

So there's going to be a couple of changes in '26 in subservicing. Early on, I think we're going to lose a smaller portfolio. Then we're gonna get something back the next quarter and potentially even get more back in the second half of the year. So Mike Drury, who is in charge of that business and many other businesses out there, you know, feels really good about his mortgage business, his subservicing.

You know, we are really good subservicers in the hard to service. So the FHA stuff is kind of our sweet spot. That we do. And, you know, people come to us to have us service those loans, and that's a niche that we have, and we feel really good about it.

So, you know, net net, you know, might bounce around a little bit throughout the year, but I think we're gonna finish the year strong overall in that space.

Very helpful color. Thanks for taking my questions.

And we'll go next now to Ebrahim Poonawala of Bank of America.

Hey, Ebrahim. Good morning, Daryl. Just one question. As we think about your growing core deposits organically, as we think about the incremental balance sheet growth that's coming on, would you say that's dilutive to the net interest margin where it is today around 3.70?

And what is there a ton of upside? Like, is there an upside scenario where this margin could be closer to 3.80? If you could sort of give us a framework around those two, appreciate that.

Yeah. So yeah. That's a good question. You know, when we, you know, put on customer relationships, we look at the returns for the overall relationship.

We just don't look at one side of the fence, whether it's deposits or loans. It's the whole relationship. You know, there are scenarios that we're, you know, if we grow loans, grow deposits, maybe you put a little lower net interest margin on the books. But net net, it still returns a good return on capital.

And which is something I think we can do. I mean, I think our net interest margin is either first or second in the peer group. So we have room for it to go down, you know, if we need it to go down to be competitive. But right now, you know, we're trying to continue to keep our mix there and grow the DDA.

In conjunction with interest-bearing deposits as well as, you know, good attractive spread loans and getting good fee income overall. So it's really getting the whole balance there. So but, you know, the guide that we have is what we're giving you is what we think is gonna happen. You know, from what's we're going to earn, and we'll keep you updated as that plays out.

But right now, we feel really good about operating in the low 3.70s in 2026.

Got it. Thanks.

Thank you. Gentlemen, it appears we have no further questions this morning. Mr. Ranjan, I'd like to turn things back to you, sir, for any closing comments.

Thank you. Again, thank you all for participating today. And as always, if any clarification is needed, please contact our investor relations department at (716) 842-5138. And I look forward to working with all of you.

Thank you, Mr. Ranjan. Thank you, Mr. Bible. Ladies and gentlemen, that will conclude today's M&T Bank Corporation fourth quarter and full year 2025 earnings conference call. Again, thanks so much for joining us, everyone. We wish you all a great afternoon. Goodbye.