M&T Bank: 2Q26 EPS REVIEW: CRE finally inflects, asset quality remains strong

Research evidence excerpt

M&T Bank: 2Q26 EPS REVIEW: CRE finally inflects, asset quality remains strong

tation led) all higher. Within commercial, it cited growth in middle

market, business banking, and several of its specialty businesses while middle market balances

benefited from higher utilization rates.

NIM stable. Its net interest margin was unchanged at 3.70%. Its NIM benefited by 1bp from

higher earning asset yields, partially offset by higher funding costs in support of loan growth,

while a lower contribution of interest-free funds cost it 1bp. Specifically, its yield on AEA

increased 5bps to 5.40% (loans +4bps owing to higher CRE yields including a benefit from higher

non-accrual-related interest, securities +7bps) while its cost of IBL rose 4bps to 2.36% (IBD

-2bps with the deposit costs improving across most of its businesses).

Increased borrowings. Average deposits declined 0.4% with NIBD down 1.3% and IBD (-0.1%)

little changed. NIBD reflected lower institutional services and commercial balance partially

offset by growth in consumer and business banking deposits while IBD saw an a decrease in its

highest cost money market deposit, which were replaced them with lower cost time deposits.

Within IBD, savings & checking declined 1% while time rose 6%. Average short-term (+41%;

FHLB) and long-term (+15%; issuances of senior notes and securitizations) borrowing also

increased. Period-end deposits rose 3.1% with NIBD (+5.2%) and IBD (+2.3%) both increasing.

Fee Income & Expenses

Fees expand. Fee income increased 7.4% (+5.6% ex. BLG) as results benefited from higher

distribution from its investment in Bayview Lending Group, an increase in trust income, and a

rise in revenues from interest rate swap agreements entered into for commercial customers.

Specifically, other (+$26mn or +$12mn ex.