M&T Bank (MTB) Q1 2026 Earnings Call Transcript

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Date

Wednesday, April 15, 2026 at 8 a.m. ET

Call participants

• Senior Executive Vice President and Chief Financial Officer — Daryl Bible

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Takeaways

• Net Interest Margin (NIM) -- 3.71%, representing a 2 basis point increase sequentially from Q4 2025 due to asset repricing, deposit pricing discipline, and positive impact from swaps.
• C&I Loan Growth -- Average C&I loans rose by $1.5 billion sequentially, with gains across middle market and specialty businesses.
• Fee Income -- Increased by 13% year over year, with all fee categories showing growth momentum.
• Net Charge-Offs -- 31 basis points for the quarter, down from 54 basis points in Q4 2025, with no single loss exceeding $10 million.
• Share Repurchases -- $1.25 billion executed, reducing outstanding shares by over 3.5% compared to 2025.
• Diluted GAAP EPS -- $4.13, compared to $4.67 in the prior quarter.
• Net Interest Income (NII) -- $1.76 billion, down $27 million (2%) sequentially from Q4 2025.
• Average Loans and Leases -- Reached $138.4 billion, a $800 million increase over Q4 2025, driven primarily by commercial loans.
• Commercial Real Estate (CRE) Loans -- Decreased 3% to $23.5 billion, with strong origination reported specifically in March.
• Allowance for Loan Losses -- Unchanged at 1.53% of total loans, with provision for credit losses at $140 million for the quarter.
• Liquidity Reserves -- Cash and securities at the Fed totaled $53.1 billion, equivalent to 25% of total assets as of quarter end.
• Investment Securities Portfolio -- Average balance grew by $1.1 billion to $37.8 billion, with yields increasing by 9 basis points to 4.26%.
• Capital Levels -- Common Equity Tier 1 (CET1) ratio estimated at 10.33%, reflecting a 51 basis point decline from Q4 2025 due to repurchases and growth in risk-weighted assets.
• Deposit Trends -- Average total deposits declined $800 million to $164.3 billion, with noninterest-bearing deposits up $400 million and interest-bearing deposits down $1.2 billion, mainly from lower brokered balances.
• Deposit Costs -- Interest-bearing deposit cost declined by 21 basis points to 1.96%, reflecting broad-based cost discipline.
• Efficiency Ratio -- Increased to 58.3% from 55.1% in Q4 2025 as expenses outpaced revenues this quarter.
• Regulatory Capital Proposal Impact -- Initial estimate is a benefit of approximately 90 basis points to CET1 ratio under new standardized rules, with an additional estimated 10-20 basis points possible if opting for the expanded approach.
• Guidance -- Management maintained the full-year NII range of $7.2 billion to $7.35 billion, NIM expected in the high 3.60s, and expects fee income and expenses to trend toward the upper end of their respective ranges.
• Deposit Beta -- Reported at 56% since the start of the rate-cutting cycle in 2024; management suggests stability in the low-to-mid 50% range as long as current rate trends persist.

Summary

M&T Bank Corporation (NYSE:MTB) started the year with notable expansion in net interest margin and robust fee income growth across all categories, driven by commercial loan strength and deposit cost discipline. Asset quality metrics improved, as evidenced by a reduction in net charge-offs and criticized loans, supporting additional share repurchases and a lower targeted CET1 range. The outlook for NII and NIM remains consistent with initial 2026 expectations, with incremental regulatory capital relief anticipated from pending Federal Reserve proposals.

• Management expects mortgage subservicing to generate an additional $30 million to $40 million in annual revenue at 50% margins, beginning in the second half of the year as new volumes are onboarded.
• The NDFI loan portfolio (including fund banking, warehouse lending, and REITs) remains a core business, with embedded diversification and risk management controls detailed, such as frequent valuations and asset quality monitoring.
• Certain fee categories, such as corporate trust and treasury management, are experiencing high single-digit growth, with capital markets fees rising from a low base.
• Operational investments have shifted from a now-completed general ledger upgrade to further projects focused on automation, AI, and customer relationship deepening, as part of management’s multiyear efficiency initiative.

Industry glossary

• NDFI: Non-Depository Financial Institution loans, including fund banking, mortgage warehouse, and institutional real estate lending, managed separately due to distinct credit and risk characteristics.
• Deposit Beta: The percentage change in a bank’s deposit interest rates relative to changes in benchmark rates, indicating pass-through of rate moves to customers.
• Bayview Distribution: A specific transaction providing noninterest income from partnership or asset distributions, referenced in the noninterest income breakdown.
• MSR Time Decay: The reduction in value of mortgage servicing rights as loans age, reported as a contra-fee item this quarter rather than classified as an expense.
• CRE Originate-and-Sell (RCC): Real Estate Capital Corporation activities involving origination of CRE loans for sale, generating off-balance-sheet fee revenue streams.

Full Conference Call Transcript

Joining me on the call this morning is M&T Bank Corporation’s Senior Executive Vice President and CFO, Daryl Bible. I will now turn the call over to Daryl.

Daryl Bible: Thank you, Rajeev, and good morning, everybody. Our purpose continues to define M&T Bank Corporation: to make a difference in people’s lives. We do this by helping our customers grow, enabling commerce, and supporting our communities. We value building long-term relationships and being a source of strength and stability to our stakeholders through various economic cycles. We are committed to investing in the places we serve. In this quarter alone, we launched a new Baltimore Ravens College Track Center, a state-of-the-art learning support space for local high school scholars. In New York City, we opened a new full-service branch in the Bronx.

And just this week, we announced our work with the Boston Foundation on a multimillion-dollar program with the City of Boston to accelerate the city’s innovation ecosystem. Looking ahead to 2026, our priorities remain clear: operational excellence—building simpler, more consistent, and resilient operations—and teaming for growth, which is about working more seamlessly to deepen relationships and expand opportunity in our markets. We enter this season with the same relentless commitment to disciplined execution and long-term performance. To that end, before we get into the results this quarter, let me underscore some long-standing qualities that have come to characterize M&T Bank Corporation’s performance.

We have always maintained a strong balance sheet, starting with a very high-quality loan portfolio, proven asset quality performance over the long term, strong levels and quality of capital, and ample liquidity. Regardless of the business environment, we remain steadfast in our disciplined approach to underwriting, pricing, and risk management. At times, that results in focused growth in some loan categories while remaining vigilant in others, as was the case last year and this quarter. I would rather say no to a transaction than compromise on structure and pricing. We chose to be selective to preserve the high quality and low volatility of our revenue and earnings stream. Those tenets serve us well.

I am confident that we will see growth across all loan categories this year, but in a manner that delivers progress while protecting all of our constituents, including customers, communities, and investors. As the industry navigates some new uncertainties from current events, we have chosen to be cautious with our NIM expectations, but we remain confident in delivering the performance we expected when we started the year. Our pipelines remain strong, but we chose not to chase growth or yield if a transaction does not fit our underwriting and return standards. We have one of the highest-quality risk-adjusted NIMs in the peer group, and we will maintain that while delivering strong results driven by a well-diversified revenue stream.

We are starting with strong year-over-year fee income momentum, and those fee income growth contributors are of high quality and low volatility. Asset quality has been improving notably. Our strong capital levels, as well as our consistent capital generation, give us flexibility for share repurchases. In combination, these factors will allow us to produce strong pre-tax pre-provision revenue and earnings, in line with and with a possibility of exceeding expectations. As we go through the presentation today, I will highlight the strength and diversification of M&T Bank Corporation’s balance sheet, capital, asset quality, and revenue, which enable us to outperform consistently across cycles.

We continue to receive recognition for our performance, including the impact of our charitable team and our engagement with investors, reflecting the dedication of our teams across M&T Bank Corporation. Now let us turn to the results for the first quarter. Our results represent a strong start to the year with several successes to highlight. Net interest margin expanded 2 basis points, reflecting continued fixed-rate asset repricing and deposit cost discipline. C&I growth was strong, with average C&I loans growing $1.5 billion from the fourth quarter, including a pickup in middle market growth. Fee income remains a bright spot, growing 13% from 2025, with solid year-over-year growth in each of our fee categories.

Credit continues to perform well, with more than $700 million reduction in criticized balances and net charge-offs of 31 basis points. We brought our capital levels within our operating range and executed $1.25 billion in share repurchases, representing over 3.5% of shares outstanding as of 2025. Diluted GAAP earnings per share were $4.13, down from $4.67 in the prior quarter. Net income was $664 million compared to $759 million in the linked quarter. M&T Bank Corporation’s first quarter results produced an ROA and ROCE of [inaudible], respectively. Supplemental reporting of our results on a net operating or tangible basis shows net operating income of $671 million compared to $767 million in the linked quarter.

Diluted net operating earnings per share were $4.18, down from $4.72 in the prior quarter. Net operating income yielded an ROTA and an ROTCE of [inaudible] for the recent quarter. Next, we will look a little deeper into the underlying trends that generated our first quarter results. Taxable-equivalent net interest income was $1.76 billion, a decrease of $27 million, or 2%, from the linked quarter. Net interest margin was 3.71%, an increase of 2 basis points from the prior quarter. This improvement was driven by a positive 8 basis points from the higher spread driven by fixed asset repricing, remixing of cash to securities, deposit pricing discipline, and a favorable impact on our swap portfolio.

That was partially offset by a negative 6 basis points from a lower contribution of free funds driven by share repurchases and the impact of lower rates on the value of free funds. Average loans and leases increased $800 million to $138.4 billion. Higher commercial loans were partially offset by lower CRE and consumer balances. Commercial loans increased $1.5 billion to $63.8 billion, aided by growth in middle market, business banking, and several of our specialty businesses. Higher middle market loans reflect an uptick in utilization in the first quarter. CRE loans declined 3% to $23.5 billion, reflecting somewhat moderating paydowns but softer volume, particularly in January and February. However, we saw strong CRE origination activity in March.

Residential mortgage loans were largely unchanged at $24.8 billion. Consumer loans declined 1% to $26.3 billion from lower recreational finance and auto loans due to poor weather early in the year. Loan yields decreased 14 basis points to 5.86%, reflecting lower rates on variable-rate loans, partially offset by fixed-rate loan repricing and eliminating the negative carry on our swaps. Our liquidity remains strong. At the end of the first quarter, securities and cash held at the Fed totaled $53.1 billion, representing 25% of total assets. Average investment securities increased $1.1 billion to $37.8 billion. The yield on investment securities increased 9 basis points to 4.26%.

The duration of the investment portfolio at the end of the quarter was 3.8 years, and the unrealized pre-tax gain on the available-for-sale portfolio was $9 million. While subject to the LCR requirements, M&T Bank Corporation estimates that its LCR at quarter end was 107%, exceeding the regulatory minimum standards that would be applicable if we were a Category 3 institution. Average total deposits declined $800 million to $164.3 billion. Noninterest-bearing deposits increased $400 million to $44.6 billion, aided by institutional services. Interest-bearing deposits declined $1.2 billion to $119.7 billion, driven by lower brokered deposits. Interest-bearing deposit costs decreased 21 basis points to 1.96%, with lower deposit costs across each of our segments.

We have been able to grow customer deposits and maintain deposit cost discipline. Since 2025, we have more than funded our loan growth, with average customer deposits outpacing loan growth by more than $1 billion. We grew customer deposits while maintaining deposit cost discipline, reflected in a 56% interest-bearing deposit beta since the start of the cutting cycle in 2024. Noninterest income was $689 million compared to $696 million in the linked quarter. Mortgage banking revenues were $127 million, down from $155 million in the fourth quarter. Residential mortgage revenues decreased $16 million to $89 million, mostly related to the MSR time decay now being recognized as a contra-fee item rather than an expense.

Commercial mortgage banking decreased $12 million to $38 million, driven by lower volumes compared to the fourth quarter. Other revenues from operations increased $24 million to $187 million from a $33 million Bayview distribution, partially offset by lower merchant discount. Noninterest expense for the quarter was $1.44 billion, an increase of $59 million from the prior quarter. Salary and benefits increased $105 million to $914 million, reflecting approximately $115 million in seasonal compensation. Professional services decreased $12 million to $93 million, reflecting lower legal and review costs. FDIC expense increased $31 million, primarily related to a $29 million reduction of estimated special assessment expense in the fourth quarter.

Other costs of operations decreased $50 million to $101 million from the previously mentioned changes related to the accounting for the MSR portfolio and a $50 million charitable contribution in the prior quarter. The efficiency ratio was 58.3% compared to 55.1% in the linked quarter. Turning to credit, asset quality was strong, with lower net charge-offs and continued improvement in nonaccruals and criticized loans. The level of criticized loans was $6.6 billion compared to $7.3 billion at December. The improvement from the linked quarter was driven by a $400 million decline in CRE and a $300 million-plus decline in C&I criticized. Nonaccrual loans decreased slightly to $1.2 billion; the nonaccrual ratio decreased 1 basis point to 89 basis points.

Net charge-offs for the quarter totaled $105 million, or 31 basis points, decreasing from 54 basis points in the linked quarter. Net charge-offs were granular, with no single net charge-off greater than $10 million. In the first quarter, we reported a provision for credit losses of $140 million compared to charge-offs of $105 million. The allowance for loan losses as a percent of total loans was unchanged at 1.53%. Our NDFI portfolio remains a smaller percentage of total loans compared to our peer group. Three portfolios—fund banking (subscription lines), residential mortgage warehouse lending, and institutional CRE (primarily lending to REITs)—comprise over two-thirds of the NDFI loans and are long-standing and relatively well understood by the market.

Business credit intermediaries consist of approximately $700 million of wholesale lender finance, $600 million of business leasing, and $400 million of loans to BDCs. Across the NDFI portfolio, advance rates vary but are calibrated to asset quality, historical recovery data, and collateral performance. Visibility into collateral is strong, with frequent reporting, borrowing bases, independent valuations, and field exams. Diversification is a key mitigant both within structures and across the broader NDFI portfolio. For example, software exposure within our BDC portfolio is less than 15%. Turning to capital, M&T Bank Corporation’s CET1 ratio was an estimated 10.33%, a decline of 51 basis points from the fourth quarter.

The lower CET1 ratio reflects $1.25 billion of share repurchases and increased risk-weighted assets, partially offset by continued strong capital generation. In March, the Federal Reserve issued regulatory capital framework proposals. Based on our initial estimate, we see an approximate 90 basis point benefit to our CET1 related to lower risk-weighted assets under the standardized approach. If we were to opt in to the expanded risk-based approach, we estimate an incremental 10 to 20 basis point benefit. The proposal also has a phase-in and inclusion of AFS securities and pension-related AOCI in regulatory capital. At the end of the year, this would be a 4 basis point benefit to the CET1 ratio on a fully phased-in basis.

We are well positioned for these proposals given our current capital levels, AOCI, loan mix, disciplined credit underwriting, and relatively straightforward business model. Now turning to the outlook. First, the economic backdrop: the economy continues to hold up well despite ongoing concerns and uncertainty regarding tariffs and other policies. The situation in Iran poses new risks to the U.S. and global economies through energy prices and uncertainty. Consumer spending has slowed but continues to grow in aggregate; however, there is a growing divide between higher- and lower-income households—the “K-shaped” economy. The higher-end consumer continues to be stronger in spending, while the lower-end consumer has maintained but is vulnerable to risks in the environment. U.S.

GDP growth has slowed, reflecting slower consumer spending among the impacts. Encouragingly, underlying details for the first quarter show continued strength in equipment investment by firms. The weak labor market in 2025 is showing possible signs of bottoming out, but we remain attuned to risks from geopolitical conflict. We remain well positioned for a dynamic economic environment. Our full-year expectations are unchanged from the ranges we discussed in January’s earnings call, but I will discuss some current trends. We expect NII of approximately $7.2 billion to $7.35 billion, which translates into a NIM in the high 3.60s.

We started the year with slower CRE and consumer growth than our initial expectations, though this has been partially offset by strength in C&I. We saw stronger CRE origination volume in March. NII will continue to be dependent on the shape of the curve and loan and deposit balances. We expect both fee income and expenses to trend toward the top of their respective ranges. This reflects strength in both fee income categories and additional subservicing balances, which I expect to bring in during the second half of the year. We will continue to manage PPNR well within the range implied by our January guidance.

Our taxable-equivalent tax rate is expected to be approximately 24%, compared to the prior outlook of 24% to 24.5%. We are also moving to the bottom end of the CET1 ratio range of 10%, given continued asset quality improvement and our strong performance. Overall performance remains on track with our initial expectations. To conclude, our results underscore an 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 outperformance through all economic cycles, while growing within the markets we serve. We remain focused on shareholder returns and consistent dividend growth.

And finally, we are a disciplined acquirer and prudent steward of shareholder capital. As we close, I want to thank my M&T Bank Corporation colleagues who work tirelessly each day to make a difference in people’s lives. Because of you, M&T Bank Corporation is able to support all of our communities. Thank you. We will now open the call for questions.

Operator: Thank you. If you would like to ask a question, press 1 on your keypad. To leave the queue at any time, press 2. Once again, that is 1 to ask a question.

Operator: Our first question today comes from Manan Gosalia with Morgan Stanley. Your line is open. Please go ahead.

Manan Gosalia: Good morning. I really appreciate all the detail on the capital side, so maybe I will start there. First, you are saying ERBA is a positive. I just wanted to clarify that you were saying that you will be adopting that, or is it still something you are deciding on? And is there a higher expense impact from opting in or anything else that we might not be considering? And second, on the ERBA, what is driving that benefit? How are you thinking about credit risk and op risk?

Daryl Bible: Thank you for the question. The proposal just came out. It has to go through the comment process and then the approval process. I cannot commit that we will adopt the ERBA, but what I can tell you is, if there is an advantage that we see today that does not change, it is up to us to make good decisions for our shareholders. That would mean we would probably opt in. We will see how things play out, but if you are going to get that much of an advantage, we can put processes in place that should more than pay for it.

Manan Gosalia: Got it. And then you did a pretty significant buyback this quarter, and you are bringing down the CET1 guide. Now that we have the new capital proposals, assuming they go through as written, what would the right normalized CET1 level be for M&T Bank Corporation over the longer term after the RWA benefit? And what will determine how quickly you get there?

Daryl Bible: It is a proposal, so let us use round numbers. If we adopt it and CET1 goes up roughly 100 basis points, we would need to see what other constituencies—primarily the rating agencies—think about that, because there is actually capital coming out of the system, but they also use RWA in many of their calculations. We need more measurement there. My guess is, whether you get the full benefit or not, you probably will trend down lower, and you will probably see that easily in the tangible equity ratio.

Analyst: Got it. Thank you.

Operator: Thank you. Our next question comes from Scott Siefers with Piper Sandler. Your line is now open.

Scott Siefers: Thanks for taking the question. Daryl, I was hoping you could expand on what caused the margin to come in a little below your prior expectations. I think you mentioned in your prepared remarks that you are choosing to be a little cautious on the guide. Has anything changed, or are you just approaching with an abundance of caution?

Daryl Bible: It is a combination of two things. We did not come out of the blocks really strong in consumer indirect. That is an important portfolio to us because it has higher yields, and it was more of a weather event. We believe we are going to catch that up and make progress, but until that happens, we are being cautious. From a CRE perspective, seasonally it always drops off in the first quarter, but we had over $1 billion in originations in March. We are off to a great start in the second quarter, so we should have a lot of confidence that CRE is going to get on track and grow this year and do really well.

It is just a matter of when that happens, and that would be a benefit. The only other thing I would weigh in is, with higher rates it is harder to get growth in our DDA accounts. We were hoping to grow those a little more. We will see if rates stay flat or go down. We are just being cautious based on what we are seeing; we do not want to overcommit.

Scott Siefers: Perfect. Thank you. And one tick-tock one: maybe discuss the overall level of borrowings. As I look at end-of-period short-term borrowings, it is about as high as I can remember for some time, and it did not look seasonality related. Anything going on there we should be aware of?

Daryl Bible: We were managing to our short-term ratios, and we also have a lot of volatility in deposits within our ICS business. We have it for a while, then it goes away, and it replaces it. We are good at keeping our lines open in multiple places so we always have access. I am a big believer in leaving lines in place, and if we need to draw upon them and increase them, we can do it immediately, same day. It is how we manage our balance sheet to minimize size. We do not want it too large. We want to operate at an optimal balance sheet size.

Scott Siefers: Got it. Perfect. Thank you very much.

Daryl Bible: You are welcome.

Operator: Thank you. Our next question comes from Gerard Cassidy with RBC Capital Markets. Your line is now open.

Gerard Cassidy: Hi, Daryl.

Daryl Bible: Hey, Gerard.

Gerard Cassidy: Circling back to the NDFI portfolio, which you give us very good detail on. Based upon M&T Bank Corporation’s history as being one of the better credit underwriters, your institution—similar to your peers—has grown these portfolios quite rapidly over the last five years. What has driven such material growth in this category versus other categories? Are there one or two reasons, whether better capital treatment or something else, that drove the growth?

Daryl Bible: The bulk of our NDFI portfolio is three primary businesses. Mortgage warehouse lending is a core business for us. It is a really safe credit business if you run strong operations and perfection of collateral. We run it efficiently and profitably. Lending to REITs is something we have done for a long period; it is another sound way of growing, and that portfolio has been growing nicely. Fund banking and capital call lines is a business we acquired from Webster. We like the business from a credit perspective and believe it is a good fit. We have been growing it to right-size for M&T Bank Corporation rather than the size it was when we acquired it.

Those three are really our core ones; everything else is relatively small. We feel very comfortable growing what we have.

Gerard Cassidy: Speaking of growth, you touched on CRE mortgages picking up in March. Can you expand on what you are seeing in CRE lending versus C&I? What is the outlook?

Daryl Bible: Our CRE business platform is one of the best in the industry. We have five distinct business lines. First is our regional portfolio—core to us—which had been shrinking, but we are now very active in those regions and generating more production. We believe our regional businesses will continue to grow. Several years ago, we got into the originate-and-sell business with RCC. RCC is another way of serving clients. We do business on and off balance sheet. Last year, RCC originations were about the same as on-balance-sheet originations; we get paid fee income even when it is off balance sheet. That business had record performance last year and continues to perform very well.

We also have the institutional CRE business with REITs, which has been growing nicely and will continue to grow. We formed a dedicated affordable housing business line—more complicated underwriting, but by pulling it together we will generate more consistent volume and build relationships. Lastly, we have the warehouse business, which is also attractive. Net, we feel really positive that CRE will continue to grow and you will see loan growth and fee income; it is bigger than just the balance sheet.

Gerard Cassidy: You have done a very good job bringing down criticized loans in CRE from a year ago. What were the drivers—paydowns, improved cash flows?

Daryl Bible: It is broad-based. We have seen improvement in operating performance, and some borrowers are paying off and going elsewhere. It is a combination. The improvement in credit quality gives us confidence to continue bringing down capital levels, and you see that in our share repurchases.

Operator: Thank you. Our next question comes from Analyst with Deutsche Bank.

Analyst: Hey, everyone. This is Nate Stein on behalf of Matt O'Connor. I wanted to drill down on the CRE comments. You said originations picked up in March, but is it fair to say that CRE loan balances can grow in 2Q and beyond?

Daryl Bible: I have been saying that for a couple of quarters, so you probably do not believe me anymore. I will not commit to that. What I will tell you is we have a lot of momentum. We are growing and getting more customers. Whether we grow average or point-to-point in the second quarter, I am not concerned. I know it is going to grow this year. Our teams are working hard and having fun working with customers and projects. We will have a very successful business with positive revenue from both fees and balances.

Analyst: Thank you. And then a quick question on the use of excess capital. First-quarter buybacks were really strong—more than double the quarterly pace. How do you think about the CET1 range 10.5% to 10% and pacing, given the backdrop?

Daryl Bible: The reason we widened the range is continued improvement in asset quality. We feel comfortable that our long-term CET1 ratio, approved by the Board, is 10%. We feel comfortable going there. We left 10.5% out there because there is a lot of geopolitical risk. If we see signs of stress, we will stop buybacks and accrete capital. In any quarter without share repurchases, net of dividend, we accrete about 25 basis points, so we can accrete back quickly. Right now, we feel very good and will continue to move ratios down, but if we see something we do not like, we will pause and accrete capital.

Operator: Thank you. We will go next to Chris McGratty with KBW. Your line is now open.

Chris McGratty: Good morning. Interested in your comments on deposit competition. Any specific geographies or markets given the industry is putting up a little better loan growth?

Daryl Bible: We have a lot of ability to grow customer deposits and have been doing so consistently for many years. We pay competitive rates; we are not the highest or the lowest, but we get our fair share. Competition is always present, but I would not view it as worse than other environments. We had nice growth this past quarter, and I think that continues through the year. Net-net, as in my prepared remarks, we have grown customer deposits more than loans the last couple of years and will continue, shrinking non-core funding if needed. Importantly, across M&T Bank Corporation our businesses are incented to get the operating account first.

Once we get that, it opens the door and increases wallet share. In business banking, we have a ratio of three times more deposits than loans, and 80% of deposits are operating—really strong. They are growing deposits and have huge loan pipelines. Business banking is performing as well as I have ever seen it.

Chris McGratty: Thank you. And on credit spreads across asset classes—any comments about incremental spreads, whether CRE with increased originations or C&I?

Daryl Bible: Spreads have moved around a bit; with the conflict in Iran, they probably widened a touch. It is also very competitive, so sometimes a little wider, sometimes narrower—net about the same. We try to be competitive and make sure we get paid for the risk we take.

Operator: Our next question comes from Ken Usdin with Autonomous Research. Your line is now open.

Ken Usdin: Thanks. Hey, Daryl. As you talk about fee growth and the high end for the year—I know the first quarter had the Bayview distribution benefit—can you flesh out more about the magnitude of the mortgage subservicing books you think you can bring on and how big of an opportunity that is? And more color on where you expect fees to grow?

Daryl Bible: We have tremendous momentum in our fee businesses. We have a specialized subservicing business focused more on FHA; it pays a little more because it is higher-touch to service. We think additional subservicing will start to come on at a run rate in the second half of the year—annual revenue run rate in the $30 million to $40 million range, operating at about a 50% margin. We are also seeing really good growth in our trust businesses—both wealth and corporate trust. Corporate trust also brings in nice deposits. Treasury management in commercial is performing really well—high single-digit growth. Capital markets fees, from a low base, are continuing to increase.

Now that we have our general ledger converted over this past weekend, our accounting and finance teams will work on breaking that out so you will see it in the next quarter or two. I feel our fees will continue to outperform; we may actually exceed our range.

Ken Usdin: Got it. And given your avenues for deposit growth, your decision tree between leaving money in cash versus putting it into the securities book—looks like you are biased toward securities. Where do you want that to live and how do you expect it to go?

Daryl Bible: It was fine-tuning. We thought we could hold a little less cash at the Fed and put a bit more into the securities portfolio. It means we will do a little less hedging because we have more fixed-rate assets, but we remain roughly neutral on interest-rate risk. We are positioned well for rates moving in either direction and will continue to manage accordingly.

Operator: Our next question comes from John Pancari with Evercore ISI. Your line is now open.

John Pancari: Morning, Daryl.

Daryl Bible: Morning.

John Pancari: You indicated some selectivity in underwriting. What are you seeing that is making you say that? Is it pricing, terms? What areas are seeing returns pressured where you decided to be more selective?

Daryl Bible: It is really competitive in lending—commercial, consumer, CRE. As we talk to leaders and teams, I probably lean a little more to structure than pricing—maybe a 60/40 tilt to structure. Structure is not something you want to give on. For good customers, you might stretch a bit on pricing. We are not in a hurry to put a lot of loans on; we will do it the right way and make sure we get paid back and have good earnings streams. We are performing well, generating a lot of capital, and returning a lot to investors.

We are not under pressure; we are doing the right things for the long term, which is what you would expect from M&T Bank Corporation.

John Pancari: Got it. Thank you. And on M&A, can you update thoughts—both bank and nonbank—given the backdrop?

Daryl Bible: M&T Bank Corporation is very consistent with a long history and track record on M&A and shareholder returns. We have always been very selective. Anything we consider must meet both our strategic criteria—primarily in-footprint—as well as our financial criteria. We will continue to focus on running the company well. If something fits, we will consider it, but we are not going to stretch.

Operator: We will go next to Ebrahim Poonawala with Bank of America Securities. Your line is now open.

Ebrahim Poonawala: Good morning, Daryl. You talked about the GL update—I think it gets completed this year. Give us a sense of tech spend and what projects are upcoming over the next year or two as we think about infrastructure upgrades?

Daryl Bible: We went live on our general ledger this past weekend. It is performing really well, and that is behind us. Hats off to the team—hundreds of people across technology, business, and finance—and our partner EY over three years. As for tech spend, it gets reallocated to other priority projects. Priorities now: teaming for growth—deeper wallet from customers and in regions—and operational excellence—simplify and automate operations using AI and other tools. We are off to a good start. This will be a multiyear effort. As projects like the GL roll off, others fill in. We have a strong planning process to allocate spend, balancing strong investor returns with getting a lot done across the company.

Ebrahim Poonawala: On capital, the roughly 100 bps benefit you could get from the proposals—if rules go effective in January 2027 or January 2028—how do you think about deploying that if your CET1 target remains the same? Do you get more active on buybacks?

Daryl Bible: We have to wait to see final rules after the comment period and what gets passed. It is directionally right. With LTVs, we are a conservative lender and have a huge lift because of our LTVs; that will continue to be core. It is too early to say how we will deploy the capital. We want to serve all constituencies and will decide as we know more.

Ebrahim Poonawala: Anything you would advocate for in the comment period—technical items that may not reflect your balance sheet’s risk?

Daryl Bible: I think it is a fair, data-driven assessment. Standardized RWAs are directionally right. Under the enhanced approach, there is a good advantage for us because of our LTVs. Also, if fee businesses remain favored, our Wilmington Trust businesses benefit. Our business mix appears well positioned under what we are seeing.

Operator: We will go next to Analyst with Jefferies. Your line is now open.

Analyst: Hey, guys. This is Brooks Dutton on for Dave today. On deposit betas going forward, you reported a 56% beta through the cycle so far. How much additional beta do you expect if rates stay higher for longer? And if you could touch on a modest curve steepening or lower short-term rates and how that would translate through NIM and NII given your current balance sheet positioning?

Daryl Bible: Simplifying it: rates were going up—our deposit beta was in the low-to-mid 50s. Rates are coming down—right now we are in the mid-50s coming down, and we will probably stay low-to-mid 50s coming down. At some point—maybe 50 to 100 basis points more—the consumer portfolio hits floors and then that beta starts to shrink, but we are still a ways away. It is not rocket science; it should go up as much as it goes down if you are disciplined on deposit pricing.

Operator: At this time, there are no further questions in queue. I will now turn the meeting back to our presenters for any additional or closing remarks.

Rajeev Ranjan: Again, thank you all for participating today. As always, if any clarification is needed, please contact our Investor Relations department at 716-842-2518. Thank you all.

Operator: Thank you. This brings us to the end of today’s meeting. We appreciate your time and participation. You may now disconnect.

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