M&T Bank Reports 28 Percent EPS Jump Sequentially in Q2

M&T Bank Corporation (NYSE:MTB) reported 2Q2025 results on July 16, 2025, highlighting a 27.7% increase in diluted GAAP EPS to $4.24 compared to $3.32 in Q1 2025 and $1.1 billion in share repurchases.

Management provided quantitative updates on risk, capital, and business line growth trends, all of which were discussed in detail.

Material Capital Return Acceleration and Prudent Targeting of Regulatory Buffers

Capital distribution was robust in 2Q2025, with $1.1 billion in share repurchases, representing 5.7% of shares outstanding in the first half of 2025, and the CET1 (Common Equity Tier 1) ratio declined 52 basis points sequentially to 10.98%. Despite exceeding regulatory requirements and Board-approved targets, management emphasized a disciplined approach given volatile macroeconomic and policy conditions, notably tariffs and global uncertainty.

"The decline in the CET1 ratio reflects increased capital distributions, including $1.1 billion in share repurchases, partially offset by continued strong capital generation. our long-term target that the board approved in January is 10%. But I think given the risk that we have right now, you know, we think the range of 11% to 10.75% is the right place to operate."
— Daryl Bible, Senior Executive Vice President & CFO

This deliberate capital strategy ensures flexibility for future opportunistic buybacks, dividend increases, or acquisitions while safeguarding against systemic shocks.

Rapid Progress in Risk Reduction and Asset Quality Diversification

In the second quarter, criticized loan balances were reduced by $1 billion (11%), criticized CRE (Commercial Real Estate) loans declined by $813 million, non-performing loans increased only modestly by two basis points, and net charge-offs of 32 basis points remained below full-year expectations.

The bank's stress capital buffer (SCB) was reduced from 3.8% to 2.7%, reflecting multi-year efforts to proactively limit on-balance sheet CRE exposure and the success of both credit sales and improved underwriting.

"Our SCB declined from 3.8% to 2.7%, reflecting the resiliency and strength of our earnings power and continued risk management efforts. We started this effort five years ago to reduce our on-balance sheet CRE exposure and still serve our customers. We are also focused on reducing our criticized loans."
— Daryl Bible, Senior Executive Vice President & CFO

A structurally safer asset mix with lower CRE concentration, faster runoff of criticized loans, and industry-outperforming stress test results position M&T Bank for enhanced credit stability across future cycles.

Strategic Growth Momentum in Fee-Based and Diversified Lending Lines

Non-interest income reached $683 million, up from $611 million in the prior quarter. Fee income grew 11% year-over-year (excluding notable items) since the second quarter of 2024, marked by notable gains in trust and wealth revenues, mortgage subservicing, and expansion into Europe.

Simultaneously, consumer and residential mortgage loans increased by $1.5 billion sequentially, and C&I pipelines in newly acquired markets (e.g., Eastern Massachusetts, Connecticut) are contributing to specialty lending growth and franchise scale benefits.

"We are actually investing in Europe. We started operations there, and it is starting to grow now. We had some big wins this past quarter in that space. The highlight that we have right now is really in treasury management. You look at treasury management revenues year over year, we are up 12, 13%."
— Daryl Bible, Senior Executive Vice President & CFO

The expansion into new geographies and business lines is driving sustainable, diversified revenue streams and strengthening M&T Bank's competitive positioning in both core and adjacent markets.

Looking Ahead

For the full year 2025, net interest margin is expected in the mid to high 3.60%s, and net charge-offs (GAAP) are forecasted below 40 basis points for the full year 2025.

Capital targets remain at 10.75%–11% CET1 for the remainder of the year, with dividend actions expected from the Board this quarter.

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