M&T Bank's Q2 2026 diluted EPS rose 25% to a record $5.32 as net income grew 14% to $818M on 4.6% higher net interest income, 8% fee growth and flat expenses, amplified by an 8% smaller share count; charge-offs fell to 0.23%.
Net interest income
$1.8B
+4.6% YoY
Net interest margin
3.70%
Net income
$818M
+14.2% YoY
Diluted EPS
$5.32
+25.5% YoY
Efficiency ratio
52.8%
Net charge-off ratio
0.23%
CET1 capital ratio
10.2%
Return on tangible common equity
18.6%
Net interest margin (NIM): what a bank earns on its loans and securities minus what it pays for deposits and borrowing, as a share of those assets. Efficiency ratio: operating costs per dollar of revenue (lower is better). Net charge-off (NCO) ratio: loans written off as unrecoverable, net of recoveries, as a share of average loans. CET1: the bank's core capital cushion against losses, as a share of risk-weighted assets.
Record EPS as a quieter expense quarter, fee income and an 8% smaller share count do the work
M&T Bank earned $818 million in the second quarter of 2026, up 14% from $716 million a year earlier, and diluted earnings per share rose 25% to $5.32, which management called a record. The two growth rates differ because of share buybacks. M&T had about 8% fewer diluted shares outstanding (146.8 million on average vs. 160.0 million). The same profit therefore went further per share. The operating drivers were modest and specific:
Net interest income up 4.6%, from more loans and cheaper funding.
Fee income up 8%, helped by a larger payout from an outside investment.
Expenses nearly flat.
Credit costs came down.
M&T is a regional bank headquartered in Buffalo, New York. Its branches run from Maine to Virginia and Washington, D.C., and its Wilmington Trust units provide trust and wealth services.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Total revenue (net interest income + noninterest income)
$2,532M
$2,396M
+5.7%
Net interest income
$1,792M
$1,713M
+4.6%
Net interest margin (taxable-equivalent)
3.70%
3.62%
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Return on tangible common equity (ROTCE, non-GAAP, annualized)
18.57%
15.54%
+3.0 pts
Total loans (period-end)
$143,193M
$136,116M
+5.2%
Total deposits (period-end)
$168,885M
$164,453M
+2.7%
CET1 capital ratio
10.19%
10.99%
-80 bp
The efficiency ratio and ROTCE are M&T's own non-GAAP figures. ROTCE is calculated on its "net operating" income, which excludes intangible amortization. The Q2 2026 CET1 ratio was an estimate in the July earnings release and matches the figure in the 10-Q. bp = basis point, one-hundredth of a percentage point.
Takeaway: Less than half of the 25% EPS jump comes from growth in the business itself. Net income rose 14%, and one item flattered that growth: a $47 million distribution from Bayview Lending Group (BLG), an investment M&T holds. The rest came from buying back about 8% of the share count. Those buybacks brought the CET1 ratio down from 10.99% to 10.19%. That puts it near the bottom of management's 10.0%–10.5% target range. Buybacks already slowed to $465 million in Q2 from $1.25 billion in Q1, so future per-share gains will have to come more from the business itself.
Net interest income: more loans, cheaper funding
Most of a bank's income is net interest income: the interest it earns on loans and securities minus the interest it pays depositors and lenders. Net interest margin (NIM) expresses that as a percentage of the bank's interest-earning assets. It measures how much the bank earns on each dollar it has lent or invested.
Net interest income on a taxable-equivalent basis rose $82 million (5%) from a year earlier, to $1,804 million. The filing credits "growth in average loans and investment securities and favorable earning asset and interest-bearing liability repricing, including an improved impact from interest rate swap agreements." The Federal Reserve's 2025 rate cuts lowered what M&T pays for funds faster than they lowered what it earns:
Rate
Q2 2026
Q2 2025
Yield on average earning assets
5.40%
5.51%
Cost of interest-bearing liabilities
2.36%
2.71%
Net interest spread
3.04%
2.80%
Asset yields fell 11 bp, but funding costs fell 35 bp. Against the first quarter, the margin was flat at 3.70%. The 10-Q attributes this to "a 5 basis-point increase in yields received on earning assets offset by a 4 basis-point increase in rates paid on interest-bearing liabilities." The $41 million quarter-on-quarter rise in net interest income came from one extra calendar day, higher interest collected on nonaccrual loans (loans that had stopped paying) and growth in earning assets.
One caveat on comparability: M&T moved to a new general ledger platform in Q2 and changed how it calculates some annualized rates. Prior-period ratios were restated, so the 3.62% year-ago NIM may not match the figure originally published for Q2 2025.
Loan mix. Average loans grew $6.0 billion (4%) year on year, and the growth was uneven. Commercial and industrial (C&I) loans, which are business loans, rose $5.0 billion (8%). Residential mortgages and consumer loans each rose $1.4 billion. Commercial real estate (CRE) balances fell $1.8 billion (7%), which the release attributes to payoffs. CRE is the loan type investors have worried about most at regional banks since 2023. Management now expects CRE balances to start growing again, and period-end CRE loans did rise $1.1 billion from March 31.
Funding. Average deposits were essentially flat year on year at $163.5 billion. Loan growth was funded by running down cash held at other banks, which fell $4.6 billion. Short-term borrowings from the Federal Home Loan Bank of New York more than doubled, and M&T also issued senior notes and securitizations. Average borrowings rose to $20.8 billion from $14.3 billion. Wholesale funding like this usually costs more than deposits. If deposits keep lagging loans, that shift would put pressure on the margin.
Fee income: a larger BLG payout, plus trust and swap revenue
Noninterest income rose $57 million (8%) to $740 million:
Trust income was up $15 million to $197 million, from institutional services and wealth management.
Trading and non-hedging derivative gains were up $10 million to $22 million, from interest rate swaps sold to commercial customers.
Deposit service charges were up $7 million to $144 million.
Other revenues from operations were up $22 million to $213 million. The driver was the $47 million BLG distribution. Last year's quarter included two one-off gains that this quarter did not repeat: $15 million from selling an out-of-footprint builder and developer loan portfolio, and $10 million from selling an institutional-services subsidiary.
A distribution from an investee does not recur on a schedule. Q1's BLG distribution was $33 million, and Q2's $47 million was the largest contributor to other revenues. Management's guidance itself calls out "the second quarter BLG distribution," so it should not be treated as a quarterly run rate.
Expenses and efficiency
The efficiency ratio is noninterest expense divided by revenue, so lower is better. It improved to 52.8% from 55.2% a year earlier and from 58.3% in Q1. Expenses rose only $13 million (1%) to $1,349 million. Pay rose $13 million on merit increases and incentive compensation, partly offset by lower staffing. Outside data processing and software rose $16 million for technology, cybersecurity and recordkeeping upgrades. Other costs of operations fell $14 million. That decline is partly accounting: from January 2026, M&T carries mortgage servicing rights at fair value, so their amortization no longer runs through expenses. Value changes on those assets now go through mortgage banking revenue instead.
The large drop from Q1 is seasonal. Q1 carries annual stock-based pay and payroll-tax costs, which pushed salaries and benefits to $914 million versus $826 million in Q2.
Credit quality: steadily improving
Net charge-offs, the loans written off as uncollectible net of recoveries, were $80 million, or 0.23% of average loans annualized. That compares with 0.32% a year ago and 0.31% in Q1.
Nonaccrual loans fell to $1.21 billion (0.84% of loans) from $1.57 billion (1.16%) a year earlier. The release attributes the decline to fewer troubled C&I and CRE loans.
The allowance for loan losses, the reserve set aside for expected losses, fell to 1.52% of loans from 1.61%. The release attributes this to "lower levels of criticized loans."
One figure moved the other way. Accruing loans 90+ days past due rose to $603 million from $496 million. The filing says these are predominantly government-guaranteed residential mortgages, which limits the loss risk.
Capital
The CET1 ratio measures a bank's highest-quality capital, mainly common equity, against its risk-weighted assets. It is the main buffer regulators watch. M&T's ratio fell to 10.19% from 10.33% in Q1 and 10.99% a year ago, because of loan growth and share repurchases. Buybacks were $465 million in the quarter, down from $1.25 billion in Q1 and $1.08 billion in Q2 2025. The quarterly dividend was $1.50 per share, 11% higher than a year earlier. Tangible book value per share rose 4% year on year to $117.41.
First-half picture
For the six months, net income was $1,482 million, up 14% from $1,300 million. Diluted EPS was $9.44, up 25% from $7.55. Taxable-equivalent net interest income rose $138 million. The margin widened 6 bp as lower funding costs outpaced lower asset yields.
Outlook
Management's 2026 guidance was issued with the Q2 results. An investor presentation on September 14, 2026 restated it as "No Change to 2026 Ranges":
Item (full-year 2026)
Guidance
Where M&T expects to land
Net interest income (taxable-equivalent)
$7.2–$7.35B
Bottom half; full-year NIM in the high 3.60s, implying mid-3.60s in the second half
Fee income
$2.8–$2.85B
High end
GAAP expense
$5.5–$5.6B
High end
Net charge-offs
~37 bp of average loans
—
Average loans
$141–$143B
—
Average deposits
$165–$167B
—
CET1 ratio
10.0%–10.5%
—
Our read: The guidance points to a weaker second half on three measures:
Margin. Management expects the second-half NIM in the mid-3.60s, below Q2's 3.70%. That fits the shift toward borrowed funding described above.
Charge-offs. First-half net charge-offs were $185 million, roughly 0.26% annualized. Holding the ~37 bp full-year target implies second-half charge-offs at roughly 0.45%–0.50% annualized, close to double the first-half pace, unless management is being conservative. This is the figure to watch in Q3.
Expenses. High-end expense guidance implies about $1.4 billion per quarter in the second half, above Q2's $1,349 million.
With CET1 already near 10.2%, near the bottom of its target range, buybacks are unlikely to return to Q1's pace. EPS growth from here will depend more on loan growth, particularly whether CRE balances actually start growing again, and less on a shrinking share count. Based on the July 15 timing of the Q2 release, Q3 2026 results would typically arrive in mid-October.