MTB — Q3 2026 Financial Report Analysis

M&T Bank earned $775 million in the third quarter of 2026, or $5.04 per diluted share. Diluted EPS rose 5% from $4.82 a year earlier, but net income fell 2% from $792 million. The gap is share buybacks: M&T had 7% fewer diluted shares outstanding than a year ago, so a slightly smaller profit was split among fewer owners. Underneath, revenue was up just 0.9% while expenses rose 2%, and net charge-offs (loans written off) rose to 0.35% of loans annualized from 0.23% in Q2. That is still below the 0.42% of a year ago. This report is based on M&T's October 16, 2026 earnings release; the full Q3 10-Q has not been filed yet, so some detail (such as the full loan-by-industry breakdown) is not yet available.

Q3 2026 key figures

The efficiency ratio and ROTCE are M&T's own non-GAAP figures; ROTCE uses its "net operating" income, which excludes intangible amortization. The Q3 2026 CET1 ratio is an estimate in the release. From Q3 2026, M&T reports loans held for sale separately from loans held for investment, so the period-end loan figure ($144.8 billion) excludes $696 million of loans held for sale and is not directly comparable to the $143.2 billion we showed for June in our Q2 report; on the new basis, June loans were $142.5 billion.

Takeaway: M&T grew loans 6% from a year ago but turned that into only 0.9% more revenue, because loan yields fell faster than funding costs and last year's quarter had $40 million of one-off fee gains. Revenue minus expenses, before credit losses, was $1,143 million against $1,150 million a year ago, essentially flat. With buybacks slowing for a third straight quarter ($323 million, after $465 million in Q2 and $1.25 billion in Q1) and CET1 at 10.16%, the share count can no longer carry EPS growth the way it did in the first half. Earnings growth now depends on the margin holding up and the loan growth translating into revenue.

Net interest income: loans up, margin down

Net interest income is the interest a bank earns on loans and securities minus what it pays to depositors and lenders. Net interest margin (NIM) expresses that as a percentage of interest-earning assets.

On a taxable-equivalent basis, net interest income was $1,805 million, up only $1 million from Q2 and $32 million (2%) from a year earlier. Against Q2, the release says it "rose nominally... reflecting an additional day, lower interest income on nonaccrual loans and loan growth funded by interest-bearing deposits as the Company reduced its average short-term borrowings." Year on year it credits "lower rates paid on average interest-bearing deposits and growth in average loans and investment securities, partially offset by lower yields received on loans."

Two things moved the margin. Quarter on quarter, funding got more expensive: average time deposits (CDs, which pay more than checking or savings) rose 9% to $15.1 billion, and the cost of interest-bearing liabilities rose 8 bp while asset yields rose only 1 bp. Year on year, the spread actually widened, but deposits that pay no interest are worth less when rates are lower, so their contribution to the margin fell from 0.81% to 0.68%.

Loan growth. Average loans rose $2.6 billion (2%) from Q2 to $143.3 billion. Commercial real estate (CRE), the loan type investors have watched most closely at regional banks since 2023, led the growth: average CRE balances rose $1.6 billion (7%) from Q2, and period-end CRE loans rose to $25.6 billion from $24.2 billion in June. Consumer loans rose $634 million and residential mortgages $367 million. Business (commercial and industrial) loans were flat from Q2 at $65.9 billion on average, though still up $4.2 billion (7%) from a year ago.

Funding. Average deposits rose $3.3 billion from Q2 to $166.8 billion, and M&T used that to cut average short-term borrowings from the Federal Home Loan Bank of New York by $2.9 billion. Long-term borrowings rose $1.2 billion from asset securitizations and senior and subordinated note issues. At quarter end, though, total deposits were $1.4 billion lower than at June 30, and noninterest-bearing deposits fell $3.5 billion to $44.8 billion, so the average figures flatter where the quarter finished.

Fee income: mortgage servicing up, one-offs gone

Noninterest income was $743 million, up $3 million from Q2 and down $9 million (1%) from a year ago.

• Mortgage banking rose $25 million from Q2 to $152 million. In June 2026, M&T began sub-servicing (handling payments and records for loans owned by others) an additional $62.9 billion of residential mortgages.
• Trust and investment services were $230 million, down $5 million from Q2 (seasonal tax-service fees in Q2) but up $13 million from a year ago on corporate trust and wealth management.
• Capital markets and advisory fell $9 million from Q2 to $32 million, on lower loan syndication fees and interest-rate swap sales to business customers.
• Other revenues fell $10 million from Q2 to $85 million. The distribution from Bayview Lending Group (BLG), an investment M&T holds, was $31 million versus $47 million in Q2 and $20 million a year earlier.

M&T reclassified several fee categories starting this quarter (announced in an 8-K on September 28, 2026), with prior periods restated, so individual line items here do not match those in our Q2 report; the $740 million Q2 total is unchanged.

Expenses: technology spending

Noninterest expense rose $44 million (3%) from Q2 to $1,393 million and $30 million (2%) from a year ago. The efficiency ratio (expenses divided by revenue, lower is better) worsened to 54.4% from 52.8% in Q2 and 53.6% a year earlier.

• Outside data processing and software rose $19 million from Q2 and $35 million (25%) from a year ago, for software maintenance and technology infrastructure.
• Professional and other services rose $8 million from Q2 and $16 million from a year ago, for the same technology work, other enterprise initiatives and higher legal costs.
• Other costs of operations rose $6 million from Q2, which the release ties to M&T's share of losses from certain Visa litigation.
• Salaries and benefits were essentially flat ($832 million versus $833 million a year ago), with full-time-equivalent staff down 4% to 21,562.

Year on year, other costs of operations fell $31 million, partly because mortgage servicing rights have been carried at fair value since January 2026, so their amortization no longer appears in expenses (value changes now run through mortgage banking revenue instead). That accounting change makes the 2% expense growth look lower than the like-for-like increase.

Credit quality: charge-offs back up from a low Q2

Net charge-offs, loans written off as uncollectible net of recoveries, were $127 million, or 0.35% of average loans annualized, up from $80 million (0.23%) in Q2 but down from $146 million (0.42%) a year earlier. The provision for credit losses, the amount set aside for future losses, was $135 million, slightly above the charge-offs.

Nonaccrual loans (loans that have stopped paying interest) rose to $1.30 billion, or 0.90% of loans, from $1.21 billion (0.85%) at June 30. They remain 14% lower than a year ago, which the release attributes to fewer troubled business and CRE loans. The allowance for loan losses edged down to 1.51% of loans from 1.53%, which the release attributes to "lower levels of criticized loans." Accruing loans 90+ days past due were $570 million, of which $556 million were government-guaranteed loans, which limits the loss risk.

Capital and the balance sheet

The CET1 ratio, a bank's highest-quality capital (mainly common equity) as a share of its risk-weighted assets, was an estimated 10.16%, versus 10.19% in Q2 and 10.99% a year ago. That is near the bottom of the 10.0%–10.5% range management gave with its Q2 results. M&T bought back 1.3 million shares for $323 million in the quarter. The quarterly dividend was unchanged at $1.50.

Rising interest rates during the quarter cut the value of M&T's available-for-sale bond portfolio: accumulated other comprehensive income fell $588 million. Tangible book value per share fell 1% from June to $115.88 and was roughly flat from a year ago ($115.31). In July, M&T moved $8.3 billion of mortgage-backed securities from available-for-sale to held-to-maturity; those securities had $222 million of unrealized losses at September 30. Securities held to maturity do not run their value changes through equity, so this move limits how much further rate rises can reduce book value.

What the headline numbers hide

• EPS growth is all buybacks. Net income available to common shareholders fell 3% to $732 million; diluted shares fell 7% to 145.2 million. Without the smaller share count, EPS would have declined.
• Last year had one-off gains. Q3 2025 fee income included a $28 million earnout payment from the 2023 sale of M&T's Collective Investment Trust business and a $12 million gain on selling equipment leases. Excluding those $40 million, fee income grew about 4%. The BLG distribution ($31 million versus $20 million) helped this year's quarter and is not a reliable recurring source.
• Tax was not a factor. The effective tax rate was 23.1%, versus 22.8% a year ago, a slight drag.
• Adjusted versus GAAP is a small gap. "Net operating" EPS, which excludes only intangible amortization, was $5.08 versus $5.04 GAAP.
• Average versus period-end deposits. Average deposits rose, but quarter-end deposits fell $1.4 billion from June, led by a $3.5 billion drop in noninterest-bearing balances. Q4 could start with a weaker funding mix than Q3's averages suggest.
• Cash flow is not shown in the release; it will be in the 10-Q.

Nine-month picture

For the nine months, net income was $2,257 million, up 8% from $2,092 million, and diluted EPS was $14.48, up 17% from $12.34. Taxable-equivalent net interest income rose 3% to $5,372 million, and the nine-month NIM was 3.68% versus 3.65%. Net charge-offs were 0.30% of loans annualized, versus 0.36% in the same period last year.

Did last time's read hold up?

Our Q2 report flagged three likely second-half pressures from management's guidance, and named charge-offs as the figure to watch:

• Margin: we expected the NIM to slip toward the mid-3.60s from 3.70%. It did: 3.65%.
• Charge-offs: we noted that the ~37 bp full-year target implied second-half charge-offs near 0.45%–0.50% annualized. Q3 came in at 0.35%, higher than Q2 but below that pace. Nine-month charge-offs were $312 million. If the 37 bp target from July still holds, Q4 would need roughly $200 million or more of charge-offs, around 0.55%–0.60% annualized. That would be the highest of the past five quarters (Q4 2025 was 0.54%). The release does not update guidance, so it is not clear whether management still expects that.
• Expenses: we estimated about $1.4 billion a quarter in the second half. Q3 was $1,393 million.

We also said EPS growth would have to rely less on buybacks and more on loan growth, particularly CRE. CRE did grow, but buybacks still accounted for all of the EPS gain.

Outlook

The earnings release contains no updated guidance. The most recent guidance we have is from the Q2 results, restated as unchanged at a September 14, 2026 investor presentation: full-year taxable-equivalent net interest income of $7.2–$7.35 billion (bottom half), fee income of $2.8–$2.85 billion (high end), expenses of $5.5–$5.6 billion (high end), net charge-offs of about 37 bp, average loans of $141–$143 billion, average deposits of $165–$167 billion and CET1 of 10.0%–10.5%.

Measured against that: nine-month taxable-equivalent NII of $5,372 million leaves about $1.83 billion needed in Q4 to reach $7.2 billion, slightly above Q3's $1,805 million. Nine-month fee income of $2,172 million implies about $630–$680 million in Q4 to land in the range, well below Q3's $743 million, so fees are on course to finish above the top of the range. Nine-month expenses of $4,180 million imply Q4 expense of $1.32–$1.42 billion, a range that includes Q3's $1,393 million.

Our read: Q3 met the margin and expense guidance and did better than expected on credit. The two things to watch in Q4 are whether the quarter-end drop in noninterest-bearing deposits pushes funding costs and the NIM lower again, and whether the 37 bp charge-off target is held or quietly lowered. With CET1 near 10.2%, buybacks are likely to stay modest, so EPS growth in 2027 will depend on revenue growing faster than the 0.9% seen this quarter.