Rising loan volume pushes M&T's earnings to record high

• Key insight: M&T expects its strong second-quarter performance to carry over into the third quarter, with increased levels of loan and deposit activity.
  
• Supporting data: The Buffalo, New York-based regional bank increased its full-year lending target by $1 billion. It's now projecting loans of $141 billion to $143 billion at year end.
  
• Expert quote: "We have a lot of momentum in the loan area." — Chief Financial Officer Daryl Bible

Strong loan growth across its commercial-and-industrial and commercial real estate businesses propelled Buffalo-based M&T Bank Corp. to a record-high quarterly profit.

The $216.5 billion-asset M&T reported second-quarter net income totaling $818 million Wednesday, up 14.2% from the same period last year. Net interest income of $1.79 billion increased 4.6%.

Average CRE loans totaled $25.6 billion during the second quarter, up 0.39% from the first-quarter level of $25.5 billion. Though modest, the increase marked the CRE portfolio's first linked-quarter expansion since 2021, Chief Financial Officer Daryl Bible told analysts Wednesday.

M&T had tamped down its CRE growth for a number of years in an effort to limit its exposure to a sector that was going through a rocky period. But Bible said on a conference call with analysts in October that the company was looking to switch gears and pursue more business.

Growth in the commercial-and-industrial segment was more substantial between April and June. Average C&I loans totaled $66 billion, up 8% from the second quarter of 2025.

"They had probably the best quarter you could probably ever have this past quarter," Bible said of M&T's C&I lenders. "I think 90% of all the businesses grew quarter-over-quarter. That just doesn't happen very often."

The broad-based second-quarter loan growth — the consumer portfolio also expanded, by 5% to $26.7 billion — prompted M&T to add $1 billion to its full-year 2026 loan guidance. The company is now targeting $141 billion to $143 billion in year-end loans, up from the previous forecast of $140 billion to $142 billion.

"We have a lot of momentum in the loan area," Bible said. "We expect all those portfolios to continue to grow in the third and fourth quarter. We may not have quite as much growth in the third and fourth quarters and we had in the second, but we're pretty positive these portfolios will continue to grow."

Analysts' reactions to M&T's second-quarter report were mostly positive. Citi's Ben Gerlinger called it a "good quarter" in a research note. In his own note, Truist's Brian Foran characterized loan growth as "better than expected," while Evercore analyst John Pancari labeled the trend "definitely encouraging," commenting during the conference call.

For the first few weeks of the second quarter, M&T's deposit gathering lagged its surging loan production. But senior management met with the leaders of M&T's various business lines around the quarter's midpoint and urged them to focus more on deposits, Bible said.

"We basically had both oars in the water," Bible said. "Loans are growing nicely, and we had to [boost] our deposit growth up well."

The renewed sense of urgency appeared to pay off. M&T' finished the quarter with average deposits of $163.5 billion, down a bit on a linked-quarter basis but slightly above the level reported on June 30, 2025. Much of the growth occurred in the final weeks of the quarter, setting M&T up for continued strength in the second half of 2026, according to Bible.

"We have a lot of deposit momentum going forward," the CFO said. "It's the right thing to do to grow loans with core funding, which is what we're doing."

Also during the second quarter, M&T reported declines in net charge-offs, nonaccrual loans and criticized loans. Bible said he hoped to see further declines in the levels of criticized loans in the second half of 2026, but added that the nonaccrual-loan number, $1.2 billion, or 84 basis points of total loans, leaves only limited room for improvement.

"That's probably bumping along the bottom," Bible said. "It's like a two decade-low loan number, so that's probably going to bounce around there and not go much lower or higher than what we see today."