M&T Bank Corporation (MTB) Q4 2025 Earnings Call Transcript

M&T Bank Corporation (NYSE: MTB) Q4 2025 Earnings Call dated Jan. 16, 2026

Corporate Participants:

Rajiv Ranjan — Head of Investor Relations and Corporate Development

Daryl Bible — Chief Financial Officer

Analysts:

Gerard Cassidy — Analyst

Scott Siefers — Analyst

Matt O’Connor — Analyst

Manan Gosalia — Analyst

John Pancari — Analyst

David Chiaverini — Analyst

Erika Najarian — Analyst

Christopher McGratty — Analyst

Ken Usdin — Analyst

Steven Chubak — Analyst

Ebrahim Poonawala — Analyst

Presentation:

Operator

Good morning, everyone. Welcome to today’s M&T Bank Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to Rajiv Ranjan, Head of Investor Relations and Corporate Development. Please go ahead, sir.

Rajiv Ranjan — Head of Investor Relations and Corporate Development

Thank you, Bo, and good morning. I would like to thank everyone for participating in M&T’s fourth quarter 2025 earnings conference call. If you have not read the earnings release we issued this morning, you may access it along with the financial tables and schedules by going to our Investor Relations website at ir.mtb.com. Also, before we start, I would like to mention that today’s presentation may contain forward-looking information.

Cautionary statements about this information are included in today’s earnings release materials and in the investor presentation as well as our SEC filings and other investor materials. The presentation also includes non-GAAP financial measures as identified in the earnings release and investor presentation. The appropriate reconciliations to GAAP are included in the appendix.

Joining me on the call this morning is M&T’s Senior Executive Vice President and CFO, Daryl Bible.

Now I would like to turn the call over to Daryl.

Daryl Bible — Chief Financial Officer

Thank you, Rajiv, and good morning, everyone. I’m excited to share our full year 2025 results. M&T has continued to deepen our presence in key markets, expand access in new communities and build innovative offerings that empower our customers and businesses alike. In the last quarter alone, we delivered on our commitment to expand access to banking in Bridgeport, Connecticut’s East End, opening our new full-service Honey Locust branch, the community’s first new bank branch in decades.

We partnered with the Baltimore Ravens and wide receiver Zay Flowers to launch our Financial Fitness Academy to give young people dynamic real-world tools to build financial confidence. And we launched our new Banking Made for Business suite of business banking solutions tailored to support small and mid-sized businesses throughout the growth of their life cycle. These efforts reflect our long-term commitment to creating economic opportunities and our purpose to make a difference in people’s lives.

Turning to slide 4. We continue to garner recognition for our businesses and our people, including those who lead the engagement with you, our investors and analysts.

Now let’s turn to slide 6 and 7. Before getting into the details of the fourth quarter, I want to pause and reflect on some of the highlights for 2025. The progress we made against our four 2025 priorities and related enterprise initiatives will allow us to grow and scale in the coming years. I look forward to executing against our updated priorities in 2026.

Our focus on the fundamentals drove our continued success in 2025. In 2025, M&T realized consistent and continued growth, while also remaining disciplined and return focused. We earned record net income of $2.85 billion and record EPS of $17, while also maintaining our top quartile return on tangible assets of over 1.4%. We increased our quarterly dividend by 11%, repurchased 9% of our outstanding shares and grew tangible book value per share by 7%. We made great progress on improving our asset quality with nonaccruals decreasing 26% and the nonaccrual percentage of total loans reaching 90 basis points, the lowest since 2007.

We also reduced criticized commercial loans by 27% over the course of the year. We grew fee income by 13%, reaching a record of $2.7 billion, and we increased our fee mix as a percentage of revenue from 26% to over 28%. Expenses remain well controlled. The efficiency ratio improved from 56.9% to 56%, while making significant enterprise investments that will allow M&T to thrive in the years to come.

Turning to slide 8, which shows the results for the fourth quarter. Diluted GAAP earnings per share were $4.67, down from $4.82 in the prior quarter. Net income was $759 million, compared to $792 million in the linked quarter. M&T’s fourth quarter results produced an ROA and ROCE of 1.41% and 10.87%, respectively. The fourth quarter included two notable expense items, a $29 million reduction in FDIC expense related to the lower estimated special assessment adding $0.14 to EPS and a $30 million charitable contribution, which reduced EPS by $0.15.

Slide 9 includes supplemental reporting of M&T’s results on a net operating or tangible basis. M&T’s net operating income was $767 million, compared to $798 million in the linked quarter. Diluted net operating earnings per share were $4.72, down from $4.87 in the prior quarter. Net operating income yielded an ROTA and an ROTCE of 1.49% and 16.24% for the recent quarter.

Next, we’ll look a little deeper into the underlying trends that generated our fourth quarter results. Please turn to Slide 10. Taxable equivalent net interest income was $1.79 billion, an increase of $17 million, or 1% from the linked quarter. The net interest margin was 3.69%, an increase of 1 basis point from the prior quarter. This improvement was driven by a positive 4 basis points from higher asset liability spread driven by continued fixed asset repricing and favorable funding mix, positive 3 basis points from a reduction in negative impact of our interest rate swaps, partially offset by negative 6 basis points from the lower contribution of net free funds.

Turning to slide 12 to talk about average loans. Average loans and leases increased $1.1 billion to $137.6 billion. Higher commercial, residential mortgage and consumer loans were partially offset by a nominal decline in CRE balances. Commercial loans increased $0.5 billion to $62.2 billion, aided by growth in dealer commercial services and to a lesser extent, REIT lending, business banking and fund banking. CRE loans declined 1% to $24.1 billion, reflecting a slowing pace of decline in the portfolio with continued payoffs and paydowns and higher originations. Residential mortgage loans increased 2% to $24.8 billion. Consumer loans grew 1% to $26.5 billion, reflecting growth in recreational finance and HELOC. Loan yields decreased 14 basis points to 6%, reflecting lower rates on variable rate loans, partially offset by continued fixed rate loan repricing, including a reduction in the negative impact on our interest rate swaps.

Turning to slide 13. Our liquidity remains strong. At the end of the fourth quarter, investment securities and cash held at the Fed totaled $53.7 billion, representing 25% of total assets. Average investment securities increased slightly to $36.7 billion. In the fourth quarter, we purchased a total of $0.9 billion in debt securities with an average yield of 4.9%. The yield on the investment securities increased 4 basis points to 4.17%, reflecting continued fixed rate securities repricing benefit. The duration of the investment portfolio at the end of the quarter was 3.4 years and the unrealized pretax gain on available-for-sale portfolio was $208 million or a 10 basis point CET1 benefit if included in regulatory capital. While not subject to the LCR requirements, M&T estimates that its LCR on December 31st was 109%, exceeding the regulatory minimum standards that would be applicable if we were a Category 3 institution.

Turning to slide 14. Average total loans rose $2.4 billion to $165.1 billion. Non-interest-bearing deposits increased $0.1 billion to $44.2 billion. Interest bearing deposits increased $2.2 billion to $120.9 billion, driven by growth in commercial and business banking, partially offset by smaller declines in consumer and corporate trust deposits. Interest bearing deposit costs decreased 19 basis points to 2.17%, aided by lower time — retail time deposit costs and lower interest checking and savings costs across our business lines.

Continuing on slide 15. Non-interest income was $696 million, compared to $752 million in the linked quarter. Mortgage banking revenues were $155 million, up from $147 million in the third quarter. Residential mortgage banking revenues decreased $3 million to $105 million. Commercial mortgage banking increased $11 million to $50 million, driven by higher gains on the sale of commercial mortgage loans. Trust income increased $3 million to $184 million from higher institutional services fee income. Other revenues from operations decreased $67 million to $163 million, primarily from prior quarter items, including the $28 million distribution of an earn-out payment, a $20 million Bayview distribution, and a $12 million gain on the sale of equipment leases.

Turning to slide 16. Noninterest expenses for the quarter were $1.38 billion, an increase of $16 million from the prior quarter. Salary and benefits decreased $24 million to $809 million from lower severance and other benefit-related expenses. Professional services increased $24 million to $105 million, reflecting higher legal and review costs. FDIC expense decreased $21 million, mostly related to the reduction in the estimated special assessment expense. Other cost of operations increased $15 million to $151 million from the $30 million contribution to the M&T Charitable Foundation, partially offset by the settlement gain from the pension annuity purchase and the prior quarter impairment of renewable energy tax credit investment. The efficiency ratio was 55.1% compared to 53.6% in the linked quarter.

Next, let’s turn to slide 17 for credit. Net charge-offs for the quarter totaled $185 million or 54 basis points, increasing from 42 basis points in the linked quarter. Net charge-offs reflect the resolution of three previously identified credits totaling over $100 million. Nonaccrual loans decreased 17% to $1.3 billion. The nonaccrual ratio decreased 20 basis points to 90 basis points, driven largely by payoffs and charge-offs of the commercial and CRE nonaccrual loans. In the fourth quarter, we reported a provision for credit losses of $125 million compared to net charge-offs of $185 million. The allowance for loan losses as a percent of total loans decreased 5 basis points to 1.53% from improved asset quality and macroeconomic factors.

Slide 18 has a summary of our NDFI portfolio. The NDFI portfolio increased $1.3 billion from the third quarter to $12.6 billion. The increase was driven by both net new loan growth and a recategorization of certain C&I loans as NDFI.

Please turn to slide 19. The level of criticized loans was $7.3 billion, compared to $7.8 billion at the end of September. The improvement from the linked quarter was largely driven by a $429 million decline in CRE criticized balances. The CRE decline was broad-based with lower criticized levels across nearly all property types. Given the consistent improvement in criticized, we will likely exclude the detailed criticized information on slides 20 and 21 in future earnings presentations, but the detail will continue to be available in our 10-K and 10-Q reporting.

Turning to slide 22 for capital. M&T’s CET1 ratio was an estimate of 10.84%, a decline of 15 basis points from the third quarter. The lower CET ratio reflects a $507 million in share repurchases and an increase in risk-weighted assets, largely from higher end-of-period commercial loans, partially offset by continued strong capital generation. The AOCI impact on the CET1 ratio from AFS securities and pension-related components combined would be approximately a positive 13 basis points if included in regulatory capital.

On slide 23, we have our employee directions for 2026, which is shaped by two priorities drawn from the work across the company. The first is what we call operational excellence. We are building an enterprise that can operate at scale with greater consistency, efficiency and transparency. Our focus is on creating intelligent, simplified operations that make it easier for customers to do business with us and easier for our teams to deliver. This includes to strengthening our shared standards, streamlining processes, equipping colleagues with better tools and maturing capabilities such as automation and enterprise-wide control processes. These steps help reduce risk, improve performance and free our people to focus on the work that matters most.

The second priority is teaming for growth. We are leaning into more unified enterprise-wide approach to growth, bringing together markets, business lines and capabilities so clients experience us as one bank. When we integrate the strengths across regions and when we match local insight with the scale of M&T and Wilmington Trust, we unlock opportunities we cannot reach in silos. This focus is about deepening relationships, more coordinated planning and a shared approach to serving clients across the spectrum from retail to commercial to wealth. Together, these priorities help deliver us consistent value, position the bank for the long-term performance and strengthen how we serve the communities that rely on us.

Now turning to slide 24 for the outlook. First, let’s begin with the economic backdrop. The economy continues to hold up well, despite the ongoing concerns and uncertainty regarding tariffs and other policies. Private data sources reported decent spending growth in the holiday season and roughly a 4% through price increases have driven some of that growth. The economy bounced back in the third quarter with the strongest expansion in two years, but we are cautious of possible revisions and a slowdown once the fourth quarter data is collected. Businesses continue engaging in capex and equipment, while spending on new buildings remain in decline. Although overall economic activity was resilient, we remain attuned to the risk of the slowdown in coming quarters due to weakening labor market. We remain well positioned for a dynamic economic environment.

Now turning to the outlook, starting with net interest income. We expect taxable equivalent net interest income to be $7.2 billion to $7.35 billion as net interest margin in the low 3.70s. Our outlook includes 50 basis points of rate cuts in 2026, though our sensitivity to the short end of the curve remains relatively neutral. That said, shifts in the shape of the curve could drive variability in the NII outlook.

We expect full year average loans to be $140 billion to $142 billion. Reflected in the priority discussed earlier, we have renewed focus on growing relationship customers and our community bank regions across all business lines. This outlook includes point-to-point growth in each of the four main loan portfolios, though we expect the full year CRE balances to be lower than the 2025 full year average. The full year average deposits are expected to be $165 billion to $167 billion. We remain focused on growing customer deposits at a reasonable cost and expect broad-based growth across each of the business lines.

Turning to fee income. We expect noninterest income to be $2.675 billion to $2.775 billion. We expect growth to be broad-based across our fee income categories and business lines. Continuing with expenses. We expect total noninterest expense, including intangible amortization to be $5.5 billion to $5.6 billion. Our expense outlook includes continued investment in enterprise initiatives while also closely managing non-investment spend. This outlook includes our usual first quarter seasonal salary and benefit increase, which is estimated to be $110 million. We also included in the outlook is approximately $31 million in intangible amortization.

As of January 1st, we elected to carry our own residential MSRs at fair value rather than the prior treatment of lower of cost or market. We have also begun hedging the changes in fair value of those MSRs. Along with this election, MSR amortization is no longer to be recognized as an expense and instead, the impact of the MSR time decay and related hedging will be net with mortgage banking revenues. These changes are included in the fee and expense guidance ranges but has minimal impact on net income or PPNR. The MSR fair value election also adds $197 million in regulatory capital or an 8 basis point benefit to the CET1 ratio.

Regarding credit, we expect charge-offs for the full year again to be near 40 basis points. We expect taxable equivalent tax rate to be 24% to 24.5%. As it relates to capital, we expect to operate with a CET1 ratio of 10.25% to 10.5% in 2026. We always run a bank to generate the best returns for our shareholders of appropriate capital levels and return excess capital to shareholders. Given the current capital levels, continued strong capital generation, we have significant flexibility to continue to support lending, pursue opportunistic inorganic growth and return excess capital to shareholders. We’ll be opportunistic with share repurchases, while also monitoring the economic backdrop and asset quality trends.

To conclude on slide 25, our results underscore our optimistic investment thesis. M&T has always been a purpose-driven organization with successful business model that benefits all stakeholders, including shareholders. We have a long track record of credit outperforming through all economic cycles, while growing within the markets we serve. We remain focused in our shareholder returns and consistent dividend growth. And finally, we are a disciplined acquirer and prudent steward of shareholder capital.

Last, I would like to thank Brian Klock for his leadership and contribution to M&T’s Investor Relations since he rejoined the bank in 2021. I look forward to his continued impact as he leads the bank’s strategy function. I’d also like to welcome Rajiv Ranjan, a 20-year-plus M&T finance veteran, who will be leading M&T’s Investor Relations along with several other finance functions. As we close, I want to thank my M&T colleagues for serving our customers and communities. It was because of all of you that M&T continues to be the top-performing community bank.

Now with that, let’s open up the call to questions before which Bo will briefly review the instructions.

Questions and Answers:

Operator

Certainly, Mr. Bible. Thank you very much. [Operator Instructions]. We’ll go first this morning to Gerard Cassidy of RBC Capital.

Gerard Cassidy

Hi, Daryl.

Daryl Bible

Hey, Gerard.

Gerard Cassidy

Circling back to the capital ratios. Obviously, we’re going to get the Basel III endgame proposal, hopefully, sometime in the first quarter as well as another stress test. Assuming those are favorable to you and your peers and brings down your required regulatory capital CET1 ratio. Is there — how do you then approach where you are today with the CET1 ratio around 10.25% to 10.50%? Is that something you guys would look to maybe bring down if your required number fell with what’s coming with those two — the stress test in Basel III endgame?

Daryl Bible

Yeah. Thanks for the question, Gerard. I would just tell you that we are always looking at what position we have on our balance sheet and what’s going on in the economy. We feel good of bringing it down to 10.25% right now and potentially, we could go lower. I don’t view the regulatory capital limits of where they are now as a binding constraint right now. We can go a lot lower with where we are today, and we may actually improve that. But I think it really depends on what other things are going on in the marketplace. But could we go below 10% at some point? Possibly. And we will evaluate it and consider that with everything else we do as we move forward.

Gerard Cassidy

And you mentioned binding constraint. What would you point to as your binding constraint if you don’t look at it as the CET1 ratio?

Daryl Bible

We have other constituencies out there that have other limitations, including the rating agencies and working with the rating agencies and getting them comfortable with how we’re performing. I mean when I look at our asset quality now, it’s probably been the best, it’s been in the last couple of decades. So we are in a really strong condition. Our capital generation is probably the best we’ve been. So we’re really strong there. So we have a lot of positives going forward.

I love the page when I started out with the statistics. We grew dividends 11%. We retired 9% of shareholders, and we grew tangible book 7%. We had record income, net income, EPS, our ROTA is over 1.4%, and our efficiency ratio went down from 56.9% to 56%. I mean, we are performing at a very high level. And the risk that we’re taking on our balance sheet is the right risk for us, and we feel really good with it, and we’re getting great returns on that.

Gerard Cassidy

Great. And then just as a follow-up question regarding the loan growth, you gave us some clarity on where you are today and where you hope to be moving forward. On the commercial real estate side, I think you pointed out that you think it will start to inflect in the second quarter of ’26. Is there regions of the franchise or property types that you’re anticipating will be the driver behind this inflection?

Daryl Bible

Yeah. I would say when you look at our teams and the CRE team run by Tim Gallagher and all the credit folks in Rich Barry’s area, they’ve been working all 2025 to get us back on track. And if you look at the fourth quarter, our production levels were the strongest they’ve been for a very long time. December, we closed over $900 million loans in CRE. So, we are performing on all cylinders.

If you look at our three sectors, we have a large regional CRE portfolio that is hitting all cylinders. We have a strong M&T RCC business. That is also hitting record returns and record outstandings. And we have an institutional CRE that is also performing very well. So, our CRE businesses are really strong and productive, and we will have growth, as we said, starting in the second quarter on an average to average basis.

So we’re going to have four of our loan portfolios. All of our four loan portfolio should have point-to-point loan growth for us in 2026, which would be really, really strong and gives us a lot of confidence with our earnings power.

Gerard Cassidy

Great. And Brian, good luck in the enhanced role. Thank you, Daryl.

Daryl Bible

Thanks, Gerard.

Operator

Thank you. We’ll go next now to Scott Siefers with Piper Sandler.

Scott Siefers

Good morning guys. Thanks for taking the question. Daryl, actually, just hoping you can expand upon just what you said about some of those non-CRE drivers. As we look at CRE having come down in the last couple of years, you’ve had pretty good momentum in some of those other main categories. Where do you see the best demand and sort of your willingness to lend in those kind of non-CRE categories as we look out into the course of the year?

Daryl Bible

So Scott, when you look at where we’ve had growth for the last couple of years, it’s been in our C&I, but mainly in our specialty businesses, fund banking, mortgage warehouse and other portfolios like corporate and institutional. And that will continue to grow and do really nicely. But when we talked about our new priorities that we have for 2026, one of them is called teaming for growth. Teaming for growth simply is basically bringing the whole bank together in the regions that we operate in. We operate in 27 regions where we have regional presidents. Regional presidents have the local knowledge to how we go to market in those markets.

So we’re trying to combine the regional presidents, local knowledge with the scale and how we deliver our products and services of a larger company together. And we’re really focused on growing our regional regions this year and do that. We are planning to grow in that area, and we think we’ll be very successful there.

Scott Siefers

Perfect. Okay, thank you. And then you all have been just quite transparent about sort of M&A aspirations. Just curious to hear any updated thoughts you might have about how you’re thinking about the landscape this year?

Daryl Bible

M&A will come our way when it happens, Scott. It’s — we aren’t aware of anybody, and we want scale and density in the markets we serve — we serve. And we’re in 12 states plus the District of Columbia. That’s where we want to continue to get more density. We are not aware of anybody who wants to sell in those markets. We will continue to reach out and have good relationships with Rene knows all the appropriate people and all that, and it will happen when it happens. We aren’t going to force anything from that perspective. And it will happen at some point down the road. But right now, we have a lot of capital. We want to deploy that capital to our markets, to our customers, first and foremost, continue to pay a great strong dividend, and we’re going to buy back a ton of stock.

Scott Siefers

Perfect. Okay, great. Thank you very much. And Brian, good luck in the new role as well.

Operator

Thank you. We’ll go next now to Matt O’Connor with Deutsche Bank.

Matt O’Connor

Good morning. I was hoping you could elaborate on the deposit environment. Obviously, you’ve been kind of running off some CDs and growing other deposits, but maybe some color in terms of net checking account growth, what you’re seeing from a competitive landscape? And any changes in the brand strategy as you think about driving organic growth? Thanks.

Daryl Bible

Yeah. Yeah, deposits are really key. One of my famous things that I have, Matt, is that we want to have both oars in the water. So as we grow loans, we also want to grow our customer deposit base. We’ve done a good job the last couple of years growing that and retiring a lot of non-core funding in the wholesale book. I think we will continue to do that. As far as competitive-wise, all of our businesses have in their plans to grow customer deposits. And we’re really focused in doing that. So we complete and really manage both sides of the balance sheet very well.

As far as competition goes, I would say the competition is the same as it’s been for the last couple of years. It’s not any worse or any easier what it is. It’s competitive. We have different pricing strategies depending on the scale and density market share that we have in those markets, and it seems to be successful. Our teams are really good at going to market.

But first and foremost, we really focus on getting the operating account, the checking account, whether you’re in the consumer bank, business banking, commercial, wealth, that is really critical to us. And from that, other revenues and products and services come off of that. And we’ve always done that, and we will continue to do that, really focused on growing net new checking accounts, which is really important.

Matt O’Connor

Okay. That’s helpful. And then just separately, I know it’s not a big category for you, but the trading revenues has stepped up each of the last two quarters to $18 million to $19 million. Remind me like has there been a change in kind of the efforts there or any small deal that would reset this level higher versus just kind of quarter-to-quarter volatility?

Daryl Bible

Yeah. No, I appreciate you breaking that out. I mean that specifically is our customer swap book. But what you see there is really just a precursor of something that’s greater overall. We have Hugh Giorgio, who runs our capital markets and investment banking area. He’s been actually adding resources. He had a record year of revenue this past year. He’s going to have really strong year, probably another record in 2026. We will actually — once we get through our general ledger conversion shortly, we’re going to break out and actually show our capital markets and investment banking, so you can see it together. It’s growing really nicely, and our teams are executing really well. And I think it’s been a very strong business and will continue to grow well for our fee income categories.

Matt O’Connor

Okay. Thank you very much.

Operator

Thank you. We go next now to Manan Gosalia at Morgan Stanley.

Manan Gosalia

Hey, Good morning, Daryl.

Daryl Bible

Good morning.

Manan Gosalia

When I look at the guide for 2026 for both fees and expenses relative to what you did in 2025 and even the 4Q run rate, it feels like both growth rates are significantly slower. I know you called out the impact of the MSR — well, you called out that the MSR fair value and hedge will impact those two lines. Is that a big driver for both lines? And what is the core growth rate that you expect for both fees and expenses next year?

Daryl Bible

Yeah. No, thank you for the question. I would say that the accounting change is part of it. It’s $75 million that would normally be in amortization expense is going to be now netted against revenues. So that’s basically just a shrink of both expenses and revenues by adopting this mark-to-market accounting on the residential MSR is one.

When you look at kind of our projections for fee income and you kind of back out the notable items, we should be about 4% in fee growth is kind of what we’re looking there. And it’s pretty broad-based when you look at the fee growth. We’re growing our treasury management. That was up double digit year-over-year. We expect to be close to that again in ’26. We’re growing trust revenues. We’re growing in the mortgage area. Potentially, our commercial mortgages are off to a good start. So they’re doing really well. Residential mortgages, if rates come down on the longer end, we’ll be able to do well there. We could have potential more subservicing growth there. And then what I just talked about in our capital markets and investment banking.

So we have momentum on the fee side and feel good about hitting the 4% [Phonetic] number that we have. It’s — if you look and put it all together, we are generating positive operating leverage in ’26, probably 150 basis points, plus or minus. So we feel good about that like we did this past year.

Manan Gosalia

Got it. And then in the deck, you spoke about operational excellence and teaming for growth and how the outcome of that should drive better revenues and profitability. When you think about the environment, loan growth is improving, fee income is growing, capital is normalizing. How do you think about the trajectory for ROTCE over the next 12 months to 18 months? And what’s a good end goal for ROTCE as we look out in the medium term?

Daryl Bible

Yeah. Thank you for the question. So we had a really strong finish in 2025 with our returns approaching 16%. We think that will kind of continue in 2026, to be in the 16% range. And our goal is to get it to 17% by 2027. So, I think we’re on a great trajectory, and I think we can get there.

Manan Gosalia

Got it. Thanks so much. And Brian, we will miss you, all the very best. And Rajiv, looking forward to working with you.

Daryl Bible

Thank you.

Operator

Thank you. We’ll go next now to John Pancari of Evercore.

John Pancari

Thanks, Rajiv, welcome. I look forward to working with you and Brian, best of luck in the new role. It’s going to feel kind of weird not seeing you’re bouncing around at the conferences and cracking some jokes. I guess on the loan growth front, Daryl, I wanted to see — I know Scott asked you a question just a little bit around the other areas. Could you elaborate a little bit more on what you’re seeing in underlying commercial C&I growth more specifically? Are you seeing — you mentioned capex in your prepared remarks. Are you seeing some drawdowns tied to capex? Are you seeing line utilization tied to that? If you could just give us a little bit more color on what’s actually beginning to take shape and influencing your growth expectations.

Daryl Bible

In the fourth quarter, our middle market commercial actually had an increase in utilization. So that was a positive. So I think that was something really good to see that it’s been dormant for a while from that perspective. I think net-net, overall, we’re seeing good growth. It’s competitive, obviously, in the commercial space, but feel that we’re going to have good growth overall, both in specialty and in our regions as we kind of launch with our new priorities from that perspective.

So I think we’re confident we’re going to have good loan growth. I mean, if you look at loan growth for the whole company, it’s in total, probably be in the 3% to 5% range and C&I will be kind of right in that same similar range. But we got CRE still shrinking year-over-year, but starting to grow point-to-point. We got commercial real estate. That’s what I just talked about. And then real estate, consumer real estate and consumer growth also growing nicely. Consumer actually in the indirect space and HELOCs will approach high single digit. So, we have good overall broad-based growth in all portfolios.

John Pancari

Got it. All right. Thanks, Daryl. And then separately, on the credit side, I know you indicated you — the charge-offs related to resolution of charge-offs of some of the previously identified credits. But your 90-day past dues jumped about 30% in the quarter. Can you give us a little bit of color what drove that and if that could influence non-performers and losses in coming quarters at all?

Daryl Bible

Yeah. So on the consumer delinquencies, that’s really just a result of more Ginnie Mae repurchases going on the balance sheet, which is an attractive trade for us, and we actually make more fee income doing that. On the commercial side, it was more administrative delays. People basically missed payments in the first week or so. If you just — if you move from year-end, go back forward seven days, we had $250 million more come in, in payments and all that, that wouldn’t have been delinquent.

So, I think there’s nothing there to say in the delinquency per se. I think we feel good about our credit quality and performance there. It’s just kind of one administrative on the commercial side and consumer is just on the Ginnie Mae growth side.

John Pancari

Got it. All right. Thanks, Daryl. Very helpful.

Daryl Bible

Yeah.

Operator

Thank you. We’ll go next now to David Chiaverini of Jefferies.

David Chiaverini

Hi, thanks for taking the question. I wanted to ask about your deposit beta on the next 50 basis points of cuts. What’s your assumption there?

Daryl Bible

We’ve been holding pretty good to the low-50s, David, so far. And we feel really good in the down 50 that you asked for, still staying in the low-50s. I think that’s definitely doable. I think at some point, as you continue to go down more, we’re going to start hitting forwards on the consumer portfolios. But definitely feel confident we can stay in the low-50s going down another 50 basis points.

David Chiaverini

And as you inflect higher on loan growth, do you expect increased competitiveness on the deposit cost front?

Daryl Bible

Our mindset first is to grow operating accounts. We’re also — I believe, in like an always-on strategy where we always will offer competitive rates to our customers. We won’t be the highest. We won’t be the lowest, but we’ll get our market share. I think that’s what you’re seeing come through from the business lines. We grew $2.2 billion this past quarter. It was in Business Banking and Commercial. So, I feel that we’re pretty much hitting stride there and doing really well. So, I feel that our deposit growth will stay intact with our loan growth. I don’t think you’re going to have any disconnect there.

David Chiaverini

Great. Thank you. And Brian, thank you, and good luck in the new role.

Operator

We’ll go next now to Erika Najarian with UBS.

Erika Najarian

Hi, good morning. Just wanted to take a step back, Daryl, as we think about how longer-term shareholders should sort of frame the M&T investment case. As we think about your capital position and as we think about some of these initiatives and sort of the CRE optimization strategy, as you think about 2026 and maybe the next three years, what is more important to this management team and Board, optimizing ROTCE or optimizing growth?

Daryl Bible

That sounds like a familiar question.

Erika Najarian

It was a good discussion.

Daryl Bible

It was a good discussion. Erika, I believe it’s really a combination of both of that, to be honest with you. We really have capital out there, and we want to use it for our customers and make sure we get good returns on that. So, we’re pretty disciplined in the returns we’re getting when we’re putting loans on the books and getting those returns. But we also will distribute capital to our shareholders. And I think you’re seeing us do that. I think we’re probably the only large bank that basically retired 9% of their shares this past year. We’re going to probably do amount close to that this next year, maybe a little bit lower because of higher stock price, but we are giving back lots of capital to our investors and shareholders.

So, I think we feel good. We’re balancing act. We generate a lot of capital. We do a lot of good for this community, which is really important for us and our customers. We make — meet their financial needs. So our company is, I think doing well on all cylinders right now. And our two new priorities is tweaking us to get even better in the things that we do and how we execute, which is really exciting from the teaming for growth and operational excellence. We just try to keep notching it up and keep setting the standard as we kind of improve and get better.

Erika Najarian

Got it. And just a more localized question on the net interest income guide, Daryl. You mentioned neutrality on the short end. How much of those three components that you mentioned that would be telling of where you are in the range? How much is the shape of the curve important versus the growth trends? And additionally, thanks for giving us the average balances. I’m wondering if you could give us a sense of the size of your overall balance sheet in terms of earning asset growth that’s embedded in that NII number?

Daryl Bible

Yeah. So I’ll start with the shape of the curve. Obviously, the shape of the curve will have impact, because we still are getting benefit from kind of our fixed rate loans, our investment securities and sometimes our swap book and all that. So, if the curve flattens out, we will definitely have less NII. If it stays steeper, we’ll have a little bit of a benefit there. It’s really hard to hedge the yield curve, and it keeps moving back and forth. So I don’t recommend trying to do that on a regular basis, to be honest with you. But I feel pretty good though, that we’re pretty neutral on the short-end, which is really good because as you know, we’re really asset sensitive without the hedges that we have right now.

I mean if we didn’t hedge right now, if we stop hedging now and you go a year forward, we’d be much more asset sensitive just by what’s rolling off. So, we have to hedge to stay relatively neutral. Growth will be a good key component. It’s going to be a good value add for us this year, having more growth consistently across all of our portfolios, being able to grow deposits and loans in sync is really good. As far as earnings assets, it’s growing about 3%, if you look at it on a point-to-point basis.

Erika Najarian

Great. And welcome, Rajiv, and congratulations, Brian, on your new role. We’ll always have Denver.

Daryl Bible

Thanks, Erika.

Operator

Thank you. We’ll go next now to Chris McGratty at KBW. Mr. McGratty, your line is open. Sir, you might be on mute.

Christopher McGratty

Sorry about that. Earlier in your remarks, Daryl, you talked about checking account growth as a priority in terms of mix shift within the deposits. Can you put a little meat on like checking account traction, maybe accounts opened in 2025, outlook for noninterest-bearing? Anything you could provide there would be great.

Daryl Bible

I’d probably start with my favorite business that I have is business banking. When you look at business banking, we have three times more deposits than loans. Their go-to-market strategy is always to get the checking account first and foremost. In the consumer bank, we definitely try to grow, and we monitor those statistics every month to try to get net account growth from that perspective. And then commercial and wealth, it’s definitely important from that. We are investing heavily in our treasury management products and services that are helping the growth in business banking as well as commercial. As far as specific numbers of account growth, I’ll probably be able to give you that maybe at the next conference and all that. I don’t have that handy with me right now, Chris, but we’ll share that information in our next investor deck for the first quarter, if that’s okay?

Christopher McGratty

That would be great. Thank you. And as my follow-up, I’m looking at slide 24 and the ranges that you’ve provided. If you take a step back, is there a piece of the P&L where you’re, I guess most optimistic within the ranges? You talked about loan growth by each category, point-to-point growing, but any kind of elaboration there would be great.

Daryl Bible

We’ve had a lot of strong momentum in the fee area in the last couple of years. So we still have momentum there. So that would be one that I’d probably be most bullish on. NII, I think we’re going to do well in that space. Expenses, we have a very disciplined company. One of the favorite things I like being part of M&T is once we set our plan and move forward, people follow the plan, and get the job done. So I have all the confidence that we’ll get our operating leverage that we have and move forward.

So I feel good about it. I mean I feel more positive entering ’26 than I have in the first couple of years I’ve been here. I think we’re moving together and really working together much better as a team. Rene, I think, has probably the strongest management team he’s had under his tenure running the company, and we are starting to perform like that as well. So I feel really good about that.

Christopher McGratty

All right, great. Thank you very much.

Operator

Thank you. We go next now to Ken Usdin with Autonomous Research.

Daryl Bible

Ken?

Ken Usdin

Hey, Daryl. Just two quick ones. On the deposit side, your growth allowed you to remix a little bit on the wholesale borrowings. Just wondering how much more room you might have there? And do you believe we’ve seen the bottom here of the DDA balances?

Daryl Bible

So on the first question, we can probably still shrink, whether it’s broker or some of our Fed funds or other areas, maybe a couple of billion more. So, we can — if we get cheaper core deposits, and we don’t — can’t deploy it in the lending side, we’ll be able to shrink and still optimize there. Definitely we want to continue to run as efficient optimal balance sheet as possible. That’s really important to us.

Your second question, what was that again?

Ken Usdin

Just about the DDA balances. And do you think we’ve hit an absolute bottom? And do you expect any growth from here?

Daryl Bible

We think when we hit around 3%, DDA should bottom out and start to actually grow. So we aren’t that far away from that, if we hit those two more down 50 basis points. We think at that point, it should start to level off and start to grow again from that perspective is our opinion. That we’re investing heavily in treasury management services. We have a great leader there that’s doing a great job, and our businesses are really good going to market with all that. So we’re launching with good products and services, and that will also benefit. But I think down about 50 more basis points, and I think you’re going to start to see it bottom out and grow.

Ken Usdin

Okay. And one on the loan side. I haven’t done the calc this morning. But as CRE bottoms, can you just remind us where CRE as a percentage of your equity today? And as you start to grow it again, where would you be comfortable taking that back to if, in fact, you kind of — the reduction ended up being any different than where you would — your comfort level would be?

Daryl Bible

Yeah. So we’re at 124%. Our limit is, I think 160%. So, we have a ton of room to grow. And then we will grow serving our clients, getting the right returns on the growth that we’re getting. So we really have a large amount of capacity to be able to grow and add to that portfolio as needed. And I think the teams are excited. Tim Gallagher, who runs that group is really excited. He said he had all three businesses performing at top levels and had an unbelievable strong finish to the end of the year, and that’s going to carry us really well.

One of the things that I always watch for going into a new year is start point issues and all that. And when we put our plan together in the third quarter, we didn’t know if we’d have any start point problems or issues. And lo and behold, as we — the year or fourth quarter played out, all of our loan portfolios performed really well, and we have no start point problems. So we’re starting where we thought we would be, and we aren’t behind. So that gives us a lot of momentum to actually lift off and grow from that perspective.

Ken Usdin

Got it. Thanks, Daryl.

Operator

We’ll go next now to Steven Chubak of Wolfe Research.

Steven Chubak

Hi, good morning and thanks for taking my questions.

Daryl Bible

Sure.

Steven Chubak

Hey, Daryl. So I wanted to ask just on consumer deposit growth. Just within the guidance that you offered up for ’26, how you’re thinking about the growth in consumer versus wholesale? I know we don’t have the explicit disclosure within the supplement, but last quarter, year-on-year retail deposit growth, it was beginning to recover back towards that flat year-on-year level. As you continue to build density in some of these markets like New England and Long Island, are you nearing a sustainable inflection in retail deposits as we look out to the coming year?

Daryl Bible

Yeah. We are really focused at growing our consumer deposits and believe that is kind of the real value that you have by having a strong consumer threshold. All the businesses that we plan for, whether it’s consumer, business banking, commercial wealth, all plan for their deposits to grow both their operating and total deposits, which is really positive. We did shrink some of our time deposits this past year. That was intentional because we didn’t have a use for the higher cost. We can get that back very easily by just going out and doing that. That was a conscious decision.

But net-net, overall, we feel good about the growth and what we can achieve in the consumer side. As far as commercial goes, they’re a machine. They’re really important. When we go and serve our clients, it’s not just loans, deposits, treasury management, other fee income services. They deliver and bring the whole bank to them and all that. So, we feel really good about getting the right wallet share on the commercial side.

Steven Chubak

Thanks for that color. And for my follow-up, just on mortgage banking, revenues continue to grow at a healthy clip. I know that’s primarily been driven by the expansion in the subservicing business. Do you believe the tailwinds from ’25 could persist into ’26? What’s a reasonable expectation for growth within that subservicing business at the current clip?

Daryl Bible

So there’s going to be a couple of changes in ’26 and subservicing early on, I think we’re going to lose a smaller portfolio, but then we’re going to get something back in the next quarter and potentially even get more back in the second half of the year. So Mike Drury, who is in charge of that business and many other businesses out there feels really good about his mortgage business, his subservicing. We are really good sub-servicers in the hard to service. So the FHA stuff is kind of our sweet spot that we do. And people come to us to have us service those loans, and that’s a niche that we have, and we feel really good about it. So, net-net, it might bounce around a little bit throughout the year, but I think we’re going to finish the year pretty strong overall in that space.

Steven Chubak

Very helpful color. Thanks for taking my questions.

Operator

And we’ll go next now to Ebrahim Poonawala of Bank of America.

Daryl Bible

Thank you, Ebrahim.

Ebrahim Poonawala

Good morning, Daryl. Just one question. As we think about — so you’re growing core deposits organically, as we think about the incremental balance sheet growth that’s coming on, would you say that’s dilutive to the net interest margin where it is today, around 3.70%? And what — is there a ton of upside? Like is there an upside scenario where this margin could be closer to 3.80%? If you could sort of give us a framework around those two, I appreciate that.

Daryl Bible

Yes. So — yeah, that’s a good question. When we put on customer relationships, we look at the returns for the overall relationship. We just don’t look at one side of the fence, whether it’s deposits or loans, it’s the whole relationship. There are scenarios that where if we grow loans, grow deposits, maybe you put a little lower net interest margin on the books. But net-net, it still returns a good return on capital, and which is something I think we can do. I mean, I think our net interest margin is either first or second in the peer group.

So we have room for it to go down if we need it to go down to be competitive. But right now, we’re trying to continue to keep our mix there and grow the DDA in conjunction with interest bearing deposits as well as good attractive spread loans and getting good fee income overall. So, it’s really getting the whole balance there. So — but the guide that we have is what we’re giving you is what we think is going to happen from what we’re going to earn, and we’ll keep you updated as that plays out. But right now, we feel really good about operating in the low 3.70s for 2026.

Ebrahim Poonawala

Got it. Thanks.

Operator

Thank you. Gentlemen, it appears we have no further questions this morning. Mr. Ranjan, I’d like to turn things back to you, sir, for any closing comments.

Rajiv Ranjan

Thank you. Again, thank you all for participating today. And as always, if any clarification is needed, please contact our Investor Relations department at (716) 842-5138, and I look forward to working with all of you.

Operator

Thank you, Mr. Ranjan. Thank you, Mr. Bible. [Operator Closing Remarks].