M&T BANK CORP

Previous wording

(a)Net interest income data are presented on a taxable-equivalent basis which is a non-GAAP measure. The taxable-equivalent adjustment represents additional income taxes that would be due if all interest income were subject to income taxes. This adjustment, which is related to interest received on qualified municipal securities, industrial revenue financings and preferred equity securities, is based on a composite income tax rate of approximately 25%.

Current wording

(a)Net interest income data are presented on a taxable-equivalent basis which is a non-GAAP measure. The taxable-equivalent adjustment represents additional income taxes that would be due if all interest income were subject to income taxes. This adjustment, which is related to interest received on qualified municipal securities, industrial revenue financings and preferred equity securities, is based on the statutory federal income tax rate.

Previous wording

The increase in net income in the recent quarter as compared with the second quarter of 2025 resulted from the following:

Current wording

The decrease in net income in the recent quarter as compared with the fourth quarter of 2025 resulted from the following:

Previous wording

•Noninterest expense rose $118 million reflecting higher levels of salaries and employee benefits expense and outside data processing and software costs, partially offset by lower FDIC assessments, which included $34 million of FDIC special assessment expense in the first nine months of 2024.

Current wording

•Noninterest expense increased $23 million reflecting higher levels of salaries and employee benefits expense, outside data processing and software costs and professional and other services expense, partially offset by lower other costs of operations. Other costs of operations in the first quarter of 2025 included amortization of residential mortgage loan servicing right assets.

Previous wording

Under approved capital plans and programs authorized by the Board of Directors, M&T repurchased 2.1 million shares of its common stock during the recent quarter at a total cost of $409 million, compared with 6.1 million shares at a total cost of $1.1 billion in the second quarter of 2025. During the first nine months of 2025, M&T repurchased 11.6 million shares of its common stock at a total cost of $2.2 billion, compared with 1.2 million shares at a total cost of $200 million during the first nine months of 2024.

Current wording

Under programs authorized by the Board of Directors, M&T repurchased 5.5 million shares of its common stock during the recent quarter at a total cost of $1.25 billion, compared with 2.7 million shares at a total cost of $507 million in the fourth quarter of 2025 and 3.4 million shares of its common stock at a total cost of $662 million during the first three months of 2025. On March 30, 2026, M&T's Board of Directors authorized a program under which $5.0 billion of common shares may be repurchased. That authorization replaced and terminated the previous authorized share repurchase program effective as of the same date. On February 1, 2026, M&T redeemed all 40,000 outstanding shares of its Perpetual Fixed Rate Reset Non-Cumulative Preferred Stock, Series G, for $400 million.

Previous wording

M&T consistently provides supplemental reporting of its results on a “net operating” or “tangible” basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and gains (when realized) and expenses (when incurred) associated with merging acquired operations into the Company, since such items are considered by management to be “nonoperating” in nature. Although “net operating income” as defined by M&T is not a GAAP measure, M&T’s management believes that this information helps investors understand the effect of acquisition activity in reported results.

Current wording

M&T consistently provides supplemental reporting of its results on a “net operating” or “tangible” basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and gains (when realized) and expenses (when incurred) associated with merging acquired or to be acquired operations into the Company, since such items are considered by management to be “nonoperating” in nature. Although “net operating income” as defined by M&T is not a GAAP measure, M&T’s management believes that this information helps investors understand the effect of acquisition activity in reported results.

Previous wording

The Company's average balance sheets accompanied by the annualized taxable-equivalent interest income and expense and the average rate on the Company's earning assets and interest-bearing liabilities are presented as follows.

Current wording

The Company's average balance sheets accompanied by the taxable-equivalent interest income and expense and the annualized average rate on the Company's earning assets and interest-bearing liabilities are presented as follows.

Previous wording

Taxable-equivalent net interest income can be impacted by changes in the composition of the Company's earning assets and interest-bearing liabilities, as discussed herein, as well as changes in interest rates and spreads. The FOMC lowered its federal funds target interest rate by a total of 100 basis points in the last four months of 2024 and by 25 basis points in September 2025.

Current wording

Taxable-equivalent net interest income can be impacted by changes in the composition of the Company's earning assets and interest-bearing liabilities, as discussed herein, as well as changes in interest rates and spreads. The FOMC lowered its federal funds target interest rate by a total of 100 basis points in the last four months of 2024 and by a total of 75 basis points in the last four months of 2025.

Previous wording

Taxable-equivalent net interest income for the first nine months of 2025 increased $40 million as compared with the same 2024 period. That increase reflects an 8 basis-point widening of the net interest margin driven by a decrease of 53 basis points in the cost of interest-bearing liabilities, partially offset by a 25 basis-point decline in the yield received on earning assets and a 20 basis-point reduction in the contribution of net interest-free funds. Contributing to lower yields on earning assets and rates paid on interest-bearing liabilities in the first nine months of 2025 as compared with the similar 2024 period was the impact of the FOMC's cumulative 100 basis-point reduction in its federal funds target interest rate during the last four months of 2024. Partially offsetting the decline in yields received on earning assets was an increase in the yields received on investment securities from the deployment of liquidity into fixed rate investment securities from early 2024 through September 2025 that yielded higher rates than maturing investment securities.

Current wording

Taxable-equivalent net interest income for the first three months of 2026 increased $56 million as compared with the same 2025 period. That increase reflects a 5 basis-point widening of the net interest margin driven by a 37 basis-point decrease in the cost of interest-bearing liabilities, partially offset by a 16 basis-point decline in yields received on earning assets. Contributing to those changes was the aforementioned FOMC interest rate reductions in 2025. The yields received on earning assets in the recent quarter reflect a comparatively favorable impact from interest rate swap agreements entered into for interest rate risk purposes on yields received on commercial and industrial and commercial real estate loans. Partially offsetting the overall decline in yields received on earning assets was an increase in the yields received on investment securities from the deployment of liquidity into fixed rate investment securities throughout 2025 and the first three months of 2026 that yielded higher rates than investment securities that matured or were sold. The 21 basis-point increase in net interest spread was partially offset by a 16 basis-point reduction in the contribution of interest-free funds, reflecting lower average balances of noninterest-bearing deposits and a lower rate environment.

Previous wording

The Company's lending activities reflect a shift in portfolio composition as the Company executed various strategies to lessen its relative concentration of commercial real estate loans throughout 2024 and to reduce the amount of criticized loans in this category through 2025. The following table summarizes changes in the components of average loans.

Current wording

The following table summarizes changes in the components of average loans and reflects the Company's efforts to reduce its exposure to commercial real estate loans designated as criticized.

Previous wording

Average loans totaled $136.5 billion in the third quarter of 2025, up $1.1 billion from the second quarter of 2025.

Current wording

Average loans totaled $138.4 billion in the first quarter of 2026, up $823 million from the fourth quarter of 2025.

Previous wording

In the first nine months of 2025, average loans increased $1.2 billion from the corresponding 2024 period.

Current wording

In the first three months of 2026, average loans increased $3.6 billion from the corresponding 2025 period.

Previous wording

•Commercial real estate loans decreased $980 million, reflecting a reduction of $1.1 billion of average construction commercial real estate loans, partially offset by a modest increase of average permanent commercial real estate loans. Contributing to the decline in average commercial real estate construction loans were payoffs and the full quarter impact of the sale of $661 million of out-of-footprint residential builder and developer loans in June 2025.

Current wording

•Average commercial real estate loans declined $2.8 billion as the Company executed various strategies to reduce its relative concentration of such loans designated as criticized. Average permanent and construction commercial real estate loans decreased by $381 million and $2.4 billion, respectively. The decline in average commercial real estate construction loans reflects the sale of $661 million of out-of-footprint residential builder and developer loans in June 2025.

Previous wording

•Average residential real estate loans increased $675 million reflecting the retention of originated residential mortgage loans and purchases.

Current wording

•Average residential real estate loans increased $1.6 billion reflecting the retention of originated residential mortgage loans and purchases.

Previous wording

•Average consumer loans increased $745 million reflecting higher average balances of recreational finance loans of $663 million and home equity loans and lines of credit of $76 million.

Current wording

•Average consumer loans increased $2.0 billion reflecting growth in average recreational finance loans of $1.4 billion, home equity loans and lines of credit of $227 million and automobile loans of $188 million.

Previous wording

The Company's investment securities portfolio is largely comprised of government-issued or guaranteed residential and commercial mortgage-backed securities and U.S. Treasury securities, but also includes municipal and other securities. When purchasing investment securities, the Company considers its liquidity position and its overall interest rate risk profile as well as the adequacy of expected returns relative to risks assumed, including prepayments. The Company may occasionally sell investment securities as a result of movements in interest rates and spreads, changes in liquidity needs, actual or anticipated prepayments, credit risk associated with a particular security, or as a result of restructuring its investment securities portfolio. The amounts of investment securities held by the Company are influenced by such factors as available yield in comparison with alternative investments, demand for loans, which generally yield more than investment securities, ongoing repayments, the levels of deposits, and management of liquidity and balance sheet size and resulting capital ratios. Information about the Company's average investment securities portfolio is presented in the following table.

Current wording

The Company's investment securities portfolio is primarily comprised of government-issued or guaranteed residential and commercial mortgage-backed securities and U.S. Treasury securities, but also includes municipal and other securities. When purchasing investment securities, the Company considers its liquidity position and its overall interest rate risk profile as well as the adequacy of expected returns relative to risks assumed, including prepayments. The Company may occasionally sell investment securities as a result of movements in interest rates and spreads, changes in liquidity needs, actual or anticipated prepayments, credit risk associated with a particular security, or as a result of restructuring its investment securities portfolio. The amounts of investment securities held by the Company are influenced by such factors as available yield in comparison with alternative investments, demand for loans, which generally yield more than investment securities, ongoing repayments, the levels of deposits, and management of liquidity and balance sheet size and resulting capital ratios. Information about the Company's average investment securities portfolio is presented in the following table.

Previous wording

The investment securities portfolio averaged $36.6 billion in the third quarter of 2025, up $1.2 billion from the second quarter of 2025, and $35.5 billion for the nine months ended September 30, 2025, an increase of $5.7 billion from the similar 2024 period. Those increases reflect the deployment of liquidity into primarily fixed rate mortgage-backed investment securities classified in the Company's available-for-sale investment securities portfolio. As a result of the purchases of higher-yielding securities and the maturities of lower-yielding securities, the weighted-average current yield for total investment securities available for sale increased to 4.65% at September 30, 2025 and 4.50% at June 30, 2025 as compared with 4.08% at September 30, 2024. The weighted-average duration of the available-for-sale investment securities portfolio was 2.5 years at September 30, 2025 as compared with 2.6 years and 2.3 years at June 30, 2025 and September 30, 2024, respectively. The Company routinely adjusts its holdings of capital stock of the FHLB of New York and the FRB of New York based on amounts of outstanding borrowings and available lines of credit with those entities.

Current wording

The investment securities portfolio averaged $37.8 billion in the first quarter of 2026, up $1.1 billion and $3.4 billion from the fourth and first quarters of 2025, respectively. Those increases reflect the Company's deployment of liquidity into primarily fixed-rate mortgage-backed investment securities classified as available-for-sale. In the recent quarter the Company sold $2.5 billion of U.S. Treasury securities, all of which had maturity dates in 2026. As a result of the purchases of higher-yielding securities and sales, paydowns and maturities of lower-yielding securities, the weighted-average current yield for total investment securities available for sale increased to 4.71% at March 31, 2026 and 4.64% at December 31, 2025 from 4.42% at March 31, 2025. The weighted-average duration of that portfolio was 3.1 years at March 31, 2026 as compared with 2.4 years and 2.5 years at December 31, 2025 and March 31, 2025, respectively. The increase in the weighted-average duration in the recent quarter reflects the sale of U.S. Treasury securities near maturity and purchase of fixed rate mortgage-backed investment securities with longer maturity dates. The Company routinely adjusts its holdings of capital stock of the FHLB of New York and the FRB of New York based on amounts of outstanding borrowings and available lines of credit with those entities.

Previous wording

The Company regularly reviews its debt investment securities for declines in value below amortized cost that might be indicative of credit-related losses. There were no credit-related losses on debt investment securities recognized in each of the nine months ended September 30, 2025 and 2024. A further discussion of fair values of investment securities is included herein under the heading "Capital." Additional information about the investment securities portfolio is included in notes 3 and 13 of Notes to Financial Statements.

Current wording

The Company regularly reviews its debt investment securities for declines in value below amortized cost that might be indicative of credit-related losses. There were no credit-related losses on debt investment securities recognized in each of the three months ended March 31, 2026, December 31, 2025 and March 31, 2025. Additional information about the investment securities portfolio is included in notes 2 and 12 of Notes to Financial Statements.

Previous wording

Other earning assets include interest-bearing deposits at banks and trading account assets. Those other earning assets in the aggregate averaged $17.8 billion and $19.8 billion for the three-month periods ended September 30, 2025 and June 30, 2025, respectively, and $19.1 billion and $28.6 billion for the nine months ended September 30, 2025 and 2024, respectively. The amounts of other earning assets at those respective dates were primarily comprised of deposits held at the FRB of New York. In general, the levels of those deposits often fluctuate due to changes in deposits of retail and commercial customers, trust-related deposits, brokered deposits and additions to or maturities of investment securities or borrowings.

Current wording

Other earning assets include interest-bearing deposits at banks and trading account assets. Those other earning assets in the aggregate averaged $16.3 billion in the recent quarter, compared with $18.1 billion and $19.8 billion during the three months ended December 31, 2025 and March 31, 2025, respectively, and were primarily comprised of deposits held at the FRB of New York. The Company considers such deposits to be an immediate source of funds in its liquidity management processes. In general, the levels of those deposits often fluctuate due to changes in deposits of retail and commercial customers, trust-related deposits and brokered deposits, lending activities and additions to or maturities of investment securities or borrowings.

Previous wording

The most significant source of funding for the Company is core deposits. The Company considers noninterest-bearing deposits, savings and interest-checking deposits and time deposits of $250,000 or less as core deposits. The Company’s branch network is its principal source of core deposits, which generally carry lower interest rates than wholesale funds of comparable maturities. Average core deposits represented 78% and 79% of average earning assets for the quarters ended September 30, 2025 and June 30, 2025, respectively, and 78% and 77% for the nine months ended September 30, 2025 and 2024, respectively. The Company also includes brokered deposits as a component of its wholesale funding strategy. Depending on market conditions, including demand by customers and other investors, and the cost of funds available from alternative sources, the Company may change the amount or composition of brokered deposits in the future. The following table provides an analysis of changes in the components of average deposits.

Current wording

The most significant source of funding for the Company is core deposits from its customer base. The Company considers noninterest-bearing deposits, savings and interest-checking deposits and time deposits of $250,000 or less as core deposits. The Company’s domestic banking network is its principal source of core deposits, which generally carry lower interest rates than wholesale funds of comparable maturities. Average core deposits represented 79% of average earning assets at each of the quarters ended March 31, 2026 and December 31, 2025, compared with 78% for the quarter ended March 31, 2025. The Company also utilizes brokered deposits as a component of its wholesale funding strategy. Depending on market conditions, including demand by customers and other investors, and the cost of funds available from alternative sources, the Company may change the amount or composition of brokered deposits in the future. The following table provides an analysis of changes in the components of average deposits.

Previous wording

Total deposits averaged $162.7 billion in the recent quarter, down $700 million from the second quarter of 2025.

Current wording

Total deposits averaged $164.3 billion in the recent quarter, down $789 million from the fourth quarter of 2025.

Previous wording

•Average core deposits decreased $853 million reflecting lower noninterest-bearing deposits largely driven by a single commercial customer, partially offset by higher average savings and interest-checking deposits.

Current wording

•Average core deposits increased $531 million reflecting higher noninterest-bearing deposits and a rise in average savings and interest-checking deposits largely driven by growth in commercial customer deposits, partially offset by lower average time deposits of retail customers.

Previous wording

The accompanying table summarizes the components of average total deposits by reportable segment for the three months ended September 30, 2025 and June 30, 2025 and the nine months ended September 30, 2025 and 2024.

Current wording

The accompanying table summarizes the components of average total deposits by reportable segment for the three months ended March 31, 2026, December 31, 2025 and March 31, 2025.

Previous wording

The Company uses borrowing capacity from banks, the FHLBs, the FRB of New York and others as sources of funding. Short-term borrowings represent arrangements that at the time they were entered into had a contractual maturity of one year or less. Average short-term borrowings in the third quarter of 2025 as compared with the second quarter of 2025, as well as for the nine months ended September 30, 2025 as compared with the similar 2024 period, were lower as a result of the Company's management of liquidity, including reductions in certain short-term wholesale funding sources.

Current wording

The Company uses borrowing capacity from banks, the FHLBs, the FRB of New York and others as sources of funding. Short-term borrowings represent arrangements that at the time they were entered into had a contractual maturity of one year or less. The higher levels of short-term borrowings in the first quarter of 2026 as compared with the fourth and first quarters of 2025 reflect the Company's management of liquidity.

Previous wording

The levels of long-term borrowings reflect the Company's strategies to diversify its wholesale funding sources to provide long-term funding stabilization and prepare for proposed regulations enumerating certain long-term debt requirements as described in Part I, Item 1, "Resolution Planning and Resolution-Related Requirements" of M&T's 2024 Annual Report. The following table provides a summary of the Company's issuances, maturities and redemptions of long-term borrowings for the three-month and nine-month periods ended September 30, 2025.

Current wording

The levels of long-term borrowings reflect the Company's strategies to diversify its wholesale funding sources to provide long-term funding stabilization. The following table provides a summary of the Company's issuances, maturities and redemptions of long-term borrowings in the recent quarter.

Previous wording

(b)Excludes paydowns of asset-backed notes.

Current wording

(b)Excludes paydowns of asset-backed notes. There were no maturities or redemptions of long-term borrowings in the first quarter of 2026.

Previous wording

Additional information regarding borrowings is provided in notes 5 and 12 of Notes to Financial Statements.

Current wording

Additional information regarding borrowings is provided in notes 4 and 11 of Notes to Financial Statements.

Previous wording

A provision for credit losses is recorded to adjust the level of the allowance to reflect expected credit losses that are based on economic forecasts as of each reporting date. A provision for credit losses of $125 million was recorded in each of the third and second quarters of 2025. The provision for credit losses included $15 million and $20 million of provision for unfunded credit commitments in the third and second quarters of 2025, respectively. For the nine months ended September 30, 2025 and 2024, the Company recorded a provision for credit losses of $380 million and $470 million, respectively. The lower provision for credit losses in the first nine months of 2025 as compared with the similar 2024 period reflects improved credit performance of commercial real estate loans, partially offset by consumer loan growth.

Current wording

A provision for credit losses is recorded to adjust the level of the allowance to reflect expected credit losses that are based on economic forecasts as of each reporting date. A provision for credit losses of $140 million was recorded in the first quarter of 2026, compared with $125 million and $130 million in the fourth and first quarters of 2025, respectively. The provision for credit losses included $15 million of provision for unfunded credit commitments in the first quarter of 2026, compared with a reduction of provision for unfunded credit commitments of $15 million in the fourth quarter of 2025. No provision for unfunded credit commitments was recorded in the first quarter of 2025.

Previous wording

A summary of the Company's net loan charge-offs by loan type and as an annualized percent of such average loans is presented in the table that follows.

Current wording

A summary of the Company's net charge-offs by loan type and as an annualized percent of such average loans is presented in the table that follows.

Previous wording

(a)Predominantly government-guaranteed residential real estate loans.

Current wording

(a)Primarily government-guaranteed residential real estate loans.

Previous wording

Nonaccrual loans decreased $61 million from June 30, 2025 to September 30, 2025 reflecting modest declines in commercial and industrial, commercial real estate and residential real estate nonaccrual loans. As compared with December 31, 2024, the $178 million decline in nonaccrual loans at September 30, 2025 reflects a $154 million, $59 million and $29 million reduction in commercial real estate, consumer and residential real estate nonaccrual loans, respectively. Partially offsetting those declines was a $64 million increase in commercial and industrial nonaccrual loans. Approximately 37% of commercial and industrial and commercial real estate nonaccrual loans were considered current with respect to their payment status at September 30, 2025.

Current wording

Nonaccrual loans at March 31, 2026 decreased $12 million from December 31, 2025, reflecting lower commercial real estate nonaccrual loans, and $300 million from March 31, 2025, predominantly driven by a $127 million reduction in commercial and industrial nonaccrual loans and a $119 million reduction in commercial real estate nonaccrual loans. Approximately 45% of nonaccrual commercial and industrial and commercial real estate loans were considered current with respect to their payment status at March 31, 2026.

Previous wording

Government-guaranteed loans designated as accruing loans past due 90 days or more included one-to-four family residential mortgage loans serviced by the Company that were repurchased to reduce associated servicing costs, including a requirement to advance principal and interest payments that had not been received from individual mortgagors. Despite the loans being purchased by the Company, the insurance or guarantee by the applicable government-related entity remains in force. The outstanding principal balances of the repurchased loans that are guaranteed by government-related entities included in accruing loans past due 90 days or more totaled $333 million at September 30, 2025, $377 million at June 30, 2025, $224 million at December 31, 2024 and $204 million at September 30, 2024. Accruing loans past due 90 days or more not guaranteed by government-related entities were loans considered to be with creditworthy borrowers that were in the process of collection or renewal.

Current wording

Government-guaranteed loans designated as accruing loans past due 90 days or more included one-to-four family residential mortgage loans serviced by the Company that were repurchased to reduce associated servicing costs, including a requirement to advance principal and interest payments that had not been received from individual mortgagors. Despite the loans being purchased by the Company, the insurance or guarantee by the applicable government-related entity remains in force. The outstanding principal balances of the repurchased loans that are guaranteed by government-related entities included in accruing loans past due 90 days or more totaled $537 million at March 31, 2026, $459 million at December 31, 2025 and $240 million at March 31, 2025. Accruing loans past due 90 days or more not guaranteed by government-related entities were loans considered to be with creditworthy borrowers that were in the process of collection or renewal. Additional information about past due and nonaccrual loans is included in note 3 of Notes to Financial Statements.

Previous wording

The Company utilizes a loan grading system to differentiate risk amongst its commercial and industrial loans and commercial real estate loans. Loans with a lower expectation of default are assigned one of ten possible “pass” loan grades while loans determined to have an elevated level of credit risk are designated as “criticized.” A criticized loan may be designated as “nonaccrual” if the Company no longer expects to collect all amounts owed under the terms of the loan agreement or the loan is delinquent 90 days or more. During 2025, the Company assessed loans to certain not-for-profit borrowers, government contractors and other commercial borrowers that may be impacted by immigration policies and enforcement, changes to government funding and reductions in the federal workforce. The Company is also monitoring commercial borrowers in certain industry sectors that may be impacted by international trade policy changes, such as tariffs, including retail and wholesale trade, manufacturing and construction companies. The Company has considered the information gathered in such reviews in its assignment of loan grades.

Current wording

The Company utilizes a loan grading system to differentiate risk amongst its commercial and industrial loans and commercial real estate loans. Loans with a lower expectation of default are assigned one of ten possible "pass" loan grades while specific loans determined to have an elevated level of credit risk are designated as "criticized." A criticized loan may be designated as "nonaccrual" if the Company no longer expects to collect all amounts owed under the terms of the loan agreement or the loan is delinquent 90 days or more. Targeted reviews are periodically performed over segments of loan portfolios that may be experiencing heightened credit risk due to current or anticipated economic conditions. The intention of such reviews is to identify trends across such portfolios and inform portfolio risk limits and loss mitigation strategies. In the recent quarter the Company reviewed certain loans to borrowers in the energy sector as recent increases in energy and transportation costs have compressed operating margins and may do so in the future for these borrowers. The Company continues to monitor commercial borrowers in certain industry sectors that may be affected by international trade policy changes, such as tariffs, including retail and wholesale trade, manufacturing, packaging and construction companies. The Company has considered the information gathered in such reviews in the assignment of loan grades.

Previous wording

The Company continues to monitor its commercial real estate loan portfolio. The primary source of repayment of these loans is typically tenant lease payments to the investor/borrower. Elevated vacancies impacting some property types and higher interest rates have contributed to lower current and anticipated future debt service coverage ratios, which have and may continue to influence the ability of borrowers to make existing loan payments. Lower debt service coverage ratios and reduced commercial real estate values also impact the ability of borrowers, in particular those borrowers with loans secured by office properties, to refinance their obligations at loan maturity. Despite these challenges, the ability of borrowers to service loans secured by investor-owned real estate has generally improved in recent quarters. The LTV ratio is one of many factors considered in assessing overall portfolio risks and loss mitigation strategies for the investor-owned commercial real estate portfolio. In determining the LTV ratio, the Company considers cross-collateralization of all exposures secured by the supporting collateral and the estimated value of such collateral. Subsequent to the origination of commercial real estate loans, updated appraisals are obtained in the normal course of business for renewals, extensions and modifications to commitment levels. As the quality of a loan deteriorates to the point of designating the loan as "criticized nonaccrual," the process of obtaining updated collateral valuation information is usually initiated, unless it is not considered warranted given factors such as the relative size of the loan or the age of the last valuation. In those cases where current appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed necessary, for estimates of subsequent declines in values as determined by line of business and/or loan workout personnel. Those adjustments are reviewed and assessed for reasonableness by the Company’s credit risk personnel. Accordingly, for real estate collateral securing larger nonaccrual commercial and industrial loans and commercial real estate loans, estimated collateral values are generally based on current appraisals and estimates of value.

Current wording

The Company continues to monitor its commercial real estate loan portfolio. The primary source of repayment of these loans is typically tenant lease payments to the investor/borrower. Elevated vacancies impacting some property types have contributed to lower current and anticipated future debt service coverage ratios, which have and may continue to influence the ability of borrowers to make existing loan payments. Lower debt service coverage ratios and reduced commercial real estate values also impact the ability of borrowers to refinance their obligations at loan maturity. Despite these challenges, the ability of borrowers to service loans secured by investor-owned real estate has generally improved in recent quarters. The LTV ratio is one of many factors considered in assessing overall portfolio risks and loss mitigation strategies for the investor-owned commercial real estate portfolio. In determining the LTV ratio, the Company considers cross-collateralization of all exposures secured by the supporting collateral and the estimated value of such collateral. Subsequent to the origination of commercial real estate loans, updated appraisals are obtained in the normal course of business for renewals, extensions and modifications to commitment levels. As the quality of a loan deteriorates to the point of designating the loan as "criticized nonaccrual," the process of obtaining updated collateral valuation information is usually initiated, unless it is not considered warranted given factors such as the relative size of the loan or the age of the last valuation. In those cases where current appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed necessary, for estimates of subsequent declines in values as determined by line of business and/or loan workout personnel. Those adjustments are reviewed and assessed for reasonableness by the Company’s credit risk personnel. Accordingly, for real estate collateral securing larger nonaccrual commercial and industrial loans and commercial real estate loans, estimated collateral values are generally based on current estimates of value.

Previous wording

The Company monitors its concentration of commercial real estate lending as a percent of its Tier 1 capital plus its allowable allowance for credit losses, consistent with a metric utilized to differentiate such concentrations amongst regulated financial institutions. This metric, as prescribed in supervisory guidance, excludes loans secured by commercial real estate considered to be owner-occupied, but includes certain other loans, such as loans to real estate investment trusts, that are classified as commercial and industrial loans. The Company's commercial real estate loan concentration approximated 128% of Tier 1 capital plus its allowable allowance for credit losses at September 30, 2025, compared with 129% at June 30, 2025, 136% at December 31, 2024 and 148% at September 30, 2024. The Company executed various strategies to lessen its relative concentration of investor-owned commercial real estate loans throughout 2024 and to reduce criticized loans in this category through 2025.

Current wording

The Company monitors its concentration of commercial real estate lending as a percent of its Tier 1 capital plus its allowable allowance for credit losses, consistent with a metric utilized to differentiate such concentrations amongst regulated financial institutions. This metric, as prescribed in supervisory guidance, excludes loans secured by commercial real estate considered to be owner-occupied, but includes certain other loans, such as loans to real estate investment trusts, that are classified as commercial and industrial loans. The Company's commercial real estate loan concentration approximated 129% of Tier 1 capital plus its allowable allowance for credit losses at March 31, 2026, compared with 124% at December 31, 2025 and 133% at March 31, 2025. The Company executed various strategies to reduce the amount of criticized loans in this category throughout 2025.

Previous wording

Loans to financial and insurance companies, motor vehicle and recreational finance dealers and the retail industry contributed to the modest increase in commercial and industrial criticized loans from December 31, 2024 to September 30, 2025, partially offset by lower criticized loans to the health services, manufacturing and transportation, communications and utilities industries. The $2.2 billion decline in commercial real estate criticized loans from December 31, 2024 to September 30, 2025 spanned most property types and also reflected lower criticized construction and development loans. At September 30, 2025, approximately 96% of criticized accrual loans and 37% of criticized nonaccrual loans were considered current with respect to their payment status.

Current wording

The $306 million reduction in commercial and industrial criticized loans from December 31, 2025 to March 31, 2026 spanned most industry types. The $400 million decline in commercial real estate criticized loans from December 31, 2025 to March 31, 2026 predominantly reflected a decline in criticized construction and development loans and permanent loans secured by multifamily properties. At March 31, 2026, approximately 96% of criticized accrual loans and 45% of criticized nonaccrual loans were considered current with respect to their payment status.

Previous wording

For loans secured by residential real estate, the Company’s loss identification and estimation techniques make reference to loan performance and house price data in specific areas of the country where collateral securing those loans is located. For residential real estate-related loans, including home equity loans and lines of credit, the excess of the loan balance over the net realizable value of the property collateralizing the loan is charged-off when the loan becomes 150 days delinquent. Information about the location of nonaccrual loans secured by residential real estate at September 30, 2025 is presented in the following table.

Current wording

For loans secured by residential real estate the Company’s loss identification and estimation techniques make reference to loan performance and house price data in specific areas of the country where collateral securing those loans is located. For loans secured by residential real estate, including home equity loans and lines of credit, the excess of the loan balance over the net realizable value of the property collateralizing the loan is charged-off when the loan becomes 150 days delinquent. Information about the location of nonaccrual loans secured by residential real estate at March 31, 2026 and December 31, 2025 is presented in the following table.

Previous wording

(a)Includes $697 million of limited documentation first lien mortgage loans with nonaccrual loan balances totaling $48 million.

Current wording

(a)Includes $650 million and $673 million of limited documentation first lien mortgage loans with nonaccrual loan balances totaling $48 million and $50 million at March 31, 2026 and December 31, 2025, respectively.

Previous wording

Consumer loans not secured by residential real estate are generally charged-off when the loans are 91 to 180 days past due, depending on whether the loan is collateralized and the status of repossession activities with respect to such collateral. A comparative summary of consumer loans in nonaccrual status by product is presented in the following table.

Current wording

Consumer loans not secured by residential real estate are generally charged-off when the loans are 91 to 180 days past due, depending on whether the loan is collateralized and the status of repossession activities with respect to such collateral. The Company primarily originates recreational finance loans and automobile loans indirectly through dealerships across the U.S. At March 31, 2026, the percent of recreational finance loans and automobile loans with FICO scores of 700 or greater at origination date was 99% and 83%, respectively. A comparative summary of nonaccrual consumer loan balances and the respective percent of outstanding balances of each consumer loan product at March 31, 2026 and December 31, 2025 is presented in the following table.

Previous wording

In establishing the allowance for loan losses, the Company estimates losses attributable to specific troubled credits identified through both normal and targeted credit review processes and also estimates losses for other loans with similar risk characteristics on a collective basis. For purposes of determining the level of the allowance for loan losses, the Company evaluates its portfolio by loan type. At the time of the Company’s analysis regarding the determination of the allowance for loan losses as of September 30, 2025 concerns existed about the impact of potential inflationary pressures and increases in unemployment on the discretionary income and purchasing power of consumers, which could impact their ability to service existing debt obligations; slower economic growth in future quarters; the volatile nature of global markets and international economic conditions that could impact the U.S. economy, including the effect of international trade policies on domestic businesses and consumers; uncertainty related to Federal Reserve positioning of monetary policy; the potential for a prolonged period of U.S. federal government shutdown; downward pressures on commercial real estate values, especially in the office sector; the persistence of elevated interest rates impacting the ability of commercial borrowers to refinance maturing debt obligations; and the extent to which borrowers may be negatively affected by general economic conditions.

Current wording

At the time of the Company’s analysis regarding the determination of the allowance for loan losses as of March 31, 2026 uncertainties existed about the impact of inflationary pressures and potential increases in unemployment on the discretionary income and purchasing power of consumers, which could impact their ability to service existing debt obligations; the volatile nature of global markets and international economic conditions that could impact the U.S. economy, including the effect of international trade policies and recent military conflicts on domestic businesses and consumers; uncertainty related to Federal Reserve positioning of monetary policy and the potential impacts on future economic growth; shifts in immigration policies and enforcement; changes to government funding and reductions in the federal workforce; downward pressures on commercial real estate values, including office properties, and the impacts on the ability of commercial borrowers to refinance maturing debt obligations; and the extent to which borrowers may be negatively affected by general economic conditions.

Previous wording

The Company generally estimates current expected credit losses on loans with similar risk characteristics on a collective basis. To estimate expected losses, the Company utilizes statistically developed models to project principal balances over the remaining contractual lives of the loan portfolios and determine estimated credit losses through a reasonable and supportable forecast period. The Company’s approach for estimating current expected credit losses for loans at each reporting date included utilizing macroeconomic assumptions to project losses over a two-year reasonable and supportable forecast period. Subsequent to the forecast period, the Company reverted to longer-term historical loss experience, over a period of one year, to estimate expected credit losses over the remaining contractual life. In determining the allowance for loan losses, the Company may adjust forecasted loss estimates for inherent limitations or biases in the models as well as for other factors that may not be adequately considered in its quantitative methodologies including the impact of portfolio concentrations, imprecision in economic forecasts, geopolitical conditions and other risk factors that influence the loss estimation process. At each of September 30, 2025, June 30, 2025 and December 31, 2024, the Company qualitatively adjusted credit loss estimates for inherent limitations in the ability to assess real-time changes in commercial borrower performance and for environmental influences affecting certain loan portfolios. Qualitative adjustments, primarily related to portfolio exposures to certain commercial and industrial borrowers and commercial real estate loans, were modestly lower at September 30, 2025 as compared with June 30, 2025 and December 31, 2024.

Current wording

In establishing the allowance for loan losses, the Company estimates losses attributable to specific troubled credits identified through both normal and targeted credit review processes and also estimates losses for other loans with similar risk characteristics on a collective basis, generally through the use of statistically developed credit models, which are required to achieve a satisfactory independent validation by the Company's Model Risk Management Department, or other quantitative methodologies. In determining the allowance for loan losses, the Company may adjust forecasted loss estimates for inherent limitations or biases in the models as well as for other factors that may not be adequately considered in its quantitative methodologies including the impact of portfolio concentrations, imprecision in economic forecasts, geopolitical conditions and other risk factors that influence the loss estimation process. At each of March 31, 2026 and December 31, 2025, the Company qualitatively adjusted credit loss estimates for inherent limitations in the ability to assess real-time changes in commercial borrower performance and for environmental influences affecting certain loan portfolios. Qualitative adjustments at March 31, 2026 as compared with December 31, 2025, were generally higher reflecting the potential negative impact of global conflicts on economic forecasts.