M&T BANK CORP

Interest income earned on certain of the Company's assets is exempt from federal income tax. Taxable-equivalent net interest income is a non-GAAP measure that adjusts income earned on a tax-exempt asset to present it on an equivalent basis to interest income earned on a fully taxable asset. 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.

AVERAGE BALANCE SHEETS AND ANNUALIZED TAXABLE-EQUIVALENT RATES

(a)Includes nonaccrual loans.

(b)Includes available-for-sale securities at amortized cost.

(c)Primarily government issued or guaranteed.

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AVERAGE BALANCE SHEETS AND ANNUALIZED TAXABLE-EQUIVALENT RATES (continued)

(a)Includes nonaccrual loans.

(b)Includes available-for-sale securities at amortized cost.

(c)Primarily government issued or guaranteed.

(d)The yield on state and political subdivision investment securities for the six-month period ended June 30, 2025 reflects $18 million of lower taxable-equivalent interest income resulting from an alignment of amortization periods for certain municipal bonds obtained from the acquisition of People's United Financial, Inc.

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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 75 basis points in the last four months of 2025 and maintained its target through the second quarter of 2026.

Taxable-equivalent net interest income increased $41 million in the recent quarter as compared with the first quarter of 2026 reflective of an additional calendar day in the recent quarter, an increase in interest income on nonaccrual loans and higher average earning assets. The net interest margin remained unchanged at 3.70% reflecting a 5 basis-point increase in yields received on earning assets offset by a 4 basis-point increase in rates paid on interest-bearing liabilities and a 1 basis-point decrease in the contribution of interest-free funds.

Taxable-equivalent net interest income for the first six months of 2026 increased $138 million as compared with the same 2025 period. That increase reflects a 6 basis-point widening of the net interest margin driven by a 35 basis-point decrease in the cost of interest-bearing liabilities, partially offset by a 13 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 first six months of 2026 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 six months of 2026 that yielded higher rates than investment securities that matured or were sold. The 22 basis-point increase in net interest spread was partially offset by a 16 basis-point reduction in the contribution of interest-free funds, reflecting a lower rate environment.

Future changes in market interest rates or spreads, as well as changes in the composition of the Company’s portfolios of earning assets and interest-bearing liabilities that result in changes to spreads, could impact the Company’s net interest income and net interest margin. Future changes in the levels of net interest-free funds and the interest rates used to value such funds could also impact the Company's net interest margin.

Interest rate swap agreements

Management assesses the potential impact of future changes in interest rates and spreads by projecting net interest income under several interest rate scenarios. In managing interest rate risk, the Company has utilized interest rate swap agreements to modify the repricing characteristics of certain portions of its earning assets and interest-bearing liabilities. Under the terms of those interest rate swap agreements, the Company generally received payments based on the outstanding notional amount at fixed rates and made payments at variable rates. Periodic settlement amounts arising from these agreements are reflected in either the yields received on earning assets or the rates paid on interest-bearing liabilities. The Company enters into forward-starting interest rate swap agreements predominantly to hedge interest rate exposures expected in future periods. The following table summarizes information about interest rate swap agreements entered into for interest rate risk management purposes at June 30, 2026 and December 31, 2025.

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INTEREST RATE SWAP AGREEMENTS - DESIGNATED AS HEDGES

Information regarding the fair value of interest rate swap agreements designated as fair value hedges and cash flow hedges is presented in note 11 of Notes to Financial Statements. The average notional amounts of interest rate swap agreements entered into for interest rate risk management purposes (excluding forward-starting interest rate swap agreements not in effect during the quarter), the related effect on net interest income and margin, and the weighted-average interest rates received or paid on those swap agreements are presented in the table that follows.

INTEREST RATE SWAP AGREEMENTS - EFFECT ON NET INTEREST INCOME

(a)Computed as an annualized percentage of average earning assets or interest-bearing liabilities.

(b)Excludes forward-starting interest rate swap agreements not in effect during the period.

(c)Weighted-average rate received or paid on interest rate swap agreements in effect during the period.

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Lending activities

The following table summarizes changes in the components of average loans.

AVERAGE LOANS

Average loans totaled $141.4 billion in the second quarter of 2026, up $3.0 billion from the first quarter of 2026.

•Average commercial and industrial loans increased $2.3 billion reflecting growth that spanned most industry types.

•Commercial real estate loans increased $57 million, reflecting an increase of $243 million in average permanent commercial real estate loans, partially offset by a reduction of $186 million in average construction commercial real estate loans.

•Average residential real estate loans increased $269 million reflecting purchases in the second quarter of 2026 and the retention of originated residential mortgage loans.

•Average consumer loans increased $413 million reflecting higher average balances of recreational finance loans of $408 million.

In the first six months of 2026, average loans increased $4.8 billion from the corresponding 2025 period.

•Average commercial and industrial loans increased $3.9 billion reflecting growth that spanned most industry types.

•Average commercial real estate loans declined $2.3 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 $134 million and $2.1 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.

•Average residential real estate loans increased $1.5 billion reflecting the retention of originated residential mortgage loans and purchases.

•Average consumer loans increased $1.7 billion reflecting growth in average recreational finance loans of $1.3 billion and home equity loans and lines of credit of $237 million.

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Commercial and industrial borrowers in the financial and insurance industry include real estate investment trusts and other specialty lending businesses including fund banking companies and mortgage warehouse lending businesses. At June 30, 2026 and December 31, 2025, approximately 91% and 89% of loans to the financial and insurance industry, respectively, and 7% of loans to the services industry, at each of those dates, were designated as loans to NDFIs as prescribed in regulatory guidance applicable to the Company. The following table presents commercial and industrial commitments and outstanding balances of loans to NDFIs at June 30, 2026 and December 31, 2025.

COMMERCIAL AND INDUSTRIAL COMMITMENTS AND LOANS TO NDFIs

(a)Includes real estate investment trust credit facilities, residential mortgage warehouse lines of credit and mortgage loan servicing rights secured financing.

(b)Primarily subscription credit facilities.

(c)Includes credit facilities to wholesale lender finance and leasing companies and business development companies.

(d)Includes credit facilities to consumer lender finance and leasing companies.

Investing activities

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.

AVERAGE INVESTMENT SECURITIES

(a)Primarily government issued or guaranteed.

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The investment securities portfolio averaged $38.7 billion in the second quarter of 2026, up $883 million from the first quarter of 2026, and $38.3 billion for the six months ended June 30, 2026, an increase of $3.4 billion from the similar 2025 period. Those increases reflect the Company's deployment of liquidity into primarily fixed-rate mortgage-backed investment securities classified as available for sale. In the first quarter of 2026 the Company sold $2.5 billion of U.S. Treasury securities, all of which had maturity dates in 2026. There were no significant sales of debt investment securities in the second quarter of 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 4.73% and 4.71% at June 30, 2026 and March 31, 2026, respectively, from 4.50% at June 30, 2025. The weighted-average duration of that portfolio was 3.1 years at each of June 30, 2026 and March 31, 2026 as compared with 2.6 years at June 30, 2025. The increase in the weighted-average duration from June 30, 2025 reflects the sale of U.S. Treasury securities near maturity and purchase of fixed-rate mortgage-backed investment securities with longer maturity dates. In July 2026, the Company transferred $8.3 billion of residential mortgage-backed securities from the available-for-sale portfolio to the held-to-maturity portfolio with gross unrealized gains of $32 million and gross unrealized losses of $24 million at the time of transfer. 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.

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 six months ended June 30, 2026 and June 30, 2025. Additional information about the investment securities portfolio is included in notes 3 and 13 of Notes to Financial Statements.

Other earning assets are comprised primarily of interest-bearing deposits at banks. Other earning assets averaged $15.1 billion and $16.3 billion during the three months ended June 30, 2026 and March 31, 2026, respectively, and $15.7 billion and $19.8 billion during the six months ended June 30, 2026 and 2025, respectively. The amounts of other earning assets at those respective dates 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.

Funding activities - deposits

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 for each of the quarters ended June 30, 2026 and March 31, 2026 and for the six months ended June 30, 2026 and 78% for the six months ended June 30, 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.

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AVERAGE DEPOSITS

(a)During the second quarter of 2026, certain savings and interest-checking deposit arrangements were redesignated as core deposits consistent with regulatory presentation. The resulting increase in average core deposits and decrease in average brokered deposits was $3.5 billion for the quarter ended June 30, 2026 and $1.8 billion for the six months ended June 30, 2026.

Total deposits averaged $163.5 billion in the recent quarter, down $652 million from the first quarter of 2026. Lower average noninterest-bearing deposits of $583 million and average brokered savings and interest-checking deposits were partially offset by an increase in average brokered time deposits of $682 million.

In the first six months of 2026, total average deposits increased $1.7 billion from the corresponding 2025 period. Average core deposits increased $4.3 billion reflecting growth in average savings and interest-checking deposits from commercial customers and the redesignation of certain deposit arrangements in the second quarter of 2026. Partially offsetting that increase was lower average noninterest-bearing deposits predominantly from commercial customers.

The accompanying table summarizes the components of average total deposits by reportable segment for the three months ended June 30, 2026 and March 31, 2026 and the six months ended June 30, 2026 and 2025.

AVERAGE DEPOSITS BY REPORTABLE SEGMENT

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Funding activities - borrowings

The following table summarizes the average balances utilized from the Company's short-term and long-term borrowing facilities and note programs.

AVERAGE BORROWINGS

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 second quarter of 2026 as compared with the first quarter of 2026, as well as for the six months ended June 30, 2026 as compared with the similar 2025 period reflect the Company's management of liquidity and growth in its earning assets.

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 as well as for the six months ended June 30, 2026.

LONG-TERM BORROWING ISSUANCES, MATURITIES AND REDEMPTIONS

(a)At par value.

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

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

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