M&T BANK CORP

As a financial intermediary, the Company is exposed to various risks, including liquidity and market risk. Liquidity refers to the Company’s ability to ensure that sufficient cash flow and liquid assets are available to satisfy current and future obligations, including demands for loans and deposit withdrawals, funding operating costs, and other corporate purposes. Liquidity risk arises whenever the cash flows associated with financial instruments included in assets and liabilities differ.

The most significant source of funding for the Company is core deposits, which are generated from a large base of consumer, corporate and institutional customers. That customer base has become more geographically diverse as a result of expansion of the Company’s businesses over time. Nevertheless, the Company faces competition in offering products and services from a large array of financial market participants, including banks, thrifts, mutual funds, securities dealers and others. Core deposits totaled $147.5 billion at December 31, 2024, compared with $146.5 billion at December 31, 2023. The increase in core deposits since December 31, 2023 reflects higher savings and interest-checking deposits, partially offset by lower noninterest-bearing deposits, as customers shifted funds to interest-bearing accounts in an elevated interest rate environment, and maturing time deposits.

The Company supplements funding provided through core deposits with various short-term and long-term wholesale borrowings, including overnight federal funds purchases, repurchase agreements, advances from the FHLBs, brokered deposits and longer-term borrowings. M&T Bank has access to additional funding sources through secured borrowings from the FHLB of New York and the FRB of New York. M&T Bank is also a counterparty to the FRB of New York standing repurchase agreement facility, which allows it to enter into overnight repurchase transactions using eligible investment securities. M&T has, in the past, issued Junior Subordinated Debentures associated with trust preferred obligations to provide liquidity and enhance regulatory capital ratios. At December 31, 2024 and 2023, long-term borrowings aggregated $12.6 billion and $8.2 billion, respectively, and short-term borrowings aggregated $1.1 billion and $5.3 billion, respectively. Information about the Company’s borrowings is included in note 8 of Notes to Financial Statements.

The Company's wholesale funding sources include the placement of brokered deposits. The Company had brokered savings and interest-checking deposit accounts which aggregated $9.8 billion and $7.8 billion at December 31, 2024 and 2023, respectively. Brokered time deposits declined $5.1 billion to $1.0 billion at December 31, 2024 from $6.1 billion at December 31, 2023, as brokered time deposits matured. The change in the composition and levels of brokered deposits during 2024 as compared with 2023, reflects a mix shift in the Company's wholesale funding strategy. Approximately 69% of brokered time deposits at December 31, 2024 have a contractual maturity date in 2025.

Total uninsured deposits were estimated to be $73.0 billion at December 31, 2024 and $67.0 billion at December 31, 2023. Approximately $9.1 billion and $10.7 billion of those uninsured deposits were collateralized by the Company at December 31, 2024 and 2023, respectively. The Company maintains available liquidity sources, as presented in Table 38, which represent approximately 133% of uninsured deposits that are not collateralized by the Company at December 31, 2024.

The Company’s ability to obtain funding from these sources could be negatively impacted should the Company experience a substantial deterioration in its financial condition or its debt ratings or should the availability of funding become restricted due to a disruption in the financial markets. The Company attempts to quantify such risks by conducting scenario analyses that estimate the liquidity impact resulting from a debt ratings downgrade and other market events. Such impact is estimated by attempting to measure the effect on available unsecured lines of credit, available capacity from secured borrowing sources and securitizable assets.

Information about the credit ratings of M&T and M&T Bank at December 31, 2024 is presented in Table 33.

Table 33

DEBT RATINGS

M&T’s primary source of funds to pay for operating expenses, shareholder dividends and treasury stock repurchases has historically been the receipt of dividends from its bank subsidiaries, which are subject to various regulatory limitations. Dividends from any bank subsidiary to M&T are limited by the amount of earnings of the subsidiary in the current year and the two preceding years. For purposes of that test, at December 31, 2024, approximately $2.3 billion was available for payment of dividends to M&T from bank subsidiaries. M&T may also obtain funding through long-term borrowings and the repayment of advances to subsidiaries. Further information about the long-term outstanding borrowings of M&T is provided in note 8 of Notes to Financial Statements. As a BHC, M&T is obligated to serve as a managerial and financial source of strength to its bank subsidiaries as described in Part I, Item 1, "Business," and may provide advances to those subsidiaries. As its ability to access the capital markets may be affected by market disruptions, M&T maintains sufficient resources at its parent company to satisfy projected cash outflows for an extended period without reliance on dividends from subsidiaries or external financing. As of December 31, 2024, M&T's parent company liquidity, inclusive of the projected repayment of notes receivable from bank subsidiaries, covered projected cash outflows for 44 months, including dividends on common and preferred stock, debt service and scheduled debt maturities.

In addition to deposits and borrowings, other sources of liquidity include maturities and repayments of investment securities, loans and other earning assets, as well as cash generated from operations, such as fees collected for services. The Company also has the ability to securitize or sell certain financial assets, including various loan types, to provide other liquidity alternatives. U.S. Treasury and government-issued or guaranteed mortgage-backed securities comprised 93% of the Company's debt securities portfolio at December 31, 2024. The weighted-average durations of debt investment securities available for sale and held to maturity at December 31, 2024 were 2.6 years and 5.3 years, respectively.

Table 34 provides the contractual maturity schedule and taxable-equivalent yields of debt securities as of December 31, 2024.

Table 34

MATURITY AND TAXABLE-EQUIVALENT YIELD OF DEBT SECURITIES (a)

(a)Weighted-average yields represent the current yield, including amortization of premiums and accretion of discounts, and are based on amortized cost. Yields on tax-exempt securities are calculated on a taxable-equivalent basis using a composite income tax rate of approximately 25%.

(b)Investment securities available for sale are presented at estimated fair value.

(c)Maturities are based upon contractual payments due. Actual maturities are expected to be significantly shorter as a result of loan repayments in the underlying mortgage pools.

Table 35 provides the maturity schedule of loans and leases as of December 31, 2024.

Table 35

MATURITY DISTRIBUTION OF LOANS AND LEASES (a)

(a)The data reflects contractually required payments, but excludes nonaccrual loans.

The Company enters into contractual obligations in the normal course of business that require future cash payments. Such obligations include, among others, payments related to deposits, borrowings, leases and other contractual commitments. The contractual amounts and timing of those payments as of December 31, 2024 are summarized in Table 36. Off-balance sheet commitments to customers may impact liquidity, including commitments to extend credit, standby letters of credit, commercial letters of credit, financial guarantees and indemnification contracts, and commitments to sell real estate loans. Because many of these commitments or contracts expire without being funded in whole or in part, the contract amounts are not necessarily indicative of future cash flows. Further discussion of these commitments is provided in note 20 of Notes to Financial Statements. Table 36 summarizes the Company's other commitments as of December 31, 2024 and the timing of the expiration of such commitments.

Table 36

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

(a)Amounts exclude discretionary funding commitments to commercial customers of $12.7 billion that the Company has the unconditional right to cancel prior to funding.

Table 37 provides the maturity of time deposits over $250,000 as of December 31, 2024.

Table 37

MATURITY OF TIME DEPOSITS WITH BALANCES OVER $250,000

The Company's Executive ALCO Committee closely monitors the Company’s liquidity position on an ongoing basis for compliance with internal policies and regulatory expectations. As a Category IV institution, the Company adheres to enhanced liquidity standards which require the performance of internal liquidity stress testing. The stress testing is designed to ensure the Company has sufficient liquidity to withstand both institution-specific and market-wide stress scenarios. For each scenario, the Company applies liquidity stress which may include deposit run-off, increased draws on unfunded loan commitments, increased collateral need for margin calls, increased haircuts on investment security-based funding and reductions in unsecured and secured borrowing capacity. Stress scenarios are measured over various time frames ranging from overnight to twelve months. As required by regulation, the Company maintains a liquidity buffer comprised of cash and highly liquid unencumbered securities to cover a 30-day stress horizon. Liquidity stress events occurring over longer time horizons can be mitigated by the availability of secured funding sources at the FHLB of

New York and FRB of New York. Presented in Table 38 is a summary of the Company's available sources of liquidity at December 31, 2024 and December 31, 2023.

Table 38

AVAILABLE LIQUIDITY SOURCES

Management continuously evaluates the use and mix of its various available funding alternatives, including short-term borrowings, issuances of long-term debt, the placement of brokered deposits and the securitization of certain loan products. Management does not anticipate engaging in any activities, either currently or in the long term, for which adequate funding would not be available and would therefore result in a significant strain on liquidity at either M&T or its subsidiary banks. In accordance with liquidity regulations, the Company maintains a contingency funding plan to facilitate on-going liquidity management in times of liquidity stress. The plan outlines various funding options available during a liquidity stress event and establishes a clear escalation protocol to be followed within the Company's Risk Framework. The plan sets forth funding strategies and procedures that management can quickly leverage to assist in decision-making and specifies roles and responsibilities for departments impacted by a potential liquidity stress event.