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.

Taxable-equivalent net interest income was $1.71 billion in the first quarter of 2025, compared with $1.74 billion and $1.69 billion, respectively, in the fourth and first quarters of 2024. The decrease in taxable-equivalent net interest income from the fourth quarter of 2024 largely reflects the impact from two less calendar days in the recent quarter. The net interest margin, or taxable-equivalent net interest income expressed as an annualized percentage of average earning assets, expanded 8 basis points from the fourth quarter of 2024 to 3.66% in the recent quarter. That expansion reflects a decrease in the cost of the Company's sources of funding, including interest-bearing deposits and short-term borrowings, which outpaced a decline in the yields received on certain earning assets, including average interest-bearing deposits at banks and average loans and leases. The increase in taxable-equivalent net interest income from the year-earlier first quarter reflects a 14 basis-point widening of the net interest margin driven by a decrease of 56 basis points in the cost of interest-bearing liabilities, partially offset by a 22 basis-point decline in the yield received on earning assets. Contributing to the decline in yields received on earning assets and rates paid on interest-bearing liabilities in the recent quarter as compared with the earlier periods was a reduction by the FOMC of its federal funds target interest rate by a total of 1.00% in the last four months of 2024. The Company continues to adjust its funding sources in consideration of the competitive landscape for customer deposits and maintenance of its liquidity profile. 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.

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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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Lending activities

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

AVERAGE LOANS AND LEASES

Average loans and leases totaled $134.8 billion in the first quarter of 2025, down $879 million or 1% from the fourth quarter of 2024.

•Average commercial and industrial loans and leases were $61.1 billion in the recent quarter, up $352 million from the fourth quarter of 2024, reflecting continued growth in loans to customers in the financial and insurance industry. 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.

•Commercial real estate loans averaged $26.3 billion in the first quarter of 2025, down $1.6 billion from the fourth quarter of 2024, reflecting decreases of $1.3 billion and $294 million of average permanent and construction commercial real estate loans, respectively. Higher payoffs and increased market competition resulted in lower average commercial real estate loan balances in the recent quarter.

•Average consumer loans in the first quarter of 2025 increased $318 million from the fourth quarter of 2024 to $24.4 billion reflecting higher average balances of recreational finance loans and automobile loans of $181 million and $103 million, respectively.

Average loans and leases increased $1.0 billion or 1% from $133.8 billion in the similar quarter of 2024.

•Average commercial and industrial loans and leases increased $4.2 billion from the year-earlier first quarter, reflecting growth that spanned most industry types.

•Average commercial real estate loans decreased $6.4 billion in the recent quarter as compared with the first quarter of 2024, reflecting decreases of $4.8 billion and $1.6 billion of average permanent and construction commercial real estate loans, respectively.

•Average consumer loans in the first quarter of 2025 increased $3.2 billion from the first quarter of 2024. The higher average balances of consumer loans reflect recreational finance and automobile loan growth of $2.4 billion and $719 million, respectively.

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Investing activities

The Company's investment securities portfolio is largely comprised of government-issued or guaranteed commercial and residential 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.

The investment securities portfolio averaged $34.5 billion in the first quarter of 2025, up $801 million and $5.9 billion from the fourth and first quarters of 2024, respectively. Those increases each reflect the deployment of liquidity into primarily fixed rate investment securities, including purchases of fixed rate agency mortgage-backed securities and U.S. Treasury securities of $1.9 billion and $667 million, respectively, in the recent quarter and $9.3 billion and $5.1 billion, respectively, in 2024 into the Company's available-for-sale investment securities portfolio. As a result of the elevated interest rate environment throughout much of 2024 and the maturities of lower-yielding securities, the weighted-average current yield for total investment securities available for sale increased to 4.42% at March 31, 2025 and 4.30% at December 31, 2024, as compared with 3.45% at March 31, 2024. The weighted-average duration of the available-for-sale investment securities portfolio was 2.5 years and 2.6 years at March 31, 2025 and December 31, 2024, respectively, compared with 2.0 years at March 31, 2024. There were no significant sales of investment securities during the three months ended March 31, 2025. In 2024, the Company sold $181 million of non-agency investment securities from its available-for-sale portfolio and its remaining equity investments in Fannie Mae and Freddie Mac preferred securities. 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. In light of such reviews, there were no credit-related losses on debt investment securities recognized in each of the three months ended March 31, 2025, December 31, 2024 and March 31, 2024. A

• 46 - 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 2 and 12 of Notes to Financial Statements.

Other earning assets include interest-bearing deposits at banks and trading account assets. Those other earning assets in the aggregate averaged $19.8 billion in the recent quarter, compared with $23.7 billion and $30.8 billion during the three months ended December 31, 2024 and March 31, 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.

Funding activities - deposits

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% of average earning assets for each of the quarters ended March 31, 2025 and December 31, 2024, compared with 76% for the quarter ended March 31, 2024. 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.

AVERAGE DEPOSITS

Total deposits averaged $161.2 billion in the recent quarter, compared with $164.6 billion in the fourth quarter of 2024.

•Average core deposits decreased $2.6 billion from the fourth quarter of 2024 reflecting a seasonal decline in commercial customer deposits and the maturity of non-brokered core time deposits.

•The decrease in average brokered deposits in the recent quarter reflects the Company's wholesale funding strategy. Average brokered time deposits decreased 55% to $777 million in the recent quarter from $1.7 billion in the fourth quarter of 2024 as those time deposits matured. Average brokered savings and interest-checking accounts increased 3% to $10.0 billion in the recent quarter from $9.7 billion in the fourth quarter of 2024.

Total average deposits decreased $2.8 billion from $164.1 billion in the year-earlier quarter.

•Average core deposits were largely unchanged compared with the year-earlier quarter and reflected a shift in customer funds from noninterest-bearing accounts to interest-bearing products. Lower average balances of core time deposits in the recent quarter reflected comparatively lower rates paid on those products.

•The $2.5 billion decrease in average brokered deposits as compared with the first quarter of 2024 reflects the maturity of brokered time deposits in the recent year, partially offset by higher average balances of brokered savings and interest-checking deposits. The Company's brokered savings and interest-bearing transaction accounts and brokered time deposits averaged $8.0 billion and $5.2 billion, respectively, in the year-earlier quarter.

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The accompanying table summarizes the components of average total deposits by reportable segment for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024.

AVERAGE DEPOSITS BY REPORTABLE SEGMENT

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 lower levels of average short-term borrowings in the first quarter of 2025 as compared with the first quarter of 2024 reflect the Company's management of liquidity, including reductions in short-term wholesale funding sources. Average short-term borrowings in the first quarter of 2025 were modestly higher as compared with the fourth quarter of 2024.

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Long-term borrowings averaged $11.3 billion, $11.7 billion and $9.8 billion during the three-month periods ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively. The increased usage of borrowing facilities in the first quarter of 2025 and fourth quarter of 2024 as compared with the first quarter of 2024 reflects 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 lower levels of average long-term borrowings in the first quarter of 2025 as compared with the final quarter of 2024 reflect maturities of long-term debt that outpaced issuances in the recent quarter. The following table provides a summary of the Company's issuances, maturities and redemptions of long-term borrowings in the recent quarter.

LONG-TERM BORROWING ISSUANCES, MATURITIES AND REDEMPTIONS

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

Net interest margin

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. Net interest spread, or the difference between the yield on earning assets and the rate paid on interest-bearing liabilities, was 2.82% in the recent quarter, up from 2.66% and 2.48% in the fourth and first quarters of 2024, respectively. Those increases in the net interest spread reflect a decrease in the rates paid on the Company's interest-bearing liabilities, partially offset by a decline in the yield on earning assets. The yield on earning assets during the first quarter of 2025 was 5.52%, down 8 and 22 basis points from the fourth and first quarters of 2024, respectively, reflecting lower yields on interest-bearing deposits at the FRB of New York and loans and leases. That decrease was partially offset by a rise in yields received on investment securities which reflected purchases of investment securities since the beginning of 2024, inclusive of the recent quarter, with a higher yield than those that matured during those same periods. The rate paid on interest-bearing liabilities was 2.70%, down 24 and 56 basis points from the fourth and first quarters of 2024, respectively, reflecting a reduction in the cost of interest-bearing deposits and funding from short-term borrowings during each of those comparative periods. That reduction in the cost of interest-bearing liabilities reflects a lower FOMC federal funds target interest rate which was reduced by a total of 1.00% in the last four months of 2024.

Net interest-free funds consist largely of noninterest-bearing demand deposits and other liabilities and shareholders’ equity, partially offset by bank owned life insurance and non-earning assets, including goodwill and core deposit and other intangible assets. Net interest-free funds averaged $59.2 billion in the first quarter of 2025, down from $60.8 billion and $61.7 billion in the fourth and first quarters of 2024, respectively. Noninterest-bearing deposits averaged $45.4 billion in the first quarter of 2025, compared with $46.6 billion in the fourth quarter of 2024, and $48.6 billion in 2024's initial quarter. The decline in average noninterest-bearing deposits in the recent quarter from the fourth quarter of 2024 reflects a seasonal decline in commercial customer deposits whereas the decline from the first quarter of 2024 reflects a shift in deposits to interest-bearing accounts in an elevated interest rate environment. The contribution of net interest-free funds to net interest margin was .84% in the first quarter of 2025, compared with .92% and 1.04% in the fourth and first quarters of 2024, respectively. The decreased contribution of net interest-free funds to the net interest margin in the first quarter of 2025 as compared with the fourth and first quarters of 2024 reflects lower rates paid on interest-bearing liabilities used to value net interest-free funds.

Reflecting the changes to the net interest spread and the contribution of net interest-free funds as described herein, the Company’s net interest margin was 3.66% in the first quarter of 2025, compared with 3.58% in the fourth quarter

• 49 - of 2024 and 3.52% in the year-earlier period. 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.

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 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 March 31, 2025 and December 31, 2024.

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 10 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 paid or received on those swap agreements are presented in the table that follows.

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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 paid or received on interest rate swap agreements in effect during the period.