M&T Q3 2026 Earnings: Loan Growth Was Offset by Higher Expenses

M&T Bank Corporation (NYSE: MTB) reported Q3 2026 net interest income of $1.793 billion, up 2% from $1.761 billion a year earlier, while diluted EPS rose 5% to $5.04 from $4.82. Net income nevertheless declined 2% to $775 million as higher operating expenses, credit provisions and weaker noninterest income offset loan growth and lower deposit funding costs. A 7% reduction in the average diluted share count helped EPS move in the opposite direction from net income.

Core Earnings Data

Net interest income benefited from growth in loans and investment securities and lower rates paid on interest-bearing deposits. Those gains were partly offset by lower loan yields, leaving taxable-equivalent net interest margin at 3.65%, compared with 3.69% a year earlier and 3.70% in the preceding quarter.

The rest of the income statement was less favorable. Noninterest income decreased 1%, noninterest expense increased 2%, and the provision for credit losses rose 8%, resulting in lower net income despite higher net interest income.

Loan, Deposit, and Fee Trends

Average loans increased 5% year over year to $143.296 billion, with growth across every major portfolio. Average commercial and industrial loans rose 7% to $65.887 billion, while commercial real estate, residential real estate and consumer loans increased 4%, 4% and 5%, respectively.

Sequentially, average loans grew $2.6 billion. Commercial real estate accounted for $1.6 billion of that increase, followed by consumer loans at $634 million and residential real estate loans at $367 million. Average deposits rose approximately 3% year over year to $166.777 billion, supporting asset growth, although a greater reliance on interest-bearing deposits contributed to the quarter-over-quarter decline in net interest margin.

Fee businesses produced mixed results. Trust and investment services income rose 6% year over year to $230 million, while mortgage banking revenue increased 3% to $152 million as residential mortgage sub-servicing income grew. M&T began sub-servicing an additional $62.9 billion of residential mortgages in June 2026.

Capital markets and advisory revenue declined 8% to $32 million. Other operating revenue fell 25% to $85 million, primarily because Q3 2025 included a $28 million earnout distribution related to the 2023 sale of the Collective Investment Trust business and a $12 million gain on equipment lease sales. These comparisons more than offset an $11 million year-over-year increase in income from M&T’s investment in Bayview Lending Group.

Profitability, Credit Quality, and Capital

Noninterest expense increased to $1.393 billion, driven mainly by technology and professional-service spending. Outside data processing and software costs rose 25% to $173 million, reflecting software maintenance and technology infrastructure enhancements. Professional and other services expense increased 22% to $97 million due to technology projects, enterprise initiatives and higher legal costs.

The efficiency ratio increased to 54.4% from 53.6% a year earlier and 52.8% in Q2 2026, indicating that expenses consumed a larger share of revenue. Annualized return on average assets declined to 1.40% from 1.49%, while return on average common equity was nearly unchanged at 11.44%.

Credit indicators were mixed but remained better than a year earlier in several areas. Nonaccrual loans fell 14% year over year to $1.298 billion, and the annualized net charge-off ratio improved to 0.35% from 0.42%. On a sequential basis, however, nonaccrual loans rose 7% and net charge-offs increased to $127 million from $80 million. Loans at least 90 days past due but still accruing increased 32% year over year to $570 million, predominantly reflecting government-guaranteed residential real estate loans.

The allowance for loan losses was $2.179 billion, or 1.51% of loans, down from 1.59% a year earlier. M&T attributed the lower reserve ratio to reduced levels of criticized loans.

The estimated CET1 capital ratio was 10.16%, compared with 10.19% in Q2 2026 and 10.99% a year earlier. M&T said its capital ratios remained above regulatory minimums, while its estimated liquidity coverage ratio was 107%. Accumulated other comprehensive income declined by $588 million during the quarter as interest rates rose, and the tangible common equity-to-tangible assets ratio fell 22 basis points sequentially.

A Smaller Share Count Lifted EPS Despite Lower Profit

The quarter’s clearest divergence was between net income and per-share earnings. Net income available to common shareholders declined 3% to $732 million, but diluted EPS increased 5% because average diluted shares outstanding fell 7% to 145.174 million.

M&T repurchased 1.3 million common shares for $323 million during Q3, following $465 million of repurchases in the preceding quarter. The lower share count increased the earnings allocated to each remaining share, but the repurchases, loan growth and unrealized investment-security losses also contributed to pressure on capital measures.

Management Commentary

Chief Financial Officer Daryl N. Bible emphasized loan and deposit growth, stable credit conditions and M&T’s capital position. Management also pointed to the breadth of fee-generating businesses, although the reported results showed that gains in mortgage banking and trust services were offset by lower capital-markets revenue and difficult comparisons in other operating revenue.

Recent Insider Transactions

Over the reported six-month period, insiders purchased 49,194 shares across 16 transactions and sold 54,542 shares across 11 transactions, resulting in net sales of 5,348 shares, or 1.10% of reported insider holdings. These transactions are presented as reported and do not by themselves establish insiders’ views about M&T’s outlook.

The source did not specify a currency for the reported transaction values.

Risks Investors Need to Monitor

• Net interest margin pressure: Margin declined both year over year and sequentially as lower loan yields and growth funded by interest-bearing deposits limited the benefit from higher earning assets.
• Rising technology costs: Data processing, software and professional-service expenses grew faster than core revenue categories, pushing the efficiency ratio higher.
• Mixed sequential credit trends: Nonaccrual loans and net charge-offs increased from Q2 even though both measures remained better than a year earlier. Rapid sequential growth in commercial real estate loans also warrants continued monitoring.
• Capital sensitivity: Loan growth, share repurchases and investment-security valuation losses contributed to lower CET1 and tangible common equity ratios, reducing the capital cushion compared with the prior year.

Summary

M&T’s Q3 2026 results combined broad loan growth and higher net interest income with weaker fee revenue, rising technology-related expenses and a larger credit provision. Credit quality remained improved from a year earlier but softened sequentially, while capital ratios declined amid asset growth, repurchases and securities valuation losses. The main issues to watch are whether loan growth can translate into wider margins, whether technology spending moderates, and whether the recent sequential increase in credit costs continues.