Improved credit quality at M&T helps push earnings higher

• Key insight: M&T Chief Financial Officer Daryl Bible said the bank’s credit quality is the best it’s been in two decades.
• Why it matters: Reduced provision expenses combined with increased net interest income powered an 11.5% year-over-year jump in the fourth-quarter profits.
• Expert quote: “We’re not going to force anything. [An acquisition] will happen at some point down the road.”— CFO Daryl Bible on the bank’s M&A outlook 

M&T Bank reported fourth-quarter profits Friday that beat analysts’ estimates by a wide margin, as the Buffalo, New York-based bank benefited from improved credit quality.

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Net income of $759 million was up 11.5% from the same period a year earlier. On a per-share basis, the $213.5 billion-asset bank earned $4.67 for the three months ending Dec. 31. The consensus forecast from Zacks Investment Service had predicted earnings per share of $4.44.

“We are performing at a very high level,” Chief Financial Officer Daryl Bible said on a conference call with analysts.

For all of 2025, M&T’s profit totaled $2.85 billion, a 10.2% increase from 2024 and the biggest profit in its history.

M&T produced those results against a backdrop of significantly improved asset quality.

Nonaccrual loans declined steeply during the fourth quarter. They totaled $1.25 billion at Dec. 31, down 26% from a year earlier. Similarly, the level of criticized commercial-and-industrial and commercial real estate loans dropped to $7.3 billion from $9.9 billion a year earlier.

M&T did report an uptick in net charge-offs, however. They totaled $185 million for the quarter, compared with $160 million for the same three months in 2024.

Of the $185 million in fourth-quarter net charge-offs, about $100 million went to resolving three previously identified problem credits, according to Bible.

“When I look at our asset quality, it’s probably the best it’s been in the past couple decades,” Bible said on the conference call. “We are in really strong condition.”

Indeed, at 0.90%, M&T’s ratio of nonaccrual loans to total loans was at the lowest level since 2007, he added. The ratio did reach the same mark in the second quarter of 2025.

“Overall, a better-than-expected fourth quarter, thanks largely to lower-than-expected credit costs,” Scott Siefers, an analyst who covers M&T for Piper Sandler, wrote in a research note.

The company reported a $125 million provision for credit losses for the quarter ending Dec. 31, level with its third-quarter provision and down from the $140 million provision reported a year ago.

Steven Alexopoulos, an analyst who covers M&T for TD Cowen, wrote that the provision for credit losses fell $18 million below his expectation.

For the three months ending Dec. 31, M&T’s net interest income totaled $1.78 billion, up 3% from the same period in 2024. The spread income boost was powered by increases in loans, which rose 2% year over year to $138.7 billion, and deposits, which jumped 4% to $167 billion at year-end.

M&T reported quarterly fee income of $696 million, up 5.9% from 2024’s fourth quarter. The increase was driven in large part by a 32% year-over-year increase in mortgage banking revenue, which totaled $155 million for the three months ending Dec. 31, and trust income, which rose 5% to $184 million.

Fee income growth outpaced the increase in noninterest expenses, which ticked up 1% from the Dec. 31, 2024, level to $1.38 billion. As a result, M&T’s efficiency ratio came in at 55.1% at the end of the fourth quarter, down from 56.8% a year earlier.

M&T maintains robust capital levels, with a common equity tier 1 capital ratio of 10.84% on Dec. 31.

During the call with analysts, M&T executives advertised an openness to merger deals in the bank’s 12-state Northeast and Mid-Atlantic footprint, stretching from New England to Central Virginia.

But in the near term, continued growth will likely remain organic, Bible said on the call.

“We want scale and density in the market we serve,” he said. “We’re not aware of anybody who wants to sell in those markets. … We’re not going to force anything. [An acquisition] will happen at some point down the road.”

For now, M&T expects to utilize its capital to lend to customers and reward investors.

“First and foremost, pay a great, strong dividend, and we’re going to buy back a ton of stock,” Bible said.

Looking ahead to 2026, M&T expects to hold its operating expenses relatively flat, while achieving growth in loans and net interest income.

“Our company is, I think, doing well on all cylinders right now,” Bible said.