The Company sold Wilmington Trust SP Services Inc. in May 2025, generating a $10 million gain included in Other revenues from operations. Concurrently, an arrangement effective February 2025 led to the Company sub-servicing an additional $51.7 billion of residential mortgage loans for Bayview Financial, significantly increasing residential mortgage loan sub-servicing revenues.

Average commercial and industrial loans increased by $3.6 billion (6% YoY) and average consumer loans grew by $3.3 billion (15% YoY) for the first six months of 2025 compared to the same period in 2024. This growth was broad-based, with recreational finance and automobile loans contributing significantly to the consumer segment.

M&T repurchased 6,073,957 shares of its common stock at a cost of $1.1 billion in Q2 2025, following $662 million in repurchases in Q1 2025, signaling confidence in the company's valuation. Additionally, the company issued $2.25 billion in senior and subordinated notes in June and July 2025 to diversify wholesale funding sources and manage long-term debt requirements.

The Company's efficiency ratio improved notably to 55.2% in Q2 2025 from 60.5% in Q1 2025. This was primarily due to a $79 million sequential decrease in total other expense, with salaries and employee benefits expense falling by $74 million (8%) due to seasonal factors.

Management has actively reduced its concentration in investor-owned commercial real estate loans throughout 2024, with average commercial real estate loans decreasing by $6.3 billion (20% YoY) in 6M 2025. The provision for credit losses declined $95 million in 6M 2025 compared to 6M 2024, mainly due to improved levels of criticized loans, indicating effective credit quality management.

Despite overall nonpersonnel expense reductions, outside data processing and software costs increased by $30 million (12% YoY) for the first six months of 2025. This increase is attributed to costs associated with enhancements to the Company's technology infrastructure, cybersecurity, and financial recordkeeping and reporting systems, demonstrating a commitment to modernization.

Management's assessment for allowance for loan losses at June 30, 2025, highlighted ongoing concerns regarding inflationary pressures, rising unemployment, slower economic growth, and volatile global markets. Specifically, downward pressures on commercial real estate values and elevated interest rates impacting borrower refinancing ability remain key risks.

The Company is evaluating the impact of proposed rulemaking to modify regulatory capital requirements for large banking organizations (total assets exceeding $100 billion). Additionally, new federal tax legislation signed into law on July 4, 2025, includes broad tax reform provisions, though the Company does not expect a material impact on its effective tax rate.

Nonaccrual loans increased by $33 million from March 31, 2025, to June 30, 2025, primarily driven by a $125 million increase in commercial and industrial nonaccrual loans. This indicates a potential weakening in the credit quality of the commercial portfolio, despite overall nonaccrual loan reductions since December 2024.

The Company's branch network continues to be its principal source of core deposits, which averaged 79% of average earning assets in Q2 2025. These deposits generally carry lower interest rates than wholesale funds, providing a stable and cost-effective funding base, which is a significant competitive edge in the banking sector.

M&T Bank substantially increased its residential mortgage sub-servicing portfolio for others to $157.6 billion at June 30, 2025, up from $111.5 billion at December 31, 2024. This 41% growth, driven by a new arrangement with Bayview Financial, enhances the Company's position in the mortgage services market and contributes to noninterest income.

The net interest margin experienced a sequential narrowing of 4 basis points in Q2 2025 to 3.62% from 3.66% in Q1 2025. This indicates potential competitive pressure on asset yields or funding costs, despite the overall year-over-year widening of the margin.

The Company's efficiency ratio improved notably to 55.2% in Q2 2025 from 60.5% in Q1 2025. This was primarily due to a $79 million sequential decrease in total other expense, with salaries and employee benefits expense falling by $74 million (8%) due to seasonal factors.

Nonpersonnel expenses for the first six months of 2025 decreased by $45 million compared to the same period in 2024, largely driven by a $52 million (53%) reduction in FDIC assessments. This favorable change reflects the absence of the special assessment expense recognized in the first half of 2024 and improved loan credit quality.

Outside data processing and software costs increased by $30 million (12% YoY) for the first six months of 2025 compared to 2024, reaching $274 million. This rise is attributed to investments in enhancing the Company's technology infrastructure, cybersecurity, and financial recordkeeping systems, indicating a strategic focus on long-term operational capabilities.

M&T has initiated a multi-phase implementation of new financial recordkeeping and reporting systems, including general ledger and subledger platforms. This effort aims to enhance internal control over financial reporting and is a key digital transformation initiative.

Outside data processing and software costs rose by $30 million (12% YoY) to $274 million for the first six months of 2025. This increase is directly linked to enhancements in the Company's technology infrastructure and cybersecurity, indicating a commitment to modernizing and securing its digital operations.

In conjunction with the new financial systems implementation, the Company will continue to change certain processes and internal controls over financial reporting. While no material effects have been identified for the current quarter, these changes are reasonably likely to materially affect internal control over financial reporting in the future, signaling a significant ongoing transformation.

M&T repurchased 6,073,957 shares of common stock at an average cost of $175.93 per share, totaling $1.1 billion in Q2 2025. This follows a new $4.0 billion repurchase authorization in January 2025, demonstrating management's commitment to returning capital to shareholders and confidence in the Company's valuation.

In June and July 2025, M&T issued a total of $2.25 billion in senior and subordinated notes with maturities extending to 2035. These issuances aim to diversify wholesale funding sources and prepare for proposed regulations on long-term debt requirements, reflecting proactive capital structure management.

The Company deployed liquidity into fixed-rate investment securities, including $1.2 billion in agency mortgage-backed securities and $638 million in U.S. Treasury securities in Q2 2025. Additionally, M&T continues to invest in tax equity partnerships for affordable housing and renewable energy, with total assets of these partnerships at $10.7 billion at June 30, 2025.

M&T Bank maintains significant investments in partnerships focused on qualified affordable housing projects, with a carrying amount of $1,527 million at June 30, 2025. These investments contribute to the Company's community reinvestment initiatives and resulted in a $10 million reduction to income tax expense in Q2 2025.

The Company invests in partnerships that develop renewable energy facilities, leveraging federal income tax credits. This strategy led to a $6 million reduction in income tax expense from renewable energy credit investments for Q2 2025, aligning with sustainability efforts and financial benefits.

While the Company benefits from tax credits through its investments in affordable housing and renewable energy partnerships, these credits are subject to recapture if the partnerships fail to comply with government regulations. The maximum exposure to loss from these investments, including potential tax credit recapture, was $2.1 billion at June 30, 2025.

The Company's macroeconomic assumptions for June 30, 2025, indicate a projected Real GDP growth rate of 0.8% in Year 1 and 1.8% in Year 2, alongside an increasing national unemployment rate of 4.8% in Year 1 and 5.3% in Year 2. These forecasts suggest a challenging economic environment for the near term.

Management's downside economic scenario projects a significant commercial real estate price index decline of 14.5% in Year 1 and 7.6% in Year 2. This, coupled with the persistence of elevated interest rates, impacts commercial borrowers' ability to refinance maturing debt obligations, posing an ongoing risk to the loan portfolio.

The FOMC's 1.00% reduction in the federal funds target interest rate in late 2024, combined with competitive pressures, has led to a shift in deposits from noninterest-bearing to interest-bearing accounts. Average noninterest-bearing deposits declined by $2.9 billion (6% YoY) for the first six months of 2025 compared to 2024, impacting the contribution of interest-free funds to net interest margin.