MTB Q3 Deep Dive: Loan Book Shifts, CRE Outlook, and Margin Pressures Shape Sentiment

Regional banking company M&T Bank (NYSE:MTB) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 7.8% year on year to $2.51 billion. Its non-GAAP profit of $4.81 per share was 9.6% above analysts’ consensus estimates.

Is now the time to buy MTB? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

M&T Bank’s third quarter results were met with a negative market reaction despite exceeding Wall Street’s revenue and non-GAAP profit expectations. Management highlighted rising net interest margin, robust fee income, and improved asset quality, but also noted higher expenses and the continued contraction in commercial real estate lending. CFO Daryl Bible described the quarter as showing “continued momentum,” but acknowledged that competitive loan pricing and select one-time credit losses affected overall profitability. While non-accrual loans and criticized balances declined, the company saw increased net charge-offs due to two large commercial credits, and expense growth reflected both severance costs and elevated project-related spending.

Looking to the next quarter and beyond, management’s guidance is shaped by expectations for continued loan growth in commercial, residential mortgage, and consumer portfolios, paired with a stabilization of commercial real estate balances. Daryl Bible emphasized caution around potential rate cuts, a weakening labor market, and regulatory shifts as key sources of uncertainty. He stated, “We remain attuned to the risk of a slowdown in coming quarters due to the weakening labor market.” Management expects margin resilience from fixed rate asset repricing and sees opportunities to reduce credit costs further, but also flagged ongoing professional services costs and heightened competition for deposits and loans as areas to watch.

Key Insights from Management’s Remarks

Management attributed third quarter performance to loan book shifts, margin expansion, and ongoing expense pressures while noting the gradual improvement in credit quality and increased competition.

• CRE lending trends: Commercial real estate (CRE) balances continued to moderate, though management is seeing a rebound in new production, especially in multifamily and industrial segments. Approvals for CRE loans have doubled compared to prior quarters, but office exposure remains under pressure as M&T continues to reduce risk in that area.
• Net interest margin expansion: The net interest margin increased to 3.68%, benefiting from fixed rate asset repricing and improved spread management. Management noted this was offset by lower contribution from net free funds and a competitive environment in both loans and deposits.
• Fee income gains: Non-interest (fee) income rose across mortgage banking, trust, and commercial services, aided by a notable earnout from the CIT sale and higher customer swap activity. The wealth management business also contributed to stable trust income performance.
• Expense growth factors: Non-interest expenses increased, driven by higher salaries, one-time severance costs, and professional services spending tied to project completions and technology upgrades. Management signaled further spending on digital platforms and data center migration in coming quarters.
• Credit quality improvement: Asset quality improved, with criticized loan balances and non-accruals declining. However, net charge-offs rose due to two large commercial exposures, and management remains cautious about pockets of stress, especially in small business and leasing portfolios.

Drivers of Future Performance

M&T Bank’s outlook is influenced by expectations for moderate loan and deposit growth, margin stability, and continued investment in technology and risk management.

• CRE portfolio bottoming: Management expects commercial real estate balances to stabilize and begin growing in early next year, particularly as payoffs decline and new production in multifamily and industrial sectors accelerates. However, the timing depends on the trajectory of interest rates and broader economic trends.
• Margin and expense dynamics: The company anticipates net interest margin to remain resilient, supported by ongoing fixed rate repricing and active deposit cost management. Still, expense pressures from professional services and technology investments will persist, with a focus on maintaining positive operating leverage as revenue growth outpaces expenses.
• Regulatory and competitive headwinds: Anticipated regulatory changes, such as Basel III implementation, are expected to be less onerous than earlier proposals but still require careful capital planning. Management also highlighted growing competition from larger banks and evolving regulatory scrutiny, particularly around risk-weighted assets and non-depository financial institution (NDFI) exposures, as ongoing challenges.

Catalysts in Upcoming Quarters

In coming quarters, our analysts will monitor (1) whether commercial real estate balances stabilize as predicted and new loan production sustains momentum, (2) the effectiveness of expense containment as investments in technology and professional services continue, and (3) the impact of regulatory changes and competitive pressures on both margin and capital planning. Progress on digital transformation and asset quality trends will also be important signposts.

M&T Bank currently trades at $176.62, down from $185.15 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

Stocks That Trumped Tariffs

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.