M&T Bank ratings confirmed by Morningstar DBRS, stable trend maintained

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M&T Bank ratings confirmed

Highlights

M&T Bank's ratings confirmed by Morningstar DBRS with a stable trend, citing strong earnings, regional franchise, and $215 billion in assets as of March 31, 2026.
Commercial real estate loans reduced to 17% of total loans with criticized commercial loans at $6.6 billion (7.4%), while net charge-offs declined to 0.31% in Q1 2026.
Funding and liquidity remain robust with available liquidity covering 120% of uninsured deposits and CET1 ratio at 10.33% as of March 31, 2026.

Rating action and credit view

As reported by Morningstar DBRS, the rating agency says the confirmation reflects M&T's strong regional banking franchise, consistent underwriting standards and long record of relatively low earnings volatility versus many peers. It also says the company benefits from solid organic capital generation through earnings, while its main bank subsidiary keeps an Intrinsic Assessment of A (high).

Morningstar DBRS says the stable trend is supported by M&T's operating profile across the Northeast and Mid-Atlantic regions of the U.S., where the group had $215 billion in total assets as of March 31, 2026. The agency also notes that the parent company's Long-Term Issuer Rating stands one notch below the bank's intrinsic assessment, with support assessments of SA1 for the bank and SA3 for the holding company.

The agency says asset quality remains a key constraint on the rating, even as conditions improve. Nonperforming and criticized loans have declined, but they still sit at the high end of peer levels, and Morningstar DBRS warns that higher-for-longer interest rates and inflation may continue to pressure some credits, especially within commercial real estate.

Profitability, loan mix and downgrade risks

M&T's earnings profile remains a major support for the ratings, according to the agency's assessment. Fee income accounts for 28% of total revenue in the first quarter of 2026, while net interest margin reaches 3.71%, helped by a loan book weighted toward commercial and industrial lending and commercial real estate, along with a comparatively high level of low-cost core deposits.

The report says the bank has been reducing its commercial real estate exposure over the last few years through portfolio actions and a strategic shift toward commercial and industrial lending. As of March 31, 2026, commercial real estate loans represent 17% of total loans, while criticized commercial loans fall to $6.6 billion, or 7.4% of commercial loans, showing improvement from the prior year. Net charge-offs decline to 0.31% in the first quarter of 2026, below the roughly 40 basis point range previously anticipated.

Funding and liquidity remain strong, with available liquidity sources covering about 120% of uninsured deposits as of March 31, 2026. M&T reports a CET1 ratio of 10.33%, and Morningstar DBRS says an upgrade would require further reduction in commercial real estate concentration and criticized loans while preserving strong earnings and balance sheet fundamentals; a material weakening in asset quality, prolonged negative operating leverage or a significant drop in capital would pressure the ratings.

In our earlier coverage of Morningstar DBRS’s confirmation of the CSAIL 2017-CX10 Commercial Mortgage Trust ratings, we outlined how strong operating results at the Standard High Line hotel in Manhattan supported Stable trends across the transaction. We also noted that DBRS applied a stressed valuation reflecting cash-flow volatility and the approaching 2027 loan maturity, which pushed implied leverage higher even as performance metrics such as occupancy and debt service coverage remained solid.

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