M&T Bank (NYSE:MTB) expects commercial real estate lending to grow in 2027 and sees opportunities to improve efficiency through automation, Chief Financial Officer Daryl Bible said during an investor event hosted by Fidelity Investments.
Bible said the bank is entering 2027 optimistic, with two priorities: bringing its product and service teams together to expand customer relationships, and redesigning back-office processes using automation and artificial intelligence.
The CFO said M&T’s headcount has fallen by 1,000 full-time equivalent positions as the company has become more efficient. The bank is also investing in areas including corporate trust and capital markets, he said.
Rates, deposits and returns
M&T has approximately $16 billion of fixed-rate assets due to reprice over the next 12 months, with an expected benefit of 75 to 100 basis points based on the yield curve at the time of the discussion, Bible said. A steeper curve would improve net interest income, while a flatter curve would hurt it to some extent, he added.
Bible said the bank’s balance sheet is relatively neutral to slightly liability-sensitive at the short end of the rate curve, with deposit pricing a key variable. He also said residential and commercial mortgage origination could generate more fee income if the 10-year Treasury yield moves closer to 4%.
The bank is targeting a 17% return on tangible common equity over the long term, Bible said. M&T is willing to accept a lower return on some customer relationships and a modest sacrifice in net interest margin to support lending demand and grow net interest income, he said.
On deposits, Bible said M&T expects its deposit beta—a measure of how much deposit rates change relative to market rates—to be closer to 57%, compared with 54% during the previous rising-rate cycle. He attributed the expected increase to a shift toward more rate-sensitive funding.
M&T prefers to fund its balance sheet with customer deposits, but could use more wholesale funding or securitizations if deposit pricing became excessively high, Bible said. He added that the bank has funded loan growth while paying down some wholesale borrowings.
Loan growth and credit
Bible said loan growth had been broad-based in the second and third quarters, and that commercial real estate loans had grown for two consecutive quarters after several years of contraction. He expects the portfolio to grow in 2027, supported in part by construction lending already in the pipeline.
Higher rates have made some commercial customers more cautious, he said. With the 10-year Treasury yield just under 5% at the time of the discussion, permanent financing activity was limited; activity generally increases as the yield approaches 4%, he said.
On credit quality, Bible said a slight increase in non-accrual loans came after the bank reached a roughly 20-year low and was driven primarily by one lender-finance credit. Five leveraged-lending credits also moved into the criticized category, though he said the bank did not expect substantial long-term losses from them.
Year-to-date charge-offs were below expectations, Bible said, adding that he did not anticipate major changes in 2027. M&T is monitoring leveraged lending, small businesses, franchises and trucking among other areas sensitive to economic conditions and higher rates.
Expansion and capital
M&T remains open to acquisitions but does not feel a sense of urgency to complete a deal, Bible said. Its focus is on building scale and market share within the 13 states where it operates, although its footprint could expand over time.
Bible said the bank ideally would operate in good times with a tangible common equity ratio of about 7.5%, including accumulated other comprehensive income. That level would allow M&T to support customers while targeting its 17% return, he said.
About M&T Bank (NYSE:MTB)
M&T Bank Corporation is a regional financial holding company headquartered in Buffalo, New York. Its principal banking subsidiary, M&T Bank, was founded in 1856 and provides financial products and services to individuals, businesses and institutions.
The company’s offerings include consumer and commercial deposit accounts, residential and commercial real estate lending, business loans, credit cards, treasury management and other banking services. Through its wealth management and institutional businesses, including Wilmington Trust, M&T also provides investment management, fiduciary, trust, estate planning and related corporate services.
M&T Bank serves customers through branch locations and digital banking channels in several states, primarily across the Mid-Atlantic and Northeast, including New York, Pennsylvania, Maryland, New Jersey, Delaware, Virginia, West Virginia and the District of Columbia.
