MTB

1. Top 5 Material Risks

• Market Interest Rate Sensitivity: M&T Bank’s financial performance is significantly impacted by interest rate movements and Federal Reserve policies. Because a high percentage of assets and liabilities are interest-bearing, changes in the yield curve or interest rate spreads directly affect net interest income and the value of financial instruments.
• Credit Quality and Loan Portfolio Concentration: Credit losses are inherent in lending, and M&T Bank faces specific risks from its concentration in commercial real estate (including office, retail, and hospitality properties) and commercial and industrial loans in the Northeast and Mid-Atlantic regions. Deterioration in these areas can lead to higher nonperforming assets and net charge-offs.
• Regulatory Capital and Liquidity Requirements: As a banking organization with $100 billion or more in assets, M&T Bank is subject to stringent capital and liquidity standards. Failure to meet these requirements—or a determination by the Federal Reserve that M&T Bank fails to meet supervisory expectations—can restrict growth, limit capital distributions, or necessitate dilutive capital raises.
• Operational and Cybersecurity Risk: M&T Bank relies on complex information systems and third-party infrastructure. Cyber attacks, ransomware, or system failures—whether at M&T Bank or its vendors—can result in financial loss, reputational damage, and significant remediation costs.
• Strategic and Competitive Pressures: The financial services industry is highly competitive, with pressure from traditional banks, private credit funds, and financial technology companies. Failure to effectively implement new technology or compete on price and service can adversely affect revenue and profitability.

2. Company-Specific Risks

• Regional Footprint Vulnerability: M&T Bank’s core banking business is concentrated in the Northeast and Mid-Atlantic regions, making it particularly susceptible to adverse economic conditions or localized events within that specific geographic footprint.
• Dividend Dependency: M&T Bank is a separate legal entity that relies on dividends from its subsidiaries as its principal source of funds to pay dividends on its own common and preferred stock and to service its debt.
• Acquisition Integration: M&T Bank’s growth strategy involves acquisitions, which carry risks including the inability to achieve expected operating efficiencies, exposure to unknown contingent liabilities, and potential dilution of tangible book value.
• Model Risk: M&T Bank relies on quantitative models for business planning, pricing, and risk measurement. If these models are poorly designed, misused, or rely on inaccurate data, they may provide inadequate information for critical decision-making regarding capital adequacy and liquidity.

3. Regulatory/Legal Risks

• Supervisory Stress Tests: Under the Tailoring Rules for Category IV institutions, M&T Bank is subject to biennial supervisory stress tests. The results determine the Stress Capital Buffer (SCB), which was 2.7% at December 31, 2025. A higher SCB resulting from future tests could restrict M&T Bank’s ability to return capital to shareholders.
• Orderly Liquidation Fund (OLF): If a systemically important financial company were to undergo an orderly liquidation, M&T Bank could face risk-based assessments to fund the OLF.
• Interchange Fee Litigation: Pending litigation challenging Federal Reserve regulations on interchange fees could, if successful, significantly and adversely affect the fees M&T Bank can charge on debit card transactions.
• Privacy Compliance: M&T Bank is subject to evolving privacy laws, such as the California Consumer Privacy Act and the General Data Protection Regulation. Failure to comply with these regulations can lead to monetary penalties and litigation.

4. Financial Impact Map

Market Interest Rate Sensitivity → Net Interest Income → Changes in interest rates or spreads affect the difference between interest earned on assets and interest paid on liabilities. Credit Quality Deterioration → Provision for Credit Losses → Increases in delinquencies, bankruptcies, or defaults result in higher levels of nonperforming assets and net charge-offs. Regulatory Capital Requirements → Common Stock Dividends / Share Repurchases → Failure to maintain capital ratios exceeding the SCB (2.7% at Dec 31, 2025) limits M&T Bank's ability to return capital to shareholders. Cybersecurity/Operational Failure → Noninterest Expense → Significant expenditures are required to modify or enhance layers of defense and remediate information security vulnerabilities. Competitive Pricing Pressures → Net Interest Margin → Competition for deposits may force M&T Bank to hold rates higher or rely on more expensive funding sources, reducing the margin.