M&T Bank Corp.

The stable outlook on M&T Bank incorporates our view that asset quality will gradually improve over the next two years as the economy recovers, but we expect asset quality to remain worse than large regional bank peers' over the outlook horizon. We also expect that loan losses will not rise substantially given conservative lending policies and current property valuations. We could lower the ratings if loan performance continues to deteriorate from current levels or does not exhibit the gradual improvement that we eventually expect, or if the planned acquisition of People's encounters integration or operational challenges. We would view a substantial rise in net charge-offs to levels that are much worse than peers' unfavorably. Conversely, we could raise the ratings

...We expect that the global economic slowdown associated with the COVID-19 pandemic will continue to pose challenges for M&T Bank Corp.'s (M&T Bank) asset quality. M&T Bank has a large proportion of economically sensitive loans, including large investor-owned real estate and construction loan exposures--which are the highest among similarly rated peers. M&T Bank's nonaccrual loans have continued to rise in recent quarters, hurt by hospitality loan exposures, in contrast to the improvement experienced at many rated U.S. regional banks. In addition, total criticized loans remain elevated and higher than similarly rated peers, having increased in recent quarters. We view M&T Bank's solid market position in the mid-Atlantic region and high proportion of noninterest revenue favorably. M&T Bank's earnings generation and consistency are good, in our view, aided by its relatively high proportion of noninterest revenue. We expect the company's net interest margin (NIM) to remain depressed given Federal...

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