In a development that could significantly impact Baltimore and its surrounding counties, M&T Bank is preparing to expand its lending activities in 2025 after spending 2024 strategically reducing its high-risk commercial real estate portfolio. This shift in strategy could bring new opportunities for commercial development and refinancing across Maryland’s largest metropolitan area.
A Year of Strategic Restructuring
Throughout 2024, M&T Bank, which maintains a substantial presence in Baltimore and serves as a crucial lender for local commercial real estate projects, took decisive steps to strengthen its portfolio. The bank successfully reduced its concentration of at-risk commercial real estate loans from 183% to 136% of total loans, demonstrating a commitment to building a more resilient lending foundation.
This strategic reduction particularly affects the Baltimore metropolitan area, where M&T Bank serves as one of the primary commercial real estate lenders. The bank’s careful approach to risk management has helped stabilize its position in the region, potentially creating a more sustainable foundation for future lending activities in Baltimore City and surrounding counties like Howard, Anne Arundel, and Baltimore County.
Office Space Challenges in the Baltimore Market
The office sector has presented particular challenges for M&T Bank’s portfolio, reflecting broader concerns in the Baltimore commercial real estate market. At the close of 2022, approximately 20% of the bank’s $5.1 billion office loan portfolio was classified as at-risk. By the third quarter of 2024, while the total number of at-risk loans decreased, the proportion rose to 29% as remaining office loans faced increased pressure.
This trend mirrors the challenges faced by Baltimore’s central business district and suburban office parks, where changing work patterns post-pandemic have significantly impacted occupancy rates and property valuations. The bank’s management of these risks has direct implications for the Baltimore region’s office market recovery and future development prospects.
Looking Ahead: Opportunities for Baltimore Region Growth
As M&T Bank positions itself for modest growth in commercial real estate lending during the second half of 2025, this could herald new opportunities for Baltimore’s commercial real estate sector. The bank’s Chief Financial Officer, Daryl Bible, expressed optimism about the portfolio’s current position, noting that the institution has successfully reduced exposure to higher-risk loans while maintaining capacity for new originations.
This balanced approach could prove particularly beneficial for Baltimore’s diverse commercial real estate market, from the Harbor East development corridor to emerging opportunities in surrounding counties. The bank’s strategy suggests a careful return to growth that could support both new development and refinancing needs across the region.
Economic Factors Shaping Local Lending
Several economic factors will influence M&T Bank’s lending activities in the Baltimore region through 2025. The yield curve’s behavior, which reflected market expectations about Federal Reserve policy through late 2024, will play a crucial role in determining borrowing conditions. Additionally, ongoing inflationary pressures could impact both lending terms and development costs throughout the Baltimore metropolitan area.
Regional Impact and Future Outlook
For Baltimore and its surrounding counties, M&T Bank’s strategic shift represents a potentially significant development in the commercial real estate landscape. While the bank plans to grow its commercial real estate portfolio modestly in the latter half of 2025, this growth will likely be tempered by broader economic conditions and continued attention to risk management. The bank’s more optimistic but measured approach to lending could help support Baltimore’s ongoing development initiatives while maintaining stability in the regional banking sector. This balanced strategy suggests a thoughtful approach to supporting commercial real estate growth across the Baltimore metropolitan area, even as the bank continues to monitor and manage risk exposure in its portfolio.
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