Item 8. Financial Statements and Supplementary Data.

| --- | --- |

Financial Statements and Supplementary Data consist of the financial statements as indexed and presented below and Table 24 “Quarterly Trends” presented in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Index to Financial Statements and Financial Statement Schedules
Report on Internal Control Over Financial Reporting	116
Report of Independent Registered Public Accounting Firm	117
Consolidated Balance Sheet — December 31, 2020 and 2019	120
Consolidated Statement of Income — Years ended December 31, 2020, 2019 and 2018	121
Consolidated Statement of Comprehensive Income — Years ended December 31, 2020, 2019 and 2018	122
Consolidated Statement of Cash Flows — Years ended December 31, 2020, 2019 and 2018	123
Consolidated Statement of Changes in Shareholders’ Equity — Years ended December 31, 2020, 2019 and 2018	124
Notes to Financial Statements	125

Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting at M&T Bank Corporation and subsidiaries (“the Company”). Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 based on criteria described in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2020.

The consolidated financial statements of the Company have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, that was engaged to express an opinion as to the fairness of presentation of such financial statements. PricewaterhouseCoopers LLP was also engaged to assess the effectiveness of the Company’s internal control over financial reporting. The report of PricewaterhouseCoopers LLP follows this report.

	M&T BANK CORPORATION
	René F. Jones
	Chairman of the Board and Chief Executive Officer
	Darren J. King
	Executive Vice President and Chief Financial Officer

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

M&T Bank Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of M&T Bank Corporation and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of income, of comprehensive income, of changes in shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for the allowance for credit losses as of January 1, 2020.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses – Adjustments to model forecasts

As described in Notes 1 and 4 to the consolidated financial statements, the Company’s allowance for credit losses of $1.7 billion reflects management's expected credit losses in the portfolio of $98.5 billion as of December 31, 2020. For purposes of determining the level of the allowance for credit losses, management evaluates the Company’s loan and lease portfolio by type. Management utilizes statistically developed models to project principal balances over the remaining contractual lives of the loan portfolios and to determine estimated credit losses through a reasonable and supportable forecast period. Model forecasts may be adjusted for inherent limitations or biases that have been identified through independent validation and back-testing of model performance to actual realized results. Management also considered the impact of portfolio concentrations, changes in underwriting

practices, product expansions into new markets, imprecision in its economic forecasts, geopolitical conditions and other risk factors that might influence the loss estimation process.

The principal considerations for our determination that performing procedures relating to the allowance for credit losses, specifically adjustments to model forecasts, is a critical audit matter are (i) the significant judgment by management in determining the adjustments to model forecasts, which led to a high degree of auditor judgment and subjectivity in performing procedures related to management’s determination of the adjustments to model forecasts, (ii) the significant audit effort in evaluating the audit evidence related to the adjustments to model forecasts, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Company’s allowance for credit losses estimation process, including controls over adjustments to model forecasts. These procedures also included, among others, testing management’s process for determining the allowance for credit losses and adjustments to model forecasts, including evaluating the appropriateness of management’s methodology, testing the data utilized by management and evaluating the reasonableness of significant assumptions relating to the adjustments to model forecasts. Evaluating significant assumptions relating to adjustments to model forecasts involved evaluating portfolio composition and concentration, as well as relevant market data. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s methodology and the reasonableness of significant assumptions relating to the adjustments to model forecasts.

Buffalo, New York

February 22, 2021

We have served as the Company’s auditor since 1984.

M&T BANK CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheet

		December 31
(Dollars in thousands, except per share)		2020				2019
Assets
Cash and due from banks		$	1,552,743			$	1,432,805
Interest-bearing deposits at banks			23,663,810				7,190,154
Federal funds sold			—				3,500
Trading account			1,068,581				470,129
Investment securities (includes pledged securities that can be sold or repledged of $105,136 at December 31, 2020; $200,339 at December 31, 2019)
Available for sale (cost: $4,621,027 at December 31, 2020; $6,258,276 at December 31, 2019)			4,822,606				6,318,776
Held to maturity (fair value: $1,842,281 at December 31, 2020; $2,699,206 at December 31, 2019)			1,748,989				2,656,917
Equity and other securities (cost: $449,008 at December 31, 2020; $487,041 at December 31, 2019)			474,102				521,558
Total investment securities			7,045,697				9,497,251
Loans and leases			98,875,788				91,188,525
Unearned discount			(339,921	)			(265,656	)
Loans and leases, net of unearned discount			98,535,867				90,922,869
Allowance for credit losses			(1,736,387	)			(1,051,071	)
Loans and leases, net			96,799,480				89,871,798
Premises and equipment			1,161,558				1,140,924
Goodwill			4,593,112				4,593,112
Core deposit and other intangible assets			14,165				29,034
Accrued interest and other assets			6,701,959				5,644,050
Total assets		$	142,601,105			$	119,872,757
Liabilities
Noninterest-bearing deposits		$	47,572,884			$	32,396,407
Savings and interest-checking deposits			67,680,840				54,932,162
Time deposits			3,899,910				5,757,456
Deposits at Cayman Islands office			652,104				1,684,044
Total deposits			119,805,738				94,770,069
Short-term borrowings			59,482				62,363
Accrued interest and other liabilities			2,166,409				2,337,490
Long-term borrowings			4,382,193				6,986,186
Total liabilities			126,413,822				104,156,108
Shareholders' equity
Preferred stock, $1.00 par, 1,000,000 shares authorized; Issued and outstanding: Liquidation preference of $1,000 per share: 350,000 shares at December 31, 2020 and December 31, 2019; Liquidation preference of $10,000 per share: 90,000 shares at December 31, 2020 and December 31, 2019			1,250,000				1,250,000
Common stock, $.50 par, 250,000,000 shares authorized, 159,741,898 shares issued at December 31, 2020 and December 31, 2019			79,871				79,871
Common stock issuable, 18,113 shares at December 31, 2020; 21,534 shares at December 31, 2019			1,344				1,566
Additional paid-in capital			6,617,404				6,593,539
Retained earnings			13,444,428				12,820,916
Accumulated other comprehensive income (loss), net			(63,032	)			(206,680	)
Treasury stock — common, at cost — 31,426,742 shares at December 31, 2020; 29,174,402 shares at December 31, 2019			(5,142,732	)			(4,822,563	)
Total shareholders’ equity			16,187,283				15,716,649
Total liabilities and shareholders’ equity		$	142,601,105			$	119,872,757

See accompanying notes to financial statements.

M&T BANK CORPORATION AND SUBSIDIARIES

Consolidated Statement of Income

		Year Ended December 31
(In thousands, except per share)		2020				2019				2018
Interest income
Loans and leases, including fees		$	3,975,053			$	4,442,182			$	4,164,561
Investment securities
Fully taxable			176,469				288,532				323,912
Exempt from federal taxes			183				321				665
Deposits at banks			32,956				141,397				108,182
Other			8,051				7,161				1,391
Total interest income			4,192,712				4,879,593				4,598,711
Interest expense
Savings and interest-checking deposits			146,701				368,003				215,411
Time deposits			66,280				95,426				51,423
Deposits at Cayman Islands office			4,054				21,917				5,633
Short-term borrowings			28				24,741				5,386
Long-term borrowings			109,332				239,242				248,556
Total interest expense			326,395				749,329				526,409
Net interest income			3,866,317				4,130,264				4,072,302
Provision for credit losses			800,000				176,000				132,000
Net interest income after provision for credit losses			3,066,317				3,954,264				3,940,302
Other income
Mortgage banking revenues			566,641				457,770				360,442
Service charges on deposit accounts			370,788				432,978				429,337
Trust income			601,884				572,608				537,585
Brokerage services income			47,428				48,922				51,069
Trading account and foreign exchange gains			40,536				62,044				32,547
Gain (loss) on bank investment securities			(9,421	)			18,037				(6,301	)
Other revenues from operations			470,588				469,320				451,321
Total other income			2,088,444				2,061,679				1,856,000
Other expense
Salaries and employee benefits			1,950,692				1,900,797				1,752,264
Equipment and net occupancy			322,037				324,079				298,828
Outside data processing and software			258,480				229,731				199,025
FDIC assessments			53,803				41,535				68,526
Advertising and marketing			61,904				93,472				85,710
Printing, postage and supplies			39,869				39,893				35,658
Amortization of core deposit and other intangible assets			14,869				19,490				24,522
Other costs of operations			683,586				819,685				823,529
Total other expense			3,385,240				3,468,682				3,288,062
Income before taxes			1,769,521				2,547,261				2,508,240
Income taxes			416,369				618,112				590,160
Net income		$	1,353,152			$	1,929,149			$	1,918,080
Net income available to common shareholders
Basic		$	1,279,066			$	1,849,509			$	1,836,028
Diluted			1,279,068				1,849,511				1,836,035
Net income per common share
Basic		$	9.94			$	13.76			$	12.75
Diluted			9.94				13.75				12.74

See accompanying notes to financial statements.

M&T BANK CORPORATION AND SUBSIDIARIES

Consolidated Statement of Comprehensive Income

		Year Ended December 31
(In thousands)		2020				2019				2018
Net income		$	1,353,152			$	1,929,149			$	1,918,080
Other comprehensive income (loss), net of tax and reclassification adjustments:
Net unrealized gains (losses) on investment securities			107,222				184,906				(86,523	)
Cash flow hedges adjustments			172,787				108,520				6,091
Foreign currency translation adjustments			2,284				1,091				(2,225	)
Defined benefit plans liability adjustments			(138,645	)			(81,116	)			43,243
Total other comprehensive income (loss)			143,648				213,401				(39,414	)
Total comprehensive income		$	1,496,800			$	2,142,550			$	1,878,666

See accompanying notes to financial statements.

M&T BANK CORPORATION AND SUBSIDIARIES

Consolidated Statement of Cash Flows

		Year Ended December 31
(In thousands)		2020				2019				2018
Cash flows from operating activities
Net income		$	1,353,152			$	1,929,149			$	1,918,080
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses			800,000				176,000				132,000
Depreciation and amortization of premises and equipment			220,598				209,937				104,864
Amortization of capitalized servicing rights			84,821				71,888				49,619
Amortization of core deposit and other intangible assets			14,869				19,490				24,522
Provision for deferred income taxes			(31,291	)			57,548				15,857
Asset write-downs			21,014				7,701				24,774
Net (gain) loss on sales of assets			(19,441	)			31,526				(23,503		)
Net change in accrued interest receivable, payable			(132,252	)			30,923				(7,162		)
Net change in other accrued income and expense			(418,752	)			75,930				13,436
Net change in loans originated for sale			(542,078	)			130,230				(150,695		)
Net change in trading account assets and liabilities			(561,453	)			(382,767	)			(11,940		)
Net cash provided by operating activities			789,187				2,357,555				2,089,852
Cash flows from investing activities
Proceeds from sales of investment securities
Available for sale			—				107				418
Equity and other securities			67,036				1,169,876				650,858
Proceeds from maturities of investment securities
Available for sale			1,614,557				2,621,603				1,997,263
Held to maturity			911,555				1,162,820				478,172
Purchases of investment securities
Available for sale			(7,581	)			(28,120	)			(12,494		)
Held to maturity			(11,993	)			(495,277	)			(444,703		)
Equity and other securities			(29,004	)			(979,734	)			(834,856		)
Net increase in loans and leases			(7,231,694	)			(2,795,263	)			(475,895		)
Net increase (decrease) in interest-bearing deposits at banks			(16,473,656	)			915,043				(3,026,294		)
Capital expenditures, net			(172,289	)			(178,049	)			(97,676		)
Net (increase) decrease in loan servicing advances			(754,823	)			(470,078	)			307,252
Other, net			67,411				(195,921	)			47,904
Net cash provided (used) by investing activities			(22,020,481	)			727,007				(1,410,051		)
Cash flows from financing activities
Net increase (decrease) in deposits			25,037,167				4,616,082				(2,272,505		)
Net increase (decrease) in short-term borrowings			(2,881	)			(4,336,015	)			4,223,279
Proceeds from long-term borrowings			—				—				1,773,189
Payments on long-term borrowings			(2,665,023	)			(1,553,493	)			(1,459,081		)
Purchases of treasury stock			(373,750	)			(1,349,785	)			(2,194,396		)
Dividends paid — common			(568,112	)			(552,138	)			(510,382		)
Dividends paid — preferred			(68,256	)			(67,454	)			(72,521		)
Proceeds from issuance of Series G preferred stock			—				396,000				—
Redemption of Series A and Series C preferred stock			—				(381,500	)			—
Other, net			(11,413	)			(25,393	)			17,167
Net cash provided (used) by financing activities			21,347,732				(3,253,696	)			(495,250		)
Net increase (decrease) in cash, cash equivalents and restricted cash			116,438				(169,134	)			184,551
Cash, cash equivalents and restricted cash at beginning of period			1,436,305				1,605,439				1,420,888
Cash, cash equivalents and restricted cash at end of period		$	1,552,743			$	1,436,305			$	1,605,439
Supplemental disclosure of cash flow information
Interest received during the period		$	4,135,990			$	4,892,301			$	4,568,991
Interest paid during the period			372,291				735,787				516,230
Income taxes paid during the period			275,558				320,513				375,116
Supplemental schedule of noncash investing and financing activities
Real estate acquired in settlement of loans		$	20,646			$	90,072			$	72,408
Securitization of residential mortgage loans allocated to
Available-for-sale investment securities		$	—			$	5,379			$	22,448
Capitalized servicing rights			—				83				365
Adoption of lease accounting standard
Right-of-use assets		$	—			$	393,877				—
Other liabilities			—				398,810				—
Additions to right-of-use assets under operating leases		$	70,754			$	132,219				—

See accompanying notes to financial statements.

M&T BANK CORPORATION AND SUBSIDIARIES

Consolidated Statement of Changes in Shareholders’ Equity

																						Accumulated
																						Other
										Common				Additional								Comprehensive
		Preferred				Common				Stock				Paid-in				Retained				Income				Treasury
Dollars in thousands, except per share		Stock				Stock				Issuable				Capital				Earnings				(Loss), Net				Stock				Total
2018
Balance — January 1, 2018		$	1,231,500				79,909				1,847				6,590,855				10,164,804				(363,814	)			(1,454,282	)		$	16,250,819
Cumulative effect of change in accounting principle — equity securities			—				—				—				—				16,853				(16,853	)			—				—
Total comprehensive income			—				—				—				—				1,918,080				(39,414	)			—				1,878,666
Preferred stock cash dividends			—				—				—				—				(72,521	)			—				—				(72,521	)
Exercise of 257,630 Series A stock warrants into 136,676 shares of common stock			—				—				—				(22,394	)			—				—				22,394				—
Purchases of treasury stock			—				—				—				—				—				—				(2,194,396	)			(2,194,396	)
Stock-based compensation transactions, net			—				(26	)			(121	)			10,881				(86	)			—				97,433				108,081
Common stock cash dividends — $3.55 per share			—				—				—				—				(510,458	)			—				—				(510,458	)
Balance — December 31, 2018		$	1,231,500				79,883				1,726				6,579,342				11,516,672				(420,081	)			(3,528,851	)		$	15,460,191
2019
Total comprehensive income			—				—				—				—				1,929,149				213,401				—				2,142,550
Preferred stock cash dividends			—				—				—				—				(72,482	)			—				—				(72,482	)
Redemption of Series A and Series C preferred stock			(381,500	)			—				—				—				—				—				—				(381,500	)
Issuance of Series G preferred stock			400,000				—				—				(4,000	)			—				—				—				396,000
Purchases of treasury stock			—				—				—				—				—				—				(1,349,785	)			(1,349,785	)
Stock-based compensation transactions, net			—				(12	)			(160	)			18,197				(207	)			—				56,073				73,891
Common stock cash dividends — $4.10 per share			—				—				—				—				(552,216	)			—				—				(552,216	)
Balance — December 31, 2019		$	1,250,000				79,871				1,566				6,593,539				12,820,916				(206,680	)			(4,822,563	)		$	15,716,649
2020
Cumulative effect of change in accounting principle — credit losses			—				—				—				—				(91,925	)			—				—				(91,925	)
Total comprehensive income			—				—				—				—				1,353,152				143,648				—				1,496,800
Preferred stock cash dividends			—				—				—				—				(68,228	)			—				—				(68,228	)
Purchases of treasury stock			—				—				—				—				—				—				(373,750	)			(373,750	)
Stock-based compensation transactions, net			—				—				(222	)			23,865				(411	)			—				53,581				76,813
Common stock cash dividends — $4.40 per share			—				—				—				—				(569,076	)			—				—				(569,076	)
Balance — December 31, 2020		$	1,250,000				79,871				1,344				6,617,404				13,444,428				(63,032	)			(5,142,732	)		$	16,187,283

See accompanying notes to financial statements.

M&T BANK CORPORATION AND SUBSIDIARIES

Notes to Financial Statements

1. Significant accounting policies

M&T Bank Corporation (“M&T”) is a bank holding company headquartered in Buffalo, New York. Through subsidiaries, M&T provides individuals, corporations and other businesses, and institutions with commercial and retail banking services, including loans and deposits, trust, mortgage banking, asset management, insurance and other financial services. Banking activities are largely focused on consumers residing in New York State, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia and the District of Columbia and on small and medium-size businesses based in those areas. Certain subsidiaries also conduct activities in other areas.

The accounting and reporting policies of M&T and subsidiaries (“the Company”) are in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant accounting policies are as follows:

Consolidation

The consolidated financial statements include M&T and all of its subsidiaries. All significant intercompany accounts and transactions of consolidated subsidiaries have been eliminated in consolidation. The financial statements of M&T included in note 25 report investments in subsidiaries under the equity method. Information about some limited purpose entities that are affiliates of the Company but are not included in the consolidated financial statements appears in note 19.

Consolidated Statement of Cash Flows

For purposes of this statement, cash and due from banks and federal funds sold are considered cash and cash equivalents.

Securities purchased under agreements to resell and securities sold under agreements to repurchase

Securities purchased under agreements to resell and securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at amounts equal to the cash or other consideration exchanged. It is generally the Company’s policy to take possession of collateral pledged to secure agreements to resell.

Trading account

Financial instruments used for trading purposes are stated at fair value. Realized gains and losses and unrealized changes in fair value of financial instruments utilized in trading activities are included in “trading account and foreign exchange gains” in the consolidated statement of income.

Investment securities

Investments in debt securities are classified as held to maturity and stated at amortized cost when management has the positive intent and ability to hold such securities to maturity. Investments in other debt securities are classified as available for sale and stated at estimated fair value with unrealized changes in fair value included in “accumulated other comprehensive income (loss), net.”

Investments in equity securities having readily determinable fair values are stated at fair value and unrealized changes in fair value are included in earnings. Investments in equity securities that do not have readily determinable fair values are stated at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Amortization of premiums and accretion of discounts for investment securities available for sale and held to maturity are included in interest income.

Other securities are stated at cost and include stock of the Federal Reserve Bank of New York and the Federal Home Loan Bank (“FHLB”) of New York.

Effective January 1, 2020, the Company adopted amended accounting guidance that requires an allowance for credit losses be deducted from the amortized cost basis of financial assets, including investment securities held to maturity, to present the net carrying value at the amount that is expected to be collected over the contractual term. In cases where fair value of an available for sale debt security is less than its amortized cost basis and the Company does not intend to sell the available for sale debt security and it is not more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis, the difference between the fair value and the amortized cost basis is separated into (a) the amount representing the credit loss and (b) the amount related to all other factors. The amount related to the credit loss is recognized as an allowance for credit losses while the amount related to other factors is recognized in other comprehensive income, net of applicable income taxes. If the Company intends to sell the security or it is more likely than not to be required to sell the security before recovery of the amortized cost basis, the security is written down to fair value with the entire amount recognized in earnings. Subsequently, the Company accounts for the debt security as if the security had been purchased on the measurement date of the write down at an amortized cost basis equal to the previous amortized cost basis less the amount of the write down recognized in earnings. Prior to 2020 individual debt securities were written down through a charge to earnings when declines in value below the cost basis of the security were considered other than temporary. Realized gains and losses on the sales of investment securities are determined using the specific identification method.

Loans and leases

The Company’s accounting methods for loans depends on whether the loans were originated or acquired by the Company.

Originated loans and leases

Loan fees and certain direct loan origination costs are deferred and recognized as an interest yield adjustment over the life of the loan. Net deferred fees have been included in unearned discount as a reduction of loans outstanding. Interest income on loans is accrued on a level yield method. Loans are placed on nonaccrual status and previously accrued interest thereon is charged against income when it is probable that the Company will be unable to collect all amounts according to the contractual terms of the loan agreement or when principal or interest is delinquent 90 days. Certain loans greater than 90 days delinquent continue to accrue interest if they are well-secured and in the process of collection. Loans less than 90 days delinquent are deemed to have an insignificant delay in payment and generally continue to accrue interest. Interest received on loans placed on nonaccrual status is generally applied to reduce the carrying value of the loan or, if principal is considered fully collectible, recognized as interest income. Nonaccrual commercial loans and commercial real estate loans are returned to accrual status when borrowers have demonstrated an ability to repay their loans and there are no delinquent principal and interest payments. Loans secured by residential real estate are returned to accrual status when they are deemed to have an insignificant delay in payments of 90 days or less. Consumer loans not secured by residential real estate are returned to accrual status when

all past due principal and interest payments have been paid by the borrower. Loan balances are charged off when it becomes evident that such balances are not fully collectable. For commercial loans and commercial real estate loans, charge-offs are recognized after an assessment by credit personnel of the capacity and willingness of the borrower to repay, the estimated value of any collateral, and any other potential sources of repayment. A charge-off is recognized when, after such assessment, it becomes evident that the loan balance is not fully collectible. For loans secured by residential real estate, the excess of the loan balances over the net realizable value of the property collateralizing the loan is charged-off when the loan becomes 150 days delinquent. Consumer loans are generally charged-off when the loans are 91 to 180 days past due, depending on whether the loan is collateralized and the status of repossession activities with respect to such collateral.

During the normal course of business, the Company modifies loans to maximize recovery efforts. If a borrower is experiencing financial difficulty and a concession to the terms of the loan agreement is granted that the Company would not otherwise consider, the modification is considered a troubled debt restructuring and such loans are classified as either nonaccrual or renegotiated loans. The United States has been operating under a state of emergency related to the Coronavirus Disease 2019 (“COVID-19”) pandemic since March 13, 2020. The direct and indirect effects of the COVID-19 pandemic resulted in a dramatic reduction in the economic activity that severely hampered the ability for businesses and consumers to meet their repayment obligations. The Coronavirus Aid, Relief, and Economic Security Act and the Consolidated Appropriations Act, 2021 (collectively “CARES Act”), in addition to providing financial assistance to both businesses and consumers, creates a forbearance program for federally-backed mortgage loans, protects borrowers from negative credit reporting due to loan accommodations related to the national emergency, and provides financial institutions the option to temporarily suspend certain requirements under GAAP related to troubled debt restructurings to account for the effects of COVID-19. The bank regulatory agencies likewise issued guidance encouraging financial institutions to work prudently with borrowers who are, or may be, unable to meet their contractual payment obligations because of the effects of COVID-19. The guidance, with concurrence of the Financial Accounting Standards Board, and provisions of the CARES Act allow modifications made on a good faith basis in response to COVID-19 to borrowers who were current with their payments prior to any relief, to not be treated as troubled debt restructurings nor be reported as past due. Modifications may include payment deferrals (including maturity extensions), covenant waivers and fee waivers. The Company has been working with its customers affected by COVID-19 and has granted modifications across many of its loan portfolios. To the extent that such modifications meet the criteria described, the modified loans have not been classified as troubled debt restructurings nor reported as past due.

Commitments to sell real estate loans are utilized by the Company to hedge the exposure to changes in fair value of real estate loans held for sale. The carrying value of hedged real estate loans held for sale recorded in the consolidated balance sheet includes changes in estimated fair value during the hedge period, typically from the date of close through the sale date. Valuation adjustments made on these loans and commitments are included in “mortgage banking revenues.”

Acquired loans and leases

Effective January 1, 2020, expected credit losses for purchased loans with credit deterioration are initially recognized as an allowance for credit losses and are added to the purchase price to determine the amortized cost basis of the loans. Any non-credit discount or premium resulting from acquiring such loans is recognized as an adjustment to interest income over the remaining lives of the loans. Subsequent changes in the amount of expected credit losses on such loans are recognized in the allowance for credit losses in the same manner as originated loans. Prior to January 1, 2020, loans acquired in a business combination were initially recorded at fair value with no carry-over of an

acquired entity’s previously established allowance for credit losses. Purchased impaired loans represented specifically identified loans with evidence of credit deterioration for which it was probable at acquisition that the Company would be unable to collect all contractual principal and interest payments. For purchased impaired loans and other loans acquired at a discount that was, in part, attributable to credit quality, the excess of cash flows expected at acquisition over the estimated fair value of acquired loans was recognized as interest income over the remaining lives of the loans. Subsequent decreases in the expected cash flows required the Company to evaluate the need for additions to the Company’s allowance for credit losses. Subsequent improvements in expected cash flows resulted first in the recovery of any related allowance for credit losses and then in recognition of additional interest income over the then-remaining lives of the loans. The Company generally recognized the excess of cash flows expected at acquisition over the estimated fair value of the acquired loans as interest income over the remaining lives of such loans regardless of the borrower’s repayment status.

For all other acquired loans, the difference between the fair value and outstanding principal balance of the loans is recognized as an adjustment to interest income over the lives of those loans. Those loans are then accounted for in a manner that is similar to originated loans.

Allowance for credit losses

Effective January 1, 2020 the Company adopted amended accounting guidance which requires an allowance for credit losses be deducted from the amortized cost basis of financial assets to present the net carrying value at the amount that is expected to be collected over the contractual term of the asset considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. In estimating expected losses in the loan and lease portfolio, borrower-specific financial data and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast period. Assumptions and judgment are applied to measure amounts and timing of expected future cash flows, collateral values and other factors used to determine the borrowers’ abilities to repay obligations. Subsequent to the forecast period, the Company utilizes longer-term historical loss experience to estimate losses over the remaining contractual life of the loans. Prior to 2020, the allowance for credit losses represented the amount that in management’s judgment reflected incurred credit losses inherent in the loan and lease portfolio as of the balance sheet date.

Assets taken in foreclosure of defaulted loans

Assets taken in foreclosure of defaulted loans are primarily comprised of commercial and residential real property and are included in “other assets” in the consolidated balance sheet. An in-substance repossession or foreclosure occurs and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Upon acquisition of assets taken in satisfaction of a defaulted loan, the excess of the remaining loan balance over the asset’s estimated fair value less costs to sell is charged-off against the allowance for credit losses. Subsequent declines in value of the assets are recognized as “other costs of operations” in the consolidated statement of income.

Premises and equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed principally using the straight-line method over the estimated useful lives of the assets.

Capitalized servicing rights

Capitalized servicing assets are included in “other assets” in the consolidated balance sheet. Separately recognized servicing assets are initially measured at fair value. The Company uses the amortization method to subsequently measure servicing assets. Under that method, capitalized servicing assets are charged to expense in proportion to and over the period of estimated net servicing income.

To estimate the fair value of servicing rights, the Company considers market prices for similar assets and the present value of expected future cash flows associated with the servicing rights calculated using assumptions that market participants would use in estimating future servicing income and expense. Such assumptions include estimates of the cost of servicing loans, loan default rates, an appropriate discount rate, and prepayment speeds. For purposes of evaluating and measuring impairment of capitalized servicing rights, the Company stratifies such assets based on the predominant risk characteristics of the underlying financial instruments that are expected to have the most impact on projected prepayments, cost of servicing and other factors affecting future cash flows associated with the servicing rights. Such factors may include financial asset or loan type, note rate and term. The amount of impairment recognized is the amount by which the carrying value of the capitalized servicing rights for a stratum exceeds estimated fair value. Impairment is recognized through a valuation allowance.

Sales and securitizations of financial assets

Transfers of financial assets for which the Company has surrendered control of the financial assets are accounted for as sales. Interests in a sale of financial assets that continue to be held by the Company, including servicing rights, are initially measured at fair value. The fair values of retained debt securities are generally determined through reference to independent pricing information. The fair values of retained servicing rights and any other retained interests are determined based on the present value of expected future cash flows associated with those interests and by reference to market prices for similar assets.

Securitization structures typically require the use of special-purpose trusts that are considered variable interest entities. A variable interest entity is included in the consolidated financial statements if the Company has the power to direct the activities that most significantly impact the variable interest entity’s economic performance and has the obligation to absorb losses or the right to receive benefits of the variable interest entity that could potentially be significant to that entity.

Goodwill and core deposit and other intangible assets

Goodwill represents the excess of the cost of an acquired entity over the fair value of the identifiable net assets acquired. Goodwill is not amortized, but rather is tested for impairment at least annually at the reporting unit level, which is either at the same level or one level below an operating segment. Other acquired intangible assets with finite lives, such as core deposit intangibles, are initially recorded at estimated fair value and are amortized over their estimated lives. Core deposit and other intangible assets are generally amortized using accelerated methods over estimated useful lives of five to ten years. The Company periodically assesses whether events or changes in circumstances indicate that the carrying amounts of core deposit and other intangible assets may be impaired.

Derivative financial instruments

The Company accounts for derivative financial instruments at fair value. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction or (c) a hedge of the foreign currency

exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign currency denominated forecasted transaction.

The Company utilizes interest rate swap agreements as part of the management of interest rate risk to modify the repricing characteristics of certain portions of its portfolios of earning assets and interest-bearing liabilities. For such agreements, amounts receivable or payable are recognized as accrued under the terms of the agreement and the net differential is recorded as an adjustment to interest income or expense of the related asset or liability. Interest rate swap agreements may be designated as either fair value hedges or cash flow hedges. In a fair value hedge, the fair values of the interest rate swap agreements and changes in the fair values of the hedged items are recorded in the Company’s consolidated balance sheet with the corresponding gain or loss recognized in current earnings. The difference between changes in the fair values of interest rate swap agreements and the hedged items represents hedge ineffectiveness and is recorded in the same income statement line item that is used to present the earnings effect of the hedged item in the consolidated statement of income. In a cash flow hedge, the derivative’s unrealized gain or loss is initially recorded as a component of other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects earnings.

The Company utilizes commitments to sell real estate loans to hedge the exposure to changes in the fair value of real estate loans held for sale. Commitments to originate real estate loans to be held for sale and commitments to sell real estate loans are generally recorded in the consolidated balance sheet at estimated fair value. Valuation adjustments made on these commitments are included in “mortgage banking revenues.”

Derivative instruments not related to mortgage banking activities, including financial futures commitments and interest rate swap agreements, that do not satisfy the hedge accounting requirements are recorded at fair value and are generally classified as trading account assets or liabilities with resultant changes in fair value being recognized in “trading account and foreign exchange gains” in the consolidated statement of income.

Stock-based compensation

Compensation expense is recognized over the vesting period of stock-based awards based on estimated grant date value, except that the recognition of compensation costs is accelerated for stock-based awards granted to retirement-eligible employees and employees who will become retirement-eligible prior to full vesting of the award because the Company’s incentive compensation plan allows for vesting at the time an employee retires.

Income taxes

Deferred tax assets and liabilities are recognized for the future tax effects attributable to differences between the financial statement value of existing assets and liabilities and their respective tax bases and carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates and laws.

The Company evaluates uncertain tax positions using the two-step process required by GAAP. The first step requires a determination of whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Under the second step, a tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

The Company accounts for its investments in qualified affordable housing projects using the proportional amortization method. Under that method, the Company amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense.

Earnings per common share

Basic earnings per common share exclude dilution and are computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding (exclusive of shares represented by the unvested portion of restricted stock and restricted stock unit grants) and common shares issuable under deferred compensation arrangements during the period. Diluted earnings per common share reflect shares represented by the unvested portion of restricted stock and restricted stock unit grants and the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in earnings. Proceeds assumed to have been received on such exercise or conversion are assumed to be used to purchase shares of M&T common stock at the average market price during the period, as required by the “treasury stock method” of accounting.

GAAP requires that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) shall be considered participating securities and shall be included in the computation of earnings per common share pursuant to the two-class method. The Company has issued stock-based compensation awards in the form of restricted stock and restricted stock units that contain such rights and, accordingly, the Company’s earnings per common share are calculated using the two-class method.

Treasury stock

Repurchases of shares of M&T common stock are recorded at cost as a reduction of shareholders’ equity. Reissuances of shares of treasury stock are recorded at average cost.

2. Investment securities

On January 1, 2018, the Company adopted amended guidance requiring equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in the consolidated statement of income. This amended guidance excludes equity method investments, investments in consolidated subsidiaries, exchange membership ownership interests, and Federal Home Loan Bank of New York and Federal Reserve Bank of New York capital stock. Upon adoption the Company reclassified $17 million, after-tax effect, from accumulated other comprehensive income to retained earnings, representing the difference between fair value and the cost basis of equity investments with readily determinable fair values at January 1, 2018.

The amortized cost and estimated fair value of investment securities were as follows:

		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value
		(In thousands)
December 31, 2020
Investment securities available for sale:
U.S. Treasury and federal agencies		$	9,154			$	198			$	14			$	9,338
Mortgage-backed securities:
Government issued or guaranteed			4,475,406				208,787				755				4,683,438
Privately issued			16				—				—				16
Other debt securities			136,451				1,664				8,301				129,814
			4,621,027				210,649				9,070				4,822,606
Investment securities held to maturity:
U.S. Treasury and federal agencies			2,999				—				—				2,999
Obligations of states and political subdivisions			1,531				9				—				1,540
Mortgage-backed securities:
Government issued or guaranteed			1,664,443				100,176				11				1,764,608
Privately issued			77,155				11,056				17,938				70,273
Other debt securities			2,861				—				—				2,861
			1,748,989				111,241				17,949				1,842,281
Total debt securities		$	6,370,016			$	321,890			$	27,019			$	6,664,887
Equity and other securities:
Readily marketable equity — at fair value		$	67,891			$	25,094			$	—			$	92,985
Other — at cost			381,117				—				—				381,117
Total equity and other securities		$	449,008			$	25,094			$	—			$	474,102

December 31, 2019
Investment securities available for sale:
U.S. Treasury and federal agencies		$	9,742			$	41			$	16			$	9,767
Obligations of states and political subdivisions			776				2				3				775
Mortgage-backed securities:
Government issued or guaranteed			6,113,913				88,634				21,607				6,180,940
Privately issued			16				—				—				16
Other debt securities			133,829				2,046				8,597				127,278
			6,258,276				90,723				30,223				6,318,776
Investment securities held to maturity:
U.S. Treasury and federal agencies			249,862				286				—				250,148
Obligations of states and political subdivisions			4,140				16				—				4,156
Mortgage-backed securities:
Government issued or guaranteed			2,306,180				50,381				1,992				2,354,569
Privately issued			93,496				11,779				18,181				87,094
Other debt securities			3,239				—				—				3,239
			2,656,917				62,462				20,173				2,699,206
Total debt securities		$	8,915,193			$	153,185			$	50,396			$	9,017,982
Equity and other securities:
Readily marketable equity — at fair value		$	105,524			$	34,786			$	269			$	140,041
Other — at cost			381,517				—				—				381,517
Total equity and other securities		$	487,041			$	34,786			$	269			$	521,558

No investment in securities of a single non-U.S. Government, government agency or government guaranteed issuer exceeded ten percent of shareholders’ equity at December 31, 2020.

As of December 31, 2020, the latest available investment ratings of all obligations of states and political subdivisions, privately issued mortgage-backed securities and other debt securities were:

										Average Credit Rating of Fair Value Amount
		Amortized Cost				Estimated Fair Value				A or Better				BBB				BB				B or Less				Not Rated
		(In thousands)
Obligations of states and political subdivisions		$	1,531			$	1,540			$	1,540			$	—			$	—			$	—			$	—
Privately issued mortgage-backed securities			77,171				70,289				1,533				—				—				490				68,266
Other debt securities			139,312				132,675				7,302				62,016				31,303				—				32,054
Total		$	218,014			$	204,504			$	10,375			$	62,016			$	31,303			$	490			$	100,320

The amortized cost and estimated fair value of collateralized mortgage obligations included in mortgage-backed securities were as follows:

		December 31
		2020				2019
		(In thousands)
Collateralized mortgage obligations:
Amortized cost		$	77,964			$	94,817
Estimated fair value			71,099				88,410

There were no significant gross realized gains or losses from sales of investment securities in 2020, 2019 or 2018.

At December 31, 2020, the amortized cost and estimated fair value of debt securities by contractual maturity were as follows:

		Amortized Cost				Estimated Fair Value
		(In thousands)
Debt securities available for sale:
Due in one year or less		$	4,950				4,945
Due after one year through five years			12,051				12,585
Due after five years through ten years			98,604				97,301
Due after ten years			30,000				24,321
			145,605				139,152
Mortgage-backed securities available for sale			4,475,422				4,683,454
		$	4,621,027				4,822,606
Debt securities held to maturity:
Due in one year or less		$	4,355				4,361
Due after one year through five years			175				178
Due after ten years			2,861				2,861
			7,391				7,400
Mortgage-backed securities held to maturity			1,741,598				1,834,881
		$	1,748,989				1,842,281

A summary of investment securities that as of December 31, 2020 and 2019 had been in a continuous unrealized loss position for less than twelve months and those that had been in a continuous unrealized loss position for twelve months or longer follows:

		Less Than 12 Months								12 Months or More
		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
		(In thousands)
December 31, 2020
Investment securities available for sale:
U.S. Treasury and federal agencies		$	985				(14	)			—				—
Mortgage-backed securities:
Government issued or guaranteed			18,687				(356	)			16,556				(399	)
Other debt securities			16,055				(181	)			63,462				(8,120	)
			35,727				(551	)			80,018				(8,519	)
Investment securities held to maturity:
Mortgage-backed securities:
Government issued or guaranteed			2,039				(11	)			—				—
Privately issued			—				—				52,418				(17,938	)
			2,039				(11	)			52,418				(17,938	)
Total		$	37,766				(562	)			132,436				(26,457	)
December 31, 2019
Investment securities available for sale:
U.S. Treasury and federal agencies		$	1,406				(7	)			2,893				(9	)
Obligations of states and political subdivisions			—				—				277				(3	)
Mortgage-backed securities:
Government issued or guaranteed			117,299				(222	)			2,002,364				(21,385	)
Other debt securities			6,600				(354	)			56,313				(8,243	)
			125,305				(583	)			2,061,847				(29,640	)
Investment securities held to maturity:
Mortgage-backed securities:
Government issued or guaranteed			2,727				(5	)			145,235				(1,987	)
Privately issued			—				—				49,656				(18,181	)
			2,727				(5	)			194,891				(20,168	)
Total		$	128,032				(588	)			2,256,738				(49,808	)

The Company owned 264 individual debt securities with aggregate gross unrealized losses of $27 million at December 31, 2020. Based on a review of each of the securities in the investment securities portfolio at December 31, 2020, the Company concluded that it expected to recover the amortized cost basis of its investment. As of December 31, 2020, the Company does not intend to sell nor is it anticipated that it would be required to sell any of its impaired investment securities at a loss. At December 31, 2020, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $381 million of cost method investment securities.

As described in notes 4 and 26, on January 1, 2020 the Company adopted amended accounting guidance that requires an allowance for credit losses be deducted from the amortized cost basis of financial assets, including investment securities held to maturity, to present the net carrying value at the amount that is expected to be collected over the contractual term of the asset. The Company

estimated no material allowance for credit losses for its investment securities classified as held-to-maturity at January 1, 2020 or December 31, 2020, as the substantial majority of such investment securities are obligations backed by the U.S government or its agencies.

At December 31, 2020, investment securities with a carrying value of $4.2 billion, including $2.9 billion of investment securities available for sale, were pledged to secure borrowings from various FHLBs, repurchase agreements, governmental deposits, interest rate swap agreements and available lines of credit as described in note 8.

Investment securities pledged by the Company to secure obligations whereby the secured party is permitted by contract or custom to sell or repledge such collateral totaled $105 million at December 31, 2020. The pledged securities included securities of the U.S. Treasury and federal agencies and mortgage-backed securities.

3. Loans and leases

Total loans and leases outstanding were comprised of the following:

		December 31
		2020				2019
		(In thousands)
Loans
Commercial, financial, etc.		$	26,554,486			$	22,575,700
Real estate:
Residential			16,708,644				16,098,125
Commercial			27,738,732				26,718,325
Construction			10,068,141				9,010,297
Consumer			16,558,889				15,373,881
Total loans			97,628,892				89,776,328
Leases
Commercial			1,246,896				1,412,197
Total loans and leases			98,875,788				91,188,525
Less: unearned discount			(339,921	)			(265,656	)
Total loans and leases, net of unearned discount		$	98,535,867			$	90,922,869

One-to-four family residential mortgage loans held for sale were $777 million at December 31, 2020 and $414 million at December 31, 2019. Commercial real estate loans held for sale were $278 million at December 31, 2020 and $28 million at December 31, 2019.

As of December 31, 2020, approximately $4.0 billion of commercial real estate loan balances serviced for others had been sold with recourse in conjunction with the Company’s participation in the Fannie Mae Delegated Underwriting and Servicing (“DUS”) program. At December 31, 2020, the Company estimated that the recourse obligations described above were not material to the Company’s consolidated financial position. There have been no material losses incurred as a result of those credit recourse arrangements.

In addition to recourse obligations, as described in note 21, the Company is contractually obligated to repurchase previously sold residential real estate loans that do not ultimately meet investor sale criteria related to underwriting procedures or loan documentation. When required to do so, the Company may reimburse loan purchasers for losses incurred or may repurchase certain loans. Charges incurred for such obligation were not material in 2020, 2019 or 2018.

The amount of foreclosed residential real estate property held by the Company was $28 million and $76 million at December 31, 2020 and 2019, respectively. There were $214 million and $402

million at December 31, 2020 and 2019, respectively, in loans secured by residential real estate that were in the process of foreclosure. Of all loans in the process of foreclosure at December 31, 2020, approximately 41% were government guaranteed.

Borrowings by directors and certain officers of M&T and its banking subsidiaries, and by associates of such persons, exclusive of loans aggregating less than $60,000, amounted to $72 million and $28 million at December 31, 2020 and 2019, respectively. During 2020, new borrowings by such persons amounted to $46 million (including any borrowings of new directors or officers that were outstanding at the time of their election) and repayments and other reductions (including reductions resulting from individuals ceasing to be directors or officers) were $2 million.

At December 31, 2020, approximately $10.2 billion of commercial loans and leases, $13.7 billion of commercial real estate loans, $12.9 billion of one-to-four family residential real estate loans, $2.1 billion of home equity loans and lines of credit and $8.5 billion of other consumer loans were pledged to secure outstanding borrowings from the FHLB of New York and available lines of credit as described in note 8.

A summary of current, past due and nonaccrual loans as of December 31, 2020 and 2019 follows:

		Current				30-89 Days Past Due				Accruing Loans Past Due 90 Days or More				Nonaccrual				Total
		(In thousands)
December 31, 2020
Commercial, financial, leasing, etc.		$	27,196,862				60,822				10,053				306,827			$	27,574,564
Real estate:
Commercial			26,688,515				168,917				47,014				775,894				27,680,340
Residential builder and developer			1,246,095				1,693				856				1,094				1,249,738
Other commercial construction			8,523,591				66,365				3,816				114,039				8,707,811
Residential			13,764,836				200,406				792,888				365,729				15,123,859
Residential — limited documentation			1,462,277				19,687				—				147,170				1,629,134
Consumer:
Home equity lines and loans			3,881,885				24,329				—				79,392				3,985,606
Recreational finance			7,002,643				47,161				—				25,519				7,075,323
Automobile			4,007,349				55,498				—				39,404				4,102,251
Other			1,346,868				17,561				4,581				38,231				1,407,241
Total		$	95,120,921				662,439				859,208				1,893,299			$	98,535,867

		Current				30-89 Days Past Due				Accruing Loans Past Due 90 Days or More (a)				Accruing Loans Acquired at a Discount Past Due 90 days or More (b)				Purchased Impaired (c)				Nonaccrual				Total
		(In thousands)
December 31, 2019
Commercial, financial, leasing, etc.		$	23,290,797				184,011				16,776				27				—				346,557			$	23,838,168
Real estate:
Commercial			26,311,414				165,579				6,740				—				15,601				158,474				26,657,808
Residential builder and developer			1,521,315				21,195				—				—				753				3,982				1,547,245
Other commercial construction			7,204,148				95,346				3,360				—				1,237				32,770				7,336,861
Residential			12,760,040				451,274				486,515				5,788				143,145				235,663				14,082,425
Residential — limited documentation			1,858,037				65,215				181				—				66,809				83,427				2,073,669
Consumer:
Home equity lines and loans			4,386,511				30,229				—				1,662				—				63,215				4,481,617
Recreational finance			5,484,997				36,827				—				99				—				14,219				5,536,142
Automobile			3,787,221				78,478				—				—				—				21,293				3,886,992
Other			1,395,240				45,978				5,156				32,056				—				3,512				1,481,942
Total		$	87,999,720				1,174,132				518,728				39,632				227,545				963,112			$	90,922,869

(a)	Excludes loans acquired at a discount.

(b)	Loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately.

(c)	Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.

If nonaccrual and renegotiated loans had been accruing interest at their originally contracted terms, interest income on such loans would have amounted to $96 million in 2020, $68 million in 2019 and $69 million in 2018. The actual amounts included in interest income on such loans were $44 million in 2020 and $33 million in each of 2019 and 2018.

A summary of outstanding loan balances for which COVID-19 related modifications were granted as of December 31, 2020 is presented below. These loans meet the criteria described in note 1 and, as such, are not considered past due or otherwise in default of loan terms as of the dates presented. Substantially all of modifications noted below expire during the first half of 2021.

		COVID-19 Related Modifications
December 31, 2020		Payment Deferrals(1)				Other Forbearances(2)				Total
		(In thousands)
Commercial, financial, leasing, etc.		$	95,823			$	291,957			$	387,780
Real estate:
Commercial			728,511				374,509				1,103,020
Residential builder and developer			653				—				653
Other commercial construction			61,235				145,770				207,005
Residential			2,447,422		(3)		—				2,447,422
Residential — limited documentation			337,108				—				337,108
Consumer:
Home equity lines and loans			18,440				—				18,440
Recreational finance			24,428				—				24,428
Automobile			51,550				—				51,550
Other			2,353				—				2,353
Total		$	3,767,523			$	812,236			$	4,579,759

(1)	Represents accruing loans at December 31, 2020 for which a COVID-19 related payment deferral (including maturity extensions) has been granted.

(2)	Consists predominantly of accruing loans for which a COVID-19 related covenant waiver has been granted.

(3)	Includes $1.7 billion of government-guaranteed loans.

The outstanding principal balance and the carrying amount of loans acquired at a discount that were recorded at fair value at the acquisition date for which interest income was recognized based on expected future cash flows that were included in the consolidated balance sheet at December 31, 2019 were as follows:

		(In thousands)
Outstanding principal balance		$	769,414
Carrying amount:
Commercial, financial, leasing, etc.			21,114
Commercial real estate			94,890
Residential real estate			341,807
Consumer			77,785
		$	535,596

Purchased impaired loans included in the table above totaled $228 million at December 31, 2019, representing less than 1% of the Company’s assets. A summary of changes in the accretable yield for loans acquired at a discount for the years ended December 31, 2019 and 2018 follows:

For the Year Ended December 31,		2019								2018
		Purchased Impaired				Other Acquired				Purchased Impaired				Other Acquired
		(In thousands)
Balance at beginning of period		$	147,210			$	96,907			$	157,918			$	133,162
Interest income			(49,017	)			(36,452	)			(37,819	)			(63,856	)
Reclassifications from nonaccretable balance			36,718				15,534				27,111				22,849
Other (a)			—				(3,909	)			—				4,752
Balance at end of period		$	134,911			$	72,080			$	147,210			$	96,907

(a)	Other changes in expected cash flows including changes in interest rates and prepayment assumptions.

During the normal course of business, the Company modifies loans to maximize recovery efforts. If the borrower is experiencing financial difficulty and a concession is granted, the Company considers such modifications as troubled debt restructurings and classifies those loans as either nonaccrual loans or renegotiated loans. The types of concessions that the Company grants typically include principal deferrals and interest rate concessions, but may also include other types of concessions.

The tables that follow summarize the Company’s loan modification activities that were considered troubled debt restructurings for the years ended December 31, 2020, 2019 and 2018:

										Post-modification (a)
Year Ended December 31, 2020		Number				Pre- modification Recorded Investment				Principal Deferral				Interest Rate Reduction				Other				Combination of Concession Types				Total
		(Dollars in thousands)
Commercial, financial, leasing, etc.			394			$	246,479			$	70,671			$	298			$	31,605			$	97,344			$	199,918
Real estate:
Commercial			161				310,578				204,591				505				4,874				85,261				295,231
Residential builder and developer			1				91				—				—				—				90				90
Other commercial construction			2				13,602				13,573				—				—				—				13,573
Residential			631				202,985				183,878				—				—				23,639				207,517
Residential — limited documentation			30				7,413				7,100				—				—				1,232				8,332
Consumer:
Home equity lines and loans			259				17,228				5,882				—				—				11,372				17,254
Recreational finance			428				16,392				16,388				—				—				4				16,392
Automobile			2,249				39,951				39,949				—				—				2				39,951
Other			1,095				7,788				3,383				—				—				4,405				7,788
Total			5,250			$	862,507			$	545,415			$	803			$	36,479			$	223,349			$	806,046
Year Ended December 31, 2019
Commercial, financial, leasing, etc.			150			$	63,715			$	10,485			$	—			$	—			$	52,871			$	63,356
Real estate:
Commercial			51				48,315				5,193				—				—				26,152				31,345
Residential builder and developer			2				1,330				1,068				—				—				—				1,068
Other commercial construction			3				1,559				—				—				—				1,500				1,500
Residential			83				21,695				10,819				—				—				11,907				22,726
Residential — limited documentation			6				1,409				399				—				—				1,044				1,443
Consumer:
Home equity lines and loans			41				4,127				176				—				—				4,004				4,180
Recreational finance			10				265				265				—				—				—				265
Automobile			66				1,141				1,076				—				—				65				1,141
Total			412			$	143,556			$	29,481			$	—			$	—			$	97,543			$	127,024

										Post-modification (a)
Year Ended December 31, 2018		Number				Pre- modification Recorded Investment				Principal Deferral				Interest Rate Reduction				Other				Combination of Concession Types				Total
		(Dollars in thousands)
Commercial, financial, leasing, etc.			203			$	102,445			$	50,490			$	803			$	6,210			$	45,411			$	102,914
Real estate:
Commercial			83				30,217				16,870				175				4,686				9,000				30,731
Other commercial construction			1				752				746				—				—				—				746
Residential			134				34,798				19,962				—				—				18,110				38,072
Residential — limited documentation			9				1,887				827				—				—				1,423				2,250
Consumer:
Home equity lines and loans			47				3,952				224				—				—				3,755				3,979
Recreational finance			7				202				202				—				—				—				202
Automobile			73				1,330				1,318				—				—				12				1,330
Total			557			$	175,583			$	90,639			$	978			$	10,896			$	77,711			$	180,224

(a)	Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages. The present value of interest rate concessions, discounted at the effective rate of the original loan, was not material.

Loans that were modified as troubled debt restructurings during the twelve months ended December 31, 2020, 2019 and 2018 and for which there was a subsequent payment default during the respective year were not material.

The Company’s loan and lease portfolio includes commercial lease financing receivables consisting of direct financing and leveraged leases for machinery and equipment, railroad equipment, commercial trucks and trailers, and aircraft. Certain leases contain payment schedules that are tied to variable interest rate indices. In general, early termination options are provided if the lessee is not in default, returns the leased equipment and pays an early termination fee. Additionally, options to purchase the underlying asset by the lessee are generally at the fair market value of the equipment. A summary of lease financing receivables follows:

		December 31,
		2020				2019
		(In thousands)
Commercial leases:
Direct financings:
Lease payments receivable		$	1,017,222			$	1,164,567
Estimated residual value of leased assets			79,621				84,540
Unearned income			(83,673	)			(106,780	)
Investment in direct financings			1,013,170				1,142,327
Leveraged leases:
Lease payments receivable			76,453				82,065
Estimated residual value of leased assets			73,600				81,025
Unearned income			(28,388	)			(31,596	)
Investment in leveraged leases			121,665				131,494
Total investment in leases		$	1,134,835			$	1,273,821
Deferred taxes payable arising from leveraged leases		$	61,905			$	70,245

Included within the estimated residual value of leased assets at December 31, 2020 and 2019 were $34 million and $37 million, respectively, in residual value associated with direct financing leases that are guaranteed by the lessees or others.

At December 31, 2020, the minimum future lease payments to be received from lease financings were as follows:

		(In thousands)
Year ending December 31:
2021		$	320,428
2022			288,322
2023			187,740
2024			122,735
2025			70,400
Later years			104,050
		$	1,093,675

4. Allowance for credit losses

Effective January 1, 2020 the Company adopted amended accounting guidance which requires an allowance for credit losses be deducted from the amortized cost basis of financial assets to present the net carrying value at the amount that is expected to be collected over the contractual term of the asset considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The new guidance replaced the previous incurred loss model for determining the allowance for credit losses.

Changes in the allowance for credit losses for the years ended December 31, 2020, 2019 and 2018 were as follows:

		Commercial, Financial,				Real Estate
		Leasing, etc.				Commercial				Residential				Consumer				Unallocated				Total
		(In thousands)
2020
Beginning balance		$	366,094				322,201				56,033				229,118				77,625			$	1,051,071
Adoption of new accounting standard			(61,474	)			23,656				53,896				194,004				(77,625	)			132,457
Provision for credit losses			220,544				356,203				(3,172	)			226,425				—				800,000
Net charge-offs
Charge-offs			(135,083	)			(35,891	)			(10,283	)			(152,250	)			—				(333,507	)
Recoveries			15,765				4,550				7,116				58,935				—				86,366
Net charge-offs			(119,318	)			(31,341	)			(3,167	)			(93,315	)			—				(247,141	)
Ending balance		$	405,846				670,719				103,590				556,232				—			$	1,736,387
2019
Beginning balance		$	330,055				341,655				69,125				200,564				78,045			$	1,019,444
Provision for credit losses			69,702				(10,726	)			(8,585	)			126,029				(420	)			176,000
Net charge-offs
Charge-offs			(58,244	)			(12,664	)			(12,711	)			(154,089	)			—				(237,708	)
Recoveries			24,581				3,936				8,204				56,614				—				93,335
Net charge-offs			(33,663	)			(8,728	)			(4,507	)			(97,475	)			—				(144,373	)
Ending balance		$	366,094				322,201				56,033				229,118				77,625			$	1,051,071
2018
Beginning balance		$	328,599				374,085				65,405				170,809				78,300			$	1,017,198
Provision for credit losses			33,967				(41,181	)			12,401				127,068				(255	)			132,000
Net charge-offs
Charge-offs			(60,414	)			(12,286	)			(15,345	)			(143,196	)			—				(231,241	)
Recoveries			27,903				21,037				6,664				45,883				—				101,487
Net (charge-offs) recoveries			(32,511	)			8,751				(8,681	)			(97,313	)			—				(129,754	)
Ending balance		$	330,055				341,655				69,125				200,564				78,045			$	1,019,444

Despite the allocation in the preceding tables, the allowance for credit losses is general in nature and is available to absorb losses from any loan or lease type.

In establishing the allowance for credit losses subsequent to December 31, 2019, the Company estimates losses attributable to specific troubled credits identified through both normal and targeted credit review processes and also estimates losses for loans and leases with similar risk characteristics on a collective basis. The amounts of specific loss components in the Company’s loan and lease portfolios are determined through a loan-by-loan analysis of larger balance commercial loans and commercial real estate loans that are in nonaccrual status. Such loss estimates are typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. To the extent that those loans are collateral-dependent, they are evaluated based on the fair

value of the loan’s collateral as estimated at or near the financial statement date. As the quality of a loan deteriorates to the point of classifying the loan as “criticized,” the process of obtaining updated collateral valuation information is usually initiated, unless it is not considered warranted given factors such as the relative size of the loan, the characteristics of the collateral or the age of the last valuation. In those cases where current appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed necessary, for estimates of subsequent declines in values as determined by line of business and/or loan workout personnel. Those adjustments are reviewed and assessed for reasonableness by the Company’s credit department. Accordingly, for real estate collateral securing larger nonaccrual commercial loans and commercial real estate loans, estimated collateral values are based on current appraisals and estimates of value. For non-real estate loans, collateral is assigned a discounted estimated liquidation value and, depending on the nature of the collateral, is verified through field exams or other procedures. In assessing collateral, real estate and non-real estate values are reduced by an estimate of selling costs.

For residential real estate loans, including home equity loans and lines of credit, the excess of the loan balance over the net realizable value of the property collateralizing the loan is charged-off when the loan becomes 150 days delinquent. That charge-off is based on recent indications of value from external parties that are generally obtained shortly after a loan becomes nonaccrual. Loans to consumers that file for bankruptcy are generally charged-off to estimated net collateral value shortly after the Company is notified of such filings. When evaluating individual home equity loans and lines of credit for charge off and for purposes of estimating losses in determining the allowance for credit losses, the Company gives consideration to the required repayment of any first lien positions related to collateral property. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows.

Information with respect to loans and leases that were considered nonaccrual at the beginning and end of the reporting period and the interest income recognized on such loans for the years ended December 31, 2020, 2019 and 2018 follows.

		December 31, 2020												January 1, 2020				Year Ended December 31, 2020
		Amortized Cost with Allowance				Amortized Cost without Allowance				Total				Amortized Cost				Interest Income Recognized
		(In thousands)
Commercial, financial, leasing, etc.		$	226,897			$	79,930			$	306,827			$	346,743			$	11,269
Real estate:
Commercial			364,110				411,784				775,894				173,796				7,821
Residential builder and developer			1,094				—				1,094				4,708				1,694
Other commercial construction			20,992				93,047				114,039				35,881				8,457
Residential			159,006				206,723				365,729				322,504				18,069
Residential — limited documentation			84,568				62,602				147,170				114,667				634
Consumer:
Home equity lines and loans			61,031				18,361				79,392				65,039				4,092
Recreational finance			19,434				6,085				25,519				14,308				626
Automobile			34,044				5,360				39,404				21,293				186
Other			3,606				34,625				38,231				35,394				1,369
Total		$	974,782			$	918,517			$	1,893,299			$	1,134,333			$	54,217

		December 31, 2019												January 1, 2019				Year Ended December 31, 2019
		Amortized Cost with Allowance				Amortized Cost without Allowance				Total				Amortized Cost				Interest Income Recognized
		(In thousands)
Commercial, financial, leasing, etc.		$	206,644			$	139,913			$	346,557			$	234,423			$	8,960
Real estate:
Commercial			40,847				117,627				158,474				203,672				5,850
Residential builder and developer			604				3,378				3,982				4,798				357
Other commercial construction			12,425				20,345				32,770				22,205				634
Residential			59,982				175,681				235,663				233,352				12,630
Residential — limited documentation			26,710				56,717				83,427				84,685				1,092
Consumer:
Home equity lines and loans			24,812				38,403				63,215				71,292				5,987
Recreational finance			9,054				5,165				14,219				11,199				575
Automobile			14,805				6,488				21,293				23,359				214
Other			3,391				121				3,512				4,623				508
Total		$	399,274			$	563,838			$	963,112			$	893,608			$	36,807

		December 31, 2018												January 1, 2018				Year Ended December 31, 2018
		Amortized Cost with Allowance				Amortized Cost without Allowance				Total				Amortized Cost				Interest Income Recognized
		(In thousands)
Commercial, financial, leasing, etc.		$	126,753			$	107,670			$	234,423			$	240,991			$	7,873
Real estate:
Commercial			90,296				113,376				203,672				184,982				10,880
Residential builder and developer			2,205				2,593				4,798				6,451				1,779
Other commercial construction			14,604				7,601				22,205				10,088				3,474
Residential			57,346				176,006				233,352				235,834				14,065
Residential — limited documentation			26,808				57,877				84,685				96,105				1,980
Consumer:
Home equity lines and loans			30,819				40,473				71,292				74,500				5,535
Recreational finance			6,016				5,183				11,199				6,509				333
Automobile			16,271				7,088				23,359				23,781				689
Other			4,591				32				4,623				3,357				230
Total		$	375,709			$	517,899			$	893,608			$	882,598			$	46,838

For purposes of determining the level of the allowance for credit losses, the Company evaluates its loan and lease portfolio by type. Accruing loans with similar risk characteristics are generally evaluated collectively. The Company utilizes statistically developed models to project principal balances over the remaining contractual lives of the loan portfolios and to determine estimated credit losses through a reasonable and supportable forecast period. Individual loan credit quality indicators including loan grade and borrower repayment performance inform the models, which have been statistically developed based on historical correlations of credit losses with prevailing economic metrics, including unemployment, gross domestic product and real estate prices. Model forecasts may be adjusted for inherent limitations or biases that have been identified through independent

validation and back-testing of model performance to actual realized results. At both January 1 and December 31, 2020, the Company utilized a reasonable and supportable forecast period of two years. Subsequent to this forecast period the Company reverted, ratably over a one-year period, to historical loss experience to inform its estimate of losses for the remaining contractual life of each portfolio. The Company also considered the impact of portfolio concentrations, changes in underwriting practices, product expansions into new markets, imprecision in its economic forecasts, geopolitical conditions and other risk factors that might influence its loss estimation process. Prior to 2020, the allowance for credit losses was estimated for incurred credit losses inherent in the loan and lease portfolio as of the balance sheet date, but did not consider reasonable and supportable forecasts that could have affected the collectability of the reported amounts.

The Company utilizes a loan grading system to differentiate risk amongst its commercial loans and commercial real estate loans. Loans with a lower expectation of default are assigned one of ten possible “pass” loan grades and are generally ascribed lower loss factors when determining the allowance for credit losses. Loans with an elevated level of credit risk are classified as “criticized” and are ascribed a higher loss factor when determining the allowance for credit losses. Criticized loans may be classified as “nonaccrual” if the Company no longer expects to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more.

Loan officers in different geographic locations with the support of the Company’s credit department personnel continuously review and reassign loan grades based on their detailed knowledge of individual borrowers and their judgment of the impact on such borrowers resulting from changing conditions in their respective regions. Factors considered in assigning loan grades include borrower-specific information related to expected future cash flows and operating results, collateral values, geographic location, financial condition and performance, payment status, and other information. At least annually, updated financial information is obtained from commercial borrowers associated with pass grade loans and additional analysis is performed. On a quarterly basis, the Company’s centralized credit department reviews all criticized commercial loans and commercial real estate loans greater than $1 million to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing.

The following table summarizes the loan grades applied at December 31, 2020 to the various classes of the Company’s commercial loans and commercial real estate loans by origination year.

		Term Loans by Origination Year																								Revolving				Revolving Loans Converted to Term
		2020				2019				2018				2017				2016				Prior				Loans				Loans				Total
		(In thousands)
Commercial, financial, leasing, etc.:
Loan grades:
Pass		$	7,732,728				2,277,233				1,505,486				930,834				719,796				1,387,695				11,352,416				21,286			$	25,927,474
Criticized accrual			388,326				84,358				113,940				41,587				39,930				73,401				584,751				13,970				1,340,263
Criticized nonaccrual			7,720				27,309				56,227				16,808				19,681				45,471				125,893				7,718				306,827
Total commercial, financial, leasing, etc.		$	8,128,774				2,388,900				1,675,653				989,229				779,407				1,506,567				12,063,060				42,974			$	27,574,564
Real estate:
Commercial:
Loan grades:
Pass		$	3,353,450				4,681,834				3,299,095				2,628,061				2,746,165				5,698,834				875,348				—			$	23,282,787
Criticized accrual			526,037				400,154				579,507				290,885				568,144				1,212,672				44,260				—				3,621,659
Criticized nonaccrual			26,876				121,899				47,144				99,293				197,319				248,949				34,414				—				775,894
Total commercial real estate		$	3,906,363				5,203,887				3,925,746				3,018,239				3,511,628				7,160,455				954,022				—			$	27,680,340
Residential builder and developer:
Loan grades:
Pass		$	506,295				223,880				109,453				15,048				10,976				11,320				236,943				—			$	1,113,915
Criticized accrual			3,690				106,847				14,836				3,421				—				1,885				4,050				—				134,729
Criticized nonaccrual			—				518				—				—				—				576				—				—				1,094
Total residential builder and developer		$	509,985				331,245				124,289				18,469				10,976				13,781				240,993				—			$	1,249,738
Other commercial construction:
Loan grades:
Pass		$	1,050,258				2,998,921				2,048,063				945,339				233,127				294,030				74,611				—			$	7,644,349
Criticized accrual			37,192				148,492				381,091				225,949				144,665				12,034				—				—				949,423
Criticized nonaccrual			335				65,592				13,522				4,213				12,097				12,873				5,407				—				114,039
Total other commercial construction		$	1,087,785				3,213,005				2,442,676				1,175,501				389,889				318,937				80,018				—			$	8,707,811

Increases to criticized loans during 2020 were predominantly attributable to effects of the COVID-19 pandemic and the related re-grading of loans.

The Company considers repayment performance a significant indicator of credit quality for its residential real estate loan and consumer loan portfolios. A summary of loans in accrual and nonaccrual status at December 31, 2020 for the various classes of the Company’s residential real estate loans and consumer loans by origination year is as follows.

		Term Loans by Origination Year																								Revolving				Revolving Loans Converted to Term
		2020				2019				2018				2017				2016				Prior				Loans				Loans				Total
		(In thousands)
Residential:
Current		$	2,722,862				1,416,259				618,736				1,318,094				718,235				6,898,756				71,894				—			$	13,764,836
30-89 days past due			13,496				7,781				7,258				13,477				7,947				150,447				—				—				200,406
Accruing loans past due 90 days or more			579				15,234				38,145				212,818				45,804				480,308				—				—				792,888
Nonaccrual			3,133				14,439				5,183				6,408				2,900				333,466				200				—				365,729
Total residential		$	2,740,070				1,453,713				669,322				1,550,797				774,886				7,862,977				72,094				—			$	15,123,859
Residential - limited documentation:
Current		$	—				—				—				—				—				1,462,277				—				—			$	1,462,277
30-89 days past due			—				—				—				—				—				19,687				—				—				19,687
Accruing loans past due 90 days or more			—				—				—				—				—				—				—				—				—
Nonaccrual			—				—				—				—				—				147,170				—				—				147,170
Total residential - limited documentation		$	—				—				—				—				—				1,629,134				—				—			$	1,629,134
Consumer:
Home equity lines and loans:
Current		$	773				3,983				1,591				2,016				162				51,554				2,569,621				1,252,185			$	3,881,885
30-89 days past due			—				—				—				—				—				1,148				939				22,242				24,329
Accruing loans past due 90 days or more			—				—				—				—				—				—				—				—				—
Nonaccrual			—				—				—				—				—				6,148				5,752				67,492				79,392
Total home equity lines and loans		$	773				3,983				1,591				2,016				162				58,850				2,576,312				1,341,919			$	3,985,606

		Term Loans by Origination Year																								Revolving				Revolving Loans Converted to Term
		2020				2019				2018				2017				2016				Prior				Loans				Loans				Total
		(In thousands)
Recreational finance:
Current		$	2,796,359				1,751,766				907,595				630,151				352,414				564,358				—				—			$	7,002,643
30-89 days past due			9,548				11,255				8,519				6,638				2,938				8,263				—				—				47,161
Accruing loans past due 90 days or more			—				—				—				—				—				—				—				—				—
Nonaccrual			1,854				3,883				4,072				4,194				2,733				8,783				—				—				25,519
Total recreational finance		$	2,807,761				1,766,904				920,186				640,983				358,085				581,404				—				—			$	7,075,323
Automobile:
Current		$	1,595,636				1,106,782				629,338				440,604				171,017				63,972				—				—			$	4,007,349
30-89 days past due			6,461				14,140				12,542				12,899				6,373				3,083				—				—				55,498
Accruing loans past due 90 days or more			—				—				—				—				—				—				—				—				—
Nonaccrual			1,615				7,144				10,788				10,061				5,991				3,805				—				—				39,404
Total automobile		$	1,603,712				1,128,066				652,668				463,564				183,381				70,860				—				—			$	4,102,251
Other:
Current		$	160,424				137,617				53,702				32,556				4,526				28,970				927,217				1,856			$	1,346,868
30-89 days past due			1,879				1,130				577				2,301				42				557				10,594				481				17,561
Accruing loans past due 90 days or more			—				—				—				—				—				374				4,207				—				4,581
Nonaccrual			1,493				492				339				183				31				501				35,044				148				38,231
Total other		$	163,796				139,239				54,618				35,040				4,599				30,402				977,062				2,485			$	1,407,241
Total loans and leases at December 31, 2020		$	20,949,019				15,628,942				10,466,749				7,893,838				6,013,013				19,233,367				16,963,561				1,387,378			$	98,535,867

The following table summarizes the loan grades applied at December 31, 2019 to the various classes of the Company’s commercial loans and commercial real estate loans.

						Real Estate
		Commercial,								Residential				Other
		Financial,								Builder and				Commercial
		Leasing, etc.				Commercial				Developer				Construction
		(In thousands)
December 31, 2019
Pass		$	22,595,821				25,728,725				1,419,162				7,092,799
Criticized accrual			895,790				770,609				124,101				211,292
Criticized nonaccrual			346,557				158,474				3,982				32,770
Total		$	23,838,168				26,657,808				1,547,245				7,336,861

The Company’s reserve for off-balance sheet credit exposures was not material at December 31, 2020 and December 31, 2019.

5. Premises and equipment

The detail of premises and equipment was as follows:

		December 31
		2020				2019
		(In thousands)
Land		$	94,929			$	96,118
Buildings			513,290				482,182
Leasehold improvements			302,246				262,438
Furniture and equipment — owned			807,701				739,724
Furniture and equipment — capital leases			8,630				14,232
			1,726,796				1,594,694
Less: accumulated depreciation and amortization
Owned assets			971,979				882,272
Capital leases			5,933				8,425
			977,912				890,697
Right of use assets — operating leases			412,674				436,927
Premises and equipment, net		$	1,161,558			$	1,140,924

The right-of-use assets and lease liabilities relate to banking offices and other space occupied by the Company and use of certain equipment under noncancelable operating lease agreements. As of December 31, 2020 and 2019, the Company recognized $467 million and $488 million respectively, of operating lease liabilities as a component of “accrued interest and other liabilities” in the consolidated balance sheet. In calculating the present value of lease payments, the Company utilized its incremental secured borrowing rate based on lease term.

The Company’s noncancelable operating lease agreements expire at various dates over the next 21 years. Real estate leases generally consist of fixed monthly rental payments with certain leases containing escalation clauses. Any variable lease payments or payments for nonlease components are recognized in the consolidated statement of income as a component of “equipment and net occupancy” expense based on actual costs incurred. Some leases contain lessee options to extend the term. Those options are included in the lease term when it is determined that it is reasonably certain the option will be exercised.

The Company has noncancelable operating lease agreements for certain equipment related to ATMs, servers, printers and mail machines that are used in the normal course of operations. The ATM leases are either based on the rights to a specific square footage or a license agreement whereby the Company has the right to operate an ATM in a landlord's location. The lease terms generally contain both fixed payments and variable payments that are transaction-based. Given the transaction-based nature of the variable payments, such payments are excluded from the measurement of the right-of-use asset and lease liability and are recognized in the consolidated statement of income as a component of “equipment and net occupancy” expense when incurred.

The following table presents information about the Company’s lease costs for operating leases recorded in the consolidated balance sheet, cash paid toward lease liabilities, and the weighted-average remaining term and discount rates of the operating leases.

		Year Ended December 31,
		2020				2019
		(Dollars in thousands)
Lease cost
Operating lease cost		$	104,158			$	100,669
Short-term lease cost			198				105
Variable lease cost			1,565				2,332
Total lease cost		$	105,921			$	103,106
Other information
Right-of-use assets obtained in exchange for new operating lease liabilities		$	70,754			$	132,219
Cash paid toward lease liabilities			104,396				101,869
Weighted-average remaining lease term		7 years				7 years
Weighted-average discount rate			2.74	%			3.01	%

Minimum lease payments under noncancelable operating leases are summarized in the following table.

	(In thousands)
Year ending December 31:
2021	$	105,445
2022		93,621
2023		75,698
2024		61,412
2025		46,023
Later years		130,475
Total lease payments		512,674
Less: imputed interest		45,354
Total	$	467,320

Net lease expense for all operating leases totaled $111 million in 2018. All other operating leasing activities were not material to the Company’s consolidated results of operations. Minimum lease payments required under capital leases are not material.

6. Capitalized servicing assets

Changes in capitalized servicing assets were as follows:

		Residential Mortgage Loans												Commercial Mortgage Loans
For the Year Ended December 31,		2020				2019				2018				2020				2019				2018
		(In thousands)
Beginning balance		$	244,411			$	120,509			$	114,978			$	130,636			$	114,663			$	114,076
Originations			45,101				26,067				28,985				29,306				41,370				26,298
Purchases			—				144,326				454				—				—				—
Amortization			(58,308	)			(46,491	)			(23,908	)			(26,513	)			(25,397	)			(25,711	)
			231,204				244,411				120,509				133,429				130,636				114,663
Valuation allowance			(30,000	)			(7,000	)			—				—				—				—
Ending balance, net		$	201,204			$	237,411			$	120,509			$	133,429			$	130,636			$	114,663

Residential mortgage loans serviced for others were $26.3 billion at December 31, 2020, $32.3 billion at December 31, 2019 and $22.2 billion at December 31, 2018. Excluded from residential mortgage loans serviced for others were loans sub-serviced for others of $68.1 billion, $62.8 billion and $56.8 billion at December 31, 2020, 2019, and 2018, respectively. On January 31, 2019, the Company purchased servicing rights for residential real estate loans that had outstanding principal balances at that date of approximately $13.3 billion. The purchase price of such servicing rights was approximately $144 million. Commercial mortgage loans serviced for others were $18.9 billion at December 31, 2020, $17.6 billion at December 31, 2019 and $15.5 billion at December 31, 2018. Excluded from commercial mortgage loans serviced for others were loans sub-serviced for others of $3.3 billion at December 31, 2020, $3.4 billion at December 31, 2019 and $2.7 billion at December 31, 2018.

The estimated fair value of capitalized residential mortgage loan servicing assets was approximately $240 million at December 31, 2020 and $297 million at December 31, 2019. The fair value of capitalized residential mortgage loan servicing assets was estimated using weighted-average discount rates of 9.4% and 10.6% at December 31, 2020 and 2019, respectively, and contemporaneous prepayment assumptions that vary by loan type. At December 31, 2020 and 2019, the discount rate represented a weighted-average option-adjusted spread (“OAS”) of 918 basis points (hundredths of one percent) and 928 basis points, respectively, over market implied forward London Interbank Offered Rates (“LIBOR”). The estimated fair value of capitalized residential mortgage loan servicing rights may vary significantly in subsequent periods due to changing interest rates and the effect thereof on prepayment speeds. The estimated fair value of capitalized commercial mortgage loan servicing assets was approximately $160 million and $153 million at December 31, 2020 and 2019, respectively. An 18% discount rate was used to estimate the fair value of capitalized commercial mortgage loan servicing rights at December 31, 2020 and 2019 with no prepayment assumptions because, in general, the servicing agreements allow the Company to share in customer loan prepayment fees and thereby recover the remaining carrying value of the capitalized servicing rights associated with such loan. The Company’s ability to realize the carrying value of capitalized commercial mortgage servicing rights is more dependent on the borrowers’ abilities to repay the underlying loans than on prepayments or changes in interest rates.

The key economic assumptions used to determine the fair value of significant portfolios of capitalized servicing rights at December 31, 2020 and the sensitivity of such value to changes in those assumptions are summarized in the table that follows. Those calculated sensitivities are hypothetical and actual changes in the fair value of capitalized servicing rights may differ significantly from the amounts presented herein. The effect of a variation in a particular assumption on the fair value of the servicing rights is calculated without changing any other assumption. In

reality, changes in one factor may result in changes in another which may magnify or counteract the sensitivities. The changes in assumptions are presumed to be instantaneous.

		Residential				Commercial
		(Dollars in thousands)
Weighted-average prepayment speeds			14.50	%
Impact on fair value of 10% adverse change		$	(15,279	)
Impact on fair value of 20% adverse change			(29,189	)
Weighted-average OAS			9.18	%
Impact on fair value of 10% adverse change		$	(7,230	)
Impact on fair value of 20% adverse change			(14,020	)
Weighted-average discount rate							18.00	%
Impact on fair value of 10% adverse change						$	(7,024	)
Impact on fair value of 20% adverse change							(13,556	)

7. Goodwill and other intangible assets

The Company does not amortize goodwill, however, core deposit and other intangible assets are amortized over the estimated life of each respective asset. Total amortizing intangible assets were comprised of the following:

		Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount
		(In thousands)
December 31, 2020
Core deposit		$	131,664			$	119,125			$	12,539
Other			6,757				5,131				1,626
Total		$	138,421			$	124,256			$	14,165
December 31, 2019
Core deposit		$	131,664			$	105,802			$	25,862
Other			6,757				3,585				3,172
Total		$	138,421			$	109,387			$	29,034

Amortization of core deposit and other intangible assets was generally computed using accelerated methods over original amortization periods of three to seven years. The weighted-average original amortization period was approximately seven years. Amortization expense for core deposit and other intangible assets was $15 million, $19 million and $25 million for the years ended December 31, 2020, 2019 and 2018, respectively. Estimated amortization expense in future years for such intangible assets is as follows:

		(In thousands)
Year ending December 31:
2021		$	10,167
2022			3,998
		$	14,165

The Company completed annual goodwill impairment tests as of October 1, 2020, 2019 and 2018. For purposes of testing for impairment, the Company assigned all recorded goodwill to the reporting units originally intended to benefit from past business combinations, which has historically

been the Company’s core relationship business reporting units. Goodwill was generally assigned based on the implied fair value of the acquired goodwill applicable to the benefited reporting units at the time of each respective acquisition. The implied fair value of the goodwill was determined as the difference between the estimated incremental overall fair value of the reporting unit and the estimated fair value of the net assets assigned to the reporting unit as of each respective acquisition date. To test for goodwill impairment at each evaluation date, the Company compared the estimated fair value of each of its reporting units to their respective carrying amounts and certain other assets and liabilities assigned to the reporting unit, including goodwill and core deposit and other intangible assets. The methodologies used to estimate fair values of reporting units as of the acquisition dates and as of the evaluation dates were similar. For the Company’s core customer relationship business reporting units, fair value was estimated as the present value of the expected future cash flows of the reporting unit. Based on the results of the goodwill impairment tests, the Company concluded that the amount of recorded goodwill was not impaired at the respective testing dates.

A summary of goodwill assigned to each of the Company’s reportable segments as of December 31, 2020 and 2019 for purposes of testing for impairment is as follows:

		(In thousands)
Business Banking		$	864,366
Commercial Banking			1,401,873
Commercial Real Estate			654,389
Discretionary Portfolio			—
Residential Mortgage Banking			—
Retail Banking			1,309,191
All Other			363,293
Total		$	4,593,112

8. Borrowings

The amounts and interest rates of short-term borrowings were as follows:

		Federal Funds Purchased and Repurchase Agreements				Other Short-term Borrowings				Total
		(Dollars in thousands)
At December 31, 2020
Amount outstanding		$	59,482			$	—			$	59,482
Weighted-average interest rate			0.01	%			—				0.01	%
For the year ended December 31, 2020
Highest amount at a month-end		$	82,893			$	—
Daily-average amount outstanding			61,551				—			$	61,551
Weighted-average interest rate			0.05	%			—				0.05	%
At December 31, 2019
Amount outstanding		$	62,363			$	—			$	62,363
Weighted-average interest rate			0.14	%			—				0.14	%
For the year ended December 31, 2019
Highest amount at a month-end		$	3,402,566			$	5,000,000
Daily-average amount outstanding			260,322				799,068			$	1,059,390
Weighted-average interest rate			1.86	%			2.49	%			2.34	%
At December 31, 2018
Amount outstanding		$	198,378			$	4,200,000			$	4,398,378
Weighted-average interest rate			1.68	%			2.63	%			2.58	%
For the year ended December 31, 2018
Highest amount at a month-end		$	2,654,416			$	4,200,000
Daily-average amount outstanding			261,200				69,465			$	330,665
Weighted-average interest rate			1.49	%			2.16	%			1.63	%

Short-term borrowings have a stated maturity of one year or less at the date the Company enters into the obligation. In general, short-term repurchase agreements outstanding at December 31, 2020 matured on the next business day following year-end.

At December 31, 2020, M&T Bank had lines of credit under formal agreements as follows:

		(In thousands)
Outstanding borrowings		$	1,727
Unused			32,010,950

At December 31, 2020, M&T Bank had borrowing facilities available with the FHLBs whereby M&T Bank could borrow up to approximately $19.0 billion. Additionally, M&T Bank had an available line of credit with the Federal Reserve Bank of New York totaling approximately

$13.0 billion at December 31, 2020. M&T Bank is required to pledge loans and investment securities as collateral for these borrowing facilities.

Long-term borrowings were as follows:

		December 31,
		2020				2019
		(In thousands)
Senior notes of M&T:
Variable rate due 2023		$	249,824			$	249,756
3.55% due 2023			533,369				520,454
Senior notes of M&T Bank:
Variable rate due 2021			349,992				349,893
Variable rate due 2022			249,858				249,758
2.05% due 2020			—				749,254
2.10% due 2020			—				749,864
2.625% due 2021			—				654,136
2.50% due 2022			664,400				652,714
2.90% due 2025			749,656				749,572
Advances from FHLB:
Fixed rates			1,683				1,815
Agreements to repurchase securities			—				101,679
Subordinated notes of M&T Bank:
Variable rate due 2020			—				409,361
Variable rate due 2021			500,000				500,000
3.40% due 2027			552,194				514,353
Junior subordinated debentures of M&T associated with preferred capital securities:
Fixed rates:
BSB Capital Trust I — 8.125%, due 2028			15,752				15,728
Provident Trust I — 8.29%, due 2028			29,099				28,235
Southern Financial Statutory Trust I — 10.60%, due 2030			6,836				6,770
Variable rates:
First Maryland Capital I — due 2027			148,409				147,871
First Maryland Capital II — due 2027			150,606				149,943
Allfirst Asset Trust — due 2029			97,075				96,930
BSB Capital Trust III — due 2033			15,464				15,464
Provident Statutory Trust III — due 2033			56,641				55,867
Southern Financial Capital Trust III — due 2033			8,338				8,236
Other			2,997				8,533
		$	4,382,193			$	6,986,186

The variable rate notes of M&T pay interest quarterly at a rate that is indexed to the three-month LIBOR. The contractual interest rates for those notes were .90% at December 31, 2020 and 2.62% at December 31, 2019.

The variable rate senior notes of M&T Bank pay interest quarterly at rates that are indexed to the three-month LIBOR. The contractual interest rates for those notes ranged from .49% to .83% at December 31, 2020 and 2.21% to 2.54% at December 31, 2019. The weighted-average contractual interest rate was 0.63% at December 31, 2020 and 2.34% at December 31, 2019.

Long-term fixed rate advances from the FHLB had weighted-average contractual interest rates of 5.82% at December 31, 2020 and December 31, 2019. Advances from the FHLB outstanding at December 31, 2020 mature in 2029 and 2035 and are secured by residential real estate loans, commercial real estate loans and investment securities.

The agreement to repurchase securities outstanding at December 31, 2019 had a contractual interest rate of 4.29%. The Company posted collateral consisting primarily of government guaranteed mortgage-backed securities of $108 million at December 31, 2019.

The subordinated notes of M&T Bank are unsecured and are subordinate to the claims of its other creditors. The notes that were repaid in 2020 paid interest monthly at a rate that was indexed to the one-month LIBOR. The contractual interest rate was 3.02% at maturity and December 31, 2019. The notes that mature in 2021 pay interest quarterly at a rate that is indexed to the three-month LIBOR. The contractual interest rate was 0.87% at December 31, 2020 and 2.55% at December 31, 2019.

The fixed and variable rate junior subordinated deferrable interest debentures of M&T (“Junior Subordinated Debentures”) are held by various trusts and were issued in connection with the issuance by those trusts of preferred capital securities (“Capital Securities”) and common securities (“Common Securities”). The proceeds from the issuances of the Capital Securities and the Common Securities were used by the trusts to purchase the Junior Subordinated Debentures. The Common Securities of each of those trusts are wholly owned by M&T and are the only class of each trust’s securities possessing general voting powers. The Capital Securities represent preferred undivided interests in the assets of the corresponding trust. Under the Federal Reserve Board’s risk-based capital guidelines, the Capital Securities qualify for inclusion in Tier 2 regulatory capital. The variable rate Junior Subordinated Debentures pay interest quarterly at rates that are indexed to the three-month LIBOR. Those rates ranged from 1.06% to 3.59% at December 31, 2020 and from 2.76% to 5.34% at December 31, 2019. The weighted-average variable rates payable on those Junior Subordinated Debentures were 1.65% at December 31, 2020 and 3.37% at December 31, 2019.

Holders of the Capital Securities receive preferential cumulative cash distributions unless M&T exercises its right to extend the payment of interest on the Junior Subordinated Debentures as allowed by the terms of each such debenture, in which case payment of distributions on the respective Capital Securities will be deferred for comparable periods. During an extended interest period, M&T may not pay dividends or distributions on, or repurchase, redeem or acquire any shares of its capital stock. In general, the agreements governing the Capital Securities, in the aggregate, provide a full, irrevocable and unconditional guarantee by M&T of the payment of distributions on, the redemption of, and any liquidation distribution with respect to the Capital Securities. The obligations under such guarantee and the Capital Securities are subordinate and junior in right of payment to all senior indebtedness of M&T.

The Capital Securities will remain outstanding until the Junior Subordinated Debentures are repaid at maturity, are redeemed prior to maturity or are distributed in liquidation to the trusts. The Capital Securities are mandatorily redeemable in whole, but not in part, upon repayment at the stated maturity dates (ranging from 2027 to 2033) of the Junior Subordinated Debentures or the earlier redemption of the Junior Subordinated Debentures in whole upon the occurrence of one or more events set forth in the indentures relating to the Capital Securities, and in whole or in part at any time after an optional redemption prior to contractual maturity contemporaneously with the optional redemption of the related Junior Subordinated Debentures in whole or in part, subject to possible regulatory approval.

Long-term borrowings at December 31, 2020 mature as follows:

		(In thousands)
Year ending December 31:
2021		$	849,976
2022			917,270
2023			783,193
2024			—
2025			749,656
Later years			1,082,098
		$	4,382,193

9. Shareholders’ equity

M&T is authorized to issue 1,000,000 shares of preferred stock with a $1.00 par value per share. Preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference, but have no general voting rights.

Issued and outstanding preferred stock of M&T as of December 31, 2020 and 2019 is presented below:

		Shares Issued and Outstanding				Carrying Value
		(Dollars in thousands)
Series E (a)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share			350,000			$	350,000
Series F (b)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock, $10,000 liquidation preference per share			50,000			$	500,000
Series G (c)
Fixed-Rate Reset Non-cumulative Perpetual Preferred Stock, $10,000 liquidation preference per share			40,000			$	400,000

(a)

Dividends, if declared, are paid semi-annually at a rate of 6.45% through February 14, 2024 and thereafter will be paid quarterly at a rate of the three-month LIBOR plus 361 basis points. The shares are redeemable in whole or in part on or after February 15, 2024. Notwithstanding M&T’s option to redeem the shares, if an event occurs such that the shares no longer qualify as Tier 1 capital, M&T may redeem all of the shares within 90 days following that occurrence. Declared dividends per share were $64.50 in each of 2020, 2019 and 2018.

(b)

Dividends, if declared, are paid semi-annually at a rate of 5.125% through October 31, 2026 and thereafter will be paid quarterly at a rate of the three-month LIBOR plus 352 basis points. The shares are redeemable in whole or in part on or after November 1, 2026. Notwithstanding M&T’s option to redeem the shares, if an event occurs such that the shares no longer qualify as Tier 1 capital, M&T may redeem all of the shares within 90 days following that occurrence. Declared dividends per share were $512.50 in each of 2020, 2019 and 2018.

(c)

Dividends, if declared, are paid semi-annually at a rate of 5.0% through July 31, 2024 and thereafter will be paid semiannually at a rate of the five-year U.S. Treasury rate plus 3.174%. The shares are redeemable in whole or in part on or after August 1, 2024. Notwithstanding M&T’s option to redeem the shares, if an event occurs such that the shares no longer qualify as Tier 1 capital, M&T may redeem all of the shares within 90 days following that occurrence. Declared dividends per share were $500.694 in 2020 and $125.694 in 2019.

10. Revenue from contracts with customers

A significant amount of the Company’s revenues are derived from net interest income on financial assets and liabilities, mortgage banking revenues, trading account and foreign exchange gains, investment securities gains, loan and letter of credit fees, income from bank-owned life insurance, and certain other revenues that are generally excluded from the scope of accounting guidance for revenue from contracts with customers.

For noninterest income revenue streams, the Company recognizes the expected amount of consideration as revenue when the performance obligations related to the services under the terms of

a contract are satisfied. The Company’s contracts generally do not contain terms that necessitate significant judgment to determine the amount of revenue to recognize.

The Company generally charges customer accounts or otherwise bills customers upon completion of its services. Typically the Company’s contracts with customers have a duration of one year or less and payment for services is received at least annually, but oftentimes more frequently as services are provided. At December 31, 2020 and 2019, the Company had $67 million and $62 million, respectively, of amounts receivable related to recognized revenue from the sources in the accompanying tables. Such amounts are classified in accrued interest and other assets in the consolidated balance sheet. In certain situations the Company is paid in advance of providing services and defers the recognition of revenue until its service obligation is satisfied. At December 31, 2020 and 2019, the Company had deferred revenue of $42 million and $43 million, respectively, related to the sources in the accompanying tables and recorded such amounts in accrued interest and other liabilities in the consolidated balance sheet. The following tables summarize sources of the Company’s noninterest income during 2020, 2019, and 2018 that are subject to the noted accounting guidance.

		Business Banking				Commercial Banking				Commercial Real Estate				Discretionary Portfolio				Residential Mortgage Banking				Retail Banking				All Other				Total
Year Ended December 31, 2020		(In thousands)
Classification in consolidated statement of income
Service charges on deposit accounts		$	50,119				92,720				10,252				—				—				211,858				5,839			$	370,788
Trust income			18				442				—				—				—				—				601,424				601,884
Brokerage services income			—				—				—				—				—				—				47,428				47,428
Other revenues from operations:
Merchant discount and credit card fees			40,475				45,528				2,221				—				—				13,481				767				102,472
Other			—				9,408				6,218				1,625				4,732				20,813				41,815				84,611
		$	90,612				148,098				18,691				1,625				4,732				246,152				697,273			$	1,207,183
Year Ended December 31, 2019
Classification in consolidated statement of income
Service charges on deposit accounts		$	60,690				93,044				9,828				—				4				263,659				5,753			$	432,978
Trust income			31				963				—				—				—				—				571,614				572,608
Brokerage services income			—				—				—				—				—				—				48,922				48,922
Other revenues from operations:
Merchant discount and credit card fees			36,844				52,161				2,516				—				—				12,140				3,381				107,042
Other			—				7,498				8,615				1,776				3,492				36,144				34,088				91,613
		$	97,565				153,666				20,959				1,776				3,496				311,943				663,758			$	1,253,163
Year Ended December 31, 2018
Classification in consolidated statement of income
Service charges on deposit accounts		$	62,323				96,407				9,870				—				10				254,590				6,137			$	429,337
Trust income			9				917				—				—				—				—				536,659				537,585
Brokerage services income			—				—				—				—				—				—				51,069				51,069
Other revenues from operations:
Merchant discount and credit card fees			34,557				52,051				2,213				—				—				14,924				2,208				105,953
Other			—				8,796				7,259				1,738				3,814				38,529				30,233				90,369
		$	96,889				158,171				19,342				1,738				3,824				308,043				626,306			$	1,214,313

Service charges on deposit accounts include fees deducted directly from customer account balances, such as account maintenance, insufficient funds and other transactional service charges, and also include debit card interchange revenue resulting from customer initiated transactions. Account maintenance charges are generally recognized as revenue on a monthly basis, whereas other fees are recognized after the respective service is provided.

Trust income includes fees related to the Institutional Client Services (“ICS”) business and the Wealth Advisory Services (“WAS”) business. Revenues from the ICS business are largely derived from a variety of trustee, agency, investment, cash management and administrative services, whereas revenues from the WAS business are mainly derived from asset management, fiduciary services, and family office services. Trust fees may be billed in arrears or in advance and are recognized as revenues as the Company’s performance obligations are satisfied. Certain fees are based on a percentage of assets invested or under management and are recognized as the service is performed and constraints regarding the uncertainty of the amount of fees are resolved.

Brokerage services income includes revenues from the sale of mutual funds and annuities and securities brokerage fees. Such revenues are generally recognized at the time of transaction execution. Mutual fund and other distribution fees are recognized upon initial placement of customer funds as well as in future periods as such customers continue to hold amounts in those mutual funds.

Other revenues from operations include merchant discount and credit card fees such as interchange fees and merchant discount fees that are generally recognized when the cardholder’s transaction is approved and settled. Also included in other revenues from operations are insurance commissions, ATM surcharge fees, and advisory fees. Insurance commissions are recognized at the time the insurance policy is executed with the customer. Insurance renewal commissions are recognized upon subsequent renewal of the policy. ATM surcharge fees are included in revenue at the time of the respective ATM transaction. Advisory fees are generally recognized at the conclusion of the advisory engagement when the Company has satisfied its service obligation.

11. Stock-based compensation plans

Stock-based compensation expense was $80 million in 2020, $76 million in 2019 and $66 million in 2018. The Company recognized income tax benefits related to stock-based compensation of $17 million in 2020, $19 million in 2019 and $24 million in 2018.

The Company’s equity incentive compensation plan allows for the issuance of various forms of stock-based compensation, including stock options, restricted stock and restricted stock units, including performance-based awards. At December 31, 2020 and 2019, respectively, there were 3,100,665 and 3,742,478 shares available for future grant under the Company’s equity incentive compensation plan.

Stock awards

Stock awards are comprised of restricted stock and restricted stock units. Stock awards granted since 2014 generally vest over three years. Stock awards granted prior to 2014 vested over four years. A portion of stock awards granted after 2013 require a performance condition to be met before such awards vest. The Company may issue shares from treasury stock to the extent available or issue new shares. There were no restricted shares issued in 2020, 2019 or 2018. The number of restricted stock units issued was 480,949 in 2020, 448,487 in 2019 and 348,512 in 2018, with a weighted-average grant date fair value of $81 million, $74 million and $66 million, respectively. Unrecognized

compensation expense associated with restricted stock units was $29 million as of December 31, 2020 and is expected to be recognized over a weighted-average period of approximately one year.

A summary of restricted stock and restricted stock unit activity follows:

		Restricted Stock Units Outstanding				Weighted- Average Grant Price				Restricted Stock Outstanding				Weighted- Average Grant Price
Unvested at January 1, 2020			691,227			$	171.72				63,591			$	162.45
Granted			480,949				168.71				—				—
Vested			(334,795	)			172.56				(49,468	)			162.48
Cancelled			(20,431	)			171.91				(573	)			158.02
Unvested at December 31, 2020			816,950			$	169.60				13,550			$	162.50

Stock option awards

Stock options issued generally vest over three years and are exercisable over terms not exceeding ten years and one day. The Company granted 187,088, 164,244 and 116,852 stock options in 2020, 2019 and 2018, respectively. The Company used an option pricing model to estimate the grant date present value of stock options granted, which was not material in each of 2020, 2019 and 2018.

A summary of stock option activity follows:

						Weighted-Average
		Stock Options Outstanding				Exercise Price				Life (In Years)				Aggregate Intrinsic Value (In thousands)
Outstanding at January 1, 2020			305,452			$	170.15
Granted			187,088				173.04
Exercised			(25,047	)			117.81
Expired			(2,070	)			174.09
Outstanding at December 31, 2020			465,423			$	174.11				8.2			$	38
Exercisable at December 31, 2020			133,098			$	178.58				7.4			$	38

For 2020, 2019 and 2018, M&T received $3 million, $9 million and $60 million, respectively, in cash from the exercise of stock options. The intrinsic value of stock options exercised during 2020 was $1 million, compared with $3 million and $16 million in 2019 and 2018, respectively, and the related tax benefits realized by the Company were not material in any of those three years. As of December 31, 2020, the amount of unrecognized compensation cost related to non-vested stock options was not material. The total grant date fair value of stock options vested during 2020, 2019 and 2018 was not material. Upon the exercise of stock options, the Company may issue shares from treasury stock to the extent available or issue new shares.

Stock purchase plan

The stock purchase plan provides eligible employees of the Company with the right to purchase shares of M&T common stock at a discount through accumulated payroll deductions. In connection with the employee stock purchase plan, shares of M&T common stock issued were 77,170 in 2020, 71,676 in 2019 and 58,167 in 2018. As of December 31, 2020, there were 2,233,581 shares available for issuance under the plan. M&T received cash for shares purchased through the employee stock purchase plan of $12 million, $11 million and $10 million in 2020, 2019 and 2018, respectively.

Compensation expense recognized for the stock purchase plan was not material in 2020, 2019 or 2018.

Deferred bonus plan

The Company provided a deferred bonus plan pursuant to which eligible employees could elect to defer all or a portion of their annual incentive compensation awards and allocate such awards to several investment options, including M&T common stock. Participants could elect the timing of distributions from the plan. Such distributions are payable in cash with the exception of balances allocated to M&T common stock which are distributable in the form of M&T common stock. Shares of M&T common stock distributable pursuant to the terms of the deferred bonus plan were 14,304 and 16,491 at December 31, 2020 and 2019, respectively. The obligation to issue shares is included in “common stock issuable” in the consolidated balance sheet.

Directors’ stock plan

The Company maintains a compensation plan for non-employee members of the Company’s boards of directors that allows such members to receive all or a portion of their compensation in shares of M&T common stock. Through December 31, 2020, 295,182 shares had been issued in connection with the directors’ stock plan.

Through acquisitions, the Company assumed obligations to issue shares of M&T common stock related to deferred directors compensation plans. Shares of common stock issuable under such plans were 3,809 and 5,043 at December 31, 2020 and 2019, respectively. The obligation to issue shares is included in “common stock issuable” in the consolidated balance sheet.

12. Pension plans and other postretirement benefits

The Company provides defined pension and other postretirement benefits (including health care and life insurance benefits) to qualified retired employees. The Company uses a December 31 measurement date for all of its plans.

Net periodic pension expense for defined benefit plans consisted of the following:

		Year Ended December 31
		2020				2019				2018
		(In thousands)
Service cost		$	19,944			$	17,294			$	20,346
Interest cost on benefit obligation			71,421				81,579				74,704
Expected return on plan assets			(125,512	)			(122,139	)			(123,127	)
Amortization of prior service cost			557				557				557
Recognized net actuarial loss			58,096				21,992				43,793
Net periodic pension cost (benefit)		$	24,506			$	(717	)		$	16,273

Net other postretirement benefits expense for defined benefit plans consisted of the following:

		Year Ended December 31
		2020				2019				2018
		(In thousands)
Service cost		$	970			$	859			$	938
Interest cost on benefit obligation			1,741				2,344				2,293
Amortization of prior service credit			(4,738	)			(4,730	)			(4,729	)
Recognized net actuarial gain			(1,236	)			(1,247	)			(826	)
Net other postretirement benefits		$	(3,263	)		$	(2,774	)		$	(2,324	)

Service cost is reflected in salaries and employee benefits expense. The other components of net periodic benefit expense are reflected in other costs of operations.

Data relating to the funding position of the defined benefit plans were as follows:

		Pension Benefits								Other Postretirement Benefits
		2020				2019				2020				2019
		(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year		$	2,247,329			$	1,949,613			$	56,492			$	59,991
Service cost			19,944				17,294				970				859
Interest cost			71,421				81,579				1,741				2,344
Plan participants’ contributions			—				—				2,386				2,749
Actuarial (gain) loss			288,944				298,713				2,371				(687	)
Medicare Part D reimbursement			—				—				574				370
Benefits paid			(106,346	)			(99,870	)			(9,253	)			(9,134	)
Benefit obligation at end of year			2,521,292				2,247,329				55,281				56,492
Change in plan assets:
Fair value of plan assets at beginning of year			2,037,940				1,833,833				—				—
Actual return on plan assets			178,610				293,546				—				—
Employer contributions			310,378				10,431				6,293				6,015
Plan participants’ contributions			—				—				2,386				2,749
Medicare Part D reimbursement			—				—				574				370
Benefits paid			(106,346	)			(99,870	)			(9,253	)			(9,134	)
Fair value of plan assets at end of year			2,420,582				2,037,940				—				—
Funded status		$	(100,710	)		$	(209,389	)		$	(55,281	)		$	(56,492	)
Prepaid asset recognized in the consolidated balance sheet			64,670				—				—				—
Accrued liability recognized in the consolidated balance sheet			(165,380	)			(209,389	)			(55,281	)			(56,492	)
Net accrued liability recognized in the consolidated balance sheet		$	(100,710	)		$	(209,389	)		$	(55,281	)		$	(56,492	)
Amounts recognized in accumulated other comprehensive income (“AOCI”) were:
Net loss (gain)		$	684,780			$	507,029			$	(13,701	)		$	(17,308	)
Net prior service cost (credit)			1,277				1,834				(22,269	)			(27,007	)
Pre-tax adjustment to AOCI			686,057				508,863				(35,970	)			(44,315	)
Taxes			(178,375	)			(133,779	)			9,352				11,650
Net adjustment to AOCI		$	507,682			$	375,084			$	(26,618	)		$	(32,665	)

The Company has an unfunded supplemental pension plan for certain key executives and others. The projected benefit obligation and accumulated benefit obligation included in the preceding data related to such plan were $165 million as of December 31, 2020 and $154 million as of December 31, 2019.

The accumulated benefit obligation for all defined benefit pension plans was $2.5 billion and $2.2 billion at December 31, 2020 and 2019, respectively.

GAAP requires an employer to recognize in its balance sheet as an asset or liability the overfunded or underfunded status of a defined benefit postretirement plan, measured as the difference between the fair value of plan assets and the benefit obligation. For a pension plan, the benefit obligation is the projected benefit obligation; for any other postretirement benefit plan, such as a retiree health care plan, the benefit obligation is the accumulated postretirement benefit obligation. Gains or losses and prior service costs or credits that arise during the period, but are not included as components of net periodic benefit expense, are recognized as a component of other comprehensive income. Amortization of net gains and losses is included in annual net periodic benefit expense if, as of the beginning of the year, the net gain or loss exceeds 10% of the greater of the benefit obligation or the market-related fair value of the plan assets. As indicated in the preceding table, as of December 31, 2020 the Company recorded a minimum liability adjustment of $650 million ($686 million related to pension plans and $(36) million related to other postretirement benefits) with a corresponding reduction of shareholders’ equity, net of applicable deferred taxes, of $481 million. In aggregate, the benefit plans realized a net loss during 2020 that resulted in an increase to the minimum liability adjustment from that which was recorded at December 31, 2019 of $186 million. The net loss in 2020 was mainly the result of lowering the discount rate used to measure the benefit obligation of all plans to 2.50% at December 31, 2020 from 3.25% used at the prior year-end and the migration to recent mortality tables published by the Society of Actuaries, offset, in part, by the amortization of actuarial losses and a return on plan assets that exceeded the assumed expected return. The table below reflects the changes in plan assets and benefit obligations recognized in other comprehensive income related to the Company’s postretirement benefit plans.

		Pension Plans				Other Postretirement Benefit Plans				Total
		(In thousands)
2020
Net loss		$	235,847			$	2,371			$	238,218
Amortization of prior service (cost) credit			(557	)			4,738				4,181
Amortization of actuarial (loss) gain			(58,096	)			1,236				(56,860	)
Total recognized in other comprehensive income, pre-tax		$	177,194			$	8,345			$	185,539
2019
Net loss (gain)		$	127,305			$	(687	)		$	126,618
Amortization of prior service (cost) credit			(557	)			4,730				4,173
Amortization of actuarial (loss) gain			(21,992	)			1,247				(20,745	)
Total recognized in other comprehensive income, pre-tax		$	104,756			$	5,290			$	110,046

The Company also provides a qualified defined contribution pension plan to eligible employees who were not participants in the defined benefit pension plan as of December 31, 2005 and to other employees who have elected to participate in the defined contribution plan. The Company makes contributions to the defined contribution plan each year in an amount that is based on an individual participant’s total compensation (generally defined as total wages, incentive compensation, commissions and bonuses) and years of service. Participants do not contribute to the defined contribution pension plan. Pension expense recorded in 2020, 2019 and 2018 associated with the defined contribution pension plan was $35 million, $32 million and $29 million, respectively.

Assumptions

The assumed weighted-average rates used to determine benefit obligations at December 31 were:

		Pension Benefits								Other Postretirement Benefits
		2020				2019				2020				2019
Discount rate			2.50	%			3.25	%			2.50	%			3.25	%
Rate of increase in future compensation levels			3.37	%			4.29	%			—				—

The assumed weighted-average rates used to determine net benefit expense for the years ended December 31 were:

		Pension Benefits												Other Postretirement Benefits
		2020				2019				2018				2020				2019				2018
Discount rate			3.25	%			4.25	%			3.50	%			3.25	%			4.25	%			3.50	%
Long-term rate of return on plan assets			6.50	%			6.50	%			6.50	%			—				—				—
Rate of increase in future compensation levels			4.29	%			4.31	%			4.33	%			—				—				—

The discount rate used by the Company to determine the present value of the Company’s future benefit obligations reflects specific market yields for a hypothetical portfolio of highly rated corporate bonds that would produce cash flows similar to the Company’s benefit plan obligations and the level of market interest rates in general as of the year-end.

The expected long-term rate of return assumption as of each measurement date was developed through analysis of historical market returns, current market conditions, anticipated future asset allocations, the funds’ past experience, and expectations on potential future market returns. The expected rate of return assumption represents a long-term average view of the performance of the plan assets, a return that may or may not be achieved during any one calendar year.

The Company’s defined benefit pension plan is sensitive to the long-term rate of return on plan assets and the discount rate. To demonstrate the sensitivity of pension expense to changes in these assumptions, with all other assumptions held constant, 25 basis point increases in: the rate of return on plan assets would have resulted in a decrease in pension expense of approximately $5 million; and the discount rate would have resulted in a decrease in pension expense of approximately $9 million. Decreases of 25 basis points in those assumptions would have resulted in similar changes in amount, but in the opposite direction from the changes presented in the preceding sentence. Additionally, an increase of 25 basis points in the discount rate would have decreased the benefit obligation by

$86 million and a decrease of 25 basis points in the discount rate would have increased the benefit obligation by $91 million at December 31, 2020.

For measurement of other postretirement benefits, a 6.25% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2021. The rate was assumed to decrease to 5.00% over eight years.

Plan assets

The Company’s policy is to invest the pension plan assets in a prudent manner for the purpose of providing benefit payments to participants and mitigating reasonable expenses of administration. The Company’s investment strategy is designed to provide a total return that, over the long-term, places an emphasis on the preservation of capital. The strategy attempts to maximize investment returns on assets at a level of risk deemed appropriate by the Company while complying with applicable regulations and laws. The investment strategy utilizes asset diversification as a principal determinant for establishing an appropriate risk profile while emphasizing total return realized from capital appreciation, dividends and interest income. The target allocations for plan assets are generally 25 to 60 percent equity securities, 10 to 65 percent debt securities, and 5 to 60 percent money-market investments/cash equivalents and other investments, although holdings could be more or less than these general guidelines based on market conditions at the time and actions taken or recommended by the investment managers providing advice to the Company. Assets are managed by a combination of internal and external investment managers. Equity securities may include investments in domestic and international equities, through individual securities, mutual funds and exchange-traded funds. Debt securities may include investments in corporate bonds of companies from diversified industries, mortgage-backed securities guaranteed by government agencies and U.S. Treasury securities through individual securities and mutual funds. Additionally, the Company’s defined benefit pension plan held $479 million (20% of total assets) of real estate funds, private investments, hedge funds and other investments at December 31, 2020. Returns on invested assets are periodically compared with target market indices for each asset type to aid management in evaluating such returns. Furthermore, management regularly reviews the investment policy and may, if deemed appropriate, make changes to the target allocations noted above.

The fair values of the Company’s pension plan assets at December 31, 2020 and 2019, by asset category, were as follows:

		Fair Value Measurement of Plan Assets At December 31, 2020
		Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
		(In thousands)
Asset category:
Money-market investments		$	65,263			$	48,322			$	16,941			$	—
Equity securities:
M&T			111,441				111,441				—				—
Domestic(a)			308,220				308,220				—				—
International(b)			13,648				13,648				—				—
Mutual funds:
Domestic(a)			302,094				302,094				—				—
International(b)			422,601				422,601				—				—
			1,158,004				1,158,004				—				—
Debt securities:
Corporate(c)			172,762				—				172,762				—
Government			234,232				—				234,232				—
International			6,413				—				6,413				—
Mutual funds:
Domestic(d)			302,635				302,635				—				—
			716,042				302,635				413,407				—
Other:
Diversified mutual fund			83,507				83,507				—				—
Real estate partnerships			26,847				3,616				—				23,231
Private equity / debt			97,124				—				—				97,124
Hedge funds			261,417				108,516				—				152,901
Guaranteed deposit fund			10,498				—				—				10,498
			479,393				195,639				—				283,754
Total(e)		$	2,418,702			$	1,704,600			$	430,348			$	283,754

		Fair Value Measurement of Plan Assets At December 31, 2019
		Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
		(In thousands)
Asset category:
Money-market investments		$	38,461			$	33,870			$	4,591			$	—
Equity securities:
M&T			148,603				148,603				—				—
Domestic(a)			219,663				219,663				—				—
International(b)			10,476				10,476				—				—
Mutual funds:
Domestic(a)			238,872				238,872				—				—
International(b)			381,433				381,433				—				—
			999,047				999,047				—				—
Debt securities:
Corporate(c)			112,783				—				112,783				—
Government			190,679				—				190,679				—
International			6,648				—				6,648				—
Mutual funds:
Domestic(d)			249,075				249,075				—				—
			559,185				249,075				310,110				—
Other:
Diversified mutual fund			86,980				86,980				—				—
Real estate partnerships			21,905				3,939				—				17,966
Private equity / debt			87,966				—				—				87,966
Hedge funds			231,807				116,029				—				115,778
Guaranteed deposit fund			10,527				—				—				10,527
			439,185				206,948				—				232,237
Total(e)		$	2,035,878			$	1,488,940			$	314,701			$	232,237

(a)	This category is mainly comprised of equities of companies primarily within the small-cap, mid-cap and large-cap sectors of the U.S. economy and range across diverse industries.

(b)	This category is comprised of equities in companies primarily within the mid-cap and large-cap sectors of international markets mainly in developed and emerging markets in Europe and the Pacific Rim.

(c)	This category represents investment grade bonds of U.S. issuers from diverse industries.

(d)	Approximately 78% of the mutual funds were invested in investment grade bonds and 22% in high-yielding bonds at December 31, 2020. Approximately 80% of the mutual funds were invested in investment grade bonds and 20% in high-yielding bonds at December 31, 2019. The holdings within the funds were spread across diverse industries.

(e)	Excludes dividends and interest receivable totaling $2 million at each of December 31, 2020 and 2019.

Pension plan assets included common stock of M&T with a fair value of $111 million (5% of total plan assets) at December 31, 2020 and $149 million (7% of total plan assets) at December 31, 2019. No investment in securities of a non-U.S. Government or government agency issuer exceeded ten percent of plan assets at December 31, 2020.

The changes in Level 3 pension plan assets measured at estimated fair value on a recurring basis during the year ended December 31, 2020 were as follows:

		Balance – January 1, 2020				Purchases (Sales)				Total Realized/ Unrealized Gains (Losses)				Balance – December 31, 2020
		(In thousands)
Other
Real estate partnerships		$	17,966			$	3,581			$	1,684			$	23,231
Private equity/debt			87,966				7,206				1,952				97,124
Hedge funds			115,778				30,000				7,123				152,901
Guaranteed deposit fund			10,527				—				(29	)			10,498
Total		$	232,237			$	40,787			$	10,730			$	283,754

The Company makes contributions to its funded qualified defined benefit pension plan as required by government regulation or as deemed appropriate by management after considering factors such as the fair value of plan assets, expected returns on such assets, and the present value of benefit obligations of the plan. The Company made a voluntary contribution of $300 million to the qualified defined benefit pension plan in 2020. The Company did not make any contributions to the plan in 2019. The Company is not required to make contributions to the qualified defined benefit plan in 2021, however, subject to the impact of actual events and circumstances that may occur in 2021, the Company may make contributions, but the amount of any such contributions has not been determined. The Company regularly funds the payment of benefit obligations for the supplemental defined benefit pension and postretirement benefit plans because such plans do not hold assets for investment. Payments made by the Company for supplemental pension benefits were $10 million in each of 2020 and 2019. Payments made by the Company for postretirement benefits were $6 million in each of 2020 and 2019. Payments for supplemental pension and other postretirement benefits for 2021 are not expected to differ from those made in 2020 by an amount that will be material to the Company’s consolidated financial position.

Estimated benefits expected to be paid in future years related to the Company’s defined benefit pension and other postretirement benefits plans are as follows:

		Pension Benefits				Other Postretirement Benefits
		(In thousands)
Year ending December 31:
2021		$	106,285			$	3,238
2022			109,880				3,269
2023			114,938				3,131
2024			119,402				2,974
2025			121,456				2,789
2026 through 2030			645,515				10,656

The Company has a retirement savings plan (“RSP”) that is a defined contribution plan in which eligible employees of the Company may defer up to 50% of qualified compensation via contributions to the plan. The RSP was amended in 2020 to increase the employer matching

contribution to 100% from 75% in prior years and also to increase the employee's qualified compensation limits to 5% from 4.5%. Employees’ accounts, including employee contributions, employer matching contributions and accumulated earnings thereon, are at all times fully vested and nonforfeitable. Employee benefits expense resulting from the Company’s contributions to the RSP totaled $62 million, $48 million and $43 million in 2020, 2019 and 2018, respectively.

13. Income taxes

The components of income tax expense were as follows:

		Year Ended December 31
		2020				2019				2018
		(In thousands)
Current
Federal		$	267,550			$	359,668			$	408,428
State and local			98,431				132,696				113,706
Total current			365,981				492,364				522,134
Deferred
Federal			(22,894	)			40,769				(12,780	)
State and local			(8,397	)			16,779				28,637
Total deferred			(31,291	)			57,548				15,857
Amortization of investments in qualified affordable housing projects			81,679				68,200				52,169
Total income taxes applicable to pre-tax income		$	416,369			$	618,112			$	590,160

The Company files a consolidated federal income tax return reflecting taxable income earned by all domestic subsidiaries. In prior years, applicable federal tax law allowed certain financial institutions the option of deducting as bad debt expense for tax purposes amounts in excess of actual losses. In accordance with GAAP, such financial institutions were not required to provide deferred income taxes on such excess. Recapture of the excess tax bad debt reserve established under the previously allowed method will result in taxable income if M&T Bank fails to maintain bank status as defined in the Internal Revenue Code or charges are made to the reserve for other than bad debt losses. At December 31, 2020, M&T Bank’s tax bad debt reserve for which no federal income taxes have been provided was $137 million. No actions are planned that would cause this reserve to become wholly or partially taxable.

Income taxes attributable to gains or losses on bank investment securities were an expense of $2 million in 2020 and $5 million in 2019 and a benefit of $2 million in 2018.

Total income taxes differed from the amount computed by applying the statutory federal income tax rate to pre-tax income as follows:

		Year Ended December 31
		2020				2019				2018
		(In thousands)
Income taxes at statutory federal income tax rate		$	371,599			$	534,925			$	526,730
Increase (decrease) in taxes:
Tax-exempt income			(22,806	)			(27,319	)			(26,186	)
State and local income taxes, net of federal income tax effect			71,127				118,085				112,451
Qualified affordable housing project federal tax credits, net			(14,826	)			(15,324	)			(12,240	)
Other			11,275				7,745				(10,595	)
		$	416,369			$	618,112			$	590,160

Deferred tax assets (liabilities) were comprised of the following at December 31:

		2020				2019				2018
		(In thousands)
Losses on loans and other assets		$	471,767			$	309,523			$	322,818
Operating lease liabilities			121,216				128,178				—
Retirement benefits			26,185				55,048				30,057
Postretirement and other employee benefits			28,004				24,023				23,563
Incentive and other compensation plans			18,984				26,861				24,796
Stock-based compensation			29,507				27,912				26,759
Unrealized losses			—				—				52,580
Losses on cash flow hedges			—				—				1,861
Other			66,763				69,863				43,880
Gross deferred tax assets			762,426				641,408				526,314
Right of use assets and other leasing transactions			(285,311	)			(326,626	)			(186,787	)
Unrealized gains			(50,785	)			(13,322	)			—
Capitalized servicing rights			(50,235	)			(56,649	)			(54,894	)
Depreciation and amortization			(95,684	)			(66,925	)			(61,881	)
Interest on loans			(8,113	)			(23,552	)			(18,920	)
Gains on cash flow hedges			(97,004	)			(36,845	)			—
Other			(62,581	)			(40,472	)			(30,211	)
Gross deferred tax liabilities			(649,713	)			(564,391	)			(352,693	)
Net deferred tax asset		$	112,713			$	77,017			$	173,621

The Company believes that it is more likely than not that the deferred tax assets will be realized through taxable earnings or alternative tax strategies.

The income tax credits shown in the statement of income of M&T in note 25 arise principally from operating losses before dividends from subsidiaries.

A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:

		Federal, State and Local Tax						Accrued Interest				Unrecognized Income Tax Benefits
		(In thousands)
Gross unrecognized tax benefits at January 1, 2018		$	45,432					$	5,651			$	51,083
Increases as a result of tax positions taken during 2018			13,426						—				13,426
Increases as a result of tax positions taken in prior years			—						1,969				1,969
Decreases as a result of settlements with taxing authorities			(664	)					(289	)			(953	)
Decreases as a result of tax positions taken in prior years			(1,920	)					(702	)			(2,622	)
Gross unrecognized tax benefits at December 31, 2018			56,274						6,629				62,903
Increases as a result of tax positions taken during 2019			6,996						—				6,996
Increases as a result of tax positions taken in prior years			3,265						3,255				6,520
Decreases as a result of tax positions taken in prior years			(7,566	)					(2,685	)			(10,251	)
Gross unrecognized tax benefits at December 31, 2019			58,969						7,199				66,168
Increases as a result of tax positions taken in prior years			—						2,800				2,800
Decreases as a result of tax positions taken in prior years			(10,107	)					(2,384	)			(12,491	)
Gross unrecognized tax benefits at December 31, 2020		$	48,862					$	7,615				56,477
Less: Federal, state and local income tax benefits													(11,174	)
Net unrecognized tax benefits at December 31, 2020 that, if recognized, would impact the effective income tax rate												$	45,303

The Company’s policy is to recognize interest and penalties, if any, related to unrecognized tax benefits in income taxes in the consolidated statement of income. The balance of accrued interest at December 31, 2020 is included in the table above. The Company’s federal, state and local income tax returns are routinely subject to examinations from various governmental taxing authorities. Such examinations may result in challenges to the tax return treatment applied by the Company to specific transactions. Management believes that the assumptions and judgment used to record tax-related assets or liabilities have been appropriate. Should determinations rendered by tax authorities ultimately indicate that management’s assumptions were inappropriate, the result and adjustments required could have a material effect on the Company’s results of operations. Examinations by the Internal Revenue Service of the Company’s federal income tax returns have been largely concluded through 2019, although under statute the income tax returns from 2017 through 2019 could be adjusted. The Company also files income tax returns in over forty states and numerous local jurisdictions. Substantially all material state and local matters have been concluded for years through 2013. It is not reasonably possible to estimate when examinations for any subsequent years will be completed.

14. Earnings per common share

The computations of basic earnings per common share follow:

		Year Ended December 31
		2020				2019				2018
		(In thousands, except per share)
Income available to common shareholders:
Net income		$	1,353,152			$	1,929,149			$	1,918,080
Less: Preferred stock dividends(a)			(68,228	)			(69,441	)			(72,521	)
Net income available to common equity			1,284,924				1,859,708				1,845,559
Less: Income attributable to unvested stock-based compensation awards			(5,858	)			(10,199	)			(9,531	)
Net income available to common shareholders		$	1,279,066			$	1,849,509			$	1,836,028
Weighted-average shares outstanding:
Common shares outstanding (including common stock issuable) and unvested stock-based compensation awards			129,404				135,169				144,740
Less: Unvested stock-based compensation awards			(766	)			(741	)			(748	)
Weighted-average shares outstanding			128,638				134,428				143,992
Basic earnings per common share		$	9.94			$	13.76			$	12.75

(a)	Including impact of not as yet declared cumulative dividends.

The computations of diluted earnings per common share follow:

		Year Ended December 31
		2020				2019				2018
		(In thousands, except per share)
Net income available to common equity		$	1,284,924			$	1,859,708			$	1,845,559
Less: Income attributable to unvested stock-based compensation awards			(5,856	)			(10,197	)			(9,524	)
Net income available to common shareholders		$	1,279,068			$	1,849,511			$	1,836,035
Adjusted weighted-average shares outstanding:
Common and unvested stock-based compensation awards			129,404				135,169				144,740
Less: Unvested stock-based compensation awards			(766	)			(741	)			(748	)
Plus: Incremental shares from assumed conversion of stock-based compensation awards and warrants to purchase common stock			66				34				159
Adjusted weighted-average shares outstanding			128,704				134,462				144,151
Diluted earnings per common share		$	9.94			$	13.75			$	12.74

GAAP defines unvested share-based awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities that shall be included in the computation of earnings per common share pursuant to the two-class method. The Company has issued stock-based compensation awards in the form of restricted stock and restricted stock units, which, in accordance with GAAP, are considered participating securities.

Stock-based compensation awards and warrants to purchase common stock of M&T representing common shares of 474,000 in 2020, 238,000 in 2019 and 194,000 in 2018 were not included in the computations of diluted earnings per common share because the effect on those years would have been antidilutive.

15. Comprehensive income

The following tables display the components of other comprehensive income (loss) and amounts reclassified from accumulated other comprehensive income (loss) to net income:

			Investment				Defined Benefit								Total Amount							Income
			Securities				Plans				Other				Before Tax							Tax				Net
			(In thousands)
Balance — January 1, 2020			$	50,701			$	(464,548	)		$	133,888			$	(279,959	)					$	73,279			$	(206,680	)
Other comprehensive income before reclassifications:
Unrealized holding gains, net				141,081				—				—				141,081							(36,498	)			104,583
Foreign currency translation adjustment				—				—				2,724				2,724							(440	)			2,284
Unrealized gains on cash flow hedges				—				—				505,042				505,042							(130,432	)			374,610
Current year benefit plans losses				—				(238,218	)			—				(238,218	)						60,208				(178,010	)
Total other comprehensive income (loss) before reclassifications				141,081				(238,218	)			507,766				410,629							(107,162	)			303,467
Amounts reclassified from accumulated other comprehensive income that (increase) decrease net income:
Amortization of unrealized holding losses on held-to-maturity (“HTM”) securities				3,606				—				—				3,606		(a)					(966	)			2,640
Gains realized in net income				(2	)			—				—				(2	)	(b)					1				(1	)
Accretion of net gain on terminated cash flow hedges				—				—				(125	)			(125	)	(c)					34				(91	)
Net yield adjustment from cash flow hedges currently in effect				—				—				(271,971	)			(271,971	)	(a)					70,239				(201,732	)
Amortization of prior service credit				—				(4,181	)			—				(4,181	)	(d)					1,057				(3,124	)
Amortization of actuarial losses				—				56,860				—				56,860		(d)					(14,371	)			42,489
Total other comprehensive income (loss)				144,685				(185,539	)			235,670				194,816							(51,168	)			143,648
Balance — December 31, 2020			$	195,386			$	(650,087	)		$	369,558			$	(85,143	)					$	22,111			$	(63,032	)
Balance — January 1, 2019			$	(200,107	)		$	(354,502	)		$	(14,719	)		$	(569,328	)					$	149,247			$	(420,081	)
Other comprehensive income before reclassifications:
Unrealized holding gains, net				247,411				—				—				247,411							(65,009	)			182,402
Foreign currency translation adjustment				—				—				1,381				1,381							(290	)			1,091
Unrealized gains on cash flow hedges				—				—				160,373				160,373							(42,163	)			118,210
Current year benefit plans losses				—				(126,618	)			—				(126,618	)						33,287				(93,331	)
Total other comprehensive income (loss) before reclassifications				247,411				(126,618	)			161,754				282,547							(74,175	)			208,372
Amounts reclassified from accumulated other comprehensive income that (increase) decrease net income:
Amortization of unrealized holding losses on HTM securities				3,394				—				—				3,394		(a)					(892	)			2,502
Losses realized in net income				3				—				—				3		(b)					(1	)			2
Accretion of net gain on terminated cash flow hedges				—				—				(136	)			(136	)	(c)					36				(100	)
Net yield adjustment from cash flow hedges currently in effect				—				—				(13,011	)			(13,011	)	(a)					3,421				(9,590	)
Amortization of prior service credit				—				(4,173	)			—				(4,173	)	(d)					1,097				(3,076	)
Amortization of actuarial losses				—				20,745				—				20,745		(d)					(5,454	)			15,291
Total other comprehensive income (loss)				250,808				(110,046	)			148,607				289,369							(75,968	)			213,401
Balance — December 31, 2019			$	50,701			$	(464,548	)		$	133,888			$	(279,959	)					$	73,279			$	(206,680	)

			Investment				Defined Benefit								Total Amount					Income
			Securities				Plans				Other				Before Tax					Tax				Net
			(In thousands)
Balance — January 1, 2018			$	(59,957	)		$	(413,168	)		$	(20,165	)		$	(493,290	)			$	129,476			$	(363,814	)
Cumulative effect of change in accounting principle — equity securities (e)				(22,795	)			—				—				(22,795	)				5,942				(16,853	)
Other comprehensive income before reclassifications:
Unrealized holding losses, net				(121,589	)			—				—				(121,589	)				31,946				(89,643	)
Foreign currency translation adjustment				—				—				(2,817	)			(2,817	)				592				(2,225	)
Unrealized losses on cash flow hedges				—				—				(4,965	)			(4,965	)				1,306				(3,659	)
Current year benefit plans gains				—				19,871				—				19,871					(5,224	)			14,647
Total other comprehensive income (loss) before reclassifications				(121,589	)			19,871				(7,782	)			(109,500	)				28,620				(80,880	)
Amounts reclassified from accumulated other comprehensive income that (increase) decrease net income:
Amortization of unrealized holding losses on HTM securities				4,252				—				—				4,252		(a)			(1,118	)			3,134
Gains realized in net income				(18	)			—				—				(18	)	(b)			4				(14	)
Accretion of net gain on terminated cash flow hedges				—				—				(111	)			(111	)	(c)			29				(82	)
Net yield adjustment from cash flow hedges currently in effect				—				—				13,339				13,339		(a)			(3,507	)			9,832
Amortization of prior service credit				—				(4,172	)			—				(4,172	)	(d)			1,097				(3,075	)
Amortization of actuarial losses				—				42,967				—				42,967		(d)			(11,296	)			31,671
Total other comprehensive income (loss)				(117,355	)			58,666				5,446				(53,243	)				13,829				(39,414	)
Balance — December 31, 2018			$	(200,107	)		$	(354,502	)		$	(14,719	)		$	(569,328	)			$	149,247			$	(420,081	)

(a) Included in interest income.

(b) Included in gain (loss) on bank investment securities.

(c) Included in interest expense.

(d) Included in other costs of operations.

(e) Beginning January 1, 2018, equity securities with readily determinable market values are required to be measured at fair value with changes in fair value recognized in the income statement. Prior to that date, such changes in fair value were reflected in other comprehensive income.

Accumulated other comprehensive income (loss), net consisted of the following:

		Investment Securities				Defined Benefit Plans				Other				Total
		(In thousands)
Balance at January 1, 2018		$	(44,150	)		$	(304,546	)		$	(15,118	)		$	(363,814	)
Cumulative effect of change in accounting principle — equity securities			(16,853	)			—				—				(16,853	)
Net gain (loss) during 2018			(86,523	)			43,243				3,866				(39,414	)
Balance at December 31, 2018			(147,526	)			(261,303	)			(11,252	)			(420,081	)
Net gain (loss) during 2019			184,906				(81,116	)			109,611				213,401
Balance at December 31, 2019			37,380				(342,419	)			98,359				(206,680	)
Net gain (loss) during 2020			107,222				(138,645	)			175,071				143,648
Balance at December 31, 2020		$	144,602			$	(481,064	)		$	273,430			$	(63,032	)

16. Other income and other expense

The following items, which exceeded 1% of total interest income and other income in the respective period, were included in either “other revenues from operations” or “other costs of operations” in the consolidated statement of income:

		Year Ended December 31
		2020				2019				2018
		(In thousands)
Other income:
Credit-related fee income		$	70,387			$	86,792			$	82,614
Other expense:
Professional services			240,047				330,900				312,998
Accrual for Wilmington Trust Corporation legal-related matters											135,000
Amortization of capitalized mortgage servicing rights			84,821				71,888

17. International activities

The Company engages in limited international activities including certain trust-related services in Europe, collecting Eurodollar deposits, engaging in foreign currency transactions associated with customer activity, providing credit to support the international activities of domestic companies and holding certain loans to foreign borrowers. Assets and revenues associated with international activities represent less than 1% of the Company’s consolidated assets and revenues. International assets included $170 million and $186 million of loans to foreign borrowers at December 31, 2020 and 2019, respectively. Deposits at M&T Bank’s Cayman Islands office were $652 million and $1.68 billion at December 31, 2020 and 2019, respectively. Deposits at M&T Bank’s office in Ontario, Canada were $32 million at December 31, 2020 and $23 million at December 31, 2019. Revenues from providing international trust-related services were approximately $36 million in 2020, $32 million in 2019 and $29 million in 2018.

18. Derivative financial instruments

As part of managing interest rate risk, the Company enters into interest rate swap agreements to modify the repricing characteristics of certain portions of the Company’s portfolios of earning assets and interest-bearing liabilities. The Company designates interest rate swap agreements utilized in the management of interest rate risk as either fair value hedges or cash flow hedges. Interest rate swap agreements are generally entered into with counterparties that meet established credit standards and most contain master netting, collateral and/or settlement provisions protecting the at-risk party. Based on adherence to the Company’s credit standards and the presence of the netting, collateral or settlement provisions, the Company believes that the credit risk inherent in these contracts was not material as of December 31, 2020.

The net effect of interest rate swap agreements was to increase net interest income by $312 million in 2020, and to decrease net interest income by $2 million in 2019 and $25 million in 2018.

Information about interest rate swap agreements entered into for interest rate risk management purposes summarized by type of financial instrument the swap agreements were intended to hedge follows:

										Weighted-								Estimated
		Notional				Average				Average Rate								Fair Value
		Amount				Maturity				Fixed				Variable				Gain (Loss) (a)
		(In thousands)				(In years)												(In thousands)
December 31, 2020
Fair value hedges:
Fixed rate long-term borrowings (b)		$	1,650,000				3.3				2.86	%			0.79	%		$	651
Cash flow hedges:
Interest payments on variable rate commercial real estate loans (b)(c)			49,400,000				0.9				2.22	%			0.15	%			425
Total		$	51,050,000				1.0											$	1,076
December 31, 2019
Fair value hedges:
Fixed rate long-term borrowings (b)		$	3,800,000				2.2				2.51	%			2.27	%		$	(567	)
Cash flow hedges:
Interest payments on variable rate commercial real estate loans (b)(d)			53,750,000				1.4				2.44	%			1.73	%			(1,195	)
Total		$	57,550,000				1.5											$	(1,762	)

(a)

Certain clearinghouse exchanges consider payments by counterparties for variation margin on derivative instruments to be settlements of those positions. The impact of such treatment at December 31, 2020 was a reduction of the estimated fair value gains on interest rate swap agreements designated as fair value hedges of $101.5 million and on interest rate swap agreements designated as cash flow hedges of $372.2 million. The impact of such treatment at December 31, 2019 was a reduction of estimated fair value gains on agreements designated as fair value hedges of $45.1 million and agreements designated as cash flow hedges of $140.7 million.

(b)	Under the terms of these agreements, the Company receives settlement amounts at a fixed rate and pays at a variable rate.

(c)	Includes notional amount and terms of $32.1 billion of forward-starting interest rate swap agreements that become effective in 2021-2022.

(d)	Includes notional amount and terms of $40.4 billion of forward-starting interest rate swap agreement that become effective in 2020-2022.

The notional amount of interest rate swap agreements entered into for risk management purposes that were outstanding at December 31, 2020 mature as follows:

		(In thousands)
Year ending December 31:
2021		$	27,700,000
2022			16,500,000
2023			6,350,000
2027			500,000
		$	51,050,000

The Company utilizes commitments to sell residential and commercial real estate loans to hedge the exposure to changes in the fair value of real estate loans held for sale. Such commitments have generally

been designated as fair value hedges. The Company also utilizes commitments to sell real estate loans to offset the exposure to changes in fair value of certain commitments to originate real estate loans for sale.

Derivative financial instruments used for trading account purposes included interest rate contracts, foreign exchange and other option contracts, foreign exchange forward and spot contracts, and financial futures. Interest rate contracts entered into for trading account purposes had notional values of $37.8 billion and $48.6 billion at December 31, 2020 and 2019, respectively. The notional amounts of foreign currency and other option and futures contracts entered into for trading account purposes aggregated $776 million and $1.2 billion at December 31, 2020 and 2019, respectively.

Information about the fair values of derivative instruments in the Company’s consolidated balance sheet and consolidated statement of income follows:

		Asset Derivatives								Liability Derivatives
		Fair Value								Fair Value
		December 31,				December 31,				December 31,				December 31,
		2020				2019				2020				2019
		(In thousands)
Derivatives designated and qualifying as hedging instruments
Interest rate swap agreements (a)		$	1,968			$	232			$	892			$	1,994
Commitments to sell real estate loans (a)			1,488				1,195				8,458				421
			3,456				1,427				9,350				2,415
Derivatives not designated and qualifying as hedging instruments
Mortgage-related commitments to originate real estate loans for sale (a)			43,599				11,965				365				1,225
Commitments to sell real estate loans (a)			2,409				3,074				13,868				3,548
Trading:
Interest rate contracts (b)			1,008,913				398,295				105,768				68,103
Foreign exchange and other option and futures contracts (b)			9,608				12,506				11,134				11,800
			1,064,529				425,840				131,135				84,676
Total derivatives		$	1,067,985			$	427,267			$	140,485			$	87,091

(a)	Asset derivatives are reported in other assets and liability derivatives are reported in other liabilities.

(b)

Asset derivatives are reported in trading account assets and liability derivatives are reported in other liabilities. The impact of variation margin payments at December 31, 2020 and December 31, 2019 was a reduction of the estimated fair value of interest rate contracts in the trading account in an asset position of $5.6 million and $43.3 million, respectively, and in a liability position of $806.5 million and $281.3 million, respectively.

		Amount of Gain (Loss) Recognized
		Year Ended December 31, 2020								Year Ended December 31, 2019								Year Ended December 31, 2018
		Derivative				Hedged Item				Derivative				Hedged Item				Derivative				Hedged Item
		(In thousands)
Derivatives in fair value hedging relationships
Interest rate swap agreements:
Fixed rate long-term borrowings (a)		$	57,611				(57,686	)		$	95,006				(94,742	)		$	(10,006	)			10,969
Derivatives not designated as hedging instruments
Trading:
Interest rate contracts (b)		$	6,344							$	24,701							$	4,506
Foreign exchange and other option and futures contracts (b)			7,363								8,511								9,416
Total		$	13,707							$	33,212							$	13,922

(a)	Reported as an adjustment to interest expense.

(b)	Reported as trading account and foreign exchange gains.

		Carrying Amount of the Hedged Item								Cumulative Amount of Fair Value Hedging Adjustment Increasing (Decreasing) the Carrying Amount of the Hedged Item
		December 31, 2020				December 31, 2019				December 31, 2020				December 31, 2019
		(In thousands)
Location in the Consolidated Balance Sheet of the Hedged Items in Fair Value Hedges
Long-term debt		$	1,750,048			$	3,840,775			$	101,326			$	43,640

The amount of interest income recognized in the consolidated statement of income associated with derivatives designated as cash flow hedges was $272 million and $13 million for 2020 and 2019, respectively. As of December 31, 2020, the unrealized gain recognized in other comprehensive income related to cash flow hedges was $373 million, of which $156 million, $170 million and $47 million relate to interest rate swap agreements maturing in 2021, 2022 and 2023, respectively.

The Company also has commitments to sell and commitments to originate residential and commercial real estate loans that are considered derivatives. The Company designates certain of the commitments to sell real estate loans as fair value hedges of real estate loans held for sale. The Company also utilizes commitments to sell real estate loans to offset the exposure to changes in the fair value of certain commitments to originate real estate loans for sale. As a result of these activities, net unrealized pre-tax gains related to hedged loans held for sale, commitments to originate loans for sale and commitments to sell loans were approximately $64 million and $18 million at December 31, 2020 and 2019, respectively. Changes in unrealized gains and losses are included in mortgage banking revenues and, in general, are realized in subsequent periods as the related loans are sold and commitments satisfied.

The Company does not offset derivative asset and liability positions in its consolidated financial statements. The Company’s exposure to credit risk by entering into derivative contracts is mitigated

through master netting agreements and collateral posting or settlement requirements. Master netting agreements covering interest rate and foreign exchange contracts with the same party include a right to set-off that becomes enforceable in the event of default, early termination or under other specific conditions.

The aggregate fair value of derivative financial instruments in a liability position, which are subject to enforceable master netting arrangements, was $114 million and $51 million at December 31, 2020 and 2019, respectively. The Company was required to post collateral relating to those positions of $103 million and $50 million at December 31, 2020 and 2019, respectively. Certain of the Company’s derivative financial instruments contain provisions that require the Company to maintain specific credit ratings from credit rating agencies to avoid higher collateral posting requirements. If the Company’s debt ratings were to fall below specified ratings, the counterparties of the derivative financial instruments could demand immediate incremental collateralization on those instruments in a net liability position. The aggregate fair value of all derivative financial instruments with such credit risk-related contingent features in a net liability position on December 31, 2020 was not material.

The aggregate fair value of derivative financial instruments in an asset position and the net asset positions with counterparties, which are subject to enforceable master netting arrangements, was $3 million and $6 million at December 31, 2020 and 2019, respectively. Counterparties posted collateral relating to those positions of $3 million and $5 million at December 31, 2020 and 2019, respectively. Trading account interest rate swap agreements entered into with customers are subject to the Company’s credit risk standards and often contain collateral provisions.

In addition to the derivative contracts noted above, the Company clears certain derivative transactions through a clearinghouse, rather than directly with counterparties. Those transactions cleared through a clearinghouse require initial margin collateral and variation margin payments depending on the contracts being in a net asset or liability position. The amount of initial margin collateral posted by the Company was $135 million and $84 million at December 31, 2020 and 2019, respectively. The fair value asset and liability amounts of derivative contracts have been reduced by variation margin payments treated as settlements as described herein. Variation margin on derivative contracts not treated as settlements continues to represent collateral posted or received by the Company. In conjunction with changes made by the clearinghouse to prepare for reference rate reform, the Company changed the discount rate index used to value interest rate swaps from the Federal Funds Overnight Index swap rate to the Secured Overnight Financial Rate in October 2020. The change did not have a material impact on the Company's consolidated financial statements.

19. Variable interest entities and asset securitizations

The Company’s securitization activity has consisted of securitizing loans originated for sale into government issued or guaranteed mortgage-backed securities that are then retained by the Company. The amounts of those securitizations in 2020, 2019 and 2018 are presented in the Company’s consolidated statement of cash flows. The Company has not recognized any losses as a result of having securitized assets.

As described in note 8, M&T has issued junior subordinated debentures payable to various trusts that have issued Capital Securities. M&T owns the common securities of those trust entities. The Company is not considered to be the primary beneficiary of those entities and, accordingly, the trusts are not included in the Company’s consolidated financial statements. At each of December 31, 2020 and 2019, the Company included the junior subordinated debentures as “long-term borrowings” in its consolidated balance sheet and recognized $23 million in other assets for its “investment” in the common securities of the trusts that will be concomitantly repaid to M&T by the respective trust from the proceeds of M&T’s repayment of the junior subordinated debentures associated with preferred capital securities described in note 8.

The Company has invested as a limited partner in various partnerships that collectively had total assets of approximately $2.3 billion at December 31, 2020 and $1.5 billion at December 31, 2019. Those partnerships generally construct or acquire properties for which the investing partners are eligible to receive certain federal income tax credits in accordance with government guidelines. Such investments may also provide tax deductible losses to the partners. The partnership investments also assist the Company in achieving its community reinvestment initiatives. As a limited partner, there is no recourse to the Company by creditors of the partnerships. However, the tax credits that result from the Company’s investments in such partnerships are generally subject to recapture should a partnership fail to comply with the respective government regulations. The Company’s carrying amount of its investments in such partnerships was $861 million, including $406 million of unfunded commitments, at December 31, 2020 and $748 million, including $414 million of unfunded commitments, at December 31, 2019. Contingent commitments to provide additional capital contributions to these partnerships were not material at December 31, 2020. The Company has not provided financial or other support to the partnerships that was not contractually required. The Company’s maximum exposure to loss from its investments in such partnerships as of December 31, 2020 was $1.2 billion, including possible recapture of certain tax credits. Management currently estimates that no material losses are probable as a result of the Company’s involvement with such entities. The Company, in its position as limited partner, does not direct the activities that most significantly impact the economic performance of the partnerships and, therefore, in accordance with the accounting provisions for variable interest entities, the partnership entities are not included in the Company’s consolidated financial statements. The Company’s investment in qualified affordable housing projects is amortized to income taxes in the consolidated statement of income as tax credits and other tax benefits resulting from deductible losses associated with the projects are received.

The Company serves as investment advisor for certain registered money-market funds. The Company has no explicit arrangement to provide support to those funds, but may waive portions of its allowable management fees as a result of market conditions.

20. Fair value measurements

GAAP permits an entity to choose to measure eligible financial instruments and other items at fair value. The Company has not made any fair value elections at December 31, 2020.

Pursuant to GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy exists in GAAP for fair value measurements based upon the inputs to the valuation of an asset or liability.

	•	Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities.

	•	Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active or by model-based techniques in which all significant inputs are observable in the market.

	•	Level 3 — Valuation is derived from model-based and other techniques in which at least one significant input is unobservable and which may be based on the Company’s own estimates about the assumptions that market participants would use to value the asset or liability.

When available, the Company attempts to use quoted market prices in active markets to determine fair value and classifies such items as Level 1 or Level 2. If quoted market prices in active markets are not available, fair value is often determined using model-based techniques incorporating various assumptions including interest rates, prepayment speeds and credit losses. Assets and

liabilities valued using model-based techniques are classified as either Level 2 or Level 3, depending on the lowest level classification of an input that is considered significant to the overall valuation. The following is a description of the valuation methodologies used for the Company’s assets and liabilities that are measured on a recurring basis at estimated fair value.

Trading account assets and liabilities

Trading account assets and liabilities include interest rate contracts and foreign exchange contracts with customers who require such services with offsetting positions with third parties to minimize the Company’s risk with respect to such transactions. The Company generally determines the fair value of its derivative trading account assets and liabilities using externally developed pricing models based on market observable inputs and, therefore, classifies such valuations as Level 2. Mutual funds held in connection with deferred compensation and other arrangements have been classified as Level 1 valuations. Valuations of investments in municipal and other bonds can generally be obtained through reference to quoted prices in less active markets for the same or similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2.

Investment securities available for sale and equity securities

The majority of the Company’s available-for-sale investment securities have been valued by reference to prices for similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2. Certain investments in mutual funds and equity securities are actively traded and, therefore, have been classified as Level 1 valuations.

Real estate loans held for sale

The Company utilizes commitments to sell real estate loans to hedge the exposure to changes in fair value of real estate loans held for sale. The carrying value of hedged real estate loans held for sale includes changes in estimated fair value during the hedge period. Typically, the Company attempts to hedge real estate loans held for sale from the date of close through the sale date. The fair value of hedged real estate loans held for sale is generally calculated by reference to quoted prices in secondary markets for commitments to sell real estate loans with similar characteristics and, accordingly, such loans have been classified as a Level 2 valuation.

Commitments to originate real estate loans for sale and commitments to sell real estate loans

The Company enters into various commitments to originate real estate loans for sale and commitments to sell real estate loans. Such commitments are considered to be derivative financial instruments and, therefore, are carried at estimated fair value on the consolidated balance sheet. The estimated fair values of such commitments were generally calculated by reference to quoted prices in secondary markets for commitments to sell real estate loans to certain government-sponsored entities and other parties. The fair valuations of commitments to sell real estate loans generally result in a Level 2 classification. The estimated fair value of commitments to originate real estate loans for sale is adjusted to reflect the Company’s anticipated commitment expirations. The estimated commitment expirations are considered significant unobservable inputs contributing to the Level 3 classification of commitments to originate real estate loans for sale. Significant unobservable inputs used in the determination of estimated fair value of commitments to originate real estate loans for sale are included in the accompanying table of significant unobservable inputs to Level 3 measurements.

Interest rate swap agreements used for interest rate risk management

The Company utilizes interest rate swap agreements as part of the management of interest rate risk to modify the repricing characteristics of certain portions of its portfolios of earning assets and interest-bearing liabilities. The Company generally determines the fair value of its interest rate swap agreements using externally developed pricing models based on market observable inputs and, therefore, classifies such valuations as Level 2. The Company has considered counterparty credit risk in the valuation of its interest rate swap agreement assets and has considered its own credit risk in the valuation of its interest rate swap agreement liabilities.

The following tables present assets and liabilities at December 31, 2020 and 2019 measured at estimated fair value on a recurring basis:

		Fair Value Measurements				Level 1				Level 2				Level 3
		(In thousands)
December 31, 2020
Trading account assets		$	1,068,581			$	50,060			$	1,018,521			$	—
Investment securities available for sale:
U.S. Treasury and federal agencies			9,338				—				9,338				—
Mortgage-backed securities:
Government issued or guaranteed			4,683,438				—				4,683,438				—
Privately issued			16				—				—				16
Other debt securities			129,814				—				129,814				—
			4,822,606				—				4,822,590				16
Equity securities			92,985				63,129				29,856				—
Real estate loans held for sale			1,054,676				—				1,054,676				—
Other assets (a)			49,464				—				5,865				43,599
Total assets		$	7,088,312			$	113,189			$	6,931,508			$	43,615
Trading account liabilities		$	116,902			$	—			$	116,902			$	—
Other liabilities (a)			23,583				—				23,218				365
Total liabilities		$	140,485			$	—			$	140,120			$	365
December 31, 2019
Trading account assets		$	470,129			$	49,040			$	421,089			$	—
Investment securities available for sale:
U.S. Treasury and federal agencies			9,767				—				9,767				—
Obligations of states and political subdivisions			775				—				775				—
Mortgage-backed securities:
Government issued or guaranteed			6,180,940				—				6,180,940				—
Privately issued			16				—				—				16
Other debt securities			127,278				—				127,278				—
			6,318,776				—				6,318,760				16
Equity securities			140,041				100,637				39,404				—
Real estate loans held for sale			442,079				—				442,079				—
Other assets (a)			16,466				—				4,501				11,965
Total assets		$	7,387,491			$	149,677			$	7,225,833			$	11,981
Trading account liabilities		$	79,903			$	—			$	79,903			$	—
Other liabilities (a)			7,188				—				5,963				1,225
Total liabilities		$	87,091			$	—			$	85,866			$	1,225

(a)	Comprised predominantly of interest rate swap agreements used for interest rate risk management (Level 2), commitments to sell real estate loans (Level 2) and commitments to originate real estate loans to be held for sale (Level 3).

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the years ended December 31, 2020, 2019 and 2018 were as follows:

		Investment Securities Available for Sale
		Privately Issued Mortgage-Backed Securities					Other Assets and Other Liabilities
		(In thousands)
2020
Balance — January 1, 2020		$	16				$	10,740
Total gains realized/unrealized:
Included in earnings			—					194,469		(a)
Transfers out of Level 3			—					(161,975	)	(b)
Balance — December 31, 2020		$	16				$	43,234
Changes in unrealized gains included in earnings related to assets still held at December 31, 2020		$	—				$	42,597		(a)
2019
Balance — January 1, 2019		$	22				$	7,712
Total gains realized/unrealized:
Included in earnings			—					129,398		(a)
Settlements			(6	)				—
Transfers out of Level 3			—					(126,370	)	(b)
Balance — December 31, 2019		$	16				$	10,740
Changes in unrealized gains included in earnings related to assets still held at December 31, 2019		$	—				$	11,146		(a)
2018
Balance — January 1, 2018		$	28				$	8,303
Total gains realized/unrealized:
Included in earnings			—					58,740		(a)
Settlements			(6	)				—
Transfers out of Level 3			—					(59,331	)	(b)
Balance — December 31, 2018		$	22				$	7,712
Changes in unrealized gains included in earnings related to assets still held at December 31, 2018		$	—				$	7,386		(a)

(a)	Reported as mortgage banking revenues in the consolidated statement of income and includes the fair value of commitment issuances and expirations.

(b)	Transfers out of Level 3 consist of interest rate locks transferred to closed loans.

The Company is required, on a nonrecurring basis, to adjust the carrying value of certain assets or provide valuation allowances related to certain assets using fair value measurements. The more significant of those assets follow.

Loans

Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectable portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the

loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace and the related nonrecurring fair value measurement adjustments have generally been classified as Level 2, unless significant adjustments have been made to the valuation that are not readily observable by market participants. Non-real estate collateral supporting commercial loans generally consists of business assets such as receivables, inventory and equipment. Fair value estimations are typically determined by discounting recorded values of those assets to reflect estimated net realizable value considering specific borrower facts and circumstances and the experience of credit personnel in their dealings with similar borrower collateral liquidations. Such discounts were generally in the range of 15% to 90% with a weighted-average of 38% at December 31, 2020. As these discounts are not readily observable and are considered significant, the valuations have been classified as Level 3. Automobile collateral is typically valued by reference to independent pricing sources based on recent sales transactions of similar vehicles, and the related non-recurring fair value measurement adjustments have been classified as Level 2. Collateral values for other consumer installment loans are generally estimated based on historical recovery rates for similar types of loans, which at December 31, 2020 was 50%. As these recovery rates are not readily observable by market participants, such valuation adjustments have been classified as Level 3. Loans subject to nonrecurring fair value measurement were $652 million at December 31, 2020, ($339 million and $313 million of which were classified as Level 2 and Level 3, respectively), $305 million at December 31, 2019 ($115 million and $190 million of which were classified as Level 2 and Level 3, respectively), and $268 million at December 31, 2018 ($120 million and $148 million of which were classified as Level 2 and Level 3, respectively). Changes in fair value recognized during the years ended December 31, 2020, 2019 and 2018 for partial charge-offs of loans and loan impairment reserves on loans held by the Company at the end of each of those years were decreases of $222 million, $110 million and $83 million, respectively.

Assets taken in foreclosure of defaulted loans

Assets taken in foreclosure of defaulted loans are primarily comprised of commercial and residential real property and are generally measured at the lower of cost or fair value less costs to sell. The fair value of the real property is generally determined using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace, and the related nonrecurring fair value measurement adjustments have generally been classified as Level 2. Assets taken in foreclosure of defaulted loans subject to nonrecurring fair value measurement were $22 million and $21 million at December 31, 2020 and December 31, 2019, respectively. Changes in fair value recognized during the years ended December 31, 2020, 2019 and 2018 for foreclosed assets held by the Company at the end of each of those years were not material.

Capitalized servicing rights

Capitalized servicing rights are initially measured at fair value in the Company’s consolidated balance sheet. The Company utilizes the amortization method to subsequently measure its capitalized servicing assets. In accordance with GAAP, the Company must record impairment charges, on a nonrecurring basis, when the carrying value of certain strata exceed their estimated fair value. To estimate the fair value of servicing rights, the Company considers market prices for similar assets, if available, and the present value of expected future cash flows associated with the servicing rights calculated using assumptions that market participants

would use in estimating future servicing income and expense. Such assumptions include estimates of the cost of servicing loans, loan default rates, an appropriate discount rate, and prepayment speeds. For purposes of evaluating and measuring impairment of capitalized servicing rights, the Company stratifies such assets based on the predominant risk characteristics of the underlying financial instruments that are expected to have the most impact on projected prepayments, cost of servicing and other factors affecting future cash flows associated with the servicing rights. Such factors may include financial asset or loan type, note rate and term. The amount of impairment recognized is the amount by which the carrying value of the capitalized servicing rights for a stratum exceed estimated fair value. Impairment is recognized through a valuation allowance. The determination of fair value of capitalized servicing rights is considered a Level 3 valuation. Capitalized servicing rights related to residential mortgage loans of $159 million and $188 million at December 31, 2020 and December 31, 2019, respectively, required a valuation allowance of $30 million and $7 million, respectively. Significant unobservable inputs used in this Level 3 valuation included weighted-average prepayment speeds of 16.01% and 18.50% at December 31, 2020 and December 31, 2019, respectively, and a weighted-average option-adjusted spread of 900 basis points at each date. Changes recognized for impairment of capitalized servicing rights were $23 million and $7 million during the years ended December 31, 2020 and 2019, respectively.

Significant unobservable inputs to level 3 measurements

The following tables present quantitative information about significant unobservable inputs used in the fair value measurements for Level 3 assets and liabilities at December 31, 2020 and 2019:

		Fair Value				Valuation Technique		Unobservable Inputs/Assumptions				Range (Weighted- Average)
		(In thousands)
December 31, 2020
Recurring fair value measurements
Privately issued mortgage- backed securities		$	16			Two independent pricing quotes			—				—
Net other assets (liabilities) (a)			43,234			Discounted cash flow		Commitment expirations				0% - 98% (16%)
December 31, 2019
Recurring fair value measurements
Privately issued mortgage- backed securities		$	16			Two independent pricing quotes			—				—
Net other assets (liabilities) (a)			10,740			Discounted cash flow		Commitment expirations				0% - 99% (13%)

(a)	Other Level 3 assets (liabilities) consist of commitments to originate real estate loans.

Sensitivity of fair value measurements to changes in unobservable inputs

An increase (decrease) in the estimate of expirations for commitments to originate real estate loans would generally result in a lower (higher) fair value measurement. Estimated commitment expirations are derived considering loan type, changes in interest rates and remaining length of time until closing.

Disclosures of fair value of financial instruments

The carrying amounts and estimated fair value for financial instrument assets (liabilities) are presented in the following tables:

		December 31, 2020
		Carrying Amount				Estimated Fair Value				Level 1				Level 2				Level 3
		(In thousands)
Financial assets:
Cash and cash equivalents		$	1,552,743				1,552,743				1,497,457				55,286				—
Interest-bearing deposits at banks			23,663,810				23,663,810				—				23,663,810				—
Trading account assets			1,068,581				1,068,581				50,060				1,018,521				—
Investment securities			7,045,697				7,138,989				63,129				7,005,571				70,289
Loans and leases:
Commercial loans and leases			27,574,564				27,220,699				—				—				27,220,699
Commercial real estate loans			37,637,889				36,816,580				—				277,911				36,538,669
Residential real estate loans			16,752,993				17,089,141				—				4,135,655				12,953,486
Consumer loans			16,570,421				16,554,050				—				—				16,554,050
Allowance for credit losses			(1,736,387	)			—				—				—				—
Loans and leases, net			96,799,480				97,680,470				—				4,413,566				93,266,904
Accrued interest receivable			419,936				419,936				—				419,936				—
Financial liabilities:
Noninterest-bearing deposits		$	(47,572,884	)			(47,572,884	)			—				(47,572,884	)			—
Savings and interest-checking deposits			(67,680,840	)			(67,680,840	)			—				(67,680,840	)			—
Time deposits			(3,899,910	)			(3,919,367	)			—				(3,919,367	)			—
Deposits at Cayman Islands office			(652,104	)			(652,104	)			—				(652,104	)			—
Short-term borrowings			(59,482	)			(59,482	)			—				(59,482	)			—
Long-term borrowings			(4,382,193	)			(4,490,433	)			—				(4,490,433	)			—
Accrued interest payable			(59,916	)			(59,916	)			—				(59,916	)			—
Trading account liabilities			(116,902	)			(116,902	)			—				(116,902	)			—
Other financial instruments:
Commitments to originate real estate loans for sale		$	43,234				43,234				—				—				43,234
Commitments to sell real estate loans			(18,429	)			(18,429	)			—				(18,429	)			—
Other credit-related commitments			(133,354	)			(133,354	)			—				—				(133,354	)
Interest rate swap agreements used for interest rate risk management			1,076				1,076				—				1,076				—

		December 31, 2019
		Carrying Amount				Estimated Fair Value				Level 1				Level 2				Level 3
						(In thousands)
Financial assets:
Cash and cash equivalents		$	1,432,805				1,432,805				1,394,984				37,821				—
Interest-bearing deposits at banks			7,190,154				7,190,154				—				7,190,154				—
Federal funds sold			3,500				3,500				—				3,500				—
Trading account assets			470,129				470,129				49,040				421,089				—
Investment securities			9,497,251				9,539,540				100,637				9,351,793				87,110
Loans and leases:
Commercial loans and leases			23,838,168				23,510,908				—				—				23,510,908
Commercial real estate loans			35,541,914				35,517,180				—				28,338				35,488,842
Residential real estate loans			16,156,094				16,227,274				—				3,990,848				12,236,426
Consumer loans			15,386,693				15,413,262				—				—				15,413,262
Allowance for credit losses			(1,051,071	)			—				—				—				—
Loans and leases, net			89,871,798				90,668,624				—				4,019,186				86,649,438
Accrued interest receivable			333,142				333,142				—				333,142				—
Financial liabilities:
Noninterest-bearing deposits		$	(32,396,407	)			(32,396,407	)			—				(32,396,407	)			—
Savings and interest-checking deposits			(54,932,162	)			(54,932,162	)			—				(54,932,162	)			—
Time deposits			(5,757,456	)			(5,829,347	)			—				(5,829,347	)			—
Deposits at Cayman Islands office			(1,684,044	)			(1,684,044	)			—				(1,684,044	)			—
Short-term borrowings			(62,363	)			(62,363	)			—				(62,363	)			—
Long-term borrowings			(6,986,186	)			(7,063,165	)			—				(7,063,165	)			—
Accrued interest payable			(105,374	)			(105,374	)			—				(105,374	)			—
Trading account liabilities			(79,903	)			(79,903	)			—				(79,903	)			—
Other financial instruments:
Commitments to originate real estate loans for sale		$	10,740				10,740				—				—				10,740
Commitments to sell real estate loans			300				300				—				300				—
Other credit-related commitments			(136,470	)			(136,470	)			—				—				(136,470	)
Interest rate swap agreements used for interest rate risk management			(1,762	)			(1,762	)			—				(1,762	)			—

With the exception of marketable securities, certain off-balance sheet financial instruments and mortgage loans originated for sale, the Company’s financial instruments are not readily marketable and market prices do not exist. The Company, in attempting to comply with the provisions of GAAP that require disclosures of fair value of financial instruments, has not attempted to market its financial instruments to potential buyers, if any exist. Since negotiated prices in illiquid markets depend greatly upon the then present motivations of the buyer and seller, it is reasonable to assume that actual sales prices could vary widely from any estimate of fair value made without the benefit of negotiations. Additionally, changes in market interest rates can dramatically impact the value of financial instruments in a short period of time.

The Company does not believe that the estimated information presented herein is representative of the earnings power or value of the Company. The preceding analysis, which is inherently limited in depicting fair value, also does not consider any value associated with existing customer relationships nor the ability of the Company to create value through loan origination, deposit gathering or fee generating activities. Many of the estimates presented herein are based upon the use of highly subjective information and assumptions and, accordingly, the results may not be precise. Management believes that fair value estimates may not be comparable between financial institutions due to the wide range of permitted valuation techniques and numerous estimates which must be

made. Furthermore, because the disclosed fair value amounts were estimated as of the balance sheet date, the amounts actually realized or paid upon maturity or settlement of the various financial instruments could be significantly different.

21. Commitments and contingencies

In the normal course of business, various commitments and contingent liabilities are outstanding. The following table presents the Company’s significant commitments. Certain of these commitments are not included in the Company’s consolidated balance sheet.

		December 31,				December 31,
		2020				2019
		(In thousands)
Commitments to extend credit
Home equity lines of credit		$	5,563,854			$	5,442,160
Commercial real estate loans to be sold			363,735				164,076
Other commercial real estate			7,237,367				9,029,608
Residential real estate loans to be sold			1,026,118				423,056
Other residential real estate			665,259				448,375
Commercial and other			19,427,886				16,170,731
Standby letters of credit			2,241,417				2,441,432
Commercial letters of credit			27,332				41,059
Financial guarantees and indemnification contracts			4,220,531				4,108,572
Commitments to sell real estate loans			2,108,823				906,037

Commitments to extend credit are agreements to lend to customers, generally having fixed expiration dates or other termination clauses that may require payment of a fee. In addition to the amounts presented in the preceding table, the Company had discretionary funding commitments to commercial customers of $10.4 billion and $9.1 billion at December 31, 2020 and 2019, respectively, that the Company had the unconditional right to cancel prior to funding. Standby and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party, whereas commercial letters of credit are issued to facilitate commerce and typically result in the commitment being funded when the underlying transaction is consummated between the customer and a third party. The credit risk associated with commitments to extend credit and standby and commercial letters of credit is essentially the same as that involved with extending loans to customers and is subject to normal credit policies. Collateral may be obtained based on management’s assessment of the customer’s creditworthiness.

Financial guarantees and indemnification contracts are predominantly comprised of recourse obligations associated with sold loans and other guarantees and commitments. Included in financial guarantees and indemnification contracts are loan principal amounts sold with recourse in conjunction with the Company’s involvement in the Fannie Mae DUS program. The Company’s maximum credit risk for recourse associated with loans sold under this program totaled approximately $4.0 billion and $3.9 billion at December 31, 2020 and 2019, respectively.

Since many loan commitments, standby letters of credit, and guarantees and indemnification contracts expire without being funded in whole or in part, the contract amounts are not necessarily indicative of future cash flows.

The Company utilizes commitments to sell real estate loans to hedge exposure to changes in the fair value of real estate loans held for sale. Such commitments are considered derivatives and along

with commitments to originate real estate loans to be held for sale are recorded in the consolidated balance sheet at estimated fair market value.

The Company is contractually obligated to repurchase previously sold residential real estate loans that do not ultimately meet investor sale criteria related to underwriting procedures or loan documentation. When required to do so, the Company may reimburse loan purchasers for losses incurred or may repurchase certain loans. The Company reduces residential mortgage banking revenues by an estimate for losses related to its obligations to loan purchasers. The amount of those charges is based on the volume of loans sold, the level of reimbursement requests received from loan purchasers and estimates of losses that may be associated with previously sold loans. At December 31, 2020, the Company believes that its obligation to loan purchasers was not material to the Company’s consolidated financial position.

M&T and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings and other matters in which claims for monetary damages are asserted. On an on-going basis management, after consultation with legal counsel, assesses the Company’s liabilities and contingencies in connection with such proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability, was between $0 and $25 million at December 31, 2020. Although the Company does not believe that the outcome of pending litigations will be material to the Company’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.

22. Segment information

Reportable segments have been determined based upon the Company’s internal profitability reporting system, which is organized by strategic business unit. Certain strategic business units have been combined for segment information reporting purposes where the nature of the products and services, the type of customer and the distribution of those products and services are similar. The reportable segments are Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and Retail Banking.

The financial information of the Company’s segments was compiled utilizing the accounting policies described in note 1 with certain exceptions. The more significant of these exceptions are described herein. The Company allocates interest income or interest expense using a methodology that charges users of funds (assets) interest expense and credits providers of funds (liabilities) with income based on the maturity, prepayment and/or repricing characteristics of the assets and liabilities. A provision for credit losses is allocated to segments in an amount based largely on actual net charge-offs incurred by the segment during the period plus or minus an amount necessary to adjust the segment’s allowance for credit losses due to changes in loan balances. In contrast, the level of the consolidated provision for credit losses is determined using the methodologies described in notes 1 and 4. The net effects of these allocations are recorded in the “All Other” category. Indirect fixed and variable expenses incurred by certain centralized support areas are allocated to segments based on actual usage (for example, volume measurements) and other criteria. Certain types of administrative expenses and bankwide expense accruals (including amortization of core deposit and other intangible assets associated with acquisitions of financial institutions) are generally not allocated to segments. Income taxes are allocated to segments based on the Company’s marginal statutory tax rate adjusted for any tax-exempt income or non-deductible expenses. Equity is allocated to the segments based on regulatory

capital requirements and in proportion to an assessment of the inherent risks associated with the business of the segment (including interest, credit and operating risk).

The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, reported segment results are not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data.

Information about the Company’s segments is presented in the accompanying table. Income statement amounts are in thousands of dollars. Balance sheet amounts are in millions of dollars.

		For the Years Ended December 31, 2020, 2019 and 2018
		Business Banking												Commercial Banking												Commercial Real Estate												Discretionary Portfolio
		2020				2019				2018				2020				2019				2018				2020				2019				2018				2020				2019				2018
Net interest income(a)		$	462,614			$	451,307			$	434,579			$	864,149			$	828,888			$	821,812			$	673,894			$	692,526			$	665,220			$	486,831			$	209,807			$	228,051
Noninterest income			103,837				113,855				111,600				276,791				289,558				288,908				208,367				214,970				183,955				(1,735	)			26,919				(9,690	)
			566,451				565,162				546,179				1,140,940				1,118,446				1,110,720				882,261				907,496				849,175				485,096				236,726				218,361
Provision for credit losses			25,928				16,501				10,916				73,099				25,580				8,976				107,210				1,537				3,159				1,508				3,608				6,683
Amortization of core deposit and other intangible assets			—				—				—				—				—				—				1,060				1,060				1,060				—				—				—
Depreciation and other amortization			1,482				2,066				382				2,421				2,353				496				28,187				26,963				25,852				285				279				187
Other noninterest expense			322,868				317,482				305,340				375,769				382,214				364,102				256,428				239,333				217,387				54,339				52,885				65,393
Income (loss) before taxes			216,173				229,113				229,541				689,651				708,299				737,146				489,376				638,603				601,717				428,964				179,954				146,098
Income tax expense (benefit)			56,953				60,617				61,279				181,179				187,835				198,229				107,548				152,977				148,807				101,673				36,342				29,872
Net income (loss)		$	159,220			$	168,496			$	168,262			$	508,472			$	520,464			$	538,917			$	381,828			$	485,626			$	452,910			$	327,291			$	143,612			$	116,226
Average total assets (in millions)		$	8,152			$	5,793			$	5,631			$	30,338			$	28,142			$	26,626			$	25,792			$	23,921			$	22,885			$	27,726			$	29,081			$	32,123
Capital expenditures (in millions)		$	—			$	1			$	—			$	—			$	2			$	—			$	—			$	—			$	—			$	—			$	—			$	1
		For the Years Ended December 31, 2020, 2019 and 2018
		Residential Mortgage Banking												Retail Banking												All Other												Total
		2020				2019				2018				2020				2019				2018				2020				2019				2018				2020				2019				2018
Net interest income(a)		$	52,712			$	20,008			$	13,933			$	1,204,309			$	1,389,788			$	1,351,165			$	121,808			$	537,940			$	557,542			$	3,866,317			$	4,130,264			$	4,072,302
Noninterest income			515,549				393,372				305,560				260,163				327,562				324,228				725,472				695,443				651,439				2,088,444				2,061,679				1,856,000
			568,261				413,380				319,493				1,464,472				1,717,350				1,675,393				847,280				1,233,383				1,208,981				5,954,761				6,191,943				5,928,302
Provision for credit losses			1,785				382				(2,178	)			108,268				122,135				112,572				482,202				6,257				(8,128	)			800,000				176,000				132,000
Amortization of core deposit and other intangible assets			—				—				—				—				—				—				13,809				18,430				23,462				14,869				19,490				24,522
Depreciation and other amortization			60,129				48,248				24,288				95,936				93,312				35,274				116,979				108,604				68,004				305,419				281,825				154,483
Other noninterest expense			332,028				273,067				241,624				764,262				784,718				789,783				959,258				1,117,668				1,125,428				3,064,952				3,167,367				3,109,057
Income (loss) before taxes			174,319				91,683				55,759				496,006				717,185				737,764				(724,968	)			(17,576	)			215				1,769,521				2,547,261				2,508,240
Income tax expense (benefit)			40,667				19,355				10,272				130,745				189,611				196,467				(202,396	)			(28,625	)			(54,766	)			416,369				618,112				590,160
Net income (loss)		$	133,652			$	72,328			$	45,487			$	365,261			$	527,574			$	541,297			$	(522,572	)		$	11,049			$	54,981			$	1,353,152			$	1,929,149			$	1,918,080
Average total assets (in millions)		$	4,038			$	2,611			$	2,161			$	16,438			$	15,083			$	13,656			$	22,996			$	14,953			$	13,877			$	135,480			$	119,584			$	116,959
Capital expenditures (in millions)		$	—			$	1			$	1			$	34			$	76			$	31			$	138			$	98			$	65			$	172			$	178			$	98

(a)

Net interest income is the difference between actual taxable-equivalent interest earned on assets and interest paid on liabilities by a segment and a funding charge (credit) based on the Company’s internal funds transfer pricing methodology. Segments are charged a cost to fund any assets (e.g. loans) and are paid a funding credit for any funds provided (e.g. deposits). The taxable-equivalent adjustment aggregated $17,288,000 in 2020, $22,863,000 in 2019 and $21,897,000 in 2018 and is eliminated in “All Other” net interest income and income tax expense (benefit).

The Business Banking segment provides deposit, lending, cash management and other financial services to small businesses and professionals through the Company’s banking office network and several other delivery channels, including business banking centers, telephone banking, Internet banking and automated teller machines. The Commercial Banking segment provides a wide range of credit products and banking services to middle-market and large commercial customers, mainly within the markets the Company serves. Among the services provided by this segment are commercial lending and leasing, letters of credit, deposit products and cash management services. The Commercial Real Estate segment provides credit services which are secured by various types of

multifamily residential and commercial real estate and deposit services to its customers. Activities of this segment include the origination, sales and servicing of commercial real estate loans. Commercial real estate loans held for sale are included in the Commercial Real Estate Segment. The Discretionary Portfolio segment includes securities; residential real estate loans and other assets; short-term and long-term borrowed funds; brokered deposits; and Cayman Islands branch deposits. This segment also provides foreign exchange services to customers. The Residential Mortgage Banking segment originates and services residential real estate loans for consumers and sells substantially all originated loans in the secondary market to investors or to the Discretionary Portfolio segment. The segment periodically purchases servicing rights to loans that have been originated by other entities. Residential real estate loans held for sale are included in the Residential Mortgage Banking segment. The Retail Banking segment offers a variety of services to consumers through several delivery channels that include banking offices, automated teller machines, and telephone, mobile and Internet banking. The “All Other” category includes other operating activities of the Company that are not directly attributable to the reported segments; the difference between the provision for credit losses and the calculated provision allocated to the reportable segments; goodwill and core deposit and other intangible assets resulting from acquisitions of financial institutions; merger-related gains and expenses resulting from acquisitions; the net impact of the Company’s internal funds transfer pricing methodology; eliminations of transactions between reportable segments; certain nonrecurring transactions; the residual effects of unallocated support systems and general and administrative expenses; and the impact of interest rate risk management strategies. The amount of intersegment activity eliminated in arriving at consolidated totals was included in the “All Other” category as follows:

		Year Ended December 31
		2020				2019				2018
		(In thousands)
Revenues		$	(47,604	)		$	(48,559	)		$	(41,285	)
Expenses			(14,038	)			(18,218	)			(24,660	)
Income taxes			(8,824	)			(7,976	)			(4,371	)
Net income			(24,742	)			(22,365	)			(12,254	)

The Company conducts substantially all of its operations in the United States. There are no transactions with a single customer that in the aggregate result in revenues that exceed ten percent of consolidated total revenues.

23. Regulatory matters

Payment of dividends by M&T’s banking subsidiaries is restricted by various legal and regulatory limitations. Dividends from any banking subsidiary to M&T are limited by the amount of earnings of the banking subsidiary in the current year and the preceding two years. For purposes of this test, at December 31, 2020, approximately $1.3 billion was available for payment of dividends to M&T from banking subsidiaries. M&T may pay dividends and repurchase stock only in accordance with a capital plan that the Federal Reserve Board has not objected to.

Banking regulations prohibit extensions of credit by the subsidiary banks to M&T unless appropriately secured by assets. Securities of affiliates are not eligible as collateral for this purpose.

The bank subsidiaries were previously required to maintain reserves against certain deposit liabilities. Effective March 26, 2020, the federal banking agencies eliminated reserve requirements for depository institutions to support lending to households and businesses. During the maintenance period that included December 31, 2019, cash and due from banks and interest-earning deposits at banks included a daily average of $666 million for such purpose.

M&T and its subsidiary banks are required to comply with applicable capital adequacy regulations established by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a material effect on the Company’s financial statements. Pursuant to the rules in effect as of December 31, 2020, the required minimum and well capitalized capital ratios are as follows:

								Well
		Minimum						Capitalized
● Common equity Tier 1 ("CET1") to risk-weighted assets				4.5	%					6.5	%
● Tier 1 capital to risk-weighted assets				6.0	%					8.0	%
● Total capital to risk-weighted assets				8.0	%					10.0	%
● Leverage — Tier 1 capital to average total assets, as defined				4.0	%					5.0	%

In addition, capital regulations require a “capital conservation buffer” of 2.5% composed entirely of CET1 on top of the minimum risk-weighted asset ratios.

The capital ratios and amounts of the Company and its banking subsidiaries as of December 31, 2020 and 2019 are presented below:

		M&T (Consolidated)				M&T Bank				Wilmington Trust, N.A.
		(Dollars in thousands)
December 31, 2020:
Common equity Tier 1 capital
Amount		$	10,623,368			$	11,550,462			$	630,574
Ratio(a)			10.00	%			10.90	%			46.57	%
Tier 1 capital
Amount			11,873,317				11,550,462				630,574
Ratio(a)			11.17	%			10.90	%			46.57	%
Total capital
Amount			14,207,937				13,373,416				632,506
Ratio(a)			13.37	%			12.62	%			46.72	%
Leverage
Amount			11,873,317				11,550,462				630,574
Ratio(b)			8.48	%			8.27	%			10.73	%
December 31, 2019:
Common equity Tier 1 capital
Amount		$	10,053,887			$	10,649,953			$	606,538
Ratio(a)			9.73	%			10.34	%			56.35	%
Tier 1 capital
Amount			11,303,836				10,649,953				606,538
Ratio(a)			10.94	%			10.34	%			56.35	%
Total capital
Amount			13,480,612				12,342,834				608,130
Ratio(a)			13.05	%			11.99	%			56.50	%
Leverage
Amount			11,303,836				10,649,953				606,538
Ratio(b)			9.59	%			9.08	%			13.12	%

(a)	The ratio of capital to risk-weighted assets, as defined by regulation.

(b)	The ratio of capital to average assets, as defined by regulation.

24. Relationship with Bayview Lending Group LLC and Bayview Financial Holdings, L.P.

M&T holds a 20% minority interest in Bayview Lending Group LLC (“BLG”), a privately-held commercial mortgage company. That investment had no remaining carrying value at December 31, 2020 as a result of cumulative losses recognized and cash distributions received in prior years. Cash distributions now received from BLG are recognized as income by M&T and included in other revenues from operations. That income totaled $53 million in 2020, $37 million in 2019 and $24 million in 2018.

Bayview Financial Holdings, L.P. (together with its affiliates, “Bayview Financial”), a privately-held specialty financial company, is BLG’s majority investor. In addition to their common investment in BLG, the Company and Bayview Financial conduct other business activities with each other. The Company has obtained loan servicing rights for mortgage loans from BLG and Bayview Financial

having outstanding principal balances of $1.9 billion and $2.2 billion at December 31, 2020 and 2019, respectively. Revenues from those servicing rights were $10 million, $12 million and $14 million during 2020, 2019 and 2018, respectively. The Company sub-services residential mortgage loans for Bayview Financial having outstanding principal balances of $68.1 billion and $62.8 billion at December 31, 2020 and 2019, respectively. Revenues earned for sub-servicing loans for Bayview Financial were $129 million, $125 million and $114 million in 2020, 2019 and 2018, respectively. In addition, the Company held $77 million and $93 million of mortgage-backed securities in its held-to-maturity portfolio at December 31, 2020 and 2019, respectively, that were securitized by Bayview Financial. At December 31, 2020, the Company held $210 million of Bayview Financial’s $1.2 billion syndicated loan facility. During the second quarter of 2020 the Company extended two $100 million secured loan facilities to certain funds managed by Bayview Financial. One of the two loans was still outstanding as of December 31, 2020 with a remaining balance of $60 million. In early 2021 the Company purchased $965 million of delinquent FHA guaranteed mortgage loans, including past due accrued interest, from Bayview Financial for $1.0 billion. The servicing rights for such loans were retained by Bayview Financial, but the Company continues to sub-service the loans.

25. Parent company financial statements

Condensed Balance Sheet

		December 31
		2020				2019
		(In thousands)
Assets
Cash in subsidiary bank		$	100,593			$	83,531
Due from consolidated bank subsidiaries
Money-market savings			699,476				876,819
Current income tax receivable			—				1,261
Total due from consolidated bank subsidiaries			699,476				878,080
Investments in consolidated subsidiaries
Banks			16,554,287				15,732,008
Other			125,988				301,765
Investments in trust preferred entities (note 19)			22,846				23,022
Other assets			92,170				67,732
Total assets		$	17,595,360			$	17,086,138
Liabilities
Accrued expenses and other liabilities		$	96,664			$	74,235
Long-term borrowings			1,311,413				1,295,254
Total liabilities			1,408,077				1,369,489
Shareholders’ equity			16,187,283				15,716,649
Total liabilities and shareholders’ equity		$	17,595,360			$	17,086,138

Condensed Statement of Income

		Year Ended December 31
		2020				2019				2018
		(In thousands, except per share)
Income
Dividends from consolidated subsidiaries		$	708,500			$	2,025,000			$	1,250,000
Income from Bayview Lending Group LLC			52,940				36,740				23,500
Other income			5,110				7,216				2,417
Total income			766,550				2,068,956				1,275,917
Expense
Interest on long-term borrowings			31,924				51,938				36,354
Other expense			33,704				25,236				23,894
Total expense			65,628				77,174				60,248
Income before income taxes and equity in undistributed income of subsidiaries			700,922				1,991,782				1,215,669
Income tax credits			1,984				8,313				8,446
Income before equity in undistributed income of subsidiaries			702,906				2,000,095				1,224,115
Equity in undistributed income of subsidiaries
Net income of subsidiaries			1,358,746				1,954,054				1,943,965
Less: dividends received			(708,500	)			(2,025,000	)			(1,250,000	)
Equity in undistributed income of subsidiaries			650,246				(70,946	)			693,965
Net income		$	1,353,152			$	1,929,149			$	1,918,080
Net income per common share
Basic		$	9.94			$	13.76			$	12.75
Diluted			9.94				13.75				12.74

Condensed Statement of Cash Flows

		Year Ended December 31
		2020				2019				2018
		(In thousands)
Cash flows from operating activities
Net income		$	1,353,152			$	1,929,149			$	1,918,080
Adjustments to reconcile net income to net cash provided by operating activities
Equity in undistributed income of subsidiaries			(650,246	)			70,946				(693,965	)
Provision for deferred income taxes			1,079				5,263				4,949
Net change in accrued income and expense			(24,206	)			(34,525	)			(8,242	)
Net cash provided by operating activities			679,779				1,970,833				1,220,822
Cash flows from investing activities
Proceeds from sales or maturities of investment securities			—				100				—
Other, net			176,050				51,235				29,933
Net cash provided by investing activities			176,050				51,335				29,933
Cash flows from financing activities
Purchases of treasury stock			(373,750	)			(1,349,785	)			(2,194,396	)
Dividends paid — common			(568,112	)			(552,138	)			(510,382	)
Dividends paid — preferred			(68,256	)			(67,454	)			(72,521	)
Proceeds from long-term borrowings			—				—				748,595
Redemption of Series A and Series C preferred stock			—				(381,500	)			—
Proceeds from issuance of Series G preferred stock			—				396,000				—
Other, net			(5,992	)			(4,431	)			45,913
Net cash used by financing activities			(1,016,110	)			(1,959,308	)			(1,982,791	)
Net increase (decrease) in cash and cash equivalents			(160,281	)			62,860				(732,036	)
Cash and cash equivalents at beginning of year			960,350				897,490				1,629,526
Cash and cash equivalents at end of year		$	800,069			$	960,350			$	897,490
Supplemental disclosure of cash flow information
Interest received during the year		$	1,493			$	1,752			$	2,219
Interest paid during the year			30,913				49,451				17,482
Income taxes received during the year			11,528				6,251				6,362

26. Recent accounting developments

The following table provides a description of accounting standards that were adopted by the Company in 2020 as well as standards that are not effective that could have an impact to M&T’s consolidated financial statements upon adoption.

	Standard			Description			Required date of adoption			Effect on consolidated financial statements
	Standards Adopted in 2020
	Measurement of Credit Losses on Financial Instruments			The amended guidance replaced the incurred loss model for determining the allowance for credit losses. The guidance requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. The allowance for credit losses represents a valuation account that is deducted from the amortized cost basis of the financial assets to present their net carrying value at the amount expected to be collected. The income statement reflects the measurement of credit losses for newly recognized financial assets as well as expected increases or decreases of expected credit losses that have taken place during the period. When determining the allowance, expected credit losses over the contractual term of the financial asset(s) (taking into account prepayments) are estimated considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The amended guidance also requires recording an allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination. The initial allowance for these assets is added to the purchase price at acquisition rather than being reported as an expense. Subsequent changes in the allowance are recorded in the income statement as an adjustment the to the provision for credit losses. In addition, the amended guidance requires credit losses relating to debt securities to be recorded through an allowance for credit losses.			January 1, 2020			The Company adopted the guidance on January 1, 2020. The Company’s approach for estimating current expected credit losses for loans includes utilizing macro-economic assumptions to project losses over a reasonable and supportable forecast period. Subsequent to the forecast period, the Company reverts to longer term historical loss experience to estimate expected credit losses over the remaining contractual life. Based on portfolio composition, then current economic conditions, and reasonable and supportable forecasts of future conditions, the Company recognized an increase to the allowance for credit losses of $132 million upon adoption of the standard as of January 1, 2020 as compared with the allowance for credit losses recognized on its consolidated balance sheet at December 31, 2019. The $132 million increase was recognized as a cumulative-effect adjustment to retained earnings as of January 1, 2020. The effect on the allowance for credit losses at the adoption date was primarily attributable to increases in reserves for residential mortgage loans and consumer loans, which generally have longer estimated lives as compared with commercial and commercial real estate loans. The adoption did not have a material effect on the allowance for credit losses for debt securities.
	Simplifying the Test for Goodwill Impairment			The amended guidance eliminates step 2 from the goodwill impairment test.			January 1, 2020			The Company adopted the amended guidance effective January 1, 2020 using a prospective transition method and will incorporate the guidance as necessary when circumstances arise for the guidance to be utilized. The Company does not expect the guidance will have a material impact on its consolidated financial statements, unless at some point in the future one of its reporting units were to fail step 1 of the goodwill impairment test. None of the Company’s reporting units failed step 1 of the goodwill impairment test in 2020.

	Standard			Description				Required date of adoption			Effect on consolidated financial statements
	Standards Adopted in 2020
	Changes to the Disclosure Requirements for Fair Value Measurements			The amendments remove, modify, and add certain disclosure requirements related to fair value measurements. The disclosure requirements removed relating to public companies are (1) the amount and reason for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels, and (3) the valuation process for Level 3 fair value measurements. The disclosure requirements modified relating to public companies are (1) for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s asset and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly, and (2) the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as a result of the use of unobservable inputs. The disclosure requirements added relating to public companies are (1) to disclose the changes in unrealized gains and losses for the period for recurring Level 3 fair value measurements, and (2) to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.				January 1, 2020			The Company adopted the amended disclosure effective January 1, 2020. Such disclosures relate to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty. The adoption of the guidance did not have a material impact on the Company’s consolidated financial statements.
	Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract			The amended guidance requires a hosting arrangement that is a service contract to follow the guidance in the internal-use software guidance to determine which implementation costs to capitalize and which costs to expense.				January 1, 2020			The Company adopted the amended guidance effective January 1, 2020 using a prospective transition method. The impact of the guidance on the Company’s consolidated financial statements is dependent on the nature and amount of actual expenditures but was not material for the year ended December 31, 2020.
	Improvements to Related Party Guidance for VIEs			The amended guidance requires that indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.				January 1, 2020			The guidance did not have a material impact on the Company’s consolidated financial statements.

	Standard			Description					Required date of adoption			Effect on consolidated financial statements
	Standards Adopted in 2020
	Reference Rate Reform			The amendments provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments (1) apply to contract modifications that replace a reference rate affected by reference rate reform, (2) provide exceptions to existing guidance related to changes to the critical terms of a hedging relationship due to reference rate reform (3) provide optional expedients for fair value hedging relationships, cash flow hedging relationships, and net investment hedging relationships, and (4) provide a onetime election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that are classified as held to maturity before January 1, 2020. This one-time election may be made at any time after March 12, 2020, but not later than December 31, 2022.					Beginning March 12, 2020 Adopted October 1, 2020			The Company adopted the amended guidance on October 1, 2020 using a prospective transition method for the amendments. The Company applied certain optional expedients associated with the change in the discount rate index used to value interest rate swaps from the Federal Funds Overnight Index Swap rate to the Secured Overnight Financing Rate that occurred in October 2020, the effects of which were not material to the Company’s consolidated financial statements. The impact related to optional expedients that are anticipated to be implemented prospectively is dependent on how reference rate reform ultimately impacts values of financial instruments in transitioning from a discontinued reference rate to a replacement reference rate and how well the optional expedients mitigate any potential differences. The Company has not yet determined if it will make a onetime election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform.
	Changes to the Disclosure Requirements for Defined Benefit Plans			The amended guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The disclosure requirements being removed relating to public companies are (1) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, (2) the amount and timing of plan assets expected to be returned to the employer, (3) the 2001 disclosure requirement relating to Japanese Welfare Pension Insurance Law, (4) related party disclosures about the amount of future annual benefits covered by insurance, and (5) the effects of a one-percentage-point change in assumed health care cost trends on the benefit cost and obligation. The disclosure requirements being added relating to public companies are (1) the weighted-average interest crediting rates for cash balance plans , and (2) an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period.					January 1, 2020 Adopted December 31, 2020			The Company has amended its disclosures related to its defined benefit plans at December 31, 2020 to comply with the amended guidance.

	Standard			Description			Required date of adoption			Effect on consolidated financial statements
	Standards Not Yet Adopted as of December 31, 2020
	Clarifying the Interactions Between Equity Securities, Equity Method and Joint Ventures, and Derivatives and Hedging			The amendments clarify the following guidance: 1. That an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in the equity securities investments guidance immediately before applying or upon discontinuing the equity method of accounting. 2. For the purpose of applying the derivatives and hedging guidance an entity should not consider whether, upon the settlement of a forward contract or exercise of a purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method of accounting or the fair value option in accordance with the financial instruments guidance. An entity also would evaluate the remaining characteristics in the derivatives and hedging guidance to determine the accounting for those forward contracts and purchased options.			January 1, 2021 Early adoption permitted			The Company adopted the amended guidance effective January 1, 2021 using a prospective transition method. The Company does not expect the guidance will have a material impact on its consolidated financial statements.

	Standard			Description			Required date of adoption			Effect on consolidated financial statements
	Standards Not Yet Adopted as of December 31, 2020
	Simplifying the Accounting for Income Taxes			The amendments remove the following exceptions for accounting for income taxes: 1. Exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income). 2. Exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment. 3. Exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary. 4. Exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments also simplify the accounting for income taxes by doing the following: 1. Requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax. 2. Requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction. 3. Specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements. However, an entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority. 4. Requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. 5. Making minor Codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method.			January 1, 2021 Early adoption permitted			The Company adopted the amended guidance effective January 1, 2021. The amendments requiring retrospective or modified retrospective application related to separate financial statements of legal entities that are not subject to tax, changes in ownership of foreign equity method investments or foreign subsidiaries, and franchise taxes that are partially based on income had no material impact to the Company’s consolidated financial statements at adoption. All other amendments should be applied on a prospective basis and are not expected to have a material effect on the Company’s consolidated financial statements.

	Standard			Description			Required date of adoption			Effect on consolidated financial statements
	Standards Not Yet Adopted as of December 31, 2020
	Changes to Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity			The amendments reduce the number of accounting models for convertible debt instruments and convertible preferred stock. The amendments also reduce form-over-substance-based guidance for the derivatives scope exception for contacts in an entity’s own equity. For convertible instruments, embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate on the instrument. The amendments also require certain changes to EPS calculations for convertible instruments as well as additional disclosures relating to conditions that cause conversion features to be met. For contacts in an entity’s own equity, the amendments revise the derivatives scope exception guidance as follows: 1. Remove the settlement in unregistered shares, collateral, and shareholder rights conditions from the settlement guidance. 2. Clarify that payment penalties for failure to timely file do not preclude equity classification. 3. Require instruments that are required to be classified as an asset or liability to be measured subsequently at fair value, with changes reported in earnings and disclosed in the financial statements. 4. Clarify that the scope of the disclosure requirements in the Contracts in an Entity’s Own Equity section of the Derivatives guidance applies only to freestanding instruments. 5. Clarify that the scope of the reassessment guidance in the Contracts in an Entity’s Own Equity section of the Derivatives guidance applies to both freestanding instruments and embedded features.			January 1, 2022 Early adoption permitted but no earlier than January 1, 2021			The amendments can be applied either on a modified retrospective method of transition or a fully retrospective method of transition. In applying the modified retrospective method, the guidance should be applied to transactions outstanding as of the beginning of the fiscal year in which the amendments are adopted. Transactions that were settled (or expired) during prior reporting periods are unaffected. The cumulative effect of the change should be recognized as an adjustment to the opening balance of retained earnings at the date of adoption. If applying the fully retrospective method of transition, the cumulative effect of the change should be recognized as an adjustment to the opening balance of retained earnings in the first comparative period presented. The fair value option is allowed to be irrevocably elected for any financial instrument that is a convertible security upon adoption of the amendments. The Company has not yet decided on which transition method will be applied to the extent applicable. The Company does not expect the guidance will have a material impact on its consolidated financial statements.

27. Subsequent event

On February 22, 2021, M&T announced that it had entered into a definitive agreement with People’s United Financial, Inc. (“People’s United”), headquartered in Bridgeport, Connecticut, under which M&T will acquire People’s United in an all-stock transaction with a total market value of approximately $7.6 billion. Under the terms of the merger agreement, People’s United shareholders will receive 0.118 of a share of M&T common stock for each People’s United share they own. In addition, at the effective time of the merger, each outstanding share of fixed-to-floating rate non-cumulative perpetual preferred stock, Series A, of People’s United will be converted into a right to receive a share of newly created series of M&T preferred stock.

The merger has been unanimously approved by the boards of directors of each company. The merger is expected to close in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including the receipt of regulatory approvals and approval by the shareholders of M&T and People’s United.

In a press release dated January 21, 2021, People’s United preliminarily reported total assets of approximately $63 billion, including loans of $44 billion, and deposits of $52 billion.