Item 1. Financial Statements.

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Item 1. Financial Statements.

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (Unaudited)

	March 31,			December 31,
(Dollars in thousands, except per share)	2022			2021
Assets
Cash and due from banks	$	1,411,460		$	1,337,577
Interest-bearing deposits at banks		36,025,382			41,872,304
Trading account		197,558			468,031
Investment securities (includes pledged securities that can be sold or repledged of $85,493 at March 31, 2022; $96,128 at December 31, 2021)
Available for sale (cost: $5,783,697 at March 31, 2022; $3,849,347 at December 31, 2021)		5,705,199			3,955,804
Held to maturity (fair value: $3,042,709 at March 31, 2022; $2,771,290 at December 31, 2021)		3,180,626			2,734,674
Equity and other securities (cost: $467,884 at March 31, 2022; $461,516 at December 31, 2021)		471,007			465,382
Total investment securities		9,356,832			7,155,860
Loans and leases		92,004,751			93,136,678
Unearned discount		(196,359	)		(224,226	)
Loans and leases, net of unearned discount		91,808,392			92,912,452
Allowance for credit losses		(1,472,359	)		(1,469,226	)
Loans and leases, net		90,336,033			91,443,226
Premises and equipment		1,134,718			1,144,765
Goodwill		4,593,112			4,593,112
Core deposit and other intangible assets		2,742			3,998
Accrued interest and other assets		6,805,715			7,088,287
Total assets	$	149,863,552		$	155,107,160
Liabilities
Noninterest-bearing deposits	$	58,520,366		$	60,131,480
Savings and interest-checking deposits		65,273,150			68,603,966
Time deposits		2,525,197			2,807,963
Total deposits		126,318,713			131,543,409
Short-term borrowings		50,307			47,046
Accrued interest and other liabilities		2,174,925			2,127,931
Long-term borrowings		3,443,587			3,485,369
Total liabilities		131,987,532			137,203,755
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 March 31, 2022 and December 31, 2021; Liquidation preference of $10,000 per share: 140,000 shares at March 31, 2022 and December 31, 2021		1,750,000			1,750,000
Common stock, $.50 par, 250,000,000 shares authorized, 159,741,898 shares issued at March 31, 2022 and December 31, 2021		79,871			79,871
Common stock issuable, 13,864 shares at March 31, 2022; 15,769 shares at December 31, 2021		1,074			1,212
Additional paid-in capital		6,611,659			6,635,000
Retained earnings		14,830,671			14,646,448
Accumulated other comprehensive income (loss), net		(377,385	)		(127,578	)
Treasury stock — common, at cost — 30,675,930 shares at March 31, 2022; 31,052,845 shares at December 31, 2021		(5,019,870	)		(5,081,548	)
Total shareholders’ equity		17,876,020			17,903,405
Total liabilities and shareholders’ equity	$	149,863,552		$	155,107,160

See accompanying notes to financial statements.

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M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

	Three Months Ended March 31
(In thousands, except per share)	2022			2021
Interest income
Loans and leases, including fees	$	870,600		$	972,582
Investment securities
Fully taxable		39,132			37,071
Exempt from federal taxes		50			55
Deposits at banks		18,280			6,874
Other		194			380
Total interest income		928,256			1,016,962
Interest expense
Savings and interest-checking deposits		6,747			11,504
Time deposits		1,397			7,010
Deposits at Cayman Islands office		—			185
Short-term borrowings		1			2
Long-term borrowings		15,937			16,866
Total interest expense		24,082			35,567
Net interest income		904,174			981,395
Provision for credit losses		10,000			(25,000	)
Net interest income after provision for credit losses		894,174			1,006,395
Other income
Mortgage banking revenues		109,148			138,754
Service charges on deposit accounts		101,507			92,777
Trust income		169,213			156,022
Brokerage services income		20,190			13,113
Trading account and foreign exchange gains		5,369			6,284
Loss on bank investment securities		(743	)		(12,282	)
Other revenues from operations		136,203			110,930
Total other income		540,887			505,598
Other expense
Salaries and employee benefits		577,520			541,078
Equipment and net occupancy		85,812			82,471
Outside data processing and software		79,719			65,751
FDIC assessments		15,576			14,188
Advertising and marketing		16,024			14,628
Printing, postage and supplies		10,150			9,317
Amortization of core deposit and other intangible assets		1,256			2,738
Other costs of operations		173,684			189,273
Total other expense		959,741			919,444
Income before taxes		475,320			592,549
Income taxes		113,146			145,300
Net income	$	362,174		$	447,249
Net income available to common shareholders
Basic	$	339,589		$	428,091
Diluted		339,590			428,093
Net income per common share
Basic	$	2.63		$	3.33
Diluted		2.62			3.33
Average common shares outstanding
Basic		128,945			128,537
Diluted		129,416			128,669

See accompanying notes to financial statements.

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M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended March 31
(In thousands)	2022			2021

Net income	$	362,174		$	447,249
Other comprehensive income (loss), net of tax and reclassification adjustments:
Net unrealized gains (losses) on investment securities		(136,367	)		(22,406	)
Cash flow hedges adjustments		(114,061	)		(66,777	)
Foreign currency translation adjustments		(1,648	)		548
Defined benefit plans liability adjustments		2,269			13,189
Total other comprehensive income (loss)		(249,807	)		(75,446	)
Total comprehensive income	$	112,367		$	371,803

See accompanying notes to financial statements.

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M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

	Three Months Ended March 31
(In thousands)	2022			2021
Cash flows from operating activities
Net income	$	362,174		$	447,249
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses		10,000			(25,000	)
Depreciation and amortization of premises and equipment		56,739			57,116
Amortization of capitalized servicing rights		25,316			19,951
Amortization of core deposit and other intangible assets		1,256			2,738
Provision for deferred income taxes		4,151			39,329
Asset write-downs		252			1,217
Net gain on sales of assets		(4,768	)		(2,106	)
Net change in accrued interest receivable, payable		15,748			(36,893	)
Net change in other accrued income and expense		(99,163	)		(27,301	)
Net change in loans originated for sale		434,520			158,878
Net change in trading account assets and liabilities		489,545			359,559
Net cash provided by operating activities		1,295,770			994,737
Cash flows from investing activities
Proceeds from sales of investment securities
Equity and other securities		4,593			2,526
Proceeds from maturities of investment securities
Available for sale		220,320			422,171
Held to maturity		120,032			171,644
Purchases of investment securities
Available for sale		(2,156,662	)		(1,002	)
Held to maturity		(566,119	)		(201,234	)
Equity and other securities		(10,966	)		(8,801	)
Net (increase) decrease in loans and leases		637,624			(988,654	)
Net (increase) decrease in interest-bearing deposits at banks		5,846,922			(7,743,417	)
Capital expenditures, net		(27,910	)		(31,016	)
Net (increase) decrease in loan servicing advances		342,947			(374,614	)
Other, net		(215,201	)		(179,350	)
Net cash provided (used) by investing activities		4,195,580			(8,931,747	)
Cash flows from financing activities
Net increase (decrease) in deposits		(5,224,696	)		8,670,627
Net increase (decrease) in short-term borrowings		3,261			(525	)
Payments on long-term borrowings		(49	)		(852,945	)
Dividends paid — common		(156,657	)		(142,044	)
Dividends paid — preferred		(30,718	)		(21,288	)
Other, net		(8,608	)		(9,569	)
Net cash provided (used) by financing activities		(5,417,467	)		7,644,256
Net increase (decrease) in cash, cash equivalents and restricted cash		73,883			(292,754	)
Cash, cash equivalents and restricted cash at beginning of period		1,337,577			1,552,743
Cash, cash equivalents and restricted cash at end of period	$	1,411,460		$	1,259,989
Supplemental disclosure of cash flow information
Interest received during the period	$	978,682		$	971,142
Interest paid during the period		40,683			55,378
Income taxes paid during the period		33,638			24,220
Supplemental schedule of noncash investing and financing activities
Real estate acquired in settlement of loans	$	4,598		$	2,301
Additions to right-of-use assets under operating leases	$	16,468		$	13,020

See accompanying notes to financial statements.

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M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

														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
2022
Balance — January 1, 2022	$	1,750,000	$	79,871	$	1,212		$	6,635,000		$	14,646,448		$	(127,578	)	$	(5,081,548	)	$	17,903,405
Total comprehensive income		—		—		—			—			362,174			(249,807	)		—			112,367
Preferred stock cash dividends (a)		—		—		—			—			(21,765	)		—			—			(21,765	)
Stock-based compensation transactions, net		—		—		(138	)		(23,341	)		(330	)		—			61,678			37,869
Common stock cash dividends — $1.20 per share		—		—		—			—			(155,856	)		—			—			(155,856	)
Balance — March 31, 2022	$	1,750,000	$	79,871	$	1,074		$	6,611,659		$	14,830,671		$	(377,385	)	$	(5,019,870	)	$	17,876,020
2021
Balance — January 1, 2021	$	1,250,000	$	79,871	$	1,344		$	6,617,404		$	13,444,428		$	(63,032	)	$	(5,142,732	)	$	16,187,283
Total comprehensive income		—		—		—			—			447,249			(75,446	)		—			371,803
Preferred stock cash dividends (a)		—		—		—			—			(17,050	)		—			—			(17,050	)
Stock-based compensation transactions, net		—		—		(179	)		(6,254	)		(208	)		—			53,639			46,998
Common stock cash dividends — $1.10 per share		—		—		—			—			(142,526	)		—			—			(142,526	)
Balance — March 31, 2021	$	1,250,000	$	79,871	$	1,165		$	6,611,150		$	13,731,893		$	(138,478	)	$	(5,089,093	)	$	16,446,508

	(a)	For the three-months ended March 31, 2022, dividends per preferred share were: Preferred Series E - $16.125; Preferred Series F - $128.125; Preferred Series G - $125.00; and Preferred Series I - $94.306. Dividends per preferred share for the three-months ended March 31, 2021 were: Preferred Series E - $16.125; Preferred Series F - $128.125; Preferred Series G - $125.00.

See accompanying notes to financial statements.

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NOTES TO FINANCIAL STATEMENTS

Significant accounting policies

The consolidated interim financial statements of M&T Bank Corporation (“M&T”) and subsidiaries (“the Company”) were compiled in accordance with generally accepted accounting principles (“GAAP”) using the accounting policies set forth in note 1 of Notes to Financial Statements included in Form 10-K for the year ended December 31, 2021 (“2021 Annual Report”). The financial statements contain all adjustments which are, in the opinion of management, necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the interim periods presented.

Acquisition

On March 4, 2022, M&T received Federal Reserve approval to acquire People’s United Financial, Inc. ("People’s United"), and on April 1, 2022 closed the acquisition. Pursuant to the terms of the merger agreement dated February 22, 2021, People’s United shareholders received consideration valued at .118 of an M&T common share in exchange for each common share of People’s United. Additionally, People’s United outstanding preferred stock was converted into new shares of Series H preferred stock of M&T. The purchase price totaled approximately $8.4 billion (with the price based on M&T’s closing price of $164.66 per share as of April 1, 2022). M&T issued 50,325,004 common shares in completing the transaction.

As of March 31, 2022 People’s United reported total assets of approximately $63.0 billion, including $36.3 billion of loans and $11.6 billion of investment securities, approximately $55.5 billion of liabilities, including $53.0 billion of deposits and approximately $7.5 billion of shareholders’ equity, including $244 million of preferred stock.

In connection with the acquisition, the Company incurred merger-related expenses consisting predominantly of professional services, including legal expenses and technology-related activities to prepare for planned integration efforts that totaled approximately $17 million for the three months ended March 31, 2022. Merger-related expenses of $10 million were incurred in the first quarter of 2021, consisting predominantly of professional services for investment banking, legal and other services.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

Investment securities

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)
March 31, 2022
Investment securities available for sale:
U.S. Treasury and federal agencies	$	2,838,987	$	707	$	49,977	$	2,789,717
Mortgage-backed securities:
Government issued or guaranteed		2,820,570		14,599		39,992		2,795,177
Other debt securities		124,140		996		4,831		120,305
		5,783,697		16,302		94,800		5,705,199
Investment securities held to maturity:
U.S. Treasury and federal agencies		3,038		—		24		3,014
Obligations of states and political subdivisions		175		—		—		175
Mortgage-backed securities:
Government issued or guaranteed		3,117,175		4,830		141,477		2,980,528
Privately issued		57,751		10,309		11,555		56,505
Other debt securities		2,487		—		—		2,487
		3,180,626		15,139		153,056		3,042,709
Total debt securities	$	8,964,323	$	31,441	$	247,856	$	8,747,908
Equity and other securities:
Readily marketable equity — at fair value	$	78,042	$	4,653	$	1,530	$	81,165
Other — at cost		389,842		—		—		389,842
Total equity and other securities	$	467,884	$	4,653	$	1,530	$	471,007

Balance — December 31, 2021
Investment securities available for sale:
U.S. Treasury and federal agencies	$	682,267	$	229	$	3,806	$	678,690
Mortgage-backed securities:
Government issued or guaranteed		3,042,771		113,102		561		3,155,312
Other debt securities		124,309		1,974		4,481		121,802
		3,849,347		115,305		8,848		3,955,804
Investment securities held to maturity:
U.S. Treasury and federal agencies		3,052		—		9		3,043
Obligations of states and political subdivisions		177		2		—		179
Mortgage-backed securities:
Government issued or guaranteed		2,667,328		49,221		8,376		2,708,173
Privately issued		61,555		10,520		14,742		57,333
Other debt securities		2,562		—		—		2,562
		2,734,674		59,743		23,127		2,771,290
Total debt securities	$	6,584,021	$	175,048	$	31,975	$	6,727,094
Equity and other securities:
Readily marketable equity — at fair value	$	73,774	$	4,460	$	594	$	77,640
Other — at cost		387,742		—		—		387,742
Total equity and other securities	$	461,516	$	4,460	$	594	$	465,382

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

Investment securities, continued

There were no significant gross realized gains or losses from sales of investment securities for the quarters ended March 31, 2022 and 2021. Unrealized losses on equity securities were $1 million and $12 million during the three months ended March 31, 2022 and 2021, respectively.

At March 31, 2022, 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	$	6,955	$	6,947
Due after one year through five years		2,895,828		2,846,337
Due after five years through ten years		30,344		30,018
Due after ten years		30,000		26,720
		2,963,127		2,910,022
Mortgage-backed securities available for sale		2,820,570		2,795,177
	$	5,783,697	$	5,705,199
Debt securities held to maturity:
Due in one year or less	$	3,213	$	3,189
Due after ten years		2,487		2,487
		5,700		5,676
Mortgage-backed securities held to maturity		3,174,926		3,037,033
	$	3,180,626	$	3,042,709

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

3. Investment securities, continued

A summary of investment securities that as of March 31, 2022 and December 31, 2021 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)
March 31, 2022
Investment securities available for sale:
U.S. Treasury and federal agencies	$	2,341,892	$	49,970	$	293	$	7
Mortgage-backed securities:
Government issued or guaranteed		2,099,805		39,425		19,599		567
Other debt securities		7,357		69		67,888		4,762
		4,449,054		89,464		87,780		5,336
Investment securities held to maturity:
U.S. Treasury and federal agencies		3,014		24		—		—
Mortgage-backed securities:
Government issued or guaranteed		2,639,956		141,419		1,178		58
Privately issued		—		—		38,536		11,555
		2,642,970		141,443		39,714		11,613
Total	$	7,092,024	$	230,907	$	127,494	$	16,949

December 31, 2021
Investment securities available for sale:
U.S. Treasury and federal agencies	$	598,566	$	3,806	$	—	$	—
Mortgage-backed securities:
Government issued or guaranteed		10,111		54		20,824		507
Other debt securities		3,760		74		66,419		4,407
		612,437		3,934		87,243		4,914
Investment securities held to maturity:
U.S. Treasury and federal agencies		3,043		9		—		—
Mortgage-backed securities:
Government issued or guaranteed		1,372,236		8,356		1,251		20
Privately issued		—		—		43,692		14,742
		1,375,279		8,365		44,943		14,762
Total	$	1,987,716	$	12,299	$	132,186	$	19,676

The Company owned 1,217 individual debt securities with aggregate gross unrealized losses of $248 million at March 31, 2022. Based on a review of each of the securities in the investment securities portfolio at March 31, 2022, the Company concluded that it expected to recover the amortized cost basis of its investment. As of March 31, 2022, 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 March 31, 2022, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $390 million of cost method equity securities.

The Company estimated no material allowance for credit losses for its investment securities classified as held-to-maturity at March 31, 2022 or December 31, 2021, as the substantial majority of such investment securities are obligations backed by the U.S. government or its agencies.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

Loans and leases and the allowance for credit losses

A summary of current, past due and nonaccrual loans as of March 31, 2022 and December 31, 2021 follows:

	Current		30-89 Days Past Due		Accruing Loans Past Due 90 Days or More		Nonaccrual		Total
	(In thousands)
March 31, 2022
Commercial, financial, leasing, etc.	$	23,140,917	$	70,716	$	9,238	$	275,146	$	23,496,017
Real estate:
Commercial		24,237,034		250,362		76,413		1,157,686		25,721,495
Residential builder and developer		1,381,331		840		—		2,916		1,385,087
Other commercial construction		7,283,522		112,599		—		50,855		7,446,976
Residential		13,126,694		249,731		687,397		341,671		14,405,493
Residential — limited documentation		1,050,328		16,546		—		123,512		1,190,386
Consumer:
Home equity lines and loans		3,407,958		16,939		—		71,489		3,496,386
Recreational finance		8,156,368		33,093		—		31,546		8,221,007
Automobile		4,688,513		31,707		—		35,350		4,755,570
Other		1,631,907		10,305		3,703		44,060		1,689,975
Total	$	88,104,572	$	792,838	$	776,751	$	2,134,231	$	91,808,392

December 31, 2021
Commercial, financial, leasing, etc.	$	23,101,810	$	142,208	$	8,284	$	221,022	$	23,473,324
Real estate:
Commercial		24,712,643		319,099		31,733		1,069,280		26,132,755
Residential builder and developer		1,400,437		2,904		—		3,005		1,406,346
Other commercial construction		7,722,049		17,175		—		111,405		7,850,629
Residential		13,294,872		239,561		920,080		355,858		14,810,371
Residential — limited documentation		1,124,520		16,666		—		122,888		1,264,074
Consumer:
Home equity lines and loans		3,476,617		15,486		—		70,488		3,562,591
Recreational finance		7,985,173		40,544		—		27,811		8,053,528
Automobile		4,604,772		40,064		—		34,037		4,678,873
Other		1,620,147		12,223		3,302		44,289		1,679,961
Total	$	89,043,040	$	845,930	$	963,399	$	2,060,083	$	92,912,452

At March 31, 2022 and December 31, 2021, the Company had $445 million and $1.2 billion, respectively, of outstanding loan balances, consisting predominantly of residential real estate loans, for which COVID-19 related payment deferrals were granted. Those loans met the criteria described in note 1 of Notes to Financial Statements in the 2021 Annual Report and, accordingly, are not considered past due or otherwise in default of loan terms as of the date presented. Included in those loan balances were $323 million and $974 million of government-guaranteed loans at March 31, 2022 and December 31, 2021, respectively. Payment deferrals are generally scheduled to expire in 2022 and/or are in the process of formal modification of repayment terms for previously deferred payments.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

Loans and leases and the allowance for credit losses, continued

One-to-four family residential mortgage loans held for sale were $238 million and $474 million at March 31, 2022 and December 31, 2021, respectively. Commercial real estate loans held for sale were $216 million at March 31, 2022 and $425 million at December 31, 2021.

Credit quality indicators

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.

Line of business personnel in different geographic locations with support from and review by the Company’s credit risk personnel 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. The Company’s policy is that at least annually, updated financial information be obtained from commercial borrowers associated with pass grade loans and additional analysis performed. On a quarterly basis, the Company’s centralized credit risk 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.

- 13 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Loans and leases and the allowance for credit losses, continued

The following table summarizes the loan grades applied at March 31, 2022 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
	2022		2021		2020		2019		2018		Prior		Loans		Loans		Total
	(In thousands)
Commercial, financial, leasing, etc.:
Loan grades:
Pass	$	1,055,017		4,113,672		1,587,360		1,244,516		804,066		1,672,521		11,620,841		21,332	$	22,119,325
Criticized accrual		2,158		160,026		85,975		112,346		54,793		239,338		431,138		15,772		1,101,546
Criticized nonaccrual		230		32,442		23,377		16,306		25,381		62,888		108,064		6,458		275,146
Total commercial, financial, leasing, etc.	$	1,057,405		4,306,140		1,696,712		1,373,168		884,240		1,974,747		12,160,043		43,562	$	23,496,017

Real estate:
Commercial:
Loan grades:
Pass	$	841,183		2,820,491		2,575,823		3,515,526		2,680,777		6,945,820		802,747		—	$	20,182,367
Criticized accrual		—		303,277		435,302		760,867		1,020,066		1,824,893		37,037		—		4,381,442
Criticized nonaccrual		—		11,335		170,600		193,832		118,467		631,956		31,496		—		1,157,686
Total commercial real estate	$	841,183		3,135,103		3,181,725		4,470,225		3,819,310		9,402,669		871,280		—	$	25,721,495

Residential builder and developer:
Loan grades:
Pass	$	148,495		693,998		72,171		65,188		48,524		13,301		203,455		—	$	1,245,132
Criticized accrual		—		3,848		6,430		109,729		13,360		63		3,609		—		137,039
Criticized nonaccrual		—		—		—		2,909		—		7		—		—		2,916
Total residential builder and developer	$	148,495		697,846		78,601		177,826		61,884		13,371		207,064		—	$	1,385,087

Other commercial construction:
Loan grades:
Pass	$	51,528		1,105,470		1,763,832		1,898,002		573,711		347,883		30,026		—	$	5,770,452
Criticized accrual		321		32,357		77,290		673,544		517,987		322,078		2,092		—		1,625,669
Criticized nonaccrual		—		—		106		10,634		3,392		32,254		4,469		—		50,855
Total other commercial construction	$	51,849		1,137,827		1,841,228		2,582,180		1,095,090		702,215		36,587		—	$	7,446,976

- 14 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Loans and leases and the allowance for credit losses, continued

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 March 31, 2022 for the various classes of the Company’s residential real estate loans and consumer loans by origination year follows.

	Term Loans by Origination Year												Revolving		Revolving Loans Converted to Term
	2022		2021		2020		2019		2018		Prior		Loans		Loans		Total
	(In thousands)
Residential:
Current	$	1,166,092		2,822,922		1,657,789		992,754		403,896		6,044,813		38,428		—	$	13,126,694
30-89 days past due		3,136		19,193		10,756		5,952		6,882		201,254		2,558		—		249,731
Accruing loans past due 90 days or more		—		28,249		60,476		25,426		28,236		545,010		—		—		687,397
Nonaccrual		—		5,764		14,866		9,950		3,347		307,228		516		—		341,671
Total residential	$	1,169,228		2,876,128		1,743,887		1,034,082		442,361		7,098,305		41,502		—	$	14,405,493

Residential - limited documentation:
Current	$	—		—		—		—		—		1,050,328		—		—	$	1,050,328
30-89 days past due		—		—		—		—		—		16,546		—		—		16,546
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		—		—		—		—		123,512		—		—		123,512
Total residential - limited documentation	$	—		—		—		—		—		1,190,386		—		—	$	1,190,386

Consumer:
Home equity lines and loans:
Current	$	70		382		762		2,648		1,480		36,016		2,249,108		1,117,492	$	3,407,958
30-89 days past due		—		—		—		—		—		935		574		15,430		16,939
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		15		—		—		—		5,445		4,772		61,257		71,489
Total home equity lines and loans	$	70		397		762		2,648		1,480		42,396		2,254,454		1,194,179	$	3,496,386

Recreational finance:
Current	$	703,845		2,719,675		1,938,655		1,175,424		602,683		1,016,086		—		—	$	8,156,368
30-89 days past due		88		5,701		7,647		6,930		4,076		8,651		—		—		33,093
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		2,664		6,270		5,907		5,017		11,688		—		—		31,546
Total recreational finance	$	703,933		2,728,040		1,952,572		1,188,261		611,776		1,036,425		—		—	$	8,221,007

Automobile:
Current	$	567,597		2,052,558		981,264		575,505		289,345		222,244		—		—	$	4,688,513
30-89 days past due		288		7,968		5,104		6,824		5,022		6,501		—		—		31,707
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		3,756		5,904		8,199		7,171		10,320		—		—		35,350
Total automobile	$	567,885		2,064,282		992,272		590,528		301,538		239,065		—		—	$	4,755,570

Other:
Current	$	56,511		222,946		85,462		61,479		19,075		26,925		1,158,065		1,444	$	1,631,907
30-89 days past due		2,187		907		369		489		166		5,814		—		373		10,305
Accruing loans past due 90 days or more		—		—		—		—		—		3,703		—		—		3,703
Nonaccrual		1,538		883		203		370		144		266		40,552		104		44,060
Total other	$	60,236		224,736		86,034		62,338		19,385		36,708		1,198,617		1,921	$	1,689,975

Total loans and leases at March 31, 2022	$	4,600,284		17,170,499		11,573,793		11,481,256		7,237,064		21,736,287		16,769,547		1,239,662	$	91,808,392

- 15 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Loans and leases and the allowance for credit losses, continued

The following table summarizes the loan grades applied at December 31, 2021 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
	2021		2020		2019		2018		2017		Prior		Loans		Loans		Total
	(In thousands)
Commercial, financial, leasing, etc.:
Loan grades:
Pass	$	4,798,052		1,916,072		1,476,786		951,881		500,615		1,398,775		10,993,461		18,699	$	22,054,341
Criticized accrual		196,680		98,595		107,010		73,126		36,232		185,935		484,755		15,628		1,197,961
Criticized nonaccrual		19,462		23,229		17,114		39,908		20,927		33,698		60,175		6,509		221,022
Total commercial, financial, leasing, etc.	$	5,014,194		2,037,896		1,600,910		1,064,915		557,774		1,618,408		11,538,391		40,836	$	23,473,324

Real estate:
Commercial:
Loan grades:
Pass	$	3,413,587		2,662,999		3,682,178		2,648,388		2,076,155		5,232,790		728,948		—	$	20,445,045
Criticized accrual		133,133		480,146		685,701		1,068,552		468,530		1,743,798		38,570		—		4,618,430
Criticized nonaccrual		21,587		133,560		195,084		83,857		76,628		520,473		38,091		—		1,069,280
Total commercial real estate	$	3,568,307		3,276,705		4,562,963		3,800,797		2,621,313		7,497,061		805,609		—	$	26,132,755

Residential builder and developer:
Loan grades:
Pass	$	786,983		106,510		75,287		47,587		4,680		12,450		230,017		—	$	1,263,514
Criticized accrual		2,055		5,356		117,258		13,637		630		—		891		—		139,827
Criticized nonaccrual		—		—		2,910		—		—		95		—		—		3,005
Total residential builder and developer	$	789,038		111,866		195,455		61,224		5,310		12,545		230,908		—	$	1,406,346

Other commercial construction:
Loan grades:
Pass	$	957,947		1,781,603		2,022,276		832,547		152,669		273,556		38,781		—	$	6,059,379
Criticized accrual		24,103		54,191		675,226		583,428		228,739		114,158		—		—		1,679,845
Criticized nonaccrual		—		—		71,613		3,303		12,263		19,970		4,256		—		111,405
Total other commercial construction	$	982,050		1,835,794		2,769,115		1,419,278		393,671		407,684		43,037		—	$	7,850,629

- 16 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Loans and leases and the allowance for credit losses, continued

A summary of loans in accrual and nonaccrual status at December 31, 2021 for the various classes of the Company’s residential real estate loans and consumer loans by origination year follows.

	Term Loans by Origination Year												Revolving		Revolving Loans Converted to Term
	2021		2020		2019		2018		2017		Prior		Loans		Loans		Total
	(In thousands)
Residential:
Current	$	3,057,118		1,672,090		1,075,896		466,040		1,037,958		5,913,461		72,309		—	$	13,294,872
30-89 days past due		15,245		12,535		9,886		6,132		33,097		162,666		—		—		239,561
Accruing loans past due 90 days or more		10,924		100,581		28,512		31,996		205,318		542,749		—		—		920,080
Nonaccrual		3,359		19,858		7,119		4,577		5,890		314,792		263		—		355,858
Total residential	$	3,086,646		1,805,064		1,121,413		508,745		1,282,263		6,933,668		72,572		—	$	14,810,371

Residential - limited documentation:
Current	$	—		—		—		—		—		1,124,520		—		—	$	1,124,520
30-89 days past due		—		—		—		—		—		16,666		—		—		16,666
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		—		—		—		—		122,888		—		—		122,888
Total residential - limited documentation	$	—		—		—		—		—		1,264,074		—		—	$	1,264,074

Consumer:
Home equity lines and loans:
Current	$	304		777		2,793		1,730		1,944		38,015		2,348,279		1,082,775	$	3,476,617
30-89 days past due		—		—		—		21		—		698		346		14,421		15,486
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		—		—		—		—		5,750		4,951		59,787		70,488
Total home equity lines and loans	$	304		777		2,793		1,751		1,944		44,463		2,353,576		1,156,983	$	3,562,591

Recreational finance:
Current	$	2,890,111		2,088,342		1,267,929		646,883		445,868		646,040		—		—	$	7,985,173
30-89 days past due		5,929		8,912		8,317		5,074		5,189		7,123		—		—		40,544
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		1,341		4,646		4,871		4,918		4,039		7,996		—		—		27,811
Total recreational finance	$	2,897,381		2,101,900		1,281,117		656,875		455,096		661,159		—		—	$	8,053,528

Automobile:
Current	$	2,220,061		1,097,684		662,000		341,655		211,774		71,598		—		—	$	4,604,772
30-89 days past due		8,508		6,615		8,936		7,161		5,715		3,129		—		—		40,064
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		1,588		4,390		7,847		7,867		6,882		5,463		—		—		34,037
Total automobile	$	2,230,157		1,108,689		678,783		356,683		224,371		80,190		—		—	$	4,678,873

Other:
Current	$	244,346		96,945		73,586		24,424		16,924		14,321		1,148,096		1,505	$	1,620,147
30-89 days past due		2,937		404		472		255		101		5,712		1,908		434		12,223
Accruing loans past due 90 days or more		—		—		—		—		—		3,302		—		—		3,302
Nonaccrual		2,051		326		326		193		104		353		40,807		129		44,289
Total other	$	249,334		97,675		74,384		24,872		17,129		23,688		1,190,811		2,068	$	1,679,961

Total loans and leases at December 31, 2021	$	18,817,411		12,376,366		12,286,933		7,895,140		5,558,871		18,542,940		16,234,904		1,199,887	$	92,912,452

- 17 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Loans and leases and the allowance for credit losses, continued

Allowance for credit losses

For purposes of determining the level of the allowance for credit losses, the Company evaluates its loan and lease portfolio by type. Changes in the allowance for credit losses for the three months ended March 31, 2022 and 2021 were as follows:

	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Total
	(In thousands)
Three Months Ended March 31, 2022
Beginning balance	$	283,899			557,239			71,726			556,362		$	1,469,226
Provision for credit losses		28,725			(30,938	)		1,720			10,493			10,000
Net charge-offs
Charge-offs		(19,234	)		(1,800	)		(3,972	)		(26,032	)		(51,038	)
Recoveries		13,665			14,943			3,107			12,456			44,171
Net (charge-offs) recoveries		(5,569	)		13,143			(865	)		(13,576	)		(6,867	)
Ending balance	$	307,055			539,444			72,581			553,279		$	1,472,359

Three Months Ended March 31, 2021
Beginning balance	$	405,846		670,719		103,590		556,232		$	1,736,387
Provision for credit losses		(72,418	)	99,471		(13,435	)	(38,618	)		(25,000	)
Net charge-offs
Charge-offs		(26,945	)	(60,652	)	(2,399	)	(32,929	)		(122,925	)
Recoveries		22,511		6,560		2,033		16,640			47,744
Net charge-offs		(4,434	)	(54,092	)	(366	)	(16,289	)		(75,181	)
Ending balance	$	328,994		716,098		89,789		501,325		$	1,636,206

- 18 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Loans and leases and the allowance for credit losses, continued

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 determining the allowance for credit losses, 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, can 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 March 31, 2022 and December 31, 2021, 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 estimates losses attributable to specific troubled credits identified through both normal and targeted credit review processes. 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 risk personnel. 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.

Changes in the amount of the allowance for credit losses reflect the outcome of the procedures described herein, including the impact of changes in macroeconomic forecasts as compared with previous forecasts, as well as the impact of portfolio concentrations, imprecision in economic forecasts, geopolitical conditions and other risk factors that might influence the loss estimation process.

The Company’s reserve for off-balance sheet credit exposures was not material at March 31, 2022 and December 31, 2021.

- 19 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Loans and leases and the allowance for credit losses, continued

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 three-month periods ended March 31, 2022 and 2021 follows.

	March 31, 2022						January 1, 2022		Three Months Ended March 31, 2022
	Amortized Cost with Allowance		Amortized Cost without Allowance		Total		Amortized Cost		Interest Income Recognized
	(In thousands)

Commercial, financial, leasing, etc.	$	171,322	$	103,824	$	275,146	$	221,022	$	13,594
Real estate:
Commercial		222,771		934,915		1,157,686		1,069,280		6,131
Residential builder and developer		524		2,392		2,916		3,005		1,428
Other commercial construction		29,914		20,941		50,855		111,405		626
Residential		191,495		150,176		341,671		355,858		6,541
Residential — limited documentation		80,590		42,922		123,512		122,888		196
Consumer:
Home equity lines and loans		32,783		38,706		71,489		70,488		809
Recreational finance		24,350		7,196		31,546		27,811		161
Automobile		30,129		5,221		35,350		34,037		38
Other		43,964		96		44,060		44,289		92
Total	$	827,842	$	1,306,389	$	2,134,231	$	2,060,083	$	29,616

	March 31, 2021						January 1, 2021		Three Months Ended March 31, 2021
	Amortized Cost with Allowance		Amortized Cost without Allowance		Total		Amortized Cost		Interest Income Recognized
	(In thousands)

Commercial, financial, leasing, etc.	$	211,894	$	83,175	$	295,069	$	306,827	$	3,085
Real estate:
Commercial		337,036		487,043		824,079		775,894		1,658
Residential builder and developer		1,224		—		1,224		1,094		33
Other commercial construction		24,186		102,039		126,225		114,039		41
Residential		186,374		199,134		385,508		365,729		4,498
Residential — limited documentation		84,342		58,727		143,069		147,170		79
Consumer:
Home equity lines and loans		44,548		34,640		79,188		79,392		952
Recreational finance		19,657		7,561		27,218		25,519		155
Automobile		33,270		4,949		38,219		39,404		49
Other		2,864		34,443		37,307		38,231		180
Total	$	945,395	$	1,011,711	$	1,957,106	$	1,893,299	$	10,730

- 20 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Loans and leases and the allowance for credit losses, continued

Loan modifications

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 table that follows summarizes the Company’s loan modification activities that were considered troubled debt restructurings for the three-month periods ended March 31, 2022 and 2021:

					Post-modification (a)
	Number		Pre- modification Recorded Investment		Principal Deferral		Interest Rate Reduction		Other		Combination of Concession Types		Total
Three Months Ended March 31, 2022	(Dollars in thousands)

Commercial, financial, leasing, etc.		37	$	10,003	$	6,920	$	—	$	54	$	2,780	$	9,754
Real estate:
Commercial		17		7,582		4,376		—		2,101		855		7,332
Residential		97		24,051		15,443		—		—		9,961		25,404
Residential — limited documentation		5		1,076		894		—		—		193		1,087
Consumer:
Home equity lines and loans		35		2,150		1,988		—		—		172		2,160
Recreational finance		177		5,997		5,990		—		—		—		5,990
Automobile		534		10,263		10,233		—		—		—		10,233
Other		33		334		334		—		—		—		334
Total		935	$	61,456	$	46,178	$	—	$	2,155	$	13,961	$	62,294


Three Months Ended March 31, 2021

Commercial, financial, leasing, etc.		93	$	53,733	$	24,653	$	—	$	—	$	28,504	$	53,157
Real estate:
Commercial		33		26,870		11,160		—		2,214		12,422		25,796
Residential		123		39,583		38,557		—		—		1,117		39,674
Residential — limited documentation		10		1,116		1,059		—		—		—		1,059
Consumer:
Home equity lines and loans		26		1,715		1,486		—		—		174		1,660
Recreational finance		72		2,212		2,212		—		—		—		2,212
Automobile		276		4,969		4,955		—		—		14		4,969
Other		222		1,434		1,434		—		—		—		1,434
Total		855	$	131,632	$	85,516	$	—	$	2,214	$	42,231	$	129,961

(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.

- 21 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Loans and leases and the allowance for credit losses, continued

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. Impairment of troubled debt restructurings that have subsequently defaulted may also be measured based on the loan’s observable market price or the fair value of collateral if the loan is collateral-dependent. Charge-offs may also be recognized on troubled debt restructurings that have subsequently defaulted. Loans that were modified as troubled debt restructurings during the twelve months ended March 31, 2022 and 2021 and for which there was a subsequent payment default during the three-month periods ended March 31, 2022 and 2021, respectively, were not material.

The amount of foreclosed residential real estate property held by the Company was $24 million at each of March 31, 2022 and December 31, 2021. There were $186 million and $151 million at March 31, 2022 and December 31, 2021, respectively, of loans secured by residential real estate that were in the process of foreclosure. Of all loans in the process of foreclosure at March 31, 2022, approximately 50% were government guaranteed.

Borrowings

M&T had $533 million of fixed and variable rate junior subordinated deferrable interest debentures ("Junior Subordinated Debentures") outstanding at March 31, 2022 that are held by various trusts that 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 securities are includable in M&T’s Tier 2 regulatory capital.

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.

- 22 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Revenue from contracts with customers

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 March 31, 2022 and December 31, 2021, the Company had $67 million and $68 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 Company’s 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 each of March 31, 2022 and December 31, 2021, the Company had deferred revenue of $45 million related to the sources in the accompanying tables recorded in accrued interest and other liabilities in the consolidated balance sheet.

The following tables summarize sources of the Company’s noninterest income during the three-month periods ended March 31, 2022 and 2021 that are subject to the revenue recognition accounting guidance.

	Business Banking								Total
Three Months Ended March 31, 2022	(In thousands)

Classification in consolidated statement of income
Service charges on deposit accounts	$	14,681	25,571	3,478	—	—	56,347	1,430	$	101,507
Trust income		—	—	—	—	—	—	169,213		169,213
Brokerage services income		—	—	—	—	—	—	20,190		20,190
Other revenues from operations:
Merchant discount and credit card fees		12,805	13,459	874	—	—	4,510	107		31,755
Other		—	1,903	2,464	693	1,729	5,099	12,891		24,779
	$	27,486	40,933	6,816	693	1,729	65,956	203,831	$	347,444
Three Months Ended March 31, 2021

Classification in consolidated statement of income
Service charges on deposit accounts	$	12,497	24,295	2,893	—	—	51,452	1,640	$	92,777
Trust income		—	—	—	—	—	—	156,022		156,022
Brokerage services income		—	—	—	—	—	—	13,113		13,113
Other revenues from operations:
Merchant discount and credit card fees		9,481	10,407	445	—	—	3,921	109		24,363
Other		—	958	1,091	384	1,722	5,807	12,948		22,910
	$	21,978	35,660	4,429	384	1,722	61,180	183,832	$	309,185

- 23 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Pension plans and other postretirement benefits

The Company provides defined benefit pension and other postretirement benefits (including health care and life insurance benefits) to qualified retired employees. Net periodic defined benefit cost for defined benefit plans consisted of the following:

	Pension Benefits						Other Postretirement Benefits
	Three Months Ended March 31
	2022			2021			2022			2021
	(In thousands)

Service cost	$	4,271		$	5,023		$	232		$	248
Interest cost on projected benefit obligation		16,267			15,434			355			327
Expected return on plan assets		(37,150	)		(35,950	)		—			—
Amortization of prior service cost (credit)		125			125			(1,075	)		(1,175	)
Amortization of net actuarial loss (gain)		4,625			22,150			(325	)		(300	)
Net periodic cost (benefit)	$	(11,862	)	$	6,782		$	(813	)	$	(900	)

Service cost is reflected in salaries and employee benefits expense in the consolidated statement of income. The other components of net periodic benefit cost are reflected in other costs of operations. Expenses incurred in connection with the Company's defined contribution pension and retirement savings plans totaled $31 million and $33 million for the three months ended March 31, 2022 and 2021, respectively, and are included in salaries and employee benefits expense.

Prior to 2022, net actuarial losses were generally amortized over the average remaining service periods of active participants in the Company’s defined benefit pension plan. If substantially all of the plan’s participants are inactive, GAAP provides for the average remaining life expectancy of the participants to be used instead of average remaining service period in determining such amortization. Substantially all of the participants in the Company’s defined benefit pension plan were inactive and beginning in 2022 the average remaining life expectancy is now utilized prospectively to amortize the net unrecognized losses. The change increased the amortization period by approximately sixteen years and reduced the amount of quarterly amortization of unrecognized losses recorded in 2022 from what would have been recorded without such change in amortization period by $9 million.

Earnings per common share

The computations of basic earnings per common share follow:

	Three Months Ended March 31
	2022			2021
	(In thousands, except per share)

Income available to common shareholders:
Net income	$	362,174		$	447,249
Less: Preferred stock dividends		(21,765	)		(17,050	)
Net income available to common equity		340,409			430,199
Less: Income attributable to unvested stock-based compensation awards		(820	)		(2,108	)
Net income available to common shareholders	$	339,589		$	428,091
Weighted-average shares outstanding:
Common shares outstanding (including common stock issuable) and unvested stock-based compensation awards		129,274			129,414
Less: Unvested stock-based compensation awards		(329	)		(877	)
Weighted-average shares outstanding		128,945			128,537

Basic earnings per common share	$	2.63		$	3.33

- 24 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Earnings per common share, continued

The computations of diluted earnings per common share follow:

	Three Months Ended March 31
	2022			2021
	(In thousands, except per share)

Net income available to common equity	$	340,409		$	430,199
Less: Income attributable to unvested stock-based compensation awards		(819	)		(2,106	)
Net income available to common shareholders	$	339,590		$	428,093
Adjusted weighted-average shares outstanding:
Common and unvested stock-based compensation awards		129,274			129,414
Less: Unvested stock-based compensation awards		(329	)		(877	)
Plus: Incremental shares from assumed conversion of stock-based compensation awards and warrants to purchase common stock		471			132
Adjusted weighted-average shares outstanding		129,416			128,669

Diluted earnings per common share	$	2.62		$	3.33

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 to purchase common stock of M&T representing 114,226 and 462,342 common shares during the three-month periods ended March 31, 2022 and 2021, respectively, were not included in the computations of diluted earnings per common share because the effect on those periods would have been antidilutive.

- 25 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

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, 2022	$	104,691			(360,276	)		83,531		$	(172,054	)			44,476		$	(127,578	)
Other comprehensive income (loss) before reclassifications:
Unrealized holding losses, net		(184,955	)		—			—			(184,955	)			47,758			(137,197	)
Foreign currency translation adjustment		—			—			(2,123	)		(2,123	)			475			(1,648	)
Unrealized losses on cash flow hedges		—			—			(115,724	)		(115,724	)			29,885			(85,839	)

Total other comprehensive income (loss) before reclassifications		(184,955	)		—			(117,847	)		(302,802	)			78,118			(224,684	)
Amounts reclassified from accumulated other comprehensive income (loss) that (increase) decrease net income:
Amortization of unrealized holding losses on held-to-maturity securities		1,119			—			—			1,119		(a)		(289	)		830
Gains realized in net income		—			—			—			—		(b)		—			—
Accretion of net gain on terminated cash flow hedges		—			—			(30	)		(30	)	(c)		9			(21	)
Net yield adjustment from cash flow hedges currently in effect		—			—			(38,019	)		(38,019	)	(a)		9,818			(28,201	)
Amortization of prior service credit		—			(950	)		—			(950	)	(d)		305			(645	)
Amortization of actuarial losses		—			4,300			—			4,300		(d)		(1,386	)		2,914
Total other comprehensive income (loss)		(183,836	)		3,350			(155,896	)		(336,382	)			86,575			(249,807	)
Balance — March 31, 2022	$	(79,145	)		(356,926	)		(72,365	)	$	(508,436	)			131,051		$	(377,385	)


Balance — January 1, 2021	$	195,386			(650,087	)		369,558		$	(85,143	)			22,111		$	(63,032	)
Other comprehensive income (loss) before reclassifications:
Unrealized holding losses, net		(32,025	)		—			—			(32,025	)			8,907			(23,118	)
Foreign currency translation adjustment		—			—			684			684				(136	)		548
Unrealized losses on cash flow hedges		—			—			(9,498	)		(9,498	)			2,571			(6,927	)
Total other comprehensive income (loss) before reclassifications		(32,025	)		—			(8,814	)		(40,839	)			11,342			(29,497	)
Amounts reclassified from accumulated other comprehensive income (loss) that (increase) decrease net income:
Amortization of unrealized holding losses on held-to-maturity securities		990			—			—			990		(a)		(276	)		714
Gains realized in net income		(3	)		—			—			(3	)	(b)		1			(2	)
Accretion of net gain on terminated cash flow hedges		—			—			(30	)		(30	)	(c)		9			(21	)
Net yield adjustment from cash flow hedges currently in effect		—			—			(82,044	)		(82,044	)	(a)		22,215			(59,829	)
Amortization of prior service credit		—			(1,050	)		—			(1,050	)	(d)		384			(666	)
Amortization of actuarial losses		—			21,850			—			21,850		(d)		(7,995	)		13,855
Total other comprehensive income (loss)		(31,038	)		20,800			(90,888	)		(101,126	)			25,680			(75,446	)
Balance — March 31, 2021	$	164,348			(629,287	)		278,670		$	(186,269	)			47,791		$	(138,478	)

(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.

- 26 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Comprehensive income, continued

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

				Defined
	Investment			Benefit
	Securities			Plans			Other			Total
	(In thousands)

Balance — December 31, 2021	$	77,625		$	(267,145	)	$	61,942		$	(127,578	)
Net gain (loss) during period		(136,367	)		2,269			(115,709	)		(249,807	)
Balance — March 31, 2022	$	(58,742	)	$	(264,876	)	$	(53,767	)	$	(377,385	)

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 March 31, 2022.

The net effect of interest rate swap agreements was to increase net interest income by $47 million and $91 million during the three-month periods ended March 31, 2022 and 2021, respectively.

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)
March 31, 2022
Fair value hedges:
Fixed rate long-term borrowings (b)	$	1,650,000		2.1		2.86	%		1.09	%	$	1,022
Cash flow hedges:
Interest payments on variable rate commercial real estate loans (b)(c)		19,000,000		0.9		1.31	%		0.35	%		2,819
Total	$	20,650,000		1.0							$	3,841
December 31, 2021
Fair value hedges:
Fixed rate long-term borrowings (b)	$	1,650,000		2.3		2.86	%		0.74	%	$	41
Cash flow hedges:
Interest payments on variable rate commercial real estate loans (b)(d)		21,700,000		0.6		1.24	%		0.09	%		(248	)
Total	$	23,350,000		0.7							$	(207	)

(a)

Certain clearinghouse exchanges consider payments by counterparties for variation margin on derivative instruments to be settlements of those positions. The impact of such payments for interest rate swap agreements designated as fair value hedges was a net settlement of losses of $782,000 at March 31, 2022 and a net settlement of gains of $43.5 million at December 31, 2021. The impact of such payments on interest rate swap agreements designated as cash flow hedges was a net settlement of losses of $68.7 million at March 31, 2022 and net settlement of gains of $88.2 million at December 31, 2021.

(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 $5.7 billion of forward-starting interest rate swap agreements that become effective in 2022 - 2023.

(d)	Includes notional amount and terms of $8.4 billion of forward-starting interest rate swap agreements that become effective in 2022.

- 27 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Derivative financial instruments, continued

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 $31.8 billion and $32.6 billion at March 31, 2022 and December 31, 2021, respectively. The notional amounts of foreign currency and other option and futures contracts entered into for trading account purposes aggregated $1.3 billion and $1.1 billion at March 31, 2022 and December 31, 2021, 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
	March 31,		December 31,		March 31,		December 31,
	2022		2021		2022		2021
	(In thousands)
Derivatives designated and qualifying as hedging instruments
Interest rate swap agreements (a)	$	4,298	$	258	$	457	$	465
Commitments to sell real estate loans (a)		10,002		4,044		74		548
		14,300		4,302		531		1,013
Derivatives not designated and qualifying as hedging instruments
Mortgage-related commitments to originate real estate loans for sale (a)		1,319		11,728		16,747		5,288
Commitments to sell real estate loans (a)		26,680		8,137		799		4,108
Trading:
Interest rate contracts (b)		141,066		410,056		292,873		76,278
Foreign exchange and other option and futures contracts (b)		9,637		8,230		9,633		7,156
		178,702		438,151		320,052		92,830
Total derivatives	$	193,002	$	442,453	$	320,583	$	93,843

(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 March 31, 2022 and December 31, 2021 was a reduction of the estimated fair value of interest rate contracts in the trading account in an asset position of $277.6 million and $54.4 million, respectively, and in a liability position of $45.9 million and $305.1 million, respectively.

	Amount of Gain (Loss) Recognized
	Three Months Ended March 31, 2022					Three Months Ended March 31, 2021
	Derivative			Hedged Item		Derivative			Hedged Item
	(In thousands)
Derivatives in fair value hedging relationships
Interest rate swap agreements:
Fixed rate long-term borrowings (a)	$	(43,273	)		42,998	$	(32,658	)		31,898
Derivatives not designated as hedging instruments
Trading:
Interest rate contracts (b)	$	106				$	(3,234	)
Foreign exchange and other option and futures contracts (b)		1,746					1,608
Total	$	1,852				$	(1,626	)

	(a)	Reported as an adjustment to interest expense.

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

- 28 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

Derivative financial instruments, continued

	Carrying Amount of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment Increasing (Decreasing) the Carrying Amount of the Hedged Item
	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
	(In thousands)
Location in the Consolidated Balance Sheet of the Hedged Items in Fair Value Hedges

Long-term debt	$	1,650,130	$	1,692,943	$	612	$	43,610

The amount of interest income recognized in the consolidated statement of income associated with derivatives designated as cash flow hedges was $38 million and $82 million for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022 the unrealized net loss recognized in other comprehensive income related to cash flow hedges was $66 million, of which gains of $5 million and losses of $35 million and $36 million related to interest rate swap agreements maturing in 2022, 2023, and 2025, 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 $13 million and $24 million at March 31, 2022 and December 31, 2021, 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 and the net liability positions with counterparties which are subject to master netting arrangements was $1 million and $35 million at March 31, 2022 and December 31, 2021, respectively. The Company was required to post collateral relating to those positions of $1 million and $33 million at March 31, 2022 and December 31, 2021, 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 rating 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 March 31, 2022 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 $83 million at March 31, 2022 and $7 million at December 31, 2021. Counterparties posted collateral relating to those positions of $84 million at March 31, 2022 and $6 million at December 31, 2021. Trading account interest rate swap agreements entered into with customers are subject to the Company’s credit risk standards and often contain collateral provisions.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

Derivative financial instruments, continued

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 $133 million and $132 million at March 31, 2022 and December 31, 2021, 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.

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. The Company has not recognized any losses as a result of having securitized assets.

As described in note 5, 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 March 31, 2022 and December 31, 2021, 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 5.

The Company has invested as a limited partner in various partnerships that collectively had total assets of approximately of $3.2 billion at March 31, 2022 and $3.0 billion at December 31, 2021. 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 $906 million, including $343 million of unfunded commitments, at March 31, 2022 and $933 million, including $361 million of unfunded commitments, at December 31, 2021. Contingent commitments to provide additional capital contributions to these partnerships were not material at March 31, 2022. 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 March 31, 2022 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 amortized $20 million and $19 million of its investments in qualified affordable housing projects to income tax expense during the three-month periods ended March 31, 2022 and 2021, respectively, and recognized $23 million and $21 million of tax credits and other tax benefits during those respective periods.

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.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

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 March 31, 2022.

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 consist primarily of 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.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

Fair value measurements, continued

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 are 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.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

12. Fair value measurements, continued

The following tables present assets and liabilities at March 31, 2022 and December 31, 2021 measured at estimated fair value on a recurring basis:

	Fair Value Measurements		Level 1		Level 2		Level 3
	(In thousands)
March 31, 2022
Trading account assets	$	197,558	$	46,655	$	150,903	$	—
Investment securities available for sale:
U.S. Treasury and federal agencies		2,789,717		—		2,789,717		—
Mortgage-backed securities:
Government issued or guaranteed		2,795,177		—		2,795,177		—
Other debt securities		120,305		—		120,305		—
		5,705,199		—		5,705,199		—
Equity securities		81,165		72,166		8,999		—
Real estate loans held for sale		454,003		—		454,003		—
Other assets (a)		42,299		—		40,980		1,319
Total assets	$	6,480,224	$	118,821	$	6,360,084	$	1,319
Trading account liabilities	$	302,506	$	—	$	302,506	$	—
Other liabilities (a)		18,077		—		1,330		16,747
Total liabilities	$	320,583	$	—	$	303,836	$	16,747

December 31, 2021
Trading account assets	$	468,031	$	49,545	$	418,486	$	—
Investment securities available for sale:
U.S. Treasury and federal agencies		678,690		—		678,690		—
Mortgage-backed securities:
Government issued or guaranteed		3,155,312		—		3,155,312		—
Other debt securities		121,802		—		121,802		—
		3,955,804		—		3,955,804		—
Equity securities		77,640		68,850		8,790		—
Real estate loans held for sale		899,282		—		899,282		—
Other assets (a)		24,167		—		12,439		11,728
Total assets	$	5,424,924	$	118,395	$	5,294,801	$	11,728
Trading account liabilities	$	83,434	$	—	$	83,434	$	—
Other liabilities (a)		10,409		—		5,121		5,288
Total liabilities	$	93,843	$	—	$	88,555	$	5,288

(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).

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

Fair value measurements, continued

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended March 31, 2022 and 2021 were as follows:

	Investment Securities Available for Sale
	Privately Issued Mortgage-Backed Securities		Other Assets and Other Liabilities
2022	(In thousands)

Balance — January 1, 2022	$	—	$	6,440
Total gains realized/unrealized:
Included in earnings		—		(18,700	)	(a)
Transfers out of Level 3		—		(3,168	)	(b)
Balance — March 31, 2022	$	—		(15,428	)
Changes in unrealized gains included in earnings related to assets still held at March 31, 2022	$	—	$	(13,219	)	(a)

2021

Balance — January 1, 2021	$	16	$	43,234
Total gains realized/unrealized:
Included in earnings		—		6,025		(a)
Transfers out of Level 3		—		(35,502	)	(b)
Balance — March 31, 2021	$	16		13,757
Changes in unrealized gains included in earnings related to assets still held at March 31, 2021	$	—	$	5,300		(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 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 in the range of 15% to 90% with a weighted-average of 36% at

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

12. Fair value measurements, continued

March 31, 2022. 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, accordingly, the related nonrecurring 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 March 31, 2022 was 67%. 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 $392 million at March 31, 2022 ($260 million and $132 million of which were classified as Level 2 and Level 3, respectively), $574 million at December 31, 2021 ($340 million and $234 million of which were classified as Level 2 and Level 3, respectively) and $658 million at March 31, 2021 ($357 million and $301 million of which were classified as Level 2 and Level 3, respectively). Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on March 31, 2022 and 2021 were decreases of $46 million and $66 million for the three-month periods ended March 31, 2022 and 2021.

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 into foreclosure of defaulted loans subject to nonrecurring fair value measurement were $9 million at March 31, 2021. Changes in fair value recognized for those foreclosed assets held by the Company were not material during the three-month periods ended March 31, 2022 and 2021.

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 $133 million and $138 million at March 31, 2022 and December 31, 2021, respectively, required a valuation allowance of $21 million and $24 million, respectively. Significant unobservable inputs used in this Level 3 valuation included weighted-average prepayment speeds of 12.42% and 14.64% at March 31, 2022 and December 31, 2021, respectively, and a weighted-average option-adjusted spread of 900 basis points at each date. There was a recovery of previously recognized impairment charges for capitalized servicing rights of $9 million during the three months ended March 31, 2021. The $3 million reduction during the three months ended March 31, 2022 reflects increased amortization recognized by the Company during that period.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

12. Fair value measurements, continued

Significant unobservable inputs to Level 3 measurements

The following tables present quantitative information about significant unobservable inputs used in the fair value measurements for certain Level 3 assets and liabilities at March 31, 2022 and December 31, 2021:

	Fair Value			Valuation Technique	Unobservable Inputs/Assumptions	Range (Weighted- Average)
	(In thousands)
March 31, 2022
Recurring fair value measurements
Net other assets (liabilities) (a)		(15,428	)	Discounted cash flow	Commitment expirations	0% - 96% (8%)

December 31, 2021
Recurring fair value measurements
Net other assets (liabilities) (a)		6,440		Discounted cash flow	Commitment expirations	0% - 80% (10%)

(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.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

Fair value measurements, continued

Disclosures of fair value of financial instruments

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

	March 31, 2022
	Carrying Amount			Estimated Fair Value			Level 1		Level 2			Level 3
	(In thousands)
Financial assets:
Cash and cash equivalents	$	1,411,460			1,411,460			1,292,609		118,851			—
Interest-bearing deposits at banks		36,025,382			36,025,382			—		36,025,382			—
Trading account assets		197,558			197,558			46,655		150,903			—
Investment securities		9,356,832			9,218,915			72,166		9,090,244			56,505
Loans and leases:
Commercial loans and leases		23,496,017			23,231,047			—		—			23,231,047
Commercial real estate loans		34,553,558			33,804,132			—		215,764			33,588,368
Residential real estate loans		15,595,879			15,118,857			—		4,674,686			10,444,171
Consumer loans		18,162,938			18,307,086			—		—			18,307,086
Allowance for credit losses		(1,472,359	)		—			—		—			—
Loans and leases, net		90,336,033			90,461,122			—		4,890,450			85,570,672
Accrued interest receivable		301,864			301,864			—		301,864			—
Financial liabilities:
Noninterest-bearing deposits	$	(58,520,366	)		(58,520,366	)		—		(58,520,366	)		—
Savings and interest-checking deposits		(65,273,150	)		(65,273,150	)		—		(65,273,150	)		—
Time deposits		(2,525,197	)		(2,526,204	)		—		(2,526,204	)		—
Short-term borrowings		(50,307	)		(50,307	)		—		(50,307	)		—
Long-term borrowings		(3,443,587	)		(3,464,637	)		—		(3,464,637	)		—
Accrued interest payable		(23,316	)		(23,316	)		—		(23,316	)		—
Trading account liabilities		(302,506	)		(302,506	)		—		(302,506	)		—
Other financial instruments:
Commitments to originate real estate loans for sale	$	(15,428	)		(15,428	)		—		—			(15,428	)
Commitments to sell real estate loans		35,809			35,809			—		35,809			—
Other credit-related commitments		(118,390	)		(118,390	)		—		—			(118,390	)
Interest rate swap agreements used for interest rate risk management		3,841			3,841			—		3,841			—

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

Fair value measurements, continued

	December 31, 2021
	Carrying Amount			Estimated Fair Value			Level 1		Level 2			Level 3
				(In thousands)
Financial assets:
Cash and cash equivalents	$	1,337,577			1,337,577			1,205,269		132,308			—
Interest-bearing deposits at banks		41,872,304			41,872,304			—		41,872,304			—
Trading account assets		468,031			468,031			49,545		418,486			—
Investment securities		7,155,860			7,192,476			68,850		7,066,293			57,333
Loans and leases:
Commercial loans and leases		23,473,324			23,285,224			—		—			23,285,224
Commercial real estate loans		35,389,730			34,730,191			—		425,010			34,305,181
Residential real estate loans		16,074,445			16,160,799			—		4,524,018			11,636,781
Consumer loans		17,974,953			18,121,363			—		—			18,121,363
Allowance for credit losses		(1,469,226	)		—			—		—			—
Loans and leases, net		91,443,226			92,297,577			—		4,949,028			87,348,549
Accrued interest receivable		335,162			335,162			—		335,162			—
Financial liabilities:
Noninterest-bearing deposits	$	(60,131,480	)		(60,131,480	)		—		(60,131,480	)		—
Savings and interest-checking deposits		(68,603,966	)		(68,603,966	)		—		(68,603,966	)		—
Time deposits		(2,807,963	)		(2,810,143	)		—		(2,810,143	)		—
Short-term borrowings		(47,046	)		(47,046	)		—		(47,046	)		—
Long-term borrowings		(3,485,369	)		(3,562,223	)		—		(3,562,223	)		—
Accrued interest payable		(40,866	)		(40,866	)		—		(40,866	)		—
Trading account liabilities		(83,434	)		(83,434	)		—		(83,434	)		—
Other financial instruments:
Commitments to originate real estate loans for sale	$	6,440			6,440			—		—			6,440
Commitments to sell real estate loans		7,525			7,525			—		7,525			—
Other credit-related commitments		(123,032	)		(123,032	)		—		—			(123,032	)
Interest rate swap agreements used for interest rate risk management		(207	)		(207	)		—		(207	)		—

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.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

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.

	March 31,		December 31,
	2022		2021
	(In thousands)
Commitments to extend credit
Home equity lines of credit	$	5,713,950	$	5,693,045
Commercial real estate loans to be sold		321,654		324,943
Other commercial real estate		4,523,995		4,998,631
Residential real estate loans to be sold		146,491		233,257
Other residential real estate		982,216		924,211
Commercial and other		21,884,664		22,145,057
Standby letters of credit		2,177,405		2,151,595
Commercial letters of credit		53,732		31,981
Financial guarantees and indemnification contracts		4,453,722		4,211,797
Commitments to sell real estate loans		862,061		1,367,523

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 in the preceding table, the Company had discretionary funding commitments to commercial customers of $11.0 billion and $10.8 billion at March 31, 2022 and December 31, 2021, 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 Delegated Underwriting and Servicing program. The Company's maximum credit risk for recourse associated with loans sold under this program totaled approximately $4.0 billion at each of March 31, 2022 and December 31, 2021. There have been no material losses incurred as a result of those credit recourse arrangements.

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 generally 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.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

13. Commitments and contingencies, continued

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 March 31, 2022, 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 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 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 as of March 31, 2022. Although the Company does not believe that the outcome of pending legal matters 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.

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 23 of Notes to Financial Statements in the 2021 Annual Report. 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, the financial information of the reported segments is 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.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

14. Segment information, continued

Information about the Company's segments is presented in the following table:

	Three Months Ended March 31
	2022								2021
	Total Revenues(a)		Inter- segment Revenues			Net Income (Loss)			Total Revenues(a)		Inter- segment Revenues			Net Income (Loss)
	(In thousands)

Business Banking	$	141,346	$	671		$	41,111		$	155,903	$	669		$	46,271
Commercial Banking		289,372		863			144,608			285,912		809			122,638
Commercial Real Estate		202,087		179			97,610			200,843		222			71,272
Discretionary Portfolio		64,727		(27,805	)		35,385			134,544		(10,027	)		90,546
Residential Mortgage Banking		137,444		37,464			28,964			153,760		22,183			49,611
Retail Banking		355,148		(3	)		84,164			346,917		272			85,358
All Other		254,937		(11,369	)		(69,668	)		209,114		(14,128	)		(18,447	)
Total	$	1,445,061	$	—		$	362,174		$	1,486,993	$	—		$	447,249

	Average Total Assets
	Three Months Ended March 31				Year Ended December 31
	2022		2021		2021
	(In millions)

Business Banking	$	6,568	$	8,622	$	8,007
Commercial Banking		27,620		30,395		28,559
Commercial Real Estate		22,648		26,097		25,628
Discretionary Portfolio		22,899		23,650		22,262
Residential Mortgage Banking		6,250		6,506		6,463
Retail Banking		18,610		17,216		17,897
All Other		47,053		35,671		43,853
Total	$	151,648	$	148,157	$	152,669

(a)

Total revenues are comprised of net interest income and other income. Net interest income is the difference between taxable-equivalent interest earned on assets and interest paid on liabilities owed by a segment and a funding charge (credit) based on the Company's internal funds transfer and allocation 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 $3,234,000 and $3,733,000 for the three-month periods ended March 31, 2022 and 2021, respectively, and is eliminated in "All Other" total revenues. Intersegment revenues are included in total revenues of the reportable segments. The elimination of intersegment revenues is included in the determination of "All Other" total revenues.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

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 March 31, 2022 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 $30 million for the three-month period ended March 31, 2022. There was no similar cash distribution during the three-month period ended March 31, 2021.

Bayview Financial Holdings, L.P. (together with its affiliates, "Bayview Financial"), a privately-held specialty finance 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 $1.6 billion at each of March 31, 2022 and December 31, 2021. Revenues from those servicing rights were $2 million for each of the three-month periods ended March 31, 2022 and 2021. The Company sub-services residential mortgage loans for Bayview Financial having outstanding principal balances of $76.6 billion and $74.7 billion at March 31, 2022 and December 31, 2021, respectively. Revenues earned for sub-servicing loans for Bayview Financial were $42 million and $34 million for the three-month periods ended March 31, 2022 and 2021, respectively. In addition, the Company held $58 million and $62 million of mortgage-backed securities in its held-to-maturity portfolio at March 31, 2022 and December 31, 2021, respectively, that were securitized by Bayview Financial. At March 31, 2022, the Company held $167 million of Bayview Financial’s $1.1 billion syndicated loan facility.

Recent accounting developments

The following table provides a description of accounting standards that were adopted by the Company in 2022 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 2022
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 contracts in an entity’s own equity.	January 1, 2022	At January 1, 2022 the Company did not have the types of instruments affected by the amended guidance and, therefore, the adoption had no impact on its consolidated financial statements.
Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options	The amendments clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange.	January 1, 2022	At January 1, 2022 the Company did not have the types of instruments affected by the amended guidance and, therefore, the adoption had no impact on its consolidated financial statements.
Lessor’s Accounting for Certain Leases with Variable Lease Payments	The amendments update the classification guidance for lessors. Under the amended guidance lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: 1. The lease would have been classified as a sales-type lease or a direct financing lease. 2. The lessor would have otherwise recognized a day-one loss. When a lease is classified as operating, the lessor does not recognize a net investment in the lease, does not derecognize the underlying asset, and, therefore, does not recognize a selling profit or loss.	January 1, 2022	The Company adopted the amended guidance effective January 1, 2022 using a prospective transition method. The adoption did not have a material impact on the Company’s consolidated financial statements.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

Recent accounting developments, continued

Standard	Description	Required date of adoption	Effect on consolidated financial statements
Standards Not Yet Adopted as of March 31, 2022
Accounting for Contract Assets and Contract Liabilities from Contracts with Customers in a Business Combination	The amendments require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with specified revenue recognition guidance. At the acquisition date, an acquirer should account for the related revenue contracts as if it had originated the contracts and may assess how the acquiree applied the revenue guidance to determine what to record for such contracts. The guidance is generally expected to result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements.	January 1, 2023 Early adoption permitted	The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments. However, if early adoption is elected, the amendments should be applied (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. The Company does not expect the guidance will have a material impact on its consolidated financial statements.
Fair Value Hedging of Multiple Hedge Layers under Portfolio Layer Method	The amendments allow multiple hedged layers to be designated for a single closed portfolio of financial assets or one or more beneficial interests secured by a portfolio of financial instruments. If multiple hedged layers are designated, the amendments require an analysis to be performed to support the expectation that the aggregate amount of the hedged layers is anticipated to be outstanding for the designated hedge periods. Only closed portfolios may be hedged under the portfolio layer method (that is, no assets can be added to the closed portfolio once established), however designating new hedging relationships and dedesignating existing hedging relationships associated with the closed portfolio any time after the closed portfolio is established is permitted.	January 1, 2023 Early adoption permitted	The amendments should be applied on a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. The Company does not expect the guidance will have a material impact on its consolidated financial statements.
Accounting for Troubled Debt Restructurings (TDRs) and Expansion of Vintage Disclosures Applicable to Credit Losses	The amendments (1) eliminate the accounting guidance for TDRs and require enhanced disclosure for certain loan refinancings by creditors when a borrower is experiencing financial difficulty and (2) require disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases within credit loss disclosures.	January 1, 2023 Early adoption permitted	The amendments should be applied prospectively, except for the amendments related to the recognition and measurement of TDRs for which an option is permitted to apply a modified retrospective transition method. Under the amended guidance the Company will no longer be required to identify TDRs and apply specialized accounting to such loans. The Company does not expect the guidance will have a material impact on its consolidated financial statements outside of the modified disclosure requirements.

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