Item 1. Financial Statements.

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Item 1. Financial Statements.

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (Unaudited)


	June 30,			December 31,
(Dollars in thousands, except per share)	2022			2021
Assets
Cash and due from banks	$	1,688,274		$	1,337,577
Interest-bearing deposits at banks		33,437,454			41,872,304
Federal funds sold and agreements to resell securities		250,250			—
Trading account		133,855			49,745
Investment securities (includes pledged securities that can be sold or repledged of $1,829,142 at June 30, 2022; $96,128 at December 31, 2021)
Available for sale (cost: $8,879,416 at June 30, 2022; $3,849,347 at December 31, 2021)		8,704,955			3,955,804
Held to maturity (fair value: $12,696,115 at June 30, 2022; $2,771,290 at December 31, 2021)		13,373,171			2,734,674
Equity and other securities (cost: $720,530 at June 30, 2022; $461,516 at December 31, 2021)		723,591			465,382
Total investment securities		22,801,717			7,155,860
Loans and leases		128,685,278			93,136,678
Unearned discount		(199,158	)		(224,226	)
Loans and leases, net of unearned discount		128,486,120			92,912,452
Allowance for credit losses		(1,823,790	)		(1,469,226	)
Loans and leases, net		126,662,330			91,443,226
Premises and equipment		1,600,172			1,144,765
Goodwill		8,501,357			4,593,112
Core deposit and other intangible assets		245,358			3,998
Accrued interest and other assets		8,712,122			7,506,573
Total assets	$	204,032,889		$	155,107,160
Liabilities
Noninterest-bearing deposits	$	72,375,515		$	60,131,480
Savings and interest-checking deposits		92,711,597			68,603,966
Time deposits		5,271,284			2,807,963
Total deposits		170,358,396			131,543,409
Short-term borrowings		1,119,321			47,046
Accrued interest and other liabilities		3,743,278			2,127,931
Long-term borrowings		3,017,363			3,485,369
Total liabilities		178,238,358			137,203,755
Shareholders' equity
Preferred stock, $1.00 par, 20,000,000 shares authorized; Issued and outstanding: Liquidation preference of $1,000 per share: 350,000 shares at June 30, 2022 and December 31, 2021; Liquidation preference of $10,000 per share: 140,000 shares at June 30, 2022 and December 31, 2021; Liquidation preference of $25 per share: 10,000,000 shares at June 30, 2022		2,010,600			1,750,000
Common stock, $.50 par, 250,000,000 shares authorized,179,436,779 shares issued at June 30, 2022 and159,741,898 shares issued at December 31, 2021		89,718			79,871
Common stock issuable, 13,968 shares at June 30, 2022;15,769 shares at December 31, 2021		1,090			1,212
Additional paid-in capital		9,986,881			6,635,000
Retained earnings		14,808,637			14,646,448
Accumulated other comprehensive income (loss), net		(506,490	)		(127,578	)
Treasury stock — common, at cost — 3,481,639 shares at June 30, 2022;31,052,845 shares at December 31, 2021		(595,905	)		(5,081,548	)
Total shareholders’ equity		25,794,531			17,903,405
Total liabilities and shareholders’ equity	$	204,032,889		$	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 June 30						Six Months Ended June 30
(In thousands, except per share)	2022			2021			2022			2021
Interest income
Loans and leases, including fees	$	1,246,742		$	926,965		$	2,117,342		$	1,899,547
Investment securities
Fully taxable		119,392			34,456			158,524			71,527
Exempt from federal taxes		17,783			10			17,833			65
Deposits at banks		80,773			8,710			99,053			15,584
Other		452			217			646			597
Total interest income		1,465,142			970,358			2,393,398			1,987,320
Interest expense
Savings and interest-checking deposits		27,907			8,052			34,654			19,556
Time deposits		1,227			5,084			2,624			12,094
Deposits at Cayman Islands office		—			16			—			201
Short-term borrowings		3,419			1			3,420			3
Long-term borrowings		20,872			14,865			36,809			31,731
Total interest expense		53,425			28,018			77,507			63,585
Net interest income		1,411,717			942,340			2,315,891			1,923,735
Provision for credit losses		302,000			(15,000	)		312,000			(40,000	)
Net interest income after provision for credit losses		1,109,717			957,340			2,003,891			1,963,735
Other income
Mortgage banking revenues		82,926			133,313			192,074			272,067
Service charges on deposit accounts		124,170			98,518			225,677			191,295
Trust income		190,084			162,991			359,297			319,013
Brokerage services income		24,138			10,265			44,328			23,378
Trading account and non-hedging derivative gains		2,293			6,502			7,662			12,786
Loss on bank investment securities		(62	)		(10,655	)		(805	)		(22,937	)
Other revenues from operations		147,551			112,699			283,754			223,629
Total other income		571,100			513,633			1,111,987			1,019,231
Other expense
Salaries and employee benefits		776,201			479,134			1,353,721			1,020,212
Equipment and net occupancy		124,655			80,848			210,467			163,319
Outside data processing and software		93,820			74,492			173,539			140,243
FDIC assessments		22,585			17,876			38,161			32,064
Advertising and marketing		20,635			13,364			36,659			27,992
Printing, postage and supplies		15,570			11,133			25,720			20,450
Amortization of core deposit and other intangible assets		18,384			2,737			19,640			5,475
Other costs of operations		331,304			185,761			504,988			375,034
Total other expense		1,403,154			865,345			2,362,895			1,784,789
Income before taxes		277,663			605,628			752,983			1,198,177
Income taxes		60,141			147,559			173,287			292,859
Net income	$	217,522		$	458,069		$	579,696		$	905,318
Net income available to common shareholders
Basic	$	192,236		$	438,756		$	531,914		$	866,848
Diluted		192,236			438,759			531,916			866,852
Net income per common share
Basic	$	1.08		$	3.41		$	3.47		$	6.74
Diluted		1.08			3.41			3.45			6.73
Average common shares outstanding
Basic		177,367			128,671			153,290			128,604
Diluted		178,277			128,842			153,981			128,756

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 June 30						Six Months Ended June 30
(In thousands)	2022			2021			2022			2021

Net income	$	217,522		$	458,069		$	579,696		$	905,318
Other comprehensive income (loss), net of tax and reclassification adjustments:
Net unrealized losses on investment securities		(70,551	)		(8,088	)		(206,918	)		(30,494	)
Cash flow hedges adjustments		(58,188	)		(47,360	)		(172,249	)		(114,137	)
Foreign currency translation adjustments		(4,264	)		145			(5,912	)		693
Defined benefit plans liability adjustments		3,898			16,807			6,167			29,996
Total other comprehensive income (loss)		(129,105	)		(38,496	)		(378,912	)		(113,942	)
Total comprehensive income	$	88,417		$	419,573		$	200,784		$	791,376

See accompanying notes to financial statements.

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M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)


	Six Months Ended June 30
(In thousands)	2022			2021
Cash flows from operating activities
Net income	$	579,696		$	905,318
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses		312,000			(40,000	)
Depreciation and amortization of premises and equipment		134,949			113,459
Amortization of capitalized servicing rights		50,998			40,147
Amortization of core deposit and other intangible assets		19,640			5,475
Provision for deferred income taxes		(77,346	)		55,153
Asset write-downs		3,469			3,243
Net gain on sales of assets		(10,856	)		(12,845	)
Net change in accrued interest receivable, payable		10,834			(1,048	)
Net change in other accrued income and expense		(32,412	)		(50,200	)
Net change in loans originated for sale		571,879			172,617
Net change in trading account and non-hedging derivative assets and liabilities		920,288			340,392
Net cash provided by operating activities		2,483,139			1,531,711
Cash flows from investing activities
Proceeds from sales of investment securities
Equity and other securities		26,286			5,268
Proceeds from maturities of investment securities
Available for sale		467,788			811,795
Held to maturity		572,192			335,976
Purchases of investment securities
Available for sale		(4,588,013	)		(2,137	)
Held to maturity		(796,312	)		(305,633	)
Equity and other securities		(26,505	)		(19,299	)
Net (increase) decrease in loans and leases		(265,684	)		1,172,249
Net (increase) decrease in interest-bearing deposits at banks		17,628,196			(10,201,014	)
Capital expenditures, net		(87,742	)		(44,459	)
Net (increase) decrease in loan servicing advances		1,039,029			(417,629	)
Acquisition, net of cash consideration
Bank and bank holding company		393,923			—
Other, net		(324,594	)		(317,489	)
Net cash provided (used) by investing activities		14,038,564			(8,982,372	)
Cash flows from financing activities
Net increase (decrease) in deposits		(14,151,849	)		8,463,034
Net increase (decrease) in short-term borrowings		(72,595	)		31,753
Payments on long-term borrowings		(900,096	)		(852,992	)
Purchases of treasury stock		(600,000	)		—
Dividends paid — common		(369,822	)		(283,791	)
Dividends paid — preferred		(47,046	)		(34,100	)
Other, net		(29,598	)		(15,518	)
Net cash provided (used) by financing activities		(16,171,006	)		7,308,386
Net increase (decrease) in cash, cash equivalents and restricted cash		350,697			(142,275	)
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	$	1,688,274		$	1,410,468
Supplemental disclosure of cash flow information
Interest received during the period	$	2,416,362		$	1,976,059
Interest paid during the period		86,713			79,841
Income taxes paid during the period		231,687			204,259
Supplemental schedule of noncash investing and financing activities
Real estate acquired in settlement of loans	$	8,800		$	3,968
Additions to right-of-use assets under operating leases		31,013			18,182
Acquisition of bank and bank holding company
Common stock issued		8,286,515			—
Common stock awards converted		104,810			—
Fair value of
Assets acquired (noncash)		63,757,316			—
Liabilities assumed		55,499,314			—
Preferred stock converted		260,600			—

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
Three Months Ended June 30, 2022
Balance — April 1, 2022	$	1,750,000	$	79,871	$	1,074		$	6,611,659		$	14,830,671		$	(377,385	)	$	(5,019,870	)	$	17,876,020
Total comprehensive income		—		—		—			—			217,522			(129,105	)		—			88,417
Acquisition of People's United Financial, Inc.:
Common stock issued		—		9,824		—			3,256,821			—			—			5,019,870			8,286,515
Common stock awards converted		—		—		—			104,810			—			—			—			104,810
Conversion of Series H preferred stock		260,600		—		—			—			—			—			—			260,600
Preferred stock cash dividends (a)		—		—		—			—			(24,941	)		—			—			(24,941	)
Purchases of treasury stock		—		—		—			—			—			—			(600,000	)		(600,000	)
Stock-based compensation transactions, net		—		23		16			13,591			(313	)		—			4,095			17,412
Common stock cash dividends — $1.20 per share		—		—		—			—			(214,302	)		—			—			(214,302	)
Balance — June 30, 2022	$	2,010,600	$	89,718	$	1,090		$	9,986,881		$	14,808,637		$	(506,490	)	$	(595,905	)	$	25,794,531

Six Months Ended June 30, 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		—		—		—			—			579,696			(378,912	)		—			200,784
Acquisition of People's United Financial, Inc.:
Common stock issued		—		9,824		—			3,256,821			—			—			5,019,870			8,286,515
Common stock awards converted		—		—		—			104,810			—			—			—			104,810
Conversion of Series H preferred stock		260,600		—		—			—			—			—			—			260,600
Preferred stock cash dividends (a)		—		—		—			—			(46,706	)		—			—			(46,706	)
Purchases of treasury stock		—		—		—			—			—			—			(600,000	)		(600,000	)
Stock-based compensation transactions, net		—		23		(122	)		(9,750	)		(643	)		—			65,773			55,281
Common stock cash dividends — $2.40 per share		—		—		—			—			(370,158	)		—			—			(370,158	)
Balance — June 30, 2022	$	2,010,600	$	89,718	$	1,090		$	9,986,881		$	14,808,637		$	(506,490	)	$	(595,905	)	$	25,794,531

Three Months Ended June 30, 2021
Balance — April 1, 2021	$	1,250,000	$	79,871	$	1,165		$	6,611,150		$	13,731,893		$	(138,478	)	$	(5,089,093	)	$	16,446,508
Total comprehensive income		—		—		—			—			458,069			(38,496	)		—			419,573
Preferred stock cash dividends (a)		—		—		—			—			(17,050	)		—			—			(17,050	)
Stock-based compensation transactions, net		—		—		14			9,378			(201	)		—			4,578			13,769
Common stock cash dividends — $1.10 per share		—		—		—			—			(142,496	)		—			—			(142,496	)
Balance — June 30, 2021	$	1,250,000	$	79,871	$	1,179		$	6,620,528		$	14,030,215		$	(176,974	)	$	(5,084,515	)	$	16,720,304

Six Months Ended June 30, 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		—		—		—			—			905,318			(113,942	)		—			791,376
Preferred stock cash dividends (a)		—		—		—			—			(34,100	)		—			—			(34,100	)
Stock-based compensation transactions, net		—		—		(165	)		3,124			(409	)		—			58,217			60,767
Common stock cash dividends — $2.20 per share		—		—		—			—			(285,022	)		—			—			(285,022	)
Balance — June 30, 2021	$	1,250,000	$	79,871	$	1,179		$	6,620,528		$	14,030,215		$	(176,974	)	$	(5,084,515	)	$	16,720,304

(a)

For the three-month and six-month periods ended June 30, 2022*, dividends per preferred share were: Preferred Series E - $*16.125 *and $32.25, respectively; Preferred Series F - $*128.125 *and $256.25, respectively; Preferred Series G - $*125.00 *and $*250.00 *respectively; and Preferred Series I - $*87.50 and $181.81, respectively. Dividends per preferred share for the converted Preferred Series H were $0.3516 for the three-month period ended June 30, 2022. Dividends per preferred share for the three-month and six-month periods ended June 30, 2021 *were: Preferred Series E - $*16.125 *and $32.25, respectively; Preferred Series F - $*128.125 *and $256.25, respectively; Preferred Series G - $*125.00 and $250.00, respectively.

See accompanying notes to financial statements.

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NOTES TO FINANCIAL STATEMENTS

1. 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”). Following the acquisition of People's United Financial, Inc. ("People's United") on April 1, 2022 and conformance of financial statement presentation, certain reclassifications have been made to prior period amounts to conform with current period presentation. The reclassifications had no effect on previously reported total assets, total liabilities, shareholders' equity or net income. Specifically, the fair values of interest rate and foreign exchange derivative contracts not designated as hedging instruments as presented in note 11 have been included in other assets and other liabilities rather than in trading account assets and liabilities. 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.

2. Acquisition

On April 1, 2022, M&T completed the acquisition of People's United. Through subsidiaries, People's United provided commercial banking, retail banking and wealth management services to individual, corporate and municipal customers through a network of branches located in Connecticut, southeastern New York, Massachusetts, Vermont, New Hampshire and Maine. Following the merger, People's United Bank, National Association, a national banking association and a wholly owned subsidiary of People's United, merged with and into Manufacturers and Traders Trust Company ("M&T Bank"), the principal banking subsidiary of M&T, with M&T Bank as the surviving entity. The results of operations acquired from People's United have been included in the Company's financial results since April 1, 2022.

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. 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. Additionally, People’s United outstanding preferred stock was converted into new shares of Series H Preferred Stock of M&T. The acquisition of People's United expanded the Company's geographical footprint and management expects the Company will benefit from greater geographical diversity and the advantages of scale associated with a larger company.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

2. Acquisition, continued

The People’s United transaction has been accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and preferred stock converted were recorded at estimated fair value on the acquisition date. The consideration paid for People’s United common equity and the preliminary amounts of identifiable assets acquired, liabilities assumed and preferred stock converted as of the acquisition date follows.


	(In thousands)
Consideration:
Common stock issued (50,325,004 shares)	$	8,286,515
Common stock awards converted		104,810
Cash		1,824
Total consideration		8,393,149

Net assets acquired:
Identifiable assets
Cash and due from banks		395,747
Interest-bearing deposits at banks		9,193,346
Investment securities		11,574,689
Loans and leases		35,840,648
Core deposit and other intangible assets		261,000
Other assets		2,979,388
Total identifiable assets acquired		60,244,818
Liabilities and preferred stock
Deposits		52,967,915
Borrowings		1,389,012
Other liabilities		1,142,387
Total liabilities assumed		55,499,314
Preferred stock		260,600
Total liabilities and preferred stock		55,759,914
Net assets acquired		4,484,904
Goodwill	$	3,908,245

The following is a description of the methodologies used to estimate the fair values of the significant assets acquired, liabilities assumed and preferred stock converted at the acquisition date:

Cash and due from banks and interest-bearing deposits in banks: Given the short-term nature of these assets, the carrying amount was determined to be a reasonable estimate of fair value.

Investment securities: Investment securities have been determined using quoted market prices, if available. If quoted market prices were not available, investment securities were valued by reference to quoted prices for similar securities or through model-based techniques.

Loans and leases: The fair values of loans and leases were generally based on a discounted cash flow methodology that considered market interest rates, expected credit losses, prepayment assumptions and other market factors for loans with similar characteristics including loan type, collateral, fixed or variable interest rate and credit risk characteristics. Expected credit losses were determined based on credit characteristics and other factors such as default and recovery rates of similar products.

Core deposit and other intangible assets: The core deposit intangible asset represents the value of certain customer deposit relationships. The fair value of the core deposit intangible asset was based on a discounted cash flow methodology that considered expected customer attrition rates, costs associated with maintaining the deposit relationships and alternative funding costs. Other intangible assets were also valued using expected and contractual cash flows.

Deposits: The fair value of deposits with no maturity date was determined to be the amount payable on demand at the acquisition date. The fair value of time deposits was determined by discounting contractual cash flows, that considered market interest rates in relation to contractual interest rates for instruments with like remaining maturities.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

2. Acquisition, continued

Borrowings: The fair value of borrowings was determined using quoted market prices for the instrument, if available. If quoted market prices for the instrument were not available, similar instruments with quoted market prices were referenced.

Preferred stock: The fair value of preferred stock converted was determined using quoted market prices.

GAAP requires loans and leases obtained through an acquisition that have experienced a more-than-insignificant deterioration in credit quality since origination be considered purchased credit deteriorated (“PCD”). The Company considered several factors in the determination of PCD loans, including loan grades assigned to acquired commercial loans and leases and commercial real estate loans utilizing the Company's loan grading system and delinquency status and history for acquired loans backed by residential real estate. Loans and leases acquired from People's United and identified as PCD totaled $3.4 billion at April 1, 2022. For those loans and leases, the initial estimate of expected credit losses of $99 million was established through an adjustment to increase both the initial carrying value and allowance for credit losses. GAAP also provides that an allowance for credit losses on loans acquired, but not classified as PCD, also be recognized. Accordingly, the Company recorded $242 million of provision for credit losses for non-PCD acquired loans and leases at the acquisition date. The following table reconciles the unpaid principal balance to the fair value of PCD loans and leases at April 1, 2022:


	Total

Unpaid principal balance (a)	$	3,410,506
Allowance for credit losses at acquisition (a)		(99,000	)
Non-credit discount		(106,814	)
Fair value	$	3,204,692

(a)

*The unpaid principal balance and allowance for credit losses at acquisition is net of charge-offs of $*33 million recognized on the PCD loans.

In connection with the acquisition, the Company recorded approximately $3.9 billion of goodwill, which represents the excess of the purchase price over the fair value of the net assets acquired, and $261 million of core deposit and other intangible assets. The core deposit and other intangible assets are being amortized over periods of three to seven years. The preliminary allocation of goodwill recorded as a result of the acquisition to the Company’s reportable segments is as follows:


	December 31, 2021		Acquisition of People's United		June 30, 2022
	(In thousands)

Business Banking	$	864,366	$	693,905	$	1,558,271
Commercial Banking		1,401,873		2,686,253		4,088,126
Commercial Real Estate		654,389		291,217		945,606
Discretionary Portfolio		—		—		—
Residential Mortgage Banking		—		—		—
Retail Banking		1,309,191		221,196		1,530,387
All Other		363,293		15,674		378,967
Total	$	4,593,112	$	3,908,245	$	8,501,357

Included in the Consolidated Statement of Income from the acquisition date through June 30, 2022 are total revenues of approximately $492 million and a net loss of approximately $176 million from the results of the acquired assets and assumed liabilities of People's United. Due to the integration of certain People's United operating systems and activities into those of the Company, the Company's ability to report on the former operations of People's United is inherently limited and will likely not be practical in future periods.

- 10 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

2. Acquisition, continued

The following table presents certain pro forma information as if People’s United had been acquired on January 1, 2021. These results combine the historical results of People’s United into the Company’s consolidated statement of income and, while adjustments were made for the estimated impact of certain fair valuation adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place as indicated. For example, merger-related expenses noted below are included in the periods where such expenses were incurred. Additionally, the Company expects to achieve operating cost savings and other business synergies as a result of the acquisition which are not reflected in the pro forma amounts that follow:


	Pro forma				Pro forma
	Six Months Ended June 30,				Three Months Ended June 30
	2022		2021		2021
	(In thousands)				(In thousands)
Total revenues(a)	$	3,900,483	$	4,001,902	$	1,982,458
Net income		757,459		1,104,961		657,899

(a)

Represents the total of net interest income and other income.

In connection with the People’s United acquisition, the Company incurred merger-related expenses related to systems conversions and other costs of integrating and conforming acquired operations with and into the Company. Those expenses consisted largely of professional services and other temporary help fees associated with preparing for systems conversions and/or integration of operations; costs related to termination of existing contractual arrangements for various services; initial marketing and promotion expenses designed to introduce M&T Bank to its new customers; severance (for former People’s United employees); travel costs; and other costs of completing the transaction and commencing operations in new markets and offices. The Company expects that there will be additional merger-related expenses in 2022. A summary of merger-related expenses included in the consolidated statement of income follows.


	Three Months Ended June 30				Six Months Ended June 30
	2022		2021		2022		2021
	(In thousands)				(In thousands)
Salaries and employee benefits	$	85,299	$	4	$	85,386	$	4
Equipment and net occupancy		502		—		2,309		—
Outside data processing software		716		244		968		244
Advertising and marketing		1,199		24		1,827		24
Printing, postage and supplies		2,460		2,049		3,182		2,049
Other cost of operations		132,633		1,572		146,509		11,523
Other expense	$	222,809	$	3,893	$	240,181	$	13,844

The Company also recognized a $242 million provision for credit losses on acquired loans that were not deemed to be PCD on April 1, 2022. GAAP requires that acquired loans be recorded at estimated fair value, which includes the use of interest rate and expected credit loss assumptions to forecast estimated cash flows. GAAP also provides that an allowance for credit losses on loans acquired, but not classified as PCD also be recognized above and beyond the impact of forecasted losses used in determining the fair value of acquired loans. Accordingly, the Company recorded a $242 million provision for credit losses related to such loans obtained in the People's United transaction.

- 11 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

3. 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)
June 30, 2022
Investment securities available for sale:
U.S. Treasury and federal agencies	$	5,273,377	$	1,568	$	92,374	$	5,182,571
Mortgage-backed securities:
Government issued or guaranteed
Commercial		617,359		—		2,575		614,784
Residential		2,799,742		2,079		75,052		2,726,769
Other debt securities		188,938		433		8,540		180,831
		8,879,416		4,080		178,541		8,704,955
Investment securities held to maturity:
U.S. Treasury and federal agencies		1,337,395		—		18,339		1,319,056
Obligations of states and political subdivisions		2,735,757		53		108,197		2,627,613
Mortgage-backed securities:
Government issued or guaranteed
Commercial		934,161		—		47,527		886,634
Residential		8,308,155		116		503,293		7,804,978
Privately issued		55,397		10,335		10,204		55,528
Other debt securities		2,306		—		—		2,306
		13,373,171		10,504		687,560		12,696,115
Total debt securities	$	22,252,587	$	14,584	$	866,101	$	21,401,070
Equity and other securities:
Readily marketable equity — at fair value	$	98,811	$	5,189	$	2,128	$	101,872
Other — at cost		621,719		—		—		621,719
Total equity and other securities	$	720,530	$	5,189	$	2,128	$	723,591

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
Residential		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
Residential		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

- 12 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

3. Investment securities, continued

There were no significant gross realized gains or losses from sales of investment securities for the three-month and six-month periods ended June 30, 2022 and 2021. Unrealized losses on equity securities were less than $1 million during the three months and six months ended June 30, 2022, compared with unrealized losses on equity securities of $11 million and $23 million during the three months and six months ended June 30, 2021, respectively.

At June 30, 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	$	8,067	$	8,024
Due after one year through five years		5,344,779		5,251,402
Due after five years through ten years		79,469		77,014
Due after ten years		30,000		26,962
		5,462,315		5,363,402
Mortgage-backed securities available for sale		3,417,101		3,341,553
	$	8,879,416	$	8,704,955
Debt securities held to maturity:
Due in one year or less	$	382,222	$	381,067
Due after one year through five years		1,180,314		1,162,783
Due after five years through ten years		946,218		928,727
Due after ten years		1,566,704		1,476,398
		4,075,458		3,948,975
Mortgage-backed securities held to maturity		9,297,713		8,747,140
	$	13,373,171	$	12,696,115

- 13 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

3. Investment securities, continued

A summary of investment securities that as of June 30, 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)
June 30, 2022
Investment securities available for sale:
U.S. Treasury and federal agencies	$	4,852,107	$	92,364	$	290	$	10
Mortgage-backed securities:
Government issued or guaranteed
Commercial		614,784		2,575		—		—
Residential		2,504,958		74,368		18,856		684
Other debt securities		106,106		2,451		67,567		6,089
		8,077,955		171,758		86,713		6,783
Investment securities held to maturity:
U.S. Treasury and federal agencies		1,319,056		18,339		—		—
Obligations of states and political subdivisions		2,577,044		108,197		—		—
Mortgage-backed securities:
Government issued or guaranteed
Commercial		869,648		47,527		—		—
Residential		7,787,763		503,207		1,083		86
Privately issued		—		—		38,272		10,204
		12,553,511		677,270		39,355		10,290
Total	$	20,631,466	$	849,028	$	126,068	$	17,073

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
Residential		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
Residential		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 3,914 individual debt securities with aggregate gross unrealized losses of $866 million at June 30, 2022. Based on a review of each of the securities in the investment securities portfolio at June 30, 2022, the Company concluded that it expected to recover the amortized cost basis of its investment. As of June 30, 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 June 30, 2022, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $622 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 June 30, 2022 or December 31, 2021.

- 14 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. Loans and leases and the allowance for credit losses

A summary of current, past due and nonaccrual loans as of June 30, 2022 and December 31, 2021 follows:


	Current		30-89 Days Past Due		Accruing Loans Past Due 90 Days or More		Nonaccrual		Total
	(In thousands)
June 30, 2022
Commercial, financial, leasing, etc.	$	38,521,001		133,014		12,165		442,496	$	39,108,676
Real estate:
Commercial		35,601,423		243,578		34,815		1,476,658		37,356,474
Residential builder and developer		1,368,677		1,219		—		518		1,370,414
Other commercial construction		7,877,882		117,323		—		73,046		8,068,251
Residential		20,476,197		345,622		473,541		331,376		21,626,736
Residential — limited documentation		1,014,151		13,612		—		112,608		1,140,371
Consumer:
Home equity lines and loans		4,959,003		21,243		—		79,445		5,059,691
Recreational finance		8,403,078		32,654		—		33,414		8,469,146
Automobile		4,369,475		32,220		—		36,266		4,437,961
Other		1,786,347		11,734		3,141		47,178		1,848,400
Total	$	124,377,234		952,219		523,662		2,633,005	$	128,486,120


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 June 30, 2022 and December 31, 2021, the Company had $109 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 $55 million and $974 million of government-guaranteed loans at June 30, 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.

One-to-four family residential mortgage loans held for sale were $65 million and $474 million at June 30, 2022 and December 31, 2021, respectively. Commercial real estate loans held for sale were $255 million at June 30, 2022 and $425 million at December 31, 2021.

- 15 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. Loans and leases and the allowance for credit losses, continued

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.

The following table summarizes the loan grades applied at June 30, 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	$	4,040,770		5,910,000		2,707,274		2,245,712		1,185,986		2,423,902		18,131,082		96,966	$	36,741,692
Criticized accrual		104,872		308,238		174,456		161,455		89,976		301,823		763,106		20,562		1,924,488
Criticized nonaccrual		8,108		32,438		43,509		48,561		43,645		67,201		181,671		17,363		442,496
Total commercial, financial, leasing, etc.	$	4,153,750		6,250,676		2,925,239		2,455,728		1,319,607		2,792,926		19,075,859		134,891	$	39,108,676

Real estate:
Commercial:
Loan grades:
Pass	$	1,968,740		3,517,917		3,331,058		4,713,994		3,623,085		12,157,321		909,783		42,152	$	30,264,050
Criticized accrual		9,416		292,974		610,198		1,016,273		1,185,485		2,474,002		26,295		1,123		5,615,766
Criticized nonaccrual		—		12,474		170,587		255,973		187,443		819,543		30,297		341		1,476,658
Total commercial real estate	$	1,978,156		3,823,365		4,111,843		5,986,240		4,996,013		15,450,866		966,375		43,616	$	37,356,474

Residential builder and developer:
Loan grades:
Pass	$	359,601		533,300		49,295		44,867		45,839		13,118		184,013		—	$	1,230,033
Criticized accrual		—		651		7,302		109,851		14,351		7,038		670		—		139,863
Criticized nonaccrual		—		—		—		518		—		—		—		—		518
Total residential builder and developer	$	359,601		533,951		56,597		155,236		60,190		20,156		184,683		—	$	1,370,414

Other commercial construction:
Loan grades:
Pass	$	296,748		1,362,467		1,727,216		1,749,121		447,298		421,217		41,528		9,890	$	6,055,485
Criticized accrual		1,987		76,778		197,643		868,248		529,883		257,535		7,646		—		1,939,720
Criticized nonaccrual		—		2,068		96		17,896		12,827		35,700		4,459		—		73,046
Total other commercial construction	$	298,735		1,441,313		1,924,955		2,635,265		990,008		714,452		53,633		9,890	$	8,068,251

- 16 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. 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 June 30, 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	$	2,774,781		4,133,015		2,824,197		1,469,655		819,846		8,410,042		44,082		579	$	20,476,197
30-89 days past due		19,586		31,097		19,219		11,035		13,304		251,381		—		—		345,622
Accruing loans past due 90 days or more		1,573		35,314		35,571		12,747		18,253		368,243		1,840		—		473,541
Nonaccrual		267		5,913		7,586		13,513		5,442		297,888		767		—		331,376
Total residential	$	2,796,207		4,205,339		2,886,573		1,506,950		856,845		9,327,554		46,689		579	$	21,626,736

Residential - limited documentation:
Current	$	—		—		—		—		—		1,014,151		—		—	$	1,014,151
30-89 days past due		—		—		—		—		—		13,612		—		—		13,612
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		—		—		—		—		112,608		—		—		112,608
Total residential - limited documentation	$	—		—		—		—		—		1,140,371		—		—	$	1,140,371

Consumer:
Home equity lines and loans:
Current	$	12,764		3,567		4,086		21,813		40,687		175,799		3,319,575		1,380,712	$	4,959,003
30-89 days past due		—		—		—		488		76		1,779		708		18,192		21,243
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		15		58		—		357		6,531		4,681		67,803		79,445
Total home equity lines and loans	$	12,764		3,582		4,144		22,301		41,120		184,109		3,324,964		1,466,707	$	5,059,691

Recreational finance:
Current	$	1,486,689		2,545,464		1,790,423		1,090,205		555,622		934,675		—		—	$	8,403,078
30-89 days past due		1,792		6,019		6,605		6,373		4,398		7,467		—		—		32,654
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		101		3,646		7,195		6,395		5,177		10,900		—		—		33,414
Total recreational finance	$	1,488,582		2,555,129		1,804,223		1,102,973		565,197		953,042		—		—	$	8,469,146

Automobile:
Current	$	712,715		1,867,711		873,582		501,358		244,089		170,020		—		—	$	4,369,475
30-89 days past due		1,686		7,833		5,534		6,587		4,816		5,764		—		—		32,220
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		193		5,425		6,912		8,213		6,879		8,644		—		—		36,266
Total automobile	$	714,594		1,880,969		886,028		516,158		255,784		184,428		—		—	$	4,437,961

Other:
Current	$	130,873		204,244		75,125		53,379		15,123		61,664		1,244,637		1,302	$	1,786,347
30-89 days past due		1,537		1,326		409		268		137		1,027		6,539		491		11,734
Accruing loans past due 90 days or more		—		—		—		—		—		147		2,994		—		3,141
Nonaccrual		1,368		522		310		278		112		278		44,200		110		47,178
Total other	$	133,778		206,092		75,844		53,925		15,372		63,116		1,298,370		1,903	$	1,848,400

Total loans and leases at June 30, 2022	$	11,936,167		20,900,416		14,675,446		14,434,776		9,100,136		30,831,020		24,950,573		1,657,586	$	128,486,120

- 17 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. 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

- 18 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. 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

- 19 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. 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 June 30, 2022 and 2021 were as follows:


	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Total
	(In thousands)
Three Months Ended June 30, 2022
Beginning balance	$	307,055			539,444			72,581			553,279		$	1,472,359
Allowance on acquired PCD loans		41,003			55,812			1,833			352			99,000
Provision for credit losses (a)		95,917			120,277			50,168			35,638			302,000
Net charge-offs
Charge-offs (b)		(37,925	)		(8,796	)		(2,863	)		(26,030	)		(75,614	)
Recoveries		8,423			1,656			2,607			13,359			26,045
Net charge-offs		(29,502	)		(7,140	)		(256	)		(12,671	)		(49,569	)
Ending balance	$	414,473			708,393			124,326			576,598		$	1,823,790


	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Total
	(In thousands)
Three Months Ended June 30, 2021
Beginning balance	$	328,994			716,098			89,789			501,325		$	1,636,206
Provision for credit losses		15,100			(24,805	)		(12,069	)		6,774			(15,000	)
Net charge-offs
Charge-offs		(40,095	)		(12,523	)		(2,262	)		(25,489	)		(80,369	)
Recoveries		10,853			1,193			2,411			19,834			34,291
Net (charge-offs) recoveries		(29,242	)		(11,330	)		149			(5,655	)		(46,078	)
Ending balance	$	314,852			679,963			77,869			502,444		$	1,575,128

(a)

*Includes $*242 million related to non-PCD acquired loans for the three months ended June 30, 2022.

(b)

*For the three months ended June 30, 2022, net charge-offs do not reflect $*33 million of charge-offs related to PCD acquired loans.

Changes in the allowance for credit losses for the six months ended June 30, 2022 and 2021 were as follows:


	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Total
	(In thousands)
Six Months Ended June 30, 2022
Beginning balance	$	283,899			557,239			71,726			556,362		$	1,469,226
Allowance on acquired PCD loans		41,003			55,812			1,833			352			99,000
Provision for credit losses (a)		124,642			89,339			51,888			46,131			312,000
Net charge-offs
Charge-offs (b)		(57,159	)		(10,596	)		(6,835	)		(52,062	)		(126,652	)
Recoveries		22,088			16,599			5,714			25,815			70,216
Net (charge-offs) recoveries		(35,071	)		6,003			(1,121	)		(26,247	)		(56,436	)
Ending balance	$	414,473			708,393			124,326			576,598		$	1,823,790

- 20 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. Loans and leases and the allowance for credit losses, continued


	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Total
	(In thousands)
Six Months Ended June 30, 2021
Beginning balance	$	405,846			670,719			103,590			556,232		$	1,736,387
Provision for credit losses		(57,318	)		74,666			(25,504	)		(31,844	)		(40,000	)
Net charge-offs
Charge-offs		(67,040	)		(73,175	)		(4,661	)		(58,418	)		(203,294	)
Recoveries		33,364			7,753			4,444			36,474			82,035
Net charge-offs		(33,676	)		(65,422	)		(217	)		(21,944	)		(121,259	)
Ending balance	$	314,852			679,963			77,869			502,444		$	1,575,128

(a)

*Includes $*242 million related to non-PCD acquired loans for the six months ended June 30, 2022.

(b)

*For the six months ended June 30, 2022, net charge-offs do not reflect $*33 million of charge-offs related to PCD acquired loans.

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 each of June 30, 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.

- 21 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. Loans and leases and the allowance for credit losses, continued

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 June 30, 2022 and December 31, 2021.

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 and six-month periods ended June 30, 2022 and 2021 follows.


	June 30, 2022						March 31, 2022		January 1, 2022		Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
	Amortized Cost with Allowance		Amortized Cost without Allowance		Total		Amortized Cost		Amortized Cost		Interest Income Recognized		Interest Income Recognized
	(In thousands)

Commercial, financial, leasing, etc.	$	278,396	$	164,100	$	442,496	$	275,146	$	221,022	$	2,121	$	15,715
Real estate:
Commercial		397,536		1,079,122		1,476,658		1,157,686		1,069,280		1,754		7,885
Residential builder and developer		518		—		518		2,916		3,005		259		1,687
Other commercial construction		36,345		36,701		73,046		50,855		111,405		2,750		3,376
Residential		175,019		156,357		331,376		341,671		355,858		6,797		13,338
Residential — limited documentation		70,718		41,890		112,608		123,512		122,888		31		227
Consumer:
Home equity lines and loans		30,328		49,117		79,445		71,489		70,488		1,813		2,622
Recreational finance		26,530		6,884		33,414		31,546		27,811		161		322
Automobile		31,970		4,296		36,266		35,350		34,037		37		75
Other		47,040		138		47,178		44,060		44,289		92		184
Total	$	1,094,400	$	1,538,605	$	2,633,005	$	2,134,231	$	2,060,083	$	15,815	$	45,431

- 22 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. Loans and leases and the allowance for credit losses, continued


	June 30, 2021						March 31, 2021		January 1, 2021		Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
	Amortized Cost with Allowance		Amortized Cost without Allowance		Total		Amortized Cost		Amortized Cost		Interest Income Recognized		Interest Income Recognized
	(In thousands)

Commercial, financial, leasing, etc.	$	210,294	$	119,746	$	330,040	$	295,069	$	306,827	$	2,930	$	6,015
Real estate:
Commercial		366,166		715,380		1,081,546		824,079		775,894		604		2,262
Residential builder and developer		1,093		13,459		14,552		1,224		1,094		—		33
Other commercial construction		20,717		113,041		133,758		126,225		114,039		274		315
Residential		191,965		180,179		372,144		385,508		365,729		6,296		10,794
Residential — limited documentation		85,683		51,000		136,683		143,069		147,170		157		236
Consumer:
Home equity lines and loans		38,860		37,851		76,711		79,188		79,392		993		1,945
Recreational finance		16,620		6,656		23,276		27,218		25,519		159		314
Automobile		27,609		3,481		31,090		38,219		39,404		48		97
Other		42,096		161		42,257		37,307		38,231		143		323
Total	$	1,001,103	$	1,240,954	$	2,242,057	$	1,957,106	$	1,893,299	$	11,604	$	22,334

- 23 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. 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 tables that follow summarize the Company’s loan modification activities that were considered troubled debt restructurings for the three-month and six-month periods ended June 30, 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 June 30, 2022	(Dollars in thousands)

Commercial, financial, leasing, etc.		40	$	36,983	$	31,514	$	9	$	700	$	5,963	$	38,186
Real estate:
Commercial		13		2,816		1,454		—		—		1,330		2,784
Residential		67		18,481		14,284		—		—		5,038		19,322
Residential — limited documentation		—		—		—		—		—		—		—
Consumer:
Home equity lines and loans		33		2,633		2,597		—		—		93		2,690
Recreational finance		170		6,204		6,204		—		—		—		6,204
Automobile		529		9,771		9,771		—		—		—		9,771
Other		65		465		465		—		—		—		465
Total		917	$	77,353	$	66,289	$	9	$	700	$	12,424	$	79,422


Three Months Ended June 30, 2021

Commercial, financial, leasing, etc.		89	$	70,749	$	11,439	$	—	$	222	$	58,787	$	70,448
Real estate:
Commercial		35		143,141		7,370		—		28,356		106,435		142,161
Other commercial construction		3		542		532		—		—		—		532
Residential		117		34,041		29,573		—		—		4,290		33,863
Residential — limited documentation		3		405		405		—		—		—		405
Consumer:
Home equity lines and loans		16		1,970		1,970		—		—		—		1,970
Recreational finance		34		1,119		1,119		—		—		—		1,119
Automobile		94		1,502		1,502		—		—		—		1,502
Other		101		836		836		—		—		—		836
Total		492	$	254,305	$	54,746	$	—	$	28,578	$	169,512	$	252,836

(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.

- 24 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. Loans and leases and the allowance for credit losses, continued


					Post-modification (a)
	Number		Pre- modification Recorded Investment		Principal Deferral		Interest Rate Reduction		Other		Combination of Concession Types		Total
Six Months Ended June 30, 2022	(Dollars in thousands)

Commercial, financial, leasing, etc.		77	$	46,986	$	38,434	$	9	$	754	$	8,743	$	47,940
Real estate:
Commercial		30		10,398		5,830		—		2,101		2,185		10,116
Residential		164		42,532		29,727		—		—		14,999		44,726
Residential — limited documentation		5		1,076		894		—		—		193		1,087
Consumer:
Home equity lines and loans		68		4,783		4,585		—		—		265		4,850
Recreational finance		347		12,201		12,194		—		—		—		12,194
Automobile		1,063		20,034		20,004		—		—		—		20,004
Other		98		799		799		—		—		—		799
Total		1,852	$	138,809	$	112,467	$	9	$	2,855	$	26,385	$	141,716

Six Months Ended June 30, 2021

Commercial, financial, leasing, etc.		182	$	124,482	$	36,092	$	—	$	222	$	87,291	$	123,605
Real estate:
Commercial		68		170,011		18,530		—		30,570		118,857		167,957
Other commercial construction		3		542		532		—		—		—		532
Residential		240		73,624		68,130		—		—		5,407		73,537
Residential — limited documentation		13		1,521		1,464		—		—		—		1,464
Consumer:
Home equity lines and loans		42		3,685		3,456		—		—		174		3,630
Recreational finance		106		3,331		3,331		—		—		—		3,331
Automobile		370		6,471		6,457		—		—		14		6,471
Other		323		2,270		2,270		—		—		—		2,270
Total		1,347	$	385,937	$	140,262	$	—	$	30,792	$	211,743	$	382,797

(a)

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 June 30, 2022 and 2021 and for which there was a subsequent payment default during the six-month periods ended June 30, 2022 and 2021, respectively, were not material.

The amount of foreclosed residential real estate property held by the Company was $27 million and $24 million at June 30, 2022 and December 31, 2021, respectively. There were $207 million and $151 million at June 30, 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 June 30, 2022, approximately 46% were government guaranteed.

- 25 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

5. Borrowings

M&T had $534 million of fixed and variable rate junior subordinated deferrable interest debentures ("Junior Subordinated Debentures") outstanding at June 30, 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.

On April 18, 2022, M&T Bank, the principal subsidiary of M&T, redeemed $650 million of fixed rate senior notes that were due to mature on May 18, 2022. In addition, $250 million of variable rate senior notes of M&T Bank matured on May 18, 2022.

Short-term borrowings assumed in the People's United acquisition totaled $895 million and included $503 million of 3.65% fixed-rate unsecured senior notes due to mature in December 2022, $390 million of agreements to repurchase securities which consisted of secured overnight transactions with commercial and municipal customers that subsequently matured and $2 million of Federal Home Loan Bank secured advances accruing interest at fixed-rates ranging from .01% to .75% and maturing at various dates through January 2023.

Long-term borrowings assumed in the People's United acquisition totaled $494 million and included $405 million of 4.0% fixed-rate subordinated notes due to mature in July 2024, $78 million of 5.75% fixed-rate subordinated notes due to mature in October 2024 and $11 million of Federal Home Loan Bank secured advances accruing interest at fixed-rates ranging from .01% to 3.00% and maturing at various dates through 2039.

- 26 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

6. Shareholders’ Equity

M&T is authorized to issue 20,000,000 shares of preferred stock with a $1.00 par value per share. Preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference, but have no general voting rights.

Issued and outstanding preferred stock of M&T as of June 30, 2022 and December 31, 2021 is presented below:


	June 30, 2022				December 31, 2021
	Shares Issued and Outstanding		Carrying Value		Shares Issued and Outstanding		Carrying Value
	(Dollars in thousands)
Series E (a)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock $1,000 liquidation preference per share		350,000	$	350,000		350,000	$	350,000
Series F (b)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock $10,000 liquidation preference per share		50,000	$	500,000		50,000	$	500,000
Series G (c)
Fixed-Rate Reset Non-cumulative Perpetual Preferred Stock $10,000 liquidation preference per share		40,000	$	400,000		40,000	$	400,000
Series H (d)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock $25 liquidation preference per share		10,000,000	$	260,600		-	$	-
Series I (e)
Fixed-Rate Reset Non-cumulative Perpetual Preferred Stock $10,000 liquidation preference per share		50,000	$	500,000		50,000	$	500,000

(a)

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

(b)

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

(c)

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

(d)

Dividends, if declared, are paid quarterly at a rate of 5.625*% through* December 14, 2026 and thereafter will be paid quarterly at a rate of the three-month LIBOR rate plus 4.02*%. The shares are redeemable in whole or in part on or after* April 1, 2027*. Notwithstanding M&T's option to redeem the shares, if an event occurs such that the shares no longer qualify as Tier 1 capital, M&T may redeem all of the shares within* 90 days following that occurrence.

(e)

Dividends, if declared, are paid semi-annually at a rate of 3.5*% through* August 31, 2026 and thereafter will be paid semiannually at a rate of the five-year U.S. Treasury rate plus 2.679*%. The shares are redeemable in whole or in part on or after* September 1, 2026*. Notwithstanding M&T’s option to redeem the shares, if an event occurs such that the shares no longer qualify as Tier 1 capital, M&T may redeem all of the shares within* 90 days following that occurrence.

- 27 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

7. 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 June 30, 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 June 30, 2022 and December 31, 2021, the Company had deferred revenue of $44 million and $45 million, respectively, 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 and six-month periods ended June 30, 2022 and 2021 that are subject to the revenue recognition accounting guidance.


	Business Banking		Commercial Banking		Commercial Real Estate		Discretionary Portfolio		Residential Mortgage Banking		Retail Banking		All Other			Total
Three Months Ended June 30, 2022	(In thousands)

Classification in consolidated statement of income
Service charges on deposit accounts	$	19,623		29,829		3,742		—		—		68,420		2,556		$	124,170
Trust income		—		—		—		—		—		—		190,084			190,084
Brokerage services income		—		—		—		—		—		—		24,138			24,138
Other revenues from operations:
Merchant discount and credit card fees		16,835		16,854		858		—		—		8,024		278			42,849
Other		—		1,259		3,803		871		1,126		7,673		11,758			26,490
	$	36,458		47,942		8,403		871		1,126		84,117		228,814		$	407,731
Three Months Ended June 30, 2021

Classification in consolidated statement of income
Service charges on deposit accounts	$	12,942		24,955		2,898		—		—		56,586		1,137		$	98,518
Trust income		—		—		—		—		—		—		162,991			162,991
Brokerage services income		—		—		—		—		—		20		10,245			10,265
Other revenues from operations:
Merchant discount and credit card fees		13,713		14,435		500		—		—		5,908		(454	)		34,102
Other		—		1,053		1,926		376		1,447		6,012		9,197			20,011
	$	26,655		40,443		5,324		376		1,447		68,526		183,116		$	325,887

- 28 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

7. Revenue from contracts with customers, continued


	Business Banking		Commercial Banking		Commercial Real Estate		Discretionary Portfolio		Residential Mortgage Banking		Retail Banking		All Other			Total
Six Months Ended June 30, 2022	(In thousands)

Classification in consolidated statement of income
Service charges on deposit accounts	$	34,304		55,400		7,220		—		—		124,767		3,986		$	225,677
Trust income		—		—		—		—		—		—		359,297			359,297
Brokerage services income		—		—		—		—		—		—		44,328			44,328
Other revenues from operations:
Merchant discount and credit card fees		29,640		30,313		1,732		—		—		12,534		385			74,604
Other		—		3,162		6,267		1,564		2,855		12,772		24,649			51,269
	$	63,944		88,875		15,219		1,564		2,855		150,073		432,645		$	755,175
Six Months Ended June 30, 2021

Classification in consolidated statement of income
Service charges on deposit accounts	$	25,439		49,250		5,791		—		—		108,038		2,777		$	191,295
Trust income		—		—		—		—		—		—		319,013			319,013
Brokerage services income		—		—		—		—		—		20		23,358			23,378
Other revenues from operations:
Merchant discount and credit card fees		23,194		24,842		945		—		—		9,829		(345	)		58,465
Other		—		2,011		3,017		760		3,169		11,819		22,145			42,921
	$	48,633		76,103		9,753		760		3,169		129,706		366,948		$	635,072

- 29 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

8. 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 June 30
	2022			2021			2022			2021
	(In thousands)

Service cost	$	4,543		$	5,234		$	993		$	258
Interest cost on projected benefit obligation		22,080			15,502			671			329
Expected return on plan assets		(50,083	)		(35,774	)		—			—
Amortization of prior service cost (credit)		133			151			(311	)		(1,194	)
Amortization of net actuarial loss (gain)		5,322			22,359			(416	)		(347	)
Net periodic cost (benefit)	$	(18,005	)	$	7,472		$	937		$	(954	)

	Pension Benefits						Other Postretirement Benefits
	Six Months Ended June 30
	2022			2021			2022			2021
	(In thousands)

Service cost	$	8,814		$	10,257		$	1,225		$	506
Interest cost on projected benefit obligation		38,347			30,936			1,026			656
Expected return on plan assets		(87,233	)		(71,724	)		—			—
Amortization of prior service cost (credit)		258			276			(1,386	)		(2,369	)
Amortization of net actuarial loss (gain)		9,947			44,509			(741	)		(647	)
Net periodic cost (benefit)	$	(29,867	)	$	14,254		$	124		$	(1,854	)

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 $35 million and $25 million for the three months ended June 30, 2022 and 2021, respectively, and $66 million and $58 million for the six months ended June 30, 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 amortization of unrecognized losses recorded for the three and six months ended June 30, 2022 from what would have been recorded without such change in amortization period by $9 million and $18 million, respectively.

- 30 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

9. Earnings per common share

The computations of basic earnings per common share follow:


	Three Months Ended June 30						Six Months Ended June 30
	2022			2021			2022			2021
	(In thousands, except per share)

Income available to common shareholders:
Net income	$	217,522		$	458,069		$	579,696		$	905,318
Less: Preferred stock dividends		(24,941	)		(17,050	)		(46,706	)		(34,100	)
Net income available to common equity		192,581			441,019			532,990			871,218
Less: Income attributable to unvested stock-based compensation awards		(345	)		(2,263	)		(1,076	)		(4,370	)
Net income available to common shareholders	$	192,236		$	438,756		$	531,914		$	866,848
Weighted-average shares outstanding:
Common shares outstanding (including common stock issuable) and unvested stock-based compensation awards		177,682			129,589			153,612			129,502
Less: Unvested stock-based compensation awards		(315	)		(918	)		(322	)		(898	)
Weighted-average shares outstanding		177,367			128,671			153,290			128,604

Basic earnings per common share	$	1.08		$	3.41		$	3.47		$	6.74

The computations of diluted earnings per common share follow:


	Three Months Ended June 30						Six Months Ended June 30
	2022			2021			2022			2021
	(In thousands, except per share)

Net income available to common equity	$	192,581		$	441,019		$	532,990		$	871,218
Less: Income attributable to unvested stock-based compensation awards		(345	)		(2,260	)		(1,074	)		(4,366	)
Net income available to common shareholders	$	192,236		$	438,759		$	531,916		$	866,852
Adjusted weighted-average shares outstanding:
Common and unvested stock-based compensation awards		177,682			129,589			153,612			129,502
Less: Unvested stock-based compensation awards		(315	)		(918	)		(322	)		(898	)
Plus: Incremental shares from assumed conversion of stock-based compensation awards and warrants to purchase common stock		910			171			691			152
Adjusted weighted-average shares outstanding		178,277			128,842			153,981			128,756

Diluted earnings per common share	$	1.08		$	3.41		$	3.45		$	6.73

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 573,924 common shares and 345,345 common shares during the three-month and six-month periods ended June 30, 2022, respectively, and 462,342 common shares during each of the three-month and six-month periods ended June 30, 2021 were not included in the computations of diluted earnings per common share because the effect on those periods would have been antidilutive.

- 31 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

10. 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		(280,918	)		—			—			(280,918	)			72,691			(208,227	)
Foreign currency translation adjustment		—			—			(7,873	)		(7,873	)			1,961			(5,912	)
Unrealized losses on cash flow hedges		—			—			(174,371	)		(174,371	)			45,129			(129,242	)
Total other comprehensive income (loss) before reclassifications		(280,918	)		—			(182,244	)		(463,162	)			119,781			(343,381	)
Amounts reclassified from accumulated other comprehensive income (loss) that (increase) decrease net income:
Amortization of unrealized holding losses on held-to-maturity securities		1,765			—			—			1,765		(a)		(456	)		1,309
Gains realized in net income		—			—			—			—		(b)		—			—
Accretion of net gain on terminated cash flow hedges		—			—			(60	)		(60	)	(c)		17			(43	)
Net yield adjustment from cash flow hedges currently in effect		—			—			(57,966	)		(57,966	)	(a)		15,002			(42,964	)
Amortization of prior service credit		—			(1,128	)		—			(1,128	)	(d)		267			(861	)
Amortization of actuarial losses		—			9,206			—			9,206		(d)		(2,178	)		7,028
Total other comprehensive income (loss)		(279,153	)		8,078			(240,270	)		(511,345	)			132,433			(378,912	)
Balance — June 30, 2022	$	(174,462	)		(352,198	)		(156,739	)	$	(683,399	)			176,909		$	(506,490	)


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		(43,732	)		—			—			(43,732	)			11,596			(32,136	)
Foreign currency translation adjustment		—			—			881			881				(188	)		693
Unrealized losses on cash flow hedges		—			—			(5,969	)		(5,969	)			1,565			(4,404	)
Total other comprehensive income (loss) before reclassifications		(43,732	)		—			(5,088	)		(48,820	)			12,973			(35,847	)
Amounts reclassified from accumulated other comprehensive income (loss) that (increase) decrease net income:
Amortization of unrealized holding losses on held-to-maturity securities		2,232			—			—			2,232		(a)		(587	)		1,645
Gains realized in net income		(4	)		—			—			(4	)	(b)		1			(3	)
Accretion of net gain on terminated cash flow hedges		—			—			(60	)		(60	)	(c)		17			(43	)
Net yield adjustment from cash flow hedges currently in effect		—			—			(148,655	)		(148,655	)	(a)		38,965			(109,690	)
Amortization of prior service credit		—			(2,093	)		—			(2,093	)	(d)		590			(1,503	)
Amortization of actuarial losses		—			43,862			—			43,862		(d)		(12,363	)		31,499
Total other comprehensive income (loss)		(41,504	)		41,769			(153,803	)		(153,538	)			39,596			(113,942	)
Balance — June 30, 2021	$	153,882			(608,318	)		215,755		$	(238,681	)			61,707		$	(176,974	)

(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.

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		(206,918	)		6,167			(178,161	)		(378,912	)
Balance — June 30, 2022	$	(129,293	)	$	(260,978	)	$	(116,219	)	$	(506,490	)

- 32 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

11. 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 June 30, 2022.

The net effect of interest rate swap agreements was to increase net interest income by $25 million and $72 million during the three-month and six-month periods ended June 30, 2022, respectively, and $75 million and $166 million during the three-month and six-month periods ended June 30, 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)
June 30, 2022
Fair value hedges:
Fixed rate long-term borrowings (b)	$	1,000,000		3.1		3.10	%		2.20	%	$	4,338
Cash flow hedges:
Interest payments on variable rate commercial real estate loans (b)(c)		18,250,000		1.5		1.72	%		1.63	%		37,079
Total	$	19,250,000		1.6							$	41,417
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 $24.8mm at June 30, 2022 and a net settlement of gains of $*43.5 *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 $*181.5 *million at June 30, 2022 and a 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 $*3.3 billion of forward-starting interest rate swap agreements that become effective in 2023.

(d)

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

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 not designated as hedging instruments included interest rate contracts, foreign exchange and other option and futures contracts. Interest rate contracts not designated as hedging instruments had notional values of $47.9 billion and $32.6 billion at June 30, 2022 and December 31, 2021, respectively. The notional amounts of foreign exchange and other option and futures contracts not designated as hedging instruments aggregated $1.6 billion and $1.1 billion at June 30, 2022 and December 31, 2021, respectively.

- 33 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

11. Derivative financial instruments, continued

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
	June 30,		December 31,		June 30,		December 31,
	2022		2021		2022		2021
	(In thousands)
Derivatives designated and qualifying as hedging instruments (a)
Interest rate swap agreements	$	41,417	$	258	$	—	$	465
Commitments to sell real estate loans		13,892		4,044		135		548
		55,309		4,302		135		1,013
Derivatives not designated and qualifying as hedging instruments (a)
Mortgage banking:
Mortgage-related commitments to originate real estate loans for sale		6,524		11,728		30,705		5,288
Commitments to sell real estate loans		37,090		8,137		3,376		4,108
Other:
Interest rate contracts (b)		121,112		410,056		754,154		76,278
Foreign exchange and other option and futures contracts		23,729		8,230		20,069		7,156
		188,455		438,151		808,304		92,830
Total derivatives	$	243,764	$	442,453	$	808,439	$	93,843

(a)

Asset derivatives are reported in other assets and liability derivatives are reported in other liabilities.

(b)

The impact of variation margin payments at June 30, 2022 and December 31, 2021 *was a reduction of the estimated fair value of interest rate contracts not designated as hedging instruments in an asset position of $*777.8 *million and $*54.4 *million, respectively, and in a liability position of $*18.7 *million and $*305.1 million, respectively.


	Amount of Gain (Loss) Recognized
	Three Months Ended June 30
	2022					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)	$	(20,683	)		20,762	$	154			(78	)
Derivatives not designated as hedging instruments
Interest rate contracts (b)	$	5,808				$	2,771
Foreign exchange and other option and futures contracts (b)		4,493					1,618
Total	$	10,301				$	4,389


	Amount of Gain (Loss) Recognized
	Six Months Ended June 30
	2022					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)	$	(63,956	)		63,760	$	(32,504	)		31,820
Derivatives not designated as hedging instruments
Interest rate contracts (b)	$	10,961				$	5,979
Foreign exchange and other option and futures contracts (b)		6,239					3,226
Total	$	17,200				$	9,205

(a)

Reported as an adjustment to interest expense.

(b)

Reported as trading account and non-hedging derivative gains.

- 34 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

11. 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
	June 30, 2022		December 31, 2021		June 30, 2022			December 31, 2021
	(In thousands)
Location in the Consolidated Balance Sheet of the Hedged Items in Fair Value Hedges

Long-term debt	$	979,471	$	1,692,943	$	(20,150	)	$	43,610

The amount of interest income recognized in the consolidated statement of income associated with derivatives designated as cash flow hedges was $20 million and $67 million for the three months ended June 30, 2022 and 2021, respectively, and $58 million and $149 million for the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022 the unrealized net loss recognized in other comprehensive income related to cash flow hedges was $144 million, of which losses of $18 million, $76 million and $50 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 $12 million and $24 million at June 30, 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 $3 million and $35 million at June 30, 2022 and December 31, 2021, respectively. The Company was required to post collateral relating to those positions of $1 million and $33 million at June 30, 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 June 30, 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 $183 million at June 30, 2022 and $7 million at December 31, 2021. Counterparties posted collateral relating to those positions of $195 million at June 30, 2022 and $6 million at December 31, 2021. Interest rate swap agreements entered into with customers are subject to the Company’s credit risk standards and often contain collateral provisions.

- 35 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

11. 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 $224 million and $132 million at June 30, 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.

12. 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 June 30, 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 $8.4 billion at June 30, 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 $1.4 billion, including $538 million of unfunded commitments, at June 30, 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 June 30, 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 June 30, 2022 was $1.7 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 $36 million and $57 million of its investments in qualified affordable housing projects to income tax expense during the three-month and six-month periods ended June 30, 2022, respectively, and recognized $42 million and $65 million of tax credits and other tax benefits during those respective periods. Similarly, for the three-month and six-month periods ended June 30, 2021, the Company amortized $19 million and $38 million of its investments in qualified affordable housing projects to income tax expense, respectively, and recognized $22 million and $43 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.

- 36 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

13. 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 June 30, 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

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.

- 37 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

13. 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 accounted for as 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.

Non-hedging derivatives

Non-hedging derivatives 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 non-hedging derivative assets and liabilities using externally developed pricing models based on market observable inputs and, therefore, classifies such valuations as Level 2.

- 38 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

13. Fair value measurements, continued

The following tables present assets and liabilities at June 30, 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)
June 30, 2022
Trading account	$	133,855	$	133,855	$	—	$	—
Investment securities available for sale:
U.S. Treasury and federal agencies		5,182,571		—		5,182,571		—
Mortgage-backed securities:
Government issued or guaranteed
Commercial		614,784		—		614,784		—
Residential		2,726,769		—		2,726,769		—
Other debt securities		180,831		—		180,831		—
		8,704,955		—		8,704,955		—
Equity securities		101,872		91,820		10,052		—
Real estate loans held for sale		319,421		—		319,421		—
Other assets (a)		243,764		—		237,240		6,524
Total assets	$	9,503,867	$	225,675	$	9,271,668	$	6,524
Other liabilities (a)		808,439		—		777,734		30,705
Total liabilities	$	808,439	$	—	$	777,734	$	30,705

December 31, 2021
Trading account	$	49,745	$	49,545	$	200	$	—
Investment securities available for sale:
U.S. Treasury and federal agencies		678,690		—		678,690		—
Mortgage-backed securities:
Government issued or guaranteed
Residential		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)		442,453		—		430,725		11,728
Total assets	$	5,424,924	$	118,395	$	5,294,801	$	11,728
Other liabilities (a)		93,843		—		88,555		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), interest rate and foreign exchange contracts not designated as hedging instruments (Level 2), commitments to sell real estate loans (Level 2) and commitments to originate real estate loans to be held for sale (Level 3).

- 39 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

13. 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 June 30, 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 — March 31, 2022	$	—	$	(15,428	)
Total gains realized/unrealized:
Included in earnings		—		(6,609	)	(a)
Transfers out of Level 3		—		(2,144	)	(b)
Balance — June 30, 2022	$	—	$	(24,181	)
Changes in unrealized gains included in earnings related to assets still held at June 30, 2022	$	—	$	(8,441	)	(a)


2021

Balance — March 31, 2021	$	16		$	13,757
Total gains realized/unrealized:
Included in earnings		—			52,312		(a)
Settlements		(16	)		—
Transfers out of Level 3		—			(30,403	)	(b)
Balance — June 30, 2021	$	—		$	35,666
Changes in unrealized gains included in earnings related to assets still held at June 30, 2021	$	—		$	37,300		(a)

- 40 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

13. Fair value measurements, continued

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the six months ended June 30, 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		—		(25,309	)	(a)
Transfers out of Level 3		—		(5,312	)	(b)
Balance — June 30, 2022	$	—	$	(24,181	)
Changes in unrealized gains included in earnings related to assets still held at June 30, 2022	$	—	$	3,405		(a)


2021

Balance — January 1, 2021	$	16		$	43,234
Total gains realized/unrealized:
Included in earnings		—			58,337		(a)
Settlements		(16	)		—
Transfers out of Level 3		—			(65,905	)	(b)
Balance — June 30, 2021	$	—		$	35,666
Changes in unrealized gains included in earnings related to assets still held at June 30, 2021	$	—		$	35,492		(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.

- 41 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

13. Fair value measurements, continued

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 50% at June 30, 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 June 30, 2022 was 68%. 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 $761 million at June 30, 2022 ($424 million and $337 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 $629 million at June 30, 2021 ($386 million and $243 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 June 30, 2022 were decreases of $73 million and $117 million for the three-month and six-month periods ended June 30, 2022, respectively. Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on June 30, 2021 were decreases of $46 million and $104 million for the three-month and six-month periods ended June 30, 2021, respectively.

- 42 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

13. Fair value measurements, continued

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 less than $1 million and $10 million at June 30, 2022 and 2021, respectively. Changes in fair value recognized for those foreclosed assets held by the Company were not material during the three-month and six-month periods ended June 30, 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 $123 million and $138 million at June 30, 2022 and December 31, 2021, respectively, required a valuation allowance of $10 million and $24 million, respectively. Significant unobservable inputs used in this Level 3 valuation included weighted-average prepayment speeds of 8.81% and 14.64% at June 30, 2022 and December 31, 2021, respectively, and a weighted-average option-adjusted spread of 900 basis points at each date. Changes in fair value recognized for impairment of capitalized servicing rights were decreases in the valuation allowance of $11 million and $14 million, respectively, for the three-month and six-month periods ended June 30, 2022 and an increase in the valuation allowance of $8 million during the three months ended June 30, 2021 and a decrease in the valuation allowance of $1 million during the six months ended June 30, 2021.

Significant unobservable inputs to Level 3 measurements

The following table presents quantitative information about significant unobservable inputs used in the fair value measurements for certain Level 3 assets and liabilities at June 30, 2022 and December 31, 2021:


	Fair Value			Valuation Technique	Unobservable Inputs/Assumptions	Range (Weighted- Average)
	(In thousands)
June 30, 2022
Recurring fair value measurements
Net other assets (liabilities) (a)	$	(24,181	)	Discounted cash flow	Commitment expirations	0% - 93% (3%)

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.

- 43 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

13. Fair value measurements, continued

Sensitivity of fair value measurements to changes in unobservable inputs

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

Disclosures of fair value of financial instruments

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


	June 30, 2022
	Carrying Amount			Estimated Fair Value			Level 1		Level 2			Level 3
	(In thousands)
Financial assets:
Cash and cash equivalents	$	1,688,274			1,688,274			1,535,535		152,739			—
Interest-bearing deposits at banks		33,437,454			33,437,454			—		33,437,454			—
Federal funds sold and agreements to resell securities		250,250			250,250			—		250,250			—
Trading account		133,855			133,855			133,855		—			—
Investment securities		22,801,717			22,124,661			91,820		21,977,313			55,528
Loans and leases:
Commercial loans and leases		39,108,676			38,785,142			—		—			38,785,142
Commercial real estate loans		46,795,139			45,504,741			—		254,822			45,249,919
Residential real estate loans		22,767,107			21,579,180			—		11,386,865			10,192,315
Consumer loans		19,815,198			19,630,170			—		—			19,630,170
Allowance for credit losses		(1,823,790	)		—			—		—			—
Loans and leases, net		126,662,330			125,499,233			—		11,641,687			113,857,546
Accrued interest receivable		475,776			475,776			—		475,776			—
Financial liabilities:
Noninterest-bearing deposits	$	(72,375,515	)		(72,375,515	)		—		(72,375,515	)		—
Savings and interest-checking deposits		(92,711,597	)		(92,711,597	)		—		(92,711,597	)		—
Time deposits		(5,271,284	)		(5,270,713	)		—		(5,270,713	)		—
Short-term borrowings		(1,119,321	)		(1,119,321	)		—		(1,119,321	)		—
Long-term borrowings		(3,017,363	)		(2,992,593	)		—		(2,992,593	)		—
Accrued interest payable		(44,471	)		(44,471	)		—		(44,471	)		—
Other financial instruments:
Commitments to originate real estate loans for sale	$	(24,181	)		(24,181	)		—		—			(24,181	)
Commitments to sell real estate loans		47,471			47,471			—		47,471			—
Other credit-related commitments		(128,344	)		(128,344	)		—		—			(128,344	)
Interest rate swap agreements used for interest rate risk management		41,417			41,417			—		41,417			—
Interest rate and foreign exchange contracts not designated as hedging instruments		(629,382	)		(629,382	)		—		(629,382	)		—

- 44 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

13. 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		49,745			49,745			49,545		200			—
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	)		—
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	)		—
Interest rate and foreign exchange contracts not designated as hedging instruments		334,852			334,852			—		334,852			—

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

14. 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.


	June 30,		December 31,
	2022		2021
	(In thousands)
Commitments to extend credit
Home equity lines of credit	$	8,504,614	$	5,693,045
Commercial real estate loans to be sold		568,799		324,943
Other commercial real estate		5,103,425		4,998,631
Residential real estate loans to be sold		69,089		233,257
Other residential real estate		1,178,317		924,211
Commercial and other		31,065,311		22,145,057
Standby letters of credit		2,342,713		2,151,595
Commercial letters of credit		52,816		31,981
Financial guarantees and indemnification contracts		4,103,744		4,211,797
Commitments to sell real estate loans		908,436		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 $13.9 billion and $10.8 billion at June 30, 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 $3.9 billion at June 30, 2022 and $4.0 billion at 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 accounted for as 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.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

14. Commitments and contingencies, continued

The Company is contractually obligated to repurchase previously sold residential real estate loans that do not ultimately meet investor sale criteria related to underwriting procedures or loan documentation. When required to do so, the Company may reimburse loan purchasers for losses incurred or may repurchase certain loans. The Company reduces residential mortgage banking revenues by an estimate for losses related to its obligations to loan purchasers. The amount of those charges is based on the volume of loans sold, the level of reimbursement requests received from loan purchasers and estimates of losses that may be associated with previously sold loans. At June 30, 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 June 30, 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.

15. 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. Information about the Company's segments follows.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

15. Segment information, continued


	Three Months Ended June 30
	2022								2021
	Total Revenues(a)		Inter- segment Revenues			Net Income (Loss)			Total Revenues(a)		Inter- segment Revenues			Net Income (Loss)
	(In thousands)

Business Banking	$	203,630	$	726		$	70,536		$	145,098	$	794		$	41,607
Commercial Banking		343,353		940			130,431			284,659		1,012			111,035
Commercial Real Estate		239,610		259			121,737			200,559		230			86,690
Discretionary Portfolio		89,412		(24,103	)		56,085			118,307		(10,079	)		78,532
Residential Mortgage Banking		113,874		37,875			9,347			146,682		22,875			30,103
Retail Banking		593,228		(4	)		139,431			350,988		281			89,200
All Other		399,710		(15,693	)		(310,045	)		209,680		(15,113	)		20,902
Total	$	1,982,817	$	—		$	217,522		$	1,455,973	$	—		$	458,069


	Six Months Ended June 30
	2022								2021
	Total Revenues(a)		Inter- segment Revenues			Net Income (Loss)			Total Revenues(a)		Inter- segment Revenues			Net Income (Loss)
	(In thousands)

Business Banking	$	344,976	$	1,397		$	111,647		$	301,001	$	1,463		$	87,878
Commercial Banking		632,725		1,803			275,039			570,571		1,821			233,673
Commercial Real Estate		441,697		438			219,347			401,402		452			157,962
Discretionary Portfolio		154,139		(51,908	)		91,470			252,851		(20,106	)		169,078
Residential Mortgage Banking		251,318		75,339			38,311			300,442		45,058			79,714
Retail Banking		948,376		(7	)		223,595			697,905		553			174,558
All Other		654,647		(27,062	)		(379,713	)		418,794		(29,241	)		2,455
Total	$	3,427,878	$	—		$	579,696		$	2,942,966	$	—		$	905,318

(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 $*10,726,000 *and $3,732,000 for the three-month periods ended June 30, 2022 and 2021, respectively, and $*13,960,000 *and $*7,465,000 for the six-month periods ended June 30, 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.


	Average Total Assets
	Six Months Ended June 30				Year Ended December 31
	2022		2021		2021
	(In millions)

Business Banking	$	7,316	$	8,681	$	8,007
Commercial Banking		31,632		29,927		28,559
Commercial Real Estate		27,784		25,999		25,628
Discretionary Portfolio		36,292		22,769		22,262
Residential Mortgage Banking		5,014		6,638		6,463
Retail Banking		24,411		17,444		17,897
All Other		47,965		37,948		43,853
Total	$	180,414	$	149,406	$	152,669

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

16. 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 June 30, 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 June 30, 2022 or in the six-month period ended June 30, 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 $1.5 billion and $1.6 billion at June 30, 2022 and December 31, 2021, respectively. Revenues from those servicing rights were $2 million in each of the three-month periods ended June 30, 2022 and 2021, and $4 million for each of the six-month periods ended June 30, 2022 and 2021. The Company sub-services residential mortgage loans for Bayview Financial having outstanding principal balances of $79.0 billion and $74.7 billion at June 30, 2022 and December 31, 2021, respectively. Revenues earned for sub-servicing loans for Bayview Financial were $44 million and $37 million for the three-month periods ended June 30, 2022 and 2021, respectively, and $86 million and $71 million in the six-month periods ended June 30, 2022 and 2021, respectively. In addition, the Company held $55 million and $62 million of mortgage-backed securities in its held-to-maturity portfolio at June 30, 2022 and December 31, 2021, respectively, that were securitized by Bayview Financial. At June 30, 2022, the Company held $247 million of Bayview Financial's $1.5 billion syndicated loan facility. Such facility was expanded to $2.0 billion in July 2022, with the Company's portion increasing to $289 million. During the second quarter of 2022 the Company purchased $191 million of residential mortgage loans from Bayview Financial for $184 million.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

17. 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

17. Recent accounting developments, continued


Standard	Description	Required date of adoption	Effect on consolidated financial statements
Standards Not Yet Adopted as of June 30, 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.
Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions	The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. In addition, the amendments require the following disclosures for equity securities subject to contractual sale restrictions: 1. The fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; 2. The nature and remaining duration of the restriction(s); and 3. The circumstances that could cause a lapse in the restriction(s).	January 1, 2024 Early adoption permitted	The amendments should be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. The Company does not expect the guidance will have a material impact on its consolidated financial statements.

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