Item 1. Financial Statements.

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Item 1. Financial Statements.

M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (Unaudited)


	March 31,			December 31,
(Dollars in millions, except per share)	2024			2023
Assets
Cash and due from banks	$	1,695		$	1,731
Interest-bearing deposits at banks		32,144			28,069
Trading account		99			106
Investment securities
Available for sale (cost: $12,397 at March 31, 2024; $10,691 at December 31, 2023)		12,134			10,440
Held to maturity (fair value: $13,865 at March 31, 2024; $14,308 at December 31, 2023)		15,078			15,330
Equity and other securities (cost: $1,279 at March 31, 2024; $1,125 at December 31, 2023)		1,284			1,127
Total investment securities		28,496			26,897
Loans and leases, net of unearned discount of $928 at March 31, 2024 and $868 at December 31, 2023		134,973			134,068
Allowance for credit losses		(2,191	)		(2,129	)
Loans and leases, net		132,782			131,939
Premises and equipment		1,707			1,739
Goodwill		8,465			8,465
Core deposit and other intangible assets		132			147
Accrued interest and other assets		9,617			9,171
Total assets	$	215,137		$	208,264
Liabilities
Noninterest-bearing deposits	$	50,578		$	49,294
Savings and interest-checking deposits		96,339			93,221
Time deposits		20,279			20,759
Total deposits		167,196			163,274
Short-term borrowings		4,795			5,316
Accrued interest and other liabilities		4,527			4,516
Long-term borrowings		11,450			8,201
Total liabilities		187,968			181,307
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 March 31, 2024 and December 31, 2023; Liquidation preference of $10,000 per share: 140,000 shares at March 31, 2024 and December 31, 2023; Liquidation preference of $25 per share: 10,000,000 shares at March 31, 2024 and December 31, 2023		2,011			2,011
Common stock, $0.50 par, 250,000,000 shares authorized,179,436,779 shares issued at March 31, 2024 and December 31, 2023		90			90
Common stock issuable, 11,458 shares at March 31, 2024;12,217 shares at December 31, 2023		1			1
Additional paid-in capital		9,976			10,020
Retained earnings		17,812			17,524
Accumulated other comprehensive income (loss), net		(589	)		(459	)
Treasury stock — common, at cost — 12,724,121 shares at March 31, 2024;13,300,298 shares at December 31, 2023		(2,132	)		(2,230	)
Total shareholders’ equity		27,169			26,957
Total liabilities and shareholders’ equity	$	215,137		$	208,264

See accompanying notes to financial statements.

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M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)


	Three Months Ended March 31,
(Dollars in millions, except per share, shares in thousands)	2024		2023
Interest income
Loans and leases, including fees	$	2,097	$	1,850
Investment securities
Fully taxable		212		181
Exempt from federal taxes		16		17
Deposits at banks		419		278
Other		1		1
Total interest income		2,745		2,327
Interest expense
Savings and interest-checking deposits		615		277
Time deposits		225		89
Short-term borrowings		84		58
Long-term borrowings		141		85
Total interest expense		1,065		509
Net interest income		1,680		1,818
Provision for credit losses		200		120
Net interest income after provision for credit losses		1,480		1,698
Other income
Mortgage banking revenues		104		85
Service charges on deposit accounts		124		113
Trust income		160		194
Brokerage services income		29		24
Trading account and other non-hedging derivative gains		9		12
Gain (loss) on bank investment securities		2		—
Other revenues from operations		152		159
Total other income		580		587
Other expense
Salaries and employee benefits		833		808
Equipment and net occupancy		129		127
Outside data processing and software		120		106
Professional and other services		85		125
FDIC assessments		60		30
Advertising and marketing		20		31
Amortization of core deposit and other intangible assets		15		17
Other costs of operations		134		115
Total other expense		1,396		1,359
Income before taxes		664		926
Income taxes		133		224
Net income	$	531	$	702
Net income available to common shareholders
Basic	$	505	$	676
Diluted		505		676
Net income per common share
Basic		3.04		4.03
Diluted		3.02		4.01
Average common shares outstanding
Basic		166,460		167,732
Diluted		167,084		168,410

See accompanying notes to financial statements.

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M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)


	Three Months Ended March 31,
(Dollars in millions)	2024			2023
Net income	$	531		$	702
Other comprehensive income (loss), net of tax and reclassification adjustments:
Net unrealized gains (losses) on investment securities		(10	)		65
Cash flow hedges adjustments		(117	)		81
Defined benefit plans liability adjustments		(1	)		(2	)
Foreign currency translation adjustments		(2	)		1
Total other comprehensive income (loss)		(130	)		145
Total comprehensive income	$	401		$	847

See accompanying notes to financial statements.

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M&T BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)



	Three Months Ended March 31,
(Dollars in millions)	2024			2023
Cash flows from operating activities
Net income	$	531		$	702
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		200			120
Depreciation and amortization of premises and equipment		80			76
Amortization of capitalized servicing rights		35			20
Amortization of core deposit and other intangible assets		15			17
Provision for deferred income taxes		2			11
Asset write-downs		6			1
Net gain on sales of assets		(1	)		(12	)
Net change in accrued interest receivable, payable		27			55
Net change in other accrued income and expense		(74	)		(43	)
Net change in loans originated for sale		(352	)		(274	)
Net change in trading account and other non-hedging derivative assets and liabilities		139			(245	)
Net cash provided by operating activities		608			428
Cash flows from investing activities
Proceeds from sales of investment securities:
Available for sale		4			—
Equity and other securities		110			521
Proceeds from maturities of investment securities:
Available for sale		1,989			141
Held to maturity		257			281
Purchases of investment securities:
Available for sale		(4,145	)		(337	)
Held to maturity		—			(2,948	)
Equity and other securities		(264	)		(792	)
Net increase in loans and leases		(724	)		(1,166	)
Net (increase) decrease in interest-bearing deposits at banks		(4,075	)		2,652
Capital expenditures, net		(35	)		(55	)
Net decrease in loan servicing advances		81			207
Other, net		(280	)		(251	)
Net cash used by investing activities		(7,082	)		(1,747	)
Cash flows from financing activities
Net increase (decrease) in deposits		3,921			(4,441	)
Net increase (decrease) in short-term borrowings		(521	)		3,440
Proceeds from long-term borrowings		3,357			3,486
Payments on long-term borrowings		(49	)		—
Purchases of treasury stock		—			(594	)
Dividends paid — common		(221	)		(221	)
Dividends paid — preferred		(34	)		(34	)
Other, net		(15	)		(19	)
Net cash provided by financing activities		6,438			1,617
Net increase (decrease) in cash, cash equivalents and restricted cash		(36	)		298
Cash, cash equivalents and restricted cash at beginning of period		1,731			1,520
Cash, cash equivalents and restricted cash at end of period	$	1,695		$	1,818
Supplemental disclosure of cash flow information
Interest received during the period	$	2,716		$	2,289
Interest paid during the period		999			410
Income taxes paid during the period		41			22
Supplemental schedule of noncash investing and financing activities
Real estate acquired in settlement of loans		19			7
Additions to right-of-use assets under operating leases		19			31

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 millions, except per share)	Stock		Stock		Issuable		Capital			Earnings			(Loss), Net			Stock			Total
Three Months Ended March 31, 2024
Balance — January 1, 2024	$	2,011	$	90	$	1	$	10,020		$	17,524		$	(459	)	$	(2,230	)	$	26,957
Total comprehensive income	—		—		—		—				531			(130	)	—				401
Preferred stock cash dividends (a)	—		—		—		—				(25	)	—			—				(25	)
Stock-based compensation transactions, net	—		—		—			(44	)	—			—				98			54
Common stock cash dividends — $1.30 per share	—		—		—		—				(218	)	—			—				(218	)
Balance — March 31, 2024	$	2,011	$	90	$	1	$	9,976		$	17,812		$	(589	)	$	(2,132	)	$	27,169

Three Months Ended March 31, 2023
Balance — January 1, 2023	$	2,011	$	90	$	1	$	10,002		$	15,754		$	(790	)	$	(1,750	)	$	25,318
Total comprehensive income	—		—		—		—				702			145		—				847
Preferred stock cash dividends (a)	—		—		—		—				(25	)	—			—				(25	)
Purchases of treasury stock	—		—		—		—			—			—				(600	)		(600	)
Stock-based compensation transactions, net	—		—		—			(16	)		(1	)	—				72			55
Common stock cash dividends — $1.30 per share	—		—		—		—				(218	)	—			—				(218	)
Balance — March 31, 2023	$	2,011	$	90	$	1	$	9,986		$	16,212		$	(645	)	$	(2,278	)	$	25,377

(a)

For the three-month periods ended March 31, 2024 and 2023*, dividends per preferred share were: Preferred Series E - $16.125; Preferred Series F - $128.125; Preferred Series G - $125.00; Preferred Series H - $0.3516; and Preferred Series I - $87.50.*

See accompanying notes to financial statements.

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NOTES TO FINANCIAL STATEMENTS

1. Significant accounting policies

The consolidated interim financial statements of the Company were compiled in accordance with GAAP using the accounting policies set forth in note 1 of Notes to Financial Statements included in the 2023 Annual Report, except as described in the following table. 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.

Recent accounting developments


Standard	Description	Required date of adoption	Effect on consolidated financial statements
Standards Adopted in 2024
Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method	The amendments permit an election to account for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. Under the proportional amortization method, the initial cost of the investment is amortized in proportion to the income tax credits and other income tax benefits received and the net amortization and income tax credits and other income tax benefits are recognized in the income statement as a component of income tax expense (benefit).	January 1, 2024	As described in note 11, the Company adopted the amended guidance effective January 1, 2024 using a modified retrospective transition. The guidance did not have a material impact on the Company’s consolidated financial statements.

2. Divestiture

On April 29, 2023, the Company sold its CIT business to a private equity firm. The transaction resulted in a pre-tax gain of $225 million ($157 million after-tax effect) that has been included in “other revenues from operations” in the Consolidated Statement of Income in the second quarter of 2023. Prior to the sale, the CIT business contributed $45 million to trust income in the three months ended March 31, 2023. After considering expenses, the results of operations from the CIT business were not material to the Company's consolidated results of operations in that period.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

3. Investment securities

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


(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
March 31, 2024
Investment securities available for sale:
U.S. Treasury and federal agencies	$	7,818	$	—	$	99	$	7,719
Mortgage-backed securities:
Government issued or guaranteed:
Commercial		1,355		1		13		1,343
Residential		3,053		—		143		2,910
Other debt securities		171		—		9		162
		12,397		1		264		12,134
Investment securities held to maturity:
U.S. Treasury and federal agencies		1,007		—		33		974
Obligations of states and political subdivisions		2,466		—		94		2,372
Mortgage-backed securities:
Government issued or guaranteed:
Commercial		2,035		—		154		1,881
Residential		9,527		—		935		8,592
Privately issued		41		9		6		44
Other debt securities		2		—		—		2
		15,078		9		1,222		13,865
Total debt securities	$	27,475	$	10	$	1,486	$	25,999
Equity and other securities:
Readily marketable equity — at fair value	$	351	$	8	$	3	$	356
Other — at cost		928		—		—		928
Total equity and other securities	$	1,279	$	8	$	3	$	1,284

December 31, 2023
Investment securities available for sale:
U.S. Treasury and federal agencies	$	7,818	$	—	$	113	$	7,705
Mortgage-backed securities:
Government issued or guaranteed:
Commercial		425		—		9		416
Residential		2,272		—		118		2,154
Other debt securities		176		—		11		165
		10,691		—		251		10,440
Investment securities held to maturity:
U.S. Treasury and federal agencies		1,005		—		31		974
Obligations of states and political subdivisions		2,501		—		67		2,434
Mortgage-backed securities:
Government issued or guaranteed:
Commercial		2,033		—		130		1,903
Residential		9,747		4		802		8,949
Privately issued		42		9		5		46
Other debt securities		2		—		—		2
		15,330		13		1,035		14,308
Total debt securities	$	26,021	$	13	$	1,286	$	24,748
Equity and other securities:
Readily marketable equity — at fair value	$	266	$	5	$	3	$	268
Other — at cost		859		—		—		859
Total equity and other securities	$	1,125	$	5	$	3	$	1,127

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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 periods ended March 31, 2024 and 2023. Unrealized losses on equity securities are included in "gain (loss) on bank investment securities" in the Consolidated Statement of Income.

At March 31, 2024, the amortized cost and estimated fair value of debt securities by contractual maturity were as follows:


(Dollars in millions)	Amortized Cost		Estimated Fair Value
Debt securities available for sale:
Due in one year or less	$	3,248	$	3,209
Due after one year through five years		4,691		4,628
Due after five years through ten years		50		44
Due after ten years		—		—
		7,989		7,881
Mortgage-backed securities		4,408		4,253
	$	12,397	$	12,134
Debt securities held to maturity:
Due in one year or less	$	588	$	575
Due after one year through five years		635		611
Due after five years through ten years		1,369		1,333
Due after ten years		883		829
		3,475		3,348
Mortgage-backed securities		11,603		10,517
	$	15,078	$	13,865

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

3. Investment securities, continued

A summary of investment securities that as of March 31, 2024 and December 31, 2023 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
(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2024
Investment securities available for sale:
U.S. Treasury and federal agencies	$	2,242	$	10	$	5,177	$	89
Mortgage-backed securities:
Government issued or guaranteed:
Commercial		765		6		393		7
Residential		813		6		1,964		137
Other debt securities		—		—		156		9
		3,820		22		7,690		242
Investment securities held to maturity:
U.S. Treasury and federal agencies		49		1		925		32
Obligations of states and political subdivisions		43		—		2,284		94
Mortgage-backed securities:
Government issued or guaranteed:
Commercial		172		9		1,709		145
Residential		1,133		12		7,459		923
Privately issued		—		—		33		6
		1,397		22		12,410		1,200
Total	$	5,217	$	44	$	20,100	$	1,442

December 31, 2023
Investment securities available for sale:
U.S. Treasury and federal agencies	$	229	$	1	$	7,474	$	112
Mortgage-backed securities:
Government issued or guaranteed:
Commercial		74		1		330		8
Residential		151		2		1,959		116
Other debt securities		6		—		154		11
		460		4		9,917		247
Investment securities held to maturity:
U.S. Treasury and federal agencies		50		—		924		31
Obligations of states and political subdivisions		218		3		2,172		64
Mortgage-backed securities:
Government issued or guaranteed:
Commercial		328		9		1,575		121
Residential		955		11		7,139		791
Privately issued		—		—		34		5
		1,551		23		11,844		1,012
Total	$	2,011	$	27	$	21,761	$	1,259

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

3. Investment securities, continued

The Company owned 4,088 individual debt securities with aggregate gross unrealized losses of $1.5 billion at March 31, 2024. Based on a review of each of the securities in the investment securities portfolio at March 31, 2024, the Company concluded that it expected to recover the amortized cost basis of its investment. As of March 31, 2024, the Company does not intend to sell, nor is it anticipated that it would be required to sell, any of its impaired investment securities at a loss. At March 31, 2024, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $928 million of cost method equity securities.

The Company estimated no material allowance for credit losses for its investment securities classified as held-to-maturity at March 31, 2024 or December 31, 2023.

At March 31, 2024 and December 31, 2023, investment securities with carrying values of $9.6 billion (including $357 million related to repurchase transactions) and $8.2 billion (including $393 million related to repurchase transactions), respectively, were pledged to secure borrowings, lines of credit and governmental deposits.

4. Loans and leases and the allowance for credit losses

A summary of current, past due and nonaccrual loans as of March 31, 2024 and December 31, 2023 follows:


(Dollars in millions)	Current		30-89 Days Past Due		Accruing Loans Past Due 90 Days or More		Nonaccrual		Total
March 31, 2024
Commercial and industrial	$	56,803	$	219	$	11	$	864	$	57,897
Real estate:
Commercial (a)		24,119		163		31		855		25,168
Residential builder and developer		984		48		—		3		1,035
Other commercial construction		5,915		155		2		141		6,213
Residential (b)		21,118		627		245		202		22,192
Residential — limited documentation		801		30		—		53		884
Consumer:
Home equity lines and loans		4,437		34		—		87		4,558
Recreational finance		10,553		71		—		30		10,654
Automobile		4,252		43		—		13		4,308
Other		1,982		20		8		54		2,064
Total	$	130,964	$	1,410	$	297	$	2,302	$	134,973

December 31, 2023
Commercial and industrial	$	56,091	$	238	$	11	$	670	$	57,010
Real estate:
Commercial (a)		24,072		311		25		869		25,277
Residential builder and developer		1,065		5		—		3		1,073
Other commercial construction		6,322		159		1		171		6,653
Residential (b)		21,080		763		295		215		22,353
Residential — limited documentation		825		31		—		55		911
Consumer:
Home equity lines and loans		4,528		40		—		81		4,649
Recreational finance		9,935		87		—		36		10,058
Automobile		3,918		60		—		14		3,992
Other		2,003		30		7		52		2,092
Total	$	129,839	$	1,724	$	339	$	2,166	$	134,068

(a)

Commercial real estate loans held for sale were *$*563 million at March 31, 2024 and *$*189 million at December 31, 2023.

(b)

One-to-four family residential mortgage loans held for sale were *$*165 million at March 31, 2024 and $190 million at December 31, 2023.

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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 and industrial 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 credit personnel review all criticized commercial and industrial loans and commercial real estate loans greater than $5 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 March 31, 2024 to the various classes of the Company’s commercial and industrial loans and commercial real estate loans and gross charge-offs for those types of loans for the three-month period ended March 31, 2024 by origination year.


	Term Loans by Origination Year												Revolving		Revolving Loans Converted to Term
(Dollars in millions)	2024		2023		2022		2021		2020		Prior		Loans		Loans		Total
Commercial and industrial:
Pass	$	2,012	$	8,129	$	7,567	$	4,441	$	2,099	$	6,456	$	22,719	$	74	$	53,497
Criticized accrual		32		306		422		277		117		602		1,745		35		3,536
Criticized nonaccrual		2		54		89		62		71		206		364		16		864
Total commercial and industrial	$	2,046	$	8,489	$	8,078	$	4,780	$	2,287	$	7,264	$	24,828	$	125	$	57,897
Gross charge-offs	$	—	$	7	$	9	$	4	$	3	$	5	$	50	$	—	$	78
Real estate:
Commercial:
Pass	$	696	$	1,783	$	1,652	$	1,331	$	2,013	$	11,278	$	435	$	—	$	19,188
Criticized accrual		—		273		815		464		558		3,008		7		—		5,125
Criticized nonaccrual		—		—		46		11		101		695		2		—		855
Total commercial real estate	$	696	$	2,056	$	2,513	$	1,806	$	2,672	$	14,981	$	444	$	—	$	25,168
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	13	$	—	$	—	$	13
Residential builder and developer:
Pass	$	89	$	509	$	187	$	34	$	5	$	14	$	102	$	—	$	940
Criticized accrual		—		2		21		21		—		46		2		—		92
Criticized nonaccrual		—		—		—		2		—		1		—		—		3
Total residential builder and developer	$	89	$	511	$	208	$	57	$	5	$	61	$	104	$	—	$	1,035
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	—	$	1
Other commercial construction:
Pass	$	27	$	990	$	1,231	$	590	$	273	$	589	$	45	$	—	$	3,745
Criticized accrual		—		75		538		460		567		687		—		—		2,327
Criticized nonaccrual		—		—		11		10		45		75		—		—		141
Total other commercial construction	$	27	$	1,065	$	1,780	$	1,060	$	885	$	1,351	$	45	$	—	$	6,213
Gross charge-offs	$	—	$	—	$	2	$	—	$	—	$	7	$	2	$	—	$	11

- 14 -

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 March 31, 2024 for the various classes of the Company’s residential real estate loans and consumer loans and gross charge-offs for those types of loans for the three-month period ended March 31, 2024 by origination year follows:


	Term Loans by Origination Year												Revolving		Revolving Loans Converted to Term
(Dollars in millions)	2024		2023		2022		2021		2020		Prior		Loans		Loans		Total
Residential:
Current	$	478	$	1,499	$	4,667	$	3,717	$	2,533	$	8,131	$	93	$	—	$	21,118
30-89 days past due		—		6		107		62		30		422		—		—		627
Accruing loans past due 90 days or more		—		2		21		19		15		188		—		—		245
Nonaccrual		—		1		15		10		2		173		1		—		202
Total residential	$	478	$	1,508	$	4,810	$	3,808	$	2,580	$	8,914	$	94	$	—	$	22,192
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	—	$	1
Residential - limited documentation:
Current	$	—	$	—	$	—	$	—	$	—	$	801	$	—	$	—	$	801
30-89 days past due		—		—		—		—		—		30		—		—		30
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		—		—		—		—		53		—		—		53
Total residential - limited documentation	$	—	$	—	$	—	$	—	$	—	$	884	$	—	$	—	$	884
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer:
Home equity lines and loans:
Current	$	—	$	—	$	—	$	2	$	2	$	105	$	2,972	$	1,356	$	4,437
30-89 days past due		—		—		—		—		—		3		—		31		34
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		—		—		—		—		5		1		81		87
Total home equity lines and loans	$	—	$	—	$	—	$	2	$	2	$	113	$	2,973	$	1,468	$	4,558
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1	$	1
Recreational finance:
Current	$	1,028	$	2,531	$	2,252	$	1,790	$	1,233	$	1,719	$	—	$	—	$	10,553
30-89 days past due		1		11		12		14		13		20		—		—		71
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		4		6		6		4		10		—		—		30
Total recreational finance	$	1,029	$	2,546	$	2,270	$	1,810	$	1,250	$	1,749	$	—	$	—	$	10,654
Gross charge-offs	$	—	$	3	$	5	$	6	$	4	$	7	$	—	$	—	$	25
Automobile:
Current	$	684	$	1,026	$	1,004	$	942	$	371	$	225	$	—	$	—	$	4,252
30-89 days past due		1		7		11		11		6		7		—		—		43
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		2		2		3		2		4		—		—		13
Total automobile	$	685	$	1,035	$	1,017	$	956	$	379	$	236	$	—	$	—	$	4,308
Gross charge-offs	$	—	$	2	$	2	$	2	$	1	$	1	$	—	$	—	$	8
Other:
Current	$	69	$	219	$	155	$	105	$	28	$	27	$	1,378	$	1	$	1,982
30-89 days past due		1		1		3		1		—		1		12		1		20
Accruing loans past due 90 days or more		—		—		—		—		—		—		8		—		8
Nonaccrual		1		1		1		—		—		—		51		—		54
Total other	$	71	$	221	$	159	$	106	$	28	$	28	$	1,449	$	2	$	2,064
Gross charge-offs	$	1	$	3	$	3	$	1	$	1	$	—	$	16	$	—	$	25
Total loans and leases at March 31, 2024	$	5,121	$	17,431	$	20,835	$	14,385	$	10,088	$	35,581	$	29,937	$	1,595	$	134,973
Total gross charge-offs for the three months ended March 31, 2024	$	1	$	15	$	21	$	13	$	9	$	35	$	68	$	1	$	163

- 15 -

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, 2023 to the various classes of the Company’s commercial and industrial loans and commercial real estate loans by origination year.


	Term Loans by Origination Year												Revolving		Revolving Loans Converted to Term
(Dollars in millions)	2023		2022		2021		2020		2019		Prior		Loans		Loans		Total
Commercial and industrial:
Pass	$	8,689	$	8,087	$	4,800	$	2,248	$	2,169	$	4,843	$	22,345	$	70	$	53,251
Criticized accrual		292		279		277		142		127		481		1,460		31		3,089
Criticized nonaccrual		29		68		56		75		36		150		243		13		670
Total commercial and industrial	$	9,010	$	8,434	$	5,133	$	2,465	$	2,332	$	5,474	$	24,048	$	114	$	57,010
Real estate:
Commercial:
Pass	$	2,048	$	1,742	$	1,367	$	2,011	$	3,059	$	8,491	$	440	$	—	$	19,158
Criticized accrual		227		891		465		456		966		2,238		7		—		5,250
Criticized nonaccrual		—		46		3		113		93		611		3		—		869
Total commercial real estate	$	2,275	$	2,679	$	1,835	$	2,580	$	4,118	$	11,340	$	450	$	—	$	25,277
Residential builder and developer:
Pass	$	530	$	252	$	41	$	6	$	2	$	12	$	116	$	—	$	959
Criticized accrual		1		18		30		—		59		—		3		—		111
Criticized nonaccrual		—		—		3		—		—		—		—		—		3
Total residential builder and developer	$	531	$	270	$	74	$	6	$	61	$	12	$	119	$	—	$	1,073
Other commercial construction:
Pass	$	813	$	1,366	$	651	$	373	$	646	$	187	$	30	$	—	$	4,066
Criticized accrual		53		391		390		691		565		326		—		—		2,416
Criticized nonaccrual		—		14		10		46		50		49		2		—		171
Total other commercial construction	$	866	$	1,771	$	1,051	$	1,110	$	1,261	$	562	$	32	$	—	$	6,653

- 16 -

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, 2023 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
(Dollars in millions)	2023		2022		2021		2020		2019		Prior		Loans		Loans		Total
Residential:
Current	$	1,726	$	4,709	$	3,732	$	2,543	$	1,215	$	7,060	$	95	$	—	$	21,080
30-89 days past due		18		120		88		52		28		457		—		—		763
Accruing loans past due 90 days or more		1		30		28		17		14		205		—		—		295
Nonaccrual		1		17		10		3		4		179		1		—		215
Total residential	$	1,746	$	4,876	$	3,858	$	2,615	$	1,261	$	7,901	$	96	$	—	$	22,353
Residential - limited documentation:
Current	$	—	$	—	$	—	$	—	$	—	$	825	$	—	$	—	$	825
30-89 days past due		—		—		—		—		—		31		—		—		31
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		—		—		—		—		55		—		—		55
Total residential - limited documentation	$	—	$	—	$	—	$	—	$	—	$	911	$	—	$	—	$	911
Consumer:
Home equity lines and loans:
Current	$	—	$	—	$	2	$	2	$	13	$	98	$	3,022	$	1,391	$	4,528
30-89 days past due		—		—		—		—		—		3		—		37		40
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		—		—		—		—		—		5		3		73		81
Total home equity lines and loans	$	—	$	—	$	2	$	2	$	13	$	106	$	3,025	$	1,501	$	4,649
Recreational finance:
Current	$	2,653	$	2,338	$	1,857	$	1,286	$	781	$	1,020	$	—	$	—	$	9,935
30-89 days past due		11		16		19		14		11		16		—		—		87
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		3		5		8		6		5		9		—		—		36
Total recreational finance	$	2,667	$	2,359	$	1,884	$	1,306	$	797	$	1,045	$	—	$	—	$	10,058
Automobile:
Current	$	1,063	$	1,096	$	1,047	$	427	$	198	$	87	$	—	$	—	$	3,918
30-89 days past due		8		15		17		9		6		5		—		—		60
Accruing loans past due 90 days or more		—		—		—		—		—		—		—		—		—
Nonaccrual		2		3		3		2		2		2		—		—		14
Total automobile	$	1,073	$	1,114	$	1,067	$	438	$	206	$	94	$	—	$	—	$	3,992
Other:
Current	$	250	$	176	$	118	$	33	$	13	$	18	$	1,392	$	3	$	2,003
30-89 days past due		3		3		2		—		—		1		20		1		30
Accruing loans past due 90 days or more		—		—		—		—		—		—		7		—		7
Nonaccrual		2		1		1		—		—		—		48		—		52
Total other	$	255	$	180	$	121	$	33	$	13	$	19	$	1,467	$	4	$	2,092
Total loans and leases at December 31, 2023	$	18,423	$	21,683	$	15,025	$	10,555	$	10,062	$	27,464	$	29,237	$	1,619	$	134,068

- 17 -

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 March 31, 2024 and 2023 were as follows:


	Commercial and			Real Estate
(Dollars in millions)	industrial			Commercial			Residential			Consumer			Total
Three Months Ended March 31, 2024
Beginning balance	$	620		$	764		$	116		$	629		$	2,129
Provision for credit losses		137			9			2			52			200
Net charge-offs:
Charge-offs		(78	)		(25	)		(1	)		(59	)		(163	)
Recoveries		5			6			1			13			25
Net charge-offs		(73	)		(19	)		—			(46	)		(138	)
Ending balance	$	684		$	754		$	118		$	635		$	2,191


Three Months Ended March 31, 2023
Beginning balance	$	568		$	611		$	115		$	631		$	1,925
Provision for credit losses		21			86			(1	)		14			120
Net charge-offs:
Charge-offs		(20	)		(29	)		(2	)		(44	)		(95	)
Recoveries		10			1			1			13			25
Net charge-offs		(10	)		(28	)		(1	)		(31	)		(70	)
Ending balance	$	579		$	669		$	113		$	614		$	1,975

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, GDP 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 March 31, 2024 and December 31, 2023, 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.

- 18 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

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

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 and industrial 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 and industrial loans and commercial real estate loans, estimated collateral values are based on current appraisals and estimates of value. For non-real estate loans, collateral is assigned a discounted estimated liquidation value and, depending on the nature of the collateral, is verified through field exams or other procedures. In assessing collateral, real estate and non-real estate values are reduced by an estimate of selling costs.

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

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

The Company’s reserve for off-balance sheet credit exposures was not material at March 31, 2024 and December 31, 2023.

- 19 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

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

Information with respect to loans and leases that were considered nonaccrual at the beginning and end of the reporting period and the interest income recognized on such loans for the three-month periods ended March 31, 2024 and 2023 follows:


	Amortized Cost with Allowance		Amortized Cost without Allowance		Total		Amortized Cost			Interest Income Recognized
(Dollars in millions)	March 31, 2024							January 1, 2024		Three Months Ended March 31, 2024
Commercial and industrial	$	590	$	274	$	864		$	670	$	2
Real estate:
Commercial		379		476		855			869		6
Residential builder and developer		3		—		3			3		—
Other commercial construction		33		108		141			171		—
Residential		82		120		202			215		3
Residential — limited documentation		18		35		53			55		1
Consumer:
Home equity lines and loans		48		39		87			81		1
Recreational finance		18		12		30			36		—
Automobile		7		6		13			14		—
Other		54		—		54			52		—
Total	$	1,232	$	1,070	$	2,302		$	2,166	$	13

(Dollars in millions)	March 31, 2023							January 1, 2023		Three Months Ended March 31, 2023
Commercial and industrial	$	227	$	342	$	569		$	504	$	3
Real estate:
Commercial		364		966		1,330			1,240		5
Residential builder and developer		3		—		3			1		—
Other commercial construction		94		49		143			125		2
Residential		125		129		254			272		5
Residential — limited documentation		40		29		69			78		—
Consumer:
Home equity lines and loans		39		42		81			85		2
Recreational finance		24		10		34			45		—
Automobile		23		4		27			40		—
Other		47		—		47			49		—
Total	$	986	$	1,571	$	2,557		$	2,439	$	17

- 20 -

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 from borrowers experiencing financial difficulty. Such loan modifications typically include payment deferrals and interest rate reductions but may also include other modified terms. Those modified loans may be considered nonaccrual if the Company does not expect to collect the contractual cash flows owed under the loan agreement. The table that follows summarizes the Company’s loan modification activities to borrowers experiencing financial difficulty for the three-month periods ended March 31, 2024 and 2023:


	Amortized cost at March 31, 2024
(Dollars in millions)	Payment Deferral		Interest Rate Reduction		Other		Combination of Modification Types (a)		Total (b) (c)		Percent of Total Loan Class
Three Months Ended March 31, 2024
Commercial and industrial	$	184	$	—	$	—	$	—	$	184		.32	%
Real estate:
Commercial		267		—		—		3		270	1.07
Residential builder and developer		2		—		—		—		2		.18
Other commercial construction		131		—		—		—		131	2.11
Residential		48		—		—		1		49		.22
Residential — limited documentation		2		—		—		—		2		.17
Consumer:
Home equity lines and loans		—		—		—		—		—		—
Recreational finance		—		—		—		—		—		—
Automobile		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total	$	634	$	—	$	—	$	4	$	638		.47	%


	Amortized cost at March 31, 2023
(Dollars in millions)	Payment Deferral		Interest Rate Reduction		Other		Combination of Modification Types (a)		Total (b) (c)		Percent of Total Loan Class
Three Months Ended March 31, 2023
Commercial and industrial	$	70	$	—	$	—	$	—	$	70		.13	%
Real estate:
Commercial		94		—		—		—		94		.35
Residential builder and developer		8		—		—		—		8		.64
Other commercial construction		92		—		—		—		92	1.39
Residential		33		—		—		2		35		.15
Residential — limited documentation		5		—		—		—		5		.51
Consumer:
Home equity lines and loans		—		—		—		—		—		—
Recreational finance		—		—		—		—		—		—
Automobile		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total	$	302	$	—	$	—	$	2	$	304		.23	%

(a)

Predominantly payment deferrals combined with interest rate reductions.

(b)

*Includes approximately $*44 *million and $*23 million of loans guaranteed by government-related entities (predominantly first lien residential mortgage loans) for the three-month periods ended March 31, 2024 and 2023, respectively.

(c)

*Excludes unfunded commitments to extend credit totaling $*29 *million and $*11 million for the three-month periods ended March 31, 2024 and 2023, respectively.

- 21 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

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

The financial effects of the modifications for the three-month periods ended March 31, 2024 and 2023 include an increase in the weighted-average remaining term for commercial and industrial loans of 0.7 years and 1.2 years, respectively, for commercial real estate loans, inclusive of residential builder and development loans and other commercial construction loans of 0.8 years and 1.2 years, respectively, and for residential real estate loans of 11.4 years and 9.1 years, respectively.

Modified loans to borrowers experiencing financial difficulty are subject to the allowance for credit losses methodology described herein, including the use of models to inform credit loss estimates and, to the extent larger balance commercial and industrial loans and commercial real estate loans are in nonaccrual status, a loan-by-loan analysis of expected credit losses on those individual loans. Loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2023 and for which there was a subsequent payment default during that period were not material. The following table summarizes the payment status, at March 31, 2024, of loans that were modified during the twelve-month period ended March 31, 2024.


	Payment status at March 31, 2024 (amortized cost)
(Dollars in millions)	Current		30-89 Days Past Due		Past Due 90 Days or More (a)		Total
Twelve Months Ended March 31, 2024
Commercial and industrial	$	310	$	7	$	10	$	327
Real estate:
Commercial		715		33		24		772
Residential builder and developer		14		39		—		53
Other commercial construction		534		5		—		539
Residential (b)		112		35		30		177
Residential — limited documentation		6		2		—		8
Consumer:
Home equity lines and loans		2		—		—		2
Recreational finance		—		—		—		—
Automobile		—		—		—		—
Other		—		—		—		—
Total	$	1,693	$	121	$	64	$	1,878

(a) Predominantly loan modifications with payment deferrals.

*(b) Includes loans guaranteed by government-related entities classified as 30 to 89 days past due of $*30 *million and as past due 90 days or more of $*27 million.

The amount of foreclosed property held by the Company, predominantly consisting of residential real estate, was $38 million and $39 million at March 31, 2024 and December 31, 2023, respectively. There were $165 million and $170 million at March 31, 2024 and December 31, 2023, respectively, of loans secured by residential real estate that were in the process of foreclosure. Of all loans in the process of foreclosure at March 31, 2024, approximately 35% were government guaranteed.

At March 31, 2024, approximately $14.9 billion of commercial and industrial loans, including leases, $16.2 billion of commercial real estate loans, $18.6 billion of one-to-four family residential real estate loans, $2.6 billion of home equity loans and lines of credit and $10.9 billion of other consumer loans were pledged to secure outstanding borrowings and available lines of credit from FHLB and the FRB of New York. At December 31, 2023, approximately $13.4 billion of commercial and industrial loans, including leases, $16.4 billion of commercial real estate loans, $18.8 billion of one-to-four family residential real estate loans, $2.6 billion of home equity loans and lines of credit and $11.0 billion of other consumer loans were pledged to secure outstanding borrowings and available lines of credit from the FHLB and the FRB of New York as described in note 5.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

5. Borrowings


(Dollars in millions)	March 31, 2024		December 31, 2023
Short-term borrowings
Federal funds purchased and repurchase agreements	$	295	$	316
FHLB advances		4,500		5,000
Total short-term borrowings	$	4,795	$	5,316

Long-term borrowings
Senior notes - M&T	$	3,276	$	2,482
Senior notes - M&T Bank		3,743		3,741
FHLB advances		2,005		5
Subordinated notes - M&T		75		76
Subordinated notes - M&T Bank		866		873
Junior subordinated debentures - M&T		541		540
Asset-backed notes		934		474
Other		10		10
Total long-term borrowings	$	11,450	$	8,201

In February 2024, M&T Bank advanced $2.0 billion from the FHLB of New York which matures in February 2025 at a variable rate of SOFR plus 25 basis points payable quarterly until maturity. In March 2024, M&T issued $850 million of senior notes that mature in March 2032 and pay a 6.082% fixed rate semi-annually until March 2031 after which SOFR plus 2.26% will be paid quarterly until maturity. Also in March 2024, M&T Bank issued asset-backed notes secured by automobile loans. A total of $511 million of such notes were purchased by third parties. Those asset-backed notes had a weighted-average estimated life of approximately two years and a weighted-average interest rate of 5.29% at the time of securitization. Further information about this financing transaction is provided in note 11.

M&T Bank had secured borrowing facilities available with the FHLB of New York and the FRB of New York totaling approximately $14.6 billion and $18.4 billion, respectively, at March 31, 2024. M&T Bank is required to pledge loans and investment securities as collateral for these borrowing facilities and could increase the availability under such facilities by pledging additional assets.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

6. Revenue from contracts with customers

The Company generally charges customer accounts or otherwise bills customers upon completion of its services. Typically, the Company’s contracts with customers have a duration of one year or less and payment for services is received at least annually, but oftentimes more frequently as services are provided. At March 31, 2024 and December 31, 2023, the Company had $63 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 March 31, 2024 and December 31, 2023, the Company had deferred revenue of $52 million and $54 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 periods ended March 31, 2024 and 2023 that are subject to the revenue recognition accounting guidance.


(Dollars in millions)	Commercial Bank		Retail Bank		Institutional Services and Wealth Management		Total
Three Months Ended March 31, 2024
Classification in Consolidated Statement of Income
Service charges on deposit accounts	$	40	$	84	$	—	$	124
Trust income		1		—		159		160
Brokerage services income		2		—		27		29
Other revenues from operations:
Merchant discount and credit card interchange fees		17		20		—		37
Other		8		7		2		17
	$	68	$	111	$	188	$	367

Three Months Ended March 31, 2023
Classification in Consolidated Statement of Income
Service charges on deposit accounts	$	34	$	79	$	—	$	113
Trust income		—		—		194		194
Brokerage services income		2		—		22		24
Other revenues from operations:
Merchant discount and credit card interchange fees		17		20		—		37
Other		6		8		1		15
	$	59	$	107	$	217	$	383

7. Pension plans and other postretirement benefits

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


	Pension Benefits						Other Postretirement Benefits
	Three Months Ended March 31,
(Dollars in millions)	2024			2023			2024			2023
Service cost	$	2		$	3		$	—		$	—
Interest cost on projected benefit obligation		29			29			1			1
Expected return on plan assets		(51	)		(51	)		—			—
Amortization of net actuarial gain		—			(1	)		(1	)		(1	)
Net periodic benefit	$	(20	)	$	(20	)	$	—		$	—

Service cost is reflected in "salaries and employee benefits" and the other components of net periodic benefit cost are reflected in "other costs of operations" in the Consolidated Statement of Income. Expenses incurred in connection with the Company's defined contribution pension and retirement savings plans totaled $45 million and $44 million for the three months ended March 31, 2024 and 2023, respectively.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

8. Earnings per common share

The computations of basic earnings per common share follow:


	Three Months Ended March 31,
(Dollars in millions, except per share, shares in thousands)	2024			2023
Income available to common shareholders:
Net income	$	531		$	702
Less: Preferred stock dividends		(25	)		(25	)
Net income available to common equity		506			677
Less: Income attributable to unvested stock-based compensation awards		(1	)		(1	)
Net income available to common shareholders	$	505		$	676
Weighted-average shares outstanding:
Common shares outstanding (including common stock issuable) and unvested stock-based compensation awards		166,738			168,010
Less: Unvested stock-based compensation awards		(278	)		(278	)
Weighted-average shares outstanding		166,460			167,732

Basic earnings per common share	$	3.04		$	4.03

The computations of diluted earnings per common share follow:


	Three Months Ended March 31,
(Dollars in millions, except per share, shares in thousands)	2024			2023
Net income available to common equity	$	506		$	677
Less: Income attributable to unvested stock-based compensation awards		(1	)		(1	)
Net income available to common shareholders	$	505		$	676
Adjusted weighted-average shares outstanding:
Common shares outstanding (including common stock issuable) and unvested stock-based compensation awards		166,738			168,010
Less: Unvested stock-based compensation awards		(278	)		(278	)
Plus: Incremental shares from assumed conversion of stock-based compensation awards		624			678
Adjusted weighted-average shares outstanding		167,084			168,410

Diluted earnings per common share	$	3.02		$	4.01

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 1,328,190 common shares and 1,367,054 common shares during the three months ended March 31, 2024 and 2023, respectively, were not included in the computations of diluted earnings per common share because the effect on those periods would have been antidilutive.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

9. 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			Cash Flow			Defined Benefit						Total Amount				Income
(Dollars in millions)	Securities			Hedges			Plans			Other			Before Tax				Tax			Net
Balance — January 1, 2024	$	(251	)	$	(203	)	$	(155	)	$	(7	)	$	(616	)		$	157		$	(459	)
Other comprehensive income (loss) before reclassifications:
Unrealized holding losses, net		(13	)		—			—			—			(13	)			2			(11	)
Foreign currency translation adjustment		—			—			—			(2	)		(2	)			—			(2	)
Unrealized losses on cash flow hedges		—			(243	)		—			—			(243	)			60			(183	)
Total other comprehensive income (loss) before reclassifications		(13	)		(243	)		—			(2	)		(258	)			62			(196	)
Amounts reclassified from accumulated other comprehensive income (loss) that (increase) decrease net income:
Losses realized in net income		1			—			—			—			1				—			1
Net yield adjustment from cash flow hedges currently in effect		—			87			—			—			87		(a)		(21	)		66
Amortization of actuarial losses		—			—			(1	)		—			(1	)	(b)		—			(1	)
Total other comprehensive income (loss)		(12	)		(156	)		(1	)		(2	)		(171	)			41			(130	)
Balance — March 31, 2024	$	(263	)	$	(359	)	$	(156	)	$	(9	)	$	(787	)		$	198		$	(589	)


Balance — January 1, 2023	$	(444	)	$	(336	)	$	(273	)	$	(13	)	$	(1,066	)		$	276		$	(790	)
Other comprehensive income (loss) before reclassifications:
Unrealized holding gains, net		89			—			—			—			89				(24	)		65
Foreign currency translation adjustment		—			—			—			2			2				(1	)		1
Unrealized losses on cash flow hedges		—			51			—			—			51				(13	)		38
Total other comprehensive income (loss) before reclassifications		89			51			—			2			142				(38	)		104
Amounts reclassified from accumulated other comprehensive income (loss) that (increase) decrease net income:
Net yield adjustment from cash flow hedges currently in effect		—			59			—			—			59		(a)		(16	)		43
Amortization of actuarial losses		—			—			(2	)		—			(2	)	(b)		—			(2	)
Total other comprehensive income (loss)		89			110			(2	)		2			199				(54	)		145
Balance — March 31, 2023	$	(355	)	$	(226	)	$	(275	)	$	(11	)	$	(867	)		$	222		$	(645	)

(a)

Included in "interest income" in the Consolidated Statement of Income.

(b)

Included in "other costs of operations" in the Consolidated Statement of Income.

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


							Defined
	Investment			Cash Flow			Benefit
(Dollars in millions)	Securities			Hedges			Plans			Other			Total
Balance — December 31, 2023	$	(187	)	$	(151	)	$	(115	)	$	(6	)	$	(459	)
Net loss during period		(10	)		(117	)		(1	)		(2	)		(130	)
Balance — March 31, 2024	$	(197	)	$	(268	)	$	(116	)	$	(8	)	$	(589	)

- 26 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

10. Derivative financial instruments

As part of managing interest rate risk, the Company enters into interest rate swap agreements to modify the repricing characteristics of certain portions of the Company’s portfolios of earning assets and interest-bearing liabilities. The Company designates interest rate swap agreements utilized in the management of interest rate risk as either fair value hedges or cash flow hedges. Interest rate swap agreements are generally entered into with counterparties that meet established credit standards and most contain master netting, collateral and/or settlement provisions protecting the at-risk party. Based on adherence to the Company’s credit standards and the presence of the netting, collateral or settlement provisions, the Company believes that the credit risk inherent in these contracts was not material as of March 31, 2024.

The net effect of interest rate swap agreements was to decrease net interest income by $100 million and $69 million during the three-month periods ended March 31, 2024 and 2023, 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:


			Average		Weighted-						Estimated
	Notional		Maturity		Average Rate						Fair Value
(Dollars in millions)	Amount		(In years)		Fixed			Variable			Gain (Loss) (a)
March 31, 2024
Fair value hedges:
Fixed rate long-term borrowings (b) (c)	$	3,850		5.9		3.48	%		5.51	%	$	—
Cash flow hedges:
Interest payments on variable rate commercial real estate loans (b) (d)		23,427		1.7	3.38			5.33				2
Total	$	27,277		2.3							$	2
December 31, 2023
Fair value hedges:
Fixed rate long-term borrowings (b) (e)	$	3,000		5.8		3.45	%		5.62	%	$	(1	)
Cash flow hedges:
Interest payments on variable rate commercial real estate loans (b) (f)		23,977		1.7	3.45			5.36				11
Total	$	26,977		2.2							$	10

(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 *$*104 million at March 31, 2024 and *$*43 million at December 31, 2023. The impact of such payments on interest rate swap agreements designated as cash flow hedges was a net settlement of losses of *$*361 million at March 31, 2024 and *$*214 million at December 31, 2023.

(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 $*1.8 billion of forward-starting interest rate swap agreements that become effective in 2025.

(d)

*Includes notional amount and terms of $*6.0 billion of forward-starting interest rate swap agreements that become effective in 2024 and 2025.

(e)

*Includes notional amount and terms of $*1.0 billion of forward-starting interest rate swap agreements that become effective in 2025.

(f)

*Includes notional amount and terms of $*9.0 billion of forward-starting interest rate swap agreements that become effective in 2024.

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 the fair value of certain commitments to originate real estate loans for sale.

Other 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 $43.4 billion and $44.4 billion at March 31, 2024 and December 31, 2023, respectively. The notional amounts of foreign exchange and other option and futures contracts not designated as hedging instruments aggregated $1.7 billion and $1.5 billion at March 31, 2024 and December 31, 2023, respectively.

- 27 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

10. 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
	March 31,		December 31,		March 31,		December 31,
(Dollars in millions)	2024		2023		2024		2023
Derivatives designated and qualifying as hedging instruments (a)
Interest rate swap agreements	$	3	$	12	$	1	$	2
Commitments to sell real estate loans		11		6		1		8
		14		18		2		10
Derivatives not designated and qualifying as hedging instruments (a)
Mortgage banking:
Commitments to originate real estate loans for sale		6		15		36		32
Commitments to sell real estate loans		40		35		2		3
		46		50		38		35
Other:
Interest rate contracts (b)		243		237		1,019		879
Foreign exchange and other option and futures contracts		15		19		13		19
		258		256		1,032		898
Total derivatives	$	318	$	324	$	1,072	$	943

(a)

Asset derivatives are reported in "accrued interest and other assets" and liability derivatives are reported in "accrued interest and other liabilities" in the Consolidated Balance Sheet.

(b)

The impact of variation margin payments at March 31, 2024 and December 31, 2023 was a reduction of the estimated fair value of interest rate contracts not designated as hedging instruments in an asset position of *$*893 million and $783 million, respectively, as of each period end, and in a liability position of *$*16 million and $32 million, respectively.


	Amount of Gain (Loss) Recognized
	Three Months Ended March 31,
	2024					2023
(Dollars in millions)	Derivative			Hedged Item		Derivative		Hedged Item
Derivatives in fair value hedging relationships
Interest rate swap agreements:
Fixed rate long-term borrowings (a)	$	(60	)	$	60	$	12	$	(12	)
Derivatives not designated as hedging instruments
Interest rate contracts (b)	$	3				$	8
Foreign exchange and other option and futures contracts (b)		4					4
Total	$	7				$	12

(a)

Reported as an adjustment to "interest expense" in the Consolidated Statement of Income.

(b)

Reported as "trading account and other non-hedging derivative gains" in the Consolidated Statement of Income.


	Carrying Amount of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment Increasing (Decreasing) the Carrying Amount of the Hedged Item
(Dollars in millions)	March 31, 2024		December 31, 2023		March 31, 2024			December 31, 2023
Location in the Consolidated Balance Sheet of the Hedged Items in Fair Value Hedges
Long-term borrowings	$	3,742	$	2,954	$	(104	)	$	(44	)

The amount of interest income recognized in the Consolidated Statement of Income associated with derivatives designated as cash flow hedges was a decrease of $87 million and $59 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the unrealized net loss recognized in other comprehensive income related to cash flow hedges was $359 million, of which losses of $1 million, $227 million, $129 million and $2 million relate to interest rate swap agreements maturing in 2024, 2025, 2026 and 2027, respectively.

- 28 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

10. Derivative financial instruments, continued

The Company does not offset derivative asset and liability positions in its consolidated financial statements. The Company’s exposure to credit risk by entering into derivative contracts is mitigated through master netting agreements and collateral posting or settlement requirements. Master netting agreements covering interest rate and foreign exchange contracts with the same party include a right to set-off that becomes enforceable in the event of default, early termination or under other specific conditions.

The aggregate fair value of derivative financial instruments in a liability position, which are subject to enforceable master netting arrangements and the related collateral posted, was not material at each of March 31, 2024 and December 31, 2023. Certain of the Company’s derivative financial instruments contain provisions that require the Company to maintain specific credit ratings from credit rating agencies to avoid higher collateral posting requirements. If the Company’s debt ratings were to fall below specified ratings, the counterparties of the derivative financial instruments could demand immediate incremental collateralization on those instruments in a net liability position. The aggregate fair value of all derivative financial instruments with such credit risk-related contingent features in a net liability position on March 31, 2024 was not material.

The aggregate fair value of derivative financial instruments in an asset position with counterparties, which are subject to enforceable master netting arrangements, was $232 million at March 31, 2024 and $179 million at December 31, 2023. Counterparties posted collateral relating to those positions of $231 million at March 31, 2024 and $179 million at December 31, 2023, respectively. Interest rate swap agreements entered into with customers are subject to the Company’s credit risk standards and often contain collateral provisions.

In addition to the derivative contracts noted above, the Company clears certain derivative transactions through a clearinghouse, rather than directly with counterparties. Those transactions cleared through a clearinghouse require initial margin collateral and variation margin payments depending on the contracts being in a net asset or liability position. The amount of initial margin collateral posted by the Company was $146 million and $129 million at March 31, 2024 and December 31, 2023, 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.

11. Variable interest entities and asset securitizations

The Company’s securitization activity includes securitizing loans originated for sale into government issued or guaranteed mortgage-backed securities. The Company has not recognized any material losses as a result of having securitized assets.

In March 2024, M&T Bank issued asset-backed notes secured by automobile loans. Approximately $526 million of such loans were sold into a special purpose trust which in turn issued asset-backed notes to investors. The loans continue to be serviced by the Company. A total of $511 million of such notes, representing the senior-most notes in the securitization, were purchased by third parties. Those asset-backed notes had a weighted-average estimated life of approximately two years and a weighted-average interest rate of 5.29% at the time of securitization. Additionally, $15 million of certificates representing the residual interests of the trust were retained by the Company. As a result of the retention of the residual interests and its continued role as servicer of the loans, the Company is considered to be the primary beneficiary of the securitization trust and, accordingly, the trust has been included in the Company's consolidated financial statements.

- 29 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

11. Variable interest entities and asset securitizations, continued

M&T has issued junior subordinated debentures payable to various trusts that have issued preferred capital securities. M&T owns the common securities of those trust entities. The Company is not considered to be the primary beneficiary of those entities and, accordingly, the trusts are not included in the Company’s consolidated financial statements. At each of March 31, 2024 and December 31, 2023, the Company included the junior subordinated debentures as “long-term borrowings” in its Consolidated Balance Sheet and recognized $22 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.

The Company has invested as a limited partner in various partnerships that collectively had total assets of approximately $9.8 billion at each of March 31, 2024 and December 31, 2023. Those partnerships generally construct or acquire properties, including properties and facilities that produce renewable energy, 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. 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, the partnership entities are not included in the Company's consolidated financial statements. The Company's investments in qualified affordable housing projects are accounted for using the proportional amortization method whereby those investments are 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. Effective January 1, 2024, the Company adopted amended guidance which permits an election to account for other tax equity investments using the proportional amortization method if certain conditions are met. The Company has elected to apply the proportional amortization method to eligible renewable energy and certain other tax credit investments in addition to the low income housing tax credit investments for which the proportional amortization method had previously been applied. Information on the Company’s carrying amount of its investments in tax equity partnerships and its related future funding commitments are presented in the following table:


(Dollars in millions)	March 31, 2024		December 31, 2023
Affordable housing projects:
Carrying amount (a)	$	1,323	$	1,340
Amount of future funding commitments included in carrying amount (b)		379		410
Contingent commitments		55		55
Renewable energy:
Carrying amount (a)		79		80
Amount of future funding commitments included in carrying amount (b)		49		31
Other:
Carrying amount (a)		40		41
Amount of future funding commitments included in carrying amount (b)		—		—

(a)

Included in "accrued interest and other assets" in the Consolidated Balance Sheet*.*

(b)

Included in "accrued interest and other liabilities" in the Consolidated Balance Sheet.

- 30 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

11. Variable interest entities and asset securitizations, continued

The reduction to income tax expense recognized from the Company's investments in partnerships accounted for using the proportional amortization method was $7 million (net of $43 million of investment amortization) and $6 million (net of $41 million of investment amortization) for the three months ended March 31, 2024 and 2023, respectively. The net reduction to income tax expense has been reported in "net change in other accrued income and expense" in the Consolidated Statement of Cash Flows. While the Company has elected to apply the proportional amortization method for renewable energy credit investments, at March 31, 2024 no such investments met the eligibility criteria for application of that method. The reduction to income tax expense recognized from renewable energy credit investments was $11 million and $8 million for the three months ended March 31, 2024 and 2023, respectively. 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 has not provided financial or other support to the partnerships that was not contractually required. Although the Company currently estimates that no material losses are probable, its maximum exposure to loss from its investments in such partnerships as of March 31, 2024 was $2.2 billion, including possible recapture of certain tax credits.

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.

12. Fair value measurements

GAAP permits an entity to choose to measure eligible financial instruments and other items at fair value. The Company has not made any fair value elections at March 31, 2024.

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.

- 31 -

NOTES TO FINANCIAL STATEMENTS, CONTINUED

12. Fair value measurements, continued

Trading account

Mutual funds held in connection with deferred compensation and other arrangements have been classified as Level 1 valuations. Valuations of investments in debt securities 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.

Available-for-sale investment securities and equity securities

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

Real estate loans held for sale

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

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

The Company enters into various commitments to originate real estate loans for sale and commitments to sell real estate loans. Such commitments are 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.

Other non-hedging derivatives

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

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

12. Fair value measurements, continued

The following tables present assets and liabilities at March 31, 2024 and December 31, 2023 measured at estimated fair value on a recurring basis:


(Dollars in millions)	Fair Value Measurements		Level 1		Level 2		Level 3 (a)
March 31, 2024
Trading account	$	99	$	99	$	—	$	—
Investment securities available for sale:
U.S. Treasury and federal agencies		7,719		—		7,719		—
Mortgage-backed securities:
Government issued or guaranteed
Commercial		1,343		—		1,343		—
Residential		2,910		—		2,910		—
Other debt securities		162		—		162		—
		12,134		—		12,134		—
Equity securities		356		343		13		—
Real estate loans held for sale		728		—		728		—
Other assets (b)		318		—		312		6
Total assets	$	13,635	$	442	$	13,187	$	6
Other liabilities (b)	$	1,072	$	—	$	1,036	$	36
Total liabilities	$	1,072	$	—	$	1,036	$	36

December 31, 2023
Trading account	$	106	$	101	$	5	$	—
Investment securities available for sale:
U.S. Treasury and federal agencies		7,705		—		7,705		—
Mortgage-backed securities:
Government issued or guaranteed
Commercial		416		—		416		—
Residential		2,154		—		2,154		—
Other debt securities		165		—		165		—
		10,440		—		10,440		—
Equity securities		268		258		10		—
Real estate loans held for sale		379		—		379		—
Other assets (b)		324		—		309		15
Total assets	$	11,517	$	359	$	11,143	$	15
Other liabilities (b)	$	943	$	—	$	911	$	32
Total liabilities	$	943	$	—	$	911	$	32

(a)

Significant unobservable inputs used in the fair value measurement of commitments to originate real estate loans held for sale included weighted-average commitment expirations of 8*% at March 31, 2024 and* 5*% at December 31, 2023. 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.*

(b)

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).

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

12. 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 and industrial 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 10% to 90% with a weighted-average of 38% at March 31, 2024. As these discounts are not readily observable and are considered significant, the valuations have been classified as Level 3. Automobile collateral is typically valued by reference to independent pricing sources based on recent sales transactions of similar vehicles and, accordingly, the related nonrecurring fair value measurement adjustments have been classified as Level 2. Collateral values for other consumer installment loans are generally estimated based on historical recovery rates for similar types of loans which at March 31, 2024 was 46%. 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 $1.0 billion at March 31, 2024 ($312 million and $707 million of which were classified as Level 2 and Level 3, respectively), $923 million at December 31, 2023 ($234 million and $689 million of which were classified as Level 2 and Level 3, respectively) and $670 million at March 31, 2023 ($374 million and $296 million of which were classified as Level 2 and Level 3, respectively). Changes in the fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on March 31, 2024 and 2023 were decreases of $175 million and $69 million for the three-month periods ended March 31, 2024 and 2023, respectively.

Assets taken in foreclosure of defaulted loans

Assets taken in foreclosure of defaulted loans are primarily comprised of commercial and residential real property and are generally measured at the lower of cost or fair value less costs to sell. The fair value of the real property is generally determined using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace and the related nonrecurring fair value measurement adjustments have generally been classified as Level 2. Assets taken into foreclosure of defaulted loans subject to nonrecurring fair value measurement were not material at each of March 31, 2024 and 2023. Changes in fair value recognized for those foreclosed assets held by the Company were not material during the three-month periods ended March 31, 2024 and 2023.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

12. Fair value measurements, continued

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 required no valuation allowance at each of March 31, 2024, December 31, 2023 and March 31, 2023.

Disclosures of fair value of financial instruments

The carrying amounts and estimated fair value for certain financial instruments that are not recorded at fair value in the Consolidated Balance Sheet are presented in the following tables:


(Dollars in millions)	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
March 31, 2024
Financial assets:
Cash and cash equivalents	$	1,695	$	1,695	$	1,396	$	299	$	—
Interest-bearing deposits at banks		32,144		32,144		—		32,144		—
Investment securities held to maturity		15,078		13,865		—		13,821		44
Loans and leases, net		132,782		129,771		—		7,354		122,417
Financial liabilities:
Time deposits		20,279		20,236		—		20,236		—
Short-term borrowings		4,795		4,795		—		4,795		—
Long-term borrowings		11,450		11,370		—		11,370		—

December 31, 2023
Financial assets:
Cash and cash equivalents		1,731		1,731		1,668		63		—
Interest-bearing deposits at banks		28,069		28,069		—		28,069		—
Investment securities held to maturity		15,330		14,308		—		14,262		46
Loans and leases, net		131,939		129,138		—		7,240		121,898
Financial liabilities:
Time deposits		20,759		20,715		—		20,715		—
Short-term borrowings		5,316		5,316		—		5,316		—
Long-term borrowings		8,201		8,107		—		8,107		—

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

12. Fair value measurements, continued

With the exception of marketable securities and mortgage loans originated for sale, the Company's financial instruments presented in the preceding tables 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.

13. Commitments and contingencies

In the normal course of business, various commitments and contingent liabilities are outstanding. The following table presents the Company's significant commitments. Certain of these commitments are not included in the Company's Consolidated Balance Sheet.


	March 31,		December 31,
(Dollars in millions)	2024		2023
Commitments to extend credit:
Commercial and industrial	$	28,439	$	28,566
Commercial real estate loans to be sold		451		916
Other commercial real estate		4,413		5,019
Residential real estate loans to be sold		211		163
Other residential real estate		393		331
Home equity lines of credit		8,080		8,109
Credit cards		5,651		5,578
Other		389		413
Standby letters of credit		2,230		2,289
Commercial letters of credit		56		62
Financial guarantees and indemnification contracts		4,129		4,036
Commitments to sell real estate loans		1,329		1,400

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 $12.4 billion and $12.3 billion at March 31, 2024 and December 31, 2023, 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.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

13. Commitments and contingencies, continued

Financial guarantees and indemnification contracts are predominantly comprised of recourse obligations associated with sold loans and other guarantees and commitments. Included in financial guarantees and indemnification contracts are loan principal amounts sold with recourse in conjunction with the Company's involvement in the Fannie Mae DUS program. The Company's maximum credit risk for recourse associated with loans sold under this program totaled approximately $4.0 billion and $3.9 billion at March 31, 2024 and December 31, 2023, respectively. At March 31, 2024, the Company estimated that the recourse obligations described above were not material to the Company's consolidated financial position. There have been no material losses incurred as a result of those credit recourse arrangements.

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 recorded in the Consolidated Balance Sheet at estimated fair market value.

The Company is contractually obligated to repurchase previously sold residential real estate loans that do not ultimately meet investor sale criteria related to underwriting procedures or loan documentation. When required to do so, the Company may reimburse loan purchasers for losses incurred or may repurchase certain loans. The Company reduces residential mortgage banking revenues by an estimate for losses related to its obligations to loan purchasers. The amount of those charges is based on the volume of loans sold, the level of reimbursement requests received from loan purchasers and estimates of losses that may be associated with previously sold loans. At March 31, 2024, the Company's estimated obligation to loan purchasers was not material to the Company’s consolidated financial position.

M&T and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings and other matters in which claims for monetary damages are asserted. On an on-going basis management, after consultation with legal counsel, assesses the Company’s liabilities and contingencies in connection with such proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability, was between $0 and $25 million as of March 31, 2024. 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.

In February 2024, the FDIC notified member banks that the loss estimate attributable to certain failed banks in 2023 was approximately $20.4 billion, an increase of approximately $4.1 billion from the estimate of $16.3 billion described in the final rule. The FDIC also indicated that through the receivership of one of the failed banks, it had estimated residual interests in securities that were sold into trusts that could potentially reduce that loss estimate in the amount of $1.7 billion. The FDIC is expected to provide an updated estimate of the Company's special assessment amount with its first quarter 2024 invoice, which is anticipated to be received in June 2024. Reflecting the update to the loss estimate and related residual interest, the Company recorded an expense of $29 million in the Consolidated Statement of Income in the first quarter of 2024 in addition to the $197 million recorded in the fourth quarter of 2023, resulting in an accrued liability recorded in "accrued interest and other liabilities" in the Company's Consolidated Balance Sheet of $226 million at March 31, 2024 and $197 million at December 31, 2023. The FDIC has indicated that the amount of the special assessment will be adjusted as its loss estimates change.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

14. Segment information

Reportable segments have been determined based upon the Company's organizational structure and its internal profitability reporting system, which is organized by strategic business unit. The reportable segments are Commercial Bank, Retail Bank and Institutional Services and Wealth Management.

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 2023 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:


	Three Months Ended March 31,
	2024											2023
(Dollars in millions)	Total Revenues(a)			Inter- segment Revenues			Net Income (Loss)			Total Average Assets		Total Revenues(a)			Inter- segment Revenues			Net Income (Loss)			Total Average Assets
Commercial Bank	$	699		$	2		$	201		$	81,083	$	811		$	2		$	333		$	79,034
Retail Bank		1,268			—			446			52,232		1,234			—			452			51,293
Institutional Services and Wealth Management		377			3			128			3,636		390			3			110			3,655
All Other		(84	)		(5	)		(244	)		74,527		(30	)		(5	)		(193	)		68,617
Total	$	2,260		$	—		$	531		$	211,478	$	2,405		$	—		$	702		$	202,599

(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 $*12 *million and $*14 million for the three-month periods ended March 31, 2024 and 2023 and is eliminated in "All Other" total revenues.

15. Relationship with BLG and Bayview Financial

M&T holds a 20% minority interest in BLG, a privately-held commercial mortgage company. That investment had no remaining carrying value at March 31, 2024 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" in the Consolidated Statement of Income. That income totaled $25 million and $20 million for the three-month periods ended March 31, 2024 and 2023, respectively.

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 $1.1 billion and $1.2 billion at March 31, 2024 and December 31, 2023, respectively. Revenues from those servicing rights were $1 million and $2 million in the three-month periods ended March 31, 2024 and 2023, respectively. The Company sub-services residential mortgage loans for Bayview Financial having outstanding principal balances of $112.0 billion and $115.3 billion at March 31, 2024 and December 31, 2023, respectively. Revenues earned for sub-servicing loans for Bayview Financial were $32 million in each of the three-month periods ended March 31, 2024 and 2023. In addition, the Company held $41 million and $42 million of mortgage-backed securities in its held-to-maturity portfolio at March 31, 2024 and December 31, 2023, respectively, that were securitized by Bayview Financial. At March 31, 2024, the Company held $674 million of Bayview Financial's $3.7 billion syndicated loan facility.

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