Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

Number of shares of the registrant’s Common Stock, $0.50 par value, outstanding as of the close of business on April ~~30, 2015: 132,970,139~~22, 2016: 158,999,014 shares.


Dollars in thousands, except per share	Dollars in thousands, except per share		March 31, 2015			December 31, 2014			Dollars in thousands, except per share		March 31, 2016			December 31, 2015

Assets		Cash and due from banks	$	1,269,816			1,289,965			Cash and due from banks	$	1,178,175			1,368,040
		Interest-bearing deposits at banks		6,291,491			6,470,867
		Federal funds sold		97,037			83,392			Interest-bearing deposits at banks		9,545,181			7,594,350
		Trading account		363,085			308,175			Trading account		467,987			273,783
		Investment securities (includes pledged securities that can be sold or repledged of $1,611,069 at March 31, 2015; $1,631,267 at December 31, 2014)								Investment securities (includes pledged securities that can be sold or repledged of $2,133,492 at March 31, 2016; $2,136,712 at December 31, 2015)
		Available for sale (cost: $10,425,720 at March 31, 2015; $8,919,324 at December 31, 2014)		10,703,500			9,156,932			Available for sale (cost: $11,937,326 at March 31, 2016; $12,138,636 at December 31, 2015)		12,200,647			12,242,671
		Held to maturity (fair value: $3,411,834 at March 31, 2015; $3,538,282 at December 31, 2014)		3,360,812			3,507,868			Held to maturity (fair value: $2,769,343 at March 31, 2016; $2,864,147 at December 31, 2015)		2,730,611			2,859,709
		Other (fair value: $328,958 at March 31, 2015; $328,742 at December 31, 2014)		328,958			328,742			Other (fair value: $536,062 at March 31, 2016; $554,059 at December 31, 2015)		536,062			554,059

		Total investment securities		14,393,270			12,993,542			Total investment securities		15,467,320			15,656,439

		Loans and leases		67,328,490			66,899,369			Loans and leases		88,104,830			87,719,234
		Unearned discount		(229,448	)		(230,413	)		Unearned discount		(232,364	)		(229,735	)

		Loans and leases, net of unearned discount		67,099,042			66,668,956			Loans and leases, net of unearned discount		87,872,466			87,489,499
		Allowance for credit losses		(921,373	)		(919,562	)		Allowance for credit losses		(962,752	)		(955,992	)

		Loans and leases, net		66,177,669			65,749,394			Loans and leases, net		86,909,714			86,533,507

		Premises and equipment		602,096			612,984			Premises and equipment		662,891			666,682
		Goodwill		3,524,625			3,524,625			Goodwill		4,593,112			4,593,112
		Core deposit and other intangible assets		28,234			35,027			Core deposit and other intangible assets		127,949			140,268
		Accrued interest and other assets		5,630,460			5,617,564			Accrued interest and other assets		5,673,303			5,961,703

		Total assets	$	98,377,783			96,685,535			Total assets	$	124,625,632			122,787,884


Liabilities		Noninterest-bearing deposits	$	27,181,120			26,947,880			Noninterest-bearing deposits	$	29,709,218			29,110,635
		NOW accounts		2,149,537			2,307,815			Interest-checking deposits		2,848,126			2,939,274
		Savings deposits		41,138,792			41,085,803			Savings deposits		48,649,114			46,627,370
		Time deposits		2,946,126			3,063,973			Time deposits		12,841,331			13,110,392
		Deposits at Cayman Islands office		178,545			176,582			Deposits at Cayman Islands office		166,787			170,170

		Total deposits		73,594,120			73,582,053			Total deposits		94,214,576			91,957,841

		Federal funds purchased and agreements to repurchase securities		193,495			192,676			Federal funds purchased and agreements to repurchase securities		206,709			150,546
		Accrued interest and other liabilities		1,552,724			1,567,951			Other short-term borrowings		1,560,117			1,981,636
		Long-term borrowings		10,509,143			9,006,959			Accrued interest and other liabilities		1,948,142			1,870,714
										Long-term borrowings		10,341,035			10,653,858
		Total liabilities		85,849,482			84,349,639
										Total liabilities		108,270,579			106,614,595

Shareholders’ equity		Preferred stock, $1.00 par, 1,000,000 shares authorized; Issued and outstanding: Liquidation preference of $1,000 per share: 731,500 shares at March 31, 2015 and at December 31, 2014; Liquidation preference of $10,000 per share: 50,000 shares at March 31, 2015 and December 31, 2014		1,231,500			1,231,500			Preferred stock, $1.00 par, 1,000,000 shares authorized; Issued and outstanding: Liquidation preference of $1,000 per share: 731,500 shares at March 31, 2016 and December 31, 2015; Liquidation preference of $10,000 per share: 50,000 shares at March 31, 2016 and December 31, 2015		1,231,500			1,231,500
		Common stock, $.50 par, 250,000,000 shares authorized, 132,909,718 shares issued at March 31, 2015; 132,312,931 shares issued at December 31, 2014		66,455			66,157			Common stock, $.50 par, 250,000,000 shares authorized, 159,963,737 shares issued at March 31, 2016; 159,563,512 shares issued at December 31, 2015		79,982			79,782
		Common stock issuable, 36,360 shares at March 31, 2015; 41,330 shares at December 31, 2014		2,310			2,608			Common stock issuable, 33,391 shares at March 31, 2016; 36,644 shares at December 31, 2015		2,180			2,364
		Additional paid-in capital		3,445,707			3,409,506			Additional paid-in capital		6,683,499			6,680,768
		Retained earnings		7,934,820			7,807,119			Retained earnings		8,596,752			8,430,502
		Accumulated other comprehensive income (loss), net		(152,491	)		(180,994	)		Accumulated other comprehensive income (loss), net		(150,189	)		(251,627	)
										Treasury stock - common, at cost - 841,082 shares at March 31, 2016		(88,671	)		—
		Total shareholders’ equity		12,528,301			12,335,896
										Total shareholders’ equity		16,355,053			16,173,289
		Total liabilities and shareholders’ equity	$	98,377,783			96,685,535
										Total liabilities and shareholders’ equity	$	124,625,632			122,787,884


			Three months ended March 31								Three months ended March 31
In thousands, except per share	In thousands, except per share		2015			2014			In thousands, except per share		2016		2015
Interest income		Loans and leases, including fees	$	647,179			645,222			Loans and leases, including fees	$	863,385		647,179
		Deposits at banks		3,118			1,884
		Federal funds sold		24			16			Investment securities
		Trading account		491			427			Fully taxable		98,015		85,957
		Investment securities								Exempt from federal taxes		795		1,318
		Fully taxable		85,957			73,899			Deposits at banks		10,337		3,118
		Exempt from federal taxes		1,318			1,504			Other		302		515

		Total interest income		738,087			722,952			Total interest income		972,834		738,087

Interest expense		NOW accounts		311			297			Interest-checking deposits		414		311
		Savings deposits		10,219			11,601			Savings deposits		15,891		10,219
		Time deposits		3,740			3,940			Time deposits		24,322		3,740
		Deposits at Cayman Islands office		147			208			Deposits at Cayman Islands office		193		147
		Short-term borrowings		34			32			Short-term borrowings		2,162		34
		Long-term borrowings		64,048			50,441			Long-term borrowings		57,888		64,048

		Total interest expense		78,499			66,519			Total interest expense		100,870		78,499

		Net interest income		659,588			656,433			Net interest income		871,964		659,588
		Provision for credit losses		38,000			32,000			Provision for credit losses		49,000		38,000

		Net interest income after provision for credit losses		621,588			624,433			Net interest income after provision for credit losses		822,964		621,588

Other income		Mortgage banking revenues		101,601			80,049			Mortgage banking revenues		82,063		101,601
		Service charges on deposit accounts		102,344			104,198
		Trust income		123,734			121,252			Service charges on deposit accounts		102,405		102,344
		Brokerage services income		15,461			16,500			Trust income		111,077		123,734
		Trading account and foreign exchange gains		6,231			6,447			Brokerage services income		16,004		15,461
		Loss on bank investment securities		(98	)		—			Trading account and foreign exchange gains		7,458		6,231
		Equity in earnings of Bayview Lending Group LLC		(4,191	)		(4,454	)		Gain (loss) on bank investment securities		4		(98	)
		Other revenues from operations		95,121			96,115			Other revenues from operations		101,922		90,930

		Total other income		440,203			420,107			Total other income		420,933		440,203

Other expense		Salaries and employee benefits		389,893			371,326			Salaries and employee benefits		431,785		389,893
		Equipment and net occupancy		66,470			71,167			Equipment and net occupancy		74,178		66,470
		Printing, postage and supplies		9,590			10,956			Printing, postage and supplies		11,986		9,590
		Amortization of core deposit and other intangible assets		6,793			10,062			Amortization of core deposit and other intangible assets		12,319		6,793
		FDIC assessments		10,660			15,488			FDIC assessments		25,225		10,660
		Other costs of operations		202,969			211,235			Other costs of operations		220,602		202,969

		Total other expense		686,375			690,234			Total other expense		776,095		686,375

		Income before taxes		375,416			354,306			Income before taxes		467,802		375,416
		Income taxes		133,803			125,289			Income taxes		169,274		133,803

		Net income	$	241,613			229,017			Net income	$	298,528		241,613


		Net income available to common shareholders								Net income available to common shareholders
		Basic	$	218,830			211,720			Basic	$	275,744		218,830
		Diluted		218,837			211,731			Diluted		275,748		218,837
		Net income per common share								Net income per common share
		Basic	$	1.66			1.63			Basic	$	1.74		1.66
		Diluted		1.65			1.61			Diluted		1.73		1.65
		Cash dividends per common share	$	.70			.70			Cash dividends per common share	$	.70		.70
		Average common shares outstanding								Average common shares outstanding
		Basic		132,049			130,212			Basic		158,734		132,049
		Diluted		132,769			131,126			Diluted		159,181		132,769


	Three months ended March 31						Three months ended March 31
In thousands	2015			2014			2016			2015

Net income	$	241,613		$	229,017		$	298,528		$	241,613
Other comprehensive income, net of tax and reclassification adjustments:
Net unrealized gains on investment securities		25,339			38,214			97,194			25,339
Cash flow hedges adjustments		871			—			(24	)		871
Foreign currency translation adjustment		(2,384	)		(136	)		(53	)		(2,384	)
Defined benefit plans liability adjustment		4,677			820
Defined benefit plans liability adjustments								4,321			4,677

Total other comprehensive income		28,503			38,898			101,438			28,503

Total comprehensive income	$	270,116		$	267,915		$	399,966		$	270,116


			Three months ended March 31								Three months ended March 31
In thousands	In thousands		2015			2014			In thousands		2016			2015
Cash flows from operating activities		Net income	$	241,613			229,017			Net income	$	298,528			241,613
		Adjustments to reconcile net income to net cash provided by operating activities								Adjustments to reconcile net income to net cash provided by operating activities
		Provision for credit losses		38,000			32,000			Provision for credit losses		49,000			38,000
		Depreciation and amortization of premises and equipment		24,178			24,708			Depreciation and amortization of premises and equipment		27,141			24,178
		Amortization of capitalized servicing rights		12,199			17,792			Amortization of capitalized servicing rights		12,249			12,199
		Amortization of core deposit and other intangible assets		6,793			10,062			Amortization of core deposit and other intangible assets		12,319			6,793
		Provision for deferred income taxes		37,052			42,256			Provision for deferred income taxes		50,075			37,052
		Asset write-downs		2,379			1,117			Asset write-downs		8,940			2,379
		Net gain on sales of assets		(1,066	)		(852	)		Net gain on sales of assets		(5,399	)		(1,066	)
		Net change in accrued interest receivable, payable		(2,200	)		(3,185	)		Net change in accrued interest receivable, payable		(16,530	)		(2,200	)
		Net change in other accrued income and expense		(80,084	)		57,884			Net change in other accrued income and expense		70,766			(80,084	)
		Net change in loans originated for sale		197,708			122,406			Net change in loans originated for sale		211			197,708
		Net change in trading account assets and liabilities		(18,206	)		27,893			Net change in trading account assets and liabilities		(59,080	)		(18,206	)

		Net cash provided by operating activities		458,366			561,098			Net cash provided by operating activities		448,220			458,366

Cash flows from investing activities		Proceeds from sales of investment securities								Proceeds from sales of investment securities
		Available for sale		693			—			Available for sale		518			693
		Other		132			146			Other		18,121			132
		Proceeds from maturities of investment securities								Proceeds from maturities of investment securities
		Available for sale		369,649			166,324			Available for sale		511,549			369,649
		Held to maturity		148,708			92,305			Held to maturity		132,636			148,708
		Purchases of investment securities								Purchases of investment securities
		Available for sale		(1,871,491	)		(1,709,847	)		Available for sale		(311,302	)		(1,871,491	)
		Held to maturity		(7,442	)		(3,238	)		Held to maturity		(5,343	)		(7,442	)
		Other		(348	)		(258	)		Other		(124	)		(348	)
		Net increase in loans and leases		(666,220	)		(220,551	)		Net increase in loans and leases		(439,712	)		(666,220	)
		Net (increase) decrease in interest bearing deposits at banks		179,376			(1,648,047	)		Net (increase) decrease in interest-bearing deposits at banks		(1,950,831	)		179,376
		Capital expenditures, net		(9,598	)		(16,725	)		Capital expenditures, net		(16,307	)		(9,598	)
		Net (increase) decrease in loan servicing advances		76,145			(122,910	)		Net decrease in loan servicing advances		37,600			76,145
		Other, net		(21,940	)		21,763			Other, net		7,920			(21,940	)

		Net cash used by investing activities		(1,802,336	)		(3,441,038	)		Net cash used by investing activities		(2,015,275	)		(1,802,336	)

Cash flows from financing activities		Net increase (decrease) in deposits		(4,543	)		1,581,705			Net increase (decrease) in deposits		2,264,623			(4,543	)
		Net increase (decrease) in short-term borrowings		819			(30,246	)		Net increase (decrease) in short-term borrowings		(343,838	)		819
		Proceeds from long-term borrowings		1,500,000			1,498,688			Proceeds from long-term borrowings		—			1,500,000
		Payments on long-term borrowings		(1,797	)		(352,245	)		Payments on long-term borrowings		(317,187	)		(1,797	)
		Proceeds from issuance of preferred stock		—			346,500			Purchases of treasury stock		(100,000	)		—
		Dividends paid - common		(93,631	)		(92,406	)		Dividends paid - common		(112,000	)		(93,631	)
		Dividends paid - preferred		(17,368	)		(6,080	)		Dividends paid - preferred		(17,368	)		(17,368	)
		Other, net		(46,014	)		24,208			Other, net		2,960			(46,014	)

		Net cash provided by financing activities		1,337,466			2,970,124			Net cash provided by financing activities		1,377,190			1,337,466

		Net increase (decrease) in cash and cash equivalents		(6,504	)		90,184			Net decrease in cash and cash equivalents		(189,865	)		(6,504	)
		Cash and cash equivalents at beginning of period		1,373,357			1,672,934			Cash and cash equivalents at beginning of period		1,368,040			1,373,357

		Cash and cash equivalents at end of period	$	1,366,853			1,763,118			Cash and cash equivalents at end of period	$	1,178,175			1,366,853

Supplemental disclosure of cash flow information		Interest received during the period	$	726,475			695,653			Interest received during the period	$	968,223			726,475
		Interest paid during the period		75,776			61,841			Interest paid during the period		146,568			75,776
		Income taxes paid during the period		88,578			4,789			Income taxes paid (refunded) during the period		(86,146	)		88,578

Supplemental schedule of noncash investing and financing activities		Securitization of residential mortgage loans allocated to								Real estate acquired in settlement of loans	$	33,737			10,846
		Available-for-sale investment securities	$	12,920			29,785			Securitization of residential mortgage loans allocated to
		Capitalized servicing rights		143			372			Available-for-sale investment securities		8,452			12,920
		Real estate acquired in settlement of loans		10,846			8,886			Capitalized servicing rights		92			143


In thousands, except per share	Preferred stock		Common stock		Common stock issuable			Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss), net			Total			Preferred stock		Common stock		Common stock issuable			Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss), net			Treasury stock			Total
2014
Balance - January 1, 2014	$	881,500		65,258		2,915			3,232,014			7,188,004			(64,159	)		11,305,532
Total comprehensive income		—		—		—			—			229,017			38,898			267,915
Preferred stock cash dividends		—		—		—			—			(14,674	)		—			(14,674	)
Issuance of Series E preferred stock		350,000		—		—			(3,500	)		—			—			346,500
Stock-based compensation plans:
Compensation expense, net		—		123		—			13,999			—			—			14,122
Exercises of stock options, net		—		266		—			49,228			—			—			49,494
Stock purchase plan		—		43		—			9,545			—			—			9,588
Directors’ stock plan		—		2		—			439			—			—			441
Deferred compensation plans, net, including dividend equivalents		—		2		(299	)		265			(29	)		—			(61	)
Other		—		—		—			412			—			—			412
Common stock cash dividends - $.70 per share		—		—		—			—			(92,406	)		—			(92,406	)

Balance - March 31, 2014	$	1,231,500		65,694		2,616			3,302,402			7,309,912			(25,261	)		11,886,863

2015
Balance - January 1, 2015	$	1,231,500		66,157		2,608			3,409,506			7,807,119			(180,994	)		12,335,896		$	1,231,500		66,157		2,608			3,409,506			7,807,119			(180,994	)		—			12,335,896
Total comprehensive income		—		—		—			—			241,613			28,503			270,116			—		—		—			—			241,613			28,503			—			270,116
Preferred stock cash dividends		—		—		—			—			(20,318	)		—			(20,318	)		—		—		—			—			(20,318	)		—			—			(20,318	)
Exercise of 2,315 Series A stock warrants into 904 shares of common stock		—		1		—			(1	)		—			—			—			—		1		—			(1	)		—			—			—			—
Stock-based compensation plans:
Compensation expense, net		—		147		—			5,425			—			—			5,572			—		147		—			5,425			—			—			—			5,572
Exercises of stock options, net		—		101		—			19,378			—			—			19,479			—		101		—			19,378			—			—			—			19,479
Stock purchase plan				45					10,301									10,346			—		45		—			10,301			—			—			—			10,346
Directors’ stock plan		—		2		—			423			—			—			425			—		2		—			423			—			—			—			425
Deferred compensation plans, net, including dividend equivalents		—		2		(298	)		270			(25	)		—			(51	)		—		2		(298	)		270			(25	)		—			—			(51	)
Other		—		—		—			405			—			—			405			—		—		—			405			—			—			—			405
Common stock cash dividends - $.70 per share		—		—		—			—			(93,569	)		—			(93,569	)		—		—		—			—			(93,569	)		—			—			(93,569	)

Balance - March 31, 2015	$	1,231,500		66,455		2,310			3,445,707			7,934,820			(152,491	)		12,528,301		$	1,231,500		66,455		2,310			3,445,707			7,934,820			(152,491	)		—			12,528,301

2016
Balance - January 1, 2016																				$	1,231,500		79,782		2,364			6,680,768			8,430,502			(251,627	)		—			16,173,289
Total comprehensive income																					—		—		—			—			298,528			101,438			—			399,966
Preferred stock cash dividends																					—		—		—			—			(20,318	)		—			—			(20,318	)
Purchases of treasury stock																					—		—		—			—			—			—			(100,000	)		(100,000	)
Stock-based compensation plans:
Compensation expense, net																					—		178		—			(978	)		—			—			745			(55	)
Exercises of stock options, net																					—		18		—			2,335			—			—			265			2,618
Stock purchase plan																					—		—		—			275			—			—			10,319			10,594
Directors’ stock plan																					—		2		—			471			—			—			—			473
Deferred compensation plans, net, including dividend equivalents																					—		2		(184	)		234			(23	)		—			—			29
Other																					—		—		—			394			—			—			—			394
Common stock cash dividends - $.70 per share																					—		—		—			—			(111,937	)		—			—			(111,937	)

Balance - March 31, 2016																				$	1,231,500		79,982		2,180			6,683,499			8,596,752			(150,189	)		(88,671	)		16,355,053

The consolidated financial statements of M&T Bank Corporation (“M&T”) and subsidiaries (“the Company”) were compiled in accordance with generally accepted accounting principles (“GAAP”) using the accounting policies set forth in note 1 of Notes to Financial Statements included in the 2014 Annual Report. Additionally, effective January 1, 2015 the Company made an accounting policy election in accordance with amended accounting guidance issued by the Financial Accounting Standards Board in January 2014 to account for investments in qualified affordable housing projects using the proportional amortization method. Under the proportional amortization method, the Company amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense. The adoption of the amended guidance did not have a significant effect on the Company’s financial position or results of operation, but did result in the restatement of the consolidated statement of incomeForm 10-K for the ~~three-month period~~year ended ~~March~~December 31, 2014 to remove $12 million of losses associated with qualified affordable housing projects from “other costs of operations” and include the amortization of the initial cost of the investment in income tax expense. The cumulative effect adjustment associated with adopting the amended guidance was not material as of the beginning of any period presented in these consolidated financial statements. See note 11 for information regarding the Company’s investments in qualified affordable housing projects.

2015 (“2015 Annual Report”). In the opinion of management, all adjustments necessary for a fair presentation have been made and ~~except as described above,~~ were all of a normal recurring nature.

On ~~August 27, 2012,~~November 1, 2015, M&T ~~announced that it had entered into a definitive agreement with~~completed the acquisition of Hudson City Bancorp, Inc. (“Hudson City”), headquartered in Paramus, New ~~Jersey, under which~~Jersey. On that date, Hudson City ~~would be acquired by M&T. Pursuant to~~Savings Bank, the ~~terms of the agreement, Hudson City shareholders will receive consideration for each common share~~banking subsidiary of Hudson City, ~~in an amount valued at .08403 of an~~was merged into M&T ~~share~~Bank, a wholly owned banking subsidiary of M&T. Hudson City Savings Bank operated 135 banking offices in New Jersey, Connecticut and New York at the date of acquisition. The results of operations acquired in the ~~form~~Hudson City transaction have been included in the Company’s financial results since November 1, 2015. After application of ~~either M&T common stock or cash, based on~~ the election, ~~of each Hudson City shareholder, subject to~~allocation and proration ~~as specified~~procedures contained in the merger agreement ~~(which provides for an aggregate split~~with Hudson City, M&T paid $2.1 billion in cash and issued 25,953,950 shares of ~~total consideration of 60%~~M&T common stock in exchange for Hudson City shares outstanding at the time of the acquisition. The purchase price was approximately $5.2 billion based on the cash paid to Hudson City shareholders, the fair value of M&T stock exchanged and ~~40% cash). As~~the estimated fair value of ~~March 31, 2015 total consideration to be paid was valued at approximately $5.5 billion.~~

~~At March 31, 2015,~~ Hudson City ~~had $36.1 billion~~stock awards converted into M&T stock awards. The acquisition of Hudson City expanded the Company’s presence in New Jersey, Connecticut and New York, and management expects that the Company will benefit from greater geographic diversity and the advantages of scale associated with a larger company.

The Hudson City transaction has been accounted for using the acquisition method of accounting and, accordingly, assets ~~including $20.9 billion~~acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. The consideration paid for Hudson City’s common equity and the amounts of ~~loans~~identifiable assets acquired and ~~$8.3 billion of investment securities, and $31.3 billion of~~ liabilities ~~including $18.9 billion of deposits. The merger has received the approval~~assumed as of the ~~common shareholders of M&T and Hudson City. However, the merger is subject to a number of other conditions, including regulatory approvals.~~acquisition date were as follows:

On June 17, 2013, M&T and Manufacturers and Traders Trust Company (“M&T Bank”), M&T’s principal banking subsidiary, entered into a written agreement with the Federal Reserve Bank of New York (“Federal Reserve Bank”). Under the terms of the agreement, M&T and M&T Bank are required to submit to the Federal Reserve Bank a revised compliance risk management program designed to ensure compliance with the Bank Secrecy Act and anti-money-laundering laws and regulations and to take certain other steps to enhance their compliance practices. The Company commenced a major initiative, including the hiring of outside consulting firms, intended to fully address the Federal Reserve Bank’s concerns. On April 3, 2015, M&T was advised that the Federal Reserve Board intends to act on the M&T and Hudson City merger application no later than September 30, 2015. As a result, M&T and Hudson City extended the date after which either party may elect to terminate the merger agreement if the merger has not yet been completed from

In early November 2015, the Company sold $5.8 billion of investment securities obtained in the acquisition and repaid $10.6 billion of borrowings assumed in the transaction. In connection with the acquisition, the Company recorded approximately $1.1 billion of goodwill and $132 million of core deposit intangible. The core deposit intangible asset is being amortized over a period of 7 years using an accelerated method.

The following table presents certain pro forma information as if Hudson City had been included in the Company’s results of operations in the first quarter of 2015. These results combine the historical results of Hudson City into the Company’s consolidated statement of income and, while certain adjustments were made for the estimated impact of certain fair valuation adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place as indicated. In particular, no adjustments have been made to eliminate the impact of gains on securities transactions of $7 million during the three months ended March 31, 2015 that may not have been recognized had the investment securities been recorded at fair value. Additionally, the Company expects to achieve operating cost savings and other business synergies as a result of the acquisition which are not reflected in the pro forma amounts that follow.

In connection with the Hudson City acquisition, the Company incurred merger-related expenses related to systems conversions and other costs of integrating and conforming acquired operations with and into the Company. Those expenses consisted largely of professional services and other temporary help fees associated with preparing for systems conversions and/or integration of operations; costs related to termination of existing contractual arrangements for various services; initial marketing and promotion expenses designed to introduce M&T Bank to its new customers; severance (for former Hudson City employees); travel costs; and other costs of completing the transaction and commencing operations in new markets and offices. The Company expects that there will be additional merger-related expenses in 2016.

A summary of merger-related expenses included in the consolidated statement of income follows:

There were no merger-related expenses during the first quarter of 2015. ~~Nevertheless, there can be no assurances that the merger will be completed by that date.~~

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


	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value		Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
	(in thousands)								(in thousands)
March 31, 2015
March 31, 2016
Investment securities available for sale:
U.S. Treasury and federal agencies	$	161,672		1,563		1	$	163,234	$	201,002		1,197		7	$	202,192
Obligations of states and political subdivisions		7,704		199		53		7,850		5,356		138		46		5,448
Mortgage-backed securities:
Government issued or guaranteed		10,008,191		265,739		8,709		10,265,221		11,490,181		265,879		5,998		11,750,062
Privately issued		96		2		3		95		65		2		2		65
Collateralized debt obligations		29,704		19,360		1,786		47,278		28,483		18,170		1,613		45,040
Other debt securities		138,366		1,909		19,002		121,273		136,968		1,407		25,667		112,708
Equity securities		79,987		18,999		437		98,549		75,271		10,225		364		85,132

		10,425,720		307,771		29,991		10,703,500		11,937,326		297,018		33,697		12,200,647


Investment securities held to maturity:
Obligations of states and political subdivisions		148,698		2,178		350		150,526		103,408		886		332		103,962
Mortgage-backed securities:
Government issued or guaranteed		3,007,420		88,417		4,024		3,091,813		2,445,563		78,448		2,070		2,521,941
Privately issued		197,509		1,421		36,620		162,310		175,467		1,848		40,048		137,267
Other debt securities		7,185		—		—		7,185		6,173		—		—		6,173

		3,360,812		92,016		40,994		3,411,834		2,730,611		81,182		42,450		2,769,343

Other securities		328,958		—		—		328,958		536,062		—		—		536,062

Total	$	14,115,490		399,787		70,985	$	14,444,292	$	15,203,999		378,200		76,147	$	15,506,052


December 31, 2014
Investment securities available for sale:
U.S. Treasury and federal agencies	$	161,408		544		5	$	161,947
Obligations of states and political subdivisions		8,027		224		53		8,198
Mortgage-backed securities:
Government issued or guaranteed		8,507,571		223,889		337		8,731,123
Privately issued		104		2		3		103
Collateralized debt obligations		30,073		21,276		1,033		50,316
Other debt securities		138,240		1,896		18,648		121,488
Equity securities		73,901		11,020		1,164		83,757

		8,919,324		258,851		21,243		9,156,932

Investment securities held to maturity:
Obligations of states and political subdivisions		148,961		2,551		189		151,323
Mortgage-backed securities:
Government issued or guaranteed		3,149,320		78,485		7,000		3,220,805
Privately issued		201,733		1,143		44,576		158,300
Other debt securities		7,854		—		—		7,854

		3,507,868		82,179		51,765		3,538,282

Other securities		328,742		—		—		328,742

Total	$	12,755,934		341,030		73,008	$	13,023,956

There were no significant gross realized gains or losses from sales of investment securities for the quarters ended March 31, ~~2015~~2016 and ~~2014.~~2015.

At March 31, ~~2015,~~2016, the amortized cost and estimated fair value of debt securities by contractual maturity were as follows:


	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
	(in thousands)				(in thousands)
Debt securities available for sale:
Due in one year or less	$	9,059		9,117	$	7,504		7,551
Due after one year through five years		163,114		165,027		201,714		203,128
Due after five years through ten years		3,272		3,314		2,728		2,926
Due after ten years		162,001		162,177		159,863		151,783

		337,446		339,635		371,809		365,388
Mortgage-backed securities available for sale		10,008,287		10,265,316		11,490,246		11,750,127

	$	10,345,733		10,604,951	$	11,862,055		12,115,515


Debt securities held to maturity:
Due in one year or less	$	27,663		27,865	$	32,387		32,542
Due after one year through five years		87,320		88,357		64,484		64,760
Due after five years through ten years		33,715		34,304		6,537		6,660
Due after ten years		7,185		7,185		6,173		6,173

		155,883		157,711		109,581		110,135
Mortgage-backed securities held to maturity		3,204,929		3,254,123		2,621,030		2,659,208

	$	3,360,812		3,411,834	$	2,730,611		2,769,343

A summary of investment securities that as of March 31, ~~2015~~2016 and December 31, ~~2014~~2015 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					Less than 12 months					12 months or more
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
	(in thousands)												(in thousands)
March 31, 2015
March 31, 2016
Investment securities available for sale:
U.S. Treasury and federal agencies	$	4,681		(1	)		—		—		$	4,051		(7	)		—		—
Obligations of states and political subdivisions		986		(4	)		1,524		(49	)		—		—			1,706		(46	)
Mortgage-backed securities:
Government issued or guaranteed		1,603,068		(8,597	)		4,138		(112	)		337,672		(1,959	)		1,233,329		(4,039	)
Privately issued		—		—			59		(3	)		—		—			34		(2	)
Collateralized debt obligations		6,091		(1,255	)		5,220		(531	)		10,326		(527	)		1,858		(1,086	)
Other debt securities		12,689		(443	)		92,304		(18,559	)		9,825		(1,203	)		88,715		(24,464	)
Equity securities		374		(437	)		—		—			2,115		(210	)		146		(154	)

		1,627,889		(10,737	)		103,245		(19,254	)		363,989		(3,906	)		1,325,788		(29,791	)


Investment securities held to maturity:
Obligations of states and political subdivisions		35,272		(317	)		1,802		(33	)		28,707		(215	)		8,813		(117	)
Mortgage-backed securities:
Government issued or guaranteed		16,660		(85	)		266,979		(3,939	)		812		(12	)		232,432		(2,058	)
Privately issued		—		—			131,779		(36,620	)		—		—			105,355		(40,048	)

		51,932		(402	)		400,560		(40,592	)		29,519		(227	)		346,600		(42,223	)

Total	$	1,679,821		(11,139	)		503,805		(59,846	)	$	393,508		(4,133	)		1,672,388		(72,014	)


December 31, 2014
December 31, 2015
Investment securities available for sale:
U.S. Treasury and federal agencies	$	6,505		(5	)		—		—		$	147,508		(187	)		—		—
Obligations of states and political subdivisions		1,785		(52	)		121		(1	)		865		(2	)		1,335		(40	)
Mortgage-backed securities:
Government issued or guaranteed		39,001		(186	)		5,555		(151	)		4,061,899		(48,534	)		7,216		(167	)
Privately issued		—		—			65		(3	)		—		—			43		(2	)
Collateralized debt obligations		2,108		(696	)		5,512		(337	)		5,711		(335	)		2,063		(853	)
Other debt securities		14,017		(556	)		92,661		(18,092	)		12,935		(462	)		93,344		(19,728	)
Equity securities		2,138		(1,164	)		—		—			18,073		(207	)		153		(147	)

		65,554		(2,659	)		103,914		(18,584	)		4,246,991		(49,727	)		104,154		(20,937	)


Investment securities held to maturity:
Obligations of states and political subdivisions		29,886		(184	)		268		(5	)		42,913		(335	)		5,853		(86	)
Mortgage-backed securities:
Government issued or guaranteed		137,413		(361	)		446,780		(6,639	)		459,983		(1,801	)		228,867		(6,016	)
Privately issued		—		—			127,512		(44,576	)		—		—			112,155		(41,367	)

		167,299		(545	)		574,560		(51,220	)		502,896		(2,136	)		346,875		(47,469	)

Total	$	232,853		(3,204	)		678,474		(69,804	)	$	4,749,887		(51,863	)		451,029		(68,406	)

The Company owned ~~294~~538 individual investment securities with aggregate gross unrealized losses of ~~$71~~$76 million at March 31, ~~2015.~~2016. Based on a review of each of the securities in the investment securities portfolio at March 31, ~~2015,~~2016, the Company concluded that it expected to recover the amortized cost basis of its investment. As of March 31, ~~2015,~~2016, 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, ~~2015,~~2016, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the ~~$329~~$536 million of cost method investment securities.

The outstanding principal balance and the carrying amount of loans acquired ~~loans~~at a discount that were recorded at fair value at the acquisition date that is included in the consolidated balance sheet were as follows:


	March 31, 2015		December 31, 2014		March 31, 2016		December 31, 2015
	(in thousands)				(in thousands)

Outstanding principal balance	$	2,837,256		3,070,268	$	2,918,333		3,122,935
Carrying amount:
Commercial, financial, leasing, etc.		207,884		247,820		71,577		78,847
Commercial real estate		869,700		961,828		588,983		644,284
Residential real estate		434,454		453,360		964,893		1,016,129
Consumer		888,985		933,537		681,535		725,807

	$	2,401,023		2,596,545	$	2,306,988		2,465,067

Purchased impaired loans included in the table above totaled ~~$184~~$716 million at March 31, ~~2015~~2016 and ~~$198~~$768 million at December 31, ~~2014,~~2015, representing less than 1% of the Company’s assets as of each date. A summary of changes in the accretable yield for loans acquired ~~loans~~at a discount for the three-month periods ended March 31, ~~2015~~2016 and ~~2014~~2015 follows:


	Three months ended March 31, 2015									Three months ended March 31, 2016
	Purchased impaired			Other acquired			Total			Purchased impaired			Other acquired			Total
	(in thousands)									(in thousands)

Balance at beginning of period	$	76,518			397,379			473,897		$	184,618			296,434			481,052
Interest income		(5,206	)		(41,277	)		(46,483	)		(14,062	)		(37,862	)		(51,924	)
Reclassifications from nonaccretable balance, net		110			183			293			629			5,664			6,293
Other (a)		—			1,610			1,610			—			4,781			4,781

Balance at end of period	$	71,422			357,895			429,317		$	171,185			269,017			440,202


	Three months ended March 31, 2014									Three months ended March 31, 2015
	Purchased impaired			Other acquired			Total			Purchased impaired			Other acquired			Total
	(in thousands)									(in thousands)

Balance at beginning of period	$	37,230			538,633			575,863		$	76,518			397,379			473,897
Interest income		(6,328	)		(52,633	)		(58,961	)		(5,206	)		(41,277	)		(46,483	)
Reclassifications from nonaccretable balance, net		37			—			37			110			183			293
Other (a)		—			(838	)		(838	)		—			1,610			1,610

Balance at end of period	$	30,939			485,162			516,101		$	71,422			357,895			429,317

A summary of current, past due and nonaccrual loans as of March 31, ~~2015~~2016 and December 31, ~~2014~~2015 were as follows:


			30-89		90 Days or more past due and accruing				Purchased						Current		30-89 Days past due		Accruing loans past due 90 days or more(a)		Accruing loans acquired at a discount past due 90 days or more(b)		Purchased impaired(c)		Nonaccrual		Total
	Current		Days past due		Non- acquired		Acquired (a)		impaired (b)		Nonaccrual		Total
			(in thousands)
March 31, 2015
March 31, 2016																			(in thousands)
Commercial, financial, leasing, etc.	$	19,519,566		43,213		4,265		3,323		9,724		195,403		19,775,494	$	20,911,645		30,495		2,358		524		1,765		279,790		21,226,577
Real estate:
Commercial		22,225,088		116,465		27,261		17,187		45,752		142,007		22,573,760		23,740,729		149,108		41,776		6,818		39,840		171,256		24,149,527
Residential builder and developer		1,460,981		6,119		—		6,953		91,839		65,310		1,631,202		1,747,261		15,304		195		3,493		23,516		32,458		1,822,227
Other commercial construction		3,575,578		18,244		3,864		1,721		17,061		24,280		3,640,748		3,663,835		28,336		9,068		280		19,239		20,781		3,741,539
Residential		7,580,514		189,901		197,299		20,058		17,283		171,496		8,176,551		19,747,097		500,241		278,640		15,790		463,871		186,452		21,192,091
Residential Alt-A		241,467		11,831		—		—		—		74,270		327,568
Residential-limited documentation																3,757,924		107,679		275		—		165,404		76,265		4,107,547
Consumer:
Home equity lines and loans		5,783,865		35,478		—		13,298		2,359		87,985		5,922,985		5,720,342		40,054		—		15,898		2,239		78,722		5,857,255
Automobile		2,024,526		25,322		—		—		—		14,100		2,063,948		2,580,241		33,439		—		2		—		14,817		2,628,499
Other		2,921,142		28,407		3,932		17,570		—		15,735		2,986,786		3,083,495		24,739		3,858		18,962		—		16,150		3,147,204

Total	$	65,332,727		474,980		236,621		80,110		184,018		790,586		67,099,042	$	84,952,569		929,395		336,170		61,767		715,874		876,691		87,872,466


			30-89		90 Days or more past due and accruing				Purchased						Current		30-89 Days past due		Accruing loans past due 90 days or more(a)		Accruing loans acquired at a discount past due 90 days or more(b)		Purchased impaired(c)		Nonaccrual		Total
	Current		Days past due		Non- acquired		Acquired (a)		impaired (b)		Nonaccrual		Total
			(in thousands)
December 31, 2014
December 31, 2015																			(in thousands)
Commercial, financial, leasing, etc.	$	19,228,265		37,246		1,805		6,231		10,300		177,445		19,461,292	$	20,122,648		52,868		2,310		693		1,902		241,917		20,422,338
Real estate:
Commercial		22,208,491		118,704		22,170		14,662		51,312		141,600		22,556,939		23,645,354		172,439		12,963		8,790		46,790		179,606		24,065,942
Residential builder and developer		1,273,607		11,827		492		9,350		98,347		71,517		1,465,140		1,507,856		7,969		5,760		6,925		28,734		28,429		1,585,673
Other commercial construction		3,484,932		17,678		—		—		17,181		25,699		3,545,490		3,428,939		65,932		7,936		2,001		24,525		16,363		3,545,696
Residential		7,640,368		226,932		216,489		35,726		18,223		180,275		8,318,013		20,507,551		560,312		284,451		16,079		488,599		153,281		22,010,273
Residential Alt-A		249,810		11,774		—		—		—		77,704		339,288
Residential-limited documentation																3,885,073		137,289		—		—		175,518		61,950		4,259,830
Consumer:
Home equity lines and loans		5,859,378		42,945		—		27,896		2,374		89,291		6,021,884		5,805,222		45,604		—		15,222		2,261		84,467		5,952,776
Automobile		1,931,138		30,500		—		133		—		17,578		1,979,349		2,446,473		56,181		—		6		—		16,597		2,519,257
Other		2,909,791		33,295		4,064		16,369		—		18,042		2,981,561		3,051,435		36,702		4,021		18,757		—		16,799		3,127,714

Total	$	64,785,780		530,901		245,020		110,367		197,737		799,151		66,668,956	$	84,400,551		1,135,296		317,441		68,473		768,329		799,409		87,489,499

One-to-four family residential mortgage loans held for sale were ~~$423~~$269 million and ~~$435~~$353 million at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. Commercial mortgage loans held for sale were ~~$117~~$128 million at March 31, ~~2015~~2016 and ~~$308~~$39 million at December 31, ~~2014.~~2015.

Changes in the allowance for credit losses for the three months ended March 31, 2016 were as follows:

Changes in the allowance for credit losses for the three months ended March 31, 2015 were as follows:

~~Changes in the allowance for credit losses for the three months ended March 31, 2014 were as follows:~~


																		Commercial,
	Commercial, Financial, Leasing, etc.			Real Estate														Financial,			Real Estate
	Commercial, Financial, Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total			Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total
	(in thousands)																	(in thousands)

Beginning balance	$	273,383			324,978			78,656			164,644			75,015		916,676		$	288,038			307,927			61,910			186,033			75,654		919,562
Provision for credit losses		12,598			116			4,228			14,141			917		32,000			1,442			15,542			960			19,574			482		38,000
Net charge-offs
Charge-offs		(14,809	)		(3,486	)		(7,453	)		(21,691	)		—		(47,439	)		(12,350	)		(6,679	)		(3,118	)		(25,329	)		—		(47,476	)
Recoveries		5,663			3,197			1,631			5,040			—		15,531			3,939			585			989			5,774			—		11,287

Net charge-offs		(9,146	)		(289	)		(5,822	)		(16,651	)		—		(31,908	)		(8,411	)		(6,094	)		(2,129	)		(19,555	)		—		(36,189	)

Ending balance	$	276,835			324,805			77,062			162,134			75,932		916,768		$	281,069			317,375			60,741			186,052			76,136		921,373

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

In establishing the allowance for credit losses, the Company estimates losses attributable to specific troubled credits identified through both normal and detailed or intensified credit review processes and also estimates losses inherent in other loans and leases on a collective basis. For purposes of determining the level of the allowance for credit losses, the Company evaluates its loan and lease portfolio by loan type. The amounts of loss components in the Company’s loan and lease portfolios are determined through a ~~loan by loan~~loan-by-loan analysis of larger balance commercial loans and commercial real estate loans that are in nonaccrual status and by applying loss factors to groups of loan balances based on loan type and management’s classification of such loans under the Company’s loan grading system. Measurement of the specific loss components is typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. In determining the allowance for credit losses, the Company utilizes a loan grading system which is applied to commercial and commercial real estate credits on an individual loan basis. Loan officers are responsible for continually assigning grades to these loans based on standards outlined in the Company’s Credit Policy. Internal loan grades are also monitored by the Company’s loan review department to ensure consistency and strict adherence to the prescribed standards. Loan grades are assigned loss component factors that reflect the Company’s loss estimate for each group of loans and leases. Factors considered in assigning loan grades and loss component factors 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; levels of and trends in portfolio charge-offs and recoveries; levels of and trends in portfolio delinquencies and impaired loans; changes in the risk profile of specific portfolios; trends in volume and terms of loans; effects of changes in credit concentrations; and observed trends and practices in the banking industry. As updated appraisals are obtained on individual loans or other events in the market place indicate that collateral values have significantly changed, individual loan grades are adjusted as appropriate. Changes in other factors cited may also lead to loan grade changes at any time. Except for consumer and residential real estate loans that are considered smaller balance homogenous loans and acquired loans that are evaluated on an aggregated basis, the Company considers a loan to be impaired for purposes of applying GAAP when, based on current information and events, it is probable that the Company will be unable to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days. Regardless of loan type, the

Company considers a loan to be impaired if it qualifies as a troubled debt restructuring. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows.

The following tables provide information with respect to loans and leases that were considered impaired as of March 31, ~~2015~~2016 and December 31, ~~2014~~2015 and for the three month periods ended March 31, ~~2015~~2016 and ~~2014.~~2015.


	March 31, 2015						December 31, 2014						March 31, 2016						December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded investment		Unpaid principal balance		Related allowance		Recorded investment		Unpaid principal balance		Related allowance
	(in thousands)												(in thousands)
With an allowance recorded:
Commercial, financial, leasing, etc.	$	108,870		130,029		19,335		132,340		165,146		31,779	$	204,786		223,269		58,714		179,037		195,821		44,752
Real estate:
Commercial		99,729		122,098		15,836		83,955		96,209		14,121		86,612		97,912		19,600		85,974		95,855		18,764
Residential builder and developer		6,512		8,731		591		17,632		22,044		805		6,581		8,296		839		3,316		5,101		196
Other commercial construction		5,116		6,084		831		5,480		6,484		900		2,358		2,678		397		3,548		3,843		348
Residential		86,691		104,630		4,405		88,970		107,343		4,296		77,579		95,679		4,348		79,558		96,751		4,727
Residential Alt-A		97,984		110,835		11,000		101,137		114,565		11,000
Residential-limited documentation														87,791		101,841		7,000		90,356		104,251		8,000
Consumer:
Home equity lines and loans		19,701		20,794		6,304		19,771		20,806		6,213		27,544		28,540		3,904		25,220		26,195		3,777
Automobile		27,122		27,122		6,983		30,317		30,317		8,070		21,289		21,289		4,867		22,525		22,525		4,709
Other		18,814		18,814		5,297		18,973		18,973		5,459		17,876		17,876		4,844		17,620		17,620		4,820

		470,539		549,137		70,582		498,575		581,887		82,643		532,416		597,380		104,513		507,154		567,962		90,093

With no related allowance recorded:
Commercial, financial, leasing, etc.		116,325		135,534		—		73,978		81,493		—		105,342		126,130		—		93,190		110,735		—
Real estate:
Commercial		51,734		59,235		—		66,777		78,943		—		92,733		106,710		—		101,340		116,230		—
Residential builder and developer		62,611		101,964		—		58,820		96,722		—		28,938		49,177		—		27,651		47,246		—
Other commercial construction		19,657		40,072		—		20,738		41,035		—		18,811		37,498		—		13,221		31,477		—
Residential		17,203		27,886		—		16,815		26,750		—		17,574		28,336		—		19,621		30,940		—
Residential Alt-A		24,785		43,635		—		26,752		46,964		—
Residential-limited documentation														17,362		29,544		—		18,414		31,113		—

		292,315		408,326		—		263,880		371,907		—		280,760		377,395		—		273,437		367,741		—


Total:
Commercial, financial, leasing, etc.		225,195		265,563		19,335		206,318		246,639		31,779		310,128		349,399		58,714		272,227		306,556		44,752
Real estate:
Commercial		151,463		181,333		15,836		150,732		175,152		14,121		179,345		204,622		19,600		187,314		212,085		18,764
Residential builder and developer		69,123		110,695		591		76,452		118,766		805		35,519		57,473		839		30,967		52,347		196
Other commercial construction		24,773		46,156		831		26,218		47,519		900		21,169		40,176		397		16,769		35,320		348
Residential		103,894		132,516		4,405		105,785		134,093		4,296		95,153		124,015		4,348		99,179		127,691		4,727
Residential Alt-A		122,769		154,470		11,000		127,889		161,529		11,000
Residential-limited documentation														105,153		131,385		7,000		108,770		135,364		8,000
Consumer:
Home equity lines and loans		19,701		20,794		6,304		19,771		20,806		6,213		27,544		28,540		3,904		25,220		26,195		3,777
Automobile		27,122		27,122		6,983		30,317		30,317		8,070		21,289		21,289		4,867		22,525		22,525		4,709
Other		18,814		18,814		5,297		18,973		18,973		5,459		17,876		17,876		4,844		17,620		17,620		4,820

Total	$	762,854		957,463		70,582		762,455		953,794		82,643	$	813,176		974,775		104,513		780,591		935,703		90,093


	Three months ended March 31, 2015						Three months ended March 31, 2014							Three months ended March 31, 2016						Three months ended March 31, 2015
			Interest income recognized						Interest income recognized							Interest income recognized						Interest income recognized
	Average recorded investment		Total		Cash basis		Average recorded investment		Total			Cash basis		Average recorded investment		Total		Cash basis		Average recorded investment		Total		Cash basis
	(in thousands)													(in thousands)
Commercial, financial, leasing, etc.	$	214,618		604		604		134,306		548			548	$	296,584		611		611		214,618		604		604
Real estate:
Commercial		153,070		1,102		1,102		185,425		926			926		182,454		1,474		1,474		153,070		1,102		1,102
Residential builder and developer		73,151		63		63		101,253		74			74		33,750		42		42		73,151		63		63
Other commercial construction		25,540		55		55		87,292		1,087			1,087		16,868		38		38		25,540		55		55
Residential		104,490		1,446		910		174,168		1,400			902		96,788		1,372		882		104,490		1,446		910
Residential Alt-A		125,654		1,610		647		139,651		1,626			559
Residential-limited documentation															107,473		1,472		630		125,654		1,610		647
Consumer:
Home equity lines and loans		19,683		201		48		15,676		121			29		26,019		246		85		19,683		201		48
Automobile		29,013		450		54		39,383		625			87		21,962		339		36		29,013		450		54
Other		18,861		174		33		17,700		174			52		17,717		178		27		18,861		174		33

Total	$	764,080		5,705		3,516		894,854		6,581			4,264	$	799,615		5,772		3,825		764,080		5,705		3,516
											��

In accordance with the previously described policies, the Company utilizes a loan grading system that is applied to all commercial loans and commercial real estate loans. Loan grades are utilized to differentiate risk within the portfolio and consider the expectations of default for each loan. Commercial loans and commercial real estate 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. All larger balance criticized commercial loans and commercial real estate loans are individually reviewed by centralized loan review personnel each quarter to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. Smaller balance criticized loans are analyzed by business line risk management areas to ensure proper loan grade classification. Furthermore, criticized nonaccrual commercial loans and commercial real estate loans are considered impaired and, as a result, specific loss allowances on such loans are established within the allowance for credit losses to the extent appropriate in each individual instance. The following table summarizes the loan grades applied to the various classes of the Company’s commercial loans and commercial real estate loans.


			Real Estate								Real Estate
	Commercial, Financial, Leasing, etc.		Commercial		Residential Builder and Developer		Other Commercial Construction		Commercial, Financial, Leasing, etc.		Commercial		Residential Builder and Developer		Other Commercial Construction
	(in thousands)								(in thousands)
March 31, 2015
March 31, 2016
Pass	$	18,880,311		21,755,661		1,522,471		3,466,705	$	20,155,277		23,138,987		1,700,088		3,631,947
Criticized accrual		699,780		676,092		43,421		149,763		791,510		839,284		89,681		88,811
Criticized nonaccrual		195,403		142,007		65,310		24,280		279,790		171,256		32,458		20,781

Total	$	19,775,494		22,573,760		1,631,202		3,640,748	$	21,226,577		24,149,527		1,822,227		3,741,539


December 31, 2014
December 31, 2015
Pass	$	18,695,440		21,837,022		1,347,778		3,347,522	$	19,442,183		23,098,856		1,497,465		3,432,679
Criticized accrual		588,407		578,317		45,845		172,269		738,238		787,480		59,779		96,654
Criticized nonaccrual		177,445		141,600		71,517		25,699		241,917		179,606		28,429		16,363

Total	$	19,461,292		22,556,939		1,465,140		3,545,490	$	20,422,338		24,065,942		1,585,673		3,545,696

In determining the allowance for credit losses, residential real estate loans and consumer loans are generally evaluated collectively after considering such factors as payment performance and recent loss experience and trends, which are mainly driven by current collateral values in the market place as well as the amount of loan defaults. Loss rates on such loans are determined by reference to recent charge-off history and are evaluated (and adjusted if deemed appropriate) through consideration of other factors including near-term forecasted loss estimates developed by the Company’s Credit Department. In arriving at such forecasts, the Company considers the current estimated fair value of its collateral based on geographical adjustments for home price depreciation/appreciation and overall borrower repayment performance. With regard to collateral values, the realizability of such values by the Company contemplates repayment of any first lien position prior to recovering amounts on a second lien position. ~~Residential~~However, residential real estate loans and outstanding balances of home equity loans and lines of credit that are more than 150 days past due are generally evaluated for collectibility on a loan-by-loan basis giving consideration to estimated collateral values. The carrying value of residential real estate loans and home equity loans and lines of credit for which a partial charge-off has been recognized aggregated ~~$62~~$52 million and ~~$20~~$24 million, respectively, at March 31, ~~2015~~2016 and ~~$63~~$55 million and ~~$18~~$21 million, respectively, at December 31, ~~2014.~~2015. Residential real estate loans and home equity loans and lines of credit that were more than 150 days past due but did not require a partial charge-off because the net realizable value of the collateral exceeded the outstanding customer balance totaled ~~$24~~$20 million and ~~$29~~$32 million, respectively, at March 31, ~~2015~~2016 and ~~$27~~$20 million and $28 million, respectively, at December 31, ~~2014.~~2015.

The Company also measures additional losses for purchased impaired loans when it is probable that the Company will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition. The determination of the allocated portion of the allowance for credit losses is very subjective. Given that inherent subjectivity and potential imprecision involved in determining the allocated portion of the allowance for credit losses, the Company also provides an inherent unallocated portion of the allowance. The unallocated portion of the allowance is intended to recognize probable losses that are not otherwise identifiable and includes management’s subjective determination of amounts necessary to provide for the possible use of imprecise estimates in determining the allocated portion of the allowance. Therefore, the level of the unallocated portion of the allowance is primarily reflective of the inherent imprecision in the various calculations used in determining the allocated portion of the allowance for credit losses. Other factors ~~that could also lead to changes in the unallocated portion include the effects of~~

that could also lead to changes in the unallocated portion include the effects of expansion into new markets for which the Company does not have the same degree of familiarity and experience regarding portfolio performance in changing market conditions, the introduction of new loan and lease product types, and other risks associated with the Company’s loan portfolio that may not be specifically identifiable.

The allocation of the allowance for credit losses summarized on the basis of the Company’s impairment methodology was as follows:


	Commercial, Financial, Leasing, etc.		Real Estate								Commercial, Financial, Leasing, etc.			Real Estate
	Commercial, Financial, Leasing, etc.		Commercial		Residential		Consumer		Total				Commercial			Residential		Consumer		Total
	(in thousands)										Commercial, Financial, Leasing, etc.	(in thousands)
March 31, 2015
March 31, 2016
Individually evaluated for impairment	$	19,335		16,921		14,811		18,584	$	69,651	$	58,714			20,611		11,348		13,615		$	104,288
Collectively evaluated for impairment		258,028		299,262		43,547		166,296		767,133		264,652			308,897		55,970		145,841			775,360
Purchased impaired		3,706		1,192		2,383		1,172		8,453		500			2,477		1,053		1,363			5,393

Allocated	$	281,069		317,375		60,741		186,052		845,237	$	323,866			331,985		68,371		160,819			885,041

Unallocated										76,136												77,711


Total									$	921,373											$	962,752


December 31, 2014
December 31, 2015
Individually evaluated for impairment	$	31,779		15,490		14,703		19,742	$	81,714	$	44,752			19,175		12,727		13,306		$	89,960
Collectively evaluated for impairment		251,607		291,244		45,061		165,140		753,052		255,615			307,000		57,624		163,511			783,750
Purchased impaired		4,652		1,193		2,146		1,151		9,142		37			656		1,887		1,503			4,083

Allocated	$	288,038		307,927		61,910		186,033		843,908	$	300,404			326,831		72,238		178,320			877,793

Unallocated										75,654												78,199


Total									$	919,562											$	955,992

The recorded investment in loans and leases summarized on the basis of the Company’s impairment methodology was as follows:


	Commercial, Financial, Leasing, etc.		Real Estate								Commercial, Financial, Leasing, etc.			Real Estate
	Commercial, Financial, Leasing, etc.		Commercial		Residential		Consumer		Total				Commercial			Residential		Consumer		Total
	(in thousands)										Commercial, Financial, Leasing, etc.	(in thousands)
March 31, 2015
March 31, 2016
Individually evaluated for impairment	$	225,195		244,340		225,364		65,637	$	760,536	$	310,128			235,039		200,306		66,709		$	812,182
Collectively evaluated for impairment		19,540,575		27,446,718		8,261,472		10,905,723		66,154,488		20,914,684			29,395,659		24,470,057		11,564,010			86,344,410
Purchased impaired		9,724		154,652		17,283		2,359		184,018		1,765			82,595		629,275		2,239			715,874


Total	$	19,775,494		27,845,710		8,504,119		10,973,719	$	67,099,042	$	21,226,577			29,713,293		25,299,638		11,632,958		$	87,872,466


December 31, 2014
December 31, 2015
Individually evaluated for impairment	$	206,318		252,347		232,398		69,061	$	760,124	$	272,227			234,132		207,949		65,365		$	779,673
Collectively evaluated for impairment		19,244,674		27,148,382		8,406,680		10,911,359		65,711,095		20,148,209			28,863,130		25,398,037		11,532,121			85,941,497
Purchased impaired		10,300		166,840		18,223		2,374		197,737		1,902			100,049		664,117		2,261			768,329


Total	$	19,461,292		27,567,569		8,657,301		10,982,794	$	66,668,956	$	20,422,338			29,197,311		26,270,103		11,599,747		$	87,489,499

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

The tables below summarize the Company’s loan modification activities that were considered troubled debt restructurings for the three months ended March 31, ~~2015~~2016 and ~~2014:~~2015:


			Recorded investment				Financial effects of modification								Recorded investment				Financial effects of modification
Three months ended March 31, 2015	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
Three months ended March 31, 2016													Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
			(dollars in thousands)												(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		21	$	1,572	$	1,557	$	(15	)	$	—			24	$	11,571	$	12,721	$	1,150		$	—
Interest rate reduction		1		99		99		—			(19	)
Combination of concession types		3		9,155		6,989		(2,166	)		—			7		6,157		5,952		(205	)		—
Real estate:
Commercial
Principal deferral		7		3,792		3,776		(16	)		—			16		3,483		3,448		(35	)		—
Combination of concession types		4		1,646		1,637		(9	)		(52	)		5		3,933		3,924		(9	)		(35	)
Residential builder and developer
Principal deferral		1		1,398		1,398		—			—
Residential
Principal deferral		7		721		742		21			—			17		1,981		2,191		210			—
Combination of concession types		3		294		349		55			(34	)		10		2,321		2,369		48			—
Residential Alt-A
Residential-limited documentation
Principal deferral														1		125		138		13			—
Combination of concession types		1		210		210		—			(4	)		5		1,312		1,379		67			(339	)
Consumer:
Home equity lines and loans
Principal deferral		1		21		21		—			—			3		335		335		—			—
Combination of concession types		5		196		196		—			(13	)		23		2,496		2,496		—			(283	)
Automobile
Principal deferral		35		303		303		—			—			48		521		521		—			—
Interest rate reduction		3		42		42		—			(3	)
Other		10		20		20		—			—			16		38		38		—			—
Combination of concession types		8		84		84		—			(7	)		8		85		85		—			(3	)
Other
Principal deferral		22		296		296		—			—			26		374		374		—			—
Other		5		59		59		—			—			2		25		25		—			—
Combination of concession types		13		224		224		—			(25	)		8		147		147		—			(27	)

Total		150	$	20,132	$	18,002	$	(2,130	)	$	(157	)		219	$	34,904	$	36,143	$	1,239		$	(687	)


Three months ended March 31, 2014	Number		Recorded investment				Financial effects of modification
Three months ended March 31, 2014	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
															Recorded investment				Financial effects of modification
Three months ended March 31, 2015													Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)														(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		30	$	14,954	$	14,848	$	(106	)	$	—			21	$	1,572	$	1,557	$	(15	)	$	—
Interest rate reduction														1		99		99		—			(19	)
Combination of concession types		2		41		39		(2	)		(4	)		3		9,155		6,989		(2,166	)		—
Real estate:
Commercial
Principal deferral		13		7,044		7,002		(42	)		—			7		3,792		3,776		(16	)		—
Combination of concession types		1		346		401		55			(104	)		4		1,646		1,637		(9	)		(52	)
Other commercial construction
Residential builder and developer
Principal deferral		1		151		151		—			—			1		1,398		1,398		—			—
Residential
Principal deferral		13		1,602		1,663		61			—			7		721		742		21			—
Interest rate reduction		1		98		104		6			(32	)
Other		1		188		188		—			—
Combination of concession types		14		2,188		2,160		(28	)		(282	)		3		294		349		55			(34	)
Residential Alt-A
Principal deferral		2		166		202		36			—
Residential-limited documentation
Combination of concession types		10		1,746		1,736		(10	)		(61	)		1		210		210		—			(4	)
Consumer:
Home equity lines and loans
Principal deferral		3		280		280		—			—			1		21		21		—			—
Combination of concession types		15		1,856		1,856		—			(172	)		5		196		196		—			(13	)
Automobile
Principal deferral		80		993		993		—			—			35		303		303		—			—
Interest rate reduction														3		42		42		—			(3	)
Other		11		61		61		—			—			10		20		20		—			—
Combination of concession types		23		250		250		—			(26	)		8		84		84		—			(7	)
Other
Principal deferral		8		55		55		—			—			22		296		296		—			—
Other		1		45		45		—			—			5		59		59		—			—
Combination of concession types		14		466		466		—			(188	)		13		224		224		—			(25	)

Total		243	$	32,530	$	32,500	$	(30	)	$	(869	)		150	$	20,132	$	18,002	$	(2,130	)	$	(157	)

Troubled debt restructurings are considered to be impaired loans and for purposes of establishing the allowance for credit losses are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Impairment of troubled debt restructurings that have subsequently defaulted may also be measured based on the loan’s observable market price or the fair value of collateral if the loan is collateral-dependent. Charge-offs may also be recognized on troubled debt restructurings that have subsequently defaulted. Loans that were modified as troubled debt restructurings during the twelve months ended March 31, ~~2015~~2016 and ~~2014~~2015 and for which there was a subsequent payment default during the three-month periods ended March 31, ~~2015~~2016 and ~~2014,~~2015, respectively, were not material.

Effective January 1, 2015, the Company adopted amended accounting and disclosure guidance for reclassification of residential real estate collateralized consumer mortgage loans upon foreclosure. The amended guidance clarifies that an in-substance repossession or foreclosure occurs and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real

estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The adoption resulted in an insignificant increase in other real estate owned. The amount of foreclosed residential real estate property held by the Company was ~~$42~~$169 million and ~~$44~~$172 million at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. AtThere were $309 million and $315 million at March 31, 2016 and December 31, 2015, ~~there were $158 million in~~respectively, of loans secured by residential real estate that were in the process of foreclosure.

During February 2015, M&T Bank issued $1.5 billion of fixed rate senior notes pursuant to a Bank Note Program, of which $750 million have a 2.10% interest rate and mature in 2020 and $750 million have a 2.90% interest rate and mature in 2025.

M&T had ~~$836~~$515 million of fixed and ~~floating~~variable rate junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) outstanding at March 31, ~~2015~~2016 that are held by various trusts ~~and~~that were issued in connection with the issuance by those trusts of preferred capital securities (“Capital Securities”) and common securities (“Common Securities”). The proceeds from the issuances of the Capital Securities and the Common Securities were used by the trusts to purchase the Junior Subordinated Debentures. The Common Securities of each of those trusts are wholly owned by M&T and are the only class of each trust’s securities possessing general voting powers. The Capital Securities represent preferred undivided interests in the assets of the corresponding trust. Under the Federal Reserve Board’s risk-based capital guidelines, beginning in 2016 none of the securities are includable in M&T’s Tier 1 regulatory capital, but do qualify for inclusion in Tier 2 regulatory capital.

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

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

On April 15, 2015, M&T redeemed all of the issued and outstanding Capital Securities issued by M&T Capital Trust I, M&T Capital Trust II and M&T Capital Trust III, and the related Junior Subordinated Debentures held by those respective trusts. In the aggregate, $323 million of Junior Subordinated Debentures were redeemed. In February 2014, M&T redeemed all of the issued and outstanding 8.5% $350 million Capital Securities issued by M&T Capital Trust IV and the related Junior Subordinated Debentures held by M&T Capital Trust IV.

Also included in long-term borrowings are agreements to repurchase securities of ~~$1.4~~$1.9 billion at each of March 31, ~~2015~~2016 and December 31, ~~2014.~~2015. The agreements reflect various repurchase dates ~~in 2016 and 2017 and~~through 2020, however, the contractual maturities of the underlying investment securities extend beyond such repurchase dates. The agreements are subject to legally enforceable master netting arrangements, however, the Company has not offset any amounts related to these agreements in its consolidated financial statements. The Company posted collateral consisting primarily of government guaranteed mortgage-backed securities of ~~$1.5~~$2.1 billion and $2.0 billion at ~~each of~~ March 31, ~~2015~~2016 and December 31, ~~2014.~~2015, respectively.

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

Issued and outstanding preferred stock of M&T as of March 31, ~~2015~~2016 and December 31, ~~2014~~2015 is presented below:


	Shares issued and outstanding		Carrying value		Shares issued and outstanding		Carrying value
	(dollars in thousands)				(dollars in thousands)
Series A (a)
Fixed Rate Cumulative Perpetual Preferred Stock, Series A, $1,000 liquidation preference per share		230,000	$	230,000
Fixed Rate Cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share						230,000	$	230,000

Series C (a)
Fixed Rate Cumulative Perpetual Preferred Stock, Series C, $1,000 liquidation preference per share		151,500	$	151,500
Fixed Rate Cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share						151,500	$	151,500

Series D (b)
Fixed Rate Non-cumulative Perpetual Preferred Stock, Series D, $10,000 liquidation preference per share		50,000	$	500,000
Fixed Rate Non-cumulative Perpetual Preferred Stock, $10,000 liquidation preference per share						50,000	$	500,000

Series E (c)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock, Series E, $1,000 liquidation preference per share		350,000	$	350,000
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share						350,000	$	350,000

In addition to the Series A warrants mentioned in (a) above, a warrant to purchase 95,383 shares of M&T common stock at $518.96 per share was outstanding at March 31, ~~2015~~2016 and December 31, ~~2014.~~2015. The obligation under that warrant was assumed by M&T in an acquisition.

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


	Pension benefits						Other postretirement benefits						Pension benefits						Other postretirement benefits
	Three months ended March 31												Three months ended March 31
	2015			2014			2015			2014			2016			2015			2016			2015
	(in thousands)												(in thousands)

Service cost	$	6,000			5,100			200			150		$	6,382			6,000			458			200
Interest cost on projected benefit obligation		17,775			17,250			650			675			20,883			17,775			1,205			650
Expected return on plan assets		(23,575	)		(22,925	)		—			—			(27,814	)		(23,575	)		— ��			—
Amortization of prior service credit		(1,525	)		(1,650	)		(350	)		(350	)		(825	)		(1,525	)		(350	)		(350	)
Amortization of net actuarial loss		11,175			3,350			25			—			8,300			11,175			—			25


Net periodic benefit cost	$	9,850			1,125			525			475		$	6,926			9,850			1,313			525

Expense incurred in connection with the Company’s defined contribution pension and retirement savings plans totaled ~~$16,750,000~~$17,690,000 and ~~$15,732,000~~$16,750,000 for the three months ended March 31, ~~2015~~2016 and ~~2014,~~2015, respectively.


	Three months ended March 31						Three months ended March 31
	2015			2014			2016			2015
	(in thousands, except per share)						(in thousands, except per share)
Income available to common shareholders:

Net income	$	241,613			229,017		$	298,528			241,613
Less: Preferred stock dividends (a)		(20,318	)		(14,674	)		(20,318	)		(20,318	)

Net income available to common equity		221,295			214,343			278,210			221,295
Less: Income attributable to unvested stock-based compensation awards		(2,465	)		(2,623	)		(2,466	)		(2,465	)


Net income available to common shareholders	$	218,830			211,720		$	275,744			218,830

Weighted-average shares outstanding:

Common shares outstanding (including common stock issuable) and unvested stock-based compensation awards		133,542			131,800			160,220			133,542
Less: Unvested stock-based compensation awards		(1,493	)		(1,588	)		(1,486	)		(1,493	)


Weighted-average shares outstanding		132,049			130,212			158,734			132,049

Basic earnings per common share	$	1.66			1.63		$	1.74			1.66


	Three months ended March 31						Three months ended March 31
	2015			2014			2016			2015
	(in thousands, except per share)						(in thousands, except per share)

Net income available to common equity	$	221,295			214,343		$	278,210			221,295
Less: Income attributable to unvested stock-based compensation awards		(2,458	)		(2,612	)		(2,462	)		(2,458	)


Net income available to common shareholders	$	218,837			211,731		$	275,748			218,837

Adjusted weighted-average shares outstanding:

Common and unvested stock-based compensation awards		133,542			131,800			160,220			133,542
Less: Unvested stock-based compensation awards		(1,493	)		(1,588	)		(1,486	)		(1,493	)
Plus: Incremental shares from assumed conversion of stock-based compensation awards		720			914
Plus: Incremental shares from assumed conversion of stock-based compensation awards and warrants to purchase common stock								447			720


Adjusted weighted-average shares outstanding		132,769			131,126			159,181			132,769

Diluted earnings per common share	$	1.65			1.61		$	1.73			1.65

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

Stock-based compensation awards and warrants to purchase common stock of M&T representing approximately ~~2.7~~2.8 million and ~~3.0~~2.7 million common shares during the three-month periods ended March 31, ~~2015~~2016 and ~~2014,~~2015, respectively, were not included in the computations of diluted earnings per common share because the effect on those periods would have been antidilutive.

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


	Investment Securities																			Investment Securities
	With OTTI (a)		All other		Defined benefit plans			Other			Total amount before tax			Income tax			Net			With OTTI (a)			All other			Defined benefit plans			Other			Total amount before tax			Income tax			Net
	(in thousands)																			(in thousands)

Balance – January 1, 2015	$	7,438		201,828		(503,027	)		(4,082	)	$	(297,843	)		116,849		$	(180,994	)
Balance - January 1, 2016																				$	16,359			62,849			(489,660	)		(4,093	)	$	(414,545	)		162,918		$	(251,627	)

Other comprehensive income before reclassifications:
Unrealized holding gains, net		8,011		32,063		—			—			40,074			(15,247	)		24,827
Unrealized holding gains (losses), net																					(370	)		159,660			—			—			159,290			(62,680	)		96,610
Foreign currency translation adjustment		—		—		—			(3,732	)		(3,732	)		1,348			(2,384	)		—			—			—			(83	)		(83	)		30			(53	)
Gains on cash flow hedges		—		—		—			1,453			1,453			(568	)		885

Total other comprehensive income before reclassifications		8,011		32,063		—			(2,279	)		37,795			(14,467	)		23,328
Total other comprehensive income (loss) before reclassifications																					(370	)		159,660			—			(83	)		159,207			(62,650	)		96,557


Amounts reclassified from accumulated other comprehensive income that (increase) decrease net income:

Accretion of unrealized holding losses on held-to-maturity (“HTM”) securities		—		739		—			—			739	(b)		(289	)		450			—			968			—			—			968	(b)		(381	)		587
Losses realized in net income		—		98		—			—			98	(c)		(36	)		62
Accretion of gain on terminated cash flow hedges		—		—		—			(24	)		(24	) (d)		10			(14	)
Gains realized in net income																					—			(4	)		—			—			(4	)(c)		1			(3	)
Accretion of net gain on terminated cash flow hedges																					—			—			—			(39	)		(39	)(d)		15			(24	)
Amortization of prior service credit		—		—		(1,875	)		—			(1,875	) (e)		934			(941	)		—			—			(1,175	)		—			(1,175	)(e)		462			(713	)
Amortization of actuarial losses		—		—		11,200			—			11,200	(e)		(5,582	)		5,618			—			—			8,300			—			8,300	(e)		(3,266	)		5,034

Total reclassifications		—		837		9,325			(24	)		10,138			(4,963	)		5,175			—			964			7,125			(39	)		8,050			(3,169	)		4,881


Total gain (loss) during the period		8,011		32,900		9,325			(2,303	)		47,933			(19,430	)		28,503			(370	)		160,624			7,125			(122	)		167,257			(65,819	)		101,438


Balance – March 31, 2015	$	15,449		234,728		(493,702	)		(6,385	)	$	(249,910	)		97,419		$	(152,491	)
Balance - March 31, 2016																				$	15,989			223,473			(482,535	)		(4,215	)	$	(247,288	)		97,099		$	(150,189	)


	Investment Securities																			Investment Securities
	With OTTI (a)		All other		Defined benefit plans			Other			Total amount before tax			Income tax			Net			With OTTI (a)		All other		Defined benefit plans			Other			Total amount before tax			Income tax			Net
	(in thousands)																			(in thousands)

Balance – January 1, 2014	$	37,255		18,450		(161,617	)		115		$	(105,797	)		41,638		$	(64,159	)
Balance - January 1, 2015																				$	7,438		201,828		(503,027	)		(4,082	)	$	(297,843	)		116,849		$	(180,994	)

Other comprehensive income before reclassifications:
Unrealized holding gains, net		19,968		42,119		—			—			62,087			(24,374	)		37,713			8,011		32,063		—			—			40,074			(15,247	)		24,827
Foreign currency translation adjustment		—		—		—			(234	)		(234	)		98			(136	)		—		—		—			(3,732	)		(3,732	)		1,348			(2,384	)
Gains on cash flow hedges																					—		—		—			1,453			1,453			(568	)		885

Total other comprehensive income before reclassifications		19,968		42,119		—			(234	)		61,853			(24,276	)		37,577
Total other comprehensive income(loss) before reclassifications																					8,011		32,063		—			(2,279	)		37,795			(14,467	)		23,328


Amounts reclassified from accumulated other comprehensive income that (increase) decrease net income:

Accretion of unrealized holding losses on HTM securities		2		823		—			—			825	(b)		(324	)		501
Amortization of unrealized holding losses on HTM securities																					—		739		—			—			739	(b)		(289	)		450
Losses realized in net income																					—		98		—			—			98	(c)		(36	)		62
Accretion of net gain on terminated cash flow hedges																					—		—		—			(24	)		(24	)(d)		10			(14	)
Amortization of prior service credit		—		—		(2,000	)		—			(2,000	) (e)		785			(1,215	)		—		—		(1,875	)		—			(1,875	)(e)		934			(941	)
Amortization of actuarial losses		—		—		3,350			—			3,350	(e)		(1,315	)		2,035			—		—		11,200			—			11,200	(e)		(5,582	)		5,618

Total reclassifications		2		823		1,350			—			2,175			(854	)		1,321			—		837		9,325			(24	)		10,138			(4,963	)		5,175


Total gain (loss) during the period		19,970		42,942		1,350			(234	)		64,028			(25,130	)		38,898			8,011		32,900		9,325			(2,303	)		47,933			(19,430	)		28,503


Balance – March 31, 2014	$	57,225		61,392		(160,267	)		(119	)	$	(41,769	)		16,508		$	(25,261	)
Balance - March 31, 2015																				$	15,449		234,728		(493,702	)		(6,385	)	$	(249,910	)		97,419		$	(152,491	)

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 and collateral provisions protecting the at-risk party. Based on adherence to the Company’s credit standards and the presence of the netting and collateral provisions, the Company believes that the credit risk inherent in these contracts was not significant as of March 31, ~~2015.~~2016.

The net effect of interest rate swap agreements was to increase net interest income by $10 million and $11 million for ~~each of~~ the three-month periods ended March 31, 2016 and 2015, ~~and 2014.~~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:


	Notional amount		Average maturity			Weighted- average rate													Weighted-
					Fixed				Variable			Notional			Average			average rate
	(in thousands)			(in years)										amount			maturity			Fixed		Variable
March 31, 2015
													(in thousands)			(in years)
March 31, 2016
Fair value hedges:
Fixed rate long-term borrowings (a)	$	1,400,000		2.4			4.42	%		1.22	%		$	1,400,000			1.4			4.42	%	1.59	%


December 31, 2014
December 31, 2015
Fair value hedges:
Fixed rate long-term borrowings (a)	$	1,400,000		2.7			4.42	%		1.19	%		$	1,400,000			1.7			4.42	%	1.39	%

The use of cash flow hedges to manage the variability of cash flows associated with the then-forecasted issuance of long-term debt did not have a significant impact on the Company’s consolidated financial position or results of operations.

The Company utilizes commitments to sell residential and commercial real estate loans to hedge the exposure to changes in the fair value of real estate loans held for sale. Such commitments have generally been designated as fair value hedges. The Company also utilizes commitments to sell real estate loans to offset the exposure to changes in fair value of certain commitments to originate real estate loans for sale.

Derivative financial instruments used for trading account purposes included interest rate contracts, foreign exchange and other option contracts, foreign exchange forward and spot contracts, and financial futures. Interest rate contracts entered into for trading account purposes had notional values of ~~$17.1~~$18.9 billion and ~~$17.6~~$18.4 billion at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. The notional amounts of foreign currency and other option and futures contracts entered into for trading account purposes aggregated ~~$1.4~~$2.8 billion and ~~$1.3~~$1.6 billion at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively.

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


	Asset derivatives				Liability derivatives				Asset derivatives				Liability derivatives
	Fair value				Fair value				Fair value				Fair value
	March 31, 2015		December 31, 2014		March 31, 2015		December 31, 2014		March 31, 2016		December 31, 2015		March 31, 2016		December 31, 2015
	(in thousands)								(in thousands)
Derivatives designated and qualifying as hedging instruments
Fair value hedges:
Interest rate swap agreements (a)	$	72,855		73,251	$	—		—	$	41,259		43,892	$	—		—
Commitments to sell real estate loans (a)		662		728		3,529		4,217		412		1,844		3,243		656

		73,517		73,979		3,529		4,217		41,671		45,736		3,243		656

Derivatives not designated and qualifying as hedging instruments
Mortgage-related commitments to originate real estate loans for sale (a)		26,295		17,396		65		49		16,929		10,282		44		403
Commitments to sell real estate loans (a)		1,571		754		8,552		4,330		428		533		2,413		846
Trading:
Interest rate contracts (b)		246,819		215,614		204,484		173,513		329,739		203,517		278,981		153,723
Foreign exchange and other option and futures contracts (b)		37,957		31,112		35,684		29,950		17,807		8,569		16,888		7,022

		312,642		264,876		248,785		207,842		364,903		222,901		298,326		161,994


Total derivatives	$	386,159		338,855	$	252,314		212,059	$	406,574		268,637	$	301,569		162,650


	Amount of unrealized gain (loss) recognized										Amount of gain (loss) recognized
	Three months ended March 31, 2015					Three months ended March 31, 2014					Three months ended March 31, 2016					Three months ended March 31, 2015
	Derivative			Hedged item		Derivative			Hedged item		Derivative			Hedged item		Derivative			Hedged item
	(in thousands)										(in thousands)
Derivatives in fair value hedging relationships

Interest rate swap agreements:
Fixed rate long-term borrowings (a)	$	(396	)		161	$	(8,160	)		7,920	$	(2,633	)		1,870	$	(396	)		161


Derivatives not designated as hedging instruments

Trading:
Interest rate contracts (b)	$	660				$	(302	)			$	974				$	660
Foreign exchange and other option and futures contracts (b)		(167	)				(5,030	)				1,212					2,789


Total	$	493				$	(5,332	)			$	2,186				$	3,449

~~In addition, the~~The Company ~~also~~ has commitments to sell and commitments to originate residential and commercial real estate loans that are considered derivatives. The Company designates certain of the commitments to sell real estate loans as fair value hedges of real estate loans held for sale. The Company also utilizes commitments to sell real estate loans to offset the exposure to changes in the fair value of certain commitments to originate real estate loans for sale. As a result of these activities, net unrealized pre-tax gains related to hedged loans held for sale, commitments to originate loans for sale and commitments to sell loans were approximately ~~at $31~~$22 million and ~~$28~~$18 million at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. Changes in unrealized gains and losses are included in mortgage banking revenues and, in general, are realized in subsequent periods as the related loans are sold and commitments satisfied.

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

The aggregate fair value of derivative financial instruments in a liability position, which are subject to enforceable master netting arrangements, was ~~$174~~$98 million and ~~$161~~$59 million at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. After consideration of such netting arrangements, the net liability positions with counterparties aggregated ~~$114~~$95 million and ~~$103~~$55 million at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. The Company was required to post collateral relating to those positions of ~~$102~~$84 million and ~~$90~~$52 million, at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. Certain of the Company’s derivative financial instruments contain provisions that require the Company to maintain specific credit ratings from credit rating agencies to avoid higher collateral

posting requirements. If the Company’s debt rating were to fall below specified ratings,

the counterparties ofto 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, ~~2015~~2016 was ~~$22~~$19 million, for which the Company had posted collateral of ~~$15~~$13 million in the normal course of business. If the credit risk-related contingent features had been triggered on March 31, ~~2015,~~2016, the maximum amount of additional collateral the Company would have been required to post with counterparties was $7$6 million.

The aggregate fair value of derivative financial instruments in an asset position, which are subject to enforceable master netting arrangements, was ~~$106~~$24 million and ~~$104~~$23 million at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. After consideration of such netting arrangements, the net asset positions with counterparties aggregated ~~$46~~$21 million and $19 million at ~~each of~~ March 31, ~~2015~~2016 and December 31, ~~2014.~~2015, respectively. Counterparties posted collateral relating to those positions of ~~$47~~$21 million and ~~$46~~$22 million at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. Trading account interest rate swap agreements entered into with customers are subject to the Company’s credit risk standards and often contain collateral provisions.

In addition to the derivative contracts noted above, the Company clears certain derivative transactions through a clearinghouse rather than directly with counterparties. Those transactions cleared through a clearinghouse require initial margin collateral and additional collateral for contracts in a net liability position. The net fair values of derivative financial instruments cleared through clearinghouses at March 31, 2016 was a net liability position of $156 million and at December 31, 2015 was a net liability position of ~~$65 million and at December 31, 2014 was a net liability position of $35~~$50 million. Collateral posted with clearinghouses was ~~$97~~$204 million and ~~$61~~$99 million at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively.

During the first quarter of 2015, the Company securitized approximately $13 million of one-to-four family residential real estate loans that had been originated for sale in guaranteed mortgage securitizations with the Government National Mortgage Association (“Ginnie Mae”) and retained the resulting securities in its investment securities portfolio. In similar transactions for the three months ended March 31, 2014, the Company securitized $29 million of one-to-four family residential real estate loans. Gains associated with those transactions were not significant.

In accordance with GAAP, at December 31, 2015 the Company determined that it was the primary beneficiary of a residential mortgage loan securitization trust considering its role as servicer and its retained subordinated interests in the trust. As a result, the Company ~~has~~had included the one-to-four family residential mortgage loans that were included in the trust in its consolidated financial statements. In the first quarter of 2016, the securitization trust was terminated as the Company exercised its right to purchase the underlying mortgage loans pursuant to the clean-up call provisions of the trust. At ~~March~~December 31, 2015, ~~and December 31, 2014,~~ the carrying ~~values~~value of the loans in the securitization trust ~~were $93 million and $98 million, respectively.~~was $81 million. The outstanding principal amount of mortgage-backed securities issued by the qualified special purpose trust that was held by parties unrelated to ~~M&T~~the Company at ~~March~~December 31, 2015 ~~and December 31, 2014~~ was $14 million and $15 million, respectively. Because the transaction was non-recourse, the Company’s maximum exposure to loss as a result of its association with the trust at March 31, 2015 is limited to realizing the carrying value of the loans less the amount of the mortgage-backed securities held by third parties.

As described in note 5, M&T has issued junior subordinated debentures payable to various trusts that have issued Capital Securities. M&T owns the common securities of those trust entities. The Company is not considered to be the primary beneficiary of those entities and, accordingly, the trusts are not included in the Company’s consolidated financial statements. At each of March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, the Company included the junior subordinated debentures as “long-term borrowings” in its consolidated balance ~~sheet. The Company has~~sheet and recognized ~~$34~~$24 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 ~~Capital Securities~~preferred capital securities described in note 5.

The Company has invested as a limited partner in various partnerships that collectively had total assets of approximately ~~$1.2~~$1.1 billion at each of March 31, ~~2015~~2016 and December 31, ~~2014.~~2015. Those partnerships generally construct or acquire properties for which the investing partners are eligible to receive certain federal income tax credits in accordance with government guidelines. Such investments may also provide tax deductible losses to the partners. The partnership investments also assist the Company in achieving its community reinvestment initiatives. As a limited partner, there is no recourse to the Company by creditors of the partnerships. However, the tax credits that result from the Company’s investments in such partnerships are generally subject to recapture should a partnership fail to comply with the respective government regulations. The Company’s maximum exposure to loss onof its investments in such partnerships was ~~$303~~$290 million, including ~~$88~~$80 million of unfunded commitments, at March 31, ~~2015~~2016 and ~~$243~~$295 million, including ~~$56~~$78 million of unfunded commitments, at December 31, ~~2014.~~2015. Contingent commitments to provide additional capital contributions to these partnerships were not material at March 31, ~~2015.~~2016. The Company has not provided financial or other support to the partnerships that was not contractually required. Management currently estimates that no material losses are probable as a result of the Company’s involvement with such entities. The Company, in its position as a limited partner, does not direct the activities that most significantly impact the economic performance of the partnerships and, therefore, in accordance with the accounting provisions for variable interest entities, the partnership entities are not included in the Company’s consolidated financial statements. As described in note 1, effective January 1, 2015 the Company retrospectively adopted for all periods presented amended accounting guidance on the accounting for investments in qualified affordable housing projects whereby theThe Company’s investment cost is amortized to income taxes in the consolidated statement of income as tax credits and other tax benefits resulting from deductible losses associated with the projects are received. The Company amortized ~~$10~~$11 million and ~~$12~~$10 million of its investments in qualified affordable housing projects to income tax expense during the three-month periods ended March 31, ~~2015~~2016 and ~~2014,~~2015, respectively, and recognized $14 ~~million and $17~~ million of tax credits and other tax benefits during each of those respective periods.

The Company serves as investment advisor for certain registered money-market funds. The Company has no explicit arrangement to provide support to those funds, but may waive portions of its management fees. Such waivers were not material during the three months ended March 31, 2016 and 2015.

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, ~~2015.~~2016.

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.

When available, the Company attempts to use quoted market prices in active markets to determine fair value and classifies such items as Level 1 or Level 2. If quoted market prices in active markets are not available, fair value is often determined using model-based techniques incorporating various assumptions including interest rates, prepayment speeds and credit losses. Assets and liabilities valued using model-based techniques are classified as either Level 2 or Level 3, depending on the lowest level classification of an input that is considered significant to the overall valuation. The following is a description of the valuation methodologies used for the Company’s assets and liabilities that are measured on a recurring basis at estimated fair value.

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

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.

Included in collateralized debt obligations are securities backed by trust preferred securities issued by financial institutions and other entities. The Company could not obtain pricing indications for many of these securities from its two primary independent pricing sources. The Company, therefore, performed internal modeling to estimate the cash flows and fair value of its portfolio of securities backed by trust preferred securities at March 31, ~~2015~~2016 and December 31, ~~2014.~~2015. The modeling techniques included estimating cash flows using bond-specific assumptions about future collateral defaults and related loss severities. The resulting cash flows were then discounted by reference to market yields observed in the single-name trust preferred securities market. In determining a market yield applicable to the estimated cash flows, a margin over LIBOR ranging from 5%4% to 10%, with a weighted-average of 8%, was used. Significant unobservable inputs used in the determination of estimated fair value of collateralized debt obligations are included in the accompanying table of

significant unobservable inputs to Level 3 measurements. At March 31, ~~2015,~~2016, the total amortized cost and fair value of securities backed by trust preferred securities issued by financial institutions and other entities were ~~$30~~$28 million and ~~$47~~$45 million, respectively, and at December 31, ~~2014~~2015 were ~~$30~~$28 million and ~~$50~~$47 million, respectively. ~~Securities~~Privately issued mortgage-backed securities and securities backed by trust preferred securities issued by financial institutions and other entities constituted ~~substantially~~ all of the available-for-sale investment securities classified as Level 3 valuations.

The Company ensures an appropriate control framework is in place over the valuation processes and techniques used for significant Level 3 fair value measurements. Internal pricing models used for significant valuation measurements have generally been subjected to validation procedures including ~~review~~testing of mathematical constructs, review of valuation methodology and significant assumptions used.

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

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

The Company enters into various commitments to originate real estate loans for sale and commitments to sell real estate loans. Such commitments are considered to be derivative financial instruments and, therefore, are carried at estimated fair value on the consolidated balance sheet. The estimated fair values of such commitments were generally calculated by reference to quoted prices in secondary markets for commitments to sell real estate loans to certain government-sponsored entities and other parties. The fair valuations of commitments to sell real estate loans generally result in a Level 2 classification. The estimated fair value of commitments to originate real estate loans for sale 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.

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

The following tables present assets and liabilities at March 31, ~~2015~~2016 and December 31, ~~2014~~2015 measured at estimated fair value on a recurring basis:


	Fair value measurements at March 31, 2015		Level 1 (a)		Level 2 (a)		Level 3		Fair value measurements at March 31, 2016		Level 1(a)		Level 2(a)		Level 3
	(in thousands)								(in thousands)

Trading account assets	$	363,085		48,978		314,107		—	$	467,987		69,689		398,298		—
Investment securities available for sale:
U.S. Treasury and federal agencies		163,234		—		163,234		—		202,192		—		202,192		—
Obligations of states and political subdivisions		7,850		—		7,850		—		5,448		—		5,448		—
Mortgage-backed securities:
Government issued or guaranteed		10,265,221		—		10,265,221		—		11,750,062		—		11,750,062		—
Privately issued		95		—		—		95		65		—		—		65
Collateralized debt obligations		47,278		—		—		47,278		45,040		—		—		45,040
Other debt securities		121,273		—		121,273		—		112,708		—		112,708		—
Equity securities		98,549		71,804		26,745		—		85,132		67,150		17,982		—

		10,703,500		71,804		10,584,323		47,373		12,200,647		67,150		12,088,392		45,105


Real estate loans held for sale		540,546		—		540,546		—		396,764		—		396,764		—
Other assets (b)		101,383		—		75,088		26,295		59,028		—		42,099		16,929

Total assets	$	11,708,514		120,782		11,514,064		73,668	$	13,124,426		136,839		12,925,553		62,034


Trading account liabilities	$	240,168		—		240,168		—	$	295,869		—		295,869		—
Other liabilities (b)		12,146		—		12,081		65		5,700		—		5,656		44

Total liabilities	$	252,314		—		252,249		65	$	301,569		—		301,525		44


	Fair value measurements at December 31, 2014		Level 1 (a)		Level 2 (a)		Level 3		Fair value measurements at December 31, 2015		Level 1(a)		Level 2(a)		Level 3
	(in thousands)								(in thousands)

Trading account assets	$	308,175		51,416		256,759		—	$	273,783		56,763		217,020		—
Investment securities available for sale:
U.S. Treasury and federal agencies		161,947		—		161,947		—		299,997		—		299,997		—
Obligations of states and political subdivisions		8,198		—		8,198		—		6,028		—		6,028		—
Mortgage-backed securities:
Government issued or guaranteed		8,731,123		—		8,731,123		—		11,686,628		—		11,686,628		—
Privately issued		103		—		—		103		74		—		—		74
Collateralized debt obligations		50,316		—		—		50,316		47,393		—		—		47,393
Other debt securities		121,488		—		121,488		—		118,880		—		118,880		—
Equity securities		83,757		64,841		18,916		—		83,671		65,178		18,493		—

		9,156,932		64,841		9,041,672		50,419		12,242,671		65,178		12,130,026		47,467


Real estate loans held for sale		742,249		—		742,249		—		392,036		—		392,036		—
Other assets (b)		92,129		—		74,733		17,396		56,551		—		46,269		10,282

Total assets	$	10,299,485		116,257		10,115,413		67,815	$	12,965,041		121,941		12,785,351		57,749


Trading account liabilities	$	203,464		—		203,464		—	$	160,745		—		160,745		—
Other liabilities (b)		8,596		—		8,547		49		1,905		—		1,502		403

Total liabilities	$	212,060		—		212,011		49	$	162,650		—		162,247		403

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended March 31, 2016 were as follows:

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended March 31, 2015 were as follows:

~~The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended March 31, 2014 were as follows:~~


	Investment securities available for sale						Other assets and other liabilities			Investment securities available for sale
	Privately issued mortgage-backed securities			Collateralized debt obligations			Other assets and other liabilities			Privately issued mortgage-backed securities			Collateralized debt obligations			Other assets and other liabilities
	(in thousands)									(in thousands)

Balance – January 1, 2014	$	1,850		$	63,083		$	3,941
Balance – January 1, 2015										$	103		$	50,316		$	17,347

Total gains (losses) realized/unrealized:
Included in earnings		—			—			22,383	(a)		—			—			29,770	(b)
Included in other comprehensive income		67	(d)		4,646	(d)		—			—			(2,004	)(c)		—
Settlements		(1,221	)		(5,961	)		—			(8	)		(1,034	)		—
Transfers in and/or out of Level 3 (b)		—			—			(13,735	) (c)
Transfers in and/or out of Level 3 (a)											—			—			(20,887	)(d)


Balance – March 31, 2014	$	696		$	61,768		$	12,589
Balance – March 31, 2015										$	95		$	47,278		$	26,230


Changes in unrealized gains included in earnings related to assets still held at March 31, 2014	$	—		$	—		$	15,050	(a)
Changes in unrealized gains included in earnings related to assets still held at March 31, 2015										$	—		$	—		$	22,636	(b)

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 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 uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace and the related nonrecurring fair value measurement adjustments have generally been classified as Level 2, unless significant adjustments have been made to the valuation that are not readily observable by market participants. Non-real estate collateral supporting commercial loans generally consists of business assets such as receivables, inventory and equipment. Fair value estimations are typically determined by discounting recorded values of those assets to reflect estimated net realizable value considering specific borrower facts and circumstances and the experience of credit personnel in their dealings with similar borrower collateral liquidations. Such discounts were generally in the range of 10% to ~~80%~~90% at March 31, ~~2015.~~2016. As these discounts are not readily observable and are considered significant, the valuations have been classified as Level 3. Automobile collateral is typically valued by reference to independent pricing sources based on recent sales transactions of similar vehicles, and the related non-recurring fair value measurement adjustments have been classified as Level 2. Collateral values for other consumer installment loans are generally estimated based on historical recovery rates for similar types of loans. 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 ~~$101~~$226 million at March 31, ~~2015~~2016 ($67127 million and ~~$34~~$99 million of which were classified as Level 2 and Level 3, respectively), ~~$173~~$210 million at December 31, ~~2014~~2015 ($94106 million and ~~$79~~$104 million of which were classified as Level 2 and Level 3, respectively) and ~~$161~~$101 million at March 31, ~~2014~~2015 ($~~100~~67 million and ~~$61~~$34 million of which were classified as Level 2 and Level 3, respectively). Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on March 31, ~~2015~~2016 and ~~2014~~2015 were decreases of $8$27 million and ~~$15~~$8 million for the three-month periods ended March 31, ~~2015~~2016 and ~~2014,~~2015, respectively.

Assets taken in foreclosure of defaulted loans are primarily comprised of commercial and residential real property and are generally measured at the lower of cost or fair value less costs to sell. The fair value of the real property is generally determined using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace, and the related nonrecurring fair value measurement adjustments have generally been classified as Level 2. Assets taken in foreclosure of defaulted loans subject to nonrecurring fair value measurement were $62 million and $11 million at ~~each of~~March 31, 2016 and March 31, 2015, ~~and March 31, 2014.~~respectively. Changes in fair value recognized for those foreclosed assets held by the Company were not material during the three-month periods ended March 31, ~~2015~~2016 and ~~2014.~~2015.

The following tables present quantitative information about ~~the~~ significant unobservable inputs used in the fair value measurements for Level 3 assets and liabilities at March 31, ~~2015~~2016 and December 31, ~~2014:~~2015:


	Fair value at March 31, 2015		Valuation technique	Unobservable input/assumptions		Range (weighted- average)		Fair value at March 31, 2016		Valuation technique	Unobservable input/assumptions	Range (weighted- average)
	(in thousands)							(in thousands)
Recurring fair value measurements

Privately issued mortgage–backed securities	$	95	Two independent pricing quotes		—	—		$	65	Two independent pricing quotes	—	—

Collateralized debt obligations		47,278	Discounted cash flow		Probability of default	12%-57% (45%)			45,040	Discounted cash flow	Probability of default	10%-56% (31%)
					Loss severity	100%					Loss severity	100%

Net other assets (liabilities) (a)		26,230	Discounted cash flow		Commitment expirations	0%-96% (19%)			16,885	Discounted cash flow	Commitment expirations	0%-66% (31%)

	Fair value at December 31, 2014		Valuation technique	Unobservable input/assumptions		Range (weighted- average)		Fair value at December 31, 2015		Valuation technique	Unobservable input/assumptions	Range (weighted- average)
	(in thousands)							(in thousands)
Recurring fair value measurements

Privately issued mortgage–backed securities	$	103	Two independent pricing quotes		—	—		$	74	Two independent pricing quotes	—	—

Collateralized debt obligations		50,316	Discounted cash flow		Probability of default	12%-57% (36%)	��		47,393	Discounted cash flow	Probability of default	10%-56% (31%)
					Loss severity	100%					Loss severity	100%

Net other assets (liabilities) (a)		17,347	Discounted cash flow		Commitment expirations	0%-96% (17%)			9,879	Discounted cash flow	Commitment expirations	0%-60% (39%)

An increase (decrease) in the probability of default and loss severity for collateralized debt securities would generally result in a lower (higher) fair value measurement.

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.

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


	March 31, 2015														March 31, 2016
	Carrying amount			Estimated fair value			Level 1		Level 2			Level 3			Carrying amount			Estimated fair value			Level 1		Level 2			Level 3
	(in thousands)																	(in thousands)
Financial assets:
Cash and cash equivalents	$	1,366,853		$	1,366,853		$	1,311,917	$	54,936		$	—		$	1,178,175		$	1,178,175		$	1,112,933	$	65,242		$	—
Interest-bearing deposits at banks		6,291,491			6,291,491			—		6,291,491			—			9,545,181			9,545,181			—		9,545,181			—
Trading account assets		363,085			363,085			48,978		314,107			—			467,987			467,987			69,689		398,298			—
Investment securities		14,393,270			14,444,292			71,804		14,162,805			209,683			15,467,320			15,506,052			67,150		15,256,530			182,372
Loans and leases:
Commercial loans and leases		19,775,494			19,484,920			—		—			19,484,920			21,226,577			20,875,827			—		—			20,875,827
Commercial real estate loans		27,845,710			27,746,166			—		117,366			27,628,800			29,713,293			29,569,740			—		127,736			29,442,004
Residential real estate loans		8,504,119			8,609,248			—		5,119,739			3,489,509			25,299,638			25,386,240			—		4,590,667			20,795,573
Consumer loans		10,973,719			10,880,895			—		—			10,880,895			11,632,958			11,553,135			—		—			11,553,135
Allowance for credit losses		(921,373	)		—			—		—			—			(962,752	)		—			—		—			—

Loans and leases, net		66,177,669			66,721,229			—		5,237,105			61,484,124			86,909,714			87,384,942			—		4,718,403			82,666,539
Accrued interest receivable		244,079			244,079			—		244,079			—			318,486			318,486			—		318,486			—

Financial liabilities:
Noninterest-bearing deposits	$	(27,181,120	)	$	(27,181,120	)	$	—	$	(27,181,120	)	$	—		$	(29,709,218	)	$	(29,709,218	)		—	$	(29,709,218	)		—
Savings deposits and NOW accounts		(43,288,329	)		(43,288,329	)		—		(43,288,329	)		—
Savings and interest-checking deposits																(51,497,240	)		(51,497,240	)		—		(51,497,240	)		—
Time deposits		(2,946,126	)		(2,967,329	)		—		(2,967,329	)		—			(12,841,331	)		(12,879,619	)		—		(12,879,619	)		—
Deposits at Cayman Islands office		(178,545	)		(178,545	)		—		(178,545	)		—			(166,787	)		(166,787	)		—		(166,787	)		—
Short-term borrowings		(193,495	)		(193,495	)		—		(193,495	)		—			(1,766,826	)		(1,766,826	)		—		(1,766,826	)		—
Long-term borrowings		(10,509,143	)		(10,641,367	)		—		(10,641,367	)		—			(10,341,035	)		(10,338,217	)		—		(10,338,217	)		—
Accrued interest payable		(77,903	)		(77,903	)		—		(77,903	)		—			(80,605	)		(80,605	)		—		(80,605	)		—
Trading account liabilities		(240,168	)		(240,168	)		—		(240,168	)		—			(295,869	)		(295,869	)		—		(295,869	)		—

Other financial instruments:
Commitments to originate real estate loans for sale	$	26,230		$	26,230		$	—	$	—		$	26,230		$	16,885		$	16,885			—	$	—		$	16,885
Commitments to sell real estate loans		(9,848	)		(9,848	)		—		(9,848	)		—			(4,816	)		(4,816	)		—		(4,816	)		—
Other credit-related commitments		(112,511	)		(112,511	)		—		—			(112,511	)		(118,521	)		(118,521	)		—		—			(118,521	)
Interest rate swap agreements used for interest rate risk management		72,855			72,855			—		72,855			—			41,259			41,259			—		41,259			—


	December 31, 2014														December 31, 2015
	Carrying amount			Estimated fair value			Level 1		Level 2			Level 3			Carrying amount			Estimated fair value			Level 1		Level 2			Level 3
	(in thousands)																	(in thousands)
Financial assets:
Cash and cash equivalents	$	1,373,357		$	1,373,357		$	1,296,923	$	76,434		$	—		$	1,368,040		$	1,368,040		$	1,276,678	$	91,362		$	—
Interest-bearing deposits at banks		6,470,867			6,470,867			—		6,470,867			—			7,594,350			7,594,350			—		7,594,350			—
Trading account assets		308,175			308,175			51,416		256,759			—			273,783			273,783			56,763		217,020			—
Investment securities		12,993,542			13,023,956			64,841		12,750,396			208,719			15,656,439			15,660,877			65,178		15,406,404			189,295
Loans and leases:
Commercial loans and leases		19,461,292			19,188,574			—		—			19,188,574			20,422,338			20,146,201			—		—			20,146,201
Commercial real estate loans		27,567,569			27,487,818			—		307,667			27,180,151			29,197,311			29,044,244			—		38,774			29,005,470
Residential real estate loans		8,657,301			8,729,056			—		5,189,086			3,539,970			26,270,103			26,267,771			—		4,727,816			21,539,955
Consumer loans		10,982,794			10,909,623			—		—			10,909,623			11,599,747			11,550,270			—		—			11,550,270
Allowance for credit losses		(919,562	)		—			—		—			—			(955,992	)		—			—		—			—

Loans and leases, net		65,749,394			66,315,071			—		5,496,753			60,818,318			86,533,507			87,008,486			—		4,766,590			82,241,896
Accrued interest receivable		227,348			227,348			—		227,348			—			306,496			306,496			—		306,496			—

Financial liabilities:
Noninterest-bearing deposits	$	(26,947,880	)	$	(26,947,880	)	$	—	$	(26,947,880	)	$	—		$	(29,110,635	)	$	(29,110,635	)		—	$	(29,110,635	)		—
Savings deposits and NOW accounts		(43,393,618	)		(43,393,618	)		—		(43,393,618	)		—
Savings and interest-checking deposits																(49,566,644	)		(49,566,644	)		—		(49,566,644	)		—
Time deposits		(3,063,973	)		(3,086,126	)		—		(3,086,126	)		—			(13,110,392	)		(13,135,042	)		—		(13,135,042	)		—
Deposits at Cayman Islands office		(176,582	)		(176,582	)		—		(176,582	)		—			(170,170	)		(170,170	)		—		(170,170	)		—
Short-term borrowings		(192,676	)		(192,676	)		—		(192,676	)		—			(2,132,182	)		(2,132,182	)		—		(2,132,182	)		—
Long-term borrowings		(9,006,959	)		(9,139,789	)		—		(9,139,789	)		—			(10,653,858	)		(10,639,556	)		—		(10,639,556	)		—
Accrued interest payable		(63,372	)		(63,372	)		—		(63,372	)		—			(85,145	)		(85,145	)		—		(85,145	)		—
Trading account liabilities		(203,464	)		(203,464	)		—		(203,464	)		—			(160,745	)		(160,745	)		—		(160,745	)		—

Other financial instruments:
Commitments to originate real estate loans for sale	$	17,347		$	17,347		$	—	$	—		$	17,347		$	9,879		$	9,879			—	$	—		$	9,879
Commitments to sell real estate loans		(7,065	)		(7,065	)		—		(7,065	)		—			875			875			—		875			—
Other credit-related commitments		(119,079	)		(119,079	)		—		—			(119,079	)		(122,334	)		(122,334	)		—		—			(122,334	)
Interest rate swap agreements used for interest rate risk management		73,251			73,251			—		73,251			—			43,892			43,892			—		43,892			—

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

Cash and cash equivalents, interest-bearing deposits at banks, deposits at Cayman Islands office, short-term borrowings, accrued interest receivable and accrued interest payable

Due to the nature of cash and cash equivalents and the near maturity of interest-bearing deposits at banks, deposits at Cayman Islands office, short-term borrowings, accrued interest receivable and accrued interest payable, the Company estimated that the carrying amount of such instruments approximated estimated fair value.

Estimated fair values of investments in readily marketable securities were generally based on quoted market prices. Investment securities that were not readily marketable were assigned amounts based on estimates provided by outside parties or modeling techniques that relied upon discounted calculations of projected cash flows or, in the case of other investment securities, which include capital stock of the Federal Reserve Bank of New York and the Federal Home Loan Bank of New York, at an amount equal to the carrying amount.

In general, discount rates used to calculate values for loan products were based on the Company’s pricing at the respective period end. A higher discount rate was assumed with respect to estimated cash flows associated with nonaccrual loans. Projected loan cash flows were adjusted for estimated credit losses. However, such estimates made by the Company may not be indicative of assumptions and adjustments that a purchaser of the Company’s loans and leases would seek.

Pursuant to GAAP, the estimated fair value ascribed to noninterest-bearing deposits, savings deposits and ~~NOW accounts~~interest-checking deposits must be established at carrying value because of the customers’ ability to withdraw funds immediately. Time deposit accounts are required to be revalued based upon prevailing market interest rates for similar maturity instruments. As a result, amounts assigned to time deposits were based on discounted cash flow calculations using prevailing market interest rates based on the Company’s pricing at the respective date for deposits with comparable remaining terms to maturity.

The Company believes that deposit accounts have a value greater than that prescribed by GAAP. The Company feels, however, that the value associated with these deposits is greatly influenced by characteristics of the buyer, such as the ability to reduce the costs of servicing the deposits and deposit attrition which often occurs following an acquisition.

The amounts assigned to long-term borrowings were based on quoted market prices, when available, or were based on discounted cash flow calculations using prevailing market interest rates for borrowings of similar terms and credit risk.

As described in note 13, in the normal course of business, various commitments and contingent liabilities are outstanding, such as loan commitments, credit guarantees and letters of credit. The Company’s pricing of such financial instruments is based largely on credit quality and relationship, probability of funding and other requirements. Loan commitments often have fixed expiration dates and contain termination and other clauses which provide for relief from funding in the event of significant deterioration in the credit quality of the customer. The rates and terms of the Company’s loan commitments, credit guarantees and letters of credit are competitive with other financial institutions operating in markets served by the Company. The Company believes that the carrying amounts, which are included in other liabilities, are reasonable estimates of the fair value of these financial instruments.

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.

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, 2015		December 31, 2014		March 31, 2016		December 31, 2015
	(in thousands)				(in thousands)
Commitments to extend credit
Home equity lines of credit	$	6,219,783		6,194,516	$	5,604,610		5,631,680
Commercial real estate loans to be sold		346,664		212,257		184,198		57,597
Other commercial real estate and construction		5,161,878		4,834,699
Other commercial real estate						5,727,946		5,949,933
Residential real estate loans to be sold		661,132		432,352		520,694		488,621
Other residential real estate		581,384		524,399		281,735		212,619
Commercial and other		11,493,613		11,080,856		12,077,612		11,802,850

Standby letters of credit		3,648,095		3,706,888		3,330,241		3,330,013

Commercial letters of credit		42,291		46,965		45,798		55,559

Financial guarantees and indemnification contracts		2,535,609		2,490,050		2,773,590		2,794,322

Commitments to sell real estate loans		1,322,998		1,237,294		958,337		782,885

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. Standby and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party, whereas commercial letters of credit are issued to facilitate commerce and typically result in the commitment being funded when the underlying transaction is consummated between the customer and a third party. The credit risk associated with commitments to extend credit and standby and commercial letters

of credit is essentially the same as that involved with extending loans to customers and is subject to normal credit policies. Collateral may be obtained based on management’s assessment of the customer’s creditworthiness.

Financial guarantees and indemnification contracts are oftentimes similar to standby letters of credit and include mandatory purchase agreements issued to ensure that customer obligations are fulfilled, recourse obligations associated with sold loans, and other guarantees of customer performance or compliance with designated rules and regulations. Included in financial guarantees and

indemnification contracts are loan principal amounts sold with recourse in conjunction with the Company’s involvement in the Fannie Mae Delegated Underwriting and Servicing program. The Company’s maximum credit risk for recourse associated with loans sold under this program totaled approximately ~~$2.4~~$2.6 billion and $2.5 billion at ~~each of~~ March 31, ~~2015~~2016 and December 31, ~~2014.~~2015, respectively.

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

The Company utilizes commitments to sell real estate loans to hedge exposure to changes in the fair value of real estate loans held for sale. Such commitments are considered derivatives and along with commitments to originate real estate loans to be held for sale are generally recorded in the consolidated balance sheet at estimated fair market value.

The Company is contractually obligated to repurchase previously sold residential real estate loans that do not ultimately meet investor sale criteria related to underwriting procedures or loan documentation. When required to do so, the Company may reimburse loan purchasers for losses incurred or may repurchase certain loans. The Company reduces residential mortgage banking revenues by an estimate for losses related to its obligations to loan purchasers. 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. AtSubject to the outcome of the matter discussed in the following paragraph, at March 31, ~~2015,~~2016, management believes that any further liability arising out of the Company’s obligation to loan purchasers is not material to the Company’s consolidated financial position.

The Company is the subject of an investigation by government agencies relating to the origination of Federal Housing Administration (“FHA”) insured residential home loans and residential home loans sold to Freddie Mac and Fannie Mae. A number of other U.S. financial institutions have announced similar investigations. Regarding FHA loans, the U.S. Department of Housing and Urban Development (“HUD”) Office of Inspector General and the Department of Justice (collectively, the “Government”) are investigating whether the Company complied with underwriting guidelines concerning certain loans where HUD paid FHA insurance claims. The Company is fully cooperating with the investigation. The Government has advised the Company that based upon its review of a sample of loans for which an FHA insurance claim was paid by HUD, some of the loans do not meet underwriting guidelines. The Company, based on its own review of the sample, does not agree with the sampling methodology and loan analysis employed by the Government. Regarding loans originated by the Company and sold to Freddie Mac and Fannie Mae, the investigation concerns whether the mortgages sold to Freddie Mac and Fannie Mae comply with applicable underwriting guidelines. The Company is also cooperating with that portion of the investigation. The investigation could lead to claims by the Government under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which allow treble and other special damages substantially in excess of actual losses. Remedies in these proceedings or settlements may include restitution, fines, penalties, or alterations in the Company’s business practices. The Company and the Government continue settlement discussions regarding the investigation and although progress has been made, the parties have not yet reached a definitive agreement. Based upon the current status of these negotiations, management expects that this potential settlement should not have a material impact on the Company’s consolidated financial condition or results of operations in future periods.

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 ~~legal~~ proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible ~~further~~ losses for such matters in the aggregate, beyond the existing recorded liability, was between $0 and $40 million. Although the Company does not believe that the outcome of pending litigations will be material to the Company’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.

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

The financial information of the Company’s segments was compiled utilizing the accounting policies described in note 22 of Notes to Financial Statements in the ~~Company’s consolidated financial statements as of and for the year ended December 31, 2014.~~2015 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~~segment results are not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data. Effective ~~January~~July 1, 2015, the Company ~~made certain changes~~changed its internal profitability reporting to ~~its methodology for measuring segment profit~~move a builder and loss. Those changes in the measurement of segment profitability were largely the result of updated funds transfer pricing and various cost allocation reviews. The most significant changes to the funds transfer pricing resulted from ascribing a longer duration to non-maturity deposits, which significantly benefitted the Retail Banking segment. The cost allocation review having the largest impact related to a branch cost study. That study consisted of transaction reviews and time studies which resulted in a higher cost allocationdeveloper lending unit from the ~~Retail~~Residential Mortgage Banking segment to the ~~Business Banking~~Commercial Real Estate segment. Accordingly, financial information presented herein for the three-month period ended March 31, 2015 has been reclassified to conform to the current presentation. As a result, oftotal revenues and net income decreased in the ~~changes, prior~~Residential Mortgage Banking segment and increased in the Commercial Real Estate segment by $6 million and $3 million, respectively, for the three-month period ~~financial information has been restated to provide segment information on a comparable basis, as noted below:~~ended March 31, 2015 from that which was previously reported.

As also described in note 22 toin the ~~Company’s 2014 consolidated financial statements,~~2015 Annual Report, neither goodwill nor core deposit and other intangible assets (and the amortization charges associated with such assets) resulting from acquisitions of financial institutions have been allocated to the Company’s reportable segments, but are included in the “All Other” category. The Company does, however, assign such intangible assets to business units for purposes of testing for impairment.


	Three months ended March 31
	2015								2014								Three months ended March 31
	Total revenues (a)		Inter- segment revenues			Net income (loss)			Total revenues (a)		Inter- segment revenues			Net income (loss)			2016								2015
	(in thousands)																Total revenues(a)		Inter- segment revenues			Net income (loss)			Total revenues(a)		Inter- segment revenues			Net income (loss)
																	(in thousands)
Business Banking	$	108,560		1,045			24,811		$	111,770		1,057			24,973		$	113,689		991			25,448		$	108,560		1,045			24,811

Commercial Banking		246,581		1,085			96,423			249,349		1,197			98,841			253,617		1,056			101,327			246,581		1,085			96,423

Commercial Real Estate		163,320		82			80,086			157,323		348			72,552			177,380		387			80,529			169,021		82			82,591

Discretionary Portfolio		15,474		(5,443	)		5,954			24,657		(5,039	)		11,360			86,835		(14,323	)		39,988			15,474		(5,443	)		5,954

Residential Mortgage Banking		111,458		11,387			31,965			93,765		9,748			18,580			96,935		19,660			17,077			105,757		11,387			29,460

Retail Banking		300,391		3,137			68,888			306,780		3,505			69,034			339,046		3,014			63,288			300,391		3,137			68,888

All Other		154,007		(11,293	)		(66,514	)		132,896		(10,816	)		(66,323	)		225,395		(10,785	)		(29,129	)		154,007		(11,293	)		(66,514	)


Total	$	1,099,791		—			241,613		$	1,076,540		—			229,017		$	1,292,897		—			298,528		$	1,099,791		—			241,613


	Average total assets
	Three months ended March 31				Year ended December 31		Average total assets
	2015		2014		2014		Three months ended March 31					Year ended December 31
	(in millions)						2016		2015			2015
							(in millions)
Business Banking	$	5,300		5,242		5,281	$	5,424		5,300			5,339

Commercial Banking		23,683		22,523		22,892		24,838		23,683			24,143

Commercial Real Estate		18,019		16,937		17,113		19,839		18,334	(b)		18,827

Discretionary Portfolio		22,714		18,581		20,798		42,509		22,714			26,648

Residential Mortgage Banking		3,512		3,157		3,333		2,647		3,197	(b)		2,918

Retail Banking		10,788		10,155		10,449		11,568		10,788			11,035

All Other		11,876		10,070		12,277		16,427		11,876			12,870


Total	$	95,892		86,665		92,143	$	123,252		95,892			101,780

M&T holds a 20% minority interest in Bayview Lending Group LLC (“BLG”), a privately-held commercial mortgage company. M&T recognizes income or loss from BLG using the equity method of accounting. The carrying value of that investment was ~~$43~~$20 million at March 31, ~~2015.~~2016.

Bayview Financial Holdings, L.P. (together with its affiliates, “Bayview Financial”), a privately-held specialty mortgage 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 ~~$4.6~~$4.0 billion and ~~$4.8~~$4.1 billion at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. Revenues from those servicing rights were $6$5 million and $7$6 million during the three-month periods ended March 31, ~~2015~~2016 and ~~2014,~~2015, respectively. The Company sub-services residential ~~mortgage~~real estate loans for Bayview Financial having outstanding principal balances totaling ~~$39.5~~$36.3 billion and ~~$41.3~~$37.7 billion at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. Revenues earned for sub-servicing loans for Bayview Financial were ~~$35~~$23 million and ~~$26~~$35 million for the three-month periods ended March 31, ~~2015~~2016 and ~~2014,~~2015, respectively. In addition, the Company held ~~$198~~$175 million and ~~$202~~$181 million of mortgage-backed securities in its held-to-maturity portfolio at March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively, that were securitized by Bayview Financial.

In April 2015, the Company sold the trade processing business within the retirement services division of its Institutional Client Services business. That sale resulted in an after-tax gain of $23 million ($45 million pre-tax) that reflected the allocation of approximately $11 million of previously recorded goodwill to the divested business. Revenues of the sold business had been included in “trust income” and were $9 million during the three months ended March 31, 2015. After considering related expenses, net income attributable to the business that was sold was not material to the consolidated results of operations of the Company during the first quarter of 2015.

Net income for M&T Bank Corporation (“M&T”) ~~recorded net income~~ in the first quarter of ~~2015~~2016 was $299 million or $1.73 of diluted earnings per common share, compared with $242 million or $1.65 of diluted earnings per common share ~~compared with $229 million or $1.61 of diluted earnings per common share~~ in the initial ~~2014~~2015 quarter. During the fourth quarter of ~~2014,~~2015, net income totaled ~~$278~~$271 million or ~~$1.92~~$1.65 of diluted earnings per common share. Basic earnings per common share were ~~$1.66~~$1.74 in the recent quarter, compared with ~~$1.63~~$1.66 and ~~$1.93~~$1.65 in the first and fourth quarters of ~~2014,~~2015, respectively. The annualized rate of return on average total assets for M&T and its consolidated subsidiaries (“the Company”) in the initial ~~2015~~2016 quarter was ~~1.02%~~.97%, compared with ~~1.07%~~1.02% in the year-earlier quarter and ~~1.12%~~.93% in the fourth quarter of ~~2014.~~2015. The annualized rate of return on average common shareholders’ equity was ~~7.99%~~7.44% in the first three months of ~~2015,~~2016, compared with ~~8.22%~~7.99% and ~~9.10%~~7.22% in the first and fourth quarters of ~~2014,~~2015, respectively.

On ~~March 12,~~November 1, 2015, M&T ~~announced that the Federal Reserve did not object to M&T’s proposed 2015 Capital Plan. Accordingly, M&T may maintain a quarterly common stock dividend~~completed its acquisition of $.70 per share; pay dividends and interest on other equity and debt instruments included in regulatory capital, including preferred stock, trust preferred securities and subordinated debt that were outstanding at December 31, 2014, consistent with the contractual terms of those instruments; repurchase up to $200 million of common shares during the first half of 2016; and redeem or repurchase up to $310 million of trust preferred securities. Common and preferred dividends are subject to approval by M&T’s Board of Directors in the ordinary course of business. On April 15, 2015, M&T redeemed $310 million of trust preferred securities in accordance with the 2015 Capital Plan.

~~On August 27, 2012, M&T announced that it had entered into a definitive agreement with~~ Hudson City Bancorp, Inc. (“Hudson City”)~~, headquartered in Paramus, New Jersey, under which~~. Immediately following completion of the merger, Hudson City ~~would be acquired by~~Savings Bank merged with and into M&T Bank, the principal bank subsidiary of M&T. Pursuant to the ~~terms~~merger agreement, M&T paid cash consideration of ~~the agreement, Hudson City common shareholders will receive consideration for each common share~~$2.1 billion and issued 25,953,950 shares of ~~Hudson City in an amount valued at .08403 of an M&T share in the form of either~~ M&T common stock ~~or cash, based on the election of each~~in exchange for Hudson City ~~shareholder, subject to proration as specified in~~shares outstanding at the ~~merger agreement (which provides for an aggregate split~~time of ~~total consideration of 60% common stock of M&T and 40% cash). The estimated purchase price considering the closing price of M&T’s common stock of $127.00 on March 31, 2015 was $5.5 billion.~~

~~At March 31, 2015, Hudson City reported $36.1~~acquisition. Assets acquired totaled approximately $36.7 billion, ~~of assets,~~ including ~~$20.9~~$19.0 billion of loans ~~(predominantly~~and leases (including approximately $234 million of commercial real estate loans, $18.6 billion of residential real estate ~~loans)~~loans and ~~$8.3~~$162 million of consumer loans). Liabilities assumed aggregated $31.5 billion, including $17.9 billion of deposits and $13.2 billion of borrowings. Immediately following the acquisition, the Company restructured its balance sheet by selling $5.8 billion of investment securities obtained in the acquisition and ~~$31.3~~repaying $10.6 billion of ~~liabilities, including $18.9~~borrowings assumed in the transaction. The common stock issued added $3.1 billion to M&T’s common shareholders’ equity. In connection with the acquisition, the Company recorded $1.1 billion of ~~deposits. The merger has received the approval of the common shareholders of M&T~~goodwill and ~~Hudson City. However, the merger is subject to a number of conditions, including regulatory approvals.~~

On June 17, 2013, M&T and M&T Bank entered into a written agreement with the Federal Reserve Bank of New York. Under the terms of the agreement, M&T and M&T Bank are required to submit to the Federal Reserve Bank of New York a revised compliance risk management program designed to ensure compliance with the Bank Secrecy Act and anti-money-laundering laws and regulations (“BSA/AML”) and to take certain other steps to enhance their compliance practices. The Company commenced a major initiative, including the hiring of outside consulting firms, intended to fully address those regulator concerns. M&T and M&T Bank continue to make progress towards completing this initiative. On April 3, 2015, M&T was advised by the Federal Reserve that the Federal Reserve Board intends to act on the M&T and Hudson City merger application no later than September 30, 2015. As a result, M&T and Hudson City extended the date after

which either party may elect to terminate the merger agreement if the merger has not yet been completed from April 30, 2015 to October 31, 2015. Nevertheless, M&T’s pending acquisition of Hudson City still remains subject to regulatory approval, including approval by the Federal Reserve, and certain other closing conditions and, as a result, there can be no assurances that the merger will be completed by that date.

Effective January 1, 2015, the Company elected to account for its investments in qualified affordable housing projects using the proportional amortization method as allowed by the Financial Accounting Standards Board (“FASB”). Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense. The adoption is required to be applied retrospectively. As a result, financial statements for periods prior to 2015 have been restated. The adoption did not have a significant effect on the Company’s financial position or results of operations, but the restatement of the consolidated statement of income for the three-month period ended March 31, 2014 resulted in the removal of $12$132 million of losses associated with qualified affordable housing projects from “other costs of operations” and added the amortization of the initial cost of the investment of a similar amount to income tax expense. The similar restatement for the second, third and fourth quarters of 2014 each reflected approximately $14 million of amortization.

As discussed in M&T’s Form 10-K for the year ended December 31, 2014, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) that was signed into law on July 21, 2010 has and will continue to significantly change the bank regulatory structure and affect the lending,core deposit investment, trading and operating activities of financial institutions and their holding companies, and the system of regulatory oversight of the Company. The Dodd-Frank Act requires various federal agencies to adopt a broad range of new implementing rules and regulations, and to prepare numerous studies and reports for Congress. Not all of the rules required or expected to be implemented under the Dodd-Frank Act have been proposed or adopted, and certain of the rules that have been proposed or adopted under the Dodd-Frank Act are subject to phase-in or transitional periods. The implications of the Dodd-Frank Act for the Company’s businesses continue to depend to a large extent on the implementation of the legislation by the Federal Reserve and other agencies.intangible asset.

~~A discussion of the provisions of the Dodd-Frank Act is included in Part I, Item 1 of M&T’s Form 10-K for the year ended December 31, 2014.~~

In July 2013, the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation approved final rules (the “New Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations. These rules went into effect as to M&T on January 1, 2015. The New Capital Rules generally implement the Basel Committee on Banking Supervision’s (the “Basel Committee”) December 2010 final capital framework for strengthening international capital standards (referred to as “Basel III”) and are intended to ensure that banking organizations have adequate capital levels given the risk levels of assets and off-balance sheet obligations. The New Capital Rules substantially revise the risk-based capital requirements applicable to bank holding companies and their depository institution subsidiaries, including M&T and M&T Bank, as compared to the U.S. general risk-based capital rules that were applicable to M&T and M&T Bank through December 31, 2014.

The New Capital Rules also preclude certain hybrid securities, such as trust preferred securities, from inclusion in bank holding companies’ Tier 1 capital, subject to phase-out in the case of bank holding companies, such as M&T, that had $15 billion or more in total consolidated assets as of December 31, 2009. As a result, beginning in 2015 25% of M&T’s trust preferred securities are includable in Tier 1 capital, and in 2016 and thereafter, none of M&T’s trust preferred securities will be includable in Tier 1 capital. Trust preferred securities no longer included in M&T’s Tier 1 capital may nonetheless be included as a component of Tier 2 capital on a permanent basis without phase-out and irrespective of whether such securities otherwise meet the revised definition of Tier 2 capital set forth in the New Capital Rules. In the first quarter of 2014, M&T redeemed $350 million of 8.50% junior subordinated debentures associated with the trust preferred capital securities of M&T Capital Trust IV and issued a like amount of 6.45% preferred stock that qualifies as Tier 1 regulatory capital. On April 15, 2015, in accordance with its 2015 Capital Plan M&T redeemed the junior subordinated debentures associated with $310 million of trust preferred securities of M&T Capital Trust I, II and III. A detailed discussion of the New Capital Rules is included in Part I, Item 1 of the Company’s Form 10-K for the year ended December 31, 2014 under the heading “Capital Requirements.” A further discussion of the Company’s regulatory capital ratios is presented herein under the heading “Capital.”

On December 10, 2013, the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Securities and Exchange Commission adopted the final version of the Volcker Rule, which was mandated under the Dodd-Frank Act. Pursuant to the Volcker Rule, banking entities are generally prohibited from engaging in proprietary trading. Under the rule, the Company was required to be in compliance with the prohibition on proprietary trading and the requirement to develop an extensive compliance program by July 2015; however, in December 2014, the Federal Reserve extended the compliance period to July 2016 for investments in and relationships with covered funds that were in place prior to December 31, 2013. The Federal Reserve has indicated that it intends to further extend the compliance period to July 2017.

The Company does not believe that it engages in any significant amount of proprietary trading as defined in the Volcker Rule and that any impact would be minimal. In addition, a review of the Company’s investments was undertaken to determine if any meet the Volcker Rule’s definition of “covered funds.” Based on that review, the Company believes that any impact related to investments considered to be covered funds would not have a material effect on the Company’s financial condition or its results of operations. Nevertheless, the Company may be required to divest certain investments subject to the Volcker Rule.

On September 3, 2014, the Federal Reserve and other banking regulators adopted final rules (“Final LCR Rule”) implementing a U.S. version of the Basel Committee’s Liquidity Coverage Ratio requirement (“LCR”) including the modified version applicable to bank holding companies, such as M&T, with $50 billion in total consolidated assets that are not “advanced approaches” institutions. The LCR is intended to ensure that banks hold a sufficient amount of so-called “high quality liquid assets” (“HQLA”) to cover the anticipated net cash outflows during a hypothetical acute 30-day stress scenario. The LCR is the ratio of an institution’s amount of HQLA (the numerator) over projected net cash outflows over the 30-day horizon (the denominator), in each case, as calculated pursuant to the Final LCR Rule. Once fully phased-in, a subject institution must maintain an LCR equal to at least 100% in order to satisfy this regulatory requirement. Only specific classes of assets, including U.S. Treasury securities, other U.S. government obligations and agency mortgage-backed securities, qualify under the rule as HQLA, with classes of assets deemed relatively less liquid and/or subject to greater degree of credit risk subject to certain haircuts and caps for purposes of calculating the numerator under the Final LCR Rule.

The initial compliance date for the modified LCR is January 2016, with the requirement fully phased-in by January 2017. The Company intends to comply with the LCR when it becomes effective. A detailed discussion of the LCR and its requirements is included in Part I, Item 1 of M&T’s Form 10-K for the year ended December 31, 2014 under the heading “Liquidity Ratios under Basel III.”

M&T consistently provides supplemental reporting of its results on a “net operating” or “tangible” basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and ~~gains and~~ expenses associated with merging acquired operations into the Company, since such items are considered by management to be “nonoperating” in nature. ~~As a result~~Those merger-related expenses generally consist of ~~business combinations~~professional services and other ~~acquisitions,~~temporary help fees associated with the ~~Company had intangible assets consisting~~actual or planned conversion of ~~goodwill~~systems and/or integration of operations; costs related to branch and ~~core deposit~~office consolidations; costs related to termination of existing contractual arrangements to purchase various services; initial marketing and promotion expenses designed to introduce M&T Bank to its new customers; severance; incentive compensation costs; travel costs; and printing, supplies and other ~~intangible assets totaling $3.6 billion at each~~costs of ~~March 31, 2015, March 31, 2014~~completing the transactions and ~~December 31, 2014. Included~~commencing operations in ~~such intangible assets was goodwill~~new markets and offices. Those acquisition and integration-related expenses (herein referred to as merger-related expenses) totaled $23 million ($14 million after-tax effect) in the first quarter of ~~$3.5 billion at each of those dates. Amortization of core deposit and other intangible assets, after tax effect, was $4 million during each of the quarters ended March 31, 2015 and December 31, 2014~~2016 ($~~.03~~.09 per diluted common share), compared with $6$97 million ($~~.05~~61 million after-tax effect) in the fourth quarter of 2015 ($.40 per diluted common share) ~~during~~. There were no merger-related expenses in the first quarter of ~~2014. There were no~~2015. Reflected in merger-related ~~gains or~~ expenses in the ~~first quarters~~fourth quarter of 2015 was a provision for credit losses of $21 million. GAAP

provides that an allowance for credit losses associated with probable incurred losses on loans acquired at a premium be recognized. Given the recognition of such losses above and ~~2014 or~~beyond the impact of forecasted losses used in determining the ~~final quarter~~fair value of ~~2014.~~acquired loans, the Company considers that provision to be a merger-related expense. Although “net operating income” as defined by M&T is not a GAAP measure, M&T’s management believes that this information helps investors understand the effect of acquisition activity in reported results.

Net operating income aggregated ~~$246~~$320 million in the initial quarter of ~~2015,~~2016, compared with ~~$235~~$246 million in the first quarter of ~~2014.~~2015. Diluted net operating earnings per common share for the recent quarter were ~~$1.68,~~$1.87, compared with ~~$1.66~~$1.68 in the year-earlier quarter. Net operating income and diluted net operating earnings per common share were ~~$282~~$338 million and ~~$1.95,~~$2.09, respectively, in the final ~~2014~~2015 quarter.

Net operating income in the first quarter of ~~2015~~2016 expressed as an annualized rate of return on average tangible assets was ~~1.08%~~1.09%, compared with ~~1.15%~~1.08% and ~~1.18%~~1.21% in the first and fourth quarters of ~~2014,~~2015, respectively. Net operating income represented an annualized return on average tangible common equity of ~~11.90%~~11.62% in the recent quarter, compared with ~~12.76%~~11.90% in the year-earlier quarter and ~~13.55%~~13.26% in the fourth quarter of ~~2014.~~2015.

Reconciliations of GAAP amounts with corresponding non-GAAP amounts are presented in table 2.

Taxable-equivalent net interest income was ~~$665~~$878 million in the first quarter of ~~2015,~~2016, up 32% from ~~$662~~$665 million in the year-earlier period. ~~The~~That growth resulted predominantly from the impact of higher average earning assets, which rose ~~$8.9~~$26.0 billion, or ~~12%~~31%, to ~~$85.2~~$111.2 billion in the recent quarter from ~~$76.3~~$85.2 billion in the first quarter of ~~2014,~~2015. The higher level of average earning assets in the initial 2016 quarter reflected a $21.0 billion increase in average loans and leases (due predominantly to the Hudson City acquisition, which added $18.1 billion to average loans), a $3.1 billion increase in average interest-bearing deposits at the Federal Reserve Bank of New York and a $2.0 billion rise in average balances of investment securities. As compared with 2015’s initial quarter, there was ~~largely offset by~~ a 35one basis point ~~(hundredths~~(hundredth of one percent) ~~narrowing~~widening of the Company’s net interest margin, or taxable-equivalent net interest income expressed as an annualized percentage of average earning ~~assets. The higher level of average earning~~ assets, ~~reflected a $4.1 billion rise~~ in ~~average balances of investment securities, a $2.8 billion increase in average loans and leases and a $2.0 billion increase in lower-yielding average interest-bearing deposits at~~ the ~~Federal Reserve Bank of New York. The increase in investment securities resulted from purchases of Ginnie Mae and Fannie Mae mortgage-~~

~~backed securities.~~recent quarter to 3.18%. Taxable-equivalent net interest income in the recent quarter ~~was below~~rose $65 million from the ~~$688~~$813 million recorded in the fourth quarter of ~~2014, reflecting two less days in~~2015, largely due to the ~~recent quarter, lower average balances~~full-quarter impact of ~~interest-bearing deposits at banks~~the Hudson City transaction, and a 6 basis point widening of the net interest margin. Contributing to that widening was the full-quarter impact of ~~actions taken~~the increase in ~~response to liquidity requirements that take effect~~interest rates initiated by the Federal Reserve in ~~2016.~~mid-December 2015.

Average loans and leases rose ~~$2.8~~$21.0 billion or 4%32% to ~~$66.6~~$87.6 billion in the initial ~~2015~~2016 quarter from ~~$63.8~~$66.6 billion in the first quarter of ~~2014.~~2015. Commercial loans and leases averaged ~~$19.5 billion in the recent quarter, up $1.0 billion or 5% from $18.5 billion in the year-earlier quarter. Average commercial real estate loans rose $1.5 billion or 6% to $27.6~~$20.7 billion in the first quarter of ~~2015~~2016, up $1.3 billion or 6% from ~~$26.1~~$19.5 billion in the ~~corresponding~~first quarter of ~~2014.~~2015. Average commercial real estate loans increased 7% or $1.8 billion to $29.4 billion in the recent quarter from $27.6 billion in the initial 2015 quarter. Reflecting average balances of $17.7 billion of loans obtained in the Hudson City acquisition, average residential real estate loans ~~outstanding decreased $272 million~~increased to $25.9 billion in the initial quarter of 2016 from $8.6 billion in the first quarter of ~~2015 from $8.8 billion in the similar 2014 quarter.~~2015. Included in ~~that portfolio~~those amounts were residential real estate loans held for sale, which averaged ~~$387~~$323 million in the recent quarter ~~compared with $329~~and $387 million in the year-earlier quarter. Average consumer loans ~~and leases~~ totaled ~~$11.0 billion in the initial quarter of 2015, $662 million or 6% higher than $10.3~~$11.6 billion in the first quarter of ~~2014. The predominant factor for~~2016, up $620 million or 6% from $11.0 billion in the ~~higher consumer loans was a 41% increase~~year-earlier quarter predominantly due to growth in average automobile ~~loans that is reflective of consumer demand, higher industry sales and generally favorable interest rates.~~loan balances.

Average loan balances in the first quarter of ~~2015~~2016 increased ~~$820 million~~$6.5 billion from $81.1 billion in the fourth quarter of ~~2014.~~2015. Average outstanding commercial loan and lease balances rose ~~$340~~$497 million, or 2%, average balances of commercial real estate loans increased ~~$532~~$452 million, or 2%, average residential real estate loan balances were ~~down $82 million~~up $5.5 billion, or 27%, and average outstanding consumer loans increased ~~$29~~$35 million from the final ~~2014~~2015 quarter. The growth in the residential real estate loan category resulted from the full-quarter impact of loans obtained in the acquisition of Hudson City. The accompanying table summarizes quarterly changes in the major components of the loan and lease portfolio.


			Percent increase (decrease) from								Percent increase (decrease) from
	1st Qtr. 2015		1st Qtr. 2014			4th Qtr. 2014			1st Qtr. 2016		1st Qtr. 2015			4th Qtr. 2015
Commercial, financial, etc.	$	19,457		5	%		2	%	$	20,717		6	%		2	%
Real estate – commercial		27,596		6			2
Real estate – consumer		8,572		(3	)		(1	)
Real estate - commercial										29,426		7			2
Real estate - consumer										25,859		202			27
Consumer
Automobile		2,024		41			5			2,573		27			5
Home equity lines		5,704		(1	)		(1	)
Home equity loans		264		(23	)		(7	)
Home equity lines and loans										5,903		(1	)		—
Other		2,970		7			—			3,106		5			(2	)

Total consumer		10,962		6			—			11,582		6			—

Total	$	66,587		4	%		1	%	$	87,584		32	%		8	%

The investment securities portfolio averaged ~~$13.4~~$15.3 billion in the recent quarter, up ~~$4.1~~$2.0 billion or ~~44%~~15% from ~~$9.3~~$13.4 billion in the initial quarter of ~~2014 and $397 million above the $13.0~~2015. Investment securities averaged $15.8 billion ~~averaged~~ in the fourth quarter of ~~2014.~~2015. The increase from the year-earlier quarter reflects mortgage-backed securities retained from the acquisition of Hudson City and the net effect of purchases, partially offset by maturities and paydowns of mortgage-backed securities. The Company purchased approximately ~~$4.6~~$3.5 billion of Fannie Mae ~~securities~~ and ~~$602 million of~~ Ginnie Mae securities that were added to the investment securities portfolio during ~~2014,~~2015, and another ~~$1.4 billion~~$305 million of Fannie Mae ~~securities~~ and ~~$470 million of~~ Ginnie Mae securities that were purchased during the first quarter of ~~2015.~~2016. Those purchases reflect increased holdings of investment securities to satisfy the requirements of the ~~LCR~~U.S. version of the Basel Committee’s Liquidity Coverage Ratio requirements (“LCR”) that ~~will become~~became effective in January 2016.

The investment securities portfolio is largely comprised of residential mortgage-backed securities, debt securities issued by municipalities, trust preferred securities issued by certain financial institutions, and shorter-term

U.S. Treasury and federal agency notes. When purchasing investment securities, the Company also considers its liquidity position and overall interest-rate risk profile as well as the adequacy of expected returns relative to risks assumed, including prepayments. In managing its investment securities portfolio, the Company occasionally sells investment securities as a result of changes in interest rates and spreads, actual or anticipated prepayments, credit risk associated with a particular security, or as a result of restructuring its investment securities portfolio in connection with a business combination. The Hudson City acquisition added approximately $7.9 billion to the investment securities portfolio on the November 1, 2015 acquisition date. As noted earlier, immediately following the acquisition of Hudson City, the Company restructured its balance sheet by selling $5.8 billion of those securities.

The Company regularly reviews its investment securities for declines in value below amortized cost that might be characterized as “other than temporary.” There were no other-than-temporary impairment charges recognized in either of the first quarters of ~~2015~~2016 and ~~2014~~2015 or in the final ~~2014~~2015 quarter. Additional information about the investment securities portfolio is included in notes 3 and 12 of Notes to Financial Statements.

Other earning assets include interest-bearing deposits at the Federal Reserve Bank of New York and other banks, trading account assets and federal funds ~~sold and agreements to resell securities.~~sold. Those other earning assets in the aggregate averaged ~~$5.2~~$8.3 billion in the recently completed quarter, compared with ~~$3.3~~$5.2 billion and ~~$9.2~~$6.7 billion in the first and fourth quarters of ~~2014,~~2015, respectively. Interest-bearing deposits at banks averaged $8.2 billion, $5.1 billion ~~$3.1 billion~~ and ~~$9.1~~$6.6 billion during the three-month periods ended March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. The rise in average interest-bearing deposits at banks in the ~~fourth quarter of 2014 and in the initial 2015~~recent quarter as compared with the ~~first~~year-earlier quarter and the fourth quarter of ~~2014~~2015 was due, in part, to the Company’s decision to maintain higher ~~Wilmington Trust-related customer deposits.~~balances at the Federal Reserve Bank of New York rather than reinvesting in other highly liquid assets due to the current interest rate environment. The amounts of investment securities and other earning assets held by the Company are influenced by such factors as demand for loans, which generally yield more than investment securities and other earning assets, ongoing repayments, the levels of deposits, and management of liquidity (including the LCR) and balance sheet size and resulting capital ratios.

As a result of the changes described herein, average earning assets totaled ~~$85.2~~$111.2 billion in the first quarter of ~~2015,~~2016, compared with ~~$76.3~~$85.2 billion in the year-earlier quarter and ~~$88.0~~$103.6 billion in the fourth quarter of ~~2014.~~2015.

The most significant source of funding for the Company is core deposits. The Company considers noninterest-bearing deposits, interest-bearing transaction accounts, savings deposits and time deposits of $250,000 or less as core deposits. The Company’s branch network is its principal source of core deposits, which generally carry lower interest rates than wholesale funds of comparable maturities. Average core deposits totaled ~~$70.1~~$89.7 billion in the first quarter of ~~2015,~~2016, compared with ~~$65.6~~$70.1 billion in the year-earlier quarter and ~~$73.8~~$83.3 billion in the fourth quarter of ~~2014.~~2015. The ~~growth in~~Hudson City acquisition added approximately $17.0 billion of core deposits ~~since the first quarter~~on November 1, 2015, including $9.7 billion of ~~2014 was due, in part, to~~time deposits, $6.6 billion of savings deposits and $691 million of noninterest-bearing deposits. The higher deposits of trust customers and the lack of attractive alternative investments available to the Company’s customers resulting from lower interest rates and from the economic environment in the U.S. The decline in average core deposits ~~as compared~~in the two most recent quarters were predominantly reflective of the impact of the merger with the fourth quarter of 2014 reflects lower deposits of trust customers. The low interest rate environment has resulted in a shift in customer savings trends, as average time deposits have continued to decline, while average noninterest-bearing deposits and savings deposits have generally increased.Hudson City. The following table provides an analysis of quarterly changes in the components of average core deposits.


			Percent increase (decrease) from								Percent increase from
	1st Qtr. 2015		1st Qtr. 2014			4th Qtr. 2014			1st Qtr. 2016		1st Qtr. 2015			4th Qtr. 2015
NOW accounts	$	1,101		14	%		4	%
Interest-checking deposits									$	1,333		21	%		2	%
Savings deposits		40,561		8			(3	)		47,805		18			7
Time deposits $250,000 or less		2,670		(13	)		(4	)
Time deposits										11,709		339			35
Noninterest-bearing deposits		25,811		7			(8	)		28,870		12			2

Total	$	70,143		7	%		(5	)%	$	89,717		28	%		8	%

The Company ~~has additional~~also receives funding from other deposit sources, including branch-related time deposits over $250,000, deposits associated with the Company’s Cayman Islands office, and brokered deposits. Time deposits over $250,000, excluding brokered certificates of deposit, averaged ~~$347 million~~$1.2 billion in the recent quarter, compared with ~~$371~~$347 million and ~~$354~~$948 million in the first and fourth quarters of ~~2014,~~2015, respectively. The higher averages in the two most recent quarters as compared with the initial 2015 quarter were predominantly due to deposits obtained in the acquisition of Hudson City. Cayman Islands office deposits averaged $187 million, $224 million ~~$380 million~~ and ~~$265~~$223 million for the three-month periods ended March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. Brokered time deposits averaged $59 million in each of the recent quarter and the fourth quarter of 2015. There were no brokered time deposits in the first quarter of 2015. The Company also had brokered ~~NOW~~interest-bearing transaction and brokered money-market deposit

accounts, which in the aggregate averaged approximately ~~$1.0~~$1.2 billion in each of the first ~~quarters~~quarter of ~~2015~~2016 and ~~2014 and $1.1 billion in~~ the fourth quarter of ~~2014.~~2015, and $1.0 billion in the first quarter of 2015. The levels of brokered ~~NOW and brokered money-market~~ deposit accounts reflect the demand for such deposits, largely resulting from the desire of brokerage firms to earn reasonable yields while ensuring that customer deposits are fully insured. The level of Cayman Islands office deposits are also reflective of customer demand. Additional amounts of Cayman Islands office deposits or brokered deposits may be added in the future depending on market conditions, including demand by customers and other investors for those deposits, and the cost of funds available from alternative sources at the time.

The Company also uses borrowings from banks, securities dealers, various Federal Home Loan Banks, the Federal Reserve Bank of New York and others as sources of funding. Short-term borrowings represent borrowing arrangements that at the time they were entered into had a contractual maturity of less than one year. Average short-term borrowings totaled ~~$196 million~~$2.1 billion in the first quarter of ~~2015,~~2016, compared with ~~$264~~$196 million in the year-earlier quarter and ~~$195 million~~$1.6 billion in the final quarter of ~~2014. Such~~2015. The higher level of such borrowings in the two most recent quarters was predominantly due to short-term borrowings from the Federal Home Loan Bank of New York assumed in the Hudson City acquisition. Those short-term fixed-rate borrowings have various maturity dates throughout 2016. Included in short-term borrowings were ~~largely comprised of~~ unsecured federal funds borrowings, which generally mature on the next business ~~day.~~day, that averaged $137 million and $147 million in the first quarters of 2016 and 2015, respectively, and $131 million in the final quarter of 2015.

Long-term borrowings averaged ~~$9.8~~$10.5 billion in the recent quarter, compared with ~~$5.9~~$9.8 billion in the year-earlier quarter and ~~$9.0~~$10.7 billion in the fourth quarter of ~~2014. During 2013,~~2015. M&T Bank ~~initiated~~has a Bank Note Program whereby M&T Bank may offer unsecured senior and subordinated notes. Average balances of ~~the unsecured senior~~ notes ~~issued~~outstanding under that program were $5.4 billion, $4.9 billion ~~$1.8 billion~~ and ~~$4.0~~$5.5 billion during the three-month periods ended March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. ~~During February 2015, M&T Bank issued $1.5 billion of senior notes of which $750 million mature in 2020 and $750 million mature in 2025.~~ The proceeds of the issuances of borrowings under the Bank Note Program have been predominantly utilized to purchase high-quality liquid assets that ~~will~~ meet the requirements of the LCR. Also included in average long-term borrowings were amounts borrowed from ~~the~~various Federal Home Loan Banks ~~of New York, Atlanta and Pittsburgh~~ of $1.2 billion in each of the initial quarters of 2016 and 2015 ~~quarter~~ and in the fourth quarter of 2014 and $29 million in the first quarter of 2014. During the second quarter of 2014, M&T Bank borrowed approximately $1.1 billion from the Federal Home Loan Bank (“FHLB”) of New York. Those borrowings were split between three-year and five-year terms at fixed rates of interest.2015. Subordinated capital notes included in long-term borrowings averaged $1.5 billion during each of the ~~two most recent quarters~~three-month periods ended March 31, 2016, March 31, 2015 and ~~$1.6 billion in the initial 2014 quarter. On November 1, 2014, M&T Bank redeemed $50 million of 9.50% subordinated notes that were due to mature in 2018.~~December 31, 2015. Junior subordinated debentures associated with trust preferred securities that were included in average long-term borrowings were $514 million during the two most recent quarters and $835 million ~~in each of the first quarter~~

~~of 2015 and the final 2014 quarter and $1.1 billion~~ in the first quarter of ~~2014. M&T redeemed $350 million of 8.50% junior subordinated debentures associated with trust preferred securities in the first quarter of 2014.~~2015. In ~~addition, in~~ accordance with its 2015 ~~Capital Plan M&T redeemed~~capital plan, on April 15, 2015 M&T redeemed the junior subordinated debentures associated with the $310 million of trust preferred securities of M&T Capital Trusts I, II and III. Those borrowings had a weighted-average interest rate of 8.24%. ~~Further~~Additional information regarding junior subordinated debentures is provided in note 5 of Notes to Financial Statements. Also included in long-term borrowings were agreements to repurchase securities, which averaged $1.9 billion during the two most recent quarters and $1.4 billion ~~during each of~~in the first ~~quarters~~quarter of 2015. The increase from the first quarter of 2015 ~~and 2014 and~~reflects agreements to repurchase securities assumed in connection with the ~~fourth quarter of 2014.~~Hudson City acquisition. The repurchase agreements held at March 31, 2016 have various repurchase dates through ~~2017,~~2020, however, the contractual maturities of the underlying securities extend beyond such repurchase dates. The Company has utilized interest rate swap agreements to modify the repricing characteristics of certain components of long-term debt. As of March 31, ~~2015,~~2016, interest rate swap agreements were used to hedge approximately $1.4 billion of outstanding fixed rate long-term borrowings. Further information on interest rate swap agreements is provided in note 10 of Notes to Financial Statements.

Changes in the composition of the Company’s earning assets and interest-bearing liabilities, as discussed herein, as well as changes in interest rates and spreads, can impact net interest income. Net interest spread, or the difference between the taxable-equivalent yield on earning assets and the rate paid on interest-bearing liabilities, was ~~2.97%~~3.01% in the recent quarter and ~~3.32%~~2.97% in the first quarter of ~~2014.~~2015. The yield on earning assets during each of the initial quarters of 2016 and 2015 ~~quarter~~ was 3.54%, ~~down 33 basis points from 3.87% in the year-earlier quarter,~~ while the rate paid on interest-bearing liabilities ~~increased 2~~decreased 4 basis points to .53% in the recent quarter from .57% ~~from ..55%.~~in the year-earlier period. In the fourth quarter of ~~2014,~~2015, the net interest spread was ~~2.92%~~2.94%, the yield on earning assets was ~~3.44%~~3.48% and the rate paid on interest-bearing liabilities was ~~.52%~~..54%. The ~~narrowing~~widening of the net interest spread in the recent quarter as compared with the first quarter of ~~2014~~2015 reflects a higher ~~average balances~~proportion of ~~investment securities~~deposits and short-term borrowings as components of interest-bearing ~~deposits held at the Federal Reserve Bank of New York that have substantially~~liabilities and lower ~~yields than loans.~~rates paid on long-term borrowings. The 57 basis point improvement in the net interest spread as compared with the final ~~2014~~2015 quarter was largely due to the ~~lower average balances~~full-quarter effect of ~~interest-bearing deposits held at~~the increase in short-term interest rates initiated by the Federal Reserve ~~Bank of New York, partially offset by higher average balances of investment securities and long-term borrowings and the impact of accelerated accretion of premiums on mortgage-backed securities due~~in mid-December 2015 that contributed to higher ~~than originally expected prepayments.~~yields on loans and leases.

Net interest-free funds consist largely of noninterest-bearing demand deposits and shareholders’ equity, partially offset by bank owned life insurance and non-earning assets, including goodwill and core deposit and other intangible assets. Net interest-free funds averaged ~~$29.3~~$35.1 billion in the first quarter of ~~2015,~~2016, compared with ~~$26.9~~$29.3 billion and ~~$31.4~~$34.0 billion in the first and fourth quarters of ~~2014,~~2015, respectively. The increases in average net interest-free funds in the two most recent quarters as compared with the first quarter of ~~2014 were predominantly the result of~~2015 reflect higher average balances of noninterest-bearing ~~deposits. Such~~deposits and shareholders’ equity. Those deposits averaged ~~$25.8~~$28.9 billion in the recent quarter, compared with ~~$24.1~~$25.8 billion and ~~$28.1~~$28.4 billion in the first and fourth quarters of ~~2014,~~2015, respectively. In connection with the acquisition of Hudson City, the Company added noninterest-bearing deposits of $691 million at the acquisition date. In addition to the impact of the merger, growth in noninterest-bearing deposits since the first quarter of 2015 was due, in part, to higher deposits of commercial and trust customers. The ~~decline~~rise in average ~~noninterest-bearing deposits from~~shareholders’ equity included $3.1 billion of common equity issued in connection with the ~~fourth quarter~~acquisition of ~~2014 to the initial 2015 quarter was largely due to a decline in trust-related customer deposits.~~Hudson City as well as net retained earnings. Goodwill and core deposit and other intangible assets averaged $4.7 billion in the recent quarter, compared with $3.6 billion ~~during each~~in the first quarter of 2015 and $4.3 billion in the ~~quarters ended March 31, 2015, March 31, 2014~~fourth quarter of 2015. Goodwill of $1.1 billion and ~~December 31, 2014.~~core deposit intangible of $132 million resulted from the Hudson City acquisition. The cash surrender value of bank owned life insurance averaged $1.7 billion in each of the three-month periods ended March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014.~~2015. Increases in the cash surrender value of bank owned life insurance and benefits received are not included in interest income, but rather are recorded in “other revenues from operations.” The contribution of net interest-free funds to net interest

margin was .17% in the first quarter of 2016, compared with .20% in ~~each of~~ the first ~~quarters~~quarter of 2015 and ~~2014, compared with~~ .18% in the fourth quarter of ~~2014.~~2015.

Reflecting the changes to the net interest spread and the contribution of net interest-free funds as described herein, the Company’s net interest margin was 3.18% in the first quarter of 2016, compared with 3.17% in the first ~~three months~~quarter of 2015 ~~compared with 3.52% in the year-earlier period~~ and ~~3.10%~~3.12% in the fourth quarter of ~~2014.~~2015. Future changes in market interest rates or spreads, as well as changes in the composition of the Company’s portfolios of earning assets and interest-bearing liabilities that result in reductions in spreads, could adversely impact the Company’s net interest income and net interest margin. ~~In particular, the relatively low interest rate environment continues to exert downward pressure on yields on loans, investment securities and other earning assets.~~

Management assesses the potential impact of future changes in interest rates and spreads by projecting net interest income under several interest rate scenarios. In managing interest rate risk, the Company has utilized

interest rate swap agreements to modify the repricing characteristics of certain portions of its interest-bearing liabilities. Periodic settlement amounts arising from these agreements are reflected in the rates paid on interest-bearing liabilities. The notional amount of interest rate swap agreements entered into for interest rate risk management purposes was $1.4 billion at each of March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014.~~2015. Under the terms of those interest rate swap agreements, the Company received payments based on the outstanding notional amount at fixed rates and made payments at variable rates. Those interest rate swap agreements were designated as fair value hedges of certain fixed rate long-term borrowings. There were no interest rate swap agreements designated as cash flow hedges at those respective dates.

In a fair value hedge, the fair value of the derivative (the interest rate swap agreement) and changes in the fair value of the hedged item are recorded in the Company’s consolidated balance sheet with the corresponding gain or loss recognized in current earnings. The difference between changes in the fair value of the interest rate swap agreements and the hedged items represents hedge ineffectiveness and is recorded in “other revenues from operations” in the Company’s consolidated statement of income. The amounts of hedge ineffectiveness recognized during the quarters ended March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014~~2015 were not material to the Company’s results of operations. The estimated aggregate fair value of interest rate swap agreements designated as fair value hedges represented gains of approximately $41 million at March 31, 2016, $73 million at ~~each of~~ March 31, 2015 and $44 million at December 31, ~~2014 and $95 million at March 31, 2014.~~2015. The fair values of such interest rate swap agreements were substantially offset by changes in the fair values of the hedged items. The changes in the fair values of the interest rate swap agreements and the hedged items primarily result from the effects of changing interest rates and spreads. The Company’s credit exposure as of March 31, ~~2015~~2016 with respect to the estimated fair value of interest rate swap agreements used for managing interest rate risk has been substantially mitigated through master netting arrangements with trading account interest rate contracts with the same counterparty as well as counterparty postings of ~~$49~~$21 million of collateral with the Company.

The weighted-average rates to be received and paid under interest rate swap agreements currently in effect were 4.42% and ~~1.22%~~1.59%, respectively, at March 31, ~~2015.~~2016. The average notional amounts of interest rate swap agreements entered into for interest rate risk management purposes, the related effect on net interest income and margin, and the weighted-average interest rates paid or received on those swap agreements are presented in the accompanying table. Additional information about the Company’s use of interest rate swap agreements and other derivatives is included in note 10 of Notes to Financial Statements.


	Three months ended March 31												Three months ended March 31
	2015						2014						2016						2015
	Amount			Rate (a)			Amount			Rate (a)			Amount			Rate (a)			Amount			Rate (a)
Increase (decrease) in:
Interest income	$	—			—	%	$	—			—	%	$	—			—	%	$	—			—	%
Interest expense		(11,277	)		(.08	)		(11,292	)		(.09	)		(10,333	)		(.05	)		(11,277	)		(.08	)

Net interest income/margin	$	11,277			.06	%	$	11,292			.06	%	$	10,333			.04	%	$	11,277			.06	%

Average notional amount	$	1,400,000					$	1,400,000					$	1,400,000					$	1,400,000

Rate received (b)					4.42	%					4.42	%					4.42	%					4.42	%
Rate paid (b)					1.20	%					1.19	%					1.45	%					1.20	%

As a financial intermediary, the Company is exposed to various risks, including liquidity and market risk. Liquidity refers to the Company’s ability to ensure that sufficient cash flow and liquid assets are available to satisfy current and future obligations, including demands for loans and deposit withdrawals, funding operating costs, and other corporate purposes. Liquidity risk arises whenever the maturities of financial instruments included in assets and liabilities differ. M&T’s banking subsidiaries have access to additional funding sources through borrowings from the FHLB of New York, lines of credit with the Federal Reserve Bank of New York, the previously noted Bank Note Program, and other available borrowing facilities. The Company has, from time to time, issued subordinated capital notes and junior subordinated debentures associated with trust preferred securities to provide liquidity and enhance regulatory capital ratios. ~~Such notes generally qualify under Federal Reserve Board’s risk-based capital guidelines for inclusion in the Company’s capital.~~ However, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the Company’s junior subordinated debentures associated with trust preferred securities ~~are being~~have been phased-out of the definition of Tier 1 capital. Effective January 1, 2015, 75% of such ~~junior subordinated debentures are~~securities were excluded from the Company’s Tier 1 capital, and beginning January 1, 2016, 100% ~~will be~~were excluded. The amounts excluded from Tier 1 capital are includable in total capital. In accordance with its 2015 capital plan, in April 2015 M&T redeemed the junior subordinated debentures associated with the trust preferred securities of M&T Capital Trusts I, II and III.

The Company has informal and sometimes reciprocal sources of funding available through various arrangements for unsecured short-term borrowings from a wide group of banks and other financial institutions. Short-term federal funds borrowings were $157 million at March 31, 2016, $155 million at March 31, 2015 ~~$180 million at March 31, 2014~~ and ~~$135~~$99 million at December 31, ~~2014.~~2015. In general, those borrowings were unsecured and matured on the next business day. In addition to satisfying customer demand, Cayman Islands office deposits may be used by the Company as an alternative to short-term borrowings. Cayman Islands office deposits totaled $167 million, $179 million ~~$248 million~~ and ~~$177~~$170 million at March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. The Company has also benefited from the placement of brokered ~~NOW~~deposits. The Company has brokered interest-bearing transaction and brokered money-market deposit accounts which aggregated approximately $1.1 billion at each of March 31, 2016 and March 31, 2015, ~~and~~compared with $1.2 billion at December 31, ~~2014, compared with $1.0 billion at March 31, 2014.~~2015. Brokered time deposits were not a significant source of funding as of those dates.

The Company’s ability to obtain funding from these or other sources could be negatively impacted should the Company experience a substantial deterioration in its financial condition or its debt ratings, or should the availability of short-term funding become restricted due to a disruption in the financial markets. The Company attempts to quantify such credit-event risk by modeling scenarios that estimate the liquidity impact resulting from a short-term ratings downgrade over various grading levels. Such impact is estimated by attempting to measure the effect on available unsecured lines of credit,

~~credit,~~ available capacity from secured borrowing sources and securitizable assets. In addition to deposits and borrowings, other sources of liquidity include maturities of investment securities and other earning assets, repayments of loans and investment securities, and cash generated from operations, such as fees collected for services.

Certain customers of the Company obtain financing through the issuance of variable rate demand bonds (“VRDBs”). The VRDBs are generally enhanced by letters of credit provided by M&T Bank. M&T Bank oftentimes acts as remarketing agent for the VRDBs and, at its discretion, may from time-to-time own some of the VRDBs while such instruments are remarketed. When this occurs, the VRDBs are classified as trading account assets in the Company’s consolidated balance sheet. Nevertheless, M&T Bank is not contractually obligated to purchase the VRDBs. The value of VRDBs in the Company’s trading account totaled ~~$11~~$37 million and $4$11 million at March 31, ~~2015~~2016 and ~~2014,~~2015, respectively, while ~~there~~less than $1 million were ~~no outstanding VRDBs in the Company’s trading account~~held at December 31, ~~2014.~~2015. The total amount of VRDBs outstanding backed by M&T Bank letters of credit was $1.7 billion at each of March 31, 2016 and December 31, 2015, compared with $1.9 billion at March 31, ~~2015, compared with $1.7 billion at March 31, 2014 and $2.0 billion at December 31, 2014.~~2015. M&T Bank also serves as remarketing agent for most of those bonds.

The Company enters into contractual obligations in the normal course of business which require future cash payments. Such obligations include, among others, payments related to deposits, borrowings, leases and other contractual commitments. Off-balance sheet commitments to customers may impact liquidity, including commitments to extend credit, standby letters of credit, commercial letters of credit, financial guarantees and indemnification contracts, and commitments to sell real estate loans. Because many of these commitments or contracts expire without being funded in whole or in part, the contract amounts are not necessarily indicative of future cash flows. Further discussion of these commitments is provided in note 13 of Notes to Financial Statements.

M&T’s primary source of funds to pay for operating expenses, shareholder dividends and treasury stock repurchases has historically been the receipt of dividends from its banking subsidiaries, which are subject to various regulatory limitations. Dividends from any banking subsidiary to M&T are limited by the amount of earnings of the banking subsidiary in the current year and the two preceding years. For purposes of that test, at March 31, ~~2015~~2016 approximately ~~$1.2~~$1.3 billion was available for payment of dividends to M&T from banking subsidiaries. Information regarding the long-term debt obligations of M&T is included in note 5 of Notes to Financial Statements.

Management closely monitors the Company’s liquidity position on an ongoing basis for compliance with internal policies and believes that available sources of liquidity are adequate to meet funding needs anticipated in the normal course of business. Management does not anticipate engaging in any activities, either currently or in the long-term, for which adequate funding would not be available and would therefore result in a significant strain on liquidity at either M&T or its subsidiary banks. Banking regulators have finalized rules requiring a banking company to maintain a minimum amount of liquid assets to withstand a standardized supervisory liquidity stress scenario. The effective date for those rules for the Company iswas January 1, 2016, subject to a ~~two year~~ phase-in period. The Company has taken steps as noted herein to enhance its liquidity and ~~will take further action, as necessary, to comply~~is in compliance with the ~~final regulations when they take effect.~~phase-in requirements of the rules.

Market risk is the risk of loss from adverse changes in the market prices and/or interest rates of the Company’s financial instruments. The primary market risk the Company is exposed to is interest rate risk. Interest rate risk arises from the Company’s core banking activities of lending and deposit-taking, because assets and liabilities reprice at different times and by different amounts as interest rates change. As a

result, net interest income earned by the Company is subject to the effects of changing interest rates. The Company measures interest rate risk by calculating the variability of net

interest income in future periods under various interest rate scenarios using projected balances for earning assets, interest-bearing liabilities and derivatives used to hedge interest rate risk. Management’s philosophy toward interest rate risk management is to limit the variability of net interest income. The balances of financial instruments used in the projections are based on expected growth from forecasted business opportunities, anticipated prepayments of loans and investment securities, and expected maturities of investment securities, loans and deposits. Management uses a “value of equity” model to supplement the modeling technique described above. Those supplemental analyses are based on discounted cash flows associated with on- and off-balance sheet financial instruments. Such analyses are modeled to reflect changes in interest rates and provide management with a long-term interest rate risk metric.

The Company’s Asset-Liability Committee, which includes members of senior management, monitors the sensitivity of the Company’s net interest income to changes in interest rates with the aid of a computer model that forecasts net interest income under different interest rate scenarios. In modeling changing interest rates, the Company considers different yield curve shapes that consider both parallel (that is, simultaneous changes in interest rates at each point on the yield curve) and non-parallel (that is, allowing interest rates at points on the yield curve to vary by different amounts) shifts in the yield curve. In utilizing the model, projections of net interest income calculated under the varying interest rate scenarios are compared to a base interest rate scenario that is reflective of current interest rates. The model considers the impact of ongoing lending and deposit-gathering activities, as well as interrelationships in the magnitude and timing of the repricing of financial instruments, including the effect of changing interest rates on expected prepayments and maturities. When deemed prudent, management has taken actions to mitigate exposure to interest rate risk through the use of on- or off-balance sheet financial instruments and intends to do so in the future. Possible actions include, but are not limited to, changes in the pricing of loan and deposit products, modifying the composition of earning assets and interest-bearing liabilities, and adding to, modifying or terminating existing interest rate swap agreements or other financial instruments used for interest rate risk management purposes.

The accompanying table as of March 31, ~~2015~~2016 and December 31, ~~2014~~2015 displays the estimated impact on net interest income from non-trading financial instruments in the base scenario described above resulting from parallel changes in interest rates across repricing categories during the first modeling year.


	Calculated increase (decrease) in projected net interest income						Calculated increase (decrease) in projected net interest income
Changes in interest rates	March 31, 2015			December 31, 2014			March 31, 2016			December 31, 2015
+200 basis points	$	234,291			246,028		$	280,537		$	243,958
+100 basis points		129,404			134,393			163,692			145,169
-100 basis points		(54,132	)		(74,634	)
-200 basis points		(89,402	)		(109,261	)
-50 basis points								(115,291	)		(99,603	)

The Company utilized many assumptions to calculate the impact that changes in interest rates may have on net interest income. The more significant of those assumptions included the rate of prepayments of mortgage-related assets, cash flows from derivative and other financial instruments held for non-trading purposes, loan and deposit volumes and pricing, and deposit maturities. In the scenarios presented, the Company also assumed gradual ~~changes~~increases in interest rates during a twelve-month period of 100 and 200 basis points, as compared with the assumed base ~~scenario.~~scenario, as well as a gradual decrease of 50 basis points. In the ~~event~~

~~that a 100 or 200 basis point~~declining rate ~~change cannot be achieved,~~scenario, the ~~applicable~~ rate changes ~~are~~may be limited to lesser amounts such that interest rates ~~cannot~~remain positive at all points on the yield curve. In 2016,

the Company suspended the -100 basis point scenario due to the persistent low level of interest rates. This scenario will be ~~less than zero.~~reinstated if and when interest rates rise sufficiently to make the analysis more meaningful. The assumptions used in interest rate sensitivity modeling are inherently uncertain and, as a result, the Company cannot precisely predict the impact of changes in interest rates on net interest income. Actual results may differ significantly from those presented due to the timing, magnitude and frequency of changes in interest rates and changes in market conditions and interest rate differentials (spreads) between maturity/repricing categories, as well as any actions, such as those previously described, which management may take to counter such changes.

Changes in fair value of the Company’s financial instruments can also result from a lack of trading activity for similar instruments in the financial markets. That impact is most notable on the values assigned to some of the Company’s investment securities. Information about the fair valuation of ~~such~~investment securities is presented herein under the heading “Capital” and in notes 3 and 12 of Notes to Financial Statements.

The Company engages in limited trading account activities to meet the financial needs of customers and to fund the Company’s obligations under certain deferred compensation plans. Financial instruments utilized in trading account activities consist predominantly of interest rate contracts, such as swap agreements, and forward and futures contracts related to foreign currencies. The Company generally mitigates the foreign currency and interest rate risk associated with trading account activities by entering into offsetting trading positions that are also included in the trading account. The fair values of the offsetting trading account positions associated with interest rate contracts and foreign currency and other option and futures contracts are presented in note 10 of Notes to Financial Statements. The amounts of gross and net trading account positions, as well as the type of trading account activities conducted by the Company, are subject to a well-defined series of potential loss exposure limits established by management and approved by M&T’s Board of Directors. However, as with any non-government guaranteed financial instrument, the Company is exposed to credit risk associated with counterparties to the Company’s trading account activities.

The notional amounts of interest rate contracts entered into for trading account purposes aggregated $18.9 billion at March 31, 2016, $17.1 billion at ~~each of~~ March 31, 2015 and ~~2014 and $17.6~~$18.4 billion at December 31, ~~2014.~~2015. The notional amounts of foreign currency and other option and futures contracts entered into for trading account purposes totaled ~~$1.4~~$2.8 billion at March 31, ~~2015,~~2016, compared with ~~$1.0~~$1.4 billion and ~~$1.3~~$1.6 billion at March 31 and December 31, ~~2014,~~2015, respectively. Although the notional amounts of these contracts are not recorded in the consolidated balance sheet, the fair values of all financial instruments used for trading account activities are recorded in the consolidated balance sheet. The fair values of all trading account assets and liabilities were $468 million and $296 million, respectively, at March 31, 2016, $363 million and $240 million, respectively, at March 31, 2015, ~~$315~~and $274 million and ~~$216 million, respectively, at March 31, 2014, and $308 million and $203~~$161 million, respectively, at December 31, ~~2014.~~2015. Included in trading account assets were assets related to deferred compensation plans totaling $22 million at March 31, 2016, compared with $25 million at March 31, 2015 ~~compared with $26 million at March 31, 2014~~ and ~~$27~~$24 million at December 31, ~~2014.~~2015. Changes in the fair value of such assets are recorded as “trading account and foreign exchange gains” in the consolidated statement of income. Included in “other liabilities” in the consolidated balance sheet at March 31, ~~2015~~2016 were ~~$29~~$26 million of liabilities related to deferred compensation plans, compared with ~~$30~~$29 million and $28 million at ~~each of~~ March 31 and December 31, ~~2014.~~2015, respectively. Changes in the balances of such liabilities due to the valuation of allocated investment options to which the liabilities are indexed are recorded in “other costs of operations” in the consolidated statement of income. Also included in trading account assets were investments in mutual funds and other assets that

the Company was required to hold under terms of certain non-qualified supplemental retirement and other benefit plans that were assumed by the Company in various acquisitions. Those assets totaled $48 million, $24 million, and $33 million at March 31, 2016, March 31, 2015 and December 31, 2015, respectively.

Given the Company’s policies, limits and positions, management believes that the potential loss exposure to the Company resulting from market risk associated with trading account activities was not material, however, as

previously noted, the Company is exposed to credit risk associated with counterparties to transactions ~~associated with~~related to the Company’s trading account activities. Additional information about the Company’s use of derivative financial instruments in its trading account activities is included in note 10 of Notes to Financial Statements.

The Company maintains an allowance for credit losses that in management’s judgment appropriately reflects losses inherent in the loan and lease portfolio. A provision for credit losses is recorded to adjust the level of the allowance as deemed necessary by management. The provision for credit losses in the first quarter of ~~2015~~2016 was ~~$38~~$49 million, compared with ~~$32~~$38 million in the year-earlier quarter and ~~$33~~$58 million in the fourth quarter of ~~2014.~~2015. A $21 million provision for credit losses was recorded in the fourth quarter of 2015, in accordance with GAAP, related to loans obtained in the Hudson City acquisition that had a fair value in excess of outstanding principal. GAAP provides that an allowance for credit losses on such loans be recorded beyond the recognition of the fair value of the loans at the acquisition date. Net loan charge-offs were ~~$36~~$42 million in the recent quarter, compared with ~~$32~~$36 million in each of the first and fourth quarters of ~~2014.~~2015. Net charge-offs as an annualized percentage of average loans and leases were .19% in the initial 2016 quarter, compared with .22% in the ~~initial 2015~~year-earlier quarter ~~compared with .20% in the first quarter of 2014~~ and ~~.19%~~.18% in the final ~~2014~~2015 quarter. A summary of net charge-offs by loan type is presented in the table that follows.


	First Quarter 2015		First Quarter 2014		Fourth Quarter 2014		First Quarter 2016			First Quarter 2015		Fourth Quarter 2015
Commercial, financial, leasing, etc.	$	8,411		9,146		9,397	$	902			8,411		(3,358	)
Real estate:
Commercial		6,094		289		1,262		(1,141	)		6,094		(1,743	)
Residential		2,129		5,822		2,554		5,085			2,129		2,462
Consumer		19,555		16,651		18,858		37,394			19,555		38,445

	$	36,189		31,908		32,071	$	42,240			36,189		35,806

Included in net charge-offs of consumer loans and leases were net charge-offs during the quarters ended March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively, of: automobile loans of $11 million, $4 million ~~in each respective period;~~and $3 million; recreational vehicle loans of $3$12 million, $4$3 million and $3 million; and home equity loans and lines of credit ~~including Alt-A second lien loans,~~ of $5 million, $6 million $4and $3 million. During the first quarter of 2016, the Company charged off consumer loans associated with customers who were either deceased or had filed for bankruptcy that, in accordance with GAAP, had previously been considered when determining the level of the allowance for credit losses. Such charge-offs totaled $14 million and $4 million. Alt-A loans represent loans secured by residential real estate that at origination typically included some form of limited borrower documentation requirements as compared with more traditional loans. Loans in the ~~Company’s Alt-A portfolio were originated by~~recent quarter and included $11 million of loan balances with a current payment status. Net charge-offs of consumer loans in the ~~Company prior to 2008.~~fourth quarter of 2015 included a $20 million charge-off of a single personal usage loan obtained in a previous acquisition.

Loans acquired in connection with acquisition transactions subsequent to 2008 were recorded at fair value with no carry-over of any previously

recorded allowance for credit losses. Determining the fair value of ~~the~~ acquired loans ~~required~~requires estimating cash flows expected to be collected on the loans and discounting those cash flows at then-current interest rates. ~~The~~For acquired loans where fair value was less than outstanding principal as of the acquisition date and the resulting discount was due, at least in part, to credit deterioration, the excess of expected cash flows over the carrying value of the loans is recognized as interest income over the lives of the loans. The difference between contractually required payments and the cash flows expected to be collected is referred to as the nonaccretable balance and is not recorded on the consolidated balance sheet. The nonaccretable balance reflects estimated future credit losses and other contractually required payments that the Company does not expect to collect. The Company regularly evaluates the reasonableness of its cash flow ~~projections.~~projections associated with such loans. Any decreases to the expected cash flows require the Company to evaluate the need for an additional allowance for credit losses and could lead to charge-offs of ~~acquired~~ loan balances. Any significant increases in expected cash flows result in additional interest income to be recognized over the then-remaining lives of the loans. The carrying amount of loans ~~obtained in acquisitions~~acquired at a discount subsequent to 2008 and accounted for based on expected cash flows was $2.3 billion, $2.4 billion ~~$3.7 billion~~ and ~~$2.6~~$2.5 billion at March 31, ~~2015,~~

2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. The ~~portion of~~decrease in the recent quarter as compared with December 31, 2015 was largely attributable to payments received. The nonaccretable balance related to remaining principal losses ~~as well as life-to-date principal losses charged against the nonaccretable balance~~associated with loans acquired at a discount as of March 31, ~~2015~~2016 and December 31, ~~2014 are~~2015 is presented in the accompanying table.

For acquired loans where the fair value exceeded the outstanding principal balance, the resulting premium is recognized as a reduction of interest income over the lives of the loans. Immediately following the acquisition date and thereafter, an allowance for credit losses is recorded for incurred losses inherent in the portfolio, consistent with the accounting for originated loans and leases. The carrying amount of Hudson City loans acquired at a premium was $17.0 billion and $17.8 billion at March 31, 2016 and December 31, 2015, respectively. As noted previously, a $21 million provision for credit losses was recorded in the fourth quarter of 2015 for incurred losses inherent in those loans. GAAP does not allow the credit loss component of the net premium associated with those loans to be bifurcated and accounted for as a nonaccreting balance as is the case with purchased impaired loans and other loans acquired at a discount. Despite the fact that the determination of aggregate fair value reflects the impact of expected credit losses, GAAP provides that incurred losses in a portfolio of loans acquired at a premium be recognized even though in a relatively homogenous portfolio of residential mortgage loans the specific loans to which the losses relate cannot be individually identified at the acquisition date.

Nonaccrual loans totaled ~~$791~~$877 million or ~~1.18%~~1.00% of total loans and leases outstanding at March 31, ~~2015,~~2016, compared with ~~$891~~$791 million or ~~1.39%~~1.18% a

year earlier and $799 million or ~~1.20%~~.91% at December 31, ~~2014.~~2015. The ~~declines~~increase in nonaccrual loans at the ~~two~~ most recent ~~quarter-ends~~quarter-end as compared with March 31, ~~2014~~and December 31, 2015 reflects the normal migration of previously performing loans obtained in the acquisition of Hudson City that became over 90 days past due during the recent quarter and, as such, were ~~largely due to lower commercial loans and commercial real estate loans in nonaccrual status.~~not identifiable as purchased impaired as of the acquisition date.

Accruing loans past due 90 days or more (excluding loans acquired ~~loans) were $237~~at a discount) totaled $336 million or ~~.35%~~.38% of total loans and leases at March 31, ~~2015,~~2016, compared with ~~$307~~$237 million or ~~.48%~~.35% at March 31, ~~2014~~2015 and ~~$245~~$317 million or ~~.37%~~.36% at December 31, ~~2014.~~2015. Those loans included loans guaranteed by government-related entities of $279 million, $194 million ~~$291 million~~ and ~~$218~~$276 million at March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. Such guaranteed loans obtained in the acquisition of Hudson City totaled $44 million at each of March 31, 2016 and December 31, 2015. Guaranteed loans also included one-to-four family residential mortgage loans serviced by the Company that were repurchased to reduce associated servicing costs, including a requirement to advance principal and interest payments that had not been received from individual mortgagors. Despite the loans being purchased by the Company, the insurance or guarantee by the applicable government-related entity remains in force. The outstanding principal balances of the repurchased loans that are guaranteed by government-related entities totaled $226 million, $178 million ~~$251 million~~ and ~~$196~~$221 million at March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. The remaining accruing loans past due 90 days or more not guaranteed by government-related entities were loans considered to be with creditworthy borrowers that were in the process of collection or renewal. Acquired accruing loans past due 90 days or more are loans that could not be specifically identified as impaired as of the acquisition date, but were recorded at estimated fair value as of such date. Such loans totaled $80 million at March 31, 2015, compared with $121 million at March 31, 2014 and $110 million at December 31, 2014.

Purchased impaired loans are loans obtained in acquisition transactions subsequent to 2008 that as of the acquisition date were specifically identified as displaying signs of credit deterioration and for which the Company did not expect to collect all outstanding principal and contractually required interest payments. Those loans were impaired at the date of acquisition, were recorded at estimated fair value and were generally delinquent in payments, but, in accordance with GAAP, the Company continues to accrue interest income on such loans based on the estimated expected cash flows associated with the loans. The carrying amount of such loans was ~~$184~~$716 million at March 31, ~~2015,~~2016, or approximately ~~.3%~~.8% of total loans. Of that amount, $624 million is related to the Hudson City acquisition. Purchased impaired loans totaled ~~$303~~$184 million and ~~$198~~$768 million at March 31 and December 31, ~~2014,~~2015, respectively. ~~The decline in~~

Accruing loans acquired at a discount past due 90 days or more are loans that could not be specifically identified as impaired as of the acquisition date, but were recorded at estimated fair value as of such date. Such loans ~~from~~totaled $62 million at March 31, ~~2014 was predominantly the result of payments received from customers.~~2016, compared with $80 million at March 31, 2015 and $68 million at December 31, 2015.

In an effort to assist borrowers, the Company modified the terms of select loans. If the borrower was experiencing financial difficulty and a concession was granted, the Company considered such modifications as troubled debt restructurings. Loan modifications included such actions as the extension of loan maturity dates and the lowering of interest rates and monthly payments. The objective of the modifications was to increase loan repayments by customers and thereby reduce net charge-offs. In accordance with GAAP, the modified loans are included in impaired loans for purposes of determining the level of the allowance for credit losses. Information about modifications of loans that are considered troubled debt restructurings is included in note 4 of Notes to Financial Statements.

Residential real estate loans modified under specified loss mitigation programs prescribed by government guarantors have not been included in renegotiated loans because the loan guarantee remains in full force and, accordingly, the Company has not granted a concession with respect to the ultimate collection of the original loan balance. Such loans aggregated $155 million, $153 million ~~$224 million~~ and ~~$149~~$147 million at March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively.

Nonaccrual commercial loans and leases aggregated $280 million at March 31, 2016, $195 million at March 31, 2015 ~~$138 million at March 31, 2014~~ and ~~$177~~$242 million at December 31, ~~2014.~~2015. The ~~increases~~largest commercial loans placed in ~~such loans~~nonaccrual status since March 31, ~~2014~~2015 were ~~not concentrated~~a $24 million relationship with a commercial maintenance services provider with operations in ~~any particular industry group.~~New Jersey and Pennsylvania that was placed in nonaccrual status in the third quarter of 2015 and a $40 million relationship with a multi-regional manufacturer of refractory brick and other cast-able products placed in nonaccrual status in the first quarter of 2016. Commercial real estate loans classified as nonaccrual totaled $224 million at March 31, 2016 and December 31, 2015, and $232 million at March 31, ~~2015, $291~~2015. Nonaccrual commercial real estate loans included construction-related loans of $53 million, $90 million and $45 million at March 31, ~~2014~~2016, March 31, 2015 and ~~$239 million at~~ December 31, ~~2014. The decreases in such~~2015, respectively. Those nonaccrual construction loans ~~at the two most recent quarter-ends as compared with March 31, 2014 was due, in part, to improving economic conditions and reflected lower~~included loans ~~in nonaccrual status to residential builders and developers. Loans~~ to residential builders and developers ~~in nonaccrual status aggregated $65~~of $32 million and ~~$90~~$65 million at March 31, ~~2015~~2016 and ~~2014,~~2015, respectively, and ~~$72~~$28 million at December 31, ~~2014.~~2015. Information about the location of nonaccrual and charged-off loans to residential real estate builders and developers as of and for the three-month period ended March 31, ~~2015~~2016 is presented in the accompanying table.


	March 31, 2015							Quarter ended March 31, 2015						March 31, 2016							Quarter ended March 31, 2016
			Nonaccrual					Net charge-offs (recoveries)								Nonaccrual					Net charge-offs (recoveries)
	Outstanding balances (a)		Balances		Percent of outstanding balances			Balances			Annualized percent of average outstanding balances			Outstanding balances (b)		Balances		Percent of outstanding balances			Balances			Annualized percent of average outstanding balances
	(dollars in thousands)													(dollars in thousands)

New York	$	751,974	$	8,571		1.14	%	$	134			.09	%	$	823,828	$	2,868		.35	%	$	71			.01	%
Pennsylvania		137,105		36,538		26.65			(2	)		(.01	)		136,965		26,898		19.64			(18	)		(.01	)
Mid-Atlantic(a)		400,934		21,909		5.46			11			.01			428,913		3,740		.87			(952	)		(.22	)
Other		365,634		1,504		.41			—			—			450,849		1,277		.28			—			—


Total	$	1,655,647	$	68,522		4.14	%	$	143			.04	%	$	1,840,555	$	34,783		1.89	%	$	(899	)		(.05	)%

Residential real estate loans in nonaccrual status at March 31, ~~2015~~2016 were ~~$246~~$263 million, compared with ~~$338~~$246 million at March 31, ~~2014~~2015 and ~~$258~~$215 million at December 31, ~~2014.~~2015. The increase in residential real estate loans classified as nonaccrual at March 31, 2016 as compared with December 31, 2015 reflects the normal migration of $80 million of previously performing loans obtained with the acquisition of Hudson City that became more than 90 days delinquent during the recent quarter. Those loans could not be identified as purchased impaired loans at the acquisition date because the borrowers were making current loan payments at the time and the loans were not recorded at a

discount. The decrease in residential real estate loans classified as nonaccrual from March 31, ~~2014 was largely related~~2015 to ~~the payoff during the second quarter of 2014 of $64 million of loans to one customer that were secured~~December 31, 2015 reflects improved repayment performance by ~~residential real estate.~~customers. Included in residential real estate loans classified as nonaccrual were ~~Alt-A~~limited documentation first mortgage loans of $76 million, $74 million ~~$79 million~~ and ~~$78~~$62 million at March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. Limited documentation first mortgage loans represent loans secured by residential real estate that at origination typically included some form of limited borrower documentation requirements as compared with more traditional loans. Such loans in the Company’s portfolio prior to the Hudson City transaction were originated by the Company before 2008. Hudson City discontinued its limited documentation loan program in January 2014. Residential real estate loans past due 90 days or more and accruing interest (excluding loans acquired ~~loans)~~at a discount) totaled ~~$197~~$279 million (including $44 million obtained in the acquisition of Hudson City) at March 31, ~~2015,~~2016, compared with ~~$285~~$197 million a year earlier and ~~$216~~$284 million at December 31, ~~2014.~~2015. A substantial portion of such amounts related to guaranteed loans repurchased from government-related entities. Information about the location of nonaccrual and charged-off residential real estate loans as of and for the quarter ended March 31, ~~2015 is presented in the accompanying table.~~

Nonaccrual consumer loans aggregated $118 million at March 31, 2015, compared with $124 million at March 31, 2014 and $125 million at December 31, 2014. Included in nonaccrual consumer loans at March 31, 2015, March 31, 2014 and December 31, 2014 were: automobile loans of $14 million, $16 million and $18 million, respectively; recreational vehicle loans of $9 million, $11 million and $11 million, respectively; and outstanding balances of home equity loans and lines of credit, including junior lien Alt-A loans, of $88 million, $83 million and $89 million, respectively. Information about the location of nonaccrual and charged-off home equity loans and lines of credit as of and for the quarter ended March 31, 20152016 is presented in the accompanying table.


	March 31, 2015							Quarter ended March 31, 2015						March 31, 2016							Quarter ended March 31, 2016
			Nonaccrual					Net charge-offs (recoveries)								Nonaccrual					Net charge-offs (recoveries)
	Outstanding balances		Balances		Percent of outstanding balances			Balances			Annualized percent of average outstanding balances			Outstanding balances		Balances		Percent of outstanding balances			Balances			Annualized percent of average outstanding balances
	(dollars in thousands)													(dollars in thousands)
Residential mortgages:
New York	$	3,456,314	$	63,978		1.85	%	$	757			.09	%	$	6,623,498	$	68,450		1.03	%	$	1,740			.10	%
Pennsylvania		1,106,917		19,210		1.74			50			.02			1,800,458		16,332		.91			736			.16
Mid-Atlantic		2,026,129		30,854		1.52			705			.14
Maryland															1,309,386		13,567		1.04			483			.15
New Jersey															6,058,466		27,216		.45			454			.03
Other Mid-Atlantic(a)															1,127,285		12,800		1.14			217			.08
Other		1,557,014		55,732		3.58			186			.05			4,242,521		47,061		1.11			452			.04

Total	$	8,146,374	$	169,774		2.08	%	$	1,698			.08	%	$	21,161,614	$	185,426		.88	%	$	4,082			.08	%

Residential construction loans:
New York	$	5,999	$	144		2.41	%	$	—			—	%	$	6,019	$	23		.38	%	$	—			—	%
Pennsylvania		3,249		734		22.58			(1	)		(.11	)		4,678		482		10.31			13			1.15
Mid-Atlantic		9,730		—		—			—			—
Maryland															4,269		—		—			—			—
New Jersey															890		—		—			—			—
Other Mid-Atlantic(a)															3,207		—		—			—			—
Other		11,199		844		7.54			66			2.14			11,414		521		4.56			19			.62

Total	$	30,177	$	1,722		5.71	%	$	65			.81	%	$	30,477	$	1,026		3.37	%	$	32			.41	%

Alt-A first mortgages:
Limited documentation first mortgages:
New York	$	55,606	$	18,263		32.84	%	$	166			1.20	%	$	1,717,886	$	23,091		1.34	%	$	574			.13	%
Pennsylvania		10,451		2,910		27.84			61			2.34			86,663		4,858		5.61			25			.11
Mid-Atlantic		65,192		9,670		14.83			10			.06
Maryland															48,923		2,755		5.63			164			1.34
New Jersey															1,612,316		13,541		.84			12			.01
Other Mid-Atlantic(a)															43,947		3,180		7.24			(84	)		(.75	)
Other		196,319		43,427		22.12			129			.26			597,812		28,840		4.82			280			.19

Total	$	327,568	$	74,270		22.67	%	$	366			.44	%	$	4,107,547	$	76,265		1.86	%	$	971			.09	%

Alt-A junior lien:
First lien home equity loans and lines of credit:
New York	$	1,066	$	56		5.24	%	$	107			40.21	%	$	1,333,557	$	17,149		1.29	%	$	365			.11	%
Pennsylvania		353		34		9.76			—			—			864,700		9,746		1.13			270			.13
Mid-Atlantic		2,801		141		5.02			(1	)		(.08	)
Maryland															702,543		6,675		.95			149			.08
New Jersey															41,188		234		.57			—			—
Other Mid-Atlantic(a)															211,391		498		.24			4			.01
Other		6,595		508		7.70			282			17.00			19,789		1,368		6.91			1			.02

Total	$	10,815	$	739		6.83	%	$	388			14.21	%	$	3,173,168	$	35,670		1.12	%	$	789			.10	%

First lien home equity loans:
Junior lien home equity loans and lines of credit:
New York	$	16,684	$	1,648		9.88	%	$	194			4.55	%	$	942,014	$	26,558		2.82	%	$	2,021			.80	%
Pennsylvania		54,773		3,282		5.99			87			.62			382,366		3,464		.91			745			.72
Mid-Atlantic		72,624		848		1.17			78			.42
Maryland															855,594		7,004		.82			1,120			.49
New Jersey															131,933		2,068		1.57			13			.04
Other Mid-Atlantic(a)															321,220		1,226		.38			75			.09
Other		1,155		—		—			(2	)		(.50	)		41,868		2,281		5.45			(1	)		(.01	)

Total	$	145,236	$	5,778		3.98	%	$	357			.96	%	$	2,674,995	$	42,601		1.59	%	$	3,973			.56	%

First lien home equity lines:
Limited documentation junior lien:
New York	$	1,358,769	$	15,112		1.11	%	$	463			.14	%	$	841	$	—		—	%	$	2			.73	%
Pennsylvania		838,591		5,922		.71			373			.18			342		—		—			—			—
Mid-Atlantic		857,883		3,959		.46			184			.09
Maryland															1,604		72		4.50			—			—
New Jersey															389		—		—			—			—
Other Mid-Atlantic(a)															745		—		—			—			—
Other		37,985		1,515		3.99			—			—			5,171		379		7.32			60			4.61

Total	$	3,093,228	$	26,508		.86	%	$	1,020			.13	%	$	9,092	$	451		4.96	%	$	62			2.71	%

Junior lien home equity loans:
New York	$	13,923	$	4,590		32.97	%	$	(165	)		(4.72	)%
Pennsylvania		17,731		998		5.63			(18	)		(.39	)
Mid-Atlantic		59,825		1,510		2.52			3			.02
Other		7,398		856		11.57			344			18.01

Total	$	98,877	$	7,954		8.04	%	$	164			.65	%

Junior lien home equity lines:
New York	$	940,262	$	30,449		3.24	%	$	1,903			.81	%
Pennsylvania		387,109		4,484		1.16			717			.74
Mid-Atlantic		1,179,393		10,267		.87			1,816			.62
Other		68,065		1,806		2.65			(27	)		(.16	)

Total	$	2,574,829	$	47,006		1.83	%	$	4,409			.69	%

Nonaccrual consumer loans aggregated $110 million at March 31, 2016, compared with $118 million at each of March 31, 2015 and December 31, 2015. Included in nonaccrual consumer loans at March 31, 2016, March 31, 2015 and December 31, 2015 were: automobile loans of $15 million, $14 million and $17 million, respectively; recreational vehicle loans of $16 million, $9 million and $9 million, respectively; and outstanding balances of home equity loans and lines of credit of $79 million, $88 million and $84 million, respectively. Information about the location of nonaccrual and charged-off home equity loans and lines of credit as of and for the quarter ended March 31, 2016 is presented in the accompanying table.

Real estate and other foreclosed assets totaled ~~$63~~$188 million and ~~$59~~$63 million at March 31, ~~2015~~2016 and March 31, ~~2014,~~2015, respectively, and ~~$64~~$195 million at December 31, ~~2014.~~2015. The higher levels of real estate and other foreclosed assets at March 31, 2016 and December 31, 2015 reflect residential real estate properties associated with the Hudson City acquisition, which totaled $121 million and $126 million at those respective dates. Gains or losses resulting from the sales of real estate and other foreclosed assets were not material in the three-month periods ended March 31, 2016, March 31, 2015 or December 31, 2015. At March 31, ~~2015, foreclosed assets included $42 million~~2016, the Company’s holding of residential real ~~estate properties.~~estate-related properties comprised approximately 90% of foreclosed assets.

A comparative summary of nonperforming assets and certain past due loan data and credit quality ratios as of the end of the periods indicated is presented in the accompanying table.


	2015			2014 Quarters												2016 First Quarter						2015 Quarters
	First Quarter			Fourth			Third			Second			First			2016 First Quarter			Fourth			Third			Second			First

Nonaccrual loans	$	790,586			799,151			847,784			880,134		$	890,893		$	876,691			799,409			787,098			797,146			790,586
Real estate and other foreclosed assets		62,578			63,635			67,629			59,793			59,407			188,004			195,085			66,144			63,734			62,578

Total nonperforming assets	$	853,164			862,786			915,413			939,927		$	950,300		$	1,064,695			994,494			853,242			860,880			853,164


Accruing loans past due 90 days or more (a)	$	236,621			245,020			312,990			289,016		$	307,017
Accruing loans past due 90 days or more(a)																$	336,170			317,441			231,465			238,568			236,621


Government guaranteed loans included in totals above:
Nonaccrual loans	$	60,508			69,095			68,586			81,817		$	75,959		$	49,688			47,052			48,955			58,259			60,508
Accruing loans past due 90 days or more		193,618			217,822			265,333			275,846			291,418			279,340			276,285			193,998			206,775			193,618


Renegotiated loans	$	198,911			202,633			209,099			270,223		$	257,889		$	200,771			182,865			189,639			197,145			198,911

Acquired accruing loans past due 90 days or more (b)	$	80,110			110,367			132,147			134,580		$	120,996
Accruing loans acquired at a discount past due 90 days or more(b)																$	61,767			68,473			80,827			78,591			80,110


Purchased impaired loans (c):
Purchased impaired loans(c):
Outstanding customer balance	$	335,079			369,080			429,915			504,584		$	534,331		$	1,124,776			1,204,004			278,979			312,507			335,079
Carrying amount		184,018			197,737			236,662			282,517			303,388			715,874			768,329			149,421			169,240			184,018


Nonaccrual loans to total loans and leases, net of unearned discount		1.18	%		1.20	%		1.29	%		1.36	%		1.39	%		1.00	%		.91	%		1.15	%		1.17	%		1.18	%
Nonperforming assets to total net loans and leases and real estate and other foreclosed assets		1.27	%		1.29	%		1.39	%		1.45	%		1.48	%		1.21	%		1.13	%		1.24	%		1.26	%		1.27	%
Accruing loans past due 90 days or more (a) to total loans and leases, net of unearned discount		.35	%		.37	%		.48	%		.45	%		.48	%		.38	%		.36	%		.34	%		.35	%		.35	%

Management determined the allowance for credit losses by performing ongoing evaluations of the loan and lease portfolio, including such factors as the differing economic risks associated with each loan category, the financial condition of specific borrowers, the economic environment in which borrowers operate, the level of delinquent loans, the value of any collateral and, where applicable, the existence of any guarantees or indemnifications.

Management evaluated the impact of changes in interest rates and overall economic conditions on the ability of borrowers to meet repayment obligations when quantifying the Company’s exposure to credit losses and the allowance for such losses as of each reporting date. Factors also considered by management when performing its assessment, in addition to general economic conditions and the other factors described above, included, but were not limited to: (i) the impact of residential real estate values on the Company’s portfolio of loans to residential real estate builders and developers and

other loans secured by residential real estate; (ii) the concentrations of commercial real estate loans in the Company’s loan portfolio; (iii) the amount of commercial and industrial loans to businesses in areas of New York State outside of the New York City metropolitan area and in central Pennsylvania that have historically experienced less economic growth and vitality than the vast majority of other regions of the country; (iv) the expected repayment performance associated with the Company’s first and second lien loans secured by residential real ~~estate;~~estate, including loans obtained in the acquisition of Hudson City that were not classified as purchased impaired; and (v) the size of the Company’s portfolio of loans to individual consumers, which historically have experienced higher net charge-offs as a percentage of loans outstanding than other loan types. The level of the allowance is adjusted based on the results of management’s analysis.

Management cautiously and conservatively evaluated the allowance for credit losses as of March 31, ~~2015~~2016 in light of: (i) residential real estate values and the level of delinquencies of loans secured by residential real estate; (ii) economic conditions in the markets served by the Company; (iii) ~~continuing weakness~~slower growth in ~~industrial~~private sector employment in upstate New York and central ~~Pennsylvania;~~Pennsylvania than in other regions served by the Company and nationally; (iv) the significant subjectivity involved in commercial real estate valuations; and (v) the amount of loan growth experienced by the Company. While there has been general improvement in economic conditions, concerns continue to exist about the strength and sustainability of such improvements; the troubled state of ~~financial~~global commodity and ~~credit~~export markets, including the impact international economic conditions could have on the U.S. economy; Federal Reserve positioning of monetary policy; ~~low levels of workforce participation;~~ and continued stagnant population growth in the upstate New York and central Pennsylvania regions (approximately ~~60%~~55% of the Company’s loans are to customers in New York State and Pennsylvania).

The Company utilizes a loan grading system which is applied to all commercial loans and commercial real estate loans. Loan grades are utilized to differentiate risk within the portfolio and consider the expectations of default for each loan. Commercial loans and commercial real estate 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. Criticized commercial loans and commercial real estate loans were ~~$2.0~~$2.3 billion at March 31, ~~2015,~~2016, compared with ~~$1.8~~$2.1 billion at ~~each of March 31, 2014 and~~ December 31, ~~2014.~~2015. The increase since December 31, ~~2014~~2015 included ~~approximately $129~~$74 million related to commercial real estate loans and $91 million related to ~~customers operating in varied industries.~~ commercial loans. Approximately 94% of loan balances added to the criticized category during the recent quarter were less than 90 days past due and 91% had a current payment status. The borrower industries most significantly impacting the higher level of criticized loans were investment real estate, services and manufacturing.

Loan officers with the support of loan review personnel in different geographic locations are responsible to continuously review and reassign loan grades to pass and criticized loans based on their detailed knowledge of individual borrowers and their judgment of the impact on such borrowers resulting from changing conditions in their respective geographic regions. At least annually, updated financial information is obtained from commercial borrowers associated with pass grade loans and additional analysis is performed. On a quarterly basis, the Company’s centralized loan review department reviews all criticized commercial ~~loans~~ and commercial real estate loans greater than $1 million to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or

nonaccruing. For criticized nonaccrual loans, additional meetings are held with loan officers and their

managers, workout specialists and senior management to discuss each of the relationships. In analyzing criticized loans, borrower-specific information is reviewed, including operating results, future cash flows, recent developments and the borrower’s outlook, and other pertinent data. The timing and extent of potential losses, considering collateral valuation and other factors, and the Company’s potential courses of action are reviewed. To the extent that these 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 value as determined by line of business and/or loan workout personnel in the respective geographic regions. Those adjustments are reviewed and assessed for reasonableness by the Company’s loan review department. Accordingly, for real estate collateral securing larger commercial ~~loans~~ and commercial real estate loans, estimated collateral values are based on current appraisals and estimates of value. For non-real estate loans, collateral is assigned a discounted estimated liquidation value and, depending on the nature of the collateral, is verified through field exams or other procedures. In assessing collateral, real estate and non-real estate values are reduced by an estimate of selling costs. With regard to residential real estate loans, the Company’s loss identification and estimation techniques make reference to loan performance and house price data in specific areas of the country where collateral ~~that was~~ securing the Company’s residential real estate loans ~~was~~is located. For residential real estate-related 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. At March 31, ~~2015,~~2016, approximately ~~55%~~54% of the Company’s home equity portfolio consisted of first lien loans and lines of credit. Of the remaining junior lien loans in the portfolio, approximately ~~73%~~72% (or approximately ~~32%~~33% of the aggregate home equity portfolio) consisted of junior lien loans that were behind a first lien mortgage loan that was not owned or serviced by the Company. To the extent known by the Company, if a senior lien loan would be on nonaccrual status because of payment delinquency, even if such senior lien loan was not owned by the Company, the junior lien loan or line that is owned by the Company is placed on nonaccrual status. At March 31, ~~2015,~~2016, the balance of junior lien loans and lines that were in nonaccrual status solely as a result of first lien loan performance was ~~$22~~$23 million, compared with ~~$30~~$22 million at each of March 31, ~~2014~~2015 and ~~$24 million at~~ December 31, ~~2014.~~2015. In monitoring the credit quality of its home equity portfolio for purposes of determining the allowance for credit losses, the Company reviews delinquency and nonaccrual information and considers recent charge-off experience. ~~Additionally, the Company generally evaluates~~When evaluating individual home equity loans and lines of credit ~~that are more than 150 days past due~~ for collectibility on a loan-by-loan basis and the excess of the loan balance over the net realizable value of the property collateralizing the loan is charged-off at that time. In determining the amount of such charge-offs,charge off, if the Company does not know the amount of the remaining first lien mortgage loan (typically because the Company does not own or service the first lien loan), the Company assumes that the first lien mortgage loan has had no principal amortization since the origination of the junior lien loan. Similarly, data used in estimating incurred losses for purposes of determining the allowance for credit losses also assumes no reductions in outstanding principal of first lien loans since the origination of the junior lien loan. Home equity line of credit terms vary but such lines are generally originated with an open draw period of ten years followed by an

approximately ~~92%~~86% of all outstanding balances of home equity lines of credit related to lines that were still in the draw period, the weighted-average remaining draw periods were approximately five years, and approximately ~~22%~~21% were making contractually allowed payments that do not include repayment of principal.

Factors that influence the Company’s credit loss experience include overall economic conditions affecting businesses and consumers, generally, but also residential and commercial real estate valuations, in particular, given the size of the Company’s real estate loan portfolios. Commercial real estate valuations can be highly subjective, as they are based upon many assumptions. Such valuations can be significantly affected over relatively short periods of time by changes in business climate, economic conditions, interest rates, and, in many cases, the results of operations of businesses and other occupants of the real property. Similarly, residential real estate valuations can be impacted by housing trends, the availability of financing at reasonable interest rates, and general economic conditions affecting consumers.

In determining the allowance for credit losses, the Company estimates losses attributable to specific troubled credits identified through both normal and detailed or intensified credit review processes and also estimates losses inherent in other loans and leases. In quantifying incurred losses, the Company considers the factors and uses the techniques described herein and in note 4 of Notes to Financial Statements. For purposes of determining the level of the allowance for credit losses, the Company segments its loan and lease portfolio by loan type. The amount of specific loss components in the Company’s loan and lease portfolios is determined through a loan-by-loan analysis of commercial loans and commercial real estate loans in nonaccrual status. Measurement of the specific loss components is typically based on expected future cash flows, collateral values or other factors that may impact the borrower’s ability to pay. Losses associated with residential real estate loans and consumer loans are generally determined by reference to recent charge-off history and are evaluated (and adjusted if deemed appropriate) through consideration of other factors including near-term forecasted loss estimates developed by the Company’s credit department. These forecasts give consideration to overall borrower repayment performance and current geographic region changes in collateral values using third party published historical price indices or automated valuation methodologies. With regard to collateral values, the realizability of such values by the Company contemplates repayment of any first lien position prior to recovering amounts on a junior lien position. Approximately ~~45%~~46% of the Company’s home equity portfolio consists of junior lien loans and lines of credit. Except for consumer loans and residential real estate loans that are considered smaller balance homogeneous loans and are evaluated collectively and loans obtained at a discount in acquisition transactions, the Company considers a loan to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more and has been placed in nonaccrual status. Those impaired loans are evaluated for specific loss components. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Loans less than 90 days delinquent are deemed to have a minimal delay in payment and are generally not considered to be impaired. Loans acquired in connection with acquisition transactions subsequent to 2008 were recorded at fair value with no carry-over of any previously recorded allowance for credit losses. Determining the fair value of the acquired loans required estimating cash flows expected to be collected on the loans and discounting those cash flows at then-current interest rates. ~~The~~For loans acquired at a discount, the impact of estimated future credit losses represents the predominant difference between contractually required payments ~~at acquisition~~

and the cash flows expected to be ~~collected at acquisition.~~collected. Subsequent decreases to those expected cash flows require the Company to evaluate the need for an additional allowance for credit losses and could lead to charge-offs of acquired loan balances. Additional

information regarding the Company’s process for determining the allowance for credit losses is included in note 4 of Notes to Financial Statements.

Management believes that the allowance for credit losses at March 31, ~~2015~~2016 appropriately reflected credit losses inherent in the portfolio as of that date. The allowance for credit losses was ~~$921~~$963 million, or ~~1.37%~~1.10% of total loans and leases at March 31, ~~2015,~~2016, compared with ~~$917~~$921 million or ~~1.43%~~1.37% at March 31, ~~2014~~2015 and ~~$920~~$956 million or ~~1.38%~~1.09% at December 31, ~~2014.~~2015. The ratio of the allowance to total loans and leases at each respective date reflects the impact of loans obtained in acquisition transactions subsequent to 2008 that ~~had~~have been recorded at estimated fair ~~value based on estimated future cash flows expected to be received on those loans. Those cash flows include the impact of expected defaults on customer repayment performance.~~value. As noted earlier, GAAP prohibits any carry-over of an allowance for credit losses for acquired loans recorded at fair value. However, for loans acquired at a premium, GAAP provides that an allowance for credit losses be recognized for incurred losses inherent in the portfolio. The declines in the ratio of the allowance to total loans and leases at March 31, 2016 and December 31, 2015 from March 31, 2015 reflects the impact of loans (predominantly residential real estate loans) obtained in the acquisition of Hudson City. The level of the allowance reflects management’s evaluation of the loan and lease portfolio using the methodology and considering the factors as described herein. Should the various credit factors considered by management in establishing the allowance for credit losses change and should management’s assessment of losses inherent in the loan portfolios also change, the level of the allowance as a percentage of loans could increase or decrease in future periods. The ratio of the allowance ~~for credit losses~~ to nonaccrual loans ~~was 117%~~ at March 31, ~~2015,~~2016 was 110%, compared with ~~103%~~117% a year earlier and ~~115%~~120% at December 31, ~~2014.~~2015. Given the Company’s general position as a secured lender and its practice of charging-off loan balances when collection is deemed doubtful, that ratio and changes in that ratio are generally not an indicative measure of the adequacy of the Company’s allowance for credit losses, nor does management rely upon that ratio in assessing the adequacy of the allowance. The level of the allowance reflects management’s evaluation of the loan and lease portfolio as of each respective date.

Other income totaled ~~$440~~$421 million in the first quarter of ~~2015,~~2016, compared with ~~$420~~$440 million in the year-earlier quarter and ~~$452~~$448 million in the fourth quarter of ~~2014.~~2015. The ~~predominant factor~~most significant factors contributing to the ~~improvement~~decline in other income from the first quarter of ~~2014 was~~2015 were a ~~$22~~$20 million ~~increase~~decrease in mortgage banking ~~revenues.~~revenues and a $13 million decrease in trust income, partially offset by increases in bank-owned life insurance income and credit-related fees. As compared with the fourth quarter of ~~2014,~~2015, the recent quarter decline in other income reflected ~~a decrease in~~lower loan syndication fees and declines in commercial mortgage banking revenues, service charges on deposit accounts and trust ~~income, partially offset by higher mortgage banking revenues.~~income.

Mortgage banking revenues totaled ~~$102~~$82 million in the recent quarter, compared with ~~$80~~$102 million in the initial quarter of ~~2014~~2015 and ~~$94~~$88 million in the final ~~2014~~2015 quarter. Mortgage banking revenues are comprised of both residential and commercial mortgage banking activities. The Company’s involvement in commercial mortgage banking activities includes the origination, sales and servicing of loans under the multi-family loan programs of Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development.

Residential mortgage banking revenues, consisting of realized gains from sales of residential real estate loans and loan servicing rights, unrealized gains and losses on residential real estate loans held for sale and related commitments, residential real estate loan servicing fees, and

other residential real estate loan-related fees and income, were $60 million in each of the first quarter of 2016 and the final quarter of 2015, compared with $79 million in the first quarter of ~~2015,~~2015. As compared with ~~$65 million in~~ the ~~year-earlier quarter and $71 million in the fourth~~first quarter of ~~2014. The improvement~~2015, the recent quarter decline in residential mortgage banking revenues ~~from each of the first and fourth quarters of 2014 to the recent quarter~~ reflects ~~an increase in commitments to originate loans for sale. The higher volumes in the recent quarter largely resulted from increased refinancing activity by consumers due to~~ a decline in ~~interest rates early in the quarter.~~revenues associated with servicing residential real estate loans for others and lower gains from origination activities, due largely to decreased volumes of loans originated for sale.

New commitments to originate residential real estate loans to be sold were approximately ~~$936~~$659 million in ~~2015’s~~2016’s initial quarter, compared with ~~$728~~$936 million in the year-earlier quarter and ~~$735~~$667 million in the final quarter of ~~2014.~~2015. Realized gains from sales of residential real estate loans and loan servicing rights ~~(net of the impact of costs associated with obligations to repurchase real estate loans originated for sale)~~ and recognized net unrealized gains and losses attributable to residential real estate loans held for sale, commitments to originate loans for sale and commitments to sell loans totaled to gains of $14 million in each of the first quarter of 2016 and the final 2015 quarter, compared with gains of $21 million in the first quarter of ~~2015, compared with gains of $15 million and $14 million in the first and fourth quarters of 2014, respectively.~~2015.

The Company is contractually obligated to repurchase previously sold 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 purchasers for losses incurred or may repurchase certain loans. The Company reduces residential mortgage banking revenues for losses related to its obligations to loan purchasers. The amount of those charges varies 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. Residential mortgage banking revenues during each of the first quarter of ~~2015~~2016 and the first and final ~~quarter~~quarters of ~~2014~~2015 were reduced by $1 million related to the actual or anticipated settlement of repurchase obligations. ~~Similar reductions in the initial 2014 quarter were less than $1 million.~~

Loans held for sale that were secured by residential real estate totaled ~~$423~~$269 million and ~~$292~~$423 million at March 31, ~~2015~~2016 and ~~2014,~~2015, respectively, and ~~$435~~$353 million at December 31, ~~2014.~~2015. Commitments to sell residential real estate loans and commitments to originate residential real estate loans for sale at pre-determined rates were $646 million and $521 million, respectively, at March 31, 2016, compared with $859 million and $661 million, respectively, at March 31, 2015, ~~compared with $655~~and $687 million and ~~$522 million at March 31, 2014, and $717 million and $432~~$489 million, respectively, at December 31, ~~2014.~~2015. Net recognized unrealized gains on residential real estate loans held for sale, commitments to sell loans, and commitments to originate loans for sale were ~~$21~~$17 million and ~~$17~~$21 million at March 31, ~~2015~~2016 and March 31, ~~2014,~~2015, respectively, and ~~$19~~$16 million at December 31, ~~2014.~~2015. Changes in such net unrealized gains ~~and losses~~ are recorded in mortgage banking revenues and resulted in a net ~~increase~~increases in revenue of $2$1 million in the most recent quarter and $2 million in the year-earlier quarter, compared with a net ~~decreases~~decrease in revenue of $2$3 million in ~~each~~the fourth quarter of ~~the first and fourth quarters of 2014.~~2015.

Revenues from servicing residential real estate loans for others were ~~$58~~$45 million in the recent quarter, compared with ~~$50~~$58 million and ~~$56~~$46 million during the quarters ended March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. Residential real estate loans serviced for others totaled $60.0 billion at March 31, 2016, $65.0 billion at March 31, 2015 ~~$73.0 billion at March 31, 2014~~ and ~~$67.2~~$61.7 billion at December 31, ~~2014.~~2015. Reflected in residential real estate loans serviced for others were loans sub-serviced for others of $36.3 billion, $40.4 billion ~~$47.4 billion~~ and ~~$42.1~~$37.8 billion at March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. Revenues earned for sub-servicing loans were ~~$35~~$23 million in the first quarter of ~~2015, $26~~2016, $35 million in the year-earlier quarter and ~~$33~~$25 million in the fourth quarter of ~~2014.~~2015. The contractual servicing rights associated with loans sub-serviced by the Company were predominantly held by affiliates of Bayview Lending Group LLC (“BLG”).

Capitalized servicing rights consist largely of servicing associated with loans sold by the Company. Capitalized residential mortgage loan

servicing assets totaled ~~$111~~$118 million at each of March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, compared with ~~$123~~$111 million at March 31, ~~2014.~~2015.

Commercial mortgage banking revenues were ~~$23~~$22 million in ~~each of~~ the ~~two~~ most recent ~~quarters,~~quarter, compared with ~~$15~~$23 million in the first quarter of ~~2014.~~2015 and $27 million in the fourth quarter of 2015. Included in such amounts were revenues from loan origination and sales activities of $12 million in the first quarter of 2016, $13 million in ~~each of~~ the first quarter of 2015 and $15 million in the fourth quarter of ~~2014, compared with $7 million in the first quarter of 2014.~~2015. Commercial real estate loans originated for sale to other investors totaled approximately ~~$455~~$355 million in the first quarter of ~~2015,~~2016, compared with ~~$136~~$455 million and ~~$570~~$464 million in the first and fourth quarters of ~~2014,~~2015, respectively. Loan servicing revenues were $10 million in each of the ~~two most recent~~first quarters of 2016 and 2015, compared with $8$12 million in the ~~initial~~final quarter of ~~2014.~~2015. Capitalized commercial mortgage servicing assets aggregated $84 million at each of March 31, 2016 and December 31, 2015, compared with $74 million at March 31, ~~2015, $71 million at March 31, 2014 and $73 million at December 31, 2014.~~2015. Commercial real estate loans serviced for other investors totaled $10.9 billion, $11.4 billion ~~$11.2 billion~~ and ~~$11.3~~$11.0 billion at March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively, and included $2.6 billion, $2.4 billion ~~$2.3 billion~~ and ~~$2.4~~$2.5 billion, respectively, of loan balances for which investors had recourse to the Company if such balances are ultimately uncollectible. Commitments to sell commercial real estate loans and commitments to originate commercial real estate loans for sale were $312 million and $184 million, respectively, at March 31, 2016, $464 million and $347 million, respectively, at March 31, 2015 ~~$190~~and $96 million and ~~$152 million, respectively, at March 31, 2014 and $520 million and $212~~$58 million, respectively, at December 31, ~~2014.~~2015. Commercial real estate loans held for sale at March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014~~2015 were $128 million, $117 million, ~~$38 million,~~ and ~~$308~~$39 million, respectively.

Service charges on deposit accounts totaled $102 million in each of the first ~~quarter~~quarters of 2016 and 2015, compared with ~~$104 million in the year-earlier quarter and~~ $106 million in the final ~~2014~~2015 quarter. The recent quarter’s decline as compared with the ~~earlier periods~~fourth quarter of 2015 was largely due to seasonally lower consumer deposit service charges, particularly overdraft fees.

Trust income includes fees related to two significant businesses. The Institutional Client Services (“ICS”) business provides a variety of trustee, agency, investment management and administrative services for corporations and institutions, investment bankers, corporate tax, finance and legal executives, and other institutional clients who: (i) use capital markets financing structures; (ii) use independent trustees to hold retirement plan and other assets; and (iii) need investment and cash management services. The Wealth Advisory Services (“WAS”) business helps high net worth clients grow their wealth, protect it, and transfer it to their heirs. A comprehensive array of wealth management services are offered, including asset management, fiduciary services and family office services. Trust income totaled $111 million in the first quarter of 2016, compared with $124 million in the first quarter of 2015 and $115 million in the fourth quarter of 2015. Revenues associated with the ICS business were approximately $52 million, $61 million ~~$57 million~~ and ~~$63~~$54 million during the quarters ended March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. InThe ICS revenue decline in the two most recent quarters as compared with the first quarter of 2015 reflects the ~~Company announced that it had agreed to sell~~April 2015 divestiture of the trade processing business within the retirement services division of ICS. Revenues related to that business reflected in trust income (in the ICS that was acquired with Wilmington Trust. That divestiture occurred on April 10, 2015. The portion of the business that was ultimately sold in April generated revenues of approximately $34 million in 2014 and $9 millionbusiness) during the first quarter of ~~2015.~~2015 were approximately $9 million. After considering related expenses, including the portion of those revenues paid to sub-advisors, net income attributable to the sold business ~~that was sold~~ was not material to the consolidated results of operations of the ~~Company.~~Company in 2015’s initial quarter. Revenues attributable to WAS were approximately ~~$56~~$51 million and ~~$53~~$56 million for the three-month periods ended March 31, ~~2015~~2016 and ~~2014,~~2015, respectively, and ~~$55~~$52 million for the three-month period ended December 31, ~~2014. In total, trust income aggregated $124 million~~2015. The decline in ~~the~~such recent quarter revenues as compared with ~~$121 million and $128 million in~~ the first and fourth quarters

of ~~2014, respectively.~~2015 was due largely to lower customer balances and market performance. Total trust assets, which include assets under management and assets under administration, aggregated $200.0 billion at March 31, 2016, compared with $293.4 billion and $199.2 billion at March 31, 2015 ~~compared with $270.5 billion and $287.9 billion at March 31, 2014~~ and December 31, ~~2014,~~2015, respectively. The declines in trust assets at the two most recent quarter-ends as compared with March 31, 2015 were predominantly due to the customer account balances included in the April 2015 sale of the trade processing business. Trust assets under management were $66.2 billion, $69.4 billion ~~$65.9~~and $66.7 billion at March 31, 2016, March 31, 2015 and ~~$68.2~~December 31, 2015, respectively. Additional trust income from investment management activities totaled $8 million in the recent quarter, $9 million in the fourth quarter of 2015 and $7 million in the first quarter of 2015. That income largely relates to fees earned from retail customer investment accounts and from an affiliated investment manager. Assets managed by that affiliated manager were $6.7 billion at March 31, 2016, $9.4 billion at March 31, 2015 ~~March 31, 2014~~ and $7.1 billion at December 31, ~~2014, respectively.~~2015. The Company’s trust income from that affiliate was not material for any of the quarters then-ended. The Company’s proprietary mutual funds

had assets of $11.4 billion, $12.8 billion ~~$13.0 billion~~ and ~~$13.3~~$12.2 billion at March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively.

Brokerage services income, which includes revenues from the sale of mutual funds and annuities and securities brokerage fees, totaled $16 million in each of the two most recent quarters, compared with $15 million in the ~~recent quarter, compared with $17 million in the year-earlier quarter and $16 million in the fourth~~first quarter of ~~2014.~~2015. Gains from trading account and foreign exchange activity totaled $6$7 million during the ~~initial quarters~~first quarter of 2016, compared with $6 million in the first quarter of 2015 and ~~2014, compared with $8~~$10 million in the final ~~2014~~2015 quarter. The recent quarter decline as compared with the immediately preceding quarter resulted from lower activity related to interest rate swap transactions executed on behalf of commercial customers. Information about the notional amount of interest rate, foreign exchange and other contracts entered into by the Company for trading account purposes is included in note 10 of Notes to Financial Statements and herein under the heading “Taxable-equivalent Net Interest Income.”

M&T’s share of the operating losses of BLG was $4 million in each of the first quarter of 2015, the year-earlier quarter and the fourth quarter of 2014. The operating losses of BLG in the respective quarters reflect provisions for losses associated with securitized loans and other loans held by BLG and loan servicing and other administrative costs. Under GAAP, such losses are required to be recognized by BLG despite the fact that many of the securitized loan losses will ultimately be borne by the underlying third party bondholders. As these loan losses are realized through later foreclosure and still later sale of real estate collateral, the underlying bonds will be charged-down leading to BLG’s future recognition of debt extinguishment gains. The timing of such debt extinguishment is difficult to predict and given ongoing loan loss provisioning, it is not possible to project when BLG will return to profitability. As a result of credit and liquidity disruptions, BLG ceased its originations of small-balance commercial real estate loans in 2008. However, as a result of past securitization activities, BLG is entitled to cash flows from mortgage assets that it owns or that are owned by its affiliates and is also entitled to receive distributions from affiliates that provide asset management and other services. Accordingly, the Company believes that BLG is capable of realizing positive cash flows that could be available for distribution to its owners, including M&T, despite a lack of positive GAAP-earnings from its core mortgage activities. To this point, BLG’s affiliates have largely reinvested their earnings to generate additional servicing and asset management activities, further contributing to the value of those affiliates. Information about the Company’s relationship with BLG and its affiliates is included in note 15 of Notes to Financial Statements.

Other revenues from operations totaled ~~$95~~$102 million in the first quarter of ~~2015,~~2016, compared with ~~$96~~$91 million in the year-earlier quarter and ~~$103~~$115 million in the fourth quarter of ~~2014.~~2015. The increase in the recent quarter as compared with the year-earlier quarter reflects higher bank-owned life insurance income, credit-related fees and merchant discount and credit card fees. The recent quarter’s decline as compared with the final ~~2014~~2015 quarter was largely attributable to lower fees for providing loan syndication ~~underwriting~~ and corporate advisory services. Included in other revenues from operations were the following significant components. Letter of credit and other credit-related fees totaled ~~$26~~$28 million in the recent quarter, compared with ~~$32~~$26 million in the first quarter of ~~2014~~2015 and ~~$33~~$42 million in the fourth quarter of ~~2014.~~2015. Tax-exempt income from bank owned life insurance, which includes increases in the cash surrender value of life insurance policies and benefits received, totaled ~~$11~~$16 million during the recent quarter, compared with ~~$12~~$11 million in the initial quarter of ~~2014~~2015 and ~~$13~~$15 million in the final quarter of ~~2014.~~2015. Revenues from merchant discount and credit card fees were ~~$24~~$26 million in the quarter ended March 31, ~~2015,~~2016, compared with ~~$22~~$24 million and ~~$26~~$28 million in the quarters ended March 31, ~~2014~~2015 and December 31, ~~2014,~~2015, respectively. Insurance-related sales commissions and other revenues totaled ~~$11~~$12 million in the initial quarter of ~~2015,~~2016, compared with ~~$12~~$11 million in the year-earlier quarter and $9$10 million in the fourth quarter of ~~2014.~~2015. M&T’s share of the operating losses of BLG recognized using the equity method of accounting was $4 million in each of the first quarters of 2016 and 2015 and $3 million in the fourth quarter of 2015. Information about the Company’s relationship with BLG and its affiliates is included in note 15 of Notes to Financial Statements. Other miscellaneous revenues and the changes in such revenues from period-to-period were not individually significant.

Effective January 1, 2015, M&T adopted amended guidance from the FASB for accounting for investments in qualified affordable housing projects under which the initial cost of such investments is amortized to income tax expense in proportion to the tax benefit received. The adoption of this accounting guidance did not have a significant effect on the Company’s financial position or results of operations, but did result in the restatement of the consolidated financial statements for 2014 and earlier years to remove net costs associated with qualified affordable housing projects from other expense and include the amortization of the investments in income tax expense. As a result, the amortization included in income tax expense was $10 million and $12 million in the first quarters of 2015 and 2014, respectively. Similarly, losses removed from other costs of operations and amortization amounts now included in income tax expense were $14 million in each of the second, third and fourth quarters of 2014.

~~Reflecting the application of the new accounting guidance, other~~Other expense totaled ~~$686~~$776 million in the first quarter of ~~2015,~~2016, compared with ~~$690~~$686 million in the year-earlier quarter and ~~$666~~$786 million in the final quarter of ~~2014.~~2015. Included in those amounts are expenses considered by management to be “nonoperating” in nature consisting of amortization of core deposit and other intangible assets of $7$12 million in ~~each of~~ the ~~two~~ most recent ~~quarters and $10~~quarter, compared with $7 million in the first quarter of ~~2014.~~2015 and $10 million in the fourth quarter of 2015 and merger-related expenses of $23 million in the first quarter of 2016 and $76 million in the fourth quarter of 2015. There were no merger-related expenses during ~~those respective quarters.~~the first quarter of 2015. Exclusive of ~~these~~those nonoperating expenses, noninterest operating expenses totaled $741 million in the first quarter of 2016, compared with $680 million in ~~each of~~ the ~~first quarters of 2015~~year-earlier quarter and ~~2014 and $659~~$701 million in the fourth quarter of ~~2014. Operating expenses~~2015. The most significant factors contributing to the increase in the recent quarter as compared with the year-earlier period ~~reflected lower~~were costs associated with the operations obtained in the Hudson City acquisition, higher costs for ~~professional services, FDIC assessments and equipment and net occupancy expenses that were offset by higher~~ salaries and employee benefits, ~~expenses.~~and increased Federal Deposit Insurance Corporation (“FDIC”) assessments. The rise in noninterest operating expenses from the fourth quarter of ~~2014 was largely due to~~2015 reflected the full-quarter impact of the Hudson City acquisition, along with seasonally higher stock-based compensation and employee benefits expenses offset, in part, by lower professional services costs. Table 2 provides a reconciliation of other expense to noninterest operating expense.

Salaries and employee benefits expense totaled ~~$390~~$432 million in ~~2015’s~~2016’s initial quarter, compared with ~~$371~~$390 million in the year-earlier quarter and ~~$345~~$434 million in the fourth quarter of ~~2014.~~2015. Merger-related salaries and employee benefits expenses were $51 million (consisting predominantly of severance) in the fourth quarter of 2015 and $5 million in the first quarter of 2016. As compared with the year-earlier period, the recent quarter reflects the impact of the additional employees associated with the Company’s expanded operations and the impact of annual merit increases for ~~employees,~~employees. Excluding merger-related expenses, the higher ~~incentive compensation costs and higher pension expense. The increase in pension~~ expense ~~is predominantly attributable to an increase~~level in the ~~amortization~~recent quarter as compared with the final quarter of ~~unrecognized actuarial losses. Cumulative unrecognized actuarial losses increased from $191 million at December 31, 2013~~2015 was largely attributable to $512 million at December 31, 2014 due predominantly to a 75 basis point reduction in the discount rate and revised mortality tables released in 2014 by the Society of Actuaries used to determine the pension benefit obligation. In accordance with GAAP, net unrecognized gains or losses that exceed ten percent of the greater of the projected benefit obligation or the market-related value of plan assets are required to be amortized over the expected service period of active employees, and are included as a component of net pension cost. In addition to higher pension expense and merit increases, seasonally higher stock-based compensation, medical plan costs, payroll-related taxes, unemployment insurance ~~payroll-related taxes~~ and the Company’s contributions for retirement savings plan benefits related to annual incentive compensation ~~payments also contributed to the rise in salaries and employee benefits expense in the recent quarter as compared with the fourth quarter of 2014.~~payments. The Company, in accordance with GAAP, has accelerated the recognition of compensation costs for stock-based awards granted to retirement-eligible employees and employees who will become retirement-eligible prior to full vesting of the award. As a result, stock-based compensation expense during the first quarters of 2016 and 2015 ~~and 2014~~ included ~~$14~~$16 million and ~~$16~~$14 million, respectively, that would have been recognized over the normal vesting period

if not for the accelerated expense recognition provisions of GAAP. That acceleration had no effect on the value of stock-based compensation awarded to employees. Salaries and employee benefits expense included stock-based compensation of ~~$28~~$29 million and ~~$30~~$28 million in the quarters ended March 31, ~~2015~~2016 and March 31, ~~2014,~~2015, respectively, and ~~$12~~$11 million in the quarter ended December 31, ~~2014.~~2015. The number of full-time equivalent employees was 16,718 at March 31, 2016, compared with 15,263 and 16,979 at March 31, 2015 ~~compared with 15,316 and 15,312 at March 31, 2014~~ and December 31, ~~2014,~~2015, respectively.

Excluding the nonoperating expenses described earlier from each quarter, nonpersonnel operating expenses were ~~$290~~$314 million and ~~$309~~$290 million in the quarters ended March 31, ~~2015~~2016 and March 31, ~~2014,~~2015, respectively, and ~~$314~~$317 million in the fourth quarter of ~~2014.~~2015. The ~~decrease~~increase in such expenses in the recent quarter as compared with the year-earlier quarter ~~and the final quarter of 2014~~ reflected a lower level of professional services costs. Professional services costs include legal expenses, which were elevated in the fourth quarter of 2014. Other professional services costs were lower in the initial quarter of 2015 as certain projects were either completed or reached significant milestones. Professional services costs related to BSA/AML compliance, capital planning and stress testing, risk management and other operational initiatives were elevated throughout 2014. As compared with the first quarter of 2014, in addition to the decline in professional services costs, lower FDIC assessments andhigher equipment and net occupancy expenses ~~also contributed~~and increased FDIC assessments due largely to the ~~decrease in nonpersonnel operating expenses in~~impact of the ~~initial 2015 quarter.~~acquisition of Hudson City. The efficiency ratio measures the relationship of noninterest operating expenses to revenues. The Company’s efficiency ratio was ~~61.5%~~57.0% in the first quarter of ~~2015,~~2016, compared with ~~62.8%~~61.5% in the year-earlier period and ~~57.8%~~55.5% in the fourth

quarter of ~~2014.~~2015. The calculation of the efficiency ratio is presented in table 2.

The provision for income taxes for the first quarter of ~~2015~~2016 was ~~$134~~$169 million, compared with ~~$125~~$134 million in the year-earlier quarter and ~~$157~~$140 million in the fourth quarter of ~~2014.~~2015. The effective tax rates were ~~35.6%~~36.2%, ~~35.4%~~35.6% and ~~36.1%~~34.1% for the quarters ended March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, 2015, respectively. During the fourth quarter of 2015, the provision for income taxes was reduced by $5 million to reflect technology research credits related to 2011 through 2014 ~~respectively. As noted earlier, effective January 1, 2015 M&T adopted amended guidance from~~that were accepted by the ~~FASB for accounting for investments~~Internal Revenue Service in qualified affordable housing projects, which resulted in the restatement of the consolidated financial statements for 2014 and earlier years. The adoption of the guidance resulted in higher effective tax rates than existed prior to such adoption.December 2015. The effective tax rate is affected by the level of income earned that is exempt from tax relative to the overall level of pre-tax income, the level of income allocated to the various state and local jurisdictions where the Company operates, because tax rates differ among such jurisdictions, and the impact of any large but infrequently occurring items.

The Company’s effective tax rate in future periods will be affected by the results of operations allocated to the various tax jurisdictions within which the Company operates, any change in income tax laws or regulations within those jurisdictions, and interpretations of income tax regulations that differ from the Company’s interpretations by any of various tax authorities that may examine tax returns filed by M&T or any of its subsidiaries.

Shareholders’ equity was ~~$12.5~~$16.4 billion at March 31, ~~2015,~~2016, representing ~~12.73%~~13.12% of total assets, compared with ~~$11.9~~$12.5 billion or ~~13.43%~~12.73% at March 31, ~~2014~~2015 and ~~$12.3~~$16.2 billion or ~~12.76%~~13.17% at December 31, ~~2014.~~2015.

Included in shareholders’ equity was preferred stock with a financial statement carrying value of $1.2 billion at each of March 31, ~~2015,~~2016, March 31, ~~2014~~2015 and December 31, ~~2014.~~2015. Further information concerning M&T’s preferred stock can be found in note 6 of Notes to Financial Statements.

Common shareholders’ equity aggregated $15.1 billion, or $95.00 per share, at March 31, 2016, compared with $11.3 billion, or $84.95 per share, ~~at March 31, 2015, compared with $10.7~~a year earlier and $14.9 billion, or ~~$81.05 per share, at March 31, 2014 and $11.1 billion, or $83.88~~$93.60 per share, at December 31, ~~2014.~~2015. In conjunction with the acquisition of Hudson City, M&T issued 25,953,950 common shares, which added $3.1 billion to common shareholders’ equity on November 1, 2015. Tangible equity per common share, which excludes goodwill and core deposit and other intangible assets and applicable deferred tax balances, was $65.65 at March 31, 2016, $58.29 at March 31, 2015 ~~$53.92 at March 31, 2014~~ and ~~$57.06~~$64.28 at December 31, ~~2014.~~2015. The Company’s ratio of tangible common equity to tangible assets was ~~8.17%~~8.71% at March 31, ~~2015,~~2016, compared with ~~8.34%~~8.17% a year earlier and ~~8.11%~~8.69% at December 31, ~~2014.~~2015. Reconciliations of total common shareholders’ equity and tangible common equity and total assets and tangible assets as of each of those respective dates are presented in table 2.

Shareholders’ equity reflects accumulated other comprehensive income or loss, which includes the net after-tax impact of unrealized gains or losses on investment securities classified as available for sale, unrealized losses on held-to-maturity securities for which an other-than-temporary impairment charge has been recognized, gains or losses associated with interest rate swap agreements designated as cash flow hedges, foreign currency translation adjustments and adjustments to reflect the funded status of defined benefit pension and other postretirement plans. Net unrealized gains on investment securities, net of applicable tax effect, were $145 million, or $.91 per common share, at March 31, 2016, compared with net unrealized gains of $153 million, or $1.15 per common share, at March 31, 2015 ~~compared with net unrealized gains of $72~~and $48 million, or ~~$.55 per common share, at March 31, 2014 and $127 million, or $.96~~$.30 per common share, at December 31, ~~2014.~~2015. The higher unrealized gains at the recent quarter-end as compared with December 31, 2015 resulted largely

from a decline in yields on treasury securities with comparable duration to the majority of the Company’s government issued or guaranteed mortgage-backed securities portfolio. Information about unrealized gains and losses as of March 31, ~~2015~~2016 and December 31, ~~2014~~2015 is included in note 3 of Notes to Financial Statements.

Reflected in net unrealized gains at March 31, ~~2015~~2016 were pre-tax effect unrealized losses of ~~$30~~$34 million on available-for-sale investment securities with an amortized cost of $1.7 billion and pre-tax effect unrealized gains of ~~$308~~$297 million on securities with an amortized cost of ~~$8.7~~$10.2 billion. The pre-tax effect unrealized losses reflect ~~$19~~$26 million of losses on trust preferred securities issued by financial institutions having an amortized cost of $124 million and an estimated fair value of ~~$105~~$98 million (generally considered Level 2 valuations). Further information concerning the Company’s valuations of available-for-sale investment securities is provided in note 12 of Notes to Financial Statements.

The Company assesses impairment losses on privately issued mortgage-backed securities in the held-to-maturity portfolio by performing internal modeling to estimate bond-specific cash flows considering recent performance of the mortgage loan collateral and utilizing assumptions about future defaults and loss severity. These bond-specific cash flows also reflect the placement of the bond in the overall securitization structure and the remaining subordination levels. In total, at March 31, 2015 and December 31, 2014, the Company had in its held-to-maturity portfolio privately issued mortgage-backed securities with an amortized cost basis of $198 million and $202 million, respectively, and a fair value of $162 million and $158 million, respectively. At March 31, 2015, 87% of the mortgage-backed securities were in the most senior tranche of the securitization structure with 28% being independently rated as investment grade. The mortgage-backed securities are generally collateralized by residential and small-balance commercial real estate loans originated between 2004 and 2008 and had a weighted-average credit enhancement of 16% at March 31, 2015, calculated by dividing the remaining unpaid principal balance of bonds subordinate to the bonds owned by the Company plus any overcollateralization remaining in the securitization structure by the remaining unpaid principal balance of all bonds in the securitization structure. All mortgage-backed securities in the held-to-maturity portfolio had a current payment status as of March 31, 2015.

The weighted-average default percentage and loss severity assumptions utilized in the Company’s internal modeling were 33% and 74%, respectively. The Company has concluded that as of March 31, 2015, its privately issued mortgage-backed securities were not other-than-temporarily impaired. Nevertheless, it is possible that adverse changes in the future performance of mortgage loan collateral underlying such securities could impact the Company’s conclusions.

As of March 31, ~~2015,~~2016, based on a review of each of the ~~remaining~~ securities in the investment securities portfolio, the Company concluded that the declines in the values of any securities containing an unrealized loss were temporary and that any additional other-than-temporary impairment charges were not appropriate. It is likely that the Company will be required to sell certain of its collateralized debt obligations backed by trust preferred securities held in the available-for-sale portfolio to comply with the provisions of the ~~Volcker Rule.~~Dodd-Frank Act commonly referred to as the “Volcker Rule”. However, the amortized cost and fair value of those collateralized debt obligations were ~~$25~~$24 million and ~~$30~~$29 million, respectively, at March 31, ~~2015~~2016 and the Company ~~did~~does not expect that it would realize any material losses if it ultimately was required to sell such securities. As of that date, the Company did not intend to sell nor is it anticipated that it would be required to sell any of its other impaired securities, that is, where fair value is less than the cost basis of the security. The Company intends to continue to closely monitor the performance of its securities because changes in their underlying credit performance or other events could cause the cost basis of those securities to become other-than-temporarily impaired. However, because the unrealized losses on available-for-sale investment securities have generally already been reflected in the financial statement values for investment securities and shareholders’ equity, any recognition of an other-than-temporary decline in value of those investment securities would not have a material effect on the Company’s consolidated financial condition. Any other-than-temporary impairment charge related to held-to-maturity securities would result in reductions in the financial statement values for investment securities and shareholders’ equity. Additional information concerning fair value measurements and the Company’s approach to the classification of such measurements is included in note 12 of the Notes to Financial Statements.

The Company assesses impairment losses on privately issued mortgage-backed securities in the held-to-maturity portfolio by performing internal modeling to estimate bond-specific cash flows considering recent performance of the mortgage loan collateral and utilizing assumptions about future defaults and loss severity. These bond-specific cash flows also reflect the placement of the bond in the overall securitization structure and the remaining subordination levels. In total, at March 31, 2016 and December 31, 2015, the Company had in its held-to-maturity portfolio privately issued mortgage-backed securities with an amortized cost basis of $175 million and $181 million, respectively, and a fair value of $137 million and $142 million, respectively. At March 31, 2016, 89% of the mortgage-backed securities were in the most senior tranche of the securitization structure with 28% being independently rated as investment grade. The mortgage-backed securities are generally collateralized by residential and small-balance commercial real estate loans originated between 2004 and 2008 and had a weighted-average credit enhancement of 15% at March 31, 2016, calculated by dividing the remaining unpaid principal balance of bonds subordinate to the

bonds owned by the Company plus any overcollateralization remaining in the securitization structure by the remaining unpaid principal balance of all bonds in the securitization structure. All mortgage-backed securities in the held-to-maturity portfolio had a current payment status as of March 31, 2016. The weighted-average default percentage and loss severity assumptions utilized in the Company’s internal modeling were 33% and 88%, respectively. The Company has concluded that as of March 31, 2016, its privately issued mortgage-backed securities were not other-than-temporarily impaired. Nevertheless, it is possible that adverse changes in the future performance of mortgage loan collateral underlying such securities could impact the Company’s conclusions.

Adjustments to reflect the funded status of defined benefit pension and other postretirement plans, net of applicable tax effect, reduced accumulated other comprehensive income by $293 million, or $1.84 per common share, at March 31, 2016, $297 million, or $1.86 per common share, at December 31, 2015, and $301 million, or $2.26 per common share, at March 31, 2015.

On March 12, 2015, ~~$306 million, or $2.31~~M&T announced that the Federal Reserve did not object to M&T’s proposed 2015 Capital Plan. Accordingly, M&T was allowed to maintain a quarterly common stock dividend of $.70 per ~~common share,~~share; continue to pay dividends and interest on other equity and debt instruments included in regulatory capital, including preferred stock, trust preferred securities and subordinated debt that were outstanding at December 31, 2014, consistent with the contractual terms of those instruments; repurchase up to $200 million of common shares during the first half of 2016; and ~~$97~~redeem or repurchase up to $310 million ~~or $.74 per common share, at March 31, 2014. The increase~~of trust preferred securities. Those latter securities were redeemed in ~~such adjustment at March 31, 2015~~April 2015. Common and ~~December 31, 2014 as compared with March 31, 2014 was the result~~preferred dividends are subject to approval by M&T’s Board of ~~two main factors: a 75 basis point decrease~~Directors in the ~~discount rate used~~ordinary course of business. As the Hudson City transaction occurred later than contemplated in that 2015 Capital Plan, common stock dividends paid in relation to ~~measure~~ the ~~benefit obligations~~common stock issued as merger consideration were less than projected. With the concurrence of the ~~defined benefit plans and~~Federal Reserve, the ~~use~~distribution of ~~updated mortality tables~~that capital, approximately $54 million, is being re-allocated into the common stock repurchase program for the ~~U.S. published~~second quarter of 2016.

The Company did not repurchase any shares of its common stock during 2015. However, M&T commenced a program to repurchase its common shares in ~~2014 by~~accordance with its approved 2015 Capital Plan, and in the ~~Society~~first quarter of ~~Actuaries.~~2016 repurchased 948,545 shares for $100 million. M&T’s Board of Directors has authorized the repurchase of up to $154 million of common stock in the second quarter of 2016.

Cash dividends declared on M&T’s common stock during the quarter ended March 31, ~~2015~~2016 totaled ~~$94~~$112 million, compared with ~~$92~~$94 million ~~and $93 million~~ in each of the quarters ended March 31 and December 31, ~~2014,~~2015, respectively, and represented a quarterly dividend payment of $.70 per common share in each of those ~~three~~ quarters.

Cash dividends declared on preferred stock ~~are detailed~~aggregated $20 million in ~~the table that follows. There were no cash dividends declared in~~each of the first ~~quarter~~quarters of ~~2014 on~~2016 and 2015 and the ~~Series E Preferred Stock issued in February 2014.~~

~~The Company did not repurchase any shares of its common stock during 2014 or the first~~fourth quarter of 2015.

M&T and its subsidiary banks are required to comply with applicable capital adequacy ~~standards~~regulations established by the federal banking agencies. In July 2013, the Federal Reserve Board, the OCC and the FDIC approved New Capital Rules establishing a new comprehensive capital framework for U.S. banking organizations. These rules went into effect as to M&T and its subsidiary banks on January 1, 2015, subject to phase-in periods for certain components and other provisions.

The New Capital Rules substantially revise the risk-based capital requirements applicable to bank holding companies and their depository institution subsidiaries, including M&T and its subsidiaries, M&T Bank and Wilmington Trust, N.A., as compared to the U.S. general risk-based capital rules that were applicable to the Company through December 31, 2014. The New Capital Rules revise the definitions and the components of regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The New Capital Rules also address asset risk weights and other matters affecting the denominator in banking institutions’ regulatory capital ratios. In addition, the New Capital Rules implement certain provisions of the Dodd-Frank Act, including the requirements of Section 939A to remove references to credit ratings from the federal agencies’ rules.

Among other matters, the New Capital Rules: (i) introduce a new capital measure called “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to the previous regulations. Under the New Capital Rules, for most banking organizations, including M&T, the most common form of Additional Tier 1 capital is non-cumulative perpetual preferred stock and the most common forms of Tier 2 capital are subordinated notes and a portion of the allowance for loan and lease losses, in each case, subject to the New Capital Rules’ specific requirements.

Pursuant to ~~the New Capital Rules,~~those regulations, the minimum capital ratios ~~as of January 1, 2015~~ are as follows:

Pursuant to the New Capital Rules, non-advanced approaches banking organizations, including M&T, may make a one-time permanent election to exclude the effects of certain accumulated other comprehensive income or loss

~~items reflected in shareholders’ equity under U.S. GAAP. M&T made that election during the first quarter of 2015. The New Capital Rules also preclude certain hybrid securities, such~~, as ~~trust preferred securities, from inclusion in bank holding companies’ Tier 1 capital, subject to phase-out~~defined in the ~~case~~regulation.

In addition, capital regulations provide for the phase-in of ~~bank holding companies, such as M&T, that had $15 billion or more in total consolidated assets as~~a “capital conservation buffer” composed entirely of ~~December 31, 2009. As a result, beginning in 2015 25%~~CET1 on top of ~~M&T’s trust preferred securities became includable in Tier~~these minimum risk-weighted asset ratios. When fully phased-in on January 1, 2019 the capital ~~and in 2016, none of M&T’s trust preferred securities~~conservation buffer will be ~~includable in Tier 1 capital. Trust preferred securities no longer included in M&T’s Tier 1 capital may nonetheless be included as a component~~2.5%. For 2016, the phased-in transition portion of Tier 2 capital on a permanent basis without phase-out and irrespective of whether such securities otherwise meet the revised definition of Tier 2 capital set forth in the New Capital Rules. A detailed discussion of the new regulatory capital rulesthat buffer is ~~included in Part I, Item 1 of Form 10-K for the year ended December 31, 2014.~~.625%.

The regulatory capital ratios of the Company, M&T Bank and Wilmington Trust, N.A. as of March 31, ~~2015~~2016 are presented in the accompanying table.


										M&T (Consolidated)			M&T Bank			Wilmington Trust, N.A.
	M&T (Consolidated)			M&T Bank			Wilmington Trust, N.A.			M&T (Consolidated)						Wilmington Trust, N.A.
Common equity Tier 1		9.78	%		10.33	%		57.32	%		11.06	%		11.33	%		73.17	%
Tier 1 capital		11.68	%		10.33	%		57.32	%		12.35	%		11.33	%		73.17	%
Total capital		14.92	%		12.88	%		57.87	%		14.84	%		13.35	%		73.84	%
Tier 1 leverage		10.17	%		9.02	%		19.61	%		9.96	%		9.15	%		20.72	%

The Company is also subject to the comprehensive regulatory framework applicable to bank and financial holding companies and their subsidiaries, which includes regular examinations by a number of federal regulators. Regulation of financial institutions such as M&T and its subsidiaries is intended primarily for the protection of depositors, the Deposit Insurance Fund of the FDIC and the banking and financial system as a whole, and generally is not intended for the protection of shareholders, investors or creditors other than insured depositors. Changes in laws, regulations and regulatory policies applicable to the Company’s operations can increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive environment in which the Company operates, all of which could have a material effect on the business, financial condition or results of operations of the Company and in M&T’s ability to pay dividends.

For additional information concerning this comprehensive regulatory framework, refer to Part I, Item 1 of M&T’s Form 10-K for the year ended December 31, 2015 and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of that Form 10-K under the heading “Regulatory Oversight.”

On ~~March 12, 2015,~~June 17, 2013, M&T ~~announced that~~and M&T Bank entered into a written agreement with the Federal Reserve ~~did not object~~Bank of New York. Under the terms of the agreement, M&T and M&T Bank were required to ~~M&T’s proposed 2015 Capital Plan. Accordingly, M&T may maintain~~submit to the Federal Reserve Bank of New York a ~~quarterly common stock dividend of $.70 per share; continue~~revised compliance risk management program designed to pay dividends and interest on other equity and debt instruments included in regulatory capital, including preferred stock, trust preferred securities and subordinated debt that were outstanding at December 31, 2014, consistentensure compliance with the ~~contractual terms of those instruments; repurchase up~~Bank Secrecy Act and anti-money-laundering laws and regulations (“BSA/AML”) and to ~~$200 million of common shares during~~take certain other steps to enhance their compliance practices. M&T and M&T Bank have since made substantial progress in implementing a BSA/AML program with significantly expanded scale and scope, as recognized by the ~~first half of 2016; and redeem or repurchase up to $310 million of trust preferred securities. Common and preferred dividends are subject to approval by M&T’s~~ Board of ~~Directors~~Governors of the Federal Reserve System in its Order approving M&T and M&T Bank’s applications to acquire Hudson City and Hudson City Savings Bank. M&T and M&T Bank are continuing to work towards the resolution of all outstanding issues in the ~~ordinary course of business. As noted earlier, M&T redeemed $310 million of trust preferred securities on April 15, 2015.~~written agreement.

As required by GAAP, the Company’s reportable segments have been determined based upon its internal profitability reporting system, which is organized by strategic business unit. Financial information about the Company’s segments is presented in note 14 of Notes to Financial Statements. ~~During~~Effective July 1, 2015, ~~certain methodology changes were made~~the Company changed its internal profitability reporting to move a builder and developer lending unit from the Residential Mortgage Banking

segment to the Commercial Real Estate segment and, accordingly, the financial information for the Company’s reportable segments for ~~2014 have~~the three-month period ended March 31, 2015 has been restated to conform with the methods and assumptions used in 2015. As described in note 14 of Notes to Financial Statements, the methodology changes were largely the result of updated funds transfer pricing and various cost allocations. Additionally, the segment financial data also reflect ~~the Company’s adoption of amended guidance for accounting for investments in qualified affordable housing projects.~~that change.

The Business Banking segment earned $25 million in each of the ~~first~~two most recent quarters ~~of 2015~~ and ~~2014, compared with $26 million~~ in the ~~fourth~~first quarter of ~~2014.~~2015. As compared with the ~~first~~year-earlier quarter, ~~of 2014,~~ a $4 million ~~decrease~~increase in net interest income and a $3 million decline in the ~~recent quarter was largely~~provision for credit losses, due to lower net charge-offs, were offset by higher centrally-allocated costs largely associated with the acquired Hudson City operations. The higher net interest income resulted predominantly from an increase in average outstanding deposit balances of $1.1 billion. As compared with the immediately preceding quarter, a decrease in the provision for credit losses, largely due to lower net charge-offs, was offset by lower revenues from merchant discount and credit card fees and modestly higher centrally-allocated costs.

The Commercial Banking segment contributed net income of $101 million during the quarter ended March 31, 2016, compared with $96 million in the year-earlier quarter and $118 million in the fourth quarter of 2015. The recent quarter’s 5% improvement as compared with the first quarter of 2015 reflected an $8 million decline in the provision for credit losses, primarily due to lower ~~noninterest operating expenses.~~net charge-offs, and a $7 million increase in net interest income. The ~~lower~~higher net interest income ~~reflects~~resulted from increases in average outstanding loan balances of $1.1 billion and a ~~narrowing~~widening of the net

interest margin on deposits of 2613 basis points, partially offset by a $444 million increase in average outstanding deposit balances. The modest decrease in net income in the recent quarter as compared with the immediately preceding quarter resulted from a $4 million decrease in net interest income, partially offset by lower costs associated with the allocation of expenses related to BSA/AML compliance, risk management, and other operational initiatives across the Company. The decline in net interest income resulted largely from a 4 basis point narrowing of the net interest margin on loans of 9 basis points. Those favorable factors were offset, in part, by an increase in centrally-allocated technology-related costs and other operating expenses. The recent quarter’s decline in net income as compared with 2015’s fourth quarter was largely due to lower credit-related and other fees of $13 million and a ~~$346~~$10 million ~~decline~~increase in ~~average outstanding deposit balances.~~the provision for credit losses, largely due to a $10 million partial recovery in the final 2015 quarter of a previously charged-off loan related to a relationship with a motor vehicle-related parts wholesaler.

~~Net~~The Commercial Real Estate segment contributed net income ~~earned by the Commercial Banking segment totaled $96~~of $81 million in the first quarter of ~~2015,~~2016, compared with ~~$99~~$83 million ~~for each~~in the year-earlier period and $90 million in the fourth quarter of ~~the three-month periods ended March 31, 2014 and December 31, 2014.~~2015. The 2%modest decline in net income as compared with the first quarter of ~~2014 resulted largely from~~2015 reflects a $3 million decrease in net interest income and a $4 million decrease in credit-related fees. The decline in net interest income was the result of a narrowing of the net interest margin on loans and deposits of 11 basis points and 17 basis points, respectively, partially offset by higher average outstanding loan and deposit balances of $1.2 billion and $912 million, respectively. The recent quarter’s decline in net income as compared with 2014’s fourth quarter was largely due to a $4 million decrease in net interest income, a $4 million increase in the provision for credit losses, due to lower recoveries of previously charged-off loans, and ~~a $2 million decrease in credit-related fees, partially~~higher operating expenses that were largely offset by ~~lower FDIC assessments and other operating expenses. The lower~~a $5 million increase in net interest income, ~~reflected a narrowing of the net interest margin on loans of 3 basis points~~reflecting increases in average outstanding loan and ~~lower average~~ deposit balances of ~~$107~~$1.5 billion and $371 million, ~~offset, in part, by higher average outstanding loans of $574 million.~~

respectively. The Commercial Real Estate segment’s net income aggregated $80 million for the first quarter of 2015, up 10% from the $73 million earned in the first three months of 2014, but down 4% from the $83 million recorded in 2014’s fourth quarter. The improvement from the year-earlier quarter reflects a $7 million increase in mortgage banking revenues and a $4 million decrease in the provision for credit losses, the result of recoveries of previously charged off loans in the recent quarter ~~partially offset by higher personnel-related expenses of $2 million. The increase in mortgage banking revenues was largely due to higher loan origination and sales activities. The~~ decline in net income as compared with the final ~~2014~~2015 quarter was largely due to ~~a $4 million decrease in credit-related fees and a $4 million decline in~~lower net interest ~~income.~~income and trading account and foreign exchange gains of $2 million each, increases in personnel costs of $2 million and other higher operating expenses. The lower net interest income was predominantly due to a narrowing of the net interest margin on loans ~~and deposits~~ of 410 basis points, ~~each,~~ partially offset by ~~increases~~an increase in average outstanding loan ~~and deposit (predominantly noninterest-bearing)~~ balances of ~~$331~~$439 million and ~~$106 million, respectively.~~a widening of the net interest margin on deposits of 16 basis points.

The Discretionary Portfolio segment recorded net income of $6$40 million during the three-month period ended March 31, ~~2015,~~2016, compared with ~~$11~~$6 million in the year-earlier period and $9$31 million in the fourth quarter of ~~2014.~~2015. The significant improvement as compared with the first quarter of 2015 was predominantly due to the impact of residential real estate loans obtained in the acquisition of Hudson City. A $5 million increase in bank owned life insurance revenues also contributed to that improvement. Those favorable factors were offset, in part, by a $3 million increase in the provision for credit losses and higher loan and other real estate-related servicing costs. The recent quarter’s favorable performance as compared with the immediately preceding quarter included the full-quarter impact of the residential real estate loans obtained in the acquisition of Hudson City, partially offset by

a $4 million increase in the provision for credit losses, primarily due to higher net charge-offs.

Net income from the Residential Mortgage Banking segment was $17 million in the recent quarter, compared with $29 million in the first quarter of 2015 and $13 million in 2015’s fourth quarter. The decline in net income as compared with the ~~first quarter of 2014 reflects a $9 million decrease in net interest income that~~year-earlier period was largely attributable to a 32 basis point narrowing of the net interest margin on investment securities, partially offset by a $4.1 billion increase in average balances of investment securities due to purchases of Fannie Mae and Ginnie Mae mortgage-backed securities to meet new liquidity requirements that are scheduled to become effective for M&T on January 1, 2016. The recent quarter’s unfavorable performance as compared with the immediately preceding quarter resulted largely from a $6$7 million decrease in net interest income that resulted from a 17 basis point narrowing of the net interest margin on investment securities, partially offset by a $399 million increase in average outstanding investment securities balances.

~~Net income of the Residential Mortgage Banking segment rose 72% to $32 million in the recent quarter from $19 million in the first quarter of 2014,~~

and was 43% higher than the $22 million earned in 2014’s fourth quarter. The improved performance from the year-earlier period was attributable to the following favorable factors: a $9 million increase in revenues from mortgage origination and sales activities (including intersegment revenues), due to ~~higher~~lower origination ~~volumes; an $8 million increase~~volumes and a decline in revenues from ~~servicing~~subservicing residential real estate ~~loans, predominantly the result of higher sub-servicing fees; and reduced amortization of capitalized servicing assets reflecting reduced prepayment speeds associated with serviced~~ loans. ~~The main factors contributing~~Contributing to the recent quarter’s ~~increased net income~~improved results as compared with the final quarter of ~~2014 was an $8~~2015 were a $2 million ~~increase~~improvement in ~~revenues from mortgage origination~~net interest income and ~~sales activities (including intersegment revenues), due to higher origination volumes, and lower operating expenses, including reduced personnel and professional services costs and lower amortization~~decreased centrally-allocated loan servicing expenses. The improvement in net interest income reflected a widening of ~~capitalized servicing assets.~~the net interest margin on loans.

Net income earned by the Retail Banking segment totaled ~~$69~~$63 million in ~~each of the first quarters of 2015 and 2014, compared with $59 million in the fourth quarter of 2014. As compared with~~ the first quarter of ~~2014,~~2016, compared with $69 million in the year-earlier quarter and $65 million in the final 2015 quarter. The primary contributors to the recent quarter decline in net income as compared with the year-earlier period were: a $21 million increase in the provision for credit losses, largely due to partial charge-offs recognized in the first quarter of 2016 on loans for which the Company identified that the customer was either bankrupt or deceased; a $15 million rise in personnel-related expenses and higher equipment and net occupancy costs of $4 million, reflecting the impact of the Hudson City acquisition; a $3 million ~~decrease~~increase in advertising and promotional expenses and higher centrally-allocated operating costs. Those unfavorable factors were largely offset by an increase in net interest income ~~and lower service charges on deposit accounts were offset by lower personnel, equipment and occupancy expenses. The decrease~~of $39 million, predominantly due to the impact of deposits obtained in ~~net interest income reflected a 10 basis point narrowing~~the acquisition of ~~the net interest margin on deposits and a $120 million decrease in average outstanding deposit balances, partially offset by a $652 million increase in average outstanding loan balances.~~Hudson City. The recent quarter’s ~~16% improvement~~modest decline in net income as compared with the fourth quarter of ~~2014~~2015 reflected a ~~$10~~$23 million increase in the provision for credit losses, largely due to the aforementioned partial charge-offs recognized in the first quarter of 2016, seasonally lower service charges on deposit accounts of $5 million and higher personnel-related expenses of $4 million due to the full-quarter impact of the Hudson City acquisition. Those unfavorable factors were largely offset by a $17 million rise in net interest income and an $8 million decrease in advertising and promotional expenses largely associated with the launch of the new brand campaign throughout the Company’s footprint during the final 2014 quarter, a $3 million decrease in personnel expenses and lower operating expenses related to the allocation of the costs of Company-wide operational initiatives, offset, in part, by a $6 million seasonal decline in service charges on deposit accounts and a $4 million decreaseexpenses. The improvement in net interest income ~~reflecting a narrowing~~predominantly reflected the full-quarter impact of consumer deposits obtained in the ~~margin on deposit balances.~~acquisition of Hudson City.

The “All Other” category reflects other activities of the Company that are not directly attributable to the reported segments. Reflected in this category are the amortization of core deposit and other intangible assets resulting from the acquisitions of financial institutions, including the November 2015 Hudson City transaction, M&T’s share of the operating losses of BLG, merger-related ~~gains and~~ expenses ~~related to~~resulting from acquisitions and the net impact of the ~~Company’s~~Company��s allocation methodologies for internal transfers for funding charges and credits associated with the earning assets and interest-bearing liabilities of the Company’s reportable segments and the provision for credit losses. The “All Other” category also includes the trust income of the Company that reflects the ICS and WAS business activities. The various components of the “All Other” category resulted in net losses totaling ~~$67~~$29 million for the quarter ended March 31, ~~2015, $66~~2016, $67 million in the ~~first~~year-earlier quarter ~~of 2014~~ and ~~$22~~$71 million in the fourth quarter of ~~2014.~~2015. As compared with the first quarter of ~~2014, higher personnel-related expenses in~~2015, the recent quarter due to BSA/AML and other company-wide initiatives and a $4 million increase in advertising, promotion and travel expenses were largely offset by lower professional services costs of $11 million, a $3 million decrease in amortization of core deposit intangibles and declines in other operating expenses. The most significant factors contributing to the increased net loss in the recent quarter as compared with the immediately preceding quarter were: a $51 million increase in personnel costs, largely related to seasonally higher stock-based compensation, payroll-related taxes and employer contributions for retirement savings plans recorded in the first quarter of 2015; an $8 million increase in advertising, promotion, and travel expenses; a decline in trust income of $5 million; and the unfavorablefavorable impact from the Company’s allocation methodologies for internal transfers for funding charges and credits associated with earning assets and interest-bearing liabilities of the Company’s reportable ~~segments.~~segments and the provision for credit losses, and decreases in professional services costs of $7 million were offset, in part, by: merger-related expenses aggregating $23 million in the recent quarter (there were no such expenses in the first quarter of 2015); higher personnel-related expenses of $17 million; a decline in trust income of $13 million, in

large part reflecting the impact of the sale of the trade processing business within the retirement services division of ICS in April 2015; and increased FDIC assessments of $10 million. Merger-related costs in the fourth quarter of 2015 aggregated $97 million. Excluding merger-related costs in each of the two most recent quarters, the “All Other” category resulted in net losses for the quarters ended March 31, 2016 and December 31, 2015 of $15 million and $10 million, respectively. The increased net loss from the immediately preceding quarter was mostly due to an increase in personnel-related and other operating costs, offset, in part, by the favorable impact from the Company’s allocation methodologies and lower professional services costs.

~~As previously noted,~~Effective January 1, 2016, the Company adopted amended accounting guidance for investments in qualified affordable housing projects under which the initial cost of investments in qualified affordable housing projects is amortized in proportion to the tax credits and other tax benefits received from such projects and recognized in the income statement as a component of income tax expense. As required, the guidance was applied retrospectively to all periods presented. The adoption of this guidance did not have a significant effect on the Company’s financial position or results of operations, but did result in the restatement of the consolidated statement of income for the three-month period ended March 31, 2014 to remove $12 million of losses associated with qualified affordable housing projects from “other costs of operations” and include the amortization of the initial cost of the investment in income tax expense. The Company amortized $10 million of its investments in qualified affordable housing projects to income tax expense during the three-month period ended March 31, 2015.

In the first quarter of 2015, the Company adopted amended accounting guidance from the FASB related to the classification of certain government-guaranteed mortgage loans upon foreclosure. This guidance requires that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separable from the loan before foreclosure; (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim; and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based upon the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The adoption of this guidance did not have a significant effect on the Company’s consolidated financial position or results of operations.

Effective January 1, 2015, the Company adopted amended accounting guidance for repurchase-to-maturity transactions and repurchase financings. The adoption had no impact on the Company’s consolidated financial position or results of operations. The Company has made the required disclosures in note 5 of Notes to Financial Statements.

In January 2015, the Company also adopted amended accounting and disclosure guidance for reclassification of residential real estate collateralized consumer mortgage loans upon foreclosure. The amended guidance clarifies that an in-substance repossession or foreclosure occurs and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The amended guidance also requires interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The Company’s adoption of this guidance on January 1, 2015 did not have a significant effect on the Company’s financial position or results of operations. The Company has made the required disclosures in note 4 of Notes to Financial Statements.

In April 2015, the FASB issued amended accounting guidance for debt issuance costs. The amended guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a

direct deduction from the carrying amount of that debt liability. This guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The Company does not expect a material change in the presentation of its financial position upon adoption of this amended guidance.

~~In February 2015, the FASB issued~~ amended accounting guidance relating to the consolidation of variable interest entities to modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities and to eliminate the presumption that a general partner should consolidate a limited partnership. The amended guidance also eliminates certain conditions in the assessment of whether fees paid by a legal entity to a decision maker or a service provider represent a variable interest in the legal entity and reduces the extent to which related party arrangements cause an entity to be considered a primary beneficiary. The new guidance eliminates the indefinite deferral of existing consolidation guidance for certain investment funds, but provides a scope exception for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. ~~This~~The adoption of this guidance ~~is effective for annual and interim periods within those annual periods beginning after December 15, 2015. The Company is still evaluating~~did not have a material effect on the ~~impact the guidance could have on its~~Company’s consolidated financial statements.

In ~~June 2014,~~January 2016, the ~~FASB issued~~Company also adopted amended accounting guidance for debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The adoption of this guidance did not have a material effect on the Company’s consolidated financial position at January 1, 2016.

In the first quarter of 2016, the Company adopted amended accounting guidance for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The amended guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The adoption of this guidance did not have a material effect on the Company’s consolidated financial position or results of operations.

Amended guidance for measurement-period adjustments related to business combinations was also adopted by the Company in the first quarter of 2016. The amended guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the

reporting period in which the adjustment amounts are determined. The acquirer is now required to record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The adoption of this guidance did not have a material effect on the Company’s consolidated financial position or results of operations.

In March 2016, the Financial Accounting Standards Board (“FASB”) issued amended guidance for share-based transactions. The amended guidance requires that all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the income statement and that excess tax benefits should be recognized regardless of whether the benefit reduces taxes payable in the current period. The guidance allows an entity to make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The guidance permits share-based awards that allow for the withholding of shares up to the maximum statutory tax ratio in applicable jurisdictions to qualify for equity classification. The previous GAAP threshold was restricted to the employer’s minimum statutory withholding requirements. The guidance also specifies certain changes to the reporting of share-based transactions on the statement of cash flows and is effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. The Company is still evaluating the impact the amended guidance may have on its consolidated financial statements.

In March 2016, the FASB issued amended accounting guidance for the transition to the equity method of accounting. The amended guidance eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method has been in effect during all previous periods that the investment had been held. Instead, the amended guidance requires the investor to adopt the equity method of accounting as of the date the investment first qualifies for such accounting. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. The Company does not expect the guidance to have a material impact on its consolidated financial statements.

In March 2016, the FASB issued two amendments to its rules on accounting for derivatives and hedging. The first amendment clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The second amendment clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment is required to assess the embedded call (put) options solely in accordance with a four-step decision sequence and no longer has to assess whether the event that triggers the ability to exercise the option is related to interest rates or credit risks. Both amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016, with early adoption permitted. The Company does not expect the guidance will have a material impact on its consolidated financial statements.

In February 2016, the FASB issued guidance related to the accounting for leases. The core principle of the guidance is that all leases create an asset and a liability for the lessee and, therefore, lease assets and lease liabilities should be recognized in the balance sheet. Lease assets will be recognized as a right-of-use asset and lease liabilities will be recognized as a liability to make lease payments. While the guidance requires all

leases to be recognized in the balance sheet, there continues to be a differentiation between finance leases and operating leases for purposes of income statement recognition and cash flow statement presentation. For finance leases, interest on the lease liability and amortization of the right-of-use asset will be recognized separately in the statement of income. Repayments of principal on lease liabilities will be classified within financing activities and payments of interest on the lease liability will be classified within operating activities in the statement of cash flows. For operating leases, a single lease cost is recognized in the statement of income and allocated over the lease term, generally on a straight-line basis. All cash payments are presented within operating activities in the statement of cash flows. The accounting applied by lessors is largely unchanged from existing GAAP, however, the guidance eliminates the accounting model for leveraged leases for leases that commence after the effective date of the guidance. The guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company occupies certain banking offices and uses certain equipment under noncancelable operating lease agreements, which currently are not reflected in its consolidated balance sheet. Such leases generally will be required to be presented in the Company’s consolidated balance sheet upon adoption of this guidance. The Company is evaluating the impact the guidance will have on its consolidated financial statements.

In January 2016, the FASB issued amended guidance related to recognition and measurement of financial assets and liabilities. The amended guidance requires that equity investments (excluding those accounted for under the equity method of accounting or those that result in consolidation of the investee) be measured at fair value with changes in fair value recognized in net income. An entity can elect to measure equity investments that do not have readily determinable fair values at cost less impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The impairment assessment of equity investments without readily determinable fair values is simplified by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates impairment exists, an entity is required to measure the investment at fair value. The guidance eliminates the requirement for public business entities to disclose the method and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. Further, the guidance requires public entities to use the exit price when measuring the fair value of financial instruments for disclosure purposes. The guidance also requires an entity to present separately in other comprehensive income, a change in the instrument-specific credit risk when the entity has elected to measure a liability at fair value in accordance with the fair value option. Separate presentation of financial assets and financial liabilities by measurement category and type of instrument on the balance sheet or accompanying notes to the financial statements is required. The guidance also clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. This guidance is effective for annual periods and interim periods within those annual periods beginning after December ~~31, 2015, with earlier adoption permitted.~~15, 2017. The Company ~~does not expect~~is evaluating the ~~amended~~impact the guidance ~~published by the FASB to~~could have ~~a material impact~~ on its consolidated financial ~~position or results of operations.~~statements.

In May 2014, the FASB issued amended accounting and disclosure guidance for revenue from contracts with customers. The core principle of the accounting guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract;

(3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer. The amended disclosure guidance requires sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB deferred the effective date of this guidance by one year. The amended guidance is now effective for annual reporting periods beginning

after December 15, ~~2016,~~2017, including interim periods within that reporting period. The guidance should be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application. The Company is still evaluating the impact the guidance could have on its consolidated financial statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this quarterly report contain forward-looking statements that are based on current expectations, estimates and projections about the Company’s business, management’s beliefs and assumptions made by management. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could,” or “may,” or by variations of such words or by similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“Future Factors”) which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Forward-looking statements speak only as of the date they are made and the Company assumes no duty to update forward-looking statements.

Future Factors include changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, credit losses and market values of loans, collateral securing loans and other assets; sources of liquidity; common shares outstanding; common stock price volatility; fair value of and number of stock-based compensation awards to be issued in future periods; the impact of changes in market values on trust-related revenues; legislation and/or regulation affecting the financial services industry as a whole, and M&T and its subsidiaries individually or collectively, including tax legislation or regulation; regulatory supervision and oversight, including monetary policy and capital requirements; changes in accounting policies or procedures as may be required by the FASB or ~~other~~ regulatory agencies; increasing price and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of pending and future litigation and governmental proceedings, including tax-related examinations and other matters; continued availability of financing; financial resources in the amounts, at the times and on the terms required to support M&T and its subsidiaries’ future businesses; and material differences in the actual financial results of merger, acquisition and investment activities compared with M&T’s initial expectations, including the full realization of anticipated cost savings and revenue enhancements.

These are representative of the Future Factors that could affect the outcome of the forward-looking statements. In addition, such statements could be affected by general industry and market conditions and growth rates,

general economic and political conditions, either nationally or in the states in which M&T and its subsidiaries do business, including interest rate and currency exchange rate fluctuations, changes and trends in the securities markets, and other Future Factors.


	2015			2014 Quarters												2016			2015 Quarters
	First Quarter			Fourth			Third			Second			First			First Quarter			Fourth			Third			Second			First
Earnings and dividends
Amounts in thousands, except per share
Interest income (taxable-equivalent basis)	$	743,925			762,619			748,864			740,139			728,897		$	979,166			908,734			776,274			766,374			743,925
Interest expense		78,499			74,772			73,964			65,176			66,519			100,870			95,333			77,199			77,226			78,499

Net interest income		665,426			687,847			674,900			674,963			662,378			878,296			813,401			699,075			689,148			665,426
Less: provision for credit losses		38,000			33,000			29,000			30,000			32,000			49,000			58,000			44,000			30,000			38,000
Other income		440,203			451,643			451,111			456,412			420,107			420,933			448,108			439,699			497,027			440,203
Less: other expense		686,375			666,221			665,359			667,660			690,234			776,095			786,113			653,816			696,628			686,375

Income before income taxes		381,254			440,269			431,652			433,715			360,251			474,134			417,396			440,958			459,547			381,254
Applicable income taxes		133,803			156,713			150,467			143,530			125,289			169,274			140,074			154,309			166,839			133,803
Taxable-equivalent adjustment		5,838			6,007			5,841			5,849			5,945			6,332			6,357			6,248			6,020			5,838

Net income	$	241,613			277,549			275,344			284,336			229,017		$	298,528			270,965			280,401			286,688			241,613

Net income available to common shareholders-diluted	$	218,837			254,239			251,917			260,695			211,731		$	275,748			248,059			257,346			263,481			218,837
Per common share data
Basic earnings	$	1.66			1.93			1.92			1.99			1.63		$	1.74			1.65			1.94			1.99			1.66
Diluted earnings		1.65			1.92			1.91			1.98			1.61			1.73			1.65			1.93			1.98			1.65
Cash dividends	$	.70			.70			.70			.70			.70		$	.70			.70			.70			.70			.70
Average common shares outstanding
Basic		132,049			131,450			131,265			130,856			130,212			158,734			150,027			132,630			132,356			132,049
Diluted		132,769			132,278			132,128			131,828			131,126			159,181			150,718			133,376			133,116			132,769

Performance ratios, annualized
Return on
Average assets		1.02	%		1.12	%		1.17	%		1.27	%		1.07	%		.97	%		.93	%		1.13	%		1.18	%		1.02	%
Average common shareholders’ equity		7.99	%		9.10	%		9.18	%		9.79	%		8.22	%		7.44	%		7.22	%		8.93	%		9.37	%		7.99	%
Net interest margin on average earning assets (taxable-equivalent basis)		3.17	%		3.10	%		3.23	%		3.40	%		3.52	%		3.18	%		3.12	%		3.14	%		3.17	%		3.17	%
Nonaccrual loans to total loans and leases, net of unearned discount		1.18	%		1.20	%		1.29	%		1.36	%		1.39	%		1.00	%		.91	%		1.15	%		1.17	%		1.18	%

Net operating (tangible) results (a)
Net operating income (in thousands)	$	245,776			281,929			279,838			289,974			235,162		$	320,064			337,613			282,907			290,341			245,776
Diluted net operating income per common share		1.68			1.95			1.94			2.02			1.66			1.87			2.09			1.95			2.01			1.68
Annualized return on
Average tangible assets		1.08	%		1.18	%		1.24	%		1.35	%		1.15	%		1.09	%		1.21	%		1.18	%		1.24	%		1.08	%
Average tangible common shareholders’ equity		11.90	%		13.55	%		13.80	%		14.92	%		12.76	%		11.62	%		13.26	%		12.98	%		13.76	%		11.90	%
Efficiency ratio (b)		61.46	%		57.84	%		58.44	%		58.20	%		62.83	%		57.00	%		55.53	%		57.05	%		58.23	%		61.46	%

Balance sheet data
In millions, except per share
Average balances
Total assets (c)	$	95,892			98,644			93,245			89,873			86,665		$	123,252			115,052			98,515			97,598			95,892
Total tangible assets (c)		92,346			95,093			89,689			86,311			83,096			118,577			110,772			94,989			94,067			92,346
Earning assets		85,212			87,965			82,776			79,556			76,288			111,211			103,587			88,446			87,333			85,212
Investment securities		13,376			12,978			12,780			10,959			9,265			15,348			15,786			14,441			14,195			13,376
Loans and leases, net of unearned discount		66,587			65,767			64,763			64,343			63,763			87,584			81,110			67,849			67,670			66,587
Deposits		71,698			75,515			70,772			69,659			67,327			92,391			85,657			73,821			72,958			71,698
Common shareholders’ equity (c)		11,227			11,211			11,015			10,808			10,576			15,047			13,775			11,555			11,404			11,227
Tangible common shareholders’ equity (c)		7,681			7,660			7,459			7,246			7,007			10,372			9,495			8,029			7,873			7,681

At end of quarter
Total assets (c)	$	98,378			96,686			97,228			90,835			88,530		$	124,626			122,788			97,797			97,080			98,378
Total tangible assets (c)		94,834			93,137			93,674			87,276			84,965			119,955			118,109			94,272			93,552			94,834
Earning assets		87,959			86,278			86,751			80,062			77,950			113,005			110,802			87,807			86,990			87,959
Investment securities		14,393			12,994			13,348			12,120			10,364			15,467			15,656			14,495			14,752			14,393
Loans and leases, net of unearned discount		67,099			66,669			65,572			64,748			64,135			87,872			87,489			68,540			68,131			67,099
Deposits		73,594			73,582			74,342			69,829			68,699			94,215			91,958			72,945			72,630			73,594
Common shareholders’ equity, net of undeclared cumulative preferred dividends (c)		11,294			11,102			11,099			10,934			10,652			15,120			14,939			11,687			11,433			11,294
Tangible common shareholders’ equity (c)		7,750			7,553			7,545			7,375			7,087			10,449			10,260			8,162			7,905			7,750
Equity per common share		84.95			83.88			83.99			82.86			81.05			95.00			93.60			87.67			85.90			84.95
Tangible equity per common share		58.29			57.06			57.10			55.89			53.92			65.65			64.28			61.22			59.39			58.29

Market price per common share
High	$	129.58			128.96			128.69			125.90			123.04		$	119.24			127.39			134.00			128.70			129.58
Low		111.78			112.42			118.51			116.10			109.16			100.08			111.50			111.86			117.86			111.78
Closing		127.00			125.62			123.29			124.05			121.30			111.00			121.18			121.95			124.93			127.00


	2015			2014 Quarters												2016			2015 Quarters
	First Quarter			Fourth			Third			Second			First			First Quarter			Fourth			Third			Second			First
Income statement data
In thousands, except per share
Net income
Net income	$	241,613			277,549			275,344			284,336			229,017		$	298,528			270,965			280,401			286,688			241,613
Amortization of core deposit and other intangible assets (a)		4,163			4,380			4,494			5,638			6,145			7,488			5,828			2,506			3,653			4,163
Merger-related expenses (a)																	14,048			60,820			—			—			—

Net operating income	$	245,776			281,929			279,838			289,974			235,162		$	320,064			337,613			282,907			290,341			245,776

Earnings per common share
Diluted earnings per common share	$	1.65			1.92			1.91			1.98			1.61		$	1.73			1.65			1.93			1.98			1.65
Amortization of core deposit and other intangible assets (a)		.03			.03			.03			.04			.05			.05			.04			.02			.03			.03
Merger-related expenses (a)																	.09			.40			—			—			—

Diluted net operating earnings per common share	$	1.68			1.95			1.94			2.02			1.66		$	1.87			2.09			1.95			2.01			1.68

Other expense
Other expense	$	686,375			666,221			665,359			667,660			690,234		$	776,095			786,113			653,816			696,628			686,375
Amortization of core deposit and other intangible assets		(6,793	)		(7,170	)		(7,358	)		(9,234	)		(10,062	)		(12,319	)		(9,576	)		(4,090	)		(5,965	)		(6,793	)
Merger-related expenses																	(23,162	)		(75,976	)		—			—			—

Noninterest operating expense	$	679,582			659,051			658,001			658,426			680,172		$	740,614			700,561			649,726			690,663			679,582

Merger-related expenses
Salaries and employee benefits																$	5,274			51,287			—			—			—
Equipment and net occupancy																	939			3			—			—			—
Printing, postage and supplies																	937			504			—			—			—
Other costs of operations																	16,012			24,182			—			—			—

Other expense																	23,162			75,976			—			—			—
Provision for credit losses																	—			21,000			—			—			—

Total																$	23,162			96,976			—			—			—

Efficiency ratio
Noninterest operating expense (numerator)	$	679,582			659,051			658,001			658,426			680,172		$	740,614			700,561			649,726			690,663			679,582

Taxable-equivalent net interest income		665,426			687,847			674,900			674,963			662,378			878,296			813,401			699,075			689,148			665,426
Other income		440,203			451,643			451,111			456,412			420,107			420,933			448,108			439,699			497,027			440,203
Less: Loss on bank investment securities		(98	)		—			—			—			—
Less: Gain (loss) on bank investment securities																	4			(22	)		—			(10	)		(98	)

Denominator	$	1,105,727			1,139,490			1,126,011			1,131,375			1,082,485		$	1,299,225			1,261,531			1,138,774			1,186,185			1,105,727

Efficiency ratio		61.46	%		57.84	%		58.44	%		58.20	%		62.83	%		57.00	%		55.53	%		57.05	%		58.23	%		61.46	%

Balance sheet data
In millions
Average assets
Average assets	$	95,892			98,644			93,245			89,873			86,665		$	123,252			115,052			98,515			97,598			95,892
Goodwill		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(4,593	)		(4,218	)		(3,513	)		(3,514	)		(3,525	)
Core deposit and other intangible assets		(31	)		(38	)		(45	)		(53	)		(64	)		(134	)		(101	)		(20	)		(25	)		(31	)
Deferred taxes		10			12			14			16			20			52			39			7			8			10

Average tangible assets	$	92,346			95,093			89,689			86,311			83,096		$	118,577			110,772			94,989			94,067			92,346

Average common equity
Average total equity	$	12,459			12,442			12,247			12,039			11,648		$	16,279			15,007			12,787			12,636			12,459
Preferred stock		(1,232	)		(1,231	)		(1,232	)		(1,231	)		(1,072	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)

Average common equity		11,227			11,211			11,015			10,808			10,576			15,047			13,775			11,555			11,404			11,227

Goodwill		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(4,593	)		(4,218	)		(3,513	)		(3,514	)		(3,525	)
Core deposit and other intangible assets		(31	)		(38	)		(45	)		(53	)		(64	)		(134	)		(101	)		(20	)		(25	)		(31	)
Deferred taxes		10			12			14			16			20			52			39			7			8			10

Average tangible common equity	$	7,681			7,660			7,459			7,246			7,007		$	10,372			9,495			8,029			7,873			7,681

At end of quarter
Total assets
Total assets	$	98,378			96,686			97,228			90,835			88,530		$	124,626			122,788			97,797			97,080			98,378
Goodwill		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(4,593	)		(4,593	)		(3,513	)		(3,513	)		(3,525	)
Core deposit and other intangible assets		(28	)		(35	)		(42	)		(49	)		(59	)		(128	)		(140	)		(18	)		(22	)		(28	)
Deferred taxes		9			11			13			15			19			50			54			6			7			9

Total tangible assets	$	94,834			93,137			93,674			87,276			84,965		$	119,955			118,109			94,272			93,552			94,834

Total common equity
Total equity	$	12,528			12,336			12,333			12,169			11,887		$	16,355			16,173			12,922			12,668			12,528
Preferred stock		(1,232	)		(1,231	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)
Undeclared dividends - cumulative preferred stock		(2	)		(3	)		(2	)		(3	)		(3	)		(3	)		(2	)		(3	)		(3	)		(2	)

Common equity, net of undeclared cumulative preferred dividends		11,294			11,102			11,099			10,934			10,652			15,120			14,939			11,687			11,433			11,294

Goodwill		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(4,593	)		(4,593	)		(3,513	)		(3,513	)		(3,525	)
Core deposit and other intangible assets		(28	)		(35	)		(42	)		(49	)		(59	)		(128	)		(140	)		(18	)		(22	)		(28	)
Deferred taxes		9			11			13			15			19			50			54			6			7			9

Total tangible common equity	$	7,750			7,553			7,545			7,375			7,087		$	10,449			10,260			8,162			7,905			7,750


	2015 First Quarter								2014 Fourth Quarter								2014 Third Quarter								2016 First Quarter								2015 Fourth Quarter								2015 Third Quarter
Average balance in millions; interest in thousands	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
Assets
Earning assets
Loans and leases, net of unearned discount*
Commercial, financial, etc.	$	19,457		$	153,866		3.21	%		19,117			156,627		3.25	%		18,889			156,440		3.29	%	$	20,717		$	174,657		3.39	%		20,221			164,515		3.23	%		19,939			161,709		3.22	%
Real estate - commercial		27,596			288,121		4.18			27,064			293,283		4.24			26,487			283,476		4.19			29,426			309,415		4.16			28,973			303,960		4.11			28,309			302,626		4.18
Real estate - consumer		8,572			88,850		4.15			8,654			90,637		4.19			8,634			90,023		4.17			25,859			254,144		3.93			20,369			204,420		4.01			8,348			87,047		4.17
Consumer		10,962			121,366		4.49			10,932			123,681		4.49			10,753			122,408		4.52			11,582			130,971		4.55			11,547			129,103		4.44			11,253			126,369		4.46

Total loans and leases, net		66,587			652,203		3.97			65,767			664,228		4.01			64,763			652,347		4.00			87,584			869,187		3.99			81,110			801,998		3.92			67,849			677,751		3.96

Interest-bearing deposits at banks		5,073			3,118		.25			9,054			5,744		.25			5,083			3,198		.25			8,193			10,337		.51			6,622			4,931		.30			6,060			3,852		.25
Federal funds sold and agreements to resell securities		97			24		.10			86			18		.08			80			14		.07
Federal funds																										1			1		.77			1			2		.54			—			—		—
Trading account		79			565		2.87			80			353		1.76			70			287		1.65			85			378		1.78			68			317		1.88			96			125		.52
Investment securities**
U.S. Treasury and federal agencies		12,437			78,313		2.55			12,032			82,843		2.73			11,817			82,475		2.77			14,264			90,138		2.54			14,778			89,052		2.39			13,548			86,152		2.52
Obligations of states and political subdivisions		159			1,967		5.04			160			1,963		4.86			162			1,897		4.65			113			1,164		4.13			128			1,419		4.40			138			1,398		4.03
Other		780			7,735		4.02			786			7,470		3.77			801			8,646		4.28			971			7,961		3.30			880			11,015		4.96			755			6,996		3.68

Total investment securities		13,376			88,015		2.67			12,978			92,276		2.82			12,780			93,018		2.89			15,348			99,263		2.60			15,786			101,486		2.55			14,441			94,546		2.60

Total earning assets		85,212			743,925		3.54			87,965			762,619		3.44			82,776			748,864		3.59			111,211			979,166		3.54			103,587			908,734		3.48			88,446			776,274		3.48

Allowance for credit losses		(925	)							(924	)							(924	)							(955	)							(947	)							(937	)
Cash and due from banks		1,221								1,290								1,273								1,288								1,348								1,218
Other assets		10,384								10,313								10,120								11,708								11,064								9,788

Total assets	$	95,892								98,644								93,245							$	123,252								115,052								98,515

Liabilities and shareholders’ equity
Interest-bearing liabilities
Interest-bearing deposits
NOW accounts	$	1,121			311		.11			1,083			383		.14			1,037			394		.15
Interest-checking deposits																									$	1,359			414		.12			1,331			384		.11			1,309			360		.11
Savings deposits		41,525			10,219		.10			42,949			11,151		.10			41,056			11,532		.11			48,976			15,891		.13			45,974			13,219		.11			41,197			10,937		.11
Time deposits		3,017			3,740		.50			3,128			3,915		.50			3,227			3,805		.47			12,999			24,322		.75			9,686			15,986		.65			2,858			3,643		.51
Deposits at Cayman Islands office		224			147		.27			265			149		.22			325			161		.20			187			193		.42			224			167		.30			206			151		.29

Total interest-bearing deposits		45,887			14,417		.13			47,425			15,598		.13			45,645			15,892		.14			63,521			40,820		.26			57,215			29,756		.21			45,570			15,091		.13

Short-term borrowings		196			34		.07			195			25		.05			181			19		.04			2,082			2,162		.42			1,615			1,575		.39			174			32		.07
Long-term borrowings		9,835			64,048		2.64			8,954			59,149		2.62			8,547			58,053		2.69			10,528			57,888		2.21			10,748			64,002		2.36			10,114			62,076		2.44

Total interest-bearing liabilities		55,918			78,499		.57			56,574			74,772		.52			54,373			73,964		.54			76,131			100,870		.53			69,578			95,333		.54			55,858			77,199		.55

Noninterest-bearing deposits		25,811								28,090								25,127								28,870								28,443								28,251
Other liabilities		1,704								1,538								1,498								1,972								2,024								1,619

Total liabilities		83,433								86,202								80,998								106,973								100,045								85,728

Shareholders’ equity		12,459								12,442								12,247								16,279								15,007								12,787

Total liabilities and shareholders’ equity	$	95,892								98,644								93,245							$	123,252								115,052								98,515

Net interest spread							2.97								2.92								3.05								3.01								2.94								2.93
Contribution of interest-free funds							.20								.18								.18								.17								.18								.21

Net interest income/margin on earning assets				$	665,426		3.17	%					687,847		3.10	%					674,900		3.23	%				$	878,296		3.18	%					813,401		3.12	%					699,075		3.14	%


	2014 Second Quarter								2014 First Quarter								2015 Second Quarter								2015 First Quarter
Average balance in millions; interest in thousands	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
Assets
Earning assets
Loans and leases, net of unearned discount*
Commercial, financial, etc.	$	18,978		$	157,891		3.34	%		18,476			153,529		3.37	%	$	19,973		$	158,109		3.18	%		19,457			153,866		3.21	%
Real estate - commercial		26,140			278,596		4.22			26,143			287,584		4.40			28,208			298,565		4.19			27,596			288,121		4.18
Real estate - consumer		8,746			95,439		4.36			8,844			92,533		4.19			8,447			88,473		4.19			8,572			88,850		4.15
Consumer		10,479			118,157		4.52			10,300			116,631		4.59			11,042			122,812		4.46			10,962			121,366		4.49

Total loans and leases, net		64,343			650,083		4.05			63,763			650,277		4.14			67,670			667,959		3.96			66,587			652,203		3.97

Interest-bearing deposits at banks		4,080			2,535		.25			3,089			1,884		.25			5,326			3,351		.25			5,073			3,118		.25
Federal funds sold and agreements to resell securities		90			16		.07			100			16		.07
Federal funds																		39			9		.10			97			24		.10
Trading account		84			264		1.25			71			477		2.68			103			239		.92			79			565		2.87
Investment securities**
U.S. Treasury and federal agencies		9,984			74,046		2.97			8,286			64,814		3.17			13,265			83,356		2.52			12,437			78,313		2.55
Obligations of states and political subdivisions		166			1,986		4.82			177			2,269		5.20			149			1,607		4.32			159			1,967		5.04
Other		809			11,209		5.56			802			9,160		4.63			781			9,853		5.06			780			7,735		4.02

Total investment securities		10,959			87,241		3.19			9,265			76,243		3.34			14,195			94,816		2.68			13,376			88,015		2.67

Total earning assets		79,556			740,139		3.73			76,288			728,897		3.87			87,333			766,374		3.52			85,212			743,925		3.54

Allowance for credit losses		(922	)							(923	)							(929	)							(925	)
Cash and due from banks		1,224								1,322								1,180								1,221
Other assets		10,015								9,978								10,014								10,384

Total assets	$	89,873								86,665							$	97,598								95,892

Liabilities and shareholders’ equity
Interest-bearing liabilities
Interest-bearing deposits
NOW accounts	$	1,026			330		.13			988			297		.12
Interest-checking deposits																	$	1,333			349		.11			1,121			311		.11
Savings deposits		39,478			11,181		.11			38,358			11,601		.12			41,712			10,361		.10			41,525			10,219		.10
Time deposits		3,350			3,855		.46			3,460			3,940		.46			2,948			3,690		.50			3,017			3,740		.50
Deposits at Cayman Islands office		339			181		.21			380			208		.22			212			150		.28			224			147		.27

Total interest-bearing deposits		44,193			15,547		.14			43,186			16,046		.15			46,205			14,550		.13			45,887			14,417		.13

Short-term borrowings		220			25		.05			264			32		.05			195			36		.07			196			34		.07
Long-term borrowings		6,525			49,604		3.05			5,897			50,441		3.47			10,164			62,640		2.47			9,835			64,048		2.64

Total interest-bearing liabilities		50,938			65,176		.51			49,347			66,519		.55			56,564			77,226		.55			55,918			78,499		.57

Noninterest-bearing deposits		25,466								24,141								26,753								25,811
Other liabilities		1,430								1,529								1,645								1,704

Total liabilities		77,834								75,017								84,962								83,433

Shareholders’ equity		12,039								11,648								12,636								12,459

Total liabilities and shareholders’ equity	$	89,873								86,665							$	97,598								95,892

Net interest spread							3.22								3.32								2.97								2.97
Contribution of interest-free funds							.18								.20								.20								.20

Net interest income/margin on earning assets				$	674,963		3.40	%					662,378		3.52	%				$	689,148		3.17	%					665,426		3.17	%

Incorporated by reference to the discussion contained under the caption “Taxable-equivalent Net Interest Income” in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

(a) Evaluation of disclosure controls and procedures. Based upon their evaluation of the effectiveness of M&T’s disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)), Robert G. Wilmers, Chairman of the Board and Chief Executive Officer, and René F. Jones, Executive Vice President and Chief Financial Officer, concluded that M&T’s disclosure controls and procedures were effective as of March 31, ~~2015.~~2016.

(b) Changes in internal control over financial reporting. M&T regularly assesses the adequacy of its internal control over financial reporting and enhances its controls in response to internal control assessments and internal and external audit and regulatory recommendations. No changes in internal control over financial reporting have been identified in connection with the evaluation of disclosure controls and procedures during the quarter ended March 31, ~~2015~~2016 that have materially affected, or are reasonably likely to materially affect, M&T’s internal control over financial reporting.

M&T’s Wilmington Trust Corporation ~~(“Wilmington Trust”)~~ subsidiary is the subject of certain governmental investigations arising from actions undertaken by Wilmington Trust Corporation prior to M&T’s acquisition of Wilmington Trust Corporation and its subsidiaries, as set forth below.

DOJ Investigation (United States v. Wilmington Trust Corp., et al, District of Delaware, Crim.No. 15-23-RGA):Prior to M&T’s acquisition of Wilmington Trust Corporation, the Department of Justice (“DOJ”) commenced an investigation of Wilmington Trust Corporation, relating to Wilmington ~~Trust’s~~Trust Corporation’s financial reporting and securities filings, as well as certain commercial real estate lending relationships involving its subsidiary bank, Wilmington Trust Company, all of which relate to filings and activities occurring prior to the acquisition of Wilmington Trust Corporation by M&T. ~~Counsel~~On January 6, 2016, the U.S. Attorney for the District of Delaware obtained an indictment against Wilmington Trust ~~has met with the DOJ~~Corporation relating to ~~discuss the DOJ investigation. The DOJ investigation is ongoing.~~alleged conduct that occurred prior to M&T’s acquisition of Wilmington Trust Corporation in

~~This investigation~~May 2011. M&T strongly believes that this unprecedented action is unjustified and Wilmington Trust Corporation will vigorously defend itself.

The indictment of Wilmington Trust Corporation could ~~lead to administrative or legal proceedings resulting~~result in potential ~~civil and/~~criminal remedies, or criminal ~~remedies,~~or non-criminal resolutions or settlements, including, among other things, enforcement actions, potential statutory or regulatory restrictions on the ability to conduct certain businesses (for which waivers may or may not be available), fines, penalties, restitution, reputational damage or additional costs and expenses.

In Re Wilmington Trust Securities Litigation (U.S. District Court, District of Delaware, Case No. 10-CV-0990-SLR): Beginning on November 18, 2010, a series of parties, purporting to be class representatives, commenced a putative class action lawsuit against Wilmington Trust Corporation, alleging that Wilmington ~~Trust’s~~Trust Corporation’s financial reporting and securities filings were in violation of securities laws. The cases were consolidated and Wilmington Trust Corporation moved to dismiss. The Court issued an order denying Wilmington ~~Trust’s~~Trust Corporation’s motion to dismiss on March 20, 2014. ~~The parties are currently engaged~~Fact discovery commenced. On April 13, 2016, the Court issued an order staying fact discovery in the ~~discovery phase~~case pending completion of the ~~lawsuit.~~trial inU.S. v. Wilmington Trust Corp., et al.

The Company is the subject of an investigation by government agencies relating to the origination of Federal Housing Administration (“FHA”) insured residential home loans and residential home loans sold to Freddie Mac and Fannie Mae. A number of other U.S. financial institutions have announced similar investigations. Regarding FHA loans, the U.S. Department of Housing and Urban Development (“HUD”) Office of Inspector General and the DOJ (collectively, the “Government”) are investigating whether the Company complied with underwriting guidelines concerning certain loans where HUD paid FHA insurance claims. The Company is fully cooperating with the investigation. The Government has advised the Company that based upon its review of a sample of loans for which an FHA insurance claim was paid by HUD, some of the loans do not meet underwriting guidelines. The Company, based on its own review of the sample, does not agree with the sampling methodology and loan analysis employed by the Government. Regarding loans originated by the Company and sold to Freddie Mac and Fannie Mae, the investigation concerns whether the mortgages sold to Freddie Mac and Fannie Mae comply with applicable underwriting guidelines. The Company is also cooperating with that portion of the investigation. The investigation could lead to claims by the Government under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which allow treble and other special damages substantially in excess of actual losses. Remedies in these proceedings or settlements may include restitution, fines, penalties, or alterations in the Company’s business practices. The Company and the Government continue settlement discussions regarding the investigation and although progress has been made, the parties have not yet reached a definitive agreement. Based upon the current status of these negotiations, management expects that this potential settlement should not have a material impact on the Company’s consolidated financial condition or results of operations in future periods.

Due to their complex nature, it is difficult to estimate when litigation and investigatory matters such as these may be resolved. As set forth in the introductory paragraph to this Item 1 –— Legal Proceedings, losses from current litigation and regulatory matters which the Company is subject to that are not currently considered probable are within a range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability, and are included in the range of reasonably possible losses set forth above.

There have been no material changes in risk factors relating to M&T to those disclosed in response to Item 1A. to Part I of Form 10-K for the year ended December 31, ~~2014.~~2015.


Issuer Purchases of Equity Securities	Issuer Purchases of Equity Securities									Issuer Purchases of Equity Securities
Period		(a)Total Number of Shares (or Units) Purchased (1)		(b)Average Price Paid per Share (or Unit)		(c)Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d)Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased Under the Plans or Programs (2)			(a)Total Number of Shares (or Units) Purchased (1)		(b)Average Price Paid per Share (or Unit)		(c)Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d)Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased Under the Plans or Programs (2)

January 1 – January 31, 2015			173,268	$	113.81		—		2,181,500
January 1 – January 31, 2016												1,186,638	$	106.38		948,545	$	100,000,000

February 1 – February 28, 2015			1,029		120.54		—		2,181,500
February 1 – February 29, 2016												583		105.73		—		100,000,000

March 1 – March 31, 2015			1,636		125.64		—		2,181,500
March 1 – March 31, 2016												441		111.45		—		154,000,000


Total			175,933	$	113.96		—					1,187,662	$	106.38		948,545

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


New York		16-0968385
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One M & T Plaza Buffalo, New York		14203
(Address of principal executive offices)		(Zip Code)


Table of Contents of Information Required in Report				Page

Part I. FINANCIAL INFORMATION

	Item 1.	Financial Statements.

		CONSOLIDATED BALANCE SHEET - March 31, ~~2015~~2016 and December 31, ~~2014~~2015			3

		CONSOLIDATED STATEMENT OF INCOME - Three months ended March 31, ~~2015~~2016 and ~~2014~~2015			4

		CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - Three months ended March 31, ~~2015~~2016 and ~~2014~~2015			5

		CONSOLIDATED STATEMENT OF CASH FLOWS - Three months ended March 31, ~~2015~~2016 and ~~2014~~2015			6

		CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY - Three months ended March 31, ~~2015~~2016 and ~~2014~~2015			7

		NOTES TO FINANCIAL STATEMENTS			8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.			5051

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk.			9193

	Item 4.	Controls and Procedures.			9193

Part II. OTHER INFORMATION

	Item 1.	Legal Proceedings.			9193

	Item 1A.	Risk Factors.			9294

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.			9395

	Item 3.	Defaults Upon Senior Securities.			9395

	Item 4.	Mine Safety Disclosures.			9395

	Item 5.	Other Information.			9395

	Item 6.	Exhibits.			9496

SIGNATURES			95		97

EXHIBIT INDEX					9597


	(in thousands)
Identifiable assets:
Cash and due from banks	$	131,688
Interest-bearing deposits at banks		7,568,934
Investment securities		7,929,014
Loans		19,015,013
Goodwill		1,079,787
Core deposit intangible		131,665
Other assets		843,219

Total identifiable assets		36,699,320


Liabilities:
Deposits		17,879,589
Borrowings		13,211,598
Other liabilities		405,025

Total liabilities		31,496,212

Total consideration	$	5,203,108


Cash paid	$	2,064,284
Common stock issued (25,953,950 shares)		3,110,581
Common stock awards converted		28,243

Total consideration	$	5,203,108


	Pro forma Three months ended March 31, 2015
	(in thousands)

Total revenues(a)	$	1,253,445
Net income		285,237


	Three months ended March 31, 2016
	(in thousands)

Salaries and employee benefits	$	5,274
Equipment and net occupancy		939
Printing, postage and supplies		937
Other cost of operations		16,012

Total	$	23,162


	Investment securities				Defined benefit
	With OTTI		All other		plans			Other			Total
	(in thousands)

Balance – December 31, 2014	$	4,518		122,683		(305,589	)		(2,606	)	$	(180,994	)

Net gain (loss) during period		4,898		20,441		4,677			(1,513	)		28,503


Balance – March 31, 2015	$	9,416		143,124		(300,912	)		(4,119	)	$	(152,491	)


	Three months ended March 31, 2014
	Net income (loss) as previously reported			Impact of changes			Net income (loss) as restated
	(in thousands)

Business Banking	$	28,598			(3,625	)		24,973

Commercial Banking		99,765			(924	)		98,841

Commercial Real Estate		74,561			(2,009	)		72,552

Discretionary Portfolio		11,279			81			11,360

Residential Mortgage Banking		19,411			(831	)		18,580

Retail Banking		29,711			39,323			69,034

All Other		(34,308	)		(32,015	)		(66,323	)


Total	$	229,017			—			229,017


	Nonaccretable balance - principal
	Remaining balance				Life-to-date charges
	March 31, 2015		December 31, 2014		March 31, 2015		December 31, 2014
	(in thousands)

Commercial, financing, leasing, etc.	$	19,961		19,589		78,084		78,736
Commercial real estate		75,451		70,261		271,490		276,681
Residential real estate		15,104		15,958		60,381		59,552
Consumer		27,701		29,582		79,700		77,819

Total	$	138,217		135,390		489,655		492,788


* Includes nonaccrual loans.		(continued)
** Includes available-for-sale securities at amortized cost.


Exhibit No.

10.1		M&T Bank Corporation Supplemental Pension Plan, as amended. Filed herewith.


10.2		M&T Bank Corporation Supplemental Retirement Savings Plan, as amended. Filed herewith.


31.1		Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.


31.2		Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.


32.1		Certification of Chief Executive Officer under 18 U.S.C. §1350 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.



32.2		Certification of Chief Financial Officer under 18 U.S.C. §1350 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.



101.INS		XBRL Instance Document. Filed herewith.

101.SCH		XBRL Taxonomy Extension Schema. Filed herewith.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase. Filed herewith.

101.LAB		XBRL Taxonomy Extension Label Linkbase. Filed herewith.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase. Filed herewith.

101.DEF		XBRL Taxonomy Definition Linkbase. Filed herewith.


	M&T BANK CORPORATION

Date: ~~May 8, 2015~~April 29, 2016	By:	/s/ René F. Jones
		René F. Jones
		Executive Vice President
		and Chief Financial Officer

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