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. ☒ 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). ☒ 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 definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Number of shares of the registrant's Common Stock, $0.50 par value, outstanding as of the close of business on ~~October~~April 28, ~~2016: 155,048,618~~2017: 153,863,872 shares.

			September 30,			December 31,					March 31,			December 31,
Dollars in thousands, except per share	Dollars in thousands, except per share		2016			2015			Dollars in thousands, except per share		2017			2016

Assets		Cash and due from banks	$	1,332,202			1,368,040			Cash and due from banks	$	1,286,962			1,320,549
		Interest-bearing deposits at banks		10,777,636			7,594,350			Interest-bearing deposits at banks		6,945,149			5,000,638
		Trading account		488,588			273,783			Trading account		174,854			323,867
		Investment securities (includes pledged securities that can be sold or repledged of $1,856,326 at September 30, 2016; $2,136,712 at December 31, 2015)								Investment securities (includes pledged securities that can be sold or repledged of $519,063 at March 31, 2017; $1,203,473 at December 31, 2016)
		Available for sale (cost: $11,551,614 at September 30, 2016; $12,138,636 at December 31, 2015)		11,862,567			12,242,671			Available for sale (cost: $12,640,244 at March 31, 2017; $13,338,301 at December 31, 2016)		12,631,000			13,332,072
		Held to maturity (fair value: $2,456,097 at September 30, 2016; $2,864,147 at December 31, 2015)		2,409,950			2,859,709			Held to maturity (fair value: $2,865,885 at March 31, 2017; $2,451,222 at December 31, 2016)		2,876,119			2,457,278
		Other (fair value: $461,057 at September 30, 2016; $554,059 at December 31, 2015)		461,057			554,059			Other (fair value: $461,296 at March 31, 2017; $461,118 at December 31, 2016)		461,296			461,118
		Total investment securities		14,733,574			15,656,439			Total investment securities		15,968,415			16,250,468
		Loans and leases		89,887,257			87,719,234			Loans and leases		89,555,547			91,101,677
		Unearned discount		(240,765	)		(229,735	)		Unearned discount		(242,545	)		(248,261	)
		Loans and leases, net of unearned discount		89,646,492			87,489,499			Loans and leases, net of unearned discount		89,313,002			90,853,416
		Allowance for credit losses		(976,121	)		(955,992	)		Allowance for credit losses		(1,001,430	)		(988,997	)
		Loans and leases, net		88,670,371			86,533,507			Loans and leases, net		88,311,572			89,864,419
		Premises and equipment		660,381			666,682			Premises and equipment		672,769			675,263
		Goodwill		4,593,112			4,593,112			Goodwill		4,593,112			4,593,112
		Core deposit and other intangible assets		106,744			140,268			Core deposit and other intangible assets		94,535			97,655
		Accrued interest and other assets		5,478,420			5,961,703			Accrued interest and other assets		5,175,883			5,323,235
		Total assets	$	126,841,028			122,787,884			Total assets	$	123,223,251			123,449,206

Liabilities		Noninterest-bearing deposits	$	33,127,627			29,110,635			Noninterest-bearing deposits	$	34,279,591			32,813,896
		Interest-checking deposits		2,554,507			2,939,274			Savings and interest-checking deposits		53,542,149			52,346,207
		Savings deposits		50,510,523			46,627,370			Time deposits		9,028,018			10,131,846
		Time deposits		11,721,005			13,110,392			Deposits at Cayman Islands office		192,763			201,927
		Deposits at Cayman Islands office		223,183			170,170			Total deposits		97,042,521			95,493,876
		Total deposits		98,136,845			91,957,841			Federal funds purchased and agreements to repurchase securities		185,102			163,442
		Federal funds purchased and agreements to repurchase securities		213,846			150,546			Accrued interest and other liabilities		1,694,905			1,811,431
		Other short-term borrowings		—			1,981,636			Long-term borrowings		8,087,619			9,493,835
		Accrued interest and other liabilities		1,938,201			1,870,714			Total liabilities		107,010,147			106,962,584
		Long-term borrowings		10,211,160			10,653,858
		Total liabilities		110,500,052			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 September 30, 2016 and December 31, 2015; Liquidation preference of $10,000 per share: 50,000 shares at September 30, 2016 and December 31, 2015		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, 2017 and December 31, 2016; Liquidation preference of $10,000 per share: 50,000 shares at March 31, 2017 and December 31, 2016		1,231,500			1,231,500
		Common stock, $.50 par, 250,000,000 shares authorized, 159,950,278 shares issued at September 30, 2016; 159,563,512 shares issued at December 31, 2015		79,975			79,782			Common stock, $.50 par, 250,000,000 shares authorized, 159,825,445 shares issued at March 31, 2017; 159,945,678 shares issued at December 31, 2016		79,913			79,973
		Common stock issuable, 33,748 shares at September 30, 2016; 36,644 shares at December 31, 2015		2,224			2,364			Common stock issuable, 28,740 shares at March 31, 2017; 32,403 shares at December 31, 2016		1,921			2,145
		Additional paid-in capital		6,689,812			6,680,768			Additional paid-in capital		6,603,355			6,676,948
		Retained earnings		9,021,965			8,430,502			Retained earnings		9,437,450			9,222,488
		Accumulated other comprehensive income (loss), net		(114,559	)		(251,627	)		Accumulated other comprehensive income (loss), net		(291,567	)		(294,636	)
		Treasury stock - common, at cost - 4,997,089 shares at September 30, 2016		(569,941	)		—			Treasury stock - common, at cost - 6,073,095 shares at March 31, 2017; 3,764,742 shares at December 31, 2016		(849,468	)		(431,796	)
		Total shareholders’ equity		16,340,976			16,173,289			Total shareholders’ equity		16,213,104			16,486,622
		Total liabilities and shareholders’ equity	$	126,841,028			122,787,884			Total liabilities and shareholders’ equity	$	123,223,251			123,449,206

			Three months ended September 30				Nine months ended September 30							Three Months Ended March 31
In thousands, except per share	In thousands, except per share		2016		2015		2016		2015			In thousands, except per share		2017		2016

Interest income		Loans and leases, including fees	$	871,345		672,092	$	2,602,208		1,981,904			Loans and leases, including fees	$	898,038		863,385
		Investment securities											Investment securities
		Fully taxable		84,893		93,062		274,092		272,163			Fully taxable		95,124		98,015
		Exempt from federal taxes		623		950		2,081		3,330			Exempt from federal taxes		430		795
		Deposits at banks		12,354		3,852		33,684		10,321			Deposits at banks		12,162		10,337
		Other		300		70		905		749			Other		279		302
		Total interest income		969,515		770,026		2,912,970		2,268,467			Total interest income		1,006,033		972,834
Interest expense		Interest-checking deposits		378		360		1,192		1,020			Savings and interest-checking deposits		25,634		16,305
		Savings deposits		23,689		10,937		59,714		31,517
		Time deposits		27,886		3,643		79,075		11,073			Time deposits		18,998		24,322
		Deposits at Cayman Islands office		204		151		578		448			Deposits at Cayman Islands office		265		193
		Short-term borrowings		169		32		3,474		102			Short-term borrowings		216		2,162
		Long-term borrowings		58,849		62,076		174,814		188,764			Long-term borrowings		46,660		57,888
		Total interest expense		111,175		77,199		318,847		232,924			Total interest expense		91,773		100,870
		Net interest income		858,340		692,827		2,594,123		2,035,543			Net interest income		914,260		871,964
		Provision for credit losses		47,000		44,000		128,000		112,000			Provision for credit losses		55,000		49,000
		Net interest income after provision for credit losses		811,340		648,827		2,466,123		1,923,543			Net interest income after provision for credit losses		859,260		822,964
Other income		Mortgage banking revenues		103,747		84,035		275,193		288,238			Mortgage banking revenues		84,692		82,063
		Service charges on deposit accounts		107,935		107,259		314,212		314,860			Service charges on deposit accounts		104,176		102,405
		Trust income		118,654		113,744		350,181		356,076			Trust income		120,015		111,077
		Brokerage services income		15,914		16,902		48,190		49,224			Brokerage services income		17,384		16,004
		Trading account and foreign exchange gains		12,754		8,362		33,434		20,639			Trading account and foreign exchange gains		9,691		7,458
		Gain (loss) on bank investment securities		28,480		—		28,748		(108	)		Gain on bank investment securities		—		4
		Other revenues from operations		103,866		109,397		310,579		348,000			Other revenues from operations		110,887		101,922
		Total other income		491,350		439,699		1,360,537		1,376,929			Total other income		446,845		420,933
Other expense		Salaries and employee benefits		399,786		363,567		1,230,246		1,115,117			Salaries and employee benefits		449,862		431,785
		Equipment and net occupancy		75,263		68,470		225,165		201,792			Equipment and net occupancy		74,366		74,178
		Printing, postage and supplies		8,972		8,691		30,865		27,586			Outside data processing and software		44,301		43,015
		Amortization of core deposit and other intangible assets		9,787		4,090		33,524		16,848			FDIC assessments		28,827		25,225
		FDIC assessments		28,459		11,090		76,054		32,551			Advertising and marketing		16,110		21,454
		Other costs of operations		230,125		197,908		682,528		642,925			Printing, postage and supplies		9,708		11,986
		Total other expense		752,392		653,816		2,278,382		2,036,819			Amortization of core deposit and other intangible assets		8,420		12,319
		Income before taxes		550,298		434,710		1,548,278		1,263,653			Other costs of operations		156,258		156,133
		Income taxes		200,314		154,309		563,735		454,951			Total other expense		787,852		776,095
		Net income	$	349,984		280,401	$	984,543		808,702			Income before taxes		518,253		467,802
		Net income available to common shareholders											Income taxes		169,326		169,274
		Basic	$	326,992		257,337	$	915,670		739,627			Net income	$	348,927		298,528
		Diluted		326,998		257,346		915,686		739,656			Net income available to common shareholders
		Net income per common share											Basic	$	328,562		275,744
		Basic	$	2.10		1.94	$	5.82		5.59			Diluted		328,567		275,748
		Diluted		2.10		1.93		5.80		5.56			Net income per common share
		Cash dividends per common share	$	.70		.70	$	2.10		2.10			Basic	$	2.13		1.74
		Average common shares outstanding											Diluted		2.12		1.73
		Basic		155,493		132,630		157,336		132,347			Cash dividends per common share	$	.75		.70
		Diluted		156,026		133,376		157,843		133,089			Average common shares outstanding
													Basic		154,427		158,734
													Diluted		154,949		159,181

	Three months ended September 30						Nine months ended September 30						Three Months Ended March 31
In thousands	2016			2015			2016			2015			2017			2016

Net income	$	349,984			280,401		$	984,543			808,702		$	348,927			298,528
Other comprehensive income (loss), net of tax and reclassification adjustments:
Other comprehensive income, net of tax and reclassification adjustments:
Net unrealized gains (losses) on investment securities		(17,133	)		48,332			127,331			1,053			(1,356	)		97,194
Cash flow hedges adjustments		(23	)		(24	)		(70	)		823			(23	)		(24	)
Foreign currency translation adjustment		(229	)		(3	)		(1,847	)		(521	)		476			(53	)
Defined benefit plans liability adjustments		3,847			5,724			11,654			16,166			3,972			4,321
Total other comprehensive income (loss)		(13,538	)		54,029			137,068			17,521
Total other comprehensive income														3,069			101,438
Total comprehensive income	$	336,446			334,430		$	1,121,611			826,223		$	351,996			399,966

Nine months ended September 30

In thousands

2016

2015

Cash flows from operating activities

Net income

$
984,543

808,702

Adjustments to reconcile net income to net cash provided by operating activities

Provision for credit losses

128,000

112,000

Depreciation and amortization of premises and equipment

79,911

73,916

Amortization of capitalized servicing rights

37,979

36,730

Amortization of core deposit and other intangible assets

33,524

16,848

Provision for deferred income taxes

109,274

20,141

Asset write-downs

14,276

5,775

Net gain on sales of assets

(46,732
)

(61,969
)

Net change in accrued interest receivable, payable

(13,833
)

(5,484
)

Net change in other accrued income and expense

113,809

11,200

Net change in loans originated for sale

(285,824
)

232,974

Net change in trading account assets and liabilities

(82,837
)

(2,993
)

Net cash provided by operating activities

1,072,090

1,247,840

Cash flows from investing activities

Proceeds from sales of investment securities

Available for sale

61,947

2,579

Other

94,516

377

Proceeds from maturities of investment securities

Available for sale

1,690,665

1,343,869

Held to maturity

459,399

519,359

Purchases of investment securities

Available for sale

(1,150,523
)

(3,320,931
)

Held to maturity

(15,806
)

(22,592
)

Other

(1,514
)

(8,179
)

Net increase in loans and leases

(2,021,004
)

(2,208,660
)

Net (increase) decrease in interest-bearing deposits at banks

(3,183,286
)

1,757,601

Capital expenditures, net

(65,277
)

(42,744
)

Net decrease in loan servicing advances

121,226

461,700

Other, net

11,459

(75,449
)

Net cash used by investing activities

(3,998,198
)

(1,593,070
)
Cash flows from financing activities

Net increase (decrease) in deposits

6,195,511

(636,144
)

Net decrease in short-term borrowings

(1,886,701
)

(18,893
)

Proceeds from long-term borrowings

—

1,500,000

Payments on long-term borrowings

(427,035
)

(324,308
)

Purchases of treasury stock

(604,000
)

—

Dividends paid - common

(333,042
)

(281,149
)

Dividends paid - preferred

(58,003
)

(58,003
)

Other, net

3,540

40,074

Net cash provided by financing activities

2,890,270

221,577

Net decrease in cash and cash equivalents

(35,838
)

(123,653
)

Cash and cash equivalents at beginning of period

1,368,040

1,373,357

Cash and cash equivalents at end of period

$
1,332,202

1,249,704

Supplemental disclosure of cash flow information

Interest received during the period

$
2,923,278

2,234,476

Interest paid during the period

387,695

234,989

Income taxes paid during the period

138,375

373,016

Supplemental schedule of noncash investing and financing activities

Real estate acquired in settlement of loans

$
100,106

35,018

Securitization of residential mortgage loans allocated to

Available-for-sale investment securities

18,685

51,481

Capitalized servicing rights

193

528

		Three Months Ended March 31
In thousands		2017			2016

Cash flows from operating activities	Net income	$	348,927			298,528
	Adjustments to reconcile net income to net cash provided by operating activities
	Provision for credit losses		55,000			49,000
	Depreciation and amortization of premises and equipment		27,429			27,141
	Amortization of capitalized servicing rights		13,543			12,249
	Amortization of core deposit and other intangible assets		8,420			12,319
	Provision for deferred income taxes		36,731			50,075
	Asset write-downs		5,118			8,940
	Net gain on sales of assets		(11,647	)		(5,399	)
	Net change in accrued interest receivable, payable		(23,782	)		(16,530	)
	Net change in other accrued income and expense		(209	)		70,766
	Net change in loans originated for sale		712,954			211
	Net change in trading account assets and liabilities		113,332			(59,080	)
	Net cash provided by operating activities		1,285,816			448,220
Cash flows from investing activities	Proceeds from sales of investment securities
	Available for sale		—			518
	Other		100			18,121
	Proceeds from maturities of investment securities
	Available for sale		697,756			511,549
	Held to maturity		121,455			132,636
	Purchases of investment securities
	Available for sale		(5,143	)		(311,302	)
	Held to maturity		(539,516	)		(5,343	)
	Other		(278	)		(124	)
	Net decrease (increase) in loans and leases		797,351			(439,712	)
	Net increase in interest-bearing deposits at banks		(1,944,511	)		(1,950,831	)
	Capital expenditures, net		(21,521	)		(16,307	)
	Net decrease in loan servicing advances		56,437			37,600
	Other, net		11,863			7,920
	Net cash used by investing activities		(826,007	)		(2,015,275	)
Cash flows from financing activities	Net increase in deposits		1,550,297			2,264,623
	Net increase (decrease) in short-term borrowings		21,660			(343,838	)
	Payments on long-term borrowings		(1,401,410	)		(317,187	)
	Purchases of treasury stock		(532,073	)		(100,000	)
	Dividends paid — common		(116,566	)		(112,000	)
	Dividends paid — preferred		(17,368	)		(17,368	)
	Other, net		2,064			2,960
	Net cash provided (used) by financing activities		(493,396	)		1,377,190
	Net decrease in cash and cash equivalents		(33,587	)		(189,865	)
	Cash and cash equivalents at beginning of period		1,320,549			1,368,040
	Cash and cash equivalents at end of period	$	1,286,962			1,178,175
Supplemental disclosure of cash flow information	Interest received during the period	$	1,001,129			968,223
	Interest paid during the period		116,183			146,568
	Income taxes paid (refunded) during the period		29,272			(86,146	)
Supplemental schedule of noncash investing and financing activities	Real estate acquired in settlement of loans	$	23,607			33,737
	Securitization of residential mortgage loans allocated to
	Available-for-sale investment securities		3,684			8,452
	Capitalized servicing rights		36			92

														Accumulated																							Accumulated
														other																							Other
					Common			Additional						comprehensive														Common			Additional						Comprehensive
	Preferred		Common		stock			paid-in			Retained			income			Treasury						Preferred		Common			Stock			Paid-in			Retained			Income			Treasury
In thousands, except per share	stock		stock		issuable			capital			earnings			(loss), net			stock			Total			Stock		Stock			Issuable			Capital			Earnings			(Loss), Net			Stock			Total
2015
Balance - January 1, 2015	$	1,231,500		66,157		2,608			3,409,506			7,807,119			(180,994	)		—			12,335,896
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		—		—		—			—			808,702			17,521			—			826,223			—		—			—			—			298,528			101,438			—			399,966
Preferred stock cash dividends		—		—		—			—			(60,953	)		—			—			(60,953	)		—		—			—			—			(20,318	)		—			—			(20,318	)
Exercise of 2,315 Series A stock warrants into 904 shares of common stock		—		1		—			(1	)		—			—			—			—
Stock-based compensation plans:
Compensation expense, net		—		143		—			31,416			—			—			—			31,559
Exercises of stock options, net		—		285		—			57,133			—			—			—			57,418
Stock purchase plan		—		45		—			10,301			—			—			—			10,346
Directors’ stock plan		—		4		—			1,346			—			—			—			1,350
Deferred compensation plans, net, including dividend equivalents		—		2		(267	)		290			(76	)		—			—			(51	)
Other		—		—		—			1,191			—			—			—			1,191
Common stock cash dividends - $2.10 per share		—		—		—			—			(281,045	)		—			—			(281,045	)
Balance - September 30, 2015	$	1,231,500		66,637		2,341			3,511,182			8,273,747			(163,473	)		—			12,921,934
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		—		—		—			—			984,543			137,068			—			1,121,611
Preferred stock cash dividends		—		—		—			—			(60,953	)		—			—			(60,953	)
Exercise of 5,320 Series A stock warrants into 1,983 shares of common stock		—		—		—			(223	)		—			—			223			—
Purchases of treasury stock		—		—		—			—			—			—			(604,000	)		(604,000	)		—		—			—			—			—			—			(100,000	)		(100,000	)
Stock-based compensation plans:
Compensation expense, net		—		171		—			7,315			—			—			10,890			18,376			—		178			—			(978	)		—			—			745			(55	)
Exercises of stock options, net		—		18		—			(183	)		—			—			11,576			11,411			—		18			—			2,335			—			—			265			2,618
Stock purchase plan		—		—		—			275			—			—			10,319			10,594			—		—			—			275			—			—			10,319			10,594
Directors’ stock plan		—		2		—			526			—			—			1,047			1,575			—		2			—			471			—			—			—			473
Deferred compensation plans, net, including dividend equivalents		—		2		(140	)		232			(70	)		—			4			28			—		2			(184	)		234			(23	)		—			—			29
Other		—		—		—			1,102			—			—			—			1,102			—		—			—			394			—			—			—			394
Common stock cash dividends - $2.10 per share		—		—		—			—			(332,057	)		—			—			(332,057	)
Balance - September 30, 2016	$	1,231,500		79,975		2,224			6,689,812			9,021,965			(114,559	)		(569,941	)		16,340,976
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
2017
Balance — January 1, 2017																							$	1,231,500		79,973			2,145			6,676,948			9,222,488			(294,636	)		(431,796	)		16,486,622
Total comprehensive income																								—		—			—			—			348,927			3,069			—			351,996
Preferred stock cash dividends																								—		—			—			—			(18,237	)		—			—			(18,237	)
Exercise of 87,515 Series A stock warrants into 47,954 shares of common stock																								—		—			—			(5,934	)		—			—			5,934			—
Purchases of treasury stock																								—		—			—			—			—			—			(532,073	)		(532,073	)
Stock-based compensation plans:
Compensation expense, net																								—		(60	)		—			(67,016	)		—			—			55,667			(11,409	)
Exercises of stock options, net																								—		—			—			(3,127	)		—			—			43,789			40,662
Stock purchase plan																								—		—			—			2,563			—			—			8,268			10,831
Directors’ stock plan																								—		—			—			126			—			—			347			473
Deferred compensation plans, net, including dividend equivalents																								—		—			(224	)		(205	)		(21	)		—			396			(54	)
Common stock cash dividends — $.75 per share																								—		—			—			—			(115,707	)		—			—			(115,707	)
Balance — March 31, 2017																							$	1,231,500		79,913			1,921			6,603,355			9,437,450			(291,567	)		(849,468	)		16,213,104

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 Form 10-K for the year ended December 31, ~~2015~~2016 (“~~2015~~2016 Annual Report”)., except that effective January 2017 the Company adopted amended accounting guidance that is discussed in note 16 herein. The most significant of those changes related to the accounting for excess tax benefits or deficiencies associated with share-based compensation whereby beginning in 2017 those amounts are recognized in income tax expense. Previously, tax effects resulting from changes in M&T’s share price subsequent to the grant date were recorded through shareholders’ equity. The adoption of this new accounting guidance resulted in a reduction of income tax expense for the quarter ended March 31, 2017 of $18 million, or $.12 of diluted earnings per common share. In the opinion of management, all adjustments necessary for a fair presentation have been made and were all of a normal recurring nature.

In connection with the acquisition of Hudson City Bancorp, Inc. (“Hudson City”), headquartered in Paramus, New Jersey. On that date, Hudson City Savings Bank, the banking subsidiary of Hudson City, was merged into M&T 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 Hudson City transaction have been included in the Company’s financial results since on November 1, 2015. After application of the election, allocation and proration procedures contained in the merger agreement with Hudson City, M&T paid $2.1 billion in cash and issued 25,953,950 shares of 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 the estimated fair value of Hudson City 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 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 identifiable assets acquired and liabilities assumed as of the acquisition date were as follows:

~~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 three-month and nine-month periods ended September 30, 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 $23 million during the three months ended September 30, 2015 and $97 million during the nine months ended September 30, 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 does not expect additional merger-related expenses in 2016.~~

A summary of merger-related expenses included in the consolidated statement of income for the three-month period ended March 31, 2016 follows:

	Nine months ended
	September 30, 2016		(In thousands)
	(in thousands)
Salaries and employee benefits	$	5,334	$	5,274
Equipment and net occupancy		1,278		939
Outside data processing and software				715
Advertising and marketing				4,195
Printing, postage and supplies		1,482		937
Other cost of operations		27,661		11,102
Total	$	35,755	$	23,162

There were no merger-related expenses during the three-month period ended ~~September 30, 2016 or during the three-month and nine-month periods ended September 30, 2015.~~March 31, 2017.

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)
September 30, 2016
March 31, 2017
Investment securities available for sale:
U.S. Treasury and federal agencies	$	724,540		1,864		3	$	726,401	$	1,907,573		181		9,504	$	1,898,250
Obligations of states and political subdivisions		4,912		108		5		5,015		3,051		77		4		3,124
Mortgage-backed securities:
Government issued or guaranteed		10,617,605		314,088		1,031		10,930,662		10,525,601		87,830		109,117		10,504,314
Privately issued		52		—		1		51		42		—		1		41
Other debt securities		134,393		1,802		17,969		118,226		133,778		1,300		15,311		119,767
Equity securities		70,112		12,363		263		82,212		70,199		35,873		568		105,504
		11,551,614		330,225		19,272		11,862,567		12,640,244		125,261		134,505		12,631,000
Investment securities held to maturity:
Obligations of states and political subdivisions		72,258		458		220		72,496		46,836		233		156		46,913
Mortgage-backed securities:
Government issued or guaranteed		2,168,460		83,630		215		2,251,875		2,670,966		34,777		10,577		2,695,166
Privately issued		163,489		1,616		39,122		125,983		153,036		1,191		35,702		118,525
Other debt securities		5,743		—		—		5,743		5,281		—		—		5,281
		2,409,950		85,704		39,557		2,456,097		2,876,119		36,201		46,435		2,865,885
Other securities		461,057		—		—		461,057		461,296		—		—		461,296
Total	$	14,422,621		415,929		58,829	$	14,779,721	$	15,977,659		161,462		180,940	$	15,958,181

December 31, 2015
December 31, 2016
Investment securities available for sale:
U.S. Treasury and federal agencies	$	299,890	294	187	$	299,997	$	1,912,110	386	9,952	$	1,902,544
Obligations of states and political subdivisions		5,924	146	42		6,028		3,570	77	6		3,641
Mortgage-backed securities:
Government issued or guaranteed		11,592,959	142,370	48,701		11,686,628		10,980,507	88,343	113,989		10,954,861
Privately issued		74	2	2		74		45	—	1		44
Collateralized debt obligations		28,438	20,143	1,188		47,393
Other debt securities		137,556	1,514	20,190		118,880		134,105	1,407	16,996		118,516
Equity securities		73,795	10,230	354		83,671		307,964	45,073	571		352,466
		12,138,636	174,699	70,664		12,242,671		13,338,301	135,286	141,515		13,332,072
Investment securities held to maturity:
Obligations of states and political subdivisions		118,431	1,003	421		119,013		60,858	267	224		60,901
Mortgage-backed securities:
Government issued or guaranteed		2,553,612	50,936	7,817		2,596,731		2,233,173	37,498	7,374		2,263,297
Privately issued		181,091	2,104	41,367		141,828		157,704	897	37,120		121,481
Other debt securities		6,575	—	—		6,575		5,543	—	—		5,543
		2,859,709	54,043	49,605		2,864,147		2,457,278	38,662	44,718		2,451,222
Other securities		554,059	—	—		554,059		461,118	—	—		461,118
Total	$	15,552,404	228,742	120,269	$	15,660,877	$	16,256,697	173,948	186,233	$	16,244,412

During the three months ended September 30, 2016, the Company sold substantially all of its collateralized debt obligations held in the available-for-sale investment securities portfolio for a gain of $28 million.

There were no ~~other~~ significant gross realized gains or losses from sales of investment securities for the ~~three-month~~quarters ended March 31, 2017 and ~~nine-month periods ended September 30, 2016 and 2015.~~2016.

At ~~September 30, 2016,~~March 31, 2017, 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	$	105,225		105,679	$	156,211		156,378
Due after one year through five years		625,911		627,585		1,756,628		1,747,311
Due after five years through ten years		3,968		4,538		56,297		54,094
Due after ten years		128,741		111,840		75,266		63,358
		863,845		849,642		2,044,402		2,021,141
Mortgage-backed securities available for sale		10,617,657		10,930,713		10,525,643		10,504,355
	$	11,481,502		11,780,355	$	12,570,045		12,525,496
Debt securities held to maturity:
Due in one year or less	$	25,141		25,301	$	21,613		21,711
Due after one year through five years		43,474		43,474		23,326		23,261
Due after five years through ten years		3,643		3,721		1,897		1,941
Due after ten years		5,743		5,743		5,281		5,281
		78,001		78,239		52,117		52,194
Mortgage-backed securities held to maturity		2,331,949		2,377,858		2,824,002		2,813,691
	$	2,409,950		2,456,097	$	2,876,119		2,865,885

A summary of investment securities that as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 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)
September 30, 2016
March 31, 2017
Investment securities available for sale:
U.S. Treasury and federal agencies	$	3,355		(3	)		—		—		$	1,745,277		(9,494	)		2,044		(10	)
Obligations of states and political subdivisions		—		—			472		(5	)		—		—			472		(4	)
Mortgage-backed securities:
Government issued or guaranteed		224,128		(904	)		7,294		(127	)		5,549,268		(108,380	)		93,425		(737	)
Privately issued		—		—			34		(1	)		—		—			25		(1	)
Other debt securities		—		—			106,876		(17,969	)		19,052		(100	)		75,763		(15,211	)
Equity securities		767		(101	)		138		(162	)		17,869		(422	)		154		(146	)
		228,250		(1,008	)		114,814		(18,264	)		7,331,466		(118,396	)		171,883		(16,109	)

Investment securities held to maturity:
Obligations of states and political subdivisions		19,557		(113	)		11,050		(107	)		13,205		(87	)		9,909		(69	)
Mortgage-backed securities:
Government issued or guaranteed		74,629		(46	)		19,256		(169	)		896,556		(10,013	)		17,472		(564	)
Privately issued		17,542		(2,371	)		91,127		(36,751	)		7,161		(29	)		74,137		(35,673	)
		111,728		(2,530	)		121,433		(37,027	)		916,922		(10,129	)		101,518		(36,306	)
Total	$	339,978		(3,538	)		236,247		(55,291	)	$	8,248,388		(128,525	)		273,401		(52,415	)

December 31, 2015
December 31, 2016
Investment securities available for sale:
U.S. Treasury and federal agencies	$	147,508		(187	)		—		—		$	1,710,241		(9,950	)		2,295		(2	)
Obligations of states and political subdivisions		865		(2	)		1,335		(40	)		—		—			593		(6	)
Mortgage-backed securities:
Government issued or guaranteed		4,061,899		(48,534	)		7,216		(167	)		6,730,829		(113,374	)		81,003		(615	)
Privately issued		—		—			43		(2	)		—		—			27		(1	)
Collateralized debt obligations		5,711		(335	)		2,063		(853	)
Other debt securities		12,935		(462	)		93,344		(19,728	)		100		(1	)		85,400		(16,995	)
Equity securities		18,073		(207	)		153		(147	)		17,776		(422	)		151		(149	)
		4,246,991		(49,727	)		104,154		(20,937	)		8,458,946		(123,747	)		169,469		(17,768	)

Investment securities held to maturity:
Obligations of states and political subdivisions	42,913		(335)			5,853		(86)				17,988		(126	)		11,891		(98	)
Mortgage-backed securities:
Government issued or guaranteed		459,983		(1,801	)		228,867		(6,016	)		618,832		(6,842	)		17,481		(532	)
Privately issued		—		—			112,155		(41,367	)		17,911		(1,222	)		57,016		(35,898	)
		502,896		(2,136	)		346,875		(47,469	)		654,731		(8,190	)		86,388		(36,528	)
Total	$	4,749,887		(51,863	)		451,029		(68,406	)	$	9,113,677		(131,937	)		255,857		(54,296	)

The Company owned ~~504~~1,075 individual investment securities with aggregate gross unrealized losses of ~~$59~~$181 million at ~~September 30, 2016.~~March 31, 2017. Based on a review of each of the securities in the investment securities portfolio at ~~September 30, 2016,~~March 31, 2017, the Company concluded that it expected to recover the amortized cost basis of its investment. As of ~~September 30, 2016,~~March 31, 2017, 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 ~~September 30, 2016,~~March 31, 2017, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $461 million of cost method investment securities.

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

Purchased impaired loans included in the table above totaled $617 million at September 30, 2016 and $768 million at December 31, 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 at a discount for the three months and nine months ended September 30, 2016 and 2015 follows:

A summary of current, past due and nonaccrual loans as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 follows:

	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		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
September 30, 2016	(in thousands)
															(In thousands)
March 31, 2017
Commercial, financial, leasing, etc.	$	21,601,646		70,597		10,831		1,893		795		231,401	$	21,917,163	$	21,986,926		38,046		6,695		387		1,825		261,497	$	22,295,376
Real estate:
Commercial		24,283,146		116,651		15,926		13,292		32,775		157,527		24,619,317		25,088,525		185,331		17,322		13,618		26,391		183,113		25,514,300
Residential builder and developer		1,814,299		16,993		4,476		3,262		18,096		20,118		1,877,244		1,714,177		15,185		—		1,972		12,798		13,573		1,757,705
Other commercial construction		5,525,684		20,238		—		198		15,412		20,669		5,582,201		5,747,834		23,973		—		—		13,879		13,963		5,799,649
Residential		18,438,396		494,767		281,023		12,510		401,551		213,896		19,842,143		17,004,912		431,427		251,308		11,116		362,283		237,685		18,298,731
Residential-limited documentation		3,400,578		105,621		—		—		146,722		89,356		3,742,277
Residential — limited documentation																3,086,264		91,177		—		—		135,759		112,560		3,425,760
Consumer:
Home equity lines and loans		5,586,704		40,406		—		13,014		1,640		79,623		5,721,387		5,398,590		32,939		—		12,238		—		79,962		5,523,729
Automobile		2,805,779		46,347		—		4		—		14,453		2,866,583		3,049,712		48,751		—		—		—		16,109		3,114,572
Other		3,410,790		31,033		5,026		21,009		—		10,319		3,478,177		3,519,996		25,876		4,694		24,401		—		8,213		3,583,180
Total	$	86,867,022		942,653		317,282		65,182		616,991		837,362	$	89,646,492	$	86,596,936		892,705		280,019		63,732		552,935		926,675	$	89,313,002

December 31, 2015
December 31, 2016
Commercial, financial, leasing, etc.	$	20,122,648		52,868		2,310		693		1,902		241,917	$	20,422,338	$	22,287,857		53,503		6,195		417		641		261,434	$	22,610,047
Real estate:
Commercial (d)		23,111,673		172,439		12,963		8,790		46,790		179,606		23,532,261
Commercial																25,076,684		183,531		7,054		12,870		31,404		176,201		25,487,744
Residential builder and developer		1,507,856		7,969		5,760		6,925		28,734		28,429		1,585,673		1,884,989		4,667		5		1,952		14,006		16,707		1,922,326
Other commercial construction (d)		3,962,620		65,932		7,936		2,001		24,525		16,363		4,079,377
Other commercial construction																5,985,118		77,701		922		198		14,274		18,111		6,096,324
Residential		20,507,551		560,312		284,451		16,079		488,599		153,281		22,010,273		17,631,377		485,468		281,298		11,537		378,549		229,242		19,017,471
Residential-limited documentation		3,885,073		137,289		—		—		175,518		61,950		4,259,830
Residential — limited documentation																3,239,344		88,366		—		—		139,158		106,573		3,573,441
Consumer:
Home equity lines and loans		5,805,222		45,604		—		15,222		2,261		84,467		5,952,776		5,502,091		44,565		—		12,678		—		81,815		5,641,149
Automobile		2,446,473		56,181		—		6		—		16,597		2,519,257		2,869,232		56,158		—		1		—		18,674		2,944,065
Other		3,051,435		36,702		4,021		18,757		—		16,799		3,127,714		3,491,629		31,286		5,185		21,491		—		11,258		3,560,849
Total	$	84,400,551		1,135,296		317,441		68,473		768,329		799,409	$	87,489,499	$	87,968,321		1,025,245		300,659		61,144		578,032		920,015	$	90,853,416

One-to-four family residential mortgage loans held for sale were ~~$415~~$297 million and ~~$353~~$414 million at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. Commercial ~~mortgage~~real estate loans held for sale were ~~$290~~$75 million at ~~September 30, 2016~~March 31, 2017 and ~~$39~~$643 million at December 31, ~~2015.~~2016.

Purchased impaired loans included in the table above totaled $553 million at March 31, 2017 and $578 million at December 31, 2016, representing less than 1% of the Company’s assets as of each date. A summary of changes in the accretable yield for loans acquired at a discount for the three-month periods ended March 31, 2017 and 2016 follows:

Changes in the allowance for credit losses for the three months ended ~~September 30, 2016~~March 31, 2017 were as follows:

																		Commercial, Financial,			Real Estate
	Commercial, Financial,			Real Estate														Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total			(In thousands)
	(in thousands)
Beginning balance	$	316,079			349,674			69,660			157,361			77,722	$	970,496		$	330,833			362,719			61,127			156,288			78,030	$	988,997
Provision for credit losses		26,222			9,963			(6,232	)		16,539			508		47,000			28,823			1,262			5,637			18,832			446		55,000
Net charge-offs
Charge-offs		(21,075	)		(1,564	)		(6,754	)		(29,882	)		—		(59,275	)		(16,357	)		(5,445	)		(6,259	)		(34,503	)		—		(62,564	)
Recoveries		6,958			1,704			1,919			7,319			—		17,900			4,461			1,474			1,507			12,555			—		19,997
Net charge-offs		(14,117	)		140			(4,835	)		(22,563	)		—		(41,375	)		(11,896	)		(3,971	)		(4,752	)		(21,948	)		—		(42,567	)
Ending balance	$	328,184			359,777			58,593			151,337			78,230	$	976,121		$	347,760			360,010			62,012			153,172			78,476	$	1,001,430

Changes in the allowance for credit losses for the three months ended ~~September 30, 2015 were as follows:~~

~~Changes in the allowance for credit losses for the nine months ended September 30,~~March 31, 2016 were as follows:

																		Commercial, Financial,			Real Estate
	Commercial, Financial,			Real Estate														Leasing, etc.			Commercial			Residential			Consumer			Unallocated			Total
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total			(In thousands)
	(in thousands)
Beginning balance	$	300,404			326,831			72,238			178,320			78,199	$	955,992		$	300,404			326,831			72,238			178,320			78,199		$	955,992
Provision for credit losses		39,667			29,799			(610	)		59,113			31		128,000			24,364			4,013			1,218			19,893			(488	)		49,000
Net charge-offs
Charge-offs		(34,711	)		(3,569	)		(18,816	)		(107,761	)		—		(164,857	)		(6,149	)		(1,272	)		(6,972	)		(44,319	)		—			(58,712	)
Recoveries		22,824			6,716			5,781			21,665			—		56,986			5,247			2,413			1,887			6,925			—			16,472
Net charge-offs		(11,887	)		3,147			(13,035	)		(86,096	)		—		(107,871	)
Net (charge-offs) recoveries																			(902	)		1,141			(5,085	)		(37,394	)		—			(42,240	)
Ending balance	$	328,184			359,777			58,593			151,337			78,230	$	976,121		$	323,866			331,985			68,371			160,819			77,711		$	962,752

~~Changes in the allowance for credit losses for the nine months ended September 30, 2015 were as follows:~~

Despite the allocation in the preceding table, 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 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~~credit 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 loans 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 ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 and for the three-month ~~and nine-month~~ periods ended ~~September 30, 2016~~March 31, 2017 and ~~2015.~~2016.

	September 30, 2016						December 31, 2015						March 31, 2017						December 31, 2016
	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.	$	192,805		212,009		55,020		179,037		195,821		44,752	$	177,001		196,338		64,056		168,072		184,432		48,480
Real estate:
Commercial		75,749		85,137		14,939		85,974		95,855		18,764		64,746		80,482		10,541		71,862		86,666		11,620
Residential builder and developer		8,142		8,923		714		3,316		5,101		196		6,870		7,031		403		7,396		8,361		506
Other commercial construction		2,729		3,092		1,103		3,548		3,843		348		2,203		2,673		398		2,475		2,731		448
Residential		79,036		97,466		3,144		79,558		96,751		4,727		91,077		111,477		3,738		86,680		105,944		3,457
Residential-limited documentation		83,296		97,984		6,200		90,356		104,251		8,000
Residential — limited documentation														81,922		97,658		5,000		82,547		97,718		6,000
Consumer:
Home equity lines and loans		42,862		46,844		7,697		25,220		26,195		3,777		46,132		50,262		8,389		44,693		48,965		8,027
Automobile		18,033		19,218		3,737		22,525		22,525		4,709		16,087		16,602		3,508		16,982		18,272		3,740
Other		4,122		5,122		864		17,620		17,620		4,820		3,522		3,670		725		3,791		5,296		776
		506,774		575,795		93,418		507,154		567,962		90,093		489,560		566,193		96,758		484,498		558,385		83,054
With no related allowance recorded:
Commercial, financial, leasing, etc.		72,429		80,757		—		93,190		110,735		—		92,546		127,252		—		100,805		124,786		—
Real estate:
Commercial		90,425		104,508		—		101,340		116,230		—		126,437		139,103		—		113,276		121,846		—
Residential builder and developer		17,346		23,617		—		27,651		47,246		—		11,748		18,863		—		14,368		21,124		—
Other commercial construction		18,265		37,432		—		13,221		31,477		—		12,029		31,072		—		15,933		35,281		—
Residential		18,079		26,127		—		19,621		30,940		—		14,946		22,209		—		16,823		24,161		—
Residential-limited documentation		17,611		27,936		—		18,414		31,113		—
Residential — limited documentation														14,466		22,941		—		15,429		24,590		—
		234,155		300,377		—		273,437		367,741		—		272,172		361,440		—		276,634		351,788		—
Total:
Commercial, financial, leasing, etc.		265,234		292,766		55,020		272,227		306,556		44,752		269,547		323,590		64,056		268,877		309,218		48,480
Real estate:
Commercial		166,174		189,645		14,939		187,314		212,085		18,764		191,183		219,585		10,541		185,138		208,512		11,620
Residential builder and developer		25,488		32,540		714		30,967		52,347		196		18,618		25,894		403		21,764		29,485		506
Other commercial construction		20,994		40,524		1,103		16,769		35,320		348		14,232		33,745		398		18,408		38,012		448
Residential		97,115		123,593		3,144		99,179		127,691		4,727		106,023		133,686		3,738		103,503		130,105		3,457
Residential-limited documentation		100,907		125,920		6,200		108,770		135,364		8,000
Residential — limited documentation														96,388		120,599		5,000		97,976		122,308		6,000
Consumer:
Home equity lines and loans		42,862		46,844		7,697		25,220		26,195		3,777		46,132		50,262		8,389		44,693		48,965		8,027
Automobile		18,033		19,218		3,737		22,525		22,525		4,709		16,087		16,602		3,508		16,982		18,272		3,740
Other		4,122		5,122		864		17,620		17,620		4,820		3,522		3,670		725		3,791		5,296		776
Total	$	740,929		876,172		93,418		780,591		935,703		90,093	$	761,732		927,633		96,758		761,132		910,173		83,054

													Three Months Ended March 31, 2017						Three Months Ended March 31, 2016
	Nine months ended September 30, 2016						Nine months ended September 30, 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.	$	283,783		7,055		7,055		226,243		2,123		2,123	$	271,825		478		478		296,584		611		611
Real estate:
Commercial		177,579		3,891		3,891		161,834		4,433		4,433		182,857		975		975		182,454		1,474		1,474
Residential builder and developer		30,832		488		488		64,165		275		275		20,051		429		429		33,750		42		42
Other commercial construction		19,774		563		563		22,130		2,166		2,166		16,328		847		847		16,868		38		38
Residential		97,229		4,778		2,591		101,997		4,639		3,011		103,875		1,636		774		96,788		1,372		882
Residential-limited documentation		104,382		4,580		1,648		120,710		4,799		1,962
Residential — limited documentation														97,121		1,500		384		107,473		1,472		630
Consumer:
Home equity lines and loans		33,998		937		295		20,619		656		179		45,542		399		100		26,019		246		85
Automobile		20,358		964		83		26,521		1,257		136		16,504		275		19		21,962		339		36
Other		10,987		371		74		19,053		547		86		3,598		72		3		17,717		178		27
Total	$	778,922		23,627		16,688		763,272		20,895		14,371	$	757,701		6,611		4,009		799,615		5,772		3,825

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~~credit 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,				Residential		Other		Commercial,				Residential		Other
	Financial,				Builder and		Commercial		Financial,				Builder and		Commercial
	Leasing, etc.		Commercial		Developer		Construction		Leasing, etc.		Commercial		Developer		Construction
	(in thousands)								(In thousands)
September 30, 2016
March 31, 2017
Pass	$	20,825,301		23,540,787		1,699,263		5,405,719	$	21,036,982		24,589,201		1,660,537		5,609,985
Criticized accrual		860,461		921,003		157,863		155,813		996,897		741,986		83,595		175,701
Criticized nonaccrual		231,401		157,527		20,118		20,669		261,497		183,113		13,573		13,963
Total	$	21,917,163		24,619,317		1,877,244		5,582,201	$	22,295,376		25,514,300		1,757,705		5,799,649
December 31, 2015
December 31, 2016
Pass	$	19,442,183		22,697,398		1,497,465		3,834,137	$	21,398,581		24,570,269		1,789,071		5,912,351
Criticized accrual		738,238		655,257		59,779		228,877		950,032		741,274		116,548		165,862
Criticized nonaccrual		241,917		179,606		28,429		16,363		261,434		176,201		16,707		18,111
Total	$	20,422,338		23,532,261		1,585,673		4,079,377	$	22,610,047		25,487,744		1,922,326		6,096,324

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.~~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. 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 $47~~totaled $43 million and ~~$33~~$30 million, respectively, at ~~September 30, 2016~~March 31, 2017 and ~~$55~~$44 million and ~~$21~~$32 million, respectively, at December 31, ~~2015.~~2016. 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 $20~~were $18 million and ~~$38~~$39 million, respectively, at ~~September 30, 2016~~March 31, 2017 and ~~$20~~$16 million and ~~$28~~$39 million, respectively, at December 31, ~~2015.~~2016.

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 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,		Real Estate								Commercial, Financial,		Real Estate
	Leasing, etc.		Commercial		Residential		Consumer		Total		Leasing, etc.		Commercial		Residential		Consumer		Total
	(in thousands)										(In thousands)
September 30, 2016
March 31, 2017
Individually evaluated for impairment	$	55,020		16,608		9,344		12,298	$	93,270	$	64,056		11,342		8,738		12,622	$	96,758
Collectively evaluated for impairment		273,164		340,737		48,500		138,193		800,594		283,704		346,795		49,902		140,550		820,951
Purchased impaired		—		2,432		749		846		4,027		—		1,873		3,372		—		5,245
Allocated	$	328,184		359,777		58,593		151,337		897,891	$	347,760		360,010		62,012		153,172		922,954
Unallocated										78,230										78,476
Total									$	976,121									$	1,001,430
December 31, 2015
December 31, 2016
Individually evaluated for impairment	$	44,752		19,175		12,727		13,306	$	89,960	$	48,480		12,500		9,457		12,543	$	82,980
Collectively evaluated for impairment		255,615		307,000		57,624		163,511		783,750		282,353		348,301		47,993		143,745		822,392
Purchased impaired		37		656		1,887		1,503		4,083		—		1,918		3,677		—		5,595
Allocated	$	300,404		326,831		72,238		178,320		877,793	$	330,833		362,719		61,127		156,288		910,967
Unallocated										78,199										78,030
Total									$	955,992									$	988,997

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

	Commercial, Financial,		Real Estate								Commercial, Financial,		Real Estate
	Leasing, etc.		Commercial		Residential		Consumer		Total		Leasing, etc.		Commercial		Residential		Consumer		Total
	(in thousands)										(In thousands)
September 30, 2016
March 31, 2017
Individually evaluated for impairment	$	265,234		211,730		198,022		65,017	$	740,003	$	269,547		224,033		202,411		65,741	$	761,732
Collectively evaluated for impairment		21,651,134		31,800,749		22,838,125		11,999,490		88,289,498		22,024,004		32,794,553		21,024,038		12,155,740		87,998,335
Purchased impaired		795		66,283		548,273		1,640		616,991		1,825		53,068		498,042		—		552,935
Total	$	21,917,163		32,078,762		23,584,420		12,066,147	$	89,646,492	$	22,295,376		33,071,654		21,724,491		12,221,481	$	89,313,002
December 31, 2015
December 31, 2016
Individually evaluated for impairment	$	272,227		234,132		207,949		65,365	$	779,673	$	268,877		224,630		201,479		65,466	$	760,452
Collectively evaluated for impairment		20,148,209		28,863,130		25,398,037		11,532,121		85,941,497		22,340,529		33,222,080		21,871,726		12,080,597		89,514,932
Purchased impaired		1,902		100,049		664,117		2,261		768,329		641		59,684		517,707		—		578,032
Total	$	20,422,338		29,197,311		26,270,103		11,599,747	$	87,489,499	$	22,610,047		33,506,394		22,590,912		12,146,063	$	90,853,416

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~~table that ~~follow summarize~~follows summarizes the Company’s loan modification activities that were considered troubled debt restructurings for the three months ended ~~September 30, 2016~~March 31, 2017 and ~~2015:~~2016:

Recorded investment

Financial effects of
modification

Three months ended September 30, 2016

Number

Pre-
modification

Post-
modification

Recorded
investment (a)

Interest
(b)

(dollars in thousands)

Commercial, financial, leasing, etc.

Principal deferral

30

$
41,652

$
40,183

$
(1,469
)

$
—

Combination of concession types

13

27,834

19,802

(8,032
)

(6
)
Real estate:

Commercial

Principal deferral

14

12,302

11,644

(658
)

—

Combination of concession types

4

2,623

2,614

(9
)

(172
)
Residential

Principal deferral

21

4,489

4,714

225

—

Combination of concession types

9

1,149

1,214

65

(120
)
Residential-limited documentation

Principal deferral

3

435

470

35

—

Combination of concession types

3

392

493

101

(123
)
Consumer:

Home equity lines and loans

Principal deferral

4

251

251

—

—

Combination of concession types

22

2,301

2,301

—

(178
)
Automobile

Principal deferral

10

186

186

—

—

Other

Principal deferral

1

26

26

—

—

Total

134

$
93,640

$
83,898

$
(9,742
)

$
(599
)

					Post-modification (a)
	Number		Pre- modification recorded investment		Principal Deferral		Other		Combination of Concession Types		Total
Three Months Ended March 31, 2017	(Dollars in thousands)

Commercial, financial, leasing, etc.	50		$	11,921	$	4,389	$	806	$	2,728	$	7,923
Real estate:
Commercial	20			6,702		2,991		—		3,606		6,597
Residential builder and developer	3			12,291		—		—		10,879		10,879
Other commercial construction	1			102		102		—		—		102
Residential	41			9,380		5,593		—		4,355		9,948
Residential — limited documentation	6			1,378		-		—		1,525		1,525
Consumer:
Home equity lines and loans	25			2,502		163		491		1,848		2,502
Automobile	20			390		383		—		7		390
Other	2			26		26		—		—		26
Total		168	$	44,692	$	13,647	$	1,297	$	24,948	$	39,892

Three Months Ended March 31, 2016

Commercial, financial, leasing, etc.		31	$	17,728	$	12,721	$	—	$	5,952	$	18,673
Real estate:
Commercial		21		7,416		3,448		—		3,924		7,372
Residential		27		4,302		2,191		—		2,369		4,560
Residential — limited documentation		6		1,437		138		—		1,379		1,517
Consumer:
Home equity lines and loans		26		2,831		335		—		2,496		2,831
Automobile		72		644		521		38		85		644
Other		36		546		374		25		147		546
Total		219	$	34,904	$	19,728	$	63	$	16,352	$	36,143

Recorded investment

Financial effects of
modification

Three months ended September 30, 2015

Number

Pre-
modification

Post-
modification

Recorded
investment (a)

Interest
(b)

(dollars in thousands)

Commercial, financial, leasing, etc.

Principal deferral

36

$
7,893

$
7,419

$
(474
)

$
—

Combination of concession types

1

31

31

—

(6
)
Real estate:

Commercial

Principal deferral

15

4,230

4,208

(22
)

—

Combination of concession types

1

1,156

1,169

13

(54
)
Other commercial construction

Principal deferral

3

296

390

94

—

Residential

Principal deferral

31

3,540

3,743

203

—

Other

1

267

267

—

—

Combination of concession types

10

1,296

1,380

84

(178
)
Residential-limited documentation

Principal deferral

1

265

276

11

—

Combination of concession types

4

605

662

57

(91
)
Consumer:

Home equity lines and loans

Principal deferral

4

727

727

—

—

Combination of concession types

22

2,003

2,003

—

(199
)
Automobile

Principal deferral

35

316

316

—

—

Other

15

93

93

—

—

Combination of concession types

25

471

471

—

(17
)
Other

Principal deferral

24

352

352

—

—

Other

5

33

33

—

—

Combination of concession types

12

117

117

—

(12
)
Total

245

$
23,691

$
23,657

$
(34
)

$
(557
)

~~The tables below summarize the Company’s loan modification activities that were considered troubled debt restructurings for the nine months ended September 30, 2016 and 2015:~~

Recorded investment

Financial effects of
modification

Nine months ended September 30, 2016

Number

Pre-
modification

Post-
modification

Recorded
investment (a)

Interest
(b)

(dollars in thousands)

Commercial, financial, leasing, etc.

Principal deferral

87

$
98,956

$
98,561

$
(395
)

$
—

Combination of concession types

25

49,248

39,971

(9,277
)

(6
)
Real estate:

Commercial

Principal deferral

40

18,511

17,802

(709
)

—

Interest rate reduction

1

129

129

—

(25
)
Other

1

4,723

4,447

(276
)

—

Combination of concession types

13

13,621

13,546

(75
)

(238
)
Residential builder and developer

Principal deferral

3

23,905

22,958

(947
)

—

Other commercial construction

Principal deferral

1

250

250

—

—

Combination of concession types

1

124

124

—

—

Residential

Principal deferral

46

7,433

7,945

512

—

Combination of concession types

27

4,513

4,705

192

(120
)
Residential-limited documentation

Principal deferral

6

711

803

92

—

Combination of concession types

8

1,704

1,872

168

(462
)
Consumer:

Home equity lines and loans

Principal deferral

8

655

655

—

—

Combination of concession types

76

8,534

8,534

—

(741
)
Automobile

Principal deferral

102

865

865

—

—

Other

38

55

55

—

—

Combination of concession types

8

85

85

—

(3
)
Other

Principal deferral

56

951

951

—

—

Other

5

45

45

—

—

Combination of concession types

17

196

196

—

(32
)
Total

569

$
235,214

$
224,499

$
(10,715
)

$
(1,627
)

Recorded investment

Financial effects of
modification

Nine months ended September 30, 2015

Number

Pre-
modification

Post-
modification

Recorded
investment (a)

Interest
(b)

(dollars in thousands)

Commercial, financial, leasing, etc.

Principal deferral

87

$
25,483

$
24,331

$
(1,152
)

$
—

Interest rate reduction

1

99

99

—

(19
)
Other

2

8,991

8,883

(108
)

—

Combination of concession types

6

25,075

24,884

(191
)

(245
)
Real estate:

Commercial

Principal deferral

37

47,005

45,569

(1,436
)

—

Combination of concession types

6

3,238

3,242

4

(159
)
Residential builder and developer

Principal deferral

2

10,650

10,598

(52
)

—

Other commercial construction

Principal deferral

3

296

390

94

—

Residential

Principal deferral

50

4,954

5,239

285

—

Other

1

267

267

—

—

Combination of concession types

22

2,551

2,795

244

(356
)
Residential-limited documentation

Principal deferral

2

426

437

11

—

Combination of concession types

7

1,239

1,298

59

(121
)
Consumer:

Home equity lines and loans

Principal deferral

6

1,946

1,946

—

—

Combination of concession types

41

3,555

3,555

—

(424
)
Automobile

Principal deferral

133

1,234

1,234

—

—

Interest rate reduction

7

137

137

—

(10
)
Other

38

134

134

—

—

Combination of concession types

42

693

693

—

(28
)
Other

Principal deferral

73

1,418

1,418

—

—

Other

12

113

113

—

—

Combination of concession types

35

384

384

—

(44
)
Total

613

$
139,888

$
137,646

$
(2,242
)

$
(1,406
)

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 ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~ and for which there was a subsequent payment default during the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2017 and 2016, ~~and 2015,~~ respectively, were not material.

The amount of foreclosed residential real estate property held by the Company ~~was $148~~totaled $112 million and ~~$172~~$129 million at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. There were ~~$321~~$538 million and ~~$315~~$506 million at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively, in loans secured by residential real estate and serviced by the Company that were in the process of foreclosure. There were $246 million at September 30, 2016 in loans secured by residential real estate and serviced by other entities for the Company that were in the process of foreclosure. Of all loans in the process of foreclosure at ~~September 30, 2016,~~March 31, 2017, approximately ~~61%~~53% were classified as purchased impaired and ~~21%~~20% were government guaranteed.

M&T had ~~$516~~$517 million of fixed and variable rate junior subordinated deferrable interest debentures ("Junior Subordinated Debentures") outstanding at ~~September 30, 2016~~March 31, 2017 that are held by various trusts that were issued in connection with the issuance by those trusts of preferred capital securities ("Capital Securities") and common securities ("Common Securities"). The proceeds from the issuances of the Capital Securities and the Common Securities were used by the trusts to purchase the Junior Subordinated Debentures. The Common Securities of each of those trusts are wholly owned by M&T and are the only class of each trust's securities possessing general voting powers. The Capital Securities represent preferred undivided interests in the assets of the corresponding trust. Under the Federal Reserve Board’s risk-based capital guidelines, ~~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.

Also included in long-term borrowings are agreements to repurchase securities of ~~$1.8 billion~~$431 million and ~~$1.9~~$1.1 billion at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. The agreements reflect various repurchase dates 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 ~~$1.9 billion~~$452 million and ~~$2.0~~$1.1 billion at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015, respectively.~~2016, 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 ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 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, $1,000 liquidation preference per share		230,000	$	230,000		230,000	$	230,000
Series C (a)
Fixed Rate Cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share		151,500	$	151,500		151,500	$	151,500
Series D (b)
Fixed Rate Non-cumulative Perpetual Preferred Stock, $10,000 liquidation preference per share		50,000	$	500,000
Series E (c)
Series E (b)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share		350,000	$	350,000		350,000	$	350,000
Series F (c)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock, $10,000 liquidation preference per share						50,000	$	500,000

In addition to the Series A warrants mentioned in (a) above, a warrant to purchase ~~95,383~~95,410 shares of M&T common stock at ~~$518.96~~$518.81 per share was outstanding at ~~September 30, 2016 and December~~March 31, ~~2015.~~2017. The obligation under that warrant was assumed by M&T in an ~~acquisition.~~

~~On October 28, 2016, M&T issued 50,000 shares of Series F Perpetual Fixed-to-Floating Rate Non-cumulative Preferred Stock, par value $1.00 per share~~acquisition and liquidation preference of $10,000 per share. Through November 1, 2026 holders of the Series F preferred stock are entitled to receive, only when, as and if declared by M&T’s Board of Directors, non-cumulative cash dividends at an annual rate of 5.125%, payable semi-annuallyexpires in arrears. Subsequent to November 1, 2026 holders will be entitled to receive quarterly cash dividends at an annual rate of three-month LIBOR plus 352 basis points. The Series F preferred stock may be redeemed at M&T’s option, in whole or in part, on any dividend payment date on or after November 1, 2026 or, in whole but not in part, at any time within 90 days following a regulatory capital treatment event whereby the full liquidation value of the shares no longer qualifies as “additional Tier 1 capital”.

In addition, M&T expects to redeem the 50,000 shares issued and outstanding of the Series D Fixed Rate Non-cumulative Perpetual Preferred Stock, $10,000 liquidation preference per share during December 2016, having received the approval of the Federal Reserve to redeem such shares after issuing the Series F preferred stock.2018.

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

													Pension Benefits						Other Postretirement Benefits
	Pension benefits						Other postretirement benefits						Three Months Ended March 31
	Three months ended September 30												2017			2016			2017			2016
	2016			2015			2016			2015			(In thousands)
	(in thousands)
Service cost	$	6,259			5,916			399		188			$	4,908			6,382			383		458
Interest cost on projected benefit obligation		20,853			17,754			1,242		651				19,691			20,883			1,080			1,205
Expected return on plan assets		(27,118	)		(23,527	)		—			—			(27,200	)		(27,814	)		—			—
Amortization of prior service credit		(807	)		(1,501	)		(339	)		(340	)
Amortization of prior service cost (credit)														125			(825	)		(350	)		(350	)
Amortization of net actuarial loss		7,536			11,207			15		26				6,800			8,300			(25	)		—
Net periodic benefit cost	$	6,723			9,849			1,317		525			$	4,324			6,926			1,088			1,313

Expense incurred in connection with the Company's defined contribution pension and retirement savings plans totaled ~~$14,783,000~~$19,419,000 and ~~$14,281,000~~$17,690,000 for the three months ended ~~September 30,~~March 31, 2017 and 2016, ~~and 2015, respectively, and $47,747,000 and $44,377,000 for the nine months ended September 30, 2016 and 2015,~~ respectively.

	Three months ended September 30						Nine months ended September 30						Three Months Ended March 31
	2016			2015			2016			2015			2017			2016
	(in thousands, except per share)												(In thousands, except per share)
Income available to common shareholders:
Net income	$	349,984			280,401			984,543			808,702		$	348,927			298,528
Less: Preferred stock dividends (a)		(20,318	)		(20,318	)		(60,953	)		(60,953	)		(18,237	)		(20,318	)
Net income available to common equity		329,666			260,083			923,590			747,749			330,690			278,210
Less: Income attributable to unvested stock-based compensation awards		(2,674	)		(2,746	)		(7,920	)		(8,122	)		(2,128	)		(2,466	)
Net income available to common shareholders	$	326,992			257,337			915,670			739,627		$	328,562			275,744
Weighted-average shares outstanding:
Common shares outstanding (including common stock issuable) and unvested stock-based compensation awards		156,767			134,049			158,710			133,805			155,463			160,220
Less: Unvested stock-based compensation awards		(1,274	)		(1,419	)		(1,374	)		(1,458	)		(1,036	)		(1,486	)
Weighted-average shares outstanding		155,493			132,630			157,336			132,347			154,427			158,734

Basic earnings per common share	$	2.10			1.94			5.82			5.59		$	2.13			1.74

													Three Months Ended March 31
	Three months ended September 30						Nine months ended September 30						2017			2016
	2016			2015			2016			2015			(In thousands, except per share)
	(in thousands, except per share)
Net income available to common equity	$	329,666			260,083			923,590			747,749		$	330,690			278,210
Less: Income attributable to unvested stock-based compensation awards		(2,668	)		(2,737	)		(7,904	)		(8,093	)		(2,123	)		(2,462	)
Net income available to common shareholders	$	326,998			257,346			915,686			739,656		$	328,567			275,748
Adjusted weighted-average shares outstanding:
Common and unvested stock-based compensation awards		156,767			134,049			158,710			133,805			155,463			160,220
Less: Unvested stock-based compensation awards		(1,274	)		(1,419	)		(1,374	)		(1,458	)		(1,036	)		(1,486	)
Plus: Incremental shares from assumed conversion of stock-based compensation awards and warrants to purchase common stock		533			746			507			742			522			447
Adjusted weighted-average shares outstanding		156,026			133,376			157,843			133,089			154,949			159,181

Diluted earnings per common share	$	2.10			1.93			5.80			5.56		$	2.12			1.73

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

Stock-based compensation awards and warrants to purchase common stock of M&T representing ~~approximately 2.0 million~~391,764 and ~~1.5 million~~2,840,575 common shares during the three-month periods ended ~~September 30,~~March 31, 2017 and 2016, ~~and 2015, respectively, and 2.5 million and 1.9 million common shares during the nine-month periods ended September 30, 2016 and 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 ~~displays~~display the components of other comprehensive income (loss) and amounts reclassified from accumulated other comprehensive income (loss) to net income:

	Investment securities					Defined benefit						Total amount				Income						Investment Securities						Defined Benefit						Total Amount				Income
	With OTTI (a)		All other			plans			Other			before tax				tax			Net			With OTTI (a)			All Other			Plans			Other			Before Tax				Tax			Net
	(in thousands)																					(In thousands)
Balance - January 1, 2016	$	16,359		62,849			(489,660	)		(4,093	)	$	(414,545	)			162,918		$	(251,627	)

Balance — January 1, 2017																						$	46,725			(73,785	)		(449,917	)		(8,268	)	$	(485,245	)			190,609		$	(294,636	)
Other comprehensive income before reclassifications:
Unrealized holding gains, net		1,228		234,438			—			—			235,666				(92,714	)		142,952
Unrealized holding gains (losses), net																							(8,628	)		5,613			—			—			(3,015	)			1,182			(1,833	)
Foreign currency translation adjustment		—		—			—			(2,836	)		(2,836	)			989			(1,847	)		—			—			—			732			732				(256	)		476
Total other comprehensive income (loss) before reclassifications		1,228		234,438			—			(2,836	)		232,830				(91,725	)		141,105			(8,628	)		5,613			—			732			(2,283	)			926			(1,357	)
Amounts reclassified from accumulated other comprehensive income that (increase) decrease net income:
Accretion of unrealized holding losses on held-to-maturity (“HTM”) securities		—		2,998			—			—			2,998		(b)		(1,180	)		1,818
Amortization of unrealized holding losses on held-to-maturity (“HTM”) securities																							—			787			—			—			787		(b)		(310	)		477
Accretion of net gain on terminated cash flow hedges																							—			—			—			(39	)		(39	)	(d)		16			(23	)
Amortization of prior service credit																							—			—			(225	)		—			(225	)	(e)		88			(137	)
Amortization of actuarial losses																							—			—			6,775			—			6,775		(e)		(2,666	)		4,109
Total reclassifications																							—			787			6,550			(39	)		7,298				(2,872	)		4,426
Total gain (loss) during the period																							(8,628	)		6,400			6,550			693			5,015				(1,946	)		3,069
Balance — March 31, 2017																						$	38,097			(67,385	)		(443,367	)		(7,575	)		(480,230	)			188,663		$	(291,567	)

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 (losses), net																							(370	)		159,660			—			—			159,290				(62,680	)		96,610
Foreign currency translation adjustment																							—			—			—			(83	)		(83	)			30			(53	)
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:
Amortization of unrealized holding losses on HTM securities																							—			968			—			—			968		(b)		(381	)		587
Gains realized in net income		—		(28,748	)		—			—			(28,748	)	(c)		11,309			(17,439	)		—			(4	)		—			—			(4	)	(c)		1			(3	)
Accretion of net gain on terminated cash flow hedges		—		—			—			(116	)		(116	)	(d)		46			(70	)		—			—			—			(39	)		(39	)	(d)		15			(24	)
Amortization of prior service credit		—		—			(3,440	)		—			(3,440	)	(e)		1,354			(2,086	)		—			—			(1,175	)		—			(1,175	)	(e)		462			(713	)
Amortization of actuarial losses		—		—			22,654			—			22,654		(e)		(8,914	)		13,740			—			—			8,300			—			8,300		(e)		(3,266	)		5,034
Total reclassifications		—		(25,750	)		19,214			(116	)		(6,652	)			2,615			(4,037	)		—			964			7,125			(39	)		8,050				(3,169	)		4,881
Total gain (loss) during the period		1,228		208,688			19,214			(2,952	)		226,178				(89,110	)		137,068			(370	)		160,624			7,125			(122	)		167,257				(65,819	)		101,438
Balance - September 30, 2016	$	17,587		271,537			(470,446	)		(7,045	)	$	(188,367	)			73,808		$	(114,559	)
Balance — March 31, 2016																						$	15,989			223,473			(482,535	)		(4,215	)	$	(247,288	)			97,099		$	(150,189	)

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 and/or settlement provisions protecting the at-risk party. Based on adherence to the Company’s credit standards and the presence of the netting, ~~and~~ collateral or settlement provisions, the Company believes that the credit risk inherent in these contracts was not ~~material~~significant as of ~~September 30, 2016.~~March 31, 2017.

The net effect of interest rate swap agreements was to increase net interest income by $9$4 million and ~~$11~~$10 million for the three-month periods ended ~~September 30,~~March 31, 2017 and 2016, ~~and 2015, respectively, and $30 million and $33 million for the nine-month periods ended September 30, 2016 and 2015,~~ 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		Average		Weighted- average rate						Notional		Average		Weighted- Average Rate						Estimated Fair
	amount		maturity		Fixed			Variable			Amount		Maturity		Fixed			Variable			Value Gain
	(in thousands)		(in years)								(In thousands)		(In years)								(In thousands)
September 30, 2016
March 31, 2017
Fair value hedges:
Fixed rate long-term borrowings (a)	$	1,400,000		0.9		4.42	%		1.79	%	$	900,000		.8		3.75	%		2.24	%	$	7,773
December 31, 2015
December 31, 2016
Fair value hedges:
Fixed rate long-term borrowings (a)	$	1,400,000		1.7		4.42	%		1.39	%	$	900,000		1.1		3.75	%		2.08	%	$	11,892

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 ~~$21.2~~$22.3 billion and ~~$18.4~~$21.6 billion at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. The notional amounts of foreign currency and other option and futures contracts entered into for trading account purposes aggregated ~~$891~~$496 million and ~~$1.6 billion~~$471 million at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, 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
	September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015		March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016
	(in thousands)								(In thousands)
Derivatives designated and qualifying as hedging instruments
Fair value hedges:
Interest rate swap agreements (a)	$	21,060		43,892	$	—		—	$	7,773		11,892	$	—		—
Commitments to sell real estate loans (a)		382		1,844		3,946		656		825		33,189		2,321		1,347
		21,442		45,736		3,946		656		8,598		45,081		2,321		1,347
Derivatives not designated and qualifying as hedging instruments
Mortgage-related commitments to originate real estate loans for sale (a)		29,851		10,282		51		403		16,847		8,060		645		735
Commitments to sell real estate loans (a)		626		533		8,437		846		4,126		5,210		1,582		399
Trading:
Interest rate contracts (b)		346,453		203,517		286,298		153,723		109,996		228,810		134,919		167,737
Foreign exchange and other option and futures contracts (b)		7,092		8,569		6,415		7,022		4,632		7,908		3,776		6,639
		384,022		222,901		301,201		161,994		135,601		249,988		140,922		175,510
Total derivatives	$	405,464		268,637	$	305,147		162,650	$	144,199		295,069	$	143,243		176,857

	Amount of gain (loss) recognized										Amount of Gain (Loss) Recognized
	Three months ended September 30, 2016					Three months ended September 30, 2015					Three Months Ended March 31, 2017					Three Months Ended March 31, 2016
	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)	$	(12,588	)		12,587	$	(2,719	)		2,382	$	(4,119	)		4,012	$	(2,633	)		1,870
Derivatives not designated as hedging instruments
Trading:
Interest rate contracts (b)	$	4,822				$	4,120				$	1,950				$	974
Foreign exchange and other option and futures contracts (b)		1,746					2,613					1,836					1,212
Total	$	6,568				$	6,733				$	3,786				$	2,186

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 ~~$38~~$24 million and ~~$18~~$28 million at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. Changes in unrealized gains and losses are included in mortgage banking revenues and, in general, are realized in subsequent periods as the related loans are sold and commitments satisfied.

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

The aggregate fair value of derivative financial instruments in a liability position, which are subject to enforceable master netting arrangements, was ~~$85~~$26 million and ~~$59~~$34 million at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. After consideration of such netting arrangements, the net liability positions with counterparties aggregated ~~$81~~$25 million and ~~$55~~$30 million at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. The Company was required to post collateral relating to those positions of ~~$79~~$23 million and ~~$52~~$27 million at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. Certain of the Company’s derivative financial instruments contain provisions that require the Company to maintain specific credit ratings from credit rating agencies to avoid higher collateral posting requirements. If the Company’s debt rating were to fall below specified ratings, the counterparties of the derivative financial instruments could demand immediate incremental collateralization on those instruments in a net liability position. The aggregate fair value of all derivative financial instruments with such credit risk-related contingent features in a net liability position on ~~September 30, 2016~~March 31, 2017 was ~~$19~~less than $1 million, for which the Company ~~had posted~~was not required to post collateral ~~of $15 million~~ in the normal course of business. If the credit risk-related contingent features had been triggered on ~~September 30, 2016, the maximum amount of additional collateral~~March 31, 2017, the Company would not have been required to post any collateral to ~~counterparties was $4 million.~~counterparties.

The aggregate fair value of derivative financial instruments in an asset position, which are subject to enforceable master netting arrangements, was $14 million and $15 million ~~and $23 million~~ at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. After consideration of such netting arrangements, the net asset positions with counterparties aggregated $13 million and $11 million ~~and $19 million~~ at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. Counterparties posted collateral relating to those positions of ~~$11~~$12 million and ~~$22~~$9 million at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, 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~~(“variation margin”) depending on the contracts being in a net asset or liability position. The amount of initial margin posted by the Company was $83 million and $111 million at March 31, 2017 and December 31, 2016, respectively. Effective January 2017, certain clearinghouse exchanges revised their rules to re-characterize required collateral postings for variation margin as legal settlements of those positions. As a result, the fair value asset and liability amounts of derivative contracts at March 31, 2017 have been reduced by contractual settlements of $112 million and $25 million, respectively. Variation margin on derivative contracts not affected by the rule changes continue to represent collateral posted or received by the Company. For those contracts, the net fair values of derivative financial instruments cleared through clearinghouses ~~at September 30, 2016~~for which variation margin is required was a net ~~liability~~asset position of ~~$177~~$1 million and ~~at December 31, 2015 was a net liability position of $50 million. Collateral posted with clearinghouses was $265 million and $99~~$63 million at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively.

Collateral posted by the clearinghouses associated with that net asset position was $1 million and $81 million at March 31, 2017 and December 31, 2016, respectively.

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 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 December 31, 2015, the carrying values of the loans in the securitization trust 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 the Company at December 31, 2015 was $13 million.

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 ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, the Company included the junior subordinated debentures as “long-term borrowings” in its consolidated balance sheet and recognized $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 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 ~~$1.1~~$1.0 billion at each of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015.~~2016. 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 of its investments in such partnerships was ~~$287~~$316 million, including ~~$82~~$114 million of unfunded commitments, at ~~September 30, 2016~~March 31, 2017 and ~~$295~~$294 million, including ~~$78~~$102 million of unfunded commitments, at December 31, ~~2015.~~2016. Contingent commitments to provide additional capital contributions to these partnerships were not material at ~~September 30, 2016.~~March 31, 2017. 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 limited partner, does not direct the activities that most significantly impact the economic performance of the partnerships and, therefore, in accordance with the accounting provisions for variable interest entities, the partnership entities are not included in the Company’s consolidated financial statements. The Company’s investment 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 $13 million and ~~$34~~$11 million of its investments in qualified affordable housing projects to income tax expense during the ~~three months~~three-month periods ended March 31, 2017 and ~~nine months ended September 30,~~ 2016, respectively, and recognized ~~$18~~$16 million and $46 million of tax credits and other tax benefits during those respective periods. Similarly, for the three months and nine months ended September 30, 2015, the Company amortized $10 million and $31 million, respectively, of its investments in qualified affordable housing projects to income tax expense, and recognized $15 million and $44$14 million of tax credits and other tax benefits during those respective periods.

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

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 ~~September 30, 2016.~~March 31, 2017.

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 at December 31, 2015 were securities backed by trust preferred securities issued by financial institutions and other entities. As disclosed in Note 3, in the third quarter of 2016 the Company sold substantially all of its collateralized debt obligations. The Company performed internal modeling to estimate the cash flows and fair value of its portfolio of securities backed by trust preferred securities at December 31, 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 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 December 31, 2015, the total amortized cost and fair value of securities backed by trust preferred securities issued by financial institutions and other entities were $28 million and $47 million, respectively. Privately issued mortgage-backed securities and securities backed by trust preferred securities issued by financial institutions and other entities constituted 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 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 ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 measured at estimated fair value on a recurring basis:

	Fair value measurements at September 30, 2016		Level 1 (a)		Level 2 (a)		Level 3		Fair Value Measurements		Level 1 (a)		Level 2 (a)		Level 3
	(in thousands)								(In thousands)
March 31, 2017
Trading account assets	$	488,588		50,699		437,889		—	$	174,854		46,137		128,717		—
Investment securities available for sale:
U.S. Treasury and federal agencies		726,401		—		726,401		—		1,898,250		—		1,898,250		—
Obligations of states and political subdivisions		5,015		—		5,015		—		3,124		—		3,124		—
Mortgage-backed securities:
Government issued or guaranteed		10,930,662		—		10,930,662		—		10,504,314		—		10,504,314		—
Privately issued		51		—		—		51		41		—		—		41
Other debt securities		118,226		—		118,226		—		119,767		—		119,767		—
Equity securities		82,212		62,546		19,666		—		105,504		63,698		41,806		—
		11,862,567		62,546		11,799,970		51		12,631,000		63,698		12,567,261		41
Real estate loans held for sale		704,984		—		704,984		—		372,023		—		372,023		—
Other assets (b)		51,919		—		22,068		29,851		29,571		—		12,724		16,847
Total assets	$	13,108,058		113,245		12,964,911		29,902	$	13,207,448		109,835		13,080,725		16,888
Trading account liabilities	$	292,713		—		292,713		—	$	138,695		—		138,695		—
Other liabilities (b)		12,434		—		12,383		51		4,548		—		3,903		645
Total liabilities	$	305,147		—		305,096		51	$	143,243		—		142,598		645

December 31, 2016
Trading account assets									$	323,867		46,135		277,732		—
Investment securities available for sale:
U.S. Treasury and federal agencies										1,902,544		—		1,902,544		—
Obligations of states and political subdivisions										3,641		—		3,641		—
Mortgage-backed securities:
Government issued or guaranteed										10,954,861		—		10,954,861		—
Privately issued										44		—		—		44
Other debt securities										118,516		—		118,516		—
Equity securities										352,466		301,711		50,755		—
										13,332,072		301,711		13,030,317		44
Real estate loans held for sale										1,056,180		—		1,056,180		—
Other assets (b)										58,351		—		50,291		8,060
Total assets									$	14,770,470		347,846		14,414,520		8,104
Trading account liabilities									$	174,376		—		174,376		—
Other liabilities (b)										2,481		—		1,746		735
Total liabilities									$	176,857		—		176,122		735

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended ~~September 30, 2016~~March 31, 2017 were as follows:

	Investment securities available for sale											Investment Securities Available for Sale
	Privately issued mortgage-backed securities			Collateralized debt obligations				Other assets and other liabilities				Privately Issued Mortgage-Backed Securities			Other Assets and Other Liabilities
	(in thousands)											(In thousands)
Balance - June 30, 2016	$	57			43,305				21,383

Balance — January 1, 2017												$	44			7,325
Total gains (losses) realized/unrealized:
Included in earnings		—			28,475				45,534		(b)		—			23,940		(b)
Included in other comprehensive income		—			(15,050	)	(c)		—				—			—
Sales		—			(56,730	)			—				—			—
Settlements		(6	)		—				—				(3	)		—
Transfers in and/or out of Level 3 (a)		—			—				(37,117	)	(d)		—			(15,063	)	(d)
Balance - September 30, 2016	$	51			—				29,800
Changes in unrealized gains included in earnings related to assets still held at September 30, 2016	$	—			—				27,663		(b)
Balance — March 31, 2017												$	41			16,202
Changes in unrealized gains included in earnings related to assets still held at March 31, 2017												$	—			15,094		(b)

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended ~~September 30, 2015 were as follows:~~

~~The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the nine months ended September 30,~~March 31, 2016 were as follows:

	Investment securities available for sale											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, 2016	$	74			47,393				9,879

Balance — January 1, 2016												$	74			47,393				9,879
Total gains (losses) realized/unrealized:
Included in earnings		—			28,475				104,862		(b)		—			—				23,898		(b)
Included in other comprehensive income		—			(18,268	)	(c)		—				—			(2,148	)	(c)		—
Sales		—			(56,730	)			—
Settlements		(23	)		(870	)			—				(9	)		(205	)			—
Transfers in and/or out of Level 3 (a)		—			—				(84,941	)	(d)		—			—				(16,892	)	(d)
Balance – September 30, 2016	$	51			—				29,800
Changes in unrealized gains included in earnings related to assets still held at September 30, 2016	$	—			—				29,288		(b)
Balance — March 31, 2016												$	65			45,040				16,885
Changes in unrealized gains included in earnings related to assets still held at March 31, 2016												$	—			—				14,539		(b)

~~The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the nine months ended September 30, 2015 were as follows:~~

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 15% to ~~92%~~90% at ~~September 30, 2016.~~March 31, 2017. 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~~nonrecurring fair value measurement adjustments have been classified as Level 2. Collateral values for other consumer installment loans are generally estimated based on historical recovery rates for similar types of loans. 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 ~~$249~~$210 million at ~~September 30, 2016~~March 31, 2017 ($~~144~~88 million and ~~$105~~$122 million of which were classified as Level 2 and Level 3, respectively), ~~$210~~$293 million at December 31, ~~2015~~2016 ($~~106~~153 million and ~~$104~~$140 million of which were classified as Level 2 and Level 3, respectively) and ~~$177~~$226 million at ~~September 30, 2015~~March 31, 2016 ($~~106~~127 million and ~~$71~~$99 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 ~~September 30,~~March 31, 2017 and 2016 were decreases of ~~$20~~$42 million and ~~$42~~$27 million for the three-month ~~and nine-month~~ periods ended ~~September 30,~~March 31, 2017 and March 31, 2016, respectively. Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on September 30, 2015 were decreases of $11 million and $53 million for the three-month and nine-month periods ended September 30, 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 ~~$53~~$32 million and ~~$15~~$62 million at ~~September 30,~~March 31, 2017 and 2016, ~~and September 30, 2015,~~ respectively. Changes in fair value recognized for those foreclosed assets held by the Company were not material during the three-month ~~and nine-month~~ periods ended ~~September 30, 2016~~March 31, 2017 and ~~2015.~~

The following tables present quantitative information about significant unobservable inputs used in the fair value measurements for certain Level 3 assets and liabilities at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015:~~2016:

	Fair value at September 30, 2016		Valuation technique	Unobservable input/assumptions		Range (weighted- average)		Fair Value		Valuation Technique	Unobservable Inputs/Assumptions		Range (Weighted- Average)
	(in thousands)							(In thousands)
March 31, 2017
Recurring fair value measurements
Privately issued mortgage-backed securities	$	51	Two independent pricing quotes		—		—	$	41	Two independent pricing quotes		—		—
Net other assets (liabilities) (a)		29,800	Discounted cash flow	Commitment expirations		0%-92% (26%)			16,202	Discounted cash flow	Commitment expirations		0%-80% (24%)

December 31, 2016
Recurring fair value measurements
Privately issued mortgage-backed securities								$	44	Two independent pricing quotes		—		—
Net other assets (liabilities) (a)									7,325	Discounted cash flow	Commitment expirations		0%-77% (30%)

~~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:

	September 30, 2016														March 31, 2017
	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	$	1,332,202			1,332,202			1,258,882		73,320			—		$	1,286,962			1,286,962			1,213,120		73,842			—
Interest-bearing deposits at banks		10,777,636			10,777,636			—		10,777,636			—			6,945,149			6,945,149			—		6,945,149			—
Trading account assets		488,588			488,588			50,699		437,889			—
Trading account																174,854			174,854			46,137		128,717			—
Investment securities		14,733,574			14,779,721			62,546		14,591,141			126,034			15,968,415			15,958,181			63,698		15,775,917			118,566
Loans and leases:
Commercial loans and leases		21,917,163			21,563,190			—		—			21,563,190			22,295,376			21,882,456			—		—			21,882,456
Commercial real estate loans		32,078,762			31,944,341			—		290,347			31,653,994			33,071,654			32,607,794			—		74,563			32,533,231
Residential real estate loans		23,584,420			23,780,993			—		4,607,044			19,173,949			21,724,491			21,776,908			—		4,686,339			17,090,569
Consumer loans		12,066,147			12,009,873			—		—			12,009,873			12,221,481			12,083,513			—		—			12,083,513
Allowance for credit losses		(976,121	)		—			—		—			—			(1,001,430	)		—			—		—			—
Loans and leases, net		88,670,371			89,298,397			—		4,897,391			84,401,006			88,311,572			88,350,671			—		4,760,902			83,589,769
Accrued interest receivable		311,414			311,414			—		311,414			—			318,152			318,152			—		318,152			—
Financial liabilities:
Noninterest-bearing deposits	$	(33,127,627	)		(33,127,627	)		—		(33,127,627	)		—		$	(34,279,591	)		(34,279,591	)		—		(34,279,591	)		—
Savings and interest-checking deposits		(53,065,030	)		(53,065,030	)		—		(53,065,030	)		—			(53,542,149	)		(53,542,149	)		—		(53,542,149	)		—
Time deposits		(11,721,005	)		(11,829,119	)		—		(11,829,119	)		—			(9,028,018	)		(9,106,654	)		—		(9,106,654	)		—
Deposits at Cayman Islands office		(223,183	)		(223,183	)		—		(223,183	)		—			(192,763	)		(192,763	)		—		(192,763	)		—
Short-term borrowings		(213,846	)		(213,846	)		—		(213,846	)		—			(185,102	)		(185,102	)		—		(185,102	)		—
Long-term borrowings		(10,211,160	)		(10,277,155	)		—		(10,277,155	)		—			(8,087,619	)		(8,104,055	)		—		(8,104,055	)		—
Accrued interest payable		(76,230	)		(76,230	)		—		(76,230	)		—			(60,737	)		(60,737	)		—		(60,737	)		—
Trading account liabilities		(292,713	)		(292,713	)		—		(292,713	)		—
Trading account																(138,695	)		(138,695	)		—		(138,695	)		—
Other financial instruments:
Commitments to originate real estate loans for sale	$	29,800			29,800			—		—			29,800		$	16,202			16,202			—		—			16,202
Commitments to sell real estate loans		(11,375	)		(11,375	)		—		(11,375	)		—			1,048			1,048			—		1,048			—
Other credit-related commitments		(124,499	)		(124,499	)		—		—			(124,499	)		(129,968	)		(129,968	)		—		—			(129,968	)
Interest rate swap agreements used for interest rate risk management		21,060			21,060			—		21,060			—			7,773			7,773			—		7,773			—

	December 31, 2015														December 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	$	1,368,040			1,368,040			1,276,678		91,362			—		$	1,320,549			1,320,549			1,249,654		70,895		—
Interest-bearing deposits at banks		7,594,350			7,594,350			—		7,594,350			—			5,000,638			5,000,638			—		5,000,638		—
Trading account assets		273,783			273,783			56,763		217,020			—
Trading account																323,867			323,867			46,135		277,732		—
Investment securities		15,656,439			15,660,877			65,178		15,406,404			189,295			16,250,468			16,244,412			301,711		15,821,176			121,525
Loans and leases:
Commercial loans and leases		20,422,338			20,146,201			—		—			20,146,201			22,610,047			22,239,428		—		—				22,239,428
Commercial real estate loans		29,197,311			29,044,244			—		38,774			29,005,470			33,506,394			33,129,428		—			642,590			32,486,838
Residential real estate loans		26,270,103			26,267,771			—		4,727,816			21,539,955			22,590,912			22,638,167		—			4,912,488			17,725,679
Consumer loans		11,599,747			11,550,270			—		—			11,550,270			12,146,063			12,061,590		—			—			12,061,590
Allowance for credit losses		(955,992	)		—			—		—			—			(988,997	)		—		—			—			—
Loans and leases, net		86,533,507			87,008,486			—		4,766,590			82,241,896			89,864,419			90,068,613		—			5,555,078			84,513,535
Accrued interest receivable		306,496			306,496			—		306,496			—			308,805			308,805		—			308,805		—
Financial liabilities:
Noninterest-bearing deposits	$	(29,110,635	)		(29,110,635	)		—		(29,110,635	)		—		$	(32,813,896	)		(32,813,896	)	—			(32,813,896	)	—
Savings and interest-checking deposits		(49,566,644	)		(49,566,644	)		—		(49,566,644	)		—			(52,346,207	)		(52,346,207	)	—			(52,346,207	)	—
Time deposits		(13,110,392	)		(13,135,042	)		—		(13,135,042	)		—			(10,131,846	)		(10,222,585	)	—			(10,222,585	)	—
Deposits at Cayman Islands office		(170,170	)		(170,170	)		—		(170,170	)		—			(201,927	)		(201,927	)	—			(201,927	)	—
Short-term borrowings		(2,132,182	)		(2,132,182	)		—		(2,132,182	)		—			(163,442	)		(163,442	)	—			(163,442	)	—
Long-term borrowings		(10,653,858	)		(10,639,556	)		—		(10,639,556	)		—			(9,493,835	)		(9,473,844	)	—			(9,473,844	)	—
Accrued interest payable		(85,145	)		(85,145	)		—		(85,145	)		—			(75,172	)		(75,172	)	—			(75,172	)	—
Trading account liabilities		(160,745	)		(160,745	)		—		(160,745	)		—
Trading account																(174,376	)		(174,376	)	—			(174,376	)	—
Other financial instruments:
Commitments to originate real estate loans for sale	$	9,879			9,879			—		—			9,879		$	7,325			7,325		—			—			7,325
Commitments to sell real estate loans		875			875			—		875			—			36,653			36,653		—			36,653		—
Other credit-related commitments		(122,334	)		(122,334	)		—		—			(122,334	)		(136,295	)		(136,295	)	—			—			(136,295	)
Interest rate swap agreements used for interest rate risk management		43,892			43,892			—		43,892			—			11,892			11,892		—			11,892		—

With the exception of marketable securities, certain off-balance sheet financial instruments and ~~one-to-four family residential~~ 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 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 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.

	September 30,		December 31,		March 31,		December 31,
	2016		2015		2017		2016
	(in thousands)				(In thousands)
Commitments to extend credit
Home equity lines of credit	$	5,525,814		5,631,680	$	5,535,221		5,499,609
Commercial real estate loans to be sold		403,411	57,597			298,039		70,100
Other commercial real estate		6,365,999		5,949,933		6,166,511		6,451,709
Residential real estate loans to be sold		635,661		488,621		473,837		478,950
Other residential real estate		297,191		212,619		240,430		232,721
Commercial and other		12,219,005		11,802,850		12,134,803		12,298,473
Standby letters of credit		3,283,270		3,330,013		2,937,504		2,987,091
Commercial letters of credit		50,109		55,559		46,560		44,723
Financial guarantees and indemnification contracts		3,147,784		2,794,322		3,477,006		3,043,580
Commitments to sell real estate loans		1,538,900		782,885		1,013,409		1,489,237

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 ~~that~~this program totaled approximately ~~$2.7~~$3.0 billion and ~~$2.5~~$2.8 billion at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, 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. ~~Nevertheless, given~~At March 31, 2017 the ~~outcome of the matter discussed in the following paragraph, at September 30, 2016 the Company’s remaining~~Company believes that its obligation to loan purchasers was not ~~considered~~ material to the Company’s consolidated financial position.

The Company was 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 U.S. Department of Justice (collectively, the “Government”) investigated whether the Company complied with underwriting guidelines concerning certain loans where HUD paid FHA insurance claims. The Company fully cooperated with the investigation. The Government 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 did not meet underwriting guidelines. The Company, based on its own review of the sample, did 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 concerned whether the mortgages sold to Freddie Mac and Fannie Mae complied with applicable underwriting guidelines. The Company also cooperated with that portion of the investigation. In order to bring those investigations to a close, M&T Bank entered into a settlement agreement with the Government under which M&T Bank paid $64 million on May 12, 2016, without admitting liability. As a result, on May 20, 2016, a Joint Stipulation of Dismissal was filed with the United States District Court for the Western District of New York. The settlement did not have a material impact on the Company’s consolidated financial condition or results of operations in the three-month or nine-month periods ended September 30, 2016.

M&T and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings and other matters in which claims for monetary damages are asserted. On an on-going basis management, after consultation with legal counsel, assesses the Company’s liabilities and contingencies in connection with such proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability, was between $0 and $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 ~~2015~~2016 Annual Report. The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, the financial information of the reported segments is not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data. As disclosed in the 2016 Annual Report, during 2016 the Company revised its funds transfer pricing allocation related to borrowings and to the residential real estate loans obtained in the acquisition of Hudson City, retroactive to 2015. Accordingly, financial information for the three-month period

ended March 31, 2016 has been reclassified to conform to the current methodology. As a result, total revenues and net income increased in the Discretionary Portfolio segment and decreased in the “All Other” category by $14 million and $8 million, respectively, for the three months ended March 31, 2016 from that which was previously reported.

As also described in note 22 in the ~~2015~~2016 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
	Three months ended September 30																2017								2016
	2016								2015								Total Revenues(a)		Inter- segment Revenues			Net Income (Loss)			Total Revenues(a)		Inter- segment Revenues			Net Income (Loss)
	Total revenues(a)		Inter- segment revenues			Net income (loss)			Total revenues(a)		Inter- segment revenues			Net income (loss)			(In thousands)
	(in thousands)
Business Banking	$	116,513		1,086			21,422		$	112,650		1,167			23,995		$	115,981		911			22,407		$	113,689		991			25,448
Commercial Banking		268,683		950			102,796			270,554		1,097			108,422			273,845		920			112,750			253,617		1,056			101,327
Commercial Real Estate		205,562		463			90,065			181,478		469			85,312			195,125		407			84,547			177,380		387			80,529
Discretionary Portfolio		114,391		(14,795	)		50,773			13,773		(5,365	)		5,113			78,946		(12,927	)		33,945			101,036		(14,323	)		48,410
Residential Mortgage Banking		108,576		22,051			22,924			99,518		12,918			21,150			93,708		18,211			14,844			96,935		19,660			17,077
Retail Banking		353,016		3,052			69,506			308,520		3,292			64,721			361,237		3,047			81,873			339,046		3,014			63,288
All Other		182,949		(12,807	)		(7,502	)		146,033		(13,578	)		(28,312	)		242,263		(10,569	)		(1,439	)		211,194		(10,785	)		(37,551	)
Total	$	1,349,690		—			349,984		$	1,132,526		—			280,401		$	1,361,105		—			348,927		$	1,292,897		—			298,528

																	Average total assets
	Nine months ended September 30																Three Months Ended March 31				Year Ended December 31
	2016								2015								2017		2016		2016
	Total revenues(a)		Inter- segment revenues			Net income (loss)			Total revenues(a)		Inter- segment revenues			Net income (loss)			(In millions)
	(in thousands)
Business Banking	$	344,562		3,274			69,617		$	332,341		3,334			74,160		$	5,596		5,424		5,456
Commercial Banking		787,781		2,917			309,515			774,392		3,281			312,926			26,723		24,838		25,592
Commercial Real Estate		575,117		1,299			254,682			535,909		978			250,501			22,977		19,839		21,131
Discretionary Portfolio		324,195		(43,726	)		151,522			49,724		(16,184	)		21,823			38,731		42,509		40,867
Residential Mortgage Banking		309,393		62,955			59,981			310,843		36,741			75,462			2,426		2,647		2,569
Retail Banking		1,037,727		9,198			204,291			914,484		9,688			202,415			12,204		11,568		11,840
All Other		575,885		(35,917	)		(65,065	)		494,779		(37,838	)		(128,585	)		14,321		16,427		16,885
Total	$	3,954,660		—			984,543		$	3,412,472		—			808,702		$	122,978		123,252		124,340

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

M&T holds a 20% minority interest in Bayview Lending Group LLC ("BLG"), a privately-held commercial mortgage company. M&T recognizes income or loss from BLG using the equity method of accounting. The carrying value of that investment was ~~$15 million~~$364 thousand at ~~September 30, 2016.~~March 31, 2017.

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 ~~$3.7~~$3.4 billion and ~~$4.1~~$3.5 billion at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. Revenues from those servicing rights were $5$4 million and $6$5 million for the quarters ended ~~September 30,~~March 31, 2017 and 2016, ~~and 2015, respectively, and $15 million and $17 million for the nine months ended September 30, 2016 and 2015,~~ respectively. The Company sub-services residential mortgage loans for Bayview Financial having outstanding principal balances ~~totaling $32.1~~of $40.8 billion and ~~$37.7~~$30.4 billion at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. Revenues earned for sub-servicing loans for Bayview Financial were ~~$25~~$23 million ~~and $26 million~~ for each of the three-month periods ended ~~September 30, 2016~~March 31, 2017 and ~~2015, respectively, and $73 million and $91 million for the nine-month periods ended September 30, 2016 and 2015, respectively.~~2016. In addition, the Company held ~~$163~~$153 million and ~~$181~~$158 million of mortgage-backed securities in its held-to-maturity portfolio at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively, that were securitized by Bayview Financial.

In April 2017, the Company provided a loan to Bayview Financial for $100 million at terms consistent with those offered to non-affiliated customers.

Effective January 1, 2017, the Company ~~sold~~adopted amended accounting guidance for share-based transactions. The most significant aspect of the ~~trade processing business within~~amended guidance that affects the ~~retirement services division~~Company requires that all excess tax benefits and tax deficiencies be recognized in income tax expense in the income statement and that such amounts be recognized in the period in which the tax deduction arises or in the period in which an expiration of ~~its Institutional Client Services business. That sale~~an award occurs. The adoption of this guidance resulted in an ~~after-tax gain~~$18 million reduction of ~~$23 million ($45 million pre-tax) that reflected~~income tax expense for 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 monthsquarter ended March 31, ~~2015. There were~~2017 that under previous accounting guidance would have been recognized directly in shareholders’ equity.

Effective January 2017, the Company also adopted 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 adoption of this guidance did not have a material effect on the Company’s consolidated financial position or results of operations.

In January 2017, the Company adopted two amendments to the accounting guidance 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 ~~revenues~~longer has to assess whether the event that triggers the ability to exercise the option is related to interest rates or credit risks. The adoption of this guidance did not have a material effect on the Company’s consolidated financial position or results of operations.

In March 2017, the Financial Accounting Standards Board (“FASB”) issued amended guidance requiring the premium on callable debt securities held at a premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.

The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018, with early adoption permitted. If adopted in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company does not expect the guidance to have a material impact on its consolidated financial statements.

In March 2017, the FASB issued amended guidance requiring the service cost component of the net periodic pension cost and net periodic postretirement benefit cost to be reported in the same line item or items in the income statement as other compensation costs arising from services rendered by the pertinent employees during the period (except for the amount being capitalized, if appropriate). The amendments also require disclosure of the line item(s) used in the income statement to present the components other than the service cost component if the other components are not presented in a separate line item or items in the income statement. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017, using a retrospective transition method for the presentation of the service cost and other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit cost would be applied using a prospective transition method. The amendments allow for a practical expedient that permits the use of the amounts disclosed in the Company’s pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company is evaluating the impact the guidance may have on its consolidated financial statements.

In January 2017, the FASB issued amended guidance eliminating Step 2 from the ~~sold~~goodwill impairment test. Under the amendments to the guidance, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized, however, should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The guidance is effective for annual periods or any interim goodwill impairment tests beginning after December 15, 2019 using a prospective transition method. Early adoption is permitted. The Company does not expect the guidance will have a material impact on its consolidated financial statements, unless at some point in the future one of its reporting units were to fail step 1 of the goodwill impairment test.

In January 2017, the FASB issued amended guidance clarifying the definition of a business ~~recognized during~~for purposes of evaluating whether transactions would be accounted for as acquisitions (or disposals) of assets or businesses. The amendments provide a screen to determine when a set of assets and activities (collectively referred to as a “set”) is not a business. The screen requires that when substantially all of the ~~three months ended June 30, 2015~~fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or ~~thereafter. After considering related expenses, net income~~group of similar assets, the set is not a business. If the screen is not met, the amendments (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output, and (2) remove the evaluation of whether a market participant could replace missing elements. The guidance is effective for annual

periods and interim periods within those annual periods beginning after December 15, 2017 using a prospective transition method. The Company does not expect the guidance to have a material impact on its consolidated financial statements.

In November 2016, the FASB issued amended guidance for the presentation of restricted cash in the statement of cash flows. The guidance requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. In addition, when cash, cash equivalents, and restricted cash or restricted cash equivalents are presented in more than one line item within the statement of financial position, the line items and amounts must be presented on the face of the statement of cash flows or disclosed in the notes to the financial statements. Information about the nature of restrictions on an entity’s cash and cash equivalents must also be disclosed. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017, using a retrospective transition method. The Company is evaluating the impact the guidance may have on the presentation of its consolidated statement of cash flows.

In August 2016, the FASB issued amended guidance for how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance addresses the following eight specific cash flow issues: 1) cash payments for debt extinguishment costs should be classified as cash outflows for financing activities; 2) for zero-coupon debt instruments, the portion of the cash payment attributable to the accreted interest should be classified as a cash outflow for operating activities; 3) contingent consideration payments made after a business combination should be classified based on the timing of the payment; 4) cash proceeds received from the settlement of insurance claims should be classified on the basis of the related insurance coverage; 5) cash proceeds received from the settlement of corporate-owned and bank-owned life insurance policies should be classified as cash inflows from investing activities; 6) when the equity method is applied, an accounting policy election should be made to classify distributions received using either the cumulative earnings approach or the nature of the distribution approach; 7) cash receipts from payments on a transferor’s beneficial interests obtained in a securitization of financial assets should be classified as cash inflows from investing activities; and 8) the classification of cash receipts and payments that ~~was sold was not material~~have aspects of more than one class of cash flows should be determined by applying specific guidance in GAAP. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. The Company is evaluating the impact the guidance may have on the presentation within its consolidated statement of cash flows.

In June 2016, the FASB issued amended guidance for the measurement of credit losses on certain financial assets. The amended guidance requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. The allowance for credit losses will represent a valuation account that is deducted from the amortized cost basis of the financial assets to present their net carrying value at the amount expected to be collected. The income statement will reflect the measurement of credit losses for newly recognized financial assets as well as expected increases or decreases of expected credit losses that have taken place during the period. When determining the allowance, expected credit losses over the contractual term of the financial asset(s) (taking into account prepayments) will be estimated considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The amended guidance also requires recording an allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination. The initial allowance for these assets will be added to the ~~consolidated results~~purchase price at acquisition rather than being reported as an expense. Subsequent changes in the allowance will be recorded through the income statement as an expense adjustment. In addition, the amended guidance requires credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. The calculation of ~~operations~~credit losses for available-for-sale securities will be similar to how it is determined under existing guidance. The guidance is effective for annual periods and interim periods within those annual periods beginning after

December 15, 2019. The Company is assessing the new guidance to determine what modifications to existing credit estimation processes may be required. The Company expects that the new guidance will result in an increase in its allowance for credit losses as a result of considering credit losses over the expected life of its loan portfolios. Increases in the level of the ~~Company.~~allowance for credit losses will also reflect new requirements to include the nonaccretable principal difference on purchased credit impaired loans and estimated credit losses on investment securities classified as held-to-maturity, if any. The Company is still evaluating the extent of the increase to the allowance for credit losses and the impact to its 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 those 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. Upon adoption of the guidance, the Company expects to report increased assets and increased liabilities as a result of recognizing right-of-use assets and lease liabilities on its consolidated balance sheet. The Company was committed to $467 million of minimum lease payments under noncancelable operating lease agreements at December 31, 2016. The Company does not expect the new guidance will have a material impact to its consolidated statement of income.

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 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 15, 2017. The Company is still evaluating the impact the guidance could

have on its consolidated financial statements. The Company does hold certain equity securities in its available-for-sale portfolio. Upon adoption of this guidance, fair value changes in such equity securities will be recognized in the consolidated statement of income as opposed to accumulated other comprehensive income where they are recognized under current accounting guidance.

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. The amended guidance is effective for annual reporting periods beginning after December 15, 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 “modified retrospective approach”). At present, the Company expects to adopt the revenue recognition guidance in the first quarter of 2018 using the modified retrospective approach. A significant amount of the Company’s revenues are derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance. With respect to noninterest income, the Company has identified revenue streams within the scope of the guidance, and is performing an evaluation of the underlying revenue contracts. To date, the Company has not yet identified any material changes in the timing of revenue recognition when considering the amended accounting guidance, however, the Company’s implementation efforts are ongoing and such assessments may change prior to the January 1, 2018 implementation date.

~~Net income for~~ M&T Bank Corporation (“M&T”) recorded net income in the ~~third~~first quarter of ~~2016 was $350~~2017 of $349 million or ~~$2.10~~$2.12 of diluted earnings per common share, compared with ~~$280~~$299 million or ~~$1.93~~$1.73 of diluted earnings per common share in the ~~year-earlier quarter.~~initial quarter of 2016. During the ~~second~~final 2016 quarter, ~~of 2016,~~ net income ~~totaled $336 million or $1.98 of~~and diluted earnings per common ~~share.~~share were $331 million and $1.98, respectively. Basic earnings per common share were ~~$2.10~~$2.13 in the recent quarter, compared with ~~$1.94 in the third quarter of 2015~~$1.74 and $1.98 in the ~~second quarter of 2016. For the~~ first ~~nine months~~and fourth quarters of 2016, net income was $985 million or $5.80 of diluted earnings per common share, compared with $809 million or $5.56 of diluted earnings per common share during the similar period of 2015. Basic earnings per common share were $5.82 for the first nine months of 2016, compared with $5.59 for the first nine months 2015.

respectively. The annualized rate of return on average total assets for M&T and its consolidated subsidiaries (“the Company”) in the ~~recent~~initial 2017 quarter was ~~1.12%~~1.15%, compared with ~~1.13%~~.97% in the ~~third~~corresponding quarter of ~~2015~~2016 and ~~1.09%~~1.05% in the ~~second quarter of 2016.~~final 2016 quarter. The annualized rate of return on average common shareholders’ equity was ~~8.68%~~8.89% in the ~~third~~recent quarter, ~~of 2016,~~ compared with ~~8.93% and 8.38%~~7.44% in the year-earlier quarter and in 2016’s second quarter, respectively. During the nine-month period ended September 30, 2016, the annualized rates of return on average assets and average common shareholders’ equity were 1.06% and 8.17%, respectively, compared with 1.11% and 8.77%, respectively,8.13% in the ~~first nine months of 2015.~~

During the third quarter of 2016, the Company sold substantially all of its collateralized debt obligations with an amortized cost of $28 million held in the available-for-sale investment securities portfolio, resulting in an after-tax gain of $17 million ($28 million pre-tax), or $.11 per diluted common share. Those securities, which had been obtained in previous acquisitions, were sold in response to the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) commonly referred to as the “Volcker Rule.” For additional information concerning the Dodd-Frank Act and the Volcker Rule, 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.” There were no significant gains or losses on investment securities during the third quarter of 2015 or the secondfourth quarter of 2016.

On June 29, 2016, M&T announced that the Federal Reserve did not object to M&T’s revised 2016 Capital Plan. That capital plan includes the repurchase of up to $1.15 billion of common shares during the four-quarter period starting on July 1, 2016 and an increase in the quarterly common stock dividend inDuring the first quarter of 2017, ~~of up to $.05 per share to $.75 per share.~~ M&T ~~may also continue to pay dividends~~adopted new accounting guidance for share-based transactions. That guidance requires that all excess tax benefits and ~~interest on other equity and debt instruments included~~tax deficiencies associated with share-based compensation be recognized in ~~regulatory capital, including preferred stock, trust preferred securities and subordinated debt that were outstanding at December 31, 2015, consistent with~~income tax expense in the contractual terms of those instruments. Dividends are subject to declaration by M&T’s Board of Directors. Furthermore, on July 19, 2016, M&T’s Board of Directors authorized a new stock repurchase program to repurchase up to $1.15 billion of shares of M&T’s common stock subject to all applicable regulatory limitations, including those set forthincome statement. Previously, tax effects resulting from changes in M&T’s share price subsequent to the grant date were recorded through shareholders’ equity at the time of vesting or exercise. The adoption of the amended accounting guidance resulted in an $18 million reduction of income tax expense in the initial 2017 quarter, or $.12 of diluted earnings per common share.

~~On November 1, 2015,~~quarter included $23 million ($14 million after-tax effect), or $.09 per diluted common share of merger-related expenses (as described below) associated with M~~&T completed its~~&T’s acquisition of Hudson City Bancorp, Inc. (“Hudson City”)~~. Immediately following completion~~ on November 1, 2015, while during the fourth quarter of 2016, the ~~merger, Hudson City Savings Bank merged with and into~~Company made a $30 million tax-deductible cash contribution ($.12 per diluted common share) to The M&T ~~Bank,~~Charitable Foundation. As described herein under the ~~principal bank subsidiary~~heading “Other Expense” reflected in the first quarter of each year were seasonally higher stock-based compensation and employee benefits expenses.

In accordance with M~~&T. Pursuant to~~&T’s revised 2016 Capital Plan, during the ~~merger agreement,~~first quarter of 2017, M&T ~~paid cash consideration of $2.1 billion and issued 25,953,950~~repurchased 3,233,196 shares of ~~M&T~~its common stock at a total cost of $532 million and increased the quarterly common stock dividend from $.70 to $.75 per share. Repurchases of common stock in ~~exchange for Hudson City~~the final 2016 quarter totaled 300,000 shares ~~outstanding~~ at ~~the time~~a cost of ~~acquisition. Assets acquired totaled approximately $36.7 billion, including $19.0 billion of loans and leases (including approximately $234~~$37 million, of commercial real estate loans, $18.6 billion of residential real estate loans and $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 obtainedwhile in the ~~acquisition and repaying $10.6 billion of borrowings assumed~~initial 2016 quarter, M&T repurchased 948,545 shares for $100 million in ~~the transaction. The common stock issued added $3.1 billion to M&T’s common shareholders’ equity. In connection~~accordance with ~~the acquisition, the Company recorded $1.1 billion of goodwill and $132 million of core deposit intangible asset.~~its 2015 Capital Plan.

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 expenses associated with merging acquired operations into the Company, since such items are considered by management to be “nonoperating” in nature. Those merger-related expenses generally consist of professional services and other temporary help fees associated with the actual or planned conversion of systems and/or integration of operations; costs related to branch and 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 costs of completing the ~~transaction~~transactions and commencing operations in new markets and offices. ~~Those acquisition and integration-related~~As noted earlier, those expenses (herein referred to as merger-related expenses) ~~were $13 million ($8~~totaled $14 million after-tax ~~effect)~~effect in the ~~second~~first quarter of ~~2016 ($.05 per diluted common share) and aggregated $36 million ($22 million after-tax effect) for the first nine months of 2016 ($.14 per diluted common share).~~2016. There were no merger-related expenses during the ~~recent~~first quarter of 2017 or the ~~first nine months~~fourth quarter of ~~2015.~~2016. 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 ~~was $356~~totaled $354 million in the recent quarter, compared with ~~$283~~$320 million in the ~~third~~first quarter of ~~2015.~~2016. Diluted net operating earnings per common share ~~were $2.13~~ for the ~~third~~first quarter of ~~2016,~~2017 were $2.15, compared with ~~$1.95~~

$1.87 in the year-earlier quarter. Net operating income and diluted net operating earnings per common share were ~~$351~~$336 million and ~~$2.07,~~$2.01, respectively, in the ~~second~~fourth quarter of 2016. For the first nine months of 2016, net operating income and diluted net operating earnings per common share were $1.03 billion and $6.07, respectively, compared with $819 million and $5.64, respectively, in the similar 2015 period.

Net operating income in ~~each of~~ the ~~third~~initial 2017 quarter ~~of 2016, the year-earlier quarter and second quarter of 2016~~ expressed as an annualized rate of return on average tangible assets was ~~1.18%.~~1.21%, compared with 1.09% and 1.10% in the first and fourth quarters of 2016, respectively. Net operating income represented an annualized return on average tangible common equity of ~~12.77%~~13.05% in the recent quarter, compared with ~~12.98% and 12.68%~~11.62% in the ~~quarters ended September 30, 2015~~similar 2016 quarter and June 30, 2016, respectively. For the first nine months of 2016, net operating income represented an annualized return on average tangible assets and average tangible common shareholders’ equity of 1.15% and 12.36%, respectively, compared with 1.17% and 12.89%, respectively,11.93% in the ~~corresponding 2015 period.~~final quarter of 2016.

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

Taxable-equivalent net interest income was ~~$865~~$922 million in the ~~third~~initial quarter of ~~2016, 24% higher than $699~~2017, up 5% from $878 million in the year-earlier quarter. That growth resulted predominantly from ~~the impact of~~ a ~~$24.4 billion or 28% rise in average earning assets that was partially offset by a 9 basis point (hundredths 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, to ~~3.05%. The higher level of average earning assets~~3.34% in the recent quarter ~~reflected~~from 3.18% in the corresponding 2016 period. The improvement in taxable-equivalent net interest income was largely the result of the higher ~~average balances of loans and leases of $20.9 billion, (due predominantly~~interest rate environment due to ~~the Hudson City acquisition, which added $16.2 billion to average loans during the recent quarter) and interest-bearing deposits at~~actions initiated by the Federal Reserve ~~Bank~~in mid-December 2016 and mid-March 2017 to raise its target Federal funds rate by .25% at each of ~~New York~~those dates and higher average loan balances of ~~$3.6~~$2.2 billion. The narrowed net interest margin reflects the impact of the continuing low interest rate environment on yields on loans and investment securities coupled with higher rates paid on interest-bearing deposits associated with the acquisition of Hudson City. Taxable-equivalent net interest income in the recent quarter ~~declined slightly~~increased 4% from ~~$870~~$883 million in the ~~second~~final quarter of ~~2016. The favorable impact of~~2016, predominantly due to a ~~$992 million increase in average earning assets was more than offset by an 8~~26 basis point ~~narrowing~~(hundredths of one percent) widening of the net interest margin from 3.08% in the ~~recent quarter from 3.13% in the second~~fourth quarter of 2016. ~~Contributing to that narrowing were lower yields on investment securities and loans, higher rates paid on interest-bearing deposits, including~~That widening also reflected the impact of ~~time deposits~~the increases in ~~the former Hudson City markets, and increased balances on deposit at~~interest rates initiated by the Federal Reserve ~~Bank of New York. While those latter deposits added to interest income, they resulted in a lowering of the reported net interest margin.~~

For the first nine months of 2016, taxable-equivalent net interest income was $2.61 billion, up 27% from $2.05 billion in the corresponding 2015 period. That increase was predominantly attributable to higher average earning assets, which rose $25.0 billion or 29% to $112.0 billion in the first nine months of 2016. Loans obtained in the acquisition of Hudson City added $17.1 billion of average earning assets in the first nine months of 2016. Partially offsetting the rise in average earning assets was a 4 basis point narrowing of the net interest margin to 3.12% in 2016 from 3.16% in 2015. That narrowing reflected higher rates paid on interest-bearing time deposits, largely related to deposits obtained in the Hudson City acquisition.as noted above.

Average loans and leases ~~totaled $88.7~~aggregated $89.8 billion in the recent quarter, ~~up 31% from $67.8~~3% higher than $87.6 billion in the ~~third~~initial quarter of ~~2015.~~2016. Commercial loans and leases averaged ~~$21.5~~$22.3 billion in the ~~third~~first quarter of ~~2016,~~2017, up ~~$1.5~~$1.6 billion or 8% from $20.7 billion in the ~~year-earlier quarter.~~first quarter of 2016. Average commercial real estate loans ~~aggregated $31.3~~were $33.2 billion in the recent quarter, an increase of ~~$2.9~~$3.7 billion, or ~~10%~~13%, from ~~$28.3~~$29.4 billion in the ~~third quarter of 2015.~~year-earlier quarter. Reflecting ~~average balances of $15.8 billion~~ongoing repayments of loans obtained in the acquisition of Hudson City, ~~transaction,~~ average residential real estate loans ~~outstanding rose $15.7~~declined $3.7 billion or 14% to ~~$24.1~~$22.2 billion in ~~2016’s third~~the first quarter of 2017 from ~~$8.3~~$25.9 billion in the year-earlier quarter. Included in that portfolio were loans held for sale, which averaged ~~$374~~$366 million in the recent quarter and $323 million in the similar 2016 quarter. Consumer loans averaged $12.2 billion in the recently completed quarter, ~~compared with $466 million in the third quarter~~an increase of ~~2015. Consumer loans averaged $11.9 billion in 2016’s third quarter, $690~~$571 million or ~~6% higher than $11.3~~5% from $11.6 billion in the ~~third~~first quarter of ~~2015. That~~2016, predominantly due to growth ~~reflects a $519 million increase~~ in average automobile ~~loan balances.~~and recreational vehicle loans, partially offset by lower outstanding balances of home equity lines of credit.

Average loan and lease balances in the ~~third~~initial quarter of ~~2016 rose $577~~2017 decreased $180 million from $90.0 billion in the ~~second~~fourth quarter of 2016. Average commercial loan and lease balances rose $354 million, or 2%, in the recent quarter from $21.9 billion in the fourth quarter of 2016. Commercial real estate loan average balances in the initial 2017 quarter increased $353 million, or 1%, from $32.8 billion in the final three months of 2016. Reflected in average commercial real estate loan balances were loans held for sale, which averaged $169 million and $524 million in the first quarter of 2017 and the fourth quarter of 2016, respectively. Average residential real estate loans in the first three months of 2017 declined $917 million, or 4%, from $23.1 billion in the final 2016 quarter, reflecting the continued pay down of loans obtained in the acquisition of Hudson City. Average consumer loans increased $30 million in the recent quarter ~~as compared with the immediately preceding quarter as seasonal declines~~from $12.1 billion in inventory loans to automobile dealers muted growth in that category. Average commercial real estate loan balances increased $1.1 billion, or 4%, and average balances of consumer loans rose $229 million, or 2%, from the second to third quarters of 2016. Reflecting pay downs of loans obtained in the Hudson City acquisition during the recent quarter, average residential real estate loans declined $800 million, or 3%, from 2016’s ~~second~~final quarter. The accompanying table summarizes quarterly changes in the major components of the loan and lease portfolio.

													Percent Increase
													(Decrease) from
			Percent increase								1st Qtr.		1st Qtr.				4th Qtr.
			(decrease) from								2017		2016				2016
	3rd Qtr.		3rd Qtr.				2nd Qtr.				(In millions)
	2016		2015				2016
Commercial, financial, etc.	$	21,480		8		%		—		%	$	22,290		8		%		2		%
Real estate – commercial		31,252		10				4				33,175		13				1
Real estate – consumer		24,058		188				(3	)			22,179		(14	)			(4	)
Consumer
Automobile		2,791		23				4				3,019		17				3
Home equity lines and loans		5,746		(2	)			(1	)			5,577		(6	)			(2	)
Other		3,405		9				6				3,557		15				1
Total consumer		11,942		6				2				12,153		5				—
Total	$	88,732		31		%		1		%	$	89,797		3		%		—		%

For the first nine months of 2016, average loans and leases aggregated $88.2 billion, up $20.8 billion or 31% from $67.4 billion in the similar 2015 period. The most significant factors contributing to that increase were the residential real estate loans obtained in the Hudson City acquisition and growth in the commercial real estate loan and commercial loan and lease portfolios.

The investment securities portfolio averaged ~~$14.4~~$16.0 billion in ~~each of the recent~~2017’s first quarter, ~~and the third quarter of 2015, compared with $14.9~~$651 million or 4% above $15.3 billion in the ~~second~~year-earlier quarter. Investment securities averaged $15.4 billion in the final quarter of 2016. ~~For~~During the first ~~nine months~~quarter of 2017, the Company purchased $536 million of Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed securities. Similar purchases of Fannie Mae and Ginnie Mae mortgage-backed securities in the initial quarter of 2016 totaled $305 million. During the fourth quarter of 2016, the Company purchased $1.2 billion of U.S. Treasury notes and ~~2015, investment securities averaged $14.9~~$1.2 billion of Fannie Mae and ~~$14.0 billion, respectively.~~Ginnie Mae mortgage-backed securities. 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 its overall interest-rate risk profile as well as the adequacy of expected returns relative to risks assumed, including prepayments. The Company manages its investment securities portfolio, in part, to satisfy the requirements of the ~~U.S. version of the Basel Committee’s~~ Liquidity Coverage Ratio (“LCR”) ~~requirements~~ that became effective in January 2016. The LCR is intended to ensure that banks hold a sufficient amount of “high quality liquid assets” to cover the anticipated net cash outflows during a hypothetical acute 30-day stress scenario. For additional information concerning the LCR rules, refer to Part I, Item 1 of M&T’s Form 10-K for the year ended December 31, 2016 under the heading “Liquidity.”

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, the Company restructured its balance sheet by selling $5.8 billion of those securities. During the third quarter of 2016, the Company sold substantially all of the collateralized debt obligations that were held in the available-for-sale investment securities portfolio for a gain of approximately $28 million. Those securities were sold in large part in response to the provisions of the Volcker Rule. The amounts of investment securities held by the Company are influenced by such factors as demand for loans, which generally yield more than investment securities, ongoing repayments, the levels of deposits, and management of liquidity (including the LCR) and balance sheet size and resulting capital ratios.

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 ~~nine months~~quarters of 2017 and 2016 or ~~2015.~~in the final 2016 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. Those other earning assets in the aggregate averaged ~~$9.8~~$6.2 billion in the ~~recent~~recently completed quarter, compared with ~~$6.2~~$8.3 billion and ~~$8.8~~$8.9 billion in the ~~third quarter of 2015~~first and ~~the second quarter~~final quarters of 2016, respectively. Interest-bearing deposits at banks averaged ~~$9.7~~$6.2 billion, in$8.2 billion and $8.8 billion during the ~~third quarter of 2016, compared with $6.1 billion in the year-earlier quarter and $8.7 billion in 2016’s second quarter. For the nine-month~~three-month periods ended ~~September 30,~~March 31, 2017, March 31, 2016 and ~~2015, average balances~~December 31, 2016, respectively. The amounts of investment securities and other earning assets were $9.0 billion and $5.6 billion, respectively, including $8.9 billion and $5.5 billion, respectively, of interest-bearing deposits at banks. The higher levels of interest-bearing deposits at banks inheld by the ~~three-month and nine-month periods ended September 30, 2016~~Company are influenced by such factors as compared with the corresponding 2015 periods resulted largely from the Company’s decision to maintain higher 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 increased level of interest-bearing deposits at banks in the recent quarter as compared with the second quarter of 2016 was predominantly due to higher trust-related customer deposits.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 ~~aggregated $112.9~~were $112.0 billion in the ~~third~~first quarter of ~~2016,~~2017, compared with ~~$88.4~~$111.2 billion in the year-earlier quarter and ~~$111.9~~$114.3 billion in the ~~second~~fourth quarter of 2016. ~~Average earning assets totaled $112.0 billion and $87.0 billion during the nine-month periods ended September 30, 2016 and 2015, respectively.~~

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 ~~$93.2~~$94.0 billion in the ~~third~~most recent quarter, ~~of 2016, up 29% from $72.0~~compared with $89.7 billion in the year-earlier quarter, and ~~2% higher than $91.5~~$94.4 billion in the ~~second~~final quarter of 2016. ~~The Hudson City acquisition added approximately $17.0 billion~~As compared with the fourth quarter of ~~core~~2016, higher average balances of noninterest-bearing deposits ~~on November 1, 2015, including $9.7 billion of~~in 2017’s first quarter, largely due to increased trust customer deposits, were offset by declines in average time deposits, ~~$6.6 billion~~predominantly related to maturities of ~~savings~~relatively high-rate deposits ~~and $691 million~~obtained in the acquisition of ~~noninterest-bearing deposits.~~Hudson City. The ~~higher~~increase in average core deposits in the ~~two most recent quarters as compared with the third~~first quarter of ~~2015 were predominantly reflective of~~2017 from the ~~impact of the merger~~year-earlier quarter reflected higher noninterest-bearing deposits, largely associated with ~~Hudson City.~~trust customers. The following table provides an analysis of quarterly changes in the components of average core deposits. ~~For the nine-month periods ended September 30, 2016 and 2015, core deposits averaged $91.5 billion and $71.1 billion, respectively.~~

			Percent increase										Percent Increase
			(decrease) from										(Decrease) from
	3rd Qtr.		3rd Qtr.				2nd Qtr.				1st Qtr.		1st Qtr.				4th Qtr.
	2016		2015				2016				2017		2016				2016
Interest-checking deposits	$	1,194		(7	)	%		(9	)	%
Savings deposits		50,273		26				2
											(In millions)

Savings and interest-checking deposits											$	52,124		6		%		(2	)	%
Time deposits		10,997		349				(4	)			8,567		(27	)			(12	)
Noninterest-bearing deposits		30,782		9				5				33,287		15				5
Total	$	93,246		29		%		2		%	$	93,978		5		%		—		%

The Company 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 deposits, averaged ~~$1.3~~$935 million in the first quarter of 2017, compared with $1.2 billion in each of the ~~two most recent~~first and fourth quarters ~~compared with $350 million in the third quarter~~ of ~~2015. The higher averages in the two most recent quarters as compared with the third quarter of 2015 were predominantly due to deposits obtained in the acquisition of Hudson City.~~2016. Cayman Islands office deposits averaged ~~$220~~$192 million, ~~$206~~$187 million and ~~$183~~$206 million for the three-month periods ended ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and ~~June 30,~~December 31, 2016, respectively. Brokered time deposits averaged $59 million in each of the ~~two most recent~~ quarters ended March 31, 2017, March 31, 2016 and ~~in the third quarter of 2015.~~December 31, 2016. The Company also ~~has~~had brokered savings and interest-bearing transaction ~~and brokered money-market deposit~~ accounts, which in the aggregate averaged ~~$1.0~~$1.1 billion during each of the ~~two most recent~~ quarters ended March 31, 2017 and December 31, 2016, compared with $1.2 billion during the ~~third~~first quarter of ~~2015.~~2016. The levels of brokered 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 is 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 ~~$231~~$184 million in the ~~recent~~first quarter of 2017, compared with ~~$174~~$2.1 billion in the year-earlier quarter and $200 million in the ~~third quarter of 2015 and $1.1 billion in the second~~final quarter of 2016. The ~~higher level of~~decrease in such borrowings insince the ~~second~~first quarter of 2016 was predominantly due to the maturities of short-term borrowings from the Federal Home Loan Bank of New York

assumed in the Hudson City acquisition. ~~Those fixed-rate borrowings largely matured during the second quarter of 2016.~~ Included in short-term borrowings were unsecured federalfunds borrowings, which generally mature on the next business day, that averaged ~~$160~~$129 million and ~~$123~~$137 million in the ~~third~~first quarters of ~~2016~~2017 and ~~2015,~~2016, respectively, and ~~$161~~$144 million in the ~~second~~final quarter of 2016.

Long-term borrowings averaged ~~$10.3~~$8.4 billion in the ~~two most recent quarters,~~initial 2017 quarter, compared with ~~$10.1~~$10.5 billion in the ~~third~~year-earlier quarter and $9.9 billion in the fourth quarter of ~~2015.~~2016. M&T Bank, M&T’s principal bank subsidiary, has a Bank Note Program whereby M&T Bank may offer unsecured senior and subordinated ~~notes.~~notes, however, only unsecured senior notes have been issued under that program. Average balances of notes outstanding under that program were $4.5 billion, $5.4 billion, and $5.2 billion during ~~each of~~ the three-month periods ended ~~September 30,~~March 31, 2017, March 31, 2016 and ~~June 30,~~December 31, 2016, ~~and $5.5 billion during the three-month period ended September 30, 2015.~~respectively. The proceeds of the issuances of borrowings under the Bank Note Program ~~have been~~were predominantly utilized to purchase high-quality liquid assets that meet the requirements of the LCR. Outstanding balances of the senior unsecured notes totaled $4.4 billion at March 31, 2017 and $5.2 billion at December 31, 2016. Also included in average long-term borrowings were amounts borrowed from ~~various~~the Federal Home Loan Banks of New York, Atlanta and Pittsburgh of $1.2 billion in each of the ~~recent quarter, the third quarter~~initial quarters of ~~2015~~2017 and 2016 and the ~~second~~final quarter of 2016. Subordinated capital notes included in long-term borrowings averaged $1.5 billion in each of the three-month periods ended ~~September 30,~~March 31, 2017, March 31, 2016, ~~September 30, 2015~~ and ~~June 30,~~December 31, 2016. Junior subordinated debentures associated with trust preferred securities that were included in average long-term borrowings were ~~$516~~$517 million in the most recent quarter, compared with ~~$513~~$514 million in the ~~third~~first quarter of ~~2015~~2016 and ~~$515~~$516 million in the ~~second~~fourth quarter of 2016. In accordance with its 2015 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%. 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 each~~$683 million in the first quarter of ~~the two most recent quarters and $1.4~~2017, $1.9 billion in the ~~third~~first quarter of ~~2015. The increases from~~2016 and $1.5 billion in the ~~third~~fourth quarter of ~~2015 reflect~~2016. The lower average balances of repurchase agreements ~~to repurchase securities assumed~~ in ~~connection~~the recent quarter as compared with the ~~Hudson City acquisition.~~first and fourth quarters of 2016 reflect maturities in the first quarter of 2017 and fourth quarter of 2016. The repurchase agreements held at ~~September 30, 2016~~March 31, 2017 totaled $431 million and have various repurchase dates through 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 ~~September 30, 2016,~~March 31, 2017, interest rate swap agreements were used to hedge approximately ~~$1.4 billion~~$900 million 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 ~~2.85%~~3.15% in the ~~third~~first quarter of ~~2016,~~2017, compared with ~~2.93%~~3.01% in the ~~third quarter of 2015 and 2.95% in the second quarter of 2016.~~year-earlier quarter. The yield on earning assets during the recent quarter was ~~3.44%~~3.67%, ~~down 4~~up 13 basis points from ~~3.48%~~3.54% in the ~~year-earlier~~initial 2016 quarter, while the rate paid on interest-bearing liabilities ~~increased 4~~decreased one basis ~~points~~point to ~~.59% from .55%~~.52% in the ~~third~~recent quarter from .53% in the year-earlier period. In the final quarter of ~~2015. In~~2016, the ~~second quarter of 2016,~~net interest spread was 2.88%, the yield on earning assets was ~~3.51%~~3.45% and the rate paid on interest-bearing liabilities was ~~.56%~~.57%. ~~For the first nine months of 2016, the net interest spread was 2.94%, down 2 basis points from the year-earlier period.~~ The yield on earning assets and the rate paid on interest-bearing liabilities for the nine-month period ended September 30, 2016 were 3.50% and .56%, respectively, compared with 3.51% and .55%, respectively, in the first nine months of 2015. The narrowingwidening of the net interest spread in the recent quarter as compared with the ~~year-earlier quarter~~first and ~~the second quarter~~final quarters of 2016 ~~resulted~~was largely ~~from lower~~due to the effect of increases in short-term interest rates initiated by the Federal Reserve in mid-December 2016 and mid-March 2017 that contributed to higher yields on loans and ~~investment securities, higher rates paid on interest-bearing deposits (largely associated with time deposits obtained~~leases. Also contributing to the improved net interest spread in the ~~Hudson City acquisition)~~initial 2017 quarter were lower average balances of long-term borrowings and ~~higher amounts~~ of relatively low-yielding ~~balances~~deposits held at the Federal Reserve Bank of New York.

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 ~~$37.3~~$40.4 billion in the ~~recent~~first quarter of 2017, compared with ~~$32.6~~$35.1 billion and $39.0 billion in the ~~third quarter~~first and fourth quarters of ~~2015 and $35.7 billion in the second quarter of 2016.~~2016, respectively. The increases in average net interest-free funds in the two most recent quarters as compared with the ~~third~~first quarter of ~~2015~~2016 reflect higher average balances of noninterest-bearing ~~deposits and shareholders’ equity.~~deposits. Those deposits averaged ~~$30.8~~$33.3 billion, ~~$28.3~~$28.9 billion and ~~$29.2~~$31.7 billion in the quarters ended ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and ~~June 30,~~December 31, 2016, respectively. During the first nine months of 2016 and 2015, average net interest-free funds were $36.0 billion and $30.9 billion, respectively, and included average balances of noninterest-bearing deposits of $29.6 billion in 2016 and $26.9 billion in 2015. 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 merger,The growth in average noninterest-bearing deposits since the ~~third~~first quarter of ~~2015~~2016 largely reflects higher deposits of ~~commercial~~trust customers. Shareholders’ equity averaged $16.3 billion ~~$12.8 billion~~in each of the three-month periods ended March 31, 2017 and ~~$16.4~~March 31, 2016, compared with $16.7 billion in the ~~quarters~~three-month period ended September 30, 2016, September 30, 2015 and June 30, 2016, respectively. Average shareholders’ equity during the first nine months of 2016 was $16.3 billion, compared with $12.6 billion during the comparable period in 2015. The rise in average shareholders’ equity included $3.1 billion of common equity issued in connection with the acquisition of Hudson City as well as net retained earnings.December 31, 2016. Goodwill and core deposit and other intangible assets averaged $4.7 billion ~~during each of~~and the two most recent quarters, compared with $3.5 billion during the quarter ended September 30, 2015. Goodwill of $1.1 billion and 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 induring each of the ~~three-month periods~~quarters ended ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and ~~June 30,~~December 31, 2016. 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 ~~.20%~~.19% in the recent quarter, compared with ~~.21%~~.17% in the ~~third~~first quarter ~~of 2015 and .18% in the second quarter of 2016. That contribution for the first nine months~~ of 2016 and ~~2015 was .18% and~~ .20%~~, respectively.~~ in the fourth quarter of 2016.

Reflecting the changes to the net interest spread and the contribution of interest-free funds as described herein, the Company’s net interest margin was ~~3.05%~~3.34% in the recent quarter, ~~down from 3.14%~~compared with 3.18% in the ~~third~~initial quarter of ~~2015~~2016 and ~~3.13%~~3.08% in the ~~second~~final quarter of 2016. ~~During the nine-month periods ended September 30, 2016 and 2015, the net interest margin was 3.12% and 3.16%, respectively.~~ 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 ~~adversel~~yadversely impact the Company’s net interest income and net interest margin.

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 $900 million at each of March 31, 2017 and December 31, 2016, compared with $1.4 billion at ~~each of September 30, 2016, September 30, 2015 and June 30,~~March 31, 2016. 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. The $500 million decline in notional amount from March 31, 2016 reflects the expiration of a hedge transaction in December 2016 upon conversion of $500 million of fixed rate long-term borrowings to a floating rate. 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 each of the quarters ended ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and ~~June 30,~~December 31, 2016 were not material to the Company’s consolidated results of operations. The estimated aggregate fair value of interest rate swap agreements designated as fair value hedges represented gains of approximately ~~$21~~$8 million at ~~September 30, 2016, $61~~March 31, 2017, $41 million at ~~September 30, 2015, $34 million at June 30,~~March 31, 2016 and ~~$44~~$12 million at December 31, ~~2015.~~2016. 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 ~~September 30, 2016~~March 31, 2017 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~~periodic settlements and counterparty postings of $11 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%~~3.75% and ~~1.79%~~2.24%, respectively, at ~~September 30, 2016.~~March 31, 2017. 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 September 30														Three Months Ended March 31
.	2016							2015							2017							2016
															Amount			Rate(a)				Amount			Rate(a)
	Amount			Rate(a)				Amount			Rate(a)				(Dollars in thousands)
Increase (decrease) in:
Interest income	$	—			—		%	$	—			—		%	$	—			—		%	$	—			—		%
Interest expense		(9,462	)		(.05	)			(10,999	)		(.08	)			(3,648	)		(.02	)			(10,333	)		(.05	)
Net interest income/margin	$	9,462			.03		%	$	10,999			.05		%	$	3,648			.01		%	$	10,333			.04		%
Average notional amount	$	1,400,000						$	1,400,000						$	900,000						$	1,400,000
Rate received (b)					4.42		%					4.42		%					3.75		%					4.42		%
Rate paid (b)					1.68		%					1.25		%					2.13		%					1.45		%

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~~bank 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 to provide liquidity and enhance regulatory capital ratios. Such notes generally qualify under the Federal Reserve Board’s risk-based capital guidelines for inclusion in the Company’s regulatory capital. However, pursuant to the Dodd-Frank Act, the Company’s junior subordinated debentures associated with trust preferred securities have been phased-out of the definition of Tier 1 capital. ~~Effective January 1, 2015, 75% of such junior subordinated debentures were excluded from the Company’s Tier 1 capital, and beginning~~Beginning January 1, 2016 ~~100% have been excluded. The amounts excluded from~~those instruments are considered Tier 12 capital and are only includable in total regulatory 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 ~~totaled $159~~were $128 million, ~~$122~~$157 million and ~~$99~~$112 million at ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and December 31, ~~2015,~~2016, respectively. 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 ~~$223~~$193 million at ~~September 30, 2016, $206~~March 31, 2017, $167 million at ~~September 30, 2015~~March 31, 2016 and ~~$170~~$202 million at December 31, ~~2015.~~2016. The Company has also benefited from the placement of brokered deposits. The Company ~~has~~had brokered savings and interest-bearing ~~transaction and brokered money-market~~checking deposit accounts which aggregated approximately ~~$1.1 billion at September 30, 2016 and~~ $1.2 billion at each of ~~September 30, 2015~~March 31, 2017 and December 31, ~~2015.~~2016, compared with $1.1 billion at March 31, 2016. Brokered time deposits were not a significant source of funding as of those dates.

The Company’s ability to obtain funding from ~~the sources noted above or from~~these 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, 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 $73~~aggregated $1 million at ~~September 30,~~March 31, 2017, $37 million at March 31, 2016 ~~(substantially all of which were remarketed in October 2016)~~ and ~~less than $1~~$30 million at December 31, ~~2015, while there were no outstanding VRDBs in the Company’s trading account at September 30, 2015.~~2016. The total amount of VRDBs outstanding backed by M&T Bank letters of credit was ~~$1.6~~$1.3 billion at ~~September 30,~~each of March 31, 2017 and December 31, 2016, compared with ~~$1.8 billion at September 30, 2015 and~~ $1.7 billion at ~~December~~March 31, ~~2015.~~2016. 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 that 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~~bank subsidiaries, which are subject to various regulatory limitations. Dividends from any ~~banking~~bank 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 ~~September 30, 2016~~March 31, 2017 approximately ~~$985~~$648 million was available for payment of dividends to M&T from ~~banking~~bank 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 enacted the LCR 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 was January 1, 2016, subject to a phase-in period. The~~ Company has taken steps ~~as noted herein~~ to ~~enhance its~~maintain appropriate liquidity and is in compliance with the ~~phase-in requirements of the~~LCR 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 ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 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	September 30, 2016			December 31, 2015			March 31, 2017			December 31, 2016
							(In thousands)

+200 basis points	$	278,164			243,958		$	204,102			227,283
+100 basis points		162,671			145,169			139,298			147,400
-50 basis points		(114,108	)		(99,603	)		(93,725	)		(98,945	)

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 ~~increases~~changes in interest rates during a twelve-month period of 100 and 200 basis ~~points,~~point increases and a 50 basis point decrease, as compared with the ~~assumed~~ base ~~scenario, as well as a gradual decrease of 50 basis points.~~scenario. In the declining rate scenario, the rate changes may be limited to lesser amounts such that interest rates remain positive on all points of 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 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. Given recent increases in short-term interest rates,

management believes that exposure to potential volatility of net interest income has recently increased. As a result, in 2017 management is adding interest rate swap agreements designated as hedging instruments to mitigate the Company’s exposure to such potential volatility.

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 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 $21.2~~totaled $22.3 billion at ~~September 30, 2016, compared with $17.6~~March 31, 2017, $18.9 billion at ~~September 30, 2015~~March 31, 2016 and ~~$18.4~~$21.6 billion at December 31, ~~2015.~~2016. The notional amounts of foreign currency and other option and futures contracts entered into for trading account purposes ~~totaled $891~~were $496 million at ~~September 30, 2016,~~March 31, 2017, compared with ~~$1.6~~$2.8 billion at ~~each of September 30, 2015~~March 31, 2016 and $471 million at December 31, ~~2015.~~2016. Although the notional amounts of these contracts are not recorded in the consolidated balance sheet, the unsettled 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 ~~totaled $489~~recognized on the balance sheet aggregated $175 million and ~~$293~~$139 million, respectively, at ~~September 30, 2016, $341~~March 31, 2017. Effective January 2017, certain clearinghouse exchanges revised their rules to re-characterize required collateral postings for changes in fair value of exchange-traded derivatives as legal settlements of those positions. As a result, the fair value asset and liability amounts at March 31, 2017 have been reduced by contractual settlements of $112 million and ~~$233~~$25 million, respectively. The fair values of trading account assets and liabilities were $468 million and $296 million, respectively, at ~~September 30, 2015,~~March 31, 2016, and ~~$274~~$324 million and ~~$161~~$174 million, respectively, at December 31, ~~2015.~~2016. Included in trading account assets ~~at September 30, 2016~~ were assets related to deferred compensation plans ~~totaling $23~~aggregating $22 million at each of ~~September 30,~~March 31, 2017, March 31, 2016 and ~~September 30, 2015, compared with $24 million at~~ December 31, ~~2015.~~2016. Changes in the fair values 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 ~~September 30, 2016~~March 31, 2017 were ~~$26~~$25 million of liabilities related to deferred compensation plans, compared with ~~$27~~$26 million at ~~September 30, 2015~~each of March 31 and ~~$28 million at~~ December 31, ~~2015.~~2016. 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 ~~$28 million, $25 million and $33~~$24 million at ~~September 30, 2016, September 30, 2015~~each of March 31, 2017 and December 31, ~~2015, respectively.~~2016, compared with $48 million at March 31, 2016.

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 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 ~~third~~initial quarter of ~~2016~~2017 was ~~$47~~$55 million, compared with ~~$44~~$49 million in the year-earlier quarter and ~~$32~~$62 million in the ~~second~~fourth quarter of 2016. ~~For the nine-month periods ended September 30, 2016 and 2015, the provision for credit losses was $128 million and $112 million, respectively.~~ Net charge-offs of loans were ~~$41~~$43 million in the recent quarter, compared with ~~$40~~$42 million and $49 million in the ~~third quarter~~first and fourth quarters of ~~2015 and $24 million in the second quarter of 2016.~~2016, respectively. Net charge-offs as an annualized percentage of average loans and leases were .19% in the ~~third quarter~~first quarters of 2017 and 2016, compared with ~~.24% and .11%~~.22% in the ~~third quarter of 2015 and the second quarter of~~final 2016 respectively. Net charge-offs for the nine-month periods ended September 30 aggregated $108 million in 2016 and $98 million in 2015, representing an annualized rate of .16% and .19%, respectively, of average loans and leases.quarter. A summary of net charge-offs by loan type is presented in the table that follows.

									First Quarter 2017		First Quarter 2016			Fourth Quarter 2016
	2015								(In thousands)
	1st Qtr.		2nd Qtr.		3rd Qtr.		Year- to-date
Commercial, financial, leasing, etc.	$	8,411		4,056		21,590		34,057	$	11,896		902			17,190
Real estate:
Commercial		6,094		2,429		84		8,607		3,971		(1,141	)		886
Residential		2,129		2,071		2,143		6,343		4,752		5,085			4,978
Consumer		19,555		12,830		16,372		48,757		21,948		37,394			26,070
	$	36,189		21,386		40,189		97,764	$	42,567		42,240			49,124

~~Included in net~~Net charge-offs of commercial loans and leases ~~were~~in the first quarter of 2017 included a $6 million charge-off associated with a producer of powdered cellulose and fiber filler products used for food and industrial applications, and in the final 2016 quarter included a $12 million ~~of loans to a commercial maintenance services provider in the third quarter of 2016 and $6 million related to a loan~~charge-off associated with a ~~general contractor in the greater New York City region in the third quarter~~multi-regional manufacturer of ~~2015. Reflected in net commercial loan~~refractory brick and ~~lease charge-offs in the second quarter of 2016 was a $7 million recovery of a previously charged-off loan.~~other castable products. Included in net charge-offs of consumer loans and leases were net charge-offs during the quarters ended ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and ~~June 30,~~December 31, 2016, respectively, of: automobile loans of $7$9 million, $2$11 million and $6$8 million; recreational vehicle loans of $4$5 million, $3$12 million and $3$5 million; and home equity loans and lines of credit secured by one-to-four family residential properties of $5$3 million, $3$5 million and $4 million. ~~During~~Beginning in the first ~~three quarters~~quarter of 2016, the Company accelerated the charge off of 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 level of the allowance for credit losses and were charged-off following the Company’s normal charge-off procedures to the extent the loans subsequently became delinquent. Charge-offs of such loans totaled $7 million in the recent quarter, ~~$5 million in the second quarter and~~ $14 million in the ~~initial~~first quarter of 2016 and $6 million in the final quarter of 2016 and included $4$5 million, $2$11 million and ~~$11~~$4 million, respectively, of loan balances with a current payment status at the time of charge-off. For the nine-month periods ended September 30, 2016 and 2015, net consumer loan charge-offs included the following: automobile loans of $24 million and $8 million, respectively; recreational vehicles loans of $19 million and $9 million, respectively; and home equity loans and lines of credit of $14

~~million and $12 million, respectively. In addition, reflected in consumer loan charge-offs in the second quarter of 2016 was a $6 million charge-off of an individual personal usage loan.~~

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. 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 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 associated with such ~~loans.~~loans, including its estimates of lifetime principal losses. 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 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 acquired at a discount subsequent to 2008 and accounted for based on expected cash flows was ~~$2.0~~$1.6 billion, $2.3 billion and $1.8 billion at ~~each of September 30,~~March 31, 2017, March 31, 2016 and ~~2015, and $2.5 billion at~~ December 31, ~~2015.~~2016, respectively. The decrease in such loans since ~~December~~March 31, ~~2015~~2016 was largely attributable to payments received. The nonaccretable balance related to remaining principal losses associated with loans acquired at a discount as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 is presented in the accompanying table.

	Remaining balance				Remaining balance
	September 30, 2016		December 31, 2015		March 31, 2017		December 31, 2016
	(in thousands)				(In thousands)
Commercial, financing, leasing, etc.	$	5,484		10,806

Commercial, financial, leasing, etc.					$	5,886		4,794
Commercial real estate		39,577		48,173		39,096		39,867
Residential real estate		70,088		113,478		47,691		59,657
Consumer		11,917		17,952		11,170		11,275
Total	$	127,066		190,409	$	103,843		115,593

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 ~~$15.1~~$13.5 billion and ~~$17.8~~$14.2 billion at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. In addition to the impact of estimated credit losses included in the determination of fair value of those loans at the acquisition date, a $21 million provision for credit losses was also recorded in the fourth quarter of 2015 for incurred losses inherent in those loans at that time. 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. SubsequentRather, subsequent to the acquisition date, incurred losses associated with those loans are evaluated using methods consistent with those applied to originated loans and such losses are considered by management in evaluating the Company’s allowance for credit losses.

Nonaccrual loans ~~totaled $837~~aggregated $927 million or ~~.93%~~1.04% of total loans and leases outstanding at ~~September 30, 2016,~~March 31, 2017, compared with ~~$787~~$877 million or ~~1.15% at September 30, 2015, $799~~1.00% a year earlier and $920 million or ~~.91%~~1.01% at December 31, ~~2015 and $849 million or .96% at June 30,~~ 2016. The ~~increases in~~higher levels of nonaccrual loans at the two most recent quarter-ends as compared with ~~September 30, 2015 and December~~March 31, ~~2015~~2016 reflect the ~~normal~~expected migration of previously performing residential real estate loans obtained in the acquisition of Hudson City that ~~subsequently~~ became past due over 90 days ~~past due in~~after March 31, 2016. Nonaccrual Hudson City-related residential real estate loans totaled $207 million at March 31, 2017, $79 million at March 31, 2016 and ~~as such, were not identifiable as purchased impaired as of the acquisition date. Those nonaccrual loans totaled $149~~$190 million at ~~September 30, 2016 and $113 million at June 30,~~December 31, 2016.

Accruing loans past due 90 days or more (excluding loans acquired at a discount) were ~~$317~~$280 million, or ~~.35%~~.31% of total loans and leases at ~~September 30, 2016,~~March 31, 2017, compared with ~~$231~~$336 million or ~~.34%~~.38% at ~~September 30, 2015, $317~~March 31, 2016 and $301 million or ~~.36%~~.33% at December 31, ~~2015 and $298 million or .34% at June 30,~~ 2016. Those ~~loans~~amounts included loans guaranteed by government-related entities of ~~$282~~$253 million, ~~$194 million, $276~~$279 million and ~~$270~~$283 million at ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015,~~and December 31, 2015 and June 30, 2016, respectively. Such guaranteed loans obtained in the acquisition of Hudson City totaled $46 million, $44 million and $45 million at September 30, 2016, December 31, 2015 and June 30, 2016, respectively. 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 ~~$225~~$197 million at ~~September 30, 2016, $182~~March 31, 2017, $226 million at ~~September 30, 2015, $221~~March 31, 2016 and $224 million at December 31, ~~2015 and $218 million at June 30,~~ 2016. 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.

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~~contractually required 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 ~~$617~~$553 million at ~~September 30, 2016,~~March 31, 2017, or ~~.7%~~.6% of total loans. Of that amount, ~~$542~~$488 million was related to the Hudson City acquisition. Purchased impaired loans totaled ~~$149~~$716 million and ~~$768~~$578 million at ~~September 30~~March 31, 2016 and December 31, ~~2015,~~2016, respectively.

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 totaled ~~$65~~$64 million at ~~September 30, 2016,~~March 31, 2017, compared with ~~$81~~$62 million at ~~September 30, 2015~~March 31, 2016 and ~~$68~~$61 million at December 31, ~~2015.~~2016.

~~In an effort to assist borrowers, the~~The Company modified the terms of select ~~loans.~~loans in an effort to assist borrowers. 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 ~~$170~~$174 million, ~~$153~~$155 million and ~~$147~~$171 million at ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and December 31, ~~2015,~~2016, respectively.

~~Nonaccrual commercial~~Commercial loans and leases classified as nonaccrual totaled ~~$231~~$261 million at ~~September 30,~~each of March 31, 2017 and December 31, 2016, ~~$224~~compared with $280 million at ~~September 30, 2015, $242 million at December~~March 31, ~~2015 and $241 million at June 30,~~ 2016.

Commercial real estate loans ~~classified as~~in nonaccrual ~~totaled $198~~status aggregated $211 million at ~~September 30,~~each of March 31, 2017 and December 31, 2016, ~~$235 million at September 30, 2015,~~compared with $224 million at ~~December~~March 31, ~~2015 and $218 million at June 30,~~ 2016. Nonaccrual commercial real estate loans included construction-related loans of ~~$41~~$28 million, ~~$58 million, $45~~$53 million and ~~$46~~$35 million at ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015,~~and December 31, ~~2015 and June 30,~~ 2016, respectively. Those nonaccrual construction loans included loans to residential builders and developers of ~~$20~~$14 million, ~~$46 million, $28~~$32 million and ~~$24~~$17 million at ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015,~~and December 31, ~~2015 and June 30,~~ 2016, respectively. 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 ~~September 30, 2016~~March 31, 2017 is presented in the accompanying table.

																						Quarter Ended
															March 31, 2017							March 31, 2017
	September 30, 2016							Quarter ended September 30, 2016									Nonaccrual					Net Charge-offs (Recoveries)
			Nonaccrual					Net charge-offs (recoveries)							Outstanding Balances(b)		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	$	711,291	$	1,713		.24	%	$	(88	)		(.05	)	%	$	509,409	$	899		.18	%	$	(42	)		(.03	)	%
Pennsylvania		128,775		16,401		12.74			7			.02				160,333		10,843		6.76			(14	)		(.04	)
Mid-Atlantic(a)		469,941		2,642		.56			(1,172	)		(.95	)			498,604		2,304		.46			(120	)		(.10	)
Other		580,487		1,232		.21			—			—				603,505		1,188		.20			—			—
Total	$	1,890,494	$	21,988		1.16	%	$	(1,253	)		(.26	)	%	$	1,771,851	$	15,234		.86	%	$	(176	)		(.04	)	%

~~Residential~~Nonaccrual residential real estate loans ~~classified as nonaccrual were $303~~totaled $350 million at ~~September 30, 2016,~~March 31, 2017, compared with ~~$218~~$263 million at ~~September 30, 2015, $215~~March 31, 2016 and $336 million at December 31, ~~2015, and $282 million at June 30,~~ 2016. The increase in residential real estate loans classified as nonaccrual at the two most recent quarter-ends as compared with ~~December~~March 31, ~~2015~~2016 reflects the ~~normal~~expected migration of previously performing loans obtained in the acquisition of Hudson City that ~~subsequently~~ became more than 90 days ~~delinquent in 2016.~~delinquent. Such nonaccrual residential real estate loans aggregated ~~$113~~$207 million at ~~June 30,~~March 31, 2017, $79 million at March 31, 2016 and ~~$149~~$190 million at ~~September 30,~~December 31, 2016. Those loans could not be identified as purchased impaired loans at the acquisition date because the borrowers were making loan payments at the time and the loans were not recorded at a discount. Included in residential real estate loans classified as nonaccrual were limited documentation first mortgage loans of ~~$89~~$113 million, ~~$64 million, $62~~$76 million and ~~$79~~$107 million at ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015,~~and December 31, ~~2015 and June 30,~~ 2016, 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 at a discount) ~~totaled $281~~aggregated $251 million ~~(including $47 million obtained in the acquisition of Hudson City)~~ at ~~September 30, 2016,~~March 31, 2017, compared with ~~$194~~$279 million at ~~September 30, 2015, $284~~March 31, 2016 and $281 million at December 31, ~~2015 and $271 million at June 30,~~ 2016. 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 ~~September 30, 2016~~March 31, 2017 is presented in the accompanying table.

Nonaccrual consumer loans ~~totaled~~were $104 million ~~and~~at March 31, 2017, compared with $110 million at ~~September 30,~~March 31, 2016 and ~~2015, respectively, compared with $118~~$112 million at December 31, ~~2015 and $108 million at June 30,~~ 2016. Included in nonaccrual consumer loans at ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015,~~and December 31, ~~2015 and June 30,~~ 2016 ~~were~~were: automobile loans of ~~$14~~$16 million, ~~$14 million, $17~~$15 million, and ~~$12~~$19 million, respectively; recreational vehicle loans of $6$5 million, ~~$8 million, $9~~$10 million and $5$7 million, respectively; and outstanding balances of home equity loans and lines of credit of $80 million, ~~$78 million, $84~~$79 million and ~~$87~~$82 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 ~~September 30, 2016~~March 31, 2017 is presented in the accompanying table.

Information about past due and nonaccrual loans as of March 31, 2017 and December 31, 2016 is also included in note 4 of Notes to Financial Statements.

	September 30, 2016							Quarter ended September 30, 2016							March 31, 2017							Quarter Ended March 31, 2017
			Nonaccrual					Net charge-offs (recoveries)									Nonaccrual					Net Charge-offs (Recoveries)
											Annualized percent of														Annualized Percent of
					Percent of						average								Percent of						Average
	Outstanding				outstanding						outstanding				Outstanding				Outstanding						Outstanding
	balances		Balances		balances			Balances			balances				Balances		Balances		Balances			Balances			Balances
	(dollars in thousands)														(Dollars in thousands)
Residential mortgages:
New York	$	6,455,531	$	69,001		1.07	%	$	569			.03		%	$	6,032,744	$	72,668		1.20	%	$	1,647			.11	%
Pennsylvania		1,679,066		15,373		.92			419			.10				1,553,283		17,762		1.14			(43	)		(.01	)
Maryland		1,271,586		15,509		1.22			414			.13				1,206,961		17,118		1.42			49			.02
New Jersey		5,441,245		40,817		.75			1,206			.09				4,907,675		48,178		.98			608			.05
Other Mid-Atlantic (a)		1,097,937		13,634		1.24			11			.01				1,043,272		12,034		1.15			(42	)		(.02	)
Other		3,872,475		58,793		1.52			644			.06				3,534,328		69,062		1.95			1,316			.15
Total	$	19,817,840	$	213,127		1.08	%	$	3,263			.06		%	$	18,278,263	$	236,822		1.30	%	$	3,535			.08	%
Residential construction loans:
New York	$	6,628	$	19		.28	%	$	(1	)		(.05	)	%	$	4,327	$	—		—	%	$	—			—	%
Pennsylvania		1,921		350		18.23			—			—				1,937		371		19.16			5			.99
Maryland		3,529		—		—			—			—				1,828		—		—			—			—
New Jersey		962		—		—			—			—				1,821		—		—			—			—
Other Mid-Atlantic (a)		4,782		—		—			—			—				4,115		120		2.90			—			—
Other		6,481		400		6.18			(2	)		(.13	)			6,440		372		5.78			(2	)		(.11	)
Total	$	24,303	$	769		3.16	%	$	(3	)		(.05	)	%	$	20,468	$	863		4.22	%	$	3			.06	%
Limited documentation first mortgages:
New York	$	1,580,261	$	29,083		1.84	%	$	1,324			.33		%	$	1,458,812	$	41,119		2.82	%	$	780			.21	%
Pennsylvania		79,805		6,751		8.46			41			.20				73,449		7,987		10.87			(1	)		(.01	)
Maryland		47,172		2,656		5.63			149			1.24				41,949		3,441		8.20			36			.34
New Jersey		1,457,583		24,326		1.67			59			.02				1,327,869		29,777		2.24			(15	)		(.01	)
Other Mid-Atlantic (a)		41,776		2,459		5.89			7			.07				35,894		3,187		8.88			57			.62
Other		535,680		24,081		4.50			(5	)		(.01	)			487,787		27,049		5.55			357			.29
Total	$	3,742,277	$	89,356		2.39	%	$	1,575			.16		%	$	3,425,760	$	112,560		3.29	%	$	1,214			.14	%
First lien home equity loans and lines of credit:
New York	$	1,307,699	$	15,890		1.22	%	$	370			.11		%	$	1,267,271	$	15,125		1.19	%	$	1,316			.42	%
Pennsylvania		841,284		9,663		1.15			471			.22				811,212		8,824		1.09			202			.10
Maryland		689,906		7,593		1.10			97			.06				667,613		6,632		.99			560			.34
New Jersey		43,887		489		1.11			—			—				44,534		564		1.27			(1	)		(.01	)
Other Mid-Atlantic (a)		209,854		1,029		.49			9			.02				204,081		1,723		.84			12			.02
Other		20,253		1,289		6.36			—			—				21,287		1,262		5.93			—			—
Total	$	3,112,883	$	35,953		1.15	%	$	947			.12		%	$	3,015,998	$	34,130		1.13	%	$	2,089			.28	%
Junior lien home equity loans and lines of credit:
New York	$	919,745	$	24,516		2.67	%	$	1,469			.63		%	$	891,927	$	23,339		2.62	%	$	352			.16	%
Pennsylvania		371,835		5,250		1.41			713			.76				355,507		6,190		1.74			145			.16
Maryland		818,865		8,883		1.08			919			.44				774,931		8,955		1.16			19			.01
New Jersey		129,658		1,452		1.12			378			1.16				128,078		1,352		1.06			21			.07
Other Mid-Atlantic (a)		320,659		1,506		.47			(7	)		(.01	)			307,238		3,420		1.11			16			.02
Other		39,121		1,729		4.42			199			1.99				41,883		2,060		4.92			(20	)		(.20	)
Total	$	2,599,883	$	43,336		1.67	%	$	3,671			.56		%	$	2,499,564	$	45,316		1.81	%	$	533			.09	%
Limited documentation junior lien:
New York	$	831	$	—		—	%	$	—			—		%	$	821	$	—		—	%	$	(1	)		(.45	%)
Pennsylvania		337		—		—			—			—				331		—		—			—			—
Maryland		1,583		62		3.93			—			—				1,382		91		6.60			—			—
New Jersey		387		—		—			(1	)		(1.47	)			384		—		—			(36	)		(37.71	)
Other Mid-Atlantic (a)		696		—		—			—			—				648		—		—			—			—
Other		4,787		272		5.68			28			2.32				4,601		425		9.23			(12	)		(1.06	)
Total	$	8,621	$	334		3.87	%	$	27			1.23		%	$	8,167	$	516		6.32	%	$	(49	)		(2.41	%)

Real estate and other foreclosed assets totaled ~~$160~~$119 million at ~~September 30, 2016,~~March 31, 2017, compared with ~~$66~~$188 million at ~~September 30, 2015, $195~~March 31, 2016 and $139 million at December 31, ~~2015 and $172 million at June 30,~~ 2016. The ~~higher levels of~~decline in real estate and other foreclosed assets ~~at September 30,~~since

March 31, 2016 ~~December 31, 2015 and June 30, 2016 reflect~~was attributable to lower levels of residential real estate properties associated with the

Hudson City ~~acquisition, which totaled $97 million, $126 million and $109 million at those respective dates.~~acquisition. Gains or losses resulting from ~~the~~ sales of real estate and other foreclosed assets were not material in the three-month periods ended ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ or ~~June 30,~~December 31, 2016. At ~~September 30, 2016,~~March 31, 2017, the Company’s holding of residential real estate-related properties comprised approximately ~~92%~~94% of foreclosed assets.

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

NONPERFORMING ASSET AND PAST DUE, RENEGOTIATED AND IMPAIRED LOAN DATA Dollars in thousands
																2017			2016 Quarters
																First Quarter			Fourth			Third			Second			First
	2016 Quarters									2015 Quarters						(Dollars in thousands)
	Third			Second			First			Fourth			Third
Nonaccrual loans	$	837,362			848,855			876,691			799,409			787,098		$	926,675			920,015			837,362			848,855			876,691
Real estate and other foreclosed assets		159,881			172,473			188,004			195,085			66,144			119,155			139,206			159,881			172,473			188,004
Total nonperforming assets	$	997,243			1,021,328			1,064,695			994,494			853,242		$	1,045,830			1,059,221			997,243			1,021,328			1,064,695
Accruing loans past due 90 days or more(a)	$	317,282			298,449			336,170			317,441			231,465		$	280,019			300,659			317,282			298,449			336,170
Government guaranteed loans included in totals above:
Nonaccrual loans	$	47,130			52,486			49,688			47,052			48,955		$	39,610			40,610			47,130			52,486			49,688
Accruing loans past due 90 days or more		282,077			269,962			279,340			276,285			193,998			252,552			282,659			282,077			269,962			279,340
Renegotiated loans	$	217,559			211,159			200,771			182,865			189,639		$	191,343			190,374			217,559			211,159			200,771
Acquired accruing loans past due 90 days or more(b)	$	65,182			68,591			61,767			68,473			80,827		$	63,732			61,144			65,182			68,591			61,767
Purchased impaired loans(c):
Outstanding customer balance	$	981,105			1,040,678			1,124,776			1,204,004			278,979		$	890,431			927,446			981,105			1,040,678			1,124,776
Carrying amount		616,991			662,059			715,874			768,329			149,421			552,935			578,032			616,991			662,059			715,874

Nonaccrual loans to total loans and leases, net of unearned discount		.93	%		.96	%		1.00	%		.91	%		1.15	%		1.04	%		1.01	%		.93	%		.96	%		1.00	%
Nonperforming assets to total net loans and leases and real estate and other foreclosed assets		1.11	%		1.15	%		1.21	%		1.13	%		1.24	%		1.17	%		1.16	%		1.11	%		1.15	%		1.21	%
Accruing loans past due 90 days or more (a) to total loans and leases, net of unearned discount		.35	%		.34	%		.38	%		.36	%		.34	%		.31	%		.33	%		.35	%		.34	%		.38	%

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, 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 ~~September 30, 2016~~March 31, 2017 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) slower growth in private sector employment in upstate New York and central 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~~volatile nature of global ~~commodity and export~~ markets, including the impact international economic conditions could have on the U.S. economy; Federal Reserve positioning of monetary policy; and continued stagnant population growth in the upstate New York and central Pennsylvania regions (approximately 55% of the Company’s loans and leases are to customers in New York State and Pennsylvania).

The Company utilizes a loan grading system ~~that~~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 $2.5 billion at ~~September 30, 2016,~~March 31, 2017, compared with $2.3 billion at ~~September 30, 2015, $2.1~~March 31, 2016 and $2.4 billion at December 31, ~~2015 and $2.4 billion at June 30,~~ 2016. ~~Increases in criticized loan balances since December 31, 2015 included approximately $265 million categorized as commercial real estate loans and $112 million as commercial loans.~~ Approximately ~~97%~~99% of loan balances added to the criticized category during the ~~first nine months of 2016~~recent quarter were less than 90 days past due and ~~95%~~91% had a current payment status. Given payment performance, amount of supporting collateral, and, in certain instances, the existence of loan guarantees, the Company still expects to collect the full outstanding principal balance on most of those loans.

Loan officers in different geographic locations with the support of ~~loan review~~the Company’s credit department 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~~credit department reviews all criticized commercial loans and commercial real estate loans greater than $1 million to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. 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~~credit 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 securing the Company’s residential real estate loans 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~~charged off to estimated net collateral value shortly after the Company is notified of such filings. At ~~September 30, 2016,~~March 31, 2017, approximately ~~54%~~55% 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 ~~71%~~70% (or approximately 32% 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 ~~September 30, 2016,~~March 31, 2017, the balance of junior lien loans and lines that were in nonaccrual status solely as a result of first lien loan performance was ~~$14~~$13 million, compared with ~~$22~~$23 million at ~~each of September 30, 2015~~March 31, 2016 and ~~December 31, 2015 and $16~~$12 million at ~~June 30,~~December 31, 2016. 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. When evaluating individual home equity loans and lines of credit for ~~charge off, if the Company does not know the amount~~charge-off and for purposes 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~~in determining the allowance for credit losses, ~~also assumes no reductions in outstanding principal~~the Company gives consideration to the required repayment of any first lien ~~loans since the origination of the junior lien loan.~~positions related to collateral property. Home equity line of credit terms vary but such lines are generally originated with an open draw period of ten years followed by an amortization period of up to twenty years. At ~~September 30, 2016,~~March 31, 2017, approximately ~~85%~~83% 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 ~~10%~~21% were making contractually allowed payments that do not include any 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 ~~46%~~45% 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. For loans acquired at a discount, the impact of estimated future credit losses represents the predominant difference between contractually required payments and the cash flows expected to be 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 ~~September 30, 2016~~March 31, 2017 appropriately reflected credit losses inherent in the portfolio as of that date. The allowance for credit losses was ~~$976 million,~~$1.0 billion, or ~~1.09%~~1.12% of total loans and leases at ~~September 30, 2016,~~March 31, 2017, compared with ~~$934~~$963 million or ~~1.36%~~1.10% at ~~September 30, 2015, $956~~March 31, 2016 and $989 million or 1.09% at December 31, ~~2015 and $970 million or 1.10% at June 30,~~ 2016. 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 have been recorded at estimated fair 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 September 30, 2016, December 31, 2015 and June 30, 2016 as compared with September 30, 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 portfolio 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%~~108% at ~~September 30, 2016,~~March 31, 2017, compared with ~~119%~~110% at ~~September 30, 2015, 120%~~March 31, 2016 and 107% at December 31, ~~2015 and 114% at June 30,~~ 2016. 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.~~Company’s allowance for credit losses. The level of the allowance reflects management’s evaluation of the loan and lease portfolio as of each respective date.

Other income ~~aggregated $491~~totaled $447 million in the ~~third~~initial quarter of 2017, compared with $421 million in the first quarter of 2016 ~~compared with $440~~and $465 million in the ~~year-earlier quarter and $448 million in the second~~fourth quarter of 2016. The rise in other income during the recent quarter as compared with the ~~third~~year-earlier quarter ~~of 2015~~ resulted largely from higher ~~mortgage banking revenues,~~ trust income and ~~gains on bank investment securities, partially offset by lower gains on~~credit-related fees. As compared with the ~~sale of previously leased equipment. The improvement from the second~~fourth quarter of 2016, ~~resulted from higher~~the recent quarter decline in other income reflected lower mortgage banking ~~revenues, service charges on deposit accounts and gains on investment securities.~~revenues.

Mortgage banking revenues were ~~$104~~$85 million in the ~~recently completed~~recent quarter, compared with ~~$84~~$82 million in the ~~third~~year-earlier quarter ~~of 2015~~ and ~~$89~~$99 million in the ~~second quarter of 2016.~~final 2016 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 ~~$67 million in each of the third quarters of 2016 and 2015 and $65~~$58 million in the ~~second~~first quarter of 2017, compared with $60 million in the year-earlier quarter and $63 million in the fourth quarter of 2016. The ~~higher level of~~lower residential mortgage banking revenues in the recent quarter as compared with the ~~immediately preceding~~final quarter ~~reflects an increase in revenues associated with loan~~of 2016 were largely the result of decreased gains from origination ~~activities.~~activities, due to lower volumes of loans originated for sale and narrower margins on those originations.

New commitments to originate residential real estate loans to be sold were approximately ~~$836~~$727 million in 2017’s first quarter, compared with $659 million in the ~~recent~~year-earlier quarter ~~compared with $870 million~~ and ~~$858~~$760 million in the ~~third~~final quarter of ~~2015 and the second quarter of 2016, respectively.~~2016. Realized gains from sales of residential real estate loans and loan servicing rights and recognized net unrealized gains ~~and~~or 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 ~~$21~~$14 million in each of the ~~recently completed quarter,~~first quarters of 2017 and 2016, compared with gains of ~~$18 million and $19~~$17 million in the ~~third~~fourth quarter of ~~2015 and the second quarter of 2016, respectively.~~2016.

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 three-month periods ended September 30, 2016, September 30, 2015 and June 30, 2016 were reduced by approximately $1 million related to actual or anticipated settlement of repurchase obligations.

Loans held for sale that were secured by residential real estate ~~totaled $415~~aggregated $297 million and $269 million at ~~September 30,~~March 31, 2017 and 2016, ~~$422 million at September 30, 2015~~respectively, and ~~$353~~$414 million at December 31, ~~2015.~~2016. Commitments to sell residential real estate loans and commitments to originate residential real estate loans for sale at pre-determined rates ~~were $845~~totaled $641 million and ~~$636~~$474 million, respectively, at ~~September 30, 2016, $817~~March 31, 2017, compared with $646 million and ~~$587~~$521 million, respectively, at ~~September 30, 2015~~March 31, 2016, and ~~$687~~$777 million and ~~$489~~$479 million, respectively, at December 31, ~~2015.~~2016. Net recognized unrealized gains on residential real estate loans held for sale, commitments to sell loans, and commitments to originate loans for sale were ~~$22~~$13 million and $17 million at ~~September 30,~~March 31, 2017 and March 31, 2016, ~~$18 million at September 30, 2015~~respectively, and ~~$16~~$15 million at December 31, ~~2015.~~2016. Changes in such net unrealized gains are recorded in mortgage banking revenues and resulted in net ~~increases~~decreases in revenues of $3$2 million and $8 million in ~~each of~~ the two most recent ~~quarter and the second quarter of 2016,~~quarters, compared with a net ~~decrease~~increase in revenues of ~~less than~~ $1 million in the ~~third~~first quarter of ~~2015.~~2016.

Revenues from servicing residential real estate loans for others were ~~$46 million in each of the recent quarter and the second quarter of 2016, compared with $49~~$44 million in the ~~third~~first quarter of ~~2015. Revenues earned for sub-servicing loans included in those amounts were $25~~2017, compared with $45 million ~~for each of~~and $46 million during the ~~three-month periods~~quarters ended ~~September 30,~~March 31, 2016 and ~~June 30,~~December 31, 2016, ~~compared with $26 million for the three-month period ended September 30, 2015.~~respectively. Residential real estate loans serviced for others totaled ~~$55.0~~$63.7 billion at ~~September 30, 2016, $64.3~~March 31, 2017, $60.0 billion at ~~September 30, 2015, $61.7~~March 31, 2016, and $53.2 billion at December 31, ~~2015 and $57.8 billion at June 30,~~ 2016. Reflected in residential real estate loans serviced for others were loans sub-serviced for others of ~~$32.1~~$40.8 billion, $36.3 billion and $30.4 billion at ~~September 30,~~March 31, 2017, March 31, 2016 ~~$40.2 billion at September 30, 2015, $37.8 billion at~~and December 31, ~~2015~~2016, respectively. Revenues earned for sub-servicing loans totaled $23 million in each of the quarters ended March 31, 2017 and ~~$34.6 billion at June 30,~~March 31, 2016, compared with $25 million in the final quarter of 2016. During March 2017, the Company acquired additional sub-servicing of residential real estate loans having outstanding principal balances of approximately $12.4 billion. The additional sub-servicing portfolio did not have a significant impact on residential mortgage banking revenues in the first quarter of 2017. The contractual servicing rights associated with loans sub-serviced by the Company were predominantly held by affiliates of Bayview Lending Group LLC (“BLG”). Information about the Company’s relationship with BLG and its affiliates is included in note 15 of Notes to Financial Statements.

Capitalized servicing rights consist largely of servicing associated with loans sold by the Company. Capitalized residential mortgage loan servicing assets ~~totaled $117~~aggregated $118 million at each of ~~September 30, 2016, September 30, 2015~~March 31, 2017 and ~~June 30,~~March 31, 2016 and ~~$118~~$117 million at December 31, ~~2015.~~2016.

Commercial mortgage banking revenues ~~were $37~~aggregated $27 million in the ~~third quarter~~first three months of ~~2016,~~2017, compared with ~~$18~~$22 million in the ~~year-earlier~~similar 2016 period and ~~$24~~$36 million in the ~~second~~fourth quarter of 2016. Included in such amounts were revenues from loan origination and sales activities of ~~$25~~$15 million in the ~~recent~~first quarter ~~compared with $8~~of 2017, $12 million in the ~~third~~year-earlier quarter ~~of 2015~~ and ~~$14~~$24 million in the ~~second~~final quarter of 2016. ~~The rise in such revenues in the recent quarter was due to higher origination volumes.~~ Commercial real estate loans originated for sale to other investors ~~totaled $721~~were approximately $308 million in the recent quarter, compared with ~~$190~~$355 million and ~~$567 million~~$1.3 billion in the ~~third quarter of 2015~~first and ~~the second quarter~~fourth quarters of 2016, respectively. Loan servicing revenues ~~were $11~~totaled $12 million in the two most recent ~~quarter,~~quarters, compared with $10 million in ~~each of~~ the ~~second~~first quarter of ~~2016 and the third quarter of 2015.~~2016. Capitalized commercial mortgage servicing assets ~~totaled $92~~were $106 million ~~and $81 million at September 30, 2016 and September 30, 2015, respectively,~~ and $84 million at March 31, 2017 and March 31, 2016, respectively, and $104 million at December 31, ~~2015.~~2016. Commercial real estate loans serviced for other investors totaled ~~$11.3~~$15.1 billion at ~~September 30, 2016, $11.6~~March 31, 2017, $10.9 billion ~~at September 30, 2015~~a year earlier and ~~$11.0~~$11.8 billion at December 31, ~~2015~~2016 and included ~~$2.7~~$3.0 billion, ~~at September 30, 2016~~$2.6 billion and ~~$2.5~~

$2.8 billion, ~~at each of September 30, 2015 and December 31, 2015~~respectively, of loan balances for which investors had recourse to the Company if such balances are ultimately uncollectible. In January 2017, the Company purchased commercial mortgage servicing rights and other assets which increased commercial real estate loans serviced for others by approximately $2.7 billion. The purchase price and assets acquired were not material to the Company’s consolidated financial position. Revenues associated with the acquired servicing rights and other assets were not significant in the first quarter of 2017. Commitments to sell commercial real estate loans and commitments to originate commercial real estate loans for sale were ~~$694~~$373 million and ~~$403~~$298 million, respectively, at ~~September 30, 2016, $161~~March 31, 2017, $312 million and ~~$89~~$184 million, respectively, at ~~September 30, 2015~~March 31, 2016 and ~~$96~~$713 million and ~~$58~~$70 million, respectively, at December 31, ~~2015.~~2016. Commercial real estate loans held for sale at ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and December 31, ~~2015~~2016 were ~~$290~~$75 million, ~~$71~~$128 million and ~~$39~~$643 million, respectively. The higher balance at December 31, 2016 reflected loans originated late in 2016 that were not delivered to investors until 2017.

Service charges on deposit accounts ~~totaled $108~~were $104 million in the ~~third~~recent quarter, ~~of 2016,~~ compared with ~~$107~~$102 million in the year-earlier quarter and ~~$104~~$105 million in the ~~second~~fourth quarter of 2016. ~~The higher level~~Brokerage services income, which includes revenues from the sale of mutual funds and annuities and securities brokerage fees, aggregated $17 million in ~~each~~the first quarter of 2017, compared with $16 million in the ~~third quarters~~first quarter of 2016 and ~~2015 as~~$15 million in the fourth quarter of 2016. Trading account and foreign exchange activity resulted in gains of $10 million during the most recent quarter, compared with gains of $7 million in the ~~second~~first quarter of 2016 ~~was largely due~~and $8 million in the final quarter of 2016. 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 ~~higher consumer deposit service fees.~~Financial Statements and herein under the heading “Taxable-equivalent Net Interest Income.”

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 $119~~aggregated $120 million in the recent quarter, compared with ~~$114~~$111 million in the year-earlier quarter and ~~$120~~$122 million in the ~~second~~fourth quarter of 2016. Revenues associated with the ICS business were approximately ~~$58~~$60 million, $52 million and $61 million during ~~each of~~ the quarters ended ~~September 30,~~March 31, 2017, March 31, 2016 and ~~June 30,~~December 31, 2016, ~~and $53 million during the quarter ended September 30, 2015.~~respectively. The higher ~~ICS revenue~~revenues in the two most recent quarters as compared with the ~~third~~first quarter of ~~2015 reflects stronger sales activities and higher~~2016 reflect increased fees earned from money-market ~~funds.~~funds and stronger sales activities. Revenues attributable to WAS ~~were~~totaled approximately ~~$52~~$54 million, ~~$53~~$51 million and ~~$55~~$53 million for the three-month periods ended ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and ~~June 30,~~December 31, 2016, respectively. ~~The second quarter of 2016 included $3 million of annual tax preparation fees.~~ Total trust assets, which include assets under management and assets under administration, aggregated ~~$208.4~~$219.0 billion at ~~September 30, 2016,~~March 31, 2017, compared with $200.0 billion at ~~September 30, 2015~~March 31, 2016 and ~~$199.2~~$210.6 billion at December 31, ~~2015.~~2016. Trust assets under management were ~~$70.8~~$73.6 billion, ~~$65.7~~$66.2 billion and ~~$66.7~~$70.7 billion at ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and December 31, ~~2015,~~2016, respectively. Additional trust income from investment management activities ~~totaled~~was $6 million in the recent quarter, compared with $8 million in each of the ~~third~~first and fourth quarters of ~~2016 and 2015 and $7 million in 2016’s second quarter.~~2016. 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 ~~$7.0~~$6.9 billion at ~~September 30, 2016, $7.8~~March 31, 2017, $6.7 billion at ~~September 30, 2015~~March 31, 2016 and ~~$7.1~~$7.3 billion at December 31, ~~2015.~~2016. The Company’s trust income from that affiliate was not material during any of the ~~noted quarters.~~quarters then-ended. The Company’s proprietary mutual funds had assets of ~~$11.5~~$10.7 billion, ~~$11.7~~$11.4 billion and ~~$12.2~~$10.9 billion at ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and December 31, ~~2015,~~2016, 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 $17 million in the third quarter of 2015. Gains from trading account and foreign exchange activity were $13 million during the each of the quarters ended September 30, 2016 and June 30, 2016 and $8 million in the third quarter of 2015. The higher level of such gains in the third quarter of 2016 as compared with the year-earlier quarter resulted largely from favorable foreign exchange rates and higher 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.”

The Company realized gains from sales of investment securities of $28 million during the recent quarter. During the third quarter of 2016, the Company sold substantially all of its collateralized debt obligations that had been held in the available-for-sale investment securities portfolio and that had been obtained through the acquisition of other banks. In total, securities with an amortized cost of $28 million were sold. Divestiture of the majority of those securities would have been required prior to July 21, 2017 in accordance with the provisions of the Volcker Rule. There were no significant gains or losses on investment securities in the third quarter of 2015 or in the second quarter of 2016.

Other revenues from operations ~~totaled $104~~were $111 million in the ~~recent~~first quarter of 2017, compared with ~~$109~~$102 million in the ~~third~~year-earlier quarter ~~of 2015~~ and ~~$105~~$116 million in the ~~second~~fourth quarter of 2016. ~~The decline in other revenues from operations in the recent quarter as~~As compared with the ~~year-earlier~~initial 2016 quarter, ~~was primarily due to $14 million of gains on the sale of previously leased equipment realized in the third quarter of 2015. Similar gains in~~ the recent ~~quarter were less than $1 million.~~quarter’s revenues reflect higher letter of credit and other credit-related fees, including loan syndication fees. Included in other revenues from operations were the following significant components. Letter of credit and other credit-related fees ~~totaled $31~~aggregated $34 million in the recent quarter, compared with ~~$29~~$28 million in the ~~third~~initial quarter

of ~~2015~~2016 and ~~$30~~$31 million in the ~~second~~final quarter of 2016. Tax-exempt income from bank owned life insurance, which includes increases in the cash surrender value of life insurance policies and benefits received, ~~aggregated $12~~totaled $15 million in ~~each~~the first quarter of 2017, compared with $16 million in the ~~third quarters~~first quarter of 2016 ~~and 2015~~ and $13 million in the ~~second quarter of 2016.~~final 2016 quarter. Revenues from merchant discount and credit card fees were ~~$28~~$27 million in the recent quarter, compared with ~~$27~~$26 million and $30 million in ~~each~~the first and fourth quarters of ~~the third quarter of 2015 and second quarter of 2016.~~2016, respectively. Insurance-related sales commissions and other revenues totaled ~~$11 million in the third quarter of 2016, compared with $9~~$12 million in each of the ~~third quarter~~first quarters of ~~2015~~2017 and 2016, compared with $11 million in the ~~second~~fourth quarter of 2016. M&T’s share of the operating losses of ~~BLG~~Bayview Lending Group LLC (“BLG”) recognized using the equity method of accounting was $2 million ~~and~~in each of the two most recent quarters, compared with $4 million in the ~~third quarters of 2016 and 2015, respectively, and $3 million in the second~~first quarter of 2016. Information about the Company’s relationship with BLG and its affiliates is included in note 15 of Notes to Financial Statements.

Other income totaled $1.36 billion in the first nine months of 2016, compared with $1.38 billion in the similar 2015 period. Reflected in other income in the 2016 period were gains on investment securities of $28 million and in the 2015 period other income included the $45 million gain from the April 2015 sale of the trade processing business in the retirement services division. In addition to the impact of those two factors, higher trading and foreign exchange gains in 2016 were offset by a decline in mortgage banking revenues.

Mortgage banking revenues were $275 million for the nine-month period ended September 30, 2016, down 5% from $288 million in the year-earlier period. Residential mortgage banking revenues declined 13% to $192 million during the first nine months of 2016 from $220 million in the corresponding 2015 period. New commitments to originate residential real estate loans to be sold were $2.4 billion and $2.8 billion during the first nine months of 2016 and 2015, respectively. Realized gains from sales of residential real estate loans and loan servicing rights and recognized unrealized gains and losses on residential real estate loans held for sale, commitments to originate loans for sale and commitments to sell loans totaled to gains of $54 million and $60 million during the nine-month periods ended September 30, 2016 and 2015, respectively. Revenues from servicing residential mortgage loans for others were $137 million and $160 million for the first nine months of 2016 and 2015, respectively. That decline was attributable to lower sub-servicing revenues that totaled $73 million and $91 million in the 2016 and 2015 periods, respectively. The decline in revenues resulted from lower balances of loans serviced for others. Commercial mortgage banking revenues totaled $83 million and $68 million during the nine-month periods ended September 30, 2016 and 2015, respectively. That increase predominantly reflects higher revenues from loan origination and sales activities. Commercial real estate loans originated for sale to other investors were $1.6 billion in the first nine months of 2016, compared with $1.5 billion in the comparable 2015 period.

Service charges on deposit accounts totaled $314 million and $315 million during the first nine months of 2016 and 2015, respectively. Trust income aggregated $350 million during the nine-month period ended September 30, 2016, compared with $356 million a year earlier. That decline was attributable to $9 million of revenues in the first quarter of 2015 associated with the trade processing business that was sold in April 2015. Brokerage services income totaled $48 million and $49 million during the first nine months of 2016 and 2015, respectively. Trading account and foreign exchange activity resulted in gains of $33 million for the nine-month period ended September 30, 2016 and $21 million for the similar period in 2015. That increase was largely the result of favorable foreign exchange rates and higher activity related to interest swap transactions executed on behalf of commercial customers. Gains on investment securities aggregated $28 million in the first nine months of 2016. There were no significant gains or losses on securities in 2015.

Other revenues from operations were $311 million in the nine-month period ended September 30, 2016, compared with $348 million in the year-earlier period. That decline reflects the April 2015 gain of $45 million from the sale of the trade processing business and higher gains in the 2015 period from the sale of previously leased equipment of $13 million. Also included in other revenues from operations during the nine-month periods ended September 30, 2016 and 2015 were the following significant components. Letter of credit and other credit-related fees totaled $89 million in 2016 and $92 million in 2015. Income from bank owned life insurance was $41 million and $38 million in 2016 and 2015, respectively. Merchant discount and credit card fees aggregated $81 million in 2016 and $77 million in 2015. Insurance-related sales commissions and other revenues were $32 million and $29 million in the first nine months of 2016 and 2015, respectively. M&T’s share of the operating losses of BLG was $8 million and $11 million in the 2016 and 2015 periods, respectively. In addition, corporate advisory fees for assisting customers were $9 million in 2016, up from $3 million in 2015.

Other expense ~~totaled $752~~aggregated $788 million in the ~~third~~first quarter of 2016, up from $654 million in the year-earlier period and $750 million in 2016’s second quarter. Included in those amounts are expenses considered by management to be “nonoperating” in nature consisting of (i) amortization of core deposit and other intangible assets of $10 million and $4 million in the third quarters of 2016 and 2015, respectively, and $11 million in the second quarter of 2016 and (ii) merger-related expenses of $13 million in the second quarter of 2016. There were no merger-related expenses during the third quarters of 2016 or 2015. Exclusive of those nonoperating expenses, noninterest operating expenses were $743 million in the most recent quarter,2017, compared with ~~$650~~$776 million in the year-earlier quarter and ~~$726~~$769 million in the ~~second~~fourth quarter of 2016. The most significant factors for the increased level of operating expenses in the recent quarter as compared with the third quarter of 2015 were the impact of the operations obtained in the Hudson City acquisition, higher costs for professional services and advertising, and increased Federal Deposit Insurance Corporation (“FDIC”) assessments. The higher level of noninterest operating expenses in the recent quarter as compared with the second quarter of 2016 was largely due to higher advertising and promotion expenses and increased FDIC assessments.

~~Other expense for the first nine months of 2016 aggregated $2.28 billion, up $242 million or 12% from $2.04 billion in the year-earlier period.~~ Included in those amounts are expenses considered to be “nonoperating” in nature consisting of amortization of core deposit and other intangible assets of ~~$34~~$8 million in 2017’s initial quarter, compared with $12 million in the first quarter of 2016 and ~~$17~~$9 million in ~~2015~~the final 2016 quarter, and merger-related expenses of ~~$36~~$23 million in the first ~~nine months~~quarter of 2016. There were no merger-related expenses induring the first ~~nine months~~quarter of ~~2015.~~2017 or the fourth quarter of 2016. Exclusive of those nonoperating expenses, noninterest operating expenses ~~through~~were $779 million in the first ~~nine months~~quarter of 2017, compared with $741 million in the corresponding 2016 quarter and $760 million in the fourth quarter of 2016. The most significant factors for the increased level of operating expenses in the recent quarter as compared with the year-earlier quarter were higher salaries and employee benefits expenses. The recent quarter’s rise in noninterest operating expenses as compared with the fourth quarter of 2016 ~~increased $189~~reflected seasonally higher stock-based compensation and employee benefits expenses offset, in part, by the effect of a $30 million ~~or 9% from~~contribution to The M&T Charitable Foundation in the ~~corresponding 2015 period. That increase was predominantly attributable to costs associated with acquired operations of Hudson City and higher professional services costs and FDIC assessments.~~final 2016 quarter. Table 2 provides a reconciliation of other expense to noninterest operating expense.

Salaries and employee benefits expense ~~totaled $400~~aggregated $450 million in 2017’s first quarter, compared with $432 million in the ~~recent~~year-earlier quarter ~~compared with $364~~and $393 million in the ~~third~~fourth quarter of ~~2015~~2016. Merger-related salaries and ~~$399~~employee benefits expenses were $5 million in the ~~second~~first quarter of 2016. ~~For the first three quarters of 2016,~~The increased salaries and employee benefits expense ~~totaled $1.22 billion, up 10% from $1.12 billion~~ in the ~~year-earlier period. As~~recent quarter as compared with the ~~comparable 2015 periods,~~first quarter of 2016 largely reflects the ~~increases during the three months and nine months ended September 30, 2016 were predominantly the result~~impact of ~~additional employees associated with the Company’s expanded operations and~~ annual merit increases for ~~employees. Stock-based~~employees and higher incentive-based compensation. The higher level of expenses in the recent quarter as compared with the final quarter of 2016 was attributable to seasonally higher stock-based compensation, ~~totaled $10~~medical plan costs, payroll-related taxes, unemployment insurance and the Company’s contributions for retirement savings plan benefits related to annual incentive compensation 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 2017 and 2016 included $20 million and ~~$11~~$16 million, ~~during~~respectively, that would have been recognized over the ~~quarters ended September 30, 2016~~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 ~~September 30, 2015, respectively, $17~~employee benefits expense included stock-based compensation of $33 million ~~during~~and $29 million in the ~~quarter ended June 30, 2016 and $55 million for each of the nine-month~~three-month periods ended ~~September 30,~~March 31, 2017 and March 31, 2016, respectively, and ~~2015.~~$9 million in the three-month period ended December 31, 2016. The number of full-time equivalent employees was ~~16,709~~16,409 at ~~September 30,~~March 31, 2017, compared with 16,718 and 16,593 at March 31, 2016 ~~15,456 at September 30, 2015, 16,979 at~~and December 31, ~~2015 and 16,814 at June 30, 2016.~~2016, respectively.

Excluding the nonoperating expense items described earlier from each ~~period,~~quarter, nonpersonnel operating expenses were ~~$343~~$330 million and $314 million in the ~~third quarter of~~quarters ended March 31, 2017 and March 31, 2016, ~~$286~~respectively, and $367 million in the ~~year-earlier quarter and $327 million in the second~~final quarter of 2016. On the same basis, those expenses were $984 million and $905 million during the first nine months of 2016 and 2015, respectively. The expenses in the 2016 periods as compared with the similar 2015 periods reflected higher equipment and net occupancy expenses and increased FDIC assessments, each due largely to the impact of the acquisition of Hudson City, and higher costs for professional services, including legal expenses. Those increased costs in the first nine months of 2016 as compared with the similar 2015 period were partially offset by a $40 million charitable contribution made in the second quarter of 2015 to The M&T Charitable Foundation. The increase in nonpersonnel operating expenses in the recent quarter as compared with the ~~second~~year-earlier quarter reflected increased Federal Deposit Insurance Corporation (“FDIC”) assessments and higher outside data processing and software costs. Higher nonpersonnel operating

expenses in the fourth quarter of 2016 ~~was largely~~as compared with the recent quarter were predominately due to ~~higher costs for advertising and FDIC assessments.~~the $30 million cash contribution made in the final 2016 quarter to The M&T Charitable Foundation.

The efficiency ratio measures the relationship of noninterest operating expenses to revenues. The Company’s efficiency ratio was ~~55.9%~~56.9% during the recent quarter, compared with ~~57.1%~~57.0% and ~~55.1%~~56.4% in the ~~year-earlier quarter~~first and ~~the second quarter~~fourth quarters of 2016, ~~respectively. The efficiency ratios for the nine-month periods ended September 30, 2016 and 2015 were 56.0% and 58.9%,~~ respectively. The calculation of the efficiency ratio is presented in ~~table~~Table 2.

The provision for income taxes for each of the ~~third quarter~~first quarters of 2017 and 2016 was ~~$200~~$169 million, compared with ~~$154 million and $194~~$180 million in the ~~year-earlier quarter and second~~fourth quarter of ~~2016, respectively.~~2016. As noted earlier, M&T adopted new accounting guidance for share-based transactions during the first quarter of 2017. That guidance requires that all excess tax benefits and tax deficiencies associated with share-based compensation be recognized as a component of income tax expense in the income statement. Previously, tax effects resulting from changes to M&T’s share price subsequent to the grant date were recorded through shareholders’ equity at the time of vesting or exercise. The adoption of the amended accounting guidance resulted in an $18 million reduction of income tax expense in the initial 2017 quarter. The effective tax rates were ~~36.4%~~32.7%, ~~35.5%~~36.2% and ~~36.6%~~35.2% for the quarters ended ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and ~~June 30,~~December 31, 2016, respectively. ~~For~~Excluding the ~~nine-month periods ended September 30, 2016 and 2015,~~impact of the ~~provision for income taxes was $564 million and $455 million, respectively, and~~adoption of the amended accounting guidance, the effective tax ~~rates were 36.4% and 36.0%, respectively.~~rate would have been 36.2% in the first quarter of 2017. 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 also 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 ~~$16.3~~$16.2 billion at ~~September 30, 2016,~~March 31, 2017, representing ~~12.88%~~13.16% of total assets, compared with ~~$12.9~~$16.4 billion or ~~13.21% of total assets~~13.12% a year earlier and ~~$16.2~~$16.5 billion or ~~13.17%~~13.35% at December 31, ~~2015.~~2016.

Included in shareholders’ equity was preferred stock with financial statement carrying values of $1.2 billion at each of ~~September 30,~~March 31, 2017, March 31, 2016 ~~September 30, 2015~~ and December 31, ~~2015.~~2016. Further information concerning M&T’s preferred stock can be found in note 6 of Notes to Financial Statements. ~~On October 28, 2016, M&T issued 50,000 shares~~

Reflecting the impact of ~~Series F Perpetual Fixed-to-Floating Rate Non-cumulative Preferred Stock, par value $1.00 per share and liquidation preference~~repurchases of ~~$10,000 per share. Through November 1, 2026 holders of the Series F preferred stock are entitled to receive, only when, as and if declared by~~ M&T’s Board of Directors, non-cumulative cash dividends at an annual rate of 5.125%, payable semi-annually in arrears. Subsequent to November 1, 2026 holders will be entitled to receive quarterly cash dividends at an annual rate of three-month LIBOR plus 352 basis points. The Series F preferredcommon stock, may be redeemed at M&T’s option, in whole or in part, on any dividend payment date on or after November 1, 2026 or, in whole but not in part, at any time within 90 days following a regulatory capital treatment event whereby the full liquidation value of the shares no longer qualifies as “additional Tier 1 capital.”

~~Common~~common shareholders’ equity was $15.0 billion, or $97.40 per share, at March 31, 2017, compared with $15.1 billion, or ~~$97.47 per share, at September 30, 2016, compared with $11.7 billion, or $87.67~~$95.00 per share, a year earlier and ~~$14.9~~$15.3 billion, or ~~$93.60~~$97.64 per share, at December 31, ~~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.~~2016. Tangible equity per common share, which excludes goodwill and core deposit and other intangible assets and applicable deferred tax balances, was ~~$67.42~~$67.16 at the end of the recent quarter, compared with ~~$61.22 a year earlier~~$65.65 at March 31, 2016 and ~~$64.28~~$67.85 at December 31, ~~2015.~~2016. The Company’s ratio of tangible common equity to tangible assets was ~~8.55%~~8.71% at ~~September 30,~~each of March 31, 2017 and March 31, 2016, compared with ~~8.66% a year earlier and 8.69%~~8.92% at December 31, ~~2015.~~2016. 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~~losses on investment securities reflected in shareholders’ equity, net of applicable tax effect, were ~~$175~~$18 million, or ~~$1.13~~$.11 per common share, at ~~September 30, 2016,~~March 31, 2017, compared with net unrealized gains of ~~$128~~$145 million, or ~~$.96~~ $.91

per common share, at ~~September 30, 2015~~March 31, 2016 and ~~$48~~net unrealized losses of $16 million, or ~~$.30~~$.10 per common share, at December 31, ~~2015.~~2016. Changes in unrealized gains and losses on investment securities are predominantly reflective of the impact of changes in interest rates on the values of such securities. Information about unrealized gains and losses as of ~~September 30, 2016~~March, 31, 2017 and December 31, ~~2015~~2016 is included in note 3 of Notes to Financial Statements.

Reflected in net unrealized ~~gains~~losses at ~~September 30, 2016~~March 31, 2017 were pre-tax effect unrealized ~~losses~~gains of ~~$19~~$125 million on available-for-sale investment securities with an amortized cost of ~~$362 million~~$5.0 billion and pre-tax effect unrealized ~~gains~~losses of ~~$330~~$135 million on securities with an amortized cost of ~~$11.2~~$7.6 billion. The pre-tax effect unrealized losses reflect ~~$18~~$15 million of losses on trust preferred securities issued by financial institutions having an amortized cost of ~~$125~~$110 million and an estimated fair value of ~~$107~~$95 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.

As of ~~September 30, 2016,~~March, 31, 2017, based on a review of each of the 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 other-than-temporary impairment charges were not appropriate. During the third quarter of 2016, the Company sold substantially all of its collateralized debt obligations held in the available-for-sale investment securities portfolio for a pre-tax gain of $28 million. Those securities had been obtained through the acquisition of other banks. Divestiture of the majority of these securities would have been required prior to July 21, 2017 in accordance with the Volcker Rule. As of ~~September 30, 2016,~~March 31, 2017, the Company did not intend to sell nor is it anticipated that it would be required to sell any of its 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~~assessed 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 ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, the Company had in its held-to-maturity portfolio privately issued mortgage-backed securities with an amortized cost basis of ~~$163~~$153 million and ~~$181~~$158 million, respectively, and a fair value of ~~$126~~$119 million and ~~$142~~$121 million, respectively. At ~~September 30, 2016, 84%~~March 31, 2017, 85% of the mortgage-backed securities were in the most senior tranche of the securitization structure with ~~26%~~24% 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 ~~September 30, 2016,~~March 31, 2017, 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 September 30, 2016.~~ The weighted-average default percentage and loss severity assumptions utilized in the Company’s internal modeling were ~~30%~~28% and ~~81%,~~71% respectively. ~~The~~Given the securitization structure, the bonds held by the Company may defer interest payments in certain circumstances, but after considering the repayment structure and estimated future collateral cash flows of each individual senior and subordinate tranche bond, the Company has concluded that as of ~~September 30, 2016,~~March 31, 2017, those privately issued mortgage-backed securities were not other-than-temporarily impaired. Nevertheless, it is possible that adverse changes in the estimated 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 ~~$285~~$269 million, or $1.75 per common

share, at March 31, 2017, $293 million, or $1.84 per common share, at ~~September 30,~~March 31, 2016 ~~$289~~and $273 million, or ~~$2.17 per common share, at September 30, 2015 and $297 million, or $1.86~~$1.75 per common share, at December 31, ~~2015.~~2016.

~~The Company did not~~Consistent with its revised 2016 Capital Plan filed with the Federal Reserve, M&T repurchased 3,233,196 common shares for $532 million during the first quarter of 2017. M&T may repurchase ~~any~~up to $231 million of its common shares during the second quarter of 2017. During the fourth quarter of 2016, M&T repurchased 300,000 shares of its common stock ~~during 2015. However, in accordance with its~~for $37 million. Pursuant to the 2015 Capital ~~Plans,~~Plan, M&T repurchased 948,545 shares of its common ~~shares~~stock for $100 million in the initial 2016 quarter.

Also in accordance with the revised 2016 Capital Plan, during the first quarter of ~~2016 and 1,319,487 common shares for $154 million in the second quarter~~2017 M&T’s Board of 2016. On June 29, 2016, M&T announced that the Federal Reserve did not object to M&T’s revised 2016 Capital Plan. That plan includes the repurchase of up to $1.15 billion of common shares during the four-quarter period starting on July 1, 2016 andDirectors authorized an increase in the quarterly common stock dividend ~~in the first quarter of 2017 of up to $.05 per share~~ to $.75 per common share from the previous rate of $.70 per common share. M&T may also 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, 2015, consistent with the contractual terms of those instruments. Dividends are subject to declaration by M&T’s Board of Directors. Furthermore, on July 19, 2016, M&T’s Board of Directors authorizedAs a new stock repurchase program to repurchase up to $1.15 billion of shares of its common stock subject to all applicable regulatory reporting limitations, including those set forth in M&T’s 2016 Capital Plan. During the recent quarter, M&T repurchased 3,039,563 shares for $350 million in accordance with that program. M&T repurchased 5,307,595 shares during the first nine months of 2016 at an aggregate amount of $604 million.

~~Cash~~result, cash dividends declared on M&T’s common stock totaled ~~$109~~$116 million in the ~~recent~~initial quarter of 2017, compared with ~~$94~~$112 million and ~~$111~~$110 million in the three-month periods ended September 30, 2015 and June 30, 2016, respectively, and represented a quarterly dividend payment of $.70 per common share in each of those periods. Common stock dividends during the nine-month periods ended September 30,March 31, 2016 and ~~2015 were $332 million and $281 million,~~December 31, 2016, respectively. Cash dividends declared on preferred stock aggregated $18 million in the first quarter of 2017, compared with $20 million in each of the ~~third~~first and fourth quarters of 2016. The decline in preferred stock dividends in the recent quarter from the 2016 ~~and 2015 and~~periods resulted from the ~~second quarter~~lower dividend rate for the $500 million of Series F preferred stock issued in October 2016 as compared with the like amount of Series D preferred stock that had been redeemed in December 2016.

M&T and its subsidiary banks are required to comply with applicable capital adequacy ~~regulations~~standards established by the federal banking agencies. Pursuant to those regulations, the minimum capital ratios are as follows:

In addition, capital regulations provide for the phase-in of a “capital conservation buffer” composed entirely of CET1 on top of these minimum risk-weighted asset ratios. When fully phased-in on January 1, 2019 the capital conservation buffer will be 2.5%. For ~~2016,~~2017, the phase-in transition portion of that buffer is ~~.625%~~1.25%.

The regulatory capital ratios of the Company and its bank subsidiaries, M&T Bank and Wilmington Trust, N.A., as of ~~September 30, 2016~~March 31, 2017 are presented in the accompanying table.

				M&T	M&T		Wilmington
	M&T	M&T	Wilmington	(Consolidated)	Bank		Trust, N.A.
	(Consolidated)	Bank	Trust, N.A.
Common equity Tier 1	10.78%	10.77%	48.82%	10.67%		10.29%	43.27%
Tier 1 capital	12.04%	10.77%	48.82%	11.91%		10.29%	43.27%
Total capital	14.47%	12.76%	49.25%	14.11%		12.01%	43.66%
Tier 1 leverage	9.81%	8.79%	15.59%	9.98%		8.63%	9.61%

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 insureddepositors. 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 ~~From~~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.”~~2016.

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 were 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. 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 Board of 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.~~scope. M&T and M&T Bank are continuing to work towards the resolution of all outstanding issues in the 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. As disclosed in M&T’s Form 10-K for the year ended December 31, 2016, in the fourth quarter of 2016, the Company revised its funds transfer pricing allocation related to borrowings and to the residential real estate loans obtained in the acquisition of Hudson City, retroactive to 2015. Accordingly, financial information for the Discretionary Portfolio segment and the “All Other” category for the three-month period ended March 31, 2016 has been reclassified to conform to the current allocation methodology.

The Business Banking segment ~~recorded~~contributed net income of ~~$21~~$22 million during the quarter ended March 31, 2017, compared with $25 million in the ~~third~~year-earlier quarter ~~of 2016, compared with~~and $24 million in the ~~third quarter of 2015 and $23 million in the second~~fourth quarter of 2016. As compared with the year-earlier quarter, ~~higher branch network allocated costs largely associated with~~a recent quarter rise in the ~~acquired Hudson City operations in 2016’s third quarter were~~provision for credit losses of $5 million was partially offset by a $4$2 million increase in net interest income. The ~~higher~~modest decline in net income in the initial 2017 quarter as compared with the immediately preceding quarter was largely due to a $2 million decrease in net interest income.

Net income of the Commercial Banking segment was $113 million in the recent quarter, compared with $101 million in the first quarter of 2016 and $102 million in the final 2016 quarter. The recent quarter’s 11% improvement as compared with the first quarter of 2016 reflected an increase in net interest income ~~resulted~~of $8 million, largely resulting from ~~an increase in average outstanding deposit balances of $687 million and~~ a 16 basis point widening of the net interest margin on deposits, higher letter of ~~8 basis points. The recent quarter~~credit and other credit-related fees of $6 million, predominantly due to loan syndication fees, a decline ~~from 2016’s second quarter primarily reflected a $3 million increase~~ in the provision for credit losses of $5 million and increased gains from the sale of previously leased equipment of $3 million. Those favorable factors were offset, in part, by higher costs for FDIC assessments of $3 million. The higher net income in the first quarter of 2017 as compared with 2016’s fourth quarter was largely due to ~~higher net charge-offs,~~a decrease in the provision for credit losses of $16 million and ~~a modest increase in~~increased letter of credit and other ~~operating expenses,~~credit-related fees of $5 million, largely due to loan syndication fees. Those favorable factors were offset, in part, by a $2$4 million ~~rise~~decline in gains from the sale of previously leased equipment.

The Commercial Real Estate segment recorded net ~~interest income. Net~~ income ~~for the Business Banking segment totaled $70~~of $85 million ~~during~~in the first ~~nine months~~quarter of ~~2016,~~2017, compared with ~~$74~~$81 million in the year-earlier ~~period. That 6% year-over-year decline was attributable to higher centrally-allocated costs largely associated~~period and $96 million in the fourth quarter of 2016. The recent quarter’s improvement in net income as compared with the ~~acquired Hudson City operations and an increase in FDIC assessments~~first quarter of ~~$2 million, offset, in part, by an $11~~2016 reflected a $13 million increase in net interest income and ~~a $4 million decline in the provision for credit losses, predominantly due to lower net charge-offs.~~higher mortgage banking revenues of $5 million. The ~~improvement in~~higher net interest income ~~reflected~~was largely attributable to an increase in average outstanding ~~deposit~~loan balances of ~~$1.1 billion.~~

Net income earned by the Commercial Banking segment totaled $103 million during the quarter ended September 30, 2016, compared with $108 million in the year-earlier quarter and $105 million in the second quarter of 2016. As compared with the third quarter of 2015, unfavorable factors in the recent quarter included lower gains on sales of previously leased equipment of $13 million and higher FDIC assessments and personnel costs of $3 million each, partially offset by a $5 million increase in net interest income, a $3 million decline in the provision for credit losses and a $3 million increase in credit-related fees. The higher net interest income resulted from higher average outstanding loan and deposit balances of $1.6$3.1 billion ~~and $969 million, respectively, and a widening of the net interest margin on deposits of 9 basis points,~~ offset, in part, by a narrowing of the net interest margin on loans of 1614 basis points. Those favorable factors were partially offset by a $4 million rise in the provision for credit losses, increased FDIC assessments of $4 million and higher personnel-related expenses of $2 million.

The decline in net income in the initial 2017 quarter as compared with the final 2016 quarter was largely due to: decreased mortgage banking revenues of $9 million, reflecting lower origination volumes; a $5 million rise in the provision for credit losses; a $3 million decline in net interest income, reflecting two less days in the recent quarter; and lower credit-related fees of $2 million.

Net income earned by the Discretionary Portfolio segment totaled $34 million during the three-month period ended March 31, 2017, compared with $48 million in the year-earlier period and $29 million in the fourth quarter of 2016. The recent quarter’s decline in net income as compared with the first quarter of 2016 was predominantly due to a $21 million decrease in net interest income, a $3 million increase in the provision for credit losses and a $2 million decline in bank owned life insurance revenues. The decline in net interest income reflected lower average loan balances of $3.8 billion and a narrowing of the net interest margin on loans of 12 basis points, each predominantly due to pay downs of loans obtained in the acquisition of Hudson City, partially offset by a 9 basis point widening of the net interest margin on investment securities. The recent quarter’s favorable performance as compared with the immediately preceding quarter reflected an increase in net interest income and declines in residential real estate-related servicing costs and the provision for credit losses.

Net income from the Residential Mortgage Banking segment was $15 million in the recent quarter, compared with $17 million in the first quarter of 2016 and $20 million in 2016’s fourth quarter. The decline in net income in the recent quarter as compared with the ~~second~~year-earlier period reflected lower servicing revenues. As compared with the final quarter of 2016, ~~was~~the decreased net income in the recent quarter reflected lower revenues associated with mortgage origination and sales activities (including intersegment revenues) of $4 million, and a $3 million decline in net interest income, due largely ~~due~~ to lower average deposit balances of $776 million.

Net income earned by the Retail Banking segment totaled $82 million in the first quarter of 2017, compared with $63 million in the year-earlier quarter and $70 million in the final 2016 quarter. The 29% improvement in net income in the recent quarter as compared with the year-earlier period reflected a $9$16 million ~~increase~~decrease in the provision for credit losses due, in part, to higher levels of partial charge-offs recognized in the first quarter of 2016 associated with loans for which the Company identified that the customer was either bankrupt or deceased, and a ~~$12~~$21 million ~~recent quarter charge-off of loans to a commercial maintenance services provider, and lower corporate advisory fees of $4 million, partially offset by increases~~increase in net interest income. The improvement in net interest income ~~and credit-related fees and lower operating expenses. Year-to-date~~reflected a widening of the net ~~income for the Commercial Banking segment totaled $310 million~~interest margin on deposits of 28 basis points offset, in ~~2016, compared with $313 million~~part, by a $2.4 billion decrease in ~~2015. Lower gains on sales of previously leased equipment of $15 million, an increase in FDIC assessments of $10 million and~~average outstanding deposit balances. Those favorable factors were partially offset by higher allocated operating expenses associated with data processing, risk management and other support services provided to this segment. The recent quarter’s improved net income as compared with the ~~Commercial Banking segment were largely offset by~~fourth quarter of 2016 was due to: a ~~$20~~decrease in advertising and marketing expenses of $7 million; a $5 million rise in net interest income, an $11 million decline in the provision for credit losses and a $5 million increase in corporate advisory fees. The improvement in net interest income reflected higher average outstanding balances of loans and deposits of $1.3 billion and $663 million, respectively, andreflecting a widening of the net interest margin on deposits of 1011 basis points, partially offset by ~~a narrowing~~the impact of ~~the net interest margin on loans of 11 basis points.~~

~~The Commercial Real Estate segment contributed net income of $90 million~~two less days in the third quarter of 2016, compared with $85 million in the year-earlier period and $84 million in the second quarter of 2016. The 6% improvement in the recent quarter as compared with the third quarter of 2015 reflects higher mortgage banking revenues of $18 million, resulting from increased loan origination activities, and a $7 million rise in net interest income, offset, in part, by increases in each of FDIC assessments and personnel costs of $4 million and other operating expenses. The higher net interest income reflected an increase in average

outstanding loan balances of $2.6 billion and a widening of the net interest margin on deposits of 17 basis points, partially offset by a narrowing of the net interest margin on loans of 28 basis points. Contributing to the 7% improvement in the recent quarter’s net income as compared with the immediately preceding quarter was an increase in mortgage banking revenues of $12 million, the result of stronger loan origination activities, and a $4 million rise in net interest income, partially offset by2017 quarter; a $3 million rise in personnel-related expenses. The higher net interest income resulted largely from an increase in average outstanding balances of loans of $1.1 billion, offset, in part, by a narrowing of the net interest margin on loans of 9 basis points. Net income for the Commercial Real Estate segment was $255 million during the nine-month period ended September 30, 2016, up from $251 million in the corresponding 2015 period. That improvement resulted from a rise in net interest income of $17 million and higher mortgage banking revenues of $15 million. Those favorable factors were offset by increased FDIC assessments of $10 million, a $6 million rise in personnel-related expenses, a $4 million increasedecline in the provision for credit ~~losses~~losses; and ~~higher~~reduced allocated operating expenses associated with data processing, risk management and other support services. ~~The increase in net interest income resulted from higher average outstanding loan balances of $1.9 billion and a widening of the net interest margin on deposits of 15 basis points~~Those favorable factors were offset, in part, by a ~~narrowing of the net interest margin on loans of 22 basis points.~~

Net income recorded by the Discretionary Portfolio segment aggregated $51 million during the three-month period ended September 30, 2016, compared with $5 million recorded in the year-earlier period and $46 million earned in the second quarter of 2016. Reflected in the results for the third quarter of 2016 were net after-tax investment securities gains of $17 million ($28 million pre-tax). Largely in response to the provisions of the Dodd-Frank Act commonly referred to as the Volcker Rule, the Company sold substantially all of its collateralized debt obligations in the quarter. In addition to the investment securities gains, the improvement in the recent quarter as compared with the third quarter of 2015 was due to the impact of residential real estate loans obtained in the acquisition of Hudson City. Partially offsetting those favorable factors were increases in the provision for credit losses of $8 million, FDIC assessments of $4 million and loan and other real estate-related servicing costs. The improvement in net income in the recent quarter as compared with the immediately preceding quarter resulted from the noted gains on investment securities, offset, in part, by a $10$3 million decrease in net interest income. The lower net interest income reflected a narrowing of the net interest margin on loans of 9 basis points and lower average outstanding loan balances of $998 million. Net income for this segment for the first nine months of the year totaled $152 million in 2016 and $22 million in 2015. That significant year-over-year increase was predominantly the result of residential real estate loans obtained in the acquisition of Hudson City and the investment securities gains, partially offset by increases of $16 million and $13 million in the provision for credit losses and FDIC assessments, respectively, and higher loan and other real-estate servicing costs.

The Residential Mortgage Banking segment contributed net income of $23 million in the recent quarter, compared with $21 million in the third quarter of 2015 and $20 million in the second quarter of 2016. The improvement in 2016’s third quarter as compared with the year-earlier period and the second quarter of 2016 was predominantly attributable to higher revenues associated with mortgage origination and sales activities (including intersegment revenues). The Residential Mortgage Banking segment earned $60 million in the first nine months of 2016, compared with $75 million in the similar period of 2015. That decline reflected lower revenues from servicing residential real estate loans for unaffiliated parties of $23 million.

Net income for the Retail Banking segment totaled $70 million in the third quarter of 2016, compared with $65 million in the year-earlier quarter and $71 million in the second quarter of 2016. As compared with the third quarter of 2015, a $44 million rise in net interest income in the recent quarter, predominantly due to the impact of deposits obtained in the acquisition of Hudson City, was largely offset by a $13 million increase in personnel-related expenses, reflecting the Hudson City acquisition, a $7 million increase in the provision for credit losses, higher equipment and net occupancy costs of $7 million, also reflecting the impact of the Hudson City acquisition, a $4 million increase in advertising and promotional expenses and increased FDIC assessments of $3 million. The modest decline in net income in the recent quarter as compared with the second quarter of 2016 reflected increased equipment and net occupancy costs of $7 million and a $2 million rise in each of the provision for credit losses and advertising and promotional expenses. Those unfavorable factors were partially offset by an increase in net interest income of $5 million and higher service charges on deposit accounts of $2 million.�� The Retail Banking segment recorded net income of $204 million and $202 million in the first nine months of 2016 and 2015, respectively. An increase in net interest income of $124 million, predominantly due to the impact of deposits obtained in the acquisition of Hudson City, was largely offset by the following unfavorable factors: a $42 million increase in personnel costs, predominantly due to the impact of the acquisition of Hudson City; a $37 million rise in the provision for credit losses, including partial charge-offs recognized on loans for which the Company identified that the customer was either bankrupt or deceased of $26 million; increases in equipment and net occupancy expenses and advertising and promotional expenses of $15 million and $11 million, respectively, reflecting the impact of the acquisition of Hudson City; higher FDIC assessment costs of $8 million; and higher allocated operating expenses associated with data processing, risk management and other support services provided from centralized service areas.accounts.

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

expenses resulting from acquisitions, and the net impact of the 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 trust income of the Company that ~~includes~~reflects the ICS and WAS business activities. The various components of the “All Other” category resulted in net losses totaling $8$1 million for the quarter ended ~~September 30, 2016, $28~~March 31, 2017, $38 million in the year-earlier quarter and ~~$14~~$10 million in the ~~second~~fourth quarter of 2016. The reduced net loss in the first quarter of 2017 as compared with the year-earlier quarter largely reflected: merger-related expenses of $23 million in the first quarter of 2016 (there were no similar merger-related expenses in the recently completed quarter); tax benefits of $18 million recognized in the first quarter of 2017 resulting from the adoption of new accounting guidance requiring that excess tax benefits associated with share-based compensation be recognized in income tax expense in the income

statement, and higher trust income of $9 million. Those favorable factors were offset, in part, by higher personnel-related expenses, including incentive-based compensation and the impact of annual merit increases for employees. As compared with the ~~third~~immediately preceding quarter, the improved performance in the recent quarter reflected the $18 million tax benefit recognized in the first quarter of ~~2015,~~2017 associated with share-based compensation, the impact of the $30 million contribution to The M&T Charitable Foundation in the final 2016 quarter, and the favorable 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 and the provision for credit losses in the recent quarter wasmethodologies. Those favorable factors were largely offset ~~in part,~~ by higher ~~professional services~~personnel-related costs, reflecting seasonally higher stock-based compensation and personnel-related costs. The reduced net loss in the third quarter of 2016 as compared with the immediately preceding quarter reflected merger-related expenses of $13 million in the second quarter of 2016 (there were no such expenses in the most recent quarter). The “All Other” category had net losses of $65 million and $129 million for the nine-month periods ended September 30, 2016 and 2015, respectively. Results for the first nine months of 2015 reflected the $45 million pre-tax gain related to the sale of the trade processing business within the retirement services division that was mostly offset by $40 million of tax-deductible cash contributions to The M&T Charitable Foundation. The improved performance in the 2016 period was predominantly due to the favorable 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, partially offset by $36 million of merger-related expenses in 2016 (there were no such expenses in the 2015 period).employee benefits expenses.

~~Effective January 1, 2016, the Company adopted amended~~A discussion of recent accounting ~~guidance relating~~developments is included in note 16 of Notes to the consolidation of variable interest entities that modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities and eliminates 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. The adoption of this guidance did not have a material effect on the Company’s consolidated financial position or results of operations.

In January 2016, the 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 accounting 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 August 2016, the~~ Financial Accounting Standards Board (“FASB”) issued amended guidance for how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance addresses the following eight specific cash flow issues: 1) cash payments for debt extinguishment costs should be classified as cash outflows for financing activities; 2) for zero-coupon debt instruments, the portion of the cash payment attributable to the accreted interest should be classified as a cash outflow for operating activities; 3) contingent consideration payments made after a business combination should be classified based on the timing of the payment; 4) cash proceeds received from the settlement of insurance claims should be classified on the basis of the related insurance coverage; 5) cash proceeds received from the settlement of corporate-owned and bank-owned life insurance policies should be classified as cash inflows from investing activities; 6) when the equity method is applied, an accounting policy election should be made to classify distributions received using either the cumulative earnings approach or the nature of the distribution approach; 7) cash receipts from payments on a transferor’s beneficial interests obtained in a securitization of financial assets should be classified as cash inflows from investing activities; and 8) the classification of cash receipts and payments that have aspects of more than one class of cash flows should be determined by applying specific guidance in GAAP. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. The Company is evaluating the impact the guidance may have on the presentation within its consolidated statement of cash flows.Statements.

In June 2016, the FASB issued amended guidance for the measurement of credit losses on certain financial assets. The amended guidance requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. The allowance for credit losses will represent a valuation account that is deducted from the amortized cost basis of the financial assets to present their net carrying value at the amount expected to be collected. The income statement will reflect the measurement of credit losses for newly recognized financial assets as well as expected increases or decreases of expected credit losses that have taken place during the period. When determining the allowance, expected credit losses over the contractual term of the financial asset(s) (taking into account prepayments) will be estimated considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The amended guidance also requires recording an allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination. The initial allowance for these assets will be added to the purchase price at acquisition rather than being reported as an expense. Subsequent changes in the allowance will be recorded through the income statement as an expense adjustment. In addition, the amended guidance requires credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. The calculation of credit losses for available-for-sale securities will be similar to how it is determined under existing guidance. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2019. The Company is evaluating the impact the amended guidance may have on its consolidated financial statements.

In March 2016, the FASB issued amended accounting 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 such amounts be recognized in the period in which the tax deduction arises or in the period in which an expiration of an award occurs. 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 rate 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 expects adoption of the guidance will result in increased volatility to reported income tax expense related to excess tax benefits and tax deficiencies for share-based transactions, but the actual amounts recognized in tax expense will be dependent on the amount of share-based transactions entered into and the stock price at the time of vesting.

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 to 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 those 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 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, 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 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.

	2016 Quarters									2015 Quarters												2017			2016 Quarters
	Third			Second			First			Fourth			Third			Second			First			First Quarter			Fourth			Third			Second			First
Earnings and dividends
Amounts in thousands, except per share
Interest income (taxable-equivalent basis)	$	976,240			977,143			979,166			908,734			776,274			766,374			743,925		$	1,014,032			990,284			976,240			977,143			979,166
Interest expense		111,175			106,802			100,870			95,333			77,199			77,226			78,499			91,773			107,137			111,175			106,802			100,870
Net interest income		865,065			870,341			878,296			813,401			699,075			689,148			665,426			922,259			883,147			865,065			870,341			878,296
Less: provision for credit losses		47,000			32,000			49,000			58,000			44,000			30,000			38,000			55,000			62,000			47,000			32,000			49,000
Other income		491,350			448,254			420,933			448,108			439,699			497,027			440,203			446,845			465,459			491,350			448,254			420,933
Less: other expense		752,392			749,895			776,095			786,113			653,816			696,628			686,375			787,852			769,103			752,392			749,895			776,095
Income before income taxes		557,023			536,700			474,134			417,396			440,958			459,547			381,254			526,252			517,503			557,023			536,700			474,134
Applicable income taxes		200,314			194,147			169,274			140,074			154,309			166,839			133,803			169,326			179,549			200,314			194,147			169,274
Taxable-equivalent adjustment		6,725			6,522			6,332			6,357			6,248			6,020			5,838			7,999			7,383			6,725			6,522			6,332
Net income	$	349,984			336,031			298,528			270,965			280,401			286,688			241,613		$	348,927			330,571			349,984			336,031			298,528
Net income available to common shareholders-diluted	$	326,998			312,974			275,748			248,059			257,346			263,481			218,837		$	328,567			307,797			326,998			312,974			275,748
Per common share data
Basic earnings	$	2.10			1.98			1.74			1.65			1.94			1.99			1.66		$	2.13			1.98			2.10			1.98			1.74
Diluted earnings		2.10			1.98			1.73			1.65			1.93			1.98			1.65			2.12			1.98			2.10			1.98			1.73
Cash dividends	$	.70			.70			.70			.70			.70			.70			.70		$	.75			.70			.70			.70			.70
Average common shares outstanding
Basic		155,493			157,802			158,734			150,027			132,630			132,356			132,049			154,427			155,123			155,493			157,802			158,734
Diluted		156,026			158,341			159,181			150,718			133,376			133,116			132,769			154,949			155,700			156,026			158,341			159,181
Performance ratios, annualized
Return on
Average assets		1.12	%		1.09	%		.97	%		.93	%		1.13	%		1.18	%		1.02	%		1.15	%		1.05	%		1.12	%		1.09	%		.97	%
Average common shareholders’ equity		8.68	%		8.38	%		7.44	%		7.22	%		8.93	%		9.37	%		7.99	%		8.89	%		8.13	%		8.68	%		8.38	%		7.44	%
Net interest margin on average earning assets (taxable-equivalent basis)		3.05	%		3.13	%		3.18	%		3.12	%		3.14	%		3.17	%		3.17	%		3.34	%		3.08	%		3.05	%		3.13	%		3.18	%
Nonaccrual loans to total loans and leases, net of unearned discount		.93	%		.96	%		1.00	%		.91	%		1.15	%		1.17	%		1.18	%		1.04	%		1.01	%		.93	%		.96	%		1.00	%
Net operating (tangible) results (a)
Net operating income (in thousands)	$	355,929			350,604			320,064			337,613			282,907			290,341			245,776		$	354,035			336,095			355,929			350,604			320,064
Diluted net operating income per common share		2.13			2.07			1.87			2.09			1.95			2.01			1.68			2.15			2.01			2.13			2.07			1.87
Annualized return on
Average tangible assets		1.18	%		1.18	%		1.09	%		1.21	%		1.18	%		1.24	%		1.08	%		1.21	%		1.10	%		1.18	%		1.18	%		1.09	%
Average tangible common shareholders’ equity		12.77	%		12.68	%		11.62	%		13.26	%		12.98	%		13.76	%		11.90	%		13.05	%		11.93	%		12.77	%		12.68	%		11.62	%
Efficiency ratio (b)		55.92	%		55.06	%		57.00	%		55.53	%		57.05	%		58.23	%		61.46	%		56.93	%		56.42	%		55.92	%		55.06	%		57.00	%
Balance sheet data
In millions, except per share
Average balances
Total assets (c)	$	124,725			123,706			123,252			115,052			98,515			97,598			95,892		$	122,978			125,734			124,725			123,706			123,252
Total tangible assets (c)		120,064			119,039			118,577			110,772			94,989			94,067			92,346			118,326			121,079			120,064			119,039			118,577
Earning assets		112,864			111,872			111,211			103,587			88,446			87,333			85,212			112,008			114,254			112,864			111,872			111,211
Investment securities		14,361			14,914			15,348			15,786			14,441			14,195			13,376			15,999			15,417			14,361			14,914			15,348
Loans and leases, net of unearned discount		88,732			88,155			87,584			81,110			67,849			67,670			66,587			89,797			89,977			88,732			88,155			87,584
Deposits		95,852			94,033			92,391			85,657			73,821			72,958			71,698			96,300			96,914			95,852			94,033			92,391
Common shareholders’ equity (c)		15,115			15,145			15,047			13,775			11,555			11,404			11,227			15,091			15,181			15,115			15,145			15,047
Tangible common shareholders’ equity (c)		10,454			10,478			10,372			9,495			8,029			7,873			7,681			10,439			10,526			10,454			10,478			10,372
At end of quarter
Total assets (c)	$	126,841			123,821			124,626			122,788			97,797			97,080			98,378		$	123,223			123,449			126,841			123,821			124,626
Total tangible assets (c)		122,183			119,157			119,955			118,109			94,272			93,552			94,834			118,573			118,797			122,183			119,157			119,955
Earning assets		115,293			112,057			113,005			110,802			87,807			86,990			87,959			112,287			112,192			115,293			112,057			113,005
Investment securities		14,734			14,963			15,467			15,656			14,495			14,752			14,393			15,968			16,250			14,734			14,963			15,467
Loans and leases, net of unearned discount		89,646			88,522			87,872			87,489			68,540			68,131			67,099			89,313			90,853			89,646			88,522			87,872
Deposits		98,137			94,650			94,215			91,958			72,945			72,630			73,594			97,043			95,494			98,137			94,650			94,215
Common shareholders’ equity, net of undeclared cumulative preferred dividends (c)		15,106			15,237			15,120			14,939			11,687			11,433			11,294			14,978			15,252			15,106			15,237			15,120
Tangible common shareholders’ equity (c)		10,448			10,573			10,449			10,260			8,162			7,905			7,750			10,328			10,600			10,448			10,573			10,449
Equity per common share		97.47			96.49			95.00			93.60			87.67			85.90			84.95			97.40			97.64			97.47			96.49			95.00
Tangible equity per common share		67.42			66.95			65.65			64.28			61.22			59.39			58.29			67.16			67.85			67.42			66.95			65.65
Market price per common share
High	$	120.40			121.11			119.24			127.39			134.00			128.70			129.58		$	173.72			158.35			120.40			121.11			119.24
Low		111.13			107.01			100.08			111.50			111.86			117.86			111.78			149.51			112.25			111.13			107.01			100.08
Closing		116.10			118.23			111.00			121.18			121.95			124.93			127.00			154.73			156.43			116.10			118.23			111.00

	2016 Quarters									2015 Quarters												2017			2016 Quarters
	Third			Second			First			Fourth			Third			Second			First			First Quarter			Fourth			Third			Second			First
Income statement data											��
In thousands, except per share
Income statement data (in thousands, except per share)
Net income
Net income	$	349,984			336,031			298,528			270,965			280,401			286,688			241,613		$	348,927			330,571			349,984			336,031			298,528
Amortization of core deposit and other intangible assets (a)		5,945			6,936			7,488			5,828			2,506			3,653			4,163			5,108			5,524			5,945			6,936			7,488
Merger-related expenses (a)		—			7,637			14,048			60,820			—			—			—			—			—			—			7,637			14,048
Net operating income	$	355,929			350,604			320,064			337,613			282,907			290,341			245,776		$	354,035			336,095			355,929			350,604			320,064
Earnings per common share
Diluted earnings per common share	$	2.10			1.98			1.73			1.65			1.93			1.98			1.65		$	2.12			1.98			2.10			1.98			1.73
Amortization of core deposit and other intangible assets (a)		.03			.04			.05			.04			.02			.03			.03			.03			.03			.03			.04			.05
Merger-related expenses (a)		—			.05			.09			.40			—			—			—			—			—			—			.05			.09
Diluted net operating earnings per common share	$	2.13			2.07			1.87			2.09			1.95			2.01			1.68		$	2.15		$	2.01		$	2.13		$	2.07		$	1.87
Other expense
Other expense	$	752,392			749,895			776,095			786,113			653,816			696,628			686,375		$	787,852			769,103			752,392			749,895			776,095
Amortization of core deposit and other intangible assets		(9,787	)		(11,418	)		(12,319	)		(9,576	)		(4,090	)		(5,965	)		(6,793	)		(8,420	)		(9,089	)		(9,787	)		(11,418	)		(12,319	)
Merger-related expenses		—			(12,593	)		(23,162	)		(75,976	)		—			—			—			-			—			—			(12,593	)		(23,162	)
Noninterest operating expense	$	742,605			725,884			740,614			700,561			649,726			690,663			679,582		$	779,432			760,014			742,605			725,884			740,614
Merger-related expenses
Salaries and employee benefits	$	—			60			5,274			51,287			—			—			—		$	—			—			—			60			5,274
Equipment and net occupancy		—			339			939			3			—			—			—			—			—			—			339			939
Outside data processing and software																							—			—			—			352			715
Advertising and marketing																							—			—			—			6,327			4,195
Printing, postage and supplies		—			545			937			504			—			—			—			—			—			—			545			937
Other costs of operations		—			11,649			16,012			24,182			—			—			—			—			—			—			4,970			11,102
Other expense		—			12,593			23,162			75,976			—			—			—
Provision for credit losses		—			—			—			21,000			—			—			—
Total	$	—			12,593			23,162			96,976			—			—			—		$	—			—			—			12,593			23,162
Efficiency ratio
Noninterest operating expense (numerator)	$	742,605			725,884			740,614			700,561			649,726			690,663			679,582		$	779,432			760,014			742,605			725,884			740,614
Taxable-equivalent net interest income		865,065			870,341			878,296			813,401			699,075			689,148			665,426			922,259			883,147			865,065			870,341			878,296
Other income		491,350			448,254			420,933			448,108			439,699			497,027			440,203			446,845			465,459			491,350			448,254			420,933
Less: Gain (loss) on bank investment securities		28,480			264			4			(22	)		—			(10	)		(98	)
Less: Gain on bank investment securities																							—			1,566			28,480			264			4
Denominator	$	1,327,935			1,318,331			1,299,225			1,261,531			1,138,774			1,186,185			1,105,727		$	1,369,104			1,347,040			1,327,935			1,318,331			1,299,225
Efficiency ratio		55.92	%		55.06	%		57.00	%		55.53	%		57.05	%		58.23	%		61.46	%		56.93	%		56.42	%		55.92	%		55.06	%		57.00	%
Balance sheet data
In millions
Balance sheet data (in millions)
Average assets
Average assets	$	124,725			123,706			123,252			115,052			98,515			97,598			95,892		$	122,978			125,734			124,725			123,706			123,252
Goodwill		(4,593	)		(4,593	)		(4,593	)		(4,218	)		(3,513	)		(3,514	)		(3,525	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)
Core deposit and other intangible assets		(112	)		(122	)		(134	)		(101	)		(20	)		(25	)		(31	)		(98	)		(102	)		(112	)		(122	)		(134	)
Deferred taxes		44			48			52			39			7			8			10			39			40			44			48			52
Average tangible assets	$	120,064			119,039			118,577			110,772			94,989			94,067			92,346		$	118,326			121,079			120,064			119,039			118,577
Average common equity
Average total equity	$	16,347			16,377			16,279			15,007			12,787			12,636			12,459		$	16,323			16,673			16,347			16,377			16,279
Preferred stock		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,492	)		(1,232	)		(1,232	)		(1,232	)
Average common equity		15,115			15,145			15,047			13,775			11,555			11,404			11,227			15,091			15,181			15,115			15,145			15,047
Goodwill		(4,593	)		(4,593	)		(4,593	)		(4,218	)		(3,513	)		(3,514	)		(3,525	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)
Core deposit and other intangible assets		(112	)		(122	)		(134	)		(101	)		(20	)		(25	)		(31	)		(98	)		(102	)		(112	)		(122	)		(134	)
Deferred taxes		44			48			52			39			7			8			10			39			40			44			48			52
Average tangible common equity	$	10,454			10,478			10,372			9,495			8,029			7,873			7,681		$	10,439			10,526			10,454			10,478			10,372
At end of quarter
Total assets
Total assets	$	126,841			123,821			124,626			122,788			97,797			97,080			98,378			123,223			123,449			126,841			123,821			124,626
Goodwill		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(3,513	)		(3,513	)		(3,525	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)
Core deposit and other intangible assets		(107	)		(117	)		(128	)		(140	)		(18	)		(22	)		(28	)		(95	)		(98	)		(107	)		(117	)		(128	)
Deferred taxes		42			46			50			54			6			7			9			38			39			42			46			50
Total tangible assets	$	122,183			119,157			119,955			118,109			94,272			93,552			94,834		$	118,573			118,797			122,183			119,157			119,955
Total common equity
Total equity	$	16,341			16,472			16,355			16,173			12,922			12,668			12,528		$	16,213			16,487			16,341			16,472			16,355
Preferred stock		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)
Undeclared dividends - cumulative preferred stock		(3	)		(3	)		(3	)		(2	)		(3	)		(3	)		(2	)		(3	)		(3	)		(3	)		(3	)		(3	)
Common equity, net of undeclared cumulative preferred dividends		15,106			15,237			15,120			14,939			11,687			11,433			11,294			14,978			15,252			15,106			15,237			15,120
Goodwill		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(3,513	)		(3,513	)		(3,525	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)
Core deposit and other intangible assets		(107	)		(117	)		(128	)		(140	)		(18	)		(22	)		(28	)		(95	)		(98	)		(107	)		(117	)		(128	)
Deferred taxes		42			46			50			54			6			7			9			38			39			42			46			50
Total tangible common equity	$	10,448			10,573			10,449			10,260			8,162			7,905			7,750		$	10,328			10,600			10,448			10,573			10,449

																									2017 First Quarter								2016 Fourth Quarter								2016 Third Quarter
	2016 Third Quarter								2016 Second Quarter								2016 First Quarter								Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
Average balance in millions; interest in thousands	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.	$	21,480		$	185,552		3.44	%		21,450			184,803		3.47	%		20,717			174,657		3.39	%	$	22,290		$	201,126		3.66	%		21,936			191,228		3.47	%		21,480			185,552		3.44	%
Real estate - commercial		31,252			319,694		4.00			30,134			311,490		4.09			29,426			309,415		4.16			33,175			347,010		4.18			32,822			336,597		4.01			31,252			319,694		4.00
Real estate - consumer		24,058			235,813		3.92			24,858			244,806		3.94			25,859			254,144		3.93			22,179			217,263		3.92			23,096			223,758		3.88			24,058			235,813		3.92
Consumer		11,942			136,592		4.55			11,713			132,437		4.55			11,582			130,971		4.55			12,153			140,170		4.68			12,123			138,144		4.53			11,942			136,592		4.55
Total loans and leases, net		88,732			877,651		3.93			88,155			873,536		3.99			87,584			869,187		3.99			89,797			905,569		4.09			89,977			889,727		3.93			88,732			877,651		3.93
Interest-bearing deposits at banks		9,681			12,355		.51			8,711			10,993		.51			8,193			10,337		.51			6,152			12,162		.80			8,790			11,833		.54			9,681			12,355		.51
Federal funds sold		—			—		—			—			—		—			1			1		.77			—			—		—			—			—		—			—			—		—
Trading account		90			342		1.52			92			364		1.58			85			378		1.78			60			328		2.20			70			358		2.05			90			342		1.52
Investment securities**
U.S. Treasury and federal agencies		13,418			78,259		2.32			13,906			84,019		2.43			14,264			90,138		2.54			15,113			88,573		2.38			14,511			80,510		2.21			13,418			78,259		2.32
Obligations of states and political subdivisions		82			888		4.32			97			1,009		4.20			113			1,164		4.13			56			578		4.17			71			778		4.38			82			888		4.32
Other		861			6,745		3.12			911			7,222		3.19			971			7,961		3.30			830			6,822		3.33			835			7,078		3.37			861			6,745		3.12
Total investment securities		14,361			85,892		2.38			14,914			92,250		2.49			15,348			99,263		2.60			15,999			95,973		2.43			15,417			88,366		2.28			14,361			85,892		2.38
Total earning assets		112,864			976,240		3.44			111,872			977,143		3.51			111,211			979,166		3.54			112,008			1,014,032		3.67			114,254			990,284		3.45			112,864			976,240		3.44
Allowance for credit losses		(982	)							(976	)							(955	)							(1,003	)							(989	)							(982	)
Cash and due from banks		1,281								1,243								1,288								1,283								1,278								1,281
Other assets		11,562								11,567								11,708								10,690								11,191								11,562
Total assets	$	124,725								123,706								123,252							$	122,978								125,734								124,725
Liabilities and shareholders’ equity
Interest-bearing liabilities
Interest-bearing deposits
Interest-checking deposits	$	1,222			378		.12			1,332			400		.12			1,359			414		.12
Savings deposits		51,294			23,689		.18			50,515			20,134		.16			48,976			15,891		.13
Savings and interest-checking deposits																									$	53,260			25,634		.20			54,055			26,798		.20			52,516			24,067		.18
Time deposits		12,334			27,886		.90			12,755			26,867		.85			12,999			24,322		.75			9,561			18,998		.81			10,936			23,766		.86			12,334			27,886		.90
Deposits at Cayman Islands office		220			204		.37			182			181		.40			187			193		.42			192			265		.56			206			219		.42			220			204		.37
Total interest-bearing deposits		65,070			52,157		.32			64,784			47,582		.30			63,521			40,820		.26			63,013			44,897		.29			65,197			50,783		.31			65,070			52,157		.32
Short-term borrowings		231			169		.29			1,078			1,143		.43			2,082			2,162		.42			184			216		.48			200			151		.30			231			169		.29
Long-term borrowings		10,287			58,849		2.28			10,297			58,077		2.27			10,528			57,888		2.21			8,423			46,660		2.25			9,901			56,203		2.26			10,287			58,849		2.28
Total interest-bearing liabilities		75,588			111,175		.59			76,159			106,802		.56			76,131			100,870		.53			71,620			91,773		.52			75,298			107,137		.57			75,588			111,175		.59
Noninterest-bearing deposits		30,782								29,249								28,870								33,287								31,717								30,782
Other liabilities		2,008								1,921								1,972								1,748								2,046								2,008
Total liabilities		108,378								107,329								106,973								106,655								109,061								108,378
Shareholders’ equity		16,347								16,377								16,279								16,323								16,673								16,347
Total liabilities and shareholders’ equity	$	124,725								123,706								123,252							$	122,978								125,734								124,725
Net interest spread							2.85								2.95								3.01								3.15								2.88								2.85
Contribution of interest-free funds							.20								.18								.17								.19								.20								.20
Net interest income/margin on earning assets				$	865,065		3.05	%					870,341		3.13	%					878,296		3.18	%				$	922,259		3.34	%					883,147		3.08	%					865,065		3.05	%

																	2016 Second Quarter								2016 First Quarter
	2015 Fourth Quarter								2015 Third Quarter								Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
Average balance in millions; interest in thousands	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
Assets
Earning assets
Loans and leases, net of unearned discount*
Commercial, financial, etc.	$	20,221		$	164,515		3.23	%		19,939			161,709		3.22	%	$	21,450		$	184,803		3.47	%		20,717			174,657		3.39	%
Real estate - commercial		28,973			303,960		4.11			28,309			302,626		4.18			30,134			311,490		4.09			29,426			309,415		4.16
Real estate - consumer		20,369			204,420		4.01			8,348			87,047		4.17			24,858			244,806		3.94			25,859			254,144		3.93
Consumer		11,547			129,103		4.44			11,253			126,369		4.46			11,713			132,437		4.55			11,582			130,971		4.55
Total loans and leases, net		81,110			801,998		3.96			67,849			677,751		3.96			88,155			873,536		3.99			87,584			869,187		3.99
Interest-bearing deposits at banks		6,622			4,931		.30			6,060			3,852		.25			8,711			10,993		.51			8,193			10,337		.51
Federal funds sold		1			2		.54			—			—		—			—			—		—			1			1		.77
Trading account		68			317		1.88			96			125		.52			92			364		1.58			85			378		1.78
Investment securities**
U.S. Treasury and federal agencies		14,778			89,052		2.39			13,548			86,152		2.52			13,906			84,019		2.43			14,264			90,138		2.54
Obligations of states and political subdivisions		128			1,419		4.40			138			1,398		4.03			97			1,009		4.20			113			1,164		4.13
Other		880			11,015		4.96			755			6,996		3.68			911			7,222		3.19			971			7,961		3.30
Total investment securities		15,786			101,486		2.55			14,441			94,546		2.60			14,914			92,250		2.49			15,348			99,263		2.60
Total earning assets		103,587			908,734		3.48			88,446			776,274		3.48			111,872			977,143		3.51			111,211			979,166		3.54
Allowance for credit losses		(947	)							(937	)							(976	)							(955	)
Cash and due from banks		1,348								1,218								1,243								1,288
Other assets		11,064								9,788								11,567								11,708
Total assets	$	115,052								98,515							$	123,706								123,252
Liabilities and shareholders’ equity
Interest-bearing liabilities
Interest-bearing deposits
Interest-checking deposits	$	1,331			384		.11			1,309			360		.11
Savings deposits		45,974			13,219		.11			41,197			10,937		.11
Savings and interest-checking deposits																	$	51,847			20,534		.16			50,335			16,305		.13
Time deposits		9,686			15,986		.65			2,858			3,643		.51			12,755			26,867		.85			12,999			24,322		.75
Deposits at Cayman Islands office		224			167		.30			206			151		.29			182			181		.40			187			193		.42
Total interest-bearing deposits		57,215			29,756		.21			45,570			15,091		.13			64,784			47,582		.30			63,521			40,820		.26
Short-term borrowings		1,615			1,575		.39			174			32		.07			1,078			1,143		.43			2,082			2,162		.42
Long-term borrowings		10,748			64,002		2.36			10,114			62,076		2.44			10,297			58,077		2.27			10,528			57,888		2.21
Total interest-bearing liabilities		69,578			95,333		.54			55,858			77,199		.55			76,159			106,802		.56			76,131			100,870		.53
Noninterest-bearing deposits		28,443								28,251								29,249								28,870
Other liabilities		2,024								1,619								1,921								1,972
Total liabilities		100,045								85,728								107,329								106,973
Shareholders’ equity		15,007								12,787								16,377								16,279
Total liabilities and shareholders’ equity	$	115,052								98,515							$	123,706								123,252
Net interest spread							2.94								2.93								2.95								3.01
Contribution of interest-free funds							.18								.21								.18								.17
Net interest income/margin on earning assets				$	813,401		3.12	%					699,075		3.14	%				$	870,341		3.13	%					878,296		3.18	%

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 Darren J. King, Executive Vice President and Chief Financial Officer, concluded that M&T’s disclosure controls and procedures were effective as of ~~September 30, 2016.~~March 31, 2017.

(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 ~~September 30, 2016~~March 31, 2017 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 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 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. On January 6, 2016, the U.S. Attorney for the District of Delaware obtained an indictment against Wilmington Trust Corporation relating to alleged conduct that occurred prior to M&T’s acquisition of Wilmington Trust Corporation in May 2011. M&T strongly believes that this unprecedented action is unjustified and Wilmington Trust Corporation will vigorously defend itself. On August 26, 2016, the Court granted

defendants joint motion for a continuance of the trial date. Trial in this matter is now scheduled to begin on October 2, 2017. Wilmington Trust Corporation and its counsel are currently involved in pretrial discovery, motion practice and trial preparation.

The indictment of Wilmington Trust Corporation could result in potential criminal remedies, or criminal 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 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 Corporation’s motion to dismiss on March 20, 2014. Fact discovery commenced. On April 13, 2016, the Court issued an order staying fact discovery in the case pending completion of the trial inU.S. v. Wilmington Trust Corp., et al.On September 19, 2016, the plaintiffs filed a motion to modify the stay of discovery in this matter to allow for additional, limited discovery. ~~The motion~~On December 19, 2016, the Court issued an order lifting the existing stay in its entirety. Trial is ~~currently pending before the Court.~~scheduled to begin on June 18, 2018.

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, ~~2015.~~

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)

Large accelerated filer	☒		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

Table of Contents of Information Required in Report		Page

Part I. FINANCIAL INFORMATION

Item 1.	Financial Statements.

	CONSOLIDATED BALANCE SHEET - ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016	3

	CONSOLIDATED STATEMENT OF INCOME - Three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~	4

	CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - Three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~	5

	CONSOLIDATED STATEMENT OF CASH FLOWS - ~~Nine~~Three months ended ~~September 30, 2016~~March 31, 2017 and ~~2015~~2016	6

	CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - ~~Nine~~Three months ended ~~September 30, 2016~~March 31, 2017 and ~~2015~~2016	7

	NOTES TO FINANCIAL STATEMENTS	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	4847

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	8279

Item 4.	Controls and Procedures.	8279

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings.	8279

Item 1A.	Risk Factors.	8381

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	8381

Item 3.	Defaults Upon Senior Securities.	8381

Item 4.	Mine Safety Disclosures.	8381

Item 5.	Other Information.	8381

Item 6.	Exhibits.	8482

SIGNATURES		8482

EXHIBIT INDEX		8583

	(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		Pro forma
	Three months ended September 30,		Nine months ended September 30,
	2015		2015
	(in thousands)
Total revenues (a)	$	1,255,165		3,879,204
Net income		296,335		939,226


	Three Months Ended March 31, 2017						Three Months Ended March 31, 2016
	Purchased			Other			Purchased			Other
	Impaired			Acquired			Impaired			Acquired
	(In thousands)

Balance at beginning of period	$	154,233			201,153		$	184,618			296,434
Interest income		(10,925	)		(25,518	)		(14,062	)		(37,862	)
Reclassifications from nonaccretable balance		146			3,183			629			5,664
Other (a)		—			2,492			—			4,781
Balance at end of period	$	143,454			181,310		$	171,185			269,017

			Recorded investment				Financial effects of modification
Three months ended September 30, 2016	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		30	$	41,652	$	40,183	$	(1,469	)	$	—
Combination of concession types		13		27,834		19,802		(8,032	)		(6	)
Real estate:
Commercial
Principal deferral		14		12,302		11,644		(658	)		—
Combination of concession types		4		2,623		2,614		(9	)		(172	)
Residential
Principal deferral		21		4,489		4,714		225			—
Combination of concession types		9		1,149		1,214		65			(120	)
Residential-limited documentation
Principal deferral		3		435		470		35			—
Combination of concession types		3		392		493		101			(123	)
Consumer:
Home equity lines and loans
Principal deferral		4		251		251		—			—
Combination of concession types		22		2,301		2,301		—			(178	)
Automobile
Principal deferral		10		186		186		—			—
Other
Principal deferral		1		26		26		—			—
Total		134	$	93,640	$	83,898	$	(9,742	)	$	(599	)

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 (losses), net		9,699	(11,139	)	—		—			(1,440	)		952			(488	)
Foreign currency translation adjustment		—	—		—		(735	)		(735	)		214			(521	)
Gains on cash flow hedges		—	—		—		1,453			1,453			(568	)		885
Total other comprehensive income before reclassifications		9,699	(11,139	)	—		718			(722	)		598			(124	)
Amounts reclassified from accumulated other comprehensive income that (increase) decrease net income:
Accretion of unrealized holding losses on HTM securities		—	2,417		—		—			2,417		(b)	(944	)		1,473
Losses realized in net income		—	108		—		—			108		(c)	(40	)		68
Accretion of net gain on terminated cash flow hedges		—	—		—		(102	)		(102	)	(d)	40			(62	)
Amortization of prior service credit		—	—		(5,523	)	—			(5,523	)	(e)	2,359			(3,164	)
Amortization of actuarial losses		—	—		33,698		—			33,698		(e)	(14,368	)		19,330
Total reclassifications		—	2,525		28,175		(102	)		30,598			(12,953	)		17,645
Total gain (loss) during the period		9,699	(8,614	)	28,175		616			29,876			(12,355	)		17,521
Balance - September 30, 2015	$	17,137	193,214		(474,852	)	(3,466	)	$	(267,967	)		104,494		$	(163,473	)

	Investment securities				Defined benefit
	With OTTI		All other		plans			Other			Total
	(in thousands)
Balance - December 31, 2015	$	9,921		38,166		(296,979	)		(2,735	)	$	(251,627	)
Net gain (loss) during period		745		126,586		11,654			(1,917	)		137,068
Balance - September 30, 2016	$	10,666		164,752		(285,325	)		(4,652	)	$	(114,559	)

	Fair value measurements at December 31, 2015		Level 1(a)		Level 2(a)		Level 3
	(in thousands)
Trading account assets	$	273,783		56,763		217,020		—
Investment securities available for sale:
U.S. Treasury and federal agencies		299,997		—		299,997		—
Obligations of states and political subdivisions		6,028		—		6,028		—
Mortgage-backed securities:
Government issued or guaranteed		11,686,628		—		11,686,628		—
Privately issued		74		—		—		74
Collateralized debt obligations		47,393		—		—		47,393
Other debt securities		118,880		—		118,880		—
Equity securities		83,671		65,178		18,493		—
		12,242,671		65,178		12,130,026		47,467
Real estate loans held for sale		392,036		—		392,036		—
Other assets (b)		56,551		—		46,269		10,282
Total assets	$	12,965,041		121,941		12,785,351		57,749
Trading account liabilities	$	160,745		—		160,745		—
Other liabilities (b)		1,905		—		1,502		403
Total liabilities	$	162,650		—		162,247		403

	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)
July 1 – July 31, 2016		1,150,209	$	114.57		1,150,000	$	1,018,000,000
August 1 – August 31, 2016		1,891,783		115.50		1,889,563		800,000,000
September 1 – September 30, 2016		5,475		118.33		—		800,000,000
Total		3,047,467	$	115.16		3,039,563

Exhibit No.


3.2		Amended and Restated Bylaws of M&T Bank Corporation, effective November 16, 2010, as amended on April 18, 2017. 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: ~~November 3, 2016~~May 5, 2017	By:	/s/ Darren J. King
		Darren J. King
		Executive Vice President and Chief Financial Officer

	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated			Total
	(in thousands)
Beginning balance	$	286,750			311,294			60,294			194,238			77,411		$	929,987
Provision for credit losses		21,507			1,879			(3,155	)		24,448			(679	)		44,000
Net charge-offs
Charge-offs		(26,912	)		(2,203	)		(3,268	)		(20,758	)		—			(53,141	)
Recoveries		5,322			2,119			1,125			4,386			—			12,952
Net charge-offs		(21,590	)		(84	)		(2,143	)		(16,372	)		—			(40,189	)
Ending balance	$	286,667			313,089			54,996			202,314			76,732		$	933,798