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

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

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

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

Number of shares of the registrant’s Common Stock, $0.50 par value, outstanding as of the close of business on ~~July 31, 2014: 131,965,978~~April 30, 2015: 132,970,139 shares.


			June 30,			December 31,
Dollars in thousands, except per share	Dollars in thousands, except per share		2014			2013			Dollars in thousands, except per share		March 31, 2015			December 31, 2014

Assets		Cash and due from banks	$	1,827,197			1,573,361			Cash and due from banks	$	1,269,816			1,289,965
										Interest-bearing deposits at banks		6,291,491			6,470,867
		Interest-bearing deposits at banks		3,032,530			1,651,138			Federal funds sold		97,037			83,392
		Federal funds sold		90,239			99,573			Trading account		363,085			308,175
		Trading account		313,325			376,131			Investment securities (includes pledged securities that can be sold or repledged of $1,611,069 at March 31, 2015; $1,631,267 at December 31, 2014)
		Investment securities (includes pledged securities that can be sold or repledged of $1,620,148 at June 30, 2014; $1,696,438 at December 31, 2013)								Available for sale (cost: $10,425,720 at March 31, 2015; $8,919,324 at December 31, 2014)		10,703,500			9,156,932
		Available for sale (cost: $7,753,752 at June 30, 2014; $4,444,365 at December 31, 2013)		8,008,779			4,531,786			Held to maturity (fair value: $3,411,834 at March 31, 2015; $3,538,282 at December 31, 2014)		3,360,812			3,507,868
		Held to maturity (fair value: $3,765,849 at June 30, 2014; $3,860,127 at December 31, 2013)		3,760,665			3,966,130			Other (fair value: $328,958 at March 31, 2015; $328,742 at December 31, 2014)		328,958			328,742
		Other (fair value: $350,751 at June 30, 2014; $298,581 at December 31, 2013)		350,751			298,581
										Total investment securities		14,393,270			12,993,542
		Total investment securities		12,120,195			8,796,497
										Loans and leases		67,328,490			66,899,369
		Loans and leases		64,980,824			64,325,783			Unearned discount		(229,448	)		(230,413	)
		Unearned discount		(233,131	)		(252,624	)
										Loans and leases, net of unearned discount		67,099,042			66,668,956
		Loans and leases, net of unearned discount		64,747,693			64,073,159			Allowance for credit losses		(921,373	)		(919,562	)
		Allowance for credit losses		(917,666	)		(916,676	)
										Loans and leases, net		66,177,669			65,749,394
		Loans and leases, net		63,830,027			63,156,483
										Premises and equipment		602,096			612,984
		Premises and equipment		625,006			633,520			Goodwill		3,524,625			3,524,625
		Goodwill		3,524,625			3,524,625			Core deposit and other intangible assets		28,234			35,027
		Core deposit and other intangible assets		49,555			68,851			Accrued interest and other assets		5,630,460			5,617,564
		Accrued interest and other assets		5,422,303			5,282,212
										Total assets	$	98,377,783			96,685,535
		Total assets	$	90,835,002			85,162,391

Liabilities		Noninterest-bearing deposits	$	26,088,763			24,661,007			Noninterest-bearing deposits	$	27,181,120			26,947,880
		NOW accounts		2,007,336			1,989,441			NOW accounts		2,149,537			2,307,815
		Savings deposits		38,209,271			36,621,580			Savings deposits		41,138,792			41,085,803
		Time deposits		3,285,995			3,523,838			Time deposits		2,946,126			3,063,973
		Deposits at Cayman Islands office		237,890			322,746			Deposits at Cayman Islands office		178,545			176,582

		Total deposits		69,829,255			67,118,612			Total deposits		73,594,120			73,582,053

		Federal funds purchased and agreements to repurchase securities		161,631			260,455			Federal funds purchased and agreements to repurchase securities		193,495			192,676
		Accrued interest and other liabilities		1,283,430			1,368,922			Accrued interest and other liabilities		1,552,724			1,567,951
		Long-term borrowings		7,391,931			5,108,870			Long-term borrowings		10,509,143			9,006,959

		Total liabilities		78,666,247			73,856,859			Total liabilities		85,849,482			84,349,639

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 June 30, 2014; 381,500 shares at December 31, 2013; Liquidation preference of $10,000 per share: 50,000 shares at June 30, 2014 and December 31, 2013		1,231,500			881,500			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, 2015 and at December 31, 2014; Liquidation preference of $10,000 per share: 50,000 shares at March 31, 2015 and December 31, 2014		1,231,500			1,231,500
		Common stock, $.50 par, 250,000,000 shares authorized, 131,911,359 shares issued at June 30, 2014; 130,516,364 shares issued at December 31, 2013		65,956			65,258			Common stock, $.50 par, 250,000,000 shares authorized, 132,909,718 shares issued at March 31, 2015; 132,312,931 shares issued at December 31, 2014		66,455			66,157
		Common stock issuable, 41,635 shares at June 30, 2014; 47,231 shares at December 31, 2013		2,600			2,915			Common stock issuable, 36,360 shares at March 31, 2015; 41,330 shares at December 31, 2014		2,310			2,608
		Additional paid-in capital		3,347,314			3,232,014			Additional paid-in capital		3,445,707			3,409,506
		Retained earnings		7,481,077			7,188,004			Retained earnings		7,934,820			7,807,119
		Accumulated other comprehensive income (loss), net		40,308			(64,159	)		Accumulated other comprehensive income (loss), net		(152,491	)		(180,994	)

		Total shareholders’ equity		12,168,755			11,305,532			Total shareholders’ equity		12,528,301			12,335,896

		Total liabilities and shareholders’ equity	$	90,835,002			85,162,391			Total liabilities and shareholders’ equity	$	98,377,783			96,685,535


			Three months ended June 30						Six months ended June 30								Three months ended March 31
In thousands, except per share	In thousands, except per share		2014			2013			2014			2013			In thousands, except per share		2015			2014
Interest income		Loans and leases, including fees	$	645,029			705,395		$	1,290,251			1,387,850			Loans and leases, including fees	$	647,179			645,222
																Deposits at banks		3,118			1,884
		Investment securities														Federal funds sold		24			16
		Fully taxable		85,210			41,293			159,109			86,053			Trading account		491			427
		Exempt from federal taxes		1,293			1,777			2,797			3,606			Investment securities
		Deposits at banks		2,535			1,455			4,419			1,722			Fully taxable		85,957			73,899
		Other		223			287			666			951			Exempt from federal taxes		1,318			1,504

		Total interest income		734,290			750,207			1,457,242			1,480,182			Total interest income		738,087			722,952

Interest expense		NOW accounts		330			321			627			643			NOW accounts		311			297
		Savings deposits		11,181			13,790			22,782			27,827			Savings deposits		10,219			11,601
		Time deposits		3,855			7,484			7,795			15,680			Time deposits		3,740			3,940
		Deposits at Cayman Islands office		181			200			389			588			Deposits at Cayman Islands office		147			208
		Short-term borrowings		25			96			57			327			Short-term borrowings		34			32
		Long-term borrowings		49,604			50,729			100,045			101,480			Long-term borrowings		64,048			50,441

		Total interest expense		65,176			72,620			131,695			146,545			Total interest expense		78,499			66,519

		Net interest income		669,114			677,587			1,325,547			1,333,637			Net interest income		659,588			656,433
		Provision for credit losses		30,000			57,000			62,000			95,000			Provision for credit losses		38,000			32,000

		Net interest income after provision for credit losses		639,114			620,587			1,263,547			1,238,637			Net interest income after provision for credit losses		621,588			624,433

Other income		Mortgage banking revenues		95,656			91,262			175,705			184,365			Mortgage banking revenues		101,601			80,049
		Service charges on deposit accounts		107,368			111,717			211,566			222,666
		Trust income		129,893			124,728			251,145			246,331
		Brokerage services income		17,487			17,258			33,987			32,969
		Trading account and foreign exchange gains		8,042			9,224			14,489			18,151
		Gain on bank investment securities		—			56,457			—			56,457
		Total other-than-temporary impairment (“OTTI”) losses		—			—			—			(1,884	)		Service charges on deposit accounts		102,344			104,198
		Portion of OTTI losses recognized in other comprehensive income (before taxes)		—			—			—			(7,916	)		Trust income		123,734			121,252
																Brokerage services income		15,461			16,500
		Net OTTI losses recognized in earnings		—			—			—			(9,800	)		Trading account and foreign exchange gains		6,231			6,447
																Loss on bank investment securities		(98	)		—
		Equity in earnings of Bayview Lending Group LLC		(4,055	)		(2,453	)		(8,509	)		(6,109	)		Equity in earnings of Bayview Lending Group LLC		(4,191	)		(4,454	)
		Other revenues from operations		102,021			100,496			198,136			196,541			Other revenues from operations		95,121			96,115

		Total other income		456,412			508,689			876,519			941,571			Total other income		440,203			420,107

Other expense		Salaries and employee benefits		339,713			323,136			711,039			679,687			Salaries and employee benefits		389,893			371,326
		Equipment and net occupancy		68,084			64,278			139,251			129,437			Equipment and net occupancy		66,470			71,167
		Printing, postage and supplies		9,180			10,298			20,136			20,997			Printing, postage and supplies		9,590			10,956
		Amortization of core deposit and other intangible assets		9,234			12,502			19,296			25,845			Amortization of core deposit and other intangible assets		6,793			10,062
		FDIC assessments		15,155			17,695			30,643			37,133			FDIC assessments		10,660			15,488
		Other costs of operations		239,828			170,682			463,100			341,088			Other costs of operations		202,969			211,235

		Total other expense		681,194			598,591			1,383,465			1,234,187			Total other expense		686,375			690,234

		Income before taxes		414,332			530,685			756,601			946,021			Income before taxes		375,416			354,306
		Income taxes		129,996			182,219			243,248			323,442			Income taxes		133,803			125,289

		Net income	$	284,336			348,466		$	513,353			622,579			Net income	$	241,613			229,017

		Net income available to common shareholders
		Basic	$	260,680			328,538		$	472,404			583,597			Net income available to common shareholders
		Diluted		260,695			328,557			472,429			583,633			Basic	$	218,830			211,720
		Net income per common share														Diluted		218,837			211,731
		Basic	$	1.99			2.56		$	3.62			4.56			Net income per common share
		Diluted		1.98			2.55			3.59			4.53			Basic	$	1.66			1.63
		Cash dividends per common share	$	.70			.70		$	1.40			1.40			Diluted		1.65			1.61
		Average common shares outstanding														Cash dividends per common share	$	.70			.70
		Basic		130,856			128,252			130,536			127,962			Average common shares outstanding
		Diluted		131,828			129,017			131,479			128,828			Basic		132,049			130,212
																Diluted		132,769			131,126


	Three months ended June 30						Six months ended June 30						Three months ended March 31
In thousands	2014			2013			2014			2013			2015			2014

Net income	$	284,336			348,466		$	513,353			622,579		$	241,613		$	229,017
Other comprehensive income (loss), net of tax and reclassification adjustments:
Net unrealized gains (losses) on investment securities		64,652			(6,722	)		102,866			3,357
Unrealized losses on cash flow hedges		(711	)		—			(711	)		—
Other comprehensive income, net of tax and reclassification adjustments:
Net unrealized gains on investment securities														25,339			38,214
Cash flow hedges adjustments														871			—
Foreign currency translation adjustment		449			(114	)		313			(1,046	)		(2,384	)		(136	)
Defined benefit plans liability adjustment		1,179			5,018			1,999			10,182			4,677			820

Total other comprehensive income (loss)		65,569			(1,818	)		104,467			12,493
Total other comprehensive income														28,503			38,898

Total comprehensive income	$	349,905			346,648		$	617,820			635,072		$	270,116		$	267,915


			Six months ended June 30								Three months ended March 31
In thousands	In thousands		2014			2013			In thousands		2015			2014
Cash flows from operating activities		Net income	$	513,353			622,579			Net income	$	241,613			229,017
		Adjustments to reconcile net income to net cash provided by operating activities								Adjustments to reconcile net income to net cash provided by operating activities
		Provision for credit losses		62,000			95,000			Provision for credit losses		38,000			32,000
		Depreciation and amortization of premises and equipment		49,133			43,354			Depreciation and amortization of premises and equipment		24,178			24,708
		Amortization of capitalized servicing rights		34,868			30,653			Amortization of capitalized servicing rights		12,199			17,792
		Amortization of core deposit and other intangible assets		19,296			25,845			Amortization of core deposit and other intangible assets		6,793			10,062
		Provision for deferred income taxes		40,964			30,373			Provision for deferred income taxes		37,052			42,256
		Asset write-downs		2,015			15,043			Asset write-downs		2,379			1,117
		Net gain on sales of assets		(1,991	)		(59,134	)		Net gain on sales of assets		(1,066	)		(852	)
		Net change in accrued interest receivable, payable		10,036			(1,131	)		Net change in accrued interest receivable, payable		(2,200	)		(3,185	)
		Net change in other accrued income and expense		(82,817	)		20,336			Net change in other accrued income and expense		(80,084	)		57,884
		Net change in loans originated for sale		(192,521	)		(220,784	)		Net change in loans originated for sale		197,708			122,406
		Net change in trading account assets and liabilities		15,168			14,362			Net change in trading account assets and liabilities		(18,206	)		27,893

		Net cash provided by operating activities		469,504			616,496			Net cash provided by operating activities		458,366			561,098

Cash flows from investing activities		Proceeds from sales of investment securities								Proceeds from sales of investment securities
		Available for sale		16			1,081,496			Available for sale		693			—
		Other		734			5,439			Other		132			146
		Proceeds from maturities of investment securities								Proceeds from maturities of investment securities
		Available for sale		375,372			652,074			Available for sale		369,649			166,324
		Held to maturity		211,005			141,255			Held to maturity		148,708			92,305
		Purchases of investment securities								Purchases of investment securities
		Available for sale		(3,609,758	)		(39,411	)		Available for sale		(1,871,491	)		(1,709,847	)
		Held to maturity		(10,745	)		(11,252	)		Held to maturity		(7,442	)		(3,238	)
		Other		(52,904	)		(8,540	)		Other		(348	)		(258	)
		Net increase in loans and leases		(566,803	)		(228,853	)		Net increase in loans and leases		(666,220	)		(220,551	)
		Net increase in interest-bearing deposits at banks		(1,381,392	)		(2,425,409	)		Net (increase) decrease in interest bearing deposits at banks		179,376			(1,648,047	)
		Capital expenditures, net		(37,747	)		(43,663	)		Capital expenditures, net		(9,598	)		(16,725	)
		Net (increase) decrease in loan servicing advances		(257,704	)		47,290			Net (increase) decrease in loan servicing advances		76,145			(122,910	)
		Other, net		16,990			38,072			Other, net		(21,940	)		21,763

		Net cash used by investing activities		(5,312,936	)		(791,502	)		Net cash used by investing activities		(1,802,336	)		(3,441,038	)

Cash flows from financing activities		Net increase in deposits		2,712,470			54,101			Net increase (decrease) in deposits		(4,543	)		1,581,705
		Net decrease in short-term borrowings		(98,824	)		(766,742	)		Net increase (decrease) in short-term borrowings		819			(30,246	)
		Proceeds from long-term borrowings		2,647,688			799,760			Proceeds from long-term borrowings		1,500,000			1,498,688
		Payments on long-term borrowings		(360,345	)		(257,178	)		Payments on long-term borrowings		(1,797	)		(352,245	)
		Proceeds from issuance of preferred stock		346,500			—			Proceeds from issuance of preferred stock		—			346,500
		Dividends paid—common		(185,134	)		(181,842	)		Dividends paid - common		(93,631	)		(92,406	)
		Dividends paid—preferred		(29,348	)		(26,725	)		Dividends paid - preferred		(17,368	)		(6,080	)
		Other, net		54,927			41,519			Other, net		(46,014	)		24,208

		Net cash provided (used) by financing activities		5,087,934			(337,107	)		Net cash provided by financing activities		1,337,466			2,970,124

		Net increase (decrease) in cash and cash equivalents		244,502			(512,113	)		Net increase (decrease) in cash and cash equivalents		(6,504	)		90,184
		Cash and cash equivalents at beginning of period		1,672,934			1,986,615			Cash and cash equivalents at beginning of period		1,373,357			1,672,934

		Cash and cash equivalents at end of period	$	1,917,436			1,474,502			Cash and cash equivalents at end of period	$	1,366,853			1,763,118

Supplemental disclosure of cash flow information		Interest received during the period	$	1,420,720			1,459,142			Interest received during the period	$	726,475			695,653
		Interest paid during the period		120,109			151,737			Interest paid during the period		75,776			61,841
		Income taxes paid during the period		198,028			226,406			Income taxes paid during the period		88,578			4,789

Supplemental schedule of noncash investing and financing activities		Securitization of residential mortgage loans allocated to								Securitization of residential mortgage loans allocated to
		Available-for-sale investment securities	$	76,097			—			Available-for-sale investment securities	$	12,920			29,785
		Held to maturity investment securities		—			917,045			Capitalized servicing rights		143			372
		Capitalized servicing rights		976			8,907			Real estate acquired in settlement of loans		10,846			8,886
		Real estate acquired in settlement of loans		18,677			15,502


In thousands, except per share	Preferred stock		Common stock		Common stock issuable			Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss), net			Total			Preferred stock		Common stock		Common stock issuable			Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss), net			Total
2013
Balance—January 1, 2013	$	872,500		64,088		3,473			3,025,520			6,477,276			(240,264	)		10,202,593
Total comprehensive income		—		—		—			—			622,579			12,493			635,072
Preferred stock cash dividends		—		—		—			—			(26,725	)		—			(26,725	)
Amortization of preferred stock discount		4,296		—		—			—			(4,296	)		—			—
Exercise of 407,542 Series C stock warrants into 186,589 shares of common stock		—		93		—			(93	)		—			—			—
Stock-based compensation plans:
Compensation expense, net		—		153		—			21,056			—			—			21,209
Exercises of stock options, net		—		366		—			63,505			—			—			63,871
Directors’ stock plan		—		4		—			793			—			—			797
Deferred compensation plans, net, including dividend equivalents		—		5		(613	)		564			(66	)					(110	)
Other		—		—		—			1,321			—			—			1,321
Common stock cash dividends—$1.40 per share		—		—		—			—			(181,698	)		—			(181,698	)

Balance—June 30, 2013	$	876,796		64,709		2,860			3,112,666			6,887,070			(227,771	)		10,716,330

2014
Balance—January 1, 2014	$	881,500		65,258		2,915			3,232,014			7,188,004			(64,159	)		11,305,532
Balance - January 1, 2014																				$	881,500		65,258		2,915			3,232,014			7,188,004			(64,159	)		11,305,532
Total comprehensive income		—		—		—			—			513,353			104,467			617,820			—		—		—			—			229,017			38,898			267,915
Preferred stock cash dividends		—		—		—			—			(35,117	)		—			(35,117	)		—		—		—			—			(14,674	)		—			(14,674	)
Issuance of Series E preferred stock		350,000		—		—			(3,500	)		—			—			346,500			350,000		—		—			(3,500	)		—			—			346,500
Exercise of 379,376 Series A stock warrants into 149,834 shares of common stock		—		75		—			(75	)		—			—			—
Stock-based compensation plans:
Compensation expense, net		—		131		—			23,250			—			—			23,381			—		123		—			13,999			—			—			14,122
Exercises of stock options, net		—		442		—			84,002			—			—			84,444			—		266		—			49,228			—			—			49,494
Stock purchase plan		—		43		—			9,545			—			—			9,588			—		43		—			9,545			—			—			9,588
Directors’ stock plan		—		4		—			875			—			—			879			—		2		—			439			—			—			441
Deferred compensation plans, net, including dividend equivalents		—		3		(315	)		309			(58	)		—			(61	)		—		2		(299	)		265			(29	)		—			(61	)
Other		—		—		—			894			—			—			894			—		—		—			412			—			—			412
Common stock cash dividends—$1.40 per share		—		—		—			—			(185,105	)		—			(185,105	)
Common stock cash dividends - $.70 per share																					—		—		—			—			(92,406	)		—			(92,406	)

Balance—June 30, 2014	$	1,231,500		65,956		2,600			3,347,314			7,481,077			40,308			12,168,755
Balance - March 31, 2014																				$	1,231,500		65,694		2,616			3,302,402			7,309,912			(25,261	)		11,886,863

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

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

The consolidated financial statements of M&T Bank Corporation (“M&T”) and subsidiaries (“the Company”) were compiled in accordance with generally accepted accounting principles (“GAAP”) using the accounting policies set forth in note 1 of Notes to Financial Statements included in the ~~2013~~2014 Annual Report. Additionally, effective January 1, 2015 the Company made an accounting policy election in accordance with amended accounting guidance issued by the Financial Accounting Standards Board in January 2014 to account for investments in qualified affordable housing projects using the proportional amortization method. Under the proportional amortization method, the Company amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense. The adoption of the amended guidance did not have a significant effect on the Company’s financial position or results of operation, but did result in the restatement of the consolidated statement of income for the three-month period ended March 31, 2014 to remove $12 million of losses associated with qualified affordable housing projects from “other costs of operations” and include the amortization of the initial cost of the investment in income tax expense. The cumulative effect adjustment associated with adopting the amended guidance was not material as of the beginning of any period presented in these consolidated financial statements. See note 11 for information regarding the Company’s investments in qualified affordable housing projects.

In the opinion of management, all adjustments necessary for a fair presentation have been made and, except as described above, were all of a normal recurring nature.

On August 27, 2012, M&T announced that it had entered into a definitive agreement with Hudson City Bancorp, Inc. (“Hudson City”), headquartered in Paramus, New Jersey, under which Hudson City would be acquired by M&T. Pursuant to the terms of the agreement, Hudson City shareholders will receive consideration for each common share of Hudson City in an amount valued at .08403 of an M&T share in the form of either M&T common stock or cash, based on the election of each Hudson City shareholder, subject to proration as specified in the merger agreement (which provides for an aggregate split of total consideration of 60% common stock of M&T and 40% cash). As of ~~June 30, 2014,~~March 31, 2015 total consideration to be paid was valued at approximately ~~$5.4~~$5.5 billion.

At ~~June 30, 2014,~~March 31, 2015, Hudson City had ~~$37.7~~$36.1 billion of assets, including ~~$23.3~~$20.9 billion of loans and ~~$8.2~~$8.3 billion of investment securities, and ~~$32.9~~$31.3 billion of liabilities, including ~~$20.5~~$18.9 billion of deposits. The merger has received the approval of the common shareholders of M&T and Hudson City. However, the merger is subject to a number of other conditions, including regulatory approvals.

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

April 30, 2015 to ~~December~~October 31, ~~2014.~~2015. Nevertheless, there can be no assurances that the merger will be completed by that date.

In connection with the pending acquisition, the Company incurred merger-related expenses related to preparing for 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 planning for the conversion of systems and/or integration of operations; initial marketing and promotion expenses designed to introduce M&T Bank to its new customers; travel costs; and printing, postage, supplies and other costs of planning for the transaction and commencing operations in new markets and offices.

A summary of merger-related expenses incurred in 2013 associated with the pending Hudson City acquisition included in the consolidated statement of income is presented below. There were no merger-related expenses during the three months or six months ended June 30, 2014.

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)
June 30, 2014
March 31, 2015
Investment securities available for sale:
U.S. Treasury and federal agencies									$	161,672		1,563		1	$	163,234
Obligations of states and political subdivisions										7,704		199		53		7,850
Mortgage-backed securities:
Government issued or guaranteed										10,008,191		265,739		8,709		10,265,221
Privately issued										96		2		3		95
Collateralized debt obligations										29,704		19,360		1,786		47,278
Other debt securities										138,366		1,909		19,002		121,273
Equity securities										79,987		18,999		437		98,549

										10,425,720		307,771		29,991		10,703,500


Investment securities held to maturity:
Obligations of states and political subdivisions										148,698		2,178		350		150,526
Mortgage-backed securities:
Government issued or guaranteed										3,007,420		88,417		4,024		3,091,813
Privately issued										197,509		1,421		36,620		162,310
Other debt securities										7,185		—		—		7,185

										3,360,812		92,016		40,994		3,411,834

Other securities										328,958		—		—		328,958

Total									$	14,115,490		399,787		70,985	$	14,444,292


December 31, 2014
Investment securities available for sale:
U.S. Treasury and federal agencies	$	42,600		324		3	$	42,921	$	161,408		544		5	$	161,947
Obligations of states and political subdivisions		9,999		302		59		10,242		8,027		224		53		8,198
Mortgage-backed securities:
Government issued or guaranteed		7,426,259		191,716		348		7,617,627		8,507,571		223,889		337		8,731,123
Privately issued		119		4		4		119		104		2		3		103
Collateralized debt obligations		32,548		24,100		448		56,200		30,073		21,276		1,033		50,316
Other debt securities		138,362		2,185		15,784		124,763		138,240		1,896		18,648		121,488
Equity securities		103,865		54,119		1,077		156,907		73,901		11,020		1,164		83,757

		7,753,752		272,750		17,723		8,008,779		8,919,324		258,851		21,243		9,156,932

Investment securities held to maturity:
Obligations of states and political subdivisions		154,733		3,289		88		157,934		148,961		2,551		189		151,323
Mortgage-backed securities:
Government issued or guaranteed		3,387,213		67,816		14,881		3,440,148		3,149,320		78,485		7,000		3,220,805
Privately issued		210,388		—		50,952		159,436		201,733		1,143		44,576		158,300
Other debt securities		8,331		—		—		8,331		7,854		—		—		7,854

		3,760,665		71,105		65,921		3,765,849		3,507,868		82,179		51,765		3,538,282

Other securities		350,751		—		—		350,751		328,742		—		—		328,742

Total	$	11,865,168		343,855		83,644	$	12,125,379	$	12,755,934		341,030		73,008	$	13,023,956

December 31, 2013
Investment securities available for sale:
U.S. Treasury and federal agencies	$	37,396		382		2	$	37,776
Obligations of states and political subdivisions		10,484		333		6		10,811
Mortgage-backed securities:
Government issued or guaranteed		4,123,435		61,001		19,350		4,165,086
Privately issued		1,468		387		5		1,850
Collateralized debt obligations		42,274		21,666		857		63,083
Other debt securities		137,828		1,722		19,465		120,085
Equity securities		91,480		41,842		227		133,095

		4,444,365		127,333		39,912		4,531,786

Investment securities held to maturity:
Obligations of states and political subdivisions		169,684		3,744		135		173,293
Mortgage-backed securities:
Government issued or guaranteed		3,567,905		16,160		65,149		3,518,916
Privately issued		219,628		—		60,623		159,005
Other debt securities		8,913		—		—		8,913

		3,966,130		19,904		125,907		3,860,127

Other securities		298,581		—		—		298,581

Total	$	8,709,076		147,237		165,819	$	8,690,494

There were no significant gross realized gains or losses from ~~the sale~~sales of investment securities for the ~~three-month~~quarters ended March 31, 2015 and ~~six-month periods ended June 30,~~ 2014. Gross realized gains on investment securities were $116 million for the three-month and six-month periods ended June 30, 2013. During the second quarter of 2013, the Company sold its holdings of Visa Class B shares for a gain of approximately $90 million and its holdings of MasterCard Class B shares for a gain of $13 million. Gross realized losses on investment securities were $60 million for the three-month and six-month periods ended June 30, 2013. During the second quarter of 2013, the Company sold substantially all of its privately issued mortgage-backed securities that had been held in the available-for-sale investment securities portfolio. In total, $1.0 billion of such securities were sold for a net loss of approximately $46 million.

There were $10 million of pre-tax other-than-temporary impairment (“OTTI”) losses recognized during the first quarter of 2013 related to privately issued mortgage-backed securities. The impairment charges were recognized in light of deterioration of real estate values and a rise in delinquencies and charge-offs of underlying mortgage loans collateralizing those securities. The OTTI losses represented management’s estimate of credit losses inherent in the debt securities considering projected cash flows using assumptions for delinquency rates, loss severities, and other estimates of future collateral performance. The Company did not recognize any OTTI losses during the first or second quarters of 2014 or the second quarter of 2013.

~~Changes in credit losses associated with debt securities for which OTTI losses had been recognized in earnings for the three months and six months ended June 30, 2013 follow:~~

~~There were no significant credit losses associated with debt securities held by the Company as of June 30, 2014 or December 31, 2013.~~

At ~~June 30, 2014,~~March 31, 2015, 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	$	7,513		7,592	$	9,059		9,117
Due after one year through five years		46,209		46,952		163,114		165,027
Due after five years through ten years		5,009		5,145		3,272		3,314
Due after ten years		164,778		174,437		162,001		162,177

		223,509		234,126		337,446		339,635
Mortgage-backed securities available for sale		7,426,378		7,617,746		10,008,287		10,265,316

	$	7,649,887		7,851,872	$	10,345,733		10,604,951


Debt securities held to maturity:
Due in one year or less	$	21,159		21,326	$	27,663		27,865
Due after one year through five years		78,588		80,389		87,320		88,357
Due after five years through ten years		54,986		56,219		33,715		34,304
Due after ten years		8,331		8,331		7,185		7,185

		163,064		166,265		155,883		157,711
Mortgage-backed securities held to maturity		3,597,601		3,599,584		3,204,929		3,254,123

	$	3,760,665		3,765,849	$	3,360,812		3,411,834

A summary of investment securities that as of ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013~~2014 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)
June 30, 2014
March 31, 2015
Investment securities available for sale:
U.S. Treasury and federal agencies	$	5,865		(3	)		—		—		$	4,681		(1	)		—		—
Obligations of states and political subdivisions		1,832		(55	)		437		(4	)		986		(4	)		1,524		(49	)
Mortgage-backed securities:
Government issued or guaranteed		42,896		(158	)		8,254		(190	)		1,603,068		(8,597	)		4,138		(112	)
Privately issued		—		—			77		(4	)		—		—			59		(3	)
Collateralized debt obligations		2,633		(114	)		5,557		(334	)		6,091		(1,255	)		5,220		(531	)
Other debt securities		157		(10	)		99,118		(15,774	)		12,689		(443	)		92,304		(18,559	)
Equity securities		3,240		(1,077	)		—		—			374		(437	)		—		—

												1,627,889		(10,737	)		103,245		(19,254	)
		56,623		(1,417	)		113,443		(16,306	)

Investment securities held to maturity:
Obligations of states and political subdivisions		8,329		(34	)		3,753		(54	)		35,272		(317	)		1,802		(33	)
Mortgage-backed securities:
Government issued or guaranteed		140,724		(878	)		730,795		(14,003	)		16,660		(85	)		266,979		(3,939	)
Privately issued		—		—			159,436		(50,952	)		—		—			131,779		(36,620	)

		149,053		(912	)		893,984		(65,009	)		51,932		(402	)		400,560		(40,592	)

Total	$	205,676		(2,329	)		1,007,427		(81,315	)	$	1,679,821		(11,139	)		503,805		(59,846	)

December 31, 2013

December 31, 2014
Investment securities available for sale:
U.S. Treasury and federal agencies	$	745		(2	)		—		—		$	6,505		(5	)		—		—
Obligations of states and political subdivisions		—		—			558		(6	)		1,785		(52	)		121		(1	)
Mortgage-backed securities:
Government issued or guaranteed		1,697,094		(19,225	)		5,815		(125	)		39,001		(186	)		5,555		(151	)
Privately issued		—		—			98		(5	)		—		—			65		(3	)
Collateralized debt obligations		—		—			6,257		(857	)		2,108		(696	)		5,512		(337	)
Other debt securities		1,428		(4	)		103,602		(19,461	)		14,017		(556	)		92,661		(18,092	)
Equity securities		159		(227	)		—		—			2,138		(1,164	)		—		—

												65,554		(2,659	)		103,914		(18,584	)
		1,699,426		(19,458	)		116,330		(20,454	)

Investment securities held to maturity:
Obligations of states and political subdivisions		13,517		(120	)		1,558		(15	)		29,886		(184	)		268		(5	)
Mortgage-backed securities:
Government issued or guaranteed		2,629,950		(65,149	)		—		—			137,413		(361	)		446,780		(6,639	)
Privately issued		—		—			159,005		(60,623	)		—		—			127,512		(44,576	)

		2,643,467		(65,269	)		160,563		(60,638	)		167,299		(545	)		574,560		(51,220	)

Total	$	4,342,893		(84,727	)		276,893		(81,092	)	$	232,853		(3,204	)		678,474		(69,804	)

The Company owned ~~289~~294 individual investment securities with aggregate gross unrealized losses of ~~$84~~$71 million at ~~June 30, 2014.~~March 31, 2015. Based on a review of each of the securities in the investment securities portfolio at ~~June 30, 2014,~~March 31, 2015, the Company concluded that it expected to recover the amortized cost basis of its investment. As of ~~June 30, 2014,~~March 31, 2015, the Company does not intend to sell nor is it anticipated that it would be required to sell any of its impaired investment securities at a loss. At ~~June 30, 2014,~~March 31, 2015, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the ~~$351~~$329 million of cost method investment securities.

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


	June 30,		December 31,		March 31, 2015		December 31, 2014
	2014		2013		(in thousands)
	(in thousands)
Outstanding principal balance	$	3,828,214		4,656,811	$	2,837,256		3,070,268
Carrying amount:
Commercial, financial, leasing, etc.		396,166		580,685		207,884		247,820
Commercial real estate		1,285,386		1,541,368		869,700		961,828
Residential real estate		515,791		576,473		434,454		453,360
Consumer		1,051,728		1,308,926		888,985		933,537

	$	3,249,071		4,007,452	$	2,401,023		2,596,545

Purchased impaired loans included in the table above totaled ~~$283~~$184 million at ~~June 30, 2014~~March 31, 2015 and ~~$331~~$198 million at December 31, ~~2013,~~2014, representing less than 1% of the Company’s assets as of each date. A summary of changes in the accretable yield for acquired loans for the ~~three months~~three-month periods ended March 31, 2015 and ~~six months ended June 30,~~ 2014 ~~and 2013~~ follows:


	Three months ended June 30												Three months ended March 31, 2015
	2014						2013						Purchased impaired			Other acquired			Total
	Purchased impaired			Other acquired			Purchased impaired			Other acquired			(in thousands)
	(in thousands)
Balance at beginning of period	$	30,939			485,162		$	33,728			577,609		$	76,518			397,379			473,897
Interest income		(5,106	)		(43,452	)		(9,747	)		(67,539	)		(5,206	)		(41,277	)		(46,483	)
Reclassifications from nonaccretable balance, net		249			774			31,168			111,702			110			183			293
Other (a)		—			8,486			—			321			—			1,610			1,610

Balance at end of period	$	26,082			450,970		$	55,149			622,093		$	71,422			357,895			429,317


	Six months ended June 30												Three months ended March 31, 2014
	2014						2013						Purchased impaired			Other acquired			Total
	Purchased impaired			Other acquired			Purchased impaired			Other acquired			(in thousands)
	(in thousands)
Balance at beginning of period	$	37,230			538,633		$	42,252			638,272		$	37,230			538,633			575,863
Interest income		(11,434	)		(96,085	)		(18,451	)		(129,286	)		(6,328	)		(52,633	)		(58,961	)
Reclassifications from nonaccretable balance, net		286			774			31,348			122,519			37			—			37
Other (a)		—			7,648			—			(9,412	)		—			(838	)		(838	)

Balance at end of period	$	26,082			450,970		$	55,149			622,093		$	30,939			485,162			516,101

A summary of current, past due and nonaccrual loans as of ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013~~2014 were as follows:


			30-89		90 Days or more past due and accruing				Purchased								30-89		90 Days or more past due and accruing				Purchased
	Current		Days past due		Non- acquired		Acquired (a)		impaired (b)		Nonaccrual		Total		Current		Days past due		Non- acquired		Acquired (a)		impaired (b)		Nonaccrual		Total
	(in thousands)																(in thousands)
June 30, 2014
March 31, 2015
Commercial, financial, leasing, etc.	$	18,831,026		56,292		3,910		5,769		16,702		192,193	$	19,105,892	$	19,519,566		43,213		4,265		3,323		9,724		195,403		19,775,494
Real estate:
Commercial		21,335,953		142,904		9,862		36,554		82,554		188,951		21,796,778		22,225,088		116,465		27,261		17,187		45,752		142,007		22,573,760
Residential builder and developer		1,203,959		10,417		—		9,505		111,937		83,624		1,419,442		1,460,981		6,119		—		6,953		91,839		65,310		1,631,202
Other commercial construction		3,075,240		11,764		—		4,018		43,511		23,521		3,158,054		3,575,578		18,244		3,864		1,721		17,061		24,280		3,640,748
Residential		7,499,250		261,083		270,492		42,245		25,231		198,816		8,297,117		7,580,514		189,901		197,299		20,058		17,283		171,496		8,176,551
Residential Alt-A		258,899		22,064		—		—		—		78,686		359,649		241,467		11,831		—		—		—		74,270		327,568
Consumer:
Home equity lines and loans		5,917,670		34,440		—		25,577		2,582		83,991		6,064,260		5,783,865		35,478		—		13,298		2,359		87,985		5,922,985
Automobile		1,621,311		23,629		—		218		—		16,075		1,661,233		2,024,526		25,322		—		—		—		14,100		2,063,948
Other		2,821,175		34,370		4,752		10,694		—		14,277		2,885,268		2,921,142		28,407		3,932		17,570		—		15,735		2,986,786

Total	$	62,564,483		596,963		289,016		134,580		282,517		880,134	$	64,747,693	$	65,332,727		474,980		236,621		80,110		184,018		790,586		67,099,042


			30-89		90 Days or more past due and accruing					Purchased								30-89		90 Days or more past due and accruing				Purchased
	Current		Days past due		Non- acquired		��	Acquired (a)		impaired (b)		Nonaccrual		Total		Current		Days past due		Non- acquired		Acquired (a)		impaired (b)		Nonaccrual		Total
					(in thousands)													(in thousands)
December 31, 2013
December 31, 2014
Commercial, financial, leasing, etc.	$	18,489,474		77,538		4,981			6,778		15,706		110,739	$	18,705,216	$	19,228,265		37,246		1,805		6,231		10,300		177,445		19,461,292
Real estate:
Commercial		21,236,071		145,749		63,353			35,603		88,034		173,048		21,741,858		22,208,491		118,704		22,170		14,662		51,312		141,600		22,556,939
Residential builder and developer		1,025,984		8,486		141			7,930		137,544		96,427		1,276,512		1,273,607		11,827		492		9,350		98,347		71,517		1,465,140
Other commercial construction		2,986,598		42,234		—			8,031		57,707		35,268		3,129,838		3,484,932		17,678		—		—		17,181		25,699		3,545,490
Residential		7,630,368		295,131		294,649			43,700		29,184		252,805		8,545,837		7,640,368		226,932		216,489		35,726		18,223		180,275		8,318,013
Residential Alt-A		283,253		18,009		—			—		—		81,122		382,384		249,810		11,774		—		—		—		77,704		339,288
Consumer:
Home equity lines and loans		5,972,365		40,537		—			27,754		2,617		78,516		6,121,789		5,859,378		42,945		—		27,896		2,374		89,291		6,021,884
Automobile		1,314,246		29,144		—			366		—		21,144		1,364,900		1,931,138		30,500		—		133		—		17,578		1,979,349
Other		2,726,522		47,830		5,386			—		—		25,087		2,804,825		2,909,791		33,295		4,064		16,369		—		18,042		2,981,561

Total	$	61,664,881		704,658		368,510			130,162		330,792		874,156	$	64,073,159	$	64,785,780		530,901		245,020		110,367		197,737		799,151		66,668,956

One-to-four family residential mortgage loans ~~originated~~held for sale were ~~$419~~$423 million and ~~$401~~$435 million at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, respectively. Commercial mortgage loans held for sale were ~~$205~~$117 million at ~~June 30, 2014~~March 31, 2015 and ~~$68~~$308 million at December 31, ~~2013.~~2014.

Changes in the allowance for credit losses for the three months ended ~~June 30, 2014~~March 31, 2015 were as follows:


																			Commercial, Financial, Leasing, etc.			Real Estate
	Commercial, Financial,			Real Estate															Commercial, Financial, Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated			Total			(in thousands)
	(in thousands)
Beginning balance	$	276,835			324,805			77,062			162,134			75,932		$	916,768		$	288,038			307,927			61,910			186,033			75,654		919,562
Provision for credit losses		25,556			(12,229	)		(1,957	)		18,676			(46	)		30,000			1,442			15,542			960			19,574			482		38,000
Net charge-offs
Charge-offs		(14,142	)		(2,814	)		(5,478	)		(19,404	)		—			(41,838	)		(12,350	)		(6,679	)		(3,118	)		(25,329	)		—		(47,476	)
Recoveries		4,002			1,492			2,777			4,465			—			12,736			3,939			585			989			5,774			—		11,287

Net charge-offs		(10,140	)		(1,322	)		(2,701	)		(14,939	)		—			(29,102	)		(8,411	)		(6,094	)		(2,129	)		(19,555	)		—		(36,189	)

Ending balance	$	292,251			311,254			72,404			165,871			75,886		$	917,666		$	281,069			317,375			60,741			186,052			76,136		921,373

Changes in the allowance for credit losses for the three months ended ~~June 30, 2013 were as follows:~~

~~Changes in the allowance for credit losses for the six months ended June 30,~~March 31, 2014 were as follows:

~~Changes in the allowance for credit losses for the six months ended June 30, 2013 were as follows:~~


																		Commercial, Financial, Leasing, etc.			Real Estate
	Commercial, Financial,			Real Estate														Commercial, Financial, Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total			(in thousands)
	(in thousands)
Beginning balance	$	246,759			337,101			88,807			179,418			73,775	$	925,860		$	273,383			324,978			78,656			164,644			75,015		916,676
Provision for credit losses		73,527			(11,225	)		3,598			28,543			557		95,000			12,598			116			4,228			14,141			917		32,000
Net charge-offs
Charge-offs		(55,856	)		(13,792	)		(13,263	)		(42,663	)		—		(125,574	)		(14,809	)		(3,486	)		(7,453	)		(21,691	)		—		(47,439	)
Recoveries		4,437			12,180			6,169			8,993			—		31,779			5,663			3,197			1,631			5,040			—		15,531

Net charge-offs		(51,419	)		(1,612	)		(7,094	)		(33,670	)		—		(93,795	)		(9,146	)		(289	)		(5,822	)		(16,651	)		—		(31,908	)

Ending balance	$	268,867			324,264			85,311			174,291			74,332	$	927,065		$	276,835			324,805			77,062			162,134			75,932		916,768

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

In establishing the allowance for credit losses, the Company estimates losses attributable to specific troubled credits identified through both normal and detailed or intensified credit review processes and also estimates losses inherent in other loans and leases on a collective basis. For purposes of determining the level of the allowance for credit losses, the Company evaluates its loan and lease portfolio by loan type. The amounts of loss components in the Company’s loan and lease portfolios are determined through a ~~loan-by-loan~~loan by loan analysis of larger balance commercial loans and commercial real estate loans that are in nonaccrual status and by applying loss factors to groups of loan balances based on loan type and management’s classification of such loans under the Company’s loan grading system. Measurement of the specific loss components is typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. In determining the allowance for credit losses, the Company utilizes a loan grading system which is applied to commercial and commercial real estate credits on an individual loan basis. Loan officers are responsible for continually assigning grades to these loans based on standards outlined in the Company’s Credit Policy. Internal loan grades are also monitored by the Company’s loan review department to ensure consistency and strict adherence to the prescribed standards. Loan grades are assigned loss component factors that reflect the Company’s loss estimate for each group of loans and leases. Factors considered in assigning loan grades and loss component factors include borrower-specific information related to expected future cash flows and operating results, collateral values, geographic location, financial condition and performance, payment status, and other information; levels of and trends in portfolio charge-offs and recoveries; levels of and trends in portfolio delinquencies and impaired loans; changes in the risk profile of specific portfolios; trends in volume and terms of loans; effects of changes in credit concentrations; and observed trends and practices in the banking industry. As updated appraisals are obtained on individual loans or other events in the market place indicate that collateral values have significantly changed, individual loan grades are adjusted as appropriate. Changes in other factors cited may also lead to loan grade changes at any time. Except for consumer and residential ~~mortgage~~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 ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013~~2014 and for the three ~~months~~month periods ended March 31, 2015 and ~~six months ended June 30, 2014 and June 30, 2013:~~2014.


	June 30, 2014						December 31, 2013						March 31, 2015						December 31, 2014
	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.	$	165,446		189,110		39,874		90,293		112,092		24,614	$	108,870		130,029		19,335		132,340		165,146		31,779
Real estate:
Commercial		95,543		112,623		16,330		113,570		132,325		19,520		99,729		122,098		15,836		83,955		96,209		14,121
Residential builder and developer		28,048		36,634		1,694		33,311		55,122		4,379		6,512		8,731		591		17,632		22,044		805
Other commercial construction		71,379		74,401		4,883		86,260		90,515		4,022		5,116		6,084		831		5,480		6,484		900
Residential		90,895		109,723		4,103		96,508		114,521		7,146		86,691		104,630		4,405		88,970		107,343		4,296
Residential Alt-A		108,426		123,349		12,000		111,911		124,528		14,000		97,984		110,835		11,000		101,137		114,565		11,000
Consumer:
Home equity lines and loans		19,358		20,424		5,877		13,672		14,796		3,312		19,701		20,794		6,304		19,771		20,806		6,213
Automobile		35,426		35,426		9,248		40,441		40,441		11,074		27,122		27,122		6,983		30,317		30,317		8,070
Other		18,561		18,561		4,831		17,660		17,660		4,541		18,814		18,814		5,297		18,973		18,973		5,459

		633,082		720,251		98,840		603,626		702,000		92,608		470,539		549,137		70,582		498,575		581,887		82,643

With no related allowance recorded:
Commercial, financial, leasing, etc.		52,913		55,167		—		28,093		33,095		—		116,325		135,534		—		73,978		81,493		—
Real estate:
Commercial		102,890		124,701		—		65,271		84,333		—		51,734		59,235		—		66,777		78,943		—
Residential builder and developer		66,149		99,746		—		72,366		104,768		—		62,611		101,964		—		58,820		96,722		—
Other commercial construction		9,453		14,306		—		7,369		11,493		—		19,657		40,072		—		20,738		41,035		—
Residential		19,681		29,512		—		84,144		95,358		—		17,203		27,886		—		16,815		26,750		—
Residential Alt-A		24,523		44,784		—		28,357		52,211		—		24,785		43,635		—		26,752		46,964		—

		275,609		368,216		—		285,600		381,258		—		292,315		408,326		—		263,880		371,907		—


Total:
Commercial, financial, leasing, etc.		218,359		244,277		39,874		118,386		145,187		24,614		225,195		265,563		19,335		206,318		246,639		31,779
Real estate:
Commercial		198,433		237,324		16,330		178,841		216,658		19,520		151,463		181,333		15,836		150,732		175,152		14,121
Residential builder and developer		94,197		136,380		1,694		105,677		159,890		4,379		69,123		110,695		591		76,452		118,766		805
Other commercial construction		80,832		88,707		4,883		93,629		102,008		4,022		24,773		46,156		831		26,218		47,519		900
Residential		110,576		139,235		4,103		180,652		209,879		7,146		103,894		132,516		4,405		105,785		134,093		4,296
Residential Alt-A		132,949		168,133		12,000		140,268		176,739		14,000		122,769		154,470		11,000		127,889		161,529		11,000
Consumer:
Home equity lines and loans		19,358		20,424		5,877		13,672		14,796		3,312		19,701		20,794		6,304		19,771		20,806		6,213
Automobile		35,426		35,426		9,248		40,441		40,441		11,074		27,122		27,122		6,983		30,317		30,317		8,070
Other		18,561		18,561		4,831		17,660		17,660		4,541		18,814		18,814		5,297		18,973		18,973		5,459

Total	$	908,691		1,088,467		98,840		889,226		1,083,258		92,608	$	762,854		957,463		70,582		762,455		953,794		82,643

In accordance with the previously described policies, the Company utilizes a loan grading system that is applied to all commercial loans and commercial real estate loans. Loan grades are utilized to differentiate risk within the portfolio and consider the expectations of default for each loan. Commercial loans and commercial real estate loans with a lower expectation of default are assigned one of ten possible “pass” loan grades and are generally ascribed lower loss factors when determining the allowance for credit losses. Loans with an elevated level of credit risk are classified as “criticized” and are ascribed a higher loss factor when determining the allowance for credit losses. Criticized loans may be classified as “nonaccrual” if the Company no longer expects to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more. All larger balance criticized commercial loans and commercial real estate loans are individually reviewed by centralized loan review personnel each quarter to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. Smaller balance criticized loans are analyzed by business line risk management areas to ensure proper loan grade classification. Furthermore, criticized nonaccrual commercial loans and commercial real estate loans are considered impaired and, as a result, specific loss allowances on such loans are established within the allowance for credit losses to the extent appropriate in each individual instance. The following table summarizes the loan grades applied to the various classes of the Company’s commercial loans and commercial real estate loans.

In determining the allowance for credit losses, residential real estate loans and consumer loans are generally evaluated collectively after considering such factors as payment performance and recent loss experience and trends, which are mainly driven by current collateral values in the market place as well as the amount of loan defaults. Loss rates on such loans are determined by reference to recent charge-off history and are evaluated (and adjusted if deemed appropriate) through consideration of other factors including near-term forecasted loss estimates developed by the Company’s Credit Department. In arriving at such forecasts, the Company considers the current estimated fair value of its collateral based on geographical adjustments for home price depreciation/appreciation and overall borrower repayment performance. With regard to collateral values, the realizability of such values by the Company contemplates repayment of ~~the original balance of~~ any first lien position prior to recovering amounts on a second lien position. ~~However, residential~~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.

~~4. Loans~~ The carrying value of residential real estate loans and ~~leases~~home equity loans and lines of credit for which a partial charge-off has been recognized aggregated $62 million and $20 million, respectively, at March 31, 2015 and $63 million and $18 million, respectively, at December 31, 2014. 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 ~~allowance for credit losses, continued~~

net realizable value of the collateral exceeded the outstanding customer balance totaled $24 million and $29 million, respectively, at March 31, 2015 and $27 million and $28 million, respectively, at December 31, 2014.

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:

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, Leasing, etc.		Real Estate
	Leasing, etc.		Commercial		Residential		Consumer		Total		Commercial, Financial, Leasing, etc.		Commercial		Residential		Consumer		Total
	(in thousands)										(in thousands)
June 30, 2014
March 31, 2015
Individually evaluated for impairment	$	218,359		371,950		242,967		73,345	$	906,621	$	225,195		244,340		225,364		65,637	$	760,536
Collectively evaluated for impairment		18,870,831		25,764,322		8,388,568		10,534,834		63,558,555		19,540,575		27,446,718		8,261,472		10,905,723		66,154,488
Purchased impaired		16,702		238,002		25,231		2,582		282,517		9,724		154,652		17,283		2,359		184,018


Total	$	19,105,892		26,374,274		8,656,766		10,610,761	$	64,747,693	$	19,775,494		27,845,710		8,504,119		10,973,719	$	67,099,042

December 31, 2013

December 31, 2014
Individually evaluated for impairment	$	118,386		376,339		320,360		71,773	$	886,858	$	206,318		252,347		232,398		69,061	$	760,124
Collectively evaluated for impairment		18,571,124		25,488,584		8,578,677		10,217,124		62,855,509		19,244,674		27,148,382		8,406,680		10,911,359		65,711,095
Purchased impaired		15,706		283,285		29,184		2,617		330,792		10,300		166,840		18,223		2,374		197,737


Total	$	18,705,216		26,148,208		8,928,221		10,291,514	$	64,073,159	$	19,461,292		27,567,569		8,657,301		10,982,794	$	66,668,956

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

The tables below summarize the Company’s loan modification activities that were considered troubled debt restructurings for the three months ended ~~June 30, 2014~~March 31, 2015 and ~~2013:~~2014:


			Recorded investment				Financial effects of modification								Recorded investment				Financial effects of modification
Three months ended June 30, 2014	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
Three months ended March 31, 2015													Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)														(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		21	$	4,414	$	4,351	$	(63	)	$	—			21	$	1,572	$	1,557	$	(15	)	$	—
Other		1		19,593		19,593		—			—
Interest rate reduction														1		99		99		—			(19	)
Combination of concession types		3		9,795		9,727		(68	)		(10	)		3		9,155		6,989		(2,166	)		—
Real estate:
Commercial
Principal deferral		11		8,327		8,314		(13	)		—			7		3,792		3,776		(16	)		—
Interest rate reduction		1		255		252		(3	)		(48	)
Combination of concession types		1		63		61		(2	)		(9	)		4		1,646		1,637		(9	)		(52	)
Residential builder and developer
Principal deferral		1		1,398		1,398		—			—
Other commercial construction
Principal deferral		2		6,407		6,318		(89	)		—			1		1,398		1,398		—			—
Residential
Principal deferral		3		142		166		24			—			7		721		742		21			—
Combination of concession types		8		923		991		68			(66	)		3		294		349		55			(34	)
Residential Alt-A
Principal deferral		3		662		698		36			—
Combination of concession types		6		1,006		1,029		23			(220	)		1		210		210		—			(4	)
Consumer:
Home equity lines and loans
Interest rate reduction		5		341		341		—			(76	)
Principal deferral														1		21		21		—			—
Combination of concession types		21		1,772		1,772		—			(204	)		5		196		196		—			(13	)
Automobile
Principal deferral		43		603		603		—			—			35		303		303		—			—
Interest rate reduction		3		60		60		—			(3	)		3		42		42		—			(3	)
Other		8		47		47		—			—			10		20		20		—			—
Combination of concession types		23		341		341		—			(36	)		8		84		84		—			(7	)
Other
Principal deferral		7		38		38		—			—			22		296		296		—			—
Interest rate reduction		3		291		291		—			(63	)
Other														5		59		59		—			—
Combination of concession types		19		906		906		—			(276	)		13		224		224		—			(25	)

Total		193	$	57,384	$	57,297	$	(87	)	$	(1,011	)		150	$	20,132	$	18,002	$	(2,130	)	$	(157	)

~~The tables below summarize the Company’s loan modification activities that were considered troubled debt restructurings for the six months ended June 30, 2014 and 2013:~~


			Recorded investment				Financial effects of modification
Six months ended June 30, 2013	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
Three months ended March 31, 2014													Number		Recorded investment				Financial effects of modification
Three months ended March 31, 2014													Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)												(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		39	$	6,876	$	6,804	$	(72	)	$	—			30	$	14,954	$	14,848	$	(106	)	$	—
Other		2		48,660		48,857		197			—
Combination of concession types		3		1,832		1,322		(510	)		—			2		41		39		(2	)		(4	)
Real estate:
Commercial
Principal deferral		13		34,027		33,893		(134	)		—			13		7,044		7,002		(42	)		—
Combination of concession types		2		582		581		(1	)		(56	)		1		346		401		55			(104	)
Residential builder and developer
Principal deferral		15		18,853		18,062		(791	)		—
Other		1		4,039		3,888		(151	)		—
Combination of concession types		3		15,580		15,514		(66	)		(535	)
Other commercial construction
Principal deferral		2		364		363		(1	)		—			1		151		151		—			—
Residential
Principal deferral		15		1,782		1,965		183			—			13		1,602		1,663		61			—
Interest rate reduction														1		98		104		6			(32	)
Other		1		195		195		—			—			1		188		188		—			—
Combination of concession types		38		71,659		68,426		(3,233	)		(557	)		14		2,188		2,160		(28	)		(282	)
Residential Alt-A
Principal deferral		1		99		102		3			—			2		166		202		36			—
Combination of concession types		13		2,094		2,219		125			(388	)		10		1,746		1,736		(10	)		(61	)
Consumer:
Home equity lines and loans
Principal deferral		4		180		182		2			—			3		280		280		—			—
Interest rate reduction		1		99		99		—			(8	)
Other		1		106		106		—			—
Combination of concession types		10		617		617		—			(97	)		15		1,856		1,856		—			(172	)
Automobile
Principal deferral		238		3,215		3,215		—			—			80		993		993		—			—
Interest rate reduction		9		140		140		—			(15	)
Other		45		232		232		—			—			11		61		61		—			—
Combination of concession types		123		1,597		1,597		—			(129	)		23		250		250		—			(26	)
Other
Principal deferral		20		230		230		—			—			8		55		55		—			—
Interest rate reduction		1		12		12		—			(2	)
Other		1		12		12		—			—			1		45		45		—			—
Combination of concession types		72		1,924		1,924		—			(501	)		14		466		466		—			(188	)

Total		673	$	215,006	$	210,557	$	(4,449	)	$	(2,288	)		243	$	32,530	$	32,500	$	(30	)	$	(869	)

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 ~~June 30,~~March 31, 2015 and 2014 ~~and 2013~~ and for which there was a subsequent payment default during the ~~six-month~~three-month periods ended ~~June 30,~~March 31, 2015 and 2014, ~~and 2013,~~respectively, were not material.

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

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

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

M&T had ~~$834~~$836 million of fixed and floating rate junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) outstanding at ~~June 30, 2014 which~~March 31, 2015 that are held by various trusts ~~that~~and 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 current risk-based capital guidelines, the Capital Securities are includable in M&T’s Tier 1 capital. However, in July 2013, the Federal Reserve Board, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation issued a final rule to comprehensively revise the capital framework for the U.S. banking sector. Under that rule, trust preferred capital securities will be phased out from inclusion in Tier 1 capital such that in 2015 only 25% of then-outstanding securities will be included in Tier 1 capital and beginning in 2016 none of the securities will be included in Tier 1 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.~~trusts. The Capital Securities are mandatorily redeemable in whole, but not in part, upon repayment at the stated maturity dates (ranging from 2027 to 2033) of the Junior Subordinated Debentures or the earlier redemption of the Junior Subordinated Debentures in whole upon the occurrence of one or more events set forth in the indentures relating to the Capital Securities, and in whole or in part at any time after an optional redemption prior to contractual maturity contemporaneously with the optional redemption of the related Junior Subordinated Debentures in whole or in part, subject to possible regulatory approval.

On April 15, 2015, M&T redeemed all of the issued and outstanding Capital Securities issued by M&T Capital Trust I, M&T Capital Trust II and M&T Capital Trust III, and the related Junior Subordinated Debentures held by those respective trusts. In the aggregate, $323 million of Junior Subordinated Debentures were redeemed. In February ~~27,~~ 2014, M&T redeemed all of the issued and outstanding 8.5% $350 million ~~trust preferred securities~~Capital Securities issued by M&T Capital Trust IV and the related Junior Subordinated Debentures held by M&T Capital Trust IV.

Also included in long-term borrowings are agreements to repurchase securities of $1.4 billion at each of ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013.~~2014. The agreements reflect various repurchase dates in 2016 and 2017 and are subject to legally enforceable master netting arrangements, however the Company has not offset any amounts related to these agreements in its consolidated financial statements. The Company posted collateral consisting primarily of government guaranteed mortgage-backed securities of $1.5 billion at ~~June 30, 2014~~each of March 31, 2015 and ~~$1.6 billion at~~ December 31, ~~2013.~~2014.

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

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


	Shares issued and outstanding		Carrying value June 30, 2014		Carrying value December 31, 2013		Shares issued and outstanding		Carrying value
			(dollars in thousands)				(dollars in thousands)
Series A (a)
Fixed Rate Cumulative Perpetual Preferred Stock, Series A, $1,000 liquidation preference per share		230,000	$	230,000	$	230,000		230,000	$	230,000

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

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

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

In addition to the Series A ~~and Series C~~ warrants mentioned in (a) above, a warrant to purchase 95,383 shares of M&T common stock at $518.96 per share was outstanding at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013.~~2014. The obligation under that warrant was assumed by M&T in an acquisition.

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


	Pension benefits						Other postretirement benefits
	Three months ended June 30
	2014			2013			2014			2013
	(in thousands)
Service cost	$	5,160			6,130			152			171
Interest cost on projected benefit obligation		17,331			14,939			714			670
Expected return on plan assets		(22,859	)		(21,802	)		—			—
Amortization of prior service cost		(1,626	)		(1,628	)		(329	)		(329	)
Amortization of net actuarial loss		3,897			10,138			—			80

Net periodic benefit cost	$	1,903			7,777			537			592

													Pension benefits						Other postretirement benefits
	Pension benefits						Other postretirement benefits						Three months ended March 31
	Six months ended June 30												2015			2014			2015			2014
	2014			2013			2014			2013			(in thousands)
	(in thousands)
Service cost	$	10,260			12,180			302			371		$	6,000			5,100			200			150
Interest cost on projected benefit obligation		34,581			30,065			1,389			1,345			17,775			17,250			650			675
Expected return on plan assets		(45,784	)		(43,677	)		—			—			(23,575	)		(22,925	)		—			—
Amortization of prior service cost		(3,276	)		(3,278	)		(679	)		(679	)
Amortization of prior service credit														(1,525	)		(1,650	)		(350	)		(350	)
Amortization of net actuarial loss		7,247			20,538			—			180			11,175			3,350			25			—


Net periodic benefit cost	$	3,028			15,828			1,012			1,217		$	9,850			1,125			525			475

Expense incurred in connection with the Company’s defined contribution pension and retirement savings plans totaled ~~$12,673,000~~$16,750,000 and ~~$12,563,000~~$15,732,000 for the three months ended ~~June 30,~~March 31, 2015 and 2014, ~~and 2013, respectively, and $28,405,000 and $28,318,000 for the six months ended June 30, 2014 and 2013,~~ respectively.


	Three months ended June 30						Six months ended June 30						Three months ended March 31
	2014			2013			2014			2013			2015			2014
	(in thousands, except per share)												(in thousands, except per share)
Income available to common shareholders:

Net income	$	284,336			348,466		$	513,353			622,579		$	241,613			229,017
Less: Preferred stock dividends (a)		(20,443	)		(13,362	)		(35,117	)		(26,725	)		(20,318	)		(14,674	)
Amortization of preferred stock discount (a)		—			(2,193	)		—			(4,340	)

Net income available to common equity		263,893			332,911			478,236			591,514			221,295			214,343
Less: Income attributable to unvested stock-based compensation awards		(3,213	)		(4,373	)		(5,832	)		(7,917	)		(2,465	)		(2,623	)


Net income available to common shareholders	$	260,680			328,538		$	472,404			583,597		$	218,830			211,720

Weighted-average shares outstanding:

Common shares outstanding (including common stock issuable) and unvested stock-based compensation awards		132,473			129,964			132,139			129,708			133,542			131,800
Less: Unvested stock-based compensation awards		(1,617	)		(1,712	)		(1,603	)		(1,746	)		(1,493	)		(1,588	)


Weighted-average shares outstanding		130,856			128,252			130,536			127,962			132,049			130,212

Basic earnings per common share	$	1.99			2.56		$	3.62			4.56		$	1.66			1.63


													Three months ended March 31
	Three months ended June 30						Six months ended June 30						2015			2014
	2014			2013			2014			2013			(in thousands, except per share)
	(in thousands, except per share)
Net income available to common equity	$	263,893			332,911		$	478,236			591,514		$	221,295			214,343
Less: Income attributable to unvested stock-based compensation awards		(3,198	)		(4,354	)		(5,807	)		(7,881	)		(2,458	)		(2,612	)


Net income available to common shareholders	$	260,695			328,557		$	472,429			583,633		$	218,837			211,731

Adjusted weighted-average shares outstanding:

Common and unvested stock-based compensation awards		132,473			129,964			132,139			129,708			133,542			131,800
Less: Unvested stock-based compensation awards		(1,617	)		(1,712	)		(1,603	)		(1,746	)		(1,493	)		(1,588	)
Plus: Incremental shares from assumed conversion of stock-based compensation awards and warrants to purchase common stock		972			765			943			866
Plus: Incremental shares from assumed conversion of stock-based compensation awards														720			914


Adjusted weighted-average shares outstanding		131,828			129,017			131,479			128,828			132,769			131,126

Diluted earnings per common share	$	1.98			2.55		$	3.59			4.53		$	1.65			1.61

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 ~~1.7~~2.7 million and ~~4.5~~3.0 million common shares during the three-month periods ended ~~June 30,~~March 31, 2015 and 2014, ~~and 2013, respectively, and 2.4 million and 4.6 million common shares during the six-month periods ended June 30, 2014 and 2013,~~ respectively, were not included in the computations of diluted earnings per common share because the effect on those periods would have been antidilutive.

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


	Investment Securities				Defined benefit plans			Other				Total amount before tax				Income tax				Net				Investment Securities
	With OTTI		All other		Defined benefit plans							Total amount before tax			With OTTI (a)					Net				All other		Defined benefit plans		Other			Total amount before tax			Income tax			Net
	(in thousands)																							(in thousands)
Balance—January 1, 2014	$	37,255		18,450		(161,617	)				115			$	(105,797	Income tax	)			41,638			$	(64,159	)
Other comprehensive income before reclassifications: Unrealized holding gains, net		10,842		156,764		—		Other		—				167,606				(65,774	)			101,832

Balance – January 1, 2015																								$	7,438		201,828		(503,027	)		(4,082	)	$	(297,843	)		116,849		$	(180,994	)

Other comprehensive income before reclassifications:
Unrealized holding gains, net																									8,011		32,063		—			—			40,074			(15,247	)		24,827
Foreign currency translation adjustment		—		—		—			479				479				(166	)			313				—		—		—			(3,732	)		(3,732	)		1,348			(2,384	)
Unrealized losses on cash flow hedges		—		—		—			(1,170	)			(1,170	)			459				(711	)
Gains on cash flow hedges																									—		—		—			1,453			1,453			(568	)		885

Total other comprehensive income before reclassifications		10,842		156,764		—			(691	)			166,915				(65,481	)			101,434				8,011		32,063		—			(2,279	)		37,795			(14,467	)		23,328


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

Accretion of unrealized holding losses on held-to-maturity (“HTM”) securities		1		1,702		—			—				1,703	(a)			(669	)			1,034				—		739		—			—			739	(b)		(289	)		450
Losses realized in net income																									—		98		—			—			98	(c)		(36	)		62
Accretion of gain on terminated cash flow hedges																									—		—		—			(24	)		(24	) (d)		10			(14	)
Amortization of prior service credit		—		—		(3,955	)		—				(3,955	)(d)			1,552				(2,403	)			—		—		(1,875	)		—			(1,875	) (e)		934			(941	)
Amortization of actuarial losses		—		—		7,247			—				7,247	(d)			(2,845	)			4,402				—		—		11,200			—			11,200	(e)		(5,582	)		5,618

Total reclassifications		1		1,702		3,292			—				4,995				(1,962	)			3,033				—		837		9,325			(24	)		10,138			(4,963	)		5,175


Total gain (loss) during the period		10,843		158,466		3,292			(691	)			171,910				(67,443	)			104,467				8,011		32,900		9,325			(2,303	)		47,933			(19,430	)		28,503

Balance—June 30, 2014	$	48,098		176,916		(158,325	)		(576	)		$	66,113				(25,805	)		$	40,308

Balance – March 31, 2015																								$	15,449		234,728		(493,702	)		(6,385	)	$	(249,910	)		97,419		$	(152,491	)


	Investment Securities						Defined benefit plans				Other				Total amount before tax				Income tax			Net				Investment Securities
	With OTTI			All other							Other				Total amount before tax			With OTTI (a)				Net				All other		Defined benefit plans		Other			Total amount before tax			Income tax			Net
	(in thousands)																									(in thousands)
Balance—January 1, 2013	$	(91,835	)		152,199					(455,590	)			(431	)		$	(395,657	Income tax	)		155,393			$	(240,264	)

Balance – January 1, 2014																										$	37,255		18,450		(161,617	)		115		$	(105,797	)		41,638		$	(64,159	)

Other comprehensive income before reclassifications:							Defined benefit plans
Unrealized holding gains(losses), net		55,473			(95,167	)		—				—				(39,694	)			15,557			(24,137	)
Unrealized holding gains, net																											19,968		42,119		—			—			62,087			(24,374	)		37,713
Foreign currency translation adjustment		—			—			—				(1,644	)			(1,644	)			598			(1,046	)			—		—		—			(234	)		(234	)		98			(136	)

Total other comprehensive income before reclassifications		55,473			(95,167	)		—				(1,644	)			(41,338	)			16,155			(25,183	)			19,968		42,119		—			(234	)		61,853			(24,276	)		37,577


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

Accretion of unrealized holding losses on HTM securities		109			2,262			—				—				2,371	(a)			(931	)		1,440				2		823		—			—			825	(b)		(324	)		501
OTTI charges recognized in net income		9,800			—			—				—				9,800	(b)			(3,847	)		5,953
Losses (gains) realized in net income		41,217			(8,129	)		—				—				33,088	(c)			(12,987	)		20,101
Amortization of prior service credit		—			—			(3,957	)			—				(3,957	)(d)			1,553			(2,404	)			—		—		(2,000	)		—			(2,000	) (e)		785			(1,215	)
Amortization of actuarial losses		—			—			20,718				—				20,718	(d)			(8,132	)		12,586				—		—		3,350			—			3,350	(e)		(1,315	)		2,035

Total reclassifications		51,126			(5,867	)		16,761				—				62,020				(24,344	)		37,676				2		823		1,350			—			2,175			(854	)		1,321


Total gain (loss) during the period		106,599			(101,034	)		16,761				(1,644	)			20,682				(8,189	)		12,493				19,970		42,942		1,350			(234	)		64,028			(25,130	)		38,898

Balance—June 30, 2013	$	14,764			51,165			(438,829	)			(2,075	)		$	(374,975	)			147,204		$	(227,771	)

Balance – March 31, 2014																										$	57,225		61,392		(160,267	)		(119	)	$	(41,769	)		16,508		$	(25,261	)

As part of managing interest rate risk, the Company enters into interest rate swap agreements to modify the repricing characteristics of certain portions of the Company’s portfolios of earning assets and interest-bearing liabilities. The Company designates interest rate swap agreements utilized in the management of interest rate risk as either fair value hedges or cash flow hedges. Interest rate swap agreements are generally entered into with counterparties that meet established credit standards and most contain master netting and collateral provisions protecting the at-risk party. Based on adherence to the Company’s credit standards and the presence of the netting and collateral provisions, the Company believes that the credit risk inherent in these contracts iswas not significant as of ~~June 30, 2014.~~March 31, 2015.

The net effect of interest rate swap agreements was to increase net interest income by ~~$12~~$11 million ~~and $10 million~~ for each of the three-month periods ended ~~June 30, 2014~~March 31, 2015 and ~~2013, respectively, and $23 million and $19 million for the six-month periods ended June 30, 2014 and 2013, respectively.~~2014.

At June 30, 2014, interest rate swap agreements were used as fair value hedges for approximately $1.4 billion of outstanding fixed rate long-term borrowings. Also at June 30, 2014, the Company had entered into forward-starting interest rate swap agreements used to hedge the variability in the interest payments anticipated to be made upon the future issuance of $300 million of senior notes. These forward-starting interest rate swap agreements were terminated upon the issuance of such notes in July 2014. Information about interest rate swap agreements entered into for interest rate risk management purposes summarized by type of financial instrument the swap agreements were intended to hedge follows:


	Notional amount				Average maturity			Weighted- average rate						Notional amount			Average maturity			Weighted- average rate
				Fixed					Variable				Fixed						Variable
			(in thousands)				(in years)									(in thousands)			(in years)
June 30, 2014
Fair value hedges:
Fixed rate long-term borrowings (a)	$	1,400,000				3.2			4.42	%	1.18	%
Cash flow hedges:
Interest payments on forecasted issuance of long-term borrowings (b)		300,000				5.1			1.82	%	0.23	%

	$	1,700,000				3.5			3.96	%	1.02	%

December 31, 2013
March 31, 2015
Fair value hedges:
Fixed rate long-term borrowings (a)	$	1,400,000				3.7			4.42	%	1.20	%		$	1,400,000			2.4			4.42	%	1.22	%


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

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

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

Derivative financial instruments used for trading account purposes included interest rate contracts, foreign exchange and other option contracts, foreign exchange forward and spot contracts, and financial futures. Interest rate

contracts entered into for trading account purposes had notional values of $17.1 billion and $17.6 billion ~~and $17.4 billion~~ at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, respectively. The notional amounts of foreign currency and other option and futures contracts entered into for trading account purposes aggregated ~~$866 million and~~ $1.4 billion and $1.3 billion at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, 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
	June 30, 2014		December 31, 2013		June 30, 2014		December 31, 2013		March 31, 2015		December 31, 2014		March 31, 2015		December 31, 2014
	(in thousands)								(in thousands)
Derivatives designated and qualifying as hedging instruments
Fair value hedges:
Interest rate swap agreements (a)	$	93,040		102,875	$	—		—	$	72,855		73,251	$	—		—
Commitments to sell real estate loans (a)		1,032		6,957		6,412		487		662		728		3,529		4,217

		94,072		109,832		6,412		487		73,517		73,979		3,529		4,217
Cash flow hedges:
Interest rate swap agreements (a)		—		—		1,170		—

Derivatives not designated and qualifying as hedging instruments
Mortgage-related commitments to originate real estate loans for sale (a)		22,215		7,616		192		3,675		26,295		17,396		65		49
Commitments to sell real estate loans (a)		1,431		6,120		6,883		230		1,571		754		8,552		4,330
Trading:
Interest rate contracts (b)		234,436		274,864		194,393		234,455		246,819		215,614		204,484		173,513
Foreign exchange and other option and futures contracts (b)		7,784		15,831		7,766		15,342		37,957		31,112		35,684		29,950

		265,866		304,431		209,234		253,702		312,642		264,876		248,785		207,842


Total derivatives	$	359,938		414,263	$	216,816		254,189	$	386,159		338,855	$	252,314		212,059


	Amount of unrealized gain (loss) recognized										Amount of unrealized gain (loss) recognized
	Six months ended June 30, 2014					Six months ended June 30, 2013					Three months ended March 31, 2015					Three months ended March 31, 2014
	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)	$	(9,835	)		9,278	$	(29,011	)		27,753	$	(396	)		161	$	(8,160	)		7,920


Derivatives not designated as hedging instruments

Trading:
Interest rate contracts (b)	$	1,082				$	3,197				$	660				$	(302	)
Foreign exchange and other option and futures contracts (b)		(5,816	)				(1,608	)				(167	)				(5,030	)


Total	$	(4,734	)			$	1,589				$	493				$	(5,332	)

In addition, the Company also has commitments to sell and commitments to originate residential and commercial real estate loans ~~for sale~~ that are considered derivatives. The Company designates certain of the commitments to sell real estate loans as fair value hedges of real estate loans held for sale. The Company also utilizes commitments to sell real estate loans to offset the exposure to changes in the fair value of certain commitments to originate real estate loans for sale. As a result of these activities, net unrealized pre-tax gains related to hedged loans held for sale, commitments to originate loans for sale and commitments to sell loans were approximately at $31 million and ~~$23~~$28 million ~~at June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, respectively. Changes in unrealized gains and losses are included in mortgage banking revenues and, in general, are realized in subsequent periods as the related loans are sold and commitments satisfied.

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

The aggregate fair value of derivative financial instruments in a liability position, which are subject to enforceable master netting arrangements, was ~~$177~~$174 million and ~~$194~~$161 million at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, respectively. After consideration of such netting arrangements, the net liability positions with counterparties aggregated ~~$107~~$114 million and $103 million at ~~each of June 30, 2014~~March 31, 2015 and December 31, ~~2013.~~2014, respectively. The Company was required to post collateral relating to those positions of ~~$92~~$102 million and ~~$95~~$90 million, at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, respectively. Certain of the Company’s derivative financial instruments contain provisions that require the Company to maintain specific credit ratings from credit rating agencies to avoid higher collateral

posting requirements. If the Company’s debt rating were to fall below specified ratings, the counterparties of the derivative financial instruments could demand immediate incremental collateralization on those instruments in a net liability position. The aggregate fair value of all derivative financial instruments with such credit risk-related contingent features in a net liability position on ~~June 30, 2014~~March 31, 2015 was ~~$28~~$22 million, for which the Company had posted collateral of ~~$18~~$15 million in the normal course of business. If the credit risk-related contingent features had been triggered on ~~June 30, 2014,~~March 31, 2015, the maximum amount of additional collateral the Company would have been required to post towith counterparties was ~~$10~~$7 million.

The aggregate fair value of derivative financial instruments in an asset position, which are subject to enforceable master netting arrangements, was ~~$133~~$106 million and ~~$183~~$104 million at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, respectively. After consideration of such netting arrangements, the net asset positions with counterparties aggregated ~~$63 million and $95~~$46 million at ~~June 30, 2014~~each of March 31, 2015 and December 31, ~~2013, respectively.~~2014. Counterparties posted collateral relating to those positions of ~~$63~~$47 million and ~~$93~~$46 million at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, 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.

InDuring the ~~second~~first quarter of ~~2013,~~2015, the Company securitized approximately $923 million of one-to-four family residential mortgage loans in guaranteed mortgage securitizations with Ginnie Mae. Approximately $296 million of such loans were formerly held in the Company’s loan portfolio, whereas the remaining $627 million of the loans were newly originated. The Company retained $917 million of the resulting securities and recognized gains of $7 million relating to loans previously held for investment, which have been recorded in other revenues from operations, and gains of $10 million on newly originated loans, which have been reflected in mortgage banking revenues. The Company expects no material credit-related losses on the retained securities as a result of the guarantees by Ginnie Mae. At June 30, 2013 the Company had $1.0 billion of loans in its loan portfolio guaranteed by the Federal Housing Administration that the Company securitized with Ginnie Mae in the third quarter of 2013. The Company retained the substantial majority of the resulting securities in its investment portfolio. In similar transactions for the six months ended June 30, 2014, the Company securitized $75$13 million of one-to-four family residential real estate loans that had been originated for sale in guaranteed mortgage securitizations with the Government National Mortgage Association (“Ginnie ~~Mae~~Mae”) and retained the resulting securities in its investment securities portfolio. ~~Pre-tax gains on such~~In similar transactions for the three months ended March 31, 2014, the Company securitized $29 million of one-to-four family residential real estate loans. Gains associated with those transactions were not ~~material.~~significant.

In accordance with GAAP, the Company determined that it was the primary beneficiary of a residential mortgage loan securitization trust considering its role as servicer and its retained subordinated interests in the trust. As a result, the Company has included the one-to-four family residential mortgage loans that were included in the trust in its consolidated financial statements. At ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, the carrying values of the loans in the securitization trust were ~~$110~~$93 million and ~~$121~~$98 million, respectively. The outstanding principal amount of mortgage-backed securities issued by the qualified special purpose trust that was held by parties unrelated to M&T at ~~each of June 30, 2014~~March 31, 2015 and December 31, ~~2013~~2014 was ~~$18 million.~~$14 million and $15 million, respectively. Because the transaction was non-recourse, the Company’s maximum exposure to loss as a result of its association with the trust at ~~June 30, 2014~~March 31, 2015 is limited to realizing the carrying value of the loans less the amount of the mortgage-backed securities held by third parties.

As described in note 5, M&T has issued junior subordinated debentures payable to various trusts that have issued Capital Securities. M&T owns the common securities of those trust entities. The Company is not considered to be the primary beneficiary of those entities and, accordingly, the trusts are not included in the Company’s consolidated financial statements. At ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, the Company included the junior subordinated debentures as “long-term borrowings” in its consolidated balance sheet. The Company has recognized $34 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~~Capital Securities described in note 5.

The Company has invested as a limited partner in various partnerships that collectively had total assets of approximately ~~$1.3~~$1.2 billion at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013, respectively.~~2014. 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 ofon its investments in such partnerships was ~~$236~~$303 million, including ~~$53~~$88 million of unfunded commitments, at ~~June 30, 2014~~March 31, 2015 and ~~$236~~$243 million, including ~~$45~~$56 million of unfunded commitments,

at December 31, ~~2013.~~2014. Contingent commitments to provide additional capital contributions to these partnerships were not material at March 31, 2015. The Company has not provided financial or other support to the partnerships that was not contractually required. Management currently estimates that no material losses are probable as a result of the Company’s involvement with such entities. The Company, in its position as a limited partner, does not direct the activities that most significantly impact the economic performance of the partnerships and, therefore, in accordance with the accounting provisions for variable interest entities, the partnership entities are not included in the Company’s consolidated financial statements. As described in note 1, effective January 1, 2015 the Company retrospectively adopted for all periods presented amended accounting guidance on the accounting for investments in qualified affordable housing projects whereby 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 $10 million and $12 million of its investments in qualified affordable housing projects to income tax expense during the three-month periods ended March 31, 2015 and 2014, respectively, and recognized $14 million and $17 million of tax credits and other tax benefits during those respective periods.

GAAP permits an entity to choose to measure eligible financial instruments and other items at fair value. The Company has not made any fair value elections at ~~June 30, 2014.~~March 31, 2015.

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 ~~and~~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 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.

The Company sold substantially all of its privately issued mortgage-backed securities classified as available for sale during the second quarter of 2013. In prior periods, the Company generally used model-based techniques to value such securities because the Company was significantly restricted in the level of market observable assumptions that could be relied upon. Specifically, market assumptions regarding credit adjusted cash flows and liquidity influences on discount rates were difficult to observe at the individual bond level. Because of the inactivity in the markets and the lack of observable valuation inputs, the Company had classified the valuation of privately issued mortgage-backed securities as Level 3.

Included in collateralized debt obligations are securities backed by trust preferred securities issued by financial institutions and other entities. The Company could not obtain pricing indications for many of these securities from its two primary independent pricing sources. The Company, therefore, performed internal modeling to estimate the cash flows and fair value of its portfolio of securities backed by trust preferred securities at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013.~~2014. 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%5% to ~~11%~~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 ~~June 30, 2014,~~March 31, 2015, the total amortized cost and fair value of securities backed by trust preferred securities issued by financial institutions and other entities were ~~$33~~$30 million and ~~$56~~$47 million, respectively, and at December 31, ~~2013~~2014 were ~~$42~~$30 million and ~~$63~~$50 million, respectively. ~~Privately issued mortgage-backed securities and securities~~Securities backed by trust preferred securities issued by financial institutions and other entities constituted substantially all of the available-for-sale investment securities classified as Level 3 valuations.

The Company ensures an appropriate control framework is in place over the valuation processes and techniques used for ~~significant~~ Level 3 fair value measurements. Internal pricing models used for significant valuation measurements have generally been subjected to validation procedures including ~~testing~~review 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 ~~originated~~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 ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013~~2014 measured at estimated fair value on a recurring basis:


									Fair value measurements at March 31, 2015		Level 1 (a)		Level 2 (a)		Level 3
	Fair value measurements at June 30, 2014		Level 1 (a)		Level 2 (a)		Level 3		(in thousands)
	(in thousands)
Trading account assets	$	313,325		50,813		262,512		—	$	363,085		48,978		314,107		—
Investment securities available for sale:
U.S. Treasury and federal agencies		42,921		—		42,921		—		163,234		—		163,234		—
Obligations of states and political subdivisions		10,242		—		10,242		—		7,850		—		7,850		—
Mortgage-backed securities:
Government issued or guaranteed		7,617,627		—		7,617,627		—		10,265,221		—		10,265,221		—
Privately issued		119		—		—		119		95		—		—		95
Collateralized debt obligations		56,200		—		—		56,200		47,278		—		—		47,278
Other debt securities		124,763		—		124,763		—		121,273		—		121,273		—
Equity securities		156,907		94,974		61,933		—		98,549		71,804		26,745		—

		8,008,779		94,974		7,857,486		56,319		10,703,500		71,804		10,584,323		47,373


Real estate loans held for sale		623,380		—		623,380		—		540,546		—		540,546		—
Other assets (b)		117,718		—		95,503		22,215		101,383		—		75,088		26,295

Total assets	$	9,063,202		145,787		8,838,881		78,534	$	11,708,514		120,782		11,514,064		73,668


Trading account liabilities	$	202,159		—		202,159		—	$	240,168		—		240,168		—
Other liabilities (b)		14,657		—		14,465		192		12,146		—		12,081		65

Total liabilities	$	216,816		—		216,624		192	$	252,314		—		252,249		65


									Fair value measurements at December 31, 2014		Level 1 (a)		Level 2 (a)		Level 3
	Fair value measurements at December 31, 2013		Level 1 (a)		Level 2 (a)		Level 3		(in thousands)
	(in thousands)
Trading account assets	$	376,131		51,386		324,745		—	$	308,175		51,416		256,759		—
Investment securities available for sale:
U.S. Treasury and federal agencies		37,776		—		37,776		—		161,947		—		161,947		—
Obligations of states and political subdivisions		10,811		—		10,811		—		8,198		—		8,198		—
Mortgage-backed securities:
Government issued or guaranteed		4,165,086		—		4,165,086		—		8,731,123		—		8,731,123		—
Privately issued		1,850		—		—		1,850		103		—		—		103
Collateralized debt obligations		63,083		—		—		63,083		50,316		—		—		50,316
Other debt securities		120,085		—		120,085		—		121,488		—		121,488		—
Equity securities		133,095		82,450		50,645		—		83,757		64,841		18,916		—

		4,531,786		82,450		4,384,403		64,933		9,156,932		64,841		9,041,672		50,419


Real estate loans held for sale		468,650		—		468,650		—		742,249		—		742,249		—
Other assets (b)		123,568		—		115,952		7,616		92,129		—		74,733		17,396

Total assets	$	5,500,135		133,836		5,293,750		72,549	$	10,299,485		116,257		10,115,413		67,815


Trading account liabilities	$	249,797		—		249,797		—	$	203,464		—		203,464		—
Other liabilities (b)		4,392		—		717		3,675		8,596		—		8,547		49

Total liabilities	$	254,189		—		250,514		3,675	$	212,060		—		212,011		49

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended ~~June 30, 2014~~March 31, 2015 were as follows:

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended ~~June 30, 2013 were as follows:~~

~~The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the six months ended June 30,~~March 31, 2014 were as follows:

~~The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the six months ended June 30, 2013 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 5%10% to 80% at ~~June 30, 2014.~~March 31, 2015. As these discounts are not readily observable and are considered significant, the valuations have been classified as Level 3. Loans subject to nonrecurring fair value measurement were ~~$212~~$101 million at ~~June 30, 2014~~March 31, 2015 ($~~129~~67 million and ~~$83~~$34 million of which were classified as Level 2 and Level 3, respectively), ~~$222~~$173 million at December 31, ~~2013~~2014 ($~~173~~94 million and ~~$49~~$79 million of which were classified as Level 2 and Level 3, respectively) and ~~$254~~$161 million at ~~June 30, 2013~~March 31, 2014 ($~~167~~100 million and ~~$87~~$61 million of which were classified as Level 2 and Level 3, respectively). Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on ~~June 30,~~March 31, 2015 and 2014 were decreases of ~~$32~~$8 million and ~~$47~~$15 million for the ~~three- and six-month~~three-month periods ended ~~June 30,~~March 31, 2015 and 2014, respectively. Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on June 30, 2013 were decreases of $34 million and $69 million for the three- and six-month periods ended June 30, 2013, 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 ~~held by the company on June 30, 2014~~ subject to nonrecurring fair value measurement were $8 million and $15 million for the three-month and six-month periods ended June 30, 2014, respectively. Assets taken in foreclosure of defaulted loans subject to nonrecurring fair value measurement were $15$11 million at each of ~~June 30, 2014~~March 31, 2015 and ~~2013.~~March 31, 2014. Changes in fair value recognized for those foreclosed assets held by the Company were not material during the three-month ~~and six-month~~ periods ended ~~June 30, 2014~~March 31, 2015 and ~~2013.~~2014.

The following tables present quantitative information about the significant unobservable inputs used in the fair value measurements for Level 3 assets and liabilities at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013:~~2014:


	Fair value at June 30, 2014		Valuation technique	Unobservable input/assumptions	Range (weighted- average)		Fair value at March 31, 2015		Valuation technique	Unobservable input/assumptions		Range (weighted- average)
	(in thousands)						(in thousands)
Recurring fair value measurements

Privately issued mortgage–backed securities	$	119	Two independent pricing quotes	—		—	$	95	Two independent pricing quotes		—	—

Collateralized debt obligations		56,200	Discounted cash flow	Probability of default		15%-56% (37%)		47,278	Discounted cash flow		Probability of default	12%-57% (45%)
				Loss severity		100%					Loss severity	100%
Net other assets (liabilities)(a)		22,023	Discounted cash flow	Commitment expirations		0%-97% (18%)

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

	Fair value at December 31, 2013		Valuation technique	Unobservable input/assumptions	Range (weighted- average)		Fair value at December 31, 2014		Valuation technique	Unobservable input/assumptions		Range (weighted- average)
	(in thousands)						(in thousands)
Recurring fair value measurements

Privately issued mortgage–backed securities	$	1,850	Two independent pricing quotes	—		—	$	103	Two independent pricing quotes		—	—

Collateralized debt obligations		63,083	Discounted cash flow	Probability of default		17%-55% (39%)		50,316	Discounted cash flow		Probability of default	12%-57% (36%)
				Loss severity		100%					Loss severity	100%
Net other assets (liabilities)(a)		3,941	Discounted cash flow	Commitment expirations		0%-90% (20%)

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

An increase (decrease) in the probability of default and loss severity for ~~mortgage-backed securities and~~ 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~~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:

With the exception of marketable securities, certain off-balance sheet financial instruments and one-to-four family residential ~~mortgage~~real estate 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. ~~Additional information about the assumptions and calculations utilized follows.~~

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

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.~~financial statements.

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

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

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

In general, discount rates used to calculate values for loan products were based on the Company’s pricing at the respective period end. A higher discount rate was assumed with respect to estimated cash flows associated with nonaccrual loans.

Projected loan cash flows were adjusted for estimated credit losses. However, such estimates made by the Company may not be indicative of assumptions and adjustments that a purchaser of the Company’s loans and leases would seek.

Pursuant to GAAP, the estimated fair value ascribed to noninterest-bearing deposits, savings deposits and NOW accounts 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.


	June 30,		December 31,
	2014		2013		March 31, 2015		December 31, 2014
	(in thousands)				(in thousands)
Commitments to extend credit
Home equity lines of credit	$	6,246,501		6,218,823	$	6,219,783		6,194,516
Commercial real estate loans to be sold		250,725		62,386		346,664		212,257
Other commercial real estate and construction		4,482,869		3,919,545		5,161,878		4,834,699
Residential real estate loans to be sold		596,865		469,869		661,132		432,352
Other residential real estate		412,964		384,617		581,384		524,399
Commercial and other		10,560,928		10,419,545		11,493,613		11,080,856

Standby letters of credit		3,581,160		3,600,528		3,648,095		3,706,888

Commercial letters of credit		43,653		53,284		42,291		46,965

Financial guarantees and indemnification contracts		2,701,575		2,457,633		2,535,609		2,490,050

Commitments to sell real estate loans		1,254,309		854,656		1,322,998		1,237,294

Commitments to extend credit are agreements to lend to customers, generally having fixed expiration dates or other termination clauses that may require payment of a fee. Standby and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party, whereas commercial letters of credit are issued to facilitate commerce and typically result in the commitment being funded when the underlying transaction is consummated between the customer and a third party. The credit risk associated with commitments to extend credit and standby and commercial letters of credit is essentially the same as that involved with extending loans to customers and is subject to normal credit policies. Collateral may be obtained based on management’s assessment of the customer’s creditworthiness.

Financial guarantees and indemnification contracts are oftentimes similar to standby letters of credit and include mandatory purchase agreements issued to ensure that customer obligations are fulfilled, recourse obligations associated with sold loans, and other guarantees of customer performance or compliance with designated rules and regulations. Included in financial guarantees and indemnification contracts are loan principal amounts sold with recourse in conjunction with the Company’s involvement in the Fannie Mae Delegated Underwriting and Servicing program. The Company’s maximum credit risk for recourse associated with loans sold under this program totaled approximately ~~$2.3~~$2.4 billion at ~~June 30, 2014~~each of March 31, 2015 and December 31, ~~2013.~~2014.

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 also has commitments under long-term operating ~~leases and an agreement with the Baltimore Ravens of the National Football League whereby the Company obtained the naming rights to a football stadium in Baltimore, Maryland through 2027.~~

The Company reinsures credit life and accident and health insurance purchased by consumer loan customers. The Company also enters into reinsurance contracts with third party insurance companies who insure against the risk of a mortgage borrower’s payment default in connection with certain mortgage loans originated by the Company. When providing reinsurance coverage, the Company receives a premium in exchange for accepting a portion of the insurer’s risk of loss. The outstanding loan principal balances reinsured by the Company were approximately $12 million at June 30, 2014. Management believes that any reinsurance losses that may be payable by the Company will not be material to the Company’s consolidated financial position.leases.

The Company is contractually obligated to repurchase previously sold residential real estate loans that do not ultimately meet investor sale criteria related to underwriting procedures or loan documentation. When required to do so, the Company may reimburse loan purchasers for losses incurred or may repurchase certain loans. The Company reduces residential mortgage banking revenues by an estimate for losses related to its obligations to loan purchasers. The amount of those charges is based on the volume of loans sold, the level of reimbursement requests received from loan purchasers and estimates of losses that may be associated with previously sold loans. At ~~June 30, 2014,~~March 31, 2015, management believes that any further liability arising out of the Company’s obligation to loan purchasers is not material to the Company’s consolidated financial position.

M&T and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings in which claims for monetary damages are asserted. On an on-going basis management, after consultation with legal counsel, assesses the Company’s liabilities and contingencies in connection with such legal proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible further losses ~~for such matters~~ in the aggregate, beyond the existing recorded liability, was between $0 and $40 million. Although the Company does not believe that the outcome of pending litigations will be material to the Company’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.

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

The financial information of the Company’s segments was compiled utilizing the accounting policies described in note 22 to the Company’s consolidated financial statements as of and for the year ended December 31, ~~2013.~~2014. 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. Effective January 1, 2015, the Company made certain changes to its methodology for measuring segment profit and loss. Those changes in the measurement of segment profitability were largely the result of updated funds transfer pricing and various cost allocation reviews. The most significant changes to the funds transfer pricing resulted from ascribing a longer duration to non-maturity deposits, which significantly benefitted the Retail Banking segment. The cost allocation review having the largest impact related to a branch cost study. That study consisted of transaction reviews and time studies which resulted in a higher cost allocation from the Retail Banking segment to the Business Banking segment. As a result of the changes, prior period financial information has been restated to provide segment information on a comparable basis, as noted below:

As also described in note 22 to the Company’s ~~2013~~2014 consolidated financial statements, 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 June 30																	2015								2014
	2014								2013									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	$	104,688		1,220			27,760			106,486			1,319			30,562		$	108,560		1,045			24,811		$	111,770		1,057			24,973

Commercial Banking		252,496		1,356			105,358			252,907			1,315			87,220			246,581		1,085			96,423			249,349		1,197			98,841

Commercial Real Estate		164,912		525			77,526			187,773			554			89,868			163,320		82			80,086			157,323		348			72,552

Discretionary Portfolio		29,912		(5,282	)		14,980			(14,109	)		(10,015	)		(8,036	)		15,474		(5,443	)		5,954			24,657		(5,039	)		11,360

Residential Mortgage Banking		110,751		11,772			27,712			111,764			21,589			34,143			111,458		11,387			31,965			93,765		9,748			18,580

Retail Banking		268,494		3,897			32,034			292,837			3,598			51,500			300,391		3,137			68,888			306,780		3,505			69,034

All Other		194,273		(13,488	)		(1,034	)		248,618			(18,360	)		63,209			154,007		(11,293	)		(66,514	)		132,896		(10,816	)		(66,323	)


Total	$	1,125,526		—			284,336			1,186,276			—			348,466		$	1,099,791		—			241,613		$	1,076,540		—			229,017


							Average total assets
	Average total assets						Three months ended March 31				Year ended December 31
	Six months ended June 30				Year ended December 31		2015		2014		2014
	2014		2013		2013		(in millions)
	(in millions)
Business Banking	$	5,286		5,010		5,080	$	5,300		5,242		5,281

Commercial Banking		22,742		21,446		21,655		23,683		22,523		22,892

Commercial Real Estate		16,878		17,122		17,150		18,019		16,937		17,113

Discretionary Portfolio		19,417		16,278		16,480		22,714		18,581		20,798

Residential Mortgage Banking		3,226		2,752		2,858		3,512		3,157		3,333

Retail Banking		10,229		11,357		10,997		10,788		10,155		10,449

All Other		10,500		8,672		9,442		11,876		10,070		12,277


Total	$	88,278		82,637		83,662	$	95,892		86,665		92,143

~~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 ~~$56~~$43 million at ~~June 30, 2014.~~March 31, 2015.

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 ~~$5.2~~$4.6 billion and ~~$5.5~~$4.8 billion at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, respectively. Revenues from those servicing rights were $7$6 million and $8$7 million during the ~~three months~~three-month periods ended ~~June 30,~~March 31, 2015 and 2014, ~~and 2013, respectively, and $14 million and $16 million for the six months ended June 30, 2014 and June 30, 2013,~~ respectively. The Company sub-services residential mortgage loans for Bayview Financial having outstanding principal balances totaling ~~$44.6~~$39.5 billion and ~~$45.6~~$41.3 billion at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, respectively. Revenues earned for sub-servicing loans for Bayview Financial were ~~$27~~$35 million and $2$26 million for the three-month periods ended ~~June 30,~~March 31, 2015 and 2014, ~~and 2013, respectively, and $53 million and $4 million for the six-month periods ended June 30, 2014 and 2013,~~ respectively. In addition, the Company held ~~$210~~$198 million and ~~$220~~$202 million of mortgage-backed securities in its held-to-maturity portfolio at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, respectively, that were securitized by Bayview Financial.

~~Net income for~~ M&T Bank Corporation (“M&T”) recorded net income in the ~~second~~first quarter of ~~2014 was $284~~2015 of $242 million or ~~$1.98~~$1.65 of diluted earnings per common share, compared with ~~$348~~$229 million or ~~$2.55~~$1.61 of diluted earnings per common share in the ~~year-earlier~~initial 2014 quarter. During the ~~initial~~fourth quarter of 2014, net income ~~aggregated $229~~totaled $278 million or ~~$1.61~~$1.92 of diluted earnings per common share. Basic earnings per common share were ~~$1.99~~$1.66 in the recent quarter, compared with ~~$2.56 in the second quarter of 2013~~$1.63 and ~~$1.63~~$1.93 in the first ~~2014 quarter. For the first half~~and fourth quarters of 2014, net income totaled $513 million or $3.59 of diluted earnings per common share, compared with $623 million or $4.53 of diluted earnings per common share in the first six months of 2013. Basic earnings per common share for the six-month periods ended June 30, 2014 and 2013 were $3.62 and $4.56, respectively.

The annualized rate of return on average total assets for M&T and its consolidated subsidiaries (“the Company”) in the ~~recent~~initial 2015 quarter was ~~1.27%~~1.02%, compared with ~~1.68%~~1.07% in the year-earlier quarter and ~~1.07%~~1.12% in the ~~first~~fourth quarter of 2014. The annualized rate of return on average common shareholders’ equity was ~~9.79%~~7.99% in the ~~second quarter~~first three months of 2015, compared with 8.22% and 9.10% in the first and fourth quarters of 2014, ~~compared with 13.78%~~respectively.

On March 12, 2015, M&T announced that the Federal Reserve did not object to M&T’s proposed 2015 Capital Plan. Accordingly, M&T may maintain a quarterly common stock dividend of $.70 per share; pay dividends and ~~8.22%~~interest on other equity and debt instruments included in ~~the three-month periods ended June 30, 2013~~regulatory capital, including preferred stock, trust preferred securities and ~~March~~subordinated debt that were outstanding at December 31, 2014, ~~respectively. During~~consistent with the ~~six-month period ended June 30, 2014, the annualized rates~~contractual terms of ~~return on average assets and average~~those instruments; repurchase up to $200 million of common ~~shareholders’ equity were 1.17% and 9.02%, respectively, compared with 1.52% and 12.47%, respectively, in~~shares during the first half of ~~2013.~~

~~The recent quarter’s results reflect two noteworthy, but largely offsetting, items. The resolution with tax authorities~~2016; and redeem or repurchase up to $310 million of ~~previously uncertain tax positions required M&T~~trust preferred securities. Common and preferred dividends are subject to ~~reduce its accrual for income taxes and increase net income~~approval by ~~$8 million, while an increase in~~ M&T’s ~~accrual for litigation-related costs~~Board of ~~$12 million reduced net income by $7 million after applicable tax effect. Both accrual items were associated with pre-acquisition activities of M&T’s Wilmington Trust entities.~~

~~Reflected~~Directors in the ~~results for~~ordinary course of business. On April 15, 2015, M&T redeemed $310 million of trust preferred securities in accordance with the second quarter of 2013 were certain noteworthy items. The Company sold the majority of its privately issued mortgage-backed securities that had been held in the available-for-sale investment securities portfolio for an after-tax loss of $28 million ($46 million pre-tax), or $.22 per diluted common share. In addition, the Company’s holdings of Visa and MasterCard shares were sold for an after-tax gain of $62 million ($103 million pre-tax), or $.48 per diluted common share. Finally, during that quarter the Company reversed an accrual for a contingent compensation obligation assumed in the May 2011 acquisition of Wilmington Trust that expired, resulting in a $26 million reduction of “other expense – other costs of operations” having an after-tax impact of $15 million, or $.12 of diluted earnings per common share. In the aggregate, those noteworthy items contributed net income of $49 million, or $.38 per diluted common share, in 2013’s second quarter.2015 Capital Plan.

On August 27, 2012, M&T announced that it had entered into a definitive agreement with Hudson City Bancorp, Inc. (“Hudson City”), headquartered in Paramus, New Jersey, under which Hudson City would be acquired by M&T. Pursuant to the terms of the agreement, Hudson City common shareholders will receive consideration for each common share of Hudson City in an amount valued at .08403 of an M&T share in the form of either M&T common stock or cash, based on the election of each Hudson City shareholder, subject to proration as specified in the merger agreement (which provides for an aggregate split of total consideration of 60% common stock of M&T and 40% cash). The estimated purchase price considering the closing price of M&T’s common stock of ~~$124.05~~$127.00 on ~~June 30, 2014~~March 31, 2015 was ~~$5.4~~$5.5 billion.

~~As of June 30, 2014,~~At March 31, 2015, Hudson City reported ~~$37.7~~$36.1 billion of assets, including ~~$23.3~~$20.9 billion of loans (predominantly residential real estate loans) and ~~$8.2~~$8.3 billion of investment securities, and ~~$32.9~~$31.3 billion of liabilities, including ~~$20.5~~$18.9 billion of deposits. The merger has received the approval of the common shareholders of M&T and Hudson City. However, the merger is subject to a number of conditions, including regulatory approvals.

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

which either party may elect to terminate the merger agreement if the merger has not yet been completed from April 30, 2015 to ~~December~~October 31, ~~2014.~~2015. Nevertheless, M&T’s pending acquisition of Hudson City still remains subject to regulatory approval, including approval by the Federal Reserve, and certain other closing conditions and, as a result, there can be no assurances that the merger will be completed by that date.

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

As discussed in M&T’s Form 10-K for the year ended December 31, ~~2013,~~2014, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) that was signed into law on July 21, 2010 has and will continue to significantly change the bank regulatory structure and affect the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies, and the system of regulatory oversight of the Company. The Dodd-Frank Act requires various federal agencies to adopt a broad range of new implementing rules and regulations, and to prepare numerous studies and reports for ~~Congress, many~~Congress. Not all of ~~which are not yet completed~~the rules required or ~~implemented. The~~expected to be implemented under the Dodd-Frank Act ~~could~~ have been proposed or adopted, and certain of the rules that have been proposed or adopted under the Dodd-Frank Act are subject to phase-in or transitional periods. The implications of the Dodd-Frank Act for the Company’s businesses continue to depend to a ~~material adverse impact~~large extent on the ~~financial services industry as a whole, as well as on M&T’s business, results~~implementation of ~~operations, financial condition~~the legislation by the Federal Reserve and ~~liquidity.~~other agencies.

A discussion of the provisions of the Dodd-Frank Act is included in Part I, Item 1 of M&T’s Form 10-K for the year ended December 31, ~~2013.~~

On July 31, 2013, the U.S. District Court for the District of Columbia issued an order granting summary judgment to the plaintiffs in a case challenging certain provisions of the Federal Reserve Board’s rule concerning electronic debit card transaction fees and network exclusivity arrangements (the “Current Rule”) that were adopted to implement Section 1075 of the Dodd-Frank Act — the so-called “Durbin Amendment.” The Court held that, in adopting the Current Rule, the Federal Reserve Board violated the Durbin Amendment’s provisions concerning which costs are allowed to be taken into account for purposes of setting fees that are “reasonable and proportional to the costs incurred by the issuer” and therefore the Current Rule’s maximum permissible fees were too high. In addition, the Court held that the Current Rule’s network non-exclusivity provisions concerning unaffiliated payment networks for debit cards also violated the Durbin Amendment. The Court vacated the Current Rule. The Court’s judgment was stayed in September 2013 pending appeal by the Federal Reserve Board. In March 2014, a panel of the

United States Court of Appeals for the District of Columbia overturned the U.S. District Court’s ruling almost in its entirety, remanding to the Federal Reserve Board for further consideration or explanation of the issue of its treatment of transactions-monitoring costs.2014.

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

The New Capital Rules also preclude certain hybrid securities, such as trust preferred securities, from inclusion in bank holding companies’ Tier 1 capital, subject to phase-out in the case of bank holding companies, such as M&T, that had $15 billion or more in total consolidated assets as of December 31, 2009. As a result, beginning in 2015 25% of M&T’s trust preferred securities ~~will be~~are includable in Tier 1 capital, and in 2016 and thereafter, none of M&T’s trust preferred securities will be includable in Tier 1 capital. Trust preferred securities no longer included in M&T’s Tier 1 capital may nonetheless be included as a component of Tier 2 capital on a permanent basis without phase-out and irrespective of whether such securities otherwise meet the revised definition of Tier 2 capital set forth in the New Capital Rules. In the first quarter of 2014, M&T redeemed $350 million of 8.50% junior subordinated debentures associated with the trust preferred capital securities of M&T Capital Trust IV and issued a like amount of 6.45% preferred stock that qualifies as Tier 1 regulatory capital. On April 15, 2015, in accordance with its 2015 Capital Plan M&T redeemed the junior subordinated debentures associated with $310 million of trust preferred securities of M&T Capital Trust I, II and III. A detailed discussion of the New Capital Rules is included in Part I, Item 1 of ~~M&T’s~~the Company’s Form 10-K for the year ended December 31, ~~2013~~2014 under the heading “Capital Requirements.”

~~Management believes that the Company will be able to comply with the revised capital adequacy requirements upon their implementation. More specifically, management estimates that~~ A further discussion of the Company’s ~~ratio of Common Equity Tier 1 (“CET1”) to risk-weighted assets~~regulatory capital ratios is presented herein under the New Capital Rules (and as defined therein) on a fully phased-in basis was approximately 9.42% as of June 30, 2014, reflecting a good faith estimate of the computation of CET1 and the Company’s risk-weighted assets under the methodologies set forth in the New Capital Rules.heading “Capital.”

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

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

Nevertheless, the Company may be required to divest certain investments subject to the Volcker ~~Rule by mid-2015.~~Rule.

On ~~October 24, 2013,~~September 3, 2014, the Federal Reserve ~~Board~~ and other banking regulators ~~issued an interagency proposal for the~~adopted final rules (“Final LCR Rule”) implementing a U.S. version of the Basel Committee’s Liquidity Coverage Ratio requirement (“LCR”). including the modified version applicable to bank holding companies, such as M&T, with $50 billion in total consolidated assets that are not “advanced approaches” institutions. The LCR ~~requires~~is intended to ensure that banks hold a ~~banking organization to maintain a minimum~~sufficient amount of so-called “high quality liquid ~~assets~~assets” (“HQLA”) to ~~withstand~~cover the anticipated net cash outflows during a ~~standardized supervisory liquidity~~hypothetical acute 30-day stress scenario. The ~~proposed effective~~LCR is the ratio of an institution’s amount of HQLA (the numerator) over projected net cash outflows over the 30-day horizon (the denominator), in each case, as calculated pursuant to the Final LCR Rule. Once fully phased-in, a subject institution must maintain an LCR equal to at least 100% in order to satisfy this regulatory requirement. Only specific classes of assets, including U.S. Treasury securities, other U.S. government obligations and agency mortgage-backed securities, qualify under the rule as HQLA, with classes of assets deemed relatively less liquid and/or subject to greater degree of credit risk subject to certain haircuts and caps for purposes of calculating the numerator under the Final LCR Rule.

The initial compliance date for the modified LCR is January ~~1, 2015, subject~~2016, with the requirement fully phased-in by January 2017. The Company intends to ~~a two-year phase-in period. The period for commenting on~~comply with the interagency proposal closed on January 31, 2014. Although the proposed rules have not yet been finalized, the Company has added securities to its investment portfolio through purchase and securitization transactions in contemplationLCR when it becomes effective. A detailed discussion of the ~~final~~ LCR ~~requirements.~~and its requirements is included in Part I, Item 1 of M&T’s Form 10-K for the year ended December 31, 2014 under the heading “Liquidity Ratios under Basel III.”

M&T consistently provides supplemental reporting of its results on a “net operating” or “tangible” basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and gains and expenses associated with merging acquired operations into the Company, since such items are considered by management to be “nonoperating” in nature. As a result of business combinations and other acquisitions, the Company had intangible assets consisting of goodwill and core deposit and other intangible assets totaling $3.6 billion at each of ~~June 30,~~March 31, 2015, March 31, 2014 ~~June 30, 2013~~ and December 31, ~~2013.~~2014. Included in such intangible assets was goodwill of $3.5 billion at each of those dates. Amortization of core deposit and other intangible assets, after tax effect, was $6$4 million during each of the ~~two most recent~~ quarters ended March 31, 2015 and December 31, 2014 ($~~.04~~.03 per diluted common ~~share in the recent quarter and $.05 per diluted common share in the initial quarter of 2014)~~share), compared with $8$6 million ($~~.06~~.05 per diluted common share) during the ~~second~~first quarter of 2013. For the six-month periods ended June 30, 2014 and 2013, amortization of core deposit and other intangible assets, after tax effect, totaled $12 million ($.09 per diluted common share) and $16 million ($.12 per diluted common share), respectively. The after-tax impact of merger-related expenses in the three-month and six-month periods ended June 30, 2013 was $5 million ($8 million pre-tax) and $8 million ($12 million pre-tax), respectively.2014. There were no merger-related gains or expenses in the first ~~or second~~ quarters of ~~2014. The merger-related expenses~~2015 and 2014 or in ~~2013 were associated with M&T’s pending acquisition~~the final quarter of ~~Hudson City.~~2014. 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 $290~~aggregated $246 million in the ~~recent~~initial quarter of 2015, compared with ~~$361~~$235 million in the ~~similar 2013 quarter.~~first quarter of 2014. Diluted net operating earnings per common share for the ~~second~~recent quarter ~~of 2014~~ were ~~$2.02,~~$1.68, compared with ~~$2.65~~$1.66 in the year-earlier quarter. Net operating income and diluted net operating earnings per common share were ~~$235~~$282 million and ~~$1.66,~~$1.95, respectively, in the ~~initial quarter of 2014. For the first six months of~~final 2014 net operating income and diluted net operating earnings per common share were $525 million and $3.68, respectively, compared with $646 million and $4.71, respectively, in the corresponding 2013 period.quarter.

Net operating income in the ~~second~~first quarter of ~~2014~~2015 expressed as an annualized rate of return on average tangible assets was ~~1.35%~~1.08%, compared with ~~1.81%~~1.15% and ~~1.15%~~1.18% in the ~~second quarter~~first and fourth quarters of ~~2013 and initial~~ 2014, ~~quarter,~~ respectively. Net operating income represented an annualized return on average tangible common equity of ~~14.92%~~11.90% in the ~~recently completed~~recent quarter, compared with ~~22.72% and~~ 12.76% in the ~~quarters ended June 30, 2013~~year-earlier quarter and ~~March~~

31, 2014, respectively. For the first six months of 2014, net operating income represented an annualized return on average tangible assets and average tangible common shareholders’ equity of 1.25% and 13.86%, respectively, compared with 1.65% and 20.76%, respectively,13.55% in the ~~similar 2013 period.~~fourth quarter of 2014.

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

Taxable-equivalent net interest income ~~aggregated $675~~was $665 million in the ~~recent~~first quarter ~~down 1%~~of 2015, up from ~~$684~~$662 million in the ~~second quarter of 2013.~~year-earlier period. The impact of higher average earning assets, which rose $8.9 billion, or 12%, to $85.2 billion from $76.3 billion in the first quarter of 2014, was largely offset by a 3135 basis point (hundredths of one percent) narrowing of the Company’s net interest margin, or taxable-equivalent net interest income expressed as an annualized percentage of average earning assets. The higher level of average earning assets ~~was largely offset by~~reflected a ~~$5.6~~$4.1 billion ~~or 8%~~ rise in average ~~earning assets as compared with~~balances of investment securities, a $2.8 billion increase in average loans and leases and a $2.0 billion increase in lower-yielding average interest-bearing deposits at the ~~second quarter~~Federal Reserve Bank of ~~2013.~~New York. The increase in investment securities resulted from purchases of Ginnie Mae and Fannie Mae mortgage-

backed securities. Taxable-equivalent net interest income in the recent quarter was ~~2% higher than $662~~below the $688 million recorded in the fourth quarter of 2014, reflecting two less days in the recent quarter, lower average balances of interest-bearing deposits at banks and the net impact of actions taken in response to liquidity requirements that take effect in 2016.

Average loans and leases rose $2.8 billion or 4% to $66.6 billion in the initial 2015 quarter from $63.8 billion in the first quarter of 2014. That improvement resulted from a $3.3 billion increase in average earning assets that reflects higher average balances of investment securities of $1.7 billion, interest-bearing deposits held at the Federal Reserve Bank of New York of $1.0 billion andCommercial loans and leases ~~of $579 million. Partially offsetting those factors was a 12 basis point narrowing of the net interest margin in the recent quarter to 3.40% from 3.52% in the initial 2014 quarter.~~

For the first half of 2014, taxable-equivalent net interest income was $1.34 billion, slightly below $1.35 billion in the first six months of 2013. That decline was largely attributable to a 25 basis point narrowing of the net interest margin to 3.46% in 2014 from 3.71% in 2013 reflecting lower yields on average loans outstanding, offset by higher average earning assets, which rose $4.8 billion or 7% from $73.2 billion in the first half of 2013 to $77.9 billion in the first six months of 2014. Contributing to the growth in average earning assets were higher balances of investment securities and interest-bearing deposits at the Federal Reserve Bank of New York, partially offset by lower average balances of loans outstanding.

~~Average loans and leases declined 2% to $64.3~~averaged $19.5 billion in the recent quarter, ~~from $66.0 billion in the second quarter of 2013. Average commercial loans and leases were $19.0 billion in the second quarter of 2014,~~ up ~~$1.3~~$1.0 billion or 7%5% from ~~$17.7~~$18.5 billion in the year-earlier quarter. ~~Commercial~~Average commercial real estate loans ~~averaged~~rose $1.5 billion or 6% to $27.6 billion in the first quarter of 2015 from $26.1 billion in ~~each of~~ the ~~recent quarter and the second~~corresponding quarter of ~~2013.~~2014. Average residential real estate loans outstanding ~~declined $2.1 billion~~decreased $272 million to ~~$8.7~~$8.6 billion in the ~~second~~first quarter of ~~2014~~2015 from ~~$10.8~~$8.8 billion in the similar ~~quarter of 2013.~~2014 quarter. Included in that portfolio were loans ~~originated~~held for sale, which averaged ~~$421~~$387 million in the recent quarter, compared with ~~$977~~$329 million in the second quarter of 2013. The further decrease in residential real estate loans was largely due to securitization activity during the second and third quarters of 2013. During the second quarter of 2013, the Company securitized approximately $296 million of residential real estate loans and during the third quarter of 2013 approximately $1.0 billion of residential real estate loans were securitized. The residential real estate loans were guaranteed by the Federal Housing Administration (“FHA”) and a substantial majority of the resulting Ginnie Mae mortgage-backed investment securities were retained by the Company in the investment securities portfolio.year-earlier quarter. Average consumer loans and leases totaled ~~$10.5~~$11.0 billion in the ~~recent~~initial quarter ~~$931~~of 2015, $662 million or ~~8% lower~~6% higher than ~~$11.4~~$10.3 billion in ~~2013’s second quarter. That decline~~the first quarter of 2014. The predominant factor for the higher consumer loans was ~~largely due to lower~~a 41% increase in average ~~balances of automobile loans. In September 2013, the Company~~

~~securitized and sold approximately $1.4 billion of~~ automobile loans that ~~had been held in its loan portfolio. The Company securitized loans to improve its regulatory capital ratios~~is reflective of consumer demand, higher industry sales and ~~strengthen its liquidity and risk profile, including the ability to pledge any of the retained assets, as a result of changing regulatory requirements.~~generally favorable interest rates.

Average loan balances in the ~~recent~~first quarter ~~rose $579~~of 2015 increased $820 million from the ~~initial~~fourth quarter of 2014. Average outstanding commercial loan and lease balances ~~increased $502~~rose $340 million, or 3%2%, average balances of ~~consumer~~commercial real estate loans increased ~~$179~~$532 million, or 2%, ~~while~~ average residential ~~real estate loans declined $98 million, or 1%, from 2014’s first quarter. Average commercial~~ real estate loan balances were ~~$26.1 billion during each of~~down $82 million and average outstanding consumer loans increased $29 million from the ~~two most recent quarters.~~final 2014 quarter. The accompanying table summarizes quarterly changes in the major components of the loan and lease portfolio.

For the first six months of 2014, average loans and leases totaled $64.1 billion, $1.9 billion or 3% below $65.9 billion in the year-earlier period. The most significant factors contributing to that decline were the 2013 loan securitizations noted earlier.

The investment securities portfolio averaged ~~$11.0~~$13.4 billion in the ~~second~~recent quarter, up $4.1 billion or 44% from $9.3 billion in the initial quarter of 2014 ~~up $5.7 billion or 107% from $5.3 billion in the year-earlier quarter~~ and ~~$1.7 billion~~$397 million above the ~~$9.3~~$13.0 billion averaged in the ~~first~~fourth quarter of 2014. ~~For~~The increase from the ~~first six months of 2014 and 2013, investment securities averaged $10.1 billion and $5.5 billion, respectively. Each of those increases~~year-earlier quarter reflects the net effect of purchases, ~~securitization transactions and sales during 2013 and purchases during the first half of 2014,~~ partially offset by maturities and paydowns of mortgage-backed securities. Beginning in the second quarter of 2013, the Company undertook certain actions to improve its regulatory capital and liquidity positions in response to evolving regulatory requirements. As a result, in the second quarter of 2013 approximately $1.0 billion of privately issued mortgage-backed securities held in the available-for-sale portfolio were sold, as were the Company’s holdings of Visa and MasterCard common stock. In the second and third quarters of 2013, the Company securitized approximately $1.3 billion of residential real estate loans guaranteed by the FHA that were held in its loan portfolio. A substantial majority of the Ginnie Mae securities resulting from those securitizations were retained by the Company. During the second quarter of 2013, the Company also began originating FHA residential real estate loans for purposes of securitizing such loans into Ginnie Mae mortgage-backed securities to be retained in the Company’s investment securities portfolio. Approximately $1.6 billion of such loans were originated and securitized during 2013. Finally, beginning in May 2013 theThe Company purchased approximately ~~$1.9~~$4.6 billion of ~~Ginnie~~Fannie Mae securities and

~~$250~~ $602 million of ~~Fannie~~Ginnie Mae securities that were added to the investment securities portfolio during ~~2013,~~2014, and another ~~$3.3~~$1.4 billion of Fannie Mae securities and ~~$239~~$470 million of Ginnie Mae securities were purchased during the first ~~half~~quarter of ~~2014. The Company has~~2015. Those purchases reflect increased ~~its~~ holdings of investment securities to satisfy the requirements of the LCR that will become effective in ~~response to changing regulatory requirements.~~January 2016.

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

U.S. Treasury and federal agency notes. When purchasing investment securities, the Company also considers ~~its liquidity position and~~ its overall interest-rate risk profile as well as the adequacy of expected returns relative to ~~the~~ risks assumed, including prepayments. In managing its investment securities portfolio, the Company occasionally sells investment securities as a result of changes in interest rates and spreads, actual or anticipated prepayments, credit risk associated with a particular security, or as a result of restructuring its investment securities portfolio in connection with a business combination.

The Company regularly reviews its investment securities for declines in value below amortized cost that might be characterized as “other than temporary.” ~~Nevertheless, there~~There were no other-than-temporary impairment charges recognized in either of the first ~~or second~~ quarters of 2015 and 2014 or the second quarter of 2013. During the first quarter of 2013, the Company recognized other-than-temporary impairment charges of $10 million. Those impairment charges related to certain privately issued mortgage-backed securities. Persistently high unemployment, loan delinquencies and foreclosures that led to a backlog of homes held for sale by financial institutions and others were significant factors contributing to the recognition of the other-than-temporary impairment charges related to those securities. Substantially all of the privately issued mortgage-backed securities held in the ~~available-for-sale investment securities portfolio were sold late in the second quarter of 2013. The impairment charge in the initial 2013 quarter related to a subset of those securities.~~final 2014 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-earning~~interest-bearing deposits at the Federal Reserve Bank of New York and other banks, trading account assets, federal funds sold and agreements to resell securities. Those other earning assets in the aggregate averaged ~~$4.3~~$5.2 billion in the recently completed quarter, compared with ~~$2.7~~$3.3 billion and ~~$3.3~~$9.2 billion in the ~~second quarter of 2013~~first and ~~the first quarter~~fourth quarters of 2014, respectively. Interest-bearing deposits at banks averaged ~~$4.1~~$5.1 billion, ~~in the second quarter of 2014, compared with $2.4 billion in the year-earlier period and~~ $3.1 billion inand $9.1 billion during the ~~first quarter of 2014.~~three-month periods ended March 31, 2015, March 31, 2014 and December 31, 2014, respectively. The rise in average interest-bearing deposits at banks in the ~~recent~~fourth quarter of 2014 and in the initial 2015 quarter as compared with the ~~earlier quarters~~first quarter of 2014 was due, in part, to ~~increased~~higher Wilmington Trust-related customer ~~deposits held at the Federal Reserve Bank of New York.~~deposits. The amounts of investment securities and other earning assets held by the Company are influenced by such factors as demand for loans, which generally yield more than investment securities and other earning assets, ongoing repayments, the levels of deposits, ~~liquidity requirements,~~ and management of liquidity and balance sheet size and resulting capital ratios.

As a result of the changes described herein, average earning assets ~~aggregated $79.6~~totaled $85.2 billion in the ~~recent quarter, compared with $74.0 billion in the corresponding~~first quarter of ~~2013 and~~2015, compared with $76.3 billion in the ~~initial~~year-earlier quarter and $88.0 billion in the fourth quarter of 2014. ~~Average earning assets totaled $77.9 billion and $73.2 billion during the six-month periods ended June 30, 2014 and 2013, 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. ~~Core~~Average core deposits ~~averaged $67.8~~totaled $70.1 billion in the ~~second~~first quarter of ~~2014, up 6% from $63.7~~2015, compared with $65.6 billion in the year-earlier quarter and ~~3% higher than $65.6~~$73.8 billion in the ~~first~~fourth quarter of 2014. The growth in core deposits since the ~~second~~first quarter of ~~2013~~2014 was due, in part, to higher deposits of trust customers and the lack of attractive alternative investments available to the Company’s customers resulting from lower interest rates and from the economic environment in the U.S. The decline in average core deposits as compared with the fourth quarter of 2014 reflects lower deposits of trust customers. The low interest rate environment has resulted in a shift in customer savings trends, as average time deposits have continued to decline, while average noninterest-bearing deposits and savings deposits have generally increased. The following table ~~presents~~provides an analysis of quarterly changes in the components of average core deposits. ~~For the six-month periods ended June 30, 2014 and 2013, core deposits averaged $66.7 billion and $62.8 billion, respectively.~~


			Percent increase (decrease) from								Percent increase (decrease) from
	2nd Qtr. 2014		2nd Qtr. 2013			1st Qtr. 2014			1st Qtr. 2015		1st Qtr. 2014			4th Qtr. 2014
NOW accounts	$	1,002		9	%		4	%	$	1,101		14	%		4	%
Savings deposits		38,366		8			3			40,561		8			(3	)
Time deposits $250,000 or less		2,967		(15	)		(4	)		2,670		(13	)		(4	)
Noninterest-bearing deposits		25,466		7			5			25,811		7			(8	)

Total	$	67,801		6	%		3	%	$	70,143		7	%		(5	)%

~~Additional~~The Company has additional funding sources, ~~for the Company included~~including branch-related time deposits over $250,000, deposits associated with the Company’s Cayman Islands office, and brokered deposits. Time deposits over $250,000 ~~excluding brokered certificates of deposit,~~ averaged ~~$378~~$347 million in the ~~second~~recent quarter, ~~of 2014,~~ compared with ~~$318~~$371 million and ~~$371~~$354 million in the ~~year-earlier quarter~~first and ~~the first quarter~~fourth quarters of 2014, respectively. Cayman Islands office deposits averaged ~~$339~~$224 million, ~~$326~~$380 million and ~~$380~~$265 million for the three-month periods ended ~~June 30, 2014, June 30, 2013 and~~March 31, 2015, March 31, 2014 ~~respectively. Average brokered time deposits totaled $5 million in the recent quarter, compared with $396 million in the second quarter of 2013~~ and ~~$9 million in the first quarter of 2014.~~December 31, 2014, respectively. The Company ~~also~~ had brokered NOW and brokered money-market deposit accounts, which in the aggregate averaged approximately $1.0 billion in each of the first quarters of 2015 and 2014 and $1.1 billion ~~during~~in the ~~recent~~fourth quarter ~~compared with $936 million and $1.0 billion during the year-earlier quarter and the initial 2014 quarter, respectively.~~of 2014. The levels of brokered NOW and brokered money-market deposit accounts reflect the demand for such deposits, largely resulting from the desire of brokerage firms to earn reasonable yields while ensuring that customer deposits are fully insured. The level of Cayman Islands office deposits ~~and brokered time deposits~~ are also reflective of customer demand. Additional amounts of ~~such~~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. Average short-term borrowings totaled ~~$220~~$196 million in the ~~recent quarter, compared with $343 million in the second~~first quarter of ~~2013 and~~2015, compared with $264 million in the ~~initial 2014 quarter. Included~~year-earlier quarter and $195 million in ~~short-term~~the final quarter of 2014. Such borrowings were largely comprised of unsecured federal funds borrowings, which generally mature on the next business ~~day, that~~day.

Long-term borrowings averaged ~~$162 million and $239 million~~$9.8 billion in the ~~second~~

~~quarters~~recent quarter, compared with $5.9 billion in the year-earlier quarter and $9.0 billion in the fourth quarter of 2014. During 2013, M&T Bank initiated a Bank Note Program whereby M&T Bank may offer unsecured senior and subordinated notes. Average balances of the unsecured senior notes issued under that program were $4.9 billion, $1.8 billion and $4.0 billion during the three-month periods ended March 31, 2015, March 31, 2014 and December 31, 2014, respectively. During February 2015, M&T Bank issued $1.5 billion of senior notes of which $750 million mature in 2020 and $750 million mature in 2025. The proceeds of the issuances of borrowings under the Bank Note Program have been predominantly utilized to purchase high-quality liquid assets that will meet the requirements of the LCR. Also included in average long-term borrowings were amounts borrowed from the Federal Home Loan Banks of New York, Atlanta and Pittsburgh of $1.2 billion in each of the initial 2015 quarter and fourth quarter of 2014 and ~~2013, respectively, compared with $183~~$29 million in the first quarter of 2014. Overnight federal funds borrowings represented the largest component of short-term borrowings and totaled $132 million at June 30, 2014, $219 million at June 30, 2013 and $169 million at December 31, 2013.

Long-term borrowings averaged $6.5 billion in the recent quarter, compared with $5.1 billion in the second quarter of 2013 and $5.9 billion in the initial 2014 quarter. Included in average long-term borrowings were subordinated capital notes of $1.6 billion in each of the quarters ended June 30, 2014, June 30, 2013 and March 31, 2014. Junior subordinated debentures associated with trust preferred securities that were included in average long-term borrowings were $834 million in the second quarter of 2014, $1.2 billion in the year-earlier quarter and $1.1 billion in the initial 2014 quarter. On February 27, 2014, M&T redeemed $350 million of 8.50% Enhanced Trust Preferred securities and the associated junior subordinated debentures. Additional information regarding junior subordinated debentures is provided in note 5 of Notes to Financial Statements. During the second quarter of 2014, M&T Bank borrowed approximately $1.1 billion from the Federal Home Loan Bank (“FHLB”) of New York. Those borrowings were split between three-year and five-year terms at fixed rates of interest. ~~Long-term~~Subordinated capital notes included in long-term borrowings ~~from~~averaged $1.5 billion during the ~~FHLBs~~two most recent quarters and $1.6 billion in the initial 2014 quarter. On November 1, 2014, M&T Bank redeemed $50 million of ~~New York, Atlanta and Pittsburgh averaged $396~~9.50% subordinated notes that were due to mature in 2018. Junior subordinated debentures associated with trust preferred securities that were included in average long-term borrowings were $835 million in each of the ~~recent~~first quarter ~~compared with $30 million~~

of 2015 and ~~$29 million~~the final 2014 quarter and $1.1 billion in ~~the second quarter of 2013 and~~ the first quarter of ~~2014, respectively.~~2014. M&T redeemed $350 million of 8.50% junior subordinated debentures associated with trust preferred securities in the first quarter of 2014. In addition, in accordance with its 2015 Capital Plan M&T redeemed on April 15, 2015 the junior subordinated debentures associated with the $310 million of trust preferred securities of M&T Capital Trusts I, II and III. Those borrowings had a weighted-average interest rate of 8.24%. Further 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 $1.4 billion during each of the ~~second~~first quarters of 2015 and 2014 and ~~2013 and~~ the ~~first~~fourth quarter of 2014. The agreements have various repurchase dates through 2017, however, the contractual maturities of the underlying securities extend beyond such repurchase dates. During the first quarter of 2013, M&T Bank initiated a Bank Note Program whereby M&T Bank may offer up to $5 billion of unsecured senior and subordinated notes. During March 2013, three-year floating rate senior notes due March 2016 were issued for $300 million and five-year 1.45% fixed rate senior notes due March 2018 were issued for $500 million. In January 2014, M&T Bank issued $1.5 billion of senior notes as follows: $250 million of three-year floating rate notes due January 2017; $500 million of three-year 1.25% fixed rate notes due January 2017; and $750 million of five-year 2.30% fixed rate notes due January 2019. The proceeds of the issuances have been predominantly utilized to purchase additional liquid investment securities that will meet the regulatory liquidity requirements. During July 2014, M&T Bank issued an additional $1.7 billion of senior notes as follows: $300 million of three-year floating rate notes due in 2017; $750 million of three-year 1.40% fixed rate notes due in 2017; and $650 million of five-year 2.25% fixed rate notes due in 2019. The Company has utilized interest rate swap agreements to modify the repricing characteristics of certain components of long-term debt. As of ~~June 30, 2014,~~March 31, 2015, interest rate swap agreements were used to hedge approximately $1.4 billion of ~~outstanding~~ fixed rate long-term borrowings. Also at June 30, 2014, the Company had entered into forward-starting interest rate swap agreements used to hedge the variability in the interest payments anticipated to be made upon the future issuance of $300 million of the senior notes. These forward-starting interest rate swaps were terminated upon the issuance of such notes in July 2014. 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 ~~3.22%~~2.97% in the ~~second~~recent quarter and 3.32% in the first quarter of ~~2014, compared with 3.48% in the year-earlier quarter.~~2014. The yield on earning assets during the ~~recent~~initial 2015 quarter was ~~3.73%~~3.54%, down 3733 basis

points from ~~4.10%~~3.87% in the ~~second~~year-earlier quarter, ~~of 2013,~~ while the rate paid on interest-bearing liabilities ~~declined 11~~increased 2 basis points to ~~.51%~~.57% from ~~.62% in the second quarter of 2013.~~..55%. In the ~~initial~~fourth quarter of 2014, the net interest spread was ~~3.32%~~2.92%, the yield on earning assets was ~~3.87%~~3.44% and the rate paid on interest-bearing liabilities was ~~.55%~~.52%. For the first half of 2014, the net interest spread was 3.27%, down 22 basis points from the corresponding 2013 period. The yield on earning assets and the rate paid on interest-bearing liabilities were 3.80% and .53%, respectively, during the first six months of 2014, compared with 4.12% and .63%, respectively, in the similar 2013 period. The narrowing of the net interest spread in the ~~2014 periods~~recent quarter as compared with the ~~three months~~first quarter of 2014 reflects higher average balances of investment securities and ~~six months ended June 30, 2013 reflects the higher level of~~interest-bearing deposits held at the Federal Reserve Bank of New York that have substantially lower yields than loans. The 5 basis point improvement in the net interest spread as compared with the final 2014 quarter was largely due to the lower average balances of interest-bearing deposits held at the Federal Reserve Bank of New York, partially offset by higher average balances of investment securities and long-term borrowings and the ~~ongoing~~ impact of ~~the low interest rate environment~~accelerated accretion of premiums on ~~loan yields.~~mortgage-backed securities due to higher than originally expected prepayments.

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 ~~$28.6~~$29.3 billion in the ~~second~~first quarter of ~~2014,~~2015, compared with ~~$26.6~~$26.9 billion and $31.4 billion in the ~~year-earlier quarter~~first and ~~$26.9 billion~~fourth quarters of 2014, respectively. The increases in ~~the initial quarter of 2014. The increase in~~average net interest-free funds in the two most recent ~~quarter~~quarters as compared with the ~~earlier quarters was~~first quarter of 2014 were predominantly the result of higher average balances of noninterest-bearing deposits. Such deposits averaged ~~$25.5 billion, $23.7 billion and $24.1~~$25.8 billion in the recent quarter, compared with $24.1 billion and $28.1 billion in the first and fourth quarters ~~ended June 30, 2014, June 30, 2013 and March 31,~~of 2014, respectively. ~~During~~The decline in average noninterest-bearing deposits from the ~~first six months~~fourth quarter of 2014 ~~and 2013, average net interest-free funds aggregated $27.8 billion and $26.0 billion, respectively. That increase~~to the initial 2015 quarter was ~~also reflective of higher average balances of noninterest-bearing~~largely due to a decline in trust-related customer deposits. Goodwill and core deposit and other intangible assets averaged $3.6 billion during each of the quarters ended ~~June 30,~~March 31, 2015, March 31, 2014 ~~June 30, 2013~~ and ~~March~~December 31, 2014. The cash surrender value of bank owned life insurance averaged $1.7 billion in each of the ~~two most recent quarters~~three-month periods ended March 31, 2015, March 31, 2014 and ~~$1.6 billion in the second quarter of 2013.~~December 31, 2014. 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% in each of the first quarters of 2015 and 2014, compared with .18% in the ~~recent quarter, compared with .23% in the second~~fourth quarter of ~~2013 and .20% in the first quarter of~~ 2014. ~~That contribution for the first six months of 2014 and 2013 was .19% and .22%, respectively.~~

Reflecting the changes to the net interest spread and the contribution of net interest-free funds as described herein, the Company’s net interest margin was ~~3.40%~~3.17% in the ~~recent quarter,~~first three months of 2015, compared with ~~3.71%~~3.52% in the year-earlier ~~quarter~~period and ~~3.52%~~3.10% in the ~~first~~fourth quarter of 2014. ~~During the first six months of 2014 and 2013, the net interest margin was 3.46% and 3.71%, 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 adversely impact the Company’s net interest income and net interest margin. In particular, the relatively low interest rate environment continues to exert downward pressure on yields on loans, investment securities and other earning assets.

Management assesses the potential impact of future changes in interest rates and spreads by projecting net interest income under several interest rate scenarios. In managing interest rate risk, the Company has utilized interest rate swap agreements to modify the repricing characteristics of certain portions of its ~~portfolios of earning assets and~~ interest-bearing

liabilities. Periodic settlement amounts arising from these agreements are ~~generally~~ reflected in ~~either the yields earned on assets or~~ the rates paid on interest-bearing liabilities. The notional amount of interest rate swap agreements entered into for interest rate risk management purposes was ~~$1.7 billion at June 30, 2014, compared with~~ $1.4 billion at each of ~~June 30, 2013~~March 31, 2015, March 31, 2014 and ~~March~~December 31, 2014. Under the terms of ~~$1.4 billion of~~ those interest rate swap agreements, ~~that are designated as fair value hedges of certain fixed rate long-term borrowings,~~ the Company received payments based on the outstanding notional amount at fixed rates and made payments at variable rates. ~~Under the terms of the remaining $300 million of~~Those interest rate swap agreements ~~outstanding at June 30, 2014 that~~ were designated as ~~cash flow~~fair value hedges ~~related to the forecasted issuance~~ of ~~senior note borrowings in July 2014, the Company was to pay a~~certain fixed rate ~~of interest and receive a variable rate. Those forward-starting interest rate swaps were terminated upon issuance of the senior note borrowings in July 2014.~~long-term borrowings.

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. In a cash flow hedge, unlike in a fair value hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects earnings. The ineffective portion of the gain or loss is reported in “other revenues from operations” immediately. The amounts of hedge ineffectiveness recognized during the quarters ended ~~June 30,~~March 31, 2015, March 31, 2014 and ~~2013 and the quarter ended March~~December 31, 2014 were not material to the Company’s results of operations. The estimated aggregate fair value of interest rate swap agreements designated as fair value hedges represented gains of approximately ~~$93~~$73 million at ~~June 30,~~each of March 31, 2015 and December 31, 2014 ~~$114 million at June 30, 2013,~~and $95 million at March 31, ~~2014 and $103 million at December 31, 2013.~~2014. The fair values of such interest rate swap agreements were substantially offset by changes in the fair values of the hedged items. The estimated fair values of the interest rate swap agreements designated as cash flow hedges were losses of $1 million at June 30, 2014. Net of applicable income taxes, such losses have been included in “accumulated other comprehensive income, net” in the Company’s consolidated balance sheet. 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 ~~June 30, 2014~~March 31, 2015 with respect to the estimated fair value of interest rate swap agreements used for managing interest rate risk has been substantially mitigated through master netting arrangements with trading account interest rate contracts with the same counterparty as well as counterparty postings of ~~$62~~$49 million of collateral with the Company.

The weighted-average rates to be received and paid under interest rate swap agreements currently in effect were ~~3.96%~~4.42% and ~~1.02%~~1.22%, respectively, at ~~June 30, 2014.~~March 31, 2015. 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 June 30,												Three months ended March 31
	2014						2013						2015						2014
	Amount			Rate(a)			Amount			Rate(a)			Amount			Rate (a)			Amount			Rate (a)
Increase (decrease) in:
Interest income	$	—			—	%	$	—			—	%	$	—			—	%	$	—			—	%
Interest expense		(11,264	)		(.09	)		(9,578	)		(.08	)		(11,277	)		(.08	)		(11,292	)		(.09	)

Net interest income/margin	$	11,264			.05	%	$	9,578			.05	%	$	11,277			.06	%	$	11,292			.06	%

Average notional amount	$	1,421,978					$	932,967					$	1,400,000					$	1,400,000

Rate received(b)					4.35	%					5.91	%
Rate paid(b)					1.17	%					1.79	%
Rate received (b)																	4.42	%					4.42	%
Rate paid (b)																	1.20	%					1.19	%


	Six months ended June 30,
	2014						2013
	Amount			Rate(a)			Amount			Rate(a)
Increase (decrease) in:
Interest income	$	—			—	%	$	—			—	%
Interest expense		(22,556	)		(.09	)		(19,092	)		(.08	)

Net interest income/margin	$	22,556			.06	%	$	19,092			.05	%

Average notional amount	$	1,411,050					$	916,575

Rate received(b)					4.39	%					6.03	%
Rate paid(b)					1.18	%					1.83	%

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

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 ~~aggregated $132 million, $219 million and $169~~were $155 million at ~~June 30,~~March 31, 2015, $180 million at March 31, 2014 ~~June 30, 2013~~ and $135 million at December 31, ~~2013, respectively.~~2014. In general, those borrowings were unsecured and matured on the next business day. In addition to satisfying customer demand, Cayman Islands office deposits ~~and brokered deposits~~ may be used by the Company as an alternative to short-term borrowings. Cayman Islands office

deposits totaled ~~$238~~$179 million, $248 million and $177 million at ~~June 30,~~March 31, 2015, March 31, 2014 ~~$284 million at June 30, 2013 and $323 million at December 31, 2013. Outstanding brokered time deposits at June 30, 2014, June 30, 2013~~ and December 31, ~~2013 were $5 million, $361 million and $26 million,~~2014, respectively. ~~At June 30, 2014, the weighted-average remaining term to maturity of brokered time deposits was one month.~~ The Company ~~also had~~has brokered NOW and brokered money-market deposit accounts which aggregated approximately $1.1 billion ~~$1.2 billion~~at each of March 31, 2015 and December 31, 2014, compared with $1.0 billion at ~~June 30, 2014, June 30, 2013 and December~~March 31, ~~2013, respectively.~~2014. Brokered time deposits were not a significant source of funding as of those dates.

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

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

Certain customers of the Company obtain financing through the issuance of variable rate demand bonds (“VRDBs”). The VRDBs are generally enhanced by letters of credit provided by M&T Bank. M&T Bank oftentimes acts as remarketing agent for the VRDBs and, at its discretion, may from time-to-time own some of the VRDBs while such instruments are remarketed. When this occurs, the VRDBs are classified as trading account assets in the Company’s consolidated balance sheet. Nevertheless, M&T Bank is not contractually obligated to purchase the VRDBs. The value of VRDBs in the Company’s trading account totaled $11 million and $4 million at March 31, 2015 and ~~$5 million at June 30,~~ 2014, ~~and 2013,~~ respectively, ~~and $25 million~~while there were no outstanding VRDBs in the Company’s trading account at December 31, ~~2013.~~2014. The total amount of VRDBs outstanding backed by M&T Bank letters of credit was $1.9 billion at March 31, 2015, compared with $1.7 billion at ~~each of June 30,~~March 31, 2014 and ~~December 31, 2013, compared with~~ $2.0 billion at ~~June 30, 2013.~~December 31, 2014. M&T Bank also serves as remarketing agent for most of those bonds.

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

M&T’s primary source of funds to pay for operating expenses, shareholder dividends and treasury stock repurchases has historically been the receipt of dividends from its banking subsidiaries, which are subject to various regulatory limitations. Dividends from any banking subsidiary to M&T are limited by the amount of earnings of the banking subsidiary in the current year and the two preceding years. For purposes of that test, at ~~June 30, 2014~~March 31, 2015 approximately ~~$1.1~~$1.2 billion was available for payment of dividends to M&T from banking subsidiaries. ~~These historic sources of cash flow have been augmented in the past by the issuance of trust preferred securities and senior notes payable.~~ Information regarding ~~trust preferred securities and~~ the ~~related junior subordinated debentures~~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 ~~proposed~~finalized rules requiring a banking company to maintain a minimum amount of liquid assets to withstand a standardized supervisory liquidity stress scenario. The ~~proposed~~ effective date for those rules for the Company is January 1, ~~2015,~~2016, subject to a two year phase-in period. The Company has taken steps as noted herein to enhance its liquidity and will take further action, as necessary, to comply with the final regulations when they take effect.

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, ~~market-implied forward interest rates over the subsequent twelve months are generally used to determine a base interest rate scenario for the~~projections of net interest ~~income simulation. That calculated base net interest income is then compared to the~~ income calculated under the varying interest rate ~~scenarios.~~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 ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013~~2014 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	June 30, 2014			December 31, 2013			March 31, 2015			December 31, 2014
+200 basis points	$	214,949			245,089		$	234,291			246,028
+100 basis points		113,569			134,188			129,404			134,393
-100 basis points		(73,569	)		(72,755	)		(54,132	)		(74,634	)
-200 basis points		(95,927	)		(100,543	)		(89,402	)		(109,261	)

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

that a 100 or 200 basis point rate change cannot be achieved, the applicable rate changes are limited to lesser amounts such that interest rates cannot be less than zero. The assumptions used in interest rate sensitivity modeling are inherently uncertain and, as a result, the Company cannot precisely predict the impact of changes in interest rates on net interest income. Actual results may differ significantly from those presented due to the timing, magnitude and frequency of changes in interest rates and changes in market conditions and interest rate differentials (spreads) between maturity/repricing categories, as well as any actions, such as those previously described, which management may take to counter such changes.

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

The Company engages in 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 ~~totaled $17.6~~aggregated $17.1 billion at ~~June 30,~~each of March 31, 2015 and 2014 ~~compared with $15.4 billion at June 30, 2013~~ and ~~$17.4~~$17.6 billion at December 31, ~~2013.~~2014. The notional amounts of

foreign currency and other option and futures contracts entered into for trading account purposes ~~aggregated $866 million at June 30, 2014, compared with $995 million at June 30, 2013 and~~totaled $1.4 billion at March 31, 2015, compared with $1.0 billion and $1.3 billion at March 31 and December 31, ~~2013. The notional amounts presented herein include both the transactions between customers and the Company and the offsetting risk management transactions.~~2014, respectively. Although the notional amounts of these ~~trading~~ contracts are not recorded in the consolidated balance sheet, the fair values of all financial instruments used for trading account activities are recorded in the consolidated balance sheet. The fair values of all trading account assets and liabilities ~~totaled $313~~were $363 million and ~~$202~~$240 million, respectively, at ~~June 30, 2014, $378~~March 31, 2015, $315 million and ~~$278~~$216 million, respectively, at ~~June 30, 2013,~~March 31, 2014, and ~~$376~~$308 million and ~~$250~~$203 million, respectively, at December 31, ~~2013.~~2014. Included in trading account assets were assets related to deferred compensation plans totaling $25 million at March 31, 2015, compared with $26 million at ~~each of June 30,~~March 31, 2014 and ~~2013 and $29~~$27 million at December 31, ~~2013.~~2014. Changes in the fair value of such assets are recorded as “trading account and foreign exchange gains” in the consolidated statement of income. Included in “other liabilities” in the consolidated balance sheet at ~~each of June 30, 2014 and 2013~~March 31, 2015 were ~~$30~~$29 million of liabilities related to deferred compensation plans, ~~while~~compared with $30 million at each of March 31 and December 31, ~~2013 liabilities related to deferred compensation plans totaled $31 million.~~2014. 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.

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~~associated with 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 ~~recent~~first quarter of 2015 was ~~$30~~$38 million, compared with ~~$57 million in the second quarter of 2013 and~~ $32 million in the initial quarter of 2014. For the six-month periods ended June 30, 2014 and 2013, the provision for credit losses was $62 million and $95 million, respectively. Net loan charge-offs were $29 million in the recently completed quarter, compared with $57 million in the year-earlier quarter and $33 million in the fourth quarter of 2014. Net loan charge-offs were $36 million in the recent quarter, compared with $32 million in each of the first ~~quarter~~and fourth quarters of 2014. Net charge-offs as an annualized percentage of average loans and leases were ~~.18%~~.22% in the ~~second~~initial 2015 quarter, compared with .20% in the first quarter of 2014 ~~compared with .35%~~ and ~~.20%~~.19% in the ~~quarters ended June 30, 2013 and March 31,~~final 2014 respectively. Net charge-offs for the six-month period ended June 30 aggregated $61 million in 2014 and $94 million in 2013, representing annualized rates of .19% and .29%, respectively, of average loans and leases.quarter. A summary of net ~~charge–offs~~charge-offs by loan type is presented in the table that follows.


	2014							First Quarter 2015		First Quarter 2014		Fourth Quarter 2014
	1st Qtr.		2nd Qtr.			Year to-date
Commercial, financial,leasing, etc.	$	9,146		10,140			19,286
Commercial, financial, leasing, etc.								$	8,411		9,146		9,397
Real estate:
Commercial		289		1,322			1,611		6,094		289		1,262
Residential		5,822		2,701			8,523		2,129		5,822		2,554
Consumer		16,651		14,939			31,590		19,555		16,651		18,858

	$	31,908		29,102			61,010	$	36,189		31,908		32,071


	2013
	1st Qtr.		2nd Qtr.			Year to-date
Commercial, financial,leasing, etc.	$	6,788		44,631			51,419
Real estate:
Commercial		8,773		(7,161	)		1,612
Residential		3,721		3,373			7,094
Consumer		17,461		16,209			33,670

	$	36,743		57,052			93,795

~~Included in net charge-offs of commercial loans in the second quarter of 2013 were $30 million of charge-offs for a relationship with a motor vehicle-related parts wholesaler.~~ Included in net charge-offs of consumer loans and leases were net charge-offs during the quarters ended ~~June 30,~~March 31, 2015, March 31, 2014 ~~June 30, 2013~~ and ~~March~~December 31, 2014, respectively, of: automobile loans of $2$4 million ~~$3 million and $4 million;~~in each respective period; recreational vehicle loans of $3 million, $3$4 million and $4$3 million; and home equity loans and lines of credit, including Alt-A second lien loans, of $5$6 million, $5$4 million and $4 million. Alt-A loans represent loans secured by residential real estate that at origination typically included some form of limited borrower documentation requirements as compared with more traditional loans. Loans in the Company’s Alt-A portfolio were originated by the Company prior to 2008.

Loans acquired in connection with acquisition transactions subsequent to 2008 were recorded at fair value with no carry-over of any previously recorded allowance for credit losses. Determining the fair value of the acquired loans required estimating cash flows expected to be collected on the loans and discounting those cash flows at then-current interest rates. The 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. Any decreases to the expected cash flows require the Company to evaluate the need for an additional allowance for credit losses and could lead to charge-offs of acquired loan balances. Any significant increases in expected cash flows result in additional interest income to be recognized over the then-remaining lives of the loans. The carrying amount of loans obtained in acquisitions subsequent to 2008 was ~~$3.2~~$2.4 billion, ~~$4.9 billion, $4.0~~$3.7 billion and ~~$3.7~~$2.6 billion at ~~June 30,~~March 31, 2015,

March 31, 2014 ~~June 30, 2013,~~and December ~~31, 2013 and March~~ 31, 2014, respectively. The portion of the nonaccretable balance related to remaining principal losses as well as life-to-date principal losses charged against the nonaccretable balance as of ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013~~2014 are presented in the accompanying table.


									Nonaccretable balance - principal
	Nonaccretable balance - principal								Remaining balance				Life-to-date charges
	Remaining balance				Life-to-date charges				March 31, 2015		December 31, 2014		March 31, 2015		December 31, 2014
	June 30, 2014		December 31, 2013		June 30, 2014		December 31, 2013		(in thousands)
	(in thousands)
Commercial, financing, leasing, etc.	$	26,059		31,931		74,847		69,772	$	19,961		19,589		78,084		78,736
Commercial real estate		106,894		110,984		280,540		277,222		75,451		70,261		271,490		276,681
Residential real estate		21,062		23,201		56,147		54,177		15,104		15,958		60,381		59,552
Consumer		31,886		33,989		76,135		74,039		27,701		29,582		79,700		77,819

Total	$	185,901		200,105		487,669		475,210	$	138,217		135,390		489,655		492,788

Nonaccrual loans totaled ~~$880~~$791 million or ~~1.36%~~1.18% of total loans and leases outstanding at ~~June 30, 2014,~~March 31, 2015, compared with ~~$965 million or 1.46% at June 30, 2013, $874 million or 1.36% at December 31, 2013 and~~ $891 million or 1.39% a year earlier and $799 million or 1.20% at ~~March~~December 31, 2014. The ~~decline~~declines in nonaccrual loans at the two most recent ~~quarter-end~~quarter-ends as compared with ~~June 30, 2013 was~~March 31, 2014 were largely due to lower commercial ~~real estate loans, including residential builder and developer and construction~~ loans and ~~residential~~commercial real estate ~~loans, partially offset by an increase in commercial~~ loans in nonaccrual status.

Accruing loans past due 90 days or more (excluding acquired loans) were ~~$289~~$237 million or ~~.45%~~.35% of total loans and leases at ~~June 30, 2014,~~March 31, 2015, compared with ~~$340 million or .52% at June 30, 2013, $369 million or .58% at December 31, 2013 and~~ $307 million or .48% at March 31, 2014 and $245 million or .37% at December 31, 2014. Those loans included loans guaranteed by government-related entities of ~~$276~~$194 million, ~~at June 30, 2014, $315~~$291 million ~~at June 30, 2013, $298 million at December 31, 2013~~ and ~~$291~~$218 million at March 31, ~~2014.~~2015, March 31, 2014 and December 31, 2014, respectively. Such guaranteed loans 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 ~~fully~~ guaranteed by ~~government–related~~government-related entities totaled $178 million, $251 million and ~~totaled $238~~$196 million at ~~June 30,~~March 31, 2015, March 31, 2014 ~~$284~~and December 31, 2014, respectively. The remaining accruing loans past due 90 days or more not guaranteed by government-related entities were loans considered to be with creditworthy borrowers that were in the process of collection or renewal. Acquired accruing loans past due 90 days or more are loans that could not be specifically identified as impaired as of the acquisition date, but were recorded at estimated fair value as of such date. Such loans totaled $80 million at ~~June 30, 2013, $255~~March 31, 2015, compared with $121 million at ~~December~~March 31, ~~2013~~2014 and ~~$251~~$110 million at ~~March~~December 31, 2014.

Purchased impaired loans are loans obtained in acquisition transactions subsequent to 2008 that as of the acquisition date were specifically identified as displaying signs of credit deterioration and for which the Company did not expect to collect all outstanding principal and contractually required interest payments. Those loans were impaired at the date of acquisition, were recorded at estimated fair value and were generally delinquent in payments, but, in accordance with GAAP, the Company continues to accrue interest income on such loans based on the estimated expected cash flows associated with the loans. The carrying amount of such loans was ~~$283~~$184 million at ~~June 30, 2014,~~March 31, 2015, or ~~less than 1%~~approximately .3% of total loans. Purchased impaired loans totaled ~~$395~~$303 million and ~~$331~~$198 million at ~~June 30~~March 31 and December 31, ~~2013.~~2014, respectively. The decline in such loans from ~~June 30, 2013~~March 31, 2014 was predominantly the result of payments received from customers.

Acquired accruing loans past due 90 days or more are loans that could not be specifically identified as impaired as of the acquisition date, but were recorded at estimated fair value as of such date. Such loans totaled $135 million at June 30, 2014, compared with $156 million at June 30, 2013 and $130 million at December 31, 2013.

In an effort to assist borrowers, the Company modified the terms of select loans. If the borrower was experiencing financial difficulty and a concession was granted, the Company ~~considers~~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 ~~$158~~$153 million, ~~$200~~$224 million and ~~$206~~$149 million at ~~June 30,~~March 31, 2015, March 31, 2014 ~~June 30, 2013~~ and December 31, ~~2013,~~2014, respectively.

Nonaccrual commercial loans and leases aggregated ~~$192~~$195 million at ~~June 30, 2014, $145 million at June 30, 2013, $111 million at December~~March 31, ~~2013 and~~2015, $138 million at March 31, 2014 and $177 million at December 31, 2014. The ~~additional nonaccrual commercial~~increases in such loans ~~at the recent quarter-end~~since March 31, 2014 were not concentrated in any particular industry group. Commercial real estate loans classified as nonaccrual totaled ~~$296~~$232 million at ~~June 30, 2014, $369 million at June 30, 2013, $305 million at December~~March 31, ~~2013 and~~2015, $291 million at March 31, 2014 and $239 million at December 31, 2014. The ~~lower levels of nonaccrual commercial real estate~~decreases in such loans at the ~~three~~two most recent quarter-ends as compared with ~~June 30, 2013 were~~March 31, 2014 was due, ~~largely~~in part, to ~~decreased~~improving economic conditions and reflected lower loans in ~~that category~~nonaccrual status to residential ~~homebuilders~~builders and developers. Loans to residential builders and developers ~~which totaled $84~~in nonaccrual status aggregated $65 million ~~and $132 million at June 30, 2014 and June 30, 2013, respectively, $96 million at December 31, 2013~~ and $90 million at March 31, 2015 and 2014, respectively, and $72 million at December 31, 2014. Information about the location of nonaccrual and ~~charged–off~~charged-off loans to residential real estate builders and developers as of and for the three-month period ended ~~June 30, 2014~~March 31, 2015 is presented in the accompanying table.


														March 31, 2015							Quarter ended March 31, 2015
	June 30, 2014							Quarter ended June 30, 2014								Nonaccrual					Net charge-offs (recoveries)
			Nonaccrual					Net charge-offs (recoveries)						Outstanding balances (a)		Balances		Percent of outstanding balances			Balances			Annualized percent of average outstanding balances
	Outstanding balances(a)		Balances		Percent of outstanding balances			Balances			Annualized percent of average outstanding balances			(dollars in thousands)
	(dollars in thousands)
New York	$	494,102	$	7,007		1.42	%	$	37			.03	%	$	751,974	$	8,571		1.14	%	$	134			.09	%
Pennsylvania		137,202		45,292		33.01			(217	)		(.69	)		137,105		36,538		26.65			(2	)		(.01	)
Mid-Atlantic		506,866		32,952		6.50			(708	)		(.56	)		400,934		21,909		5.46			11			.01
Other		306,825		777		.25			—			—			365,634		1,504		.41			—			—


Total	$	1,444,995	$	86,028		5.95	%	$	(888	)		(.26	)%	$	1,655,647	$	68,522		4.14	%	$	143			.04	%

Residential real estate loans in nonaccrual status at March 31, 2015 were $246 million, compared with $338 million at March 31, 2014 and $258 million at December 31, 2014. The decrease in residential real estate loans classified as nonaccrual ~~were $278 million at June 30, 2014, compared with $339 million at June 30, 2013, $334 million at December 31, 2013 and $338 million at~~from March 31, ~~2014. The decrease in such nonaccrual loans at the recent quarter-end~~2014 was ~~predominantly~~largely related to the payoff during the second quarter of 2014 of $64 million of loans to one customer that were secured by residential real estate. Included in residential real estate loans classified as nonaccrual were Alt-A loans of $74 million, $79 million ~~$85 million, $81 million~~ and ~~$79~~$78 million at ~~June 30,~~March 31, 2015, March 31, 2014 ~~June 30, 2013,~~and December ~~31, 2013 and March~~ 31, 2014, respectively. Residential real estate loans past due 90 days or more and accruing interest

~~(excluding~~ (excluding acquired loans) totaled ~~$270~~$197 million at ~~June 30, 2014,~~March 31, 2015, compared with ~~$313~~$285 million a year earlier and $216 million at ~~June 30, 2013, $295 million at~~ December ~~31, 2013 and $285 million at March~~ 31, 2014. A substantial portion of such amounts related to guaranteed loans ~~guaranteed by~~repurchased from government-related entities. Information about the location of nonaccrual and ~~charged–off~~charged-off residential real estate loans as of and for the quarter ended ~~June 30, 2014~~March 31, 2015 is presented in the accompanying table.

Nonaccrual consumer loans ~~totaled $114 million and $112~~aggregated $118 million at ~~June 30,~~March 31, 2015, compared with $124 million at March 31, 2014 and ~~2013, respectively, compared with~~ $125 million at December ~~31, 2013 and $124 million at March~~ 31, 2014. Included in nonaccrual consumer loans at ~~June 30, 2014, June 30, 2013, December~~March 31, ~~2013 and~~2015, March 31, 2014 ~~were~~and December 31, 2014 were: automobile loans of $14 million, $16 million ~~$21 million, $21 million~~ and ~~$16~~$18 million, respectively; recreational vehicle loans of ~~$8 million,~~ $9 million, ~~$12~~$11 million and $11 million, respectively; and outstanding balances of home equity loans and lines of credit, including junior lien Alt-A loans, of ~~$84~~$88 million, ~~$70 million, $79~~$83 million and ~~$83~~$89 million, respectively. Information about the location of nonaccrual and ~~charged–off~~charged-off home equity loans and lines of credit as of and for the quarter ended ~~June 30, 2014~~March 31, 2015 is presented in the accompanying table.


	June 30, 2014							Quarter ended June 30, 2014						March 31, 2015							Quarter ended March 31, 2015
			Nonaccrual					Net charge-offs (recoveries)								Nonaccrual					Net charge-offs (recoveries)
	Outstanding balances		Balances		Percent of outstanding balances			Balances			Annualized percent of average outstanding balances			Outstanding balances		Balances		Percent of outstanding balances			Balances			Annualized percent of average outstanding balances
	(dollars in thousands)													(dollars in thousands)
Residential mortgages:
New York	$	3,520,286	$	72,102		2.05	%	$	510			.06	%	$	3,456,314	$	63,978		1.85	%	$	757			.09	%
Pennsylvania		1,160,210		20,877		1.80			463			.16			1,106,917		19,210		1.74			50			.02
Mid-Atlantic		2,102,399		33,184		1.58			1,067			.20			2,026,129		30,854		1.52			705			.14
Other		1,480,962		69,356		4.68			811			.22			1,557,014		55,732		3.58			186			.05

Total	$	8,263,857	$	195,519		2.37	%	$	2,851			.14	%	$	8,146,374	$	169,774		2.08	%	$	1,698			.08	%

Residential construction:
Residential construction loans:
New York	$	6,915	$	1,299		18.79	%	$	(3	)		(.17	)%	$	5,999	$	144		2.41	%	$	—			—	%
Pennsylvania		1,628		716		43.98			99			22.36			3,249		734		22.58			(1	)		(.11	)
Mid-Atlantic		7,478		160		2.14			—			—			9,730		—		—			—			—
Other		17,239		1,122		6.51			(656	)		(16.11	)		11,199		844		7.54			66			2.14

Total	$	33,260	$	3,297		9.91	%	$	(560	)		(6.87	)%	$	30,177	$	1,722		5.71	%	$	65			.81	%

Alt-A first mortgages:
New York	$	60,328	$	17,564		29.11	%	$	—			—	%	$	55,606	$	18,263		32.84	%	$	166			1.20	%
Pennsylvania		10,908		2,861		26.23			(18	)		(.64	)		10,451		2,910		27.84			61			2.34
Mid-Atlantic		71,127		11,629		16.35			14			.08			65,192		9,670		14.83			10			.06
Other		217,286		46,632		21.46			414			.75			196,319		43,427		22.12			129			.26

Total	$	359,649	$	78,686		21.88	%	$	410			.45	%	$	327,568	$	74,270		22.67	%	$	366			.44	%

Alt-A junior lien:
New York	$	1,207	$	129		10.69	%	$	44			14.42	%	$	1,066	$	56		5.24	%	$	107			40.21	%
Pennsylvania		385		59		15.32			—			—			353		34		9.76			—			—
Mid-Atlantic		3,291		143		4.35			86			10.27			2,801		141		5.02			(1	)		(.08	)
Other		7,508		672		8.95			136			7.12			6,595		508		7.70			282			17.00

Total	$	12,391	$	1,003		8.09	%	$	266			8.43	%	$	10,815	$	739		6.83	%	$	388			14.21	%

First lien home equity loans:
New York	$	21,313	$	2,550		11.96	%	$	45			.61	%	$	16,684	$	1,648		9.88	%	$	194			4.55	%
Pennsylvania		69,387		3,660		5.27			70			.40			54,773		3,282		5.99			87			.62
Mid-Atlantic		86,994		1,199		1.38			2			.01			72,624		848		1.17			78			.42
Other		2,861		504		17.62			110			15.19			1,155		—		—			(2	)		(.50	)

Total	$	180,555	$	7,913		4.38	%	$	227			.49	%	$	145,236	$	5,778		3.98	%	$	357			.96	%

First lien home equity lines:
New York	$	1,385,285	$	13,080		.94	%	$	519			.15	%	$	1,358,769	$	15,112		1.11	%	$	463			.14	%
Pennsylvania		840,717		5,738		.68			147			.07			838,591		5,922		.71			373			.18
Mid-Atlantic		869,957		2,760		.32			62			.03			857,883		3,959		.46			184			.09
Other		33,552		1,562		4.66			—			—			37,985		1,515		3.99			—			—

Total	$	3,129,511	$	23,140		.74	%	$	728			.09	%	$	3,093,228	$	26,508		.86	%	$	1,020			.13	%

Junior lien home equity loans:
New York	$	17,525	$	5,071		28.94	%	$	93			2.06	%	$	13,923	$	4,590		32.97	%	$	(165	)		(4.72	)%
Pennsylvania		21,365		1,202		5.63			12			.22			17,731		998		5.63			(18	)		(.39	)
Mid-Atlantic		72,147		2,125		2.95			57			.31			59,825		1,510		2.52			3			.02
Other		8,833		334		3.78			(28	)		(1.25	)		7,398		856		11.57			344			18.01

Total	$	119,870	$	8,732		7.28	%	$	134			.44	%	$	98,877	$	7,954		8.04	%	$	164			.65	%

Junior lien home equity lines:
New York	$	958,499	$	29,363		3.06	%	$	1,399			.59	%	$	940,262	$	30,449		3.24	%	$	1,903			.81	%
Pennsylvania		392,999		4,116		1.05			469			.48			387,109		4,484		1.16			717			.74
Mid-Atlantic		1,201,514		7,657		.64			843			.28			1,179,393		10,267		.87			1,816			.62
Other		68,921		2,067		3.00			619			3.56			68,065		1,806		2.65			(27	)		(.16	)

Total	$	2,621,933	$	43,203		1.65	%	$	3,330			.51	%	$	2,574,829	$	47,006		1.83	%	$	4,409			.69	%

Real estate and other foreclosed assets totaled $63 million and $59 million at March 31, 2015 and March 31, 2014, and $64 million at December 31, 2014. At March 31, 2015, foreclosed assets included $42 million of residential real estate properties.

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


																2015			2014 Quarters
	2014 Quarters						2013 Quarters									First Quarter			Fourth			Third			Second			First
	Second			First			Fourth			Third			Second
Nonaccrual loans	$	880,134			890,893			874,156			915,871			964,906		$	790,586			799,151			847,784			880,134		$	890,893
Real estate and other foreclosed assets		59,793			59,407			66,875			89,203			82,088			62,578			63,635			67,629			59,793			59,407

Total nonperforming assets	$	939,927			950,300			941,031			1,005,074			1,046,994		$	853,164			862,786			915,413			939,927		$	950,300

Accruing loans past due 90 days or more(a)	$	289,016			307,017			368,510			339,792			340,467

Accruing loans past due 90 days or more (a)																$	236,621			245,020			312,990			289,016		$	307,017


Government guaranteed loans included in totals above:
Nonaccrual loans	$	81,817			75,959			63,647			68,519			69,508		$	60,508			69,095			68,586			81,817		$	75,959
Accruing loans past due 90 days or more		275,846			291,418			297,918			320,732			315,281			193,618			217,822			265,333			275,846			291,418


Renegotiated loans	$	270,223			257,889			257,092			259,301			263,351		$	198,911			202,633			209,099			270,223		$	257,889

Acquired accruing loans past due 90 days or more(b)	$	134,580			120,996			130,162			153,585			155,686
Acquired accruing loans past due 90 days or more (b)																$	80,110			110,367			132,147			134,580		$	120,996

Purchased impaired loans(c):

Purchased impaired loans (c):
Outstanding customer balance	$	504,584			534,331			579,975			648,118			725,196		$	335,079			369,080			429,915			504,584		$	534,331
Carrying amount		282,517			303,388			330,792			357,337			394,697			184,018			197,737			236,662			282,517			303,388


Nonaccrual loans to total loans and leases, net of unearned discount		1.36	%		1.39	%		1.36	%		1.44	%		1.46	%		1.18	%		1.20	%		1.29	%		1.36	%		1.39	%
Nonperforming assets to total net loans and leases and real estate and other foreclosed assets		1.45	%		1.48	%		1.47	%		1.58	%		1.59	%		1.27	%		1.29	%		1.39	%		1.45	%		1.48	%
Accruing loans past due 90 days or more (a) to total loans and leases, net of unearned discount		.45	%		.48	%		.58	%		.53	%		.52	%		.35	%		.37	%		.48	%		.45	%		.48	%

Real estate and other foreclosed assets were $60 million at June 30, 2014, compared with $82 million a year earlier, $67 million at December 31, 2013 and $59 million at March 31, 2014. At June 30, 2014, the Company’s holding of residential real estate-related properties comprised 81% of foreclosed assets.

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 repayment performance associated with the Company’s first and second lien loans secured by residential real estate; 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 ~~June 30, 2014~~March 31, 2015 in light of: (i) residential real estate values and the level of delinquencies of loans secured by residential real estate; (ii) economic conditions in the markets served by the Company; (iii) continuing weakness in industrial employment in upstate New York and central Pennsylvania; (iv) the significant subjectivity involved in ~~many~~ 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 ~~slowly strengthening housing market; the~~ troubled state of financial and credit ~~markets;~~markets, including the impact international economic conditions could have on the U.S. economy; Federal Reserve positioning of monetary policy; ~~high~~low levels of ~~unemployment;~~workforce participation; and continued stagnant population growth in the upstate New York and central Pennsylvania regions (approximately 60% of the Company’s loans are to customers in New York State and Pennsylvania).

The Company utilizes a loan grading system which is applied to all commercial loans and commercial real estate loans. Loan grades are utilized to differentiate risk within the portfolio and consider the expectations of default for each loan. Commercial loans and commercial real estate loans with a lower expectation of default are assigned one of ten possible “pass” loan grades and are generally ascribed lower loss factors when determining the allowance for credit losses. Loans with an elevated level of credit risk are classified as “criticized” and are ascribed a higher loss factor when determining the allowance for credit losses. Criticized loans may be classified as “nonaccrual” if the Company no longer expects to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more. Criticized commercial loans and commercial real estate loans were $2.0 billion at March 31, 2015, compared with $1.8 billion at each of ~~June 30, 2014, December 31, 2013 and~~ March 31, 2014 and ~~$2.1 billion at June 30, 2013.~~December 31, 2014. The increase since December 31, 2014 included approximately $129 million related to commercial loans to customers operating in varied industries. Loan officers with the support of loan review personnel in different geographic locations are responsible to continuously review and reassign loan grades to pass and

criticized loans based on their detailed knowledge of individual borrowers and their judgment of the impact on such borrowers resulting from changing conditions in their respective geographic regions. On a quarterly basis, the Company’s centralized loan review department reviews all criticized commercial loans and commercial real estate loans greater than $1 million to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. For criticized nonaccrual loans, additional meetings are held with loan officers and their

managers, workout specialists and senior management to discuss each of the relationships. In analyzing criticized loans, borrower-specific information is reviewed, including operating results, future cash flows, recent developments and the borrower’s outlook, and other pertinent data. The timing and extent of potential losses, considering collateral valuation and other factors, and the Company’s potential courses of action are reviewed. To the extent that these loans are collateral-dependent, they are evaluated based on the fair value of the loan’s collateral as estimated at or near the financial statement date. As the quality of a loan deteriorates to the point of classifying the loan as “criticized,” the process of obtaining updated collateral valuation information is usually initiated, unless it is not considered warranted given factors such as the relative size of the loan, the characteristics of the collateral or the age of the last valuation. In those cases where current appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed necessary, for estimates of subsequent declines in value as determined by line of business and/or loan workout personnel in the respective geographic regions. Those adjustments are reviewed and assessed for reasonableness by the Company’s loan review department. Accordingly, for real estate collateral securing larger commercial loans and commercial real estate loans, estimated collateral values are based on current appraisals and estimates of value. For non-real estate loans, collateral is assigned a discounted estimated liquidation value and, depending on the nature of the collateral, is verified through field exams or other procedures. In assessing collateral, real estate and non-real estate values are reduced by an estimate of selling costs. With regard to residential real estate loans, the Company’s loss identification and estimation techniques make reference to loan performance and house price data in specific areas of the country where collateral that was securing the Company’s residential real estate loans was 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. At ~~June 30, 2014,~~March 31, 2015, approximately 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 ~~74%~~73% (or approximately ~~33%~~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 ~~June 30, 2014,~~March 31, 2015, the balance of junior lien loans and lines that were in nonaccrual status solely as a result of first lien loan performance was ~~$29~~$22 million, compared with ~~$28 million at June 30, 2013 and~~ $30 million at ~~each of~~March 31, 2014 and $24 million at December ~~31, 2013 and March~~ 31, 2014. In monitoring the credit quality of its home equity portfolio for purposes of determining the allowance for credit losses, the Company reviews delinquency and nonaccrual information and considers recent charge-off experience. Additionally, the Company generally evaluates home equity loans and lines of credit that are more than 150 days past due for collectibility on a loan-by-loan basis and the excess of the loan

balance over the net realizable value of the property collateralizing the loan is charged-off at that time. In determining the amount of such charge-offs, if the Company does not know the amount of the remaining first lien mortgage loan (typically because the Company does not own or service the first lien loan), the Company assumes that the first lien mortgage loan has had no principal amortization since the origination of the junior lien loan. Similarly, data used in estimating incurred losses for purposes of determining the allowance for credit losses also assumes no reductions in outstanding principal of first lien loans since the origination of the junior lien loan. Home equity line of credit terms vary but such lines are generally originated with an open draw period of ten years followed by an

amortization period of up to twenty years. At ~~June 30, 2014,~~March 31, 2015, approximately ~~94%~~92% 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 ~~19%~~22% 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 45% of the Company’s home equity portfolio consists of junior lien loans and lines of credit. The Company generally evaluates residential real estate loans and home equity loans and lines of credit that are more than 150 days past due for collectibility on a loan-by-loan basis and the excess of the loan balance over the net realizable value of the property collateralizing the loan is charged-off at that time. Except for consumer loans and residential real estate loans that are

considered smaller balance homogeneous loans and are evaluated collectively and loans obtained in acquisition transactions, the Company considers a loan to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more and has been placed in nonaccrual status. Those impaired loans are evaluated for specific loss components. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Loans less than 90 days delinquent are deemed to have a minimal delay in payment and are generally not considered to be impaired. Loans acquired in connection with acquisition transactions subsequent to 2008 were recorded at fair value with no carry-over of any previously recorded allowance for credit losses. Determining the fair value of the acquired loans required estimating cash flows expected to be collected on the loans and discounting those cash flows at then-current interest rates. The impact of estimated future credit losses represents the predominant difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition. 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 ~~June 30, 2014~~March 31, 2015 appropriately reflected credit losses inherent in the portfolio as of that date. The allowance for credit losses was ~~$918~~$921 million, or ~~1.42%~~1.37% of total loans and leases at ~~June 30, 2014,~~March 31, 2015, compared with ~~$927 million or 1.41% at June 30, 2013 and~~ $917 million or 1.43% at ~~each of~~March 31, 2014 and $920 million or 1.38% at December ~~31, 2013 and March~~ 31, 2014. 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~~had been recorded at estimated fair value based on estimated future cash flows expected to be received on those loans. Those cash flows ~~reflect~~include the impact of expected defaults on customer repayment performance. As noted earlier, GAAP prohibits any carry-over of an allowance for credit losses for acquired loans recorded at fair value. 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~~portfolios also change, the level of the allowance as a percentage of loans could increase or decrease in future periods. The ratio of the allowance for credit losses to nonaccrual loans was ~~104%~~117% at ~~June 30, 2014,~~March 31, 2015, compared with ~~96%~~103% a year earlier ~~105%~~and 115% at December ~~31, 2013 and 103% at March~~ 31, 2014. Given the Company’s general position as a secured lender and its practice of ~~charging off~~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 ~~determining~~assessing the adequacy of the allowance. The level of the allowance reflects management’s evaluation of the loan and lease portfolio as of each respective date.

Other income totaled ~~$456~~$440 million in the ~~second~~first quarter of ~~2014,~~2015, compared with ~~$509~~$420 million in the year-earlier quarter and ~~$420~~$452 million in the fourth quarter of 2014. The predominant factor contributing to the improvement from the first quarter of ~~2014. Reflected~~2014 was a $22 million increase in mortgage banking revenues. As compared with the ~~second quarter of 2013 amount were net gains on investment securities of $56 million. During that quarter, the~~

Company sold privately issued mortgage-backed securities held in its available-for-sale portfolio having an amortized cost of approximately $1.0 billion, resulting in a net pre-tax loss of $46 million. The Company sold the privately issued mortgage-backed securities in order to improve its regulatory capital and liquidity position through reduced exposure to such relatively higher risk, less liquid, securities in favor of lower risk, highly liquid, Ginnie Mae securities. Also in 2013’s second quarter, the Company realized a $103 million pre-tax gain from the sale of its holdings of Visa and MasterCard common stock that it had received at no cost as part of the restructuring of those companies several years earlier. There were no realized gains and losses from sales of investment securities in the three-month periods ended March 31 and June 30, 2014.

~~Excluding gains and losses on bank investment securities (including other-than-temporary impairment losses) in the second 2013 quarter, other income totaled $456 million in the second~~fourth quarter of 2014, ~~compared with $452 million~~the decline in ~~2013’s second quarter~~other income reflected a decrease in loan syndication fees and ~~$420 million~~declines in ~~the first quarter of 2014. Higher~~service charges on deposit accounts and trust income, partially offset by higher mortgage banking revenues.

Mortgage banking revenues ~~and trust income~~totaled $102 million in the recent quarter, ~~contributed to those improvements.~~

~~Mortgage banking revenues were $96 million in the recently completed quarter, up from $91 million in the second quarter of 2013 and~~compared with $80 million in the initial quarter of 2014 and $94 million in the final 2014 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 ~~multifamily~~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 ~~$78~~$79 million in the ~~second~~first quarter of ~~2014,~~2015, compared with ~~$66 million in the second quarter of 2013 and~~ $65 million in the ~~initial~~year-earlier quarter and $71 million in the fourth quarter of 2014. The ~~higher level of~~improvement in residential mortgage banking revenues from each of the first and fourth quarters of 2014 to the recent quarter reflects an increase in commitments to originate loans for sale. The higher volumes in the recent quarter ~~as compared with the year-earlier quarter~~largely resulted ~~predominantly~~ from increased ~~revenues for servicing residential real estate loans for others, partially offset~~refinancing activity by lower volumes of loans originated for sale. As compared with the first quarter of 2014, the recent quarter’s higher residential mortgage banking revenues reflect increased volumes of loans originated for sale as well as the sale of re-performing government guaranteed loans. Loans originated for sale include the impact of the Company’s involvementconsumers due to a decline in interest rates early in the U.S. Government’s Home Affordable Refinance Program (“HARP 2.0”), which allows homeowners to refinance their Fannie Mae or Freddie Mac mortgages when the value of their home has fallen such that they have little or no equity. The HARP 2.0 program was set to expire December 31, 2013, but was extended and will now be available to borrowers through December 31, 2015. Nevertheless, volumes associated with the HARP 2.0 refinancing program have declined since 2013.quarter.

New commitments to originate residential real estate loans to be sold were approximately ~~$905~~$936 million in ~~the recent~~2015’s initial quarter, compared with ~~$1.8 billion and~~ $728 million in the ~~second~~year-earlier quarter and $735 million in the final quarter of 2013 and the first quarter of 2014, respectively. Included in those commitments to originate residential real estate loans to be sold were HARP 2.0 commitments of $69 million, $375 million and $95 million during the quarters ended June 30,

~~2014, June 30, 2013 and March 31, 2014, respectively.~~2014. Realized gains from sales of residential real estate loans and loan servicing rights (net of the impact of costs associated with obligations to repurchase real estate loans originated for sale) and recognized net unrealized gains orand losses attributable to residential real estate loans held for sale, commitments to originate loans for sale and commitments to sell loans totaled to ~~a gain of $27 million in the recently completed quarter, compared with~~ gains of ~~$40 million in the second quarter of 2013 and $15~~$21 million in the first quarter of ~~2014.~~2015, compared with gains of $15 million and $14 million in the first and fourth quarters of 2014, respectively.

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 ~~loan~~ purchasers for losses incurred or may repurchase certain loans. The Company reduces residential mortgage banking revenues for losses related to its obligations to loan purchasers. The amount of those charges varies based on the volume of loans sold, the level of reimbursement requests received from loan purchasers and estimates of losses that may be associated with previously sold loans. Residential mortgage banking revenues during each of the first quarter of 2015 and the final quarter of 2014 were reduced by ~~approximately $3~~$1 million ~~during~~related to the ~~three-month period ended June 30,~~actual or anticipated settlement of repurchase obligations. Similar reductions in the initial 2014 ~~compared with similar reductions of $5 million during the three-month period ended June 30, 2013 and~~quarter were less than $1 ~~million in the three-month period ended March 31, 2014.~~million.

Loans held for sale that ~~are~~were secured by residential real estate totaled ~~$419~~$423 million and $292 million at ~~June 30,~~March 31, 2015 and 2014, ~~$1.9 billion at June 30, 2013~~respectively, and ~~$401~~$435 million at December 31, ~~2013.~~2014. Commitments to sell residential real estate loans and commitments to originate residential real estate loans for sale at pre-determined rates were ~~$799~~$859 million and ~~$597~~$661 million, respectively, at ~~June 30, 2014, $2.6 billion and $896 million, respectively, at June 30, 2013, and $725~~March 31, 2015, compared with $655 million and ~~$470~~$522 million at March 31, 2014, and $717 million and $432 million, respectively, at December 31, ~~2013.~~2014. Net recognized unrealized gains on residential real estate loans held for sale, commitments to sell loans, and commitments to originate loans for sale were ~~$20~~$21 million and $17 million at ~~each of June 30,~~March 31, 2015 and March 31, 2014, respectively, and $19 million at December 31, ~~2013, and $45 million at June 30, 2013.~~2014. Changes in such net unrealized gains and losses are recorded in mortgage banking revenues and resulted in a net ~~increases~~increase in ~~revenues~~revenue of $3$2 million in the most recent quarter, compared with net decreases in ~~revenues~~revenue of ~~$12 million in the second quarter of 2013 and~~ $2 million in each of the ~~initial quarter~~first and fourth quarters of 2014.

Revenues from servicing residential real estate loans for others were ~~$51~~$58 million in the recent quarter, compared with ~~$25~~$50 million and ~~$50~~$56 million during the quarters ended ~~June 30, 2013~~March 31, 2014 and ~~March~~December 31, 2014, respectively. Residential real estate loans serviced for others totaled ~~$71.0~~$65.0 billion at ~~June 30, 2014, compared with $35.9 billion at June 30, 2013, $72.4 billion at December~~March 31, ~~2013 and~~2015, $73.0 billion at March 31, 2014 ~~including certain small balance commercial real estate loans of $3.0~~and $67.2 billion at ~~June 30, 2014, $3.6 billion at June 30, 2013, $3.2 billion at~~ December ~~31, 2013 and $3.1 billion at March~~ 31, 2014. Reflected in residential real estate loans serviced for others were loans sub-serviced for others of ~~$45.5~~$40.4 billion, ~~at June 30, 2014, $11.5~~$47.4 billion ~~at June 30, 2013, $46.6 billion at December 31, 2013~~ and ~~$47.4~~$42.1 billion at March 31, 2015, March 31, 2014 and December 31, 2014, respectively. Revenues earned for sub-servicing loans were $35 million in the first quarter of 2015, $26 million in the year-earlier quarter and $33 million in the fourth quarter of 2014. ~~Included in residential real estate~~The contractual servicing rights associated with loans sub-serviced ~~for others~~by the Company were ~~loans sub-serviced for~~predominantly held by affiliates of Bayview Lending Group LLC (“BLG”) of $44.6 billion, $10.4 billion, $45.6 billion and $46.5 billion at June 30, 2014, June 30, 2013, December 31, 2013 and March 31, 2014, respectively. During the third quarter of 2013, the Company added approximately $35 billion of residential real estate loans to its portfolio of loans sub-serviced for affiliates of BLG. Revenues earned for sub-servicing loans were $27 million and $3 million for the three-month periods ended June 30, 2014 and 2013, respectively, and $26 million for the three-month period ended March 31, 2014..

Capitalized servicing rights consist largely of servicing associated with loans sold by the Company. Capitalized residential mortgage loan servicing assets ~~net of any applicable valuation allowance for possible impairment,~~ totaled ~~$117~~$111 million at ~~June 30,~~each of March 31, 2015 and December 31, 2014, compared with ~~$118 million a year earlier, $129 million at December 31, 2013 and~~ $123 million at March 31, 2014.

Commercial mortgage banking revenues were ~~$18~~$23 million in each of the ~~second quarter of 2014,~~two most recent quarters, compared with ~~$25 million in the year-earlier period and~~ $15 million in the first quarter of 2014. Included in such amounts were revenues from loan origination and sales activities of $9$13 million in each of the ~~recent~~first quarter of 2015 and fourth quarter of 2014, compared with ~~$18 million and~~ $7 million in the ~~second~~first quarter of ~~2013 and the initial 2014 quarter, respectively.~~2014. Commercial real estate loans originated for sale to other investors totaled ~~$312~~approximately $455 million in the ~~second~~first quarter of ~~2014,~~2015, compared with ~~$617~~$136 million and ~~$136~~$570 million in the ~~second quarter~~first and fourth quarters of ~~2013 and the initial~~ 2014, ~~quarter,~~ respectively. Loan servicing revenues were $9$10 million in each of the ~~second quarter of 2014, up from $7 million in 2013’s second quarter and~~two most recent quarters, compared with $8 million in the ~~first~~initial quarter of 2014. Capitalized commercial mortgage servicing assets ~~totaled $69 million and $65~~aggregated $74 million at ~~June 30,~~March 31, 2015, $71 million at March 31, 2014 and ~~2013, respectively, and $72~~$73 million at December 31, ~~2013.~~2014. Commercial real estate loans serviced for other investors totaled ~~$11.1~~$11.4 billion, $11.2 billion and ~~$11.4~~$11.3 billion at ~~June 30,~~March 31, 2015, March 31, 2014 ~~June 30, 2013~~ and December 31, ~~2013,~~2014, respectively, and included $2.4 billion, $2.3 billion ~~$2.1 billion~~ and ~~$2.3~~$2.4 billion, respectively, of loan balances for which investors had recourse to the Company if such balances are ultimately uncollectible. Commitments to sell commercial real estate loans and commitments to originate commercial real estate loans for sale were ~~$455~~$464 million and ~~$251~~$347 million, respectively, at ~~June 30, 2014, $380~~March 31, 2015, $190 million and ~~$247~~$152 million, respectively, at ~~June 30, 2013~~March 31, 2014 and ~~$130~~$520 million and ~~$62~~$212 million, respectively, at December 31, ~~2013.~~2014. Commercial real estate loans held for sale at ~~June 30,~~March 31, 2015, March 31, 2014 ~~June 30, 2013~~ and December 31, ~~2013~~2014 were ~~$205~~$117 million, ~~$133~~$38 million, and ~~$68~~$308 million, respectively.

Service charges on deposit accounts totaled ~~$107~~$102 million in the ~~second~~first quarter of ~~2014,~~2015, compared with ~~$112 million and~~ $104 million in the ~~second~~year-earlier quarter ~~of 2013~~ and ~~the first quarter of 2014, respectively. The lower level of fees~~$106 million in the ~~two most~~final 2014 quarter. The recent ~~quarters~~quarter’s decline as compared with the ~~second quarter of 2013~~earlier periods was largely due to lower consumer deposit service fees.

Trust income includes fees related to two significant businesses. The Institutional Client Services (“ICS”) business provides a variety of trustee, agency, investment management and administrative services for corporations and institutions, investment bankers, corporate tax, finance and legal executives, and other institutional clients who: (i) use capital markets financing structures; (ii) use independent trustees to hold retirement plan and other assets; and (iii) need investment and cash management services. The Wealth Advisory Services (“WAS”) business helps high net worth clients grow their wealth, protect it, and transfer it to their heirs. A comprehensive array of wealth management services are offered, including asset management, fiduciary services and family office services. Revenues associated with the ICS business were approximately $61 million, ~~$60~~$57 million and ~~$57~~$63 million during the quarters ended ~~June 30, 2014, June 30, 2013 and~~March 31, 2015, March 31, 2014 and December 31, 2014, respectively. In the first quarter of 2015, the Company announced that it had agreed to sell the trade processing business within the retirement services division of ICS that was acquired with Wilmington Trust. That divestiture occurred on April 10, 2015. The portion of the business that was ultimately sold in April generated revenues of approximately $34 million in 2014 and $9 million during the first quarter of 2015. After considering related expenses, including the portion of those revenues paid to sub-advisors, net income attributable to the business that was sold was not material to the consolidated results of operations of the Company. Revenues attributable to WAS were approximately ~~$60 million,~~ $56 million and $53 million for the three-month periods ended ~~June 30, 2014, June 30, 2013, and~~ March 31, 2015 and 2014, ~~respectively.~~respectively, and $55 million for the three-month period ended December 31, 2014. In total, trust income aggregated ~~$130~~$124 million in the ~~second~~recent quarter, ~~of 2014,~~ compared with ~~$125~~$121 million and ~~$121~~$128 million in the ~~year-earlier quarter~~first and ~~the first quarter~~fourth quarters of 2014, respectively. Total trust assets, which include assets under management and assets under

administration, aggregated ~~$275.5~~$293.4 billion at ~~June 30, 2014,~~March 31, 2015, compared with ~~$249.7~~$270.5 billion and ~~$266.1~~$287.9 billion at ~~June 30, 2013~~March 31, 2014 and December 31, ~~2013,~~2014, respectively. Trust assets under management were ~~$66.9~~$69.4 billion, $65.9 billion and $68.2 billion at ~~June 30,~~March 31, 2015, March 31, 2014 ~~$61.5 billion at June 30, 2013~~ and ~~$65.1 billion at~~ December 31, ~~2013.~~2014, respectively. The Company’s proprietary mutual funds

had assets of ~~$12.3~~$12.8 billion, $13.0 billion and $13.3 billion at ~~June 30,~~March 31, 2015, March 31, 2014 ~~and $12.7 billion at each of June 30, 2013~~ and December 31, ~~2013,~~2014, respectively.

Brokerage services income, which includes revenues from the sale of mutual funds and annuities and securities brokerage fees, totaled $15 million in the recent quarter, compared with $17 million in ~~each~~the year-earlier quarter and $16 million in the fourth quarter of ~~the three-month periods ended June 30, 2014, June 30, 2013 and March 31,~~ 2014. Gains from trading account and foreign exchange activity totaled $8$6 million during the ~~second quarter~~initial quarters of 2015 and 2014, compared with ~~$9 million and $6~~$8 million in the ~~second quarter of 2013 and the initial~~final 2014 ~~quarter, respectively.~~quarter. 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.”

During the second quarter of 2013, the Company recognized net gains on investment securities of $56 million. During that quarter, the Company sold its holdings of Visa Class B shares for a gain of $90 million and its holdings of MasterCard Class B shares for a gain of $13 million. The shares of Visa and MasterCard were sold as a result of favorable market conditions and to enhance the Company’s capital and liquidity. In addition, the Company sold substantially all of its privately issued mortgage-backed securities held in the available-for-sale investment securities portfolio. In total, $1.0 billion of such securities were sold for a net loss of approximately $46 million. The mortgage-backed securities were sold to reduce the Company’s exposure to such relatively higher risk securities in favor of lower risk Ginnie Mae securities in response to changing regulatory capital and liquidity standards. There were no net gains or losses on investment securities in the two most recent quarters.

M&T’s share of the operating ~~results~~losses of BLG was $4 million in each of the ~~two most recent quarters was a loss of $4 million, compared with a loss of $2 million in the second~~first quarter of ~~2013.~~2015, the year-earlier quarter and the fourth quarter of 2014. The operating losses of BLG in the respective quarters reflect provisions for losses associated with securitized loans and other loans held by BLG and loan servicing and other administrative costs. Under GAAP, such losses are required to be recognized by BLG despite the fact that many of the securitized loan losses will ultimately be borne by the underlying third party ~~bond-holders.~~bondholders. As these loan losses are realized through later foreclosure and still later sale of real estate collateral, the underlying bonds will be charged-down leading to BLG’s future recognition of debt extinguishment gains. The timing of such debt extinguishment is difficult to predict and given ongoing loan loss provisioning, it is not possible to project when BLG will return to profitability. As a result of credit and liquidity disruptions, BLG ceased its originations of small-balance commercial real estate loans in 2008. However, as a result of past securitization activities, BLG is entitled to cash flows from mortgage assets that it owns or that are owned by its affiliates and is also entitled to receive distributions from affiliates that provide asset management and other services. Accordingly, the Company believes that BLG is capable of realizing positive cash flows that could be available for distribution to its owners, including M&T, despite a lack of positive GAAP-earnings from its core mortgage activities. To this point, BLG’s affiliates have largely reinvested their earnings to generate additional servicing and asset management activities, further contributing to the value of those affiliates.

Information about the Company’s relationship with BLG and its affiliates is included in note 15 of Notes to Financial Statements.

Other revenues from operations totaled ~~$102 million in the recent quarter, compared with $100 million in the second quarter of 2013 and $96~~$95 million in the first quarter of 2015, compared with $96 million in the year-earlier quarter and $103 million in the fourth quarter of 2014. The recent quarter’s decline as compared with the final 2014 quarter was largely attributable to lower fees for providing loan syndication, underwriting and advisory services. Included in other revenues from operations were the following significant components. Letter of credit and other credit-related fees totaled ~~$35~~$26 million in the ~~second~~recent quarter, ~~of 2014, $31 million in the second quarter of 2013 and~~compared with $32 million in the first quarter of 2014 and $33 million in the fourth quarter of 2014. Tax-exempt income from bank owned life insurance, which includes increases in the cash surrender value of life insurance policies and benefits received, totaled $11 million during the recent quarter, compared with $12 million in the initial quarter of 2014 and $13 million in the ~~second quarter of 2014, $18 million in the year-earlier quarter and $12 million in the first~~final quarter of 2014. Revenues from merchant discount and credit card fees were $24 million ~~$21~~in the quarter ended March 31, 2015, compared with $22 million and ~~$22~~$26 million in the ~~three-month periods~~quarters ended ~~June 30,~~March 31, 2014 ~~June 30, 2013~~ and ~~March~~December 31, 2014, respectively. Insurance-related sales commissions and other revenues totaled $11 million in the ~~second~~initial quarter of ~~2014, $10~~2015, compared with $12 million in the year-earlier quarter and ~~$12~~$9 million in the ~~initial 2014 quarter.~~

fourth quarter of 2014. Other income totaled $877 million in the first half of 2014, compared with $942 million in the year-earlier period. Gains and losses on bank investment securities (including other-than-temporary impairment losses) totaled to net gains of $47 million in 2013. There were no gains or losses on investment securities in 2014. Excluding gains and losses from bank investment securities, other income aggregated $895 million in the first half of 2013. The primary contributors to the decline in other income during the 2014 period were lower mortgage bankingmiscellaneous revenues and ~~service charges on deposit accounts.~~

~~Mortgage banking~~the changes in such revenues from period-to-period were $176 million for the first half of 2014, compared with $184 million in the year-earlier period. Residential mortgage banking revenues totaled $143 million in the first six months of 2014, compared with $141 million in the first half of 2013. New commitments to originate residential real estate loans to be sold were $1.6 billion and $3.7 billion during the first six months of 2014 and 2013, respectively. As a result, realized gains from sales of residential real estate loans and loan servicing rights (net of the impact of costs associated with obligations to repurchase real estate loans originated for sale) and recognized 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 $42 million and $91 million during the first six months of 2014 and 2013, respectively. Residential mortgage banking revenues during the six-month periods ended June 30, 2014 and 2013 were reduced by $3 million and $10 million, respectively, related to actual or anticipated settlements of repurchase obligations. Revenues from servicing residential mortgage loans for others were $101 million and $51 million for the first half of 2014 and 2013, respectively. That increase was largely attributable to increased sub-servicing revenues that totaled $53 million and $5 million in the 2014 and 2013 periods, respectively. Commercial mortgage banking revenues totaled $33 million and $43 million during the six-month periods ended June 30, 2014 and 2013, respectively. That decline resulted largely from lower origination activity. Commercial real estate loans originated for sale to other investors were $448 million in the first half of 2014, compared with $1.0 billion in the comparable 2013 period.not individually significant.

Service charges on deposit accounts totaled $212 million and $223 million during the six-month periods ended June 30, 2014 and 2013, respectively. That decline resulted from lower consumer service charges, largely overdraft fees. Trust income aggregated $251 million in the first half of 2014, up 2% from $246 million a year earlier. Brokerage services income totaled $34 million during the first six months of 2014, compared with $33 million in the corresponding 2013 period. Trading account and foreign exchange activity resulted in gains of $14 million and $18 million for the six-month periods ended June 30, 2014 and 2013, respectively. M&T’s investment in BLG resulted in losses of $9 million and $6 million for the first half of 2014 and 2013, respectively. Investment securities gains and losses totaled to net gains of $47 million for the first six months of 2013. Reflected in that amount were other-than-temporary impairment losses of $10 million. Those losses related to a subset of the privately issued mortgage-backed securities that were sold in the second quarter of 2013. There were no gains or losses on investment securities in 2014.

Other revenues from operations were $198 million in the first half of 2014 and $197 million in the similar 2013 period. Included in other revenues from operations during the six-month periods ended June 30, 2014 and 2013 were the following significant components: letter of credit and other credit-related fees of $67 million and $63 million, respectively; income from bank owned life insurance of $25 million and $31 million, respectively; merchant discount and credit card fees of $45 million and $41 million, respectively; and insurance-related sales commissions and other revenues of $22 million and $23 million, respectively.

~~Other~~Effective January 1, 2015, M&T adopted amended guidance from the FASB for accounting for investments in qualified affordable housing projects under which the initial cost of such investments is amortized to income tax expense ~~totaled $681~~in proportion to the tax benefit received. The adoption of this accounting guidance did not have a significant effect on the Company’s financial position or results of operations, but did result in the restatement of the consolidated financial statements for 2014 and earlier years to remove net costs associated with qualified affordable housing projects from other expense and include the amortization of the investments in income tax expense. As a result, the amortization included in income tax expense was $10 million and $12 million in the first quarters of 2015 and 2014, respectively. Similarly, losses removed from other costs of operations and amortization amounts now included in income tax expense were $14 million in each of the second, third and fourth quarters of 2014.

Reflecting the application of the new accounting guidance, other expense totaled $686 million in the first quarter of ~~2014, up 14% from $599~~2015, compared with $690 million in the year-earlier quarter ~~but 3% less than $702~~and $666 million in the ~~first~~final quarter of 2014. Included in those amounts are expenses considered by management to be “nonoperating” in nature consisting of amortization of core deposit and other intangible assets of $9$7 million in each of the ~~second quarter of 2014, $13 million in the year-earlier quarter~~two most recent quarters and $10 million in the first quarter of ~~2014, and merger-related expenses of $8 million in the three-month period ended June 30, 2013.~~2014. There were no merger-related expenses in the 2014 periods. The merger-related expenses in the second quarter of 2013 were incurred in connection with the pending Hudson City acquisition. Those expenses consisted largely of professional services and other temporary help fees associated with the planned conversion of systems and/or integration of operations; initial marketing and promotion expenses designed to introduce M&T Bank to its new customers; travel costs; and printing, postage, supplies and other costs.during those respective quarters. Exclusive of these nonoperating expenses, noninterest operating expenses totaled ~~$672~~$680 million in each of the first quarters of 2015 and 2014 and $659 million in the ~~recent quarter, compared with $578 million in the second quarter of 2013 and $692 million in the first~~fourth quarter of 2014. ~~The higher level of such~~Operating expenses in the recent quarter as compared with the year-earlier period ~~was predominantly the result of~~reflected lower costs for professional services, FDIC assessments and equipment and net occupancy expenses that were offset by higher salaries ~~associated with BSA/AML activities, compliance, capital planning~~ and stress testing, risk management, and other operational initiatives, and the $12 million accrual for litigation-related costs. In addition, during the second quarter of 2013 the Company reversed a $26 million accrual for a contingent compensation obligation assumed in the May 2011 acquisition of Wilmington Trust that expired and was no longer payable. As compared with the first quarter of 2014, the recent quarter’s declineemployee benefits expenses. The rise in noninterest operating expenses ~~was due, in large part, to lower personnel costs, as~~from the ~~initial~~fourth quarter of 2014 ~~reflected~~was largely due to seasonally higher stock-based compensation ~~unemployment insurance, payroll-related taxes~~ and employee benefits ~~costs.~~

~~Other expense for the first six months of 2014 aggregated $1.38 billion, up 12% from $1.23 billion~~expenses offset, 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 $19 million and $26 million in the six-month periods ended June 30, 2014 and 2013, respectively, and merger-related expenses of $12 million in 2013. Exclusive of these nonoperating expenses, noninterest operating expenses for the first half of 2014 increased 14% to $1.36 billion from $1.20 billion in the first six months of 2013. The most significant factors contributing to that increase were higher costs forpart, by lower professional services and salaries associated with the BSA/AML activities, compliance, capital planning and stress testing, risk management, and other operational initiatives, and the reversal in the second quarter of 2013 of the contingent compensation obligation that expired.costs. Table 2 provides a reconciliation of other expense to noninterest operating expense.

Salaries and employee benefits expense totaled ~~$340~~$390 million in ~~the recent~~2015’s initial quarter, compared with ~~$323 million in the second quarter of 2013 and~~ $371 million in the ~~initial~~year-earlier quarter and $345 million in the fourth quarter of 2014. As compared with the year-earlier period, the recent quarter reflects the impact of annual merit increases for employees, higher incentive compensation costs and higher pension expense. The increase in pension expense is predominantly attributable to an increase in the amortization of unrecognized actuarial losses. Cumulative unrecognized actuarial losses increased from $191 million at December 31, 2013 to $512 million at December 31, 2014 ~~quarter. During~~due predominantly to a 75 basis point reduction in the ~~first six months~~discount rate and revised mortality tables released in 2014 by the Society of ~~2014~~Actuaries used to determine the pension benefit obligation. In accordance with GAAP, net unrecognized gains or losses that exceed ten percent of the greater of the projected benefit obligation or the market-related value of plan assets are required to be amortized over the expected service period of active employees, and ~~2013,~~are included as a component of net pension cost. In addition to higher pension expense and merit increases, seasonally higher stock-based compensation, unemployment insurance, payroll-related taxes and the Company’s contributions for retirement savings plan benefits related to annual incentive compensation payments also contributed to the rise in salaries and employee benefits expense ~~aggregated $711 million and $680 million, respectively. Such expense included stock-based compensation~~in the recent quarter as compared with the fourth quarter of ~~$12 million, $9 million and $30 million during~~2014. The Company, in accordance with GAAP, has accelerated the quarters ended June 30, 2014, June 30, 2013 and March 31, 2014, and $42 million and $38 million for the six-month periods ended June 30, 2014 and 2013, respectively. The higher expense level in 2014’s initial quarter reflects the accelerated 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 2015 and 2014 included $14 million and $16 million, respectively, that ~~quarter.~~would have been recognized over the normal vesting period

if not for the accelerated expense recognition provisions of GAAP. That acceleration had no effect on the value of stock-based compensation awarded to employees. Salaries and employee benefits expense included stock-based compensation of $28 million and $30 million in the quarters ended March 31, 2015 and March 31, 2014, respectively, and $12 million in the quarter ended December 31, 2014. The number of full-time equivalent employees was ~~15,387 at June 30, 2014, 14,885 at June 30, 2013, 15,368 at December 31, 2013 and 15,316~~15,263 at March 31, ~~2014.~~2015, compared with 15,316 and 15,312 at March 31, 2014 and December 31, 2014, respectively.

Excluding the nonoperating ~~expense items~~expenses described earlier from each ~~period,~~quarter, nonpersonnel operating expenses were ~~$332~~$290 million and $309 million in the ~~recent quarter, compared with $256~~quarters ended March 31, 2015 and March 31, 2014, respectively, and $314 million in the ~~second~~fourth quarter of ~~2013 and $321 million~~2014. The decrease in ~~the first three months of 2014. On the same basis,~~ such ~~expenses were $653 million and $517 million during the first six months of 2014 and 2013, respectively. The increase in nonpersonnel operating~~ expenses in the recent quarter as compared with the ~~second~~year-earlier quarter and the final quarter of ~~2013 was predominantly due to~~2014 reflected a lower level of professional services costs. Professional services costs include legal expenses, which were elevated in the ~~higher~~fourth quarter of 2014. Other professional services costs were lower in the initial quarter of 2015 as certain projects were either completed or reached significant milestones. Professional services costs related to ~~the~~BSA/AML compliance, capital planning and stress testing, risk management and other operational initiatives ~~already noted, and the expiration in the second 2013 quarter of the Wilmington Trust-related contingency. The recent quarter increase as~~were elevated throughout 2014. As compared with the ~~initial~~first quarter of 2014, ~~reflects~~in addition to the ~~accrued litigation-related~~decline in professional services costs, lower FDIC assessments and equipment and net occupancy expenses ~~already noted. The rise~~also contributed to the decrease in nonpersonnel operating expenses in the first half of 2014 as compared with the corresponding 2013 period was attributable to the higher professional services and litigation costs, as well as the impact of the reversal of the Wilmington Trust-related accrual in 2013.

initial 2015 quarter. The efficiency ratio or noninterest operating expenses (as defined above) divided by the sum of taxable-equivalent net interest income and noninterest income (exclusive of gains and losses from bank investment securities), measures the relationship of noninterest operating expenses to revenues. The Company’s efficiency ratio was ~~59.4% during the recent quarter, compared with 50.9% during the year-earlier quarter and 63.9%~~61.5% in the first quarter of ~~2014. The efficiency ratios for~~2015, compared with 62.8% in the ~~six-month periods ended June 30, 2014~~year-earlier period and ~~2013 were 61.6% and 53.4%, respectively.~~57.8% in the fourth quarter of 2014.

The provision for income taxes for the ~~second~~first quarter of ~~2014~~2015 was ~~$130~~$134 million, compared with ~~$182 million and $113~~$125 million in the year-earlier quarter and ~~first~~$157 million in the fourth quarter of ~~2014, respectively.~~2014. The effective tax rates were ~~31.4%~~35.6%, ~~34.3%~~35.4% and ~~33.1%~~36.1% for the quarters ended ~~June 30, 2014, June 30, 2013 and~~March 31, 2015, March 31, 2014 and December 31, 2014, respectively. ~~For~~As noted earlier, effective January 1, 2015 M&T adopted amended guidance from the ~~first six months~~FASB for accounting for investments in qualified affordable housing projects, which resulted in the restatement of the consolidated financial statements for 2014 and ~~2013,~~earlier years. The adoption of the ~~provision for income taxes totaled $243 million and $323 million, respectively, and the~~guidance resulted in higher effective tax rates were 32.2% and 34.2%, respectively. During the second quarter of 2014, the Company resolved with tax authorities previously uncertain tax positions associated with pre-acquisition activities of M&T’s Wilmington Trust entities, resulting in a reduction of the provision for income taxes of $8 million. Excluding that reduction of income tax expense, the effective tax rates for the three months and six months ended June 30, 2014 would have been 33.3% and 33.2%, respectively.than existed prior to such adoption. The effective tax rate is affected by the level of income earned that is exempt from tax relative to the overall level of pre-tax income, the level of income allocated to the various state and local jurisdictions where the Company operates, because tax rates differ among such jurisdictions, and the impact of any large but infrequently occurring items.

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

Shareholders’ equity was ~~$12.2~~$12.5 billion at ~~June 30, 2014,~~March 31, 2015, representing ~~13.40%~~12.73% of total assets, compared with ~~$10.7~~$11.9 billion or ~~12.88%~~13.43% at ~~June 30, 2013~~March 31, 2014 and ~~$11.3~~$12.3 billion or ~~13.28%~~12.76% at December 31, ~~2013.~~2014.

Included in shareholders’ equity was preferred stock with a financial statement carrying ~~values~~value of $1.2 billion at ~~June 30,~~each of March 31, 2015, March 31, 2014 ~~$877 million at June 30, 2013~~ and ~~$882 million at~~ December 31, 2013. On February 11, 2014, M&T issued 350,000 shares of Series E Perpetual Fixed-to-Floating Rate Non-Cumulative Preferred Stock, par value $1.00 per share and liquidation preference of $1,000 per share. Dividends, if declared, will be paid semi-annually at a rate of 6.45% through February 14, 2024 and thereafter will be paid quarterly at a rate of the three-month London Interbank Offered Rate plus 361 basis points. The shares are redeemable in whole or in part on or after February 15, 2024. Notwithstanding M&T’s option to redeem the shares, if an event occurs such that the shares no longer qualify as Tier 1 regulatory capital, M&T may redeem all of the shares within 90 days following that occurrence.2014. Further information concerning M&T&T’s preferred stock can be found in note 6 of Notes to Financial Statements.

Common shareholders’ equity ~~was $10.9~~aggregated $11.3 billion, or ~~$82.86~~$84.95 per share, at ~~June 30, 2014,~~March 31, 2015, compared with ~~$9.8~~$10.7 billion, or ~~$75.98~~$81.05 per share, at ~~June 30, 2013~~March 31, 2014 and ~~$10.4~~$11.1 billion, or ~~$79.81~~$83.88 per share, at December 31, ~~2013.~~2014. Tangible equity per common share, which excludes goodwill and core deposit and other intangible assets and applicable deferred tax balances, was ~~$55.89~~$58.29 at ~~June 30,~~March 31, 2015, $53.92 at March 31, 2014 ~~compared with $48.26 a year earlier~~ and ~~$52.45~~$57.06 at December 31, ~~2013.~~2014. The Company’s ratio of tangible common equity to tangible assets was ~~8.45%~~8.17% at ~~June 30, 2014,~~March 31, 2015, compared with ~~7.85%~~8.34% a year earlier and ~~8.39%~~8.11% at ~~June 30, 2013 and~~ December 31, ~~2013,~~

~~respectively.~~2014. Reconciliations of total common shareholders’ equity and tangible common equity and total assets and tangible assets as of each of those respective dates are presented in table 2.

Shareholders’ equity reflects accumulated other comprehensive income or loss, which includes the net after-tax impact of unrealized gains or losses on investment securities classified as available for sale, unrealized losses on held-to-maturity securities for which an other-than-temporary impairment charge has been recognized, gains or losses associated with interest rate swap agreements designated as cash flow hedges, foreign currency translation adjustments and adjustments to reflect the funded status of defined benefit pension and other postretirement plans. Net unrealized gains on investment securities, net of applicable tax effect, were ~~$137~~$153 million, or ~~$1.04~~$1.15 per common share, at ~~June 30, 2014,~~March 31, 2015, compared with ~~$40~~net unrealized gains of $72 million, or ~~$.31~~$.55 per common share, at ~~June 30, 2013~~March 31, 2014 and ~~$34~~$127 million, or ~~$.26~~$.96 per common share, at December 31, ~~2013.~~2014. Information about unrealized gains and losses as of ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013~~2014 is included in note 3 of Notes to Financial Statements.

Reflected in net unrealized gains at ~~June 30, 2014~~March 31, 2015 were pre-tax effect unrealized losses of ~~$18~~$30 million on available-for-sale investment securities with an amortized cost of ~~$188 million~~$1.7 billion and pre-tax effect unrealized gains of ~~$273~~$308 million on securities with an amortized cost of ~~$7.6~~$8.7 billion. The pre-tax effect unrealized losses reflect ~~$16~~$19 million of losses on trust preferred securities issued by financial institutions having an amortized cost of ~~$115~~$124 million and an estimated fair value of ~~$99~~$105 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.~~

In the second quarter of 2013, the Company sold substantially all of its privately issued residential mortgage-backed securities that were classified as available for sale and recorded a pre-tax loss of $46 million. Those privately issued mortgage-backed securities previously held by the Company were generally collateralized by prime and Alt-A residential mortgage loans. The sales, which were in response to changing regulatory capital and liquidity standards, resulted in improved liquidity and regulatory capital ratios for the Company. Further information on the sales is provided in note 3 of Notes to Financial Statements.

The Company assesses impairment losses on privately issued mortgage-backed securities in the held-to-maturity portfolio by performing internal modeling to estimate bond-specific cash flows ~~that~~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. ~~As a result, the Company did not recognize any other-than-temporary impairment charge related to mortgage-backed securities in the held-to-maturity portfolio during the second quarter of 2014.~~ In total, at ~~June 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, the Company had in its held-to-maturity portfolio privately issued mortgage-backed securities with an amortized cost basis of ~~$210~~$198 million and ~~$220~~$202 million, respectively, and a fair value of ~~$159~~$162 million ~~at each of those dates.~~and $158 million, respectively. At ~~June 30, 2014, 90%~~March 31, 2015, 87% of the mortgage-backed securities were in the most senior tranche of the securitization structure with ~~33%~~28% being independently rated as investment grade. The mortgage-backed securities are generally collateralized by residential and small-balance commercial real estate loans originated between 2004 and 2008 and had a weighted-average credit enhancement of ~~19%~~16% at ~~June 30, 2014,~~March 31, 2015, calculated by dividing the remaining unpaid principal balance of bonds subordinate to the bonds owned by the Company plus any overcollateralization remaining in the securitization structure by the remaining unpaid principal balance of all bonds in the securitization structure. All mortgage-backed securities in the held-to-maturity portfolio had a current payment status as of ~~June 30, 2014.~~March 31, 2015.

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

As of ~~June 30, 2014,~~March 31, 2015, based on a review of each of the remaining securities in the investment securities portfolio, the Company concluded that the declines in the values of any securities containing an unrealized loss were temporary and that any additional other-than-temporary impairment charges were not appropriate. It is ~~possible~~likely that the Company ~~may~~will be required to sell certain of its collateralized debt obligations backed by trust preferred securities held in the available-for-sale portfolio to comply with the provisions of the Volcker Rule. However, the amortized cost and fair value of those collateralized debt obligations were ~~$28~~$25 million and ~~$38~~$30 million, respectively, at ~~June 30, 2014~~March 31, 2015 and the Company did not expect that it would realize any material losses if it ultimately was required to sell such securities. As of that date, the Company did not intend to sell nor is it anticipated that it would be required to sell any of its other impaired securities, that is, where fair value is less than the cost basis of the security. The Company intends to continue to closely monitor the performance of its securities because changes in their underlying credit performance or other events could cause the cost basis of those securities to become other-than-temporarily impaired. However, because the unrealized losses on available-for-sale investment securities have generally already been reflected in the financial statement values for investment securities and shareholders’ equity, any recognition of an other-than-temporary decline in value of those investment securities would not have a material effect on the Company’s consolidated financial condition. Any other-than-temporary impairment charge related to held-to-maturity securities would result in reductions in the financial statement values for investment securities and shareholders’ equity. Additional information concerning fair value measurements and the Company’s approach to the classification of such measurements is included in note 12 of the Notes to Financial Statements.

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 ~~$96~~$301 million, or ~~$.73~~$2.26 per common share, at ~~June 30, 2014, $267~~March 31, 2015, $306 million, or ~~$2.06 per common share, at June 30, 2013 and $98 million or $.75~~$2.31 per common share, at December 31, ~~2013.~~2014, and $97 million, or $.74 per common share, at March 31, 2014. The increase in such adjustment at March 31, 2015 and December 31, 2014 as compared with March 31, 2014 was the result of two main factors: a 75 basis point decrease in the discount rate used to measure the benefit obligations of the defined benefit plans and the use of updated mortality tables for the U.S. published in 2014 by the Society of Actuaries.

Cash dividends declared on M&T’s common stock during the quarter ended March 31, 2015 totaled ~~approximately $93~~$94 million, ~~in the recent quarter,~~ compared with ~~$91~~$92 million and ~~$92~~$93 million in the quarters ended ~~June 30, 2013~~March 31 and ~~March~~December 31, 2014, respectively, and represented a quarterly dividend payment of $.70 per common share in each of those three quarters. ~~Common stock dividends during the six-month periods ended June 30, 2014 and 2013 were $185 million and $182 million, respectively.~~

Cash dividends declared on preferred stock are detailed in the table that follows. There were ~~as follows:~~no cash dividends declared in the first quarter of 2014 on the Series E Preferred Stock issued in February 2014.

The Company did not repurchase any shares of its common stock during ~~2013~~2014 or the first ~~half~~quarter of ~~2014.~~2015.

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

The New Capital Rules substantially revise the ~~current Basel I~~risk-based capital requirements applicable to bank holding companies and their depository institution subsidiaries, including M&T and its subsidiaries, M&T Bank and Wilmington Trust, N.A., as compared to the U.S. general risk-based capital rules that were applicable to ~~maintain “Tier 1 capital”~~the Company through December 31, 2014. The New Capital Rules revise the definitions and ~~“total capital” ratios~~the components of ~~at least 4%~~regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The New Capital Rules also address asset risk weights and ~~8%, respectively, of risk-adjusted total assets.~~other matters affecting the denominator in banking institutions’ regulatory capital ratios. In addition, to the ~~risk-based measures, Federal bank regulators have also implemented a minimum “leverage” ratio guideline of 3%~~New Capital Rules implement certain provisions of the ~~quarterly average~~Dodd-Frank Act, including the requirements of ~~total assets. As~~Section 939A to remove references to credit ratings from the federal agencies’ rules.

Among other matters, the New Capital Rules: (i) introduce a new capital measure called “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of ~~June 30, 2014,~~CET1 to risk-weighted assets; (ii) specify that Tier 1 capital ~~included~~consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to the previous regulations. Under the New Capital Rules, for most banking organizations, including M&T, the most common form of Additional Tier 1 capital is non-cumulative perpetual preferred stock and the most common forms of Tier 2 capital are subordinated notes and a portion of the allowance for loan and lease losses, in each case, subject to the New Capital Rules’ specific requirements.

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

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

items reflected in shareholders’ equity under U.S. GAAP. M&T made that election during the first quarter of 2015. The New Capital Rules also preclude certain hybrid securities, such as trust preferred securities, from inclusion in bank holding companies’ Tier 1 capital, subject to phase-out in the case of ~~approximately $800 million~~bank holding companies, such as ~~described~~M&T, that had $15 billion or more in ~~note 5~~total consolidated assets as of ~~Notes to Financial Statements~~December 31, 2009. As a result, beginning in 2015 25% of M&T’s trust preferred securities became includable in Tier 1 capital, and ~~total capital further included subordinated capital notes~~in 2016, none of ~~$1.3 billion. As previously noted, pursuant to the Dodd-Frank Act,~~M&T’s trust preferred securities will be ~~phased-out~~includable in Tier 1 capital. Trust preferred securities no longer included in M&T’s Tier 1 capital may nonetheless be included as a component of Tier 2 capital on a permanent basis without phase-out and irrespective of whether such securities otherwise meet the revised definition of Tier 2 capital set forth in the New Capital Rules. A detailed discussion of the new regulatory capital rules is included in Part I, Item 1 ~~capital~~ of ~~bank holding companies beginning in 2015. On February 27, 2014, M&T redeemed $350 million of 8.50% Enhanced Trust Preferred Securities and~~Form 10-K for the ~~associated junior subordinated debentures.~~year ended December 31, 2014.

The regulatory capital ratios of the Company, M&T Bank and Wilmington Trust, N.A., as of ~~June 30, 2014~~March 31, 2015 are presented in the accompanying table.


	M&T (Consolidated)			M&T Bank			Wilmington Trust, N.A.			M&T (Consolidated)			M&T Bank			Wilmington Trust, N.A.
Common equity Tier 1											9.78	%		10.33	%		57.32	%
Tier 1 capital		12.36	%		10.25	%		67.19	%		11.68	%		10.33	%		57.32	%
Total capital		15.34	%		13.08	%		67.87	%		14.92	%		12.88	%		57.87	%
Tier 1 leverage		10.72	%		8.93	%		11.97	%		10.17	%		9.02	%		19.61	%

~~As described herein under the heading “Recent Legislative and Regulatory Developments,” in July 2013~~On March 12, 2015, M&T announced that the Federal Reserve ~~adopted~~did not object to M&T’s proposed 2015 Capital Plan. Accordingly, M&T may maintain a ~~final rule~~quarterly common stock dividend of $.70 per share; continue to pay dividends and interest on other equity and debt instruments included in regulatory capital, including preferred stock, trust preferred securities and subordinated debt that ~~revises risk-based~~were outstanding at December 31, 2014, consistent with the contractual terms of those instruments; repurchase up to $200 million of common shares during the first half of 2016; and ~~leverage capital requirements for banking organizations, including~~redeem or repurchase up to $310 million of trust preferred securities. Common and preferred dividends are subject to approval by M&T’s Board of Directors in the ~~Company.~~ordinary course of business. As noted earlier, M&T redeemed $310 million of trust preferred securities on April 15, 2015.

As required by GAAP, the Company’s reportable segments have been determined based upon its internal profitability reporting system, which is organized by strategic business unit. Financial information about the Company’s segments is presented in note 14 of Notes to Financial Statements. During 2015, certain methodology changes were made and, accordingly, the financial information for the Company’s reportable segments for 2014 have been restated to conform with the methods and assumptions used in 2015. As described in note 14 of Notes to Financial Statements, the methodology changes were largely the result of updated funds transfer pricing and various cost allocations. Additionally, the segment financial data also reflect the Company’s adoption of amended guidance for accounting for investments in qualified affordable housing projects.

~~Net income earned by the~~The Business Banking segment ~~totaled $28~~earned $25 million in each of the first quarters of 2015 and 2014, compared with $26 million in the fourth quarter of 2014. As compared with the first quarter of 2014, a $4 million decrease in net interest income in the recent quarter ~~representing a 9% decline from the $31 million recorded in the second quarter of 2013~~was largely offset by higher merchant discount and ~~down 3% from $29 million earned in the three months ended March 31, 2014.~~credit card fees and lower noninterest operating expenses. The ~~decline from the year-earlier period reflects~~ lower net interest income reflects a narrowing of $3the net

interest margin on deposits of 26 basis points, partially offset by a $444 million an increase in average outstanding deposit balances. The modest decrease in net income in the ~~provision for credit losses of $2~~recent quarter as compared with the immediately preceding quarter resulted from a $4 million ~~and increased~~decrease in net interest income, partially offset by lower costs associated with the allocation of expenses related to BSA/AML compliance, risk management, and other operational initiatives across the Company. The ~~lower~~decline in net interest income ~~reflects~~resulted largely from a 274 basis point narrowing of the net interest margin on ~~deposits offset, in part, by increases~~loans and a $346 million decline in average outstanding deposit ~~(predominantly noninterest-bearing) and loan balances of $378 million and $256 million, respectively. As compared with~~balances.

Net income earned by the initial 2014 quarter, the lower net income in the recent quarter was largely attributable to a $3 million increase in the provision for credit losses, the result of higher net charge-offs, partially offset by increases of $1 million in each of net interest income and merchant and credit card fees. The BusinessCommercial Banking ~~segment’s net contribution aggregated $56~~segment totaled $96 million in the first ~~six months~~quarter of 2015, compared with $99 million for each of the three-month periods ended March 31, 2014 and December 31, 2014. The 2% decline in net income as compared with the first quarter of 2014 ~~11% lower than the $63~~resulted largely from a $3 million ~~earned in the year-earlier period. That~~

decline resulted from lower net interest income of $5 million and increased costs associated with the allocation of expenses related to BSA/AML compliance, risk management, and other operational initiatives. The decrease in net interest income ~~resulted from~~and a ~~30 basis point~~$4 million decrease in credit-related fees. The decline in net interest income was the result of a narrowing of the net interest margin on loans and deposits ~~offset, in part, by increases in average outstanding deposit (predominantly noninterest-bearing) and loan balances~~ of ~~$377 million and $276 million, respectively.~~

The Commercial Banking segment recorded net income of $105 million during the quarter ended June 30, 2014, 21% higher than the $87 million earned in the year-earlier quarter and 6% above the $100 million earned in the first quarter of 2014. The recent quarter’s rise in net income as compared with 2013’s second quarter was largely due to a $34 million decrease in the provision for credit losses, reflecting lower net charge-offs, and a $4 million increase in letter of credit and other credit-related fees. Those favorable factors were partially offset by lower net interest income of $8 million, resulting from the narrowing of the net interest margin on deposits and loans of 2911 basis points and 1417 basis points, respectively, partially offset by higher average outstanding loan and deposit balances of ~~$1.3~~$1.2 billion and ~~$313~~$912 million, respectively. The ~~higher~~recent quarter’s decline in net ~~charge-offs recorded~~income as compared with 2014’s fourth quarter was largely due to a $4 million decrease in net interest income, a $4 million increase in the ~~second quarter~~provision for credit losses and a $2 million decrease in credit-related fees, partially offset by lower FDIC assessments and other operating expenses. The lower net interest income reflected a narrowing of ~~2013 resulted from $30~~the net interest margin on loans of 3 basis points and lower average deposit balances of $107 million offset, in part, by higher average outstanding loans of ~~loans charged-off~~$574 million.

The Commercial Real Estate segment’s net income aggregated $80 million for ~~a relationship with a motor vehicle-related parts wholesaler. Contributing to the improved recent quarter performance as compared with~~ the first quarter of 2015, up 10% from the $73 million earned in the first three months of 2014, ~~was~~but down 4% from the $83 million recorded in 2014’s fourth quarter. The improvement from the year-earlier quarter reflects a $9$7 million increase in mortgage banking revenues and a $4 million decrease in the provision for credit losses, the result of ~~lower net charge-offs, and a $4 million increase~~recoveries of previously charged off loans in ~~letter of credit and other credit-related loan fees,~~the recent quarter, partially offset ~~in part~~ by ~~lower net interest income~~higher personnel-related expenses of $2 million. The increase in mortgage banking revenues was largely due to higher loan origination and sales activities. The decline in net ~~interest~~ income as compared with the final 2014 quarter was attributable to an 8 basis point narrowing of the net interest margin on loans and a decrease in average outstanding deposit balances of $343 million, offset, in part, by a $392 million increase in average outstanding loan balances. Net income recorded by the Commercial Banking segment totaled $205 million for the first half of 2014, 5% above the $195 million earned in the similar 2013 period. That improvement was predominantlylargely due to a ~~$22~~$4 million decrease in ~~the provision for credit losses resulting from the charge-offs related to the motor vehicle-related parts wholesaler, partially offset by~~credit-related fees and a ~~$10~~$4 million decline in net interest income. The lower net interest income ~~reflects~~was due to a narrowing of the net interest margin on loans and deposits ~~and loans~~ of 304 basis points ~~and 8 basis points, respectively,~~each, partially offset by ~~higher~~increases in average outstanding loan and deposit (predominantly noninterest-bearing) balances of ~~$1.3 billion~~$331 million and ~~$520~~$106 million, respectively.

The Commercial Real Estate segment contributed net income of $78 million during the second quarter of 2014, compared with $90 million in the year-earlier quarter and $75 million in the initial 2014 quarter. The decrease in net income as compared with the second quarter of 2013 was largely due to a $16 million decline in net interest income, resulting from the narrowing of the net interest margin on deposits and loans of 38 basis points and 26 basis points, respectively, and a $7 million decrease in mortgage banking revenues, the result of lower volumes of real estate loans originated for sale. The main contributing factor to the recent quarter’s increase in net income as compared with 2014’s first quarter was a $3 million increase in mortgage banking revenues, the result of increased volumes of real estate loans originated for sale. Net income for the Commercial Real Estate segment was $152 million and $166 million for the first six months of 2014 and 2013, respectively. That lower net income was attributable to a $19 million decline in net interest income, resulting from the narrowing of the net interest margin on deposits and loans of 39 basis points and 13 basis points, respectively, and a $10 million decrease in mortgage banking revenues, the result of lower volumes of real estate loans originated for sale.

The Discretionary Portfolio segment recorded net income of ~~$15~~$6 million induring the ~~2014’s second quarter,~~three-month period ended March 31, 2015, compared with ~~a net loss of $8~~$11 million in the year-earlier ~~quarter~~period and ~~net income of $11~~$9 million in the ~~first~~fourth quarter of 2014. The improved performance from the year-earlier period was predominantly attributable to net pre-tax losses of $46 million from the sale in the second quarter of 2013 of approximately $1.0 billion of privately issued mortgage-backed securities that were held in the available-for-sale investment portfolio, partially offset by a $5 million decline in ~~revenues from bank owned life insurance. The recent quarter’s higher~~ net income as compared with the first quarter of 2014 ~~was largely due to~~reflects a $4$9 million ~~increase~~decrease in net interest income that ~~reflected~~was largely attributable to a ~~$1.7~~32 basis point narrowing of the net interest margin on investment securities, partially offset by a $4.1 billion increase in average balances of investment securities ~~balances. Net income~~due to purchases of Fannie Mae and Ginnie Mae mortgage-backed securities to meet new liquidity requirements that are scheduled to become effective for ~~the Discretionary Portfolio segment in the first six months of 2014 totaled $26 million,~~M&T on January 1, 2016. The recent quarter’s unfavorable performance as compared with the immediately preceding quarter resulted largely from a ~~net loss of~~ $6 million in the corresponding 2013 period. Adjusted to exclude the impact of the securities losses noted above and pre-tax other-than-temporary impairment charges (relating to certain privately issued mortgage-backed securities) of $10 million, this segment recorded net income of $27 million in the first half of 2013. The relatively unchanged results, on an adjusted basis, reflected an $8 million decrease in ~~intersegment costs, due to~~net interest income that resulted from a ~~lower amount~~17 basis point narrowing of ~~residential real estate loans being acquired from~~the net interest margin on investment securities, partially offset by a $399 million increase in average outstanding investment securities balances.

Net income of the Residential Mortgage Banking segment and a $4 million increase in net interest income, partially offset by a $7 million decline in bank owned life insurance revenues. The improved net interest income was largely the result of a $3.1 billion increase in average earning assets.

~~Net income from the Residential Mortgage Banking segment totaled $28~~rose 72% to $32 million in the recent quarter ~~down 19%~~ from ~~$34 million in the year-earlier quarter, but 43% higher than the~~ $19 million ~~recorded~~ in the first quarter of ~~2014.~~2014,

and was 43% higher than the $22 million earned in 2014’s fourth quarter. The ~~following unfavorable factors were~~improved performance from the ~~main contributors~~year-earlier period was attributable to the ~~recent quarter’s decline as compared with the year-earlier quarter:~~following favorable factors: a ~~$19~~$9 million ~~decrease~~increase in revenues from ~~residential~~ mortgage origination and sales activities (including intersegment revenues), due to ~~lower~~higher origination volumes; a $9 million increase in the provision for credit losses, as the second quarter 2013 reflected a recovery of a previously charged-off loan to a residential real estate builder and developer of $9 million; and increased costs associated with the allocation of expenses related to BSA/AML compliance, risk management, and other operational initiatives across the Company. Those unfavorable factors were offset, in part, by a $24an $8 million increase in revenues from servicing residential real estate loans, predominantly the result of ~~increased~~higher sub-servicing ~~activities.~~fees; and reduced amortization of capitalized servicing assets reflecting reduced prepayment speeds associated with serviced loans. The main factors contributing to the recent quarter’s ~~improved performance~~increased net income as compared with the final quarter of 2014 was an $8 million increase in revenues from mortgage origination and sales activities (including intersegment revenues), due to higher origination volumes, and lower operating expenses, including reduced personnel and professional services costs and lower amortization of capitalized servicing assets.

Net income earned by the Retail Banking segment totaled $69 million in each of the first quarters of 2015 and 2014, compared with $59 million in the fourth quarter of 2014. As compared with the first quarter of 2014, ~~reflected higher gains from originations and sales of loans and~~ a $4$3 million ~~increase~~decrease in net interest income ~~resulting from a 49 basis point widening of the net interest margin~~and lower service charges on ~~loans~~deposit accounts were offset by lower personnel, equipment and ~~a $208 million increase in the average outstanding deposit balances. Year-to-date net income for this segment totaled $47 million in 2014 and $69 million in 2013.~~occupancy expenses. The ~~year-over-year decline was attributable to the following factors: a $58 million~~ decrease in loan origination and sales revenues (including intersegment revenues) due to lower origination volumes; an $8 million increase in the provision for credit losses, as the year-earlier period included a $9 million recovery from a loan to a residential real estate builder and developer; and increased costs related to the allocation of expenses for BSA/AML compliance, risk management, and other operational initiatives. Partially offsetting those unfavorable factors was a $47 million rise in revenues from servicing residential real estate loans predominantly the result of the increased sub-servicing activities.

Net income of the Retail Banking segment totaled $32 million for the three-month period ended June 30, 2014, down 38% from the $52 million in the second quarter of 2013, but 8% higher than the $30 million earned in the first quarter of 2014. The most significant factors contributing to the recent quarter’s decline in net income as compared with the year-earlier quarter included: a $22 million decline in net interest income ~~reflecting~~reflected a 2310 basis point narrowing of the net interest margin on deposits and a $120 million decrease in average outstanding ~~loans~~deposit balances, partially offset by a $652 million increase in average outstanding loan balances. The recent quarter’s 16% improvement in net income as compared with the fourth quarter of ~~$1.0 billion,~~2014 reflected a $10 million decrease in advertising and promotional expenses largely associated with the launch of the new brand campaign throughout the Company’s footprint during the final 2014 quarter, a $3 million decrease in personnel expenses and lower operating expenses related to the allocation of the costs of Company-wide operational initiatives, offset, in part, by a ~~14 basis point widening of the net interest margin on loans; a $5~~$6 million reduction in fees earned for providing deposit account services, primarily due to lower volumes of consumer service charges; and higher noninterest operating expenses, including allocated costs related to BSA/AML compliance, risk management and other operational initiatives. The recent quarter’s favorable performance as compared with the immediate preceding quarter was predominantly due to a $4 million increaseseasonal decline in service charges on deposit accounts ~~largely due to higher overdraft fees. Year-to-date net income for this segment totaled $62 million in 2014~~ and ~~$104 million in 2013. The year-over-year decrease in net income was attributable to the following factors:~~ a ~~$47~~$4 million decrease in net interest income, reflecting a ~~25 basis point~~ narrowing of the ~~net interest~~ margin on deposits and a $1.1 billion decrease in the average outstanding loans balances, partially offset by a 16 basis point widening of the net interest margin on loans; a $12 million reduction in fees earned for providing deposit ~~account services; and higher noninterest operating expenses related to the Company-wide operational initiatives.~~balances.

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, M&T’s share of the operating losses of BLG, merger-related gains and expenses ~~resulting from~~related to acquisitions ~~of financial institutions,~~ 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 the trust ~~activities~~income of the ~~Company.~~Company that reflects the ICS and WAS business activities. The various components of the “All Other” category resulted in net losses ~~of $1 million and $34~~totaling $67 million for the ~~three months~~quarter ended ~~June 30,~~March 31, 2015, $66 million in the first quarter of 2014 and ~~March 31,~~$22 million in the fourth quarter of 2014. As compared with the first quarter of 2014, ~~respectively, and net income of $63 million for the three months ended June 30, 2013. The decline in net income~~higher personnel-related expenses in the recent quarter ~~from~~due to BSA/AML and other company-wide initiatives and a $4 million increase in advertising, promotion and travel expenses were largely offset by lower professional services costs of $11 million, a $3 million decrease in amortization of core deposit intangibles and declines in other operating expenses. The most significant factors contributing to the ~~year-earlier period reflects the notable items~~increased net loss in the ~~second~~recent quarter as compared with the immediately preceding quarter were: a $51 million increase in personnel costs, largely related to seasonally higher stock-based compensation, payroll-related taxes and employer contributions for retirement savings plans recorded in the first quarter of ~~2013 consisting~~2015; an $8 million increase in advertising, promotion, and travel expenses; a decline in trust income of ~~realized gains from the sale of Visa and MasterCard common stock of $103 million~~$5 million; and the ~~$26 million reversal of an accrual for a contingent compensation obligation assumed in the May 2011 acquisition of Wilmington Trust. These items were partially offset by the favorable~~unfavorable 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. The most significant factors contributing to the lower net loss in the recent quarter in comparison to the first quarter of 2014 were: a $33 million decline in personnel costs, largely related to seasonally higher stock-based compensation, payroll-related taxes and employer contributions for retirement savings plans recorded in the first quarter of 2014; a $9 million increase in trust income due to new business and seasonal tax preparation fees; and the $8 million reversal of an income tax accrual following resolution with tax authorities of previously uncertain tax positions. The “All Other” category had a net loss of $35 million for the first six months of 2014, compared with net income of $32 million in the year earlier period. The 2013 period’s results included the noted securities gains and the reversal of the contingent compensation obligation that added approximately $78 million to net income in 2013’s first half.

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

In the first quarter of 2015, the Company adopted amended accounting guidance from the FASB related to the classification of certain government-guaranteed mortgage loans upon foreclosure. This guidance ~~provides~~requires that a ~~measurement alternative permitting~~mortgage loan be derecognized and that a ~~reporting entity~~separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separable from the loan before foreclosure; (2) at the time of foreclosure, the creditor has the intent to ~~use~~convey the ~~more observable~~real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim; and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the ~~financial assets and~~real estate is fixed. Upon foreclosure, the ~~fair value~~separate other receivable should be measured based upon the amount of the ~~financial liabilities of a collateralized financing entity~~loan balance (principal and interest) expected to ~~measure both. If elected,~~be recovered from the measurement alternative would eliminate measurement differences that exist when both financial assets and financial liabilities are measured at fair value under pre-existing generally accepted accounting principles.guarantor. The measurement alternative will be available to reporting entities that are required to consolidate a collateralized financing entity under the variable interest entity guidance when (a) the reporting entity measures all of the financial assets and the financial liabilities of that collateralized financing entity at fair value in the consolidated financial statements and (b) the changes in the fair values of those financial assets and financial liabilities are reflected in earnings. If a reporting entity does not elect the measurement alternative for a consolidated collateralized financing entity that meets the scopeadoption of this guidance did not have a significant effect on the Company’s consolidated financial ~~assets~~position or results of operations.

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

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

In April 2015, the FASB issued amended accounting guidance for debt issuance costs. The amended guidance requires that debt issuance costs related to a recognized debt liability be ~~measured using the pre-existing fair value measurement guidance and any differences~~presented in the ~~fair value~~balance sheet as a

direct deduction from the carrying amount of ~~the financial assets and the fair value of the financial liabilities should be reflected in earnings and attributed to the reporting entity in the consolidated statement of income. A reporting entity~~ that consolidates a collateralized financing entity that does not meet the scope requirements of this amendment because the fair value option was not elected to measure the eligible financial assets, financial liabilities, or both of the collateralized financing entity when it was initially consolidated, may elect at the date of adoption to apply the measurement alternative to those financial assets and financial liabilities or to continue using the guidance in pre-existing generally accepted accounting principles to measure the financial assets and the financial liabilities of the consolidated collateralized financing entity.debt liability. This guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The Company does not expect a material change in the presentation of its financial position upon adoption of this amended guidance.

In February 2015, the FASB issued amended accounting guidance relating to the consolidation of variable interest entities to modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities and to eliminate the presumption that a general partner should consolidate a limited partnership. The amended guidance also eliminates certain conditions in the assessment of whether fees paid by a legal entity to a decision maker or a service provider represent a variable interest in the legal entity and reduces the extent to which related party arrangements cause an entity to be ~~applied using~~considered a ~~modified retrospective method approach by recording~~primary beneficiary. The new guidance eliminates the indefinite deferral of existing consolidation guidance for certain investment funds, but provides a ~~cumulative-effect adjustment~~scope exception for reporting entities with interests in legal entities that are required to ~~equity as~~comply with or operate in accordance with requirements similar to those in Rule 2a-7 of the ~~beginning~~Investment Company Act of ~~the~~1940 for registered money market funds. This guidance is effective for annual ~~period of adoption. A reporting entity also may apply the amendments retrospectively to all relevant prior~~and interim periods within those annual periods beginning ~~with the annual period in which the amendments were initially adopted.~~after December 15, 2015. The Company is still evaluating the impact the guidance could have on its consolidated financial statements.

In June 2014, the FASB issued 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. This guidance is effective for annual periods and interim periods within those annual periods beginning after December 31, 2015, with earlier adoption permitted. The Company does not expect the amended guidance published by the FASB to have a material impact on its financial position or results of operations.

In June 2014, the FASB issued amended accounting guidance for repurchase-to-maturity transactions and repurchase financings. The amended guidance changes the accounting for repurchase-to-maturity transactions to secured borrowing accounting, which is consistent with the accounting for other repurchase agreements. Further, for repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments require new disclosures on transfers accounted for as sales in transactions that are economically similar to repurchase agreements and about the types of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The accounting changes in this guidance are effective for the first interim or annual period beginning after December 15, 2014. Changes in accounting for transactions outstanding on the effective date should be presented as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The disclosure guidance for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure guidance for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. The Company does not currently have repurchase-to-maturity transactions or transfers of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty. The Company will make the required disclosures when the guidance becomes effective.

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, 2016, 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.

In January 2014, the FASB issued amended accounting and disclosure guidance for reclassification of residential real estate collateralized consumer mortgage loans upon foreclosure. The amended guidance clarifies that an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The amended guidance also requires interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. This guidance should be applied using a prospective transition method or a modified retrospective transition method. The Company does not expect that the guidance will have a material impact on its financial position or results of operations.

In January 2014, the FASB issued amended accounting guidance permitting an accounting policy election to account for investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense. The decision to apply the proportional amortization method of accounting is an accounting policy election that should be applied consistently to all qualifying affordable housing project investments. This guidance is effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014. This guidance should be applied retrospectively to all periods presented. The Company is still evaluating the impact the guidance could have on its consolidated financial statements.

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

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

These are representative of the Future Factors that could affect the outcome of the forward-looking statements. In addition, such statements could be affected by general industry and market conditions and growth rates, general economic and political conditions, either nationally or in the states in which M&T and its subsidiaries do business, including interest rate and currency exchange rate fluctuations, changes and trends in the securities markets, and other Future Factors.


	2014 Quarters						2013 Quarters												2015			2014 Quarters
	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)	$	740,139			728,897			740,665			748,791			756,424			736,425		$	743,925			762,619			748,864			740,139			728,897
Interest expense		65,176			66,519			67,982			69,578			72,620			73,925			78,499			74,772			73,964			65,176			66,519

Net interest income		674,963			662,378			672,683			679,213			683,804			662,500			665,426			687,847			674,900			674,963			662,378
Less: provision for credit losses		30,000			32,000			42,000			48,000			57,000			38,000			38,000			33,000			29,000			30,000			32,000
Other income		456,412			420,107			446,246			477,388			508,689			432,882			440,203			451,643			451,111			456,412			420,107
Less: other expense		681,194			702,271			743,072			658,626			598,591			635,596			686,375			666,221			665,359			667,660			690,234

Income before income taxes		420,181			348,214			333,857			449,975			536,902			421,786			381,254			440,269			431,652			433,715			360,251
Applicable income taxes		129,996			113,252			106,236			149,391			182,219			141,223			133,803			156,713			150,467			143,530			125,289
Taxable-equivalent adjustment		5,849			5,945			6,199			6,105			6,217			6,450			5,838			6,007			5,841			5,849			5,945

Net income	$	284,336			229,017			221,422			294,479			348,466			274,113		$	241,613			277,549			275,344			284,336			229,017

Net income available to common shareholders-diluted	$	260,695			211,731			203,451			275,356			328,557			255,096		$	218,837			254,239			251,917			260,695			211,731
Per common share data
Basic earnings	$	1.99			1.63			1.57			2.13			2.56			2.00		$	1.66			1.93			1.92			1.99			1.63
Diluted earnings		1.98			1.61			1.56			2.11			2.55			1.98			1.65			1.92			1.91			1.98			1.61
Cash dividends	$	.70			.70			.70			.70			.70			.70		$	.70			.70			.70			.70			.70
Average common shares outstanding
Basic		130,856			130,212			129,497			129,171			128,252			127,669			132,049			131,450			131,265			130,856			130,212
Diluted		131,828			131,126			130,464			130,265			129,017			128,636			132,769			132,278			132,128			131,828			131,126

Performance ratios, annualized
Return on
Average assets		1.27	%		1.07	%		1.03	%		1.39	%		1.68	%		1.36	%		1.02	%		1.12	%		1.17	%		1.27	%		1.07	%
Average common shareholders’ equity		9.79	%		8.22	%		7.99	%		11.06	%		13.78	%		11.10	%		7.99	%		9.10	%		9.18	%		9.79	%		8.22	%
Net interest margin on average earning assets (taxable-equivalent basis)		3.40	%		3.52	%		3.56	%		3.61	%		3.71	%		3.71	%		3.17	%		3.10	%		3.23	%		3.40	%		3.52	%
Nonaccrual loans to total loans and leases, net of unearned discount		1.36	%		1.39	%		1.36	%		1.44	%		1.46	%		1.60	%		1.18	%		1.20	%		1.29	%		1.36	%		1.39	%

Net operating (tangible) results (a)
Net operating income (in thousands)	$	289,974			235,162			227,797			300,968			360,734			285,136		$	245,776			281,929			279,838			289,974			235,162
Diluted net operating income per common share		2.02			1.66			1.61			2.16			2.65			2.06			1.68			1.95			1.94			2.02			1.66
Annualized return on
Average tangible assets		1.35	%		1.15	%		1.11	%		1.48	%		1.81	%		1.48	%		1.08	%		1.18	%		1.24	%		1.35	%		1.15	%
Average tangible common shareholders’ equity		14.92	%		12.76	%		12.67	%		17.64	%		22.72	%		18.71	%		11.90	%		13.55	%		13.80	%		14.92	%		12.76	%
Efficiency ratio (b)		59.39	%		63.95	%		65.48	%		56.03	%		50.92	%		55.88	%		61.46	%		57.84	%		58.44	%		58.20	%		62.83	%

Balance sheet data
In millions, except per share
Average balances
Total assets (c)	$	89,873			86,665			85,330			84,011			83,352			81,913		$	95,892			98,644			93,245			89,873			86,665
Total tangible assets (c)		86,311			83,096			81,754			80,427			79,760			78,311			92,346			95,093			89,689			86,311			83,096
Earning assets		79,556			76,288			75,049			74,667			73,960			72,339			85,212			87,965			82,776			79,556			76,288
Investment securities		10,959			9,265			8,354			6,979			5,293			5,803			13,376			12,978			12,780			10,959			9,265
Loans and leases, net of unearned discount		64,343			63,763			63,550			64,858			65,979			65,852			66,587			65,767			64,763			64,343			63,763
Deposits		69,659			67,327			67,212			66,232			65,680			64,540			71,698			75,515			70,772			69,659			67,327
Common shareholders’ equity (c)		10,808			10,576			10,228			10,003			9,687			9,448			11,227			11,211			11,015			10,808			10,576
Tangible common shareholders’ equity (c)		7,246			7,007			6,652			6,419			6,095			5,846			7,681			7,660			7,459			7,246			7,007

At end of quarter
Total assets (c)	$	90,835			88,530			85,162			84,427			83,229			82,812		$	98,378			96,686			97,228			90,835			88,530
Total tangible assets (c)		87,276			84,965			81,589			80,847			79,641			79,215			94,834			93,137			93,674			87,276			84,965
Earning assets		80,062			77,950			74,706			74,085			73,927			73,543			87,959			86,278			86,751			80,062			77,950
Investment securities		12,120			10,364			8,796			8,310			5,211			5,661			14,393			12,994			13,348			12,120			10,364
Loans and leases, net of unearned discount		64,748			64,135			64,073			63,659			65,972			65,924			67,099			66,669			65,572			64,748			64,135
Deposits		69,829			68,699			67,119			66,552			65,661			65,090			73,594			73,582			74,342			69,829			68,699
Common shareholders’ equity, net of undeclared cumulative preferred dividends (c)		10,934			10,652			10,421			10,133			9,836			9,545			11,294			11,102			11,099			10,934			10,652
Tangible common shareholders’ equity (c)		7,375			7,087			6,848			6,553			6,248			5,948			7,750			7,553			7,545			7,375			7,087
Equity per common share		82.86			81.05			79.81			77.81			75.98			73.99			84.95			83.88			83.99			82.86			81.05
Tangible equity per common share		55.89			53.92			52.45			50.32			48.26			46.11			58.29			57.06			57.10			55.89			53.92

Market price per common share
High	$	125.90			123.04			117.29			119.54			112.01			105.90		$	129.58			128.96			128.69			125.90			123.04
Low		116.10			109.16			109.23			109.47			95.68			99.59			111.78			112.42			118.51			116.10			109.16
Closing		124.05			121.30			116.42			111.92			111.75			103.16			127.00			125.62			123.29			124.05			121.30


	2014 Quarters						2013 Quarters												2015			2014 Quarters
	Second			First			Fourth			Third			Second			First			First Quarter			Fourth			Third			Second			First
Income statement data
In thousands, except per share
Net income
Net income	$	284,336			229,017			221,422			294,479			348,466			274,113		$	241,613			277,549			275,344			284,336			229,017
Amortization of core deposit and other intangible assets (a)		5,638			6,145			6,375			6,489			7,632			8,148			4,163			4,380			4,494			5,638			6,145
Merger-related expenses (a)		—			—			—			—			4,636			2,875

Net operating income	$	289,974			235,162			227,797			300,968			360,734			285,136		$	245,776			281,929			279,838			289,974			235,162

Earnings per common share
Diluted earnings per common share	$	1.98			1.61			1.56			2.11			2.55			1.98		$	1.65			1.92			1.91			1.98			1.61
Amortization of core deposit and other intangible assets (a)		.04			.05			.05			.05			.06			.06			.03			.03			.03			.04			.05
Merger-related expenses (a)		—			—			—			—			.04			.02

Diluted net operating earnings per common share	$	2.02			1.66			1.61			2.16			2.65			2.06		$	1.68			1.95			1.94			2.02			1.66

Other expense
Other expense	$	681,194			702,271			743,072			658,626			598,591			635,596		$	686,375			666,221			665,359			667,660			690,234
Amortization of core deposit and other intangible assets		(9,234	)		(10,062	)		(10,439	)		(10,628	)		(12,502	)		(13,343	)		(6,793	)		(7,170	)		(7,358	)		(9,234	)		(10,062	)
Merger-related expenses		—			—			—			—			(7,632	)		(4,732	)

Noninterest operating expense	$	671,960			692,209			732,633			647,998			578,457			617,521		$	679,582			659,051			658,001			658,426			680,172

Merger-related expenses
Salaries and employee benefits	$	—			—			—			—			300			536
Equipment and net occupancy		—			—			—			—			489			201
Printing, postage and supplies		—			—			—			—			998			827
Other costs of operations		—			—			—			—			5,845			3,168

Total	$	—			—			—			—			7,632			4,732

Efficiency ratio
Noninterest operating expense (numerator)	$	671,960			692,209			732,633			647,998			578,457			617,521		$	679,582			659,051			658,001			658,426			680,172

Taxable-equivalent net interest income		674,963			662,378			672,683			679,213			683,804			662,500			665,426			687,847			674,900			674,963			662,378
Other income		456,412			420,107			446,246			477,388			508,689			432,882			440,203			451,643			451,111			456,412			420,107
Less: Gain on bank investment securities		—			—			—			—			56,457			—
Net OTTI losses recognized in earnings		—			—			—			—			—			(9,800	)
Less: Loss on bank investment securities																				(98	)		—			—			—			—

Denominator	$	1,131,375			1,082,485			1,118,929			1,156,601			1,136,036			1,105,182		$	1,105,727			1,139,490			1,126,011			1,131,375			1,082,485

Efficiency ratio		59.39	%		63.95	%		65.48	%		56.03	%		50.92	%		55.88	%		61.46	%		57.84	%		58.44	%		58.20	%		62.83	%

Balance sheet data
In millions
Average assets
Average assets	$	89,873			86,665			85,330			84,011			83,352			81,913		$	95,892			98,644			93,245			89,873			86,665
Goodwill		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)
Core deposit and other intangible assets		(53	)		(64	)		(74	)		(84	)		(95	)		(109	)		(31	)		(38	)		(45	)		(53	)		(64	)
Deferred taxes		16			20			23			25			28			32			10			12			14			16			20

Average tangible assets	$	86,311			83,096			81,754			80,427			79,760			78,311		$	92,346			95,093			89,689			86,311			83,096

Average common equity
Average total equity	$	12,039			11,648			11,109			10,881			10,563			10,322		$	12,459			12,442			12,247			12,039			11,648
Preferred stock		(1,231	)		(1,072	)		(881	)		(878	)		(876	)		(874	)		(1,232	)		(1,231	)		(1,232	)		(1,231	)		(1,072	)

Average common equity		10,808			10,576			10,228			10,003			9,687			9,448			11,227			11,211			11,015			10,808			10,576

Goodwill		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)
Core deposit and other intangible assets		(53	)		(64	)		(74	)		(84	)		(95	)		(109	)		(31	)		(38	)		(45	)		(53	)		(64	)
Deferred taxes		16			20			23			25			28			32			10			12			14			16			20

Average tangible common equity	$	7,246			7,007			6,652			6,419			6,095			5,846		$	7,681			7,660			7,459			7,246			7,007

At end of quarter
Total assets
Total assets	$	90,835			88,530			85,162			84,427			83,229			82,812		$	98,378			96,686			97,228			90,835			88,530
Goodwill		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)
Core deposit and other intangible assets		(49	)		(59	)		(69	)		(79	)		(90	)		(102	)		(28	)		(35	)		(42	)		(49	)		(59	)
Deferred taxes		15			19			21			24			27			30			9			11			13			15			19

Total tangible assets	$	87,276			84,965			81,589			80,847			79,641			79,215		$	94,834			93,137			93,674			87,276			84,965

Total common equity
Total equity	$	12,169			11,887			11,306			11,016			10,716			10,423		$	12,528			12,336			12,333			12,169			11,887
Preferred stock		(1,232	)		(1,232	)		(882	)		(879	)		(877	)		(875	)		(1,232	)		(1,231	)		(1,232	)		(1,232	)		(1,232	)
Undeclared dividends—cumulative preferred stock		(3	)		(3	)		(3	)		(4	)		(3	)		(3	)
Undeclared dividends - cumulative preferred stock																				(2	)		(3	)		(2	)		(3	)		(3	)

Common equity, net of undeclared cumulative preferred dividends		10,934			10,652			10,421			10,133			9,836			9,545			11,294			11,102			11,099			10,934			10,652

Goodwill		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)		(3,525	)
Core deposit and other intangible assets		(49	)		(59	)		(69	)		(79	)		(90	)		(102	)		(28	)		(35	)		(42	)		(49	)		(59	)
Deferred taxes		15			19			21			24			27			30			9			11			13			15			19

Total tangible common equity	$	7,375			7,087			6,848			6,553			6,248			5,948		$	7,750			7,553			7,545			7,375			7,087


	2013 Third Quarter								2013 Second Quarter								2014 Second Quarter								2014 First Quarter
Average balance in millions; interest in thousands	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
Assets
Earning assets
Loans and leases, net of unearned discount*
Commercial, financial, etc.	$	17,798		$	156,915		3.50	%		17,713			159,639		3.61	%	$	18,978		$	157,891		3.34	%		18,476			153,529		3.37	%
Real estate—commercial		26,129			301,178		4.51			26,051			311,111		4.72
Real estate—consumer		9,636			100,364		4.17			10,806			109,356		4.05
Real estate - commercial																		26,140			278,596		4.22			26,143			287,584		4.40
Real estate - consumer																		8,746			95,439		4.36			8,844			92,533		4.19
Consumer		11,295			130,179		4.57			11,409			130,418		4.58			10,479			118,157		4.52			10,300			116,631		4.59

Total loans and leases, net		64,858			688,636		4.21			65,979			710,524		4.32			64,343			650,083		4.05			63,763			650,277		4.14

Interest-bearing deposits at banks		2,646			1,650		.25			2,403			1,455		.24			4,080			2,535		.25			3,089			1,884		.25
Federal funds sold and agreements to resell securities		117			22		.08			199			46		.09			90			16		.07			100			16		.07
Trading account		67			211		1.27			86			309		1.43			84			264		1.25			71			477		2.68
Investment securities**
U.S. Treasury and federal agencies		5,948			48,406		3.23			3,522			28,454		3.24			9,984			74,046		2.97			8,286			64,814		3.17
Obligations of states and political subdivisions		193			2,460		5.07			197			2,530		5.14			166			1,986		4.82			177			2,269		5.20
Other		838			7,406		3.51			1,574			13,106		3.34			809			11,209		5.56			802			9,160		4.63

Total investment securities		6,979			58,272		3.31			5,293			44,090		3.34			10,959			87,241		3.19			9,265			76,243		3.34

Total earning assets		74,667			748,791		3.98			73,960			756,424		4.10			79,556			740,139		3.73			76,288			728,897		3.87

Allowance for credit losses		(935	)							(937	)							(922	)							(923	)
Cash and due from banks		1,374								1,326								1,224								1,322
Other assets		8,905								9,003								10,015								9,978

Total assets	$	84,011								83,352							$	89,873								86,665

Liabilities and shareholders’ equity
Interest-bearing liabilities
Interest-bearing deposits
NOW accounts	$	924			333		.14			941			321		.14		$	1,026			330		.13			988			297		.12
Savings deposits		36,990			13,733		.15			36,459			13,790		.15			39,478			11,181		.11			38,358			11,601		.12
Time deposits		3,928			6,129		.62			4,210			7,484		.71			3,350			3,855		.46			3,460			3,940		.46
Deposits at Cayman Islands office		392			213		.22			326			200		.25			339			181		.21			380			208		.22

Total interest-bearing deposits		42,234			20,408		.19			41,936			21,795		.21			44,193			15,547		.14			43,186			16,046		.15

Short-term borrowings		299			58		.08			343			96		.11			220			25		.05			264			32		.05
Long-term borrowings		5,010			49,112		3.89			5,051			50,729		4.03			6,525			49,604		3.05			5,897			50,441		3.47

Total interest-bearing liabilities		47,543			69,578		.58			47,330			72,620		.62			50,938			65,176		.51			49,347			66,519		.55

Noninterest-bearing deposits		23,998								23,744								25,466								24,141
Other liabilities		1,589								1,715								1,430								1,529

Total liabilities		73,130								72,789								77,834								75,017

Shareholders’ equity		10,881								10,563								12,039								11,648

Total liabilities and shareholders’ equity	$	84,011								83,352							$	89,873								86,665

Net interest spread							3.40								3.48								3.22								3.32
Contribution of interest-free funds							.21								.23								.18								.20

Net interest income/margin on earning assets				$	679,213		3.61	%					683,804		3.71	%				$	674,963		3.40	%					662,378		3.52	%

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

(a) Evaluation of disclosure controls and procedures. Based upon their evaluation of the effectiveness of M&T’s disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)), Robert G. Wilmers, Chairman of the Board and Chief Executive Officer, and René F. Jones, Executive Vice President and Chief Financial Officer, concluded that M&T’s disclosure controls and procedures were effective as of ~~June 30, 2014.~~March 31, 2015.

(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 ~~June 30, 2014~~March 31, 2015 that have materially affected, or are reasonably likely to materially affect, M&T’s internal control over financial reporting.

M&T and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings in which claims for monetary damages are asserted. On an on-going basis management, after consultation with legal counsel, assesses the Company’s liabilities and contingencies in connection with such legal proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible further losses for such matters in the aggregate, beyond the existing recorded liability, was between $0 and $40 million. Although the Company does not believe that the outcome of pending litigations will be material to the Company’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.

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

~~SEC Investigation~~: Prior to M&T’s acquisition of Wilmington Trust, the Securities and Exchange Commission (“SEC”) commenced an investigation of Wilmington Trust, relating to the financial reporting and securities filings of Wilmington Trust prior to its acquisition by M&T. Counsel for Wilmington Trust has met with the SEC to discuss the investigation and its possible resolution. On August 5, 2013, the SEC issued a Wells Notice to Wilmington Trust. On September 20, 2013, Wilmington Trust filed a Wells submission. The SEC investigation is ongoing.

DOJ Investigation: Prior to M&T’s acquisition of Wilmington Trust, the Department of Justice (“DOJ”) ~~also~~ commenced an investigation of Wilmington Trust, relating to Wilmington Trust’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 by M&T. Counsel for Wilmington Trust has met with the DOJ to discuss the DOJ investigation. The DOJ investigation is ongoing.

This investigation could lead to administrative or legal proceedings resulting in potential civil and/or criminal remedies, or settlements, including, among other things, enforcement actions, fines, penalties, restitution 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, alleging that Wilmington Trust’s financial reporting and securities filings were in violation of securities laws. The cases were consolidated and Wilmington Trust moved to dismiss. On March 29, 2012, the Court granted Wilmington Trust’s motion to dismiss in its entirety, but allowed plaintiffs to re-file their Complaint. Plaintiffs subsequently filed a Second, Third and Fourth Amended Complaint. Wilmington Trust moved to dismiss the Fourth Amended Complaint on July 17, 2013. The Court issued an order denying Wilmington Trust’s motion to dismiss on March 20, 2014. The ~~case is now proceeding with discovery.~~parties are currently engaged in the discovery phase of the lawsuit.

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 ~~including those involving Wilmington Trust-related entities, although~~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, ~~2013.~~2014.


Issuer Purchases of Equity Securities	Issuer Purchases of Equity Securities									Issuer Purchases of Equity Securities
Period		(a)Total Number of Shares (or Units) Purchased (1)		(b)Average Price Paid per Share (or Unit)		(c)Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d)Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased Under the Plans or Programs (2)			(a)Total Number of Shares (or Units) Purchased (1)		(b)Average Price Paid per Share (or Unit)		(c)Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d)Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased Under the Plans or Programs (2)
April 1 – April 30, 2014			1,918	$	121.66		—		2,181,500
May 1 – May 31, 2014			409		120.98		—		2,181,500
June 1 – June 30, 2014			4,756		123.83		—		2,181,500

January 1 – January 31, 2015												173,268	$	113.81		—		2,181,500

February 1 – February 28, 2015												1,029		120.54		—		2,181,500

March 1 – March 31, 2015												1,636		125.64		—		2,181,500


Total			7,083	$	123.08		—					175,933	$	113.96		—

~~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.~~

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
~~incorporation or organization)~~		Identification No.)

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


Table of Contents of Information Required in Report		Page

Part I. FINANCIAL INFORMATION

Item 1.	Financial Statements.

	CONSOLIDATED BALANCE ~~SHEET—June 30, 2014~~SHEET - March 31, 2015 and December 31, ~~2013~~2014		3

	CONSOLIDATED STATEMENT OF ~~INCOME—~~INCOME - Three ~~and six~~ months ended ~~June 30,~~March 31, 2015 and 2014 ~~and 2013~~		4

	CONSOLIDATED STATEMENT OF COMPREHENSIVE ~~INCOME—~~INCOME - Three ~~and six~~ months ended ~~June 30,~~March 31, 2015 and 2014 ~~and 2013~~		5

	CONSOLIDATED STATEMENT OF CASH ~~FLOWS—Six~~FLOWS - Three months ended ~~June 30,~~March 31, 2015 and 2014 ~~and 2013~~		6

	CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ ~~EQUITY—Six~~EQUITY - Three months ended ~~June 30,~~March 31, 2015 and 2014 ~~and 2013~~		7

	NOTES TO FINANCIAL STATEMENTS		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		5750

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		~~105~~91

Item 4.	Controls and Procedures.		~~105~~91

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings.		~~105~~91

Item 1A.	Risk Factors.		~~106~~92

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		~~107~~93	��

Item 3.	Defaults Upon Senior Securities.		~~107~~93

Item 4.	Mine Safety Disclosures.		~~107~~93

Item 5.	Other Information.		~~107~~93

Item 6.	Exhibits.		~~108~~94

SIGNATURES			~~108~~95

EXHIBIT INDEX			~~109~~95


	Three months ended		Six months ended
	June 30, 2013		June 30, 2013
	(in thousands)
Salaries and employee benefits	$	300	$	836
Equipment and net occupancy		489		690
Printing, postage and supplies		998		1,825
Other costs of operations		5,845		9,013

	$	7,632	$	12,364


	Three months ended June 30, 2014						Three months ended June 30, 2013
			Interest income recognized						Interest income recognized
	Average recorded investment		Total		Cash basis		Average recorded investment		Total		Cash basis
	(in thousands)
Commercial, financial, leasing, etc.	$	150,625		220		220		183,544		3,408		3,408
Real estate:
Commercial		207,633		869		869		201,236		409		409
Residential builder and developer		91,614		39		39		162,567		518		384
Other commercial construction		77,801		356		356		97,975		2,479		2,479
Residential		119,133		5,056		4,468		185,751		1,934		1,401
Residential Alt-A		134,895		1,733		660		151,977		1,670		516
Consumer:
Home equity lines and loans		18,762		200		72		12,619		165		39
Automobile		36,631		589		74		44,641		740		131
Other		18,309		166		49		15,564		156		49

Total	$	855,403		9,228		6,807		1,055,874		11,479		8,816


	Six months ended June 30, 2014						Six months ended June 30, 2013
			Interest income recognized						Interest income recognized
	Average recorded investment		Total		Cash basis		Average recorded investment		Total		Cash basis
	(in thousands)
Commercial, financial, leasing, etc.	$	142,466		768		768		172,637		5,842		5,842
Real estate:
Commercial		196,529		1,795		1,795		197,546		712		712
Residential builder and developer		96,434		113		113		173,535		658		449
Other commercial construction		82,546		1,443		1,443		98,160		3,114		3,114
Residential		146,651		6,456		5,370		186,582		3,404		2,323
Residential Alt-A		137,273		3,359		1,219		154,461		3,410		1,107
Consumer:
Home equity lines and loans		17,219		321		101		12,544		332		78
Automobile		38,007		1,214		161		46,134		1,516		277
Other		18,005		340		101		15,261		307		103

Total	$	875,130		15,809		11,071		1,056,860		19,295		14,005


			Recorded investment				Financial effects of modification
Three months ended June 30, 2013	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		15	$	4,870	$	4,822	$	(48	)	$	—
Other		1		1,460		1,657		197			—
Combination of concession types		2		1,490		980		(510	)		—
Real estate:
Commercial
Principal deferral		5		15,549		15,530		(19	)		—
Residential builder and developer
Principal deferral		7		17,496		16,722		(774	)		—
Other		1		4,039		3,888		(151	)		—
Combination of concession types		2		13,879		13,823		(56	)		(535	)
Other commercial construction
Principal deferral		2		364		363		(1	)		—
Residential
Principal deferral		8		1,216		1,358		142			—
Combination of concession types		18		69,210		65,890		(3,320	)		(186	)
Residential Alt-A
Principal deferral		1		99		102		3			—
Combination of concession types		8		1,187		1,294		107			(278	)
Consumer:
Home equity lines and loans
Principal deferral		2		101		103		2			—
Interest rate reduction		1		99		99		—			(8	)
Other		1		106		106		—			—
Combination of concession types		8		406		406		—			(64	)
Automobile
Principal deferral		117		1,629		1,629		—			—
Interest rate reduction		7		104		104		—			(10	)
Other		28		73		73		—			—
Combination of concession types		62		1,044		1,044		—			(87	)
Other
Principal deferral		14		185		185		—			—
Interest rate reduction		1		12		12		—			(2	)
Combination of concession types		30		707		707		—			(234	)

Total		341	$	135,325	$	130,897	$	(4,428	)	$	(1,404	)


			Recorded investment				Financial effects of modification
Six months ended June 30, 2014	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		51	$	19,368	$	19,199	$	(169	)	$	—
Other		1		19,593		19,593		—			—
Combination of concession types		5		9,836		9,766		(70	)		(14	)
Real estate:
Commercial
Principal deferral		24		15,371		15,316		(55	)		—
Interest rate reduction		1		255		252		(3	)		(48	)
Combination of concession types		2		409		462		53			(113	)
Residential builder and developer
Principal deferral		1		1,398		1,398		—			—
Other commercial construction
Principal deferral		3		6,558		6,469		(89	)		—
Residential
Principal deferral		16		1,744		1,829		85			—
Interest rate reduction		1		98		104		6			(32	)
Other		1		188		188		—			—
Combination of concession types		22		3,111		3,151		40			(348	)
Residential Alt-A
Principal deferral		5		828		900		72			—
Combination of concession types		16		2,752		2,765		13			(281	)
Consumer:
Home equity lines and loans
Principal deferral		3		280		280		—			—
Interest rate reduction		5		341		341		—			(76	)
Combination of concession types		36		3,628		3,628		—			(376	)
Automobile
Principal deferral		123		1,596		1,596		—			—
Interest rate reduction		3		60		60		—			(3	)
Other		19		108		108		—			—
Combination of concession types		46		591		591		—			(62	)
Other
Principal deferral		15		93		93		—			—
Interest rate reduction		3		291		291		—			(63	)
Other		1		45		45		—			—
Combination of concession types		33		1,372		1,372		—			(464	)

Total		436	$	89,914	$	89,797	$	(117	)	$	(1,880	)


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

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

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


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


	Investment securities available for sale
	Privately issued mortgage-backed securities			Collateralized debt obligations			Other assets and other liabilities
	(in thousands)
Balance—March 31, 2014	$	696		$	61,768		$	12,589
Total gains realized/unrealized:
Included in earnings		—			—			31,517	(b)
Included in other comprehensive income		205	(e)		4,486	(e)		—
Sales		—			—			—
Settlements		(782	)		(10,054	)		—
Transfers in and/or out of Level 3 (c)		—			—			(22,083	)(d)

Balance—June 30, 2014	$	119		$	56,200		$	22,023

Changes in unrealized gains included in earnings related to assets still held at June 30, 2014	$	—		$	—		$	20,215	(b)


	March 31, 2015
	Carrying amount			Estimated fair value			Level 1		Level 2			Level 3
	(in thousands)
Financial assets:
Cash and cash equivalents	$	1,366,853		$	1,366,853		$	1,311,917	$	54,936		$	—
Interest-bearing deposits at banks		6,291,491			6,291,491			—		6,291,491			—
Trading account assets		363,085			363,085			48,978		314,107			—
Investment securities		14,393,270			14,444,292			71,804		14,162,805			209,683
Loans and leases:
Commercial loans and leases		19,775,494			19,484,920			—		—			19,484,920
Commercial real estate loans		27,845,710			27,746,166			—		117,366			27,628,800
Residential real estate loans		8,504,119			8,609,248			—		5,119,739			3,489,509
Consumer loans		10,973,719			10,880,895			—		—			10,880,895
Allowance for credit losses		(921,373	)		—			—		—			—

Loans and leases, net		66,177,669			66,721,229			—		5,237,105			61,484,124
Accrued interest receivable		244,079			244,079			—		244,079			—

Financial liabilities:
Noninterest-bearing deposits	$	(27,181,120	)	$	(27,181,120	)	$	—	$	(27,181,120	)	$	—
Savings deposits and NOW accounts		(43,288,329	)		(43,288,329	)		—		(43,288,329	)		—
Time deposits		(2,946,126	)		(2,967,329	)		—		(2,967,329	)		—
Deposits at Cayman Islands office		(178,545	)		(178,545	)		—		(178,545	)		—
Short-term borrowings		(193,495	)		(193,495	)		—		(193,495	)		—
Long-term borrowings		(10,509,143	)		(10,641,367	)		—		(10,641,367	)		—
Accrued interest payable		(77,903	)		(77,903	)		—		(77,903	)		—
Trading account liabilities		(240,168	)		(240,168	)		—		(240,168	)		—

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


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

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

Commercial Banking		99,765			(924	)		98,841

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

Discretionary Portfolio		11,279			81			11,360

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

Retail Banking		29,711			39,323			69,034

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


Total	$	229,017			—			229,017


	1st Qtr.		2nd Qtr.		Year- to-date
	(in thousands)
Series A – 2014	$	3,666		3,666		7,332
Series A – 2013		2,875		2,875		5,750
Series C – 2014		2,414		2,414		4,828
Series C – 2013		1,894		1,894		3,788
Series D – 2014		8,594		8,593		17,187
Series D – 2013		8,594		8,593		17,187
Series E – 2014		—		5,770		5,770
Series E – 2013		—		—		—

Totals – 2014	$	14,674		20,443		35,117

Totals – 2013	$	13,363		13,362		26,725


	2014 Second Quarter								2014 First Quarter								2013 Fourth Quarter
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.	$	18,978		$	157,891		3.34	%		18,476			153,529		3.37	%		18,096			155,396		3.41	%
Real estate—commercial		26,140			278,596		4.22			26,143			287,584		4.40			26,231			300,225		4.48
Real estate—consumer		8,746			95,439		4.36			8,844			92,533		4.19			8,990			94,436		4.20
Consumer		10,479			118,157		4.52			10,300			116,631		4.59			10,233			118,554		4.60

Total loans and leases, net		64,343			650,083		4.05			63,763			650,277		4.14			63,550			668,611		4.17

Interest-bearing deposits at banks		4,080			2,535		.25			3,089			1,884		.25			2,948			1,829		.25
Federal funds sold and agreements to resell securities		90			16		.07			100			16		.07			115			20		.07
Trading account		84			264		1.25			71			477		2.68			82			280		1.36
Investment securities**
U.S. Treasury and federal agencies		9,984			74,046		2.97			8,286			64,814		3.17			7,349			60,150		3.25
Obligations of states and political subdivisions		166			1,986		4.82			177			2,269		5.20			186			2,436		5.20
Other		809			11,209		5.56			802			9,160		4.63			819			7,339		3.56

Total investment securities		10,959			87,241		3.19			9,265			76,243		3.34			8,354			69,925		3.32

Total earning assets		79,556			740,139		3.73			76,288			728,897		3.87			75,049			740,665		3.92

Allowance for credit losses		(922	)							(923	)							(925	)
Cash and due from banks		1,224								1,322								1,417
Other assets		10,015								9,978								9,789

Total assets	$	89,873								86,665								85,330

Liabilities and shareholders’ equity
Interest-bearing liabilities
Interest-bearing deposits
NOW accounts	$	1,026			330		.13			988			297		.12			933			311		.13
Savings deposits		39,478			11,181		.11			38,358			11,601		.12			38,079			13,388		.14
Time deposits		3,350			3,855		.46			3,460			3,940		.46			3,617			4,630		.51
Deposits at Cayman Islands office		339			181		.21			380			208		.22			414			217		.21

Total interest-bearing deposits		44,193			15,547		.14			43,186			16,046		.15			43,043			18,546		.17

Short-term borrowings		220			25		.05			264			32		.05			287			45		.06
Long-term borrowings		6,525			49,604		3.05			5,897			50,441		3.47			5,009			49,391		3.91
	��
Total interest-bearing liabilities		50,938			65,176		.51			49,347			66,519		.55			48,339			67,982		.56

Noninterest-bearing deposits		25,466								24,141								24,169
Other liabilities		1,430								1,529								1,713

Total liabilities		77,834								75,017								74,221

Shareholders’ equity		12,039								11,648								11,109

Total liabilities and shareholders’ equity	$	89,873								86,665								85,330

Net interest spread							3.22								3.32								3.36
Contribution of interest-free funds							.18								.20								.20

Net interest income/margin on earning assets				$	674,963		3.40	%					662,378		3.52	%					672,683		3.56	%


	2015 First Quarter								2014 Fourth Quarter								2014 Third Quarter
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.	$	19,457		$	153,866		3.21	%		19,117			156,627		3.25	%		18,889			156,440		3.29	%
Real estate - commercial		27,596			288,121		4.18			27,064			293,283		4.24			26,487			283,476		4.19
Real estate - consumer		8,572			88,850		4.15			8,654			90,637		4.19			8,634			90,023		4.17
Consumer		10,962			121,366		4.49			10,932			123,681		4.49			10,753			122,408		4.52

Total loans and leases, net		66,587			652,203		3.97			65,767			664,228		4.01			64,763			652,347		4.00

Interest-bearing deposits at banks		5,073			3,118		.25			9,054			5,744		.25			5,083			3,198		.25
Federal funds sold and agreements to resell securities		97			24		.10			86			18		.08			80			14		.07
Trading account		79			565		2.87			80			353		1.76			70			287		1.65
Investment securities**
U.S. Treasury and federal agencies		12,437			78,313		2.55			12,032			82,843		2.73			11,817			82,475		2.77
Obligations of states and political subdivisions		159			1,967		5.04			160			1,963		4.86			162			1,897		4.65
Other		780			7,735		4.02			786			7,470		3.77			801			8,646		4.28

Total investment securities		13,376			88,015		2.67			12,978			92,276		2.82			12,780			93,018		2.89

Total earning assets		85,212			743,925		3.54			87,965			762,619		3.44			82,776			748,864		3.59

Allowance for credit losses		(925	)							(924	)							(924	)
Cash and due from banks		1,221								1,290								1,273
Other assets		10,384								10,313								10,120

Total assets	$	95,892								98,644								93,245

Liabilities and shareholders’ equity
Interest-bearing liabilities
Interest-bearing deposits
NOW accounts	$	1,121			311		.11			1,083			383		.14			1,037			394		.15
Savings deposits		41,525			10,219		.10			42,949			11,151		.10			41,056			11,532		.11
Time deposits		3,017			3,740		.50			3,128			3,915		.50			3,227			3,805		.47
Deposits at Cayman Islands office		224			147		.27			265			149		.22			325			161		.20

Total interest-bearing deposits		45,887			14,417		.13			47,425			15,598		.13			45,645			15,892		.14

Short-term borrowings		196			34		.07			195			25		.05			181			19		.04
Long-term borrowings		9,835			64,048		2.64			8,954			59,149		2.62			8,547			58,053		2.69

Total interest-bearing liabilities		55,918			78,499		.57			56,574			74,772		.52			54,373			73,964		.54

Noninterest-bearing deposits		25,811								28,090								25,127
Other liabilities		1,704								1,538								1,498

Total liabilities		83,433								86,202								80,998

Shareholders’ equity		12,459								12,442								12,247

Total liabilities and shareholders’ equity	$	95,892								98,644								93,245

Net interest spread							2.97								2.92								3.05
Contribution of interest-free funds							.20								.18								.18

Net interest income/margin on earning assets				$	665,426		3.17	%					687,847		3.10	%					674,900		3.23	%


Exhibit No.

~~10.1~~		~~Consulting Agreement, dated as of June 16, 2014, between M&T Bank Corporation and Robert E. Sadler, Jr. 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.~~


~~Exhibit No.~~

~~10.1~~		~~Consulting Agreement, dated as of June 16, 2014, between M&T Bank Corporation and Robert E. Sadler, Jr. 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.

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company