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

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

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

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

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

Number of shares of the registrant's Common Stock, $0.50 par value, outstanding as of the close of business on April ~~28, 2017: 153,863,872~~30, 2018: 145,235,614 shares.

			March 31,			December 31,					March 31,			December 31,
Dollars in thousands, except per share	Dollars in thousands, except per share		2017			2016			Dollars in thousands, except per share		2018			2017

Assets		Cash and due from banks	$	1,286,962			1,320,549			Cash and due from banks	$	1,291,664		$	1,420,888
										Interest-bearing deposits at banks		6,135,434			5,078,903
		Interest-bearing deposits at banks		6,945,149			5,000,638			Federal funds sold		1,000			—
		Trading account		174,854			323,867			Trading account		141,134			132,909
		Investment securities (includes pledged securities that can be sold or repledged of $519,063 at March 31, 2017; $1,203,473 at December 31, 2016)								Investment securities (includes pledged securities that can be sold or repledged of $470,906 at March 31, 2018; $487,151 at December 31, 2017)
		Available for sale (cost: $12,640,244 at March 31, 2017; $13,338,301 at December 31, 2016)		12,631,000			13,332,072			Available for sale (cost: $10,508,620 at March 31, 2018; $10,938,796 at December 31, 2017)		10,297,856			10,896,284
		Held to maturity (fair value: $2,865,885 at March 31, 2017; $2,451,222 at December 31, 2016)		2,876,119			2,457,278			Held to maturity (fair value: $3,160,215 at March 31, 2018; $3,341,762 at December 31, 2017)		3,228,756			3,353,213
		Other (fair value: $461,296 at March 31, 2017; $461,118 at December 31, 2016)		461,296			461,118			Equity and other securities (cost: $526,593 at March 31, 2018; $415,028 at December 31, 2017)		539,952			415,028
		Total investment securities		15,968,415			16,250,468			Total investment securities		14,066,564			14,664,525
		Loans and leases		89,555,547			91,101,677			Loans and leases		87,967,757			88,242,886
		Unearned discount		(242,545	)		(248,261	)		Unearned discount		(257,008	)		(253,903	)
		Loans and leases, net of unearned discount		89,313,002			90,853,416			Loans and leases, net of unearned discount		87,710,749			87,988,983
		Allowance for credit losses		(1,001,430	)		(988,997	)		Allowance for credit losses		(1,019,671	)		(1,017,198	)
		Loans and leases, net		88,311,572			89,864,419			Loans and leases, net		86,691,078			86,971,785
		Premises and equipment		672,769			675,263			Premises and equipment		628,706			646,451
		Goodwill		4,593,112			4,593,112			Goodwill		4,593,112			4,593,112
		Core deposit and other intangible assets		94,535			97,655			Core deposit and other intangible assets		64,957			71,589
		Accrued interest and other assets		5,175,883			5,323,235			Accrued interest and other assets		5,009,175			5,013,325
		Total assets	$	123,223,251			123,449,206			Total assets	$	118,622,824		$	118,593,487

Liabilities		Noninterest-bearing deposits	$	34,279,591			32,813,896			Noninterest-bearing deposits	$	31,817,516		$	33,975,180
		Savings and interest-checking deposits		53,542,149			52,346,207			Savings and interest-checking deposits		52,724,608			51,698,008
		Time deposits		9,028,018			10,131,846			Time deposits		6,126,442			6,580,962
		Deposits at Cayman Islands office		192,763			201,927			Deposits at Cayman Islands office		278,064			177,996
		Total deposits		97,042,521			95,493,876			Total deposits		90,946,630			92,432,146
		Federal funds purchased and agreements to repurchase securities		185,102			163,442			Short-term borrowings		1,626,129			175,099
		Accrued interest and other liabilities		1,694,905			1,811,431			Accrued interest and other liabilities		1,749,320			1,593,993
		Long-term borrowings		8,087,619			9,493,835			Long-term borrowings		8,591,051			8,141,430
		Total liabilities		107,010,147			106,962,584			Total liabilities		102,913,130			102,342,668
Shareholders' equity		Preferred stock, $1.00 par, 1,000,000 shares authorized; Issued and outstanding: Liquidation preference of $1,000 per share: 731,500 shares at March 31, 2017 and December 31, 2016; Liquidation preference of $10,000 per share: 50,000 shares at March 31, 2017 and December 31, 2016		1,231,500			1,231,500			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, 2018 and December 31, 2017; Liquidation preference of $10,000 per share: 50,000 shares at March 31, 2018 and December 31, 2017		1,231,500			1,231,500
		Common stock, $.50 par, 250,000,000 shares authorized, 159,825,445 shares issued at March 31, 2017; 159,945,678 shares issued at December 31, 2016		79,913			79,973			Common stock, $.50 par, 250,000,000 shares authorized, 159,768,397 shares issued at March 31, 2018; 159,817,518 shares issued at December 31, 2017		79,884			79,909
		Common stock issuable, 28,740 shares at March 31, 2017; 32,403 shares at December 31, 2016		1,921			2,145			Common stock issuable, 24,371 shares at March 31, 2018; 27,138 shares at December 31, 2017		1,675			1,847
		Additional paid-in capital		6,603,355			6,676,948			Additional paid-in capital		6,572,281			6,590,855
		Retained earnings		9,437,450			9,222,488			Retained earnings		10,404,458			10,164,804
		Accumulated other comprehensive income (loss), net		(291,567	)		(294,636	)		Accumulated other comprehensive income (loss), net		(483,243	)		(363,814	)
		Treasury stock - common, at cost - 6,073,095 shares at March 31, 2017; 3,764,742 shares at December 31, 2016		(849,468	)		(431,796	)		Treasury stock — common, at cost — 12,993,850 shares at March 31, 2018; 9,733,115 shares at December 31, 2017		(2,096,861	)		(1,454,282	)
		Total shareholders’ equity		16,213,104			16,486,622			Total shareholders’ equity		15,709,694			16,250,819
		Total liabilities and shareholders’ equity	$	123,223,251			123,449,206			Total liabilities and shareholders’ equity	$	118,622,824		$	118,593,487

			Three Months Ended March 31						Three Months Ended March 31
In thousands, except per share	In thousands, except per share		2017		2016		In thousands, except per share		2018			2017

Interest income		Loans and leases, including fees	$	898,038		863,385		Loans and leases, including fees	$	979,969			898,038
		Investment securities						Investment securities
		Fully taxable		95,124		98,015		Fully taxable		82,852			95,124
		Exempt from federal taxes		430		795		Exempt from federal taxes		248			430
		Deposits at banks		12,162		10,337		Deposits at banks		18,677			12,162
		Other		279		302		Other		404			279
		Total interest income		1,006,033		972,834		Total interest income		1,082,150			1,006,033
Interest expense		Savings and interest-checking deposits		25,634		16,305		Savings and interest-checking deposits		40,527			25,634
		Time deposits		18,998		24,322		Time deposits		10,936			18,998
		Deposits at Cayman Islands office		265		193		Deposits at Cayman Islands office		381			265
		Short-term borrowings		216		2,162		Short-term borrowings		883			216
		Long-term borrowings		46,660		57,888		Long-term borrowings		53,906			46,660
		Total interest expense		91,773		100,870		Total interest expense		106,633			91,773
		Net interest income		914,260		871,964		Net interest income		975,517			914,260
		Provision for credit losses		55,000		49,000		Provision for credit losses		43,000			55,000
		Net interest income after provision for credit losses		859,260		822,964		Net interest income after provision for credit losses		932,517			859,260
Other income		Mortgage banking revenues		84,692		82,063		Mortgage banking revenues		87,306			84,692
		Service charges on deposit accounts		104,176		102,405		Service charges on deposit accounts		105,115			104,176
		Trust income		120,015		111,077		Trust income		131,375			120,015
		Brokerage services income		17,384		16,004		Brokerage services income		13,392			17,384
		Trading account and foreign exchange gains		9,691		7,458		Trading account and foreign exchange gains		4,637			9,691
		Gain on bank investment securities		—		4		Gain (loss) on bank investment securities		(9,431	)		—
		Other revenues from operations		110,887		101,922		Other revenues from operations		126,302			110,887
		Total other income		446,845		420,933		Total other income		458,696			446,845
Other expense		Salaries and employee benefits		449,862		431,785		Salaries and employee benefits		463,428			449,741
		Equipment and net occupancy		74,366		74,178		Equipment and net occupancy		74,797			74,366
		Outside data processing and software		44,301		43,015		Outside data processing and software		48,429			44,301
		FDIC assessments		28,827		25,225		FDIC assessments		20,280			28,827
		Advertising and marketing		16,110		21,454		Advertising and marketing		16,248			16,110
		Printing, postage and supplies		9,708		11,986		Printing, postage and supplies		9,319			9,708
		Amortization of core deposit and other intangible assets		8,420		12,319		Amortization of core deposit and other intangible assets		6,632			8,420
		Other costs of operations		156,258		156,133		Other costs of operations		294,211			156,379
		Total other expense		787,852		776,095		Total other expense		933,344			787,852
		Income before taxes		518,253		467,802		Income before taxes		457,869			518,253
		Income taxes		169,326		169,274		Income taxes		105,259			169,326
		Net income	$	348,927		298,528		Net income	$	352,610			348,927
		Net income available to common shareholders						Net income available to common shareholders
		Basic	$	328,562		275,744		Basic	$	332,748			328,562
		Diluted		328,567		275,748		Diluted		332,749			328,567
		Net income per common share						Net income per common share
		Basic	$	2.13		1.74		Basic	$	2.24			2.13
		Diluted		2.12		1.73		Diluted		2.23			2.12
		Cash dividends per common share	$	.75		.70		Cash dividends per common share	$	.75			.75
		Average common shares outstanding						Average common shares outstanding
		Basic		154,427		158,734		Basic		148,688			154,427
		Diluted		154,949		159,181		Diluted		148,905			154,949

	Three Months Ended March 31						Three Months Ended March 31
In thousands	2017			2016			2018			2017

Net income	$	348,927			298,528		$	352,610			348,927
Other comprehensive income, net of tax and reclassification adjustments:
Net unrealized gains (losses) on investment securities		(1,356	)		97,194			(100,684	)		(1,356	)
Cash flow hedges adjustments		(23	)		(24	)		(10,442	)		(23	)
Foreign currency translation adjustment		476			(53	)		1,290			476
Defined benefit plans liability adjustments		3,972			4,321			7,260			3,972
Total other comprehensive income		3,069			101,438
Total other comprehensive income (loss)								(102,576	)		3,069
Total comprehensive income	$	351,996			399,966		$	250,034			351,996

		Three Months Ended March 31							Three Months Ended March 31
In thousands		2017			2016				2018			2017

Cash flows from operating activities	Net income	$	348,927			298,528		Net income	$	352,610			348,927
	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		55,000			49,000		Provision for credit losses		43,000			55,000
	Depreciation and amortization of premises and equipment		27,429			27,141		Depreciation and amortization of premises and equipment		27,281			27,429
	Amortization of capitalized servicing rights		13,543			12,249		Amortization of capitalized servicing rights		11,656			13,543
	Amortization of core deposit and other intangible assets		8,420			12,319		Amortization of core deposit and other intangible assets		6,632			8,420
	Provision for deferred income taxes		36,731			50,075		Provision for deferred income taxes		(124,772	)		36,731
	Asset write-downs		5,118			8,940		Asset write-downs		3,192			5,118
	Net gain on sales of assets		(11,647	)		(5,399	)	Net gain on sales of assets		(4,547	)		(11,647	)
	Net change in accrued interest receivable, payable		(23,782	)		(16,530	)	Net change in accrued interest receivable, payable		(14,803	)		(23,782	)
	Net change in other accrued income and expense		(209	)		70,766		Net change in other accrued income and expense		165,114			(209	)
	Net change in loans originated for sale		712,954			211		Net change in loans originated for sale		(72,403	)		712,954
	Net change in trading account assets and liabilities		113,332			(59,080	)	Net change in trading account assets and liabilities		91,219			113,332
	Net cash provided by operating activities		1,285,816			448,220		Net cash provided by operating activities		484,179			1,285,816
Cash flows from investing activities	Proceeds from sales of investment securities							Proceeds from sales of investment securities
	Available for sale		—			518		Available for sale		100			—
	Other		100			18,121		Other		254,860			100
	Proceeds from maturities of investment securities							Proceeds from maturities of investment securities
	Available for sale		697,756			511,549		Available for sale		349,294			697,756
	Held to maturity		121,455			132,636		Held to maturity		123,923			121,455
	Purchases of investment securities							Purchases of investment securities
	Available for sale		(5,143	)		(311,302	)	Available for sale		(100	)		(5,143	)
	Held to maturity		(539,516	)		(5,343	)	Held to maturity		—			(539,516	)
	Other		(278	)		(124	)	Other		(288,259	)		(278	)
	Net decrease (increase) in loans and leases		797,351			(439,712	)	Net decrease in loans and leases		303,886			797,351
	Net increase in interest-bearing deposits at banks		(1,944,511	)		(1,950,831	)	Net increase in interest-bearing deposits at banks		(1,056,531	)		(1,944,511	)
	Capital expenditures, net		(21,521	)		(16,307	)	Capital expenditures, net		(9,544	)		(21,521	)
	Net decrease in loan servicing advances		56,437			37,600		Net decrease in loan servicing advances		115,163			56,437
	Other, net		11,863			7,920		Other, net		(41,322	)		11,863
	Net cash used by investing activities		(826,007	)		(2,015,275	)	Net cash used by investing activities		(248,530	)		(826,007	)
Cash flows from financing activities	Net increase in deposits		1,550,297			2,264,623		Net increase (decrease) in deposits		(1,484,629	)		1,550,297
	Net increase (decrease) in short-term borrowings		21,660			(343,838	)	Net increase in short-term borrowings		1,451,030			21,660
	Payments on long-term borrowings		(1,401,410	)		(317,187	)	Proceeds from long-term borrowings		999,594			—
	Purchases of treasury stock		(532,073	)		(100,000	)	Payments on long-term borrowings		(504,192	)		(1,401,410	)
	Dividends paid — common		(116,566	)		(112,000	)	Purchases of treasury stock		(720,966	)		(532,073	)
	Dividends paid — preferred		(17,368	)		(17,368	)	Dividends paid — common		(112,318	)		(116,566	)
	Other, net		2,064			2,960		Dividends paid — preferred		(17,368	)		(17,368	)
	Net cash provided (used) by financing activities		(493,396	)		1,377,190		Other, net		24,976			2,064
	Net decrease in cash and cash equivalents		(33,587	)		(189,865	)	Net cash used by financing activities		(363,873	)		(493,396	)
	Cash and cash equivalents at beginning of period		1,320,549			1,368,040		Net decrease in cash, cash equivalents and restricted cash		(128,224	)		(33,587	)
	Cash and cash equivalents at end of period	$	1,286,962			1,178,175		Cash, cash equivalents and restricted cash at beginning of period		1,420,888			1,320,549
								Cash, cash equivalents and restricted cash at end of period	$	1,292,664			1,286,962
Supplemental disclosure of cash flow information	Interest received during the period	$	1,001,129			968,223		Interest received during the period	$	1,077,676			1,001,129
	Interest paid during the period		116,183			146,568		Interest paid during the period		118,342			116,183
	Income taxes paid (refunded) during the period		29,272			(86,146	)	Income taxes paid during the period		37,999			29,272
Supplemental schedule of noncash investing and financing activities	Real estate acquired in settlement of loans	$	23,607			33,737		Real estate acquired in settlement of loans	$	15,410			23,607
	Securitization of residential mortgage loans allocated to							Securitization of residential mortgage loans allocated to
	Available-for-sale investment securities		3,684			8,452		Available-for-sale investment securities		5,128			3,684
	Capitalized servicing rights		36			92		Capitalized servicing rights		64			36

															Accumulated																							Accumulated
															Other																							Other
						Common			Additional						Comprehensive														Common			Additional						Comprehensive
	Preferred		Common			Stock			Paid-in			Retained			Income			Treasury						Preferred		Common			Stock			Paid-in			Retained			Income			Treasury
In thousands, except per share	Stock		Stock			Issuable			Capital			Earnings			(Loss), Net			Stock			Total
2016
Balance — January 1, 2016	$	1,231,500		79,782			2,364			6,680,768			8,430,502			(251,627	)		—			16,173,289
Total comprehensive income		—		—			—			—			298,528			101,438			—			399,966
Preferred stock cash dividends		—		—			—			—			(20,318	)		—			—			(20,318	)
Purchases of treasury stock		—		—			—			—			—			—			(100,000	)		(100,000	)
Stock-based compensation plans:
Compensation expense, net		—		178			—			(978	)		—			—			745			(55	)
Exercises of stock options, net		—		18			—			2,335			—			—			265			2,618
Stock purchase plan		—		—			—			275			—			—			10,319			10,594
Directors’ stock plan		—		2			—			471			—			—			—			473
Deferred compensation plans, net, including dividend equivalents		—		2			(184	)		234			(23	)		—			—			29
Other		—		—			—			394			—			—			—			394
Common stock cash dividends — $.70 per share		—		—			—			—			(111,937	)		—			—			(111,937	)
Balance — March 31, 2016	$	1,231,500		79,982			2,180			6,683,499			8,596,752			(150,189	)		(88,671	)		16,355,053
Dollars in thousands, except per share																								Stock		Stock			Issuable			Capital			Earnings			(Loss), Net			Stock			Total
2017
Balance — January 1, 2017	$	1,231,500		79,973			2,145			6,676,948			9,222,488			(294,636	)		(431,796	)		16,486,622		$	1,231,500		79,973			2,145			6,676,948			9,222,488			(294,636	)		(431,796	)		16,486,622
Total comprehensive income		—		—			—			—			348,927			3,069			—			351,996			—		—			—			—			348,927			3,069			—			351,996
Preferred stock cash dividends		—		—			—			—			(18,237	)		—			—			(18,237	)		—		—			—			—			(18,237	)		—			—			(18,237	)
Exercise of 87,515 Series A stock warrants into 47,954 shares of common stock		—		—			—			(5,934	)		—			—			5,934			—			—		—			—			(5,934	)		—			—			5,934			—
Purchases of treasury stock		—		—			—			—			—			—			(532,073	)		(532,073	)		—		—			—			—			—			—			(532,073	)		(532,073	)
Stock-based compensation plans:
Compensation expense, net		—		(60	)		—			(67,016	)		—			—			55,667			(11,409	)		—		(60	)		—			(67,016	)		—			—			55,667			(11,409	)
Exercises of stock options, net		—		—			—			(3,127	)		—			—			43,789			40,662			—		—			—			(3,127	)		—			—			43,789			40,662
Stock purchase plan		—		—			—			2,563			—			—			8,268			10,831			—		—			—			2,563			—			—			8,268			10,831
Directors’ stock plan		—		—			—			126			—			—			347			473			—		—			—			126			—			—			347			473
Deferred compensation plans, net, including dividend equivalents		—		—			(224	)		(205	)		(21	)		—			396			(54	)		—		—			(224	)		(205	)		(21	)		—			396			(54	)
Common stock cash dividends — $.75 per share		—		—			—			—			(115,707	)		—			—			(115,707	)		—		—			—			—			(115,707	)		—			—			(115,707	)
Balance — March 31, 2017	$	1,231,500		79,913			1,921			6,603,355			9,437,450			(291,567	)		(849,468	)		16,213,104		$	1,231,500		79,913			1,921			6,603,355			9,437,450			(291,567	)		(849,468	)		16,213,104
2018
Balance — January 1, 2018																								$	1,231,500		79,909			1,847			6,590,855			10,164,804			(363,814	)		(1,454,282	)		16,250,819
Cumulative effect of change in accounting principle — equity securities																									—		—			—			—			16,853			(16,853	)		—			—
Total comprehensive income																									—		—			—			—			352,610			(102,576	)		—			250,034
Preferred stock cash dividends																									—		—			—			—			(18,130	)		—			—			(18,130	)
Exercise of 36,974 Series A stock warrants into 22,553 shares of common stock																									—		—			—			(3,455	)		—			—			3,455			—
Purchases of treasury stock																									—		—			—			—			—			—			(720,966	)		(720,966	)
Stock-based compensation plans:
Compensation expense, net																									—		(25	)		—			(15,362	)		—			—			21,220			5,833
Exercises of stock options, net																									—		—			—			(1,945	)		—			—			44,045			42,100
Stock purchase plan																									—		—			—			2,358			—			—			8,766			11,124
Directors’ stock plan																									—		—			—			74			—			—			515			589
Deferred compensation plans, net, including dividend equivalents																									—		—			(172	)		(244	)		(18	)		—			386			(48	)
Common stock cash dividends — $.75 per share																									—		—			—			—			(111,661	)		—			—			(111,661	)
Balance — March 31, 2018																								$	1,231,500		79,884			1,675			6,572,281			10,404,458			(483,243	)		(2,096,861	)		15,709,694

The consolidated financial statements of M&T Bank Corporation (“M&T”) and subsidiaries (“the Company”) were compiled in accordance with generally accepted accounting principles (“GAAP”) using the accounting policies set forth in note 1 of Notes to Financial Statements included in Form 10-K for the year ended December 31, ~~2016~~2017 (“~~2016~~2017 Annual Report”), except that effective January ~~2017~~1, 2018 the Company adopted amended accounting guidance that is discussed in ~~note~~notes 2, 15 and 16 herein. The most significant of those changes related to the accounting for excess tax benefits or deficiencies associated with share-based compensation whereby beginning in 2017 those amounts are recognized in income tax expense. Previously, tax effects resulting from changes in M&T’s share price subsequent to the grant date were recorded through shareholders’ equity. The adoption of this new accounting guidance resulted in a reduction of income tax expense for the quarter ended March 31, 2017 of $18 million, or $.12 of diluted earnings per common share. In the opinion of management, all adjustments necessary for a fair presentation have been made and were all of a normal recurring nature.

~~In connection with the acquisition of Hudson City Bancorp, Inc. (“Hudson City”) on November~~On January 1, ~~2015~~2018, the Company ~~incurred merger-related expenses related~~adopted amended guidance requiring equity investments with readily determinable fair values to ~~systems conversions~~be measured at fair value with changes in fair value recognized in the consolidated statement of income. This amended guidance excludes equity method investments, investments in consolidated subsidiaries, exchange membership ownership interests, and Federal Home Loan Bank of New York and Federal Reserve Bank of New York capital stock. Upon adoption the Company reclassified $17 million, after-tax effect, from accumulated other ~~costs~~comprehensive income to retained earnings, representing the difference between fair value and the cost basis of ~~integrating and conforming acquired operations~~equity investments with and into the Company. Those expenses consisted largely of professional services and other temporary help fees associated with preparing for systems conversions and/or integration of operations; costs related to termination of existing contractual arrangements for various services; initial marketing and promotion expenses designed to introduce M&T Bank to its new customers; severance (for former Hudson City employees); travel costs; and other costs of completing the transaction and commencing operations in new markets and offices.

~~A summary of merger-related expenses included~~readily determinable fair values at January 1, 2018. Net unrealized losses recorded as gain (loss) on bank investment securities in the consolidated statement of income ~~for~~during the ~~three-month period~~three months ended March 31, ~~2016 follows:~~

~~There~~2018 were ~~no merger-related expenses during the three-month period ended March 31, 2017.~~

$9 million. The amortized cost and estimated fair value of investment securities were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In thousands)								(In thousands)
March 31, 2017
March 31, 2018
Investment securities available for sale:
U.S. Treasury and federal agencies	$	1,907,573		181		9,504	$	1,898,250	$	1,962,160		—		20,682	$	1,941,478
Obligations of states and political subdivisions		3,051		77		4		3,124		1,986		16		2		2,000
Mortgage-backed securities:
Government issued or guaranteed		10,525,601		87,830		109,117		10,504,314		8,407,476		21,318		206,665		8,222,129
Privately issued		42		—		1		41		27		—		—		27
Other debt securities		133,778		1,300		15,311		119,767		136,971		2,457		7,206		132,222
Equity securities		70,199		35,873		568		105,504
		12,640,244		125,261		134,505		12,631,000		10,508,620		23,791		234,555		10,297,856
Investment securities held to maturity:
Obligations of states and political subdivisions		46,836		233		156		46,913		20,209		75		36		20,248
Mortgage-backed securities:
Government issued or guaranteed		2,670,966		34,777		10,577		2,695,166		3,074,830		6,153		58,581		3,022,402
Privately issued		153,036		1,191		35,702		118,525		128,997		7,932		24,084		112,845
Other debt securities		5,281		—		—		5,281		4,720		—		—		4,720
		2,876,119		36,201		46,435		2,865,885		3,228,756		14,160		82,701		3,160,215
Other securities		461,296		—		—		461,296
Total	$	15,977,659		161,462		180,940	$	15,958,181
Total debt securities									$	13,737,376		37,951		317,256	$	13,458,071
Equity and other securities:
Readily marketable equity — at fair value										48,358		14,075		716		61,717
Other — at cost										478,235		—		—		478,235
Total equity and other securities									$	526,593		14,075		716	$	539,952

There were no significant gross realized gains or losses from sales of investment securities for the quarters ended March 31, ~~2017~~2018 and ~~2016.~~2017.

At March 31, ~~2017,~~2018, 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	$	156,211		156,378	$	817,981		813,574
Due after one year through five years		1,756,628		1,747,311		1,151,292		1,134,986
Due after five years through ten years		56,297		54,094		82,301		82,049
Due after ten years		75,266		63,358		49,543		45,091
		2,044,402		2,021,141		2,101,117		2,075,700
Mortgage-backed securities available for sale		10,525,643		10,504,355		8,407,503		8,222,156
	$	12,570,045		12,525,496	$	10,508,620		10,297,856
Debt securities held to maturity:
Due in one year or less	$	21,613		21,711	$	11,410		11,432
Due after one year through five years		23,326		23,261		8,703		8,716
Due after five years through ten years		1,897		1,941		96		100
Due after ten years		5,281		5,281		4,720		4,720
		52,117		52,194		24,929		24,968
Mortgage-backed securities held to maturity		2,824,002		2,813,691		3,203,827		3,135,247
	$	2,876,119		2,865,885	$	3,228,756		3,160,215

A summary of investment securities that as of March 31, ~~2017~~2018 and December 31, ~~2016~~2017 had been in a continuous unrealized loss position for less than twelve months and those that had been in a continuous unrealized loss position for twelve months or longer follows:

	Less Than 12 Months					12 Months or More					Less Than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)										(In thousands)
March 31, 2017
March 31, 2018
Investment securities available for sale:
U.S. Treasury and federal agencies	$	1,745,277		(9,494	)		2,044		(10	)	$	241,594		(2,314	)		1,699,784		(18,368	)
Obligations of states and political subdivisions		—		—			472		(4	)		1,020		(1	)		376		(1	)
Mortgage-backed securities:
Government issued or guaranteed		5,549,268		(108,380	)		93,425		(737	)		3,825,869		(68,681	)		3,023,992		(137,984	)
Privately issued		—		—			25		(1	)
Other debt securities		19,052		(100	)		75,763		(15,211	)		4,341		(90	)		64,506		(7,116	)
Equity securities		17,869		(422	)		154		(146	)
		7,331,466		(118,396	)		171,883		(16,109	)		4,072,824		(71,086	)		4,788,658		(163,469	)

Investment securities held to maturity:
Obligations of states and political subdivisions		13,205		(87	)		9,909		(69	)		1,891		(4	)		5,454		(32	)
Mortgage-backed securities:
Government issued or guaranteed		896,556		(10,013	)		17,472		(564	)		2,280,618		(46,285	)		249,897		(12,296	)
Privately issued		7,161		(29	)		74,137		(35,673	)		—		—			53,852		(24,084	)
		916,922		(10,129	)		101,518		(36,306	)		2,282,509		(46,289	)		309,203		(36,412	)
Total	$	8,248,388		(128,525	)		273,401		(52,415	)	$	6,355,333		(117,375	)		5,097,861		(199,881	)

December 31, 2016
December 31, 2017
Investment securities available for sale:
U.S. Treasury and federal agencies	$	1,710,241		(9,950	)		2,295		(2	)	$	278,132		(1,761	)		1,669,355		(16,417	)
Obligations of states and political subdivisions		—		—			593		(6	)		—		—			474		(2	)
Mortgage-backed securities:
Government issued or guaranteed		6,730,829		(113,374	)		81,003		(615	)		2,106,142		(13,695	)		3,138,841		(84,892	)
Privately issued		—		—			27		(1	)
Other debt securities		100		(1	)		85,400		(16,995	)		3,067		(26	)		61,159		(10,449	)
Equity securities		17,776		(422	)		151		(149	)
Equity securities (a)												—		—			18,162		(424	)
		8,458,946		(123,747	)		169,469		(17,768	)		2,387,341		(15,482	)		4,887,991		(112,184	)

Investment securities held to maturity:
Obligations of states and political subdivisions		17,988		(126	)		11,891		(98	)		2,954		(4	)		6,110		(45	)
Mortgage-backed securities:
Government issued or guaranteed		618,832		(6,842	)		17,481		(532	)		1,331,759		(7,036	)		265,695		(6,710	)
Privately issued		17,911		(1,222	)		57,016		(35,898	)		5,061		(1,216	)		55,255		(26,359	)
		654,731		(8,190	)		86,388		(36,528	)		1,339,774		(8,256	)		327,060		(33,114	)
Total	$	9,113,677		(131,937	)		255,857		(54,296	)	$	3,727,115		(23,738	)		5,215,051		(145,298	)

The Company owned ~~1,075~~1,442 individual ~~investment~~debt securities with aggregate gross unrealized losses of ~~$181~~$317 million at March 31, ~~2017.~~2018. Based on a review of each of the securities in the investment securities portfolio at March 31, ~~2017,~~2018, the Company concluded that it expected to recover the amortized cost basis of its investment. As of March 31, ~~2017,~~2018, the Company does not intend to sell nor is it anticipated that it would be required to sell any of its impaired

investment securities at a loss. At March 31, ~~2017,~~2018, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the ~~$461~~$478 million of cost method ~~investment~~equity securities.

A summary of current, past due and nonaccrual loans as of March 31, ~~2017~~2018 and December 31, ~~2016~~2017 follows:

	Current		30-89 Days Past Due		Accruing Loans Past Due 90 Days or More (a)		Accruing Loans Acquired at a Discount Past Due 90 days or More (b)		Purchased Impaired (c)		Nonaccrual		Total		Current		30-89 Days Past Due		Accruing Loans Past Due 90 Days or More (a)		Accruing Loans Acquired at a Discount Past Due 90 days or More (b)		Purchased Impaired (c)		Nonaccrual		Total
	(In thousands)														(In thousands)
March 31, 2017
March 31, 2018
Commercial, financial, leasing, etc.	$	21,986,926		38,046		6,695		387		1,825		261,497	$	22,295,376	$	21,377,917		51,438		5,547		26		2		262,592	$	21,697,522
Real estate:
Commercial		25,088,525		185,331		17,322		13,618		26,391		183,113		25,514,300		24,919,508		250,993		3,311		4,569		11,744		152,832		25,342,957
Residential builder and developer		1,714,177		15,185		—		1,972		12,798		13,573		1,757,705		1,641,644		1,974		—		—		357		4,519		1,648,494
Other commercial construction		5,747,834		23,973		—		—		13,879		13,963		5,799,649		6,680,584		71,115		—		—		1,194		9,162		6,762,055
Residential		17,004,912		431,427		251,308		11,116		362,283		237,685		18,298,731		14,942,659		407,773		221,666		8,416		263,939		234,309		16,078,762
Residential — limited documentation		3,086,264		91,177		—		—		135,759		112,560		3,425,760		2,599,705		82,738		—		—		100,764		98,977		2,882,184
Consumer:
Home equity lines and loans		5,398,590		32,939		—		12,238		—		79,962		5,523,729		5,037,213		32,100		—		8,157		—		73,169		5,150,639
Automobile		3,049,712		48,751		—		—		—		16,109		3,114,572		3,468,893		64,995		—		—		—		20,613		3,554,501
Other		3,519,996		25,876		4,694		24,401		—		8,213		3,583,180		4,523,469		28,686		4,801		28,181		—		8,498		4,593,635
Total	$	86,596,936		892,705		280,019		63,732		552,935		926,675	$	89,313,002	$	85,191,592		991,812		235,325		49,349		378,000		864,671	$	87,710,749

December 31, 2016
December 31, 2017
Commercial, financial, leasing, etc.	$	22,287,857		53,503		6,195		417		641		261,434	$	22,610,047	$	21,332,234		167,756		1,322		327		21		240,991	$	21,742,651
Real estate:
Commercial		25,076,684		183,531		7,054		12,870		31,404		176,201		25,487,744		24,910,381		166,305		4,444		6,016		16,815		184,982		25,288,943
Residential builder and developer		1,884,989		4,667		5		1,952		14,006		16,707		1,922,326		1,618,973		5,159		—		—		1,135		6,451		1,631,718
Other commercial construction		5,985,118		77,701		922		198		14,274		18,111		6,096,324		6,407,451		23,467		—		—		4,706		10,088		6,445,712
Residential		17,631,377		485,468		281,298		11,537		378,549		229,242		19,017,471		15,376,759		474,372		233,437		7,582		282,102		235,834		16,610,086
Residential — limited documentation		3,239,344		88,366		—		—		139,158		106,573		3,573,441		2,718,019		83,898		—		—		105,236		96,105		3,003,258
Consumer:
Home equity lines and loans		5,502,091		44,565		—		12,678		—		81,815		5,641,149		5,171,345		38,546		—		9,391		—		74,500		5,293,782
Automobile		2,869,232		56,158		—		1		—		18,674		2,944,065		3,441,371		78,511		—		—		—		23,781		3,543,663
Other		3,491,629		31,286		5,185		21,491		—		11,258		3,560,849		4,349,071		40,929		5,202		24,102		—		9,866		4,429,170
Total	$	87,968,321		1,025,245		300,659		61,144		578,032		920,015	$	90,853,416	$	85,325,604		1,078,943		244,405		47,418		410,015		882,598	$	87,988,983

One-to-four family residential mortgage loans held for sale were ~~$297~~$288 million and ~~$414~~$356 million at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. Commercial real estate loans held for sale were ~~$75~~$167 million at March 31, ~~2017~~2018 and ~~$643~~$22 million at December 31, ~~2016.~~2017.

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

	March 31,		December 31,		March 31,		December 31,
	2017		2016		2018		2017
	(In thousands)				(In thousands)

Outstanding principal balance	$	2,089,909		2,311,699	$	1,305,611		1,394,188
Carrying amount:
Commercial, financial, leasing, etc.		55,671		59,928		28,637		31,105
Commercial real estate		415,047		456,820		200,932		228,054
Residential real estate		765,986		799,802		587,562		620,827
Consumer		369,803		487,721		122,073		123,413
	$	1,606,507		1,804,271	$	939,204		1,003,399

Purchased impaired loans included in the table above totaled ~~$553~~$378 million at March 31, ~~2017~~2018 and ~~$578~~$410 million at December 31, ~~2016,~~2017, representing less than 1% of the Company’s assets as of each date. A summary of changes in the accretable yield for loans acquired at a discount for the three-month periods ended March 31, ~~2017~~2018 and ~~2016~~2017 follows:


	Three Months Ended March 31, 2017						Three Months Ended March 31, 2016						Three Months Ended March 31, 2018						Three Months Ended March 31, 2017
	Purchased			Other			Purchased			Other			Purchased			Other			Purchased			Other
	Impaired			Acquired			Impaired			Acquired			Impaired			Acquired			Impaired			Acquired
	(In thousands)												(In thousands)

Balance at beginning of period	$	154,233			201,153		$	184,618			296,434		$	157,918			133,162		$	154,233			201,153
Interest income		(10,925	)		(25,518	)		(14,062	)		(37,862	)		(9,819	)		(15,112	)		(10,925	)		(25,518	)
Reclassifications from nonaccretable balance		146			3,183			629			5,664			908			207			146			3,183
Other (a)		—			2,492			—			4,781			—			(73	)		—			2,492
Balance at end of period	$	143,454			181,310		$	171,185			269,017		$	149,007			118,184		$	143,454			181,310

Changes in the allowance for credit losses for the three months ended March 31, 2018 were as follows:

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

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

Beginning balance	$	330,833			362,719			61,127			156,288			78,030	$	988,997		$	330,833			362,719			61,127			156,288			78,030	$	988,997
Provision for credit losses		28,823			1,262			5,637			18,832			446		55,000			28,823			1,262			5,637			18,832			446		55,000
Net charge-offs
Charge-offs		(16,357	)		(5,445	)		(6,259	)		(34,503	)		—		(62,564	)		(16,357	)		(5,445	)		(6,259	)		(34,503	)		—		(62,564	)
Recoveries		4,461			1,474			1,507			12,555			—		19,997			4,461			1,474			1,507			12,555			—		19,997
Net charge-offs		(11,896	)		(3,971	)		(4,752	)		(21,948	)		—		(42,567	)
Net (charge-offs) recoveries																			(11,896	)		(3,971	)		(4,752	)		(21,948	)		—		(42,567	)
Ending balance	$	347,760			360,010			62,012			153,172			78,476	$	1,001,430		$	347,760			360,010			62,012			153,172			78,476	$	1,001,430

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

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

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

The following tables provide information with respect to loans and leases that were considered impaired as of March 31, ~~2017~~2018 and December 31, ~~2016~~2017 and for the three-month periods ended March 31, ~~2017~~2018 and ~~2016.~~2017.

	March 31, 2017						December 31, 2016						March 31, 2018						December 31, 2017
	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.	$	177,001		196,338		64,056		168,072		184,432		48,480	$	172,385		203,464		45,501		177,250		194,257		45,488
Real estate:
Commercial		64,746		80,482		10,541		71,862		86,666		11,620		77,118		88,313		9,981		67,199		75,084		9,140
Residential builder and developer		6,870		7,031		403		7,396		8,361		506		5,536		5,828		187		5,320		5,641		308
Other commercial construction		2,203		2,673		398		2,475		2,731		448		3,893		19,598		456		4,817		20,357		647
Residential		91,077		111,477		3,738		86,680		105,944		3,457		112,068		134,431		4,048		101,724		122,602		4,000
Residential — limited documentation		81,922		97,658		5,000		82,547		97,718		6,000		76,984		92,586		4,000		77,277		92,439		3,900
Consumer:
Home equity lines and loans		46,132		50,262		8,389		44,693		48,965		8,027		48,991		54,032		8,913		48,847		53,914		8,812
Automobile		16,087		16,602		3,508		16,982		18,272		3,740		12,797		15,461		2,694		13,498		15,737		2,811
Other		3,522		3,670		725		3,791		5,296		776		3,082		5,857		629		3,220		5,872		656
		489,560		566,193		96,758		484,498		558,385		83,054		512,854		619,570		76,409		499,152		585,903		75,762
With no related allowance recorded:
Commercial, financial, leasing, etc.		92,546		127,252		—		100,805		124,786		—		115,336		145,450		—		89,126		115,327		—
Real estate:
Commercial		126,437		139,103		—		113,276		121,846		—		96,267		104,911		—		138,356		149,716		—
Residential builder and developer		11,748		18,863		—		14,368		21,124		—		3,760		3,832		—		5,057		5,296		—
Other commercial construction		12,029		31,072		—		15,933		35,281		—		5,425		9,142		—		5,456		9,130		—
Residential		14,946		22,209		—		16,823		24,161		—		13,868		19,105		—		13,574		18,980		—
Residential — limited documentation		14,466		22,941		—		15,429		24,590		—		7,751		12,960		—		9,588		16,138		—
		272,172		361,440		—		276,634		351,788		—		242,407		295,400		—		261,157		314,587		—
Total:
Commercial, financial, leasing, etc.		269,547		323,590		64,056		268,877		309,218		48,480		287,721		348,914		45,501		266,376		309,584		45,488
Real estate:
Commercial		191,183		219,585		10,541		185,138		208,512		11,620		173,385		193,224		9,981		205,555		224,800		9,140
Residential builder and developer		18,618		25,894		403		21,764		29,485		506		9,296		9,660		187		10,377		10,937		308
Other commercial construction		14,232		33,745		398		18,408		38,012		448		9,318		28,740		456		10,273		29,487		647
Residential		106,023		133,686		3,738		103,503		130,105		3,457		125,936		153,536		4,048		115,298		141,582		4,000
Residential — limited documentation		96,388		120,599		5,000		97,976		122,308		6,000		84,735		105,546		4,000		86,865		108,577		3,900
Consumer:
Home equity lines and loans		46,132		50,262		8,389		44,693		48,965		8,027		48,991		54,032		8,913		48,847		53,914		8,812
Automobile		16,087		16,602		3,508		16,982		18,272		3,740		12,797		15,461		2,694		13,498		15,737		2,811
Other		3,522		3,670		725		3,791		5,296		776		3,082		5,857		629		3,220		5,872		656
Total	$	761,732		927,633		96,758		761,132		910,173		83,054	$	755,261		914,970		76,409		760,309		900,490		75,762

	Three Months Ended March 31, 2017						Three Months Ended March 31, 2016						Three Months Ended March 31, 2018						Three Months Ended March 31, 2017
			Interest Income Recognized						Interest Income Recognized						Interest Income Recognized							Interest Income Recognized
	Average Recorded Investment		Total		Cash Basis		Average Recorded Investment		Total		Cash Basis		Average Recorded Investment		Total		Cash Basis		Average Recorded Investment			Total		Cash Basis
	(In thousands)												(In thousands)

Commercial, financial, leasing, etc.	$	271,825		478		478		296,584		611		611	$	272,172		783		783		271,825	��		478		478
Real estate:
Commercial		182,857		975		975		182,454		1,474		1,474		181,846		3,147		3,147		182,857			975		975
Residential builder and developer		20,051		429		429		33,750		42		42		9,840		1,682		1,682		20,051			429		429
Other commercial construction		16,328		847		847		16,868		38		38		10,102		6		6		16,328			847		847
Residential		103,875		1,636		774		96,788		1,372		882		121,209		1,902		902		103,875			1,636		774
Residential — limited documentation		97,121		1,500		384		107,473		1,472		630		85,595		1,728		696		97,121			1,500		384
Consumer:
Home equity lines and loans		45,542		399		100		26,019		246		85		48,797		414		86		45,542			399		100
Automobile		16,504		275		19		21,962		339		36		13,125		224		15		16,504			275		19
Other		3,598		72		3		17,717		178		27		3,119		85		3		3,598			72		3
Total	$	757,701		6,611		4,009		799,615		5,772		3,825	$	745,805		9,971		7,320		757,701			6,611		4,009

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 credit personnel each quarter to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. Smaller-balance criticized loans are analyzed by business line risk management areas to ensure proper loan grade classification. Furthermore, criticized nonaccrual commercial loans and commercial real estate loans are considered impaired and, as a result, specific loss allowances on such loans are established within the allowance for credit losses to the extent appropriate in each individual instance.

The following table summarizes the loan grades applied to the various classes of the Company’s commercial loans and commercial real estate loans.

			Real Estate								Real Estate
	Commercial,				Residential		Other		Commercial,				Residential		Other
	Financial,				Builder and		Commercial		Financial,				Builder and		Commercial
	Leasing, etc.		Commercial		Developer		Construction		Leasing, etc.		Commercial		Developer		Construction
	(In thousands)								(In thousands)
March 31, 2017
March 31, 2018
Pass	$	21,036,982		24,589,201		1,660,537		5,609,985	$	20,484,737		24,525,402		1,505,502		6,654,458
Criticized accrual		996,897		741,986		83,595		175,701		950,193		664,723		138,473		98,435
Criticized nonaccrual		261,497		183,113		13,573		13,963		262,592		152,832		4,519		9,162
Total	$	22,295,376		25,514,300		1,757,705		5,799,649	$	21,697,522		25,342,957		1,648,494		6,762,055
December 31, 2016
December 31, 2017
Pass	$	21,398,581		24,570,269		1,789,071		5,912,351	$	20,490,486		24,380,184		1,485,148		6,270,812
Criticized accrual		950,032		741,274		116,548		165,862		1,011,174		723,777		140,119		164,812
Criticized nonaccrual		261,434		176,201		16,707		18,111		240,991		184,982		6,451		10,088
Total	$	22,610,047		25,487,744		1,922,326		6,096,324	$	21,742,651		25,288,943		1,631,718		6,445,712

In determining the allowance for credit losses, residential real estate loans and consumer loans are generally evaluated collectively after considering such factors as payment performance and recent loss experience and trends, which are mainly driven by current collateral values in the market place as well as the amount of loan defaults. Loss

rates on such loans are determined by reference to recent charge-off history and are evaluated (and adjusted if deemed appropriate) through consideration of other factors including near-term forecasted loss estimates developed by the Company’s credit department. In arriving at such forecasts, the Company considers the current estimated fair value of its collateral based on geographical adjustments for home price depreciation/appreciation and overall borrower repayment performance. With regard to collateral values, the realizability of such values by the Company contemplates repayment of any first lien position prior to recovering amounts on a second lien position. However, residential real estate loans and outstanding balances of home equity loans and lines of credit that are more than 150 days past due are generally evaluated for collectibility on a loan-by-loan basis giving consideration to estimated collateral values. The carrying value of residential real estate loans and home equity loans and lines of credit for which a partial charge-off has been recognized totaled ~~$43~~$33 million and ~~$30~~$25 million, respectively, at March 31, ~~2017~~2018 and ~~$44~~$34 million and ~~$32~~$25 million, respectively, at December 31, ~~2016.~~2017. Residential real estate loans and home equity loans and lines of credit that were more than 150 days past due but did not require a partial charge-off because the net realizable value of the collateral exceeded the outstanding customer balance were ~~$18~~$19 million and ~~$39~~$29 million, respectively, at March 31, ~~2017~~2018 and ~~$16~~$20 million and ~~$39~~$32 million, respectively, at December 31, ~~2016.~~2017.

The Company also measures additional losses for purchased impaired loans when it is probable that the Company will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition. The determination of the allocated portion of the allowance for credit losses is very subjective. Given that inherent subjectivity and potential imprecision involved in determining the allocated portion of the allowance for credit losses, the Company also provides an inherent unallocated portion of the allowance. The unallocated portion of the allowance is intended to recognize probable losses that are not otherwise identifiable and includes management’s subjective determination of amounts necessary to provide for the possible use of imprecise estimates in determining the allocated portion of the allowance. Therefore, the level of the unallocated portion of the allowance is primarily reflective of the inherent imprecision in the various calculations used in determining the allocated portion of the allowance for credit losses. Other factors that could also lead to changes in the unallocated portion include the effects of expansion into new markets for which the Company does not have the same degree of familiarity and experience regarding portfolio performance in changing market conditions, the introduction of new loan and lease product types, and other risks associated with the Company’s loan portfolio that may not be specifically identifiable.

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

	Commercial, Financial,		Real Estate								Commercial, Financial,		Real Estate
	Leasing, etc.		Commercial		Residential		Consumer		Total		Leasing, etc.		Commercial		Residential		Consumer		Total
	(In thousands)										(In thousands)
March 31, 2017
March 31, 2018
Individually evaluated for impairment	$	64,056		11,342		8,738		12,622	$	96,758	$	45,501		10,624		8,048		12,236	$	76,409
Collectively evaluated for impairment		283,704		346,795		49,902		140,550		820,951		280,570		357,093		51,093		161,605		850,361
Purchased impaired		—		1,873		3,372		—		5,245		—		—		13,906		—		13,906
Allocated	$	347,760		360,010		62,012		153,172		922,954	$	326,071		367,717		73,047		173,841		940,676
Unallocated										78,476										78,995
Total									$	1,001,430									$	1,019,671
December 31, 2016
December 31, 2017
Individually evaluated for impairment	$	48,480		12,500		9,457		12,543	$	82,980	$	45,488		10,095		7,900		12,279	$	75,762
Collectively evaluated for impairment		282,353		348,301		47,993		143,745		822,392		283,111		363,990		47,645		158,530		853,276
Purchased impaired		—		1,918		3,677		—		5,595		—		—		9,860		—		9,860
Allocated	$	330,833		362,719		61,127		156,288		910,967	$	328,599		374,085		65,405		170,809		938,898
Unallocated										78,030										78,300
Total									$	988,997									$	1,017,198

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

	Commercial, Financial,		Real Estate								Commercial, Financial,		Real Estate
	Leasing, etc.		Commercial		Residential		Consumer		Total		Leasing, etc.		Commercial		Residential		Consumer		Total
	(In thousands)										(In thousands)
March 31, 2017
March 31, 2018
Individually evaluated for impairment	$	269,547		224,033		202,411		65,741	$	761,732	$	287,721		191,999		210,671		64,870	$	755,261
Collectively evaluated for impairment		22,024,004		32,794,553		21,024,038		12,155,740		87,998,335		21,409,799		33,548,212		18,385,572		13,233,905		86,577,488
Purchased impaired		1,825		53,068		498,042		—		552,935		2		13,295		364,703		—		378,000
Total	$	22,295,376		33,071,654		21,724,491		12,221,481	$	89,313,002	$	21,697,522		33,753,506		18,960,946		13,298,775	$	87,710,749
December 31, 2016
December 31, 2017
Individually evaluated for impairment	$	268,877		224,630		201,479		65,466	$	760,452	$	266,376		226,205		202,163		65,565	$	760,309
Collectively evaluated for impairment		22,340,529		33,222,080		21,871,726		12,080,597		89,514,932		21,476,254		33,117,512		19,023,843		13,201,050		86,818,659
Purchased impaired		641		59,684		517,707		—		578,032		21		22,656		387,338		—		410,015
Total	$	22,610,047		33,506,394		22,590,912		12,146,063	$	90,853,416	$	21,742,651		33,366,373		19,613,344		13,266,615	$	87,988,983

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 table that follows summarizes the Company’s loan modification activities that were considered troubled debt restructurings for the three months ended March 31, ~~2017~~2018 and ~~2016:~~2017:

					Post-modification (a)												Post-modification (a)
													Number		Pre- modification recorded investment		Principal Deferral		Interest Rate Reduction		Other		Combination of Concession Types		Total
Three Months Ended March 31, 2018													(Dollars in thousands)

Commercial, financial, leasing, etc.													56		$	47,994	$	35,673	$	624	$	—	$	13,047	$	49,344
Real estate:
Commercial													20			6,780		5,824		—		—		927		6,751
Other commercial construction													1			752		746		—		—		—		746
Residential													47			12,636		6,945		—		—		6,902		13,847
Residential — limited documentation													2			295		267		—		—		118		385
Consumer:
Home equity lines and loans													14			1,348		4		—		—		1,348		1,352
Automobile													8			148		148		—		—		—		148
Other													2			49		49		—		—		—		49
Total														150	$	70,002	$	49,656	$	624	$	—	$	22,342	$	72,622
	Number		Pre- modification recorded investment		Principal Deferral		Other		Combination of Concession Types		Total
Three Months Ended March 31, 2017	(Dollars in thousands)

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

Three Months Ended March 31, 2016

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

Troubled debt restructurings are considered to be impaired loans and for purposes of establishing the allowance for credit losses are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Impairment of troubled debt restructurings that have subsequently defaulted may also be measured based on the loan’s observable market price or the fair value of collateral if the loan is collateral-dependent. Charge-offs may also be recognized on troubled debt restructurings that have subsequently defaulted. Loans that were modified as troubled debt restructurings during the twelve months ended March 31, ~~2017~~2018 and ~~2016~~2017 and for which there was a subsequent payment default during the three-month periods ended March 31, ~~2017~~2018 and ~~2016,~~2017, respectively, were not material.

The amount of foreclosed residential real estate property held by the Company ~~totaled $112~~was $100 million and ~~$129~~$108 million at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. There were ~~$538~~$458 million and ~~$506~~$497 million at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, in loans secured by residential real estate that were in the process of foreclosure. Of all loans in the process of foreclosure at March 31, ~~2017,~~2018, approximately ~~53%~~41% were classified as purchased impaired and ~~20%~~21% were government guaranteed.

During January 2018, M&T Bank, the principal subsidiary of M&T, issued $1.0 billion of senior notes that mature in January 2021 pursuant to a Bank Note Program, of which $650 million have a 2.625% fixed interest rate and $350 million have a variable rate paid quarterly at rates that are indexed to the three-month London Interbank Offered Rate (“LIBOR”).

M&T had ~~$517~~$520 million of fixed and variable rate junior subordinated deferrable interest debentures ("Junior Subordinated Debentures") outstanding at March 31, ~~2017~~2018 that are held by various trusts that were issued in connection with the issuance by those trusts of preferred capital securities ("Capital Securities") and common securities ("Common Securities"). The proceeds from the issuances of the Capital Securities and the Common Securities were used by the trusts to purchase the Junior Subordinated Debentures. The Common Securities of each of those trusts are wholly owned by M&T and are the only class of each trust's securities possessing general voting powers. The Capital Securities represent preferred undivided interests in the assets of the corresponding trust. Under the Federal Reserve Board’s risk-based capital guidelines, the securities are includable in M&T’s Tier 2 regulatory capital.

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

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

at any time after an optional redemption prior to contractual maturity contemporaneously with the optional redemption of the related Junior Subordinated Debentures in whole or in part, subject to possible regulatory approval.

Also included in long-term borrowings are agreements to repurchase securities of ~~$431~~$419 million and ~~$1.1 billion~~$422 million at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. The agreements reflect various repurchase dates through 2020, however, the contractual maturities of the underlying investment securities extend beyond such repurchase dates. The agreements are subject to legally enforceable master netting arrangements, however, the Company has not offset any amounts related to these agreements in its consolidated financial statements. The Company posted collateral consisting primarily of government guaranteed mortgage-backed securities of ~~$452~~$436 million and ~~$1.1 billion~~$442 million at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.

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

Issued and outstanding preferred stock of M&T as of March 31, ~~2017~~2018 and December 31, ~~2016~~2017 is presented below:

	Shares Issued and Outstanding		Carrying Value		Shares Issued and Outstanding		Carrying Value
	(Dollars in thousands)				(Dollars in thousands)
Series A (a)
Fixed Rate Cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share		230,000	$	230,000		230,000	$	230,000
Series C (a)
Fixed Rate Cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share		151,500	$	151,500		151,500	$	151,500
Series E (b)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock, $1,000 liquidation preference per share		350,000	$	350,000		350,000	$	350,000
Series F (c)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock, $10,000 liquidation preference per share		50,000	$	500,000		50,000	$	500,000

In addition to the Series A warrants mentioned in (a) above, a warrant to purchase ~~95,410~~95,525 shares of M&T common stock at ~~$518.81~~$518.18 per share was outstanding at March 31, ~~2017.~~2018. The obligation under that warrant was assumed by M&T in an acquisition and expires inon December 12, 2018.

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

	Pension Benefits						Other Postretirement Benefits						Pension Benefits						Other Postretirement Benefits
	Three Months Ended March 31												Three Months Ended March 31
	2017			2016			2017			2016			2018			2017			2018			2017
	(In thousands)												(In thousands)

Service cost	$	4,908			6,382			383		458			$	5,103			4,908			226		383
Interest cost on projected benefit obligation		19,691			20,883			1,080			1,205			18,805			19,691			557			1,080
Expected return on plan assets		(27,200	)		(27,814	)		—			—			(30,875	)		(27,200	)		—			—
Amortization of prior service cost (credit)		125			(825	)		(350	)		(350	)		125			125			(1,175	)		(350	)
Amortization of net actuarial loss		6,800			8,300			(25	)		—			11,100			6,800			(200	)		(25	)
Net periodic benefit cost	$	4,324			6,926			1,088			1,313		$	4,258			4,324			(592	)		1,088

~~Expense~~Service cost is reflected in salaries and employee benefits expense. The other components of net periodic benefit cost are reflected in other costs of operations. Expenses incurred in connection with the Company's defined contribution pension and retirement savings plans totaled ~~$19,419,000~~$21,274,000 and ~~$17,690,000~~$19,419,000 for the three months ended March 31, 2018 and 2017, respectively, and ~~2016,~~ ~~respectively.~~are included in salaries and employee benefits expense.

	Three Months Ended March 31						Three Months Ended March 31
	2017			2016			2018			2017
	(In thousands, except per share)						(In thousands, except per share)
Income available to common shareholders:
Net income	$	348,927			298,528		$	352,610			348,927
Less: Preferred stock dividends (a)		(18,237	)		(20,318	)		(18,130	)		(18,237	)
Net income available to common equity		330,690			278,210			334,480			330,690
Less: Income attributable to unvested stock-based compensation awards		(2,128	)		(2,466	)		(1,732	)		(2,128	)
Net income available to common shareholders	$	328,562			275,744		$	332,748			328,562
Weighted-average shares outstanding:
Common shares outstanding (including common stock issuable) and unvested stock-based compensation awards		155,463			160,220			149,470			155,463
Less: Unvested stock-based compensation awards		(1,036	)		(1,486	)		(782	)		(1,036	)
Weighted-average shares outstanding		154,427			158,734			148,688			154,427

Basic earnings per common share	$	2.13			1.74		$	2.24			2.13

	Three Months Ended March 31						Three Months Ended March 31
	2017			2016			2018			2017
	(In thousands, except per share)						(In thousands, except per share)

Net income available to common equity	$	330,690			278,210		$	334,480			330,690
Less: Income attributable to unvested stock-based compensation awards		(2,123	)		(2,462	)		(1,731	)		(2,123	)
Net income available to common shareholders	$	328,567			275,748		$	332,749			328,567
Adjusted weighted-average shares outstanding:
Common and unvested stock-based compensation awards		155,463			160,220			149,470			155,463
Less: Unvested stock-based compensation awards		(1,036	)		(1,486	)		(782	)		(1,036	)
Plus: Incremental shares from assumed conversion of stock-based compensation awards and warrants to purchase common stock		522			447			217			522
Adjusted weighted-average shares outstanding		154,949			159,181			148,905			154,949

Diluted earnings per common share	$	2.12			1.73		$	2.23			2.12

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 ~~391,764~~237,584 and ~~2,840,575~~391,764 common shares during the three-month periods ended March 31, ~~2017~~2018 and ~~2016,~~2017, 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			Defined Benefit						Total Amount				Income
																										Securities (a)			Plans			Other			Before Tax				Tax			Net
																										(In thousands)

Balance — January 1, 2018																										$	(59,957	)		(413,168	)		(20,165	)	$	(493,290	)			129,476		$	(363,814	)
Cumulative effect of change in accounting principle — equity securities																											(22,795	)		—			—			(22,795	)			5,942			(16,853	)
Other comprehensive income before reclassifications:
Unrealized holding gains (losses), net																											(145,457	)		—			—			(145,457	)			44,176			(101,281	)
Foreign currency translation adjustment																											—			—			1,632			1,632				(342	)		1,290
Unrealized losses on cash flow hedges																											—			—			(14,719	)		(14,719	)			3,870			(10,849	)
Total other comprehensive income (loss) before reclassifications																											(145,457	)		—			(13,087	)		(158,544	)			47,704			(110,840	)
Amounts reclassified from accumulated other comprehensive income that (increase) decrease net income:
Amortization of unrealized holding losses on held-to-maturity (“HTM”) securities																											810			—			—			810		(c)		(213	)		597
Accretion of net gain on terminated cash flow hedges																											—			—			(28	)		(28	)	(d)		7			(21	)
Net yield adjustment from cash flow hedges currently in effect																											—			—			580			580		(d)		(152	)		428
Amortization of prior service credit																											—			(1,050	)		—			(1,050	)	(e)		276			(774	)
Amortization of actuarial losses																											—			10,900			—			10,900		(e)		(2,866	)		8,034
Total other comprehensive income (loss)																											(144,647	)		9,850			(12,535	)		(147,332	)			44,756			(102,576	)
Balance — March 31, 2018																										$	(227,399	)		(403,318	)		(32,700	)	$	(663,417	)			180,174		$	(483,243	)

	Investment Securities						Defined Benefit						Total Amount				Income						Investment Securities						Defined Benefit						Total Amount				Income
	With OTTI (a)			All Other			Plans			Other			Before Tax				Tax			Net			With OTTI (b)			All Other			Plans			Other			Before Tax				Tax			Net
	(In thousands)																						(In thousands)

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

Balance — January 1, 2016	$	16,359			62,849			(489,660	)		(4,093	)	$	(414,545	)			162,918		$	(251,627	)
Other comprehensive income before reclassifications:
Unrealized holding gains (losses), net		(370	)		159,660			—			—			159,290				(62,680	)		96,610
Foreign currency translation adjustment		—			—			—			(83	)		(83	)			30			(53	)
Total other comprehensive income (loss) before reclassifications		(370	)		159,660			—			(83	)		159,207				(62,650	)		96,557
Amounts reclassified from accumulated other comprehensive income that (increase) decrease net income:
Amortization of unrealized holding losses on HTM securities		—			968			—			—			968		(b)		(381	)		587
Gains realized in net income		—			(4	)		—			—			(4	)	(c)		1			(3	)
Accretion of net gain on terminated cash flow hedges		—			—			—			(39	)		(39	)	(d)		15			(24	)
Amortization of prior service credit		—			—			(1,175	)		—			(1,175	)	(e)		462			(713	)
Amortization of actuarial losses		—			—			8,300			—			8,300		(e)		(3,266	)		5,034
Total reclassifications		—			964			7,125			(39	)		8,050				(3,169	)		4,881
Total gain (loss) during the period		(370	)		160,624			7,125			(122	)		167,257				(65,819	)		101,438
Balance — March 31, 2016	$	15,989			223,473			(482,535	)		(4,215	)	$	(247,288	)			97,099		$	(150,189	)

As part of managing interest rate risk, the Company enters into interest rate swap agreements to modify the repricing characteristics of certain portions of the Company’s portfolios of earning assets and interest-bearing liabilities. The Company designates interest rate swap agreements utilized in the management of interest rate risk as either fair value hedges or cash flow hedges. Interest rate swap agreements are generally entered into with counterparties that meet established credit standards and most contain master netting, collateral and/or settlement provisions protecting the at-risk party. Based on adherence to the Company’s credit standards and the presence of the netting, collateral or settlement provisions, the Company believes that the credit risk inherent in these contracts was not significant as of March 31, ~~2017.~~2018.

~~The~~Exclusive of the impact of hedge ineffectiveness (which was not material), the net effect of interest rate swap agreements was to increase net interest income by $4$1 million and ~~$10~~$4 million for the three-month periods ended March 31, 2018 and 2017, ~~and 2016,~~ respectively.

Information about interest rate swap agreements entered into for interest rate risk management purposes summarized by type of financial instrument the swap agreements were intended to hedge follows:

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 ~~$22.3~~$39.5 billion and ~~$21.6~~$29.9 billion at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. The notional amounts of foreign currency and other option and futures contracts entered into for trading account purposes aggregated ~~$496~~$538 million and ~~$471~~$530 million at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.

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

	Asset Derivatives				Liability Derivatives				Asset Derivatives				Liability Derivatives
	Fair Value				Fair Value				Fair Value				Fair Value
	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016		March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017
	(In thousands)								(In thousands)
Derivatives designated and qualifying as hedging instruments
Fair value hedges:
Interest rate swap agreements (a)	$	7,773		11,892	$	—		—	$	376	$	639	$	—	$	—
Commitments to sell real estate loans (a)		825		33,189		2,321		1,347		1,335		734		1,470		283
		8,598		45,081		2,321		1,347		1,711		1,373		1,470		283
Derivatives not designated and qualifying as hedging instruments
Mortgage-related commitments to originate real estate loans for sale (a)		16,847		8,060		645		735		10,562		8,797		1,802		494
Commitments to sell real estate loans (a)		4,126		5,210		1,582		399		5,361		2,526		2,341		1,019
Trading:
Interest rate contracts (b)		109,996		228,810		134,919		167,737		71,930		74,164		231,254		132,104
Foreign exchange and other option and futures contracts (b)		4,632		7,908		3,776		6,639		6,634		5,657		5,580		5,286
		135,601		249,988		140,922		175,510		94,487		91,144		240,977		138,903
Total derivatives	$	144,199		295,069	$	143,243		176,857	$	96,198	$	92,517	$	242,447	$	139,186

	Amount of Gain (Loss) Recognized										Amount of Gain (Loss) Recognized
	Three Months Ended March 31, 2017					Three Months Ended March 31, 2016					Three Months Ended March 31, 2018					Three Months Ended March 31, 2017
	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)	$	(4,119	)		4,012	$	(2,633	)		1,870	$	(42,390	)		42,370	$	(4,119	)		4,012
Derivatives not designated as hedging instruments
Trading:
Interest rate contracts (b)	$	1,950				$	974				$	(1,605	)			$	1,950
Foreign exchange and other option and futures contracts (b)		1,836					1,212					2,631					1,836
Total	$	3,786				$	2,186				$	1,026				$	3,786

The amount of gain (loss) recognized in the consolidated statement of income associated with derivatives designated as cash flow hedges was not material.

The Company also has commitments to sell and commitments to originate residential and commercial real estate loans that are considered derivatives. The Company designates certain of the commitments to sell real estate loans as fair value hedges of real estate loans held for sale. The Company also utilizes commitments to sell real estate loans to offset the exposure to changes in the fair value of certain commitments to originate real estate loans for sale. As a result of these activities, net unrealized pre-tax gains related to hedged loans held for sale, commitments to originate loans for sale and commitments to sell loans were approximately ~~$24~~$17 million and ~~$28~~$16 million at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. Changes in unrealized gains and losses are included in mortgage banking revenues and, in general, are realized in subsequent periods as the related loans are sold and commitments satisfied.

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

The aggregate fair value of derivative financial instruments in a liability position and the net liability positions with counterparties, which are subject to enforceable master netting arrangements, was ~~$26~~$4 million and ~~$34~~$13 million at March 31, ~~2017~~2018 and December 31, ~~2016, respectively. After consideration of such netting arrangements, the net liability positions with counterparties aggregated $25 million and $30 million at March 31,~~ 2017, ~~and December 31, 2016,~~ respectively. The Company was required to post collateral relating to those positions of ~~$23~~$4 million and ~~$27~~$12 million at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, 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 March 31, ~~2017 was less than $1 million, for which the Company~~2018 was not ~~required to post collateral in the normal course of business.~~significant. If the credit risk-related contingent features had been triggered on March 31, ~~2017,~~2018, the Company would not have been required to post any additional collateral to counterparties.

The aggregate fair value of derivative financial instruments in an asset position and the net asset positions with counterparties, which are subject to enforceable master netting arrangements, was ~~$14~~$38 million and ~~$15~~$13 million at March 31, ~~2017~~2018 and December 31, ~~2016, respectively. After consideration of such netting arrangements, the net asset positions with counterparties aggregated $13 million and $11 million at March 31,~~ 2017, ~~and December 31, 2016,~~ respectively. Counterparties posted collateral relating to those positions of ~~$12~~$32 million and $9$12 million at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. Trading account interest rate swap agreements entered into with customers are subject to the Company’s credit risk standards and often contain collateral provisions.

In addition to the derivative contracts noted above, the Company clears certain derivative transactions through a clearinghouse, rather than directly with counterparties. Those transactions cleared through a clearinghouse require initial margin collateral and ~~additional collateral (“~~variation ~~margin”)~~margin payments depending on the contracts being in a net asset or liability position. The amount of initial margin collateral posted by the Company was ~~$83~~$53 million and ~~$111~~$52 million at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. Effective January 2017, certain clearinghouse exchanges revised their rules to re-characterize required collateral postings for variation margin as legal settlements of those positions. As a result, theThe fair value asset and liability amounts of derivative contracts at March 31, ~~2017~~2018 have been reduced by ~~contractual~~variation margin payments treated as settlements of ~~$112~~$122 million and ~~$25~~$6 million, respectively. Variation margin on derivative contracts not ~~affected by the rule changes continue~~treated as settlements continues to represent collateral posted or received by the Company. For those contracts, the net fair values of derivative financial instruments cleared through clearinghouses for which variation margin is required was a net asset position of $1 million and $63 million at March 31, 2017 and December 31, 2016, respectively. Collateral posted by the clearinghouses associated with that net asset position was $1 million and $81 million at March 31, 2017 and December 31, 2016, respectively.

The Company’s securitization activity has consisted of securitizing loans originated for sale into government issued or guaranteed mortgage-backed securities. The amounts of those securitizations during the three-month periods March 31, 2018 and March 31, 2017 are presented in the Company’s consolidated statement of cash flows. The Company has not recognized any losses as a result of having securitized assets.

As described in note 5,4, M&T has issued junior subordinated debentures payable to various trusts that have issued Capital Securities. M&T owns the common securities of those trust entities. The Company is not considered to be the primary beneficiary of those entities and, accordingly, the trusts are not included in the Company’s consolidated financial statements. At each of March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, the Company included the junior subordinated debentures as “long-term borrowings” in its consolidated balance sheet and recognized ~~$24~~$23 million in other assets for its “investment” in the common securities of the trusts that will be concomitantly repaid to M&T by the respective trust from the proceeds of M&T’s repayment of the junior subordinated debentures associated with preferred capital securities described in note 5.4.

The Company has invested as a limited partner in various partnerships that collectively had total assets of approximately $1.0 billion at each of March 31, ~~2017~~2018 and December 31, ~~2016.~~2017. Those partnerships generally construct or acquire properties for which the investing partners are eligible to receive certain federal income tax credits in accordance with government guidelines. Such investments may also provide tax deductible losses to the partners. The partnership investments also assist the Company in achieving its community reinvestment initiatives. As a limited partner, there is no recourse to the Company by creditors of the partnerships. However, the tax credits that result from the Company’s investments in such partnerships are generally subject to recapture should a partnership fail to comply with the respective government regulations. The Company’s maximum exposure to loss of its investments in such partnerships was ~~$316~~$422 million, including ~~$114~~$196 million of unfunded commitments, at March 31, ~~2017~~2018 and ~~$294~~$420 million, including ~~$102~~$201 million of unfunded commitments, at December 31, ~~2016.~~2017. Contingent commitments to provide additional capital contributions to these partnerships were not material at March 31, ~~2017.~~2018. The Company has not provided financial or other support to the partnerships that was not contractually required. Management currently estimates that no material losses are probable as a result of the Company’s involvement with such entities. The Company, in its position as limited partner, does not direct the activities that most significantly impact the economic performance of the partnerships and, therefore, in accordance with the accounting provisions for variable interest entities, the partnership entities are not included in the Company’s consolidated financial statements. The Company’s investment cost is amortized to income taxes in the consolidated statement of income as tax credits and other tax benefits resulting from deductible losses associated with the projects are received. The Company amortized $13 million ~~and $11 million~~ of its investments in qualified affordable housing projects to income tax expense during each of the three-month periods ended March 31, ~~2017~~2018 and ~~2016, respectively,~~2017 and recognized $16 ~~million and $14~~ million of tax credits and other tax benefits during each of those ~~respective~~ periods.

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

GAAP permits an entity to choose to measure eligible financial instruments and other items at fair value. The Company has not made any fair value elections at March 31, ~~2017.~~2018.

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

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

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

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

The Company enters into various commitments to originate real estate loans for sale and commitments to sell real estate loans. Such commitments are considered to be derivative financial instruments and, therefore, are carried at estimated fair value on the consolidated balance sheet. The estimated fair values of such commitments were generally calculated by reference to quoted prices in secondary markets for commitments to sell real estate loans to certain government-sponsored entities and other parties. The fair valuations of commitments to sell real estate loans generally result in a Level 2 classification. The estimated fair value of commitments to originate real estate loans for sale are adjusted to reflect the Company's anticipated commitment expirations. The estimated commitment expirations are considered significant unobservable inputs contributing to the Level 3 classification of commitments to originate real estate loans for sale. Significant unobservable inputs used in the determination of estimated fair value of commitments to originate real estate loans for sale are included in the accompanying table of significant unobservable inputs to Level 3 measurements.

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

The following tables present assets and liabilities at March 31, ~~2017~~2018 and December 31, ~~2016~~2017 measured at estimated fair value on a recurring basis:

	Fair Value Measurements		Level 1 (a)		Level 2 (a)		Level 3		Fair Value Measurements		Level 1 (a)		Level 2 (a)		Level 3
	(In thousands)								(In thousands)
March 31, 2017
March 31, 2018
Trading account assets									$	141,134	$	46,215	$	94,919	$	—
Investment securities available for sale:
U.S. Treasury and federal agencies										1,941,478		—		1,941,478		—
Obligations of states and political subdivisions										2,000		—		2,000		—
Mortgage-backed securities:
Government issued or guaranteed										8,222,129		—		8,222,129		—
Privately issued										27		—		—		27
Other debt securities										132,222		—		132,222		—
										10,297,856		—		10,297,829		27
Equity securities										61,717		43,496		18,221		—
Real estate loans held for sale										455,196		—		455,196		—
Other assets (b)										17,634		—		7,072		10,562
Total assets									$	10,973,537	$	89,711	$	10,873,237	$	10,589
Trading account liabilities									$	236,834	$	—	$	236,834	$	-
Other liabilities (b)										5,613		—		3,811		1,802
Total liabilities									$	242,447	$	—	$	240,645	$	1,802

December 31, 2017
Trading account assets	$	174,854		46,137		128,717		—	$	132,909	$	47,873	$	85,036	$	—
Investment securities available for sale:
U.S. Treasury and federal agencies		1,898,250		—		1,898,250		—		1,947,487		—		1,947,487		—
Obligations of states and political subdivisions		3,124		—		3,124		—		2,589		—		2,589		—
Mortgage-backed securities:
Government issued or guaranteed		10,504,314		—		10,504,314		—		8,716,392		—		8,716,392		—
Privately issued		41		—		—		41		28		—		—		28
Other debt securities		119,767		—		119,767		—		128,832		—		128,832		—
Equity securities		105,504		63,698		41,806		—		100,956		73,232		27,724		—
		12,631,000		63,698		12,567,261		41		10,896,284		73,232		10,823,024		28
Real estate loans held for sale		372,023		—		372,023		—		378,047		—		378,047		—
Other assets (b)		29,571		—		12,724		16,847		12,696		—		3,899		8,797
Total assets	$	13,207,448		109,835		13,080,725		16,888	$	11,419,936	$	121,105	$	11,290,006	$	8,825
Trading account liabilities	$	138,695		—		138,695		—	$	137,390	$	—	$	137,390	$	—
Other liabilities (b)		4,548		—		3,903		645		1,796		—		1,302		494
Total liabilities	$	143,243		—		142,598		645	$	139,186	$	—	$	138,692	$	494

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

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended March 31, 2018 were as follows:

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

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

	Investment Securities Available for Sale											Investment Securities Available for Sale
	Privately Issued Mortgage-Backed Securities			Collateralized Debt Obligations				Other Assets and Other Liabilities				Privately Issued Mortgage-Backed Securities			Other Assets and Other Liabilities
				(In thousands)								(In thousands)

Balance — January 1, 2016	$	74			47,393				9,879
Balance — January 1, 2017												$	44			7,325
Total gains (losses) realized/unrealized:
Included in earnings		—			—				23,898		(b)		—			23,940		(b)
Included in other comprehensive income		—			(2,148	)	(c)		—
Settlements		(9	)		(205	)			—				(3	)		—
Transfers in and/or out of Level 3 (a)		—			—				(16,892	)	(d)		—			(15,063	)	(c)
Balance — March 31, 2016	$	65			45,040				16,885
Changes in unrealized gains included in earnings related to assets still held at March 31, 2016	$	—			—				14,539		(b)
Balance — March 31, 2017												$	41			16,202
Changes in unrealized gains included in earnings related to assets still held at March 31, 2017												$	—			15,094		(b)

The Company is required, on a nonrecurring basis, to adjust the carrying value of certain assets or provide valuation allowances related to certain assets using fair value measurements. The more significant of those assets follow.

Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace and the related nonrecurring fair value measurement adjustments have generally been classified as Level 2, unless significant adjustments have been made to the valuation that are not readily observable by market participants. Non-real estate collateral supporting commercial loans generally consists of business assets such as receivables, inventory and equipment. Fair value estimations are typically determined by discounting recorded values of those assets to reflect estimated net realizable value considering specific borrower facts and circumstances and the experience of credit personnel in their dealings with similar borrower collateral liquidations. Such discounts were generally in the range of 15% to 90% at March 31, ~~2017.~~2018. As these discounts are not readily observable and are considered significant, the valuations have been classified as Level 3. Automobile collateral is typically valued by reference to independent pricing sources based on recent sales transactions of similar vehicles, and the related nonrecurring fair value measurement adjustments have been classified as Level 2. Collateral values for other consumer installment loans are generally estimated based on historical recovery rates for similar types of loans. As these recovery rates are not readily observable by market participants, such valuation adjustments have been classified as Level 3. Loans subject to nonrecurring fair value measurement were ~~$210~~$178 million at March 31, ~~2017~~2018 ($8897 million and ~~$122~~$81 million of which were classified as Level 2 and Level 3, respectively), ~~$293~~$210 million at December 31, ~~2016~~2017 ($~~153~~145 million and ~~$140~~$65 million of which were classified as Level 2 and Level 3, respectively) and ~~$226~~$210 million at March 31, ~~2016~~2017 ($~~127~~88 million and ~~$99~~$122 million of which were classified as Level 2 and Level 3, respectively). Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on March 31, ~~2017~~2018 and ~~2016~~2017 were decreases of ~~$42~~$27 million and ~~$27~~$42 million for the three-month periods ended March 31, ~~2017~~2018 and March 31, ~~2016,~~2017, respectively.

Assets taken in foreclosure of defaulted loans are primarily comprised of commercial and residential real property and are generally measured at the lower of cost or fair value less costs to sell. The fair value of the real property is generally determined using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace, and the related nonrecurring fair value measurement adjustments have generally been classified as Level 2. Assets taken in foreclosure of defaulted loans subject to nonrecurring fair value measurement were ~~$32~~$19 million and ~~$62~~$32 million at March 31, ~~2017~~2018 and ~~2016,~~2017, respectively. Changes in fair value recognized for those foreclosed assets held by the Company were not material during the three-month periods ended March 31, ~~2017~~2018 and ~~2016.~~2017.

The following tables present quantitative information about significant unobservable inputs used in the fair value measurements for certain Level 3 assets and liabilities at March 31, ~~2017~~2018 and December 31, ~~2016:~~2017:

	Fair Value		Valuation Technique	Unobservable Inputs/Assumptions		Range (Weighted- Average)		Fair Value		Valuation Technique	Unobservable Inputs/Assumptions		Range (Weighted- Average)
	(In thousands)							(In thousands)
March 31, 2017
March 31, 2018
Recurring fair value measurements
Privately issued mortgage-backed securities	$	41	Two independent pricing quotes		—		—	$	27	Two independent pricing quotes		—		—
Net other assets (liabilities) (a)		16,202	Discounted cash flow	Commitment expirations		0%-80% (24%)			8,760	Discounted cash flow	Commitment expirations		0%-76% (19%)

December 31, 2016
December 31, 2017
Recurring fair value measurements
Privately issued mortgage-backed securities	$	44	Two independent pricing quotes		—		—	$	28	Two independent pricing quotes		—		—
Net other assets (liabilities) (a)		7,325	Discounted cash flow	Commitment expirations		0%-77% (30%)			8,303	Discounted cash flow	Commitment expirations		0%-78% (22%)

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

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

	March 31, 2017														March 31, 2018
	Carrying Amount			Estimated Fair Value			Level 1		Level 2			Level 3			Carrying Amount			Estimated Fair Value			Level 1		Level 2			Level 3
	(In thousands)														(In thousands)
Financial assets:
Cash and cash equivalents	$	1,286,962			1,286,962			1,213,120		73,842			—		$	1,292,664			1,292,664			1,206,172		86,492			—
Interest-bearing deposits at banks		6,945,149			6,945,149			—		6,945,149			—			6,135,434			6,135,434			—		6,135,434			—
Trading account		174,854			174,854			46,137		128,717			—
Trading account assets																141,134			141,134			46,215		94,919			—
Investment securities		15,968,415			15,958,181			63,698		15,775,917			118,566			14,066,564			13,998,023			43,496		13,841,655			112,872
Loans and leases:
Commercial loans and leases		22,295,376			21,882,456			—		—			21,882,456			21,697,522			21,294,038			—		—			21,294,038
Commercial real estate loans		33,071,654			32,607,794			—		74,563			32,533,231			33,753,506			33,123,306			—		166,773			32,956,533
Residential real estate loans		21,724,491			21,776,908			—		4,686,339			17,090,569			18,960,946			18,812,289			—		4,226,284			14,586,005
Consumer loans		12,221,481			12,083,513			—		—			12,083,513			13,298,775			13,112,874			—		—			13,112,874
Allowance for credit losses		(1,001,430	)		—			—		—			—			(1,019,671	)		—			—		—			—
Loans and leases, net		88,311,572			88,350,671			—		4,760,902			83,589,769			86,691,078			86,342,507			—		4,393,057			81,949,450
Accrued interest receivable		318,152			318,152			—		318,152			—			332,151			332,151			—		332,151			—
Financial liabilities:
Noninterest-bearing deposits	$	(34,279,591	)		(34,279,591	)		—		(34,279,591	)		—		$	(31,817,516	)		(31,817,516	)		—		(31,817,516	)		—
Savings and interest-checking deposits		(53,542,149	)		(53,542,149	)		—		(53,542,149	)		—			(52,724,608	)		(52,724,608	)		—		(52,724,608	)		—
Time deposits		(9,028,018	)		(9,106,654	)		—		(9,106,654	)		—			(6,126,442	)		(6,177,695	)		—		(6,177,695	)		—
Deposits at Cayman Islands office		(192,763	)		(192,763	)		—		(192,763	)		—			(278,064	)		(278,064	)		—		(278,064	)		—
Short-term borrowings		(185,102	)		(185,102	)		—		(185,102	)		—			(1,626,129	)		(1,626,129	)		—		(1,626,129	)		—
Long-term borrowings		(8,087,619	)		(8,104,055	)		—		(8,104,055	)		—			(8,591,051	)		(8,598,328	)		—		(8,598,328	)		—
Accrued interest payable		(60,737	)		(60,737	)		—		(60,737	)		—			(65,819	)		(65,819	)		—		(65,819	)		—
Trading account		(138,695	)		(138,695	)		—		(138,695	)		—
Trading account liabilities																(236,834	)		(236,834	)		—		(236,834	)		—
Other financial instruments:
Commitments to originate real estate loans for sale	$	16,202			16,202			—		—			16,202		$	8,760			8,760			—		—			8,760
Commitments to sell real estate loans		1,048			1,048			—		1,048			—			2,885			2,885			—		2,885			—
Other credit-related commitments		(129,968	)		(129,968	)		—		—			(129,968	)		(122,805	)		(122,805	)		—		—			(122,805	)
Interest rate swap agreements used for interest rate risk management		7,773			7,773			—		7,773			—			376			376			—		376			—	��

	December 31, 2016														December 31, 2017
	Carrying Amount			Estimated Fair Value			Level 1		Level 2			Level 3			Carrying Amount			Estimated Fair Value			Level 1		Level 2			Level 3
				(In thousands)														(In thousands)
Financial assets:
Cash and cash equivalents	$	1,320,549			1,320,549			1,249,654		70,895		—			$	1,420,888			1,420,888			1,352,035		68,853		—
Interest-bearing deposits at banks		5,000,638			5,000,638			—		5,000,638		—				5,078,903			5,078,903			—		5,078,903		—
Trading account		323,867			323,867			46,135		277,732		—
Trading account assets																132,909			132,909			47,873		85,036		—
Investment securities		16,250,468			16,244,412			301,711		15,821,176			121,525			14,664,525			14,653,074			73,232		14,469,127			110,715
Loans and leases:
Commercial loans and leases		22,610,047			22,239,428		—		—				22,239,428			21,742,651			21,321,282		—		—				21,321,282
Commercial real estate loans		33,506,394			33,129,428		—			642,590			32,486,838			33,366,373			32,950,724		—			22,130			32,928,594
Residential real estate loans		22,590,912			22,638,167		—			4,912,488			17,725,679			19,613,344			19,596,826		—			4,440,645			15,156,181
Consumer loans		12,146,063			12,061,590		—			—			12,061,590			13,266,615			13,161,517		—			—			13,161,517
Allowance for credit losses		(988,997	)		—		—			—			—			(1,017,198	)		—		—			—			—
Loans and leases, net		89,864,419			90,068,613		—			5,555,078			84,513,535			86,971,785			87,030,349		—			4,462,775			82,567,574
Accrued interest receivable		308,805			308,805		—			308,805		—				327,170			327,170		—			327,170			—
Financial liabilities:
Noninterest-bearing deposits	$	(32,813,896	)		(32,813,896	)	—			(32,813,896	)	—			$	(33,975,180	)		(33,975,180	)	—			(33,975,180	)	—
Savings and interest-checking deposits		(52,346,207	)		(52,346,207	)	—			(52,346,207	)	—				(51,698,008	)		(51,698,008	)	—			(51,698,008	)	—
Time deposits		(10,131,846	)		(10,222,585	)	—			(10,222,585	)	—				(6,580,962	)		(6,635,048	)	—			(6,635,048	)	—
Deposits at Cayman Islands office		(201,927	)		(201,927	)	—			(201,927	)	—				(177,996	)		(177,996	)	—			(177,996	)	—
Short-term borrowings		(163,442	)		(163,442	)	—			(163,442	)	—				(175,099	)		(175,099	)	—			(175,099	)	—
Long-term borrowings		(9,493,835	)		(9,473,844	)	—			(9,473,844	)	—				(8,141,430	)		(8,193,783	)	—			(8,193,783	)	—
Accrued interest payable		(75,172	)		(75,172	)	—			(75,172	)	—				(75,641	)		(75,641	)	—			(75,641	)	—
Trading account		(174,376	)		(174,376	)	—			(174,376	)	—
Trading account liabilities																(137,390	)		(137,390	)	—			(137,390	)	—
Other financial instruments:
Commitments to originate real estate loans for sale	$	7,325			7,325		—			—			7,325		$	8,303			8,303		—			—			8,303
Commitments to sell real estate loans		36,653			36,653		—			36,653		—				1,958			1,958		—			1,958		—
Other credit-related commitments		(136,295	)		(136,295	)	—			—			(136,295	)		(125,281	)		(125,281	)	—			—			(125,281	)
Interest rate swap agreements used for interest rate risk management		11,892			11,892		—			11,892		—				639			639		—			639		—

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

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

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

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

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

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

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

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

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

The Company does not believe that the estimated information presented herein is representative of the earnings power or value of the Company. The preceding analysis, which is inherently limited in depicting fair value, also does not consider any value associated with existing customer relationships nor the ability of the Company to create value through loan origination, deposit gathering or fee generating activities. Many of the estimates presented herein are based upon the use of highly subjective information and assumptions and, accordingly, the results may not be precise. Management believes that fair value estimates may not be comparable between financial institutions due to the wide range of permitted valuation techniques and numerous estimates which must be made. Furthermore, because the disclosed fair value amounts were estimated as of the balance sheet date, the amounts actually realized or paid upon maturity or settlement of the various financial instruments could be significantly different.

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

	March 31,		December 31,		March 31,		December 31,
	2017		2016		2018		2017
	(In thousands)				(In thousands)
Commitments to extend credit
Home equity lines of credit	$	5,535,221		5,499,609	$	5,518,820		5,482,622
Commercial real estate loans to be sold		298,039		70,100		288,883		194,763
Other commercial real estate		6,166,511		6,451,709		5,788,080		6,050,569
Residential real estate loans to be sold		473,837		478,950		343,400		347,113
Other residential real estate		240,430		232,721		223,589		201,426
Commercial and other		12,134,803		12,298,473		12,951,589		12,733,815
Standby letters of credit		2,937,504		2,987,091		2,477,474		2,497,844
Commercial letters of credit		46,560		44,723		56,245		46,739
Financial guarantees and indemnification contracts		3,477,006		3,043,580		3,449,447		3,434,381
Commitments to sell real estate loans		1,013,409		1,489,237		977,257		812,217

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 ~~$3.0 billion and $2.8~~$3.3 billion at each of March 31, ~~2017~~2018 and December 31, ~~2016, respectively.~~

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

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

The Company is contractually obligated to repurchase previously sold residential real estate loans that do not ultimately meet investor sale criteria related to underwriting procedures or loan documentation. When required to do so, the Company may reimburse loan purchasers for losses incurred or may repurchase certain loans. The Company reduces residential mortgage banking revenues by an estimate for losses related to its obligations to loan purchasers.

The amount of those charges is based on the volume of loans sold, the level of reimbursement requests received from loan purchasers and estimates of losses that may be associated with previously sold loans. At March 31, ~~2017~~2018 the Company believes that its obligation to loan purchasers was not material to the Company’s consolidated financial position.

As previously disclosed, Wilmington Trust Corporation (“WTC”), a wholly-owned subsidiary of M&T, is the subject of a class action lawsuit alleging that WTC’s financial reporting and securities filings prior to its acquisition by M&T in 2011 were in violation of securities laws. In April 2018, the parties reached an agreement in principle. The agreement in principle is subject to certain required party approvals, the negotiation and execution of a formal settlement agreement and court approval. The Company currently anticipates that necessary party approvals will be completed and a formal settlement agreement will be executed and filed with the court for approval during the second quarter of 2018. A motion for preliminary approval of a proposed settlement will be decided by the court at its discretion. As of March 31, 2018, the Company increased its reserve for litigation matters by $135 million.

M&T and its subsidiaries are subject in the normal course of business to various other pending and threatened legal proceedings and ~~other~~ matters in which claims for monetary damages are asserted. On an on-going basis management, after consultation with legal counsel, assesses the Company’s liabilities and contingencies in connection with such proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability, was between $0 and ~~$40~~$50 million. Although the Company does not believe that the outcome of pending litigations will be material to the Company’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.

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

The financial information of the Company's segments was compiled utilizing the accounting policies described in note 22 of Notes to Financial Statements in the ~~2016~~2017 Annual Report. The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, the financial information of the reported segments is not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data. ~~As disclosed in~~During the ~~2016 Annual Report, during 2016~~second quarter of 2017 the Company revised its funds transfer pricing allocation related to ~~borrowings and to the residential real estate loans obtained in the acquisition of Hudson City, retroactive to 2015. Accordingly,~~certain deposit categories. As a result, financial information for the ~~three-month period~~
first quarter of 2017 has been reclassified to provide segment information on a comparable basis, as noted in the following table.

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

As also described in note 22 in the 2016 Annual Report, neither goodwill nor core deposit and other intangible assets (and the amortization charges associated with such assets) resulting from acquisitions of financial institutions have been allocated to the Company's reportable segments, but are included in the “All Other” category. The Company does, however, assign such intangible assets to business units for purposes of testing for impairment.

	Three Months Ended March 31																Three Months Ended March 31
	2017								2016								2018								2017
	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	$	115,981		911			22,407		$	113,689		991			25,448		$	127,884		918			37,718		$	120,333		911			24,988
Commercial Banking		273,845		920			112,750			253,617		1,056			101,327			266,396		850			125,465			273,908		920			112,787
Commercial Real Estate		195,125		407			84,547			177,380		387			80,529			202,607		340			108,303			195,125		407			84,547
Discretionary Portfolio		78,946		(12,927	)		33,945			101,036		(14,323	)		48,410			50,038		(10,832	)		19,739			78,946		(12,927	)		33,945
Residential Mortgage Banking		93,708		18,211			14,844			96,935		19,660			17,077			82,458		15,421			14,946			85,401		18,211			9,917
Retail Banking		361,237		3,047			81,873			339,046		3,014			63,288			393,476		2,865			123,380			368,518		3,047			86,191
All Other		242,263		(10,569	)		(1,439	)		211,194		(10,785	)		(37,551	)		311,354		(9,562	)		(76,941	)		238,874		(10,569	)		(3,448	)
Total	$	1,361,105		—			348,927		$	1,292,897		—			298,528		$	1,434,213		—			352,610		$	1,361,105		—			348,927

	Average total assets						Average Total Assets
	Three Months Ended March 31				Year Ended December 31		Three Months Ended March 31				Year Ended December 31
	2017		2016		2016		2018		2017		2017
	(In millions)						(In millions)

Business Banking	$	5,596		5,424		5,456	$	5,681		5,596		5,602
Commercial Banking		26,723		24,838		25,592		26,482		26,723		26,573
Commercial Real Estate		22,977		19,839		21,131		22,811		22,977		22,741
Discretionary Portfolio		38,731		42,509		40,867		34,095		38,731		37,203
Residential Mortgage Banking		2,426		2,647		2,569		2,278		2,426		2,355
Retail Banking		12,204		11,568		11,840		13,377		12,204		12,702
All Other		14,321		16,427		16,885		12,960		14,321		13,684
Total	$	122,978		123,252		124,340	$	117,684		122,978		120,860

~~15.~~14. 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~~That investment had no remaining carrying value at March 31, 2018 as a result of ~~that investment was $364 thousand at~~cumulative losses recognized and cash distributions received. Income recognized by M&T is included in other revenues from operations and totaled $23 million during the three months ended March 31, 2018, compared with a loss of $2 million during the three months ended March 31, 2017.

Bayview Financial Holdings, L.P. (together with its affiliates, "Bayview Financial"), a privately-held specialty mortgage finance company, is BLG's majority investor. In addition to their common investment in BLG, the Company and Bayview Financial conduct other business activities with each other. The Company has obtained loan servicing rights for mortgage loans from BLG and Bayview Financial having outstanding principal balances of ~~$3.4~~$2.9 billion and ~~$3.5~~$3.0 billion at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. Revenues from those servicing rights were $4 million ~~and $5 million~~ for each of the quarters ended March 31, ~~2017~~2018 and ~~2016, respectively.~~2017. The Company sub-services residential mortgage loans for Bayview Financial having outstanding principal balances of ~~$40.8~~$55.8 billion and ~~$30.4~~$56.6 billion at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. Revenues earned for sub-servicing loans for Bayview Financial were $30 million and $23 million for ~~each of~~ the three-month periods ended March 31, 2018 and 2017, ~~and 2016.~~respectively. In addition, the Company held ~~$153~~$129 million and ~~$158~~$136 million of mortgage-backed securities in its held-to-maturity portfolio at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, that were securitized by Bayview Financial. ~~In April 2017,~~At March 31, 2018, the Company ~~provided a~~held $90 million of Bayview Financial’s $750 million syndicated loan ~~to Bayview Financial for $100 million at terms consistent with those offered to non-affiliated customers.~~

Effective January 1, 2017, the Company adopted amended accounting guidance for share-based transactions. The most significant aspect of the amended guidance that affects the Company requires that all excess tax benefits and tax deficiencies be recognized in income tax expense in the income statement and that such amounts be recognized in the period in which the tax deduction arises or in the period in which an expiration of an award occurs. The adoption of this guidance resulted in an $18 million reduction of income tax expense for the quarter ended March 31, 2017 that under previous accounting guidance would have been recognized directly in shareholders’ equity.

Effective January 2017, the Company also adopted amended accounting guidance for the transition to the equity method of accounting. The amended guidance eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method has been in effect during all previous periods that the investment had been held. Instead, the amended guidance requires the investor to adopt the equity method of accounting as of the date the investment first qualifies for such accounting. The adoption of this guidance did not have a material effect on the Company’s consolidated financial position or results of operations.

In January 2017, the Company adopted two amendments to the accounting guidance for derivatives and hedging. The first amendment clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The second amendment clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment is required to assess the embedded call (put) options solely in accordance with a four-step decision sequence and no longer has to assess whether the event that triggers the ability to exercise the option is related to interest rates or credit risks. The adoption of this guidance did not have a material effect on the Company’s consolidated financial position or results of operations.facility.

~~16. Recent accounting developments, continued~~15. Revenue from contracts with customers

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

~~The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15,~~Effective January 1, 2018 with early adoption permitted. If adopted in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company does not expect the guidance to have a material impact on its consolidated financial statements.

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

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

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

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

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

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

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

December 15, 2019. The Company is assessing the new guidance to determine what modifications to existing credit estimation processes may be required. The Company expects that the new guidance will result in an increase in its allowance for credit losses as a result of considering credit losses over the expected life of its loan portfolios. Increases in the level of the allowance for credit losses will also reflect new requirements to include the nonaccretable principal difference on purchased credit impaired loans and estimated credit losses on investment securities classified as held-to-maturity, if any. The Company is still evaluating the extent of the increase to the allowance for credit losses and the impact to its financial statements.

In February 2016, the FASB issued guidance related to the accounting for leases. The core principle of the guidance is that all leases create an asset and a liability for the lessee and, therefore, lease assets and lease liabilities should be recognized in the balance sheet. Lease assets will be recognized as a right-of-use asset and lease liabilities will be recognized as a liability to make lease payments. While the guidance requires all leases to be recognized in the balance sheet, there continues to be a differentiation between finance leases and operating leases for purposes of income statement recognition and cash flow statement presentation. For finance leases, interest on the lease liability and amortization of the right-of-use asset will be recognized separately in the statement of income. Repayments of principal on those lease liabilities will be classified within financing activities and payments of interest on the lease liability will be classified within operating activities in the statement of cash flows. For operating leases, a single lease cost is recognized in the statement of income and allocated over the lease term, generally on a straight-line basis. All cash payments are presented within operating activities in the statement of cash flows. The accounting applied by lessors is largely unchanged from existing GAAP, however, the guidance eliminates the accounting model for leveraged leases for leases that commence after the effective date of the guidance. The guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company occupies certain banking offices and uses certain equipment under noncancelable operating lease agreements, which currently are not reflected in its consolidated balance sheet. Upon adoption of the guidance, the Company expects to report increased assets and increased liabilities as a result of recognizing right-of-use assets and lease liabilities on its consolidated balance sheet. The Company was committed to $467 million of minimum lease payments under noncancelable operating lease agreements at December 31, 2016. The Company does not expect the new guidance will have a material impact to its consolidated statement of income.

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

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

~~In May 2014, the FASB issued~~adopted amended accounting and disclosure guidance for revenue from contracts with ~~customers. The core principle of the accounting guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to~~ customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer. The amended disclosure guidance requires sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amended guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The guidance should be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application (the “modified retrospective approach”). At present, the Company expects to adopt the revenue recognition guidance in the first quarter of 2018 usingunder the modified retrospective approach. A significant amount of the Company’s revenues are derived from net interest income on financial assets and liabilities, ~~which~~mortgage banking revenues, trading account and foreign exchange gains, investment securities gains, loan and letter of credit fees, operating lease income, income from bank-owned life insurance, and certain other revenues that are generally excluded from the scope of the amended guidance. ~~With respect~~As of result of the adoption, the Company began reporting credit card interchange revenue net of $3 million of rewards in other revenue from operations in the first quarter of 2018. For the quarter ended March 31, 2017, credit card rewards expense of $2 million was included in other costs of operations. The adjustment to beginning retained earnings as well as the impact of any changes in timing of revenue recognition of noninterest income items within the ~~Company has identified~~scope of the guidance was not material to the Company’s consolidated financial position at December 31, 2017 or its consolidated results of operations for the three months ended March 31, 2018.

For noninterest income revenue streams within the scope of the amended guidance, the Company recognizes the expected amount of consideration as revenue when the performance obligations related to the services under the terms of a contract are satisfied. The Company’s contracts generally do not contain terms that necessitate significant judgment to determine the amount of revenue to recognize.

The Company generally charges customer accounts or otherwise bills customers upon completion of its services. Typically the Company’s contracts with customers have a duration of one year or less and payment for services is ~~performing an evaluation~~received at least annually, but oftentimes more frequently as services are provided. At March 31, 2018, the Company had $49 million of uncollected amounts receivable related to recognized revenue from the sources in the table below. Such amount is classified in accrued interest and other assets in the Company’s consolidated balance sheet. In certain situations the Company is paid in advance of providing services and defers the recognition of revenue until its service obligation is satisfied. At March 31, 2018, the Company had deferred revenue of $43 million related to the sources in the table below recorded in accrued interest and other liabilities on its consolidated balance sheet. The following table summarizes sources of M&T’s noninterest income during the first quarter of 2018 that are subject to the amended guidance.

Service charges on deposit accounts are generally deducted directly from customer account balances and include account maintenance charges as well as fees for insufficient funds, debit card usage, and other transactional services. Account maintenance charges are generally recognized as revenue on a monthly basis, whereas transactional fees are recognized after M&T provides the respective service.

Trust income includes fees related to the Institutional Client Services (“ICS”) business and the Wealth Advisory Services (“WAS”) business. Revenues from the ICS business are largely derived from a variety of trustee, agency,

investment, cash management and administrative services, whereas revenues from the WAS business are mainly derived from asset management, fiduciary services, and family office services. Trust fees may be billed in arrears or in advance and are recognized as revenues as M&T’s performance obligations are satisfied. Certain fees are based on a percentage of assets invested or under management and are recognized as the service is performed and constraints regarding the uncertainty of the ~~underlying~~amount of fees are resolved.

Brokerage service income includes revenues from the sale of mutual funds and annuities and securities brokerage fees. Such revenues are generally recognized at the time of transaction execution. Mutual fund and other distribution fees are recognized upon initial placement of customer funds as well as in future periods as such customers continue to hold amounts in those mutual funds.

Merchant discount and other credit card fees include interchange fees and merchant discount fees that are generally recognized as other revenues from operations when the cardholder’s transaction is approved and settled. Beginning in 2018, credit card rewards accrued to cardholders are recognized as a reduction of interchange revenue. Also included in other revenues from operations are insurance commissions, ATM surcharge fees, and advisory fees. Insurance commissions are recognized at the time the insurance policy is executed with the customer. Insurance renewal commissions are recognized upon subsequent renewal of the policy. ATM surcharge fees are included in revenue ~~contracts. To date,~~at the time of the respective ATM transaction. Advisory fees are generally recognized at the conclusion of the advisory engagement when the Company has satisfied its service obligation.

The following table provides a description of accounting standards that were adopted by the company in 2018 as well as standards that are not ~~yet identified any material changes in the timing of revenue recognition when considering the amended~~effective that could have an impact to M&T’s consolidated financial statements upon adoption.

16. Recent accounting ~~guidance, however, the Company’s implementation efforts are ongoing and such assessments may change prior to the January 1, 2018 implementation~~developments, continued

M&T Bank Corporation (“M&T”) recorded net income in the first quarter of ~~2017~~2018 of $353 million or $2.23 of diluted earnings per common share, compared with $349 million or $2.12 of diluted earnings per common share ~~compared with $299 million or $1.73 of diluted earnings per common share~~ in the ~~initial~~year-earlier quarter. During the fourth quarter of ~~2016. During the final 2016 quarter,~~2017, net income and diluted earnings per common share were ~~$331~~$322 million and ~~$1.98,~~$2.01, respectively. Basic earnings per common share were ~~$2.13~~$2.24 in the recent quarter, compared with ~~$1.74~~$2.13 and ~~$1.98~~$2.01 in the first and fourth quarters of ~~2016,~~2017, respectively. The annualized rate of return on average total assets for M&T and its consolidated subsidiaries (“the Company”) in the initial ~~2017~~2018 quarter was ~~1.15%~~1.22%, compared with ~~.97%~~1.15% in the ~~corresponding~~similar 2017 quarter ~~of 2016~~ and ~~1.05%~~1.06% in the final ~~2016~~2017 quarter. The annualized rate of return on average common shareholders’ equity was ~~8.89%~~9.15% in the recent quarter, compared with ~~7.44%~~8.89% in the year-earlier quarter and ~~8.13%~~8.03% in the fourth quarter of ~~2016.~~2017.

As of March 31, 2018, the Company increased its reserve for litigation matters by $135 million to reflect the status of pre-existing litigation. The increase, on an after-tax basis, reduced net income by $102 million, or $.68 of diluted earnings per common share. Additional information about litigation matters is included in note 12 of Notes to Financial Statements and Part II, Item 1 of this Form 10-Q. In addition, income tax expense in the first quarter of 2018 reflects the reduction of the corporate Federal income tax rate from 35% to 21% by the Tax Cuts and Jobs Act (‘the Tax Act”) that was enacted on December 22, 2017. Finally, the Company adopted amended accounting guidance in the first quarter of 2018 to separately report equity securities at fair value on the consolidated balance sheet (which were previously reported as investment securities available for sale) with changes in fair value recognized in the consolidated statement of income rather than through other comprehensive income. Net unrealized losses in investments in equity securities in the initial 2018 quarter totaled $9 million.

During the ~~first~~initial quarter of 2017, M&T adopted new accounting guidance for share-based transactions. That guidance requires that all excess tax benefits and tax deficiencies associated with share-based compensation be recognized in income tax expense in the income statement. Previously, tax effects resulting from changes in M&T’s share price subsequent to the grant date were recorded through shareholders’ equity at the time of vesting or exercise. The adoption of the amended accounting guidance resulted in an $18 million reduction of income tax expense in the ~~initial~~first quarter of 2017, ~~quarter,~~ or $.12 of diluted earnings per common ~~share.~~

~~The Company’s results~~share, and a $9 million reduction of ~~operations during the initial 2016 quarter included $23 million ($14 million after-tax effect),~~income tax expense, or ~~$.09~~$.06 of diluted earnings per ~~diluted~~ common share, of merger-related expenses (as described below) associated with M&T’s acquisition of Hudson City Bancorp, Inc. (“Hudson City”) on November 1, 2015, while during the fourth quarter of 2016, the Company made a $30 million tax-deductible cash contribution ($.12 per diluted common share) to The M&T Charitable Foundation. As described herein under the heading “Other Expense” reflected in the first quarter of ~~each year were seasonally higher stock-based compensation and employee benefits expenses.~~2018. The impact on the final 2017 quarter was insignificant.

~~In accordance with M&T’s revised 2016 Capital Plan, during~~Results for the ~~first~~fourth quarter of 2017 ~~M&T repurchased 3,233,196 shares~~reflected several notable items. GAAP requires that the impact of ~~its common stock at a total cost~~the provisions of ~~$532 million and increased~~ the ~~quarterly common stock dividend from $.70 to $.75 per share. Repurchases of common stock~~Tax Act be accounted for in the ~~final 2016 quarter totaled 300,000 shares at a cost~~period of ~~$37 million, while~~enactment. Accordingly, the incremental income tax expense recorded by the Company in the ~~initial 2016~~fourth quarter of 2017 related to the Tax Act was $85 million, representing $.56 of diluted earnings per common share. The additional expense was largely attributable to the reduction in carrying value of net deferred tax assets reflecting lower future tax benefits resulting from the lower corporate tax rate. Also during that quarter the Company realized after-tax gains from investment securities of $14 million ($21 million pre-tax) that added $.09 to diluted earnings per common share. Finally, the Company increased its contribution to The M&T ~~repurchased 948,545 shares for $100~~Charitable Foundation by $44 million in ~~accordance with its 2015 Capital Plan.~~the quarter, reducing net income by $27 million, or $.18 of diluted earnings per common share.

M&T consistently provides supplemental reporting of its results on a “net operating” or “tangible” basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and expenses associated with merging acquired operations into the Company, since such items are considered by management to be “nonoperating” in nature. Those merger-related expenses generally consist of professional services and other temporary help fees associated with the actual or planned conversion of systems and/or integration of operations; costs related to branch and office consolidations; costs related to termination of existing contractual arrangements to purchase various services; initial marketing and promotion expenses designed to introduce M&T Bank to its new customers; severance; incentive compensation costs; travel costs; and printing, supplies and other costs of completing the transactions and commencing operations in new markets and offices. As noted earlier, those expenses (herein referred to as merger-related expenses) totaled $14 million after-tax effect in the first quarter of 2016. There were no merger-related expenses during the first quarter of 2017 or the fourth quarter of 2016. Although “net operating income” as defined by M&T is not a GAAP measure, M&T’s management believes that this information helps investors understand the effect of acquisition activity in reported results.

Net operating income totaled ~~$354~~$357 million in the ~~recent~~initial 2018 quarter, compared with ~~$320~~$354 million in the first quarter of ~~2016.~~2017. Diluted net operating earnings per common share for the first quarter of ~~2017~~2018 were ~~$2.15,~~$2.26, compared with

~~$1.87~~ $2.15 in the year-earlier quarter. Net operating income and diluted net operating earnings per common share were ~~$336~~$327 million and ~~$2.01,~~$2.04, respectively, in the fourth quarter of ~~2016.~~

2017. Net operating income in the ~~initial 2017~~recent quarter expressed as an annualized rate of return on average tangible assets was ~~1.21%~~1.28%, compared with ~~1.09%~~1.21% and ~~1.10%~~1.12% in the first and fourth quarters of ~~2016,~~2017, respectively. Net operating income represented an annualized return on average tangible common equity of ~~13.05%~~13.51% in the recent quarter, compared with ~~11.62%~~13.05% in the ~~similar 2016~~corresponding quarter of 2017 and ~~11.93%~~11.77% in the final ~~quarter of 2016.~~2017 quarter.

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

Taxable-equivalent net interest income was ~~$922~~$980 million in the ~~initial~~first quarter of ~~2017,~~2018, up 5%6% from ~~$878~~$922 million in the year-earlier quarter. That growth resulted predominantly from a widening of the net interest margin, or taxable-equivalent net interest income expressed as an annualized percentage of average earning assets, to ~~3.34%~~3.71% in the recent quarter from ~~3.18%~~3.34% in the ~~corresponding 2016 period.~~initial 2017 quarter. The improvement in taxable-equivalent net interest income was largely the result of the higher interest rate environment due to actions initiated by the Federal Reserve in ~~mid-December 2016~~March, June and ~~mid-March~~December 2017 and in March 2018 to raise its target Federal funds rate by .25% atin each of those ~~dates and higher~~months. The widening of the net interest margin was partially offset by lower average earning assets of $4.8 billion, including a decline in average loan and lease balances of ~~$2.2~~$2.0 billion. Taxable-equivalent net interest income in the recent quarter ~~increased 4%~~was little changed from ~~$883 million in~~ the final quarter of ~~2016, predominantly due to a 26~~2017. A 15 basis point (hundredths of one percent) widening of the net interest margin from ~~3.08%~~3.56% in the fourth quarter of ~~2016. That~~2017 was offset by lower average earning assets of $2.2 billion, predominantly lower interest-bearing deposits at the Federal Reserve Bank of New York. The widening ~~also~~of the net interest margin reflected the impact of the two most recent increases in interest rates initiated by the Federal ~~Reserve as noted above.~~Reserve.

Average loans and leases ~~aggregated $89.8~~were $87.8 billion in the recent quarter, ~~3% higher~~2% lower than ~~$87.6 billion in the initial quarter of 2016. Commercial loans and leases averaged $22.3~~$89.8 billion in the first quarter of ~~2017, up $1.6 billion or 8% from $20.7~~2017. Commercial loans and leases averaged $21.5 billion in the ~~first~~initial 2018 quarter, ~~of 2016.~~down $743 million or 3% from $22.3 billion in the year-earlier quarter. Average commercial real estate loans ~~were $33.2~~totaled $33.7 billion in the recent quarter, ~~an increase of $3.7 billion,~~up $477 million, or ~~13%~~1%, from ~~$29.4~~$33.2 billion in the ~~year-earlier quarter.~~similar quarter of 2017. Reflecting ongoing repayments of loans obtained in the 2015 acquisition of Hudson City Bancorp, Inc. (“Hudson City”), average residential real estate loans declined ~~$3.7~~$2.9 billion or ~~14%~~13% to ~~$22.2~~$19.3 billion in the first quarter of ~~2017~~2018 from ~~$25.9~~$22.2 billion in the ~~year-earlier~~corresponding 2017 quarter. Included in that portfolio were loans held for sale, which averaged ~~$366~~$300 million in the recent quarter and ~~$323~~$366 million in the ~~similar 2016~~year-earlier quarter. Consumer loans averaged ~~$12.2~~$13.3 billion in the recently completed quarter, an increase of ~~$571 million~~$1.1 billion or 5%9% from ~~$11.6~~$12.2 billion in the first quarter of ~~2016,~~2017, predominantly due to growth in average automobile and recreational vehicle ~~loans, partially offset by lower outstanding balances of home equity lines of credit.~~loans.

Average loan and lease balances in the ~~initial~~first quarter of ~~2017~~2018 decreased ~~$180~~$71 million from ~~$90.0 billion in~~ the fourth quarter of ~~2016. Average commercial loan and lease balances rose $354 million, or 2%, in the recent quarter from $21.9 billion in the fourth quarter of 2016.~~2017. Commercial real estate loan average balances in the initial ~~2017~~2018 quarter increased ~~$353~~$514 million, or 1%2%, from ~~$32.8~~$33.1 billion in the final ~~three months~~quarter of ~~2016.~~2017 while average commercial loan and lease balances were little changed. Reflected in average commercial real estate loan balances were loans held for sale, which averaged ~~$169~~$120 million and ~~$524~~$259 million in the first quarter of ~~2017~~2018 and the fourth quarter of ~~2016,~~2017, respectively. Average residential real estate loans in the first three months of ~~2017~~2018 declined ~~$917~~$700 million, or 4%, from ~~$23.1~~$20.0 billion in the final ~~2016 quarter,~~three months of 2017, reflecting the continued pay down of loans obtained in the acquisition of Hudson City. Average consumer loans increased ~~$30~~$130 million in the recent quarter from ~~$12.1~~$13.2 billion in ~~2016’s~~2017’s final quarter. The accompanying table summarizes quarterly changes in the major components of the loan and lease portfolio.

			Percent Increase										Percent Increase
			(Decrease) from										(Decrease) from
	1st Qtr.		1st Qtr.				4th Qtr.				1st Qtr.		1st Qtr.				4th Qtr.
	2017		2016				2016				2018		2017				2017
	(In millions)										(In millions)

Commercial, financial, etc.	$	22,290		8		%		2		%	$	21,547		(3	)	%		—		%
Real estate – commercial		33,175		13				1				33,652		1				2
Real estate – consumer		22,179		(14	)			(4	)			19,274		(13	)			(4	)
Consumer
Automobile		3,019		17				3				3,570		18				2
Home equity lines and loans		5,577		(6	)			(2	)			5,222		(6	)			(2	)
Other		3,557		15				1				4,501		27				4
Total consumer		12,153		5				—				13,293		9				1
Total	$	89,797		3		%		—		%	$	87,766		(2	)	%		—		%

The investment securities portfolio averaged ~~$16.0~~$14.5 billion in ~~2017’s~~2018’s first quarter, ~~$651 million~~$1.5 billion or ~~4% above $15.3~~10% lower than $16.0 billion in the year-earlier quarter. Investment securities averaged ~~$15.4~~$14.8 billion in the final quarter of ~~2016.~~2017. There were no significant purchases of investment securities in the initial 2018 quarter. The Company sold a portion of its holdings of Fannie Mae and Freddie Mac preferred stock during the fourth quarter of 2017 for a gain of $18 million. The preferred stock that was sold had a cost basis (after previous write-downs) of $3 million.

As noted earlier, effective January 1, 2018 amended accounting guidance was adopted that requires that fair value changes in equity securities with readily determinable fair values be recognized in the consolidated statement of income as opposed to accumulated other comprehensive income where they had been recognized under previous accounting guidance. During the first quarter of ~~2017,~~2018, net unrealized losses on such equity securities aggregated $9 million, predominantly related to the ~~Company purchased $536 million of Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed securities. Similar purchases~~Company’s remaining holdings of Fannie Mae and Ginnie Mae mortgage-backed securities in the initial quarter of 2016 totaled $305 million. During the fourth quarter of 2016, the Company purchased $1.2 billion of U.S. Treasury notes and $1.2 billion of Fannie Mae and Ginnie Mae mortgage-backed securities. Freddie Mac preferred stock.

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 considers its liquidity position and its overall interest-rate risk profile as well as the adequacy of expected returns relative to risks assumed, including prepayments. The Company manages its investment securities portfolio, in part, to satisfy the ~~requirements of the~~ Liquidity Coverage Ratio (“LCR”) ~~that became effective in January 2016.~~requirements established by regulators. The LCR is intended to ensure that banks hold a sufficient amount of “high quality liquid assets” to cover the anticipated net cash outflows during a hypothetical acute 30-day stress scenario. For additional information concerning the LCR rules, refer to Part I, Item 1 of M&T’s Form 10-K for the year ended December 31, ~~2016~~2017 under the heading “Liquidity.”

In ~~managing its investment securities portfolio,~~addition to the sales noted earlier, the Company may occasionally ~~sells~~sell 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 amounts of investment securities held by the Company are influenced by such factors as demand for loans, which generally yield more than investment securities, ongoing repayments, the levels of deposits, and management of liquidity (including the LCR) and balance sheet size and resulting capital ratios.

~~The~~ Company regularly reviews its investment securities for declines in value below amortized cost that might be characterized as “other than temporary.” There were no other-than-temporary impairment charges recognized in either of the first quarters of ~~2017~~2018 and ~~2016~~2017 or in the final ~~2016~~2017 quarter. Additional information about the investment securities portfolio is included in notes 32 and 1211 of Notes to Financial Statements.

Other earning assets include interest-bearing deposits at the Federal Reserve Bank of New York and other banks, trading account assets and federal funds sold. Those other earning assets in the aggregate averaged ~~$6.2~~$5.0 billion in the recently completed quarter, compared with ~~$8.3~~$6.2 billion and ~~$8.9~~$6.8 billion in the first and final quarters of ~~2016,~~2017, respectively. Interest-bearing deposits at banks averaged $4.9 billion, $6.2 billion ~~$8.2 billion~~ and ~~$8.8~~$6.7 billion during the

three-month periods ended March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. The amounts of investment securities and other earning assets held by the Company are influenced by such factors as demand for

loans, which generally yield more than investment securities and other earning assets, ongoing repayments, the levels of deposits, and management of liquidity (including the LCR) and balance sheet size and resulting capital ratios. The amounts of interest-bearing deposits at banks at the respective dates were predominantly comprised of deposits held at the Federal Reserve Bank of New York. The levels of those deposits often fluctuate due to changes in deposits of business and trust-related customers or short-term borrowings to manage the Company’s liquidity.

As a result of the changes described herein, average earning assets were ~~$112.0~~$107.2 billion in the first quarter of ~~2017,~~2018, compared with ~~$111.2~~$112.0 billion in the year-earlier quarter and ~~$114.3~~$109.4 billion in the fourth quarter of ~~2016.~~2017.

The most significant source of funding for the Company is core deposits. The Company considers noninterest-bearing deposits, interest-bearing transaction accounts, savings deposits and time deposits of $250,000 or less as core deposits. The Company’s branch network is its principal source of core deposits, which generally carry lower interest rates than wholesale funds of comparable maturities. Average core deposits totaled $88.9 billion in the first quarter of 2018, compared with $94.0 billion in the ~~most recent quarter, compared with $89.7 billion in the year-earlier~~similar 2017 quarter and ~~$94.4~~$91.3 billion in ~~the final quarter of 2016. As compared with~~ the fourth quarter of ~~2016, higher~~2017. The decline in average core deposits in the first quarter of 2018 from the year-earlier quarter reflected a $2.9 billion, or 34%, decline in average balances of ~~noninterest-bearing~~time deposits ~~in 2017’s first quarter, largely due to increased trust customer deposits, were offset by declines in average time deposits,~~of $250,000 or less, predominantly related to maturities of relatively high-rate deposits obtained in the acquisition of Hudson ~~City. The increase in average core deposits in the first quarter of 2017 from the year-earlier quarter reflected higher~~City, and lower noninterest-bearing deposits, largely associated with trust customers. As compared with the fourth quarter of 2017, the lower average core deposits in the recent quarter reflected declines in commercial savings deposits, including escrow deposits, time deposits and noninterest-bearing deposits. The following table provides an analysis of quarterly changes in the components of average core deposits.

			Percent Increase										Percent Increase
			(Decrease) from										(Decrease) from
	1st Qtr.		1st Qtr.				4th Qtr.				1st Qtr.		1st Qtr.				4th Qtr.
	2017		2016				2016				2018		2017				2017
	(In millions)										(In millions)

Savings and interest-checking deposits	$	52,124		6		%		(2	)	%	$	51,239		(2	)	%		(2	)	%
Time deposits		8,567		(27	)			(12	)			5,656		(34	)			(9	)
Noninterest-bearing deposits		33,287		15				5				32,047		(4	)			(3	)
Total	$	93,978		5		%		—		%	$	88,942		(5	)	%		(3	)	%

The Company also receives funding from other deposit sources, including branch-related time deposits over $250,000, deposits associated with the Company’s Cayman Islands office, and brokered deposits. Time deposits over $250,000, excluding brokered deposits, averaged $605 million in the initial quarter of 2018, compared with $935 million in the corresponding 2017 quarter and $645 million in the fourth quarter of 2017. The declines in such deposits since the first quarter of 2017 ~~compared with $1.2 billion~~were predominantly the result of maturities of time deposits obtained in ~~each of~~ the ~~first and fourth quarters of 2016.~~Hudson City acquisition. Cayman Islands office deposits averaged $248 million, $192 million ~~$187 million~~ and ~~$206~~$215 million for the three-month periods ended March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. Brokered time deposits averaged $59 million in each of the quarters ended March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016.~~2017. The Company also had brokered savings and interest-bearing transaction accounts, which in the aggregate averaged ~~$1.1~~$1.3 billion ~~during~~in each of the quarters ended March 31, ~~2017~~2018 and December 31, ~~2016, compared with $1.2~~2017 and $1.1 billion ~~during~~in the first quarter of 2016. The levels of brokered deposit accounts reflect the demand for such deposits, largely resulting from the desire of brokerage firms to earn reasonable yields while ensuring that customer deposits are fully insured. The level of Cayman Islands office deposits is also reflective of customer demand.initial 2017 quarter. Additional amounts of Cayman Islands office deposits or brokered deposits may be added in the future depending on market conditions, including demand by customers and other investors for those deposits, and the cost of funds available from alternative sources at the time.

The Company also uses borrowings from banks, securities dealers, various Federal Home Loan Banks, the Federal Reserve Bank of New York and others as sources of funding. Short-term borrowings represent borrowing

arrangements that at the time they were entered into had a contractual maturity of ~~less than~~ one ~~year.~~year or less. Average short-term borrowings totaled ~~$184~~$280 million in the first quarter of ~~2017,~~2018, compared with ~~$2.1 billion~~$184 million in the year-earlier quarter and ~~$200~~$178 million in the final quarter of ~~2016. The decrease in such borrowings since the first quarter of 2016 was predominantly due to the maturities of short-term borrowings from the Federal Home Loan Bank of New York~~

~~assumed in the Hudson City acquisition.~~2017. Included in short-term borrowings were unsecured federal funds borrowings, which generally mature on the next business day, that averaged ~~$129~~$141 million and ~~$137~~$129 million in the first quarters of ~~2017~~2018 and ~~2016,~~2017, respectively, and ~~$144~~$121 million in the final quarter of ~~2016.~~2017.

Long-term borrowings averaged ~~$8.4~~$8.6 billion in the initial ~~2017~~2018 quarter, compared with ~~$10.5~~$8.4 billion in the year-earlier quarter and ~~$9.9~~$8.5 billion in the fourth quarter of ~~2016.~~2017. M&T Bank, M&T’s principal ~~bank~~banking subsidiary, has a Bank Note Program whereby M&T Bank may offer unsecured senior and subordinated ~~notes, however, only unsecured senior notes have been issued under that program.~~notes. Average balances of outstanding senior unsecured notes ~~outstanding~~issued under that program were $5.5 billion, $4.5 billion ~~$5.4 billion,~~ and ~~$5.2~~$5.0 billion during the three-month periods ended March 31, 2017, March 31, 2016 and December 31, 2016, respectively. The proceeds of the issuances of borrowings under the Bank Note Program were predominantly utilized to purchase high-quality liquid assets that meet the requirements of the LCR. Outstanding balances of the senior unsecured notes totaled $4.4 billion at2018, March 31, 2017 and ~~$5.2 billion at~~ December 31, ~~2016.~~2017, respectively. During January 2018, M&T Bank issued $650 million of fixed rate and $350 million of variable rate senior notes that mature in 2021. Also included in average long-term borrowings were amounts borrowed from the Federal Home Loan Banks of New York, Atlanta and Pittsburgh of $577 million in the recent quarter, compared with $1.2 billion ~~in each of~~and $579 million during the ~~initial~~first and fourth quarters of 2017, ~~and 2016 and the final quarter of 2016.~~respectively. Subordinated capital notes included in long-term borrowings averaged $1.6 billion, $1.5 billion ~~in each of~~and $1.9 billion for the three-month periods ended March 31, ~~2017,~~2018, March 31, ~~2016,~~2017 and December 31, ~~2016.~~2017, respectively. Junior subordinated debentures associated with trust preferred securities that were included in average long-term borrowings were ~~$517~~$520 million in the ~~most~~ recent quarter, ~~compared with $514~~$517 million in the first quarter of ~~2016~~2017 and ~~$516~~$519 million in the fourth quarter of ~~2016.~~2017. Additional information regarding junior subordinated debentures is provided in note 54 of Notes to Financial Statements. Also included in long-term borrowings were agreements to repurchase securities, which averaged ~~$683~~$420 million in the first quarter of ~~2017, $1.9 billion~~2018, $683 million in the ~~first~~year-earlier quarter and $423 million in the final quarter of 2016 and $1.5 billion in the fourth quarter of 2016. The lower average balances of repurchase agreements in the recent quarter as compared with the first and fourth quarters of 2016 reflect maturities in the first quarter of 2017 and fourth quarter of 2016.2017. The repurchase agreements held at March 31, ~~2017~~2018 totaled ~~$431~~$419 million and have various repurchase dates through 2020, however, the contractual maturities of the underlying securities extend beyond such repurchase dates. The Company has utilized interest rate swap agreements to modify the repricing characteristics of certain components of long-term debt. As of March 31, ~~2017,~~2018, interest rate swap agreements were used to hedge approximately ~~$900 million~~$4.7 billion of outstanding fixed rate long-term borrowings. Further information on interest rate swap agreements is provided in note 109 of Notes to Financial Statements.

~~Changes~~Net interest income can be impacted by 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.~~spreads. Net interest spread, or the difference between the taxable-equivalent yield on earning assets and the rate paid on interest-bearing liabilities, was ~~3.15%~~3.47% in the first quarter of ~~2017,~~2018, compared with ~~3.01%~~3.15% in the year-earlier quarter. The yield on earning assets during the recent quarter was ~~3.67%~~4.11%, up 1344 basis points from ~~3.54%~~3.67% in the initial ~~2016~~2017 quarter, while the rate paid on interest-bearing liabilities ~~decreased one~~increased 12 basis ~~point~~points to ~~.52%~~.64% in the recent quarter from ~~.53%~~.52% in the year-earlier period. In the final quarter of ~~2016,~~2017, the net interest spread was ~~2.88%~~3.34%, the yield on earning assets was ~~3.45%~~3.93% and the rate paid on interest-bearing liabilities was ~~.57%~~.59%. The widening of the net interest spread in the recent quarter as compared with the first and final quarters of ~~2016~~2017 was largely due to the effect of increases in short-term interest rates initiated by the Federal Reserve in ~~mid-December 2016~~March, June and ~~mid-March~~December 2017 and in March 2018 that contributed to higher yields on loans and leases. Also contributing to the improved net interest spread in the initial 2017 quarter were lower average balances of long-term borrowings and of relatively low-yielding deposits held at the Federal Reserve Bank of New York.

Net interest-free funds consist largely of noninterest-bearing demand deposits and shareholders’ equity, partially offset by bank owned life insurance and non-earning assets, including goodwill and core deposit and other intangible assets. Net interest-free funds averaged ~~$40.4~~$39.3 billion in the first quarter of ~~2017,~~2018, compared with ~~$35.1~~$40.4 billion and ~~$39.0~~$40.2 billion in the first and fourth quarters of ~~2016,~~2017, respectively. The ~~increases~~decreases in average net interest-free funds in the ~~two~~ most recent ~~quarters~~quarter as compared with the first ~~quarter~~and last quarters of ~~2016~~2017 reflect ~~higher~~lower average balances of noninterest-bearing deposits. Those deposits averaged $32.0 billion, $33.3 billion ~~$28.9 billion~~ and ~~$31.7~~$32.9 billion in the quarters ended March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. ~~The growth in average noninterest-bearing deposits since the first quarter of 2016 largely reflects higher deposits of trust customers.~~ Shareholders’ equity averaged $16.1 billion for the three-month period ended March 31, 2018, compared with $16.3 billion in each of the three-month periods ended March 31, 2017 and ~~March 31, 2016, compared with $16.7 billion in the three-month period ended~~ December 31, ~~2016.~~2017. Goodwill and core deposit and other intangible assets averaged $4.7 billion ~~and the~~in each of those three quarters. The cash surrender value of bank owned life insurance averaged $1.8 billion in each of the three-month periods ended March 31, 2018 and December 31, 2017, compared with $1.7 billion during ~~each~~the first quarter of ~~the quarters ended March 31, 2017, March 31, 2016 and December 31, 2016.~~2017. 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 ~~.19% in the recent quarter, compared with .17%~~.24% in the first quarter of ~~2016~~2018, compared with .19% and ~~.20%~~.22% in the first and fourth ~~quarter~~quarters of ~~2016.~~2017, respectively.

Reflecting the changes to the net interest spread and the contribution of interest-free funds as described herein, the Company’s net interest margin was ~~3.34%~~3.71% in the recent quarter, compared with ~~3.18%~~3.34% in the initial quarter of ~~2016~~2017 and ~~3.08%~~3.56% in the final ~~quarter of 2016.~~2017 quarter. 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.

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 earning assets and interest-bearing liabilities. Periodic settlement amounts arising from these agreements are reflected in either the yields on earning 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 $7.6 billion (excluding $2.0 billion of forward-starting swap agreements) at March 31, 2018, compared with $900 million at ~~each of~~ March 31, 2017 and $7.4 billion at December 31, ~~2016, compared with $1.4~~2017 (excluding $2.0 billion ~~at March 31, 2016.~~of forward-starting swap agreements). Under the terms of those interest rate swap agreements, the Company received payments based on the outstanding notional amount at fixed rates and made payments at variable rates. ~~Those~~The increases in notional amounts from March 31, 2017 reflect additions of $2.9 billion of interest rate swap agreements ~~were~~designated as cash flow hedges of variable rate commercial real estate loans and $3.8 billion of interest rate swap agreements designated as fair value hedges of ~~certain~~ fixed rate long-term borrowings. The $500 million decline in notional amount from March 31, 2016 reflects the expiration of a hedge transaction in December 2016 upon conversion of $500 million of fixed rate long-term borrowings to a floating rate. There were no interest rate swap agreements designated as cash flow hedges at ~~those respective dates.~~March 31, 2017.

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 coincident with the Company’s adoption of amended hedge accounting guidance on January 1, 2018 is recorded as an adjustment to the interest income or interest expense of the respective hedged item. Prior to 2018, hedge ineffectiveness was recorded in “other revenues from operations” in the Company’s consolidated statement of income. In a cash flow 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 derivative’s gain or loss on cash flow hedges is accounted for similar to that associated with fair value hedges. The amounts of hedge ineffectiveness recognized during each of the quarters ended March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016~~2017 were not material to the Company’s consolidated results of operations. ~~The estimated aggregate~~Information regarding the fair value of interest rate swap agreements ~~designated as fair value hedges represented gains~~and hedge ineffectiveness is presented in note 9 of approximately $8 million at March 31, 2017, $41 million at March 31, 2016 and $12 million at December 31, 2016. The fair values of such interest rate swap agreements were substantially offset by changes in the fair values of the hedged items.Notes to Financial Statements. The changes in the fair values of the interest rate swap agreements and the hedged items primarily result from the effects of changing interest rates and spreads. The Company’s credit exposure as of March 31, 2017 with respect to the estimated fair value of interest rate swap agreements used for managing interest rate risk has been substantially mitigated through master netting arrangements with trading account interest rate contracts with the same counterparty, periodic settlements and counterparty postings of $11 million of collateral with the Company.

The weighted-average rates to be received and paid under interest rate swap agreements currently in effect were ~~3.75%~~2.17% and ~~2.24%~~2.07%, respectively, at March 31, ~~2017.~~2018. 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 109 of Notes to Financial Statements.

	Three Months Ended March 31														Three Months Ended March 31
.	2017							2016							2018							2017
	Amount			Rate(a)				Amount			Rate(a)				Amount			Rate(a)				Amount			Rate(a)
	(Dollars in thousands)														(Dollars in thousands)
Increase (decrease) in:
Interest income	$	—			—		%	$	—			—		%	$	(580	)		—		%	$	—			—		%
Interest expense		(3,648	)		(.02	)			(10,333	)		(.05	)			(1,529	)		(.01	)			(3,648	)		(.02	)
Net interest income/margin	$	3,648			.01		%	$	10,333			.04		%	$	949			.01		%	$	3,648			.01		%
Average notional amount	$	900,000						$	1,400,000						$	7,631,667						$	900,000
Rate received (b)					3.75		%					4.42		%					2.04		%					3.75		%
Rate paid (b)					2.13		%					1.45		%					1.99		%					2.13		%

In addition to interest rate swap agreements, the Company has entered into interest rate floor agreements that are accounted for in the trading account rather than as hedging instruments but, nevertheless, provide the Company with protection against the possibility of future declines in interest rates on earning assets. At March 31, 2018 and December 31, 2017, outstanding notional amounts of such agreements totaled $15.6 billion and $6.3 billion, respectively.

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 bank subsidiaries have access to additional funding sources through borrowings from the FHLB of New York, lines of credit with the Federal Reserve Bank of New York, the previously noted Bank Note Program, and other available borrowing facilities. The Company has, from time to time, issued subordinated capital notes and junior subordinated debentures associated with trust preferred securities to provide liquidity and enhance regulatory capital ratios. ~~Such notes generally qualify under the Federal Reserve Board’s risk-based capital guidelines for inclusion in the Company’s regulatory capital.~~ However, pursuant to the Dodd-Frank Act, the Company’s junior subordinated debentures associated with trust preferred securities have been phased-out of the definition of Tier 1 ~~capital. Beginning January 1, 2016 those instruments~~capital but, similar to other subordinated capital notes, are considered Tier 2 capital and are ~~only~~ includable in total regulatory 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 were $177 million, $128 million ~~$157 million~~ and ~~$112~~$125 million at March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. In general, those borrowings were unsecured and matured on the next business day. Also included in short-term borrowings at March 31, 2018 were overnight borrowings from the Federal Home Loan Bank of New York totaling $1.4 billion. Such borrowings were entered into by the Company to manage its liquidity position. In addition to satisfying customer demand, Cayman Islands office deposits may be used by the Company as an alternative to short-term borrowings. Cayman Islands office deposits totaled $278 million at March 31, 2018, $193 million at March 31, 2017 ~~$167 million at March 31, 2016~~ and ~~$202~~$178 million at December 31, ~~2016.~~2017. The Company has also benefited from the placement of brokered deposits. The Company had brokered savings and ~~interest-bearing~~interest-

bearing checking deposit accounts which aggregated approximately ~~$1.2~~$1.3 billion at each of March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, compared with ~~$1.1~~$1.2 billion at March 31, ~~2016.~~2017. Brokered time deposits were not a significant source of funding as of those dates.

The Company’s ability to obtain funding from these other sources could be negatively impacted should the Company experience a substantial deterioration in its financial condition or its debt ratings, or should the availability of short-term funding become restricted due to a disruption in the financial markets. The Company attempts to quantify such credit-event risk by modeling scenarios that estimate the liquidity impact resulting from a short-term ratings downgrade over various grading levels. Such impact is estimated by attempting to measure the effect on available unsecured lines of credit, available capacity from secured borrowing sources and securitizable assets. In addition to deposits and borrowings, other sources of liquidity include maturities of investment securities and other earning assets, repayments of loans and investment securities, and cash generated from operations, such as fees collected for services.

Certain customers of the Company obtain financing through the issuance of variable rate demand bonds (“VRDBs”). The VRDBs are generally enhanced by letters of credit provided by M&T Bank. M&T Bank oftentimes acts as remarketing agent for the VRDBs and, at its discretion, may from time-to-time own some of the VRDBs while such instruments are remarketed. When this occurs, the VRDBs are classified as trading account assets in the Company’s consolidated balance sheet. Nevertheless, M&T Bank is not contractually obligated to purchase the VRDBs. The value of VRDBs in the Company’s trading account ~~aggregated $1 million~~was not material at March 31, ~~2017, $37 million at~~2018, March 31, ~~2016 and $30 million at~~2017 or December 31, ~~2016.~~2017. The total ~~amount~~amounts of VRDBs outstanding backed by M&T Bank letters of credit ~~was $1.3~~were $1.0 billion at each of March 31, ~~2017~~2018 and December 31, ~~2016, compared with $1.7~~2017 and $1.3 billion at March 31, ~~2016.~~2017. M&T Bank also serves as remarketing agent for most of those bonds.

The Company enters into contractual obligations in the normal course of business that require future cash payments. Such obligations include, among others, payments related to deposits, borrowings, leases and other contractual commitments. Off-balance sheet commitments to customers may impact liquidity, including commitments to extend credit, standby letters of credit, commercial letters of credit, financial guarantees and indemnification contracts, and commitments to sell real estate loans. Because many of these commitments or contracts expire without being funded in whole or in part, the contract amounts are not necessarily indicative of future cash flows. Further discussion of these commitments is provided in note 1312 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 bank subsidiaries, which are subject to various regulatory limitations. Dividends from any bank subsidiary to M&T are limited by the amount of earnings of the subsidiary in the current year and the two preceding years. For purposes of that test, at March 31, ~~2017~~2018 approximately ~~$648~~$499 million was available for payment of dividends to M&T from bank subsidiaries. Information regarding the long-term debt obligations of M&T is included in note 54 of Notes to Financial Statements.

Management closely monitors the Company’s liquidity position on an ongoing basis for compliance with internal policies and believes that available sources of liquidity are adequate to meet funding needs anticipated in the normal course of business. Management does not anticipate engaging in any activities, either currently or in the long-term, for which adequate funding would not be available and would therefore result in a significant strain on liquidity at either M&T or its subsidiary banks. Banking regulators have enacted the LCR rules requiring a banking company to maintain a minimum amount of liquid assets to withstand a standardized supervisory liquidity stress scenario. The Company ~~has taken steps to maintain appropriate liquidity and~~ is in compliance with the ~~LCR~~requirements of those rules.

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

calculating the variability of net interest income in future periods under various interest rate scenarios using projected balances for earning assets, interest-bearing liabilities and derivatives used to hedge interest rate risk. Management’s philosophy toward interest rate risk management is to limit the variability of net interest income. The

balances of financial instruments used in the projections are based on expected growth from forecasted business opportunities, anticipated prepayments of loans and investment securities, and expected maturities of investment securities, loans and deposits. Management uses a “value of equity” model to supplement the modeling technique described above. Those supplemental analyses are based on discounted cash flows associated with on- and off-balance sheet financial instruments. Such analyses are modeled to reflect changes in interest rates and provide management with a long-term interest rate risk metric. The Company has entered into interest rate swap agreements to help manage exposure to interest rate risk. At March 31, 2018, the aggregate notional amount of interest rate swap agreements entered into for risk management purposes that were currently in effect was $7.6 billion. In addition, the Company has entered into $2.0 billion of forward-starting interest rate swap agreements that will become effective as a like amount of currently effective swap agreements mature.

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

The accompanying table as of March 31, ~~2017~~2018 and December 31, ~~2016~~2017 displays the estimated impact on net interest income ~~from non-trading financial instruments~~ in the base scenario described above resulting from parallel changes in interest rates across repricing categories during the first modeling year.

	Calculated Increase (Decrease) in Projected Net Interest Income						Calculated Increase (Decrease) in Projected Net Interest Income
Changes in interest rates	March 31, 2017			December 31, 2016			March 31, 2018			December 31, 2017
	(In thousands)						(In thousands)

+200 basis points	$	204,102			227,283		$	67,061			81,570
+100 basis points		139,298			147,400			55,208			64,434
-50 basis points		(93,725	)		(98,945	)
-100 basis points								(122,456	)		(94,014	)

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 point increases and a 50 basis point decrease,~~ as compared with the base scenario. In the declining rate scenario, the rate changes may be limited to lesser amounts such that interest rates remain positive on all points of the yield curve. In 2016, the Company suspended the -100 basis point scenario due to the persistent low level of interest rates. This scenario will be reinstated if and when interest rates rise sufficiently to make the analysis more meaningful.

The assumptions used in interest rate sensitivity modeling are inherently uncertain and, as a result, the Company cannot precisely predict the impact of changes in interest rates on net interest income. Actual results may differ significantly from those presented due to the timing, magnitude and frequency of changes in interest rates and changes in market conditions and interest rate differentials (spreads) between maturity/repricing categories, as well as any actions, such as those previously described, which management may take to counter such changes. Given recent increases in short-term interest rates,

management believes that exposure to potential volatility of net interest income has recently increased. As a result, in 2017 management ~~is adding~~added interest rate swap agreements designated as hedging instruments to mitigate the Company’s exposure to such potential volatility. As previously noted, the Company has also entered into interest rate floor agreements that are included in the trading account. Such floor agreements provide the Company with protection against the possibility of future declines in interest rates on its earning assets. In light of the uncertainties and assumptions associated with the process, the amounts presented in the table are not considered significant to the Company’s past or projected net interest income.

Changes in fair value of the Company’s financial instruments can also result from a lack of trading activity for similar instruments in the financial markets. That impact is most notable on the values assigned to some of the Company’s investment securities. Information about the fair valuation of investment securities is presented herein under the heading “Capital” and in notes 32 and 1211 of Notes to Financial Statements.

The Company engages in limited trading account activities to meet the financial needs of customers and to fund the Company’s obligations under certain deferred compensation plans. Financial instruments utilized in trading account activities consist predominantly of interest rate contracts, such as interest rate 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 109 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 $39.5 billion at March 31, 2018, $22.3 billion at March 31, 2017 ~~$18.9 billion at March 31, 2016~~ and ~~$21.6~~$29.9 billion at December 31, ~~2016.~~2017. The notional amounts of foreign currency and other option and futures contracts entered into for trading account purposes were $538 million at March 31, 2018, compared with $496 million at March 31, 2017 ~~compared with $2.8 billion at March 31, 2016~~ and ~~$471~~$530 million at December 31, ~~2016.~~2017. Although the notional amounts of these contracts are not recorded in the consolidated balance sheet, the unsettled fair values of all financial instruments used for trading account activities are recorded in the consolidated balance sheet. The fair values of all trading account assets and liabilities recognized ~~on the balance sheet aggregated $175~~were $141 million and ~~$139~~$237 million, respectively, at March 31, 2018 and $133 million and $137 million, respectively, at December 31, 2017. Effective January 2017, certain clearinghouse exchanges revised their rules to re-characterize required collateral postings for changes in fair value of exchange-traded derivatives as legal settlements of those positions. As a result, theThe fair value asset and liability amounts at March 31, ~~2017~~2018 have been reduced by contractual settlements of ~~$112~~$236 million and ~~$25~~$6 million, respectively. ~~The fair values of trading account assets and liabilities were $468 million and $296 million, respectively, at March 31, 2016, and $324 million and $174 million, respectively, at December 31, 2016.~~ Included in trading account assets were assets related to deferred compensation plans aggregating $21 million at March 31, 2018, $22 million at ~~each of~~ March 31, 2017 ~~March 31, 2016~~ and $23 million at December 31, ~~2016.~~2017. Changes in the fair values of such assets are recorded as “trading account and foreign exchange gains” in the consolidated statement of income. Included in “other liabilities” in the consolidated balance sheet at March 31, ~~2017~~2018 were ~~$25~~$26 million of liabilities related to deferred compensation plans, compared with ~~$26~~$25 million at ~~each of~~ March 31, 2017 and $27 million at December 31, ~~2016.~~2017. Changes in the balances of such liabilities due to the valuation of allocated investment options to which the liabilities are indexed are recorded in “other costs of operations” in the consolidated statement of income. Also included in trading account assets were investments in mutual funds and other assets that the Company was required to hold under terms of certain non-qualified supplemental retirement and other benefit plans that were assumed by the Company in various acquisitions. Those assets totaled $25 million at March 31, 2018, compared with $24 million at each of March 31, 2017 and December 31, ~~2016, compared with $48 million at March 31, 2016.~~2017.

Given the Company’s policies, limits and positions, management believes that the potential loss exposure to the Company resulting from market risk associated with trading account activities was not material, however, as previously noted, the Company is exposed to credit risk associated with counterparties to transactions related to the Company’s trading account activities. Additional information about the Company’s use of derivative financial instruments in its trading account activities is included in note 109 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 ~~initial~~first quarter of ~~2017~~2018 was ~~$55~~$43 million, compared with ~~$49~~$55 million in the year-earlier quarter and ~~$62~~$31 million in the fourth quarter of ~~2016.~~2017. Net charge-offs of loans were ~~$43~~$41 million in the recent quarter, compared with ~~$42~~$43 million and ~~$49~~$27 million in the first and fourth quarters of ~~2016,~~2017, respectively. Net charge-offs as an annualized percentage of average loans and leases were .19% in each of the first quarters of ~~2017~~2018 and ~~2016,~~2017, compared with ~~.22%~~.12% in the final ~~2016~~2017 quarter. A summary of net charge-offs by loan type is presented in the table that follows.

	First Quarter 2017		First Quarter 2016			Fourth Quarter 2016		First Quarter 2018		First Quarter 2017		Fourth Quarter 2017
	(In thousands)							(In thousands)

Commercial, financial, leasing, etc.	$	11,896		902			17,190	$	9,758		11,896		4,744
Real estate:
Commercial		3,971		(1,141	)		886		1,143		3,971		(4,404	)
Residential		4,752		5,085			4,978		2,844		4,752		1,717
Consumer		21,948		37,394			26,070		26,782		21,948		25,071
	$	42,567		42,240			49,124	$	40,527		42,567		27,128

Net charge-offs of commercial loans and leases in the first quarter of 2017 included a $6 million charge-off associated with a producer of powdered cellulose and fiber filler products used for food and industrial applications, and in the final 2016 quarter included a $12 million charge-off associated with a multi-regional manufacturer of refractory brick and other castable products. Included in net charge-offs of consumer loans ~~and leases~~ were net charge-offs ~~during the quarters ended March 31, 2017, March 31, 2016 and December 31, 2016, respectively,~~ of: automobile loans of $10 million in the initial 2018 quarter and $9 million ~~$11 million~~in each of the first and ~~$8 million;~~fourth quarters of 2017; recreational vehicle loans of $5 million ~~$12 million~~in each of the first quarters of 2018 and ~~$5 million;~~2017 and the fourth quarter of 2017; and home equity loans and lines of credit secured by one-to-four family residential properties of $3 million, $5 million and $4 million. Beginning in the first quarter of 2016, the Company accelerated the charge off of consumer loans associated with customers who were either deceased or had filed for bankruptcy that, in accordance with GAAP, had previously been considered when determining level of the allowance for credit losses and were charged-off following the Company’s normal charge-off procedures to the extent the loans subsequently became delinquent. Charge-offs of such loans totaled $7$2 million in the recent quarter ~~$14~~and $3 million in each of the first ~~quarter~~and fourth quarters of ~~2016 and $6 million in the final quarter of 2016 and included $5 million, $11 million and $4 million, respectively, of loan balances with a current payment status at the time of charge-off.~~ 2017.

Loans acquired in connection with acquisition transactions subsequent to 2008 were recorded at fair value with no carry-over of any previously recorded allowance for credit losses. Determining the fair value of the acquired loans required estimating cash flows expected to be collected on the loans and discounting those cash flows at then-current interest rates. For acquired loans where fair value was less than outstanding principal as of the acquisition date and the resulting discount was due, at least in part, to credit deterioration, the excess of expected cash flows over the carrying value of the loans is recognized as interest income over the lives of loans. The difference between contractually required payments and the cash flows expected to be collected is referred to as the nonaccretable balance and is not recorded on the consolidated balance sheet. The nonaccretable balance reflects estimated future credit losses and other contractually required payments that the Company does not expect to collect. The Company regularly evaluates the reasonableness of its cash flow projections associated with such loans, including its estimates of lifetime principal losses. Any decreases to the expected cash flows require the Company to evaluate the need for an additional allowance for credit losses and could lead to charge-offs of loan balances. Any significant increases in expected cash flows result in additional interest income to be recognized over the then-remaining lives of the loans. The carrying amount of loans acquired at a discount subsequent to 2008 and accounted for based on expected cash flows was $939 million, $1.6 billion ~~$2.3 billion~~ and ~~$1.8~~$1.0 billion at March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. ~~The decrease in such loans since March 31, 2016 was largely attributable to payments received.~~ The nonaccretable balance related to remaining principal losses associated with loans acquired at a discount as of March 31, ~~2017~~2018 and December 31, ~~2016~~2017 is presented in the accompanying table.

	Remaining balance				Remaining balance
	March 31, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(In thousands)				(In thousands)

Commercial, financial, leasing, etc.	$	5,886		4,794	$	3,747		3,586
Commercial real estate		39,096		39,867		28,238		28,783
Residential real estate		47,691		59,657		32,957		33,880
Consumer		11,170		11,275		7,228		7,482
Total	$	103,843		115,593	$	72,170		73,731

For acquired loans where the fair value exceeded the outstanding principal balance, the resulting premium is recognized as a reduction of interest income over the lives of the loans. Immediately following the acquisition date and thereafter, an allowance for credit losses is recorded for incurred losses inherent in the portfolio, consistent with the accounting for originated loans and leases. The carrying amount of Hudson City loans acquired in 2015 at a premium was ~~$13.5~~$11.0 billion and ~~$14.2~~$11.5 billion at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. GAAP does not allow the credit loss component of the net premium associated with those loans to be bifurcated and accounted for as a nonaccreting balance as is the case with purchased impaired loans and other loans acquired at a discount. Rather, subsequent to the acquisition date, incurred losses associated with those loans are evaluated using methods consistent with those applied to originated loans and such losses are considered by management in evaluating the Company’s allowance for credit losses.

Nonaccrual loans aggregated ~~$927~~$865 million or ~~1.04%~~.99% of total loans and leases outstanding at March 31, ~~2017,~~2018, compared with ~~$877~~$927 million or ~~1.00%~~1.04% a year earlier and ~~$920~~$883 million or ~~1.01%~~1.00% at December 31, ~~2016.~~2017. The ~~higher~~lower levels of nonaccrual loans at the two most recent quarter-ends as compared with March 31, ~~2016~~2017 reflect the ~~expected migration~~effect of previously performing residential real estate loans obtained in the acquisition of Hudson City that became past due over 90 days after March 31, 2016. Nonaccrual Hudson City-related residential real estate loans totaled $207 million at March 31, 2017, $79 million at March 31, 2016borrower repayment performance and ~~$190 million at December 31, 2016.~~ charge-offs.

Accruing loans past due 90 days or more (excluding loans acquired at a discount) were ~~$280~~$235 million, or ~~.31%~~.27% of total loans and leases at March 31, ~~2017,~~2018, compared with ~~$336~~$280 million or ~~.38%~~.31% at March 31, ~~2016~~2017 and ~~$301~~$244 million or ~~.33%~~.28% at December 31, ~~2016.~~2017. Those amounts included loans guaranteed by government-related entities of $224 million, $253 million ~~$279 million~~ and ~~$283~~$235 million at March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. 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 guaranteed by government-related entities totaled $194 million at March 31, 2018, $197 million at March 31, 2017 ~~$226 million at March 31, 2016~~ and ~~$224~~$207 million at December 31, ~~2016.~~2017. The remaining accruing loans past due 90 days or more not guaranteed by government-related entities were loans considered to be with creditworthy borrowers that were in the process of collection or renewal.

Purchased impaired loans are loans obtained in acquisition transactions subsequent to 2008 that as of the acquisition date were specifically identified as displaying signs of credit deterioration and for which the Company did not expect to collect all contractually required principal and 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 ~~$553~~$378 million at March 31, ~~2017,~~2018, or ~~.6%~~.4% of total loans. Of that amount, ~~$488~~$357 million was related to the Hudson City acquisition. Purchased impaired loans totaled ~~$716~~$553 million and ~~$578 million at March 31, 2016 and December 31, 2016, respectively.~~

Accruing loans acquired at a discount past due 90 days or more are loans that could not be specifically identified as impaired as of the acquisition date, but were recorded at estimated fair value as of such date. Such loans totaled $64$410 million at March 31, 2017 ~~compared with $62 million at March 31, 2016~~ and ~~$61 million at~~ December 31, ~~2016.~~2017, respectively.

The Company modified the terms of select loans in an effort to assist borrowers. If the borrower was experiencing financial difficulty and a concession was granted, the Company considered such modifications as troubled debt restructurings. Loan modifications included such actions as the extension of loan maturity dates and the lowering of interest rates and monthly payments. The objective of the modifications was to increase loan repayments by customers and thereby reduce net charge-offs. In accordance with GAAP, the modified loans are included in impaired loans for purposes of determining the level of the allowance for credit losses. Information about modifications of loans that are considered troubled debt restructurings is included in note 43 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 $191 million, $174 million ~~$155 million~~ and ~~$171~~$189 million at March 31, ~~2017, March 31, 2016 and December 31, 2016, respectively.~~

~~Commercial loans and leases classified as nonaccrual totaled $261 million at each of~~2018, March 31, 2017 and December 31, ~~2016, compared with $280~~2017, respectively.

Nonaccrual commercial loans and leases totaled $263 million, $261 million and $241 million at March 31, ~~2016.~~2018, March 31, 2017 and December 31, 2017, respectively. Commercial real estate loans in nonaccrual status aggregated $167 million, $211 million and $202 million at ~~each of~~March 31, 2018, March 31, 2017 and December 31, ~~2016, compared with $224 million at March 31, 2016.~~2017, respectively. Nonaccrual commercial real estate loans included construction-related loans of $14 million, $28 million ~~$53 million~~ and ~~$35~~$17 million at March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. Those nonaccrual construction loans included loans to residential builders and developers of $5 million, $14 million ~~$32 million~~ and ~~$17~~$6 million at March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. Information about the location of nonaccrual and charged-off loans to residential real estate builders and developers as of and for the three-month period ended March 31, 2017 is presented in the accompanying table.

Nonaccrual residential real estate loans totaled $333 million at March 31, 2018, compared with $350 million at March 31, 2017 ~~compared with $263 million at March 31, 2016~~ and ~~$336~~$332 million at December 31, ~~2016. The increase~~2017. Reflected in residential real estate loans classified as nonaccrual ~~at the two most recent quarter-ends as compared with March 31, 2016 reflects the expected migration of~~were previously performing loans obtained in the acquisition of Hudson City that became more than 90 days delinquent. Such nonaccrual residential real estate loans aggregated $223 million at March 31, 2018, $207 million at March 31, 2017 ~~$79 million at March 31, 2016~~ and ~~$190~~$215 million at December 31, ~~2016.~~2017. Those loans could not be identified as purchased impaired loans at the acquisition date because the borrowers were making loan payments at the time and the loans were not recorded at a discount. Included in residential real estate loans classified as nonaccrual were limited

documentation first mortgage loans of ~~$113~~$99 million ~~$76~~at March 31, 2018 (including $70 million ~~and $107~~obtained in the acquisition of Hudson City), $113 million at March 31, 2017 ~~March 31, 2016~~ and $96 million at December 31, ~~2016, respectively.~~2017. Limited documentation first mortgage loans represent loans secured by residential real estate that at origination typically included some form of limited borrower documentation requirements as compared with more traditional loans. Such loans in the Company’s portfolio prior to the Hudson City transaction were originated by the Company before 2008. Hudson City discontinued its limited documentation loan program in January 2014. Residential real estate loans past due 90 days or more and accruing interest (excluding loans acquired at a discount) aggregated $222 million at March 31, 2018, compared with $251 million at March 31, 2017 ~~compared with $279 million at March 31, 2016~~ and ~~$281~~$233 million at December 31, ~~2016.~~2017. A substantial portion of such amounts related to guaranteed loans repurchased from government-related entities. Information about the location of nonaccrual and charged-off residential real estate loans as of and for the quarter ended March 31, ~~2017~~2018 is presented in the accompanying table.

Nonaccrual consumer loans were $102 million at March 31, 2018, compared with $104 million at March 31, 2017 ~~compared with $110 million at March 31, 2016~~ and ~~$112~~$108 million at December 31, ~~2016.~~2017. Included in nonaccrual consumer loans at March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016~~2017 were: automobile loans of $21 million, $16 million, ~~$15 million,~~ and ~~$19~~$24 million, respectively; recreational vehicle loans of $5 million, ~~$10~~$5 million and $7$6 million, respectively; and outstanding balances of home equity loans and lines of credit of $73 million, $80 million ~~$79 million~~ and ~~$82~~$75 million, respectively. Information about the location of nonaccrual and charged-off home equity loans and lines of credit as of and for the quarter ended March 31, ~~2017~~2018 is presented in the accompanying table.

Information about past due and nonaccrual loans as of March 31, ~~2017~~2018 and December 31, ~~2016~~2017 is also included in note 43 of Notes to Financial Statements.

	March 31, 2017							Quarter Ended March 31, 2017						March 31, 2018							Quarter Ended March 31, 2018
			Nonaccrual					Net Charge-offs (Recoveries)								Nonaccrual					Net Charge-offs (Recoveries)
											Annualized Percent of													Annualized Percent of
					Percent of						Average							Percent of						Average
	Outstanding				Outstanding						Outstanding			Outstanding				Outstanding						Outstanding
	Balances		Balances		Balances			Balances			Balances			Balances		Balances		Balances			Balances			Balances
	(Dollars in thousands)													(Dollars in thousands)
Residential mortgages:
New York	$	6,032,744	$	72,668		1.20	%	$	1,647			.11	%	$	5,431,218	$	75,285		1.39	%	$	701			.05	%
Pennsylvania		1,553,283		17,762		1.14			(43	)		(.01	)		1,345,809		15,435		1.15			162			.05
Maryland		1,206,961		17,118		1.42			49			.02			1,102,398		14,808		1.34			215			.08
New Jersey		4,907,675		48,178		.98			608			.05			4,118,156		57,552		1.40			1,368			.13
Other Mid-Atlantic (a)		1,043,272		12,034		1.15			(42	)		(.02	)		992,460		11,232		1.13			(129	)		(.05	)
Other		3,534,328		69,062		1.95			1,316			.15			3,063,724		59,582		1.94			1,031			.13
Total	$	18,278,263	$	236,822		1.30	%	$	3,535			.08	%	$	16,053,765	$	233,894		1.46	%	$	3,348			.08	%
Residential construction loans:
New York	$	4,327	$	—		—	%	$	—			—	%	$	6,635	$	—		—	%	$	—			—	%
Pennsylvania		1,937		371		19.16			5			.99			3,445		343		9.96			—			—
Maryland		1,828		—		—			—			—			2,396		—		—			—			—
New Jersey		1,821		—		—			—			—			1,964		—		—			—			—
Other Mid-Atlantic (a)		4,115		120		2.90			—			—			4,478		—		—			—			—
Other		6,440		372		5.78			(2	)		(.11	)		6,079		72		1.18			(2	)		(.14	)
Total	$	20,468	$	863		4.22	%	$	3			.06	%	$	24,997	$	415		1.66	%	$	(2	)		(.03	%)
Limited documentation first mortgages:
New York	$	1,458,812	$	41,119		2.82	%	$	780			.21	%	$	1,252,813	$	37,988		3.03	%	$	(431	)		(.14	%)
Pennsylvania		73,449		7,987		10.87			(1	)		(.01	)		60,035		5,134		8.55			147			.97
Maryland		41,949		3,441		8.20			36			.34			36,010		2,945		8.18			2			.02
New Jersey		1,327,869		29,777		2.24			(15	)		(.01	)		1,104,562		26,201		2.37			178			.06
Other Mid-Atlantic (a)		35,894		3,187		8.88			57			.62			28,333		1,815		6.41			(94	)		(1.34	)
Other		487,787		27,049		5.55			357			.29			400,431		24,894		6.22			(304	)		(.30	)
Total	$	3,425,760	$	112,560		3.29	%	$	1,214			.14	%	$	2,882,184	$	98,977		3.43	%	$	(502	)		(.07	%)
First lien home equity loans and lines of credit:
New York	$	1,267,271	$	15,125		1.19	%	$	1,316			.42	%	$	1,230,871	$	14,010		1.14	%	$	509			.17	%
Pennsylvania		811,212		8,824		1.09			202			.10			765,007		7,833		1.02			497			.26
Maryland		667,613		6,632		.99			560			.34			631,833		7,508		1.19			262			.17
New Jersey		44,534		564		1.27			(1	)		(.01	)		63,945		256		.40			(2	)		(.01	)
Other Mid-Atlantic (a)		204,081		1,723		.84			12			.02			202,161		2,501		1.24			(5	)		(.01	)
Other		21,287		1,262		5.93			—			—			24,631		891		3.62			9			.14
Total	$	3,015,998	$	34,130		1.13	%	$	2,089			.28	%	$	2,918,448	$	32,999		1.13	%	$	1,270			.18	%
Junior lien home equity loans and lines of credit:
New York	$	891,927	$	23,339		2.62	%	$	352			.16	%	$	815,117	$	18,909		2.32	%	$	334			.16	%
Pennsylvania		355,507		6,190		1.74			145			.16			309,711		3,894		1.26			(9	)		(.01	)
Maryland		774,931		8,955		1.16			19			.01			674,292		11,139		1.65			700			.41
New Jersey		128,078		1,352		1.06			21			.07			99,792		1,511		1.51			11			.04
Other Mid-Atlantic (a)		307,238		3,420		1.11			16			.02			281,550		2,808		1.00			143			.20
Other		41,883		2,060		4.92			(20	)		(.20	)		44,604		1,482		3.32			(54	)		(.50	)
Total	$	2,499,564	$	45,316		1.81	%	$	533			.09	%	$	2,225,066	$	39,743		1.79	%	$	1,125			.20	%
Limited documentation junior lien:
New York	$	821	$	—		—	%	$	(1	)		(.45	%)	$	699	$	—		—	%	$	3			1.43	%
Pennsylvania		331		—		—			—			—			289		17		5.88			5			7.11
Maryland		1,382		91		6.60			—			—			1,311		61		4.65			1			.15
New Jersey		384		—		—			(36	)		(37.71	)		383		—		—			—			—
Other Mid-Atlantic (a)		648		—		—			—			—			598		—		—			—			—
Other		4,601		425		9.23			(12	)		(1.06	)		3,845		349		9.08			4			.47
Total	$	8,167	$	516		6.32	%	$	(49	)		(2.41	%)	$	7,125	$	427		5.99	%	$	13			.73	%

Real estate and other foreclosed assets totaled $102 million at March 31, 2018, compared with $119 million at March 31, 2017 ~~compared with $188 million at March 31, 2016~~ and ~~$139~~$112 million at December 31, ~~2016. The decline in~~2017. Net gains or losses associated with real estate and other ~~foreclosed assets since~~

~~March 31, 2016 was attributable to lower levels of residential real estate properties associated with the Hudson City acquisition. Gains or losses resulting from sales of real estate and other~~ foreclosed assets were not material induring the three-month periods ended March 31, ~~2017,~~2018, March 31, ~~2016~~2017 or December 31, ~~2016.~~2017. At March 31, ~~2017,~~2018, the Company’s holding of residential real estate-related properties comprised approximately ~~94%~~98% of foreclosed assets.

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

	2017			2016 Quarters												2018			2017 Quarters
	First Quarter			Fourth			Third			Second			First			First Quarter			Fourth			Third			Second			First
	(Dollars in thousands)															(Dollars in thousands)

Nonaccrual loans	$	926,675			920,015			837,362			848,855			876,691		$	864,671			882,598			869,362			872,374			926,675
Real estate and other foreclosed assets		119,155			139,206			159,881			172,473			188,004			101,514			111,910			110,515			104,424			119,155
Total nonperforming assets	$	1,045,830			1,059,221			997,243			1,021,328			1,064,695		$	966,185			994,508			979,877			976,798			1,045,830
Accruing loans past due 90 days or more(a)	$	280,019			300,659			317,282			298,449			336,170		$	235,325			244,405			261,288			265,461			280,019
Government guaranteed loans included in totals above:
Nonaccrual loans	$	39,610			40,610			47,130			52,486			49,688		$	36,618			35,677			34,687			39,296			39,610
Accruing loans past due 90 days or more		252,552			282,659			282,077			269,962			279,340			223,611			235,489			252,072			235,227			252,552
Renegotiated loans	$	191,343			190,374			217,559			211,159			200,771		$	226,829			221,513			226,672			221,892			191,343
Acquired accruing loans past due 90 days or more(b)	$	63,732			61,144			65,182			68,591			61,767		$	49,349			47,418			56,225			57,498			63,732
Purchased impaired loans(c):
Outstanding customer balance	$	890,431			927,446			981,105			1,040,678			1,124,776		$	643,124			688,091			779,340			838,476			890,431
Carrying amount		552,935			578,032			616,991			662,059			715,874			378,000			410,015			466,943			512,393			552,935

Nonaccrual loans to total loans and leases, net of unearned discount		1.04	%		1.01	%		.93	%		.96	%		1.00	%		.99	%		1.00	%		.99	%		.98	%		1.04	%
Nonperforming assets to total net loans and leases and real estate and other foreclosed assets		1.17	%		1.16	%		1.11	%		1.15	%		1.21	%		1.10	%		1.13	%		1.11	%		1.10	%		1.17	%
Accruing loans past due 90 days or more (a) to total loans and leases, net of unearned discount		.31	%		.33	%		.35	%		.34	%		.38	%		.27	%		.28	%		.30	%		.30	%		.31	%

(a) Excludes loans acquired at a discount. Predominantly residential real estate loans.

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 commercial and residential real estate; (ii) the concentrations of commercial real estate loans in the Company’s loan portfolio; (iii) the amount of commercial and industrial loans to businesses in areas of New York State outside of the New York City metropolitan area and in central Pennsylvania that have historically experienced less economic growth and vitality than the vast majority of other regions of the country; (iv) the expected repayment performance associated with the Company’s first and second lien loans secured by residential real ~~estate, including loans obtained in the acquisition of Hudson City that~~

~~were not classified as purchased impaired;~~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 March 31, ~~2017~~2018 in light of: (i) residential real estate values and the level of delinquencies of loans secured by residential real estate; (ii) economic conditions in the markets served by the Company; (iii) slower growth in private sector employment in upstate New York and central Pennsylvania than in other regions served by the Company and nationally; (iv) the significant subjectivity involved in commercial real estate valuations; and (v) the amount of loan growth experienced by the Company. While there has been general improvement in economic conditions, concerns continue to exist about the strength and sustainability of such improvements; the volatile nature of global commodity and export markets, including the impact international economic conditions could have on the U.S. economy; Federal Reserve positioning of monetary policy; and continued stagnant population growth in the upstate New York and central Pennsylvania regions (approximately ~~55%~~53% of the Company’s loans and leases are to customers in New York State and Pennsylvania).

~~The~~As described in note 3 of Notes to Financial Statements, the Company utilizes a loan grading system ~~which is applied~~ to ~~all~~differentiate risk amongst its 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~~Loans with a lower expectation of default are assigned one of ten possible “pass” loan grades and are generally ascribed lower loss factors when determining the allowance for credit losses. Loans with an elevated level of credit risk are classified as “criticized” and are ascribed a higher loss factor when determining the allowance for credit losses. Criticized loans may be classified as “nonaccrual” if the Company no longer expects to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more. Criticized commercial loans and commercial real estate loans ~~were $2.5 billion at March 31, 2017, compared with~~totaled $2.3 billion at March 31, ~~2016 and $2.4~~2018, compared with $2.5 billion at each of March 31 and December 31, ~~2016. Approximately 99% of loan balances added to the criticized category during the recent quarter were less than 90 days past due and 91% had a current payment status.~~2017. Given payment performance, amount of supporting collateral, and, in certain instances, the existence of loan guarantees, the Company still expects to collect the full outstanding principal balance on most of those loans.

Loan officers in different geographic locations with the support of the Company’s credit department personnel ~~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 regions. At least annually, updated financial information is obtained from commercial borrowers associated with pass grade loans and additional analysis is performed. On a quarterly basis, the Company’s centralized credit department reviews all criticized commercial loans and commercial real estate loans greater than $1 million to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. For criticized nonaccrual loans, additional meetings are held with loan officers and their managers, workout specialists and senior management to discuss each of the relationships. In analyzing criticized loans, borrower-specific information is reviewed, including operating results, future cash flows, recent developments and the borrower’s outlook, and other pertinent data. The timing and extent of potential losses, considering collateral valuation and other factors, and the Company’s potential courses of action are ~~reviewed.~~contemplated. 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 credit department. Accordingly, for real estate collateral securing larger commercial loans and commercial real estate loans, estimated collateral values are based on current appraisals and estimates of value. For non-real estate loans, collateral is assigned a discounted estimated liquidation value and, depending on the nature of the collateral, is verified through field exams or other procedures. In assessing collateral,

real estate and non-real estate values are reduced by an estimate of selling costs.

With regard to residential real estate loans, the Company’s loss identification and estimation techniques make reference to loan performance and house price data in specific areas of the country where collateral securing the Company’s residential real estate loans is located. For residential real estate-related loans, including home equity loans and lines of credit, the excess of the loan balance over the net realizable value of the property collateralizing the loan is charged-off when the loan becomes 150 days delinquent. That charge-off is based on recent indications of value from external parties that are generally obtained shortly after a loan becomes nonaccrual. Loans to consumers that file for bankruptcy are generally charged off to estimated net collateral value shortly after the Company is notified of such filings. At March 31, ~~2017,~~2018, approximately ~~55%~~57% 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 ~~70%~~69% (or approximately ~~32%~~30% of the aggregate home equity portfolio) consisted of junior lien loans that were behind a first lien mortgage loan that was not owned or serviced by the Company. To the extent known by the Company, if a senior lien loan would be on nonaccrual status because of payment delinquency, even if such senior lien loan was not owned by the Company, the junior lien loan or line that is owned by the Company is placed on nonaccrual status. At March 31, 2018 and 2017, the balance of junior lien loans and lines that were in nonaccrual status solely as a result of first lien loan performance was $13 million, compared with ~~$23 million at March 31, 2016 and $12~~$10 million at December 31, ~~2016.~~2017. In monitoring the credit quality of its home equity portfolio for purposes of determining the allowance for credit losses, the Company reviews delinquency and nonaccrual information and considers recent charge-off experience. When evaluating individual home equity loans and lines of credit for charge-off and for purposes of estimating incurred losses in determining the allowance for credit losses, the Company gives consideration to the required repayment of any first lien positions related to collateral property. 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 March 31, ~~2017,~~2018, approximately ~~83%~~82% 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 ~~21%~~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~~targeted 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 43 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%~~43% of the Company’s home equity portfolio consists of junior lien loans and lines of credit. Except for consumer loans and

residential real estate loans that are considered smaller balance homogeneous loans and are evaluated collectively and loans obtained at a discount in acquisition transactions, the Company considers a loan to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more and has been placed in nonaccrual status. Those impaired loans are evaluated for specific loss components. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Loans less than 90 days delinquent are deemed to have a minimal delay in payment and are generally not considered to be impaired. Loans acquired in connection with acquisition transactions subsequent to 2008 were recorded at fair value with no carry-over of any previously recorded allowance for credit losses. Determining the fair value of the acquired loans required estimating cash flows expected to be collected on the loans and discounting those cash flows at then-current interest rates. For loans acquired at a discount, the impact of estimated future credit losses represents the predominant difference between contractually required payments and the cash flows expected to be collected. Subsequent decreases to those expected cash flows require the Company to evaluate the need for an additional allowance for credit losses and could lead to charge-offs of acquired loan balances. Additional information regarding the Company’s process for determining the allowance for credit losses is included in note 43 of Notes to Financial Statements.

Management believes that the allowance for credit losses at March 31, ~~2017~~2018 appropriately reflected credit losses inherent in the portfolio as of that date. The allowance for credit losses was ~~$1.0~~$1.02 billion, or ~~1.12%~~1.16% of total loans and leases at each of March 31, 2018 and December 31, 2017, compared with ~~$963 million~~$1.00 billion or ~~1.10%~~1.12%, at March 31, ~~2016 and $989 million or 1.09% at December 31, 2016.~~2017. The ratio of the allowance to total loans and leases at each respective date reflects the impact of loans obtained in acquisition transactions subsequent to 2008 that have been recorded at estimated fair value. ~~As noted earlier,~~ GAAP prohibits any carry-over of an allowance for credit losses for acquired loans recorded at fair value. However, for loans acquired at a premium, GAAP provides that an allowance for credit losses be recognized for incurred losses inherent in the portfolio. The level of the allowance reflects management’s evaluation of the loan and lease portfolio using the methodology and considering the factors as described herein. Should the various credit factors considered by management in establishing the allowance for credit losses change and should management’s assessment of losses inherent in the loan portfolio also change, the level of the allowance as a percentage of loans could increase or decrease in future periods. The ratio of the allowance for credit losses to nonaccrual loans was 118% at March 31, 2018, compared with 108% at March 31, 2017 ~~compared with 110% at March 31, 2016~~ and ~~107%~~115% at December 31, ~~2016.~~2017. 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 assessing the adequacy of the Company’s allowance for credit losses. The level of the allowance reflects management’s evaluation of the loan and lease portfolio as of each respective date.

Other income totaled ~~$447 million in the initial quarter of 2017, compared with $421~~$459 million in the first quarter of ~~2016 and $465~~2018, compared with $447 million in the ~~fourth~~corresponding quarter of ~~2016.~~2017 and $484 million in the final 2017 quarter. The ~~rise in other income during the~~ recent ~~quarter~~quarter’s improvement as compared with the ~~year-earlier~~initial 2017 quarter ~~resulted largely from~~reflects higher trust income and ~~credit-related fees.~~$23 million of income from Bayview Lending Group LLC (“BLG”), partially offset by unrealized losses on investments in equity securities that, beginning in 2018, are reflected in the consolidated statement of income. As compared with the fourth quarter of ~~2016,~~2017, the recent ~~quarter~~quarter’s income from BLG was more than offset by a decline in ~~other income reflected lower~~ mortgage banking ~~revenues.~~revenues and gains realized from the sale of investment securities in 2017.

Mortgage banking revenues were $87 million in the first quarter of 2018, compared with $85 million in the ~~recent~~first quarter ~~compared with $82 million in the year-earlier quarter~~of 2017 and ~~$99~~$96 million in the final ~~2016~~2017 quarter. Mortgage banking revenues are comprised of both residential and commercial mortgage banking activities. The Company’s involvement in commercial mortgage banking activities includes the origination, sales and servicing of loans under the multi-family loan programs of Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development.

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

commitments, residential real estate loan servicing fees, and other residential real estate loan-related fees and income, were $62 million in each of the first quarter of 2018 and the final 2017 quarter, compared with $58 million in the first quarter of ~~2017, compared with $60 million in the year-earlier quarter and $63 million in the fourth quarter of 2016.~~2017. The ~~lower~~higher residential mortgage banking revenues in the recent quarter as compared with the ~~final~~first quarter of ~~2016~~2017 were largely the result of ~~decreased~~increased mortgage servicing income, partially offset by lower gains ~~from origination activities, due to lower volumes~~on sales of ~~loans originated for sale and narrower margins on those originations.~~residential mortgage loans.

New commitments to originate residential real estate loans to be sold were approximately ~~$727~~$625 million in ~~2017’s first~~the initial quarter of 2018, compared with ~~$659~~$727 million in the year-earlier quarter and ~~$760~~$696 million in the final quarter of ~~2016.~~2017. Realized gains from sales of residential real estate loans and loan servicing rights and recognized net unrealized gains or losses attributable to residential real estate loans held for sale, commitments to originate loans for sale and commitments to sell loans totaled to gains of $12 million in the first quarter of 2018, $14 million in ~~each of~~ the first ~~quarters~~quarter of 2017 and ~~2016, compared with gains of $17~~$13 million in the fourth quarter of ~~2016.~~2017.

Loans held for sale that were secured by residential real estate aggregated ~~$297~~$288 million ~~and $269~~at March 31, 2018, $297 million at March 31, 2017 and ~~2016, respectively, and $414~~$356 million at December 31, ~~2016.~~2017. Commitments to sell residential real estate loans and commitments to originate residential real estate loans for sale at pre-determined rates totaled $522 million and $343 million, respectively, at March 31, 2018, compared with $641 million and $474 million, respectively, at March 31, 2017 ~~compared with $646~~and $595 million and ~~$521 million, respectively, at March 31, 2016, and $777 million and $479~~$347 million, respectively, at December 31, ~~2016.~~2017. Net recognized unrealized gains on residential real estate loans held for sale, commitments to sell loans, and commitments to originate loans for sale were ~~$13~~$8 million and ~~$17~~$13 million at March 31, ~~2017~~2018 and March 31, ~~2016,~~2017, respectively, and ~~$15~~$10 million at December 31, ~~2016.~~2017. Changes in such net unrealized gains are recorded in mortgage banking revenues and resulted in net decreases in revenues of $2 million in each of the first quarters of 2018 and $82017 and $5 million in the ~~two most recent quarters, compared with a net increase in revenues of $1 million in the first~~final quarter of ~~2016.~~

Revenues from servicing residential real estate loans for others were ~~$44~~$50 million in the first quarter of ~~2017,~~2018, compared with ~~$45~~$44 million and ~~$46~~$49 million during the quarters ended March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. Residential real estate loans serviced for others totaled $78.3 billion at March 31, 2018, $63.7 billion at March 31, 2017 ~~$60.0 billion at March 31, 2016,~~ and ~~$53.2~~$79.2 billion at December 31, ~~2016.~~2017. Reflected in residential real estate loans serviced for others were loans sub-serviced for others of $55.8 billion, $40.8 billion ~~$36.3 billion~~ and ~~$30.4~~$56.6 billion at March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. Revenues earned for sub-servicing loans totaled $30 million for the quarter ended March 31, 2018, $23 million ~~in each of~~for the ~~quarters~~quarter ended March 31, 2017, and ~~March 31, 2016, compared with $25~~$29 million in the ~~final~~fourth quarter of ~~2016.~~2017. During ~~March~~ 2017, the Company acquired additional sub-servicing of residential real estate loans ~~having~~as follows: in March, approximately $12.4 billion of outstanding principal balances were added; in June, outstanding principal balances of approximately ~~$12.4 billion. The additional sub-servicing portfolio did not have a significant impact on residential mortgage banking revenues in the first quarter~~$11.2 billion were added; and during September, approximately $12.0 billion of ~~2017.~~outstanding principal balances were added. The contractual servicing rights associated with loans sub-serviced by the Company were predominantly held by affiliates of ~~Bayview Lending Group LLC (“BLG”).~~BLG. Information about the Company’s relationship with BLG and its affiliates is included in note 1514 of Notes to Financial Statements.

Capitalized servicing rights consist largely of servicing associated with loans sold by the Company. Capitalized residential mortgage ~~loan~~ servicing assets aggregated $116 million at March 31, 2018, $118 million at ~~each of~~ March 31, 2017 and ~~March 31, 2016 and $117~~$115 million at December 31, ~~2016.~~2017.

Commercial mortgage banking revenues aggregated $25 million in the recent quarter, compared with $27 million in the ~~first three months of 2017, compared with $22 million in the similar 2016~~year-earlier period and ~~$36~~$34 million in the fourth quarter of ~~2016.~~2017. Included in such amounts were revenues from loan origination and sales activities of ~~$15~~$12 million in the first quarter of ~~2017, $12~~2018, $15 million in the ~~year-earlier~~corresponding quarter of 2017 and ~~$24~~$19 million in the final ~~quarter of 2016.~~2017 quarter. Commercial real estate loans originated for sale to other investors were approximately ~~$308~~$518 million in the recent quarter, compared with ~~$355~~$308 million and ~~$1.3 billion~~$816 million in the first and fourth quarters of ~~2016,~~2017, respectively. Loan servicing revenues totaled $13 million in the most recent quarter, compared with $12 million in the ~~two most recent quarters, compared with $10~~initial quarter of 2017 and $14 million in the ~~first~~fourth quarter of ~~2016.~~2017. Capitalized commercial mortgage servicing assets were ~~$106~~$112 million and ~~$84~~$106 million at March 31, ~~2017~~2018 and March 31, ~~2016,~~2017, respectively, and ~~$104~~$114 million at December 31, ~~2016.~~2017. Commercial real estate loans serviced for other investors totaled ~~$15.1~~$16.3 billion at March 31, ~~2017, $10.9~~2018, $15.1 billion a year earlier and ~~$11.8~~$16.2 billion at December 31, ~~2016 and included $3.0 billion, $2.6 billion and~~2017

~~$2.8~~and included $3.3 billion, $3.0 billion and $3.3 billion, respectively, of loan balances for which investors had recourse to the Company if such balances are ultimately uncollectible. In January 2017, the Company purchased commercial mortgage servicing rights and other assets which increased commercial real estate loans serviced for others by approximately $2.7 billion. The purchase price and assets acquired were not material to the Company’s consolidated financial position. Revenues associated with the acquired servicing rights and other assets were not significant in the first quarter of 2017. Commitments to sell commercial real estate loans and commitments to originate commercial real estate loans for sale were $455 million and $289 million, respectively, at March 31, 2018, $373 million and $298 million, respectively, at March 31, 2017 ~~$312~~and $217 million and ~~$184 million, respectively, at March 31, 2016 and $713 million and $70~~$195 million, respectively, at December 31, ~~2016.~~2017. Commercial real estate loans held for sale at March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016~~2017 were $167 million, $75 million ~~$128~~and $22 million, ~~and $643 million,~~ respectively. ~~The higher balance at December 31, 2016 reflected loans originated late in 2016 that were not delivered to investors until 2017.~~

Service charges on deposit accounts were ~~$104~~$105 million in the recent quarter, compared with ~~$102~~$104 million in the year-earlier quarter and ~~$105~~$108 million in the fourth quarter of ~~2016.~~2017. Brokerage services income, which includes revenues from the sale of mutual funds and annuities and securities brokerage fees, aggregated $13 million in each of the first quarter of 2018 and fourth quarter of 2017, compared with $17 million in the first quarter of ~~2017, compared with $16 million in the first quarter of 2016 and $15 million in the fourth quarter of 2016.~~2017. Trading account and foreign exchange activity resulted in gains of ~~$10~~$5 million during the most recent quarter, compared with gains of $7$10 million in each of the first and fourth quarters of 2017. The recent quarter decline as compared with the earlier quarters was due largely to valuation changes on interest rate floor agreements that are not accounted for as hedging instruments but, nevertheless, provide the Company with protection against the possibility of ~~2016 and $8 million~~future declines in ~~the final quarter of 2016.~~interest rates on its earnings assets. 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 109 of Notes to Financial Statements and herein under the heading “Taxable-equivalent Net Interest Income.”

Trust income includes fees related to two significant businesses. The Institutional Client Services (“ICS”) business provides a variety of trustee, agency, investment management and administrative services for corporations and institutions, investment bankers, corporate tax, finance and legal executives, and other institutional clients who: (i) use capital markets financing structures; (ii) use independent trustees to hold retirement plan and other assets; and (iii) need investment and cash management services. The Wealth Advisory Services (“WAS”) business helps high net worth clients grow their wealth, protect it, and transfer it to their heirs. A comprehensive array of wealth management services are offered, including asset management, fiduciary services and family office services. Trust income aggregated ~~$120~~$131 million in the recent quarter, compared with ~~$111~~$120 million in the year-earlier quarter and ~~$122~~$130 million in the fourth quarter of ~~2016.~~2017. Revenues associated with the ICS business were approximately $67 million during each of the first quarter of 2018 and the fourth quarter of 2017 and $60 million ~~$52 million and $61 million during~~in the ~~quarters ended March 31, 2017, March 31, 2016 and December 31, 2016, respectively.~~first quarter of 2017. The higher revenues in the two most recent quarters as compared with the first quarter of ~~2016~~2017 reflect increased fees earned from money-market funds, ~~and~~ stronger sales ~~activities.~~activities and higher retirement services income from growth in collective funds balances. Revenues attributable to WAS totaled approximately $61 million, $54 million ~~$51 million~~ and ~~$53~~$58 million for the three-month periods ended March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. The higher revenues in the two most recent quarters as compared with the initial 2017 quarter reflect stronger sales activities and favorable equity market performance. Total trust assets, which include assets under management and assets under administration, ~~aggregated~~totaled $243.4 billion at March 31, 2018, compared with $219.0 billion at March 31, 2017 ~~compared with $200.0 billion at March 31, 2016~~ and ~~$210.6~~$241.5 billion at December 31, ~~2016.~~2017. Trust assets under management were $82.9 billion, $73.6 billion ~~$66.2 billion~~ and ~~$70.7~~$82.5 billion at March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. Trust assets under management include the Company’s proprietary mutual funds assets of $10.6 billion, $10.7 billion and $11.2 billion at March 31, 2018, March 31, 2017 and December 31, 2017, respectively. Additional trust income from investment management activities was $6$4 million in the recent quarter, compared with $8$6 million in ~~each of~~ the first quarter of 2017 and $5 million in the fourth ~~quarters~~quarter of ~~2016.~~2017. That income largely relates to fees earned from retail customer investment accounts and from an affiliated investment manager. Assets managed by that affiliated manager were $6.7 billion at each of March 31, 2018 and December 31, 2017 and $6.9 billion at March 31, ~~2017, $6.7 billion at March 31, 2016 and $7.3 billion at December 31, 2016.~~2017. The Company’s trust income from that affiliate was not material during any of the quarters then-ended.

The ~~Company’s proprietary mutual funds had assets~~Company recognized net losses on investment securities of ~~$10.7 billion, $11.4 billion and $10.9 billion at March 31, 2017, March 31, 2016 and December 31, 2016, respectively.~~

~~Other revenues from operations were $111~~$9 million in the first quarter of ~~2017,~~2018, compared with ~~$102~~gains of $21 million in the ~~year-earlier~~final 2017 quarter. There were no gains or losses on investment securities in the initial quarter of 2017. The losses in the recent quarter represented unrealized losses on investments in equity securities, largely Fannie Mae and ~~$116~~Freddie Mac preferred stock. The gains realized in the fourth quarter of 2017 resulted from the sale of a portion of the Company’s holdings of preferred stock of Fannie Mae and Freddie Mac.

Other revenues from operations were $126 million in the first quarter of 2018, compared with $111 million in the similar quarter of 2017 and $106 million in the fourth quarter of ~~2016. As~~2017. The most significant contributor to the recent quarter’s increase as compared with the ~~initial 2016~~first and fourth quarters of 2017 was $23 million of income received from BLG. Information about the Company’s relationship with BLG and its affiliates is included in note 14 of Notes to Financial Statements. Partially offsetting that improvement as compared with the first quarter ~~the recent quarter’s revenues reflect higher~~of 2017 were lower letter of credit and other credit-related ~~fees, including loan syndication~~ fees. Included in other revenues from operations were the following significant components. Letter of credit and other credit-related fees aggregated ~~$34~~$29 million in each of the two most recent ~~quarter,~~quarters, compared with ~~$28~~$34 million in the initial quarter

of ~~2016 and $31 million in the final quarter of 2016.~~2017. 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 in the first quarter of 2018, compared with $15 million in the first quarter of 2017 ~~compared with $16 million in the first quarter of 2016~~ and $13 million in the final ~~2016~~2017 quarter. Revenues from merchant discount and credit card fees were ~~$27~~$28 million in the recent quarter, compared with ~~$26~~$27 million and ~~$30~~$32 million in the first and fourth quarters of ~~2016,~~2017, respectively. Insurance-related sales commissions and other revenues totaled $12 million in each of the first quarters of 2017 and 2016, compared with $11 million in the fourth quarter of 2016. M&T’s share of the operating losses of Bayview Lending Group LLC (“BLG”) recognized using the equity method of accounting was $2 million in each of the two most recent quarters, compared with $4$13 million in the first quarter of ~~2016. Information about~~2018, compared with $12 million and $10 million in the ~~Company’s relationship with BLG~~first and ~~its affiliates is included in note 15~~fourth quarters of ~~Notes to Financial Statements.~~2017, respectively.

Other expense aggregated ~~$788~~$933 million in the first quarter of ~~2017,~~2018, compared with ~~$776~~$788 million in the ~~year-earlier~~corresponding 2017 quarter and ~~$769~~$796 million in the fourth quarter of ~~2016.~~2017. Included in those amounts are expenses considered to be “nonoperating” in nature consisting of amortization of core deposit and other intangible assets of $8$7 million in ~~2017’s initial~~each of the first quarter of 2018 and the fourth 2017 quarter, compared with ~~$12~~$8 million in the first quarter of 2016 and $9 million in the final 2016 quarter, and merger-related expenses of $23 million in the first quarter of 2016. There were no merger-related expenses during the first quarter of 2017 or the fourth quarter of 2016.2017. Exclusive of those nonoperating expenses, noninterest operating expenses were $927 million in the initial quarter of 2018, compared with $779 million in the ~~first~~similar 2017 quarter ~~of 2017, compared with $741~~and $789 million in the ~~corresponding 2016 quarter and $760 million in the fourth~~final quarter of ~~2016.~~2017. The most significant ~~factors for~~factor associated with the increased level of operating expenses in the recent quarter as compared with the year-earlier quarter ~~were higher salaries~~ and ~~employee benefits expenses.~~the fourth quarter of 2017 was a $135 million increase in the reserve for litigation matters. The recent quarter’s rise in noninterest operating expenses as compared with the fourth quarter of ~~2016~~2017 also reflected seasonally higher stock-based compensation and employee benefits expenses offset, in part, by ~~the effect of~~ a ~~$30~~$44 million contribution to The M&T Charitable Foundation made in the final ~~2016~~2017 quarter. Table 2 provides a reconciliation of other expense to noninterest operating expense.

Salaries and employee benefits expense aggregated ~~$450~~$463 million in ~~2017’s~~2018’s first quarter, compared with ~~$432~~$450 million in the year-earlier quarter and ~~$393~~$403 million in the fourth quarter of ~~2016. Merger-related salaries and employee benefits expenses were $5 million in the first quarter of 2016.~~2017. The ~~increased~~higher salaries and employee benefits expense in the recent quarter as compared with the first quarter of ~~2016~~2017 largely reflects the impact of annual merit increases for employees and higher incentive-based compensation. The higher level of expenses in the recent quarter as compared with the final quarter of ~~2016~~2017 was attributable to seasonally higher stock-based compensation, medical plan costs, payroll-related taxes, unemployment insurance and the Company’s contributions for retirement savings plan benefits related to annual incentive compensation payments. The Company, in accordance with GAAP, has accelerated the recognition of compensation costs for stock-based awards granted to retirement-eligible employees and employees who will become retirement-eligible prior to full vesting of the award. As a result, stock-based compensation expense during the first quarters of 2018 and 2017 ~~and 2016~~ included ~~$20~~$23 million and ~~$16~~$20 million, respectively, that would have been recognized over the normal vesting period if not for the accelerated expense recognition provisions of GAAP. That acceleration had no effect on the value of stock-based compensation awarded to employees. Salaries and employee benefits expense included stock-based compensation of ~~$33~~$35 million and ~~$29~~$33 million in the three-month periods ended March 31, ~~2017~~2018 and March 31, ~~2016,~~2017, respectively, and $9 million in the three-month period ended December 31, ~~2016.~~2017. The number of full-time equivalent employees was 16,531 at March 31, 2018, compared with 16,409 and 16,456 at March 31, 2017 ~~compared with 16,718 and 16,593 at March 31, 2016~~ and December 31, ~~2016,~~2017, respectively.

Excluding the nonoperating expense items described earlier from each quarter, nonpersonnel operating expenses were ~~$330~~$463 million and ~~$314~~$330 million in the quarters ended March 31, ~~2017~~2018 and March 31, ~~2016,~~2017, respectively, and ~~$367~~$386 million in the final quarter of ~~2016.~~2017. The ~~increase in~~higher nonpersonnel operating expenses in the recent quarter as compared with the year-earlier quarter reflected ~~increased~~the $135 million increase in the reserve for

litigation matters, partially offset by lower Federal Deposit Insurance Corporation (“FDIC”) ~~assessments and higher outside data processing and software costs. Higher nonpersonnel operating~~

~~expenses in~~assessments. As compared with the fourth quarter of ~~2016 as compared with~~2017, the recent ~~quarter were predominately due~~quarter’s increase to the ~~$30~~reserve for litigation matters was offset, in part, by the impact of the $44 million cash contribution made in the final ~~2016~~2017 quarter to The M&T Charitable Foundation.

The efficiency ratio measures the relationship of noninterest operating expenses to revenues. The Company’s efficiency ratio was ~~56.9%~~64.0% during the recent quarter, compared with ~~57.0%~~56.9% and ~~56.4%~~54.7% in the first and fourth quarters of ~~2016,~~2017, respectively. The calculation of the efficiency ratio is presented in Table 2.

The provision for income taxes was $105 million in the recent quarter, compared with $169 million in the year-earlier quarter and $306 million in the final quarter of 2017. The effective tax rates were 23.0%, 32.7% and 48.7% for ~~each~~the quarters ended March 31, 2018, March 31, 2017 and December 31, 2017, respectively. The enactment of the ~~first quarters~~Tax Act that was signed into law on December 22, 2017 impacted the effective tax rates in the two most recent quarters. The Tax Act reduced the corporate Federal income tax rate from 35% to 21% effective January 1, 2018 and made other changes to U.S. corporate income tax laws. GAAP requires that the impact of ~~2017 and 2016 was $169 million, compared with $180 million~~the provisions of the Tax Act be accounted for in the period of enactment. Accordingly, the incremental income tax expense recorded by the Company in the fourth quarter of ~~2016. As noted earlier, M&T adopted new accounting guidance for share-based transactions during~~2017 related to the ~~first quarter~~Tax Act was $85 million. That additional expense was largely attributable to the reduction in carrying value of ~~2017. That guidance~~net deferred tax assets reflecting lower future tax benefits resulting from the lower corporate tax rate. GAAP also requires that ~~all~~ excess tax benefits and tax deficiencies associated with share-based compensation be recognized as a discreet component of income tax expense in the income statement. ~~Previously, tax effects resulting from changes to M&T’s share price subsequent to~~As a result, the ~~grant date were recorded through shareholders’ equity at the time of vesting or exercise. The adoption of the amended accounting guidance resulted in an $18 million reduction~~Company recognized reductions of income tax expense of $9 million and $18 million in the initial quarters of 2018 and 2017, ~~quarter.~~respectively. The ~~effective tax rates were 32.7%, 36.2% and 35.2% for the quarters ended March 31, 2017, March 31, 2016 and December 31, 2016, respectively. Excluding the~~ impact of ~~the adoption of the amended accounting guidance, the effective tax rate would have been 36.2%~~that requirement in the ~~first~~fourth quarter of ~~2017.~~ 2017 was not significant.

The effective tax rate is affected by the level of income earned that is exempt from tax relative to the overall level of pre-tax income, the level of income allocated to the various state and local jurisdictions where the Company operates, because tax rates differ among such jurisdictions, and the impact of any large but infrequently occurring items.

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

Shareholders’ equity was ~~$16.2~~$15.7 billion at March 31, ~~2017,~~2018, representing ~~13.16%~~13.24% of total assets, compared with ~~$16.4~~$16.2 billion or ~~13.12%~~13.16% a year earlier and ~~$16.5~~$16.3 billion or ~~13.35%~~13.70% at December 31, ~~2016.~~2017.

Included in shareholders’ equity was preferred stock with financial statement carrying values of $1.2 billion at each of March 31, ~~2017,~~2018, March 31, ~~2016~~2017 and December 31, ~~2016. Further information concerning M&T’s preferred stock can be found in note 6 of Notes to Financial Statements.~~

2017. Reflecting the impact of repurchases of M&T’s common stock, common shareholders’ equity was $14.5 billion, or $98.60 per share, at March 31, 2018, compared with $15.0 billion, or $97.40 per share, ~~at March 31, 2017, compared with $15.1 billion, or $95.00 per share,~~ a year earlier and ~~$15.3~~$15.0 billion, or ~~$97.64~~$100.03 per share, at December 31, ~~2016.~~2017. Tangible equity per common share, which excludes goodwill and core deposit and other intangible assets and applicable deferred tax balances, was ~~$67.16~~$66.99 at the end of the recent quarter, compared with ~~$65.65~~$67.16 at March 31, ~~2016~~2017 and ~~$67.85~~$69.08 at December 31, ~~2016.~~2017. The Company’s ratio of tangible common equity to tangible assets was ~~8.71%~~8.63% at ~~each of~~ March 31, ~~2017 and March 31, 2016,~~2018, compared with ~~8.92%~~8.71% a year earlier and 9.10% at December 31, ~~2016.~~2017. 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 losses on investment securities reflected in shareholders’ equity, net of applicable tax effect, were $162 million, or $1.10 per common share, at March 31, 2018, compared with net unrealized losses of $18 million, or $.11 per common share, at March 31, 2017 ~~compared with net unrealized gains of $145~~and $44 million, or ~~$.91~~

~~per common share, at March 31, 2016 and net unrealized losses of $16 million, or $.10~~$.29 per common share, at December 31, ~~2016.~~2017. Changes in unrealized gains and losses on investment securities are predominantly reflective of the impact of changes in interest rates on the values of such securities. Information about unrealized gains and losses as of March, 31, ~~2017~~2018 and December 31, ~~2016~~2017 is included in note 32 of Notes to Financial Statements.

Reflected in ~~net unrealized losses~~the carrying amount of available-for-sale investment securities at March 31, ~~2017~~2018 were pre-tax effect unrealized gains of ~~$125 million on available-for-sale investment securities with an amortized cost of $5.0 billion and pre-tax effect unrealized losses of $135~~$24 million on securities with an amortized cost of ~~$7.6 billion. The~~$1.4 billion and pre-tax effect unrealized losses ~~reflect $15~~of $235 million ~~of losses~~ on ~~trust preferred~~ securities ~~issued by financial institutions having~~with an amortized cost of ~~$110 million and an estimated fair value of $95 million (generally considered Level 2 valuations).~~$9.1 billion. Further information concerning the Company’s valuations of available-for-sale investment securities is provided in note 1211 of Notes to Financial Statements.

Each reporting period the Company reviews its investment securities for other-than-temporary impairment. For debt securities, the Company analyzes the creditworthiness of the issuer or reviews the credit performance of the underlying collateral supporting the bond. For debt securities backed by pools of loans, such as privately issued mortgage-backed securities, the Company estimates the cash flows of the underlying loan collateral using forward-looking assumptions for default rates, loss severities and prepayment speeds. Estimated collateral cash flows are then utilized to estimate bond-specific cash flows to determine the ultimate collectibility of the bond. If the present value of the cash flows indicates that the Company should not expect to recover the entire amortized cost basis of a bond or if the Company intends to sell the bond or it more likely than not will be required to sell the bond before recovery of its amortized cost basis, an other-than-temporary impairment loss is recognized. If an other-than-temporary impairment loss is deemed to have occurred, the investment security’s cost basis is adjusted, as appropriate for the circumstances.

As of March, 31, ~~2017,~~2018, based on a review of each of the securities in the investment securities portfolio, the Company concluded that the declines in the values of any securities containing an unrealized loss were temporary and that any other-than-temporary impairment charges were not appropriate. As of March 31, ~~2017,~~2018, the Company did not intend to sell nor is it anticipated that it would be required to sell any of its impaired securities, that is, where fair value is less than the cost basis of the security. The Company intends to continue to closely monitor the performance of its securities because changes in their underlying credit performance or other events could cause the cost basis of those securities to become other-than-temporarily impaired. However, because the unrealized losses on available-for-sale investment securities have generally already been reflected in the financial statement values for investment securities and shareholders’ equity, any recognition of an other-than-temporary decline in value of those investment securities would not have a material effect on the Company’s consolidated financial condition. Any other-than-temporary impairment charge related to held-to-maturity securities would result in reductions in the financial statement values for investment securities and shareholders’ equity. Additional information concerning fair value measurements and the Company’s approach to the classification of such measurements is included in note 1211 of the Notes to Financial Statements.

The Company assessed impairment losses on privately issued mortgage-backed securities in the held-to-maturity portfolio by performing internal modeling to estimate bond-specific cash flows considering recent performance of the mortgage loan collateral and utilizing assumptions about future defaults and loss severity. These bond-specific cash flows also reflect the placement of the bond in the overall securitization structure and the remaining subordination levels. In total, at March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, the Company had in its held-to-maturity portfolio privately issued mortgage-backed securities with an amortized cost basis of ~~$153~~$129 million and ~~$158~~$136 million, respectively, and a fair value of ~~$119~~$113 million and ~~$121~~$111 million, respectively. At March 31, ~~2017, 85%~~2018, 84% of the mortgage-backed securities were in the most senior tranche of the securitization structure with ~~24%~~19% being independently rated as investment grade. The mortgage-backed securities are generally collateralized by residential and small-balance commercial real estate loans originated between 2004 and 2008 and had a weighted-average credit

enhancement of ~~16%~~17% at March 31, ~~2017,~~2018, 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. The weighted-average default percentage and loss severity assumptions utilized in the Company’s internal modeling were ~~28%~~33% and ~~71%~~67% respectively. Given the securitization structure, some of the bonds held by the Company may defer interest payments in certain circumstances, but after considering the repayment structure and estimated future collateral cash flows of each individual senior and subordinate tranche bond, the Company has concluded that as of March 31, ~~2017,~~2018, those privately issued mortgage-backed securities were not other-than-temporarily impaired. Nevertheless, it is possible that adverse changes in the estimated future performance of mortgage loan collateral underlying such securities could impact the Company’s conclusions.

Adjustments to reflect the funded status of defined benefit pension and other postretirement plans, net of applicable tax effect, reduced accumulated other comprehensive income by ~~$269~~$297 million, or ~~$1.75 per common~~

~~share, at March 31, 2017, $293 million, or $1.84~~$2.03 per common share, at March 31, ~~2016 and $273~~2018, $269 million, or $1.75 per common share, at March 31, 2017 and $305 million, or $2.03 per common share, at December 31, ~~2016.~~2017.

~~Consistent with its revised 2016 Capital Plan filed with~~On February 5, 2018, M&T received notice of non-objection from the Federal Reserve ~~M&T repurchased 3,233,196~~to repurchase an additional $745 million of shares of its common ~~shares~~stock by June 30, 2018. This amount is in addition to the previously announced $900 million of common stock authorized for ~~$532~~repurchase. The additional repurchases of up to $745 million ~~during~~are being made under the terms of a stock repurchase program approved by M&T’s Board of Directors on February 21, 2018. During the first quarter of ~~2017.~~2018, M&T ~~may~~repurchased 3,783,282 shares of its common stock at a total cost of $721 million. Repurchases of common stock in the final 2017 quarter totaled 1,343,356 shares at a cost of $224 million, while in the first quarter of 2017 M&T repurchased 3,233,196 shares for $532 million. As of March 31, 2018, M&T has remaining authorization to repurchase up to ~~$231~~$475 million of its common shares during the second quarter of 2017. During the fourth quarter of 2016, M&T repurchased 300,000 shares of its common stock for $37 million. Pursuant to the 2015 Capital Plan, M&T repurchased 948,545 shares of its common stock for $100 million in the initial 2016 quarter. 2018.

Also in accordance with the revised 2016 Capital Plan, during the first quarter of 2017 M&T’s Board of Directors authorized an increase in the quarterly common stock dividend to $.75 per common share from the previous rate of $.70 per common share. As a result, cashCash dividends declared on M&T’s common stock totaled ~~$116~~$112 million in the initial quarter of ~~2017,~~2018, compared with ~~$112~~$116 million and ~~$110~~$113 million in the three-month periods ended March 31, ~~2016~~2017 and December 31, ~~2016,~~2017, respectively. Cash dividends declared on preferred stock aggregated $18 million in each of the first quarter of 2018, the first quarter of 2017 ~~compared with $20 million in each~~and the fourth quarter of the first and fourth quarters of 2016. The decline in preferred stock dividends in the recent quarter from the 2016 periods resulted from the lower dividend rate for the $500 million of Series F preferred stock issued in October 2016 as compared with the like amount of Series D preferred stock that had been redeemed in December 2016.2017.

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

In addition, capital regulations provide for the phase-in of a “capital conservation buffer” composed entirely of CET1 on top of these minimum risk-weighted asset ratios. When fully phased-in on January 1, 2019 the capital conservation buffer will be 2.5%. For ~~2017,~~2018, the phase-in transition portion of that buffer is ~~1.25%~~1.875%.

The regulatory capital ratios of the Company and its bank subsidiaries, M&T Bank and Wilmington Trust, N.A., as of March 31, ~~2017~~2018 are presented in the accompanying table.

	M&T	M&T		Wilmington	M&T	M&T		Wilmington
	(Consolidated)	Bank		Trust, N.A.	(Consolidated)	Bank		Trust, N.A.

Common equity Tier 1	10.67%		10.29%	43.27%	10.59%		10.84%	68.88%
Tier 1 capital	11.91%		10.29%	43.27%	11.86%		10.84%	68.88%
Total capital	14.11%		12.01%	43.66%	14.35%		12.94%	69.41%
Tier 1 leverage	9.98%		8.63%	9.61%	10.15%		9.29%	12.95%

The Company is subject to the comprehensive regulatory framework applicable to bank and financial holding companies and their subsidiaries, which includes regular examinations by a number of regulators. Regulation of financial institutions such as M&T and its subsidiaries is intended primarily for the protection of depositors, the

Deposit Insurance Fund of the FDIC and the banking and financial system as a whole, and generally is not intended for the protection of shareholders, investors or creditors other than insureddepositors. Changes in laws, regulations and regulatory policies applicable to the Company’s operations can increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive environment in which the Company operates, all of which could have a material effect on the business, financial condition or results of operations of the Company and in M&T’s ability to pay dividends. For additional information concerning this comprehensive regulatory framework, refer to Part I, Item 1 of M&T’s Form 10-K for the year ended December 31, ~~2016.~~

On June 17, 2013, M&T and M&T Bank entered into a written agreement with the Federal Reserve Bank of New York. Under the terms of the agreement, M&T and M&T Bank were required to submit to the Federal Reserve Bank of New York a revised compliance risk management program designed to ensure compliance with the Bank Secrecy Act and anti-money-laundering laws and regulations (“BSA/AML”) and to take certain other steps to enhance their compliance practices. M&T and M&T Bank have since made substantial progress in implementing a BSA/AML program with significantly expanded scale and scope. M&T and M&T Bank are continuing to work towards the resolution of all outstanding issues in the written agreement.2017.

~~As required by GAAP, the~~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 1413 of Notes to Financial Statements. As disclosed in M&T’s Form 10-K for the year ended December 31, ~~2016, in~~2017, during the ~~fourth~~second quarter of ~~2016,~~2017 the Company revised its funds transfer pricing allocation related to ~~borrowings~~certain deposit categories. As a result of the changes and as described in note 13 of Notes to ~~the residential real estate loans obtained in the acquisition of Hudson City, retroactive to 2015. Accordingly,~~Financial Statements, financial information for the ~~Discretionary Portfolio segment and the “All Other” category for the three-month period ended March 31, 2016~~first quarter of 2017 has been reclassified to ~~conform~~provide segment information on a comparable basis. Additionally, each reportable segment benefited from a lower corporate Federal income tax rate in the recent quarter due to the ~~current allocation methodology.~~enactment of the Tax Act, as compared with the first and fourth quarters of 2017.

~~The~~Net income of the Business Banking segment ~~contributed net income of $22~~was $38 million during the quarter ended March 31, ~~2017,~~2018, compared with $25 million in the year-earlier quarter and ~~$24~~$31 million in the fourth quarter of ~~2016.~~2017. As compared with the ~~year-earlier~~initial 2017 quarter, the improvement reflected an $8 million increase in net interest income, a ~~recent quarter rise~~$3 million decline in the provision for credit losses, of $5 million was partially offset by a $2 million increase in net interest income. The modest decline in net income in the initial 2017 quarter as compared with the immediately preceding quarter was largely due to ~~a $2 million decrease~~lower net charge-offs, and the lower income tax rate in ~~net interest income.~~

~~Net income of the Commercial Banking segment was $113 million in the recent quarter, compared with $101 million in the first quarter of 2016 and $102 million in the final 2016 quarter.~~2018. The ~~recent quarter’s 11% improvement as compared with the first quarter of 2016 reflected an increase in~~higher net interest income ~~of $8 million, largely resulting from~~reflected a ~~16 basis point~~ widening of the net interest margin on deposits ~~higher letter~~ of ~~credit and other credit-related fees of $6 million, predominantly due to loan syndication fees, a decline~~26 basis points. The increase in the provision for credit losses of $5 million and increased gains from the sale of previously leased equipment of $3 million. Those favorable factors were offset, in part, by higher costs for FDIC assessments of $3 million. The higher net income in the ~~first~~recent quarter as compared with the final quarter of 2017 ~~as compared with 2016’s fourth quarter~~ was ~~largely~~predominantly due to ~~a decrease in~~ the provision for credit losses of $16 million and increased letter of credit and other credit-related fees of $5 million, largely due to loan syndication fees. Those favorable factors were offset, in part, by a $4 million decline in gains from the sale of previously leased equipment. lower income tax rate.

The Commercial ~~Real Estate~~Banking segment ~~recorded~~contributed net income of ~~$85~~$125 million in the recent quarter, compared with $113 million in the first quarter of 2017 ~~compared with $81~~and $109 million in the ~~year-earlier period and $96 million~~final 2017 quarter. The 11% improvement in the ~~fourth~~first quarter of ~~2016. The recent quarter’s improvement in net income~~2018 as compared with the ~~first~~corresponding quarter of ~~2016 reflected~~2017 was primarily the result of the reduction in the income tax rate. Partially offsetting that factor were a ~~$13~~$6 million increase in the provision for credit losses, mainly due to higher net charge-offs, a $6 million decline in letter of credit and credit-related fees and higher allocated operating expenses associated with data processing, risk management and other support services provided to the Commercial Banking segment. As compared with 2017’s fourth quarter, the higher recent quarter net income was primarily due to the lower income tax rate offset, in part, by a $6 million decline in net interest income and a $6

million rise in the provision for credit losses, due to higher ~~mortgage banking revenues of $5 million.~~net charge-offs. The ~~higher~~lower net interest income ~~was largely attributable to an increase~~reflected two less days in ~~average outstanding loan balances of $3.1 billion offset, in part, by~~the recent quarter and a narrowing of the net interest margin on loans of 148 basis points. ~~Those favorable factors were~~

Net income of the Commercial Real Estate segment was $108 million in the first quarter of 2018, compared with $85 million in the year-earlier period and $95 million in the fourth quarter of 2017. The results in the recent quarter as compared with the initial 2017 quarter reflected a $7 million increase in net interest income, decreases of $3 million in each of the provision for credit losses, due to lower net charge-offs, and FDIC assessments, and the lower income tax rate. The higher net interest income was largely attributable to a widening of the net interest margin on deposits and loans of 49 basis points and 6 basis points, respectively. The increase in net income in the recent quarter as compared with the final quarter of 2017 resulted primarily from the lower income tax rate, partially offset by a $4$6 million rise in the provision for credit losses, ~~increased FDIC assessments of $4 million and higher personnel-related expenses of $2 million.~~

~~The decline in~~primarily due to net ~~income~~recoveries in the ~~initial~~ 2017 quarter, ~~as compared with the final 2016 quarter was largely due to:~~ decreased mortgage banking revenues of $9$5 million, reflecting lower origination ~~volumes;~~volumes, and a ~~$5 million rise in the provision for credit losses; a $3~~$4 million decline in net interest income, reflecting two less days in the recent ~~quarter; and lower credit-related fees of $2 million.~~quarter.

Net income earned by the Discretionary Portfolio segment totaled ~~$34~~$20 million during the three-month period ended March 31, ~~2017,~~2018, compared with ~~$48~~$34 million in the year-earlier period and ~~$29~~$40 million in the fourth quarter of ~~2016. The~~2017. As compared with the first quarter of 2017, the recent quarter’s decline in net income ~~as compared with the first quarter of 2016~~ was ~~predominantly~~primarily due to a ~~$21~~$16 million decrease in net interest income ~~a $3~~and $9 million ~~increase~~of unrealized losses on equity securities that, beginning in 2018, are reflected in the ~~provision for credit losses and a $2 million decline~~income statement, offset, in ~~bank owned life insurance revenues.~~part, by the impact of the lower income tax rate in 2018. The decline in net interest income reflected lower average loan balances of ~~$3.8~~$2.9 billion and a narrowing of the net interest margin on ~~loans~~investment securities of 12 basis points, each predominantly due to pay downs of loans obtained in the acquisition of Hudson City, partially offset by a 9 basis point widening of the net interest margin on investment securities. The recent quarter’s favorable performance as compared with the immediately preceding quarter reflected an increase in net interest income and declines in residential real estate-related servicing costs and the provision for credit losses.

~~Net income from the Residential Mortgage Banking segment was $15 million in the recent quarter, compared with $17 million in the first quarter of 2016 and $20 million in 2016’s fourth quarter.~~points. The decline in net income in the recent quarter as compared with the ~~year-earlier period~~immediately preceding quarter reflected $18 million of realized gains from the sale of Fannie Mae and Freddie Mac preferred stock in 2017’s final quarter and the $9 million of unrealized losses on equity securities in the recent quarter offset, in part, by the impact of the lower ~~servicing revenues. As~~income tax rate in 2018.

The Residential Mortgage Banking segment contributed net income of $15 million in the recent quarter, compared with $10 million in the ~~final~~year-earlier quarter ~~of 2016, the decreased~~and $8 million in 2017’s fourth quarter. The higher net income in the recent quarter ~~reflected~~as compared with the initial 2017 quarter was due to higher servicing revenues (including intersegment revenues) and lower servicing-related costs which were partially offset by lower revenues associated with mortgage origination and sales activities (including intersegment revenues). As compared with the final quarter of ~~$4 million,~~2017, higher net income in the recent quarter was primarily the result of reduced professional services costs and ~~a $3 million decline in net interest income, due largely~~other expenses related to ~~lower average deposit balances of $776 million.~~servicing residential real estate loans.

Net income ~~earned by~~of the Retail Banking segment totaled ~~$82~~$123 million in the first quarter of ~~2017,~~2018, compared with ~~$63~~$86 million in the ~~year-earlier~~similar quarter of 2017 and ~~$70~~$95 million in the final ~~2016~~2017 quarter. The ~~29%~~43% improvement in net income in the recent quarter as compared with the year-earlier period reflected a $16 million decrease in the provision for credit losses due, in part, to higher levels of partial charge-offs recognized in the first quarter of 2016 associated with loans for which the Company identified that the customer was either bankrupt or deceased, and a $21$25 million increase in net interest ~~income.~~income and the impact of the lower income tax rate in 2018. The ~~improvement in~~higher net interest income reflected a widening of the net interest margin on deposits of 2839 basis points, partially offset ~~in part,~~ by a ~~$2.4~~$3.7 billion decrease in average outstanding deposit balances. ~~Those favorable factors were partially offset by higher allocated operating expenses associated with data processing, risk management and other support services provided to this segment.~~ The recent quarter’s improved net ~~income~~contribution as compared with the fourth quarter of ~~2016~~2017 was largely due to: a $6 million decrease in advertising and marketing ~~expenses of $7 million;~~expenses; a $5$6 million rise in net interest income, reflecting a widening of the net interest margin on deposits of 1115 basis points which was partially offset by the impact of two less days in the ~~2017~~recent quarter; a $3$4 million ~~decline~~decrease in credit card fees and merchant expenses; and the ~~provision for credit losses; and reduced allocated operating expenses associated with data processing, risk management and other support services.~~lower income tax rate in 2018. Those favorable factors were offset, in part, by a $3$4 million decrease in service charges on deposit ~~accounts.~~accounts and a $3 million decrease in merchant discount and credit card fees.

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~~results and distributions associated with BLG, merger-related expenses resulting from acquisitions and the net impact of the Company’s allocation methodologies for internal transfers for funding charges and credits associated with the earning assets and interest-bearing liabilities of the Company’s reportable segments and the provision for credit losses. The “All Other” category also includes trust income of the Company that reflects the ICS and WAS business activities. The

various components of the “All Other” category resulted in net losses totaling $1$77 million for the quarter ended March 31, ~~2017, $38~~2018, $3 million in the year-earlier quarter and ~~$10~~$55 million in the fourth quarter of ~~2016.~~2017. The ~~reduced~~ net loss in the first quarter of ~~2017~~2018 as compared with the year-earlier quarter largely ~~reflected: merger-related expenses~~reflected an increase to the reserve for litigation matters of $135 million to reflect the status of pre-existing litigation and higher professional and other outside services of $19 million, reflecting legal, consulting and advisory expenses. Partially offsetting those items were the following favorable recent quarter factors: $23 million ~~in the first quarter~~ of ~~2016 (there were no similar merger-related expenses in the recently completed quarter); tax benefits~~income from BLG; lower provision for credit losses of $18 million recognized in the first quarter of 2017 resulting from the adoption of new accounting guidance requiring that excess tax benefits associated with share-based compensation be recognized in income tax expense in the income

~~statement, and~~$15 million; higher trust income of ~~$9 million. Those favorable factors were offset, in part, by higher personnel-related expenses, including incentive-based compensation~~$11 million, largely the result of increased revenues from the WAS and ICS businesses; and the favorable impact ~~of annual merit increases for employees.~~from the Company’s allocation methodologies. As compared with the immediately preceding quarter, the ~~improved performance~~higher net loss in the recent quarter reflected the ~~$18~~increased reserve for litigation matters of $135 million ~~tax benefit recognized~~and higher personnel-related expenses of $55 million, reflecting annual merit increases and seasonally higher incentive and stock-based compensation and employee benefits. Those unfavorable factors were offset, in ~~the first quarter of 2017 associated with share-based compensation,~~part, by the impact of ~~the $30~~a $44 million contribution to The M&T Charitable Foundation in the final ~~2016~~2017 quarter, the $23 million of income from BLG in the first quarter of 2018, and the favorable impact from the Company’s allocation methodologies. ~~Those favorable factors were largely offset by higher personnel-related costs, reflecting seasonally higher stock-based compensation and employee benefits expenses.~~

A discussion of recent accounting developments is included in note 16 of Notes to Financial Statements.

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

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

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

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

	2017			2016 Quarters												2018			2017 Quarters
	First Quarter			Fourth			Third			Second			First			First Quarter			Fourth			Third			Second			First
Earnings and dividends
Amounts in thousands, except per share
Interest income (taxable-equivalent basis)	$	1,014,032			990,284			976,240			977,143			979,166		$	1,086,959			1,083,146			1,066,038			1,039,149			1,014,032
Interest expense		91,773			107,137			111,175			106,802			100,870			106,633			102,689			100,076			92,213			91,773
Net interest income		922,259			883,147			865,065			870,341			878,296			980,326			980,457			965,962			946,936			922,259
Less: provision for credit losses		55,000			62,000			47,000			32,000			49,000			43,000			31,000			30,000			52,000			55,000
Other income		446,845			465,459			491,350			448,254			420,933			458,696			484,053			459,429			460,816			446,845
Less: other expense		787,852			769,103			752,392			749,895			776,095			933,344			795,813			806,025			750,635			787,852
Income before income taxes		526,252			517,503			557,023			536,700			474,134			462,678			637,697			589,366			605,117			526,252
Applicable income taxes		169,326			179,549			200,314			194,147			169,274			105,259			306,287			224,615			215,328			169,326
Taxable-equivalent adjustment		7,999			7,383			6,725			6,522			6,332			4,809			9,007			8,828			8,736			7,999
Net income	$	348,927			330,571			349,984			336,031			298,528		$	352,610			322,403			355,923			381,053			348,927
Net income available to common shareholders-diluted	$	328,567			307,797			326,998			312,974			275,748		$	332,749			302,486			335,804			360,662			328,567
Per common share data
Basic earnings	$	2.13			1.98			2.10			1.98			1.74		$	2.24			2.01			2.22			2.36			2.13
Diluted earnings		2.12			1.98			2.10			1.98			1.73			2.23			2.01			2.21			2.35			2.12
Cash dividends	$	.75			.70			.70			.70			.70		$	.75			.75			.75			.75			.75
Average common shares outstanding
Basic		154,427			155,123			155,493			157,802			158,734			148,688			150,063			151,347			152,857			154,427
Diluted		154,949			155,700			156,026			158,341			159,181			148,905			150,348			151,691			153,276			154,949
Performance ratios, annualized
Return on
Average assets		1.15	%		1.05	%		1.12	%		1.09	%		.97	%		1.22	%		1.06	%		1.18	%		1.27	%		1.15	%
Average common shareholders’ equity		8.89	%		8.13	%		8.68	%		8.38	%		7.44	%		9.15	%		8.03	%		8.89	%		9.67	%		8.89	%
Net interest margin on average earning assets (taxable-equivalent basis)		3.34	%		3.08	%		3.05	%		3.13	%		3.18	%
Net interest margin on average earning assets (taxable- equivalent basis)																	3.71	%		3.56	%		3.53	%		3.45	%		3.34	%
Nonaccrual loans to total loans and leases, net of unearned discount		1.04	%		1.01	%		.93	%		.96	%		1.00	%		.99	%		1.00	%		.99	%		.98	%		1.04	%
Net operating (tangible) results (a)
Net operating income (in thousands)	$	354,035			336,095			355,929			350,604			320,064		$	357,498			326,664			360,658			385,974			354,035
Diluted net operating income per common share		2.15			2.01			2.13			2.07			1.87		$	2.26			2.04			2.24			2.38			2.15
Annualized return on
Average tangible assets		1.21	%		1.10	%		1.18	%		1.18	%		1.09	%		1.28	%		1.12	%		1.25	%		1.33	%		1.21	%
Average tangible common shareholders’ equity		13.05	%		11.93	%		12.77	%		12.68	%		11.62	%		13.51	%		11.77	%		13.03	%		14.18	%		13.05	%
Efficiency ratio (b)		56.93	%		56.42	%		55.92	%		55.06	%		57.00	%		63.98	%		54.65	%		56.00	%		52.74	%		56.93	%
Balance sheet data
In millions, except per share
Average balances
Total assets (c)	$	122,978			125,734			124,725			123,706			123,252		$	117,684			120,226			119,515			120,765			122,978
Total tangible assets (c)		118,326			121,079			120,064			119,039			118,577			113,041			115,584			114,872			116,117			118,326
Earning assets		112,008			114,254			112,864			111,872			111,211			107,231			109,412			108,642			109,987			112,008
Investment securities		15,999			15,417			14,361			14,914			15,348			14,467			14,808			15,443			15,913			15,999
Loans and leases, net of unearned discount		89,797			89,977			88,732			88,155			87,584			87,766			87,837			88,386			89,268			89,797
Deposits		96,300			96,914			95,852			94,033			92,391			91,119			93,469			93,134			94,201			96,300
Common shareholders’ equity (c)		15,091			15,181			15,115			15,145			15,047			14,827			15,039			15,069			15,053			15,091
Tangible common shareholders’ equity (c)		10,439			10,526			10,454			10,478			10,372			10,184			10,397			10,426			10,405			10,439
At end of quarter
Total assets (c)	$	123,223			123,449			126,841			123,821			124,626		$	118,623			118,593			120,402			120,897			123,223
Total tangible assets (c)		118,573			118,797			122,183			119,157			119,955			113,982			113,947			115,761			116,251			118,573
Earning assets		112,287			112,192			115,293			112,057			113,005			107,976			107,786			109,365			109,976			112,287
Investment securities		15,968			16,250			14,734			14,963			15,467			14,067			14,665			15,074			15,816			15,968
Loans and leases, net of unearned discount		89,313			90,853			89,646			88,522			87,872			87,711			87,989			87,925			89,081			89,313
Deposits		97,043			95,494			98,137			94,650			94,215			90,947			92,432			93,513			93,541			97,043
Common shareholders’ equity, net of undeclared cumulative preferred dividends (c)		14,978			15,252			15,106			15,237			15,120			14,475			15,016			15,083			15,049			14,978
Tangible common shareholders’ equity (c)		10,328			10,600			10,448			10,573			10,449			9,834			10,370			10,442			10,403			10,328
Equity per common share		97.40			97.64			97.47			96.49			95.00		$	98.60			100.03			99.70			98.66			97.40
Tangible equity per common share		67.16			67.85			67.42			66.95			65.65		$	66.99			69.08			69.02			68.20			67.16
Market price per common share
High	$	173.72			158.35			120.40			121.11			119.24		$	197.37			176.62			166.85			164.03			173.72
Low		149.51			112.25			111.13			107.01			100.08			170.00			155.77			141.12			147.55			149.51
Closing		154.73			156.43			116.10			118.23			111.00			184.36			170.99			161.04			161.95			154.73

	2017			2016 Quarters												2018			2017 Quarters
	First Quarter			Fourth			Third			Second			First			First Quarter			Fourth			Third			Second			First
Income statement data (in thousands, except per share)
Net income
Net income	$	348,927			330,571			349,984			336,031			298,528		$	352,610			322,403			355,923			381,053			348,927
Amortization of core deposit and other intangible assets (a)		5,108			5,524			5,945			6,936			7,488			4,888			4,261			4,735			4,921			5,108
Merger-related expenses (a)		—			—			—			7,637			14,048
Net operating income	$	354,035			336,095			355,929			350,604			320,064		$	357,498			326,664			360,658			385,974			354,035
Earnings per common share
Diluted earnings per common share	$	2.12			1.98			2.10			1.98			1.73		$	2.23			2.01			2.21			2.35			2.12
Amortization of core deposit and other intangible assets (a)		.03			.03			.03			.04			.05			.03			.03			.03			.03			.03
Merger-related expenses (a)		—			—			—			.05			.09
Diluted net operating earnings per common share	$	2.15		$	2.01		$	2.13		$	2.07		$	1.87		$	2.26			2.04			2.24			2.38			2.15
Other expense
Other expense	$	787,852			769,103			752,392			749,895			776,095		$	933,344			795,813			806,025			750,635			787,852
Amortization of core deposit and other intangible assets		(8,420	)		(9,089	)		(9,787	)		(11,418	)		(12,319	)		(6,632	)		(7,025	)		(7,808	)		(8,113	)		(8,420	)
Merger-related expenses		-			—			—			(12,593	)		(23,162	)
Noninterest operating expense	$	779,432			760,014			742,605			725,884			740,614		$	926,712			788,788			798,217			742,522			779,432
Merger-related expenses
Salaries and employee benefits	$	—			—			—			60			5,274
Equipment and net occupancy		—			—			—			339			939
Outside data processing and software		—			—			—			352			715
Advertising and marketing		—			—			—			6,327			4,195
Printing, postage and supplies		—			—			—			545			937
Other costs of operations		—			—			—			4,970			11,102
Total	$	—			—			—			12,593			23,162
Efficiency ratio
Noninterest operating expense (numerator)	$	779,432			760,014			742,605			725,884			740,614		$	926,712			788,788			798,217			742,522			779,432
Taxable-equivalent net interest income		922,259			883,147			865,065			870,341			878,296			980,326			980,457			965,962			946,936			922,259
Other income		446,845			465,459			491,350			448,254			420,933			458,696			484,053			459,429			460,816			446,845
Less: Gain on bank investment securities		—			1,566			28,480			264			4
Less: Gain (loss) on bank investment securities																	(9,431	)		21,296			—			(17	)		—
Denominator	$	1,369,104			1,347,040			1,327,935			1,318,331			1,299,225		$	1,448,453			1,443,214			1,425,391			1,407,769			1,369,104
Efficiency ratio		56.93	%		56.42	%		55.92	%		55.06	%		57.00	%		63.98	%		54.65	%		56.00	%		52.74	%		56.93	%
Balance sheet data (in millions)
Average assets
Average assets	$	122,978			125,734			124,725			123,706			123,252		$	117,684			120,226			119,515			120,765			122,978
Goodwill		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)
Core deposit and other intangible assets		(98	)		(102	)		(112	)		(122	)		(134	)		(68	)		(75	)		(82	)		(90	)		(98	)
Deferred taxes		39			40			44			48			52			18			26			32			35			39
Average tangible assets	$	118,326			121,079			120,064			119,039			118,577		$	113,041			115,584			114,872			116,117			118,326
Average common equity
Average total equity	$	16,323			16,673			16,347			16,377			16,279		$	16,059			16,271			16,301			16,285			16,323
Preferred stock		(1,232	)		(1,492	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)
Average common equity		15,091			15,181			15,115			15,145			15,047			14,827			15,039			15,069			15,053			15,091
Goodwill		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)
Core deposit and other intangible assets		(98	)		(102	)		(112	)		(122	)		(134	)		(68	)		(75	)		(82	)		(90	)		(98	)
Deferred taxes		39			40			44			48			52			18			26			32			35			39
Average tangible common equity	$	10,439			10,526			10,454			10,478			10,372		$	10,184			10,397			10,426			10,405			10,439
At end of quarter
Total assets
Total assets		123,223			123,449			126,841			123,821			124,626			118,623			118,593			120,402			120,897			123,223
Goodwill		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)
Core deposit and other intangible assets		(95	)		(98	)		(107	)		(117	)		(128	)		(65	)		(72	)		(79	)		(86	)		(95	)
Deferred taxes		38			39			42			46			50			17			19			31			33			38
Total tangible assets	$	118,573			118,797			122,183			119,157			119,955		$	113,982			113,947			115,761			116,251			118,573
Total common equity
Total equity	$	16,213			16,487			16,341			16,472			16,355		$	15,710			16,251			16,318			16,284			16,213
Preferred stock		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)		(1,232	)
Undeclared dividends - cumulative preferred stock		(3	)		(3	)		(3	)		(3	)		(3	)		(3	)		(3	)		(3	)		(3	)		(3	)
Common equity, net of undeclared cumulative preferred dividends		14,978			15,252			15,106			15,237			15,120			14,475			15,016			15,083			15,049			14,978
Goodwill		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)		(4,593	)
Core deposit and other intangible assets		(95	)		(98	)		(107	)		(117	)		(128	)		(65	)		(72	)		(79	)		(86	)		(95	)
Deferred taxes		38			39			42			46			50			17			19			31			33			38
Total tangible common equity	$	10,328			10,600			10,448			10,573			10,449		$	9,834			10,370			10,442			10,403			10,328

	2017 First Quarter								2016 Fourth Quarter								2016 Third Quarter								2018 First Quarter								2017 Fourth Quarter								2017 Third Quarter
	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
Average balance in millions; interest in thousands
Assets
Earning assets
Loans and leases, net of unearned discount*
Commercial, financial, etc.	$	22,290		$	201,126		3.66	%		21,936			191,228		3.47	%		21,480			185,552		3.44	%	$	21,547		$	227,296		4.28	%		21,562			220,470		4.06	%		21,734			217,953		3.98	%
Real estate - commercial		33,175			347,010		4.18			32,822			336,597		4.01			31,252			319,694		4.00
Real estate - consumer		22,179			217,263		3.92			23,096			223,758		3.88			24,058			235,813		3.92
Real estate – commercial																										33,652			397,713		4.73			33,138			390,752		4.61			33,257			382,352		4.50
Real estate – consumer																										19,274			195,701		4.06			19,974			201,151		4.03			20,609			204,008		3.96
Consumer		12,153			140,170		4.68			12,123			138,144		4.53			11,942			136,592		4.55			13,293			163,991		5.00			13,163			162,765		4.91			12,786			157,721		4.89
Total loans and leases, net		89,797			905,569		4.09			89,977			889,727		3.93			88,732			877,651		3.93			87,766			984,701		4.55			87,837			975,138		4.40			88,386			962,034		4.32
Interest-bearing deposits at banks		6,152			12,162		.80			8,790			11,833		.54			9,681			12,355		.51			4,941			18,677		1.53			6,680			21,981		1.31			4,740			14,970		1.25
Federal funds sold		—			—		—			—			—		—			—			—		—			3			17		1.85			—			2		1.78			—			1		1.58
Trading account		60			328		2.20			70			358		2.05			90			342		1.52			54			404		3.00			87			283		1.31			73			351		1.92
Investment securities**
U.S. Treasury and federal agencies		15,113			88,573		2.38			14,511			80,510		2.21			13,418			78,259		2.32			13,689			78,017		2.31			14,012			78,995		2.24			14,632			81,707		2.22
Obligations of states and political subdivisions		56			578		4.17			71			778		4.38			82			888		4.32			24			271		4.67			30			378		5.00			37			442		4.69
Other		830			6,822		3.33			835			7,078		3.37			861			6,745		3.12			754			4,872		2.62			766			6,369		3.30			774			6,533		3.35
Total investment securities		15,999			95,973		2.43			15,417			88,366		2.28			14,361			85,892		2.38			14,467			83,160		2.33			14,808			85,742		2.30			15,443			88,682		2.28
Total earning assets		112,008			1,014,032		3.67			114,254			990,284		3.45			112,864			976,240		3.44			107,231			1,086,959		4.11			109,412			1,083,146		3.93			108,642			1,066,038		3.89
Allowance for credit losses		(1,003	)							(989	)							(982	)							(1,020	)							(1,019	)							(1,014	)
Cash and due from banks		1,283								1,278								1,281								1,336								1,340								1,297
Other assets		10,690								11,191								11,562								10,137								10,493								10,590
Total assets	$	122,978								125,734								124,725							$	117,684								120,226								119,515
Liabilities and shareholders’ equity
Interest-bearing liabilities
Interest-bearing deposits
Savings and interest-checking deposits	$	53,260			25,634		.20			54,055			26,798		.20			52,516			24,067		.18		$	52,504			40,527		.31			53,436			39,286		.29			53,287			37,714		.28
Time deposits		9,561			18,998		.81			10,936			23,766		.86			12,334			27,886		.90			6,320			10,936		.70			6,888			12,212		.70			7,673			13,992		.72
Deposits at Cayman Islands office		192			265		.56			206			219		.42			220			204		.37			248			381		.62			215			330		.61			169			310		.73
Total interest-bearing deposits		63,013			44,897		.29			65,197			50,783		.31			65,070			52,157		.32			59,072			51,844		.36			60,539			51,828		.34			61,129			52,016		.34
Short-term borrowings		184			216		.48			200			151		.30			231			169		.29			280			883		1.28			178			363		.81			244			554		.90
Long-term borrowings		8,423			46,660		2.25			9,901			56,203		2.26			10,287			58,849		2.28			8,606			53,906		2.54			8,464			50,498		2.37			8,033			47,506		2.35
Total interest-bearing liabilities		71,620			91,773		.52			75,298			107,137		.57			75,588			111,175		.59			67,958			106,633		.64			69,181			102,689		.59			69,406			100,076		.57
Noninterest-bearing deposits		33,287								31,717								30,782								32,047								32,930								32,005
Other liabilities		1,748								2,046								2,008								1,620								1,844								1,803
Total liabilities		106,655								109,061								108,378								101,625								103,955								103,214
Shareholders’ equity		16,323								16,673								16,347								16,059								16,271								16,301
Total liabilities and shareholders’ equity	$	122,978								125,734								124,725							$	117,684								120,226								119,515
Net interest spread							3.15								2.88								2.85								3.47								3.34								3.32
Contribution of interest-free funds							.19								.20								.20								.24								.22								.21
Net interest income/margin on earning assets				$	922,259		3.34	%					883,147		3.08	%					865,065		3.05	%				$	980,326		3.71	%					980,457		3.56	%					965,962		3.53	%

	2016 Second Quarter								2016 First Quarter								2017 Second Quarter								2017 First Quarter
	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance				Interest		Average Rate
Average balance in millions; interest in thousands
Assets
Earning assets
Loans and leases, net of unearned discount*
Commercial, financial, etc.	$	21,450		$	184,803		3.47	%		20,717			174,657		3.39	%	$	22,350		$	213,840		3.84	%		22,290				201,126		3.66	%
Real estate - commercial		30,134			311,490		4.09			29,426			309,415		4.16
Real estate - consumer		24,858			244,806		3.94			25,859			254,144		3.93
Real estate – commercial																		33,214			361,313		4.30			33,175				347,010		4.18
Real estate – consumer																		21,318			210,152		3.94			22,179				217,263		3.92
Consumer		11,713			132,437		4.55			11,582			130,971		4.55			12,386			147,597		4.78			12,153				140,170		4.68
Total loans and leases, net		88,155			873,536		3.99			87,584			869,187		3.99			89,268			932,902		4.19			89,797				905,569		4.09
Interest-bearing deposits at banks		8,711			10,993		.51			8,193			10,337		.51			4,741			12,213		1.03			6,152				12,162		.80
Federal funds sold		—			—		—			1			1		.77			1			3		1.44			—				—		—
Trading account		92			364		1.58			85			378		1.78			64			240		1.50			60				328		2.20
Investment securities**
U.S. Treasury and federal agencies		13,906			84,019		2.43			14,264			90,138		2.54			15,060			87,171		2.32			15,113				88,573		2.38
Obligations of states and political subdivisions		97			1,009		4.20			113			1,164		4.13			46			553		4.86			56				578		4.17
Other		911			7,222		3.19			971			7,961		3.30			807			6,067		3.02			830				6,822		3.33
Total investment securities		14,914			92,250		2.49			15,348			99,263		2.60			15,913			93,791		2.36			15,999				95,973		2.43
Total earning assets		111,872			977,143		3.51			111,211			979,166		3.54			109,987			1,039,149		3.79			112,008				1,014,032		3.67
Allowance for credit losses		(976	)							(955	)							(1,011	)							(1,003	)
Cash and due from banks		1,243								1,288								1,257								1,283
Other assets		11,567								11,708								10,532								10,690
Total assets	$	123,706								123,252							$	120,765								122,978
Liabilities and shareholders’ equity
Interest-bearing liabilities
Interest-bearing deposits
Savings and interest-checking deposits	$	51,847			20,534		.16			50,335			16,305		.13		$	53,611			30,543		.23			53,260				25,634		.20
Time deposits		12,755			26,867		.85			12,999			24,322		.75			8,559			16,303		.76			9,561				18,998		.81
Deposits at Cayman Islands office		182			181		.40			187			193		.42			163			281		.69			192				265		.56
Total interest-bearing deposits		64,784			47,582		.30			63,521			40,820		.26			62,333			47,127		.30			63,013				44,897		.29
Short-term borrowings		1,078			1,143		.43			2,082			2,162		.42			212			378		.71			184				216		.48
Long-term borrowings		10,297			58,077		2.27			10,528			57,888		2.21			8,292			44,708		2.16			8,423				46,660		2.25
Total interest-bearing liabilities		76,159			106,802		.56			76,131			100,870		.53			70,837			92,213		.52			71,620		��		91,773		.52
Noninterest-bearing deposits		29,249								28,870								31,868								33,287
Other liabilities		1,921								1,972								1,775								1,748
Total liabilities		107,329								106,973								104,480								106,655
Shareholders’ equity		16,377								16,279								16,285								16,323
Total liabilities and shareholders’ equity	$	123,706								123,252							$	120,765								122,978
Net interest spread							2.95								3.01								3.27									3.15
Contribution of interest-free funds							.18								.17								.18									.19
Net interest income/margin on earning assets				$	870,341		3.13	%					878,296		3.18	%				$	946,936		3.45	%						922,259		3.34	%

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,~~René F. Jones, Chairman of the Board and Chief Executive Officer, and Darren J. King, Executive Vice President and Chief Financial Officer, concluded that M&T’s disclosure controls and procedures were effective as of March 31, ~~2017.~~2018.

(b) Changes in internal control over financial reporting. M&T regularly assesses the adequacy of its internal control over financial reporting and enhances its controls in response to internal control assessments and internal and external audit and regulatory recommendations. No changes in internal control over financial reporting have been identified in connection with the evaluation of disclosure controls and procedures during the quarter ended March 31, ~~2017~~2018 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 and other matters in which claims for monetary damages are asserted. On an on-going basis management, after consultation with legal counsel, assesses the Company’s liabilities and contingencies in connection with such proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability, was between $0 and ~~$40~~$50 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 subsidiary is the subject of certain ~~governmental investigations~~litigation arising from actions undertaken by Wilmington Trust Corporation prior to M&T’s acquisition of Wilmington Trust Corporation and its subsidiaries, as set forth below.

~~DOJ Investigation (United States v. Wilmington Trust Corp., et al, District of Delaware, Crim. No. 15-23-RGA):~~ Prior to M&T’s acquisition of Wilmington Trust Corporation, the Department of Justice (“DOJ”) commenced an investigation of Wilmington Trust Corporation relating to Wilmington Trust Corporation’s financial reporting and securities filings, as well as certain commercial real estate lending relationships involving its subsidiary bank, Wilmington Trust Company, all of which relate to filings and activities occurring prior to the acquisition of Wilmington Trust Corporation by M&T. On January 6, 2016, the U.S. Attorney for the District of Delaware obtained an indictment against Wilmington Trust Corporation relating to alleged conduct that occurred prior to M&T’s acquisition of Wilmington Trust Corporation in May 2011. M&T strongly believes that this unprecedented action is unjustified and Wilmington Trust Corporation will vigorously defend itself. On August 26, 2016, the Court granted

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

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

In Re Wilmington Trust Securities Litigation (U.S. District Court, District of Delaware, Case No. 10-CV-0990-SLR): Beginning on November 18, 2010, a series of parties, purporting to be class representatives, commenced a putative class action lawsuit against Wilmington Trust Corporation, alleging that Wilmington Trust Corporation’s financial reporting and securities filings were in violation of securities laws. The cases were ~~consolidated and~~consolidated. Wilmington Trust Corporation moved to dismiss. The Court issued an order denying Wilmington Trust Corporation’s motion to dismiss on March 20, 2014. Plaintiffs’ motion for class certification was granted on September 3, 2015. Fact discovery ~~commenced. On April 13, 2016, the~~was stayed by Court ~~issued an~~ order ~~staying fact discovery in the case pending completion~~during extended periods of ~~the trial in~~ ~~U.S. v. Wilmington Trust Corp., et al.~~ ~~On September 19, 2016, the plaintiffs filed a motion to modify the stay of discovery in~~ this ~~matter to allow for additional, limited discovery.~~litigation. On December 19, 2016, the Court issued an order lifting the existing stay in its entirety. ~~Trial is scheduled to begin~~Fact discovery was completed on ~~June 18, 2018.~~or about August 15, 2017. On December 12, 2017, the Court issued an order extending certain pre-trial deadlines, pushing all dates off until after the completion of the criminal trial involving certain individual witnesses. Expert

discovery was ordered to be completed by July 31, 2018 and summary judgment motions briefed by October 31, 2018.

In April 2018, the parties reached an agreement in principle. The anticipated settlement amount is within the Company’s current reserve for litigation matters. The agreement in principle is subject to certain required party approvals, the negotiation and execution of a formal settlement agreement and court approval. The Company currently anticipates that necessary party approvals will be completed and a formal settlement agreement will be executed and filed with the court for approval during the second quarter of 2018. A motion for preliminary approval of a proposed settlement will be decided by the Court at its discretion.

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

There have been no material changes in risk factors relating to M&T to those disclosed in response to Item 1A. to Part I of Form 10-K for the year ended December 31, ~~2016.~~2017.

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

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

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

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

Table of Contents of Information Required in Report		Page

Part I. FINANCIAL INFORMATION

Item 1.	Financial Statements.

	CONSOLIDATED BALANCE SHEET - March 31, ~~2017~~2018 and December 31, ~~2016~~2017	3

	CONSOLIDATED STATEMENT OF INCOME - Three months ended March 31, ~~2017~~2018 and ~~2016~~2017	4

	CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - Three months ended March 31, ~~2017~~2018 and ~~2016~~2017	5

	CONSOLIDATED STATEMENT OF CASH FLOWS - Three months ended March 31, ~~2017~~2018 and 20167	6

	CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - Three months ended March 31, ~~2017~~2018 and 20167	7

	NOTES TO FINANCIAL STATEMENTS	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	4746

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	79

Item 4.	Controls and Procedures.	79

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings.	79

Item 1A.	Risk Factors.	81

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	81

Item 3.	Defaults Upon Senior Securities.	81

Item 4.	Mine Safety Disclosures.	81

Item 5.	Other Information.	81

Item 6.	Exhibits.	82

SIGNATURES		82

~~EXHIBIT INDEX~~		83

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

Beginning balance	$	300,404			326,831			72,238			178,320			78,199		$	955,992
Provision for credit losses		24,364			4,013			1,218			19,893			(488	)		49,000
Net charge-offs
Charge-offs		(6,149	)		(1,272	)		(6,972	)		(44,319	)		—			(58,712	)
Recoveries		5,247			2,413			1,887			6,925			—			16,472
Net (charge-offs) recoveries		(902	)		1,141			(5,085	)		(37,394	)		—			(42,240	)
Ending balance	$	323,866			331,985			68,371			160,819			77,711		$	962,752

	Investment Securities						Defined Benefit
	With OTTI			All Other			Plans			Other			Total
	(In thousands)

Balance - December 31, 2016	$	28,338			(44,657	)		(272,874	)		(5,443	)	$	(294,636	)
Net gain (loss) during period		(5,232	)		3,876			3,972			453			3,069
Balance — March 31, 2017	$	23,106			(40,781	)		(268,902	)		(4,990	)	$	(291,567	)

	Investment			Defined Benefit
	Securities			Plans			Other			Total
	(In thousands)

Balance — December 31, 2017	$	(44,150	)		(304,546	)		(15,118	)	$	(363,814	)
Cumulative effect of change in accounting principle — equity securities		(16,853	)		—			—			(16,853	)
Net gain (loss) during period		(100,684	)		7,260			(9,152	)		(102,576	)
Balance — March 31, 2018	$	(161,687	)		(297,286	)		(24,270	)	$	(483,243	)

	Notional		Average		Weighted- Average Rate						Estimated Fair
	Amount		Maturity		Fixed			Variable			Value Gain
	(In thousands)		(In years)								(In thousands)
March 31, 2017
Fair value hedges:
Fixed rate long-term borrowings (a)	$	900,000		.8		3.75	%		2.24	%	$	7,773
December 31, 2016
Fair value hedges:
Fixed rate long-term borrowings (a)	$	900,000		1.1		3.75	%		2.08	%	$	11,892

	Carrying Amount of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment Increasing (Decreasing) the Carrying Amount of the Hedged Item
	March 31,		December 31,		March 31,			December 31,
	2018		2017		2018			2017
Location in the Consolidated Balance Sheet of the Hedged Items in Fair Value Hedges

Long-term debt	$	4,612,063	$	4,504,029	$	(82,503	)	$	(40,133	)

	Three Months Ended March 31,2017
	Total Revenues as Previously Reported		Impact of Changes			Total Revenues as Reclassified		Net Income (Loss) as Previously Reported			Impact of Changes			Net Income (Loss) as Reclassified
	(In thousands)

Business Banking	$	115,981		4,352			120,333	$	22,407			2,581			24,988
Commercial Banking		273,845		63			273,908		112,750			37			112,787
Commercial Real Estate		195,125		—			195,125		84,547			—			84,547
Discretionary Portfolio		78,946		—			78,946		33,945			—			33,945
Residential Mortgage Banking		93,708		(8,307	)		85,401		14,844			(4,927	)		9,917
Retail Banking		361,237		7,281			368,518		81,873			4,318			86,191
All Other		242,263		(3,389	)		238,874		(1,439	)		(2,009	)		(3,448	)
Total	$	1,361,105		—			1,361,105	$	348,927			—			348,927

Standard	Description	Required date of adoption	Effect on consolidated financial statements
Standards Adopted in 2018
Recognition and Measurement of Financial Assets and Financial Liabilities	The amended guidance requires equity investments (excluding those accounted for under the equity method of accounting or those that result in consolidation of the investee) be measured at fair value with changes in fair value recognized in net income, public entities to use the exit price when measuring the fair value of financial instruments for disclosure purposes, and an entity to present separately in other comprehensive income a change in the instrument-specific credit risk when the entity has elected to measure a liability at fair value in accordance with the fair value option.	January 1, 2018	At January 1, 2018 the Company reclassified marketable equity securities from investment securities available for sale. Upon adoption $17 million of fair value changes in those equity securities, net of tax were reclassified from accumulated other comprehensive income to retained earnings. As presented in note 2, fair value changes in such equity securities for the three months ended March 31, 2018 were $9 million and were recognized in gain (loss) on bank investment securities in the consolidated statement of income.
Improvements to Accounting for Hedging Activities	The amended guidance expands and clarifies hedge accounting for nonfinancial and financial risk components, aligns the recognition and presentation of the effects of the hedging instrument and hedged item in the financial statements, and simplifies the requirements for assessing effectiveness in a hedging relationship.	January 1, 2019 Early adoption permitted	The Company early adopted the amended guidance on January 1, 2018 and such adoption did not have a material impact on its consolidated financial statements.
Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost	The amended guidance requires the service cost component of the net periodic pension cost and net periodic postretirement benefit cost to be reported in the same line item in the income statement as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments also require that the other components of net benefit costs be presented separately from the service cost component.	January 1, 2018	The Company adopted the new reporting requirements effective January 1, 2018. The Company previously reported all of its net periodic pension and postretirement benefit costs in salaries and employee benefits within the consolidated statement of income. Information about net periodic pension and postretirement benefit costs that were not service cost-related is included in note 6. The impact of adopting the amended guidance was not material.
Scope of Modification Accounting for Share-Based Payment Awards	The amended guidance addresses which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting.	January 1, 2018	The Company adopted the amended guidance on January 1, 2018. The guidance is being applied on a prospective basis for awards modified on or after the adoption date.
Restricted Cash	The amended guidance requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. In addition, when cash, cash equivalents, and restricted cash or restricted cash equivalents are presented in more than one line item within the statement of financial position, the line items and amounts must be presented on the face of the statement of cash flows or disclosed in the notes to the financial statements. Information about the nature of restrictions on an entity’s cash and cash equivalents must also be disclosed.	January 1, 2018	The guidance was adopted on January 1, 2018 and did not have a material impact on the Company’s consolidated financial statements.

								Quarter Ended
	March 31, 2017							March 31, 2017
			Nonaccrual					Net Charge-offs (Recoveries)
	Outstanding Balances(b)		Balances		Percent of Outstanding Balances			Balances			Annualized Percent of Average Outstanding Balances
	(Dollars in thousands)

New York	$	509,409	$	899		.18	%	$	(42	)		(.03	)	%
Pennsylvania		160,333		10,843		6.76			(14	)		(.04	)
Mid-Atlantic(a)		498,604		2,304		.46			(120	)		(.10	)
Other		603,505		1,188		.20			—			—
Total	$	1,771,851	$	15,234		.86	%	$	(176	)		(.04	)	%

	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)

January 1 - January 31, 2017		1,025,996	$	161.47		900,000	$	617,531,000
February 1 - February 28, 2017		2,340,750		165.83		2,333,196		230,593,000
March 1 - March 31, 2017		468		155.56		—		230,593,000
Total		3,367,214	$	164.50		3,233,196

Exhibit No.


3.2		Amended and Restated Bylaws of M&T Bank Corporation, ~~effective November 16, 2010,~~ as amended on April ~~18, 2017. Filed herewith.~~17, 2018. Incorporated by reference to Exhibit 3.2 to the Form 8-K dated April 17, 2018 (File No. 1-9861).

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.~~herewith.

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

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

101.INS		XBRL Instance Document. Filed herewith.

101.SCH		XBRL Taxonomy Extension Schema. Filed herewith.

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

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

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

101.DEF		XBRL Taxonomy Definition Linkbase. Filed herewith.

	M&T BANK CORPORATION

Date: May ~~5, 2017~~4, 2018	By:	/s/ Darren J. King
		Darren J. King
		Executive Vice President and Chief Financial Officer

~~Exhibit~~ ~~No.~~


~~3.2~~		~~Amended and Restated Bylaws of M&T Bank Corporation, effective November 16, 2010, as amended on April 18, 2017. Filed herewith.~~

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

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

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

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

~~101.INS~~		~~XBRL Instance Document. Filed herewith.~~

~~101.SCH~~		~~XBRL Taxonomy Extension Schema. Filed herewith.~~

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

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

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

~~101.DEF~~		~~XBRL Taxonomy Definition Linkbase. Filed herewith.~~