M&T Bank Annual Report 2021

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FY2021 Annual Report · M&T Bank

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the fiscal year ended December 31, 2021
or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

Commission file number 1-9861

M&T BANK CORPORATION

(Exact name of registrant as specified in its charter)

New York
(State of incorporation)
One M&T Plaza, Buffalo, New York
(Address of principal executive offices)

16-0968385
(I.R.S. Employer Identification No.)
14203
(Zip Code)

Registrant’s telephone number, including area code:
716-635-4000
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Common Stock, $.50 par value

Name of Each Exchange on Which Registered
New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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, 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 every Interactive Data File required to be submitted 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 such
files). Yes ☒ No ☐

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

Large accelerated filer
Non-accelerated filer
Emerging growth company

☒
☐
☐

Accelerated filer
Smaller reporting company

☐
☐

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
Aggregate market value of the Common Stock, $0.50 par value, held by non-affiliates of the registrant, computed by reference to the closing price as of the

close of business on June 30, 2021: $18,124,066,420.

Number of shares of the Common Stock, $0.50 par value, outstanding as of the close of business on February 11, 2022: 129,034,484 shares.

(1) Portions of the Proxy Statement for the 2022 Annual Meeting of Shareholders of M&T Bank Corporation in Parts II and III.

Auditor Firm Id:

238

Auditor Name:

PricewaterhouseCoopers LLP

Auditor Location: Buffalo, NY, United States

Documents Incorporated By Reference:

M&T BANK CORPORATION
Form 10-K for the year ended December 31, 2021
CROSS-REFERENCE SHEET

PART I

Item 1. Business....................................................................................................
Disclosure pursuant to subpart 1400 of Regulation S-K

Distribution of assets, liabilities, and shareholders’ equity; interest

rates and interest differential

A. Average balance sheets .......................................................................
B. Interest income/expense and resulting yield or rate on average

interest-earning assets and interest-bearing liabilities ....................
C. Rate/volume variances ........................................................................
Investments in debt securities
A. Maturity schedule and weighted average yield..................................
Loan portfolio
A. Maturity schedule ...............................................................................

II.

III.

IV. Allowance for credit losses

Form 10-K
Page

69
26

102

100

A. Credit ratios ........................................................................................

82, 83, 85, 87

Factors driving material changes in credit ratios or related

components ....................................................................................
B. Allocation of the allowance for credit losses .....................................
Deposits
A. Average balances and rates ................................................................
B. Uninsured and time deposits over $250,000 ......................................
Item 1A. Risk Factors..............................................................................................
Item 1B. Unresolved Staff Comments ....................................................................
Properties..................................................................................................
Item 2.
Item 3. Legal Proceedings ....................................................................................
Item 4. Mine Safety Disclosures ..........................................................................
Executive Officers of the Registrant ........................................................

Item 5. Market for Registrant’s Common Equity, Related Stockholder

PART II

80-92, 140-155
91, 146

69
78, 103
27
53
53
54
54
54

Matters and Issuer Purchases of Equity Securities ..............................
A. Principal market..................................................................................
B. Approximate number of holders at year-end ......................................
C. Frequency and amount of dividends declared ....................................
D. Restrictions on dividends....................................................................
E. Securities authorized for issuance under equity

57
57
24
25-26, 118, 129
11

compensation plans ........................................................................
F. Performance graph..............................................................................
G. Repurchases of common stock ...........................................................
Selected Financial Data............................................................................

Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition

and Results of Operations ....................................................................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk .................
Financial Statements and Supplementary Data........................................
Item 8.
A. Report on Internal Control Over Financial Reporting ........................
B. Report of Independent Registered Public Accounting Firm...............

57-59
58
59
59

59
120
120
121
122

C. Consolidated Balance Sheet — December 31, 2021 and 2020 ..........
D. Consolidated Statement of Income — Years ended December 31,

2021, 2020 and 2019 ......................................................................

E. Consolidated Statement of Comprehensive Income — Years

ended December 31, 2021, 2020 and 2019 ....................................

F. Consolidated Statement of Cash Flows — Years ended

December 31, 2021, 2020 and 2019 ...................................................

G. Consolidated Statement of Changes in Shareholders’ Equity —

Years ended December 31, 2021, 2020 and 2019 ..........................
H. Notes to Financial Statements ............................................................
I. Quarterly Trends .................................................................................

Item 9. Changes in and Disagreements with Accountants on Accounting

and Financial Disclosure......................................................................
Item 9A. Controls and Procedures ..........................................................................

A. Conclusions of principal executive officer and principal financial

officer regarding disclosure controls and procedures.....................

B. Management’s annual report on internal control over financial

reporting .............................................................................................
C. Attestation report of the registered public accounting firm................
D. Changes in internal control over financial reporting ..........................
Item 9B. Other Information.....................................................................................
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections .....

PART III

Item 10. Directors, Executive Officers and Corporate Governance.......................
Item 11. Executive Compensation..........................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters .........................................................

Item 13. Certain Relationships and Related Transactions, and Director

Independence...........................................................................................
Item 14. Principal Accountant Fees and Services ..................................................

PART IV

Item 15. Exhibits and Financial Statement Schedules............................................
Item 16. Form 10-K Summary ...............................................................................
SIGNATURES.........................................................................................................

Form 10-K
Page
125

126

127

128

129
130
118

208
208

208

208
208
208
208
208

208
209

209

209
209

210
213
214

Item 1. Business.

PART I

M&T Bank Corporation (“Registrant” or “M&T”) is a New York business corporation which is
registered as a financial holding company under the Bank Holding Company Act of 1956, as
amended (“BHCA”) and as a bank holding company (“BHC”) under Article III-A of the New York
Banking Law (“Banking Law”). The principal executive offices of M&T are located at One M&T
Plaza, Buffalo, New York 14203. M&T was incorporated in November 1969. M&T and its direct and
indirect subsidiaries are collectively referred to herein as the “Company.” As of December 31, 2021
the Company had consolidated total assets of $155.1 billion, deposits of $131.5 billion and
shareholders’ equity of $17.9 billion. The Company had 17,115 full-time and 454 part-time
employees as of December 31, 2021.

At December 31, 2021, M&T had two wholly owned bank subsidiaries: Manufacturers and
Traders Trust Company (“M&T Bank”) and Wilmington Trust, National Association (“Wilmington
Trust, N.A.”). The banks collectively offer a wide range of retail and commercial banking, trust and
wealth management, and investment services to their customers. At December 31, 2021, M&T Bank
represented 99% of consolidated assets of the Company.

The Company from time to time considers acquiring banks, thrift institutions, branch offices of
banks or thrift institutions, or other businesses within markets currently served by the Company or in
other locations that would complement the Company’s business or its geographic reach. The
Company has pursued acquisition opportunities in the past, continues to review different
opportunities, including the possibility of major acquisitions, and intends to continue this practice.

Subsidiaries
M&T Bank is a banking corporation that is incorporated under the laws of the State of New York.
M&T Bank is a member of the Federal Reserve System and the Federal Home Loan Bank System,
and its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to applicable
limits. M&T acquired all of the issued and outstanding shares of the capital stock of M&T Bank in
December 1969. The stock of M&T Bank represents a major asset of M&T. M&T Bank operates
under a charter granted by the State of New York in 1892, and the continuity of its banking business
is traced to the organization of the Manufacturers and Traders Bank in 1856. The principal executive
offices of M&T Bank are located at One M&T Plaza, Buffalo, New York 14203. As of December 31,
2021, M&T Bank had 688 domestic banking offices located in New York State, Maryland, New
Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia, and the District of Columbia
and a full-service commercial banking office in Ontario, Canada. As of December 31, 2021, M&T
Bank had consolidated total assets of $154.7 billion, deposits of $133.7 billion and shareholder’s
equity of $16.8 billion. The deposit liabilities of M&T Bank are insured by the FDIC through its
Deposit Insurance Fund (“DIF”). As a commercial bank, M&T Bank offers a broad range of financial
services to a diverse base of consumers, businesses, professional clients, governmental entities and
financial institutions located in its markets. Lending is largely focused on consumers residing in New
York State, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia,
and Washington, D.C., and on small and medium-size businesses based in those areas, although loans
are originated through offices in other states and in Ontario, Canada. In addition, the Company
conducts lending activities in various states through other subsidiaries. Trust and other fiduciary
services are offered by M&T Bank and through its wholly owned subsidiary, Wilmington Trust
Company. M&T Bank and certain of its subsidiaries also offer commercial mortgage loans secured
by income producing properties or properties used by borrowers in a trade or business. Additional
financial services are provided through other operating subsidiaries of the Company.

Wilmington Trust, N.A., a national banking association and a member of the Federal Reserve

System and the FDIC, commenced operations on October 2, 1995. The deposit liabilities of

Wilmington Trust, N.A. are insured by the FDIC through the DIF. The main office of Wilmington
Trust, N.A. is located at 1100 North Market Street, Wilmington, Delaware 19890. Wilmington Trust,
N.A. offers various trust and wealth management services. As of December 31, 2021, Wilmington
Trust, N.A. had total assets of $12.0 billion, deposits of $11.1 billion and shareholder’s equity of
$779 million.

Wilmington Trust Company, a wholly owned subsidiary of M&T Bank, was incorporated as a
Delaware bank and trust company in March 1901 and amended its charter in July 2011 to become a
nondepository trust company. Wilmington Trust Company provides a variety of Delaware based
trust, fiduciary and custodial services to its clients. As of December 31, 2021, Wilmington Trust
Company had total assets of $1.2 billion and shareholder’s equity of $678 million. Revenues of
Wilmington Trust Company were $135 million in 2021. The headquarters of Wilmington Trust
Company are located at 1100 North Market Street, Wilmington, Delaware 19890.

M&T Insurance Agency, Inc. (“M&T Insurance Agency”), a wholly owned insurance agency

subsidiary of M&T Bank, was incorporated as a New York corporation in March 1955. M&T
Insurance Agency provides insurance agency services principally to the commercial market. As of
December 31, 2021, M&T Insurance Agency had assets of $41 million and shareholder’s equity of
$26 million. M&T Insurance Agency recorded revenues of $37 million during 2021. The
headquarters of M&T Insurance Agency are located at 285 Delaware Avenue, Buffalo, New York
14202.

M&T Realty Capital Corporation (“M&T Realty Capital”), a wholly owned subsidiary of M&T
Bank, was incorporated as a Maryland corporation in October 1973. M&T Realty Capital engages in
multifamily commercial real estate lending and provides loan servicing to purchasers of the loans it
originates. As of December 31, 2021, M&T Realty Capital serviced or sub-serviced $23.7 billion of
commercial mortgage loans for non-affiliates and had assets of $944 million and shareholder’s equity
of $179 million. M&T Realty Capital recorded revenues of $187 million in 2021. The headquarters
of M&T Realty Capital are located at One Light Street, Baltimore, Maryland 21202.

M&T Securities, Inc. (“M&T Securities”) is a wholly owned subsidiary of M&T Bank that was
incorporated as a New York business corporation in November 1985. M&T Securities is registered as
a broker/dealer under the Securities Exchange Act of 1934. It provides institutional brokerage and
securities services. As of December 31, 2021, M&T Securities had assets of $48 million and
shareholder’s equity of $46 million. M&T Securities recorded $50 million of revenue during 2021.
The headquarters of M&T Securities are located at One Light Street, Baltimore, Maryland 21202.
Wilmington Trust Investment Advisors, Inc. (“WT Investment Advisors”), a wholly owned

subsidiary of M&T Bank, was incorporated as a Maryland corporation on June 30, 1995. WT
Investment Advisors, a registered investment advisor under the Investment Advisors Act, serves as
an investment advisor to the Wilmington Funds, a family of proprietary mutual funds, and
institutional clients. As of December 31, 2021, WT Investment Advisors had assets of $57 million
and shareholder’s equity of $50 million. WT Investment Advisors recorded revenues of $42 million
in 2021. The headquarters of WT Investment Advisors are located at 1100 North Market Street,
Wilmington, Delaware 19890.

Wilmington Funds Management Corporation (“Wilmington Funds Management”) is a wholly

owned subsidiary of M&T that was incorporated in September 1981 as a Delaware corporation.
Wilmington Funds Management is registered as an investment advisor under the Investment Advisors
Act and serves as an investment advisor to the Wilmington Funds. Wilmington Funds Management had
assets and shareholder’s equity of $23 million as of December 31, 2021. Wilmington Funds
Management recorded revenues of $11 million in 2021. The headquarters of Wilmington Funds
Management are located at 1100 North Market Street, Wilmington, Delaware 19890.

Wilmington Trust Investment Management, LLC (“WTIM”) is a wholly owned subsidiary of
M&T and was incorporated in December 2001 as a Georgia limited liability company. WTIM is a

registered investment advisor under the Investment Advisors Act and provides investment
management services to clients, including certain private funds. As of December 31, 2021, WTIM
has assets and shareholder’s equity of $8 million. WTIM recorded revenues of $2 million in 2021.
WTIM’s headquarters is located at Terminus 27th Floor, 3280 Peachtree Road N.E., Atlanta, Georgia
30305.

The Registrant and its banking subsidiaries have a number of other special-purpose or inactive

subsidiaries. These other subsidiaries did not represent, individually and collectively, a significant
portion of the Company’s consolidated assets, net income and shareholders’ equity at December 31,
2021.

Segment Information, Principal Products/Services and Foreign Operations
Information about the Registrant’s business segments is included in note 23 of Notes to Financial
Statements filed herewith in Part II, Item 8, “Financial Statements and Supplementary Data” and is
further discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations.” The Registrant’s reportable segments have been determined based upon
its 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 Company’s international activities are discussed in note 18 of Notes to Financial Statements
filed herewith in Part II, Item 8, “Financial Statements and Supplementary Data.”

The only activity that, as a class, contributed 10% or more of the sum of consolidated interest
income and other income in any of the last three years was interest on loans and, in 2021, trust income.
The amount of income from such sources during those years is recorded in various business segments
and is set forth in the Company’s Consolidated Statement of Income and Notes to Financial Statements
filed herewith in Part II, Item 8, “Financial Statements and Supplementary Data.”

Supervision and Regulation of the Company
M&T and its subsidiaries are subject to the comprehensive regulatory framework applicable to bank
and financial holding companies and their subsidiaries. Regulation of financial institutions such as
M&T and its subsidiaries is intended primarily for the protection of depositors, the FDIC’s DIF and
the banking and financial system as a whole, and generally is not intended for the protection of
shareholders, investors or creditors other than insured depositors.

Proposals to change the applicable regulatory framework may be introduced in the United
States Congress and state legislatures, as well as by regulatory agencies. Such initiatives may include
proposals to expand or contract the powers of bank holding companies and depository institutions or
proposals to substantially change the financial institution regulatory system. Such legislation could
change banking statutes and the operating environment of the Company in substantial and
unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business,
limit or expand permissible activities or affect the competitive balance among banks, savings
associations, credit unions, and other financial institutions. A change in statutes, regulations or
regulatory policies applicable to M&T or any of its subsidiaries could have a material effect on the
business, financial condition or results of operations of the Company.

Described hereafter are material elements of the significant federal and state laws and

regulations applicable to M&T and its subsidiaries.

Overview
M&T is registered with the Board of Governors of the Federal Reserve System (“Federal Reserve”)
as a financial holding company and BHC under the BHCA. As such, M&T and its subsidiaries are
subject to the supervision, examination, reporting, capital and other requirements of the BHCA and
the regulations of the Federal Reserve. In addition, M&T’s banking subsidiaries are subject to
regulation, supervision and examination by, as applicable, the New York State Department of
Financial Services (“NYSDFS”), the Office of the Comptroller of the Currency (“OCC”), the FDIC
and the Federal Reserve, and their consumer financial products and services are regulated by the
Consumer Financial Protection Bureau (“CFPB”). Further, financial services entities such as M&T’s
investment advisor subsidiaries and M&T’s broker-dealer are subject to regulation by the Securities
and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), and
the Securities Investor Protection Corporation (“SIPC”), among others. Other non-bank affiliates and
activities, particularly insurance brokerage and agency activities, are subject to other federal and state
laws and regulations as well as licensing and regulation by state insurance and bank regulatory
agencies. Although the scope of regulation and the form of supervision may vary from state to state,
insurance laws generally grant broad discretion to regulatory authorities in adopting regulations and
supervising regulated activities. This supervision generally includes the licensing of insurance
brokers and agents and the regulation of the handling of customer funds held in a fiduciary capacity
as well as regulations requiring, among other things, maintenance of capital, record keeping, and
reporting.

M&T Bank is a New York chartered bank and a member of the Federal Reserve. As a result, it

is subject to extensive regulation, examination and oversight by the NYSDFS and the Federal
Reserve Bank of New York. New York laws and regulations govern many aspects of M&T Bank’s
operations, including branching, dividends, subsidiary activities, fiduciary activities, lending, and
deposit taking. M&T Bank is also subject to Federal Reserve regulations and guidance, including
with respect to capital levels. Its deposits are insured by the FDIC, subject to certain limitations,
which also exercises regulatory oversight over certain aspects of M&T Bank’s operations. Certain
subsidiaries of M&T Bank are subject to regulation by other federal and state regulators as well. For
example, M&T Securities is regulated by the SEC, FINRA, SIPC, and state securities regulators, and
WT Investment Advisors is also subject to SEC regulation.

Wilmington Trust, N.A. is a national bank with operations that include fiduciary and related
activities with limited lending and deposit business. It is subject to extensive regulation, examination
and oversight by the OCC which governs many aspects of its operations, including fiduciary
activities, capital levels, office locations, dividends and subsidiary activities. Its deposits are insured
by the FDIC, subject to certain limitations, which also exercises regulatory oversight over certain
aspects of the operations of Wilmington Trust, N.A.

Permissible Activities under the BHC Act
In general, the BHCA limits the business of a BHC to banking, managing or controlling banks, and
other activities that the Federal Reserve has determined to be so closely related to banking as to be a
proper incident thereto. In addition, bank holding companies are obligated by a Federal Reserve
policy to serve as a managerial and financial source of strength to their subsidiary depository
institutions, including committing resources to support such subsidiaries. This support may be
required at times when M&T may not be inclined or able to provide it. In addition, any capital loans
by a BHC to a subsidiary bank are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. In the event of a BHC’s bankruptcy, any commitment by the
BHC to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.

Bank holding companies that qualify and elect to be financial holding companies may engage in

any activity, or acquire and retain the shares of a company engaged in any activity, that is either
(i) financial in nature or incidental to such financial activity (as determined by the Federal Reserve,
by regulation or order, in consultation with the Secretary of the Treasury) or (ii) complementary to a
financial activity and does not pose a substantial risk to the safety and soundness of depository
institutions or the financial system generally (as solely determined by the Federal Reserve).
Activities that are financial in nature include securities underwriting and dealing, insurance
underwriting and merchant banking.

M&T elected to become a financial holding company on March 1, 2011. To maintain financial
holding company status, a financial holding company and all of its depository institution subsidiaries
must be “well capitalized” and “well managed.” The failure to meet such requirements could result in
material restrictions on the activities of M&T and may also adversely affect M&T’s ability to enter
into certain transactions, including acquisitions, or obtain necessary approvals in connection with
those transactions, as well as loss of financial holding company status. Additionally, if each of the
Company’s depository institution subsidiaries has not received at least a “satisfactory” rating on its
most recent examination under the Community Reinvestment Act of 1977 (the “CRA”), the
Company would not be able to commence any new financial activities or acquire a company that
engages in such activities, although it would still be allowed to engage in activities closely related to
banking and make investments in the ordinary course of conducting banking activities. For recent
revisions to the CRA, see the section captioned “Community Reinvestment Act” included herein.

Enhanced Prudential Standards
Under Section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-
Frank Act”), as amended by the Economic Growth, Regulatory Relief, and Consumer Protection Act
of 2018 (“EGRRCPA”), U.S. bank holding companies with total consolidated assets of $100 billion
or more, including M&T, are subject to enhanced prudential standards. The enhanced prudential
standards include risk-based capital and leverage requirements, liquidity standards, risk management
and risk committee requirements, stress test requirements and a debt-to-equity limit for companies
that the Financial Stability Oversight Council has determined would pose a grave threat to systemic
financial stability were they to fail such limits. “Tailoring Rules” adopted by the Federal Reserve and
other federal bank regulators in 2019 assign each U.S. BHC with $100 billion or more in total
consolidated assets, as well as its bank subsidiaries, to one of four categories based on its size and
five other risk-based indicators: (1) cross-jurisdictional activity, (2) weighted short-term wholesale
funding, (3) nonbank assets, (4) off-balance sheet exposure, and (5) status as a U.S. global
systemically important BHC (“G-SIB”). Under the Tailoring Rules, M&T and its depository
institution subsidiaries are subject to Category IV standards, which apply to banking organizations
with at least $100 billion in total consolidated assets that do not meet any of the thresholds specified
for Categories I through III. The threshold for Category III is $250 billion or more in total
consolidated assets, or $100 billion or more in total consolidated assets and at least $75 billion in
weighted short-term wholesale funding, nonbank assets or off-balance sheet exposures.

Under the Tailoring Rules, Category IV firms, among other things, (1) are not subject to any
Liquidity Coverage Ratio (“LCR”) or Net Stable Funding Ratio (“NSFR”) (or, in certain cases, are
subject to reduced requirements), (2) remain eligible to opt-out of the requirement to recognize most
elements of Accumulated Other Comprehensive Income (“AOCI”) in regulatory capital, (3) are no
longer subject to company-run stress testing requirements, (4) are subject to supervisory stress testing
on a biennial basis rather than an annual basis, (5) are subject to requirements to develop and
maintain a capital plan on an annual basis and (6) are subject to certain liquidity risk management
and risk committee requirements. Category IV firms continue not to be subject to (1) advanced
approaches capital requirements, (2) the supplementary leverage ratio (“SLR”) and (3) the

countercyclical capital buffer (“CCyB”). Other elements of the Tailoring Rules are discussed in
further detail throughout this section. Compared to Category IV firms, Category III firms are subject
to the LCR and NSFR, company-run stress testing requirements, annual (instead of biennial)
supervisory stress tests, the SLR and the CCyB.

Capital Requirements
M&T and its subsidiary banks are required to comply with applicable capital adequacy standards
established by the federal banking agencies (the “Capital Rules”), which are based on the Basel
Committee’s December 2010 final capital framework for strengthening international capital
standards, referred to as “Basel III”. The Capital Rules include both risk-based requirements, which
compare three measures of capital to risk-weighted assets (“RWAs”), as well as leverage
requirements, which, in the case of Category IV bank holding companies such as M&T, consist of
the Tier 1 leverage ratio described below. Pursuant to the Capital Rules, the minimum capital ratios
are as follows:

•
•
•
•

4.5% Common Equity Tier 1 Capital (“CET1”) to RWAs;
6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to RWAs;
8.0% Total capital (that is, Tier 1 plus Tier 2 capital) to RWAs; and
4.0% Tier 1 capital to average consolidated assets (the “leverage ratio”).

In calculating risk-based capital ratios, M&T must assign risk weights to the Company’s assets

and off-balance sheet items. M&T has an ongoing process to review data elements associated with
these exposures that from time to time may affect how specific exposures are classified and could
lead to increases or decreases of the regulatory risk weights assigned to such exposures.

The Capital Rules also require firms to maintain a “buffer,” consisting solely of CET1 capital,
in addition to the minimum risk-based requirements. Failure to satisfy the buffer requirement in full
results in graduated constraints on capital distributions and discretionary executive compensation.
The severity of the constraints depends on the amount of the shortfall and the firm’s “eligible
retained income,” defined as the greater of (i) net income for the four preceding quarters, net of
distributions and associated tax effects not reflected in net income; and (ii) the average of net income
over the preceding four quarters.

As a Category IV BHC, M&T’s buffer requirement, referred to as the “Stress Capital Buffer,” is

determined through the Federal Reserve’s supervisory stress tests, discussed below. For M&T’s
bank subsidiaries, the buffer requirement consists of the static capital conservation buffer equal to
2.5% of RWAs.

CET1 consists of common stock instruments that meet the eligibility criteria in the Capital
Rules, including common stock and related surplus, net of treasury stock, retained earnings, certain
minority interests and, for certain firms, AOCI. As permitted under the Capital Rules, M&T made a
one-time permanent election to neutralize certain AOCI components, with the result that those
components are not recognized in M&T’s CET1.

The Capital Rules provide for a number of deductions from and adjustments to CET1. As a

“non-advanced approaches” firm under the Capital Rules, M&T is subject to rules that provide for
simplified capital requirements relating to the threshold deductions for mortgage servicing assets,
deferred tax assets arising from temporary differences that a banking organization could not realize
through net operating loss carry backs, and investments in the capital of unconsolidated financial
institutions, as well as the inclusion of minority interests in regulatory capital. M&T’s regulatory
capital ratios are presented in note 24 of Notes to Financial Statements filed herewith in Part II,
Item 8, “Financial Statements and Supplementary Data.”

In December 2017, the Basel Committee published standards that it described as the finalization

of the Basel III post-crisis regulatory reforms. Among other things, these standards revise the Basel
Committee’s standardized approach for credit risk (including by recalibrating risk weights and
introducing new capital requirements for certain “unconditionally cancellable commitments,” such as
unused credit card lines of credit) and provide a new standardized approach for operational risk
capital. Under the Basel framework, these standards will generally be effective on January 1, 2023,
with an aggregate output floor phasing in through January 1, 2028. Under the current U.S. capital
rules, operational risk capital requirements and a capital floor apply only to advanced approaches
institutions, and not to the Company. The impact of these standards will depend on the manner in
which they are implemented by the federal banking regulators.

Stress Testing and Stress Capital Buffer
As part of the enhanced prudential requirements applicable to systemically important financial
institutions, the Federal Reserve conducts periodic analyses of bank holding companies with at least
$100 billion in total consolidated assets using baseline and severely adverse economic and financial
scenarios generated by the Federal Reserve. For Category IV firms, such as M&T, these supervisory
stress tests occur on a biennial basis, in even-numbered years. The Federal Reserve may also use
additional components in the severely adverse scenario or additional or more complex scenarios
designed to capture salient risks to specific business groups. A summary of results of the Federal
Reserve’s analysis under the severely adverse stress scenario is publicly disclosed. Under the
Tailoring Rules, Category IV firms, including M&T, are no longer subject to company-run stress
testing requirements.

Bank holding companies with total consolidated assets of $100 billion or more, including
Category IV bank holding companies such as M&T, must annually submit capital plans as part of the
Federal Reserve’s process. The comprehensive capital plans include a view of capital adequacy
under various scenarios — including a BHC-defined baseline scenario, a baseline scenario provided
by the Federal Reserve, at least one BHC-defined stress scenario, and severely adverse scenarios
provided by the Federal Reserve. The process is intended to help ensure that these bank holding
companies have robust, forward-looking capital planning processes that account for each company’s
unique risks and that permit continued operations during times of economic and financial stress. Each
of the bank holding companies participating in the process is also required to collect and report
certain related data to the Federal Reserve on a quarterly basis. The Stress Capital Buffer is based on
a BHC’s stressed losses in the supervisory stress test, plus four quarters of planned common stock
dividends, subject to a floor of 2.5% of RWAs. In August 2021, the Federal Reserve provided M&T
with a Stress Capital Buffer of 2.5%, representing the floor under the regulatory capital rules, which
became applicable to M&T on October 1, 2021. Accordingly, it currently is subject to a CET1 capital
requirement of 7.0% (a sum of the Stress Capital Buffer and the minimum CET 1 capital ratio).

In January 2021, the Federal Reserve issued a final rule to align its process with the categories
set forth in the Tailoring Rules. Under the final rule, for Category IV firms, the portion of the Stress
Capital Buffer based on the Federal Reserve’s supervisory stress tests will be calculated biennially, in
even-numbered years. During a year in which a Category IV firm does not undergo a supervisory
stress test, the firm will receive an updated Stress Capital Buffer that reflects the firm’s updated
planned common stock dividends. A Category IV firm is also able to elect to participate in the
supervisory stress test in a year in which the firm would not normally be subject to the supervisory
stress test and consequently receive an updated Stress Capital Buffer.

The Federal Reserve also incorporates an assessment of the qualitative aspects of the firm’s
capital planning process into regular, ongoing supervisory activities and through targeted, horizontal
assessments of particular aspects of capital planning. M&T’s annual capital plan is currently due in

April each year. The Federal Reserve publishes the results of its supervisory stress tests by June 30 of
each year.

A BHC’s planned capital distributions in its annual capital plan submissions must be consistent

with any effective distribution limitations that would apply under the firm’s own baseline
projections, including its Stress Capital Buffer.

Distributions
M&T is a legal entity separate and distinct from its banking and other subsidiaries. Historically, the
majority of M&T’s revenue has been from dividends paid to M&T by its subsidiary banks. M&T
Bank and Wilmington Trust, N.A. are subject to laws and regulations imposing restrictions on the
amount of dividends they may declare and pay. Future dividend payments to M&T by its subsidiary
banks will be dependent on a number of factors, including the earnings and financial condition of
each such bank, and are subject to the limitations referred to in note 24 of Notes to Financial
Statements filed herewith in Part II, Item 8, “Financial Statements and Supplementary Data,” and to
other statutory powers of bank regulatory agencies.

An insured depository institution is prohibited from making any capital distribution to its
owner, including any dividend, if, after making such distribution, the depository institution fails to
meet the required minimum level for any relevant capital measure, including the risk-based capital
adequacy and leverage standards discussed herein. Dividend payments by M&T to its shareholders
and common stock repurchases by M&T are subject to the oversight of the Federal Reserve. M&T’s
ability to make capital distributions would likely be impacted in the event that M&T fails to maintain
its Stress Capital Buffer above its minimum CET1 risk-based, Tier-1 risk-based and total risk-based
capital requirements.

In addition, the Federal Reserve’s capital plan rule also provides that a BHC must receive prior

approval for any dividend, stock repurchase, or other capital distribution, other than a capital
distribution on a newly issued capital instrument, if the BHC is required to resubmit its capital plan.
Among other circumstances, a firm may be required to resubmit its capital plan in connection with
certain acquisitions or dispositions.

Liquidity
Under the Tailoring Rules, the Company is not subject to the Federal Reserve and other federal
banking regulators rules, which implement a U.S. version of the Basel Committee’s LCR
requirement, which is intended to ensure that banks hold sufficient amounts of so-called “high
quality liquid assets” (“HQLA”) to cover the anticipated net cash outflows during a hypothetical
acute 30-day stress scenario or the NSFR, which is designed to promote more medium- and long-
term funding of the assets and activities of banks over a one-year time horizon. The Federal
Reserve’s enhanced prudential standards, however, require the Company, as a BHC with $100 billion
or more in total consolidated assets, to comply with enhanced liquidity and overall risk management
standards, which include maintaining a level of highly liquid assets based on projected funding needs
for 30 days, and increased involvement by boards of directors in liquidity and overall risk
management. Under the Tailoring Rules, the liquidity risk management and reporting requirements
are less stringent for Category IV bank holding companies as compared to bank holding companies
in a different Category.

Cross Guaranty Provision
The cross guaranty provisions in the Federal Deposit Insurance Act (“FDIA”) require each insured
depository institution owned by the same BHC to be financially responsible for the failure or
resolution costs of any affiliated insured institution. Generally, the amount of the cross guaranty
liability is equal to the estimated loss to the DIF for the resolution of the affiliated institution(s) in

default. The FDIC’s claim under the cross guaranty provision is superior to claims of shareholders of
the insured depository institution or its BHC and to most claims arising out of obligations or
liabilities owed to affiliates of the institution, but is subordinate to claims of depositors, secured
creditors and holders of subordinated debt (other than affiliates) of the commonly controlled insured
depository institution. The FDIC may decline to enforce the cross guaranty provision if it determines
that a waiver is in the best interest of the DIF.

Volcker Rule
The Volcker Rule limits proprietary trading and investing in and sponsoring certain hedge funds and
private equity funds (defined as “covered funds” in the Volcker Rule). The Company does not
engage in any significant amount of proprietary trading as defined in the Volcker Rule and
implemented the required procedures for those areas in which trading does occur. In addition, the
Company does not engage in any significant covered fund activities that are impacted by the Volcker
Rule.

Safety and Soundness Standards
Guidelines adopted by the federal bank regulatory agencies pursuant to the FDIA establish general
standards relating to internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and
benefits. In general, these guidelines require, among other things, appropriate systems and practices
to identify and manage the risk and exposures specified in the guidelines. Additionally, the agencies
adopted regulations that authorize, but do not require, an agency to order an institution that has been
given notice by an agency that it is not satisfying any of such safety and soundness standards to
submit a compliance plan. If, after being so notified, an institution fails to submit an acceptable
compliance plan or fails in any material respect to implement an acceptable compliance plan, the
agency must issue an order directing action to correct the deficiency and may issue an order directing
other actions of the types to which an undercapitalized institution is subject. If an institution fails to
comply with such an order, the agency may seek to enforce such order in judicial proceedings and to
impose civil money penalties.

Limits on Undercapitalized Depository Institutions
The FDIA establishes a system of regulatory remedies to resolve the problems of undercapitalized
institutions, referred to as the prompt corrective action. The federal banking regulators have
established five capital categories (“well-capitalized,” “adequately capitalized,” “undercapitalized,”
“significantly undercapitalized” and “critically undercapitalized”) and must take certain mandatory
supervisory actions, and are authorized to take other discretionary actions, with respect to institutions
which are undercapitalized, significantly undercapitalized or critically undercapitalized. The severity
of these mandatory and discretionary supervisory actions depends upon the capital category in which
the institution is placed. The federal banking regulators have specified by regulation the relevant
capital levels for each category. The FDIA’s prompt corrective action provisions only apply to
depository institutions and not to bank holding companies. The Federal Reserve’s regulations
applicable to bank holding companies separately define “well capitalized.” A financial holding
company that is not well-capitalized and well-managed (or whose bank subsidiaries are not well
capitalized and well managed) under applicable prompt corrective action standards may be restricted
in certain of its activities and ultimately may lose financial holding company status. Under existing
rules, a depository institution that is subject to Category IV standards is deemed to be “well
capitalized” if it has (i) a CET1 ratio of at least 6.5%, (ii) a Tier 1 capital ratio of at least 8%, (iii) a
Total capital ratio of at least 10%, and (iv) a Tier 1 leverage ratio of at least 5%.

An institution that is categorized as undercapitalized, significantly undercapitalized or critically
undercapitalized is required to submit an acceptable capital restoration plan to its appropriate federal
banking regulator. Under the FDIA, in order for the capital restoration plan to be accepted by the
appropriate federal banking agency, a BHC must guarantee that a subsidiary depository institution
will comply with its capital restoration plan, subject to certain limitations. The BHC must also
provide appropriate assurances of performance. An undercapitalized institution is also generally
prohibited from increasing its average total assets, accepting brokered deposits or offering interest
rates on any deposits significantly higher than prevailing market rates, making acquisitions,
establishing any branches or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC. Institutions that are significantly
undercapitalized or undercapitalized and either fail to submit an acceptable capital restoration plan or
fail to implement an approved capital restoration plan may be subject to a number of requirements
and restrictions, including orders to sell sufficient voting stock to become adequately capitalized,
requirements to reduce total assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized depository institutions failing to submit or implement an acceptable
capital restoration plan are subject to appointment of a receiver or conservator.

Transactions with Affiliates
There are various legal restrictions on the extent to which M&T and its non-bank subsidiaries or
affiliates (M&T Insurance Agency, Inc., M&T Realty Capital Corporation, M&T Securities, Inc.,
Wilmington Trust Investment Advisors, Inc.) may borrow or otherwise obtain funding from M&T
Bank and Wilmington Trust, N.A. In general, Sections 23A and 23B of the Federal Reserve Act and
Federal Reserve Regulation W require that any “covered transaction” by M&T Bank and Wilmington
Trust, N.A. (or any of their respective subsidiaries) with an affiliate must in certain cases be secured
by designated amounts of specified collateral and must be limited as follows: (i) in the case of any
single such affiliate, the aggregate amount of covered transactions of the insured depository
institution and its subsidiaries may not exceed 10% of the capital stock and surplus of such insured
depository institution, and (ii) in the case of all affiliates, the aggregate amount of covered
transactions of an insured depository institution and its subsidiaries may not exceed 20% of the
capital stock and surplus of such insured depository institution. “Covered transactions” are defined
by statute to include, among other things, a loan or extension of credit, as well as a purchase of
securities issued by an affiliate, a purchase of assets (unless otherwise exempted by the Federal
Reserve) from the affiliate, certain derivative transactions that create a credit exposure to an affiliate,
the acceptance of securities issued by the affiliate as collateral for a loan, and the issuance of a
guarantee, acceptance or letter of credit on behalf of an affiliate. All covered transactions, including
certain additional transactions (such as transactions with a third party in which an affiliate has a
financial interest), must be conducted on terms and under circumstances including credit standards,
(i) that are substantially the same, or at least as favorable to such bank or its subsidiary, as those
prevailing at the time for comparable transactions with or involving other nonaffiliated companies, or
in the absence of comparable transactions, or (ii) that in good faith would be offered to, or would
apply to, nonaffiliated companies.

FDIC Insurance Assessments
M&T Bank and Wilmington Trust, N.A. deposits are insured by the DIF of the FDIC up to the limits
set forth under applicable law. The FDIC imposes a risk-based premium assessment system that
determines assessment rates for financial institutions. Deposit insurance assessments are based on
average total assets minus average tangible equity. For larger institutions, such as M&T Bank, the
FDIC uses a performance score and a loss-severity score that are used to calculate an initial
assessment rate. In calculating these scores, the FDIC uses a bank’s capital level and supervisory

ratings and certain financial measures to assess an institution’s ability to withstand asset-related
stress and funding-related stress. The FDIC has the ability to make discretionary adjustments to the
total score based upon significant risk factors that are not adequately captured in the calculations.
Under the current system, premiums are assessed quarterly.

Under the FDIA, insurance of deposits may be terminated by the FDIC upon a finding that the

institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to
continue operations, or has violated any applicable law, regulation, rule, order or condition imposed
by the FDIC.

Acquisitions
Federal and state laws impose notice and approval requirements for mergers and acquisitions
involving depository institutions or bank holding companies. For example, the BHCA requires every
BHC to obtain the prior approval of the Federal Reserve before: (1) it may acquire direct or indirect
ownership or control of any voting shares of any bank or savings institution, if after such acquisition,
the BHC will directly or indirectly own or control 5% or more of the voting shares of the institution;
(2) it or any of its subsidiaries, other than a bank, may acquire all or substantially all of the assets of
any bank or savings institution; or (3) it may merge or consolidate with any other BHC. In addition,
financial holding companies are required to obtain prior approval from the Federal Reserve before
acquiring certain nonbank financial companies with assets exceeding $10 billion.

The BHCA further provides that the Federal Reserve may not approve any transaction that

would result in a monopoly or would be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in any section of the United States, or
the effect of which may be substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of trade, unless the
anticompetitive effects of the proposed transaction are clearly outweighed by the public interest in
meeting the convenience and needs of the community to be served. The Federal Reserve is also
required to consider the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to be served.
Consideration of financial resources generally focuses on capital adequacy and consideration of
convenience and needs issues and includes the parties’ performance under the CRA and compliance
with laws, especially consumer protection laws. When evaluating a transaction, the Federal Reserve
must also take into account the institutions’ effectiveness in combating money laundering and
consider the extent to which the transaction would result in greater or more concentrated risks to the
stability of the United States banking or financial system.

Refer to “Risk Factors—Risks Related to the Merger” below for discussion related to the
Company’s pending application for the proposed merger with People’s United Financial, Inc.
(“People’s United”).

Executive and Incentive Compensation
Guidelines adopted by several federal banking agencies prohibit excessive compensation as an
unsafe and unsound practice and describe compensation as “excessive” when the amounts paid are
unreasonable or disproportionate to the services performed by an executive officer, employee,
director or principal stockholder. The Federal Reserve issued comprehensive guidance on incentive
compensation policies (the “Incentive Compensation Guidance”) intended to ensure that the
incentive compensation policies of banking organizations do not undermine the safety and soundness
of such organizations by encouraging excessive risk-taking. The Incentive Compensation Guidance,
which covers all employees that have the ability to materially affect the risk profile of an
organization, either individually or as part of a group, is based upon the key principles that a banking
organization’s incentive compensation arrangements should (i) provide incentives that do not

encourage risk-taking beyond the organization’s ability to effectively identify and manage risks,
(ii) be compatible with effective internal controls and risk management, and (iii) be supported by
strong corporate governance, including active and effective oversight by the organization’s board of
directors. These three principles are incorporated into the proposed joint compensation regulations
under the Dodd-Frank Act noted below. Any deficiencies in compensation practices that are
identified may be incorporated into the organization’s supervisory ratings, which can affect its ability
to make acquisitions or perform other actions. The Incentive Compensation Guidance states that
enforcement actions may be taken against a banking organization if its incentive compensation
arrangements or related risk-management control or governance processes pose a risk to the
organization’s safety and soundness and the organization is not taking prompt and effective measures
to correct the deficiencies.

The Dodd-Frank Act requires the federal bank regulatory agencies and the SEC to establish

joint regulations or guidelines prohibiting incentive-based payment arrangements at specified
regulated entities having at least $1 billion in total assets, such as M&T and M&T Bank. The
agencies proposed rules to implement this requirement but these proposed rules have not been
finalized. In addition, the SEC proposed in 2015, but has not finalized, rules directing national
securities exchanges and associations to establish listing standards requiring companies to adopt
policies that require executive officers to pay back incentive-based compensation that they were
awarded erroneously. In October 2021, the SEC reopened the comment period on this proposal.

In addition, the NYSDFS issued guidance emphasizing that its regulated banking institutions,
including M&T Bank, must ensure that any incentive compensation arrangements tied to employee
performance indicators are subject to effective risk management, oversight and control.

Resolution Planning
Pursuant to the Dodd-Frank Act, as amended by EGRRCPA, certain bank holding companies are
required to report periodically to the Federal Reserve and the FDIC a resolution plan for their rapid
and orderly resolution in the event of material financial distress or failure. In late 2019, the Federal
Reserve and FDIC issued modified rules that, among other things, adjusted the review cycles and
applicability of the agencies’ resolution planning requirements. Under these rules, Category IV firms
such as M&T are not required to submit resolution plans.

The FDIC has separately required insured depository institutions (“IDIs”) with $50 billion or

more in total assets, such as M&T Bank, to submit to the FDIC periodic plans for resolution in the
event of the institution’s failure. In January 2021, the FDIC lifted its existing moratorium on
resolution plans, indicating it will resume the requirement for resolution plan submissions for IDIs
with $100 billion or more in assets. The FDIC also announced its intention to engage in targeted
engagement and capabilities testing related to resolution planning with select firms, for which M&T
Bank participated in mid-2021. In June 2021, the FDIC issued a Statement on Resolution Plans for
IDI’s, which, among other things, provides general information regarding the content that filers will
be expected to prepare and extends the submission frequency for specified IDI’s to a three-year
resolution plan filing cycle. The FDIC has notified M&T Bank that its next resolution plan is due by
no later than December 1, 2022.

Insolvency of an Insured Depository Institution or a Bank Holding Company
If the FDIC is appointed as conservator or receiver for an insured depository institution such as M&T
Bank or Wilmington Trust, N.A., upon its insolvency or in certain other events without limitation,
the FDIC has the power:

•

to transfer any of the depository institution’s assets and liabilities to a new depository
institution, including a newly formed “bridge” bank without the approval of the insolvent
depository institution’s creditors or equity holders;
to enforce the terms of the depository institution’s contracts pursuant to their terms
without regard to any provisions triggered by the appointment of the FDIC in that
capacity; or
to repudiate or disaffirm any contract or lease to which the depository institution is a party,
the performance of which is determined by the FDIC to be burdensome and the
disaffirmance or repudiation of which is determined by the FDIC to promote the orderly
administration of the depository institution.

In addition, under federal law, the claims of holders of domestic deposit liabilities and certain

claims for administrative expenses against an insured depository institution would be afforded a
priority over other general unsecured claims against such an institution, including claims of debt
holders of the institution, in the “liquidation or other resolution” of such an institution by any
receiver. As a result, whether or not the FDIC ever sought to repudiate any debt obligations of M&T
Bank or Wilmington Trust, N.A., the debt holders would be treated differently from, and could
receive, if anything, substantially less than, the depositors of the bank.

The Dodd-Frank Act created a new resolution regime (known as “orderly liquidation

authority”) for systemically important financial companies, including bank holding companies and
their affiliates. Under the orderly liquidation authority, the FDIC may be appointed as receiver for the
systemically important institution, and its failed subsidiaries, for purposes of liquidating the entity if,
among other conditions, it is determined at the time of the institution’s failure that it is in default or
in danger of default and the failure poses a risk to the stability of the U.S. financial system.

If the FDIC is appointed as receiver under the orderly liquidation authority, then the powers of

the receiver, and the rights and obligations of creditors and other parties who have dealt with the
institution, would be determined under the Dodd-Frank Act provisions, and not under the insolvency
law that would otherwise apply. The powers of the receiver under the orderly liquidation authority
were based on the powers of the FDIC as receiver for depository institutions under the FDIA.
However, the provisions governing the rights of creditors under the orderly liquidation authority
were modified in certain respects to reduce disparities with the treatment of creditors’ claims under
the U.S. Bankruptcy Code as compared to the treatment of those claims under the new authority.
Nonetheless, substantial differences in the rights of creditors exist as between these two regimes,
including the right of the FDIC to disregard the strict priority of creditor claims in some
circumstances, the use of an administrative claims procedure to determine creditors’ claims (as
opposed to the judicial procedure utilized in bankruptcy proceedings), and the right of the FDIC to
transfer claims to a “bridge” entity.

An orderly liquidation fund will fund such liquidation proceedings through borrowings from the

Treasury Department and risk-based assessments made, first, on entities that received more in the
resolution than they would have received in liquidation to the extent of such excess, and second, if
necessary, on bank holding companies with total consolidated assets of $50 billion or more, such as
M&T. If an orderly liquidation is triggered, M&T could face assessments for the orderly liquidation
fund.

The FDIC has developed a strategy under the orderly liquidation authority referred to as the

“single point of entry” strategy, under which the FDIC would resolve a failed financial holding

company by transferring its assets (including shares of its operating subsidiaries) and, potentially,
very limited liabilities to a “bridge” holding company; utilize the resources of the failed financial
holding company to recapitalize the operating subsidiaries; and satisfy the claims of unsecured
creditors of the failed financial holding company and other claimants in the receivership by
delivering securities of one or more new financial companies that would emerge from the bridge
holding company. Under this strategy, management of the failed financial holding company would be
replaced and shareholders and creditors of the failed financial holding company would bear the
losses resulting from the failure.

Depositor Preference
Under federal law, depositors and certain claims for administrative expenses and employee
compensation against an insured depository institution would be afforded a priority over other
general unsecured claims against such an institution in the “liquidation or other resolution” of such
an institution by any receiver. If an insured depository institution fails, insured and uninsured
depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit
creditors, including depositors whose deposits are payable only outside of the United States and the
parent BHC, with respect to any extensions of credit they have made to such insured depository
institution.

Financial Privacy and Cyber Security
The federal banking regulators have adopted rules that limit the ability of banks and other financial
institutions to disclose non-public and personally identifiable information about consumers to non-
affiliated third parties. These limitations require disclosure of privacy policies to consumers and, in
some circumstances, allow consumers to prevent disclosure of certain personal information to a non-
affiliated third party. These regulations affect how consumer information is transmitted through
diversified financial companies and conveyed to outside vendors. In addition, consumers may also
prevent disclosure of certain information among affiliated companies that is assembled or used to
determine eligibility for a product or service, such as that shown on consumer credit reports and asset
and income information from applications. Consumers also have the option to direct banks and other
financial institutions not to share information about transactions and experiences with affiliated
companies for the purpose of marketing products or services. Federal law makes it a criminal
offense, except in limited circumstances, to obtain or attempt to obtain customer information of a
financial nature by fraudulent or deceptive means.

In November 2021, the federal banking agencies issued a final rule requiring banking
organizations to notify their primary regulator as soon as possible and within 36 hours of determining
that a “notification incident” has occurred. A notification incident is a “computer-security incident”
that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the
banking organization’s ability to deliver services to a material portion of its customer base,
jeopardize the viability of key operations of the banking organization, or impact the stability of the
financial sector. The final rule also requires specific and immediate notifications by bank service
providers that become aware of similar incidents. The rule is effective April 1, 2022, with
compliance required by May 1, 2022.

Financial institutions regulated by the NYSDFS, including M&T Bank, are also subject to
NYSDFS regulations on cybersecurity matters, including, among other things, requirements to (i)
establish and maintain a cyber security program designed to ensure the confidentiality, integrity and
availability of their information systems; (ii) implement and maintain a written cyber security policy
setting forth policies and procedures for the protection of their information systems and nonpublic
information; and (iii) designate a Chief Information Security Officer.

Many states and regulators have been increasingly active in implementing privacy and

cybersecurity standards and regulations, including implementing or modifying their data breach
notification and data privacy requirements. One example of recent state legislation is the California
Consumer Privacy Act (“CCPA”), which became effective on January 1, 2020 and applies to for-
profit businesses that conduct business in California and meet certain revenue or data collection
thresholds. November 2020 amendments expanding the scope of and requirements under the CCPA
will generally become effective on January 1, 2023.

Consumer Protection Laws and the Consumer Financial Protection Bureau Supervision
In connection with their respective lending and leasing activities, M&T Bank, Wilmington Trust,
N.A. and certain of their subsidiaries, are each subject to a number of federal and state laws designed
to protect borrowers and promote lending to various sectors of the economy. Such laws include: the
Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair and Accurate Credit
Transactions Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Electronic Fund
Transfer Act, the Real Estate Settlement Procedures Act, the Military Lending Act, the
Servicemembers Civil Relief Act, and various state law counterparts. Furthermore, the CFPB has
issued integrated disclosure requirements under the Truth in Lending Act and the Real Estate
Settlement Procedures Act that relate to the provision of disclosures to borrowers. There are also
consumer protection laws governing deposit taking activities (e.g. Truth in Savings Act), as well
securities and insurance laws governing certain aspects of the Company’s consolidated operations.
The CFPB has broad powers to supervise and enforce most federal consumer protection laws.
The CFPB has broad rule-making authority for a wide range of consumer protection laws that apply
to all banks and savings institutions, including the authority to prohibit “unfair, deceptive or abusive”
acts and practices. The CFPB has examination and enforcement authority over all banks and savings
institutions with more than $10 billion in assets, including M&T Bank.

In addition, federal law permits states to adopt consumer protection laws and standards that are

more stringent than those adopted at the federal level and, in certain circumstances, permits state
attorneys general to enforce compliance with both the state and federal laws and regulations.

Community Reinvestment Act
The CRA is intended to encourage depository institutions to help meet the credit needs of the
communities in which they operate, including low- and moderate-income neighborhoods, consistent
with safe and sound operations. CRA examinations are conducted by the federal agencies that are
responsible for supervising the relevant depository institutions: the Federal Reserve, the FDIC and
the OCC. For purposes of the CRA, M&T is regulated by the Federal Reserve. A financial
institution’s performance in helping to meet the credit needs of its community is evaluated in the
context of information about the institution (capacity, constraints and business strategies), its
community (demographic and economic data, lending, investment, and service opportunities), and its
competitors and peers. Upon completion of a CRA examination, an overall CRA Rating is assigned
using a four-tiered rating system. These ratings are: “Outstanding,” “Satisfactory,” “Needs to
Improve” and “Substantial Noncompliance.” The CRA evaluation is used in evaluating applications
for future approval of bank activities including mergers, acquisitions, charters, branch openings and
deposit facilities. An unsatisfactory CRA evaluation could result in the delay or denial of acquisition
or merger applications, among other activities. M&T Bank has a current rating of “Outstanding.”
M&T Bank is also subject to New York State CRA examination and is assessed using a 1 to 4
scoring system. M&T Bank currently has a rating of 1, or “Outstanding” from the NYSDFS.
Wilmington Trust, N.A. has been designated a special purpose trust company since March 3, 2016,
and is therefore exempt from the requirements of the CRA. In September 2020, the Federal Reserve
released an Advance Notice of Proposed Rulemaking that sought public comment on ways to

modernize the Federal Reserve’s CRA regulation. The effects on the Company of any potential
change to the CRA rules will depend on the final form of any Federal Reserve rulemaking and cannot
be predicted at this time.

Bank Secrecy Act Regulation and Anti-Money Laundering Obligations
Federal laws and regulations impose obligations on U.S. financial institutions, including banks and
broker/dealer subsidiaries, to implement and maintain appropriate policies, procedures and controls
which are reasonably designed to prevent, detect and report instances of money laundering and the
financing of terrorism and to verify the identity of their customers. These provisions also require the
federal financial institution regulatory agencies to consider the effectiveness of a financial
institution’s anti-money laundering activities when reviewing bank mergers and BHC acquisitions.
Failure of a financial institution to maintain and implement adequate programs to combat money
laundering and terrorist financing could have serious legal and reputational consequences for the
institution, including the denial by federal regulators of proposed merger, acquisition, restructuring or
other expansionary activity.

The Financial Crimes Enforcement Network (“FinCEN”), which drafts regulations
implementing the USA PATRIOT Act and other anti-money laundering and Bank Secrecy Act
legislation, has adopted rules that require financial institutions to, among other things, obtain
beneficial ownership information with respect to legal entities with which such institutions conduct
business, subject to certain exclusions and exemptions. Bank regulators are focusing their
examinations on anti-money laundering compliance, and M&T continues to monitor and augment,
where necessary, its Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”) Compliance
Program.

The Anti-Money Laundering Act of 2020 (“AMLA”), which amends the BSA, was enacted in
January 2021. The AMLA is intended to comprehensively reform and modernize U.S. bank secrecy
and anti-money laundering laws. Among other things, it codifies a risk-based approach to anti-money
laundering compliance for financial institutions; requires the U.S. Department of the Treasury to
promulgate priorities for anti-money laundering and countering the financing of terrorism policy;
requires the development of standards for testing technology and internal processes for BSA
compliance; expands enforcement and investigation-related authority, including increasing available
sanctions for certain BSA violations; and expands BSA whistleblower incentives and protections. In
June 2021, FinCEN issued the priorities for anti-money laundering and countering the financing of
terrorism policy required under AMLA. The priorities include: corruption, cybercrime, terrorist
financing, fraud, transnational crime, drug trafficking, human trafficking and proliferation financing.
M&T reviews and monitors its anti-money laundering compliance program to ensure it complies
with the changes reflected in the AMLA and the regulations that implement it.

Office of Foreign Assets Control Regulation
The United States has imposed economic sanctions that prohibit transactions with designated foreign
countries, nationals and others. These are typically known as the “OFAC” rules based on their
administration by the U.S. Treasury Department Office of Foreign Assets Control (“OFAC”). The
OFAC-administered sanctions targeting countries take many different forms. Generally, however,
they contain one or more of the following elements: (i) restrictions on trade with or investment in a
sanctioned country, including prohibitions against direct or indirect imports from and exports to a
sanctioned country and prohibitions on “U.S. persons” engaging in financial transactions relating to
making investments in, or providing investment-related advice or assistance to, a sanctioned country;
and (ii) a blocking of assets in which the government or specially designated nationals of the
sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction
(including property in the possession or control of U.S. persons). Blocked assets (e.g. property and

bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license
from OFAC. Failure to comply with these sanctions could have serious legal and reputational
consequences, including denial by federal regulators of proposed merger, acquisition, restructuring,
or other expansionary activity. The OFAC rules are included as part of M&T’s BSA/AML
Compliance Program, which M&T continues to monitor and augment, where necessary.

Regulation of Insurers and Insurance Brokers
The Company’s operations in the areas of insurance agency/brokerage and reinsurance of credit life
insurance are subject to regulation and supervision by various state insurance regulatory authorities.
Although the scope of regulation and form of supervision may vary from state to state, insurance
laws generally grant broad discretion to regulatory authorities in adopting regulations and
supervising regulated activities. This supervision generally includes the licensing of insurance
brokers and agents and the regulation of the handling of customer funds held in a fiduciary capacity.
Certain of M&T’s subsidiaries that are engaged in insurance-related activities are subject to extensive
regulatory supervision and to insurance laws and regulations requiring, among other things,
maintenance of capital, record keeping, reporting and examinations.

Federal Reserve Policies
The earnings of the Company are significantly affected by the monetary and fiscal policies of
governmental authorities, including the Federal Reserve. Among the instruments of monetary policy used
by the Federal Reserve are open-market operations in U.S. Government securities and federal funds,
changes in the discount rate on member bank borrowings and changes in reserve requirements against
member bank deposits. These instruments of monetary policy are used in varying combinations to
influence the overall level of bank loans, investments and deposits, and the interest rates charged on loans
and paid for deposits. The Federal Reserve frequently uses these instruments of monetary policy,
especially its open-market operations and the discount rate, to influence the level of interest rates and to
affect the strength of the economy, the level of inflation or the price of the dollar in foreign exchange
markets. The monetary policies of the Federal Reserve have had a significant effect on the operating
results of banking institutions in the past and are expected to continue to do so in the future. It is not
possible to predict the nature of future changes in monetary and fiscal policies or the effect which they
may have on the Company’s business and earnings.

Corporate Governance
M&T’s Corporate Governance Standards and the following corporate governance documents are also
available on M&T’s website at the Investor Relations link: Disclosure and Regulation FD Policy;
Executive Committee Charter; Nomination, Compensation and Governance Committee Charter;
Audit Committee Charter; Risk Committee Charter; Financial Reporting and Disclosure Controls and
Procedures Policy; Code of Ethics for CEO and Senior Financial Officers; Code of Business Conduct
and Ethics; and Employee Complaint Procedures for Accounting and Auditing Matters. Copies of
such governance documents are also available, free of charge, to any person who requests them. Such
requests may be directed to M&T Bank Corporation, Shareholder Relations Department, One M&T
Plaza, 8th Floor, Buffalo, NY 14203-2399 (Telephone: (716) 842-5138).

Human Capital Resources
M&T recognizes employees are the difference makers that drive its success. The Company’s talent
strategy focuses on recruiting, developing, promoting and retaining high-performing, diverse
individuals whose strengths align with M&T’s values, purpose and leadership competencies to create
and maintain a highly competitive workforce.

As of December 31, 2021, the Company employed 17,569 full-time and part-time employees.

The Company’s employee base is concentrated in the Northeast and Mid-Atlantic United States, with
approximately 58% of employees residing in New York, followed by 12% in Maryland, 10% in
Delaware and the remainder primarily concentrated in the other states where M&T Bank maintains a
retail bank branch presence. Approximately 4% of the Company’s employee base resides outside of
its retail banking footprint. Inclusive in the above, as of December 31, 2021, the Company employed
115 international employees based in the UK, Ireland, Canada, Germany and France. The Company’s
employee base includes 3,793 employees that support customers in the retail branch network.
Overall, the average tenure of the Company’s employees is 10 years and the average tenure of the
Company’s executive officers is 24 years.

Talent Attraction and Diversity, Equity and Inclusion

M&T leverages various channels to effectively identify, develop and recruit high-caliber

talent throughout its footprint. Current employees are leveraged to supplement the Company’s
normal recruiting processes. The Employee Referral Program typically serves as the primary tool for
generating applicants, and it accounted for 29% of new hires in 2021. In addition, the Company’s
Talent Acquisition Ambassador Program, which was implemented in 2020 and currently includes
approximately 60 employees throughout different business lines, dedicated over 800 hours towards
promoting awareness of M&T career opportunities within the Company’s communities.

M&T’s recruitment team strives to create and maintain diverse representation at all levels

and in all areas of the organization to promote a sense of belonging among employees and maintain a
workforce that reflects the communities the Company serves. M&T employees attended 51
individual diversity-based recruiting events in 2021 with target audiences crossing many diversity
dimensions, such as Black, LatinX, Veterans, LGBTQ+, individuals with disabilities and women.
The Company also works with diversity-focused schools and organizations as part of its efforts to
recruit and maintain a diverse workforce. In 2021, 41% of total corporate hires were people of color
and 62% were women, 47% of summer interns were people of color, and 44% of the participants in
the Company’s Technology Internship Program were people of color. As of December 31, 2021, the
entire Company’s workforce consisted of approximately 60% women and 24% people of color.

To further drive diversity within the company, M&T also supports several employee resource

group charters and chapters, which are voluntary, employee-driven groups organized around a
particular shared interest and characteristic, such as race, ethnicity, gender, sexual orientation or
differing abilities. Approximately 34% of the Company’s employees and 53% of managers are
involved in these groups. The Company’s diversity efforts are led by its Chief Diversity Officer, who
is a member of senior leadership, and the Senior Leadership Diversity & Inclusion Council, both of
which champion inclusion efforts throughout the Company. M&T’s Board of Directors also receives
regular updates on the Company’s diversity, inclusion and belonging efforts.

Development and Engagement

The Company’s performance management philosophy is foundational to its employees’
success, focusing on reinforcing values, providing continuous, transparent feedback and recognizing
and rewarding outstanding performance. The Company helps empower employee performance and
cultivate employee development through a variety of learning offerings on topics such as technical,
job-specific skills and professional development, including courses aligned with the Company’s
enterprise-wide leadership competencies. Training content is made available as synchronous,
asynchronous, and blended learning solutions to promote employee access. The Company also
invests in creating its leaders of tomorrow through various internal programs including its Manager
Acceleration Program, Management Development Program, Executive Associate Program,

Technology Development Program and two additional programs focused on the Company’s high-
performing diverse employees – the Rising Leadership Development Program and Equity One.

M&T’s commitment to finding the best talent, creating a positive employee experience and
fostering development results in a highly engaged employee base that drives the Company’s success.
Since 2001, the Company has conducted 16 “Engagement Surveys,” with average participation rates
above 90%, demonstrating a commitment to fostering candid, open and honest, two-way
communication with employees to enhance the workplace. All survey results are reviewed with
senior management and shared with individual managers, who identify and implement improvements
based on employees’ feedback, as well as presented to M&T's Board of Directors. Employees also
participate in action planning within individual work groups. In addition, M&T conducts other
surveys to monitor and guide the employee experience throughout an employee’s time with the
Company. Surveys are conducted at various times, such as new hire onboarding as well as in
connection with key events, such as acquisitions. M&T has also conducted numerous employee
surveys during the COVID-19 pandemic.

Employee engagement is also fostered through the Company’s allotment of 40 hours of

volunteer time for each employee to make a difference in the communities in which they serve.
Although volunteer opportunities recently have been limited by the pandemic, in 2021, M&T
employees volunteered approximately 50,000 hours and served on the boards of over 170 non-profit
organizations.

Compensation, Health and Wellness

The Company provides comprehensive compensation and benefits programs intended to attract,
retain and incentivize its employees. In addition to base pay, these programs (which vary by country
and region) include cash incentives, long term equity-based awards, an Employee Stock Purchase
Plan, a 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts,
paid time off, parental leave, family care resources, flexible work schedules, employee assistance
programs and tuition assistance, among others.

The Company’s wellness program provides employees and their families with resources that
may be helpful in navigating life events and are designed to provide support to help improve their
well-being. In addition to addressing employees’ physical needs through flexible and convenient
medical plan and telemedicine options, M&T endeavors to find ways to contribute to employees’
emotional health and social well-being through various programs offered to employees. The
Company partners with several of its medical partners to offer sponsored events and courses, led by
medical experts, and also works to help employees manage their financial wellness through free
educational resources.

As part of its ongoing response to the global COVID-19 pandemic, the Company continues to
educate employees on safety precautions through communications and webinars while maintaining
safety measures including protective equipment and increased sanitation at all work sites. The
Company also continued to support work from home practices for employees capable of performing
their duties remotely throughout 2021. In 2022, M&T will continue to monitor the COVID-19
pandemic and take appropriate measures to protect the safety and health of employees with the goal
of bringing many employees back to the office in a hybrid working model, balancing on-site
collaboration with employee flexibility.

Competition
The Company faces extensive and intensive competition in the products and services it offers. The
Company competes in offering commercial and personal financial and wealth services with other
banking institutions and thrifts and with firms in a number of other industries, such as credit unions,
personal loan companies, sales finance companies, leasing companies, securities brokerage firms,

mutual fund companies, hedge funds, wealth and investment advisory firms, insurance companies
and other financial services-related entities. Furthermore, diversified financial services companies are
able to offer a combination of these services to their customers on a nationwide basis. Financial
technology companies, using digital, mobile and other technologies, also are increasingly offering
traditional banking products and services, which has resulted in the Company contending with a
broader range of competitors, including many that are not located within the geographic footprint of
the Company’s banking office network.

Other Information
Through a link on the Investor Relations section of M&T’s website at www.mtb.com, copies of
M&T’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of
the Exchange Act, are made available, free of charge, as soon as reasonably practicable after
electronically filing such material with, or furnishing it to, the SEC. Copies of such reports and other
information are also available at no charge to any person who requests them or at www.sec.gov. Such
requests may be directed to M&T Bank Corporation, Shareholder Relations Department, One M&T
Plaza, 8th Floor, Buffalo, NY 14203-2399 (Telephone: (716) 842-5138).

Disclosure Pursuant to Subpart 1400 of Regulation S-K
See cross-reference sheet for disclosures incorporated elsewhere in this Annual Report on Form 10-
K.

Table 1

SELECTED CONSOLIDATED YEAR-END BALANCES

2021

2020

2019
(In thousands)

2018

2017

Interest-bearing deposits at banks.......... $ 41,872,304 $ 23,663,810 $
Federal funds sold..................................
Trading account .....................................
Investment securities

—
1,068,581

—
468,031

7,190,154 $
3,500
470,129

8,105,197 $

—
185,584

5,078,903
—
132,909

U.S. Treasury and federal

agencies .........................................

6,504,382

6,360,218

8,746,749

11,746,240

13,851,832

Obligations of states and political

subdivisions...................................
Other.................................................
Total investment securities .........

Loans and leases

Commercial, financial, leasing,

etc. .................................................
Commercial real estate .....................
Residential real estate.......................
Consumer .........................................
Total loans and leases .................
Unearned discount............................

Loans and leases, net of

unearned discount ....................
Allowance for credit losses ..............
Loans and leases, net ..................
Goodwill ................................................
Core deposit and other intangible

177
651,301
7,155,860

1,531
683,948
7,045,697

4,915
745,587
9,497,251

9,153
937,420
12,692,813

27,151
785,542
14,664,525

23,621,188
35,473,884
16,077,275
17,964,331
93,136,678
(224,226)

27,801,382
37,728,844
16,786,673
16,558,889
98,875,788
(339,921)

23,987,897
35,633,593
16,193,154
15,373,881
91,188,525
(265,656)

23,136,913
34,448,927
17,191,566
13,956,086
88,733,492
(267,015)

21,900,258
33,450,133
19,640,830
13,251,665
88,242,886
(253,903)

92,912,452
(1,469,226)
91,443,226
4,593,112

98,535,867
(1,736,387)
96,799,480
4,593,112

90,922,869
(1,051,071)
89,871,798
4,593,112

88,466,477
(1,019,444)
87,447,033
4,593,112

87,988,983
(1,017,198)
86,971,785
4,593,112

3,998
assets ...................................................
Real estate and other assets owned ........
23,901
Total assets............................................. 155,107,160

14,165
34,668
142,601,105

29,034
85,646
119,872,757

47,067
78,375
120,097,403

71,589
111,910
118,593,487

Noninterest-bearing deposits .................
Savings and interest-checking deposits .
Time deposits.........................................
Deposits at Cayman Islands office ........

60,131,480
68,603,966
2,807,963
—
Total deposits.............................. 131,543,409
47,046
Short-term borrowings...........................
Long-term borrowings ...........................
3,485,369
Total liabilities ....................................... 137,203,755
17,903,405
Shareholders’ equity ..............................

47,572,884
67,680,840
3,899,910
652,104
119,805,738
59,482
4,382,193
126,413,822
16,187,283

32,396,407
54,932,162
5,757,456
1,684,044
94,770,069
62,363
6,986,186
104,156,108
15,716,649

32,256,668
50,963,744
6,124,254
811,906
90,156,572
4,398,378
8,444,914
104,637,212
15,460,191

33,975,180
51,698,008
6,580,962
177,996
92,432,146
175,099
8,141,430
102,342,668
16,250,819

Table 2

Number at Year-End

2021

2020

2019

2018

2017

SHAREHOLDERS, EMPLOYEES AND OFFICES

Shareholders...................................................................... 16,099 16,797 17,333 18,099 18,864
Employees......................................................................... 17,569 17,373 17,773 17,267 16,794
833
Offices...............................................................................

771

724

751

794

Table 3

CONSOLIDATED EARNINGS

2021

2020

2019
(In thousands)

2018

2017

Interest income
Loans and leases, including fees......................................... $ 3,748,988
Investment securities

Fully taxable .................................................................
Exempt from federal taxes............................................
Deposits at banks ................................................................
Other ...................................................................................
Total interest income ....................................................

Interest expense
Savings and interest-checking deposits ..............................
Time deposits......................................................................
Deposits at Cayman Islands office .....................................
Short-term borrowings........................................................
Long-term borrowings ........................................................
Total interest expense ...................................................
Net interest income ...........................................................
Provision for credit losses...................................................
Net interest income after provision for credit losses ..........
Other income
Mortgage banking revenues................................................
Service charges on deposit accounts ..................................
Trust income .......................................................................
Brokerage services income .................................................
Trading account and foreign exchange gains .....................
Gain (loss) on bank investment securities ..........................
Other revenues from operations .........................................
Total other income........................................................

141,046
116
47,491
1,143
3,938,784

32,998
18,635
201
7
62,165
114,006
3,824,778
(75,000)
3,899,778

571,329
402,113
644,716
62,791
24,376
(21,220)
482,889
2,166,994

Other expense
2,045,677
Salaries and employee benefits...........................................
326,698
Equipment and net occupancy ............................................
291,839
Outside data processing and software ................................
69,704
FDIC assessments...............................................................
64,428
Advertising and marketing .................................................
36,507
Printing, postage and supplies ............................................
10,167
Amortization of core deposit and other intangible assets...
766,603
Other costs of operations ....................................................
3,611,623
Total other expense.......................................................
2,455,149
Income before income taxes ...............................................
596,403
Income taxes .......................................................................
Net income ......................................................................... $ 1,858,746
Dividends declared

$ 3,975,053

$ 4,442,182

$ 4,164,561

$ 3,742,867

176,469
183
32,956
8,051
4,192,712

146,701
66,280
4,054
28
109,332
326,395
3,866,317
800,000
3,066,317

566,641
370,788
601,884
47,428
40,536
(9,421)
470,588
2,088,444

288,532
321
141,397
7,161
4,879,593

368,003
95,426
21,917
24,741
239,242
749,329
4,130,264
176,000
3,954,264

457,770
432,978
572,608
48,922
62,044
18,037
469,320
2,061,679

323,912
665
108,182
1,391
4,598,711

215,411
51,423
5,633
5,386
248,556
526,409
4,072,302
132,000
3,940,302

360,442
429,337
537,585
51,069
32,547
(6,301)
451,321
1,856,000

361,157
1,431
61,326
1,014
4,167,795

133,177
61,505
1,186
1,511
189,372
386,751
3,781,044
168,000
3,613,044

363,827
427,372
501,381
61,445
35,301
21,279
440,538
1,851,143

1,950,692
322,037
258,480
53,803
61,904
39,869
14,869
683,586
3,385,240
1,769,521
416,369
$ 1,353,152

1,900,797
324,079
229,731
41,535
93,472
39,893
19,490
819,685
3,468,682
2,547,261
618,112
$ 1,929,149

1,752,264
298,828
199,025
68,256
85,710
35,658
24,522
823,529
3,288,062
2,508,240
590,160
$ 1,918,080

1,648,794
295,084
184,670
101,871
69,203
35,960
31,366
773,377
3,140,325
2,323,862
915,556
$ 1,408,306

Common ....................................................................... $ 582,967
72,915
Preferred .......................................................................

$ 569,076
68,228

$ 552,216
72,482

$ 510,458
72,521

$ 457,200
72,734

Table 4

Per share

Net income

COMMON SHAREHOLDER DATA

2021

2020

2019

2018

2017

Basic .......................................................................... $ 13.81
13.80
Diluted .......................................................................
Cash dividends declared..................................................
4.50
Common shareholders’ equity at year-end ..................... 125.51
Tangible common shareholders’ equity at

9.94
9.94
4.40
116.39

$ 13.76
13.75
4.10
110.78

$ 12.75
12.74
3.55
102.69

8.72
8.70
3.00
100.03

year-end........................................................................
Dividend payout ratio......................................................

Table 5

75.44
89.80
32.69% 44.32% 29.70% 27.66% 34.24%

69.28

80.52

69.08

CHANGES IN INTEREST INCOME AND EXPENSE(a)

2021 Compared with 2020

2020 Compared with 2019

Resulting from
Changes in:

Total
Change

Volume

Rate

Total
Change

Volume

Rate

(Increase (decrease) in thousands)

Interest income (a)
Loans and leases, including fees ....................... $(228,557)
Deposits at banks ..............................................
14,535
Federal funds sold and agreements to resell

313
30,322

(228,870) $(472,523) 336,371
85,334
(108,441)
(15,787)

(808,894)
(193,775)

securities.........................................................
Trading account.................................................
Investment securities

U.S. Treasury and federal agencies .............
Obligations of states and political

(6,783)
(169)

(4,294)
(60)

(2,489)
(109)

1,478
(731)

9,526
(358)

(8,048)
(373)

(35,670)

(38,576)

2,906

(97,088)

(74,239)

(22,849)

(95)
subdivisions ..............................................
Other ............................................................
255
Total interest income ................................... $(256,484)

(105)
(642)

10
897

(173)
(14,979)
$(692,457)

(189)
(2,536)

16
(12,443)

Interest expense
Interest-bearing deposits

Savings and interest-checking deposits ....... $(113,703)
(47,645)
Time deposits...............................................
(3,853)
Deposits at Cayman Islands office ..............
(21)
Short-term borrowings ......................................
(47,167)
Long-term borrowings ......................................
Total interest expense .................................. $(212,389)

14,603
(17,823)
(2,100)
4
(40,540)

(128,306) $(221,304)
(29,146)
(29,822)
(17,863)
(1,753)
(24,713)
(25)
(129,909)
(6,627)
$(422,935)

51,927
(19,098)
(3,417)
(12,130)
(49,983)

(273,231)
(10,048)
(14,446)
(12,583)
(79,926)

(a)

Interest income data are on a taxable-equivalent basis. The apportionment of changes resulting from the
combined effect of both volume and rate was based on the separately determined volume and rate changes.

Item 1A. Risk Factors.

Risk Factors Summary
Risks Relating to the Merger with People’s United

• M&T is expected to incur significant costs related to the merger and integration.
• Combining M&T and People’s United may be more difficult, costly or time-consuming than

expected, and M&T may fail to realize the anticipated benefits of the merger.
• M&T may be unable to retain M&T and/or People’s United personnel successfully.
• The COVID-19 pandemic may delay and adversely affect the completion of the merger.
• Regulatory approval from the Federal Reserve Board may not be received, may take longer
than expected, or may impose conditions that are not presently anticipated or that could have
an adverse effect on M&T following the merger.

• Failure to complete the merger could negatively impact M&T.
• M&T is subject to business uncertainties and contractual restrictions while the merger is

pending.

• Litigation related to the merger has been filed against People’s United, the People’s United
board of directors and M&T, and additional litigation may be filed against People’s United,
the People’s United board of directors, M&T and the M&T board of directors in the future,
which could prevent or delay the completion of the merger, result in the payment of damages
or otherwise negatively impact the business and operations of M&T.

Risks Relating to COVID-19 Pandemic

• M&T’s business, financial condition, capital and results of operations have been, and will

likely continue to be, adversely affected by the COVID-19 pandemic.

Market Risk

• Weakness in the economy has adversely affected the Company in the past and may adversely

affect the Company in the future.

• The Company’s business and financial performance is impacted significantly by market
interest rates and movements in those rates. The monetary, tax and other policies of
governmental agencies, including the Federal Reserve, have a significant impact on interest
rates and overall financial market performance over which the Company has no control and
which the Company may not be able to anticipate adequately.

• The discontinuation of LIBOR as a permissible rate index in new contracts after 2021, the
formal announcement of LIBOR’s cessation date (June 30, 2023), and ongoing uncertainty
related to the emergence of one or more alternative benchmark indices to replace LIBOR
could adversely impact the Company’s business and results of operations.

• The Company’s business and performance is vulnerable to the impact of volatility in debt and

equity markets.

• The Company’s regional concentrations expose it to adverse economic conditions in its

primary retail banking office footprint.

Risks Relating to Compliance and the Regulatory Environment

• The Company is subject to extensive government regulation and supervision and this

regulatory environment can be and has been significantly impacted by financial regulatory
reform initiatives.

• The Company may be subject to more stringent capital and liquidity requirements.
• M&T’s ability to return capital to shareholders and to pay dividends on common stock may
be adversely affected by market and other factors outside of its control and will depend, in
part, on the results of supervisory stress tests administered by the Federal Reserve.

•

If an orderly liquidation of a systemically important BHC or non-bank financial company
were triggered, M&T could face assessments for the Orderly Liquidation Fund (“OLF”).

Credit Risk

• Deteriorating credit quality could adversely impact the Company.
• The Company may be adversely affected by the soundness of other financial institutions.

Liquidity Risk

• The Company must maintain adequate sources of funding and liquidity.
•

If the Company is unable to maintain or grow its deposits, it may be subject to paying higher
funding costs.

• M&T relies on dividends from its subsidiaries for its liquidity.

Strategic Risk

• The financial services industry is highly competitive and creates competitive pressures that

could adversely affect the Company’s revenue and profitability.

• Difficulties in obtaining regulatory approval for acquisitions and in combining the operations
of acquired entities with the Company’s own operations may prevent M&T from achieving
the expected benefits from its acquisitions.

• M&T could suffer if the Company fails to attract and retain skilled personnel.

Operational Risk

• The Company is subject to operational risk which could adversely affect the Company’s

business and reputation and create material legal and financial exposure.

• The Company’s information systems may experience interruptions or breaches in security,

including due to events beyond the Company’s control.

• The Company could incur higher costs, experience lower revenue, and suffer reputational
damage in the event of the theft, loss or misuse of information, including due to a cyber
security attack.

• The Company is subject to laws and regulations relating to the privacy of the information of
clients, employees or others, and any failure to comply with these laws and regulations could
expose the Company to liability and/or reputational damage.

• M&T relies on other companies to provide key components of the Company’s business

infrastructure.

• The Company is or may become involved from time to time in suits, legal proceedings,

information-gathering requests, investigations and proceedings by governmental and self-
regulatory agencies that may lead to adverse consequences.

Business Risk

• Changes in accounting standards could impact the Company’s financial condition and results

of operations.

• The Company’s reported financial condition and results of operations depend on

management’s selection of accounting methods and require management to make estimates
about matters that are uncertain.

• The Company’s models used for business planning purposes could perform poorly or provide

inadequate information.

• The Company is exposed to reputational risk.
• The Company’s framework for managing risks may not be effective.
• Pandemics, acts of war or terrorism and other adverse external events could significantly

impact the Company’s business.

• The Company’s assets, communities, operations, reputation and customers could be

adversely affected by the impacts of climate risk

Risk Factors
M&T and its subsidiaries face a number of potential risks and uncertainties that are difficult to
predict. As a financial institution, certain risk elements are inherent in the ordinary course of the
Company’s business activities and adverse experience with those risks could have a material impact
on the Company’s business, financial condition, liquidity and results of operations, as well as on the
values of the Company’s financial instruments and M&T’s securities, including its common stock.
The following risk factors set forth some of the risks that could materially and adversely impact the
Company, although there may be additional risks that are not presently material or known that may
adversely affect the Company. These risk factors include risks relating to M&T’s acquisition of
People’s United pursuant to an agreement and plan of merger, dated February 21, 2021, by and
among M&T, Bridge Merger Corp., a direct, wholly owned subsidiary of M&T, and People’s United
(the “merger agreement” and, such transaction, the “merger”).

Risks Related to the Merger with People’s United

M&T is expected to incur significant costs related to the merger and integration.

M&T has incurred and expects to incur significant, non-recurring costs in connection with
negotiating the merger agreement and closing the merger. In addition, M&T will incur integration
costs following the completion of the merger as M&T integrates the People’s United business,
including facilities and systems consolidation costs and employment-related costs.

There can be no assurances that the expected benefits and efficiencies related to the integration

of the businesses will be realized to offset these transaction and integration costs over time. M&T
may also incur additional costs to maintain employee morale and to retain key employees. M&T will
also incur significant legal, financial advisory, accounting, banking and consulting fees, fees relating
to regulatory filings and notices, SEC filing fees, printing and mailing fees and other costs associated
with the merger. Some of these costs are payable regardless of whether the merger is completed.

Combining M&T and People’s United may be more difficult, costly or time-consuming than
expected, and M&T may fail to realize the anticipated benefits of the merger.

The success of the merger will depend, in part, on the ability to realize the anticipated cost savings
from combining the businesses of M&T and People’s United. To realize the anticipated benefits and
cost savings from the merger M&T and People’s United must integrate and combine their businesses
in a manner that permits cost savings to be realized, without adversely affecting revenues and future
growth. If M&T and People’s United are not able to successfully achieve these objectives, the
anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than
expected. In addition, the actual cost savings of the merger could be less than anticipated, and
integration may result in additional and unforeseen expenses.

An inability to realize the full extent of the anticipated benefits of the merger and the other

transactions contemplated by the merger agreement, as well as any delays encountered in the
integration process, could have an adverse effect upon the revenues, levels of expenses and operating
results of M&T following the completion of the merger, which may adversely affect the value of
M&T’s common stock following the completion of the merger.

M&T and People’s United have operated and, until the completion of the merger, must
continue to operate, independently. It is possible that the integration process could result in the loss
of key employees, the disruption of each company’s ongoing businesses or inconsistencies in
standards, controls, procedures and policies that adversely affect the companies’ abilities to maintain
relationships with clients, customers, depositors and employees or to achieve the anticipated benefits
and cost savings of the merger. Integration efforts between the two companies may also divert

management attention and resources. These integration matters could have an adverse effect on M&T
during this transition period and for an undetermined period after completion of the merger.

M&T may be unable to retain M&T and/or People’s United personnel successfully.

The success of the merger will depend in part on M&T’s ability to retain the talents and dedication of
key employees currently employed by M&T and People’s United. It is possible that these employees
may decide not to remain with M&T or People’s United, as applicable, while the merger is pending
or with M&T after the merger is completed. If M&T and People’s United are unable to retain key
employees, including management, who are critical to the successful integration and future
operations of the companies, M&T and People’s United could face disruptions in their operations,
loss of existing customers, loss of key information, expertise or know-how and unanticipated
additional recruitment costs. In addition, following the merger, if key employees terminate their
employment, M&T’s business activities may be adversely affected, and management’s attention may
be diverted from successfully integrating M&T and People’s United to hiring suitable replacements,
all of which may cause M&T’s business to suffer. In addition, M&T and People’s United may not be
able to locate or retain suitable replacements for any key employees who leave either company.

The COVID-19 pandemic may delay and adversely affect the completion of the merger.

The COVID-19 pandemic has created economic and financial disruptions that have adversely
affected, and are likely to continue to adversely affect, the business, financial condition, liquidity,
capital and results of operations of M&T and People’s United. If the effects of the COVID-19
pandemic cause a continued or extended decline in the economic environment and the financial
results of M&T or People’s United, or the business operations of M&T or People’s United are further
disrupted as a result of the COVID-19 pandemic, efforts to complete the merger and integrate the
businesses of M&T and People’s United may also be delayed and adversely affected. Additional time
may be required to obtain the requisite regulatory approval, and the Board of Governors of the
Federal Reserve System (the “Federal Reserve Board”) may impose additional requirements on
M&T or People’s United that must be satisfied prior to completion of the merger, which could delay
and adversely affect the completion of the merger.

Regulatory approval from the Federal Reserve Board may not be received, may take longer than
expected, or may impose conditions that are not presently anticipated or that could have an adverse
effect on M&T following the merger.

Before the merger and the other transactions contemplated by the merger agreement may be
completed, certain regulatory approvals must be obtained. Approvals from the New York State
Department of Financial Services and the State of Connecticut Department of Banking, among other
regulatory approvals, have been received but the transaction remains subject to approval from the
Federal Reserve Board. That approval could be delayed or not obtained at all, including due to: an
adverse development in either party’s regulatory standing or in any other factors considered by
regulators when granting such approval, including factors not known at the present time and factors
that may arise in the future; governmental, political or community group inquiries, investigations or
opposition; or changes in legislation or the political environment generally. The Federal Reserve
Board has stated that if material weaknesses are identified by examiners before a banking
organization applies to engage in expansionary activity, the Federal Reserve Board will expect the
banking organization to resolve all such weaknesses before applying for such expansionary activity.
The Federal Reserve Board has also stated that if issues arise during the processing of an application
for expansionary activity, it will expect the applicant banking organization to withdraw its
application pending resolution of any supervisory concerns.

Any Federal Reserve Board approval, if granted, may impose terms and conditions,
limitations, obligations or costs, or place restrictions on the conduct of M&T’s business or require
changes to the terms of the transactions contemplated by the merger agreement. There can be no
assurance that the regulator will not impose any such conditions, limitations, obligations or
restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of
delaying the completion of any of the transactions contemplated by the merger agreement, imposing
additional material costs on or materially limiting the revenues of M&T following the merger or
otherwise reduce the anticipated benefits of the merger if the merger were consummated successfully
within the expected timeframe. In addition, there can be no assurance that any such conditions, terms,
obligations or restrictions will not result in the delay or abandonment of the merger. Additionally, the
completion of the merger is conditioned on the absence of certain orders, injunctions or decrees by
any court or regulatory agency of competent jurisdiction that would prohibit or make illegal the
completion of any of the transactions contemplated by the merger agreement.

In addition, despite the parties’ commitments to use their reasonable best efforts to comply
with conditions imposed by regulators, under the terms of the merger agreement, M&T will not be
required, and People’s United will not be permitted without M&T’s prior written consent, to take
actions or agree to conditions in connection with obtaining the foregoing permits, consents, approvals
and authorizations of governmental entities that would reasonably be expected to have a material
adverse effect on M&T and its subsidiaries, taken as a whole, after giving effect to the merger.

Failure to complete the merger could negatively impact M&T.

If the merger is not completed for any reason, there may be various adverse consequences and M&T
may experience negative reactions from the financial markets and from its customers and employees.
For example, M&T’s business may have been impacted adversely by the failure to pursue other
beneficial opportunities due to the focus of management on the merger, without realizing any of the
anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated,
the market price of M&T common stock could decline to the extent that the current market price of
M&T common stock reflects a market assumption that the merger will be beneficial to M&T and will
be completed. M&T could be subject to litigation related to any failure to complete the merger or to
proceedings commenced against M&T to perform its obligations under the merger agreement. If the
merger agreement is terminated under certain circumstances, M&T may be required to pay a
termination fee of $280 million to People’s United.

Additionally, M&T has incurred and will incur substantial expenses in connection with the

negotiation and completion of the transactions contemplated by the merger agreement, as well as the
costs and expenses of preparing, filing, printing and mailing the joint proxy statement/prospectus for
the merger, and all filing and other fees paid in connection with the merger. If the merger is not
completed, M&T would have incurred these expenses without realizing the expected benefits of the
merger.

M&T is subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect
on M&T. These uncertainties may impair M&T’s ability to attract, retain and motivate key personnel
until the merger is completed, and could cause customers and others that deal with M&T to seek to
change existing business relationships with M&T. In addition, subject to certain exceptions, M&T
has agreed to refrain from taking certain actions that may adversely affect its ability to consummate
the merger on a timely basis without People’s United’s consent. These restrictions may prevent M&T
from pursuing attractive business opportunities that may arise prior to the completion of the merger.

Litigation related to the merger has been filed against People’s United, the People’s United board of
directors and M&T, and additional litigation may be filed against People’s United, the People’s
United board of directors, M&T and the M&T board of directors in the future. Among other
remedies, litigation that has been filed seeks, and additional litigation by shareholders of M&T
and/or stockholders of People’s United in the future may seek damages and/or to enjoin the merger
or the other transactions contemplated by the merger agreement. The outcome of any litigation is
uncertain. If any plaintiff were successful in obtaining an injunction prohibiting M&T or People’s
United from completing the merger or any other transactions contemplated by the merger agreement,
then such injunction may delay or prevent the effectiveness of the merger and could result in
significant costs to M&T, including costs in connection with the defense or settlement of any
shareholder lawsuits filed in connection with the merger. Further, such lawsuits and the defense or
settlement of any such lawsuits may have an adverse effect on the financial condition and results of
operations of M&T.

Risks Relating to COVID-19 Pandemic

M&T’s business, financial condition, capital and results of operations have been, and will likely
continue to be, adversely affected by the COVID-19 pandemic.

The COVID-19 pandemic has caused severe disruption to the U.S. and global economy and created
significant volatility in the financial markets. The duration of this disruption and impact cannot be
reasonably estimated at this time.

The pandemic has created economic and financial disruptions that have adversely affected, and

are likely to continue to adversely affect, the Company’s business, financial condition, capital and
results of operations. The extent to which the COVID-19 pandemic will continue to negatively affect
the Company’s business, financial condition, capital and results of operations will depend on future
developments, including the scope and duration of the pandemic, the emergence of new variants, the
effectiveness and distribution of vaccines and other public health measures, the continued
effectiveness of M&T’s business continuity plans, the direct and indirect impact of the pandemic on
the Company’s employees, customers, clients, counterparties, vendors, service providers and other
market participants, and actions taken by governmental authorities and other third parties in response
to the pandemic, all of which are highly uncertain and cannot be reasonably predicted.

Although economic and market conditions have generally improved during 2021, the COVID-
19 pandemic, including associated variants, has, at times, resulted in adverse economic and market
conditions. Depending on the duration and severity of the pandemic on general economic and
market conditions, consumer and corporate spending and investment and borrowing patterns, there is
a risk that adverse conditions could occur, including the following:

•

Increased unemployment levels, interrupted income of consumers and decreased consumer
confidence generally, leading to an increased risk of delinquencies, defaults and
foreclosures;
Increased disruption to businesses, permanent or temporary closure of businesses and
decreased business confidence generally, leading to increased risk of delinquencies,
defaults and bankruptcies;

•

•
•
•
•

•

An initial sudden and significant reduction in the valuation of the equity, fixed-income and
commodity markets and the significant increase in the volatility of those markets;
A decrease in the rates and yields on U.S. Treasury securities, which could negatively
impact the Company’s net interest income and margin;
Higher inflation and supply chain disruptions;
Declines in collateral values;
Increased demands on capital and liquidity;
Heightened cybersecurity, information security and operational risks to the Company,
including as a result of remote work arrangements for employees and increased digital and
mobile banking activities by customers;
Disruptions to the business operations of the Company, including temporary branch
closures and disruptions to branch and office openings, supply chains and employee travel
and working arrangements; and
Disruptions to business operations at counterparties, vendors and other service providers.

The pandemic is likely to continue to contribute to these risks and impacts and could affect

geographic areas in which the Company operates differently as further noted herein under “Market
Risk” and “Credit Risk.” As a result, the Company’s credit, liquidity, market, operational and other
risks are generally expected to remain elevated until the pandemic subsides. In addition, the
Company’s business operations continue to be at risk of adverse disruption if significant portions of
the Company’s workforce are unable to work effectively, including because of illness, quarantines,
government actions, failures in systems or technology that disrupt remote work arrangements or
other effects of the pandemic, or if the Company is unable to keep branches or offices open,
including because of risk of infection. The Company faces similar risks if its counterparties, vendors
and other service providers are unable to maintain operations due to pandemic-related disruptions.
The pandemic may also delay or adversely affect M&T’s efforts to complete the merger and integrate
the businesses of the Company and People’s United, if the effects of the COVID-19 pandemic cause
a continued or extended decline in the economic environment and the financial results of M&T or
People’s United or cause further disruption to the business operations of the Company or People’s
United.

Governmental authorities have taken unprecedented measures to provide economic assistance to

individual households and businesses, stabilize the markets and support economic growth. The
success of those measures is not yet entirely known and those measures, or additional measures that
may be introduced, may not be sufficient to fully mitigate the negative impact of the COVID-19
pandemic. Additionally, some measures, such as a suspension of mortgage and other loan payments
and foreclosures, may have a negative impact on the Company’s business, financial condition,
liquidity, capital and results of operations. If such measures are not effective in mitigating the effects
of the COVID-19 pandemic on the Company’s borrowers, the Company may also experience higher
rates of default and increased credit losses in future periods. The Company also faces an increased
risk of litigation and governmental and regulatory scrutiny as a result of the effects of the COVID-19
pandemic on market and economic conditions and actions governmental authorities take in response
to those conditions. Furthermore, various government programs such as the Paycheck Protection
Program are complex and the Company’s participation may lead to litigation and governmental,
regulatory and third party scrutiny, negative publicity and damage to its reputation.

The length of the pandemic and the efficacy of the measures being put in place to address it are

unknown. It is unknown when there will be a return to normal business activity and a subsiding of
the economic stress associated with the pandemic. Prolonged continuation of the pandemic could
worsen these risks and impacts. Until the pandemic subsides, the Company may experience reduced
revenues in certain of its fee-related businesses and increased customer and client defaults, including
defaults in unsecured loans. Even after the pandemic subsides, the U.S. economy may experience a
prolonged economic slowdown or recession, and M&T anticipates the Company’s businesses would
be materially and adversely affected by a prolonged economic slowdown or recession. To the extent
the pandemic adversely affects the Company’s business, financial condition, liquidity, capital or
results of operations, it may also have the effect of heightening many of the other risks described in
this “Risk Factors” section and M&T’s other filings with the Securities and Exchange Commission,
including the Company’s business and operations following the completion of the merger with
People’s United.

Market Risk

Weakness in the economy has adversely affected the Company in the past and may adversely affect
the Company in the future.

Poor business and economic conditions in general or specifically in markets served by the Company
could have adverse effects on the Company’s business including:

•

•
•
•

A decrease in the demand for loans and other products and services offered by the
Company.
A decrease in net interest income derived from the Company’s lending and deposit
gathering activities.
A decrease in the value of the Company’s investment securities, loans held for sale or
other assets secured by residential or commercial real estate.
A decrease in fees from the Company’s brokerage, trust, and investment management
businesses associated with declines or lack of growth in stock market prices.
Potential higher FDIC assessments due to the DIF falling below minimum required levels.
An impairment of certain intangible assets, such as goodwill.
An increase in the number of customers and counterparties who become delinquent, file
for protection under bankruptcy laws or default on their loans or other obligations to the
Company. An increase in the number of delinquencies, bankruptcies or defaults could
result in higher levels of nonperforming assets, net charge-offs, provision for credit losses
as well as impairment write-downs of certain investment securities and valuation
adjustments on loans held for sale.

Volatility and uncertainty related to inflation and the effects of inflation, which may lead to

increased costs for businesses and consumers and potentially contribute to poor business and
economic conditions generally, may also enhance or contribute to some of the risks discussed herein.
For example, higher inflation, or volatility and uncertainty related to inflation, could reduce demand
for the Company’s products, adversely affect the creditworthiness of the Company’s borrowers or
result in lower values for the Company’s investment securities and other interest-earning assets.

The Company’s business and financial performance is impacted significantly by market interest rates
and movements in those rates. The monetary, tax and other policies of governmental agencies,
including the Federal Reserve, have a significant impact on interest rates and overall financial
market performance over which the Company has no control and which the Company may not be
able to anticipate adequately.

As a result of the high percentage of the Company’s assets and liabilities that are in the form of
interest-bearing or interest-related instruments, changes in interest rates, including in the shape of the
yield curve or in spreads between different market interest rates, as well as changes linked to
inflation, can have a material effect on the Company’s business and profitability and the value of the
Company’s assets and liabilities.

For example, changes in interest rates or interest rate spreads may:
•

Affect the difference between the interest that the Company earns on assets and the
interest that the Company pays on liabilities, which impacts the Company’s overall net
interest income and profitability.
Adversely affect the ability of borrowers to meet obligations under variable or adjustable
rate loans and other debt instruments, which, in turn, affects the Company’s loss rates on
those assets.
Decrease the demand for interest rate-based products and services, including loans and
deposits.
Affect the Company’s ability to hedge various forms of market and interest rate risk and
may decrease the profitability or protection or increase the risk or cost associated with
such hedges.
Affect mortgage prepayment speeds and could result in the impairment of capitalized
mortgage servicing assets, reduce the value of loans held for sale and increase the
volatility of mortgage banking revenues, potentially adversely affecting the Company’s
results of operations.

•

The monetary, tax and other policies of the government and its agencies, including the Federal
Reserve, have a significant impact on interest rates and overall financial market performance. These
governmental policies can thus affect the activities and results of operations of banking organizations
such as the Company. An important function of the Federal Reserve is to regulate the national supply
of bank credit and certain interest rates. The actions of the Federal Reserve influence the rates of
interest that the Company charges on loans and that the Company pays on borrowings and interest-
bearing deposits and can also affect the value of the Company’s on-balance sheet and off-balance
sheet financial instruments. Also, due to the impact on rates for short-term funding, the Federal
Reserve’s policies influence, to a significant extent, the Company’s cost of such funding.

In addition, the Company is routinely subject to examinations from various governmental
taxing authorities. Such examinations may result in challenges to the tax return treatment applied by
the Company to specific transactions. Management believes that the assumptions and judgment used
to record tax-related assets or liabilities have been appropriate. Should tax laws change or the tax
authorities determine that management’s assumptions were inappropriate, the result and adjustments
required could have a material effect on the Company’s results of operations. M&T cannot predict
the nature or timing of future changes in monetary, tax and other policies or the effect that they may
have on the Company’s business activities, financial condition and results of operations.

The discontinuation of LIBOR as a permissible rate index in new contracts after 2021, the formal
announcement of LIBOR’s cessation date (June 30, 2023), and ongoing uncertainty related to the
emergence of one or more alternative benchmark indices to replace LIBOR, could adversely impact
the Company’s business and results of operations.

The Company’s floating-rate funding, certain hedging transactions and a significant portion of the
Company’s products, such as floating-rate loans and mortgages, determine the applicable interest rate
or payment amount by reference to a benchmark rate, such as the London Interbank Offered Rate
(“LIBOR”), or to an alternative index, currency, basket or other financial metric.

In July 2017, the Chief Executive of the Financial Conduct Authority (“FCA”), which regulates
LIBOR, announced that the FCA intended to stop persuading or compelling its panel banks to submit
rates for the calculation of LIBOR after 2021. This announcement created market uncertainty as to
whether and to what extent panel banks would continue to provide submissions for the calculation of
LIBOR after 2021 and as to the continued existence of LIBOR after 2021. The uncertainty lessened
in November 2020, when (i) public statements issued by the ICE Benchmark Administration
(“IBA”), the administrator of LIBOR, and the FCA, announced a proposal to, among other things,
extend the publication of the most commonly utilized tenors of USD LIBOR until June 30, 2023, and
(ii) a joint-statement of the federal bank regulators, including the Federal Reserve, indicated support
for the IBA proposal and encouraged banks to (a) transition away from USD LIBOR as soon as
practicable, (b) cease (with limited exceptions) entering into new contracts that use USD LIBOR as a
reference rate as soon as practicable and no later than December 31, 2021, and (c) for new contracts
entered into before December 31, 2021, either utilize a reference rate other than USD LIBOR or
include robust fallback language that includes a clearly defined alternative reference rate after USD
LIBOR’s discontinuation, noting that failure to do so would create safety and soundness risks. On
March 5, 2021, public statements by the FCA and IBA confirmed the future cessation (or non-
representativeness) of all USD LIBOR tenors, and specifically, the June 30, 2023 cessation date for
the most commonly utilized USD LIBOR tenors, after which USD LIBOR will either no longer exist
or no longer be representative of the underlying market it is intended to measure.

Following the initial FCA announcement in 2017, regulators and various financial industry
groups sponsored or formed committees (e.g., the Federal Reserve-sponsored Alternative Reference
Rates Committee (“AARC”)) to, among other things, facilitate the identification of an alternative
benchmark index to replace LIBOR, and publish recommended practices for transitioning the market
away from LIBOR, including (i) the utilization of recommended fallback language for LIBOR-linked
financial instruments, and (ii) development of alternative pricing methodologies for recommended
alternative benchmarks such as the Secured Overnight Financing Rate (“SOFR”). In 2020, the ARRC
finalized and issued recommendations for the use of so-called “hardwired” LIBOR fallback language
that, when incorporated into existing LIBOR-based loan documents, provides for, upon LIBOR’s
permanent cessation (or an announcement from LIBOR’s administrator or certain governmental
authorities that LIBOR is no longer representative of the underlying market), the replacement of
LIBOR with SOFR as the benchmark index, with an appropriate spread adjustment that is
representative of the historical difference between LIBOR and SOFR, which when added to SOFR
would be intended to facilitate a value-neutral transition. In April 2021, M&T adopted hardwired
fallback language modeled after the ARRC recommendations for use in all new LIBOR loans.

SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury
securities, and is based on directly observable U.S. Treasury-based repurchase transactions. The fact
that SOFR is a secured overnight rate and considered a “risk free” rate, while LIBOR is an unsecured
term rate that factors in credit risk, means that SOFR may perform differently than LIBOR, and those
differences may be material, particularly in times of economic stress, negatively impacting the
Company’s profitability.

Over the past few years, the AARC’s recommendations and proposals have evolved, and the
Company has continued to monitor both ARRC and general market developments. While the ARRC
has maintained its recommendation that SOFR is the preferred replacement for LIBOR, some
industry participants are questioning whether a “risk free” SOFR rate is an ideal replacement for
LIBOR in the commercial lending market and suggesting that a credit-sensitive component or
alternative be considered and developed. One such credit sensitive alternative is the Bloomberg
Short-Term Bank Yield Index (BSBY), which gained some increased attention and use in the
business loan market in the latter half of 2021. Whether BSBY or other alternatives develop and gain
any significant traction in the market are unknown and unpredictable at this time, and this adds

further uncertainty to the LIBOR transition process, both with respect to amending existing LIBOR
contracts and pricing new contracts based on SOFR or an alternative reference rate going forward.

LIBOR cessation is also impacting the derivatives market. In October 2020, The International

Swaps and Derivatives Association, Inc. (ISDA), published the IBOR Fallbacks Supplement
(Supplement) and IBOR Fallbacks Protocol (Protocol). The Supplement, which became effective on
January 25, 2021, amends existing standard definitions for interest rate derivatives to incorporate
robust fallbacks to the SOFR benchmark for derivatives linked to LIBOR. The Protocol enables
market participants to incorporate these revisions into their legacy non-cleared derivatives trades
with other counterparties that choose to adhere to the Protocol. The fallbacks apply following a
permanent cessation of LIBOR or following a determination by the FCA that LIBOR is no longer
representative of the underlying market. M&T and M&T Bank adhered to the Protocol on November
5, 2020, and the Company is in the process of remediating its interest rate swap hedging transactions
with its end user customers, i.e., borrowers who have hedged their interest rate payment obligations.
If the Company is not able to agree to appropriate LIBOR fallbacks with these customers, there will
be uncertainty as to how to value and effect the Company’s rights and obligations under legacy
derivatives contracts. With respect to the Company’s cleared interest rate derivatives that reference
LIBOR, both the CME and LCH clearinghouses have adopted the same relevant SOFR benchmark
fallbacks of the Supplement and Protocol which also became effective on January 25, 2021.

The Company has outstanding issuances, or acts as an administrative (or calculation) agent or in

other capacities, across various maturities of securities referencing LIBOR in which the underlying
contracts do not contemplate cessation or contemplate cessation but do so in a manner that may
create other risks (“Tough Legacy Contracts”). Some of these contracts provide for selecting
replacement rates in a manner that presents significant challenges or that gives the Company or
another party discretion to select a rate or provide for determination of a reference rate. In April
2021, the New York State legislature passed Senate Bill 297B/Assembly Bill 164B which allows
certain New York State law governed Tough Legacy Contracts to transition to SOFR, as the statutory
benchmark replacement rate, by operation of law. Similarly, the United States Congress is currently
considering the Adjustable Interest Rate (LIBOR) Act of 2021 (H.R. 4616) which, if enacted, would
have an analogous effect on the transition of Tough Legacy Contracts, but would expand the
applicability beyond the State of New York to contracts governed by the laws of any state, the
District of Columbia, or any territory or possession of the United States. Notwithstanding the
availability or potential availability of statutory frameworks to address Tough Legacy Contracts,
there will likely be continued uncertainty surrounding the transition as these frameworks have not
been tested and their effectiveness and ultimate impact is not certain.

The discontinuation of LIBOR as a benchmark could result in changes to the Company’s risk

exposures (for example, if the anticipated discontinuation of LIBOR adversely affects the availability
or cost of floating-rate funding and, therefore, the Company’s exposure to fluctuations in interest
rates) or otherwise result in losses on a product or having to pay more or receive less on securities
that the Company has issued or owns. A substantial portion of the Company’s on- and off-balance
sheet financial instruments (many of which have terms that extend beyond 2023) are indexed to
LIBOR, including interest rate swap agreements and other contracts used for hedging and trading
account purposes, loans to commercial customers and consumers (including mortgage loans and
other loans), and long-term borrowings. Uncertainty as to the impact of the discontinuation of
LIBOR, the replacement of LIBOR with an alternative index, and the operational feasibility of
amending existing contracts referencing LIBOR to include hardwired LIBOR fallback language
referencing a new replacement index could result in pricing volatility, loss of market share in certain
products, adverse tax or accounting impacts, and compliance, legal and operational costs and risks.
The market’s transition from LIBOR to an alternative reference rate will be complex and

unpredictable, giving rise to a variety of risks, including operational risks, risks of value transfer

between contract parties, the potential for customer disputes and litigation, as well as regulatory
scrutiny, as the most recent regulatory announcements indicate that there will be increased regulatory
focus on LIBOR transition in 2022 and beyond. The Company established an enterprise-wide LIBOR
transition program in 2019, which now includes a LIBOR Transition Office with senior management
level leadership and dedicated full-time employee staffing. An impact assessment has been
completed to identify on- and off-balance sheet exposures, systems, processes, models, customers,
and employees affected by the discontinuation of LIBOR. The Company continues to develop and
execute plans to transition products and contracts associated with LIBOR to alternative reference
rates.

The Company’s business and performance is vulnerable to the impact of volatility in debt and equity
markets.

As most of the Company’s assets and liabilities are financial in nature, the Company’s performance
is sensitive to the performance of the financial markets. Turmoil and volatility in U.S. and global
financial markets can be a major contributory factor to overall weak economic conditions, leading to
some of the risks discussed herein, including the impaired ability of borrowers and other
counterparties to meet obligations to the Company. Financial market volatility may:

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Affect the value or liquidity of the Company’s on-balance sheet and off-balance sheet
financial instruments.
Affect the value of capitalized servicing assets.
Affect M&T’s ability to access capital markets to raise funds. Inability to access capital
markets if needed, at cost effective rates, could adversely affect the Company’s liquidity
and results of operations.
Affect the value of the assets that the Company manages or otherwise administers or
services for others. Although the Company is not directly impacted by changes in the
value of such assets, decreases in the value of those assets would affect related fee income
and could result in decreased demand for the Company’s services.
Impact the nature, profitability or risk profile of the financial transactions in which the
Company engages.

Volatility in the markets for real estate and other assets commonly securing financial products

has been and may continue to be a significant contributor to overall volatility in financial markets. In
addition, unfavorable or uncertain economic and market conditions can be caused by the imposition
of tariffs or other limitations on international trade and travel, as well as elevated inflation, which can
result in market volatility, negatively impact client activity, and adversely affect the Company’s
financial condition and results of operations.

The Company’s regional concentrations expose it to adverse economic conditions in its primary
retail banking office footprint.

The Company’s core banking business is largely concentrated within the Company’s retail banking
office network footprint, located principally in New York, Maryland, New Jersey, Pennsylvania,
Delaware, Connecticut, Virginia, West Virginia and the District of Columbia. Therefore, the
Company is, or in the future may be, particularly vulnerable to adverse changes in economic
conditions in the Northeast and Mid-Atlantic regions. The credit quality of the Company’s borrowers
may deteriorate for a number of reasons that are outside the Company’s control, including as a result
of prevailing economic and market conditions and asset valuations. The trends and risks affecting
borrower credit quality, particularly in the Northeast and Mid-Atlantic regions, have caused, and in
the future may cause, the Company to experience impairment charges, which are drastic reductions

in the recoverable value of an asset, increased purchase demands, wherein customers make
withdrawals with minimum notice, higher costs (e.g., servicing, foreclosure, property maintenance),
additional write-downs and losses and a potential impact to engage in lending transactions based on a
reduction of customer deposits, which could have a material adverse effect on the Company’s
business, financial condition and results of operations.

Risks Relating to Compliance and the Regulatory Environment

The Company is subject to extensive government regulation and supervision and this regulatory
environment can be and has been significantly impacted by financial regulatory reform initiatives.

The Company is subject to extensive federal and state regulation and supervision. Banking
regulations are primarily intended to protect consumers, depositors and the financial system as a
whole, not securities holders, including the holders of common stock. These regulations and
supervisory guidance affect the Company’s sale and lending practices, capital structure, capital
distributions and dividend policy, investment practices, growth and expansionary activity, among
other things. Failure to comply with laws, regulations or policies, or to meet supervisory
expectations, could result in civil or criminal penalties, including monetary penalties, the loss of
FDIC insurance, the revocation of a banking charter, other sanctions by regulatory agencies, and/or
reputational damage, which could have a material adverse effect on the Company’s business,
financial condition and results of operations. In this regard, government authorities, including the
bank regulatory agencies, can pursue aggressive enforcement actions with respect to compliance and
other legal matters involving financial activities, which heightens the risks associated with actual and
perceived compliance failures and may also adversely affect the Company’s ability to enter into
certain transactions or engage in certain activities, or obtain necessary regulatory approvals in
connection therewith. In general, the amounts paid by financial institutions in settlement of
proceedings or investigations have increased substantially and are likely to remain elevated. In some
cases, governmental authorities have required criminal pleas or admissions of wrongdoing as part of
such settlements, which could have significant collateral consequences for a financial institution,
including loss of customers, restrictions on the ability to access the capital markets, and the inability
to operate certain businesses or offer certain products for a period of time. In addition, enforcement
matters could impact the Company’s supervisory and CRA ratings, which may in turn restrict or limit
the Company’s activities. A prior enforcement action also increases the risk that regulators and
governmental authorities pursue formal enforcement actions in connection with the resolution of an
inquiry or investigation, even if unrelated to the prior enforcement action.

Any new regulatory requirements, changes to existing requirements, or changes to
interpretations of requirements could require changes to the Company’s businesses, result in
increased compliance costs and affect the profitability of such businesses. Additionally, such activity
could affect the behaviors of third parties with which the Company deals in the ordinary course of
business, such as rating agencies, insurance companies and investors. Heightened regulatory scrutiny,
requirements or expectations could affect the Company in substantial and unpredictable ways, and, in
turn, could have a material adverse effect on the Company’s business, financial condition and results
of operations.

There have been significant revisions to the laws and regulations applicable to the Company

that have been enacted or proposed in recent years, and additional proposed changes are anticipated.
Many of these and other rules to implement the changes have yet to be finalized, and the final timing,
scope and impact of these changes to the regulatory framework applicable to financial institutions
remain uncertain. For more information on the regulations to which the Company is subject and
recent initiatives to reform financial institution regulation, see Part I, Item 1 — Business in this
report.

M&T may be subject to more stringent capital and liquidity requirements.

Bank holding companies, including M&T, are subject to capital and liquidity requirements and
standards imposed as a result of the Dodd-Frank Act (as amended by EGRRCPA) and the U.S. Basel
III-based capital rules. For additional information, see “Capital Requirements” under Part I,
Item 1 — Business.

Regulators have and may, from time to time, implement changes to these regulatory capital
adequacy and liquidity requirements. If the Company fails to meet these minimum capital adequacy
and liquidity requirements and other regulatory requirements, its business activities, including
lending, and its ability to expand, either organically or through acquisitions, could be limited. It could
also result in M&T being required to take steps to increase its regulatory capital that may be dilutive
to shareholders or limit its ability to pay dividends or otherwise return capital to shareholders, or sell
or refrain from acquiring assets. In addition, the liquidity-related provisions of the Federal Reserve’s
liquidity-related enhanced prudential supervision requirements may reduce the Company’s ability to
invest in other longer-term assets even if deemed more desirable from a balance sheet management
perspective, which could adversely affect its net interest income and net interest margin.

The federal bank regulators have not yet released a proposal to implement the significant
revisions of the Basel capital framework announced by the Basel Committee in December 2017, and
the impact on the Company of these revisions will depend on the manner in which they are
implemented in the U.S. with respect to firms such as M&T.

M&T’s ability to return capital to shareholders and to pay dividends on common stock may be
adversely affected by market and other factors outside of its control and will depend, in part, on the
results of supervisory stress tests administered by the Federal Reserve.

Any decision by M&T to return capital to shareholders, whether through a common stock dividend
or a common stock share repurchase program, requires the approval of M&T’s Board of Directors
and must comply with applicable capital regulations, including the maintenance of capital ratios
exceeding specified minimum levels and applicable buffers.

For bank holding companies designated as Category IV institutions under the Tailoring Rules,

including M&T, the Federal Reserve conducts biennial supervisory stress tests required under the
Dodd-Frank Act whereby the BHC’s financial position is tested under assumed severely adverse
economic conditions. The results of those stress tests are incorporated in the determination of M&T’s
Stress Capital Buffer. As a general matter, if M&T is unable to maintain capital in excess of
regulatory minimum levels inclusive of its Stress Capital Buffer, it would be subject to limitations on
its ability to make capital distributions, including paying dividends and repurchasing stock. In August
2021, the Federal Reserve Board provided M&T with a Stress Capital Buffer of 2.5%, representing
the floor under the regulatory capital rules, which became applicable to M&T on October 1, 2021.
The results of future supervisory stress tests are uncertain, and a more severe outcome may result in a
higher Stress Capital Buffer and an increase in M&T’s effective capital requirements. An increased
Stress Capital Buffer may restrict M&T’s ability to return capital to shareholders, including through
paying dividends, entering into acquisitions or repurchasing its common stock, which in turn could
negatively impact market and investor perceptions of M&T.

In addition, during 2020 and the first half of 2021, the Federal Reserve implemented measures

requiring all large bank holding companies to preserve capital through limitations on share
repurchase programs and common stock dividends. While these restrictions are no longer applicable,
the Federal Reserve may implement similar restrictions in the future, including in response to adverse
or uncertain economic conditions. Also, if, as in June 2020, the Company is required to resubmit its
capital plan, the Company generally may not make capital distributions, such as share repurchases or
dividends, without the prior approval of the Federal Reserve.

If an orderly liquidation of a systemically important BHC or non-bank financial company were
triggered, M&T could face assessments for the Orderly Liquidation Fund (“OLF”).

The Dodd-Frank Act created a mechanism, the OLF, for liquidation of systemically important bank
holding companies and non-bank financial companies. The OLF is administered by the FDIC and is
based on the FDIC’s bank resolution model. The Secretary of the U.S. Treasury may trigger a
liquidation under this authority after consultation with the President of the U.S. and after receiving a
recommendation from the boards of the FDIC and the Federal Reserve upon a two-thirds vote.
Liquidation proceedings will be funded by the OLF, which will borrow from the U.S. Treasury and
impose risk-based assessments on covered financial companies. Risk-based assessments would be
first made on entities that received more in the resolution than they would have received in the
liquidation to the extent of such excess, and second, if necessary, on, among others, bank holding
companies with total consolidated assets of $50 billion or more, such as M&T. Any such assessments
may adversely affect the Company’s business, financial condition or results of operations.

Credit Risk

Deteriorating credit quality could adversely impact the Company.

As a lender, the Company is exposed to the risk that customers will be unable to repay their loans
and other obligations in accordance with the terms of the relevant agreements, and that any collateral
securing the loans and obligations may be insufficient to assure full repayment. Credit losses are
inherent in the business of making loans and entering into other financial arrangements.

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. Factors
that can influence the Company’s credit loss experience include: (i) the impact of residential real
estate values on loans to residential real estate builders and developers and other loans secured by
residential real estate; (ii) the concentrations of commercial real estate loans in the Company’s loan
portfolio, including in the New York City area; (iii) the amount of commercial and industrial loans to
businesses in areas of New York State outside of the New York City area and in central Pennsylvania
that have historically experienced less economic growth and vitality than many other regions of the
country; (iv) the repayment performance associated with first and second lien loans secured by
residential real estate; and (v) the size of the Company’s portfolio of loans to individual consumers,
which historically have experienced higher net charge-offs as a percentage of loans outstanding than
loans to other types of borrowers. The Company’s credit risk and the performance of its lending
portfolios may be affected by concentration in an industry, geography or asset type. Also, as
described further in the risk factor above, the Company’s credit risks have been impacted by the
COVID-19 pandemic and are generally expected to remain elevated until the pandemic subsides. The
pandemic has created economic and financial disruptions that have adversely affected, and are likely
to continue to adversely affect, customers, including businesses in the hotel and travel industry.
In response to the COVID-19 pandemic and to support its customers, the Company offered
(primarily in 2020, but also in 2021) payment deferrals and other expanded assistance to businesses
and consumers, and committed in certain states in which it operates to suspend residential mortgage
payments and foreclosure sales for financially impacted customers for certain periods of time. A
significant number of the Company’s customers sought to suspend their mortgage payments under
these programs. Suspensions of mortgage payments and foreclosures and reduced pricing under these
programs may adversely affect the Company’s revenue and results of operations. In addition, if these
programs are not effective in mitigating the financial consequences of COVID-19 on customers, or if
customers are unable to pay their loans after these programs expire, the Company may experience

higher rates of default, increased credit losses and additional increases to the allowance for credit
losses in future periods.

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. Emerging and evolving factors
such as the shift to work-from-home arrangements, changing consumer preferences (including for
online shopping), COVID-19-related restrictions and resulting changes in occupancy rates as a result
of these and other trends can also impact such valuations over relatively short periods. Similarly,
residential real estate valuations can be impacted by housing trends, the availability of financing at
reasonable interest rates, governmental policy regarding housing and housing finance, and general
economic conditions affecting consumers, including as impacted by the COVID-19 pandemic, as
described above.

The Company maintains an allowance for credit losses which represents, in management’s
judgment, the amount of losses expected in the loan and lease portfolio. The allowance is determined
by management’s evaluation of the loan and lease portfolio based on such factors as the differing
economic risks associated with each loan category, the current 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 believes that the allowance for credit losses as of December 31, 2021 appropriately
reflects expected credit losses in the loan and lease portfolio. However, there is no assurance that the
allowance is sufficient to cover all credit losses that may occur.

The Company may be adversely affected by the soundness of other financial institutions.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other
relationships. The Company has exposure to many different industries and counterparties, and
routinely executes transactions with counterparties in the financial services industry, including
commercial banks, brokers and dealers, investment banks, and other institutional clients. Many of
these transactions expose the Company to credit risk in the event of a default by a counterparty or
client. In addition, the Company’s credit risk may be exacerbated when the collateral held by the
Company cannot be realized or is liquidated at prices not sufficient to recover the full amount of the
credit due to or derivative exposure of the Company. Any resulting losses could have a material
adverse effect on the Company’s financial condition and results of operations.

Liquidity Risk

The Company must maintain adequate sources of funding and liquidity.

The Company must maintain adequate funding sources in the normal course of business to support its
operations and fund outstanding liabilities, as well as meet regulatory requirements and supervisory
expectations. The Company primarily relies on deposits to be a low cost and stable source of funding
for the loans it makes and the operations of its business. Core customer deposits, which include
noninterest-bearing deposits, interest-bearing transaction accounts, savings deposits and time
deposits of $250,000 or less, have historically provided the Company with a sizeable source of
relatively stable and low-cost funds. In addition to customer deposits, sources of liquidity include
borrowings from securities dealers, various Federal Home Loan Banks and the Federal Reserve Bank
of New York, as well as the debt and equity capital markets.

The Company’s liquidity and ability to fund and operate the business could be materially
adversely affected by a variety of conditions and factors, including financial and credit market
disruptions and volatility or a lack of market or customer confidence in financial markets in general,

which may result in a loss of customer deposits or outflows of cash or collateral and/or ability to
access capital markets on favorable terms. Negative news about the Company or the financial
services industry generally may reduce market or customer confidence in the Company, which could
in turn materially adversely affect the Company’s liquidity and funding. Such reputational damage
may result in the loss of customer deposits, the inability to sell or securitize loans or other assets, and
downgrades in one or more of the Company’s credit ratings, and may also negatively affect the
Company’s ability to access the capital markets. A downgrade in the Company’s credit ratings,
which could result from general industry-wide or regulatory factors not solely related to the
Company, could adversely affect the Company’s ability to borrow funds, including by raising the
cost of borrowings substantially, and could cause creditors and business counterparties to raise
collateral requirements or take other actions that could adversely affect M&T’s ability to raise
capital. Many of the above conditions and factors may be caused by events over which M&T has
little or no control. There can be no assurance that significant disruption and volatility in the financial
markets will not occur in the future.

Regulatory changes relating to liquidity and risk management may also negatively impact the

Company’s results of operations and competitive position. Various regulations have been adopted to
impose more stringent liquidity requirements for large financial institutions, including the Company.
These regulations address, among other matters, liquidity stress testing and minimum liquidity
requirements. The application of certain of these regulations to banking organizations, such as the
Company, have been modified, including in connection with the implementation of the tailoring rules
in the EGRRCPA. While marginal relief from certain capital and liquidity standards has been
afforded to the Company (such as relief from LCR compliance), overall capital and liquidity
management practices and expectations will remain unchanged for the foreseeable future.

If the Company is unable to continue to fund assets through customer bank deposits or access

funding sources on favorable terms or if the Company suffers an increase in borrowing costs or
otherwise fails to manage liquidity effectively, the Company’s liquidity, operating margins, financial
condition and results of operations may be materially adversely affected. The Company may also
need to raise additional capital and liquidity through the issuance of stock, which could dilute the
ownership of existing stockholders, or reduce or even eliminate common stock dividends or share
repurchases to preserve capital and liquidity.

If the Company is unable to maintain or grow its deposits, it may be subject to paying higher funding
costs.

The total amount that the Company pays for funding costs is dependent, in part, on the Company’s
ability to maintain or grow its deposits. If the Company is unable to sufficiently maintain or grow its
deposits to meet liquidity objectives, it may be subject to paying higher funding costs. The Company
competes with banks and other financial services companies for deposits. If competitors raise the
rates they pay on deposits, the Company’s funding costs may increase, either because the Company
raises rates to avoid losing deposits or because the Company loses deposits and must rely on more
expensive sources of funding. Customers may also move noninterest-bearing deposits to interest
bearing accounts, increasing the cost of those deposits. Checking and savings account balances and
other forms of customer deposits may decrease when customers perceive alternative investments,
such as the stock market, as providing a better risk/return tradeoff. The Company’s bank customers
could withdraw their money and put it in alternative investments, causing the Company to lose a
lower cost source of funding. Higher funding costs could reduce the Company’s net interest margin
and net interest income.

M&T relies on dividends from its subsidiaries for its liquidity.

M&T is a separate and distinct legal entity from its subsidiaries. M&T typically receives
substantially all of its revenue from subsidiary dividends. These dividends are M&T’s principal
source of funds to pay dividends on common and preferred stock, pay interest and principal on its
debt, and fund purchases of its common stock. Various federal and/or state laws and regulations, as
well as regulatory expectations, limit the amount of dividends that M&T’s banking subsidiaries and
certain non-bank subsidiaries may pay. Regulatory scrutiny of capital levels at bank holding
companies and insured depository institution subsidiaries has increased in recent years and has
resulted in increased regulatory focus on all aspects of capital planning, including dividends and
other distributions to shareholders of banks, such as parent bank holding companies. See “Item 1 —
Business, Supervision and Regulation of the Company, Distributions” for a discussion of regulatory
and other restrictions on dividend declarations. Also, M&T’s right to participate in a distribution of
assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of that
subsidiary’s creditors. Limitations on M&T’s ability to receive dividends from its subsidiaries could
have a material adverse effect on its liquidity and ability to pay dividends on its stock or interest and
principal on its debt, and ability to fund purchases of its common stock.

Strategic Risk

The financial services industry is highly competitive and creates competitive pressures that could
adversely affect the Company’s revenue and profitability.

The financial services industry in which the Company operates is highly competitive. The Company
competes not only with commercial and other banks and thrifts, but also with insurance companies,
mutual funds, hedge funds, securities brokerage firms, financial technology companies and other
companies offering financial services in the U.S., globally and over the Internet. Some of the
Company’s non-bank competitors are not subject to the same extensive regulations the Company is,
and may have greater flexibility in competing for business. In particular, the activity and prominence
of so-called marketplace lenders and other technological financial services companies has grown
significantly in recent years and is expected to continue growing. The Company competes on the
basis of several factors, including capital, access to capital, revenue generation, products, services,
transaction execution, innovation, reputation and price. Over time, certain sectors of the financial
services industry have become more concentrated, as institutions involved in a broad range of
financial services have been acquired by or merged into other firms. These developments have and
could continue to result in the Company’s competitors gaining greater capital and other resources,
such as a broader range of products and services and geographic diversity. The Company has and
may continue to experience pricing pressures as a result of these factors and as some of its
competitors seek to increase market share.

Finally, technological change is influencing how individuals and firms conduct their financial
affairs and is changing the delivery channels for financial services. Financial technology providers,
who invest substantial resources in developing and designing new technology (in particular digital
and mobile technology), are beginning to offer more traditional banking products (either directly or
through bank partnerships) and may in the future be able to provide additional services by obtaining
a bank-like charter, such as the OCC’s fintech charter. As a result, the Company has had and will
likely continue to have to contend with a broader range of competitors including many that are not
located within the geographic footprint of its banking office network. Further, along with other
participants in the financial services industry, the Company frequently attempts to introduce new
technology-driven products and services that are aimed at allowing the Company to better serve
customers and to reduce costs. The Company may not be able to effectively implement new

technology-driven products and services that allow it to remain competitive or be successful in
marketing these products and services to its customers.

Difficulties in obtaining regulatory approval for acquisitions and in combining the operations of
acquired entities with the Company’s own operations may prevent M&T from achieving the expected
benefits from its acquisitions.

M&T has expanded its business through past acquisitions and may do so in the future. The
Company’s ability to complete acquisitions is in many instances subject to regulatory approval, and
the Company cannot be certain when or if, or on what terms and conditions, any required regulatory
approvals would be granted. Any requisite approval could be delayed or not obtained at all, including
due to, among other factors, an adverse development in either party’s regulatory standing or in any
other factors considered by regulators when granting such approval, including factors not known at
the time of entering into the definitive agreement for the acquisition or submission of the related
application for regulatory approval, and factors that may arise subsequently; governmental, political
or community group inquiries, investigations or opposition; or changes in legislation or the political
environment more generally.

In addition, inherent uncertainties exist when integrating the operations of an acquired entity.

Acquiring other entities involves potential risks that could have a material adverse impact on the
Company’s business, financial condition and results of operations, including:

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Inability to fully achieve the Company’s strategic objectives and planned operating
efficiencies in an acquisition.
Issues arising during transition and integration.
Disruption of the Company’s business and diversion of management’s time and attention.
Exposure to unknown or contingent liabilities of acquired institutions.
Loss of key employees and customers of acquired institutions.
Dilution in the ownership percentage of holders of M&T common stock.
Payment of a premium over book and market values that may dilute the Company’s
tangible book value and earnings per common share in the short and long-term.
Inability to realize the expected benefits of the acquisition due to lower financial results
pertaining to the acquired entity (for example, the Company could experience higher credit
losses, incur higher operating expenses or realize less revenue than originally anticipated
related to an acquired entity).
Changes in banking or tax laws or regulations that could impair or eliminate the expected
benefits of merger and acquisition activities.

M&T could suffer if it fails to attract and retain skilled personnel.

M&T’s success depends, in large part, on its ability to attract and retain key individuals and to have a
diverse workforce. Competition for qualified and diverse candidates in the activities in which the
Company engages and markets that the Company serves is significant, and the Company may not be
able to hire candidates and retain them. Growth in the Company’s business, including through
acquisitions, may increase its need for additional qualified personnel. The Company is increasingly
competing for personnel with financial technology providers and other less regulated entities who
may not have the same limitations on compensation as the Company does. The increase in remote
work arrangements and opportunities in regional, national and global labor markets has also
increased competition for the Company to attract and retain skilled personnel. The Company’s
current or future approach to in-office and remote-work arrangements may not meet the needs or
expectations of current or prospective employees or may not be perceived as favorable as compared
to the arrangements offered by other companies, which could adversely affect the Company’s ability

to attract and retain employees. If the Company is not able to hire or retain highly skilled and
qualified individuals, it may be unable to execute its business strategies and may suffer adverse
consequences to its business, financial condition and results of operations.

The Company’s compensation practices are subject to review and oversight by the Federal

Reserve, the OCC, the FDIC and other regulators. The federal banking agencies have issued joint
guidance on executive compensation designed to help ensure that a banking organization’s incentive
compensation policies do not encourage imprudent risk taking and are consistent with the safety and
soundness of the organization. In addition, the Dodd-Frank Act required those agencies, along with
the SEC, to adopt rules to require reporting of incentive compensation and to prohibit certain
compensation arrangements. If as a result of complying with such rules the Company is unable to
attract and retain qualified employees, or do so at rates necessary to maintain its competitive position,
or if the compensation costs required to attract and retain employees become more significant, the
Company’s performance, including its competitive position, could be materially adversely affected.

Operational Risk

The Company is subject to operational risk which could adversely affect the Company’s business and
reputation and create material legal and financial exposure.

Like all businesses, the Company is subject to operational risk, which represents the risk of loss
resulting from human error or misconduct, inadequate or failed internal processes and systems, and
external events, including the risk of loss resulting from fraud by employees or persons outside the
company, and breaches in data security. Operational risk also encompasses reputational risk and
compliance and legal risk, which is the risk of loss from violations of, or noncompliance with, laws,
rules, regulations, prescribed practices or ethical standards, as well as the risk of noncompliance with
contractual and other obligations. The Company is also exposed to operational risk through
outsourcing arrangements, and the effect that changes in circumstances or capabilities of its
outsourcing vendors can have on the Company’s ability to continue to perform operational functions
necessary to its business. Although the Company seeks to mitigate operational risk through a system
of internal controls that are reviewed and updated, no system of controls, however well designed and
maintained, is infallible. Control weaknesses or failures or other operational risks could result in
charges, increased operational costs, harm to the Company’s reputation or foregone business
opportunities.

As described further in the risk factor herein, the Company’s operational risks have been
impacted by the COVID-19 pandemic and are generally expected to remain elevated until the
pandemic subsides.

The Company’s information systems may experience interruptions or breaches in security, including
due to events beyond the Company’s control.

The Company relies heavily on communications and information systems, including those of third-
party service providers, to conduct its business. Any failure, interruption or breach in security of
these systems could result in disruptions to its accounting, deposit, loan and other systems, and
adversely affect the Company’s customer relationships. Disruption of operating systems caused by
events beyond the Company’s control may include computer viruses, electrical or
telecommunications outages, quality of vulnerability patches, cyber security attacks (including
Distributed Denial of Service attacks, which occur when legitimate users are unable to access
information systems, devices, or other network resources due to the actions of a malicious cyber
threat actor), damage to property or physical assets, or events arising from political protests or
terrorist acts. While the Company has policies and procedures designed to prevent or limit the effect

of these possible events, there can be no assurance that any such failure, disruption, interruption or
security breach will not occur or, if any does occur, that it can be sufficiently or timely remediated.

Information security risks for large financial institutions such as M&T have increased

significantly in recent years in part because of the proliferation of new technologies, such as digital
and mobile banking to conduct financial transactions, and the increased sophistication and activities
of organized crime, hackers, terrorists, nation-states, activists and other external parties. There have
been increasing efforts on the part of third parties, including through cyber security attacks, to breach
data security at financial institutions or with respect to financial transactions. There have been
numerous instances involving financial services and consumer-based companies reporting
unauthorized access to and disclosure of client or customer information or the destruction or theft of
corporate data, including by executive impersonation and third party vendors, or the freezing of
operating systems and databases making them inaccessible or unusable. There have also been several
highly publicized cases where hackers have requested “ransom” payments in exchange for not
disclosing customer information or for restoring access to, or the usage of, operating systems and
databases. Ransomware is a form of malicious software, known as “malware,” designed to block
access to, and often encrypt, computer systems or data. Once the victim’s computer system or data is
locked down and encrypted, rendering it essentially useless, the malicious cyber actor then extorts
the victim by demanding a ransom payment in exchange for providing a method to decrypt it. The
attacker may also copy the victim’s data in the course of the attack and threaten to sell or publish the
data if the ransom is not paid. Ransomware attacks can result in a loss of business functionality and
of sensitive data.

As cyber security threats continue to evolve, the Company expects to continue to expend
significant additional resources to modify or enhance its layers of defense or to investigate and
remediate any information security vulnerabilities. The techniques used by cyber security criminals
change frequently, may not be recognized until launched and can be initiated by a variety of actors,
including terrorist organizations and hostile foreign governments. These techniques may include
attempts to fraudulently induce employees, customers or others to disclose sensitive information in
order to gain access to data or systems. These risks may increase as the use of mobile payment and
other Internet-based applications expands.

Further, third parties with which the Company does business, as well as vendors and other third
parties with which the Company’s customers do business, can also be sources of information security
risk to the Company, particularly where activities of customers are beyond the Company’s security
and control systems, such as through the use of the Internet, personal computers, tablets, smart
phones and other mobile services. Security breaches affecting the Company’s customers, or systems
breakdowns, failures, security breaches or employee misconduct affecting such other third parties,
may require the Company to take steps to protect the integrity of its own systems or to safeguard
confidential information of the Company or its customers, thereby increasing the Company’s
operational costs and adversely affecting its business. Additionally, successful cyber security attacks
at other large financial institutions, whether or not the Company is impacted, could lead to a general
loss of customer confidence in financial institutions that could negatively affect M&T, including
harming the market perception of the effectiveness of the Company’s security measures or the
financial system in general which could result in reduced use of the Company’s financial products.
Though the Company has insurance against some cyber security risks and attacks, it may not be
sufficient to offset the impact of a material loss event.

The Company, as well as third parties with which the Company does business, has expanded

the use of cloud service providers, which providers could experience system breakdowns or failures,
outages, downtime, cyber security-attacks, negative changes to financial condition, bankruptcy, or
other adverse conditions, which could have a material adverse effect on the Company’s business and
reputation. Thus, increasing the amount of infrastructure that the Company or its vendors and service
providers outsource to the cloud or to other parties may increase M&T’s risk exposure. The failure to
properly upgrade or maintain the computer systems could result in greater susceptibility to attacks,

particularly in light of the greater frequency and severity of attacks in recent years, as well as the
growing prevalence of supply chain attacks affecting software and information technology service
providers. Failures related to upgrades and maintenance also increase risks related to unauthorized
access and misuse, as well as the Company’s ability to achieve its business continuity and resiliency
objectives.

The Company could incur higher costs, experience lower revenue, and suffer reputational damage in
the event of the theft, loss or misuse of information, including due to a cyber security attack.

Like other financial services firms, the systems, networks and devices of the Company, its customers,
employees, service providers or other third parties with whom the Company interacts continue to be
the subject of attempted unauthorized access, denial-of-service attacks, computer viruses, hacking,
malware, ransomware, phishing or other forms of social engineering, and cyber security attacks
designed to obtain confidential information, destroy data, disrupt or degrade service, eliminate access
or cause other damage. These threats may arise from human error, fraud on the part of employees,
insiders or third parties or may result from accidental technology failure or vulnerabilities of
suppliers through supply chain attacks. Further, cyber security and information security risks for
financial institutions have generally increased because of, among other things, the growth of new
technologies, the use of the internet and telecommunications technologies (including computers,
smartphones, and other mobile devices outside the Company’s systems) by customers to conduct
financial transactions, and the increased sophistication and activities of organized crime, fraudsters,
hackers, terrorists, activists, instrumentalities of foreign governments and other external parties.

Although the Company believes that a robust suite of authentication and layered security

controls, data encryption and tokenization, threat intelligence, anti-malware defenses and
vulnerability management tools exist, the failure of any of these controls could result in a failure to
detect, mitigate or remediate these risks in a timely manner. Further, as the Company expands its
mobile and digital capabilities, cyber security risks increase.

A disruption or breach, including as a result of a cyber security attack, or media reports of
perceived security vulnerabilities at the Company or at third-party service providers, could result in
significant legal and financial exposure, regulatory intervention, remediation costs, damage to
reputation or loss of confidence in the security of systems, products and services that could adversely
affect the Company’s business. Like other U.S. financial services providers, M&T continues to be
targeted with evolving and adaptive cyber security threats from sophisticated third parties. Although
the Company is not aware of any material losses relating to cyber security incidents, there can be no
assurance that unauthorized access or cyber security incidents will not become known or occur or
that the Company will not suffer such losses in the future.

The Company is subject to laws and regulations relating to the privacy of the information of clients,
employees or others, and any failure to comply with these laws and regulations could expose the
Company to liability and/or reputational damage

The Company is also subject to laws and regulations relating to the privacy of the information of
clients, employees or others, and any failure to comply with these laws and regulations could expose
the Company to liability and/or reputational damage. New customer privacy initiatives will impose
additional operational burdens on the Company, may limit the Company’s ability to pursue desirable
business initiatives and increase the risks associated with any future use of customer data. Significant
examples include the General Data Protection Regulation and the California Consumer Privacy Act.
Compliance with these laws and regulations may require changes to policies, procedures and
technology for information security and segregation of data, which could, among other things, make
the Company more vulnerable to operational failures, and to monetary penalties, litigation or
regulatory enforcement actions for breach of such laws and regulations.

As privacy-related laws and regulations are implemented, they may also limit how companies
like M&T can use customer data and impose obligations on companies in their management of such

data. The time and resources needed for the Company to comply with such laws and regulations, as
well as its potential liability for non-compliance and reporting obligations in the case of data
breaches, may significantly increase. The impacts will be greater to the extent requirements vary
across jurisdictions.

M&T relies on other companies to provide key components of the Company’s business
infrastructure.

Third parties provide key components of the Company’s business infrastructure such as banking
services, processing, and Internet connections and network access. Any disruption in such services
provided by these third parties or any failure of these third parties to handle current or higher
volumes of use could adversely affect the Company’s ability to deliver products and services to
clients and otherwise to conduct business. Technological or financial difficulties of a third party
service provider could adversely affect the Company’s business to the extent those difficulties result
in the interruption or discontinuation of services provided by that party. The Company may not be
insured against all types of losses as a result of third party failures and insurance coverage may be
inadequate to cover all losses resulting from system failures or other disruptions. Failures in the
Company’s business infrastructure could interrupt the operations or increase the costs of doing
business.

Additionally, the Company is exposed to the risk that a service disruption at a common service

provider to the Company’s third-party service providers could impede their ability to provide
services to the Company. Notwithstanding any attempts to diversify its reliance on third parties, the
Company may not be able to effectively mitigate operational risks relating to its vendors’ use of
common service providers.

The Company is or may become involved from time to time in suits, legal proceedings, information-
gathering requests, investigations and proceedings by governmental and self-regulatory agencies
that may lead to adverse consequences.

Many aspects of the Company’s business and operations involve substantial risk of legal liability.
M&T and/or its subsidiaries have been named or threatened to be named as defendants in various
lawsuits arising from its or its subsidiaries’ business activities (and in some cases from the activities
of companies M&T has acquired). In addition, from time to time, M&T is, or may become, the
subject of governmental and self-regulatory agency information-gathering requests, reviews,
investigations and proceedings and other forms of regulatory inquiry, including by bank and other
regulatory agencies, the SEC and law enforcement authorities. The SEC has announced a policy of
seeking admissions of liability in certain settled cases, which could adversely impact the defense of
private litigation. M&T is also at risk with respect to its obligations to indemnify directors and
officers of it and its subsidiaries in connection with certain legal matters as well as in situations
where it has agreed to indemnify others for losses related to legal proceedings, including for
litigation and governmental investigations and inquiries, such as in connection with the purchase or
sale of a business or assets. The results of such proceedings could lead to significant civil or criminal
penalties, including monetary penalties, damages, adverse judgments, settlements, fines, injunctions,
restrictions on the way in which the Company conducts its business, or reputational harm.

Although the Company establishes accruals for legal proceedings when information related to
the loss contingencies represented by those matters indicates both that a loss is probable and that the
amount of loss can be reasonably estimated, the Company does not have accruals for all legal
proceedings where it faces a risk of loss. In addition, due to the inherent subjectivity of the
assessments and unpredictability of the outcome of legal proceedings, amounts accrued may not
represent the ultimate loss to the Company from the legal proceedings in question. Thus, the
Company’s ultimate losses may be higher, and possibly significantly so, than the amounts accrued

for legal loss contingencies, which could adversely affect the Company’s financial condition and
results of operations.

Many financial institutions, including the Company, have received inquiries from the United
States Congress, regulators and other government authorities regarding implementation of provisions
and programs under the CARES Act, and may also face the risk of litigation concerning their
participation in the PPP under that Act. The Company’s involvement in these and other programs
created in response to the COVID-19 pandemic may lead to additional government and regulatory
inquiries and litigation in the future, any of which could negatively impact the Company’s business,
reputation, financial condition and results of operations.

Business Risk

Changes in accounting standards could impact the Company’s financial condition and results of
operations.

The accounting standard setters, including the Financial Accounting Standards Board (“FASB”), the
SEC and other regulatory bodies, periodically change the financial accounting and reporting
standards that govern the preparation of the Company’s consolidated financial statements. These
changes can be difficult to predict and can materially impact how the Company records and reports
its financial condition and results of operations. In some cases, the Company could be required to
apply a new or revised standard retroactively, which would result in the restating of the Company’s
prior period financial statements. Information about recently adopted and not as yet adopted
accounting standards is included in note 27 of Notes to Financial Statements included in Part II, Item
8 — Financial Statements and Supplemental Data of this Form 10-K.

The Company’s reported financial condition and results of operations depend on management’s
selection of accounting methods and require management to make estimates about matters that are
uncertain.

Accounting policies and processes are fundamental to the Company’s reported financial condition
and results of operations. Some of these policies require use of estimates and assumptions that may
affect the reported amounts of assets or liabilities and financial results. Several of M&T’s accounting
policies are critical because they require management to make difficult, subjective and complex
judgments about matters that are inherently uncertain and because it is likely that materially different
amounts would be reported under different conditions or using different assumptions. Pursuant to
generally accepted accounting principles, management is required to make certain assumptions and
estimates in preparing the Company’s financial statements. If assumptions or estimates underlying
the Company’s financial statements are incorrect, the Company may experience material losses.

Management has identified certain accounting policies as being critical because they require

management’s judgment to ascertain the valuations of assets, liabilities, commitments and
contingencies. A variety of factors could affect the ultimate value that is obtained either when
earning income, recognizing an expense, recovering an asset, valuing an asset or liability, or
recognizing or reducing a liability. M&T has established detailed policies and control procedures that
are intended to ensure these critical accounting estimates and judgments are well controlled and
applied consistently. In addition, the policies and procedures are intended to ensure that the process
for changing methodologies occurs in an appropriate manner. Because of the uncertainty surrounding
judgments and the estimates pertaining to these matters, M&T could be required to adjust accounting
policies or restate prior period financial statements if those judgments and estimates prove to be
incorrect. For additional information, see Part II, Item 7 — Management’s Discussion and Analysis
of Financial Condition and Results of Operations, “Critical Accounting Estimates” and Note 1,
“Significant Accounting Policies,” of Notes to Financial Statements in Part II, Item 8.

The Company’s models used for business planning purposes could perform poorly or provide
inadequate information.

The Company uses quantitative models to assist in measuring risks and estimating or predicting
certain financial values, among other uses. The Company uses models throughout many of its
business lines, relying on them, along with its judgement, for many decision making processes.
Examples of areas where the Company uses models include determining the pricing of various
products, grading loans and extending credit, measuring interest rate and other market risks,
predicting or estimating losses, assessing capital adequacy, and calculating economic and regulatory
capital levels. The Company also uses models to estimate the value of financial instruments and
balance sheet items. Models generally evaluate the performance of various factors under anticipated
future conditions, relying on historical data to help build the model and in part on assumptions as to
the future, often with respect to macro-economic conditions, in order to generate the output. The
models used may not accurately account for all variables and may fail to predict outcomes accurately
and/or may overstate or understate certain effects. Poorly designed, implemented, or managed
models or misused models, including in the choice of relevant historical data or future-looking
assumptions, present the risk that the Company’s business decisions that consider information based
on such models will be adversely affected due to inadequate or inaccurate information, which may
damage the Company’s reputation and adversely affect its reported financial condition and results of
operations. Even if the underlying assumptions used in the Company’s models are adequate, the
models may be deficient due to errors in computer code, use of bad data during development or input
into the model during model use, or the use of a model for a purpose outside the scope of the model’s
design. As a result, the Company’s models may not fully capture or express the risks the Company
faces, may suggest that the Company has sufficient capital when it may not, or may lead the
Company to misjudge the business and economic environment in which it operates. If the models
fail to produce reliable results on an ongoing basis, the Company may not make appropriate risk
management, capital planning, or other business or financial decisions. Furthermore, strategies that
the Company employs to manage and govern the risks associated with its use of models may not be
effective or fully reliable, and as a result, the Company may realize losses or other lapses. Finally,
information the Company provides to the public or to its regulators based on poorly designed,
implemented, or managed models or misused models could be inaccurate or misleading. Some of the
decisions that the Company’s regulators make, including those related to capital distributions to
M&T’s stockholders, could be affected adversely due to their perception that the quality of the
models used to generate the relevant information is insufficient.

The Company is exposed to reputational risk.

A negative public opinion of the Company and its business can result from any number of activities,
including the Company’s lending practices, corporate governance and regulatory compliance,
acquisitions and actions taken by regulators or by community organizations in response to these
activities. Significant harm to the Company’s reputation could also arise as a result of regulatory or
governmental actions, litigation, employee misconduct or the activities of customers, other
participants in the financial services industry or the Company’s contractual counterparties, such as
service providers and vendors. A service disruption of the Company’s technology platforms or an
impact to the Company’s branches could have a negative impact on a customer’s access to banking
services, and harm the Company’s reputation with customers. In particular, a cyber security event
impacting the Company’s or its customers’ data could have a negative impact on the Company’s
reputation and customer confidence in the Company and its cyber security. Damage to the
Company’s reputation could also adversely affect its credit ratings and access to the capital markets.

Additionally, whereas negative public opinion once was primarily driven by adverse news

coverage in traditional media, the increased use of social media platforms facilitates the rapid
dissemination of information or misinformation, which magnifies the potential harm to the
Company’s reputation.

The Company’s framework for managing risks may not be effective.

The Company’s risk management framework is made up of various processes and strategies to
manage its risk exposure. The framework to manage risk, including the framework’s underlying
assumptions, may not be effective under all conditions and circumstances. If the risk management
framework proves ineffective, the Company could suffer unexpected losses and could be materially
adversely affected.

The Company has established processes and procedures intended to identify, measure, monitor,
report, and analyze the types of risk to which it is subject, including liquidity risk, credit risk, market
risk, interest rate risk, compliance risk, strategic risk, reputation risk, and operational risk related to
its employees, systems and vendors, among others. There are inherent limitations to the Company’s
risk management strategies as there may exist, or develop in the future, risks that it has not
appropriately anticipated or identified. In addition, the Company relies on both qualitative and
quantitative factors, including models, to monitor, measure and analyze certain risks and to estimate
certain financial values, which are subject to error. The Company must also develop and maintain a
culture of risk management among its employees, as well as manage risks associated with third
parties, and could fail to do so effectively. If the Company’s risk management framework proves
ineffective, the Company could incur litigation and negative regulatory consequences, and suffer
unexpected losses that could affect its financial condition or results of operations.

Pandemics, acts of war or terrorism and other adverse external events could significantly impact the
Company’s business.

Pandemics, acts of war or terrorism and other adverse external events, including severe weather and
other natural disasters, could have a significant impact on the Company’s ability to conduct business.
Such events could affect the stability of the Company’s deposit base, impair the ability of borrowers
to repay outstanding loans, impair the value of collateral securing loans, cause significant property
damage, result in loss of revenue and/or cause the Company to incur additional expenses. Although
the Company has established disaster recovery plans and procedures, and monitors for significant
environmental effects on its properties or its investments, the occurrence of any such event could
have a material adverse effect on the Company.

The Company’s assets, communities, operations, reputation and customers could be adversely
affected by the impacts of climate risk.

The Company operates in regions where its businesses and the activities of its customers could be
negatively impacted by climate risk.

This includes the physical risks resulting from chronic shifts in climate, such as rising

average global temperatures and rising sea levels, and an increase in the frequency and severity of
extreme weather events and natural disasters, including floods, wildfires, hurricanes and tornados.
Such chronic shifts and events could damage or otherwise impact the value or productivity of
customers’ assets and disrupt the Company’s operations and the operations of customers or third
parties on which the Company relies. They could also result in market volatility, negatively impact
the Company’s customers’ ability to repay outstanding loans, and damage or deteriorate the value of
collateral. Over time such risks may result in both increasing premiums for and reduced availability
of insurance and have a broader impact on the economy.

Further, climate risk may manifest from efforts to transition to a low-carbon economy.
Transition risks may arise from changes in consumer and business preferences, legislation,
regulation, policy, and technological advancement associated with the changes necessary to limit
climate change. Such risks may result in increased expenses or otherwise adversely impact the
Company and its customers, including the ability of customers to repay outstanding loans. The
Company could experience increased expenses resulting from climate-related strategic planning and
market changes, as well as litigation and reputational harm as a result of negative public sentiment,
regulatory scrutiny and reduced investor and stakeholder confidence due to its climate change
strategy and responses. Ongoing legislative or regulatory uncertainties and changes regarding
appropriate climate risk management and practices may also result in higher regulatory, compliance
and other expenses.

Discussions of the specific risks outlined above and other risks facing the Company are included
within this Annual Report on Form 10-K in Part I, Item 1 “Business,” and Part II, Item 7
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Furthermore, in Part II, Item 7 under the heading “Forward-Looking Statements” is included a
description of certain risks, uncertainties and assumptions identified by management that are difficult
to predict and that could materially affect the Company’s financial condition and results of
operations, as well as the value of the Company’s financial instruments in general, and M&T
common stock, in particular.

In addition, the market price of M&T common stock may fluctuate significantly in response to a
number of other factors, including changes in securities analysts’ estimates of financial performance,
volatility of stock market prices and volumes, rumors or erroneous information, changes in market
valuations of similar companies and changes in accounting policies or procedures as may be required
by the FASB or other regulatory agencies.

Item 1B. Unresolved Staff Comments.

None.

Item 2.

Properties.

Both M&T and M&T Bank maintain their executive offices at One M&T Plaza in Buffalo, New
York. This twenty-one story headquarters building, containing approximately 300,000 rentable
square feet of space, is owned by M&T Bank. M&T, M&T Bank and their subsidiaries occupy
approximately 98% of the building and the remainder is leased to non-affiliated tenants. At
December 31, 2021, the cost of this property (including improvements subsequent to the initial
construction), net of accumulated depreciation, was $24.3 million.

M&T Bank owns and occupies an additional facility in Buffalo, New York (known as M&T

Center) with approximately 395,000 rentable square feet of space. At December 31, 2021, the cost
of this building (including improvements subsequent to acquisition), net of accumulated depreciation,
was $10.8 million.

M&T Bank also owns and occupies three separate facilities in the Buffalo area which support

certain back-office and operations functions of the Company. The total square footage of these
facilities approximates 290,000 square feet and their combined cost (including improvements
subsequent to acquisition), net of accumulated depreciation, was $25.5 million at December 31,
2021.

M&T Bank owns facilities in Wilmington, Delaware, with approximately 340,000 (known as

Wilmington Center) and 295,000 (known as Wilmington Plaza) rentable square feet of space,
respectively. M&T Bank occupies approximately 100% of Wilmington Center and approximately
8% of Wilmington Plaza. At December 31, 2021, the cost of these buildings (including

improvements subsequent to acquisition), net of accumulated depreciation, was $40.3 million and
$14.0 million, respectively.

M&T Bank also owns facilities in Millsboro, Delaware and Harrisburg, Pennsylvania with
approximately 325,000 and 220,000 rentable square feet of space, respectively. M&T Bank occupies
approximately 100% and 29% of those facilities, respectively. At December 31, 2021, the cost of
those buildings (including improvements subsequent to acquisition), net of accumulated depreciation,
was $15.4 million and $8.4 million, respectively.

M&T owns many other properties none which have more than 100,000 square feet of space.
The Company also leases office space and other facilities to support its business operations. The cost
and accumulated depreciation and amortization of the Company’s premises and equipment and
information regarding the Company’s lease arrangements is detailed in note 6 of Notes to Financial
Statements filed herewith in Part II, Item 8, “Financial Statements and Supplementary Data.”

Of the 688 domestic banking office locations of M&T’s subsidiary banks at December 31,

2021, 268 are owned and 420 are leased.

Item 3.

Legal Proceedings.

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 $25 million. Although the Company does not believe that the
outcome of pending legal matters will be material to the Company’s consolidated financial position,
it cannot rule out the possibility that such outcomes will be material to the consolidated results of
operations for a particular reporting period in the future.

Item 4. Mine Safety Disclosures.

Not applicable.

Executive Officers of the Registrant
Information concerning M&T’s executive officers is presented below. The year the officer was first
appointed to the indicated position with M&T or its subsidiaries is shown parenthetically. In the case
of each entity noted below, officers’ terms run until the first meeting of the board of directors after
such entity’s annual meeting, which in the case of M&T takes place immediately following the
Annual Meeting of Shareholders, and until their successors are elected and qualified.

René F. Jones, age 57, is chief executive officer, chairman of the board and a director of M&T
and M&T Bank (2017). Previously, he was an executive vice president (2006) of M&T and a vice
chairman (2014) of M&T Bank with responsibility for the Company’s Wealth and Institutional
Services Division, Treasury Division, and Mortgage and Consumer Lending Divisions. Previously,
Mr. Jones served as chairman of the board and a director (2014) of Wilmington Trust Investment
Advisors, a director (2007) of M&T Insurance Agency, chief financial officer (2005) of M&T, M&T
Bank and Wilmington Trust, N.A. and had held a number of management positions within M&T
Bank’s Finance Division since 1992.

Richard S. Gold, age 61, is president, chief operating officer and a director of M&T and M&T

Bank (2017). Mr. Gold oversees the Consumer Banking, Business Banking, Legal and Human
Resources Divisions. Previously, he was an executive vice president (2006) and chief risk officer
(2014) of M&T and was a vice chairman and chief risk officer (2014) of M&T Bank. Mr. Gold had
been responsible for overseeing the Company’s governance and strategy for risk management, as
well as relationships with key regulators and supervisory agencies. He served as chairman, president
and chief executive officer (2018) of Wilmington Trust N.A., as a senior vice president of M&T
Bank from 2000 to 2006 and has held a number of management positions since he began his career
with M&T Bank in 1989. Mr. Gold is a director (2017) of Wilmington Trust, N.A and a director
(2020) of Wilmington Trust Company.

Kevin J. Pearson, age 60, is vice chairman (2020) and a director (2018) of M&T and is vice
chairman (2014) and a director (2018) of M&T Bank. He is a member of the Directors Advisory
Council (2006) of the New York City/Long Island Division of M&T Bank. Mr. Pearson has
oversight of the Commercial Banking, Credit, Technology and Banking Operations, and Wealth and
Institutional Services Divisions. Previously, Mr. Pearson served as an executive vice president of
M&T and M&T Bank, and has held a number of management positions since he began his career
with M&T Bank in 1989. He is chairman of the board and a director (2018) of Wilmington Trust
Company, chairman of the board (2020) and a director (2014) of Wilmington Trust, N.A., and a
director (2018) of Wilmington Trust Investment Advisors.

Robert J. Bojdak, age 66, is an executive vice president and chief credit officer (2004) for M&T

Bank where he is responsible for managing the overall risk involving the bank’s loan portfolio,
monitoring portfolio metrics and workout activities. He is an executive vice president (2004) of
Wilmington Trust, N.A. and an executive vice president (2020) of Wilmington Trust Company.
Previously from April 2002 to April 2004, Mr. Bojdak served as senior vice president and credit
deputy for M&T Bank and as a director (2004) of Wilmington Trust, N.A.

John L. D’Angelo, age 59, is an executive vice president (2017) and director of environmental,

social, and governance (“ESG”) (2021) of M&T and M&T Bank. Mr. D’Angelo is responsible for
designing, implementing and measuring the formal strategy to establish M&T Bank as a leader in
ESG and sustainable business practices. He served as chief risk officer (2017), senior vice president
and general auditor of M&T and M&T Bank from 2005 to 2017 and has held a number of positions
since he began his career with M&T Bank in 1987.

Christopher E. Kay, age 56, is an executive vice president (2018) of M&T and M&T Bank, and
is responsible for all aspects of Consumer Banking, including the Mortgage, Consumer Lending and
Retail businesses, and Business Banking and Marketing. Prior to joining M&T in 2018, Mr. Kay
served as chief innovation officer at Humana from 2014 to 2018 and as managing director of Citi
Ventures from 2007 to 2013.

Darren J. King, age 52, is an executive vice president (2010) and chief financial officer (2016)

of M&T and executive vice president (2009) and chief financial officer (2016) of M&T Bank. Mr.
King has responsibility for the overall financial management of the Company and oversees the
Finance and Treasury Divisions. Prior to his current role, Mr. King was the Retail Banking executive
with responsibility for overseeing Business Banking, Consumer Deposits, Consumer Lending and
M&T Bank’s Marketing and Communications team. Mr. King previously served as senior vice
president of M&T Bank and has held a number of management positions within M&T Bank since
2000. Mr. King is an executive vice president (2009) and chief financial officer (2016) of
Wilmington Trust, N.A. and a director of M&T Insurance Agency (2018).

Gino A. Martocci, age 56, is an executive vice president (2014) of M&T and M&T Bank, and is

responsible for managing M&T Bank’s commercial banking lines of business. Mr. Martocci is
responsible for directing strategic growth and business line development activities across the
Company’s footprint for commercial customers. Previously, Mr. Martocci co-managed M&T Bank’s

commercial banking lines of business. Mr. Martocci was a senior vice president of M&T Bank from
2002 to 2013, serving in a number of management positions and was a member of the Directors
Advisory Council of the New Jersey Division (2015) of M&T Bank. He is chairman of the board
(2018) and a director (2009) of M&T Realty Capital, and a member of the Directors Advisory
Council of the New York City/Long Island Division (2013) of M&T Bank and its Mortgage
Investment Committee.

Doris P. Meister, age 66, is an executive vice president (2016) of M&T and M&T Bank, and is
responsible for overseeing the Company’s wealth management business, including Wilmington Trust
Wealth Management, M&T Securities and Wilmington Trust Investment Advisors. Ms. Meister is an
executive vice president and a director (2016) of Wilmington Trust, N.A., an executive vice president
and director of Wilmington Trust Company (2016) and chairman of the board, chief executive officer
and a director (2017) of Wilmington Trust Investment Advisors. Prior to joining M&T in 2016, Ms.
Meister served as President of U.S. Markets for BNY Mellon Wealth Management from 2009 to
2016 and prior to that was a Managing Director of the New York office of Bernstein Global Wealth
Management.

Michael J. Todaro, age 60, is an executive vice president (2015) and chief risk officer (2021) of

M&T and M&T Bank. Mr. Todaro is responsible for overseeing the Company’s governance and
strategy for risk management as well as relationships with the Company’s regulators and supervisory
agencies. Previously, Mr. Todaro was responsible for the Mortgage, Consumer Lending and
Customer Asset Management Divisions. Most recently he was responsible for Enterprise
Transformation activities. Mr. Todaro previously served as senior vice president of M&T Bank and
held a number of management positions within M&T Bank’s Mortgage Division since 1995. He is an
executive vice president (2015), chief risk officer (2021) and a director (2021) of Wilmington Trust,
N.A. and an executive vice president (2021) and a director (2021) of Wilmington Trust Company.
Michele D. Trolli, age 60, is an executive vice president (2005) and head of corporate
operations and enterprise initiatives (2018) of M&T and M&T Bank. Previously, she was chief
information officer (2005) of M&T and M&T Bank. Ms. Trolli leads a wide range of the Company’s
Banking Operations, which includes Banking Services, Corporate Services, Business Continuity and
Enterprise Transformation and Change Management.

D. Scott N. Warman, age 56, is an executive vice president (2009) and treasurer (2008) of M&T

and M&T Bank. He is responsible for managing the Company’s Treasury Division, including
asset/liability management, funding, investment and derivative portfolio management, capital
markets foreign exchange trading and sales. Mr. Warman previously served as senior vice president
of M&T Bank and has held a number of management positions within M&T Bank since 1995. He is
an executive vice president and treasurer of Wilmington Trust, N.A. (2008) and is an executive vice
president and treasurer of Wilmington Trust Company (2012).

Jennifer Warren, age 57, is an executive vice president (2022) of M&T and M&T Bank. Ms.
Warren is responsible for managing administrative and business development functions of Institutional
Client Services within the Wealth and Institutional Services Division. Prior to joining the Company, Ms.
Warren was chief executive officer of Issuer Services, North America for Computershare from 2018 to
2021. Ms. Warren previously served as head of the U.S. region and president and chief executive officer
of CIBC World Markets Corp., where she worked for nearly 12 years.

Tracy S. Woodrow, age 48, is an executive vice president and chief human resources officer
(2020) of M&T and M&T Bank. Ms. Woodrow is responsible for managing the Company’s Human
Resources Division. She is an executive vice president (2020) of Wilmington Trust, N.A. and
Wilmington Trust Company. Ms. Woodrow previously served as the Bank Secrecy Act / Anti-
Money Laundering / Office of Foreign Assets Control Officer (2013) for M&T, M&T Bank and
Wilmington Trust, N.A.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities.

M&T’s common stock is traded under the symbol MTB on the New York Stock Exchange. See
cross-reference sheet for disclosures incorporated elsewhere in this Annual Report on Form 10-K for
approximate number of common shareholders at year-end, frequency and amounts of dividends on
common stock and restrictions on the payment of dividends.

During the fourth quarter of 2021, M&T did not issue any shares of its common stock that were

not registered under the Securities Act of 1933.

Equity Compensation Plan Information
The following table provides information as of December 31, 2021 with respect to shares of common
stock that may be issued under M&T’s existing equity compensation plans. M&T’s existing equity
compensation plans include the M&T Bank Corporation 2019 Equity Incentive Compensation Plan,
which has been previously approved by shareholders and the M&T Bank Corporation Deferred
Bonus Plan, which did not require shareholder approval.

The table does not include information with respect to shares of common stock subject to
outstanding options and rights assumed by M&T in connection with mergers and acquisitions of the
companies that originally granted those options and rights. Footnote (1) to the table sets forth the
total number of shares of common stock issuable upon the exercise of such assumed options and
rights as of December 31, 2021, and their weighted-average exercise price.

Plan Category

Equity compensation plans approved

by security holders.....................................

Equity compensation plans not approved

by security holders.....................................
Total...................................................

Number of
Securities
to be Issued Upon
Exercise of
Outstanding
Options or Rights
(A)

Weighted-Average
Exercise Price of
Outstanding
Options or Rights
(B)

Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column A)
(C)

635,864

13,319
649,183

162.73

78.02
160.99

2,299,502

—
2,299,502

(1)

As of December 31, 2021, a total of 2,450 shares of M&T common stock were issuable upon exercise of
outstanding options or rights assumed by M&T in connection with merger and acquisition transactions.
The weighted-average exercise price of those outstanding options or rights is $70.53 per common share.

Deferred Bonus Plan. M&T maintains a deferred bonus plan which was frozen effective
January 1, 2010 and did not allow any additional deferrals after that date. Prior to January 1, 2010,
the plan allowed eligible officers of M&T and its subsidiaries to elect to defer all or a portion of their
annual incentive compensation awards and allocate such awards to several investment options,
including M&T common stock. At the time of the deferral election, participants also elected the
timing of distributions from the plan. Such distributions are payable in cash, with the exception of
balances allocated to M&T common stock which are distributable in the form of shares of common
stock.

Performance Graph
The following graph contains a comparison of the cumulative shareholder return on M&T common
stock against the cumulative total returns of the KBW Nasdaq Bank Index, compiled by Keefe,
Bruyette & Woods, Inc., and the S&P 500 Index, compiled by Standard & Poor’s Corporation, for
the five-year period beginning on December 31, 2016 and ending on December 31, 2021. The KBW
Nasdaq Bank Index is a modified market capitalization weighted index consisting of 24 banking
stocks representing leading large U.S. national money centers, regional banks and thrift institutions.

Comparison of Five-Year Cumulative Return*

$250

$200

$150

$100

$50

2016

2017

2018

2019

2020

2021

M&T Bank Corporation

KBW Nasdaq Bank Index

S&P 500 Index

Shareholder Value at Year End*

M&T Bank Corporation ..........................
KBW Nasdaq Bank Index .......................
S&P 500 Index ........................................

100
100
100

111
119
122

95
98
116

116
133
153

90
119
181

112
165
233

2016

2017

2018

2019

2020

2021

* Assumes a $100 investment on December 31, 2016 and reinvestment of all dividends.

In accordance with and to the extent permitted by applicable law or regulation, the information

set forth above under the heading “Performance Graph” shall not be incorporated by reference into
any future filing under the Securities Act of 1933, as amended (the “Securities Act”), or the
Exchange Act and shall not be deemed to be “soliciting material” or to be “filed” with the SEC under
the Securities Act or the Exchange Act.

Issuer Purchases of Equity Securities
During the fourth quarter of 2021, M&T purchased shares of its common stock as follows:

Issuer Purchases of Equity Securities

(c)Total
Number of
Shares
(or Units)
Purchased
as Part of
Publicly
Announced
Plans or
Programs

(d)Maximum
Number (or
Approximate
Dollar Value)
of Shares
(or Units)
that may yet
be Purchased
Under the
Plans or
Programs (2)

(a)Total
Number
of Shares
(or Units)
Purchased (1)

(b)Average
Price Paid
per Share
(or Unit)

Period

October 1 - October 31, 2021 ......................................
November 1 - November 30, 2021 ..............................
December 1 - December 31, 2021 ...............................
Total .............................................................................

— $
—
—
— $

—
—
—
—

— $800,000,000
800,000,000
—
—
800,000,000
—

(1) The total number of shares purchased during the periods indicated includes shares purchased
as part of publicly announced programs and shares deemed to have been received from
employees who exercised stock options by attesting to previously acquired common shares in
satisfaction of the exercise price or shares received from employees upon the vesting of
restricted stock awards in satisfaction of applicable tax withholding obligations, as is permitted
under M&T’s stock-based compensation plans.

(2) On January 20, 2021, M&T’s Board of Directors authorized a stock repurchase program to

repurchase up to $800 million of common shares, with the exact number, timing, price and
terms of such repurchases to be determined at the discretion of management and subject to all
regulatory limitations. No common shares were repurchased during 2021.

Item 6.

Selected Financial Data [Reserved].

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of

Operations.

Corporate Profile and Significant Developments
M&T Bank Corporation (“M&T”) is a bank holding company headquartered in Buffalo, New York
with consolidated assets of $155.1 billion at December 31, 2021. The consolidated financial
information presented herein reflects M&T and all of its subsidiaries, which are referred to
collectively as “the Company.” M&T’s wholly owned bank subsidiaries are Manufacturers and
Traders Trust Company (“M&T Bank”) and Wilmington Trust, National Association (“Wilmington
Trust, N.A.”).

M&T Bank, with total assets of $154.7 billion at December 31, 2021, is a New York-chartered

commercial bank with 688 domestic banking offices in New York State, Maryland, New Jersey,
Pennsylvania, Delaware, Connecticut, Virginia, West Virginia and the District of Columbia, and a
full-service commercial banking office in Ontario, Canada. M&T Bank and its subsidiaries offer a
broad range of financial services to a diverse base of consumers, businesses, professional clients,
governmental entities and financial institutions located in their markets. M&T Bank lends to
consumers residing in the states noted above and to small and medium-size businesses based in those
areas, although loans are also originated through offices in other states and in Ontario, Canada.
Certain lending activities are also conducted in other states through various subsidiaries. Trust and
other fiduciary services are offered by M&T Bank and through its wholly owned subsidiary,
Wilmington Trust Company. Other subsidiaries of M&T Bank include: M&T Realty Capital

Corporation, a multifamily commercial mortgage lender; M&T Securities, Inc., which provides
institutional brokerage and securities services; Wilmington Trust Investment Advisors, Inc., which
serves as an investment advisor to the Wilmington Funds, a family of proprietary mutual funds, and
other funds and institutional clients; and M&T Insurance Agency, Inc., an insurance agency.

Wilmington Trust, N.A. is a national bank with total assets of $12.0 billion at December 31,

2021. Wilmington Trust, N.A. and its subsidiaries offer various trust and wealth management
services.

Financial results during 2020 and 2021 were adversely impacted by the effects of the
Coronavirus Disease 2019 (“COVID-19”) pandemic. Large portions of the U.S. economy were
severely impacted throughout much of those two years and as a result, many commercial and
consumer customers were negatively affected. The effects of the pandemic resulted in the Company
recognizing an elevated provision for credit losses during 2020 that reflected projections of credit
losses based on macroeconomic forecasts that were based on then existing economic conditions. As a
result, the Company recorded a provision for credit losses of $800 million in 2020. Improvements in
economic conditions and forecasts throughout 2021 led the Company to recognize a provision
recapture of $75 million in that year. In response to the pandemic, the Federal Reserve took actions
to lower interest rates that have negatively affected the Company’s net interest income since the
beginning of the pandemic.

On March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)
was signed into law. In addition to providing financial assistance to both businesses and consumers,
the CARES Act created a forbearance program for federally-backed mortgage loans, protected
borrowers from negative credit reporting due to loan accommodations resulting from the pandemic,
and provided financial institutions the option to temporarily suspend certain requirements under
GAAP related to troubled debt restructurings to account for the effects of COVID-19. The bank
regulatory agencies likewise issued guidance encouraging financial institutions to work prudently
with borrowers that were unable to meet their contractual payment obligations because of the effects
of COVID-19. That guidance, with concurrence of the Financial Accounting Standards Board, and
provisions of the CARES Act allowed modifications made on a good faith basis in response to
COVID-19 to borrowers who were generally current with their payments prior to any relief, to not be
treated as troubled debt restructurings nor be reported as past due.

The CARES Act also provided funding opportunities for small businesses under the Paycheck

Protection Program (“PPP”) from approved Small Business Administration (“SBA”) lenders,
including M&T Bank. For commercial and consumer customers, the Company provided a host of
relief options, such as payment deferrals (including maturity extensions), loan covenant waivers and
low interest rate loan products. M&T Bank funded approximately $7.0 billion of PPP loans during
2020 and another $2.9 billion in 2021, of which $1.2 billion remained outstanding at December 31,
2021.

The national effort to mitigate the pandemic has resulted in a challenging environment for
businesses and their employees. The Company has taken actions designed to help provide a safe
environment for its customers and employees and to provide relief to customers in a variety of ways.
Examples of those actions include:

• The deployment of a Pandemic Response Plan to manage the pandemic’s effects on
operations, employees and customers, including seeking to ensure employee safety, maintaining
continuity of operations and service levels for customers, preserving the Company’s financial
strength, and complying with applicable laws and regulations. Actions have included placing
restrictions on travel, implementing social distancing, health screening, sanitation and other
protocols, and mandating for all employees whose jobs can be performed remotely to work from
home where possible. In accordance with changes in Federal guidelines (e.g. the Centers for Disease
Control and Prevention) and state and local regulations, the Company has begun to roll back certain
of these measures;

• The vast majority of the Company’s non-branch employees continued to work remotely
during 2021; the Company is preparing to employ an operating model consisting of onsite, hybrid
and fully remote employee work schedules when COVID-19 infections and hospitalizations stabilize;
• M&T Bank branches remain open, with open lobbies and normal access to drive-through

windows and ATMs; and

• Some loan customers are still receiving COVID-19 related relief in various forms, including
modification and forbearance requests as of December 31, 2021 as described herein and in note 4 of
Notes to Financial Statements.

On February 22, 2021 M&T announced that it had entered into a definitive agreement with
People’s United Financial, Inc. (“People’s United”) under which People’s United will be acquired by
M&T in an all-stock transaction. Pursuant to the terms of the agreement, People’s United
shareholders will receive consideration valued at .118 of an M&T share in the form of M&T
common stock. People’s United outstanding preferred stock will be converted to a new series of
M&T preferred stock upon completion of the acquisition. The transaction is valued at approximately
$7.8 billion (with the price based on M&T’s closing price of $153.58 per share as of December 31,
2021).

As of December 31, 2021, People’s United reported $64.6 billion of assets, including $37.9
billion of loans and $10.8 billion of investment securities, $56.7 billion of liabilities, including $53.8
billion of deposits, and $7.9 billion of stockholders’ equity. The merger has been approved by the
common shareholders of M&T and People’s United, the New York State Department of Financial
Services and Connecticut Department of Banking but remains subject to approval by the Board of
Governors of the Federal Reserve System. The merger is expected to be completed promptly after
the parties have obtained approval and satisfied other customary closing conditions.

Critical Accounting Estimates
The Company’s significant accounting policies conform with generally accepted accounting
principles (“GAAP”) and are described in note 1 of Notes to Financial Statements. In applying those
accounting policies, management of the Company is required to exercise judgment in determining
many of the methodologies, assumptions and estimates to be utilized. Certain of the critical
accounting estimates are more dependent on such judgment and in some cases may contribute to
volatility in the Company’s reported financial performance should the assumptions and estimates
used change over time due to changes in circumstances. The more significant areas in which
management of the Company applies critical assumptions and estimates include the following:

•

Accounting for credit losses — Effective January 1, 2020 the Company adopted amended
accounting guidance that impacts how the allowance for credit losses is determined.
Under the new accounting guidance, the allowance for credit losses represents a valuation
account that is deducted from the amortized cost basis of certain financial assets, including
loans and leases, to present the net amount expected to be collected at the balance sheet
date. A provision for credit losses is recorded to adjust the level of the allowance as
deemed necessary by management. In estimating expected losses in the loan and lease
portfolio, borrower-specific financial data and macro-economic assumptions are utilized to
project losses over a reasonable and supportable forecast period. For certain loan pools
that share similar risk characteristics, the Company utilizes statistically developed models
to estimate amounts and timing of expected future cash flows, collateral values and other
factors used to determine the borrowers’ abilities to repay obligations. Such models
consider historical correlations of credit losses with various macroeconomic assumptions
including unemployment, gross domestic product and real estate prices. These forecasts
may be adjusted for inherent limitations or biases of the models. Subsequent to the
forecast period, the Company utilizes longer-term historical loss experience to estimate

•

losses over the remaining contractual life of the loans. Prior to 2020, the allowance for
credit losses represented the amount that in management’s judgment reflected incurred
credit losses inherent in the loan and lease portfolio as of the balance sheet date. The
estimation of the allowance for credit losses prior to 2020 did not consider reasonable and
supportable forecasts that could have affected the collectability of the reported amounts.
Changes in the circumstances considered when determining management’s estimates and
assumptions could result in changes in those estimates and assumptions, which could
result in adjustment of the allowance for credit losses in future periods. A discussion of
facts and circumstances considered by management in determining the allowance for
credit losses is included herein under the heading “Provision for Credit Losses” and in
note 5 of Notes to Financial Statements.
Valuation methodologies — Management of the Company applies various valuation
methodologies to assets and liabilities which often involve a significant degree of
judgment, particularly when liquid markets do not exist for the particular items being
valued. Quoted market prices are referred to when estimating fair values for certain assets,
such as trading assets, most investment securities, and residential real estate loans held for
sale and related commitments. However, for those items for which an observable liquid
market does not exist, management utilizes significant estimates and assumptions to value
such items. Examples of these items include loans, deposits, borrowings, goodwill, core
deposit and other intangible assets, other assets and liabilities obtained or assumed in
business combinations, capitalized servicing assets, pension and other postretirement
benefit obligations, estimated residual values of property associated with leases, and
certain derivative and other financial instruments. These valuations require the use of
various assumptions, including, among others, discount rates, rates of return on assets,
repayment rates, cash flows, default rates, costs of servicing and liquidation values. The
use of different assumptions could produce significantly different results, which could
have material positive or negative effects on the Company’s results of operations, financial
condition or disclosures of fair value information. In addition to valuation, the Company
must assess whether there are any declines in value below the carrying value of assets that
require recognition of a loss in the consolidated statement of income. Examples include
certain investments, capitalized servicing assets, goodwill and core deposit and other
intangible assets, among others. Specific assumptions and estimates utilized by
management are discussed in detail herein in management’s discussion and analysis of
financial condition and results of operations and in notes 1, 3, 4, 7, 8, 13, 19, 20 and 21 of
Notes to Financial Statements.
Commitments, contingencies and off-balance sheet arrangements — Information
regarding the Company’s commitments and contingencies, including guarantees and
contingent liabilities arising from litigation, and their potential effects on the Company’s
results of operations is included in note 22 of Notes to Financial Statements. In addition,
the Company is routinely subject to examinations from various governmental taxing
authorities. Such examinations may result in challenges to the tax return treatment applied
by the Company to specific transactions. Management believes that the assumptions and
judgment used to record tax-related assets or liabilities have been appropriate. Should tax
laws change or the tax authorities determine that management’s assumptions were
inappropriate, the result and adjustments required could have a material effect on the
Company’s results of operations. Information regarding the Company’s income taxes is
presented in note 14 of Notes to Financial Statements. The recognition or de-recognition
in the Company’s consolidated financial statements of assets and liabilities held by so-
called variable interest entities is subject to the interpretation and application of complex
accounting pronouncements or interpretations that require management to estimate and
assess the relative significance of the Company’s financial interests in those entities and

the degree to which the Company can influence the most important activities of the
entities. Information relating to the Company’s involvement in such entities and the
accounting treatment afforded each such involvement is included in note 20 of Notes to
Financial Statements.

Overview
Net income recorded by the Company in 2021 was $1.86 billion or $13.80 of diluted earnings per
common share, representing an increase of 37% and 39%, respectively, from $1.35 billion or $9.94
of diluted earnings per common share in 2020. Basic earnings per common share also increased 39%
to $13.81 in 2021 from $9.94 in 2020. In connection with M&T’s pending acquisition of People’s
United, the after-tax impact of merger-related expenses was $34 million ($44 million pre-tax), or
$.25 of basic and diluted earnings per common share in 2021. Merger-related expenses largely
consisted of professional services related to planned integration efforts associated with the merger.
There were no merger-related expenses during 2020 and 2019. Net income in 2019 totaled $1.93
billion, while diluted and basic earnings per common share were $13.75 and $13.76, respectively.
Expressed as a rate of return on average assets, net income in 2021 was 1.22%, compared with 1.00%
in 2020 and 1.61% in 2019. The return on average common shareholders’ equity was 11.54% in
2021, 8.72% in 2020 and 12.87% in 2019.

Table 1

Increase (Decrease)(a)
2020 to 2021
2019 to 2020
Amount % Amount %

EARNINGS SUMMARY
Dollars in millions

2021

2020

2019

2018

2017

(6) $ (692.4) (14) Interest income(b) ........................................... $3,953.5 $4,210.0 $4,902.4 $4,620.6 $4,202.4
$ (256.5)
386.8
(65)
(212.4)
3,815.6
(44.1)
(1)
168.0
(875.0) (109)
21.3
(11.8) —
1,829.9
4
90.3

114.0
(6) Net interest income(b)..................................... 3,839.5
(75.0)
(21.2)
3 Other income ................................................... 2,188.2

(422.9) (56) Interest expense ...............................................
(269.5)
624.0 355 Less: provision for credit losses ......................
(27.4) — Gain (loss) on bank investment securities.......
54.2

526.4
4,153.1 4,094.2
132.0
(6.3)
2,043.7 1,862.3

326.4
3,883.6
800.0
(9.4)
2,097.9

176.0
18.0

749.3

Compound
Growth Rate
5 Years
2016 to 2021

— %
(23)
2
—
—
4

Less:

95.0
131.4
683.0

5
9
38

Salaries and employee benefits ................ 2,045.7
49.9
Other expense ........................................... 1,565.9
(133.4)
(783.2) (30) Income before income taxes............................ 2,469.9

3
(9)

1,950.7
1,434.5
1,786.9

1,900.8 1,752.3
1,567.9 1,535.8
2,570.1 2,530.1

1,648.8
1,491.5
2,358.5

5
2
3

Less:

(2.6)
180.0
$ 505.6

(5.6) (24)
(201.7) (33)

34.6
(15)
43
915.6
37 $ (575.9) (30) Net income ...................................................... $1,858.8 $1,353.2 $1,929.1 $1,918.1 $1,408.3

Taxable-equivalent adjustment(b) ............
Income taxes.............................................

22.9
618.1

17.3
416.4

21.9
590.1

14.7
596.4

(11)
(4)
7 %

(a)
(b)

Changes were calculated from unrounded amounts.
Interest income data are on a taxable-equivalent basis. The taxable-equivalent adjustment represents additional income
taxes that would be due if all interest income were subject to income taxes. This adjustment, which is related to interest
received on qualified municipal securities, industrial revenue financings and preferred equity securities, is based on a
composite income tax rate of approximately 26% in 2018-2021 and 39% in prior years.

Financial results for 2021 and 2020 were adversely impacted by the COVID-19 pandemic.
Large portions of the U.S. economy were substantially curtailed for extended periods of time and, as
a result, many commercial and consumer customers were adversely impacted. Specifically, those

adverse economic impacts, coupled with an accounting change noted herein, resulted in the Company
recognizing significantly higher provisions for credit losses during 2020 as compared with previous
years. An improvement in economic conditions during 2021 led the Company to recapture provision
for credit losses of $75 million in 2021 compared with provisions for credit losses of $800 million in
2020 and $176 million in 2019. The 2020 and 2021 periods reflect the amended accounting guidance
for the measurement of expected credit losses on financial instruments. Prior to 2020, the provision
for credit losses reflected incurred losses only. In response to the pandemic, the Federal Reserve
took actions to lower interest rates that have negatively affected the Company’s net interest income
since the beginning of the pandemic. Taxable-equivalent net interest income totaled $3.84 billion,
$3.88 billion and $4.15 billion in 2021, 2020 and 2019, respectively.

Economic forecasts improved in 2021 resulting in a recapture of provision for credit losses in
2021 compared with significant provision for credit losses recorded in the prior year. During 2020,
economic forecasts utilized during each interim period resulted in higher estimates of expected credit
losses in the Company’s loan portfolio than at January 1, 2020, resulting in higher levels of the
provision for credit losses in each of those quarters as compared with the comparable 2019 periods.
Specifically, the level of the provision in 2020 reflected the ongoing impacts of the pandemic on
economic activity in the hospitality and retail sectors, the uncertainty at December 31, 2020 as to the
sufficiency and effectiveness of economic stimulus provided by the U.S. government to the
economy, and concerns about ultimate collectability of real estate loans where the borrowers
requested re-payment forbearance. Concerns remain about large sectors of the economy, including
the hotel, healthcare and office space sectors. The allowance for credit losses for commercial real
estate loans remains elevated as a result. The Company expects that it will likely continue to be
impacted by the COVID-19 pandemic after December 31, 2021. Specifically, the Company expects
that the following balance sheet and income statement categories could be affected:

• Net interest income and net interest margin – the low interest rate environment will continue
to negatively affect the Company’s net interest margin until the level of general interest rates rises;
• Provision for credit losses – although the economy has experienced a recovery in 2021, it is

possible that economic assumptions used to calculate the allowance for credit losses at the end of
future reporting periods could deteriorate, resulting in higher levels of the provision and allowance
for credit losses. In addition, the impact on borrowers’ ability to repay loans could be negatively
affected, potentially leading to increased charge-offs;

• A resurgence of the pandemic or emergence of COVID-19 variants in large parts of the

country may impact customer demand for many of the Company’s products and services, in
particular credit and deposit-related products and services.

Effective January 1, 2020, M&T adopted amended accounting guidance for the measurement of

credit losses on financial instruments. That guidance required an allowance for credit losses to be
deducted from the amortized cost basis of financial assets to present the net carrying value that is
expected to be collected over the contractual term of the assets considering relevant information
about past events, current conditions, and reasonable and supportable forecasts that affect the
collectability of the reported amount. The accounting guidance replaced the previous incurred loss
model for determining the allowance for credit losses. The adoption of the amended guidance
resulted in a $132 million increase in the allowance for credit losses as of January 1, 2020.
Additional information on the amended accounting guidance is provided under the heading
“Provision for Credit Losses” and in note 5 of Notes to Financial Statements.

There were several notable matters during 2019 that impacted that year’s results. In the first
quarter of 2019, the Company recognized an expense of $50 million (reflected in “other costs of
operations”) to increase its reserve for legal matters associated with a subsidiary’s role as trustee of
Employee Stock Ownership Plans in its Institutional Client Services business. That expense, on an
after-tax basis, reduced net income by $37 million, or $.27 of diluted earnings per common share. In

July 2019, M&T agreed to sell its non-controlling interest in an asset manager obtained in the 2011
acquisition of Wilmington Trust Corporation that had been accounted for using the equity method of
accounting and, as a result, as of June 30, 2019 recorded a $48 million charge (reflected in “other
costs of operations”) to reduce the carrying value of the investment to its estimated net realizable
value. Similar to other active investment managers, the investee entity had experienced a decrease in
assets under management and during the second quarter of 2019 the entity’s chief executive and
investment officer announced his retirement. Following that announcement, successor management
submitted a proposal to M&T to restructure the organization of the entity. The after-tax impact of the
charge was a reduction in net income of $36 million, or $.27 of diluted earnings per common share.
The sale of M&T’s interest in the asset manager was effective September 30, 2019.

Reflecting the matters discussed previously, taxable-equivalent net interest income was $3.84

billion in 2021, compared with $3.88 billion in 2020. That decline resulted from a 40 basis point
(hundredths of one percent) narrowing of the net interest margin, or taxable-equivalent net interest
income expressed as an annualized percentage of average earning assets, to 2.76% in 2021 from
3.16% in 2020, partially offset by the impact of an increase in average earning assets to $139.1
billion in 2021 from $122.9 billion in 2020. The increase in average earning assets resulted from
higher amounts of low-yielding balances maintained by the Company at the Federal Reserve Bank
(“FRB”) of New York. Taxable-equivalent net interest income decreased 6% in 2020 from $4.15
billion in 2019. That decrease resulted from a 68 basis point narrowing of the net interest margin
from 3.84% in 2019, partially offset by the impact of an increase in average earning assets from
$108.2 billion in 2019 that reflected higher balances of loans and amounts held at the FRB of New
York.

The provision for credit losses declined significantly in 2021 resulting in a recapture of
previously recorded provisions of $75 million, compared with a provision for credit losses of $800
million recorded in 2020. The provision in 2019 was $176 million. Net charge-offs in 2021, 2020 and
2019 were $192 million, $247 million and $144 million, respectively.

Other income totaled $2.17 billion in 2021, $2.09 billion in 2020 and $2.06 billion in 2019. As

compared with 2020, higher amounts of trust income, service charges on deposit accounts, and
brokerage services income in 2021 were partially offset by lower trading account and foreign
exchange gains, a higher loss on bank investment securities and less in distributions from Bayview
Lending Group LLC (“BLG”). Comparing 2020 with 2019, a 24% rise in mortgage banking
revenues, higher trust income and increased income from BLG were partially offset by a declines in
service charges on deposit accounts, trading account and foreign exchange gains and loan
syndication fees.

Other expense totaled $3.61 billion in 2021, compared with $3.39 billion in 2020 and $3.47
billion in 2019. Included in those amounts are expenses considered by M&T to be “nonoperating” in
nature, consisting of amortization of core deposit and other intangible assets of $10 million, $15
million and $19 million in 2021, 2020 and 2019, respectively, and merger-related expenses of $44
million in 2021. No merger-related expenses were recorded in 2020 and 2019. Exclusive of those
nonoperating expenses, noninterest operating expenses totaled $3.56 billion in 2021, compared with
$3.37 billion in 2020 and $3.45 billion in 2019. The higher level of such expenses in 2021 as
compared with 2020 was due to increased costs for salaries and employee benefits, outside data
processing and software, FDIC assessments, and professional services. Contributing to the lower
level of noninterest operating expenses in 2020 as compared with 2019 were decreased costs for
professional services, legal-related matters, advertising and marketing, travel and entertainment, and
a $48 million charge in the second quarter of 2019 associated with the sale of an equity investment in
an asset manager. Those factors were partially offset by higher costs for salaries and employee
benefits, outside data processing and software, increases to the valuation allowance for capitalized
residential mortgage servicing rights and $14 million of expenses related to the planned transition of

the support for the Company’s retail brokerage and advisory business to the platform of LPL
Financial.

The efficiency ratio measures the relationship of noninterest operating expenses to revenues.
The Company’s efficiency ratio, or noninterest operating expenses (as previously defined) divided by
the sum of taxable-equivalent net interest income and noninterest income (exclusive of gains and
losses from bank investment securities), was 59.0% in 2021, compared with 56.3% and 55.7% in
2020 and 2019, respectively. The calculations of the efficiency ratio are presented in table 2.

The Company’s effective tax rate was 24.3% in 2021 and 2019, compared with 23.5% in 2020.

Supplemental Reporting of Non-GAAP Results of Operations
As a result of business combinations and other acquisitions, the Company had intangible assets
consisting of goodwill and core deposit and other intangible assets totaling $4.6 billion at each of
December 31, 2021 and 2020, consisting predominantly of goodwill. Amortization of core deposit
and other intangible assets, after-tax effect, totaled $8 million, $11 million and $14 million during
2021, 2020 and 2019, respectively.

M&T consistently provides supplemental reporting of its results on a “net operating” or
“tangible” basis, from which M&T excludes the after-tax effect of amortization of core deposit and
other intangible assets (and the related goodwill, core deposit intangible and other intangible asset
balances, net of applicable deferred tax amounts) and gains (when realized) and expenses (when
incurred) associated with merging acquired or to be acquired operations with and into the Company,
since such items are considered by management to be “nonoperating” in nature. In 2021, those
merger-related expenses generally consisted of professional services, reflecting legal expenses and
technology-related efforts to prepare for the integration of People’s United’s systems with those of
the Company, and printing costs associated with the production of the joint proxy
statement/prospectus distributed to the shareholders of M&T and People’s United. Such expenses
totaled $44 million ($34 million after-tax) in 2021. There were no merger-related gains or expenses
in 2020 and 2019. Although “net operating income” as defined by M&T is not a GAAP measure,
M&T’s management believes that this information helps investors understand the effect of
acquisition activity in reported results.

Net operating income was $1.90 billion in 2021, $1.36 million in 2020, and $1.94 billion in
2019. Diluted net operating earnings per common share were $14.11 in 2021, $10.02 in 2020 and
$13.86 in 2019.

Net operating income expressed as a rate of return on average tangible assets was 1.28% in
2021, compared with 1.04% in 2020 and 1.69% in 2019. Net operating income represented a return
on average tangible common equity of 16.80% in 2021, compared with 12.79% in 2020 and 19.08%
in 2019.

Reconciliations of GAAP amounts with corresponding non-GAAP amounts are presented in

table 2.

Table 2

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

Income statement data
Dollars in thousands, except per share
Net income
Net income ..................................................................................................................................................................................
Amortization of core deposit and other intangible assets(a) .......................................................................................................
Merger-related expenses(a) .........................................................................................................................................................
Net operating income ..........................................................................................................................................................

Earnings per common share
Diluted earnings per common share ............................................................................................................................................
Amortization of core deposit and other intangible assets(a) .......................................................................................................
Merger-related expenses(a) .........................................................................................................................................................
Diluted net operating earnings per common share..............................................................................................................

Other expense
Other expense ..............................................................................................................................................................................
Amortization of core deposit and other intangible assets............................................................................................................
Merger-related expenses..............................................................................................................................................................
Noninterest operating expense ............................................................................................................................................

Merger-related expenses
Salaries and employee benefits ...................................................................................................................................................
Equipment and net occupancy.....................................................................................................................................................
Outside data processing and software .........................................................................................................................................
Advertising and marketing ..........................................................................................................................................................
Printing, postage and supplies .....................................................................................................................................................
Other costs of operations .............................................................................................................................................................
Other expense......................................................................................................................................................................

Efficiency ratio
Noninterest operating expense (numerator) ................................................................................................................................

Taxable-equivalent net interest income.......................................................................................................................................
Other income ...............................................................................................................................................................................
Less: Gain (loss) on bank investment securities .........................................................................................................................
Denominator ................................................................................................................................................................................

Efficiency ratio ............................................................................................................................................................................

Balance sheet data
In millions....................................................................................................................................................................................
Average assets ............................................................................................................................................................................
Average assets .............................................................................................................................................................................
Goodwill ......................................................................................................................................................................................
Core deposit and other intangible assets .....................................................................................................................................
Deferred taxes..............................................................................................................................................................................
Average tangible assets.......................................................................................................................................................

Average common equity
Average total equity ....................................................................................................................................................................
Preferred stock.............................................................................................................................................................................
Average common equity .....................................................................................................................................................
Goodwill ......................................................................................................................................................................................
Core deposit and other intangible assets .....................................................................................................................................
Deferred taxes..............................................................................................................................................................................
Average tangible common equity .......................................................................................................................................

At end of year
Total assets
Total assets ..................................................................................................................................................................................
Goodwill ......................................................................................................................................................................................
Core deposit and other intangible assets .....................................................................................................................................
Deferred taxes..............................................................................................................................................................................
Total tangible assets ............................................................................................................................................................

Total common equity
Total equity..................................................................................................................................................................................
Preferred stock.............................................................................................................................................................................
Common equity...................................................................................................................................................................
Goodwill ......................................................................................................................................................................................
Core deposit and other intangible assets .....................................................................................................................................
Deferred taxes..............................................................................................................................................................................
Total tangible common equity ............................................................................................................................................

(a)

After any related tax effect.

2021

2020

2019

1,858,746
7,532
33,560
1,899,838

13.80
.06
.25
14.11

3,611,623
(10,167 )
(43,860 )
3,557,596

176
341
1,119
866
2,965
38,393
43,860

3,557,596

3,839,509
2,166,994
(21,220 )
6,027,723

59.0 %

152,669
(4,593 )
(8 )
2
148,070

16,909
(1,438 )
15,471
(4,593 )
(8 )
2
10,872

155,107
(4,593 )
(4 )
1
150,511

17,903
(1,750 )
16,153
(4,593 )
(4 )
1
11,557

1,353,152
10,993
—
1,364,145

9.94
.08
—
10.02

3,385,240
(14,869 )
—
3,370,371

1,929,149
14,359
—
1,943,508

13.75
.11
—
13.86

3,468,682
(19,490 )
—
3,449,192

— $
—
—
—
—
—
— $

—
—
—
—
—
—
—

3,370,371

3,883,605
2,088,444
(9,421 )
5,981,470

56.3 %

135,480
(4,593 )
(21 )
5
130,871

15,991
(1,250 )
14,741
(4,593 )
(21 )
5
10,132

142,601
(4,593 )
(14 )
4
137,998

16,187
(1,250 )
14,937
(4,593 )
(14 )
4
10,334

3,449,192

4,153,127
2,061,679
18,037
6,196,769

55.7 %

119,584
(4,593 )
(38 )
10
114,963

15,718
(1,272 )
14,446
(4,593 )
(38 )
10
9,825

119,873
(4,593 )
(29 )
7
115,258

15,717
(1,250 )
14,467
(4,593 )
(29 )
7
9,852

Net Interest Income/Lending and Funding Activities
Taxable-equivalent net interest income was $3.84 billion in 2021, compared with $3.88 billion in
2020. The decrease in 2021 was primarily attributable to a 40 basis point narrowing of the net
interest margin to 2.76% in 2021 from 3.16% in 2020 reflecting lower yields on loans offset, in part,
by lower rates paid on deposits, and reduced balances of investment securities. Those net impacts
were partially offset by increased deposits held at the FRB of New York that serve to increase net
interest income, but, due to their low yield, reduce the reported net interest margin.

Average earnings assets were $139.1 billion and $122.9 billion in 2021 and 2020, respectively.
Average loans and leases were $96.6 billion in both 2021 and 2020. Average balances of commercial
loans and leases decreased $2.3 billion or 8% to $25.2 billion in 2021 from $27.5 billion in 2020.
That decrease was largely the result of a decline in average balances of PPP loans due to loan
forgiveness by the SBA, lower dealer floor plan balances reflecting automobile production and
inventory issues experienced by the industry and subdued loan demand by commercial customers, in
general. PPP loans averaged $4.1 billion in 2021 compared with $4.4 billion in 2020. Average
commercial real estate loan balances were up $336 million or 1% to $37.3 billion in 2021 from $37.0
billion in 2020. Consumer loans averaged $17.3 billion in 2021, an increase of $1.4 billion or 9%
from $15.9 billion in 2020, due to growth in recreational finance loans (consisting predominantly of
loans secured by recreational vehicles and boats) and, to a lesser extent, automobile loans that was
partially offset by declines in average outstanding balances of home equity loans and lines of credit.
Average residential real estate loans were $16.8 billion and $16.2 billion in 2021 and 2020,
respectively, reflecting repurchases of government-guaranteed loans from Ginnie Mae pools that are
serviced by the Company. The Company repurchases government-guaranteed loans to reduce
associated servicing costs, namely a requirement to advance principal and interest payments that had
not been received from individual mortgagors, including payments deferred under COVID-19
forbearance arrangements. The loans repurchased from Ginnie Mae pools averaged $3.3 billion in
2021, up from $2.6 billion in 2020. Additionally, late in the third quarter of 2021 the Company began
to retain recently originated residential mortgage loans in portfolio rather than sell such loans. These
increases were offset by the ongoing repayments of loans by customers.

Net interest income expressed on a taxable-equivalent basis aggregated $3.88 billion in 2020,

down 6% from $4.15 billion in 2019. That decline primarily resulted from a 68 basis point narrowing
of the net interest margin, largely the result of declines in yields on loans and balances held at the
FRB of New York, reflecting the lower interest rate environment due to actions initiated by the
Federal Reserve to decrease its target Federal funds rate three times in the second half of 2019 (each
by a .25% increment) and twice in March of 2020 (first by .50%, then another by 1.0%). The lower
net interest margin was partially offset by the impact of a $14.6 billion, or 14%, increase in average
earning assets to $122.9 billion in 2020 from $108.2 billion in 2019 that reflected increases in
average loan and lease balances of $7.1 billion and in interest-bearing deposits at banks of $8.5
billion, partially offset by a decline in average balances of investment securities of $3.4 billion.

Average loans and leases rose $7.1 billion, or 8%, in 2020 from $89.5 billion in 2019. Average
balances of commercial loans and leases increased $4.2 billion or 18% to $27.5 billion in 2020 from
$23.3 billion in 2019. That increase was the result of average outstanding PPP loans of $4.4 billion
that were predominantly funded in the second quarter of 2020. Average commercial real estate loan
balances were up $2.1 billion or 6% to $37.0 billion in 2020 from $34.9 billion in 2019. Consumer
loans averaged $15.9 billion in 2020, up $1.2 billion or 9% from $14.6 billion in 2019, due to growth
in recreational finance loans and automobile loans that was partially offset by declines in outstanding
balances of home equity loans and lines of credit. Average residential real estate loans were $16.2
billion in 2020 and $16.7 billion in 2019, reflecting ongoing payments by customers, partially offset
by repurchases of government-guaranteed loan from Ginnie Mae pools. These repurchased loans
averaged $2.6 billion in 2020, up from $889 million in 2019.

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Table 4 summarizes average loans and leases outstanding in 2021 and percentage changes in the

major components of the portfolio over the past two years.

Table 4

AVERAGE LOANS AND LEASES
(Net of unearned discount)

Percent Increase
(Decrease) from

2020 to
2021

2019 to
2020

2021

(In millions)

Commercial, financial, etc........................................................................ $
Real estate — commercial........................................................................
Real estate — consumer ...........................................................................
Consumer

Recreational finance ...........................................................................
Automobile .........................................................................................
Home equity lines and loans...............................................................
Other ...................................................................................................
Total consumer ..............................................................................

Total ......................................................................................... $

25,191
37,321
16,770

7,680
4,449
3,725
1,477
17,331
96,613

(8) %
1
3

21
14
(12)
5
9
— %

18 %
6
(3)

31
4
(9)
2
9
8 %

Commercial loans and leases, excluding loans secured by real estate, totaled $23.5 billion at
December 31, 2021, representing 25% of total loans and leases. Table 5 presents information on
commercial loans and leases as of December 31, 2021 relating to geographic area, size, borrower
industry and whether the loans are secured by collateral or unsecured. Of the $23.5 billion of
commercial loans and leases outstanding at the end of 2021, approximately $19.9 billion, or 85%,
were secured, while 35%, 17% and 28% were granted to businesses in New York State, Pennsylvania
and in the Mid-Atlantic area (which includes Delaware, Maryland, New Jersey, Virginia, West
Virginia and the District of Columbia), respectively. The Company provides financing for leases to
commercial customers, primarily for equipment. Commercial leases included in total commercial
loans and leases at December 31, 2021 aggregated $1.0 billion, of which 48% were secured by
collateral located in New York State, 14% were secured by collateral in Pennsylvania and another
20% were secured by collateral in the Mid-Atlantic area.

Table 5

COMMERCIAL LOANS AND LEASES, NET OF UNEARNED DISCOUNT
(Excludes Loans Secured by Real Estate)

December 31, 2021

New York

Pennsylvania

Mid-
Atlantic(a)
(Dollars in millions)

Other

Total

Percent of
Total

Services ............................................. $1,390
1,284
Manufacturing ...................................
Motor vehicle and recreational

finance dealers................................
Financial and insurance.....................
Wholesale..........................................
Retail .................................................
Construction ......................................
Real estate investors..........................
Transportation, communications,

859
1,197
642
384
478
736

674
711

507
257
546
254
351
172

$1,363
788

$ 524
627

$ 3,951
3,410

422
627
631
533
580
488

443
501
22
33
71
$6,502

1,233
913
418
329
84
56

335
60
14
10
93
$4,696

3,021
2,994
2,237
1,500
1,493
1,452

1,348
1,326
165
127
449
$23,473

17%
14%

13%
13%
9%
6%
6%
6%

6%
6%
1%
1%
2%
100%

227
183
38
56
144
$ 4,120

utilities............................................
343
Health services ..................................
582
Public administration ........................
91
Agriculture, forestry, fishing, etc. .....
28
141
Other..................................................
Total .................................................. $8,155
Percent of total ..................................
Percent of dollars outstanding
Secured..............................................
Unsecured..........................................
Leases................................................
Total ..................................................
Percent of dollars outstanding by

73%
21
6
100%

35%

size of loan

Less than $1 million ..........................
$1 million to $5 million ....................
$5 million to $10 million ..................
$10 million to $20 million ................
$20 million to $30 million ................
$30 million to $50 million ................
Greater than $50 million ...................
Total ..................................................

26%
25
12
11
7
7
12
100%

17%

28%

20%

100%

83%
14
3
100%

21%
24
17
16
11
6
5
100%

81%
16
3
100%

25%
21
11
12
8
9
14
100%

91%
5
4
100%

12%
20
15
16
11
11
15
100%

81%
15
4
100%

22%
23
14
12
9
8
12
100%

(a)

Includes Delaware, Maryland, New Jersey, Virginia, West Virginia and the District of Columbia.

International loans included in commercial loans and leases totaled $116 million and $100
million at December 31, 2021 and 2020, respectively. Included in such amounts at each of those
dates were $94 million of loans at M&T Bank’s commercial banking office in Ontario, Canada. The
remaining international loans were predominantly to domestic companies with foreign operations.

Loans secured by real estate, including outstanding balances of home equity loans and lines of
credit which the Company classifies as consumer loans, represented approximately 59% of the loan
and lease portfolio during each of 2021 and 2020, compared with 63% in 2019. At December 31,
2021, the Company held approximately $35.4 billion of commercial real estate loans (including $425
million held for sale), $16.1 billion of consumer real estate loans secured by one-to-four family
residential properties (including $474 million of loans held for sale) and $3.6 billion of outstanding
balances of home equity loans and lines of credit, compared with $37.6 billion, $16.8 billion and $4.0
billion, respectively, at December 31, 2020. Included in commercial real estate loans at
December 31, 2021 and 2020 were construction loans of $9.3 billion and $10.0 billion, respectively,
including amounts due from builders and developers of residential real estate aggregating $1.4 billion
and $1.3 billion at December 31, 2021 and 2020, respectively. Commercial real estate loans included
loans held for sale totaling $425 million and $278 million at December 31, 2021 and 2020,
respectively. International loans included in commercial real estate loans totaled $74 million at
December 31, 2021 and $60 million at December 31, 2020.

Commercial real estate loans originated by the Company include both fixed and variable rate

instruments with monthly payments and a balloon payment of the remaining unpaid principal at
maturity. Maturity dates generally range from five to ten years and, for borrowers in good standing,
the terms of such loans may be extended by the customer following maturity at the then-current
market rate of interest. Adjustable-rate commercial real estate loans represented approximately 69%
of the commercial real estate loan portfolio at the 2021 year-end. Table 6 presents commercial real
estate loans by geographic area, type of collateral and size of the loans outstanding at December 31,
2021. New York City area commercial real estate loans totaled $8.2 billion at December 31, 2021.
The $7.1 billion of investor-owned commercial real estate loans in the New York City area were
largely secured by multifamily residential properties, retail space and office space. The Company’s
experience has been that office, retail and service-related properties tend to demonstrate more
volatile fluctuations in value through economic cycles and changing economic conditions than do
multifamily residential properties. Approximately 67% of the aggregate dollar amount of New York
City area loans were for loans with outstanding balances of $30 million or less, while loans of more
than $50 million made up approximately 18% of the total.

Commercial real estate loans secured by properties located in other parts of New York State,

Pennsylvania and the Mid-Atlantic area tend to have a greater diversity of collateral types and
include a significant amount of lending to customers who use the mortgaged property in their trade or
business (owner-occupied). Approximately 93% of the aggregate dollar amount of commercial real
estate loans in New York State secured by properties located outside of the New York City area were
for loans with outstanding balances of $30 million or less. Of the outstanding balances of commercial
real estate loans in Pennsylvania and the Mid-Atlantic area, approximately 81% and 77%,
respectively, were for loans with outstanding balances of $30 million or less.

Commercial real estate loans secured by properties located outside of Pennsylvania, the Mid-

Atlantic area and New York State comprised 22% of total commercial real estate loans as of
December 31, 2021.

Commercial real estate construction and development loans made to investors presented in

table 6 totaled $8.9 billion at December 31, 2021, or 10% of total loans and leases. Approximately
82% of those construction loans had adjustable interest rates. Included in such loans at the 2021 year-
end were $1.4 billion of loans to builders and developers of residential real estate properties. The
remainder of the commercial real estate construction loan portfolio was comprised of loans made for
various purposes, including the construction of office buildings, multifamily residential housing,
retail space and other commercial development.

Table 6

COMMERCIAL REAL ESTATE LOANS, NET OF UNEARNED DISCOUNT

December 31, 2021

New York State

New York
City

Other

Penn-
sylvania

Mid-
Atlantic(a)
(Dollars in millions)

Other

Total

Percent of
Total

Investor-owned

Permanent finance by property

type
Retail/Service ................................... $ 1,468
1,080
Apartments/Multifamily ...................
889
Office................................................
512
Health facilities.................................
574
Hotel .................................................
213
Industrial/Warehouse........................
147
Other .................................................
4,883
Total permanent .........................

Construction/Development

Commercial

Construction ..................................
Land/Land development ...............

1,929
154

Residential builder and developer

Construction ..................................
Land/Land development ...............

Total construction/

development ............................
Total investor-owned...............................
Owner-occupied by industry(b)

Other services ...................................
Motor vehicle and recreational
finance dealers ................................
Retail ................................................
Health services .................................
Wholesale .........................................
Manufacturing ..................................
Real estate investors .........................
Other .................................................
Total owner-occupied ................

191
175
106
98
102
57
146
1,123
Total commercial real estate ................... $ 8,242

116
37

2,236
7,119

248

632
1,115
896
472
369
217
25
3,726

460
25

18
11

514
4,240

393

409
407
481
434
220
265
13
2,229

539
12

55
40

646
2,875

212

906
532
1,023
638
765
426
70
4,360

2,001
164

179
96

2,440
6,800

568

233
172
280
73
204
88
190
1,633
$ 5,873

339
282
64
143
92
78
211
1,421
$ 4,296

331
415
170
243
135
216
348
2,426
$ 9,226

912
779
567
638
653
306
—
3,855

2,011
151

588
266

3,016
6,871

$ 4,327
3,913
3,856
2,694
2,581
1,427
255
19,053

6,940
506

956
450

8,852
27,905

1,505

360
205
10
127
35
38
23
882
$ 7,753

1,454
1,249
630
684
568
477
918
7,485
$ 35,390

Percent of total ........................................

23%

17%

12%

26%

22%

100%

Percent of dollars outstanding by

size of loan

Less than $1 million ................................
$1 million to $5 million...........................
$5 million to $10 million.........................
$10 million to $30 million.......................
$30 million to $50 million.......................
$50 million to $100 million.....................
Greater than $100 million .......................
Total ........................................................

4%
15
15
33
15
15
3
100%

14%
25
21
33
4
—
3
100%

11%
21
18
31
18
1
—
100%

10%
18
15
34
16
4
3
100%

8%
11
12
34
21
7
7
100%

9%
17
16
33
15
6
4
100%

(a)
(b)

Includes Delaware, Maryland, New Jersey, Virginia, West Virginia and the District of Columbia.
Includes $405 million of construction loans.

12%
11
11
8
7
4
1
54%

20%
1

3
1

25%
79%

4
3
2
2
2
1
3
21%
100%

M&T Realty Capital Corporation, a commercial real estate lending subsidiary of M&T Bank,

participates in the Delegated Underwriting and Servicing (“DUS”) program of Fannie Mae, pursuant
to which commercial real estate loans are originated in accordance with terms and conditions
specified by Fannie Mae and sold. Under this program, loans are sold with partial credit recourse to
M&T Realty Capital Corporation. The amount of recourse is generally limited to one-third of any
credit loss incurred by the purchaser on an individual loan, although in some cases the recourse
amount is less than one-third of the outstanding principal balance. The Company’s maximum credit
risk for recourse associated with sold commercial real estate loans was approximately $4.0 billion at
each of December 31, 2021 and 2020. There have been no material losses incurred as a result of
those recourse arrangements. At December 31, 2021 and 2020, commercial real estate loans serviced
by the Company for other investors were $23.7 billion and $22.2 billion, respectively. Reflected in
commercial real estate loans serviced for others were loans sub-serviced for others that had
outstanding balances of $3.5 billion and $3.3 billion at December 31, 2021 and 2020, respectively.
Real estate loans secured by one-to-four family residential properties were $16.1 billion at
December 31, 2021, including approximately 36% secured by properties located in New York State,
7% secured by properties located in Pennsylvania, 17% secured by properties in New Jersey and
17% secured by properties located in other Mid-Atlantic areas. Included in residential real estate
loans were loans repurchased by the Company from Ginnie Mae pools as previously described.
Those repurchased loans totaled $2.8 billion at December 31, 2021 and $2.7 billion at December 31,
2020. The Company’s portfolio of limited documentation residential real estate loans held for
investment totaled $1.3 billion at December 31, 2021, compared with $1.6 billion at December 31,
2020. That portfolio consisted predominantly of limited documentation loans acquired in a prior
business combination. Such loans represent loans that at origination typically included some form of
limited borrower documentation requirements as compared with more traditional residential real
estate loans. The acquired loans that were eligible for limited documentation processing were
available in amounts up to 65% of the lower of the appraised value or purchase price of the property.
Loans to individuals to finance the construction of one-to-four family residential properties totaled
$57 million at December 31, 2021 and $77 million at December 31, 2020, or approximately .1% of
total loans and leases at each of those dates. Information about the credit performance of the
Company’s residential real estate loans is included herein under the heading “Provision For Credit
Losses.”

Consumer loans comprised approximately 19% of total loans and leases at December 31, 2021
and 17% at December 31, 2020. Outstanding balances of recreational finance loans represented the
largest component of the consumer loan portfolio at December 31, 2021 and totaled $8.1 billion or
approximately 9% of total loans, up from $7.1 billion or 7% at December 31, 2020. That growth
reflects continued consumer demand for such loans. Home equity loans and lines of credit
outstanding at December 31, 2021 and December 31, 2020 were $3.6 billion and $4.0 billion,
respectively. Approximately 41% of home equity loans and lines of credit outstanding at
December 31, 2021 were secured by properties in New York State, 22% in Maryland, 21% in
Pennsylvania and 5% in New Jersey. Outstanding automobile loan balances rose to $4.7 billion at
December 31, 2021 from $4.1 billion at December 31, 2020. That increase also reflects continued
consumer demand for motor vehicles despite recent supply chain disruptions.

Table 7 presents the composition of the Company’s loan and lease portfolio at the end of 2021,

including outstanding balances to businesses and consumers in New York State, Pennsylvania, the
Mid-Atlantic area and other states.

Table 7

LOANS AND LEASES, NET OF UNEARNED DISCOUNT

December 31, 2021

Outstandings
(In millions)

Real estate

Residential ................................ $ 16,074
35,390
Commercial ..............................
51,464
Total real estate ....................
Commercial, financial, etc.............
22,471
Consumer

Recreational finance .................
Home equity lines and loans.....
Automobile ...............................
Other secured or guaranteed .....
Other unsecured........................
Total consumer ....................
Total loans.......................
Commercial leases.........................

8,053
3,563
4,679
677
1,003
17,975
91,910
1,002
Total loans and leases ..... $ 92,912

Percent of Dollars Outstanding

Mid-Atlantic

New
York

Penn-
sylvania Maryland

New
Jersey

Other(a)

Other

36%
40
39%
34%

10%
41
27
27
38
23%
34%
48%
35%

7%
12
10%
18%

21
18
8
19
13%
13%
14%
13%

9%
10
10%
13%

22
12
9
26
11%
11%
12%
11%

17%
7
10%
7%

4%
5
7
3
3
4%
8%
6%
8%

8%
9
8%
8%

5%
9
15
19
11

9%
9%
2%
9%

23%
22
23%
20%

72%
2
21
34
3
40%
25%
18%
24%

(a)

Includes Delaware, Virginia, West Virginia and the District of Columbia.

The investment securities portfolio averaged $6.4 billion in 2021, down from $8.2 billion and

$11.6 billion in 2020 and 2019, respectively. The decline in average balances of investment
securities in 2021 and 2020 was predominantly due to maturities and pay downs of mortgage-backed
securities and maturities of U.S. Treasury notes. During 2021 the Company purchased approximately
$1.6 billion of fixed rate residential mortgage-backed securities and approximately $680 million of
U.S. Treasury notes. There were no significant purchases of investment securities during 2020.
During 2019, the Company purchased $500 million of U.S. Treasury notes. Sales of investment
securities were not significant in 2021, 2020 or 2019. The Company routinely has increases and
decreases in its holdings of capital stock of the Federal Home Loan Bank (“FHLB”) of New York
and the FRB of New York. Those holdings are accounted for at cost and are adjusted based on the
amounts of outstanding borrowings and available lines of credit with those entities.

The investment securities portfolio is largely comprised of residential mortgage-backed
securities 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
may occasionally 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 available
yield in comparison with alternative investments, demand for loans, which generally yield more than

investment securities, ongoing repayments, the levels of deposits, and management of liquidity and
balance sheet size and resulting capital ratios.

Fair value changes in equity securities with readily determinable fair values are recognized in

the consolidated statement of income. Net unrealized losses on such equity securities were $21
million in 2021 and $9 million in 2020, compared with net unrealized gains of $18 million in 2019.
Those gains and losses were predominantly related to the Company’s holdings of Fannie Mae and
Freddie Mac preferred stock.

The Company regularly reviews its debt investment securities for declines in value below
amortized cost that might be indicative of credit-related losses. In light of such reviews, there were
no credit-related losses on debt investment securities recognized in 2021, 2020 or 2019. Based on
management’s assessment of future cash flows associated with individual investment securities as of
December 31, 2021, the Company did not expect to incur any material credit-related losses in its
portfolios of debt investment securities. A further discussion of fair values of investment securities is
included herein under the heading “Capital.” Additional information about the investment securities
portfolio is included in notes 3 and 21 of Notes to Financial Statements.

Other earning assets include interest-bearing balances at the FRB of New York and other banks,

trading account assets, federal funds sold and agreements to resell securities. Those other earning
assets in the aggregate averaged $36.0 billion in 2021, $18.1 billion in 2020 and $7.2 billion in 2019.
Interest-bearing deposits at banks averaged $35.8 billion in 2021, compared with $15.3 billion in
2020 and $6.8 billion in 2019. The amounts of interest-bearing deposits at banks at the respective
dates were predominantly comprised of deposits held at the FRB of New York. The levels of those
deposits often fluctuate due to changes in trust-related deposits of commercial entities, purchases or
maturities of investment securities, or borrowings to manage the Company’s liquidity. The higher
amount in 2021 as compared with 2020 and 2019 reflects increased commercial and consumer
deposit balances. Agreements to resell securities averaged $167 million, $2.7 billion, $327 million in
2021, 2020 and 2019, respectively. The higher average balance in 2020 reflects the temporary
investment by the Company of increased customer deposit levels.

Table 8

AVERAGE CORE DEPOSITS

Percent Increase
(Decrease) from

2020 to
2021

2019 to
2020

2021

(In millions)

67,048
Savings and interest-checking deposits.................................................... $
2,861
Time deposits ...........................................................................................
55,666
Noninterest-bearing deposits....................................................................
Total ......................................................................................................... $ 125,575

12 %
(33)
34
19 %

15 %
(18)
35
20 %

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 were $125.6 billion in 2021, compared with $105.7
billion in 2020 and $87.9 billion in 2019. Average balances of savings and interest-checking core
deposits rose $7.3 billion or 12% in 2021 to $67.0 billion from $59.8 billion in 2020. Average
noninterest-bearing deposits increased $14.0 billion or 34% to $55.7 billion in 2021 from $41.7
billion in 2020. A continuance of the trend observed in 2020, those increases were largely due to

higher average deposits of commercial and consumer customers. Average core deposits in 2020 were
up 20% as compared with 2019. Average savings and interest-checking core deposit balances rose
$7.9 billion or 15% in 2020 from $51.9 billion in 2019. Average noninterest-bearing deposits in
2020 increased $10.9 billion or 35% from $30.8 million in 2019. Funding provided by core deposits
represented 90% of average earning assets in 2021, compared with 86% in 2020 and 81% in 2019.
Table 8 summarizes average core deposits in 2021 and percentage changes in the components of such
deposits over the past two years. Core deposits totaled $128.0 billion and $114.2 billion at
December 31, 2021 and 2020, respectively.

Table 9

AVERAGE DEPOSITS

Retail

Trust

Commercial
and Other

Total

(In millions)

2021
Savings and interest-checking deposits.................................... $ 33,964
3,062
Time deposits ...........................................................................
8,379
Noninterest-bearing deposits....................................................
Deposits at Cayman Islands office ...........................................
—
Total ......................................................................................... $ 45,405

2020
Savings and interest-checking deposits.................................... $ 29,072
4,657
Time deposits ...........................................................................
6,572
Noninterest-bearing deposits....................................................
Deposits at Cayman Islands office ...........................................
—
Total ......................................................................................... $ 40,301

2019
Savings and interest-checking deposits.................................... $ 26,814
5,739
Time deposits ...........................................................................
5,352
Noninterest-bearing deposits....................................................
Deposits at Cayman Islands office ...........................................
—
Total ......................................................................................... $ 37,905

6,021
25
10,529
—
$ 16,575

5,631
50
5,406
—
$ 11,087

6,453
46
4,219
—
$ 10,718

30,894
176
36,758
181
68,009

$ 70,879
3,263
55,666
181
$129,989

28,887
253
29,705
1,117
59,962

$ 63,590
4,960
41,683
1,117
$111,350

21,343
524
21,192
1,367
44,426

$ 54,610
6,309
30,763
1,367
$ 93,049

The Company also receives funding from other deposit sources, including branch-related time
deposits over $250,000, brokered deposits and, prior to June 30, 2021, deposits associated with the
Company’s Cayman Islands office. Time deposits over $250,000 averaged $402 million in 2021,
$683 million in 2020 and $956 million in 2019. The decline in such deposits from 2019 through 2021
was predominantly the result of maturities of time deposits and, due to the low interest rate
environment, a reduced demand from customers for time deposit products. Cayman Islands office
deposits averaged $181 million in 2021, $1.1 billion in 2020 and $1.4 billion in 2019. Those deposits
consisted predominantly of balances swept from lower-yielding commercial customer accounts.
During the second quarter of 2021, the Company introduced a new interest-bearing sweep product
(included in savings and interest-bearing deposits) that replaced the Eurodollar sweep product
previously recorded as Cayman Islands office deposits. As a result, there were no outstanding
deposits at the Cayman Islands office as of December 31, 2021 and the office is closed. The
Company had brokered savings and interest-bearing transaction accounts that averaged $3.8 billion
in each of 2021 and 2020, compared with $2.7 billion in 2019. Brokered time deposits were not a

significant source of funding in any of the three years discussed herein. Additional 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.
Time deposits over $250,000 were $345 million and $454 million at December 31, 2021 and 2020,
respectively. Total uninsured deposits were estimated to be $69.1 billion at December 31, 2021.

The Company also uses borrowings from banks, the FHLB of New York, the FRB of New York
and others as sources of funding. Short-term borrowings represent arrangements that at the time they
were entered into had a contractual maturity of one year or less. Average short-term borrowings were
$68 million in 2021, $62 million in 2020 and $1.1 billion in 2019.

Long-term borrowings averaged $3.5 billion in 2021, $5.8 billion in 2020 and $7.7 billion in
2019. Average balances of outstanding senior notes were $2.4 billion in 2021, compared with $3.8
billion and $5.3 billion in 2020 and 2019, respectively. Unsecured senior notes totaled $2.4 billion
and $2.8 billion at December 31, 2021 and 2020, respectively. In January 2021, $350 million of
variable rate senior notes of M&T Bank matured. During 2020, M&T Bank redeemed $2.1 billion of
fixed rate senior notes that were within thirty days of scheduled maturity and, thereby, eligible for
redemption. Also included in average long-term borrowings were amounts borrowed from FHLBs of
$2 million in 2021 and 2020, compared with $241 million in 2019 and subordinated capital notes of
$581 million in 2021, compared with $1.4 billion in each of 2020 and 2019. In March 2021, M&T
Bank redeemed $500 million of subordinated capital notes that were due to mature on December 1,
2021 and during December 2020, $409 million of subordinated capital notes of M&T Bank matured.
Junior subordinated debentures associated with trust preferred securities that were included in
average long-term borrowings were $530 million in 2021, $527 million in 2020 and $524 million in
2019. Additional information regarding long-term borrowings, including information regarding
contractual maturities of such borrowings, is provided in note 9 of Notes to Financial Statements.

The Company has utilized interest rate swap agreements to modify the repricing characteristics
of certain components of its loans and long-term debt. As of December 31, 2021, interest rate swap
agreements were used as fair value hedges of approximately $1.65 billion of outstanding fixed rate
long-term borrowings. Additionally, interest rate swap agreements with a notional amount of $13.35
billion were used as cash flow hedges of interest payments associated with variable rate commercial
real estate loans. Further information on interest rate swap agreements is provided herein and in note
19 of Notes to Financial Statements.

Changes in the composition of the Company’s earning assets and interest-bearing liabilities, as
discussed herein, as well as changes in interest rates and spreads, can impact net interest income. Net
interest spread, or the difference between the taxable-equivalent yield on earning assets and the rate
paid on interest-bearing liabilities, was 2.70% in 2021, compared with 3.00% in 2020 and 3.48% in
2019. The yield on the Company’s earning assets decreased 59 basis points to 2.84% in 2021 from
3.43% in 2020 and the rate paid on interest-bearing liabilities decreased 29 basis points to .14% in
2021 from .43% in 2020. During 2019, the yield on earning assets was 4.53% and the rate paid on
interest-bearing liabilities was 1.05%. The lower net interest spreads in 2021 and 2020 as compared
with 2019 also reflect the effect of decreases in short-term interest rates initiated by the Federal
Reserve and the impact of a higher proportion of low-yielding balances at the FRB of New York to
total average earning assets. While those low-yielding balances add to net interest income, they have
the effect of reducing the yield on total average earning assets and, as a result, the net interest spread.
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 $61.1 billion in 2021, $47.3
billion in 2020 and $37.2 billion in 2019. The increase in net interest-free funds in 2021 and in 2020
reflects higher average balances of noninterest-bearing deposits. Those deposits averaged $55.7
billion in 2021, $41.7 billion in 2020 and $30.8 billion in 2019. The increase in such balances since

2019 was largely due to higher levels of deposits of commercial customers. Shareholders’ equity
averaged $16.9 billion, $16.0 billion and $15.7 billion in 2021, 2020 and 2019, respectively.
Goodwill and core deposit and other intangible assets averaged $4.6 billion in each of 2021, 2020
and 2019. The cash surrender value of bank owned life insurance averaged $1.86 billion in 2021,
$1.84 billion in 2020 and $1.81 billion in 2019. Increases in the cash surrender value of bank owned
life insurance 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 .06% in 2021, .16%
in 2020 and .36% in 2019. The reduced contribution of net interest-free funds to net interest margin
in 2021 and 2020 reflects the lower rates on interest-bearing liabilities used to value net interest-free
funds.

Reflecting the changes to the net interest spread and the contribution of net interest-free funds

as described herein, the Company’s net interest margin was 2.76% in 2021, 3.16% in 2020 and
3.84% in 2019. 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 $15.0 billion (excluding $8.4 billion of forward-starting swap
agreements) at December 31, 2021, $19.0 billion (excluding $32.1 billion of forward-starting swap
agreements) at December 31, 2020 and $17.2 billion (excluding $40.4 billion of forward-starting
swap agreements) at December 31, 2019. 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. At December 31, 2021, interest rate swap agreements with notional
amounts of $13.35 billion were serving as cash flow hedges of interest payments associated with
variable rate commercial real estate loans, compared with $17.35 billion at December 31, 2020 and
$13.35 billion at December 31, 2019. Interest rate swap agreements with notional amounts of $1.65
billion at each of December 31, 2021 and 2020, and $3.80 billion at December 31, 2019 were serving
as fair value hedges of fixed rate long-term borrowings. The Company has entered into the forward-
starting interest rate swap agreements predominantly to extend the term of its interest rate swap
agreements serving as cash flow hedges, and provide a hedge against changing interest rates on
certain of its variable rate loans.

In a fair value hedge, the fair value of the derivative (the interest rate swap agreement) and
changes in the fair value of the hedged item are recorded in the Company’s consolidated balance
sheet with the corresponding gain or loss recognized in current earnings. The difference between
changes in the fair value of the interest rate swap agreements and the hedged items represents hedge
ineffectiveness and is recorded as an adjustment to the interest income or interest expense of the
respective hedged item. The amounts of hedge ineffectiveness recognized in 2021, 2020 and 2019
were not material to the Company’s consolidated results of operations. In a cash flow hedge, 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. Information
regarding cash flow hedges is presented in note 16 of Notes to Financial Statements. Information
regarding the fair value of interest rate swap agreements and hedge ineffectiveness is presented in
note 19 of 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 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 table 10.

Table 10

INTEREST RATE SWAP AGREEMENTS

2021

Year Ended December 31
2020

2019

Amount

Rate(a)

Amount

Rate(a)

Amount

Rate(a)

(Dollars in thousands)

Increase (decrease) in:

Interest income .................................... $
Interest expense ...................................
Net interest income/margin ................. $

252,397
(34,810)
287,207
Average notional amount (c) .................... $18,282,192
Rate received (b).......................................
Rate paid (b)..............................................

.18 %$
(.03)
.20 %$

271,971
(40,145)
312,116
$16,985,246

.22 %$
(.05)
.25 %$

13,011
15,136
(2,125)
$16,248,356

1.75 %
.18 %

2.51 %
.67 %

.01 %
.02
— %

2.40 %
2.42 %

(a) Computed as a percentage of average earning assets or interest-bearing liabilities.
(b) Weighted-average rate paid or received on interest rate swap agreements in effect during the

year.

Provision for Credit Losses
As described in note 5 of Notes to Financial Statements, effective January 1, 2020 the Company
adopted amended accounting guidance for the measurement of credit losses on financial instruments.
That guidance requires an allowance for credit losses to be deducted from the amortized cost basis of
financial assets to present the net carrying value that is expected to be collected over the contractual
term of the assets considering relevant information about past events, current conditions, and
reasonable and supportable forecasts that affect the collectability of the reported amount. The
guidance replaced the previous incurred loss model for determining the allowance for credit losses.
The adoption of the amended guidance resulted in a $132 million increase in the allowance for credit
losses at January 1, 2020. Increases in the allowance for residential real estate loans and consumer
loans, reflecting the longer-dated maturities of such portfolios, were offset somewhat by net
decreases in the allowance for commercial loans resulting from lower loss estimates on demand loan
products due to the assumption that the Company could require full repayment of such loans in the
near-term. Table 11 depicts the changes in the allowance for credit losses by loan category resulting
from the adoption of the amended guidance.

Table 11

IMPACT OF ADOPTION OF AMENDED ACCOUNTING GUIDANCE ON
ALLOWANCE FOR CREDIT LOSSES

Balance
December 31, 2019

Impact of Adoption
Increase (Decrease)
(In thousands)

Balance
January 1, 2020

Commercial, financial, leasing, etc. ..................... $
Commercial real estate .........................................
Residential real estate...........................................
Consumer..............................................................
Unallocated...........................................................

Total................................................................. $

366,094
322,201
56,033
229,118
77,625
1,051,071

(61,474) $
23,656
53,896
194,004
(77,625)
132,457

304,620
345,857
109,929
423,122
—
1,183,528

The amended guidance requires estimated credit losses on loans acquired at a discount to be
reflected in the allowance for credit losses. Previously, such losses were netted in the carrying value
of the loans unless there was an increased loss expectation subsequent to their acquisition. The gross-
up of the estimated losses on loans acquired at a discount that was previously not recognized in the
allowance for credit losses was $18 million on January 1, 2020. Prior to January 1, 2020, the
Company generally recognized interest income on loans acquired at a discount regardless of the
borrowers’ repayment status. Effective with the adoption of the accounting guidance, the Company’s
nonaccrual loan policy applied to loans acquired at a discount. Loans acquired at a discount at
December 31, 2019 included $171 million of loans that, effective with the adoption of the guidance,
were classified as non-accrual loans on January 1, 2020.

A provision for credit losses is recorded to adjust the level of the allowance to reflect
expected credit losses that are based on economic forecasts as of each reporting date. A provision for
credit loss recapture of $75 million was recorded in 2021, compared with provisions for credit losses
of $800 million in 2020 and $176 million in 2019. As noted earlier, the recapture in 2021 and the
significant increase in the provision in 2020 as compared with 2019 follows the adoption of
accounting guidance on January 1, 2020 and reflects economic assumptions and projections that
considered the macroeconomic outlook associated with the COVID-19 pandemic and subsequent
recovery. The Company’s estimates of expected losses reflect the ongoing impacts of the pandemic
on economic activity, generally, and concerns about commercial real estate values and the ultimate
collectability of real estate loans for which borrowers had previously received forbearance as a result
of the pandemic. Net charge-offs of loans were $192 million in 2021, $247 million in 2020 and $144
million in 2019. Net charge-offs as a percentage of average loans and leases outstanding were .20%
in 2021, compared with .26% in 2020 and .16% in 2019. A summary of the Company’s loan charge-
offs, provision and allowance for credit losses is presented in table 12 and in note 5 of Notes to
Financial Statements.

Table 12

LOAN CHARGE-OFFS, PROVISION AND ALLOWANCE FOR CREDIT LOSSES

2021

2020

2019
(Dollars in thousands)

2018

2017

Allowance for credit losses beginning

balance ................................................. $1,736,387
—

Adoption of new accounting standard ....
Charge-offs during year

$1,051,071
132,457

$1,019,444
—

$1,017,198
—

$ 988,997
—

Commercial, financial,

Recoveries during year

Commercial, financial,

leasing, etc. .....................................
Commercial real estate ......................
Residential real estate ........................
Consumer...........................................
Total recoveries ............................
Net charge-offs........................................
Provision for credit losses.......................
Allowance for credit losses ending

122,651
101,306
10,904
103,293
338,154

41,082
30,651
8,857
65,403
145,993
192,161
(75,000)

135,083
35,891
10,283
152,250
333,507

15,765
4,550
7,116
58,935
86,366
247,141
800,000

58,244
12,664
12,711
154,089
237,708

24,581
3,936
8,204
56,614
93,335
144,373
176,000

60,414
12,286
15,345
143,196
231,241

27,903
21,037
6,664
45,883
101,487
129,754
132,000

64,941
7,931
20,799
130,927
224,598

21,196
12,582
8,983
42,038
84,799
139,799
168,000

balance ................................................. $1,469,226

$1,736,387

$1,051,071

$1,019,444

$1,017,198

Net charge-offs as a percent of:

Provision for credit losses..................
Average loans and leases, net of

unearned discount ...........................
Allowance for credit losses as a percent

of:

Loans and leases, net of unearned

discount, at year-end.......................
Nonaccrual loans, at year-end............

(a) Not meaningful

NM(a)

30.89%

82.03%

98.30%

83.21%

.20%

.26%

.16%

.15%

.16%

1.58%
71.32%

1.76%
91.71%

1.16%
109.13%

1.15%
114.08%

1.16%
115.25%

Nonaccrual loans aggregated $2.06 billion at December 31, 2021, compared with $1.89 billion

and $963 million at December 31, 2020 and 2019, respectively. As a percentage of total loans and
leases outstanding, nonaccrual loans represented 2.22% at December 31, 2021, compared with 1.92%
and 1.06% at December 31, 2020 and 2019, respectively. The higher level of nonaccrual loans at
December 31, 2021 as compared with December 31, 2020 reflects the continuing impact of the
pandemic on borrowers’ ability to make contractual payments on their loans, most notably loans in
the hospitality sector. The higher level at December 31, 2020 as compared with December 31, 2019
reflects the addition in 2020 of $530 million of loans associated with hotels as well as other additions
that, in general, resulted from the economic conditions in 2020. A summary of nonperforming assets
and certain past due, renegotiated and impaired loan data and credit quality ratios is presented in
table 13.

Table 13

NONPERFORMING ASSET AND PAST DUE, RENEGOTIATED AND IMPAIRED LOAN DATA

December 31

2021

2020

2019

2018

2017

(Dollars in thousands)

Nonaccrual loans........................................................... $2,060,083
Real estate and other foreclosed assets .........................
23,901
Total nonperforming assets........................................... $2,083,984
Accruing loans past due 90 days or more(a)................. $ 963,399
Government guaranteed loans included in totals

above:

Nonaccrual loans ..................................................... $
Accruing loans past due 90 days or more(a) ...........

51,429
927,788
Renegotiated loans ........................................................ $ 230,408
Acquired accruing loans past due 90 days

or more(b) ..................................................................

Purchased impaired loans(c):

Outstanding customer balance.................................
Carrying amount ......................................................

N/A

N/A
N/A

1,893,299
34,668
1,927,967
859,208

963,112
85,646
1,048,758
518,728

893,608
78,375
971,983
222,527

882,598
111,910
994,508
244,405

48,820
798,121
238,994

50,891
479,829
234,424

34,667
192,443
245,367

35,677
235,489
221,513

N/A

39,632

39,750

47,418

N/A
N/A

415,413
227,545

529,520
303,305

688,091
410,015

Nonaccrual loans to total loans and leases, net of

unearned discount ......................................................

2.22%

1.92%

1.06%

1.01%

1.00%

Nonperforming assets to total net loans and leases

and real estate and other foreclosed assets.................

2.24%

1.96%

1.15%

1.10%

1.13%

Accruing loans past due 90 days or more(a) to total

loans and leases, net of unearned discount ................

1.04%

.87%

.57%

.25%

.28%

(a)
(b)

(c)

Predominantly residential real estate loans. Prior to 2020, excludes loans acquired at a discount.
Prior to 2020, loans acquired at a discount that were recorded at fair value at acquisition date. This category
does not include purchased impaired loans that are presented separately.
Prior to 2020, accruing loans acquired at a discount that were impaired at acquisition date and recorded at
fair value.

Accruing loans past due 90 days or more were $963 million or 1.04% of total loans and leases
at December 31, 2021 and $859 million or .87% at December 31, 2020. Accruing loans past due 90
days or more (excluding loans acquired at a discount) were $519 million or .57% at December 31,
2019. Accruing loans past due 90 days or more included loans guaranteed by government-related
entities of $928 million, $798 million and $480 million at December 31, 2021, 2020 and 2019,
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 included in the amounts noted above that are guaranteed by government-related entities totaled
$889 million at December 31, 2021, $764 million at December 31, 2020 and $452 million at
December 31, 2019. The increase in such loans as compared with December 31, 2019 reflects loans
repurchased during 2021 and 2020. 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. In addition to the past due loans, the Company also
has $974 million of government-guaranteed residential mortgage loans as of December 31, 2021 that
are not considered delinquent because the borrower has requested and received a COVID-19 related
payment deferral. In general, those loans were also repurchased to reduce associated servicing costs
as described above and also remain covered by the insurance or guarantee of the applicable
government-related entity, but are not considered to be past due in accordance with the accounting
treatment afforded under the CARES Act and related regulatory and financial accounting guidance as
described below and in note 1 of Notes to Financial Statements.

Loans that were 30-89 days past due were $846 million at December 31, 2021, compared with

$662 million at December 31, 2020 and $1.2 billion at December 31, 2019. Loans that are still
subject to a COVID-19 related payment deferral are classified as current in accordance with
regulatory guidance and, as a result, did not contribute to incremental additions to loans categorized
as 30-89 days past due. COVID-19 related modified loans that exit the deferral period and
subsequently fail to make contractual payments in accordance with the modified terms are reported
in the applicable delinquency classification per M&T Bank’s credit policy. Information about
delinquent loans at December 31, 2021 and 2020 is included in note 4 of Notes to Financial
Statements.

Prior to the adoption of the new accounting standard on January 1, 2020, the Company reported

purchased impaired loans. 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 continued to accrue interest income on such loans based on the estimated expected cash
flows associated with the loans. The amended accounting guidance requires estimated credit losses
on loans acquired at a discount to now be reflected in the allowance for credit losses and effective
with the adoption of the guidance, the Company’s nonaccrual loan policy applies to such loans. The
carrying amount of purchased impaired loans was $228 million at December 31, 2019.

The direct and indirect effects of the COVID-19 pandemic resulted in a dramatic reduction in
2020 in economic activity that severely hampered the ability of some businesses and consumers to
meet their repayment obligations. The CARES Act, in addition to providing financial assistance to
both businesses and consumers, created a forbearance program for federally-backed mortgage loans,
protected borrowers from negative credit reporting due to loan accommodations related to the
pandemic, and provided financial institutions the option to temporarily suspend certain requirements
under GAAP related to troubled debt restructurings for a limited period of time to account for the
effects of COVID-19. The banking regulatory agencies likewise issued guidance encouraging
financial institutions to work prudently with borrowers who are, or may be, unable to meet their
contractual payment obligations because of the effects of COVID-19. That guidance, with
concurrence of the Financial Accounting Standards Board and provisions of the CARES Act,
allowed modifications made on a good faith basis in response to COVID-19 to borrowers who were
generally current with their payments prior to any relief, to not be treated as delinquent or as troubled
debt restructurings. Modifications included payment deferrals (including extensions of maturity
dates), covenant waivers and fee waivers. The Company worked with its customers affected by
COVID-19 and granted modifications across many of its loan portfolios. To the extent that such
modifications met the criteria previously described, such modifications have not been classified as
delinquent or as troubled debt restructurings. A summary of loans for which COVID-19
forbearances are still in effect and which are not considered past due is included in note 4 of Notes to
the Financial Statements.

The Company also modified the terms of select loans in an effort to assist borrowers that were
not related to the COVID-19 pandemic. 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. Information about modifications of
loans that are considered troubled debt restructurings is included in note 4 of Notes to Financial
Statements.

Residential real estate loans modified under specified loss mitigation programs prescribed by
government guarantors that were not related to the COVID-19 pandemic 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 totaled $425 million and $342 million at December 31, 2021 and December 31, 2020,
respectively.

Charge-offs of commercial loans and leases, net of recoveries, aggregated $82 million in 2021,

$119 million in 2020 and $34 million in 2019. As a percentage of average commercial loans, those
net charge-offs were .32%, .43%, and .14% in 2021, 2020 and 2019, respectively. Commercial loans
and leases in nonaccrual status were $221 million at December 31, 2021, $307 million at
December 31, 2020 and $347 million at December 31, 2019. Net charge-offs of commercial real
estate loans totaled $71 million during 2021, compared with $31 million during 2020 and $9 million
in 2019 or .19% in 2021, .08% in 2020 and .03% in 2019 of average commercial real estate loans.
The higher levels of net charge-offs in 2021 and 2020 of commercial loans and commercial real
estate loans reflect the impact of the pandemic on borrowers’ abilities to repay loans. In the
commercial real estate portfolio, those charged-off loans were mostly associated with the retail,
office building and hospitality sectors. Commercial real estate loans classified as nonaccrual were
$1.2 billion at December 31, 2021, $891 million at December 31, 2020 and $195 million at
December 31, 2019. Nonaccrual commercial real estate loans included construction-related loans of
$114 million, $115 million and $37 million at the end of 2021, 2020 and 2019, respectively. The
increase in commercial real estate loans in nonaccrual status since December 31, 2019 was largely
reflective of loans in the hospitality sector. Hotel-related commercial real estate loans (including
construction) in nonaccrual status at December 31, 2021 and 2020 were $696 million and $607
million, respectively.

Net charge-offs of residential real estate loans were $2 million in 2021, $3 million in 2020 and
$5 million in 2019 representing .01% of average residential real estate loans in 2021, compared with
.02% in 2020 and .03% in 2019. Residential real estate loans in nonaccrual status at December 31,
2021 were $479 million, compared with $513 million and $319 million at December 31, 2020 and
2019, respectively. Nonaccrual limited documentation first mortgage loans aggregated $123 million
at December 31, 2021, compared with $147 million and $83 million at December 31, 2020 and 2019,
respectively. Limited documentation first mortgage loans represent loans secured by residential real
estate that at origination typically included some form of limited borrower documentation
requirements as compared with more traditional loans. The Company no longer originates limited
documentation loans. Residential real estate loans past due 90 days or more and accruing interest
(excluding loans acquired at a discount prior to 2020) totaled $920 million at December 31, 2021,
$793 million at December 31, 2020 and $487 million at December 31, 2019. A substantial portion of
such amounts related to guaranteed loans repurchased from government-related entities, including
the previously noted higher level of repurchases of loans associated with the Company’s loan
servicing portfolio. However, loans that have been granted forbearances related to COVID-19 that
are still in effect are not considered to be past due in accordance with the previously noted regulatory
guidance and provisions of the CARES Act. Information about the location of nonaccrual and
charged-off residential real estate loans as of and for the year ended December 31, 2021 is presented
in table 14.

Table 14

SELECTED RESIDENTIAL REAL ESTATE-RELATED LOAN DATA

December 31, 2021

Nonaccrual

Year Ended
December 31, 2021
Net Charge-offs
(Recoveries)

Outstanding
Balances

Percent of
Outstanding
Balances
(Dollars in thousands)

Balances

Percent of
Average
Outstanding
Balances

Residential mortgages:

New York.............................................................................. $ 5,198,808
1,036,187
Pennsylvania .........................................................................
1,434,464
Maryland ...............................................................................
2,279,024
New Jersey ............................................................................
1,202,368
Other Mid-Atlantic (a) ..........................................................
Other .....................................................................................
3,602,456
Total ...................................................................................... $ 14,753,307

Residential construction loans:

New York.............................................................................. $
Pennsylvania .........................................................................
Maryland ...............................................................................
New Jersey ............................................................................
Other Mid-Atlantic (a) ..........................................................
Other .....................................................................................
Total ...................................................................................... $

19,292
5,727
7,466
10,017
11,019
3,543
57,064

Limited documentation first mortgages:

579,421
New York.............................................................................. $
23,098
Pennsylvania .........................................................................
13,880
Maryland ...............................................................................
467,010
New Jersey ............................................................................
11,681
Other Mid-Atlantic (a) ..........................................................
Other .....................................................................................
168,984
Total ...................................................................................... $ 1,264,074

First lien home equity loans and lines of credit:

910,565
New York.............................................................................. $
550,228
Pennsylvania .........................................................................
447,690
Maryland ...............................................................................
64,951
New Jersey ............................................................................
160,577
Other Mid-Atlantic (a) ..........................................................
Other .....................................................................................
23,459
Total ...................................................................................... $ 2,157,470

Junior lien home equity loans and lines of credit:

553,611
New York.............................................................................. $
189,189
Pennsylvania .........................................................................
350,891
Maryland ...............................................................................
95,785
New Jersey ............................................................................
173,894
Other Mid-Atlantic (a) ..........................................................
Other .....................................................................................
39,047
Total ...................................................................................... $ 1,402,417

Limited documentation junior lien:

372
149
515
115
248
1,305
2,704

136,280
13,670
15,996
91,744
21,645
76,149
355,484

146
228
—
—
—
—
374

54,636
3,471
1,970
37,523
1,393
23,895
122,888

16,600
9,372
9,358
621
2,610
1,228
39,789

13,676
2,616
9,388
1,105
3,271
459
30,515

21
24
25
—
32
82
184

(a)

Includes Delaware, Virginia, West Virginia and the District of Columbia.

2.62%
1.32
1.12
4.03
1.80
2.11
2.41%

.76%
3.98
—
—
—
—
.66%

9.43%
15.03
14.19
8.03
11.93
14.14

9.72%

1.82%
1.70
2.09
.96
1.63
5.23
1.84%

2.47%
1.38
2.68
1.15
1.88
1.18
2.18%

5.65%
16.11
4.85
—
12.90
6.28
6.80%

1,312
465
600
(60)
(19)
583
2,881

—
—
—
—
—
—
—

53
21
(27)
—
(2)
(879)
(834)

372
428
305
(11)
25
41
1,160

(595)
(599)
(1,222)
(1,485)
59
(416)
$ (4,258)

(7)
10
(1)
—
—
(182)
(180)

.03%
.04
.04
—
—
.02
.02%

—%
—
—
—
—
—
—%

.01%
.07
(.16)
—
(.02)
(.45)
(.06%)

.04%
.07
.07
(.02)
.01
.15
.05%

(.10%)
(.30)
(.32)
(1.59)
.03
(1.04)

(.29%)

(1.85%)
6.08
(.16)
—
—
(9.56)
(4.95%)

Net charge-offs of consumer loans aggregated $38 million in 2021, compared with $93 million

in 2020 and $97 million in 2019. As a percentage of average consumer loans those net charge-offs
were .22% in 2021, .59% in 2020 and .67% in 2019. Included in net charge-offs of consumer loans
were: net recoveries of automobile loans of $2 million in 2021, compared with net charge-offs of $22
million in 2020 and $24 million in 2019; recreational finance loan net charge-offs of $13 million, $27
million and $26 million during 2021, 2020 and 2019, respectively; and net recoveries of home equity
loans and lines of credit secured by one-to-four family residential properties of $3 million in 2021,
compared with net charge-offs of $3 million in 2020 and $6 million in 2019. The reduced level of net
charge-offs of consumer loans in 2021 reflects the improving economy, in general, and the level of
prices associated with motor vehicles, recreational vehicles and residential real estate. Nonaccrual
consumer loans were $177 million at December 31, 2021, compared with $183 million and $102
million at December 31, 2020 and 2019, respectively. Included in nonaccrual consumer loans at the
2021, 2020 and 2019 year-ends were: automobile loans of $34 million, $39 million and $21 million,
respectively; recreational finance loans of $28 million, $26 million and $14 million, respectively; and
outstanding balances of home equity loans and lines of credit of $70 million, $79 million and $63
million, respectively. Information about the location of nonaccrual and charged-off home equity
loans and lines of credit as of and for the year ended December 31, 2021 is presented in table 14.
Information about past due and nonaccrual loans as of December 31, 2021 and 2020 is also included
in note 5 of Notes to Financial Statements.

Real estate and other foreclosed assets totaled $24 million at December 31, 2021, compared

with $35 million at December 31, 2020 and $86 million at December 31, 2019. The decline in 2020
and 2021 is largely reflective of foreclosure moratoriums imposed by government authorities in
numerous jurisdictions. Net gains or losses associated with real estate and other foreclosed assets
were not material in 2021, 2020 or 2019. At December 31, 2021, foreclosed assets are comprised
entirely of the Company’s holding of residential real estate-related properties.

Beginning in 2020, management determined the allowance for credit losses under amended

accounting guidance that requires estimating the amount of current expected credit losses over the
remaining contractual term of the loan and lease portfolio. Prior to 2020, the allowance for credit
losses represented the amount that in management’s judgment reflected incurred credit losses
inherent in the loan and lease portfolio as of the balance sheet date. A description of the
methodologies used by the Company to estimate its allowance for credit losses can be found in note 5
of Notes to Financial Statements.

In establishing the allowance for credit losses subsequent to December 31, 2019, the Company
estimates losses attributable to specific troubled credits identified through both normal and targeted
credit review processes and also estimates losses for other loans and leases with similar risk
characteristics 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 type. Despite recent improvements in
macroeconomic forecasts, at the time of the Company’s analysis regarding the determination of the
allowance for credit losses as of December 31, 2021, concerns persisted about the somewhat uneven
and incomplete recovery evident in the economy, the emergence of new COVID-19 variants
(including the recent emerging variant commonly referred to as Omicron) that may further disrupt a
recovery, the ultimate effectiveness of economic stimulus being provided by the U.S. government
that has contributed to increased deficit spending and raised inflation concerns; disruptions to supply
chains and the related impacts to businesses and consumers; the volatile nature of global markets,
including the impact international economic conditions could have on the U.S. economy; Federal
Reserve positioning of monetary policy; the extent to which borrowers, in particular commercial real
estate borrowers may continue to be negatively affected by pandemic-related and general economic
conditions; and continued stagnant population and economic growth in the upstate New York and
central Pennsylvania regions (approximately 48% of the Company’s loans and leases are to
customers in New York State and Pennsylvania) that could see lingering effects of the economic

downturn. The Company utilizes a loan grading system to differentiate risk amongst its commercial
loans and commercial real estate loans. Loans with a lower expectation of default are assigned one of
ten possible “pass” loan grades while specific loans determined to have an elevated level of credit
risk are classified as “criticized.” A criticized loan 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. During 2021 and 2020, the Company re-graded significant
portions of its commercial loans and commercial real estate loans based on financial results and
projections of specific borrowers, particularly those that were affected by COVID-19 impacts.
Criticized commercial loans and commercial real estate loans totaled $9.0 billion at December 31,
2021, compared with $7.2 billion at December 31, 2020 and $2.5 billion at December 31, 2019. The
rise in criticized loans reflects the impact of the pandemic on borrowers’ financial condition and the
re-grading of loans by the Company, and is reflective of the provision for expected credit losses
recorded by the Company in 2020 as the pandemic unfolded. The increases in such loans since
December 31, 2020 were largely attributable to investor-owned permanent commercial real estate
loans in the hotel, office and healthcare sectors and commercial real estate construction loans in the
hotel and healthcare sectors. On the overall basis, weighted-average loan-to-stabilized value (“LTV”)
ratios for investor-owned commercial real estate properties do not vary significantly by asset class or
sector, and at December 31, 2021 were generally within the range of 55% to 65% with an overall
weighted-average LTV ratio of approximately 57%. Investor-owned commercial real estate loans
comprised $7.0 billion, or 78% of total criticized loans of $9.0 billion at December 31, 2021.

The COVID-19 pandemic and related governmental responses led to a significant reduction in

economic activity that was detrimental to many borrowers across the Company’s geographic regions,
particularly commercial borrowers in the hotel, health care-related and office sectors and residential
mortgage borrowers. Many of these borrowers have been and could likely continue to be adversely
impacted by the economic effects of the COVID-19 pandemic. COVID-19 related modifications with
payment deferrals at December 31, 2021 totaled $1.2 billion and consisted predominantly of
residential real estate loans, including $974 million of government-guaranteed loans. Substantially all
of those deferrals are scheduled to expire during 2022 and/or are in the process of formal
modification of repayment terms for previously deferred payments.

As commercial loans and commercial real estate loans were approved for modifications related

to COVID-19, the Company assessed loans considering the credit worthiness of the borrower,
collateral values, the financial condition of any guarantors, and the expected collectability of
contractual principal and interest payments. Loan-to-collateral values on investor-owned loans are
generally relatively low and oftentimes the loans include some form of recourse. Loans secured by
residential real estate with a COVID-19 payment forbearance were evaluated for collectability based
on the borrower’s ability to repay considering past performance and estimated collateral values. If
collectability was considered doubtful, loans were classified as nonaccrual.

Loan officers in different geographic locations with the support of the Company’s credit

department personnel review and reassign loan grades based on their detailed knowledge of
individual borrowers and their judgment of the impact on such borrowers resulting from changing
conditions in their respective regions. The Company re-assessed its loan grades for those borrowers
most impacted by COVID-19. The Company’s policy is that, at least annually, updated financial
information is obtained from commercial borrowers associated with pass grade loans and additional
analysis 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 contemplated.

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 December 31, 2021, approximately 61% 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 56% (or approximately 22% 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. 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 determining the allowance for credit
losses, the Company considers 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 December 31,
2021, approximately 85% of all outstanding balances of home equity lines of credit related to lines
that were still in the draw period, the weighted-average remaining draw periods were approximately
five years, and approximately 10% were making contractually allowed payments that do not include
any repayment of principal.

The Company generally estimates current expected credit losses on loans with similar risk
characteristics on a collective basis. To estimate expected losses, the Company utilizes statistically
developed models to project principal balances over the remaining contractual lives of the loan
portfolios and determine estimated credit losses through a reasonable and supportable forecast
period. The Company’s approach for estimating current expected credit losses for loans and leases
has included utilizing macro-economic assumptions to project losses over a two-year reasonable and
supportable forecast period. Subsequent to the forecast period, the Company reverted to longer-term
historical loss experience, over a period of one year, to estimate expected credit losses over the
remaining contractual life. Forward-looking estimates of certain macro-economic variables are
determined by the M&T Scenario Development Group, which is comprised of senior management
business leaders and economists. Among the assumptions utilized as of December 31, 2021 was that
the national unemployment rate will average 4.6% through the first year of the reasonable and

supportable forecast period before gradually improving to 3.7% in the latter half of 2023. The
forecast also assumed gross domestic product grows during 2022 at a 3.1% annual rate and during
2023 at a 2.7% average rate. Commercial real estate and residential real estate prices were assumed
to cumulatively grow 11.1% and 5.9%, respectively, over the two-year reasonable and supportable
forecast period. The assumptions utilized in estimating the allowance for credit losses as of
December 31, 2020 included an estimated unemployment rate averaging 6.9% through 2021
followed by a gradual return to long-term historical averages by the end of 2022. Gross domestic
product was assumed to grow at a 4.1% annual rate during 2021 resulting in a return to pre-pandemic
levels by the end of 2022. Commercial real estate prices were assumed to decline by approximately
6.8% in 2021, followed by improvement. Residential real estate prices were not assumed to fluctuate
significantly. In most instances the actual macroeconomic conditions experienced in 2021 were
favorable in comparison to the forecasts made at December 31, 2020. Such improvements
contributed to the recapture of provision for credit losses during 2021 of $75 million. The
assumptions utilized as of January 1, 2020 at the time of the adoption of the expected credit loss
accounting standard were significantly less severe. Those assumptions anticipated unemployment
rates that averaged under 4% and steady growth in gross domestic product of 3.3% over the eight-
quarter forecast period. Forecasted changes in real estate prices as of that date were not significant.
The assumptions utilized were based on information available to the Company at or near December
31, 2021, December 31, 2020 and January 1, 2020 (at the time it was preparing its estimate of
expected credit losses as of those dates).

In establishing the allowance for credit losses the Company also considers the impact of
portfolio concentrations, changes in underwriting practices, product expansions into new markets,
imprecision in its economic forecasts, and other risk factors that influence its loss estimation process.
With respect to economic forecasts, the Company assessed the likelihood of alternative economic
scenarios during the two-year reasonable and supportable time period. Economic forecasts have
changed rapidly in the recent past due to the uncertain impacts of COVID-19. Generally, an increase
in unemployment rate or a decrease in any of the rate of change in gross domestic product,
commercial real estate prices or home prices would have an adverse impact on expected credit losses
and would likely result in an increase in the allowance for credit losses. Forward looking economic
forecasts are subject to inherent imprecision and future events may differ materially from actual
events. In consideration of such uncertainty, the following alternative economic scenarios were
considered to estimate the possible impact on modeled credit losses.

• A potential downside economic scenario assumed the unemployment rate reaches 9.0% in

2022 before declining to 7.1% by the end of the reasonable and supportable forecast period. The
scenario also assumed gross domestic product contracts 2.1% in 2022 before recovering to recently
experienced levels by the third quarter of 2023, commercial real estate prices cumulatively decline
12.4% by the end of 2023, and residential real estate prices decline modestly in 2022 and remain flat
during 2023.

• A potential upside economic scenario assumed the unemployment rate declines to 3.0% in

2022’s fourth quarter where it stays for the remainder of the reasonable and supportable forecast
period. The scenario also assumes gross domestic product grows 4.8% in 2022 and 1.5% in 2023,
while commercial real estate and residential real estate prices cumulatively rise 16.9% and 7.6%,
respectively, over the two-year reasonable and supportable forecast period.

The scenario analyses resulted in an additional $222 million of modeled credit losses under the

assumptions of the downside economic scenario, whereas under the assumptions of the upside
economic scenario a $56 million reduction in modeled credit losses could occur. These examples are
only a few of the numerous possible economic scenarios that could be utilized in assessing the
sensitivity of expected credit losses. The estimated impacts on credit losses in such scenarios pertain

only to modeled credit losses and do not include consideration of other factors the Company may
evaluate when determining its allowance for credit losses.

As a result, it is possible that the Company may, at another point in time, reach different
conclusions regarding credit loss estimates. The Company’s process for determining the allowance
for credit losses undergoes quarterly and periodic evaluations by independent risk management
personnel, which among many other considerations, evaluate the reasonableness of management’s
methodology and significant assumptions. Further information about the Company’s methodology to
estimate expected credit losses is included in note 5 of Notes to Financial Statements.

Prior to 2020, the allowance for credit losses represented the amount that in management’s
judgment reflected incurred credit losses inherent in the loan and lease portfolio as of the balance
sheet date. The allowance was determined by management’s evaluation of the loan and lease
portfolio based on such factors as the differing economic risks associated with each loan category,
the current financial condition of specific borrowers, the current 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. The estimation of the allowance for credit losses
prior to 2020 did not consider reasonable and supportable forecasts that could have affected the
collectability of the reported amounts.

A comparative allocation of the allowance for credit losses for each of the past five year-ends is

presented in table 15. Amounts were allocated to specific loan categories based on information
available to management at the time of each year-end assessment and using the methodologies
described herein. Variations in the allocation of the allowance by loan category as a percentage of
those loans reflect the impact of the new accounting rules effective January 1, 2020 as well as
changes in management’s estimate of credit losses in light of economic developments. Furthermore,
the Company’s allowance is general in nature and is available to absorb losses from any loan or lease
category. Additional information about the allowance for credit losses is included in note 5 of Notes
to Financial Statements.

Table 15

ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES TO LOAN CATEGORIES

December 31

2021

2020

2019
(Dollars in thousands)

2018

2017

Commercial, financial, leasing, etc. ................ $ 283,899
557,239
Commercial real estate ....................................
71,726
Residential real estate ......................................
556,362
Consumer.........................................................
—
Unallocated......................................................
Total ........................................................... $1,469,226

$ 405,846
670,719
103,590
556,232
—
$1,736,387

$ 366,094
322,201
56,033
229,118
77,625
$1,051,071

$ 330,055
341,655
69,125
200,564
78,045
$1,019,444

$ 328,599
374,085
65,405
170,809
78,300
$1,017,198

As a Percentage of Loans and Leases
Outstanding, Net of Unearned Discount

Commercial, financial, leasing, etc. ................
Commercial real estate ....................................
Residential real estate ......................................
Consumer.........................................................
Total.................................................................

1.21%
1.57
.45
3.10
1.58

1.47%
1.78
.62
3.36
1.76

1.54%
.91
.35
1.49
1.16

1.44%
.99
.40
1.44
1.15

1.51%
1.12
.33
1.29
1.16

Management believes that the allowance for credit losses at December 31, 2021 appropriately

reflected expected credit losses inherent in the portfolio as of that date. The allowance for credit
losses totaled $1.47 billion at December 31, 2021, $1.74 billion at December 31, 2020, and $1.18
billion at January 1, 2020 when amended guidance became effective. The allowance for credit losses
was $1.05 billion at December 31, 2019. The decrease in the allowance in 2021 reflects improved
financial forecasts as compared with those as of December 31, 2020. The increase in the allowance in
2020 as compared with 2019 reflected the $132 million addition attributable the adoption of the new
accounting standard as well as the expected impact of forecasted economic conditions resulting from
the COVID-19 pandemic on borrowers’ abilities to repay loans. As a percentage of loans
outstanding, the allowance was 1.58% at December 31, 2021, 1.76% at December 31, 2020 and
1.16% at December 31, 2019. Excluding the impact of $1.2 billion and $5.4 billion of government-
guaranteed PPP loans outstanding at December 31, 2021 and December 31, 2020, respectively, the
allowance as a percentage of total loans and leases was 1.60% and 1.86%, respectively. 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 economic forecasts
and credit factors considered by management in establishing the allowance for credit losses change
and should management’s assessment of losses in the loan portfolio also change, the level of the
allowance as a percentage of loans could increase or decrease in future periods. The reported level of
the allowance reflects management’s evaluation of the loan and lease portfolio as of each respective
date.

The ratio of the allowance for credit losses to total nonaccrual loans at the end of 2021, 2020
and 2019 was 71%, 92% and 109%, respectively. Given the Company’s general position as a secured
lender and its practice of charging off loan balances when collection is deemed doubtful, that ratio
and changes in the 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 Company had no concentrations of credit extended to any specific industry that exceeded

10% of total loans at December 31, 2021, however residential real estate loans comprised
approximately 17% of the loan portfolio. Outstanding loans to foreign borrowers aggregated $197
million at December 31, 2021, or .2% of total loans and leases.

Other Income
Other income aggregated $2.17 billion in 2021, up from $2.09 billion and $2.06 billion in 2020 and
2019, respectively. The rise in other income from 2020 to 2021 was largely attributable to higher
trust income, service charges on deposit accounts, brokerage services income, merchant discount and
credit card fees and letter of credit and other credit-related fees, partially offset by lower trading
account and foreign exchange gains, higher valuation losses on investment securities and a decline in
the level of distributions from BLG. The growth experienced from 2019 to 2020 reflected higher
mortgage banking revenues and trust income, partially offset by declines in service charges on
deposit accounts, trading account and foreign exchange gains and letter of credit and other credit-
related fees.

Mortgage banking revenues aggregated $571 million in 2021, $567 million in 2020 and $458

million in 2019. Mortgage banking revenues are comprised of both residential and commercial
mortgage banking activities. The Company’s involvement in commercial mortgage banking activities
includes the origination, sales and servicing of loans under the multifamily 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 $406 million in 2021, $424 million in 2020 and $317
million in 2019. The higher residential mortgage banking revenues in 2021 and 2020 as compared
with 2019 resulted from higher gains associated with loans held for sale, reflecting higher origination
volumes and improved margins. Late in the third quarter of 2021, the Company began to originate
the majority of its residential real estate loans to retain in its loan portfolio rather than for sale,
contributing to the reduction in residential mortgage banking revenues from 2020.

New commitments to originate residential real estate loans to be sold were approximately $3.9

billion in 2021, compared with $4.5 billion in 2020 and $2.7 billion in 2019. The decrease in 2021
from 2020 reflects the retention of originated residential real estate loans beginning late in the third
quarter of 2021. 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 aggregated to gains of $164
million in 2021, $191 million in 2020 and $72 million in 2019.

Loans held for sale that were secured by residential real estate totaled $474 million and $777
million at December 31, 2021 and 2020, respectively. Commitments to sell residential real estate
loans and commitments to originate residential real estate loans for sale at pre-determined rates
totaled $617 million and $233 million, respectively, at December 31, 2021, $1.47 billion and $1.03
billion, respectively, at December 31, 2020 and $713 million and $423 million, respectively, at
December 31, 2019. Net recognized unrealized gains on residential real estate loans held for sale,
commitments to sell loans and commitments to originate loans for sale were $10 million at December
31, 2021, compared with $52 million at December 31, 2020 and $12 million at December 31, 2019.
Changes in such net unrealized gains are recorded in mortgage banking revenues and resulted in a net
decrease in revenue of $16 million in 2021, compared with net increases of $40 million and $5
million in 2020 and 2019, respectively.

Revenues from servicing residential real estate loans for others totaled $242 million in 2021
compared with $233 million in 2020 and $245 million in 2019. Residential real estate loans serviced
for others aggregated $97.9 billion at December 31, 2021, $94.4 billion a year earlier and $95.1
billion at December 31, 2019. Reflected in residential real estate loans serviced for others were loans
sub-serviced for others of $74.7 billion, $68.1 billion and $62.8 billion at December 31, 2021, 2020
and 2019, respectively. Revenues earned for sub-servicing loans totaled $153 million in 2021,
compared with $129 million in 2020 and $125 million in 2019. The contractual servicing rights
associated with loans sub-serviced by the Company were predominantly held by affiliates of BLG.
Information about the Company’s relationship with BLG and its affiliates is included in note 25 of
Notes to Financial Statements.

Capitalized residential mortgage servicing assets totaled $217 million at December 31, 2021

(net of a $24 million valuation allowance), compared with $201 million (net of a $30 million
valuation allowance) and $237 million (net of a $7 million valuation allowance) at December 31,
2020 and 2019, respectively. Reflecting changes in fair value of some of the servicing rights in
comparison to the amortized cost of such rights, a $6 million reversal of the valuation allowance for
impairment of capitalized residential mortgage servicing rights was recorded in 2021, compared with
provisions of $23 million and $7 million recorded in 2020 and 2019, respectively. Additional
information about the Company’s capitalized residential mortgage servicing assets, including
information about the calculation of estimated fair value, is presented in note 7 of Notes to Financial
Statements.

Commercial mortgage banking revenues totaled $165 million in 2021, compared with $143

million in 2020 and $141 million in 2019. Included in such amounts were revenues from loan
origination and sales activities of $89 million in 2021, $84 million in 2020 and $81 million in 2019.
Commercial real estate loans originated for sale to other investors totaled approximately $4.0 billion

in each of 2021 and 2019, compared with $3.4 billion in 2020. Loan servicing revenues totaled $76
million in 2021, $59 million in 2020 and $60 million in 2019. The higher servicing revenues in 2021
were reflective of fees received from customers who repaid loans prior to maturity. Capitalized
commercial mortgage servicing assets were $133 million at each of December 31, 2021 and
December 31, 2020 and $131 million at December 31, 2019. Commercial real estate loans serviced
for other investors totaled $23.7 billion at December 31, 2021, $22.2 billion at December 31, 2020
and $21.0 billion at December 31, 2019, and included $4.0 billion at each of December 31, 2021 and
December 31, 2020 and $3.9 billion at December 31, 2019 of loan balances for which investors had
recourse to the Company if such balances are ultimately uncollectable. Included in commercial real
estate loans serviced for others were loans sub-serviced for others of $3.5 billion at December 31,
2021, $3.3 billion at December 31, 2020. and $3.4 billion at December 31, 2019. Commitments to
sell commercial real estate loans and commitments to originate commercial real estate loans for sale
aggregated $751 million and $325 million, respectively, at December 31, 2021, $641 million and
$364 million, respectively, at December 31, 2020 and $193 million and $164 million, respectively, at
December 31, 2019. Commercial real estate loans held for sale were $425 million, $278 million and
$28 million at December 31, 2021, 2020 and 2019, respectively. The higher balances at December
31, 2021 and 2020, as compared with December 31, 2019, reflect loans originated later in each year
that had not been delivered to investors by year end.

Service charges on deposit accounts totaled $402 million in 2021, compared with $371 million

in 2020 and $433 million in 2019. The lower service charges in 2020 as compared with 2021 and
2019 reflect reduced consumer service charges, predominantly resulting from COVID-19 related fee
waivers and lower customer transaction activity. The decrease from 2019 to 2020 also reflected
lower commercial service charges, largely due to higher customer deposit levels that could be used
by those customers to offset transaction related fees. In February 2022, the Company announced it
will be eliminating non-sufficient funds fees and overdraft protection transfer charges from linked
deposit accounts as well as reducing overdraft fees and limiting daily fee assessments to once per
day. The Company estimates these changes will reduce income from service charges on deposit
accounts by approximately $40 million in 2022.

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 offers personal trust,
planning, fiduciary, asset management, family office and other services designed to help high net
worth individuals and families grow, preserve and transfer wealth. Trust income was $645 million in
2021, compared with $602 million in 2020 and $573 million in 2019. Revenues associated with the
ICS business were $375 million in 2021, $342 million in 2020 and $311 million in 2019. The
increases in ICS revenue in 2021 and 2020 reflect sales activities and increased retirement services
income resulting from growth in collective fund balances. Revenues attributable to WAS totaled
$255 million in 2021 and $233 million in each of 2020 and 2019. As compared with the previous two
years, revenue in 2021 reflected an increase related to equity market performance. Revenue in 2021
and 2020 was offset by proprietary fund money market fee waivers as a result of the low interest rate
environment. Trust assets under management were $165.6 billion and $135.8 billion at December 31,
2021 and 2020, respectively. Trust assets under management include the Company’s proprietary
mutual funds’ assets of $13.2 billion at December 31, 2021 and $12.9 billion at December 31, 2020.
Additional trust income from investment management activities was $15 million, $27 million and
$29 million in 2021, 2020 and 2019, respectively, and includes fees earned from retail customer
investment accounts.

Brokerage services income, which includes revenues from the sale of mutual funds and
annuities and securities brokerage fees and, since June 2021, sales of select investment products of
LPL Financial (as described below), totaled $63 million in 2021, compared with $47 million in 2020
and $49 million in 2019. The increase in brokerage services income in 2021 reflects a change in June
2021 in product delivery to retail brokerage and certain trust customers related to the LPL Financial
relationship. Revenues associated with the sale of investment products of LPL Financial, an
independent financial services broker, are included in “brokerage services income.” Prior to the
transition to LPL Financial’s product platform, revenues earned by the Company from providing
those customers with proprietary trust products managed by the Company were reported as trust
income. Trading account and foreign exchange activity resulted in gains of $24 million in 2021, $41
million in 2020 and $62 million in 2019. The decline in gains resulted predominantly from decreased
activity related to interest rate swap agreements with commercial customers. The Company enters
into interest rate swap agreements and foreign exchange contracts with customers who need such
services and concomitantly enters into offsetting trading positions with third parties to minimize the
risks involved with these types of transactions. 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 19 of Notes to Financial Statements and herein under the heading “Liquidity,
Market Risk, and Interest Rate Sensitivity.”

The Company recognized net losses on investment securities of $21 million and $9 million in
2021 and 2020, respectively, compared with net gains of $18 million in 2019. The gains and losses
represented unrealized gains and losses on investments in Fannie Mae and Freddie Mac preferred
stock.

Other revenues from operations totaled $483 million in 2021, compared with $471 million in
2020 and $469 million in 2019. Comparing 2021 with 2020, higher merchant discount, credit card
interchange and letter of credit and credit-related fees, largely loan syndication fees, were partially
offset by lower income received from BLG during 2021. Comparing 2020 with 2019, higher income
received from BLG during 2020 was offset by declines in letter of credit and credit-related fees,
predominantly loan syndication fees.

Included in other revenues from operations were the following significant components. Letter
of credit and other credit-related fees totaled $128 million, $109 million and $124 million in 2021,
2020 and 2019, respectively. The increased level of such fees in 2021 and 2019 resulted largely from
higher loan syndication fees as compared with 2020. Revenues from merchant discount and credit
card fees were $140 million in 2021, $111 million in 2020 and $117 million in 2019. The higher
level of such revenues in 2021 was the result of increased customer transaction activity reflecting
lessened pandemic related restrictions on business and customer activity as compared with 2020.
Tax-exempt income earned from bank owned life insurance, which includes increases in the cash
surrender value of life insurance policies and benefits received, aggregated $47 million in 2021, $48
million in 2020 and $50 million in 2019. Insurance-related sales commissions and other revenues
totaled $47 million in each of 2021, 2020 and 2019. Automated teller machine usage fees aggregated
$11 million in 2021, $9 million in 2020 and $13 million in 2019.

M&T’s investment in BLG resulted in cash distributions declared and paid by BLG that are
included in “other revenues from operations” of $30 million in 2021, $53 million in 2020 and $37
million in 2019. During 2017, the operating losses of BLG resulted in M&T reducing the carrying
value of its investment in BLG to zero. Subsequently, M&T has received cash distributions when
declared by BLG that result in the recognition of income by M&T. M&T expects cash distributions
from BLG in the future, but the timing and amount of those distributions cannot be estimated. BLG is
entitled to receive distributions from its affiliates that provide asset management and other services
that are available for distribution to BLG’s owners, including M&T. Information about the

Company’s relationship with BLG and its affiliates is included in note 25 of Notes to Financial
Statements.

Other Expense
Other expense aggregated $3.61 billion in 2021, compared with $3.39 billion in 2020 and $3.47
billion in 2019. Included in those amounts are expenses considered to be “nonoperating” in nature
consisting of amortization of core deposit and other intangible assets of $10 million, $15 million and
$19 million in 2021, 2020 and 2019, respectively and merger-related expenses of $44 million in
2021. No merger-related expenses were incurred in 2020 and 2019. Exclusive of those nonoperating
expenses, noninterest operating expenses aggregated $3.56 billion in 2021, $3.37 billion in 2020 and
$3.45 billion in 2019. The higher level of noninterest operating expenses in 2021 as compared with
the prior year reflected increased costs for salaries and employee benefits (predominantly incentive
compensation), outside data processing and software, FDIC assessments, and professional services
expenses, partially offset by a reduction in the valuation allowance for capitalized mortgage servicing
rights as compared to an increase in 2020. Contributing to the lower level of noninterest operating
expense in 2020 as compared with 2019 were decreased costs for professional services, legal-related
matters, advertising and marketing, and travel and entertainment. Additionally, a $48 million charge
was recorded in 2019 to reduce the carrying value of an investment in an asset manager that had been
accounted for using the equity method of accounting to its estimated realizable value. Those factors
were partially offset by higher costs for salaries and employee benefits, outside data processing and
software, increases to the valuation allowance for capitalized residential mortgage servicing rights
and $14 million of expenses related to the planned transition of the support for the Company’s retail
brokerage and advisory business to the platform of LPL Financial.

Salaries and employee benefits expense aggregated $2.05 billion in 2021, compared with $1.95

billion and $1.90 billion in 2020 and 2019, respectively. The higher levels of expenses in 2021 as
compared with 2020 reflect the impact of higher incentive compensation, including commissions, as
well as merit and other increases for employees. Stock-based compensation totaled $85 million in
2021, compared with $80 million in 2020 and $76 million in 2019. The number of full-time
equivalent employees were 17,421 and 17,076 at December 31, 2021 and 2020, respectively,
compared with 17,503 at December 31, 2019.

The Company provides pension and other postretirement benefits for its employees, including

pension, retirement savings and post-retirement benefit plans. Expenses related to such benefits
totaled $128 million in 2021, $118 million in 2020 and $76 million in 2019. The amounts recorded in
salaries and employee benefits expense and other costs of operations, respectively, from the
preceding sentence were as follows: $125 million and $3 million in 2021; $118 million and
($329,000) in 2020; and $98 million and ($22) million in 2019. The Company sponsors both defined
benefit and defined contribution pension plans. Pension benefit expense for those plans was $68
million in 2021, $60 million in 2020 and $31 million in 2019. Components of pension expense
include the amortization of net unrecognized gains and losses included in accumulated other
comprehensive income. Such net unrecognized gains and losses have generally been amortized over
the average remaining service periods of active participants in the plan. If all or substantially all of
the plan’s participants are inactive, GAAP provides for the average remaining life expectancy of the
participants to be used instead of average remaining service periods. Substantially all of the
participants in the Company’s qualified defined benefit pension plan were inactive and, beginning in
2022, the average remaining life expectancy will be utilized prospectively to amortize the net
unrecognized gains and losses of the Plan existent at each measurement date. The change is expected
to increase the amortization period by approximately sixteen years beginning in 2022 and,
accordingly, reduce the amount of amortization of unrecognized losses recorded in the 2022 net
periodic pension expense that otherwise would have been recorded by approximately $35 million.

Information about the Company’s pension plans, including significant assumptions utilized in

completing actuarial calculations for the plans, is included in note 13 of Notes to Financial
Statements.

The Company’s retirement savings plan (“RSP”) is a defined contribution plan in which eligible

employees of the Company may defer up to 50% of qualified compensation via contributions to the
plan. RSP expense reflecting the Company’s employer matching contribution totaled $63 million in
2021, $62 million in 2020 and $48 million in 2019.

Excluding the nonoperating expense items already noted, nonpersonnel operating expenses
were $1.51 billion in 2021, $1.42 billion in 2020 and $1.55 billion in 2019. The increase in such
expenses in 2021 as compared with 2020 reflects a rise in expenditures for outside data processing
and software, FDIC assessments and professional services, partially offset by a reduction in the
valuation allowance for capitalized mortgage servicing rights as compared to an increase in 2020.
The decrease in nonpersonnel operating expenses from 2019 to 2020 reflected lower expenditures for
professional services, legal-related matters, advertising and marketing, and travel and entertainment.
Additionally, a $48 million charge from the 2019 sale of an investment in an asset manager
contributed to the higher expenses in 2019. Those factors were partially offset by higher costs for
outside data processing and software, increases to the valuation allowance for capitalized residential
mortgage servicing rights and $14 million of expenses related to the planned transition of the support
for the Company’s retail brokerage and advisory business to the platform of LPL Financial. During
2019 the Company increased its reserve for legal matters, predominantly related to a subsidiary’s role
as trustee of Employee Stock Ownership Plans in its Institutional Client Services business. The
Company made contributions to The M&T Charitable Foundation of $28 million and $8 million in
2021 and 2020, respectively. There were no similar contributions in 2019.

Income Taxes
The provision for income taxes was $596 million in 2021, $416 million in 2020 and $618 million in
2019. The effective tax rates were 24.3% in each of 2021 and 2019 and 23.5% in 2020. 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
discrete or infrequently occurring items. The Company’s effective tax rate in future periods will also
be affected by any change in income tax laws or regulations 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. Information about amounts accrued for
uncertain tax positions and a reconciliation of income tax expense to the amount computed by
applying the statutory federal income tax rate to pre-tax income is provided in note 14 of Notes to
Financial Statements.

International Activities
Assets and revenues associated with international activities represent less than 1% of the Company’s
consolidated assets and revenues. International assets included $197 million and $170 million of
loans to foreign borrowers at December 31, 2021 and 2020, respectively. During the second quarter
of 2021, the Company introduced a new interest-bearing sweep product (included in savings and
interest-bearing deposits) that replaced the Eurodollar sweep product previously recorded as Cayman
Islands office deposits. As a result, there were no outstanding deposits at the Cayman Islands office
at December 31, 2021 and the office is closed. Deposits in the Company’s office in the Cayman
Islands aggregated $652 million at December 31, 2020. Loans at M&T Bank’s commercial banking
office in Ontario, Canada included in international assets as of December 31, 2021 and 2020 totaled
$153 million and $149 million, respectively. Deposits at that office were $32 million at each of

December 31, 2021 and December 31, 2020. The Company also offers trust-related services in
Europe. Revenues from providing such services during 2021, 2020 and 2019 were approximately $38
million, $36 million and $32 million, respectively.

Liquidity, Market Risk, and Interest Rate Sensitivity
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.

The most significant source of funding for the Company is core deposits, which are generated
from a large base of consumer, corporate and institutional customers. That customer base has, over
the past several years, become more geographically diverse as a result of expansion of the
Company’s businesses. Nevertheless, the Company faces competition in offering products and
services from a large array of financial market participants, including banks, thrifts, mutual funds,
securities dealers and others. Core deposits financed 90% of the Company’s earning assets at
December 31, 2021, compared with 88% at December 31, 2020 and 83% at December 31, 2019.

The Company supplements funding provided through core deposits with various short-term and

long-term wholesale borrowings, including overnight federal funds purchased, short-term advances
from the FHLB of New York, brokered deposits and longer-term borrowings. At December 31, 2021,
M&T Bank had short-term and long-term credit facilities with the FHLBs aggregating $16.2 billion.
Outstanding borrowings under FHLB credit facilities totaled $2 million at each of December 31,
2021 and 2020. Such borrowings were secured by loans and investment securities. M&T Bank had
an available line of credit with the FRB of New York that totaled approximately $13.8 billion at
December 31, 2021. The amount of that line is dependent upon the balances of loans and securities
pledged as collateral. There were no borrowings outstanding under such line of credit at
December 31, 2021 and 2020. Senior notes issued and outstanding totaled $2.4 billion at
December 31, 2021 and $2.8 billion at December 31, 2020. On January 25, 2021, $350 million of
variable rate senior notes of M&T Bank matured. In addition, on March 1, 2021, M&T Bank
redeemed $500 million of subordinated notes that were due to mature on December 1, 2021.

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. Pursuant to the Dodd-Frank Act, the Company’s junior subordinated debentures
associated with trust preferred securities have been removed from the definition of Tier 1 capital but,
similar to other subordinated capital notes, are considered Tier 2 capital and are includable in total
regulatory capital. Information about the Company’s borrowings is included in note 9 of Notes to
Financial Statements.

The Company has also benefited from the placement of brokered deposits. The Company has

brokered savings and interest-bearing checking deposit accounts that aggregated $3.2 billion and
$4.5 billion at December 31, 2021 and 2020, respectively. Brokered time deposits were not a
significant source of funding as of those dates.

The Company’s ability to obtain funding from these 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. Information about the credit ratings

of M&T and M&T Bank is presented in table 16. Additional information regarding the terms and
maturities of all of the Company’s short-term and long-term borrowings is provided in note 9 of Notes
to Financial Statements. 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.

Table 16

DEBT RATINGS

Moody’s

Standard
and Poor’s

Fitch

M&T Bank Corporation

Senior debt..................................................................................
Subordinated debt.......................................................................

A3
A3

M&T Bank

Short-term deposits.....................................................................
Long-term deposits.....................................................................
Senior debt..................................................................................
Subordinated debt.......................................................................

Prime-1
Aa3
A3
A3

BBB+
BBB

A-2
A-
A-
BBB+

A
A-

F1
A+
A
A-

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 was not material at December 31, 2021 or December 31, 2020. The total
amount of VRDBs outstanding backed by M&T Bank letters of credit was $662 million and $725
million at December 31, 2021 and 2020, respectively. M&T Bank also serves as remarketing agent for
most of those bonds.

Table 17

MATURITY DISTRIBUTION OF LOANS AND LEASES(a)

December 31, 2021

Demand

2022

2023 - 2026
(In thousands)

2027 - 2036

After 2036

Commercial, financial, leasing, etc. ... $5,492,359 $ 4,219,626 $12,395,898 $ 1,170,961 $ 119,074
89,210
Commercial real estate.......................
2,960,580
5,987,321 6,008,251
Residential real estate.........................
6,120,006 3,377,688
Consumer ...........................................
Total .............................................. $6,142,801 $19,777,966 $39,300,050 $16,238,868 $9,594,223

100,704 13,080,694 18,058,994
2,683,556
852,195
46,966
6,161,602
1,625,451
502,772

Floating or adjustable interest rates:

Commercial, financial, leasing, etc..
Commercial real estate ....................
Residential real estate ......................
Consumer.........................................
Fixed or predetermined interest rates:
Commercial, financial, leasing, etc..
Commercial real estate ....................
Residential real estate ......................
Consumer.........................................
Total ..............................................

$ 7,377,411 $
12,468,282
449,620
650,713

298,217 $

2,127
36,038
1,580,905
1,109,820 1,348,893
312,697 2,535,347

5,018,487
5,590,712
2,233,936
5,510,889

116,947
872,744
1,379,675
53,172
4,877,501 4,659,358
842,341
5,807,309
$39,300,050 $16,238,868 $9,594,223

(a) The data do not include nonaccrual loans.

The Company enters into contractual obligations in the normal course of business that require
future cash payments. The contractual amounts and timing of those payments as of December 31, 2021
are summarized in table 18. 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 22 of Notes to Financial Statements. Table 18 summarizes the Company’s other commitments
as of December 31, 2021 and the timing of the expiration of such commitments.

100

Table 18

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

December 31, 2021

Less Than One
Year

One to Three
Years

Three to Five
Years
(In thousands)

Over Five
Years

Total

Payments due for contractual

obligations
Time deposits................... $ 2,300,825
47,046
Short-term borrowings.....
903,864
Long-term borrowings .....
94,566
Operating leases...............
Other ................................
279,570
Total ................................. $ 3,625,871

Other commitments

Commitments to extend

$ 376,848
—
775,636
145,692
109,568
$1,407,744

$ 130,290
—
749,740
91,454
17,005
$ 988,489

— $ 2,807,963
—
47,046
3,485,369
1,056,129
431,112
99,400
424,544
18,401
$ 7,196,034
$ 1,173,930

credit (a)........................ $17,060,039

$8,170,578

$5,459,006

$ 3,629,521

$34,319,144

Standby letters of

credit .............................

1,279,387

542,887

228,757

100,564

2,151,595

Commercial letters of

credit .............................

14,142

666

17,173

—

31,981

Financial guarantees and

41,988

282,282

734,726

3,152,801

4,211,797

indemnification
contracts ........................
Commitments to sell real
estate loans....................

1,214,036
Total ................................. $19,609,592

153,487
$9,149,900

—
$6,439,662

—
$ 6,882,886

1,367,523
$42,082,040

(a)

Amounts exclude discretionary funding commitments to commercial customers of $10.8 billion that the
Company has the unconditional right to cancel prior to funding.

M&T’s primary source of funds to pay for operating expenses, shareholder dividends and

treasury stock repurchases has historically been the receipt of dividends from its banking
subsidiaries, which are subject to various regulatory limitations. Dividends from any 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 December 31, 2021 approximately $1.6 billion was
available for payment of dividends to M&T from banking subsidiaries. M&T also may obtain
funding through long-term borrowings. Outstanding senior notes of M&T at December 31, 2021 and
December 31, 2020 were $766 million and $783 million, respectively. Junior subordinated
debentures of M&T associated with trust preferred securities outstanding at December 31, 2021 and
December 31, 2020 totaled $532 million and $528 million, respectively.

101

Table 19

MATURITY AND TAXABLE-EQUIVALENT YIELD OF INVESTMENT SECURITIES

December 31, 2021

Investment securities available for sale(a)
U.S. Treasury and federal agencies

One Year
or Less

One to Five
Years

Five to Ten
Years
(Dollars in thousands)

Over Ten
Years

Total

Carrying value ......................................................................... $
Yield ........................................................................................

5,165

673,525

1.14%

.82%

— $
—

678,690

.83%

Mortgage-backed securities(b)

Government issued or guaranteed

Carrying value ..................................................................
Yield .................................................................................

311,207

1,317,943

906,798

619,364

3,155,312

2.28%

2.27%

2.23%

2.27%

Other debt securities

Carrying value .........................................................................
Yield ........................................................................................

1,778
2.34%

7,302
3.39%

86,205

2.70%

26,517

4.00%

121,802

3.04%

Total investment securities available for sale

Carrying value .........................................................................
Yield ........................................................................................

318,150

1,998,770

993,003

645,881

3,955,804

2.26%

1.78%

2.31%

2.04%

Investment securities held to maturity
U.S. Treasury and federal agencies

Carrying value .........................................................................
Yield ........................................................................................

Obligations of states and political subdivisions

Carrying value .........................................................................
Yield ........................................................................................

3,052

.12%

177
4.87%

—
—

3,052

.12%

177
4.87%

Mortgage-backed securities(b)

Government issued or guaranteed

Carrying value ..................................................................
Yield .................................................................................

120,585

504,540

609,850

1,432,353

2,667,328

2.16%

Privately issued

Carrying value ..................................................................
Yield .................................................................................

3,813
2.72%

15,265

2.72%

19,079

2.72%

23,398

2.60%

61,555

2.66%

Other debt securities

Carrying value .........................................................................
Yield ........................................................................................

—
—

2,562
4.32%

2,562

4.32%

Total investment securities held to maturity

Carrying value .........................................................................
Yield ........................................................................................

127,627

519,805

628,929

1,458,313

2,734,674

2.13%

2.18%

2.17%

Equity and other securities
Equity securities

Carrying Value ........................................................................
Yield ........................................................................................

Other investment securities

Carrying Value ........................................................................
Yield ........................................................................................

Total investment securities

77,640

.50%

387,742

2.90%

Carrying value ......................................................................... $
Yield ........................................................................................

445,777

$ 2,518,575

$ 1,621,932

$ 2,104,194

$ 7,155,860

2.22%

1.86%

2.25%

2.21%

2.12%

(a)
(b)

Investment securities available for sale are presented at estimated fair value. Yields on such securities are based on amortized cost.
Maturities are reflected based upon contractual payments due. Actual maturities are expected to be significantly shorter as a result of
loan repayments in the underlying mortgage pools.

102

Table 20

MATURITY OF TIME DEPOSITS WITH BALANCES OVER $250,000

December 31,
2021
(In thousands)

3 months or less................................................................................................................. $ 182,077
124,165
Over 3 through 6 months...................................................................................................
29,210
Over 6 through 12 months.................................................................................................
9,736
Over 12 months .................................................................................................................
Total.............................................................................................................................. $ 345,188

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.

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 December 31, 2021, the aggregate
notional amount of interest rate swap agreements entered into for interest rate risk management
purposes that were currently in effect was $15.0 billion. In addition, the Company has entered into
$8.4 billion of forward-starting interest rate swap agreements. Information about interest rate swap
agreements entered into for interest rate risk management purposes is included herein under the
heading “Net Interest Income/Lending and Funding Activities” and in note 19 of Notes to Financial
Statements.

The Company’s Asset-Liability Committee, which includes members of senior management,
monitors the sensitivity of the Company’s net interest income to changes in interest rates with the aid
of a computer model that forecasts net interest income under different interest rate scenarios. In
modeling changing interest rates, the Company considers different yield curve shapes that consider
both parallel (that is, simultaneous changes in interest rates at each point on the yield curve) and non-
parallel (that is, allowing interest rates at points on the yield curve to vary by different amounts)
shifts in the yield curve. In utilizing the model, market-implied forward interest rates over the

103

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. 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.

Table 21 displays as of December 31, 2021 and 2020 the estimated impact on net interest
income in the base scenario described above resulting from parallel changes in interest rates across
repricing categories during the first modeling year.

Table 21

SENSITIVITY OF NET INTEREST INCOME TO CHANGES IN INTEREST RATES

Changes in interest rates

Calculated Increase (Decrease)
in Projected Net Interest Income

December 31, 2021

December 31, 2020

(In thousands)

+200 basis points ................................................................................. $
+100 basis points .................................................................................
-100 basis points ..................................................................................

533,317
297,573
(204,760)

324,684
182,661
(61,792)

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 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 at or above zero on all points of the
yield curve. 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. The sensitivity of
net interest income to changes in interest rates increased as of December 31, 2021 as compared with
December 31, 2020 due to the low interest rate environment and composition of the Company’s
portfolios of earning assets and interest-bearing liabilities, in particular the increased balance of
interest-bearing deposits at banks.

Table 22 presents cumulative totals of net assets (liabilities) repricing on a contractual basis
within the specified time frames, as adjusted for the impact of interest rate swap agreements entered
into for interest rate risk management purposes. Management believes that this measure does not
appropriately depict interest rate risk since changes in interest rates do not necessarily affect all

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categories of earning assets and interest-bearing liabilities equally nor, as assumed in the table, on the
contractual maturity or repricing date. Furthermore, this static presentation of interest rate risk fails to
consider the effect of ongoing lending and deposit gathering activities, projected changes in balance
sheet composition or any subsequent interest rate risk management activities the Company is likely
to implement.

Table 22

CONTRACTUAL REPRICING DATA

December 31, 2021

Three Months
or Less

Four to Twelve
Months

One to
Five Years
(Dollars in thousands)

After
Five Years

Total

Loans and leases, net ............ $ 47,499,655
212,554
Investment securities.............
41,921,266
Other earning assets ..............
Total earning assets .........
89,633,475

$ 6,871,241
92,732
783
6,964,756

$19,866,684
737,854
—
20,604,538

$18,674,872
6,112,720
—
24,787,592

$ 92,912,452
7,155,860
41,922,049
141,990,361

Savings and interest-

checking deposits...............
Time deposits........................

68,603,966
1,071,254

—
1,229,571

—
507,138

—
—

68,603,966
2,807,963

Total interest-

bearing deposits............
Short-term borrowings..........
Long-term borrowings ..........

69,675,220
47,046
—

1,229,571
—
903,864

507,138
—
1,525,376

—
—
1,056,129

71,411,929
47,046
3,485,369

Total interest-

bearing liabilities..........

69,722,266

2,133,435

2,032,514

1,056,129

74,944,344

Interest rate swap

agreements .........................

(15,000,000)
Periodic gap .......................... $ 4,911,209
Cumulative gap .....................
4,911,209
Cumulative gap as a %

8,150,000
$12,981,321
17,892,530

6,350,000
$24,922,024
42,814,554

500,000
$24,231,463
67,046,017

—

of total earning assets.........

3.5%

12.6%

30.2%

47.2%

A significant amount of the Company’s interest-earning assets, interest-bearing liabilities,

preferred equity instruments and interest rate swap agreements have contractual repricing terms that
reference the London Interbank Offered Rate (“LIBOR”). Various regulatory bodies have
encouraged banks to transition away from LIBOR as soon as practicable, generally cease entering
new contracts that use LIBOR as a reference rate no later than December 31, 2021, and for new
contracts entered into before December 31, 2021 to utilize a reference rate other than LIBOR or
include robust language that includes a clearly defined alternative reference rate after LIBOR’s
discontinuation. Certain tenors of LIBOR have ceased publication at December 31, 2021 and
complete cessation of LIBOR publication is expected by June 30, 2023. Effective December 31,
2021, the Company has essentially discontinued entering into new LIBOR-based contracts.

The Company established an enterprise-wide LIBOR transition program in 2019, which
includes a LIBOR Transition Office with senior management level leadership and dedicated full-time
employee staffing. Progress on the LIBOR transition effort is monitored by executive management as
well as the Risk Committee of the Board of Directors. At December 31, 2021 the Company had
LIBOR-based commercial loans and leases and commercial real estate loans of $37.7 billion and
residential mortgage and consumer loans of $1.9 billion outstanding. As of that date, approximately

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half of such loans either mature before June 30, 2023 or have been amended to include appropriate
alternative language to be effective upon cessation of LIBOR publication. Approximately $979
million of borrowings and $850 million of preferred equity instruments reference LIBOR. The
Company’s interest rate swap agreements primarily reference LIBOR. In October 2020, the
International Swaps and Derivatives Association, Inc. published the IBOR Fallbacks Supplement
(“Supplement”) and the IBOR Fallback Protocol (“Protocol”). The Protocol enables market
participants to incorporate certain revisions into their legacy non-cleared derivative trades with other
counterparties that also choose to adhere to the Protocol. M&T adhered to the Protocol in November
2020 and is in the process of remediating its interest rate swap transactions with its end-user
customers. With respect to the Company’s cleared interest rate swap agreements that reference
LIBOR, clearinghouses have adopted the same relevant Secured Overnight Financing Rate (“SOFR”)
benchmark alternatives of the Supplement and Protocol.

As loans mature and new originations occur a larger percentage of the Company’s variable-rate

loans are expected to reference SOFR or other indexes, including the Bloomberg Short Term Bank
Yield Index (“BSBY”). At December 31, 2021, the Company had approximately $3.6 billion and $55
million of outstanding loan balances that reference SOFR and BSBY, respectively. Additionally, as
of December 31, 2021 the Company had $5.0 billion of notional amount of interest rate swap
agreements designated as cash flow hedges of commercial real estate loans, including $3.5 billion of
forward-starting interest rate swap agreements that become effective in 2022 and 2023, and notional
amounts of $1.0 billion of interest rate contracts in the trading account that are referenced to SOFR.
The Company’s usage of interest rate swap agreements referenced to SOFR or BSBY is expected to
increase in response to the discontinuation of LIBOR. The Company continues to work with its
customers and other counterparties to remediate LIBOR-based agreements which expire after June
30, 2023 by incorporating alternative language, negotiating new agreements, or other means. The
discontinuation of LIBOR and uncertainty relating to the emergence of one or more alternative
benchmark indexes to replace LIBOR could materially impact the Company’s interest rate risk
profile and its management thereof.

In addition to the effect of interest rates, 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 in notes 3 and 21
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 for 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 trading account positions associated with interest rate
contracts and foreign currency and other option and futures contracts are presented in note 19 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
$32.6 billion at December 31, 2021 and $37.8 billion at December 31, 2020. The notional amounts of
foreign currency and other option and futures contracts entered into for trading account purposes
were $1.1 billion and $776 million at December 31, 2021 and 2020, respectively. Although the
notional amounts of these contracts are not recorded in the consolidated balance sheet, the unsettled

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fair values of all financial instruments used for trading account activities are recorded in the
consolidated balance sheet. The fair values of all trading account assets and liabilities were $468
million and $83 million, respectively, at December 31, 2021 and $1.1 billion and $117 million,
respectively, at December 31, 2020. The fair value asset and liability amounts at December 31, 2021
have been reduced by contractual settlements of $54 million and $305 million, respectively, and at
December 31, 2020 by contractual settlements of $6 million and $806 million, respectively. The
lower balance of trading account assets at December 31, 2021 as compared with 2020 was largely the
result of decreased values associated with interest rate swap agreements entered into with
commercial customers that are not subject to periodic variation margin settlement payments.
Included in trading account assets at each of December 31, 2021 and 2020 were $21 million of assets
related to deferred compensation plans. 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 each of December 31, 2021 and 2020 were $24
million of liabilities related to deferred compensation plans. 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 $29 million at each
of December 31, 2021 and December 31, 2020.

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 19 of Notes to Financial Statements.

Capital
Shareholders’ equity was $17.9 billion at December 31, 2021 and represented 11.54% of total assets,
compared with $16.2 billion or 11.35% at December 31, 2020 and $15.7 billion or 13.11% at
December 31, 2019.

Included in shareholders’ equity was preferred stock with financial statement carrying values of
$1.75 billion at December 31, 2021, compared with $1.25 billion at each of December 31, 2020 and
December 31, 2019. On August 17, 2021, M&T issued 50,000 shares of Series I Perpetual Fixed-
Rate Reset Non-cumulative Preferred Stock, par value $1.00 and liquidation preference of $10,000
per share. Through August 31, 2026 holders of the Series I preferred stock are entitled to receive,
only when, as and if declared by M&T’s Board of Directors, non-cumulative cash dividends at an
annual rate of 3.5%, payable semiannually in arrears. Subsequent to August 31, 2026 holders will be
entitled to receive, only when, as and if declared by M&T’s Board of Directors, non-cumulative cash
dividends at an annual rate of the five-year U.S. Treasury Rate plus 2.679%, payable semiannually in
arrears. The Series I preferred stock may be redeemed at M&T’s option, in whole or in part, on any
dividend payment date on or after September 1, 2026 or, in whole but not in part, at any time within
90 days following a regulatory capital treatment event whereby the full liquidation value of the
shares no longer qualifies as “additional Tier 1 capital”. On July 30, 2019, M&T issued 40,000
shares of Series G Perpetual Fixed-Rate Reset Non-cumulative Preferred Stock, par value $1.00 per
share and liquidation preference of $10,000 per share. Through July 31, 2024 holders of the Series G
preferred stock are entitled to receive, only when, as and if declared by M&T’s Board of Directors,
non-cumulative cash dividends at an annual rate of 5.0%, payable semiannually in arrears.
Subsequent to July 31, 2024 holders will be entitled to receive, only when, as and if declared by
M&T’s Board of Directors, non-cumulative cash dividends at an annual rate of the five-year U.S.

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Treasury Rate plus 3.174%, payable semiannually in arrears. The Series G preferred stock may be
redeemed at M&T’s option, in whole or in part, on any dividend payment date on or after August 1,
2024 or, in whole but not in part, at any time within 90 days following a regulatory capital treatment
event whereby the full liquidation value of the shares no longer qualifies as “additional Tier 1
capital.” On August 30, 2019 M&T redeemed the 230,000 shares of the Series A and 151,500 shares
of the Series C Fixed Rate Cumulative Perpetual Preferred Stock, $1,000 liquidation preference per
share, having received the approval of the Federal Reserve to redeem such shares after issuing the
Series G preferred stock. Further information concerning M&T’s preferred stock can be found in
note 10 of Notes to Financial Statements.

Common shareholders’ equity totaled $16.2 billion, or $125.51 per share, at December 31,
2021, compared with $14.9 billion, or $116.39 per share, at December 31, 2020 and $14.5 billion, or
$110.78 per share, at December 31, 2019. Tangible equity per common share, which excludes
goodwill and core deposit and other intangible assets and applicable deferred tax balances, was
$89.80 at December 31, 2021, compared with $80.52 and $75.44 at December 31, 2020 and 2019,
respectively. The Company’s ratio of tangible common equity to tangible assets was 7.68% at
December 31, 2021, compared with 7.49% and 8.55% at December 31, 2020 and 2019, respectively.
Reconciliations of total common shareholders’ equity and tangible common equity and total assets
and tangible assets as of December 31, 2021, 2020 and 2019 are presented in table 2. During 2021,
2020 and 2019, the ratio of average total shareholders’ equity to average total assets was 11.08%,
11.80% and 13.14%, respectively. The ratio of average common shareholders’ equity to average total
assets was 10.13%, 10.88% and 12.08% in 2021, 2020 and 2019, respectively.

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, remaining unrealized losses on held-to-maturity securities transferred from available for sale
that have not yet been amortized, gains or losses associated with interest rate swap agreements
designated as cash flow hedges, foreign currency translation adjustments and adjustments to reflect
the funded status of defined benefit pension and other postretirement plans. Net unrealized gains on
investment securities reflected in shareholders’ equity, net of applicable tax effect, were $78 million,
or $.60 per common share, at December 31, 2021, $145 million, or $1.13 per common share, at
December 31, 2020, and $37 million, or $.29 per common share, at December 31, 2019. 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 December 31, 2021 and 2020 is included in note 3 of Notes to Financial Statements.

Reflected in the carrying amount of available-for-sale investment securities at December 31,
2021 were pre-tax effect unrealized gains of $115 million on securities with an amortized cost of
$3.1 billion and pre-tax effect unrealized losses of $9 million on securities with an amortized cost of
$709 million. Information concerning the Company’s fair valuations of investment securities is
provided in notes 3 and 21 of Notes to Financial Statements.

Each reporting period the Company reviews its available-for-sale investment securities for

declines in value that might be indicative of credit-related losses through an analysis of the
creditworthiness of the issuer or the credit performance of the underlying collateral supporting the
bond. If the Company does not expect to recover the entire amortized cost basis of a debt security a
credit loss is recognized in the consolidated statement of income. A loss is also recognized if the
Company intends to sell a bond or it more likely than not will be required to sell a bond before
recovery of the amortized cost basis.

As of December 31, 2021, based on a review of each of the securities in the available-for-sale

investment securities portfolio, the Company concluded that it expected to realize the amortized cost
basis of each security. As of December 31, 2021, the Company did not intend to sell nor is it
anticipated that it would be required to sell any securities for which fair value was less than the

108

amortized 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 amortized cost basis of those securities to become uncollectable.

On January 1, 2020 the Company adopted amended accounting guidance that requires

investment securities held to maturity to be presented at their net carrying value that is expected to be
collected over their contractual term. The Company estimated no material allowance for credit losses
for its investment securities classified as held-to-maturity at December 31, 2021 and December 31,
2020 as the substantial majority of such investment securities were obligations backed by the U.S.
government or its agencies. The Company assessed the potential for expected credit 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 December 31, 2021 and 2020, the Company had in its held-to-
maturity portfolio privately issued mortgage-backed securities with an amortized cost basis of $62
million and $77 million, respectively, and a fair value of $57 million and $70 million, respectively.
At December 31, 2021, 81% of the mortgage-backed securities were in the most senior tranche of the
securitization structure. The mortgage-backed securities are generally collateralized by residential
and small-balance commercial real estate loans originated between 2004 and 2008. After considering
the repayment structure and estimated future collateral cash flows of each individual bond, the
Company has concluded that as of December 31, 2021, it expected to recover the amortized cost
basis of those privately issued mortgage-backed securities. 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 $267
million, or $2.08 per common share, at December 31, 2021, $481 million, or $3.75 per common
share, at December 31, 2020 and $342 million, or $2.62 per common share, at December 31, 2019.
Information about the funded status of the Company’s pension and other postretirement benefit plans
is included in note 13 of Notes to Financial Statements.

On January 20, 2021, M&T’s Board of Directors authorized a stock repurchase plan to

repurchase up to $800 million of shares of M&T’s common stock subject to all applicable regulatory
limitations. There were no repurchases pursuant to that authorization during 2021. Pursuant to
previously approved capital plans and authorizations by M&T’s Board of Directors, M&T
repurchased 2,577,000 common shares for $374 million in 2020 and 8,257,000 common shares for
$1.3 billion during 2019.

During the fourth quarter of 2021, M&T’s Board of Directors authorized an increase in the
quarterly common stock dividend to $1.20 per common share from the previous rate of $1.10 per
common share. During 2019, M&T’s Board of Directors authorized an increase in the quarterly
common stock dividend to $1.10 per common share in the fourth quarter from the previous rate of
$1.00 per common share. Cash dividends declared on M&T’s common stock totaled $584 million in
2021, compared with $569 million and $552 million in 2020 and 2019, respectively. Dividends per
common share totaled $4.50 in 2021, compared with $4.40 and $4.10 in 2020 and 2019, respectively.
Dividends of $73 million in 2021, $68 million in 2020 and $72 million in 2019 were declared on
preferred stock in accordance with the terms of each series.

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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:

•

4.5% Common Equity Tier 1 (“CET1”) to risk-weighted assets (each as defined in the
capital regulations);
6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets
(each as defined in the capital regulations);
8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets (each
as defined in the capital regulations); and
4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial
statements (known as the “leverage ratio”), as defined in the capital regulations.
Capital regulations require buffers in addition to the minimum risk-based capital ratios noted
above. M&T is subject to a stress capital buffer requirement that is determined through the Federal
Reserve’s supervisory stress tests and M&T’s bank subsidiaries are subject to a capital conservation
buffer requirement. The buffer requirement for each entity is currently 2.5% of risk-weighted assets
and must be composed entirely of CET1. The federal bank regulatory agencies have issued rules that
allow banks and bank holding companies to phase-in the impact of adopting the expected credit loss
accounting model on regulatory capital. Those rules allow banks and bank holding companies to
delay for two years the day one impact on retained earnings of adopting the expected loss accounting
standard and 25% of the cumulative change in the reported allowance for credit losses subsequent to
the initial adoption, followed by a three-year transition period. M&T and its subsidiary banks
adopted these rules and the impact is reflected in regulatory capital ratios as of December 31, 2021.
The regulatory capital amounts and ratios of M&T and its bank subsidiaries as of December 31, 2021
are presented in note 24 of Notes to Financial Statements. A detailed discussion of the regulatory
capital rules is included in Part I, Item 1 of this Form 10-K under the heading “Capital
Requirements.”

The Company is subject to the comprehensive regulatory framework applicable to bank and
financial holding companies and their subsidiaries, which includes 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 insured depositors. Changes in laws, regulations and regulatory policies applicable
to the Company’s operations can increase or decrease the cost of doing business, limit or expand
permissible activities or affect the competitive environment in which the Company operates, all of
which could have a material effect on the business, financial condition or results of operations of the
Company and in M&T’s ability to pay dividends. For additional information concerning this
comprehensive regulatory framework, refer to Part I, Item 1 of this Form 10-K.

Fourth Quarter Results
Net income in the fourth quarter of 2021 was $458 million, compared with $471 million in the year-
earlier quarter. Diluted and basic earnings per common share were each $3.37 in the final 2021
quarter, compared with diluted and basic earnings per common share of $3.52 in the corresponding
quarter of 2020. The annualized rates of return on average assets and average common shareholders’
equity for the final quarter of 2021 were 1.15% and 10.91%, respectively, compared with 1.30% and
12.07%, respectively, in the corresponding quarter of 2020.

Net operating income during 2021’s fourth quarter was $475 million, compared with $473
million in the year-earlier quarter. Diluted net operating earnings per common share were $3.50 and
$3.54 in the fourth quarters of 2021 and 2020, respectively. The annualized net operating returns on

110

average tangible assets and average tangible common equity in the final three months of 2021 were
1.23% and 15.98%, respectively, compared with 1.35% and 17.53%, respectively, in the similar 2020
period. Reconciliations of GAAP results with non-GAAP results for the quarterly periods of 2021
and 2020 are provided in table 24.

Taxable-equivalent net interest income aggregated $937 million in the final quarter of 2021,
compared with $993 million in the year-earlier period. That decline was attributable to lower average
outstanding loan balances and a reduced net interest margin. Reflecting the impact of persistently low
market interest rates and increased holdings of low-yielding balances at the FRB of New York, the
net interest margin narrowed 42 basis points to 2.58% in the fourth quarter of 2021 from 3.00% in
the final three months of 2020. Average earning assets were $131.9 billion in the final quarter of
2020 and $144.4 billion in 2021’s fourth quarter. The $12.5 billion increase in average earning assets
was driven by a $22.1 billion rise in low-yielding deposit balances at the FRB of New York and other
banks, partially offset by a $5.4 billion reduction in average outstanding loans. Average balances of
commercial loans and leases were $22.3 billion in the recent quarter, down $5.4 billion or 19% from
$27.7 billion in the fourth quarter of 2020. That decline was largely the result of decreased average
balances of PPP loans, due to loan forgiveness by the Small Business Administration, lower dealer
floor plan balances, reflecting automobile production and inventory issues experienced by the
industry, and subdued loan demand by commercial customers, in general. PPP loans averaged $1.6
billion in 2021’s final quarter, compared with $6.2 billion in the year-earlier quarter. Average
commercial real estate loan balances aggregated $36.7 billion in the final quarter of 2021, down $990
million or 3% from $37.7 billion in the year-earlier quarter. Included in those totals were average
balances of loans held for sale of $535 million in the final three months of 2021, compared with $307
million in the corresponding period of 2020. Average residential real estate loan balances decreased
$471 million to $16.3 billion in the fourth quarter of 2021 from $16.8 billion in the year-earlier
quarter, reflecting ongoing repayments of loans obtained in the acquisition of Hudson City. Also
contributing to the decrease were loans held for sale that averaged $485 million and $645 million in
the final quarters of 2021 and 2020, respectively. Consumer loans averaged $17.9 billion in the last
three months of 2021, $1.4 billion or 9% higher than in the year-earlier quarter. That increase
resulted from a rise in average balances of recreational finance loans of $1.0 billion and automobile
loans of $624 million. The net interest spread narrowed in the fourth quarter of 2021 to 2.52%, down
38 basis points from 2.90% in the corresponding quarter of 2020. The yield on earning assets in the
last three months of 2021 was 2.64%, down 51 basis points from the year-earlier quarter. The rate
paid on interest-bearing liabilities in the 2021’s final quarter was .12%, down 13 basis points from
.25% in the similar quarter of 2020. The contribution of net interest-free funds to the Company’s net
interest margin was .06% and .10% in the fourth quarters of 2021 and 2020, respectively. As a result,
the Company’s net interest margin narrowed to 2.58% in the fourth quarter of 2021 from 3.00% in
the year-earlier period.

A recapture of provision for credit losses of $15 million was recorded for the quarter ended

December 31, 2021, compared with a $75 million provision for credit losses in the year-earlier
period. Net loan charge-offs were $31 million in the last three months of 2021, representing an
annualized .13% of average loans and leases outstanding, compared with $97 million or .39% during
the similar 2020 period. Net charge-offs in the fourth quarters of 2021 and 2020 included: net charge-
offs of commercial loans of $25 million in 2021 and $67 million in 2020; net recoveries of
commercial real estate loans of $7 million in 2021 compared with net charge-offs of $12 million in
2020; net charge-offs of residential real estate loans of $2 million in 2021 and net recoveries of $1
million in 2020; and net charge-offs of consumer loans of $11 million in 2021 and $19 million in
2020.

111

Other income rose to $579 million in the fourth quarter of 2021 from $551 million in the similar

2020 period. The increased level in the recent quarter resulted largely from higher trust income,
service charges on deposit accounts and brokerage services income.

Other expense totaled $928 million during the recent quarter, compared with $845 million in

the final quarter of 2020. Included in such amounts are expenses considered to be “nonoperating” in
nature consisting of amortization of core deposit and other intangible assets of $2 million and $3
million during the quarters ended December 31, 2021 and 2020, respectively and merger-related
expenses of $21 million in fourth quarter of 2021. No merger-related expenses were incurred in the
year-earlier quarter. Exclusive of those nonoperating expenses, noninterest operating expenses were
$904 million in the fourth quarter of 2021 and $842 million in the corresponding 2020 quarter.
Factors contributing to the higher level of expenses in the recent quarter as compared with the fourth
quarter of 2020 were predominantly related to increased costs for salaries and employee benefits
(including higher incentive compensation), outside data processing and software, and professional
services. The Company’s efficiency ratio during the final quarters of 2021 and 2020 was 59.7% and
54.6%, respectively. Table 24 includes a reconciliation of other expense to noninterest operating
expense and the calculation of the efficiency ratio for each of the quarters of 2021 and 2020.

Segment Information
In accordance with GAAP, the Company’s reportable segments have been determined based upon its
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 23 of Notes to Financial Statements. 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, reported
segments and the financial information of the reported segments are not necessarily comparable with
similar information reported by other financial institutions. Furthermore, changes in management
structure or allocation methodologies and procedures may result in changes in reported segment
financial data. Financial information about the Company’s segments is presented in note 23 of Notes to
Financial Statements.

The Business Banking segment provides a wide range of services to small businesses and
professionals within markets served by the Company through the Company’s branch network,
business banking centers and other delivery channels such as telephone banking, Internet banking
and automated teller machines. Services and products offered by this segment include various
business loans and leases, including loans guaranteed by the Small Business Administration, business
credit cards, deposit products, and financial services such as cash management, payroll and direct
deposit, merchant credit card and letters of credit. Net income of the Business Banking segment
aggregated $213 million in 2021, up 34% from $159 million in 2020. Higher net interest income of
$56 million, a $15 million decline in the provision for credit losses and higher merchant discount and
credit card fees of $12 million in 2021 were partially offset by higher personnel-related costs of $11
million. The higher net interest income reflected a 127 basis point widening of the net interest margin
on loans and higher average deposit balances of $3.3 billion, partially offset by a 57 basis point
narrowing of the net interest margin on deposits. The widening margin on loans resulted from a
higher level of PPP fee income resulting from the forgiveness of loans by the SBA. The increase in
average deposits resulted from a continued desire by the customers of the Business Banking segment

112

to maintain liquidity during the pandemic and amid the low interest rate environment. This segment
recorded net income of $168 million in 2019. The 6% decline in 2020 as compared with 2019
resulted from a $10 million decrease in service charges on deposit accounts, a $9 million increase in
the provision for credit losses, due largely to higher net charge-offs, and higher personnel-related
costs of $7 million. Those unfavorable factors were partially offset by an $11 million increase in net
interest income. The growth in net interest income reflected an increase in average outstanding
deposit and loan balances of $3.0 billion and $2.4 billion, respectively, partially offset by a
narrowing of the net interest margin on deposits and loans of 89 basis points and 17 basis points,
respectively.

The Commercial Banking segment provides a wide range of credit products and banking
services for middle-market and large commercial customers, mainly within the markets served by the
Company. Services provided by this segment include commercial lending and leasing, letters of
credit, deposit products, and cash management services. The Commercial Banking segment recorded
net income of $494 million in 2021, compared with $508 million in 2020. The most significant
factors contributing to the 3% decline in net income from 2020 to 2021 included a higher provision
for credit losses of $28 million, an increase of $13 million in centrally allocated costs associated with
data processing, risk management and other support services provided to the Commercial Banking
segment, and a $10 million decrease in net interest income. The impact of those items on net income
was partially offset by higher letter of credit and other credit-related fees of $22 million and higher
merchant discount and credit card fees of $13 million. The decrease in net interest income reflected
lower average outstanding loan balances of $1.8 billion and a 52 basis point narrowing of the net
interest margin on deposits offset, in part, by a widening of the net interest margin on loans of 22
basis points and higher average deposit balances of $5.4 billion. Net income for the Commercial
Banking segment totaled $520 million in 2019. The decline in net income in 2020 from 2019 was
predominantly driven by a $48 million increase in the provision for credit losses, due to higher loan
balances and net charge-offs, and a $9 million write-down of equipment in 2020 that was leased to
customers. Offsetting the noted unfavorable factors were a $35 million increase in net interest
income and an $11 million decrease in centrally-allocated costs associated with data processing, risk
management and other support services provided to the Commercial Banking segment. The increased
net interest income reflected higher average outstanding deposit and loan balances of $6.2 billion and
$2.2 billion, respectively, partially offset by an 84 basis point narrowing of the net interest margin on
deposits.

The Commercial Real Estate segment provides credit and deposit services to its customers.

Commercial real estate loans may be secured by apartment/multifamily buildings, office, retail and
industrial space or other types of collateral. Activities of this segment also include the origination,
sales and servicing of commercial real estate loans through the Fannie Mae DUS program and other
programs. Commercial real estate loans held for sale are included in this segment. Net income for
the Commercial Real Estate segment was $372 million in 2021, compared with $382 million in 2020.
The $10 million, or 2%, decrease was primarily attributable to a $30 million decline in net interest
income, reflecting a 58 basis point narrowing of the net interest margin on deposits and lower
average loan balances of $237 million. Additionally, lower trading account and foreign exchange
gains of $12 million, resulting from decreased activity related to interest rate swap agreements
executed on behalf of commercial customers, a $7 million increase in the amortization of capitalized
commercial mortgage servicing rights, a $7 million increase in centrally-allocated costs associated
with data processing, risk management and other support services provided to the Commercial Real
Estate segment and higher FDIC assessments and salaries and employee benefits of $6 million each
were partially offset by a $40 million decrease in the provision for credit losses and a $17 million
increase in commercial mortgage servicing income. Net income for this segment decreased 21% in
2020 from $486 million in 2019. That decline resulted from a $106 million rise in the provision for

113

credit losses, due to higher loan balances and net charge-offs, a decline in net interest income of $19
million, higher salaries and employee benefits expense of $11 million, largely reflecting increased
incentive compensation costs, and lower trading account and foreign exchange gains of $9 million,
resulting from decreased activity related to interest rate swap agreements executed on behalf of
customers. Partially offsetting those unfavorable factors was a $10 million rise in commercial
mortgage banking revenues, due in part to wider margins on loans originated for sale. The lower net
interest income was largely attributable to a narrowing of the net interest margin on deposits and
loans of 76 basis points and 14 basis points, respectively, partially offset by higher average
outstanding loan balances of $1.7 billion.

The Discretionary Portfolio segment includes investment and trading account securities,
residential real estate loans and other assets, short-term and long-term borrowed funds, brokered
deposits, and, through June 2021, Cayman Islands office deposits. This segment also provides
foreign exchange services to customers. Net income of the Discretionary Portfolio segment
aggregated $289 million in 2021 and $327 million in 2020. The 12% decline in the 2021’s net
income as compared with 2020 reflects a $21 million increase in intersegment fees related to the
transfer of residential mortgage loans to the Discretionary Portfolio segment from the Residential
Mortgage Banking segment, a $12 million decrease in the value of marketable equity securities, and
an $8 million increase in centrally-allocated costs associated with data processing, risk management
and other support services provided to the Discretionary Portfolio segment. The Discretionary
Portfolio segment recorded net income $144 million in 2019. The significant increase to $327 million
in 2020 was driven by a $277 million rise in net interest income, reflecting additional income from
interest rate swap agreements utilized as part of the Company’s management of interest rate risk.
Partially offsetting that factor were valuation losses associated with marketable equity securities
(compared with gains in the 2019 period) representing a change of $25 million.

The Residential Mortgage Banking segment originates and services residential mortgage loans
and sells substantially all of those loans in the secondary market to investors or to the Discretionary
Portfolio segment. The Company periodically purchases the rights to service loans and also sub-
services residential real estate loans for others. Residential real estate loans held for sale are included
in this segment. Income for the Residential Mortgage Banking segment increased 29% to $173
million in 2021 from $134 million in 2020. That year-over-year increase was attributable to higher
net interest income of $40 million, reflecting higher average loan balances of $1.3 billion, and
increased revenues associated with servicing and sub-servicing residential real estate loans (including
intersegment revenues) of $9 million. The Residential Mortgage Banking segment’s net income rose
85% to $134 million in 2020 from $72 million in 2019. That improvement resulted from a $131
million increase in revenues associated with mortgage origination and sales activities (including
intersegment revenues) and higher net interest income of $33 million, reflecting higher average
outstanding balances of deposits and loans of $1.1 billion and $1.0 billion, respectively. Offsetting
those favorable factors were higher servicing-related costs (including intersegment costs and changes
to the valuation allowance for capitalized residential mortgage servicing rights) of $37 million,
higher personnel-related costs of $22 million, reflecting increased headcount and higher
commissions, lower revenues of $17 million associated with servicing and sub-servicing residential
real estate loans (including intersegment revenues), and a $14 million rise in centrally-allocated costs
associated with data processing, risk management and other support services provided to the
Residential Mortgage Banking segment.

The Retail Banking segment offers a variety of services to consumers through several delivery

channels which include branch offices, automated teller machines, telephone banking and Internet
banking. The Company has branch offices in New York State, Maryland, New Jersey, Pennsylvania,
Delaware, Connecticut, Virginia, West Virginia and the District of Columbia. Credit services offered
by this segment include consumer installment loans, automobile and recreational finance loans

114

(originated both directly and indirectly through dealers), home equity loans and lines of credit, and
credit cards. The segment also offers to its customers deposit products, including demand, savings
and time accounts, investment products, including mutual funds and annuities and other services.
Retail Banking segment net income aggregated $341 million in 2021 compared with $365 million in
2020. Factors contributing to the decline in net income in 2021 included a decrease of $78 million in
net interest income and increased centrally-allocated costs, largely associated with data processing,
risk management and other support services provided to the Retail Banking segment. The net interest
income decline reflected a narrowing of the net interest margin on deposits of 49 basis points,
partially offset by higher average outstanding balances of deposits and loans of $5.1 billion and $1.5
billion, respectively. The unfavorable factors were partially offset by a $53 million decrease in the
provision for credit losses, a $22 million decrease in personnel-related costs (reflecting lower staffing
levels), a $20 million rise in service charges on deposit accounts and an $8 million increase in
merchant discount and credit card fees. Net income for the Retail Banking segment was $365 million
in 2020, down 31% from $528 million in 2019. That decrease was predominantly attributable to a
$185 million decline in net interest income, reflecting a 74 basis point narrowing of the net interest
margin on deposits, partially offset by higher average outstanding deposit and loan balances of $2.4
billion and $1.4 billion, respectively, and a $51 million decrease in consumer service charges on
deposit accounts. The lower consumer service charges reflect fee waivers and lower transaction
activity as a result of the COVID-19 pandemic. Those unfavorable factors were offset, in part, by a
$17 million decrease in advertising and marketing expenses due to reduced activities related to the
pandemic and a $14 million decline in the provision for credit losses.

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 from the acquisitions of financial institutions, distributions from BLG,
merger-related expenses related to acquisitions (when incurred) 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 a net loss of $24 million and $523 million in 2021 and 2020, respectively. As compared with 2020,
the lower net loss in 2021 resulted from a $795 million decrease in the provision for credit losses, the
favorable impact from the Company’s allocation methodologies for internal transfers for funding
charges and credits associated with earning assets and interest-bearing liabilities of the Company’s
reportable segments, and increased trust income. Those favorable factors were partially offset by
higher professional services expenses and increased personnel-related costs. The net loss in 2020 as
compared with 2019’s net income of $11 million resulted from a $476 million increase in the
provision for credit losses, the unfavorable impact from the Company’s allocation methodologies for
internal transfers for funding charges and credits associated with earning assets and interest-bearing
liabilities of the Company’s reportable segments, and a $29 million increase in outside data
processing and software costs. Those unfavorable factors were partially offset by a $112 million
decrease in professional and other outside services, a $49 million decrease in accruals for legal
matters, the impact of a $48 million charge from the sale of an affiliated asset manager during 2019,
higher trust income of $29 million, and increased income from BLG of $16 million.

Recent Accounting Developments
A discussion of recent accounting developments is included in note 27 of Notes to Financial
Statements.

115

Forward-Looking Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations and other
sections of this annual report contain forward-looking statements, within the meaning of the Private
Securities Litigation Reform Act of 1995. Any statement that does not describe historical or current
facts is a forward-looking statement, including statements that are based on current expectations,
estimates and projections about the Company’s business, management’s beliefs and assumptions
made by management.

Statements regarding the potential effects of the COVID-19 pandemic on the Company’s

business, financial condition, liquidity and results of operations may constitute forward-looking
statements and are subject to the risk that the actual effects may differ, possibly materially, from
what is reflected in those forward-looking statements due to factors and future developments that are
uncertain, unpredictable and in many cases beyond the Company’s control, including the scope and
duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and
the direct and indirect impact of the pandemic on customers, clients, third parties and the Company.
Statements regarding the Company’s expectations or predictions regarding the proposed
transaction between M&T and People’s United also are forward-looking statements, including
statements regarding the expected timing, completion and effects of the proposed transaction as well
as M&T’s and People’s United’s expected financial results, prospects, targets, goals and outlook.
M&T provides further detail regarding the risks and uncertainties related to the proposed transaction
in its public filings, including in the “Risk Factors” section of this annual report.

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.

Future factors include risks, predictions and uncertainties relating to: the proposed transaction

between M&T and People’s United, including the factors that are described in the “Risk Factors”
section of this annual report; the impact of the COVID-19 pandemic; 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 on 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 regulations affecting the
financial services industry, and/or M&T and its subsidiaries individually or collectively, including
tax policy; regulatory supervision and oversight, including monetary policy and capital requirements;
changes in accounting policies or procedures as may be required by the Financial Accounting
Standards Board, regulatory agencies or legislation; increasing price, product and 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 and 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

116

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. Forward-
looking statements speak only as of the date they are made and the Company assumes no duty to
update forward-looking statements.

117

Table 23

Earnings and dividends
Amounts in thousands, except per share
Interest income (taxable-equivalent basis) .........................
Interest expense ..................................................................
Net interest income.............................................................
Less: provision for credit losses .........................................
Other income ......................................................................
Less: other expense.............................................................
Income before income taxes...............................................
Applicable income taxes.....................................................
Taxable-equivalent adjustment...........................................
Net income..........................................................................

Net income available to common shareholders-diluted .....
Per common share data

QUARTERLY TRENDS
2021 Quarters

2020 Quarters

Fourth

Third

Second

First

Fourth

Third

Second

First

$ 962,081
24,725
937,356
(15,000 )
578,637
927,500
603,493
141,962
3,563
$ 457,968

996,649
25,696
970,953
(20,000 )
569,126
899,334
660,745
161,582
3,703
495,460

974,090
28,018
946,072
(15,000 )
513,633
865,345
609,360
147,559
3,732
458,069

1,020,695
35,567
985,128
(25,000 )
505,598
919,444
596,282
145,300
3,733
447,249

1,042,862
49,610
993,252
75,000
551,250
845,008
624,494
149,382
3,972
471,140

1,005,180
58,066
947,114
150,000
520,561
826,774
490,901
114,746
4,019
372,136

1,036,476
75,105
961,371
325,000
487,273
807,042
316,602
71,314
4,234
241,054

1,125,482
143,614
981,868
250,000
529,360
906,416
354,812
80,927
5,063
268,822

$ 434,171

475,961

438,759

428,093

451,869

353,400

223,099

250,701

Basic earnings.............................................................
Diluted earnings..........................................................
Cash dividends............................................................

3.37
3.37
1.20

3.70
3.69
1.10

3.41
3.41
1.10

3.33
3.33
1.10

3.52
3.52
1.10

2.75
2.75
1.10

1.74
1.74
1.10

1.93
1.93
1.10

Average common shares outstanding

Basic ...........................................................................
Diluted ........................................................................

128,698
128,888

128,689
128,844

128,671
128,842

128,537
128,669

128,303
128,379

128,285
128,355

128,275
128,333

129,696
129,755

Performance ratios, annualized
Return on

Average assets ............................................................
Average common shareholders’ equity ......................

1.22 %
1.28 %
1.15 %
10.91 % 12.16 % 11.55 %

1.22 %
11.57 %

1.30 %
12.07 %

1.06 %
9.53 %

.71 %
6.13 %

.90 %
7.00 %

Net interest margin on average earning assets

(taxable-equivalent basis)................................................

2.58 %

2.74 %

2.77 %

2.97 %

3.00 %

2.95 %

3.13 %

3.65 %

Nonaccrual loans to total loans and leases, net of

unearned discount...........................................................

2.22 %

2.40 %

2.31 %

1.97 %

1.92 %

1.26 %

1.18 %

1.13 %

Net operating (tangible) results (a)
Net operating income (in thousands)..................................
Diluted net operating income per common share...............
Annualized return on

Average tangible assets ..............................................
Average tangible common shareholders’ equity ........
Efficiency ratio (b) .............................................................

Balance sheet data
In millions, except per share
Average balances

$ 475,477
3.50
$

504,030
3.76

462,959
3.45

457,372
3.41

473,453
3.54

375,029
2.77

243,958
1.76

271,705
1.95

1.27 %
1.34 %
1.23 %
15.98 % 17.54 % 16.68 %
58.4 %
57.7 %
59.7 %

1.29 %
17.05 %
60.3 %

1.35 %
17.53 %
54.6 %

1.10 %
13.94 %
56.2 %

.74 %
9.04 %
55.7 %

.94 %
10.39 %
58.9 %

Total assets (c) ............................................................
Total tangible assets (c) ..............................................
Earning assets .............................................................
Investment securities ..................................................
Loans and leases, net of unearned discount................
Deposits ......................................................................
Common shareholders’ equity (c) ..............................
Tangible common shareholders’ equity (c) ................

At end of quarter

Total assets (c) ............................................................
Total tangible assets (c) ..............................................
Earning assets .............................................................
Investment securities ..................................................
Loans and leases, net of unearned discount................
Deposits ......................................................................
Common shareholders’ equity (c) ...............................
Tangible common shareholders’ equity (c) ................
Equity per common share ...........................................
Tangible equity per common share ............................

$ 157,722
153,125
144,420
6,804
93,250
134,444
15,863
11,266

$ 155,107
150,511
141,990
7,156
92,912
131,543
16,153
11,557
125.51
89.80

154,037
149,439
140,420
6,019
95,314
131,255
15,614
11,016

151,901
147,304
138,257
6,448
93,583
128,701
15,779
11,182
122.60
86.88

150,641
146,041
136,951
6,211
98,610
128,413
15,321
10,721

150,623
146,023
137,171
6,143
97,113
128,269
15,470
10,870
120.22
84.47

148,157
143,554
134,355
6,605
99,356
125,733
15,077
10,474

150,481
145,879
137,367
6,611
99,299
128,476
15,197
10,595
118.12
82.35

144,563
139,958
131,916
7,195
98,666
120,976
14,963
10,358

142,601
137,998
129,295
7,046
98,536
119,806
14,937
10,334
116.39
80.52

140,181
135,574
127,689
7,876
98,210
116,306
14,823
10,216

138,627
134,021
126,418
7,723
98,447
115,163
14,851
10,245
115.75
79.85

136,446
131,836
123,492
8,500
97,797
111,795
14,703
10,093

139,537
134,928
127,149
8,454
97,758
114,968
14,695
10,086
114.54
78.62

120,585
115,972
108,226
9,102
91,706
96,166
14,470
9,857

124,578
119,966
112,046
8,957
94,142
100,183
14,566
9,954
113.54
77.60

(a)

(b)
(c)

Excludes amortization and balances related to goodwill and core deposit and other intangible assets and merger-related expenses which, except in the calculation of the
efficiency ratio, are net of applicable income tax effects. A reconciliation of net income and net operating income appears in Table 24.
Excludes impact of merger-related expenses and net securities transactions.
The difference between total assets and total tangible assets, and common shareholders’ equity and tangible common shareholders’ equity, represents goodwill, core
deposit and other intangible assets, net of applicable deferred tax balances. A reconciliation of such balances appears in Table 24.

118

Table 24

RECONCILIATION OF QUARTERLY GAAP TO NON-GAAP MEASURES
2020 Quarters
2021 Quarters

Fourth

Third

Second

First

Fourth

Third

Second

First

Income statement data (in thousands, except
per share)
Net income
Net income ............................................................
Amortization of core deposit and other

intangible assets (a) ............................................
Merger-related expenses (a) ..................................
Net operating income....................................

Earnings per common share
Diluted earnings per common share......................
Amortization of core deposit and other

intangible assets (a) ............................................
Merger-related expenses (a) ..................................

Diluted net operating earnings per
common share .............................................

3.50

$ 457,968

495,460

458,069

447,249

471,140

372,136

241,054

268,822

1,447
16,062
$ 475,477

3.37

.01
.12

2,028
6,542
504,030

2,023
2,867
462,959

2,034
8,089
457,372

2,313
—
473,453

2,893
—
375,029

2,904
—
243,958

2,883
—
271,705

3.69

.02
.05

3.76

3.41

.02
.02

3.45

3.33

.02
.06

3.41

3.52

.02
—

3.54

2.75

.02
—

2.77

1.74

.02
—

1.76

1.93

.02
—

1.95

Other expense
Other expense........................................................
Amortization of core deposit and other

intangible assets..................................................
Merger-related expenses .......................................
Noninterest operating expense......................

Merger-related expenses
Salaries and employee benefits .............................
Equipment and net occupancy...............................
Outside data processing and software ...................
Advertising and marketing ....................................
Printing, postage and supplies...............................
Other costs of operations.......................................
Other expense ...............................................

Efficiency ratio
Noninterest operating expense (numerator) ..........

Taxable-equivalent net interest income.................
Other income .........................................................
Less: Gain (loss) on bank investment
securities..............................................................
Denominator .................................................

$ 927,500

899,334

865,345

919,444

845,008

826,774

807,042

906,416

(1,954 )
(21,190 )
$ 904,356

(2,738 )
(8,826 )
887,770

(2,737 )
(3,893 )
858,715

(2,738 )
(9,951 )
906,755

(3,129 )
—
841,879

(3,914 )
—
822,860

(3,913 )
—
803,129

(3,913 )
—
902,503

112
340
250
337
186
19,965
21,190

60
1
625
505
730
6,905
8,826

4
—
244
24
2,049
1,572
3,893

—
—
—
—
—
9,951
9,951

—
—
—
—
—
—
—

$ 904,356

$ 937,356
578,637

887,770

970,953
569,126

858,715

946,072
513,633

906,755

985,128
505,598

841,879

993,252
551,250

822,860

947,114
520,561

803,129

961,371
487,273

902,503

981,868
529,360

1,426
$ 1,514,567

291
1,539,788

(10,655 )
1,470,360

(12,282 )
1,503,008

1,619
1,542,883

2,773
1,464,902

6,969
1,441,675

(20,782 )
1,532,010

Efficiency ratio......................................................

59.7 %

57.7 %

58.4 %

60.3 %

54.6 %

56.2 %

55.7 %

58.9 %

Balance sheet data (in millions)
Average assets
Average assets .......................................................
Goodwill................................................................
Core deposit and other intangible assets ...............
Deferred taxes .......................................................
Average tangible assets.................................

Average common equity
Average total equity ..............................................
Preferred stock.......................................................
Average common equity ...............................
Goodwill................................................................
Core deposit and other intangible assets ...............
Deferred taxes .......................................................
Average tangible common equity .................

At end of quarter
Total assets
Total assets ............................................................
Goodwill................................................................
Core deposit and other intangible assets ...............
Deferred taxes .......................................................
Total tangible assets......................................

Total common equity
Total equity ...........................................................
Preferred stock.......................................................
Common equity.............................................
Goodwill................................................................
Core deposit and other intangible assets ...............
Deferred taxes .......................................................
Total tangible common equity ......................

(a)

After any related tax effect.

$ 157,722
(4,593 )
(5 )
1
$ 153,125

17,613
(1,750 )
15,863
(4,593 )
(5 )
1
11,266

$ 155,107
(4,593 )
(4 )
1
$ 150,511

17,903
(1,750 )
16,153
(4,593 )
(4 )
1
11,557

154,037
(4,593 )
(7 )
2
149,439

17,109
(1,495 )
15,614
(4,593 )
(7 )
2
11,016

151,901
(4,593 )
(6 )
2
147,304

17,529
(1,750 )
15,779
(4,593 )
(6 )
2
11,182

150,641
(4,593 )
(10 )
3
146,041

16,571
(1,250 )
15,321
(4,593 )
(10 )
3
10,721

150,623
(4,593 )
(9 )
2
146,023

16,720
(1,250 )
15,470
(4,593 )
(9 )
2
10,870

148,157
(4,593 )
(13 )
3
143,554

16,327
(1,250 )
15,077
(4,593 )
(13 )
3
10,474

150,481
(4,593 )
(12 )
3
145,879

16,447
(1,250 )
15,197
(4,593 )
(12 )
3
10,595

144,563
(4,593 )
(16 )
4
139,958

16,213
(1,250 )
14,963
(4,593 )
(16 )
4
10,358

142,601
(4,593 )
(14 )
4
137,998

16,187
(1,250 )
14,937
(4,593 )
(14 )
4
10,334

140,181
(4,593 )
(19 )
5
135,574

16,073
(1,250 )
14,823
(4,593 )
(19 )
5
10,216

138,627
(4,593 )
(17 )
4
134,021

16,101
(1,250 )
14,851
(4,593 )
(17 )
4
10,245

136,446
(4,593 )
(23 )
6
131,836

15,953
(1,250 )
14,703
(4,593 )
(23 )
6
10,093

139,537
(4,593 )
(21 )
5
134,928

15,945
(1,250 )
14,695
(4,593 )
(21 )
5
10,086

120,585
(4,593 )
(27 )
7
115,972

15,720
(1,250 )
14,470
(4,593 )
(27 )
7
9,857

124,578
(4,593 )
(25 )
6
119,966

15,816
(1,250 )
14,566
(4,593 )
(25 )
6
9,954

119

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Incorporated by reference to the discussion contained in Part II, Item 7, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” under the captions “Liquidity,
Market Risk, and Interest Rate Sensitivity” (including Table 21) and “Capital.”

Item 8. Financial Statements and Supplementary Data.

Financial Statements and Supplementary Data consist of the financial statements as indexed and
presented below and Table 23 “Quarterly Trends” presented in Part II, Item 7, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.”

Index to Financial Statements and Financial Statement Schedules
Report on Internal Control Over Financial Reporting ...................................................................
Report of Independent Registered Public Accounting Firm ..........................................................
Consolidated Balance Sheet — December 31, 2021 and 2020......................................................
Consolidated Statement of Income — Years ended December 31, 2021, 2020 and 2019 ............
Consolidated Statement of Comprehensive Income — Years ended December 31, 2021, 2020

and 2019 ....................................................................................................................................
Consolidated Statement of Cash Flows — Years ended December 31, 2021, 2020 and 2019 .....
Consolidated Statement of Changes in Shareholders’ Equity — Years ended December 31,

2021, 2020 and 2019..................................................................................................................
Notes to Financial Statements........................................................................................................

121
122
125
126

127
128

129
130

120

Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial
reporting at M&T Bank Corporation and subsidiaries (“the Company”). Management has assessed
the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021
based on criteria described in “Internal Control — Integrated Framework (2013)” issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment,
management concluded that the Company maintained effective internal control over financial
reporting as of December 31, 2021.

The consolidated financial statements of the Company have been audited by

PricewaterhouseCoopers LLP, an independent registered public accounting firm, that was engaged to
express an opinion as to the fairness of presentation of such financial statements.
PricewaterhouseCoopers LLP was also engaged to assess the effectiveness of the Company’s internal
control over financial reporting. The report of PricewaterhouseCoopers LLP follows this report.

M&T BANK CORPORATION

René F. Jones
Chairman of the Board and Chief Executive Officer

Darren J. King
Executive Vice President and Chief Financial Officer

121

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of
M&T Bank Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of M&T Bank Corporation and its
subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated
statements of income, of comprehensive income, of changes in shareholders' equity and of cash flows
for each of the three years in the period ended December 31, 2021, including the related notes
(collectively referred to as the “consolidated financial statements”). We also have audited the
Company's internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of
its operations and its cash flows for each of the three years in the period ended December 31, 2021 in
conformity with accounting principles generally accepted in the United States of America. Also in
our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2021, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in
which it accounts for the allowance for credit losses as of January 1, 2020.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for
maintaining effective internal control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying
management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company's internal control
over financial reporting based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud, and whether
effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks
of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our
audits also included evaluating the accounting principles used and significant estimates made by

122

management, as well as evaluating the overall presentation of the consolidated financial statements.
Our audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the
audit committee and that (i) relates to accounts or disclosures that are material to the consolidated
financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.

Allowance for Credit Losses – Adjustments to model forecasts

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s allowance for
credit losses of $1.5 billion reflects management's expected credit losses in the loan and lease
portfolio of $92.9 billion as of December 31, 2021. For purposes of determining the level of the
allowance for credit losses, management evaluates the Company’s loan and lease portfolio by type.
Management utilizes statistically developed models to project principal balances over the remaining
contractual lives of the loan portfolios and to determine estimated credit losses through a reasonable
and supportable forecast period. Model forecasts may be adjusted for inherent limitations or biases
that have been identified through independent validation and back-testing of model performance to
actual realized results. Management also considered the impact of portfolio concentrations, changes

123

in underwriting practices, product expansions into new markets, imprecision in its economic
forecasts, geopolitical conditions and other risk factors that might influence the loss estimation
process.

The principal considerations for our determination that performing procedures relating to the
allowance for credit losses, specifically certain adjustments to model forecasts, is a critical audit
matter are (i) the significant judgment by management in determining the adjustments to model
forecasts, which in turn led to a high degree of auditor judgment and subjectivity in performing
procedures related to management’s determination of these adjustments to model forecasts, (ii) the
significant audit effort in evaluating the audit evidence related to these adjustments to model
forecasts, and (iii) the audit effort involved the use of professionals with specialized skill and
knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection
with forming our overall opinion on the consolidated financial statements. These procedures included
testing the effectiveness of controls relating to the Company’s allowance for credit losses estimation
process, including controls relating to the allowance for credit losses estimation process for certain
adjustments to model forecasts. These procedures also included, among others, testing management’s
process for determining the allowance for credit losses and these adjustments to model forecasts,
including evaluating the appropriateness of management’s methodology, testing the data utilized by
management and evaluating the reasonableness of significant assumptions relating to these
adjustments to model forecasts. Evaluating significant assumptions relating to these adjustments to
model forecasts involved evaluating portfolio composition and concentration, as well as relevant
market data. Professionals with specialized skill and knowledge were used to assist in evaluating the
appropriateness of management’s methodology and the reasonableness of significant assumptions
relating to these adjustments to model forecasts.

Buffalo, New York
February 16, 2022

We have served as the Company’s auditor since 1984.

124

M&T BANK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet

(Dollars in thousands, except per share)
Assets
Cash and due from banks ........................................................................................................................
Interest-bearing deposits at banks ...........................................................................................................
Trading account.......................................................................................................................................
Investment securities (includes pledged securities that can be sold or repledged of

$96,128 at December 31, 2021; $105,136 at December 31, 2020)
Available for sale (cost: $3,849,347 at December 31, 2021;

December 31,

2021

2020

1,337,577
41,872,304
468,031

1,552,743
23,663,810
1,068,581

$4,621,027 at December 31, 2020)................................................................................................

3,955,804

4,822,606

Held to maturity (fair value: $2,771,290 at December 31, 2021;

$1,842,281 at December 31, 2020)................................................................................................

2,734,674

1,748,989

Equity and other securities (cost: $461,516 at December 31, 2021;

$449,008 at December 31, 2020)...................................................................................................
Total investment securities .........................................................................................................
Loans and leases......................................................................................................................................
Unearned discount ............................................................................................................................
Loans and leases, net of unearned discount...................................................................................
Allowance for credit losses...............................................................................................................
Loans and leases, net .....................................................................................................................
Premises and equipment..........................................................................................................................
Goodwill..................................................................................................................................................
Core deposit and other intangible assets .................................................................................................
Accrued interest and other assets ............................................................................................................
Total assets .................................................................................................................................

Liabilities
Noninterest-bearing deposits...................................................................................................................
Savings and interest-checking deposits...................................................................................................
Time deposits ..........................................................................................................................................
Deposits at Cayman Islands office ..........................................................................................................
Total deposits .............................................................................................................................
Short-term borrowings ............................................................................................................................
Accrued interest and other liabilities.......................................................................................................
Long-term borrowings.............................................................................................................................
Total liabilities............................................................................................................................

Shareholders' equity
Preferred stock, $1.00 par, 1,000,000 shares authorized;

Issued and outstanding: Liquidation preference of $1,000 per share: 350,000
shares at December 31, 2021 and December 31, 2020; Liquidation preference of
$10,000 per share: 140,000 shares at December 31, 2021 and 90,000 shares at
December 31, 2020 ..............................................................................................................................

Common stock, $.50 par, 250,000,000 shares authorized,

465,382
7,155,860
93,136,678
(224,226)
92,912,452
(1,469,226)
91,443,226
1,144,765
4,593,112
3,998
7,088,287
$155,107,160

$ 60,131,480
68,603,966
2,807,963
—
131,543,409
47,046
2,127,931
3,485,369
137,203,755

474,102
7,045,697
98,875,788
(339,921)
98,535,867
(1,736,387)
96,799,480
1,161,558
4,593,112
14,165
6,701,959
$142,601,105

$ 47,572,884
67,680,840
3,899,910
652,104
119,805,738
59,482
2,166,409
4,382,193
126,413,822

1,750,000

1,250,000

159,741,898 shares issued at December 31, 2021 and December 31, 2020 ........................................

79,871

Common stock issuable, 15,769 shares at December 31, 2021;

18,113 shares at December 31, 2020....................................................................................................
Additional paid-in capital........................................................................................................................
Retained earnings ....................................................................................................................................
Accumulated other comprehensive income (loss), net............................................................................
Treasury stock — common, at cost — 31,052,845 shares at December 31, 2021;

1,212
6,635,000
14,646,448
(127,578)

1,344
6,617,404
13,444,428
(63,032)

31,426,742 shares at December 31, 2020.............................................................................................
Total shareholders’ equity ..........................................................................................................
Total liabilities and shareholders’ equity ...................................................................................

(5,081,548)
17,903,405
$155,107,160

(5,142,732)
16,187,283
$142,601,105

See accompanying notes to financial statements.

125

M&T BANK CORPORATION AND SUBSIDIARIES
Consolidated Statement of Income

(In thousands, except per share)
Interest income
Loans and leases, including fees ...............................................................
Investment securities

Fully taxable ........................................................................................
Exempt from federal taxes ..................................................................
Deposits at banks ......................................................................................
Other..........................................................................................................
Total interest income .....................................................................

Interest expense
Savings and interest-checking deposits.....................................................
Time deposits ............................................................................................
Deposits at Cayman Islands office............................................................
Short-term borrowings ..............................................................................
Long-term borrowings ..............................................................................
Total interest expense ....................................................................
Net interest income....................................................................................
Provision for credit losses .........................................................................
Net interest income after provision for credit losses.................................
Other income
Mortgage banking revenues ......................................................................
Service charges on deposit accounts .........................................................
Trust income .............................................................................................
Brokerage services income .......................................................................
Trading account and foreign exchange gains............................................
Gain (loss) on bank investment securities.................................................
Other revenues from operations ................................................................
Total other income.........................................................................

Other expense
Salaries and employee benefits .................................................................
Equipment and net occupancy ..................................................................
Outside data processing and software .......................................................
FDIC assessments .....................................................................................
Advertising and marketing........................................................................
Printing, postage and supplies...................................................................
Amortization of core deposit and other intangible assets .........................
Other costs of operations...........................................................................
Total other expense........................................................................
Income before taxes ..................................................................................
Income taxes .............................................................................................
Net income.................................................................................................
Net income available to common shareholders

Year Ended December 31
2020

2019

2021

$ 3,748,988

$ 3,975,053

$ 4,442,182

141,046
116
47,491
1,143
3,938,784

32,998
18,635
201
7
62,165
114,006
3,824,778
(75,000)
3,899,778

571,329
402,113
644,716
62,791
24,376
(21,220)
482,889
2,166,994

176,469
183
32,956
8,051
4,192,712

146,701
66,280
4,054
28
109,332
326,395
3,866,317
800,000
3,066,317

566,641
370,788
601,884
47,428
40,536
(9,421)
470,588
2,088,444

288,532
321
141,397
7,161
4,879,593

368,003
95,426
21,917
24,741
239,242
749,329
4,130,264
176,000
3,954,264

457,770
432,978
572,608
48,922
62,044
18,037
469,320
2,061,679

2,045,677
326,698
291,839
69,704
64,428
36,507
10,167
766,603
3,611,623
2,455,149
596,403
$ 1,858,746

1,950,692
322,037
258,480
53,803
61,904
39,869
14,869
683,586
3,385,240
1,769,521
416,369
$ 1,353,152

1,900,797
324,079
229,731
41,535
93,472
39,893
19,490
819,685
3,468,682
2,547,261
618,112
$ 1,929,149

Basic ..............................................................................................
Diluted ...........................................................................................

$ 1,776,977
1,776,987

$ 1,279,066
1,279,068

$ 1,849,509
1,849,511

Net income per common share

13.81
13.80

9.94
9.94

13.76
13.75

See accompanying notes to financial statements.

126

M&T BANK CORPORATION AND SUBSIDIARIES

Consolidated Statement of Comprehensive Income

(In thousands)

Net income ...............................................................................................
Other comprehensive income (loss), net of tax and

reclassification adjustments:

Year Ended December 31
2020

2019

2021

$1,858,746

$1,353,152

$1,929,149

Net unrealized gains (losses) on investment securities ......................
Cash flow hedges adjustments ...........................................................
Foreign currency translation adjustments...........................................
Defined benefit plans liability adjustments ........................................
Total other comprehensive income (loss) .....................................
Total comprehensive income ........................................................

(66,977)
(210,626)
(862)
213,919
(64,546)
$1,794,200

107,222
172,787
2,284
(138,645)
143,648
$1,496,800

184,906
108,520
1,091
(81,116)
213,401
$2,142,550

See accompanying notes to financial statements.

127

M&T BANK CORPORATION AND SUBSIDIARIES

Consolidated Statement of Cash Flows

(In thousands)
Cash flows from operating activities
Net income........................................................................................................................................
Adjustments to reconcile net income to net cash provided by operating activities

Year Ended December 31

2021

2020

2019

1,858,746

$ 1,353,152

$ 1,929,149

Provision for credit losses..................................................................................................
Depreciation and amortization of premises and equipment...............................................
Amortization of capitalized servicing rights......................................................................
Amortization of core deposit and other intangible assets ..................................................
Provision for deferred income taxes ..................................................................................
Asset write-downs..............................................................................................................
Net gain (loss) on sales of assets........................................................................................
Net change in accrued interest receivable, payable ...........................................................
Net change in other accrued income and expense .............................................................
Net change in loans originated for sale..............................................................................
Net change in trading account assets and liabilities...........................................................
Net cash provided by operating activities ..........................................................................

(75,000)
224,274
89,767
10,167
87,159
8,431
(10,308)
65,724
52,540
(163,623)
567,082
2,714,959

800,000
220,598
84,821
14,869
(31,291)
21,014
(19,441 )
(132,252)
(418,752)
(542,078)
(561,453 )
789,187

Cash flows from investing activities
Proceeds from sales of investment securities

Available for sale ......................................................................................................................
Equity and other securities ........................................................................................................

—
17,654

—
67,036

Proceeds from maturities of investment securities

1,433,793
615,201

1,614,557
911,555

(677,916)
(1,601,698 )
(30,153)
5,676,670
(18,208,494 )
(149,213)
(197,141)
(510,302)
(13,631,599 )

11,737,671
(12,436)
9,500
(853,091)
—
(580,260)
(68,200)
495,000
—
(26,710)
10,701,474
(215,166)
1,552,743
1,337,577

(7,581)
(11,993 )
(29,004 )
(7,231,694 )
(16,473,656 )
(172,289 )
(754,823)
67,411
(22,020,481 )

25,037,167
(2,881)
—
(2,665,023 )
(373,750)
(568,112 )
(68,256 )
—
—
(11,413 )
21,347,732
116,438
1,436,305
$ 1,552,743

Purchases of investment securities

Available for sale ......................................................................................................................
Held to maturity ........................................................................................................................
Equity and other securities ........................................................................................................
Net (increase) decrease in loans and leases ......................................................................................
Net (increase) decrease in interest-bearing deposits at banks ..........................................................
Capital expenditures, net ..................................................................................................................
Net increase in loan servicing advances ...........................................................................................
Other, net ..........................................................................................................................................
Net cash provided (used) by investing activities.......................................................................

Cash flows from financing activities
Net increase in deposits ....................................................................................................................
Net decrease in short-term borrowings.............................................................................................
Proceeds from long-term borrowings ...............................................................................................
Payments on long-term borrowings..................................................................................................
Purchases of treasury stock ..............................................................................................................
Dividends paid — common..............................................................................................................
Dividends paid — preferred .............................................................................................................
Proceeds from issuance of Series I and G preferred stock......................................................
Redemption of Series A and C preferred stock ......................................................................
Other, net ..........................................................................................................................................
Net cash provided (used) by financing activities ......................................................................
Net increase (decrease) in cash, cash equivalents and restricted cash..............................................
Cash, cash equivalents and restricted cash at beginning of period...................................................
Cash, cash equivalents and restricted cash at end of period.............................................................

Supplemental disclosure of cash flow information
Interest received during the period ...................................................................................................
Interest paid during the period..........................................................................................................
Income taxes paid during the period ................................................................................................
Supplemental schedule of noncash investing and financing activities
Real estate acquired in settlement of loans.......................................................................................
Loans held for sale transferred to loans held for investment............................................................
Securitization of residential mortgage loans allocated to

Available-for-sale investment securities ...................................................................................
Capitalized servicing rights.......................................................................................................

Adoption of lease accounting standard

Right-of-use assets ....................................................................................................................
Other liabilities..........................................................................................................................
Additions to right-of-use assets under operating leases ...................................................................

See accompanying notes to financial statements.

128

3,976,804
139,164
314,295

$ 4,135,990
372,291
275,558

$ 4,892,301
735,787
320,513

8,851
330,188

—
—

—
—
57,760

20,646
—

—
—

—
—
70,754

90,072
—

5,379
83

393,877
398,810
132,219

176,000
209,937
71,888
19,490
57,548
7,701
31,526
30,923
75,930
130,230
(382,767 )
2,357,555

107
1,169,876

2,621,603
1,162,820

(28,120)
(495,277 )
(979,734 )
(2,795,263 )
915,043
(178,049 )
(470,078)
(195,921 )
727,007

4,616,082
(4,336,015)
—
(1,553,493 )
(1,349,785 )
(552,138 )
(67,454 )
396,000
(381,500 )
(25,393 )
(3,253,696 )
(169,134 )
1,605,439
$ 1,436,305

M&T BANK CORPORATION AND SUBSIDIARIES

Consolidated Statement of Changes in Shareholders’ Equity

Common Additional

Preferred Common

Stock

Stock
Issuable

Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income
(Loss), Net

Treasury
Stock

Total

$ 1,231,500
—
—

79,883
—
—

1,726
—
—

6,579,342

11,516,672
— 1,929,149
(72,482)
—

(420,081)
213,401
—

(3,528,851) $ 15,460,191
— 2,142,550
(72,482 )
—

(381,500)
400,000
—

—
—
—

—
(4,000)
—

—
—
—

—
—
—
—
— (1,349,785 )

(381,500)
396,000
(1,349,785 )

—

(12)

(160)

18,197

(207)

—

56,073

73,891

—
$ 1,250,000

—
79,871

—
1,566

—
6,593,539

(552,216)
12,820,916

—
(206,680)

—

(552,216)
(4,822,563) $ 15,716,649

—
—
—
—

—

—
—
—
—

—

—
—
—
—

—
(91,925)
— 1,353,152
(68,228)
—
—
—

—
(91,925)
—
— 1,496,800
143,648
(68,228)
—
—
(373,750)
— (373,750)

(222)

23,865

(411)

—

53,581

76,813

—
$ 1,250,000

—
79,871

—
1,344

—
6,617,404

(569,076)
13,444,428

—
(63,032)

—

(569,076)
(5,142,732) $ 16,187,283

—
—
500,000

—

—
—
—

—

—
—
—

— 1,858,746
(72,915)
—
—
(5,000)

(64,546)
—
—

— 1,794,200
(72,915)
—
495,000
—

(132)

22,596

(844)

—

61,184

82,804

Dollars in thousands, except per share
2019
Balance — January 1, 2019....................
Total comprehensive income..................
Preferred stock cash dividends ...............
Redemption of Series A and Series C
preferred stock ......................................
Issuance of Series G preferred stock ......
Purchases of treasury stock ....................
Stock-based compensation

transactions, net ...................................

Common stock cash dividends —

$4.10 per share ....................................
Balance — December 31, 2019..............
2020
Cumulative effect of change in
accounting principle — credit
losses ...................................................
Total comprehensive income..................
Preferred stock cash dividends ...............
Purchases of treasury stock ....................
Stock-based compensation

transactions, net ...................................

Common stock cash dividends —

$4.40 per share ....................................
Balance — December 31, 2020..............
2021
Total comprehensive income..................
Preferred stock cash dividends ...............
Issuance of Series I preferred stock........
Stock-based compensation

transactions, net ...................................

Common stock cash dividends —

$4.50 per share ....................................
Balance — December 31, 2021..............

—
$ 1,750,000

—
79,871

—
1,212

—
6,635,000

(582,967)
14,646,448

—
(127,578)

—

(582,967)
(5,081,548 ) $ 17,903,405

See accompanying notes to financial statements.

129

M&T BANK CORPORATION AND SUBSIDIARIES

Notes to Financial Statements

1. Significant accounting policies
M&T Bank Corporation (“M&T”) is a bank holding company headquartered in Buffalo, New York.
Through subsidiaries, M&T provides individuals, corporations and other businesses, and institutions
with commercial and retail banking services, including loans and deposits, trust, mortgage banking,
asset management, insurance and other financial services. Banking activities are largely focused on
consumers residing in New York State, Maryland, New Jersey, Pennsylvania, Delaware,
Connecticut, Virginia, West Virginia and the District of Columbia and on small and medium-size
businesses based in those areas. Certain subsidiaries also conduct activities in other areas.

The accounting and reporting policies of M&T and subsidiaries (“the Company”) are in

accordance with accounting principles generally accepted in the United States of America (“GAAP”)
and general practices within the banking industry. The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. The significant accounting policies are as
follows:

Consolidation
The consolidated financial statements include M&T and all of its subsidiaries. All significant
intercompany accounts and transactions of consolidated subsidiaries have been eliminated in
consolidation. The financial statements of M&T included in note 26 report investments in
subsidiaries under the equity method. Information about some limited purpose entities that are
affiliates of the Company but are not included in the consolidated financial statements appears in
note 20.

Consolidated Statement of Cash Flows
For purposes of this statement, cash and due from banks and federal funds sold are considered cash
and cash equivalents.

Securities purchased under agreements to resell and securities sold under agreements to
repurchase
Securities purchased under agreements to resell and securities sold under agreements to repurchase
are treated as collateralized financing transactions and are recorded at amounts equal to the cash or
other consideration exchanged. It is generally the Company’s policy to take possession of collateral
pledged to secure agreements to resell.

Trading account
Financial instruments used for trading purposes are stated at fair value. Realized gains and losses and
unrealized changes in fair value of financial instruments utilized in trading activities are included in
“trading account and foreign exchange gains” in the consolidated statement of income.

Investment securities
Investments in debt securities are classified as held to maturity and stated at amortized cost when
management has the positive intent and ability to hold such securities to maturity. Investments in
other debt securities are classified as available for sale and stated at estimated fair value with
unrealized changes in fair value included in “accumulated other comprehensive income (loss), net.”

130

Investments in equity securities having readily determinable fair values are stated at fair value and
unrealized changes in fair value are included in earnings. Investments in equity securities that do not
have readily determinable fair values are stated at cost minus impairment, if any, plus or minus
changes resulting from observable price changes in orderly transactions for the identical or a similar
investment of the same issuer. Amortization of premiums and accretion of discounts for investment
securities available for sale and held to maturity are included in interest income.

Other securities are stated at cost and include stock of the Federal Reserve Bank of New York

and the Federal Home Loan Bank (“FHLB”) of New York.

Beginning in 2020 GAAP requires an allowance for credit losses be deducted from the
amortized cost basis of financial assets, including investment securities held to maturity, to present
the net carrying value at the amount that is expected to be collected over the contractual term. In
cases where fair value of an available for sale debt security is less than its amortized cost basis and
the Company does not intend to sell the available for sale debt security and it is not more likely than
not that the Company will be required to sell the security before recovery of the amortized cost basis,
the difference between the fair value and the amortized cost basis is separated into (a) the amount
representing the credit loss and (b) the amount related to all other factors. The amount related to the
credit loss is recognized as an allowance for credit losses while the amount related to other factors is
recognized in other comprehensive income, net of applicable income taxes. If the Company intends
to sell the security or it is more likely than not to be required to sell the security before recovery of
the amortized cost basis, the security is written down to fair value with the entire amount recognized
in earnings. Subsequently, the Company accounts for the debt security as if the security had been
purchased on the measurement date of the write down at an amortized cost basis equal to the
previous amortized cost basis less the amount of the write down recognized in earnings. Prior to 2020
individual debt securities were written down through a charge to earnings when declines in value
below the cost basis of the security were considered other than temporary. Realized gains and losses
on the sales of investment securities are determined using the specific identification method.

Loans and leases
The Company’s accounting methods for loans depends on whether the loans were originated or
acquired by the Company.

Originated loans and leases
Loan fees and certain direct loan origination costs are deferred and recognized as an interest yield
adjustment over the life of the loan. Net deferred fees have been included in unearned discount as a
reduction of loans outstanding. Interest income on loans is accrued on a level yield method. Loans
are placed on nonaccrual status and previously accrued interest thereon is charged against income
when it is probable that the Company will be unable to collect all amounts according to the
contractual terms of the loan agreement or when principal or interest is delinquent 90 days. Certain
loans greater than 90 days delinquent continue to accrue interest if they are well-secured and in the
process of collection. Loans less than 90 days delinquent are deemed to have an insignificant delay in
payment and generally continue to accrue interest. Interest received on loans placed on nonaccrual
status is generally applied to reduce the carrying value of the loan or, if principal is considered fully
collectable, recognized as interest income. Nonaccrual commercial loans and commercial real estate
loans are returned to accrual status when borrowers have demonstrated an ability to repay their loans
and there are no delinquent principal and interest payments. Loans secured by residential real estate
are returned to accrual status when they are deemed to have an insignificant delay in payments of 90
days or less. Consumer loans not secured by residential real estate are returned to accrual status when
all past due principal and interest payments have been paid by the borrower. Loan balances are

131

charged off when it becomes evident that such balances are not fully collectable. For commercial
loans and commercial real estate loans, charge-offs are recognized after an assessment by credit
personnel of the capacity and willingness of the borrower to repay, the estimated value of any
collateral, and any other potential sources of repayment. A charge-off is recognized when, after such
assessment, it becomes evident that the loan balance is not fully collectable. For loans secured by
residential real estate, the excess of the loan balances over the net realizable value of the property
collateralizing the loan is charged-off when the loan becomes 150 days delinquent. Consumer loans
are generally charged-off when the loans are 91 to 180 days past due, depending on whether the loan
is collateralized and the status of repossession activities with respect to such collateral.

During the normal course of business, the Company modifies loans to maximize recovery

efforts. If a borrower is experiencing financial difficulty and a concession to the terms of the loan
agreement is granted that the Company would not otherwise consider, the modification is considered
a troubled debt restructuring and such loans are classified as either nonaccrual or renegotiated loans.
Due to the direct and indirect effects of the Coronavirus Disease 2019 (“COVID-19”) pandemic, a
dramatic reduction in economic activity severely hampered the ability for businesses and consumers
to meet their repayment obligations. The Coronavirus Aid, Relief, and Economic Security Act and
the Consolidated Appropriations Act, 2021 (collectively “CARES Act”), in addition to providing
financial assistance to both businesses and consumers, created a forbearance program for federally-
backed mortgage loans, protected borrowers from negative credit reporting due to loan
accommodations related to the pandemic, and provided financial institutions the option to
temporarily suspend certain requirements under GAAP related to troubled debt restructurings to
account for the effects of COVID-19. The bank regulatory agencies likewise issued guidance
encouraging financial institutions to work prudently with borrowers who were unable to meet their
contractual payment obligations because of the effects of COVID-19. The guidance, with
concurrence of the Financial Accounting Standards Board, and provisions of the CARES Act
allowed modifications made on a good faith basis in response to COVID-19 to borrowers who were
current with their payments prior to any relief, to not be treated as troubled debt restructurings nor be
reported as past due. Modifications included payment deferrals (including maturity extensions),
covenant waivers and fee waivers. The Company worked with its customers affected by COVID-19
and granted modifications across many of its loan portfolios. To the extent that such modifications
met the criteria described, the modified loans were not classified as troubled debt restructurings nor
reported as past due.

Commitments to sell real estate loans are utilized by the Company 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 recorded in the consolidated balance sheet includes changes in estimated fair value
during the hedge period, typically from the date of close through the sale date. Valuation adjustments
made on these loans and commitments are included in “mortgage banking revenues.”

Acquired loans and leases
Beginning in 2020, expected credit losses for purchased loans with credit deterioration are initially
recognized as an allowance for credit losses and are added to the purchase price to determine the
amortized cost basis of the loans. Any non-credit discount or premium resulting from acquiring such
loans is recognized as an adjustment to interest income over the remaining lives of the loans.
Subsequent changes in the amount of expected credit losses on such loans are recognized in the
allowance for credit losses in the same manner as originated loans. Prior to 2020, loans acquired in a
business combination were initially recorded at fair value with no carry-over of an acquired entity’s
previously established allowance for credit losses. Purchased impaired loans represented specifically
identified loans with evidence of credit deterioration for which it was probable at acquisition that the

132

Company would be unable to collect all contractual principal and interest payments. For purchased
impaired loans and other loans acquired at a discount that was, in part, attributable to credit quality,
the excess of cash flows expected at acquisition over the estimated fair value of acquired loans was
recognized as interest income over the remaining lives of the loans. Subsequent decreases in the
expected cash flows required the Company to evaluate the need for additions to the Company’s
allowance for credit losses. Subsequent improvements in expected cash flows resulted first in the
recovery of any related allowance for credit losses and then in recognition of additional interest
income over the then-remaining lives of the loans. The Company generally recognized the excess of
cash flows expected at acquisition over the estimated fair value of the acquired loans as interest
income over the remaining lives of such loans regardless of the borrower’s repayment status.

For all other acquired loans, the difference between the fair value and outstanding principal

balance of the loans is recognized as an adjustment to interest income over the lives of those loans.
Those loans are then accounted for in a manner that is similar to originated loans.

Allowance for credit losses
On January 1, 2020, the Company adopted amended accounting guidance which requires an
allowance for credit losses to be deducted from the amortized cost basis of financial assets to present
the net carrying value at the amount that is expected to be collected over the contractual term of the
asset considering relevant information about past events, current conditions, and reasonable and
supportable forecasts that affect the collectability of the reported amount. In estimating expected
losses in the loan and lease portfolio, borrower-specific financial data and macro-economic
assumptions are utilized to project losses over a reasonable and supportable forecast period.
Assumptions and judgment are applied to measure amounts and timing of expected future cash flows,
collateral values and other factors used to determine the borrowers’ abilities to repay obligations.
Subsequent to the forecast period, the Company utilizes longer-term historical loss experience to
estimate losses over the remaining contractual life of the loans. Prior to 2020, the allowance for
credit losses represented the amount that in management’s judgment reflected incurred credit losses
inherent in the loan and lease portfolio as of the balance sheet date.

Assets taken in foreclosure of defaulted loans
Assets taken in foreclosure of defaulted loans are primarily comprised of commercial and residential
real property and are included in “other assets” in the consolidated balance sheet. An in-substance
repossession or foreclosure occurs and a creditor is considered to have received physical possession
of residential real estate property collateralizing a consumer mortgage loan upon either (1) the
creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or
(2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy
that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement.
Upon acquisition of assets taken in satisfaction of a defaulted loan, the excess of the remaining loan
balance over the asset’s estimated fair value less costs to sell is charged-off against the allowance for
credit losses. Subsequent declines in value of the assets are recognized as “other costs of operations”
in the consolidated statement of income.

Premises and equipment
Premises and equipment are stated at cost less accumulated depreciation. Depreciation expense is
computed principally using the straight-line method over the estimated useful lives of the assets.

Capitalized servicing rights
Capitalized servicing assets are included in “other assets” in the consolidated balance sheet.
Separately recognized servicing assets are initially measured at fair value. The Company uses the

133

amortization method to subsequently measure servicing assets. Under that method, capitalized
servicing assets are charged to expense in proportion to and over the period of estimated net
servicing income.

To estimate the fair value of servicing rights, the Company considers market prices for similar

assets and the present value of expected future cash flows associated with the servicing rights
calculated using assumptions that market participants would use in estimating future servicing
income and expense. Such assumptions include estimates of the cost of servicing loans, loan default
rates, an appropriate discount rate, and prepayment speeds. For purposes of evaluating and measuring
impairment of capitalized servicing rights, the Company stratifies such assets based on the
predominant risk characteristics of the underlying financial instruments that are expected to have the
most impact on projected prepayments, cost of servicing and other factors affecting future cash flows
associated with the servicing rights. Such factors may include financial asset or loan type, note rate
and term. The amount of impairment recognized is the amount by which the carrying value of the
capitalized servicing rights for a stratum exceeds estimated fair value. Impairment is recognized
through a valuation allowance.

Sales and securitizations of financial assets
Transfers of financial assets for which the Company has surrendered control of the financial assets
are accounted for as sales. Interests in a sale of financial assets that continue to be held by the
Company, including servicing rights, are initially measured at fair value. The fair values of retained
debt securities are generally determined through reference to independent pricing information. The
fair values of retained servicing rights and any other retained interests are determined based on the
present value of expected future cash flows associated with those interests and by reference to market
prices for similar assets.

Securitization structures typically require the use of special-purpose trusts that are considered

variable interest entities. A variable interest entity is included in the consolidated financial statements
if the Company has the power to direct the activities that most significantly impact the variable
interest entity’s economic performance and has the obligation to absorb losses or the right to receive
benefits of the variable interest entity that could potentially be significant to that entity.

Goodwill and core deposit and other intangible assets
Goodwill represents the excess of the cost of an acquired entity over the fair value of the identifiable
net assets acquired. Goodwill is not amortized, but rather is tested for impairment at least annually at
the reporting unit level, which is either at the same level or one level below an operating segment.
Other acquired intangible assets with finite lives, such as core deposit intangibles, are initially
recorded at estimated fair value and are amortized over their estimated lives. Core deposit and other
intangible assets are generally amortized using accelerated methods over estimated useful lives of
five to ten years. The Company periodically assesses whether events or changes in circumstances
indicate that the carrying amounts of core deposit and other intangible assets may be impaired.

Derivative financial instruments
The Company accounts for derivative financial instruments at fair value. If certain conditions are
met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the
exposure to variable cash flows of a forecasted transaction or (c) a hedge of the foreign currency
exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-
for-sale security, or a foreign currency denominated forecasted transaction.

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

134

interest-bearing liabilities. For such agreements, amounts receivable or payable are recognized as
accrued under the terms of the agreement and the net differential is recorded as an adjustment to
interest income or expense of the related asset or liability. Interest rate swap agreements may be
designated as either fair value hedges or cash flow hedges. In a fair value hedge, the fair values of the
interest rate swap agreements and changes in the fair values of the hedged items 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 values of interest rate swap agreements and the
hedged items represents hedge ineffectiveness and is recorded in the same income statement line
item that is used to present the earnings effect of the hedged item in the consolidated statement of
income. In a cash flow hedge, the derivative’s unrealized gain or loss is initially recorded as a
component of other comprehensive income and subsequently reclassified into earnings when the
forecasted transaction affects earnings.

The Company utilizes commitments to sell real estate loans to hedge the exposure to changes in
the fair value of real estate loans held for sale. Commitments to originate real estate loans to be held
for sale and commitments to sell real estate loans are generally recorded in the consolidated balance
sheet at estimated fair value. Valuation adjustments made on these commitments are included in
“mortgage banking revenues.”

Derivative instruments not related to mortgage banking activities, including financial futures

commitments and interest rate swap agreements, that do not satisfy the hedge accounting
requirements are recorded at fair value and are generally classified as trading account assets or
liabilities with resultant changes in fair value being recognized in “trading account and foreign
exchange gains” in the consolidated statement of income.

Revenue from contracts with customers
A significant amount of the Company’s revenues are derived from net interest income on financial
assets and liabilities, mortgage banking revenues, trading account and foreign exchange gains,
investment securities gains, loan and letter of credit fees, income from bank-owned life insurance,
and certain other revenues that are generally excluded from the scope of accounting guidance for
revenue from contracts with customers. For other noninterest income revenue streams, the Company
generally 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.

Stock-based compensation
Compensation expense is recognized over the vesting period of stock-based awards based on
estimated grant date value, except that the recognition of compensation costs is accelerated for stock-
based awards granted to retirement-eligible employees and employees who will become retirement-
eligible prior to full vesting of the award because the Company’s incentive compensation plan allows
for vesting at the time an employee retires.

Income taxes
Deferred tax assets and liabilities are recognized for the future tax effects attributable to differences
between the financial statement value of existing assets and liabilities and their respective tax bases
and carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates and laws.
The Company evaluates uncertain tax positions using the two-step process required by GAAP.
The first step requires a determination of whether it is more likely than not that a tax position will be
sustained upon examination, including resolution of any related appeals or litigation processes, based
on the technical merits of the position. Under the second step, a tax position that meets the more-

135

likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than
fifty percent likely of being realized upon ultimate settlement.

The Company accounts for its investments in qualified affordable housing projects using the

proportional amortization method. Under that method, the Company amortizes the initial cost of the
investment in proportion to the tax credits and other tax benefits received and recognizes the net
investment performance in the income statement as a component of income tax expense.

Earnings per common share
Basic earnings per common share exclude dilution and are computed by dividing income available to
common shareholders by the weighted-average number of common shares outstanding (exclusive of
shares represented by the unvested portion of restricted stock and restricted stock unit grants) and
common shares issuable under deferred compensation arrangements during the period. Diluted
earnings per common share reflect shares represented by the unvested portion of restricted stock and
restricted stock unit grants and the potential dilution that could occur if securities or other contracts
to issue common stock were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in earnings. Proceeds assumed to have been received on such
exercise or conversion are assumed to be used to purchase shares of M&T common stock at the
average market price during the period, as required by the “treasury stock method” of accounting.

GAAP requires that unvested share-based payment awards that contain nonforfeitable rights to

dividends or dividend equivalents (whether paid or unpaid) shall be considered participating
securities and 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 that contain such rights and, accordingly, the Company’s
earnings per common share are calculated using the two-class method.

Treasury stock
Repurchases of shares of M&T common stock are recorded at cost as a reduction of shareholders’
equity. Reissuances of shares of treasury stock are recorded at average cost.

2. Acquisition
On February 22, 2021, M&T announced that it had entered into a definitive agreement with People’s
United Financial, Inc. ("People’s United"), headquartered in Bridgeport, Connecticut, under which
People’s United will be acquired by M&T in an all-stock transaction. Pursuant to the terms of the
agreement, People’s United shareholders will receive consideration valued at .118 of an M&T share
in the form of M&T common stock. People’s United outstanding preferred stock will be converted
into a new series of M&T preferred stock upon completion of the acquisition. The transaction is
valued at approximately $7.8 billion (with the price based on M&T’s closing price of $153.58 per
share as of December 31, 2021).

The merger has been approved by the boards of directors and shareholders of each company.

The merger is expected to close promptly after the parties have satisfied customary closing
conditions, including the approval of the Board of Governors of the Federal Reserve System. As of
December 31, 2021, People’s United disclosed that it had total assets of $64.6 billion, including
$37.9 billion of loans, $56.7 billion of liabilities, including $53.8 billion of deposits, and $7.9 billion
of stockholders’ equity.

In connection with the acquisition, the Company incurred merger-related expenses consisting of

professional services, including legal expenses and technology-related activities to prepare for
planned integration efforts, and printing costs associated with communications with shareholders that
totaled approximately $44 million for the year ended December 31, 2021.

136

Investment securities

3.
The amortized cost and estimated fair value of investment securities were as follows:

December 31, 2021
Investment securities available for sale:
U.S. Treasury and federal agencies ......................................
Mortgage-backed securities:

Government issued or guaranteed...................................
Other debt securities .............................................................

Investment securities held to maturity:
U.S. Treasury and federal agencies ......................................
Obligations of states and political subdivisions ...................
Mortgage-backed securities:

Government issued or guaranteed...................................
Privately issued ...............................................................
Other debt securities .............................................................

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair
Value

(In thousands)

$ 682,267 $

229 $

3,806 $ 678,690

3,042,771
124,309
3,849,347

113,102
1,974
115,305

561
4,481
8,848

3,155,312
121,802
3,955,804

3,052
177

2,667,328
61,555
2,562
2,734,674

—
2

49,221
10,520
—
59,743

9
—

3,043
179

2,708,173
8,376
57,333
14,742
2,562
—
23,127
2,771,290
31,975 $6,727,094

Total debt securities..............................................................
Equity and other securities:

$6,584,021 $ 175,048 $

Readily marketable equity — at fair value .....................
Other — at cost ...............................................................
Total equity and other securities...........................................

73,774 $

387,742
$ 461,516 $

4,460 $
—
4,460 $

77,640
594 $
—
387,742
594 $ 465,382

December 31, 2020
Investment securities available for sale:
U.S. Treasury and federal agencies ......................................
Mortgage-backed securities:

9,154 $

198 $

14 $

9,338

4,475,406
16
136,451
4,621,027

2,999
1,531

1,664,443
77,155
2,861
1,748,989

208,787
—
1,664
210,649

—
9

100,176
11,056
—
111,241

755
—
8,301
9,070

—
—

4,683,438
16
129,814
4,822,606

2,999
1,540

1,764,608
11
70,273
17,938
2,861
—
17,949
1,842,281
27,019 $6,664,887

Total debt securities..............................................................
Equity and other securities:

$6,370,016 $ 321,890 $

67,891 $

381,117
$ 449,008 $

25,094 $
—
25,094 $

92,985
— $
—
381,117
— $ 474,102

137

No investment in securities of a single non-U.S. Government, government agency or

government guaranteed issuer exceeded ten percent of shareholders’ equity at December 31, 2021.

As of December 31, 2021, the latest available investment ratings of all obligations of states and

political subdivisions, privately issued mortgage-backed securities and other debt securities were:

Amortized
Cost

Estimated
Fair Value

A or
Better

BBB

B or
Less

Not
Rated

Average Credit Rating of Fair Value Amount

(In thousands)

Obligations of states and political

subdivisions ............................................ $

177

179

$ 179 $ — $ — $ — $ —

Privately issued mortgage-backed

61,555
securities .................................................
Other debt securities ..................................
126,871
Total ........................................................... $188,603

57,333
124,364
$181,876

—
6,526

—
51,349
$6,705 $51,349

—
32,593
$32,593

485

56,848
— 33,896
$90,744

$ 485

The amortized cost and estimated fair value of collateralized mortgage obligations included in

mortgage-backed securities were as follows:

December 31

2021

2020

(In thousands)

Collateralized mortgage obligations:

Amortized cost ............................................................................................... $ 61,980
57,763
Estimated fair value .......................................................................................

$ 77,964
71,099

There were no significant gross realized gains or losses from sales of investment securities in

2021, 2020 or 2019.

At December 31, 2021, the amortized cost and estimated fair value of debt securities by

contractual maturity were as follows:

Debt securities available for sale:
Due in one year or less.................................................................................................
Due after one year through five years..........................................................................
Due after five years through ten years .........................................................................
Due after ten years .......................................................................................................

Mortgage-backed securities available for sale.............................................................

Debt securities held to maturity:
Due in one year or less.................................................................................................
Due after ten years .......................................................................................................

Mortgage-backed securities held to maturity...............................................................

Amortized
Cost

Estimated
Fair Value

(In thousands)

6,912
683,983
85,681
30,000
806,576
3,042,771
$ 3,849,347

3,229
2,562
5,791
2,728,883
$ 2,734,674

6,943
680,827
86,205
26,517
800,492
3,155,312
$ 3,955,804

3,222
2,562
5,784
2,765,506
$ 2,771,290

138

A summary of investment securities that as of December 31, 2021 and 2020 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
Fair
Value

Unrealized
Losses

12 Months or More
Fair
Value

Unrealized
Losses

(In thousands)

December 31, 2021
Investment securities available for sale:
U.S. Treasury and federal agencies ....................................... $ 598,566
Mortgage-backed securities:

3,806

— $

—

Government issued or guaranteed....................................
Other debt securities ..............................................................

Investment securities held to maturity:
U.S. Treasury and federal agencies .......................................
Mortgage-backed securities:

10,111
3,760
612,437

54
74
3,934

20,824
66,419
87,243

3,043

—

Government issued or guaranteed....................................
Privately issued ................................................................

1,372,236
—
1,375,279
Total....................................................................................... $1,987,716

8,356
—
8,365
12,299

1,251
43,692
44,943
$ 132,186

507
4,407
4,914

—

20
14,742
14,762
19,676

December 31, 2020
Investment securities available for sale:
U.S. Treasury and federal agencies ....................................... $
Mortgage-backed securities:

Government issued or guaranteed....................................
Other debt securities ..............................................................

Investment securities held to maturity:
Mortgage-backed securities:

Government issued or guaranteed....................................
Privately issued ................................................................

Total....................................................................................... $

985

— $

—

18,687
16,055
35,727

2,039
—
2,039
37,766

356
181
551

11
—
11
562

16,556
63,462
80,018

399
8,120
8,519

—
52,418
52,418
$ 132,436

—
17,938
17,938
26,457

The Company owned 371 individual debt securities with aggregate gross unrealized losses of

$32 million at December 31, 2021. Based on a review of each of the securities in the investment
securities portfolio at December 31, 2021, the Company concluded that it expected to recover the
amortized cost basis of its investment. As of December 31, 2021, 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 December 31, 2021, the Company has not identified events or changes in circumstances
which may have a significant adverse effect on the fair value of the $388 million of cost method
investment securities.

The Company estimated no material allowance for credit losses for its investment securities

classified as held-to-maturity at December 31, 2021 or December 31, 2020, as the substantial
majority of such investment securities are obligations backed by the U.S government or its agencies.

139

At December 31, 2021, investment securities with a carrying value of $5.1 billion, including

$2.4 billion of investment securities available for sale, were pledged to secure borrowings from
various FHLBs, repurchase agreements, governmental deposits, interest rate swap agreements and
available lines of credit as described in note 9.

Investment securities pledged by the Company to secure obligations whereby the secured party

is permitted by contract or custom to sell or repledge such collateral totaled $96 million at
December 31, 2021. The pledged securities included securities of the U.S. Treasury and federal
agencies and mortgage-backed securities.

4. Loans and leases
Total loans and leases outstanding were comprised of the following:

December 31

2021

2020

(In thousands)

Loans
Commercial, financial, etc........................................................................ $22,524,542 $26,554,486
37,728,844
Commercial real estate .............................................................................
16,786,673
Residential real estate...............................................................................
16,558,889
Consumer .................................................................................................
97,628,892
Total loans ...........................................................................................

35,473,884
16,077,275
17,964,331
92,040,032

Leases

1,246,896
Commercial .........................................................................................
98,875,788
Total loans and leases...............................................................................
Less: unearned discount ...........................................................................
(339,921)
Total loans and leases, net of unearned discount ..................................... $92,912,452 $98,535,867

1,096,646
93,136,678
(224,226)

One-to-four family residential mortgage loans held for sale were $474 million at December 31,
2021 and $777 million at December 31, 2020. Commercial real estate loans held for sale were $425
million at December 31, 2021 and $278 million at December 31, 2020.

The amount of foreclosed residential real estate property held by the Company was $24 million

and $28 million at December 31, 2021 and 2020, respectively. There were $151 million and $214
million at December 31, 2021 and 2020, respectively, in loans secured by residential real estate that
were in the process of foreclosure. Of all loans in the process of foreclosure at December 31, 2021,
approximately 44% were government guaranteed.

Borrowings by directors and certain officers of M&T and its banking subsidiaries, and by
associates of such persons, exclusive of loans aggregating less than $60,000, amounted to $113
million and $72 million at December 31, 2021 and 2020, respectively. During 2021, new borrowings
by such persons amounted to $42 million (including any borrowings of new directors or officers that
were outstanding at the time of their election) and repayments and other reductions (including
reductions resulting from individuals ceasing to be directors or officers) were $1 million.

At December 31, 2021, approximately $9.5 billion of commercial loans and leases, $11.9

billion of commercial real estate loans, $11.5 billion of one-to-four family residential real estate
loans, $1.9 billion of home equity loans and lines of credit and $10.2 billion of other consumer loans
were pledged to secure outstanding borrowings and available lines of credit from the FHLB and the
Federal Reserve Bank of New York as described in note 9.

140

A summary of current, past due and nonaccrual loans as of December 31, 2021 and 2020 follows:

Current

30-89 Days
Past Due

Accruing
Loans Past
Due 90
Days or
More

(In thousands)

Nonaccrual

Total

$23,101,810

$ 142,208

8,284

$ 221,022

$23,473,324

24,712,643
1,400,437
7,722,049
13,294,872

319,099
2,904
17,175
239,561

31,733
—
—
920,080

1,069,280
3,005
111,405
355,858

26,132,755
1,406,346
7,850,629
14,810,371

December 31, 2021
Commercial, financial, leasing, etc............
Real estate:

Commercial ..........................................
Residential builder and developer ........
Other commercial construction ............
Residential ............................................
Residential — limited

documentation ...................................

1,124,520

16,666

—

122,888

1,264,074

Consumer:

Home equity lines and loans ................
Recreational finance .............................
Automobile...........................................
Other.....................................................
Total ...........................................................

3,476,617
7,985,173
4,604,772
1,620,147
$89,043,040

15,486
40,544
40,064
12,223
$ 845,930

—
—
—
3,302
$ 963,399

70,488
27,811
34,037
44,289
$2,060,083

3,562,591
8,053,528
4,678,873
1,679,961
$92,912,452

December 31, 2020
Commercial, financial, leasing, etc. ..........
Real estate:

Commercial .........................................
Residential builder and developer .......
Other commercial construction ...........
Residential ...........................................
Residential — limited

$27,196,862

60,822

10,053

$ 306,827

$27,574,564

26,688,515
1,246,095
8,523,591
13,764,836

168,917
1,693
66,365
200,406

47,014
856
3,816
792,888

775,894
1,094
114,039
365,729

27,680,340
1,249,738
8,707,811
15,123,859

documentation ..................................

1,462,277

19,687

—

147,170

1,629,134

Consumer:

Home equity lines and loans................
Recreational finance ............................
Automobile ..........................................
Other ....................................................
Total ..........................................................

3,881,885
7,002,643
4,007,349
1,346,868
$95,120,921

24,329
47,161
55,498
17,561
$ 662,439

—
—
—
4,581
$ 859,208

79,392
25,519
39,404
38,231
$1,893,299

3,985,606
7,075,323
4,102,251
1,407,241
$98,535,867

141

A summary of outstanding loan balances for which COVID-19 related payment deferrals were
in effect as of December 31, 2021 and 2020 is presented in the following table. These loans meet the
criteria described in note 1 and, as such, are not considered past due or otherwise in default of loan
terms as of the dates presented. Substantially all of those deferrals are scheduled to expire during
2022 and/or are in the process of formal modification of repayment terms for previously deferred
payments.

COVID-19 Related Payment
Deferrals (1)
December 31

2021

2020

(In thousands)

Commercial, financial, leasing, etc. ..................................................................................... $
Real estate:

— $

95,823

Commercial ....................................................................................................................
Residential builder and developer ..................................................................................
Other commercial construction ......................................................................................
Residential (2)..................................................................................................................
Residential — limited

—
—
—
1,126,734

728,511
653
61,235
2,447,422

documentation .............................................................................................................

63,078

337,108

Consumer:

Home equity lines and loans...........................................................................................
Recreational finance .......................................................................................................
Automobile .....................................................................................................................
Other ...............................................................................................................................

3,419
3,286
7,365
139
Total ..................................................................................................................................... $1,204,021

18,440
24,428
51,550
2,353
$3,767,523

(1)

(2)

Represents accruing loans for which a COVID-19 related payment deferral (including maturity extensions)
was in effect.
Includes $974 million and $1.7 billion of government-guaranteed loans at December 31, 2021 and 2020,
respectively.

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.

142

The tables that follow summarize the Company’s loan modification activities that were
considered troubled debt restructurings for the years ended December 31, 2021, 2020 and 2019:

Year Ended December 31, 2021

Number

Post-modification (a)

Pre-
modification
Recorded
Investment

Principal
Deferral

Interest
Rate

Reduction Other

(Dollars in thousands)

Combination
of
Concession
Types

Total

Commercial, financial, leasing, etc..................
Real estate:

Commercial ................................................
Residential builder and developer ..............
Other commercial construction ..................
Residential ..................................................
Residential — limited

284 $ 185,458 $ 46,806 $

— $40,558 $

95,516 $ 182,880

99
1
3
373

202,878
3
542
108,325

67,387
3
532
95,769

— 31,202
—
—
—
—
—
—

102,248 200,837
3
532
12,866 108,635

—
—

documentation .........................................

2,920

2,865

—

— 2,865

Consumer:

Home equity lines and loans ......................
Recreational finance ...................................
Automobile .................................................
Other ...........................................................
Total .................................................................

Year Ended December 31, 2020

Commercial, financial, leasing, etc..................
Real estate:

89
281
807
362

6,430
9,931
14,668
2,597
2,320 $ 533,752 $246,598 $

6,054
9,931
14,654
2,597

—
—
—
—

—
321
6,375
—
— 9,931
—
14
14,668
— 2,597
—
— $71,760 $ 210,965 $ 529,323

394 $ 246,479 $ 70,671 $

298 $31,605 $

97,344 $ 199,918

161
1
2
631

310,578 204,591
—
13,573
202,985 183,878

91
13,602

documentation .........................................

7,413

7,100

Consumer:

17,228
259
16,392
428
39,951
2,249
1,095
7,788
5,250 $ 862,507 $545,415 $

5,882
16,388
39,949
3,383

505
—
—
—

—

4,874
—
—
—

85,261 295,231
90
90
— 13,573
23,639 207,517

—

1,232

8,332

—
—
—
—

17,254
16,392
39,951
7,788
803 $36,479 $ 223,349 $ 806,046

11,372
4
2
4,405

—
—
—
—

143

Year Ended December 31, 2019

Number

Pre-
modification
Recorded
Investment

Post-modification (a)

Interest
Rate

Principal
Deferral

Reduction Other
(Dollars in thousands)

Combination
of
Concession
Types

Total

Commercial, financial, leasing, etc. ........................
Real estate:

Commercial........................................................
Residential builder and developer......................
Other commercial construction..........................
Residential .........................................................
Residential — limited

documentation.................................................

Consumer:

150 $

63,715 $10,485 $

— $ — $

52,871 $ 63,356

51
2
3
83

48,315
1,330
1,559

5,193
1,068
—
21,695 10,819

— —
— —
— —
— —

26,152

31,345
— 1,068
1,500
22,726

1,500
11,907

1,409

399

— —

1,044

1,443

Home equity lines and loans..............................
Recreational finance ..........................................
Automobile ........................................................
Total ........................................................................

4,127
41
265
10
66
1,141
412 $ 143,556 $29,481 $

176
265
1,076

— —
— —
— —
— $ — $

4,004
—
65

4,180
265
1,141
97,543 $127,024

(a)

Financial effects impacting the recorded investment included principal payments or advances, charge-offs
and capitalized escrow arrearages. The present value of interest rate concessions, discounted at the effective
rate of the original loan, was not material.

Loans that were modified as troubled debt restructurings during the twelve months ended
December 31, 2021, 2020 and 2019 and for which there was a subsequent payment default during the
respective year were not material.

A summary of changes in the accretable yield for loans acquired at a discount for the year

ended December 31, 2019 follows:

2019

Purchased
Impaired

Other
Acquired

(In thousands)

Balance at beginning of period .............................................................................. $
Interest income.......................................................................................................
Reclassifications from

147,210
(49,017)

nonaccretable balance .........................................................................................
Other (a).................................................................................................................
Balance at end of period ........................................................................................

36,718
—
134,911

96,907
(36,452)

15,534
(3,909)
72,080

(a) Other changes in expected cash flows including changes in interest rates and prepayment

assumptions.

144

The Company’s loan and lease portfolio includes commercial lease financing receivables
consisting of direct financing and leveraged leases for machinery and equipment, railroad equipment,
commercial trucks and trailers, and aircraft. Certain leases contain payment schedules that are tied to
variable interest rate indices. In general, early termination options are provided if the lessee is not in
default, returns the leased equipment and pays an early termination fee. Additionally, options to
purchase the underlying asset by the lessee are generally at the fair market value of the equipment. A
summary of lease financing receivables follows:

December 31,

2021

2020

(In thousands)

Commercial leases:

Direct financings:

Lease payments receivable.................................................................... $ 873,089 $1,017,222
79,621
Estimated residual value of leased assets ..............................................
(83,673)
Unearned income...................................................................................
1,013,170
Investment in direct financings.........................................................

75,140
(68,456)
879,773

Leveraged leases:

Lease payments receivable....................................................................
Estimated residual value of leased assets ..............................................
Unearned income...................................................................................
Investment in leveraged leases .........................................................

76,453
73,600
(28,388)
121,665
Total investment in leases............................................................................... $1,002,816 $1,134,835
61,905
Deferred taxes payable arising from leveraged leases.................................... $

75,003
73,414
(25,374)
123,043

56,759 $

Included within the estimated residual value of leased assets at December 31, 2021 and 2020
were $29 million and $34 million, respectively, in residual value associated with direct financing
leases that are guaranteed by the lessees or others.

At December 31, 2021, the minimum future lease payments to be received from lease

financings were as follows:

Year ending December 31:

(In thousands)

2022 ................................................................................................................................ $ 282,388
247,084
2023 ................................................................................................................................
171,176
2024 ................................................................................................................................
107,998
2025 ................................................................................................................................
67,528
2026 ................................................................................................................................
71,918
Later years ......................................................................................................................
$ 948,092

5. Allowance for credit losses
Effective January 1, 2020 the Company adopted amended accounting guidance which requires an
allowance for credit losses be deducted from the amortized cost basis of financial assets to present
the net carrying value at the amount that is expected to be collected over the contractual term of the
asset considering relevant information about past events, current conditions, and reasonable and

145

supportable forecasts that affect the collectability of the reported amount. The new guidance replaced
the previous incurred loss model for determining the allowance for credit losses.

Changes in the allowance for credit losses for the years ended December 31, 2021, 2020 and

2019 were as follows:

2021
Beginning balance.................................
Provision for credit losses .....................
Net charge-offs

Charge-offs ......................................
Recoveries .......................................
Net charge-offs......................................
Ending balance ......................................

2020
Beginning balance.................................
Adoption of new accounting standard ..
Provision for credit losses .....................
Net charge-offs

2019
Beginning balance.................................
Provision for credit losses .....................
Net charge-offs

Commercial,
Financial,

Real Estate

Leasing, etc. Commercial Residential Consumer Unallocated

Total

(In thousands)

$ 405,846 $ 670,719 $103,590 $ 556,232 $

(40,378)

(42,825)

(29,817)

38,020

— $1,736,387
(75,000)
—

(122,651)
41,082
(81,569)

(101,306)
30,651
(70,655)

(10,904)
8,857
(2,047)

(103,293)
65,403
(37,890)

$ 283,899 $ 557,239 $ 71,726 $ 556,362 $

— (338,154)
— 145,993
— (192,161)
— $1,469,226

$ 366,094 $ 322,201 $ 56,033 $ 229,118 $ 77,625 $1,051,071
132,457
— 800,000

(61,474)
220,544

194,004
226,425

23,656
356,203

53,896
(3,172)

(77,625)

(135,083)
15,765
(119,318)

(35,891)
4,550
(31,341)

(10,283)
7,116
(3,167)

(152,250)
58,935
(93,315)

$ 405,846 $ 670,719 $103,590 $ 556,232 $

— (333,507)
86,366
—
— (247,141)
— $1,736,387

$ 330,055 $ 341,655 $ 69,125 $ 200,564 $ 78,045 $1,019,444
176,000

(10,726)

126,029

(8,585)

69,702

(420)

(58,244)
24,581
(33,663)

— (237,708)
—
93,335
— (144,373)
$ 366,094 $ 322,201 $ 56,033 $ 229,118 $ 77,625 $1,051,071

(154,089)
56,614
(97,475)

(12,711)
8,204
(4,507)

(12,664)
3,936
(8,728)

Despite the allocation in the preceding tables, the allowance for credit losses is general in nature
and is available to absorb losses from any loan or lease type. Changes in the amount of the allowance
for credit losses reflect the outcome of the procedures described herein.

For purposes of determining the level of the allowance for credit losses, the Company evaluates

its loan and lease portfolio by type. Accruing loans with similar risk characteristics are generally
evaluated collectively. In establishing the allowance for credit losses subsequent to December 31,
2019, the Company utilizes statistically developed models to project principal balances over the
remaining contractual lives of the loan portfolios and to determine estimated credit losses through a
reasonable and supportable forecast period. Individual loan credit quality indicators, including loan
grade and borrower repayment performance, can inform the models, which have been statistically
developed based on historical correlations of credit losses with prevailing economic metrics,
including unemployment, gross domestic product and real estate prices. Model forecasts may be
adjusted for inherent limitations or biases that have been identified through independent validation
and back-testing of model performance to actual realized results. At both December 31, 2021 and
2020, the Company utilized a reasonable and supportable forecast period of two years. Subsequent to

146

this forecast period the Company reverted, ratably over a one-year period, to historical loss
experience to inform its estimate of losses for the remaining contractual life of each portfolio. The
Company also considered the impact of portfolio concentrations, changes in underwriting practices,
product expansions into new markets, imprecision in its economic forecasts, geopolitical conditions
and other risk factors that might influence its loss estimation process. Prior to 2020, the allowance for
credit losses was estimated for incurred credit losses inherent in the loan and lease portfolio as of the
balance sheet date, but did not consider reasonable and supportable forecasts that could have affected
the collectability of the reported amounts.

The Company also estimates losses attributable to specific troubled credits. The amounts of
specific loss components in the Company’s loan and lease portfolios are determined through a loan-
by-loan analysis of larger balance commercial loans and commercial real estate loans that are in
nonaccrual status. Such loss estimates are typically based on expected future cash flows, collateral
values and other factors that may impact the borrower’s ability to pay. To the extent that those loans
are collateral-dependent, they are evaluated based on the fair value of the loan’s collateral as
estimated at or near the financial statement date. As the quality of a loan deteriorates to the point of
classifying the loan as “criticized,” the process of obtaining updated collateral valuation information
is usually initiated, unless it is not considered warranted given factors such as the relative size of the
loan, the characteristics of the collateral or the age of the last valuation. In those cases where current
appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed
necessary, for estimates of subsequent declines in values as determined by line of business and/or
loan workout personnel. Those adjustments are reviewed and assessed for reasonableness by the
Company’s credit department. Accordingly, for real estate collateral securing larger nonaccrual
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.

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

147

Information with respect to loans and leases that were considered nonaccrual at the beginning

and end of the reporting period and the interest income recognized on such loans for the years ended
December 31, 2021, 2020 and 2019 follows.

Amortized
Cost with
Allowance

December 31, 2021
Amortized
Cost without
Allowance

Total
(In thousands)

Year
Ended
December
31,
2021
Interest
Income
Recognized

January 1,
2021

Amortized
Cost

Commercial, financial, leasing, etc....................... $110,790 $ 110,232
Real estate:

$ 221,022

$ 306,827 $ 11,865

Commercial ..................................................... 242,078
Residential builder and developer ...................
613
Other commercial construction .......................
30,229
Residential....................................................... 198,560
79,777
Residential — limited documentation.............

827,202
2,392
81,176
157,298
43,111

1,069,280
3,005
111,405
355,858
122,888

775,894
1,094
114,039
365,729
147,170

15,872
973
596
23,772
528

Consumer:

Home equity lines and loans ...........................
Recreational finance........................................
Automobile......................................................
Other................................................................

38,219
6,335
4,723
167
Total...................................................................... $789,228 $1,270,855

32,269
21,476
29,314
44,122

70,488
27,811
34,037
44,289
$2,060,083

79,392
25,519
39,404
38,231

3,780
637
186
531
$1,893,299 $ 58,740

December 31, 2020

Amortized
Cost with
Allowance

Amortized
Cost without
Allowance

Total

(In thousands)

January 1,
2020

Amortized
Cost

Year Ended
December 31,
2020
Interest
Income
Recognized

79,930 $ 306,827 $ 346,743 $

11,269

Commercial, financial, leasing, etc. ..................... $226,897 $
Real estate:

Commercial..................................................... 364,110
1,094
Residential builder and developer...................
Other commercial construction.......................
20,992
Residential....................................................... 159,006
84,568
Residential — limited documentation ............

Consumer:

Home equity lines and loans ...........................
Recreational finance........................................
Automobile .....................................................
Other ...............................................................

61,031
19,434
34,044
3,606

411,784
—
93,047
206,723
62,602

18,361
6,085
5,360
34,625

775,894
1,094
114,039
365,729
147,170

79,392
25,519
39,404
38,231

173,796
4,708
35,881
322,504
114,667

65,039
14,308
21,293
35,394

Total...................................................................... $974,782 $ 918,517 $1,893,299 $1,134,333 $

148

7,821
1,694
8,457
18,069
634

4,092
626
186
1,369
54,217

Amortized
Cost with
Allowance

December 31, 2019
Amortized
Cost without
Allowance

Total

(In thousands)

January 1,
2019

Amortized
Cost

Year Ended
December 31,
2019
Interest
Income
Recognized

$ 139,913

$ 346,557

$ 234,423 $

8,960

Commercial, financial, leasing, etc....................... $ 206,644
Real estate:

Commercial .....................................................
Residential builder and developer ...................
Other commercial construction .......................
Residential .......................................................
Residential — limited documentation .............

40,847
604
12,425
59,982
26,710

Consumer:

117,627
3,378
20,345
175,681
56,717

158,474
3,982
32,770
235,663
83,427

203,672
4,798
22,205
233,352
84,685

Home equity lines and loans............................
Recreational finance ........................................
Automobile ......................................................
Other ................................................................

24,812
9,054
14,805
3,391
Total ...................................................................... $ 399,274

38,403
5,165
6,488
121
$ 563,838

63,215
14,219
21,293
3,512
$ 963,112

71,292
11,199
23,359
4,623
$ 893,608 $

5,850
357
634
12,630
1,092

5,987
575
214
508
36,807

The Company utilizes a loan grading system to differentiate risk amongst its 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.
Loan officers in different geographic locations with the support of the Company’s credit

department personnel review and reassign loan grades based on their detailed knowledge of
individual borrowers and their judgment of the impact on such borrowers resulting from changing
conditions in their respective regions. Factors considered in assigning loan grades include borrower-
specific information related to expected future cash flows and operating results, collateral values,
geographic location, financial condition and performance, payment status, and other information. The
Company’s policy is that, at least annually, updated financial information be obtained from
commercial borrowers associated with pass grade loans and additional analysis 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.

149

The following table summarizes the loan grades applied at December 31, 2021 to the various
classes of the Company’s commercial loans and commercial real estate loans by origination year.

Term Loans by Origination Year

2021

2020

2019

2018

2017

Prior

(In thousands)

Revolving
Loans
Converted
to Term
Loans

Revolving
Loans

Total

Commercial, financial, leasing, etc.:

Loan grades:

Pass.................................. $4,798,052 1,916,072 1,476,786
107,010
Criticized accrual ............
17,114
Criticized nonaccrual ......

196,680
19,462

98,595
23,229

951,881
73,126
39,908

500,615 1,398,775 10,993,461
484,755
185,935
36,232
60,175
33,698
20,927

18,699 $22,054,341
1,197,961
15,628
221,022
6,509

Total commercial,

financial, leasing, etc.............. $5,014,194 2,037,896 1,600,910 1,064,915

557,774 1,618,408 11,538,391

40,836 $23,473,324

Real estate:
Commercial:

Loan grades:

Pass.................................. $3,413,587 2,662,999 3,682,178 2,648,388 2,076,155 5,232,790
468,530 1,743,798
Criticized accrual ............
520,473
Criticized nonaccrual ......

685,701 1,068,552
83,857
195,084

480,146
133,560

133,133
21,587

76,628

728,948
38,570
38,091

— $20,445,045
— 4,618,430
— 1,069,280

Total commercial real

estate....................................... $3,568,307 3,276,705 4,562,963 3,800,797 2,621,313 7,497,061

805,609

— $26,132,755

Residential builder and developer:

Loan grades:

Pass.................................. $ 786,983
2,055
Criticized accrual ............
—
Criticized nonaccrual ......

106,510
5,356
—

75,287
117,258
2,910

47,587
13,637
—

4,680
630
—

12,450
-
95

230,017
891
—

— $ 1,263,514
139,827
—
3,005
—

Total residential builder

and developer ......................... $ 789,038

111,866

195,455

61,224

5,310

12,545

230,908

— $ 1,406,346

Other commercial construction:

Loan grades:

Pass.................................. $ 957,947 1,781,603 2,022,276
675,226
Criticized accrual ............
— 71,613
Criticized nonaccrual ......

24,103
—

54,191

832,547
583,428
3,303

152,669
228,739
12,263

273,556
114,158
19,970

38,781
—
4,256

— $ 6,059,379
— 1,679,845
111,405
—

Total other commercial

construction ............................ $ 982,050 1,835,794 2,769,115 1,419,278

393,671

407,684

43,037

— $ 7,850,629

Increases to criticized loans during 2021 were predominantly attributable to effects of the

COVID-19 pandemic and the related re-grading of loans.

150

The Company considers repayment performance a significant indicator of credit quality for its

residential real estate loan and consumer loan portfolios. A summary of loans in accrual and
nonaccrual status at December 31, 2021 for the various classes of the Company’s residential real
estate loans and consumer loans by origination year is as follows.

Term Loans by Origination Year

Revolving

Revolving
Loans
Converted
to Term

2021

2020

2019

2018

2017

Prior

Loans

Total

(In thousands)

Residential:

Current ............................... $3,057,118 1,672,090 1,075,896 466,040 1,037,958 5,913,461
162,666
12,535
30-89 days past due ...........
Accruing loans past due 90
days or more ....................
Nonaccrual.........................

542,749
314,792
Total residential ........................... $3,086,646 1,805,064 1,121,413 508,745 1,282,263 6,933,668

28,512 31,996
4,577
7,119

100,581
19,858

205,318
5,890

10,924
3,359

15,245

33,097

6,132

9,886

72,309
—

—
263
72,572

—
—

—

— $13,294,872
239,561
—

920,080
—
—
355,858
— $14,810,371

— $ 1,124,520
16,666
—

—
—

—
122,888

— $ 1,264,074

—
—

—

—
—

—

— 1,124,520
— 16,666

—
—
— 122,888

— 1,264,074

Residential - limited
documentation:

Current ............................... $
30-89 days past due ...........
Accruing loans past due 90
days or more ....................
Nonaccrual.........................

Total residential - limited

documentation .......................... $

Consumer:
Home equity lines and loans:

Current ............................... $
30-89 days past due ...........
Accruing loans past due 90
days or more ....................
Nonaccrual.........................

Total home equity lines and
loans............................................. $

—
—

—

304
—

—
—

—

777
—

—
—

2,793
—

1,730
21

1,944
—

38,015 2,348,279 1,082,775 $ 3,476,617
15,486

14,421

346

698

—
—

—
5,750

—
4,951

—
59,787

—
70,488

304

777

2,793

1,751

1,944

44,463 2,353,576 1,156,983 $ 3,562,591

151

Term Loans by Origination Year

Revolving

Revolving
Loans
Converted
to Term

2021

2020

2019

2018

2017

Prior

Loans

Total

Recreational finance:

Current........................ $ 2,890,111 2,088,342 1,267,929
8,317
30-89 days past due.....
Accruing loans past due
90 days or more ........

5,929

8,912

—
1,341

—
4,646

—
4,871

Nonaccrual..................

(In thousands)

646,883
5,074

445,868
5,189

646,040
7,123

—
4,918

—
4,039

—
7,996

Total recreational
finance ........................... $ 2,897,381 2,101,900 1,281,117

656,875

455,096

661,159

Automobile:

Current........................ $ 2,220,061 1,097,684
30-89 days past due.....
6,615
Accruing loans past due
90 days or more ........

—
4,390
Total automobile ........... $ 2,230,157 1,108,689

Nonaccrual..................

—
1,588

8,508

662,000
8,936

341,655
7,161

211,774
5,715

—
7,847
678,783

—
7,867
356,683

—
6,882
224,371

71,598
3,129

—
5,463
80,190

—
—

—

—
—

—
—
—

— $ 7,985,173
40,544
—

—
—

—
27,811

— $ 8,053,528

— $ 4,604,772
40,064
—

—
—
—
34,037
— $ 4,678,873

Other:

Current........................ $
30-89 days past due.....
Accruing loans past due
90 days or more......
Nonaccrual..................
Total other ..................... $

244,346
2,937

—
2,051
249,334

96,945
404

—
326
97,675

73,586
472

24,424
255

16,924
101

14,321 1,148,096
1,908

5,712

1,505 $ 1,620,147
12,223

434

—
326
74,384

—
193
24,872

—
104
17,129

3,302
353

—
40,807
23,688 1,190,811

—
129

3,302
44,289
2,068 $ 1,679,961

Total loans and leases at
December 31, 2021........ $18,817,411 12,376,366 12,286,933 7,895,140 5,558,871 18,542,940 16,234,904 1,199,887 $92,912,452

152

The following tables summarizes the loan grades applied at December 31, 2020 to the various classes
of the Company’s commercial loans and commercial real estate loans by origination year.

Term Loans by Origination Year

2020

2019

2018

2017

2016

Prior

(In thousands)

Revolving
Loans
Converted
to Term
Loans

Revolving
Loans

Total

Commercial, financial, leasing, etc.:

Loan grades:

Pass.................................. $7,732,728 2,277,233 1,505,486
113,940
Criticized accrual ............
56,227
Criticized nonaccrual ......

388,326
7,720

84,358
27,309

930,834
41,587
16,808

719,796 1,387,695 11,352,416
584,751
73,401
39,930
125,893
45,471
19,681

21,286 $25,927,474
1,340,263
13,970
306,827
7,718

Total commercial,

financial, leasing, etc.............. $8,128,774 2,388,900 1,675,653

989,229

779,407 1,506,567 12,063,060

42,974 $27,574,564

Real estate:
Commercial:

Loan grades:

Pass.................................. $3,353,450 4,681,834 3,299,095 2,628,061 2,746,165 5,698,834
568,144 1,212,672
Criticized accrual ............
248,949
197,319
Criticized nonaccrual ......

579,507
47,144

400,154
121,899

290,885
99,293

526,037
26,876

875,348
44,260
34,414

— $23,282,787
— 3,621,659
775,894
—

Total commercial real

estate....................................... $3,906,363 5,203,887 3,925,746 3,018,239 3,511,628 7,160,455

954,022

— $27,680,340

Residential builder and developer:

Loan grades:

Pass.................................. $ 506,295
3,690
Criticized accrual ............
—
Criticized nonaccrual ......

223,880
106,847
518

109,453
14,836
—

15,048
3,421
—

10,976
—
—

11,320
1,885
576

236,943
4,050
—

— $ 1,113,915
134,729
—
1,094
—

Total residential builder

and developer ......................... $ 509,985

331,245

124,289

18,469

10,976

13,781

240,993

— $ 1,249,738

Other commercial construction:

Loan grades:

Pass.................................. $1,050,258 2,998,921 2,048,063
381,091
Criticized accrual ............
13,522
Criticized nonaccrual ......

148,492
65,592

37,192
335

945,339
225,949
4,213

233,127
144,665
12,097

294,030
12,034
12,873

74,611
—
5,407

— $ 7,644,349
949,423
—
114,039
—

Total other commercial

construction ............................ $1,087,785 3,213,005 2,442,676 1,175,501

389,889

318,937

80,018

— $ 8,707,811

153

A summary of loans in accrual and nonaccrual status at December 31, 2020 for the various classes of
the Company’s residential real estate loans and consumer loans by origination year follows.

Term Loans by Origination Year

Revolving

Revolving
Loans
Converted
to Term

2020

2019

2018

2017

2016

Prior

Loans

Total

(In thousands)

Residential:

Current......................................... $2,722,862 1,416,259 618,736 1,318,094 718,235 6,898,756
30-89 days past due.......................
150,447
Accruing loans past due

13,477

13,496

7,781

7,947

7,258

90 days or more ........................
Nonaccrual ...................................

480,308
333,466
Total residential............................... $2,740,070 1,453,713 669,322 1,550,797 774,886 7,862,977

212,818 45,804
2,900

15,234 38,145
5,183
14,439

579
3,133

6,408

71,894
—

—
200
72,094

—
—

—

— $13,764,836
200,406
—

792,888
—
—
365,729
— $15,123,859

— $ 1,462,277
19,687
—

—
—

—
147,170

— $ 1,629,134

—
—

—

—
—

—

—
—

—

— 1,462,277
— 19,687

—
—
— 147,170

— 1,629,134

3,983
—

1,591
—

—
—
3,983

—
—
1,591

2,016
—

—
—
2,016

162
—

—
—
162

51,554 2,569,621 1,252,185 $ 3,881,885
24,329
1,148

22,242

939

—
6,148

—
79,392
58,850 2,576,312 1,341,919 $ 3,985,606

—
67,492

—
5,752

Residential - limited documentation:
Current.......................................... $
30-89 days past due.......................
Accruing loans past due

90 days or more ........................
Nonaccrual ...................................

Total residential - limited

documentation .............................. $

Consumer:
Home equity lines and loans:

Current.......................................... $
30-89 days past due.......................
Accruing loans past due

90 days or more ........................
Nonaccrual ...................................
Total home equity lines and loans... $

—
—

—

773
—

—
—
773

154

Term Loans by Origination Year

Revolving

Revolving
Loans
Converted
to Term

2020

2019

2018

2017

2016

Prior

Loans

Total

Recreational finance:

Current....................................... $ 2,796,359 1,751,766
30-89 days past due ...................
11,255
Accruing loans past due

9,548

90 days or more.....................
Nonaccrual.................................

—
3,883
Total recreational finance............ $ 2,807,761 1,766,904

—
1,854

Automobile:

Current...................................... $ 1,595,636 1,106,782
30-89 days past due ...................
14,140
Accruing loans past due

6,461

90 days or more.....................
Nonaccrual ...............................

—
7,144
Total automobile ......................... $ 1,603,712 1,128,066

—
1,615

(In thousands)

907,595
8,519

630,151
6,638

352,414
2,938

564,358
8,263

—
4,072
920,186

—
4,194
640,983

—
2,733
358,085

—
8,783
581,404

629,338
12,542

440,604
12,899

171,017
6,373

—
10,788
652,668

—
10,061
463,564

—
5,991
183,381

63,972
3,083

—
3,805
70,860

—
—

—
—
—

—
—

—
—
—

— $ 7,002,643
47,161
—

—
—
—
25,519
— $ 7,075,323

— $ 4,007,349
55,498
—

—
—
39,404
—
— $ 4,102,251

Other:

Current...................................... $
30-89 days past due ...................
Accruing loans past due

160,424
1,879

137,617
1,130

53,702
577

32,556
2,301

90 days or more.....................
Nonaccrual ...............................
Total other ................................... $

—
1,493
163,796

—
492
139,239

—
339
54,618

—
183
35,040

4,526
42

—
31
4,599

28,970
557

927,217
10,594

1,856 $ 1,346,868
17,561

481

374
501
30,402

4,207
35,044
977,062

—
148

4,581
38,231
2,485 $ 1,407,241

Total loans and leases at

December 31, 2020 .................. $20,949,019 15,628,942 10,466,749 7,893,838 6,013,013 19,233,367 16,963,561

1,387,378 $98,535,867

The Company’s reserve for off-balance sheet credit exposures was not material at December 31,

2021 and December 31, 2020.

6. Premises and equipment
The detail of premises and equipment was as follows:

Land ................................................................................................................ $
Buildings .........................................................................................................
Leasehold improvements ................................................................................
Furniture and equipment — owned ................................................................
Furniture and equipment — capital leases......................................................

Less: accumulated depreciation and amortization

December 31

2021

2020

(In thousands)

93,862 $
512,988
304,825
880,153
115

94,929
513,290
302,246
807,701
8,630
1,791,943 1,726,796

Owned assets..............................................................................................
Capital leases..............................................................................................

971,979
5,933
977,912
Right of use assets — operating leases ...........................................................
412,674
Premises and equipment, net........................................................................... $1,144,765 $1,161,558

1,026,842
38
1,026,880
379,702

155

The right-of-use assets and lease liabilities relate to banking offices and other space occupied by

the Company and use of certain equipment under noncancelable operating lease agreements. As of
December 31, 2021 and 2020, the Company recognized $431 million and $467 million respectively,
of operating lease liabilities as a component of “accrued interest and other liabilities” in the
consolidated balance sheet. In calculating the present value of lease payments, the Company utilized
its incremental secured borrowing rate based on lease term.

The Company’s noncancelable operating lease agreements expire at various dates over the next

20 years. Real estate leases generally consist of fixed monthly rental payments with certain leases
containing escalation clauses. Any variable lease payments or payments for nonlease components
are recognized in the consolidated statement of income as a component of “equipment and net
occupancy” expense based on actual costs incurred. Some leases contain lessee options to extend the
term. Those options are included in the lease term when it is determined that it is reasonably certain
the option will be exercised.

The Company has noncancelable operating lease agreements for certain equipment related to

ATMs, servers, printers and mail machines that are used in the normal course of operations. The
ATM leases are either based on the rights to a specific square footage or a license agreement
whereby the Company has the right to operate an ATM in a landlord's location. The lease terms
generally contain both fixed payments and variable payments that are transaction-based. Given the
transaction-based nature of the variable payments, such payments are excluded from the
measurement of the right-of-use asset and lease liability and are recognized in the consolidated
statement of income as a component of “equipment and net occupancy” expense when incurred.

The following table presents information about the Company’s lease costs for operating leases

recorded in the consolidated balance sheet, cash paid toward lease liabilities, and the weighted-
average remaining term and discount rates of the operating leases.

2021

Year Ended December 31,
2020
(Dollars in thousands)

2019

Lease cost
Operating lease cost.......................................
Short-term lease cost .....................................
Variable lease cost .........................................
Total lease cost..........................................

$ 101,353
111
4,103
$ 105,567

$ 104,158
198
1,565
$ 105,921

$ 100,669
105
2,332
$ 103,106

Other information
Right-of-use assets obtained in exchange for
new operating lease liabilities...................
Cash paid toward lease liabilities ..................
Weighted-average remaining lease term .......
Weighted-average discount rate ....................

57,760
106,586
6 years

70,754
104,396
7 years

$ 132,219
101,869
7 years

2.51%

2.74%

3.01%

156

Minimum lease payments under noncancelable operating leases are summarized in the

following table.

Year ending December 31:

(In thousands)

2022 ..............................................................................................................$
2023 ..............................................................................................................
2024 ..............................................................................................................
2025 ..............................................................................................................
2026 ..............................................................................................................
Later years.....................................................................................................
Total lease payments .........................................................................................
Less: imputed interest ........................................................................................
Total...................................................................................................................$

102,417
86,467
71,321
56,413
42,634
107,652
466,904
35,792
431,112

All other operating leasing activities were not material to the Company’s consolidated results

of operations. Minimum lease payments required under capital leases are not material.

7. Capitalized servicing assets
Changes in capitalized servicing assets were as follows:

For the Year Ended December 31,

Residential Mortgage Loans
2020

2021

2019

Commercial Mortgage Loans
2020

2019

2021

(In thousands)

Beginning balance........................... $231,204 $244,411 $120,509 $133,429 $130,636 $114,663
41,370
Originations ....................................
—
Purchases ........................................
(25,397)
Amortization ...................................
130,636
—
Valuation allowance .......................
Ending balance, net......................... $217,053 $201,204 $237,411 $132,604 $133,429 $130,636

26,067
— 144,326
(46,491)
244,411
(7,000)

65,723
—
(55,874)
241,053
(24,000)

33,068
—
(33,893)
132,604
—

29,306
—
(26,513)
133,429
—

(58,308)
231,204
(30,000)

45,101

Residential mortgage loans serviced for others were $23.2 billion at December 31, 2021, $26.3

billion at December 31, 2020 and $32.3 billion at December 31, 2019. Excluded from residential
mortgage loans serviced for others were loans sub-serviced for others of $74.7 billion, $68.1 billion
and $62.8 billion at December 31, 2021, 2020, and 2019, respectively. In January 2019, the
Company purchased servicing rights for residential real estate loans that had outstanding principal
balances at that date of approximately $13.3 billion. The purchase price of such servicing rights was
approximately $144 million. Commercial mortgage loans serviced for others were $20.2 billion at
December 31, 2021, $18.9 billion at December 31, 2020 and $17.6 billion at December 31, 2019.
Excluded from commercial mortgage loans serviced for others were loans sub-serviced for others of
$3.5 billion at December 31, 2021, $3.3 billion at December 31, 2020 and $3.4 billion at December
31, 2019.

The estimated fair value of capitalized residential mortgage loan servicing assets was

approximately $257 million at December 31, 2021 and $240 million at December 31, 2020. The fair
value of capitalized residential mortgage loan servicing assets was estimated using weighted-average
discount rates of 9.8% and 9.4% at December 31, 2021 and 2020, respectively, and contemporaneous
prepayment assumptions that vary by loan type. At December 31, 2021 and 2020, the discount rate

157

represented a weighted-average option-adjusted spread (“OAS”) of 894 basis points (hundredths of
one percent) and 918 basis points, respectively, over market implied forward London Interbank
Offered Rates (“LIBOR”). The estimated fair value of capitalized residential mortgage loan servicing
rights may vary significantly in subsequent periods due to changing interest rates and the effect
thereof on prepayment speeds. The estimated fair value of capitalized commercial mortgage loan
servicing assets was approximately $160 million at each of December 31, 2021 and 2020. An 18%
discount rate was used to estimate the fair value of capitalized commercial mortgage loan servicing
rights at December 31, 2021 and 2020 with no prepayment assumptions because, in general, the
servicing agreements allow the Company to share in customer loan prepayment fees and thereby
recover the remaining carrying value of the capitalized servicing rights associated with such loan.
The Company’s ability to realize the carrying value of capitalized commercial mortgage servicing
rights is more dependent on the borrowers’ abilities to repay the underlying loans than on
prepayments or changes in interest rates.

The key economic assumptions used to determine the fair value of significant portfolios of
capitalized servicing rights at December 31, 2021 and the sensitivity of such value to changes in
those assumptions are summarized in the table that follows. Those calculated sensitivities are
hypothetical and actual changes in the fair value of capitalized servicing rights may differ
significantly from the amounts presented herein. The effect of a variation in a particular assumption
on the fair value of the servicing rights is calculated without changing any other assumption. In
reality, changes in one factor may result in changes in another which may magnify or counteract the
sensitivities. The changes in assumptions are presumed to be instantaneous.

Residential

Commercial

(Dollars in thousands)

Weighted-average prepayment speeds ..............................................

Impact on fair value of 10% adverse change ................................ $
Impact on fair value of 20% adverse change ................................
Weighted-average discount rate ........................................................
Impact on fair value of 10% adverse change ................................
Impact on fair value of 20% adverse change ................................

12.92%

(13,587)
(26,047)

8.94%

(7,621)
(14,786)

18.00%
(6,892)
(13,306)

8. Goodwill and other intangible assets
The Company does not amortize goodwill, however, core deposit and other intangible assets are
amortized over the estimated life of each respective asset. A summary of total amortizing intangible
assets follows.

158

Gross Carrying
Amount

Accumulated
Amortization
(In thousands)

Net Carrying
Amount

December 31, 2021

Core deposit....................................................... $
Other ..................................................................
Total................................................................... $

December 31, 2020

131,664
6,757
138,421

127,746
6,677
134,423

119,125
5,131
124,256

3,918
80
3,998

12,539
1,626
14,165

Amortization of core deposit and other intangible assets was generally computed using

accelerated methods over original amortization periods of three to seven years. The weighted-average
original amortization period was approximately seven years. Amortization expense for core deposit
and other intangible assets was $10 million, $15 million and $19 million for the years ended
December 31, 2021, 2020 and 2019, respectively. Estimated amortization expense in 2022 for such
intangible assets is $4 million.

The Company completed annual goodwill impairment tests as of October 1, 2021, 2020 and
2019. For purposes of testing for impairment, the Company assigned all recorded goodwill to the
reporting units originally intended to benefit from past business combinations, which has historically
been the Company’s core relationship business reporting units. Goodwill was generally assigned
based on the implied fair value of the acquired goodwill applicable to the benefited reporting units at
the time of each respective acquisition. The implied fair value of the goodwill was determined as the
difference between the estimated incremental overall fair value of the reporting unit and the
estimated fair value of the net assets assigned to the reporting unit as of each respective acquisition
date. To test for goodwill impairment at each evaluation date, the Company compared the estimated
fair value of each of its reporting units to their respective carrying amounts and certain other assets
and liabilities assigned to the reporting unit, including goodwill and core deposit and other intangible
assets. The methodologies used to estimate fair values of reporting units as of the acquisition dates
and as of the evaluation dates were similar. For the Company’s core customer relationship business
reporting units, fair value was estimated as the present value of the expected future cash flows of the
reporting unit. Based on the results of the goodwill impairment tests, the Company concluded that the
amount of recorded goodwill was not impaired at the respective testing dates.

A summary of goodwill assigned to each of the Company’s reportable segments as of

December 31, 2021 and 2020 for purposes of testing for impairment is as follows:

(In thousands)

Business Banking ............................................................................................................ $
864,366
Commercial Banking.......................................................................................................
1,401,873
Commercial Real Estate ..................................................................................................
654,389
Discretionary Portfolio ....................................................................................................
—
Residential Mortgage Banking ........................................................................................
—
Retail Banking .................................................................................................................
1,309,191
363,293
All Other ..........................................................................................................................
Total................................................................................................................................. $ 4,593,112

159

9. Borrowings
The amounts and interest rates of short-term borrowings were as follows:

Federal Funds
Purchased
and
Repurchase
Agreements

Other
Short-term
Borrowings
(Dollars in thousands)

Total

At December 31, 2021

Amount outstanding...................................................... $
Weighted-average interest rate .....................................

47,046

0.01%

— $
—

47,046

0.01%

For the year ended December 31, 2021

Highest amount at a month-end .................................... $ 103,548
Daily-average amount outstanding ...............................
68,073
Weighted-average interest rate .....................................

0.01%

—
— $
—

68,073

0.01%

At December 31, 2020

Amount outstanding...................................................... $
Weighted-average interest rate .....................................

59,482

0.01%

— $
—

59,482

0.01%

For the year ended December 31, 2020

Highest amount at a month-end .................................... $
Daily-average amount outstanding ...............................
Weighted-average interest rate .....................................

82,893
61,551

0.05%

—
— $
—

61,551

0.05%

At December 31, 2019

Amount outstanding...................................................... $
Weighted-average interest rate .....................................

62,363

0.14%

— $
—

62,363

0.14%

For the year ended December 31, 2019

Highest amount at a month-end .................................... $3,402,566
Daily-average amount outstanding ...............................
260,322
Weighted-average interest rate .....................................

1.86%

$5,000,000
799,068

$1,059,390

2.49%

2.34%

Short-term borrowings have a stated maturity of one year or less at the date the Company enters
into the obligation. In general, short-term borrowings outstanding at December 31, 2021 matured on
the next business day following year-end.

At December 31, 2021, M&T Bank had lines of credit under formal agreements as follows:

(In thousands)

Outstanding borrowings ..................................................................................................
Unused .............................................................................................................................

1,578
30,065,461

At December 31, 2021, M&T Bank had borrowing facilities available with the FHLBs whereby

M&T Bank could borrow up to approximately $16.2 billion. Additionally, M&T Bank had an
available line of credit with the Federal Reserve Bank of New York totaling approximately
$13.8 billion at December 31, 2021. M&T Bank is required to pledge loans and investment securities
as collateral for these borrowing facilities.

160

Long-term borrowings were as follows:

December 31,

2021

2020

(In thousands)

Senior notes of M&T:

Variable rate due 2023........................................................................ $
3.55% due 2023 ..................................................................................

249,893 $
516,173

249,824
533,369

Senior notes of M&T Bank:

Variable rate due 2021........................................................................
Variable rate due 2022........................................................................
2.50% due 2022 ..................................................................................
2.90% due 2025 ..................................................................................

—
249,961
653,903
749,740

349,992
249,858
664,400
749,656

Advances from FHLB:

Fixed rates ..........................................................................................

1,578

1,683

Subordinated notes of M&T Bank:

Variable rate due 2021........................................................................
3.40% due 2027 ..................................................................................

—
522,867

500,000
552,194

Junior subordinated debentures of M&T associated with

preferred capital securities:
Fixed rates:

BSB Capital Trust I — 8.125%, due 2028 ....................................
Provident Trust I — 8.29%, due 2028 ...........................................
Southern Financial Statutory Trust I — 10.60%, due 2030...........

15,775
30,103
6,912

15,752
29,099
6,836

Variable rates:

First Maryland Capital I — due 2027............................................
First Maryland Capital II — due 2027 ..........................................
Allfirst Asset Trust — due 2029....................................................
BSB Capital Trust III — due 2033 ................................................
Provident Statutory Trust III — due 2033 .....................................
Southern Financial Capital Trust III — due 2033 .........................
Other........................................................................................................

148,945
151,270
97,220
15,464
57,547
8,448
9,570

148,409
150,606
97,075
15,464
56,641
8,338
2,997
$ 3,485,369 $ 4,382,193

The variable rate notes of M&T pay interest quarterly at a rate that is indexed to the three-

month LIBOR. The contractual interest rates for those notes were .81% at December 31, 2021 and
.90% at December 31, 2020.

161

The variable rate senior notes of M&T Bank pay interest quarterly at rates that are indexed to the

three-month LIBOR. The contractual interest rates for those notes ranged from .61% to .81% at
December 31, 2021 and .49% to .83% at December 31, 2020. The weighted-average contractual
interest rate was .71% at December 31, 2021 and .63% at December 31, 2020.

Long-term fixed rate advances from the FHLB had weighted-average contractual interest rates of

5.82% at December 31, 2021 and December 31, 2020. Advances from the FHLB outstanding at
December 31, 2021 mature in 2029 and 2035 and are secured by residential real estate loans,
commercial real estate loans and investment securities.

The subordinated notes of M&T Bank are unsecured and are subordinate to the claims of its
other creditors. The notes that were repaid in 2021 paid interest monthly at a rate that was indexed to
the three-month LIBOR. The contractual interest rate was .87% at December 31, 2020.

The fixed and variable rate junior subordinated deferrable interest debentures of M&T (“Junior
Subordinated Debentures”) are held by various trusts and were issued in connection with the issuance
by those trusts of preferred capital securities (“Capital Securities”) and common securities
(“Common Securities”). The proceeds from the issuances of the Capital Securities and the Common
Securities were used by the trusts to purchase the Junior Subordinated Debentures. The Common
Securities of each of those trusts are wholly owned by M&T and are the only class of each trust’s
securities possessing general voting powers. The Capital Securities represent preferred undivided
interests in the assets of the corresponding trust. Under the Federal Reserve Board’s risk-based
capital guidelines, the Capital Securities qualify for inclusion in Tier 2 regulatory capital. The
variable rate Junior Subordinated Debentures pay interest quarterly at rates that are indexed to the
three-month LIBOR. Those rates ranged from .98% to 3.47% at December 31, 2021 and from 1.06%
to 3.59% at December 31, 2020. The weighted-average variable rates payable on those Junior
Subordinated Debentures were 1.53% at December 31, 2021 and 1.65% at December 31, 2020.

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.

162

Long-term borrowings at December 31, 2021 mature as follows:

Year ending December 31:

2022 .............................................................................................................................. $ 903,864
766,136
2023 ..............................................................................................................................
2024 ..............................................................................................................................
9,500
749,740
2025 ..............................................................................................................................
2026 ..............................................................................................................................
—
1,056,129
Later years.....................................................................................................................
$3,485,369

(In thousands)

10. Shareholders’ equity
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 December 31, 2021 and 2020 is presented

below:

December 31, 2021
Shares
Issued and
Outstanding

Carrying
Value

December 31, 2020
Shares
Issued and
Outstanding

Carrying
Value

(Dollars in thousands)

Series E (a)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred

Stock, $1,000 liquidation preference per share ..................................

350,000 $350,000

Series F (b)
Fixed-to-Floating Rate Non-cumulative Perpetual Preferred

Stock, $10,000 liquidation preference per share ................................

50,000 $500,000

Series G (c)
Fixed-Rate Reset Non-cumulative Perpetual Preferred Stock,

$10,000 liquidation preference per share ...........................................

40,000 $400,000

Series I (d)
Fixed-Rate Reset Non-cumulative Perpetual Preferred Stock,

$10,000 liquidation preference per share ...........................................

50,000 $500,000

— $

—

(a)

(b)

(c)

(d)

Dividends, if declared, are paid semi-annually at a rate of 6.45% through February 14, 2024 and thereafter will be paid quarterly at a
rate of the three-month LIBOR plus 361 basis points. The shares are redeemable in whole or in part on or after February 15, 2024.
Notwithstanding M&T’s option to redeem the shares, if an event occurs such that the shares no longer qualify as Tier 1 capital, M&T
may redeem all of the shares within 90 days following that occurrence. Declared dividends per share were $64.50 in each of 2021, 2020
and 2019.
Dividends, if declared, are paid semi-annually at a rate of 5.125% through October 31, 2026 and thereafter will be paid quarterly at a
rate of the three-month LIBOR plus 352 basis points. The shares are redeemable in whole or in part on or after November 1, 2026.
Notwithstanding M&T’s option to redeem the shares, if an event occurs such that the shares no longer qualify as Tier 1 capital, M&T
may redeem all of the shares within 90 days following that occurrence. Declared dividends per share were $512.50 in each of 2021, 2020
and 2019.
Dividends, if declared, are paid semi-annually at a rate of 5.0% through July 31, 2024 and thereafter will be paid semiannually at a rate
of the five-year U.S. Treasury rate plus 3.174%. The shares are redeemable in whole or in part on or after August 1, 2024.
Notwithstanding M&T’s option to redeem the shares, if an event occurs such that the shares no longer qualify as Tier 1 capital, M&T may
redeem all of the shares within 90 days following that occurrence. Declared dividends per share were $500.00 in 2021, $500.694 in 2020
and $125.694 in 2019.
Dividends, if declared, are paid semi-annually at a rate of 3.5% through August 31, 2026 and thereafter will be paid semiannually at a
rate of the five-year U.S. Treasury rate plus 2.679%. The shares are redeemable in whole or in part on or after September 1, 2026.
Notwithstanding M&T’s option to redeem the shares, if an event occurs such that the shares no longer qualify as Tier 1 capital, M&T may
redeem all of the shares within 90 days following that occurrence. Dividends declared per share were $94.306 in 2021.

163

11. Revenue from contracts with customers

The Company generally charges customer accounts or otherwise bills customers upon

completion of its services. Typically the Company’s contracts with customers have a duration of one
year or less and payment for services is received at least annually, but oftentimes more frequently as
services are provided. At December 31, 2021 and 2020, the Company had $68 million and $67
million, respectively, of amounts receivable related to recognized revenue from the sources in the
accompanying tables. Such amounts are classified in “accrued interest and other assets” in the
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
December 31, 2021 and 2020, the Company had deferred revenue of $45 million and $42 million,
respectively, related to the sources in the accompanying tables recorded in “accrued interest and
other liabilities” in the consolidated balance sheet. The following tables summarize sources of the
Company’s noninterest income during 2021, 2020, and 2019 that are subject to the revenue
recognition guidance.

Business
Banking

Commercial
Banking

Commercial
Real Estate

Residential
Mortgage
Banking

Discretionary
Portfolio
(In thousands)

Retail
Banking

All
Other

Total

Year Ended December 31, 2021

Classification in consolidated

statement of income

Service charges on deposit accounts ... $ 53,816
—
Trust income ........................................
Brokerage services income..................
—
Other revenues from operations:

98,880
—
—

Merchant discount and credit card
fees.............................................
Other ..............................................

52,343
—
$106,159

55,164
5,968
160,012

Year Ended December 31, 2020

Classification in consolidated

statement of income

Service charges on deposit accounts ... $ 50,119
18
Trust income ........................................
Brokerage services income..................
—
Other revenues from operations:

92,720
442
—

Merchant discount and credit card
fees.............................................
Other ..............................................

40,475
—
$ 90,612

45,528
9,408
148,098

11,853
—
—

2,661
7,304
21,818

10,252
—
—

2,221
6,218
18,691

Year Ended December 31, 2019

Classification in consolidated

statement of income

—
—
—

— 232,279
—
—

5,285 $ 402,113
644,716
62,791

— 644,716
— 62,791

—
1,359
1,359

— 20,850

131,405
387
6,166 22,878 39,973
83,648
6,166 276,007 753,152 $1,324,673

—
—
—

— 211,858
—
—

5,839 $ 370,788
601,884
47,428

— 601,424
— 47,428

—
1,625
1,625

— 13,481

102,472
767
4,732 20,813 41,815
84,611
4,732 246,152 697,273 $1,207,183

Service charges on deposit accounts ... $ 60,690
31
Trust income ........................................
—
Brokerage services income..................
Other revenues from operations:

93,044
963
—

9,828
—
—

—
—
—

4 263,659

5,753 $ 432,978
572,608
48,922

— 571,614
— 48,922

—
—

Merchant discount and credit card
fees.............................................
Other ..............................................

36,844
—
$ 97,565

52,161
7,498
153,666

2,516
8,615
20,959

—
1,776
1,776

— 12,140

107,042
3,381
3,492 36,144 34,088
91,613
3,496 311,943 663,758 $1,253,163

164

Service charges on deposit accounts include fees deducted directly from customer account balances,
such as account maintenance, insufficient funds and other transactional service charges, and also
include debit card interchange revenue resulting from customer initiated transactions. Account
maintenance charges are generally recognized as revenue on a monthly basis, whereas other fees are
recognized after the respective service is provided.

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 the Company’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 amount of fees are resolved.

Brokerage services 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.

Other revenues from operations include merchant discount and credit card fees that are generally
recognized when the cardholder’s transaction is approved and settled. 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 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.

12. Stock-based compensation plans
Stock-based compensation expense was $85 million in 2021, $80 million in 2020 and $76 million in
2019. The Company recognized income tax benefits related to stock-based compensation of $16
million in 2021, $17 million in 2020 and $19 million in 2019.

The Company’s equity incentive compensation plan allows for the issuance of various forms of

stock-based compensation, including stock options, restricted stock and restricted stock units,
including performance-based awards. At December 31, 2021 and 2020, respectively, there were
2,299,502 and 3,100,665 shares available for future grant under the Company’s equity incentive
compensation plan.

Stock awards
Stock awards granted to employees are comprised of restricted stock and restricted stock units. Stock
awards generally vest over three years. The Company may issue shares from treasury stock to the
extent available or issue new shares. There were no restricted shares issued in 2021, 2020 or 2019.
The number of restricted stock units issued was 636,956 in 2021, 480,949 in 2020 and 448,487 in
2019, with a weighted-average grant date fair value of $84 million, $81 million and $74 million,
respectively. Unrecognized compensation expense associated with restricted stock units was $27
million as of December 31, 2021 and is expected to be recognized over a weighted-average period of
approximately one year.

165

A summary of restricted stock and restricted stock unit activity follows:

Restricted
Stock Units
Outstanding

Weighted-
Average
Grant Price

Restricted
Stock
Outstanding

Weighted-
Average
Grant Price

Unvested at January 1, 2021 ...................................
816,950 $ 169.60
132.85
636,956
Granted ....................................................................
170.80
(379,155)
Vested ......................................................................
Cancelled .................................................................
149.61
(36,059)
Unvested at December 31, 2021 ............................. 1,038,692 $ 147.32

13,550 $ 162.50
—
162.57
—
4,076 $ 162.35

—
(9,474)
—

Stock option awards
Stock options granted to employees generally vest over three years and are exercisable over terms not
exceeding ten years and one day. The Company granted 178,441, 187,088 and 164,244 stock options
in 2021, 2020 and 2019, respectively. The weighted-average grant date fair value of options granted
was $5 million in each of 2021, 2020 and 2019. The Company used an option pricing model to
estimate the grant date present value of stock options granted.

A summary of stock option activity follows:

Stock
Options
Outstanding

Weighted-Average

Exercise
Price

Life
(In Years)

Aggregate
Intrinsic Value
(In thousands)

Outstanding at January 1, 2021 ...............................
Granted ....................................................................
Exercised .................................................................
Expired ....................................................................
Outstanding at December 31, 2021 .........................
Exercisable at December 31, 2021 ..........................

465,423 $ 174.11
132.47
178,441
113.06
(2,699)
169.24
(5,301)
635,864 $ 162.73
282,081 $ 177.02

7.8 $
6.9 $

3,762
—

For 2021, 2020 and 2019, M&T received $305,000, $3 million and $9 million, respectively, in
cash from the exercise of stock options. The intrinsic value of stock options exercised and the related
tax benefits realized by the Company were not material in any of those three years. As of
December 31, 2021, the amount of unrecognized compensation cost related to non-vested stock
options was not material. The total grant date fair value of stock options vested during 2021, 2020
and 2019 was not material. Upon the exercise of stock options, the Company may issue shares from
treasury stock to the extent available or issue new shares.

Stock purchase plan
The stock purchase plan provides eligible employees of the Company with the right to purchase
shares of M&T common stock at a discount through accumulated payroll deductions. In connection
with the employee stock purchase plan, shares of M&T common stock issued were 95,147 in 2021,
77,170 in 2020 and 71,676 in 2019. As of December 31, 2021, there were 2,138,434 shares available
for issuance under the plan. M&T received cash for shares purchased through the employee stock
purchase plan of $11 million in each of 2021 and 2019, and $12 million in 2020, Compensation
expense recognized for the stock purchase plan was not material in 2021, 2020 or 2019.

166

Deferred bonus plan
The Company provided a deferred bonus plan pursuant to which eligible employees could elect to
defer all or a portion of their annual incentive compensation awards and allocate such awards to
several investment options, including M&T common stock. Participants could elect the timing of
distributions from the plan. Such distributions are payable in cash with the exception of balances
allocated to M&T common stock which are distributable in the form of M&T common stock. Shares
of M&T common stock distributable pursuant to the terms of the deferred bonus plan were 13,319
and 14,304 at December 31, 2021 and 2020, respectively. The obligation to issue shares is included
in “common stock issuable” in the consolidated balance sheet.

Directors’ stock compensation programs
The Company maintains compensation programs for members of the Company’s boards of directors
and its regional director advisory councils that provides for a portion of their compensation to be
received in shares or restricted stock units. In 2021, 28,646 shares were issued under such programs.

Through acquisitions, the Company assumed obligations to issue shares of M&T common

stock related to deferred directors compensation plans. Shares of common stock issuable under such
plans were 2,450 and 3,809 at December 31, 2021 and 2020, respectively. The obligation to issue
shares is included in “common stock issuable” in the consolidated balance sheet.

13. Pension plans and other postretirement benefits
The Company provides defined pension and other postretirement benefits (including health care and
life insurance benefits) to qualified retired employees. The Company uses a December 31
measurement date for all of its plans.

Net periodic pension expense for defined benefit plans consisted of the following:

2021

Year Ended December 31
2020
(In thousands)

2019

Service cost ......................................................................... $
Interest cost on benefit obligation.......................................
Expected return on plan assets ............................................
Amortization of prior service cost ......................................
Recognized net actuarial loss..............................................
Net periodic pension cost (benefit) ..................................... $

20,513 $
61,873
(143,448)
553
89,017
28,508 $

19,944 $
71,421
(125,512)
557
58,096
24,506 $

17,294
81,579
(122,139)
557
21,992
(717)

Net other postretirement benefits expense for defined benefit plans consisted of the following:

2021

Year Ended December 31
2020
(In thousands)

2019

Service cost .............................................................................
Interest cost on benefit obligation ...........................................
Amortization of prior service credit ........................................
Recognized net actuarial gain .................................................
Net other postretirement benefits ............................................

1,014 $
1,311
(4,738)
(1,295)
(3,708) $

970 $

1,741
(4,738)
(1,236)
(3,263) $

859
2,344
(4,730)
(1,247)
(2,774)

Service cost is reflected in salaries and employee benefits expense. The other components of

net periodic benefit expense are reflected in other costs of operations.

167

Data relating to the funding position of the defined benefit plans were as follows:

Change in benefit obligation:

Pension Benefits

2021

2020