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

9 Months Ended

Sep. 30, 2011

Relationship with Bayview Lending Group LLC and Bayview Financial Holdings, L.P. [Abstract]

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

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

M&T holds a 20% interest in Bayview Lending Group LLC (“BLG”), a privately-held commercial mortgage lender. M&T recognizes income or loss from BLG using the equity method of accounting. The carrying value of that investment was $199 million at September 30, 2011.

Bayview Financial Holdings, L.P. (together with its affiliates, “Bayview Financial”), a privately-held specialty mortgage finance company, is BLG’s majority investor. In addition to their common investment in BLG, the Company and Bayview Financial conduct other business activities with each other. The Company has obtained loan servicing rights for small balance commercial mortgage loans from BLG and Bayview Financial having outstanding principal balances of $4.7 billion and $5.2 billion at September 30, 2011 and December 31, 2010, respectively. Amounts recorded as capitalized servicing assets for such loans totaled $18 million at September 30, 2011 and $26 million at December 31, 2010. In addition, capitalized servicing rights at September 30, 2011 and December 31, 2010 also included $6 million and $9 million, respectively, for servicing rights that were obtained from Bayview Financial related to residential mortgage loans with outstanding principal balances of $3.3 billion at September 30, 2011 and $3.6 billion at December 31, 2010. Revenues from servicing residential and small-balance commercial mortgage loans obtained from BLG and Bayview Financial were $10 million and $11 million for the quarters ended September 30, 2011 and 2010, respectively, and $31 million and $35 million for the nine months ended September 30, 2011 and 2010, respectively. In addition, at September 30, 2011 and December 31, 2010, the Company held $17 million and $22 million, respectively, of collateralized mortgage obligations in its available-for-sale investment securities portfolio that were securitized by Bayview Financial. Finally, the Company held $278 million and $313 million of similar investment securities in its held-to-maturity portfolio at September 30, 2011 and December 31, 2010, respectively.