Loans and Leases

12 Months Ended

Dec. 31, 2020

3. Loans and leases

Total loans and leases outstanding were comprised of the following:

	December 31
	2020			2019
	(In thousands)
Loans
Commercial, financial, etc.	$	26,554,486		$	22,575,700
Real estate:
Residential		16,708,644			16,098,125
Commercial		27,738,732			26,718,325
Construction		10,068,141			9,010,297
Consumer		16,558,889			15,373,881
Total loans		97,628,892			89,776,328
Leases
Commercial		1,246,896			1,412,197
Total loans and leases		98,875,788			91,188,525
Less: unearned discount		(339,921	)		(265,656	)
Total loans and leases, net of unearned discount	$	98,535,867		$	90,922,869

One-to-four family residential mortgage loans held for sale were $777 million at December 31, 2020 and $414 million at December 31, 2019. Commercial real estate loans held for sale were $278 million at December 31, 2020 and $28 million at December 31, 2019.

As of December 31, 2020, approximately $4.0 billion of commercial real estate loan balances serviced for others had been sold with recourse in conjunction with the Company’s participation in the Fannie Mae Delegated Underwriting and Servicing (“DUS”) program. At December 31, 2020, the Company estimated that the recourse obligations described above were not material to the Company’s consolidated financial position. There have been no material losses incurred as a result of those credit recourse arrangements.

In addition to recourse obligations, as described in note 21, the Company is contractually obligated to repurchase previously sold residential real estate loans that do not ultimately meet investor sale criteria related to underwriting procedures or loan documentation. When required to do so, the Company may reimburse loan purchasers for losses incurred or may repurchase certain loans. Charges incurred for such obligation were not material in 2020, 2019 or 2018.

The amount of foreclosed residential real estate property held by the Company was $28 million and $76 million at December 31, 2020 and 2019, respectively. There were $214 million and $402

million at December 31, 2020 and 2019, 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, 2020, approximately 41% 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 $72 million and $28 million at December 31, 2020 and 2019, respectively. During 2020, new borrowings by such persons amounted to $46 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 $2 million.

At December 31, 2020, approximately $10.2 billion of commercial loans and leases, $13.7 billion of commercial real estate loans, $12.9 billion of one-to-four family residential real estate loans, $2.1 billion of home equity loans and lines of credit and $8.5 billion of other consumer loans were pledged to secure outstanding borrowings from the FHLB of New York and available lines of credit as described in note 8.

A summary of current, past due and nonaccrual loans as of December 31, 2020 and 2019 follows:

	Current		30-89 Days Past Due		Accruing Loans Past Due 90 Days or More		Nonaccrual		Total
	(In thousands)
December 31, 2020
Commercial, financial, leasing, etc.	$	27,196,862		60,822		10,053		306,827	$	27,574,564
Real estate:
Commercial		26,688,515		168,917		47,014		775,894		27,680,340
Residential builder and developer		1,246,095		1,693		856		1,094		1,249,738
Other commercial construction		8,523,591		66,365		3,816		114,039		8,707,811
Residential		13,764,836		200,406		792,888		365,729		15,123,859
Residential — limited documentation		1,462,277		19,687		—		147,170		1,629,134
Consumer:
Home equity lines and loans		3,881,885		24,329		—		79,392		3,985,606
Recreational finance		7,002,643		47,161		—		25,519		7,075,323
Automobile		4,007,349		55,498		—		39,404		4,102,251
Other		1,346,868		17,561		4,581		38,231		1,407,241
Total	$	95,120,921		662,439		859,208		1,893,299	$	98,535,867

	Current		30-89 Days Past Due		Accruing Loans Past Due 90 Days or More (a)		Accruing Loans Acquired at a Discount Past Due 90 days or More (b)		Purchased Impaired (c)		Nonaccrual		Total
	(In thousands)
December 31, 2019
Commercial, financial, leasing, etc.	$	23,290,797		184,011		16,776		27		—		346,557	$	23,838,168
Real estate:
Commercial		26,311,414		165,579		6,740		—		15,601		158,474		26,657,808
Residential builder and developer		1,521,315		21,195		—		—		753		3,982		1,547,245
Other commercial construction		7,204,148		95,346		3,360		—		1,237		32,770		7,336,861
Residential		12,760,040		451,274		486,515		5,788		143,145		235,663		14,082,425
Residential — limited documentation		1,858,037		65,215		181		—		66,809		83,427		2,073,669
Consumer:
Home equity lines and loans		4,386,511		30,229		—		1,662		—		63,215		4,481,617
Recreational finance		5,484,997		36,827		—		99		—		14,219		5,536,142
Automobile		3,787,221		78,478		—		—		—		21,293		3,886,992
Other		1,395,240		45,978		5,156		32,056		—		3,512		1,481,942
Total	$	87,999,720		1,174,132		518,728		39,632		227,545		963,112	$	90,922,869

(a)	Excludes loans acquired at a discount.

(b)	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.

(c)	Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.

If nonaccrual and renegotiated loans had been accruing interest at their originally contracted terms, interest income on such loans would have amounted to $96 million in 2020, $68 million in 2019 and $69 million in 2018. The actual amounts included in interest income on such loans were $44 million in 2020 and $33 million in each of 2019 and 2018.

A summary of outstanding loan balances for which COVID-19 related modifications were granted as of December 31, 2020 is presented below. 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 modifications noted below expire during the first half of 2021.

	COVID-19 Related Modifications
December 31, 2020	Payment Deferrals⁽¹⁾			Other Forbearances⁽²⁾		Total
	(In thousands)

Commercial, financial, leasing, etc.	$	95,823		$	291,957	$	387,780
Real estate:
Commercial		728,511			374,509		1,103,020
Residential builder and developer		653			—		653
Other commercial construction		61,235			145,770		207,005
Residential		2,447,422	(3)		—		2,447,422
Residential — limited documentation		337,108			—		337,108
Consumer:
Home equity lines and loans		18,440			—		18,440
Recreational finance		24,428			—		24,428
Automobile		51,550			—		51,550
Other		2,353			—		2,353
Total	$	3,767,523		$	812,236	$	4,579,759

(1)	Represents accruing loans at December 31, 2020 for which a COVID-19 related payment deferral (including maturity extensions) has been granted.

(2)	Consists predominantly of accruing loans for which a COVID-19 related covenant waiver has been granted.

(3)	Includes $1.7 billion of government-guaranteed loans.

The outstanding principal balance and the carrying amount of loans acquired at a discount that were recorded at fair value at the acquisition date for which interest income was recognized based on expected future cash flows that were included in the consolidated balance sheet at December 31, 2019 were as follows:



	(In thousands)

Outstanding principal balance	$	769,414
Carrying amount:
Commercial, financial, leasing, etc.		21,114
Commercial real estate		94,890
Residential real estate		341,807
Consumer		77,785
	$	535,596

Purchased impaired loans included in the table above totaled $228 million at December 31, 2019, representing less than 1% of the Company’s assets. A summary of changes in the accretable yield for loans acquired at a discount for the years ended December 31, 2019 and 2018 follows:

For the Year Ended December 31,	2019						2018
	Purchased Impaired			Other Acquired			Purchased Impaired			Other Acquired
	(In thousands)

Balance at beginning of period	$	147,210		$	96,907		$	157,918		$	133,162
Interest income		(49,017	)		(36,452	)		(37,819	)		(63,856	)
Reclassifications from nonaccretable balance		36,718			15,534			27,111			22,849
Other (a)		—			(3,909	)		—			4,752
Balance at end of period	$	134,911		$	72,080		$	147,210		$	96,907

(a)	Other changes in expected cash flows including changes in interest rates and prepayment assumptions.

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

The tables that follow summarize the Company’s loan modification activities that were considered troubled debt restructurings for the years ended December 31, 2020, 2019 and 2018:

					Post-modification (a)
Year Ended December 31, 2020	Number		Pre- modification Recorded Investment		Principal Deferral		Interest Rate Reduction		Other		Combination of Concession Types		Total
	(Dollars in thousands)

Commercial, financial, leasing, etc.		394	$	246,479	$	70,671	$	298	$	31,605	$	97,344	$	199,918
Real estate:
Commercial		161		310,578		204,591		505		4,874		85,261		295,231
Residential builder and developer		1		91		—		—		—		90		90
Other commercial construction		2		13,602		13,573		—		—		—		13,573
Residential		631		202,985		183,878		—		—		23,639		207,517
Residential — limited documentation		30		7,413		7,100		—		—		1,232		8,332
Consumer:
Home equity lines and loans		259		17,228		5,882		—		—		11,372		17,254
Recreational finance		428		16,392		16,388		—		—		4		16,392
Automobile		2,249		39,951		39,949		—		—		2		39,951
Other		1,095		7,788		3,383		—		—		4,405		7,788
Total		5,250	$	862,507	$	545,415	$	803	$	36,479	$	223,349	$	806,046

Year Ended December 31, 2019

Commercial, financial, leasing, etc.		150	$	63,715	$	10,485	$	—	$	—	$	52,871	$	63,356
Real estate:
Commercial		51		48,315		5,193		—		—		26,152		31,345
Residential builder and developer		2		1,330		1,068		—		—		—		1,068
Other commercial construction		3		1,559		—		—		—		1,500		1,500
Residential		83		21,695		10,819		—		—		11,907		22,726
Residential — limited documentation		6		1,409		399		—		—		1,044		1,443
Consumer:
Home equity lines and loans		41		4,127		176		—		—		4,004		4,180
Recreational finance		10		265		265		—		—		—		265
Automobile		66		1,141		1,076		—		—		65		1,141
Total		412	$	143,556	$	29,481	$	—	$	—	$	97,543	$	127,024

					Post-modification (a)
Year Ended December 31, 2018	Number		Pre- modification Recorded Investment		Principal Deferral		Interest Rate Reduction		Other		Combination of Concession Types		Total
	(Dollars in thousands)

Commercial, financial, leasing, etc.		203	$	102,445	$	50,490	$	803	$	6,210	$	45,411	$	102,914
Real estate:
Commercial		83		30,217		16,870		175		4,686		9,000		30,731
Other commercial construction		1		752		746		—		—		—		746
Residential		134		34,798		19,962		—		—		18,110		38,072
Residential — limited documentation		9		1,887		827		—		—		1,423		2,250
Consumer:
Home equity lines and loans		47		3,952		224		—		—		3,755		3,979
Recreational finance		7		202		202		—		—		—		202
Automobile		73		1,330		1,318		—		—		12		1,330
Total		557	$	175,583	$	90,639	$	978	$	10,896	$	77,711	$	180,224

(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, 2020, 2019 and 2018 and for which there was a subsequent payment default during the respective year were not material.

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,
	2020			2019
	(In thousands)
Commercial leases:
Direct financings:
Lease payments receivable	$	1,017,222		$	1,164,567
Estimated residual value of leased assets		79,621			84,540
Unearned income		(83,673	)		(106,780	)
Investment in direct financings		1,013,170			1,142,327
Leveraged leases:
Lease payments receivable		76,453			82,065
Estimated residual value of leased assets		73,600			81,025
Unearned income		(28,388	)		(31,596	)
Investment in leveraged leases		121,665			131,494
Total investment in leases	$	1,134,835		$	1,273,821
Deferred taxes payable arising from leveraged leases	$	61,905		$	70,245

Included within the estimated residual value of leased assets at December 31, 2020 and 2019 were $34 million and $37 million, respectively, in residual value associated with direct financing leases that are guaranteed by the lessees or others.

At December 31, 2020, the minimum future lease payments to be received from lease financings were as follows:

	(In thousands)
Year ending December 31:
2021	$	320,428
2022		288,322
2023		187,740
2024		122,735
2025		70,400
Later years		104,050
	$	1,093,675