4. Loans and leases

Total loans and leases outstanding were comprised of the following:

	December 31
	2016			2015
	(In thousands)
Loans
Commercial, financial, etc.	$	21,351,119		$	19,223,419
Real estate:
Residential		22,584,141			26,249,059
Commercial		25,550,057			23,592,097
Construction		8,066,756			5,716,994
Consumer		12,130,094			11,584,347
Total loans		89,682,167			86,365,916
Leases
Commercial		1,419,510			1,353,318
Total loans and leases		91,101,677			87,719,234
Less: unearned discount		(248,261	)		(229,735	)
Total loans and leases, net of unearned discount	$	90,853,416		$	87,489,499

One-to-four family residential mortgage loans held for sale were $414 million at December 31, 2016 and $353 million at December 31, 2015. Commercial real estate loans held for sale were $643 million at December 31, 2016 and $39 million at December 31, 2015.

As of December 31, 2016, approximately $2.8 billion of commercial real estate loan balances serviced for others had been sold with recourse in conjunction with the Company’s participation in the Federal National Mortgage Association (“Fannie Mae”) Delegated Underwriting and Servicing (“DUS”) program. At December 31, 2016, 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, which are recorded as a reduction of mortgage banking revenues, were $4 million, $5 million and $4 million in 2016, 2015 and 2014, respectively.

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

	December 31
	2016		2015
	(In thousands)

Outstanding principal balance	$	2,311,699	$	3,122,935
Carrying amount:
Commercial, financial, leasing, etc.		59,928		78,847
Commercial real estate		456,820		644,284
Residential real estate		799,802		1,016,129
Consumer		487,721		725,807
	$	1,804,271	$	2,465,067

Purchased impaired loans included in the table above totaled $578 million at December 31, 2016 and $768 million at December 31, 2015, representing less than 1% of the Company’s assets as of each date. A summary of changes in the accretable yield for loans acquired at a discount for the years ended December 31, 2016, 2015 and 2014 follows:

For the Year Ended December 31,	2016						2015						2014
	Purchased			Other			Purchased			Other			Purchased			Other
	Impaired			Acquired			Impaired			Acquired			Impaired			Acquired
	(In thousands)

Balance at beginning of period	$	184,618		$	296,434		$	76,518		$	397,379		$	37,230		$	538,633
Additions		—			—			117,251			—			—			—
Interest income		(52,769	)		(123,044	)		(28,551	)		(158,260	)		(21,263	)		(178,670	)
Reclassifications from nonaccretable balance		22,384			22,677			19,400			49,930			60,551			24,907
Other(a)		—			5,086			—			7,385			—			12,509
Balance at end of period	$	154,233		$	201,153		$	184,618		$	296,434		$	76,518		$	397,379

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

A summary of current, past due and nonaccrual loans as of December 31, 2016 and 2015 follows:

	Current		30-89 Days Past Due		Accruing Loans Past Due 90 Days or More(a)		Accruing Loans Acquired at a Discount Past Due 90 Days or More(b)		Purchased Impaired(c)		Nonaccrual		Total
	(In thousands)
December 31, 2016
Commercial, financial, leasing, etc.	$	22,287,857	$	53,503	$	6,195	$	417	$	641	$	261,434	$	22,610,047
Real estate:
Commercial		25,076,684		183,531		7,054		12,870		31,404		176,201		25,487,744
Residential builder and developer		1,884,989		4,667		5		1,952		14,006		16,707		1,922,326
Other commercial construction		5,985,118		77,701		922		198		14,274		18,111		6,096,324
Residential		17,631,377		485,468		281,298		11,537		378,549		229,242		19,017,471
Residential — limited documentation		3,239,344		88,366		—		—		139,158		106,573		3,573,441
Consumer:
Home equity lines and loans		5,502,091		44,565		—		12,678		—		81,815		5,641,149
Automobile		2,869,232		56,158		—		1		—		18,674		2,944,065
Other		3,491,629		31,286		5,185		21,491		—		11,258		3,560,849
Total	$	87,968,321	$	1,025,245	$	300,659	$	61,144	$	578,032	$	920,015	$	90,853,416

December 31, 2015
Commercial, financial, leasing, etc.	$	20,122,648	$	52,868	$	2,310	$	693	$	1,902	$	241,917	$	20,422,338
Real estate:
Commercial(d)		23,111,673		172,439		12,963		8,790		46,790		179,606		23,532,261
Residential builder and developer		1,507,856		7,969		5,760		6,925		28,734		28,429		1,585,673
Other commercial construction(d)		3,962,620		65,932		7,936		2,001		24,525		16,363		4,079,377
Residential		20,507,551		560,312		284,451		16,079		488,599		153,281		22,010,273
Residential — limited documentation		3,885,073		137,289		—		—		175,518		61,950		4,259,830
Consumer:
Home equity lines and loans		5,805,222		45,604		—		15,222		2,261		84,467		5,952,776
Automobile		2,446,473		56,181		—		6		—		16,597		2,519,257
Other		3,051,435		36,702		4,021		18,757		—		16,799		3,127,714
Total	$	84,400,551	$	1,135,296	$	317,441	$	68,473	$	768,329	$	799,409	$	87,489,499

(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.

(d)	The Company expanded its definition of construction loans in 2016 and, as a result, re-characterized certain commercial real estate loans as other commercial construction loans. The December 31, 2015 balances reflect such changes.

If nonaccrual and renegotiated loans had been accruing interest at their originally contracted terms, interest income on such loans would have amounted to $68,371,000 in 2016, $56,784,000 in 2015 and $58,314,000 in 2014. The actual amounts included in interest income during 2016, 2015 and 2014 on such loans were $33,941,000, $30,735,000 and $28,492,000, 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.

The table below summarizes the Company’s loan modification activities that were considered troubled debt restructurings for the year ended December 31, 2016:

			Recorded Investment				Financial Effects of Modification
	Number		Pre- modification		Post- modification		Recorded Investment(a)			Interest (b)
	(Dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		127	$	102,872	$	102,446	$	(426	)	$	—
Combination of concession types		37		51,221		41,673		(9,548	)		(95	)
Real estate:
Commercial
Principal deferral		56		24,323		23,558		(765	)		—
Interest rate reduction		1		129		129		—			(25	)
Other		1		4,723		4,447		(276	)		—
Combination of concession types		23		15,695		15,603		(92	)		(585	)
Residential builder and developer
Principal deferral		3		23,905		22,958		(947	)		—
Combination of concession types		3		15,755		15,123		(632	)		—
Other commercial construction
Principal deferral		1		250		250		—			—
Combination of concession types		2		2,863		2,782		(81	)		—
Residential
Principal deferral		73		11,082		11,771		689			—
Combination of concession types		46		8,975		9,367		392			(120	)
Residential-limited documentation
Principal deferral		8		902		1,047		145			—
Combination of concession types		13		2,658		2,917		259			(706	)
Consumer:
Home equity lines and loans
Principal deferral		10		760		761		1			—
Combination of concession types		93		11,110		11,110		—			(916	)
Automobile
Principal deferral		117		1,124		1,124		—			—
Other		38		55		55		—			—
Combination of concession types		8		85		85		—			(3	)
Other
Principal deferral		57		968		968		—			—
Other		5		45		45		—			—
Combination of concession types		17		196		196		—			(32	)
Total		739	$	279,696	$	268,415	$	(11,281	)	$	(2,482	)

(a)	Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages.

(b)	Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

The table below summarizes the Company’s loan modification activities that were considered troubled debt restructurings for the year ended December 31, 2015:

			Recorded Investment				Financial Effects of Modification
	Number		Pre- modification		Post- modification		Recorded Investment(a)			Interest (b)
	(Dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		114	$	55,621	$	50,807	$	(4,814	)	$	—
Interest rate reduction		1		99		99		—			(19	)
Other		3		12,965		12,827		(138	)		—
Combination of concession types		9		32,444		31,439		(1,005	)		(245	)
Real estate:
Commercial
Principal deferral		49		49,486		48,388		(1,098	)		—
Other		3		4,169		4,087		(82	)		—
Combination of concession types		6		3,238		3,242		4			(159	)
Residential builder and developer
Principal deferral		2		10,650		10,598		(52	)		—
Other commercial construction
Principal deferral		4		368		460		92			—
Combination of concession types		2		10,375		10,375		—			(49	)
Residential
Principal deferral		58		6,194		6,528		334			—
Other		1		267		267		—			—
Combination of concession types		26		4,024		4,277		253			(483	)
Residential-limited documentation
Principal deferral		2		426		437		11			—
Combination of concession types		9		1,536		1,635		99			(121	)
Consumer:
Home equity lines and loans
Principal deferral		8		2,175		2,175		—			—
Combination of concession types		63		5,203		5,204		1			(677	)
Automobile
Principal deferral		192		1,818		1,818		—			—
Interest rate reduction		7		137		137		—			(10	)
Other		46		150		150		—			—
Combination of concession types		57		948		948		—			(43	)
Other
Principal deferral		102		1,995		1,995		—			—
Other		13		116		116		—			—
Combination of concession types		40		396		396		—			(45	)
Total		817	$	204,800	$	198,405	$	(6,395	)	$	(1,851	)

(a)	Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages.

(b)	Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

The table below summarizes the Company’s loan modification activities that were considered troubled debt restructurings for the year ended December 31, 2014:

			Recorded Investment				Financial Effects of Modification
	Number		Pre- modification		Post- modification		Recorded Investment(a)			Interest (b)
	(Dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		95	$	29,035	$	23,628	$	(5,407	)	$	—
Other		3		29,912		31,604		1,692			—
Combination of concession types		7		19,167		19,030		(137	)		(20	)
Real estate:
Commercial
Principal deferral		39		19,077		18,997		(80	)		—
Interest rate reduction		1		255		252		(3	)		(48	)
Other		1		650		—		(650	)		—
Combination of concession types		7		1,152		1,198		46			(264	)
Residential builder and developer
Principal deferral		2		1,639		1,639		—			—
Other commercial construction
Principal deferral		4		6,703		6,611		(92	)		—
Residential
Principal deferral		28		2,710		2,905		195			—
Interest rate reduction		11		1,146		1,222		76			(152	)
Other		1		188		188		—			—
Combination of concession types		30		4,211		4,287		76			(483	)
Residential-limited documentation
Principal deferral		6		880		963		83			—
Combination of concession types		21		3,806		3,846		40			(386	)
Consumer:
Home equity lines and loans
Principal deferral		3		280		280		—			—
Interest rate reduction		6		535		535		—			(120	)
Combination of concession types		47		5,031		5,031		—			(560	)
Automobile
Principal deferral		208		3,293		3,293		—			—
Interest rate reduction		9		152		152		—			(12	)
Other		42		255		255		—			—
Combination of concession types		81		1,189		1,189		—			(100	)
Other
Principal deferral		33		245		245		—			—
Interest rate reduction		4		293		293		—			(63	)
Other		1		45		45		—			—
Combination of concession types		70		2,502		2,502		—			(761	)
Total		760	$	134,351	$	130,190	$	(4,161	)	$	(2,969	)

(a)	Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages.

(b)	Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

Troubled debt restructurings are considered to be impaired loans and for purposes of establishing the allowance for credit losses are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Impairment of troubled debt restructurings that have subsequently defaulted may also be measured based on the loan’s observable market price or the fair value of collateral if the loan is collateral-dependent. Charge-offs may also be recognized on troubled debt restructurings that have subsequently defaulted. Loans that were modified as troubled debt restructurings during the twelve months ended December 31, 2016, 2015 and 2014 and for which there was a subsequent payment default during the respective period were not material.

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 $120,000, amounted to $63,543,000 and $52,152,000 at December 31, 2016 and 2015, respectively. During 2016, new borrowings by such persons amounted to $15,350,000 (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 retirements) were $3,959,000.

At December 31, 2016, approximately $11.9 billion of commercial loans and leases, $12.5 billion of commercial real estate loans, $17.8 billion of one-to-four family residential real estate loans, $2.3 billion of home equity loans and lines of credit and $4.4 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 9.

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. A summary of lease financing receivables follows:

	December 31
	2016			2015
	(In thousands)
Commercial leases:
Direct financings:
Lease payments receivable	$	1,136,815		$	1,058,605
Estimated residual value of leased assets		79,449			81,269
Unearned income		(107,535	)		(102,723	)
Investment in direct financings		1,108,729			1,037,151
Leveraged leases:
Lease payments receivable		92,918			95,316
Estimated residual value of leased assets		110,328			118,128
Unearned income		(38,760	)		(41,556	)
Investment in leveraged leases		164,486			171,888
Total investment in leases	$	1,273,215		$	1,209,039
Deferred taxes payable arising from leveraged leases	$	139,067		$	160,603

Included within the estimated residual value of leased assets at December 31, 2016 and 2015 were $47 million and $50 million, respectively, in residual value associated with direct financing leases that are guaranteed by the lessees or others.

At December 31, 2016, the minimum future lease payments to be received from lease financings were as follows:

	(In thousands)
Year ending December 31:
2017	$	301,611
2018		276,524
2019		209,835
2020		150,631
2021		101,403
Later years		189,729
	$	1,229,733

The amount of foreclosed residential real estate property held by the Company was $129 million and $172 million at December 31, 2016 and 2015, respectively. There were $314 million and $315 million at December 31, 2016 and 2015, respectively, in loans secured by residential real estate and serviced by the Company that were in the process of foreclosure. There were $192 million in loans secured by residential real estate and serviced by other entities for the Company that were in the process of foreclosure at December 31, 2016. Of all the loans in the process of foreclosure at December 31, 2016, approximately 57% were classified as purchased impaired and 20% were government guaranteed.