4. Loans and leases

Total loans and leases outstanding were comprised of the following:

	December 31
	2017			2016
	(In thousands)
Loans
Commercial, financial, etc.	$	20,474,696		$	21,351,119
Real estate:
Residential		19,619,259			22,584,141
Commercial		25,345,779			25,550,057
Construction		8,125,925			8,066,756
Consumer		13,251,665			12,130,094
Total loans		86,817,324			89,682,167
Leases
Commercial		1,425,562			1,419,510
Total loans and leases		88,242,886			91,101,677
Less: unearned discount		(253,903	)		(248,261	)
Total loans and leases, net of unearned discount	$	87,988,983		$	90,853,416

One-to-four family residential mortgage loans held for sale were $356 million at December 31, 2017 and $414 million at December 31, 2016. Commercial real estate loans held for sale were $22 million at December 31, 2017 and $643 million at December 31, 2016.

As of December 31, 2017, approximately $3.3 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, 2017, 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 not material in 2017, 2016 or 2015.

A summary of current, past due and nonaccrual loans as of December 31, 2017 and 2016 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, 2017
Commercial, financial, leasing, etc.	$	21,332,234		167,756		1,322		327		21		240,991	$	21,742,651
Real estate:
Commercial		24,910,381		166,305		4,444		6,016		16,815		184,982		25,288,943
Residential builder and developer		1,618,973		5,159		—		—		1,135		6,451		1,631,718
Other commercial construction		6,407,451		23,467		—		—		4,706		10,088		6,445,712
Residential		15,376,759		474,372		233,437		7,582		282,102		235,834		16,610,086
Residential — limited documentation		2,718,019		83,898		—		—		105,236		96,105		3,003,258
Consumer:
Home equity lines and loans		5,171,345		38,546		—		9,391		—		74,500		5,293,782
Automobile		3,441,371		78,511		—		—		—		23,781		3,543,663
Other		4,349,071		40,929		5,202		24,102		—		9,866		4,429,170
Total	$	85,325,604		1,078,943		244,405		47,418		410,015		882,598	$	87,988,983

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

(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 $63,872,000 in 2017, $68,371,000 in 2016 and $56,784,000 in 2015. The actual amounts included in interest income during 2017, 2016 and 2015 on such loans were $31,425,000, $33,941,000 and $30,735,000, 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
	2017		2016
	(In thousands)

Outstanding principal balance	$	1,394,188	$	2,311,699
Carrying amount:
Commercial, financial, leasing, etc.		31,105		59,928
Commercial real estate		228,054		456,820
Residential real estate		620,827		799,802
Consumer		123,413		487,721
	$	1,003,399	$	1,804,271

Purchased impaired loans included in the table above totaled $410 million at December 31, 2017 and $578 million at December 31, 2016, 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, 2017, 2016 and 2015 follows:

For the Year Ended December 31,	2017						2016						2015
	Purchased			Other			Purchased			Other			Purchased			Other
	Impaired			Acquired			Impaired			Acquired			Impaired			Acquired
	(In thousands)

Balance at beginning of period	$	154,233		$	201,153		$	184,618		$	296,434		$	76,518		$	397,379
Additions		—			—			—			—			117,251			—
Interest income		(47,452	)		(82,605	)		(52,769	)		(123,044	)		(28,551	)		(158,260	)
Reclassifications from nonaccretable balance		51,137			16,437			22,384			22,677			19,400			49,930
Other(a)		—			(1,823	)		—			5,086			—			7,385
Balance at end of period	$	157,918		$	133,162		$	154,233		$	201,153		$	184,618		$	296,434

(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, 2017, 2016 and 2015:

					Post-modification (a)
	Number		Pre- modification recorded investment		Principal Deferral		Other		Combination of Concession Types		Total
Year Ended December 31, 2017	(Dollars in thousands)

Commercial, financial, leasing, etc.		217	$	111,036	$	25,051	$	6,459	$	57,153	$	88,663
Real estate:
Commercial		83		44,924		17,039		868		22,975		40,882
Residential builder and developer		3		12,291		—		—		10,879		10,879
Other commercial construction		2		168		168		—		—		168
Residential		141		31,827		16,633		—		17,974		34,607
Residential — limited documentation		20		4,230		911		—		3,661		4,572
Consumer:
Home equity lines and loans		110		10,049		1,137		491		8,585		10,213
Automobile		69		1,378		1,203		—		175		1,378
Other		9		160		160		—		—		160
Total		654	$	216,063	$	62,302	$	7,818	$	121,402	$	191,522

Year Ended December 31, 2016

Commercial, financial, leasing, etc.		164	$	154,093	$	102,446	$	—	$	41,673	$	144,119
Real estate:
Commercial		81		44,870		23,558		4,576		15,603		43,737
Residential builder and developer		6		39,660		22,958		—		15,123		38,081
Other commercial construction		3		3,113		250		—		2,782		3,032
Residential		119		20,057		11,771		—		9,367		21,138
Residential — limited documentation		21		3,560		1,047		—		2,917		3,964
Consumer:
Home equity lines and loans		103		11,870		761		—		11,110		11,871
Automobile		163		1,264		1,124		55		85		1,264
Other		79		1,209		968		45		196		1,209
Total		739	$	279,696	$	164,883	$	4,676	$	98,856	$	268,415

					Post-modification (a)
	Number		Pre- modification recorded investment		Principal Deferral		Other		Combination of Concession Types		Total
Year Ended December 31, 2015	(Dollars in thousands)

Commercial, financial, leasing, etc.		127	$	101,129	$	50,807	$	12,926	$	31,439	$	95,172
Real estate:
Commercial		58		56,893		48,388		4,087		3,242		55,717
Residential builder and developer		2		10,650		10,598		—		—		10,598
Other commercial construction		6		10,743		460		—		10,375		10,835
Residential		85		10,485		6,528		267		4,277		11,072
Residential — limited documentation		11		1,962		437		—		1,635		2,072
Consumer:
Home equity lines and loans		71		7,378		2,175		—		5,204		7,379
Automobile		302		3,053		1,818		287		948		3,053
Other		155		2,507		1,995		116		396		2,507
Total		817	$	204,800	$	123,206	$	17,683	$	57,516	$	198,405

(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.

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, 2017, 2016 and 2015 and for which there was a subsequent payment default during the respective year 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 $60,000, amounted to $93,103,000 and $63,543,000 at December 31, 2017 and 2016, respectively. During 2017, new borrowings by such persons amounted to $88,077,000 (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 individuals ceasing to be directors or officers) were $58,517,000.

At December 31, 2017, approximately $11.9 billion of commercial loans and leases, $12.7 billion of commercial real estate loans, $15.3 billion of one-to-four family residential real estate loans, $2.3 billion of home equity loans and lines of credit and $5.2 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
	2017			2016
	(In thousands)
Commercial leases:
Direct financings:
Lease payments receivable	$	1,159,584		$	1,136,815
Estimated residual value of leased assets		89,666			79,449
Unearned income		(110,261	)		(107,535	)
Investment in direct financings		1,138,989			1,108,729
Leveraged leases:
Lease payments receivable		87,821			92,918
Estimated residual value of leased assets		88,491			110,328
Unearned income		(35,792	)		(38,760	)
Investment in leveraged leases		140,520			164,486
Total investment in leases	$	1,279,509		$	1,273,215
Deferred taxes payable arising from leveraged leases	$	81,359		$	139,067

Included within the estimated residual value of leased assets at December 31, 2017 and 2016 were $37 million and $47 million, respectively, in residual value associated with direct financing leases that are guaranteed by the lessees or others.

At December 31, 2017, the minimum future lease payments to be received from lease financings were as follows:

	(In thousands)
Year ending December 31:
2018	$	310,207
2019		297,599
2020		208,613
2021		150,553
2022		96,871
Later years		183,562
	$	1,247,405

The amount of foreclosed residential real estate property held by the Company was $108 million and $129 million at December 31, 2017 and 2016, respectively. There were $497 million and $506 million at December 31, 2017 and 2016, 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, 2017, approximately 45% were classified as purchased impaired and 19% were government guaranteed.