Approximately 10% have asked for additional relief.
The common equity Tier 1 ratio improved by 31 basis points to 9.81%.
At the same time, the allowance for loan losses grew to 1.79% of loans, positioning M&T to meet the needs of our customers and communities.
Diluted GAAP earnings per common share were $2.75 for the third quarter of 2020 compared with $1.74 in the second quarter of 2020 and $3.47 in the third quarter of 2019.
Net income for the quarter was $372 million compared with $241 million in the linked quarter and $480 million in the year-ago quarter.
On a GAAP basis, M&T's third-quarter results produced an annualized rate of return on average assets of 1.06% and an annualized return on average common equity of 9.53%.
This compares with rates of 0.71% and 6.13%, respectively, in the previous quarter.
Included in GAAP results in the recent quarter were after-tax expenses from the amortization of intangible assets amounting to $3 million or $0.02 per common share, little change from the prior quarter.
M&T's net operating income for the third quarter, which excludes intangible amortization, was $375 million compared with $244 million in the linked quarter and $484 million in last year's third quarter.
Diluted net operating earnings per common share were $2.77 for the recent quarter compared with $1.76 in 2020 second quarter and $3.50 in the third quarter of 2019.
Net operating income yielded annualized rates of return on average tangible assets and average tangible common shareholders' equity of 1.1% and 13.94% for the recent quarter.
The comparable returns were 0.74% and 9.04% in the second quarter of 2020.
Taxable equivalent net interest income was $947 million in the third quarter of 2020, marking a decline of $14 million or 1% from the linked quarter.
That decrease primarily reflects the impact on loan yields from the 20 basis point decline in average one-month LIBOR compared to the second quarter.
The net interest margin declined by 18 basis points to 2.95% compared with 3.13% in the linked quarter.
Average interest-earning assets increased by $4 billion to $128 billion for the third quarter, primarily reflecting a $4.4 billion increase in funds invested with either the Federal Reserve Bank of New York or into resale agreements.
The increase in cash equivalent investments caused an estimated 10 basis points of pressure on the net interest margin while having little effect on net interest income.
For context, since the fourth quarter of 2019, the combination of short term liquidity investments primarily placed at the Fed and investment securities has increased by $9.1 billion, reducing the net interest margin by approximately 25 basis points, while incrementally benefiting net interest income.
Average total loans increased by $413 million or a little less than one half percent compared with the previous quarter.
On an average basis, compared with the linked quarter, commercial and industrial loans declined by $1.4 billion or 5%, primarily the results of a $1.2 billion decline in vehicle dealer floor plan loans.
PPP loans were effectively unchanged from the end of the second quarter at $6.5 billion.
Commercial real estate loans grew by less than 1% compared with the second quarter.
Residential real estate loans increased by just under $1 billion or 6%, reflecting loans purchased from Ginnie Mae servicing pools, pending resolution, partially offset by repayments.
Consumer loans were up by 4%, reflecting higher indirect recreation finance loans, partially offset by lower auto loans and home equity lines of credit.
Average core customer deposits, which exclude deposits received at M&T's Cayman Islands office and CDs over $250,000, grew by $4 billion, primarily in interest and noninterest checking or about 4% compared with the second quarter.
Non-interest income totaled $521 million in the third quarter compared with $487 million in the prior quarter.
The recent quarter included $3 million of valuation gains on equity securities, largely on our remaining holdings of GSE preferred stock, while the second quarter included $7 million of such gains.
Mortgage banking revenues were $153 million in the recent quarter, improving from $145 million in the linked quarter.
Residential mortgage loans originated for sale were $1.2 billion in the quarter, up 7% from $1.1 billion in the second quarter.
Total residential mortgage banking revenues, including origination and servicing activities, were $119 million in the third quarter, improved from $111 million in the prior quarter.
Commercial mortgage banking revenues totaled $34 million, encompassing both originations and servicing and which was little changed from the second quarter.
Trust income was $150 million in the recent quarter, down slightly from $152 million in the previous quarter.
Recall that second quarter figures included $5 million of seasonal tax preparation fees.
Service charges on deposit accounts were $91 million, improved sharply from $77 million in the second quarter.
Similarly, the $20 million improvement in other revenues from operations compared with the linked quarter reflects a rebound in COVID-19-impacted payments revenues that are not included in service charges, such as credit card interchange and merchant discount with a slight improvement in loan-related fees, including syndications.
Operating expenses for the third quarter, which exclude the amortization of intangible assets, were $823 million compared with $803 million in the second quarter.
The $20 million linked quarter increase in salaries and benefits reflect the impact of one additional workday during the quarter and higher compensation tied to the uptick in both mortgage banking and trust related activity compared with the prior quarter.
Recall that other cost of operations for each of the first and second quarters included a $10 million addition to the valuation allowance on our capitalized mortgage servicing rights.
The efficiency ratio, which excludes intangible amortization from the numerator and securities gains or losses from the denominator, was 56.2% in the recent quarter compared with 55.7% in the second quarter and 56% in the third quarter of 2019.
Net charge-offs for the recent quarter amounted to $30 million.
Annualized net charge-offs as a percentage of total loans were 12 basis points for the third quarter compared with 29 basis points in the second quarter.
The provision for loan losses in the third quarter amounted to $150 million, exceeding net charge-offs by $120 million and increasing the allowance for credit losses to $1.8 billion or 1.79% of loans.
Our forecast assumes the quarterly unemployment rate increases to 9% in the fourth quarter of this year, followed by a sustained high single-digit unemployment rate through 2022.
The forecast assumes GDP contracts 5.1% during 2020 and recovers to prerecession peak levels by the third quarter of 2022.
Nonaccrual loans as of September 30 amounted to $1.2 billion, an increase of $83 million from the end of June.
At the end of the quarter, nonaccrual loans as a percentage of loans was 1.26%.
Excluding the impact of PPP loans, the ratio of the allowance for credit losses to loans would be 1.91%.
Similarly, the ratio of nonaccrual loans to total loans would be 1.35% and annualized net charge-offs as a percentage of total loans would be 13 basis points.
Loans 90 days past due, on which we continue to accrue interest, were $527 million at the end of the recent quarter.
Of these loans, $505 million or 96% were guaranteed by government-related entities.
A significant majority of commercial loans that were granted COVID-19 payment relief were for 90 days, with the ability for clients to request a second 90 days.
For example, substantially all of the $4.2 billion of forbearance as of June 30 given to vehicle dealers was for 90 days, and less than $100 million are under some form of forbearance relief at the end of the third quarter.
For the total commercial and industrial portfolio, including the aforementioned dealer portfolio, loans under COVID-19 forbearance have declined by 85% to slightly higher than $800 million or about 3% as of September 30.
In total, deferrals in the CRE portfolio have declined by 41% to $5.1 billion.
We'll know more over the next 60 days or so as the 180-day deferrals reach their end of term.
For the consumer portfolios, deferrals declined from just under $700 million at June 30 to under $150 million or less than 1% at the end of September.
For residential mortgage loans we own, nongovernment-guaranteed loans under deferral amount to $1.6 billion, down about 19% from the second quarter.
Total deferrals have increased to $3.3 billion from $2.3 billion 90 days ago.
All of these figures do not include approximately $10 billion of forbearance on residential mortgage loans we service for others.
M&T's common equity Tier 1 capital ratio was an estimated 9.81% as of September 30 compared to 9.5% at the end of the second quarter.
As those deposits and associated short-term investments decline, we'd expect that the net interest margin would benefit by about two to three basis points per $1 billion decline, with limited impact on net interest income.
To be more specific, the $13.4 billion notional amount of active cash flow hedges will step up to $17.4 billion this quarter and then remain at those levels for about one year.

Summary:
Diluted GAAP earnings per common share were $2.75 for the third quarter of 2020 compared with $1.74 in the second quarter of 2020 and $3.47 in the third quarter of 2019.
Diluted net operating earnings per common share were $2.77 for the recent quarter compared with $1.76 in 2020 second quarter and $3.50 in the third quarter of 2019.
Taxable equivalent net interest income was $947 million in the third quarter of 2020, marking a decline of $14 million or 1% from the linked quarter.
The provision for loan losses in the third quarter amounted to $150 million, exceeding net charge-offs by $120 million and increasing the allowance for credit losses to $1.8 billion or 1.79% of loans.