Diluted GAAP earnings per common share was $3.33 for the first quarter of 2021, compared with $3.52 in the fourth quarter of 2020 and $1.93 in last year's first quarter.
Net income for the quarter was $447 million, compared with $471 million in the linked quarter and $269 million in the year-ago quarter.
On a GAAP basis, M&T's first-quarter results produced an annualized rate of return on average assets of 1.22% and an annualized return on average common equity of 11.57%.
This compares with rates of 1.30% and 12.07%, 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 $2 million or $0.02 per common share, little change from the prior quarter.
Also included in the quarter's results were merger-related charges of $10 million related to M&T's proposed acquisition of People's United Financial.
This amounted to $8 million after tax or $0.06 per common share.
Net operating income for the first quarter, which excludes intangible amortization and the merger-related expenses, was $457 million, compared with $473 million in the linked quarter and $272 million in last year's first quarter.
Diluted net operating earnings per share were $3.41 for the recent quarter, compared with $3.54 in 2020's fourth quarter and $1.95 in the first quarter of last year -- of last year.
Net operating income yielded annualized rates of return on average tangible asset and average tangible common shareholders' equity of 1.29% and 17.05% for the recent quarter.
The comparable returns were 1.35% and 17.53% in the fourth quarter of 2020.
Taxable equivalent net interest income was $985 million in the first quarter of 2021, compared with $993 million in the linked quarter.
The margin for the past quarter was 2.97%, down 3 basis points from 3% in the linked quarter.
The primary driver of the margin decline was the higher level of cash on deposit with the Federal Reserve, which we estimated reduced the margin by 5 basis points.
Similarly, the $8 million linked-quarter decline in net interest income reflects the loss of income from two fewer accrual days.
Compared with the fourth quarter of 2020, average interest-earning assets increased by some 2%, reflecting a 9% increase in money market placements, including cash on deposit with the Federal Reserve, and an 8% decline in investment securities.
Average loans outstanding grew by – grew nearly 1% compared with the previous quarter.
Excluding PPP loans, average loans grew $1.1 billion or over 1%.
Due to timing of originations and the receipt of payments, average PPP loans declined $453 million from the prior quarter.
Commercial real estate loans declined less than 0.5% compared to the fourth quarter, indicative of very low levels of customer activity.
Residential real estate loans grew by 4%, consistent with our expectations.
Consumer loans were up nearly 1%.
On an end-of-period basis, PPP loans totaled $6.2 billion, up from $5.4 billion at the end of the fourth quarter.
Average core customer deposits, which exclude deposits received at M&T's Cayman Island office and CDs over $250,000, increased 4% or $5 billion compared to the fourth quarter.
That figure includes $4 billion of noninterest-bearing deposits.
On an end-of-period basis, core deposits were up nearly $9 billion.
Foreign office deposits increased 17% on an average basis but were -- I'm sorry, decreased 17% on an average basis but were essentially flat on an end-of-period basis.
Turning to noninterest income, noninterest income totaled $506 million for the first quarter, compared with $551 million in the linked quarter.
The recent quarter included $12 million of valuation losses on equity securities, largely the remaining holdings of our GSE preferred stock, while 2020's final quarter included $2 million of gains.
Results for the first quarter of 2020 included a $23 million distribution and a change in the past timing.
As you may know, M&T received a $30 million distribution in the fourth quarter of 2020, as expected.
Mortgage banking revenues were $139 million in the recent quarter, down $1 million from $140 million in the linked quarter.
Revenues from that business, including both originations and servicing activities, were $107 million in the first quarter, improved from $95 million in the prior quarter.
Residential mortgage loans originated for sale were $1.3 billion in the recent quarter, up about 5% from the fourth quarter.
Commercial mortgage banking revenues were $32 million in the first quarter, reflecting the -- a seasonal decline from $45 million in the linked quarter.
That figure was $30 million in the year-ago quarter.
Trust income rose to $156 million in the recent quarter, improved from $151 million in the previous quarter.
Service charges on deposits were $93 million, compared with $96 million in the fourth quarter.
Operating expenses -- turning to operating expenses for the first quarter, which exclude the amortization of intangible assets and merger-related expenses, were $907 million.
The comparable figures were $842 million in the linked quarter and $903 million in the year-ago quarter.
As is typical for M&T's fiscal first-quarter results, operating expenses for the recent quarter included approximately $69 million of seasonally higher compensation costs relating to accelerated – to the accelerated recognition of equity compensation expense for certain retirement-eligible employees, the HSA contribution, the impact of annual incentive compensation payouts on the 401(k) match and FICA payments, and unemployment insurance.
Those same items amounted to an increase in salaries and benefits of approximately $67 million in last year's first quarter.
Other cost of operations for the past quarter included a $9 million reduction in the valuation allowance on our capitalized mortgage servicing rights.
You'll recall that there was a $3 million addition to the allowance in 2020's fourth quarter and a $10 million addition in last year's first quarter.
The efficiency ratio, which excludes intangible amortization from the numerator and securities gains or losses from the denominator, was 60.3% in the recent quarter compared with 54.6% in 2020's fourth quarter and 58.9% in the first quarter of 2020.
The allowance for credit losses amounted to $1.6 billion at the end of the first quarter.
The $100 million decline from the end of 2020 reflects a $25 million recapture of previous provisions for credit losses, combined with $75 million of net charge-offs in the first quarter.
Our forecast assumes that the national unemployment rate continues to be at elevated levels, on average, 5.7% through 2021, followed by a gradual improvement, reaching 2.4% by the end of 2022.
I'm sorry, 4.2% by the end of 2022.
The forecast assumes that GDP grows at 6.2% annual -- at annual rate during 2021, resulting in GDP returning to pre-pandemic levels during 2021.
Nonaccrual loans amounted to $1.9 billion or 1.97% of loans at the end of March.
This was up slightly from 1.92% at the end of last December.
As noted, net charge-offs for the recent quarter amounted to $75 million.
Annualized net charge-offs as a percentage of total loans were 31 basis points for the first quarter compared with 39 basis points in the fourth quarter.
Loans 90 days past due, on which we continue to improve interest, were $1.1 billion at the end of the recent quarter, 96% of those loans were guaranteed by government-related entities.
M&T's common equity Tier 1 ratio was an estimated 10.4% compared with 10% at the end of the fourth quarter, and which reflects a slight reduction in risk-weighted assets and earnings net of -- and earnings net of dividends.

Summary:
Diluted GAAP earnings per common share was $3.33 for the first quarter of 2021, compared with $3.52 in the fourth quarter of 2020 and $1.93 in last year's first quarter.
Diluted net operating earnings per share were $3.41 for the recent quarter, compared with $3.54 in 2020's fourth quarter and $1.95 in the first quarter of last year -- of last year.
Taxable equivalent net interest income was $985 million in the first quarter of 2021, compared with $993 million in the linked quarter.
The $100 million decline from the end of 2020 reflects a $25 million recapture of previous provisions for credit losses, combined with $75 million of net charge-offs in the first quarter.
As noted, net charge-offs for the recent quarter amounted to $75 million.