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M&T Bank Corporation Announces Third Quarter Results

BUFFALO, N.Y., Oct 11, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- M&T Bank Corporation ("M&T")(NYSE: MTB) today reported its results of operations for the quarter ended September 30, 2006.

GAAP Results of Operations. Diluted earnings per share measured in accordance with generally accepted accounting principles ("GAAP") for the third quarter of 2006 were $1.85, 13% higher than $1.64 in the corresponding period of 2005. On the same basis, net income in the recent quarter totaled $210 million, up 10% from $191 million in the third quarter of 2005. GAAP-basis net income for 2006's third quarter expressed as an annualized rate of return on average assets and average common stockholders' equity was 1.49% and 13.72%, respectively, compared with 1.39% and 12.97%, respectively, in the year-earlier quarter.

M&T's third quarter 2006 results reflect the impact of the June 30, 2006 acquisition by M&T Bank of 21 branch offices in Buffalo and Rochester, New York from Citibank, N.A., including approximately $269 million in loans and $1.0 billion in deposits. Including the impact of the amortization of core deposit intangible resulting from the transaction and acquisition-related expenses, net income and diluted earnings per share in the recent quarter were reduced by approximately $5 million and $.04, respectively, as a result of the transaction.

The recent quarter's results also reflect certain other notable events that in total had no significant effect on net income. M&T recorded a $13 million gain resulting from the accelerated recognition of a purchase accounting premium related to the call of a $200 million Federal Home Loan Bank of Atlanta ("FHLB") borrowing assumed in a previous acquisition. After applicable taxes, that gain added $8 million to net income. Also reflected in the 2006 third quarter results was a $3 million reduction of income tax expense related to the favorable settlement of refund claims originally filed by Allfirst Financial Inc. prior to its acquisition by M&T on April 1, 2003. The refunds received, consisting of income taxes and taxable interest, exceeded the amounts previously accrued for such items by $5 million (pre-tax). Finally, an $18 million tax deductible contribution was made by M&T Bank, a wholly owned subsidiary of M&T, to The M&T Charitable Foundation, a tax exempt private charitable foundation, which increased "other expense" by the amount of the contribution and, after applicable tax effect, reduced net income by $11 million. As noted above, the aggregate impact of these events had no significant effect on M&T's net income or diluted earnings per share in the third quarter of 2006.

Last year's third quarter results reflected a $29 million non-cash, other-than-temporary impairment charge related to preferred stock issuances of the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"). As a result of that impairment charge and the recognition of available income tax benefits, M&T's reported net income in 2005's third quarter was reduced by $18 million, or $.16 of diluted earnings per share.

Commenting on M&T's third quarter results, Rene F. Jones, Executive Vice President and Chief Financial Officer, noted, "Despite a less than desirable rate environment and modest loan growth, M&T posted strong results for the third quarter. Highlights of the quarter included the integration of 21 branches in upstate New York acquired at the end of the second quarter of 2006, a stable net interest margin, strong credit quality and continued success at managing operating expense levels."

Further commenting on M&T's operating expense levels, Mr. Jones noted, "Even after considering the incremental costs added to our recent quarter's expense totals associated with the acquired branches, M&T's operating expenses were held in check. In fact, after excluding the recent quarter's $18 million charitable contribution and mortgage impairment charges and recoveries, operating expenses in the third quarter decreased from the second quarter by over $4 million."

For the nine-month period ended September 30, 2006, GAAP-basis diluted earnings per share rose 11% to $5.49 from $4.95 in the similar period of 2005. On the same basis, net income for the first three quarters of 2006 totaled $626 million, up 8% from the $577 million earned in the corresponding 2005 period. GAAP-basis net income for the nine months ended September 30, 2006 expressed as an annualized rate of return on average assets and average common stockholders' equity was 1.51% and 14.01%, respectively, compared with 1.43% and 13.37%, respectively, in the similar nine-month period of 2005.

Supplemental Reporting of Non-GAAP Results of Operations. Since 1998, M&T has consistently provided supplemental reporting of its results on a "net operating" or "tangible" basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts) and expenses associated with merging acquired operations into M&T, because such expenses are considered by management to be "nonoperating" in nature. Although "net operating income" as defined by M&T is not a GAAP measure, M&T's management believes that this information helps investors understand the effect of acquisition activity in reported results. Amortization of core deposit and other intangible assets, after tax effect, totaled $12 million ($.10 per diluted share) in the recent quarter, compared with $9 million ($.08 per diluted share) in the third quarter of 2005. Similar amortization charges, after tax effect, for each of the nine-month periods ended September 30, 2006 and 2005 were $27 million or $.23 per diluted share. The after-tax effect of amortization of the core deposit intangible associated with the June 2006 branch acquisition was $5 million and of expenses related to the acquisition and integration of those branch offices was $1 million during the third quarter of 2006. Together, those items totaled $6 million, after tax effect, or $.05 per diluted share in the recent quarter. Acquisition and integration-related expenses totaled $3 million, after tax effect, or $.03 of diluted earnings per share, during the nine months ended September 30, 2006. There were no similar expenses in 2005.

Diluted net operating earnings per share, which exclude amortization of core deposit and other intangible assets and merger-related expenses, were $1.96 in the third quarter of 2006, 14% higher than $1.72 in the year-earlier quarter. Net operating income totaled $223 million and $200 million in the third quarter of 2006 and 2005, respectively. The second quarter branch acquisition was slightly accretive to the recent quarter's diluted net operating earnings per share. Expressed as an annualized rate of return on average tangible assets and average tangible stockholders' equity, net operating income was 1.67% and 30.22%, respectively, in 2006's third quarter, compared with 1.54% and 27.67% in the year-earlier quarter.

Diluted net operating earnings per share for the nine-month period ended September 30, 2006 increased 11% to $5.75 from $5.18 in the corresponding period of 2005. For the first nine months of 2006, net operating income totaled $656 million, 9% above $604 million in the year-earlier period. Expressed as an annualized rate of return on average tangible assets and average tangible equity, net operating income for the first three quarters of 2006 was 1.67% and 29.86%, respectively, compared with 1.59% and 29.04% in the first nine months of 2005.

Reconciliation of GAAP and Non-GAAP Results of Operations. A reconciliation of diluted earnings per share and net income with diluted net operating earnings per share and net operating income follows:

                                     Three months ended   Nine months ended
                                         September 30        September 30
                                        2006     2005       2006     2005
                                        ----     ----       ----     ----
                                        (in thousands, except per share)

    Diluted earnings per share      $   1.85     1.64       5.49     4.95
    Amortization of core deposit
     and other intangible assets(1)      .10      .08        .23      .23
    Merger-related expenses (1)          .01        -        .03        -
                                    --------  -------    -------  -------
    Diluted net operating earnings
     per share                      $   1.96     1.72       5.75     5.18
                                    ========  =======    =======  =======
    Net income                      $210,370  191,074    625,860  577,198
    Amortization of core deposit
     and other intangible assets(1)   12,154    8,503     27,014   26,929
    Merger-related expenses (1)          704        -      3,048        -
                                    --------  -------    -------  -------
    Net operating income            $223,228  199,577    655,922  604,127
                                    ========  =======    =======  =======
     (1) After any related tax effect


Reconciliation of Total Assets and Equity to Tangible Assets and Equity. A reconciliation of average assets and equity with average tangible assets and average tangible equity follows:

                                   Three months ended   Nine months ended
                                       September 30        September 30
                                      2006     2005       2006     2005
                                      ----     ----       ----     ----
                                                 (in millions)

    Average assets                  $56,158   54,444     55,591   53,899
    Goodwill                         (2,909)  (2,904)    (2,908)  (2,904)
    Core deposit and other
     intangible assets                 (281)    (128)      (167)    (142)
    Deferred taxes                       36       49         39       55
                                    -------   ------     ------   ------
    Average tangible assets         $53,004   51,461     52,555   50,908
                                    =======   ======     ======   ======

    Average equity                  $ 6,085    5,845      5,973    5,772
    Goodwill                         (2,909)  (2,904)    (2,908)  (2,904)
    Core deposit and other
     intangible assets                 (281)    (128)      (167)    (142)
    Deferred taxes                       36       49         39       55
                                    -------   ------     ------   ------
    Average tangible equity         $ 2,931    2,862      2,937    2,781
                                    =======   ======     ======   ======

Taxable-equivalent Net Interest Income. Taxable-equivalent net interest income was $462 million in the third quarter of 2006, up slightly from $460 million in the year-earlier quarter. Net interest margin, or taxable-equivalent net interest income expressed as an annualized percentage of average earning assets, was 3.68% in 2006's third quarter, compared with 3.76% in the corresponding period of 2005. Such decline reflects the continuing impact of higher short-term interest rates, which resulted in the rates paid on interest-bearing liabilities rising more rapidly than the yield on many earning assets. However, reflecting a more stable short-term interest rate environment in the recent quarter, the net interest margin in 2006's third quarter was 2 basis points (hundredths of one percent) higher than in 2006's second quarter. Largely offsetting the impact of a lower net interest margin in the recent quarter as compared with the year-earlier quarter was growth in average loans and leases, which aggregated $41.7 billion in 2006's third quarter, up 5% from $39.9 billion in the third quarter of 2005. Such growth was attributable to increases in average outstanding balances of 9% in commercial loans, 6% in commercial real estate loans and 18% in residential real estate loans, while average consumer loans declined 7% from the third quarter of 2005. The major factor in that decline was a drop in automobile loans and leases outstanding resulting from M&T's decision to allow such loans to decline rather than matching interest rates that M&T believes are inadequate, but that are being offered by competitors.

Provision for Credit Losses/Asset Quality. The provision for credit losses totaled $17 million in the recent quarter, down from $22 million in the third quarter of 2005. Net charge-offs of loans during the third quarter of 2006 and 2005 were also $17 million and $22 million, respectively. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .16% in the recently completed quarter, compared with .21% in the corresponding 2005 period.

Loans classified as nonperforming totaled $180 million, or .43% of total loans at the recent quarter-end, up from $166 million or .41% at September 30, 2005 and $156 million at each of December 31, 2005 and June 30, 2006, or .39% and .38% of total loans at those respective dates. The increase from the prior periods was due to the recent quarter addition of approximately $26 million of loans related to a single automobile dealer relationship. Loans past due 90 days or more and accruing interest totaled $112 million at September 30, 2006, compared with $131 million a year earlier. Included in these past due but accruing amounts were loans guaranteed by government-related entities of $76 million and $107 million, respectively. Assets taken in foreclosure of defaulted loans were $14 million at September 30, 2006, compared with $9 million a year earlier.

Allowance for Credit Losses. The allowance for credit losses totaled $646 million, or 1.54% of total loans, at September 30, 2006, compared with $638 million, or 1.58%, a year earlier and at December 31, 2005. The ratio of M&T's allowance for credit losses to nonperforming loans was 360%, 383% and 408% at September 30, 2006, September 30, 2005 and December 31, 2005, respectively.

Noninterest Income and Expense. Noninterest income in the recent quarter totaled $274 million, up 24% from $221 million in the year-earlier quarter. The increase reflects the previously discussed $13 million gain recognized in the recent quarter from the accelerated recognition of a purchase accounting premium related to the call of an FHLB borrowing assumed in an acquisition and the $29 million non-cash accounting charge recognized during 2005's third quarter for the other-than-temporary decline in value of the preferred stock of FNMA and FHLMC.

Noninterest expense in the third quarter of 2006 totaled $409 million, compared with $368 million in 2005's third quarter. Included in such amounts are expenses considered to be nonoperating in nature consisting of amortization of core deposit and other intangible assets of $20 million in 2006 and $14 million in 2005 and merger-related expenses of $1 million in 2006. Exclusive of those nonoperating expenses, noninterest operating expenses were $388 million in the recent quarter, compared with $354 million in the third quarter of 2005. The higher operating expenses in the recent quarter reflect the $18 million charitable contribution made in the quarter and a $5 million addition to the valuation allowance for the impairment of capitalized mortgage servicing rights. The addition to the valuation allowance reflects a decrease in the value of capitalized mortgage servicing rights resulting from lower residential mortgage loan interest rates at September 30, 2006 as compared with a quarter earlier. A $6 million partial reversal of the valuation allowance for the impairment of capitalized mortgage servicing rights was recorded during the third quarter of 2005, largely the result of the higher interest rate environment that existed at the end of that quarter as compared with June 30, 2005.

The efficiency ratio, or noninterest operating expenses divided by the sum of taxable-equivalent net interest income and noninterest income (exclusive of gains and losses from bank investment securities), measures the relationship of operating expenses to revenues. M&T's efficiency ratio was 52.8% in the third quarter of 2006, compared with 50.0% in the year-earlier period. Were the $18 million charitable contribution and the $13 million gain on the called borrowing with the FHLB excluded from the computation, the efficiency ratio in the recent quarter would have been 51.2%.

Balance Sheet. M&T had total assets of $56.4 billion at September 30, 2006, up from $54.8 billion at September 30, 2005. Loans and leases, net of unearned discount, totaled $42.1 billion at September 30, 2006, compared with $40.3 billion a year earlier. Deposits aggregated $39.1 billion at the recent quarter-end, up from $37.2 billion at September 30, 2005. Total stockholders' equity was $6.2 billion at September 30, 2006, representing 10.91% of total assets, compared with $5.8 billion or 10.66% a year earlier. Common stockholders' equity per share was $55.58 and $51.81 at September 30, 2006 and 2005, respectively. Tangible equity per common share was $27.15 at September 30, 2006, compared with $25.42 at September 30, 2005. In the calculation of tangible equity per common share, stockholders' equity is reduced by the carrying values of goodwill and core deposit and other intangible assets, net of applicable deferred tax balances, which aggregated $3.1 billion and $3.0 billion at September 30, 2006 and 2005, respectively.

In November 2005, M&T announced that it had been authorized by its Board of Directors to purchase up to 5,000,000 shares of its common stock. During the recent quarter, 762,000 shares of common stock were repurchased by M&T pursuant to such plan at an average cost per share of $120.44. Through September 30, 2006, M&T had repurchased 2,681,400 shares of its common stock pursuant to such plan at an average cost of $113.31 per share.

Conference Call. Investors will have an opportunity to listen to M&T's conference call to discuss third quarter financial results today at 10:00 a.m. Eastern Daylight Saving Time. Those wishing to participate in the call may dial 877-780-2276. International participants, using any applicable international calling codes, may dial 973-582-2700. Callers should reference M&T Bank Corporation or conference ID #7900365.

The conference call will also be webcast live on M&T's website at http://ir.mandtbank.com/conference.cfm. A replay of the call will be available until Thursday, October 12, 2006 by calling 877-519-4471, or 973-341-3080 for international participants, and by making reference to ID #7900365. The event will also be archived and available by 3:00 p.m. today on M&T's website at http://ir.mandtbank.com/conference.cfm.

Forward-Looking Statements. This news release contains forward-looking statements that are based on current expectations, estimates and projections about M&T's business, management's beliefs and assumptions made by management. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Future Factors") which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

Future Factors include changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations and credit losses; sources of liquidity; common shares outstanding; common stock price volatility; fair value of and number of stock-based compensation awards to be issued in future periods; legislation affecting the financial services industry as a whole, and M&T and its subsidiaries individually or collectively; regulatory supervision and oversight, including monetary policy and required capital levels; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies; increasing price and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of pending and future litigation and governmental proceedings; continued availability of financing; financial resources in the amounts, at the times and on the terms required to support M&T and its subsidiaries' future businesses; and material differences in the actual financial results of merger and acquisition activities compared with M&T's initial expectations, including the full realization of anticipated cost savings and revenue enhancements.

These are representative of the Future Factors that could affect the outcome of the forward-looking statements. In addition, such statements could be affected by general industry and market conditions and growth rates, general economic and political conditions, either nationally or in the states in which M&T and its subsidiaries do business, including interest rate and currency exchange rate fluctuations, changes and trends in the securities markets, and other Future Factors.


    M&T BANK CORPORATION
    Financial Highlights

                         Three months ended         Nine months ended
                            September 30              September 30
                        ------------------         ------------------
    Amounts in thousands,
     except per share      2006      2005  Change    2006      2005   Change
                        --------   ------- ------  --------   ------- ------
    Performance
    -----------
    Net income          $210,370   191,074   10%   $625,860   577,198   8%

    Per common share:
      Basic earnings       $1.89      1.68   13%      $5.62      5.06  11%
      Diluted earnings      1.85      1.64   13        5.49      4.95  11
      Cash dividends       $ .60       .45   33       $1.65      1.30  27

    Common shares
     outstanding:
      Average
       - diluted (1)     113,897   116,200   -2%    114,069   116,598  -2%
      Period end (2)     110,678   112,848   -2     110,678   112,848  -2

    Return on
     (annualized):
      Average total
       assets               1.49%     1.39%            1.51%     1.43%
      Average common
       stockholders'
       equity              13.72%    12.97%           14.01%    13.37%

    Taxable-equivalent
     net interest
     income             $462,356   459,553    1% $1,365,367 1,357,493   1%

    Yield on average
     earning assets         6.83%     5.94%            6.64%     5.72%
    Cost of
     interest-bearing
     liabilities            3.77%     2.64%            3.54%     2.35%
    Net interest spread     3.06%     3.30%            3.10%     3.37%
    Contribution of
     interest-free funds     .62%      .46%             .59%      .42%
    Net interest margin     3.68%     3.76%            3.69%     3.79%

    Net charge-offs to
     average total net
     loans (annualized)      .16%      .21%             .14%      .18%

    Net operating
     results (3)
    -------------
    Net operating
     income             $223,228   199,577   12% $  655,922   604,127   9%
    Diluted net
     operating earnings
     per common share       1.96      1.72   14        5.75      5.18  11
    Return on
     (annualized):
      Average tangible
       assets               1.67%     1.54%            1.67%     1.59%
      Average tangible
       common equity       30.22%    27.67%           29.86%    29.04%
    Efficiency ratio       52.76%    49.97%           51.95%    51.38%


                                               At September 30
                                          -------------------------
    Loan quality                            2006             2005     Change
    ------------                          --------          -------   ------
    Nonaccrual loans                      $162,933          154,768       5%
    Renegotiated loans                      16,579           11,697      42
                                          --------          -------
      Total nonperforming loans           $179,512          166,465       8%
                                          ========          =======
    Accruing loans past due 90 days or
     more                                 $112,090          130,944     -14%

    Nonperforming loans to total net loans     .43%             .41%
    Allowance for credit losses to total
     net loans                                1.54%            1.58%


    (1)  Includes common stock equivalents.
    (2)  Includes common stock issuable under deferred compensation plans.
    (3)  Excludes amortization and balances related to goodwill and core
         deposit and other intangible assets and merger-related expenses
         which, except in the calculation of the efficiency ratio, are net of
         applicable income tax effects.  A reconciliation of net income and
         net operating income is included herein.



    M&T BANK CORPORATION
    Condensed Consolidated Statement of Income

                         Three months ended         Nine months ended
                            September 30                September 30
                         ------------------        ---------------------
    Dollars in thousands    2006      2005  Change    2006       2005   Change
                         --------   ------- ------ ----------  --------- -----
    Interest income      $852,836   720,754   18%  $2,443,019  2,035,593   20%
    Interest expense      395,652   265,576   49    1,092,196    690,858   58
                         --------   -------        ----------  ---------
    Net interest income   457,184   455,178    -    1,350,823  1,344,735    -

    Provision for
     credit losses         17,000    22,000  -23       52,000     65,000  -20
                         --------   -------        ----------  ---------
    Net interest income
     after provision
     for credit losses    440,184   433,178    2    1,298,823  1,279,735    1

    Other income
      Mortgage banking
       revenues            36,806    35,345    4      112,882    100,045   13
      Service charges on
       deposit accounts   100,314    94,878    6      284,739    276,200    3
      Trust income         35,224    33,748    4      103,777    100,016    4
      Brokerage services
       income              14,794    13,685    8       43,999     42,045    5
      Trading account and
       foreign exchange
       gains                5,082     6,326  -20       17,756     17,152    4
      Gain (loss) on bank
       investment
       securities           1,133   (27,995)   -        1,427    (27,749)   -
      Other revenues from
       operations          80,549    65,507   23      224,855    193,405   16
                         --------   -------        ----------  ---------
          Total other
           income         273,902   221,494   24      789,435    701,114   13

    Other expense
      Salaries and
       employee benefits  218,980   207,705    5      660,224    618,922    7
      Equipment and net
       occupancy           41,683    43,033   -3      127,612    129,647   -2
      Printing, postage
       and supplies         8,294     8,684   -4       24,933     25,926   -4
      Amortization of core
       deposit and other
       intangible assets   19,936    13,926   43       44,321     44,102    -
      Other costs of
       operations         120,048    94,902   26      310,851    297,431    5
                         --------   -------        ----------  ---------
          Total other
           expense        408,941   368,250   11    1,167,941  1,116,028    5

    Income before
     income taxes         305,145   286,422    7      920,317    864,821    6

    Applicable income
     taxes                 94,775    95,348   -1      294,457    287,623    2
                         --------   -------        ----------  ---------
    Net income           $210,370   191,074   10%  $  625,860    577,198    8%
                         ========   =======        ==========  =========



    M&T BANK CORPORATION
    Condensed Consolidated Balance Sheet

                                                   September 30
                                           ------------------------
    Dollars in thousands                        2006         2005     Change
                                           -----------   ----------
    ASSETS

    Cash and due from banks                $ 1,336,737    1,401,790     -5%

    Interest-bearing deposits at banks          10,425       10,491     -1

    Federal funds sold and agreements
      to resell securities                     123,245       20,690    496

    Trading account assets                     176,450      186,744     -6

    Investment securities                    7,626,300    8,230,447     -7

    Loans and leases, net of unearned
     discount                               42,098,271   40,334,607      4
      Less: allowance for credit losses        646,319      637,819      1
                                           -----------   ----------
      Net loans and leases                  41,451,952   39,696,788      4

    Goodwill                                 2,908,849    2,904,081      -

    Core deposit and other intangible
     assets                                    270,910      121,405    123

    Other assets                             2,468,608    2,268,913      9
                                           -----------   ----------
      Total assets                         $56,373,476   54,841,349      3%
                                           ===========   ==========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Noninterest-bearing deposits at U.S.
     offices                               $ 7,754,061    8,067,788     -4%

    Other deposits at U.S. offices          27,348,917   24,948,861     10

    Deposits at foreign office               3,975,811    4,182,366     -5
                                           -----------   ----------
      Total deposits                        39,078,789   37,199,015      5

    Short-term borrowings                    4,418,356    4,198,206      5

    Accrued interest and other
     liabilities                             1,001,600      742,442     35

    Long-term borrowings                     5,723,488    6,854,663    -17
                                           -----------   ----------
      Total liabilities                     50,222,233   48,994,326      3

    Stockholders' equity (1)                 6,151,243    5,847,023      5
                                           -----------   ----------
      Total liabilities and stockholders'
       equity                              $56,373,476   54,841,349      3%
                                           ===========   ==========

    (1)  Reflects accumulated other comprehensive loss, net of applicable
         income tax effect, of $86.9 million at September 30, 2006 and
         $45.3 million at September 30, 2005.



    M&T BANK CORPORATION
    Condensed Consolidated Average Balance Sheet
     and Annualized Taxable-equivalent Rates

                                  Three months ended
                                     September 30
                            -------------------------------
    Dollars in millions
                               2006              2005         Change in
                           ------------       ------------
                         Balance     Rate   Balance     Rate   balance
                         -------     ----   -------     ----   ------
    ASSETS

    Interest-bearing
     deposits at banks   $    13     3.67%       11     1.77%     22%

    Federal funds sold and
     agreements to resell
     securities              136     7.23        24     3.79     476

    Trading account assets    92     2.97        94     2.16      -3

    Investment securities  7,898     4.82     8,439     4.41      -6

    Loans and leases, net
     of unearned discount
      Commercial,
       financial, etc.    11,436     7.31    10,497     5.71       9
      Real estate -
       commercial         15,256     7.43    14,351     6.86       6
      Real estate -
       consumer            5,053     6.48     4,268     5.99      18
      Consumer             9,965     7.29    10,763     6.25      -7
                          ------             ------
        Total loans
         and leases, net  41,710     7.22    39,879     6.27       5
                          ------             ------
      Total earning
       assets             49,849     6.83    48,447     5.94       3

    Goodwill               2,909              2,904                -

    Core deposit and
     other intangible
     assets                  281                128              119

    Other assets           3,119              2,965                5
                          ------             ------
      Total assets       $56,158             54,444                3%
                          ======             ======

    LIABILITIES AND
     STOCKHOLDERS' EQUITY

    Interest-bearing
     deposits
      NOW accounts       $   434      .88       400      .60       8%
      Savings deposits    14,463     1.42    14,822     1.00      -2
      Time deposits       13,016     4.65     9,540     3.30      36
      Deposits at
       foreign office      3,674     5.21     4,005     3.42      -8
                          ------             ------
        Total
         interest-
         bearing
         deposits         31,587     3.19    28,767     2.09      10
                          ------             ------
    Short-term borrowings  4,441     5.31     4,779     3.50      -7
    Long-term borrowings   5,660     5.79     6,373     4.46     -11
                          ------             ------
    Total interest-
     bearing liabilities  41,688     3.77    39,919     2.64       4

    Noninterest-
     bearing deposits      7,571              7,941               -5

    Other liabilities        814                739               10
                          ------             ------
      Total liabilities   50,073             48,599                3

    Stockholders' equity   6,085              5,845                4
                          ------             ------
      Total liabilities
       and stockholders'
       equity            $56,158             54,444                3%
                          ======             ======
    Net interest
     spread                          3.06               3.30
    Contribution
     of interest-free
     funds                            .62                .46
    Net interest margin              3.68%              3.76%



    M&T BANK CORPORATION
    Condensed Consolidated Average Balance Sheet
     and Annualized Taxable-equivalent Rates

                                  Nine months ended
                                     September 30
                            -------------------------------
    Dollars in millions
                               2006              2005         Change in
                           ------------       ------------
                         Balance     Rate   Balance     Rate   balance
                         -------     ----   -------     ----   ------
    ASSETS

    Interest-bearing
     deposits at banks   $    13     3.17%       10     1.48%     25%

    Federal funds sold and
     agreements to resell
     securities               66     6.58        24     3.34     178

    Trading account assets    97     2.89        74     1.63      31

    Investment securities  8,197     4.78     8,535     4.37      -4

    Loans and leases, net
     of unearned discount
      Commercial,
       financial, etc.    11,250     7.01    10,360     5.43       9
      Real estate -
       commercial         14,962     7.24    14,315     6.44       5
      Real estate -
       consumer            4,839     6.32     3,672     5.98      32
      Consumer            10,031     7.02    10,887     6.03      -8
                          ------             ------
        Total loans
         and leases, net  41,082     7.03    39,234     6.02       5
                          ------             ------
      Total earning
       assets             49,455     6.64     47,877    5.72       3

    Goodwill               2,908              2,904                -

    Core deposit and
     other intangible
     assets                  167                142               17

    Other assets           3,061              2,976                3
                          ------             ------
      Total assets       $55,591             53,899                3%
                          ======             ======

    LIABILITIES AND
     STOCKHOLDERS'EQUITY

    Interest-bearing
     deposits
      NOW accounts       $   427      .75       393      .50       9%
      Savings deposits    14,351     1.33    15,021      .88      -4
      Time deposits       12,532     4.37     8,531     3.01      47
      Deposits at
       foreign office      3,553     4.85     4,018     2.93     -12
                          ------             ------
        Total
         interest-
         bearing
         deposits         30,863     2.96    27,963     1.82      10
                          ------             ------
    Short-term borrowings  4,441     4.93     4,979     2.98     -11
    Long-term borrowings   5,959     5.49     6,346     4.21      -6
                          ------             ------
    Total interest-
     bearing liabilities  41,263     3.54    39,288     2.35       5

    Noninterest-
     bearing deposits      7,530              8,121               -7

    Other liabilities        825                718               15
                          ------             ------
      Total liabilities   49,618             48,127                3

    Stockholders' equity   5,973              5,772                3
                          ------             ------
      Total liabilities
       and stockholders'
       equity            $55,591             53,899                3%
                          ======             ======
    Net interest
     spread                          3.10               3.37
    Contribution
     of interest-free
     funds                            .59                .42
    Net interest margin              3.69%              3.79%


    INVESTOR CONTACT:  Donald J. MacLeod
                       (716) 842-5138

    MEDIA CONTACT:     C. Michael Zabel
                       (716) 842-5385

SOURCE M&T Bank Corporation

Investors: Donald J. MacLeod, +1-716-842-5138, or Media: C. Michael Zabel,
+1-716-842-5385
http://www.mandtbank.com

Copyright (C) 2006 PR Newswire. All rights reserved

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