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M&T Bank Corporation Announces Third Quarter Results

BUFFALO, N.Y., Oct 21, 2008 /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, 2008.

GAAP Results of Operations. Diluted earnings per share measured in accordance with generally accepted accounting principles ("GAAP") for the third quarter of 2008 were $.82. On the same basis, net income in the recent quarter totaled $91 million. GAAP-basis net income for 2008's third quarter expressed as an annualized rate of return on average assets and average common stockholders' equity was .56% and 5.66%, respectively.

As previously disclosed in M&T's Form 8-K filed with the Securities and Exchange Commission on September 12, 2008, a non-cash charge for other-than-temporary impairment of the value of preferred stock holdings of the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") was recognized in the recent quarter. That charge reduced net income and diluted earnings per share by $97 million and $.88, respectively.

Rene F. Jones, Executive Vice President and Chief Financial Officer, commented, "Our third quarter results are just what you would expect from M&T, steady performance during times of economic turmoil. We continued to experience growth in our core deposits, which increased for the fourth consecutive quarter. That growth was particularly strong during September, when markets were significantly disrupted. Our interest margin remained stable as compared with the first two quarters of 2008. Nonperforming loans trended higher during the recent quarter, even though net charge-offs of loans were down slightly. Both remain at manageable levels. Most notable is the continued improvement of our regulatory capital ratios, which reflects the strength of our operating model and allows us to continue to invest and lend in the communities we serve."

In September, M&T resolved certain tax issues related to its activities in various jurisdictions that resulted in a reduction of income tax expense of $40 million in the recent quarter, thereby adding $.36 to diluted earnings per share.

Diluted earnings per share were $1.83 and $1.44 in the third quarter of 2007 and the second quarter of 2008, respectively. Net income for those respective quarters was $199 million and $160 million.

Supplemental Reporting of Non-GAAP Results of Operations. M&T consistently provides 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, since 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 $10 million ($.09 per diluted share) in each of the quarters ended September 30, 2008, June 30, 2008 and September 30, 2007. There were no merger and integration-related expenses incurred during those quarters.

Diluted net operating earnings per share and net operating income, which exclude amortization of core deposit and other intangible assets and merger-related expenses, were $.91 and $101 million, respectively, in the third quarter of 2008. Expressed as an annualized rate of return on average tangible assets and average tangible stockholders' equity, that net operating income was .65% and 13.17%, respectively.

Diluted net operating earnings per share totaled $1.92 in 2007's third quarter and $1.53 in the second quarter of 2008. Net operating income was $209 million and $170 million in those respective quarters.

Taxable-equivalent Net Interest Income. Taxable-equivalent net interest income totaled $493 million in the third quarter of 2008, 4% higher than $473 million in the year-earlier period. Growth in average loans and leases, which rose 11% to $48.5 billion in 2008's third quarter from $43.8 billion in the third quarter of 2007, was the most significant contributor to the improvement. Such growth was attributable to increases in average outstanding balances in commercial loans, commercial real estate loans and consumer loans, and includes the impact of loans added in the fourth quarter of 2007 as a result of acquisitions. Also noteworthy was a 7% increase in average deposits, including a 12% rise in core deposits, from the third quarter of 2007 to the recent quarter. The growth in deposits also reflects the impact of the late-2007 acquisitions. The favorable effect of higher loans and deposits on taxable-equivalent net interest income was partially offset by a year-over-year narrowing of the net interest margin, or taxable-equivalent net interest income expressed as an annualized percentage of average earning assets, which declined 26 basis points (hundredths of one percent) to 3.39% in 2008's third quarter from 3.65% in the corresponding period of 2007. Nevertheless, M&T's net interest margin in the recent quarter was unchanged from 2008's second quarter, when taxable-equivalent net interest income was $492 million.

Provision for Credit Losses/Asset Quality. The provision for credit losses was $101 million in the third quarter of 2008 and exceeded net charge-offs by $7 million. That was comparable to the $100 million provision in the second quarter of 2008, but was up from $34 million in the third quarter of 2007. Net charge-offs of loans totaled $94 million during the recent quarter, compared with $99 million in 2008's second quarter and $22 million in the third quarter of 2007. Contributing to the increase in net charge-offs as compared with the year-earlier quarter were $33 million recorded in the recent quarter related to loans to builders and developers of residential real estate. There were $38 million of such loans charged off in the second quarter of 2008, while in 2007's third quarter there were no such loans charged off. Net charge-offs of loans collateralized by first or second liens on residential real estate totaled $23 million during the recent quarter, compared with $21 million and $8 million in the quarters ended June 30, 2008 and September 30, 2007, respectively. Alt-A loans included in those net charge-offs were $15 million in each of the quarters ended September 30, 2008 and June 30, 2008, and $5 million in the quarter ended September 30, 2007. Indirect automobile loan net charge-offs were $13 million in the recent quarter, compared with $11 million and $7 million in the second quarter of 2008 and the third 2007 quarter, respectively. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .77%, .81% and .20% in the quarters ended September 30, 2008, June 30, 2008 and September 30, 2007, respectively.

Loans classified as nonperforming rose to $710 million, or 1.46% of total loans at September 30, 2008 from $371 million or .83% a year earlier, $447 million or .93% at December 31, 2007 and $587 million or 1.20% at June 30, 2008. Factors contributing to the rise in nonperforming loans from September 30, 2007 to September 30, 2008 were a $156 million increase in residential real estate loans and a $100 million increase in loans to builders and developers of residential real estate. The higher level of nonperforming residential real estate loans reflects a December 2007 change in accounting procedure whereby residential real estate loans previously classified as nonaccrual when payments were 180 days past due now stop accruing interest when payments become 90 days delinquent. The acceleration of the classification of such loans as nonaccrual increased nonperforming loans at September 30, 2008 and December 31, 2007 by $72 million and $84 million, respectively. Contributing to the increase in nonperforming loans from June 30, 2008 were the net additions of $64 million of commercial real estate loans (including $19 million of loans to residential real estate builders and developers) and $42 million of residential real estate loans.

Loans past due 90 days or more and accruing interest were $96 million at the end of the recent quarter, compared with $140 million a year earlier. Included in these past due but accruing amounts were loans guaranteed by government-related entities of $90 million and $70 million at September 30, 2008 and 2007, respectively. Assets taken in foreclosure of defaulted loans were $76 million at September 30, 2008, up from $22 million at September 30, 2007. The rise in such assets resulted from higher residential real estate loan defaults and recent quarter additions from residential real estate development projects.

Allowance for Credit Losses. The allowance for credit losses was $781 million, or 1.60% of total loans, at September 30, 2008, up from $680 million, or 1.52%, a year earlier, and $759 million, or 1.58%, at December 31, 2007. The increase in the allowance as a percentage of loans reflects the impact of lower valuations of residential real estate and higher levels of borrower delinquencies. Reflecting the value of collateral securing M&T's nonperforming loans, the ratio of the allowance for credit losses to nonperforming loans was 110%, 183% and 170% at September 30, 2008, September 30, 2007, and December 31, 2007, respectively.

Noninterest Income and Expense. Noninterest income in the third quarter of 2008 aggregated $114 million, compared with $253 million in the year-earlier quarter. The recent quarter's total reflects the non-cash, other-than-temporary impairment charge of $153 million (pre-tax) related to M&T's holdings of preferred stock of Fannie Mae and Freddie Mac. Excluding that charge, other income in 2008's third quarter was $266 million, or 5% higher than in the year-earlier quarter. That improvement was largely attributable to higher mortgage banking revenues, service charges on deposit accounts and credit-related fees. Reflected in other income during the third quarters of 2008 and 2007 were reductions of $14 million and $11 million, respectively, resulting from M&T's pro-rata portion of the operating results of Bayview Lending Group, LLC ("BLG"), a privately-held commercial mortgage lender in which M&T invested on February 5, 2007. Including expenses associated with M&T's investment in BLG, most notably interest expense, that investment reduced M&T's net income by approximately $11 million (after tax effect) in the third quarter of 2008, while a similar reduction amounted to $9 million in the third quarter of 2007. BLG's operating results reflect losses incurred on sales of loans due to significant disruptions in the commercial mortgage-backed securities market. In response to the illiquidity in the marketplace, BLG has reduced its originations activities, scaled back its workforce and made use of its contingent liquidity sources.

Noninterest expense in the third quarter of 2008 totaled $435 million, compared with $391 million in the third quarter of 2007. Included in such amounts are expenses considered to be nonoperating in nature consisting of amortization of core deposit and other intangible assets of $16 million in each of the third quarters of 2008 and 2007. Exclusive of those nonoperating expenses, noninterest operating expenses were $419 million in the recent quarter, compared with $375 million in the third quarter of 2007. The higher level of operating expenses in the recent quarter as compared with the year-earlier period was due largely to increased expenses for salaries, occupancy, professional services, advertising and promotion, and foreclosed residential real estate properties.

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 55.2% in the third quarter of 2008, compared with 51.6% in the year-earlier period.

Balance Sheet. M&T had total assets of $65.2 billion at September 30, 2008, up from $60.0 billion at September 30, 2007. Loans and leases, net of unearned discount, were $48.7 billion at September 30, 2008, compared with $44.8 billion a year earlier. Deposits aggregated $42.5 billion at the recent quarter-end, compared with $38.5 billion at September 30, 2007. Total stockholders' equity was $6.4 billion and $6.2 billion at September 30, 2008 and 2007, representing 9.83% and 10.40%, respectively, of total assets. Common stockholders' equity per share was $58.17 and $58.40 at September 30, 2008 and 2007, respectively. Tangible equity per common share was $27.67 at September 30, 2008, compared with $29.48 at September 30, 2007. 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 $3.4 billion and $3.1 billion at September 30, 2008 and 2007, respectively.

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 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 #63006736. The conference call will 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 23, 2008 by calling 800-642-1687, or 706-645-9291 for international participants, and by making reference to ID #63006736. The event will also be archived and available by 7:00 p.m. today on M&T's website at http://ir.mandtbank.com/conference.cfm.

M&T is a bank holding company whose banking subsidiaries, M&T Bank and M&T Bank, National Association, operate branch offices in New York, Pennsylvania, Maryland, Virginia, West Virginia, Delaware, New Jersey and the District of Columbia.

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, credit losses and market values on loans, other assets and collateral securing loans; 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, including tax legislation; 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, including tax-related examinations and other matters; 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, acquisition and investment 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
                                         September 30
    Amounts in thousands,            --------------------
    except per share                   2008        2007     Change
                                     --------    --------   ------

    Performance
    -----------

    Net income                    $    91,185     199,187     -54 %

    Per common share:
      Basic earnings              $       .83        1.86     -55 %
      Diluted earnings                    .82        1.83     -55
      Cash dividends              $       .70         .70       -

    Common shares outstanding:
      Average - diluted (1)           110,807     108,957       2 %
      Period end (2)                  110,313     106,807       3

    Return on (annualized):
      Average total assets                .56 %      1.37 %
      Average common
       stockholders' equity              5.66 %     12.78 %

    Taxable-equivalent
     net interest income          $   493,499     472,800       4 %

    Yield on average earning
     assets                              5.54 %      6.94 %
    Cost of interest-bearing
     liabilities                         2.50 %      3.88 %
    Net interest spread                  3.04 %      3.06 %
    Contribution of
     interest-free funds                  .35 %       .59 %
    Net interest margin                  3.39 %      3.65 %

    Net charge-offs to average
     total net loans (annualized)         .77 %       .20 %

    Net operating results (3)
    -------------------------

    Net operating income          $   100,809     208,749     -52 %
    Diluted net operating
     earnings per common share            .91        1.92     -53
    Return on (annualized):
      Average tangible assets             .65 %      1.51 %
      Average tangible common
       equity                           13.17 %     26.80 %
    Efficiency ratio                    55.16 %     51.64 %


                                       At September 30
                                     --------------------
    Loan quality                       2008        2007     Change
    ------------                     --------    --------   ------

    Nonaccrual loans              $   688,214     356,438      93 %
    Renegotiated loans                 21,804      14,953      46
                                     --------    --------
      Total nonperforming
       loans                      $   710,018     371,391      91 %
                                     ========    ========

    Accruing loans past due 90
     days or more                 $    96,206     140,313     -31 %

    Nonperforming loans to
     total net loans                     1.46 %      .83 %
    Allowance for credit losses
     to total net loans                  1.60 %     1.52 %


                                       Nine months ended
                                         September 30
    Amounts in thousands,            --------------------
    except per share                   2008        2007     Change
                                     --------    --------   ------
    Performance
    -----------

    Net income                    $   453,646     589,329     -23 %

    Per common share:
      Basic earnings              $      4.12        5.45     -24 %
      Diluted earnings                   4.09        5.34     -23
      Cash dividends              $      2.10        1.90      11

    Common shares outstanding:
      Average - diluted (1)           111,000     110,342       1 %
      Period end (2)                  110,313     106,807       3

    Return on (annualized):
      Average total assets                .93 %      1.37 %
      Average common
       stockholders' equity              9.37 %     12.69 %

    Taxable-equivalent
     net interest income          $ 1,470,615   1,395,234       5 %

    Yield on average earning
     assets                              5.80 %      6.94 %
    Cost of interest-bearing
     liabilities                         2.80 %      3.88 %
    Net interest spread                  3.00 %      3.06 %
    Contribution of
     interest-free funds                  .38 %       .60 %
    Net interest margin                  3.38 %      3.66 %

    Net charge-offs to average
     total net loans (annualized)         .65 %       .19 %

    Net operating results (3)
    -------------------------

    Net operating income          $   486,767     620,101     -22 %
    Diluted net operating
     earnings per common share           4.39        5.62     -22
    Return on (annualized):
      Average tangible assets            1.05 %      1.52 %
      Average tangible common
       equity                           21.10 %     26.74 %
    Efficiency ratio                    53.47 %     52.24 %


    ----------------------------------------------------------------------
    (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.



    M&T BANK CORPORATION
    Condensed Consolidated Statement of Income

                                                 Three months ended
                                                    September 30
                                              -----------------------
    Dollars in thousands                           2008       2007     Change
                                              -----------   ---------  ------

    Interest income                          $   801,354     893,014    -10 %
    Interest expense                             313,115     425,326    -26
                                              -----------   ---------

    Net interest income                          488,239     467,688      4

    Provision for credit losses                  101,000      34,000    197
                                              -----------   ---------

    Net interest income after provision
     for credit losses                           387,239     433,688    -11

    Other income
      Mortgage banking revenues                   38,002      31,643     20
      Service charges on deposit accounts        110,371     104,402      6
      Trust income                                38,789      38,168      2
      Brokerage services income                   16,218      14,978      8
      Trading account and foreign exchange
       gains                                       4,278       7,279    -41
      Gain (loss) on bank investment
       securities                               (152,273)       (138)     -
      Equity in earnings of Bayview Lending
       Group, LLC                                (14,480)    (11,294)     -
      Other revenues from operations              72,812      67,861      7
                                              -----------   ---------
        Total other income                       113,717     252,899    -55

    Other expense
      Salaries and employee benefits             236,678     220,750      7
      Equipment and net occupancy                 47,033      42,091     12
      Printing, postage and supplies               8,443       7,996      6
      Amortization of core deposit and
       other intangible assets                    15,840      15,702      1
      Other costs of operations                  126,769     103,989     22
                                              -----------   ---------
        Total other expense                      434,763     390,528     11

    Income before income taxes                    66,193     296,059    -78

    Applicable income taxes (benefit)            (24,992)     96,872      -
                                              -----------   ---------

    Net income                               $    91,185     199,187    -54 %
                                              ===========   =========


                                                 Nine months ended
                                                    September 30
                                              -----------------------
    Dollars in thousands                           2008       2007     Change
                                              -----------  ----------  ------

    Interest income                          $ 2,503,090   2,632,239     -5 %
    Interest expense                           1,049,369   1,252,212    -16
                                              -----------  ----------

    Net interest income                        1,453,721   1,380,027      5

    Provision for credit losses                  261,000      91,000    187
                                              -----------  ----------

    Net interest income after provision
     for credit losses                         1,192,721   1,289,027     -7

    Other income
      Mortgage banking revenues                  116,291      81,062     43
      Service charges on deposit accounts        324,165     303,615      7
      Trust income                               119,519     112,691      6
      Brokerage services income                   48,902      46,844      4
      Trading account and foreign exchange
       gains                                      15,627      20,465    -24
      Gain (loss) on bank investment
       securities                               (124,247)      1,185      -
      Equity in earnings of Bayview Lending
       Group, LLC                                (28,766)     (5,594)     -
      Other revenues from operations             226,071     212,231      7
                                              -----------  ----------
        Total other income                       697,562     772,499    -10

    Other expense
      Salaries and employee benefits             724,676     682,204      6
      Equipment and net occupancy                141,050     126,036     12
      Printing, postage and supplies              27,459      25,886      6
      Amortization of core deposit and
       other intangible assets                    50,938      50,515      1
      Other costs of operations                  336,054     297,575     13
                                              -----------  ----------
        Total other expense                    1,280,177   1,182,216      8

    Income before income taxes                   610,106     879,310    -31

    Applicable income taxes (benefit)            156,460     289,981    -46
                                              -----------  ----------

    Net income                                  $453,646     589,329    -23 %
                                              ===========  ==========




    M&T BANK CORPORATION
    Condensed Consolidated Balance Sheet

                                                 September 30
                                          ------------------------
    Dollars in thousands                       2008         2007    Change
                                          -----------  -----------  ------

    ASSETS

    Cash and due from banks              $  1,368,917    1,295,377     6 %

    Interest-bearing deposits at banks         13,604        8,503    60

    Federal funds sold and agreements
     to resell securities                     108,600      399,997   -73

    Trading account assets                    370,420      180,019   106

    Investment securities                   8,433,441    8,003,015     5

    Loans and leases, net of unearned
     discount                              48,693,543   44,778,472     9
      Less: allowance for credit losses       780,683      680,498    15
                                          -----------  -----------

      Net loans and leases                 47,912,860   44,097,974     9

    Goodwill                                3,192,128    2,908,849    10

    Core deposit and other intangible
     assets                                   198,554      200,195    -1

    Other assets                            3,648,691    2,914,194    25
                                            ---------  -----------

      Total assets                       $ 65,247,215   60,008,123     9 %
                                          ===========  ===========


    LIABILITIES AND STOCKHOLDERS'
     EQUITY

    Noninterest-bearing deposits at
     U.S. offices                        $  8,332,060    7,565,762    10 %

    Other deposits at U.S. offices         28,408,485   24,719,291    15

    Deposits at foreign office              5,760,748    6,188,126    -7
                                           ----------  -----------

      Total deposits                       42,501,293   38,473,179    10

    Short-term borrowings                   2,929,242    4,920,901   -40

    Accrued interest and other
     liabilities                              918,029      859,847     7

    Long-term borrowings                   12,481,967    9,516,192    31
                                           ----------  -----------

      Total liabilities                    58,830,531   53,770,119     9

    Stockholders' equity (1)                6,416,684    6,238,004     3
                                          -----------  -----------

      Total liabilities and
       stockholders' equity              $ 65,247,215   60,008,123     9 %
                                          ===========  ===========

    ----------------------------------------------------------------------
    (1) Reflects accumulated other comprehensive loss, net of applicable
        income tax effect, of $462.1 million at September 30, 2008 and
        $86.7 million at September 30, 2007.



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

                                       Three months ended
                                          September 30
                                 ------------------------------
    Dollars in millions               2008             2007        Change
                                 -------------    -------------      in
                                 Balance  Rate    Balance  Rate    balance
                                 -------  ----    -------  ----    -------
    ASSETS

    Interest-bearing deposits
     at banks                   $      9  1.09 %        8  3.27 %     17 %

    Federal funds sold and
     agreements to resell
     securities                      102  2.01        248  5.47      -59

    Trading account assets            80  1.81         59   .98       35

    Investment securities          9,303  5.01      7,260  5.04       28

    Loans and leases, net of
     unearned discount
      Commercial, financial,
       etc.                       13,882  5.09     12,239  7.25       13
      Real estate - commercial    18,557  5.62     15,474  7.54       20
      Real estate - consumer       4,964  6.01      5,915  6.47      -16
      Consumer                    11,074  6.31     10,122  7.51        9
                                 -------          -------
        Total loans and leases,
         net                      48,477  5.65     43,750  7.28       11
                                 -------          -------

      Total earning assets        57,971  5.54     51,325  6.94       13

    Goodwill                       3,192            2,909             10

    Core deposit and other
     intangible assets               206              208             -1

    Other assets                   3,628            3,420              6
                                 -------          -------

      Total assets              $ 64,997           57,862             12 %
                                 =======          =======



    LIABILITIES AND
     STOCKHOLDERS' EQUITY

    Interest-bearing deposits
      NOW accounts              $    484   .54        464   .84        4 %
      Savings deposits            18,191  1.29     14,908  1.67       22
      Time deposits                9,318  3.08      9,880  4.70       -6
      Deposits at foreign
       office                      3,837  1.94      4,324  5.11      -11
                                 -------          -------
        Total interest-bearing
         deposits                 31,830  1.88     29,576  3.17        8
                                 -------          -------

    Short-term borrowings          5,392  2.08      5,228  5.19        3
    Long-term borrowings          12,666  4.23      8,661  5.51       46
                                 -------          -------

    Total interest-bearing
     liabilities                  49,888  2.50     43,465  3.88       15

    Noninterest-bearing
     deposits                      7,673            7,360              4

    Other liabilities              1,021              851             20
                                 -------          -------

      Total liabilities           58,582           51,676             13

    Stockholders' equity           6,415            6,186              4
                                 -------          -------

      Total liabilities and
       stockholders' equity     $ 64,997           57,862             12 %
                                 =======          =======


    Net interest spread                   3.04             3.06
    Contribution of
     interest-free funds                   .35              .59
    Net interest margin                   3.39 %           3.65 %


                                       Nine months ended
                                          September 30
                                 ------------------------------
    Dollars in millions               2008             2007        Change
                                 -------------    -------------      in
                                 Balance  Rate    Balance  Rate    balance
                                 -------  ----    -------  ----    -------
    ASSETS

    Interest-bearing deposits
     at banks                   $      9  1.32 %        8  3.31 %     16 %

    Federal funds sold and
     agreements to resell
     securities                      110  2.38        333  6.00      -67

    Trading account assets            73  1.40         60  1.09       22

    Investment securities          9,000  5.10      7,120  5.03       26

    Loans and leases, net of
     unearned discount
      Commercial, financial,
       etc.                       13,664  5.42     12,051  7.25       13
      Real estate - commercial    18,348  5.91     15,509  7.43       18
      Real estate - consumer       5,653  6.08      5,909  6.48       -4
      Consumer                    11,192  6.54     10,012  7.47       12
                                 -------          -------
        Total loans and leases,
         net                      48,857  5.94     43,481  7.27       12
                                 -------          -------

      Total earning assets        58,049  5.80     51,002  6.94       14

    Goodwill                       3,193            2,909             10

    Core deposit and other
     intangible assets               222              224             -1

    Other assets                   3,734            3,398             10
                                 -------          -------

      Total assets              $ 65,198           57,533             13 %
                                 =======          =======



    LIABILITIES AND
     STOCKHOLDERS' EQUITY

    Interest-bearing deposits
      NOW accounts              $    493   .62        452   .94        9 %
      Savings deposits            17,710  1.40     14,890  1.66       19
      Time deposits                9,649  3.57     10,680  4.73      -10
      Deposits at foreign
       office                      4,322  2.45      3,918  5.16       10
                                 -------          -------
        Total interest-bearing
         deposits                 32,174  2.18     29,940  3.20        7
                                 -------          -------

    Short-term borrowings          6,468  2.73      5,213  5.27       24
    Long-term borrowings          11,452  4.57      7,963  5.54       44
                                 -------          -------

    Total interest-bearing
     liabilities                  50,094  2.80     43,116  3.88       16

    Noninterest-bearing
     deposits                      7,562            7,373              3

    Other liabilities              1,077              835             29
                                 -------          -------

      Total liabilities           58,733           51,324             14

    Stockholders' equity           6,465            6,209              4
                                 -------          -------

      Total liabilities and
       stockholders' equity     $ 65,198           57,533             13 %
                                 =======          =======


    Net interest spread                   3.00             3.06
    Contribution of
     interest-free funds                   .38              .60
    Net interest margin                   3.38 %           3.66 %



    M&T BANK CORPORATION
    Reconciliation of Quarterly GAAP to Non-GAAP Measures



                                     Three months ended      Nine months ended
                                 --------------------------  -----------------
                                   September 30    June 30     September 30
                                   2008     2007     2008     2008      2007
                                 --------  -------  -------  -------  -------

    Income statement data
    ---------------------
    Amounts in thousands, except
     per share

       Net income
    Net income                   $ 91,185  199,187  160,265  453,646  589,329
    Amortization of core deposit
     and other intangible
     assets (1)                     9,624    9,562   10,096   30,961   30,772
    Merger-related expenses (1)         -        -        -    2,160        -
                                 --------  -------  -------  -------  -------
      Net operating income       $100,809  208,749  170,361  486,767  620,101
                                 ========  =======  =======  =======  =======
       Earnings per share
    Diluted earnings per common
     share                       $    .82     1.83     1.44     4.09     5.34
    Amortization of core deposit
     and other intangible
     assets (1)                       .09      .09      .09      .28      .28
    Merger-related expenses (1)         -        -        -      .02        -
                                 --------  -------  -------  -------  -------
      Diluted net operating
       earnings per share        $    .91     1.92     1.53     4.39     5.62
                                 ========  =======  =======  =======  =======


    Balance sheet data
    ------------------
    Dollars in millions

       Average assets
    Average assets                $64,997   57,862   65,584   65,198   57,533
    Goodwill                       (3,192)  (2,909)  (3,192)  (3,193)  (2,909)
    Core deposit and other
     intangible assets               (206)    (208)    (222)    (222)    (224)
    Deferred taxes                     28       21       31       31       24
                                 --------  -------  -------  -------  -------
      Average tangible assets     $61,627   54,766   62,201   61,814   54,424
                                 ========  =======  =======  =======  =======
       Average equity
    Average equity                $ 6,415    6,186    6,469    6,465    6,209
    Goodwill                       (3,192)  (2,909)  (3,192)  (3,193)  (2,909)
    Core deposit and other
     intangible assets               (206)    (208)    (222)    (222)    (224)
    Deferred taxes                     28       21       31       31       24
                                 --------  -------  -------  -------  -------
      Average tangible equity     $ 3,045    3,090    3,086    3,081    3,100
                                 ========  =======  =======  =======  =======

    -------------------------------------------------------------------------
    (1) After any related tax effect.



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

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

SOURCE M&T Bank Corporation

http://ir.mandtbank.com/conference.cfm

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