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M&T Bank Corporation Announces 2008 Fourth Quarter and Full-Year Profits

BUFFALO, N.Y., Jan 22, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- M&T Bank Corporation ("M&T")(NYSE: MTB) today reported its results of operations for 2008.

GAAP Results of Operations. Diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") were $.92 in the fourth quarter of 2008, up from $.60 in the year-earlier period and $.82 in 2008's third quarter. On the same basis, net income for the recently completed quarter totaled $102 million, up from $65 million and $91 million in the fourth quarter of 2007 and the third quarter of 2008, respectively. Expressed as an annualized rate of return on average assets and average common stockholders' equity, GAAP-basis net income for the fourth quarter of 2008 was .63% and 6.41%, respectively, improved from .42% and 4.05%, respectively, in the similar period of 2007, and .56% and 5.66%, respectively, in the third quarter of 2008.

GAAP-basis diluted earnings per common share for the years ended December 31, 2008 and 2007 were $5.01 and $5.95, respectively. On the same basis, net income was $556 million in 2008 and $654 million in 2007. GAAP-basis net income for 2008 expressed as a rate of return on average assets and average common stockholders' equity was .85% and 8.64%, respectively, compared with 1.12% and 10.47%, respectively, in 2007.

Rene F. Jones, Executive Vice President and Chief Financial Officer, reflecting on M&T's 2008 performance, noted, "During the past year, M&T once again remained solidly profitable through a very difficult period of time for the U.S. economy. We continue to benefit from a flight to quality by depositors, which resulted in core deposit growth of 11% for the year and an annualized 18% for the fourth quarter, which was the fifth consecutive quarter of growth in those deposits. Significantly, we also experienced growth in commercial loans and commercial real estate loans during 2008 of 15%, and an annualized 5% during the fourth quarter. We continued to invest in our infrastructure in the Mid-Atlantic region, by opening three new branches and by announcing our pending acquisition of Provident Bankshares Corporation. As we work through the current economic and credit cycles, we believe that M&T, while not immune to economic factors, is well-positioned to serve the needs of our customers and our shareholders."

Notable Fourth Quarter Events. Based on a detailed review of its investment securities portfolio, during the recent quarter other-than-temporary impairment charges of $24 million (pre-tax) were recorded by M&T on certain securities. Each of those securities continues to make payments, as required. Also recorded in the fourth quarter of 2008 was a $19 million (pre-tax) addition to the valuation allowance for capitalized residential mortgage servicing rights. That addition resulted from lower mortgage interest rates at the 2008 year-end as compared with September 30, 2008. Those two items reduced M&T's fourth quarter 2008 net income and diluted earnings per common share by $26 million and $.24, respectively.

M&T announced in December that it has entered into a definitive agreement to acquire Provident Bankshares Corporation ("Provident") in a stock-for-stock transaction. Provident, which is based in Baltimore, Maryland, had approximately $6.4 billion of assets at September 30, 2008. The transaction, which will give M&T the second largest deposit share in Maryland and will triple its presence in Virginia, is expected to close in the second quarter of 2009.

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, 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, for the years ended December 31, 2008 and 2007 totaled $41 million ($.36 per diluted common share) and $40 million ($.37 per diluted common share), respectively. Similar amortization charges, after tax effect, were $10 million in each of the quarters ended December 31, 2008, December 31, 2007 and September 30, 2008, or $.08 per diluted common share for the fourth quarter of 2008 and $.09 per diluted common share in each of the fourth quarter of 2007 and the third quarter of 2008. Merger-related acquisition and integration expenses aggregated $2 million (after tax effect) in 2008, or $.02 of diluted earnings per common share. Similar expenses totaled $9 million (after tax effect) in the three months and twelve months ended December 31, 2007, or $.08 of diluted earnings per common share. There were no such expenses in the final two quarters of 2008.

Diluted net operating earnings per common share, which exclude the impact of amortization of core deposit and other intangible assets and merger-related expenses, were $5.39 in 2008 and $6.40 in 2007. Net operating income for 2008 and 2007 aggregated $599 million and $704 million, respectively. Net operating income in 2008 expressed as a rate of return on average tangible assets and average tangible common stockholders' equity was .97% and 19.63%, respectively, compared with 1.27% and 22.58% in 2007.

For 2008's fourth quarter, diluted net operating earnings per common share were $1.00, up from $.77 in the corresponding 2007 period and $.91 in 2008's third quarter. Net operating income for the final quarters of 2008 and 2007 was $112 million and $84 million, respectively, compared with $101 million in the third quarter of 2008. For the three months ended December 31, 2008, net operating income expressed as an annualized rate of return on average tangible assets and average tangible common equity was .72% and 15.01%, respectively, compared with .57% and 10.49% in the similar period of 2007, and .65% and 13.17%, respectively, in 2008's third quarter.

Taxable-equivalent Net Interest Income. Taxable-equivalent net interest income was $1.96 billion in 2008, 5% higher than $1.87 billion in 2007. The most significant contributor to that improvement was growth in average loans and leases outstanding, which rose 11% to $48.8 billion in 2008 from $44.1 billion in 2007. Such growth was attributable to average outstanding balance increases in commercial loans, commercial real estate loans and consumer loans. Of the $4.7 billion increase in average loans, approximately $1.5 billion resulted from the 2007 acquisitions. Average deposits rose 6% from 2007 to 2008, and also reflected the impact of the $2.4 billion of deposits added from the late-2007 acquisitions. The favorable impact of higher loans on taxable-equivalent net interest income was partially offset by a narrowing of the net interest margin, or taxable-equivalent net interest income expressed as a percentage of average earning assets, to 3.38% in 2008 from 3.60% in 2007.

During the fourth quarter of 2008, taxable-equivalent net interest income was $491 million, up 3% from $476 million in the corresponding 2007 quarter. Average loans outstanding and annualized net interest margin in 2008's final quarter were $48.8 billion and 3.37%, respectively, compared with $46.1 billion and 3.45% in the year-earlier period. The recent quarter's net interest margin was down slightly from 3.39% in the third quarter of 2008 as was taxable-equivalent net interest income which declined less than 1% from $493 million in that quarter.

Provision for Credit Losses/Asset Quality. The provision for credit losses rose to $412 million in 2008 from $192 million in 2007. Net loan charge-offs in 2008 totaled $383 million, or .78% of average loans outstanding, compared with $114 million or .26% of average loans in 2007. The provision for credit losses was $151 million during the recently completed quarter, compared with $101 million in the corresponding 2007 period. Net charge-offs of loans were $144 million in the final quarter of 2008, representing an annualized 1.17% of average loans outstanding, compared with $53 million or .46% during the year-earlier quarter. During 2008's third quarter, the provision for credit losses totaled $101 million and net charge-offs aggregated $94 million, or .77% of average loans outstanding.

The rise in net charge-offs from 2007 to 2008 was significantly influenced by the state of the economy in the United States, which was in recession throughout 2008, and was adversely affected by steep declines in residential real estate values and the impact of those declines on businesses and investments directly tied to the residential real estate marketplace. The most significant contributors to the higher level of net charge-offs in 2008 were charge-offs of: loans to residential real estate builders and developers of $100 million, up from $4 million in 2007; commercial loans of $94 million, up from $24 million in 2007; residential real estate loans of $65 million as compared with $19 million in 2007; and consumer loans of $112 million, up from $65 million in the prior year.

Loans classified as nonaccrual totaled $755 million, or 1.54% of total loans at December 31, 2008, compared with $431 million or .90% a year earlier and $688 million or 1.41% at September 30, 2008. Major factors contributing to the year-over-year increase were a $124 million increase in loans to residential builders and developers and a $75 million increase in residential real estate loans. The $67 million increase in nonaccrual loans since September 30, 2008 reflects increases of $29 million in loans to residential builders and developers, $19 million in commercial loans and $15 million in residential real estate loans.

Assets taken in foreclosure of defaulted loans increased to $100 million at December 31, 2008 from $40 million at December 31, 2007 and $85 million at September 30, 2008, due to residential real estate loan defaults and additions from residential real estate development projects.

During 2008, in an effort to assist borrowers M&T modified the terms of residential real estate mortgages having outstanding balances at December 31, 2008 of approximately $162 million. The modified loans were largely from M&T's portfolio of Alt-A loans. Of that total, $93 million were included in nonaccrual loans at December 31, 2008. After a period of demonstrated performance, those loans may begin to accrue interest in 2009. The remaining $69 million of modified loans were classified as renegotiated loans, were current in their payments and were accruing interest at the 2008 year-end.

Loans past due 90 days or more and accruing interest totaled $159 million at the recent year-end, up from $77 million at December 31, 2007 and $96 million at September 30, 2008. Included in those past due but accruing amounts were $114 million, $73 million and $90 million at December 31, 2008, December 31, 2007 and September 30, 2008, respectively, of loans guaranteed by government-related entities.

Allowance for Credit Losses. M&T regularly performs detailed analyses of individual borrowers and portfolios for purposes of assessing the adequacy of the allowance for credit losses. Reflecting those analyses, the allowance was $788 million, or 1.61% of total loans, at December 31, 2008, compared with $759 million, or 1.58%, a year earlier and $781 million, or 1.60% at September 30, 2008. The ratio of M&T's allowance for credit losses to nonaccrual loans was 104% and 176% at December 31, 2008 and 2007, respectively, and 113% at September 30, 2008.

Noninterest Income and Expense. Noninterest income aggregated $939 million in 2008, compared with $933 million in 2007. Reflected in those amounts were losses from bank investment securities of $148 million and $126 million, respectively, due in large part to other-than-temporary impairment charges related to certain of M&T's collateralized debt obligations, collateralized mortgage obligations and preferred stock holdings of Fannie Mae and Freddie Mac, all held in the available-for-sale investment securities portfolio. Excluding the impact of those securities losses, noninterest income was $1.09 billion in 2008, 3% higher than $1.06 billion in 2007. Higher mortgage banking revenues and fees for providing deposit account services were partially offset by a $46 million decline in 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.

Noninterest income of $241 million in the fourth quarter of 2008 was up 50% from $160 million in the corresponding 2007 quarter. Excluding losses from bank investment securities, noninterest income in the recent quarter was $265 million, down 8% from $288 million in the year-earlier quarter. That decline was primarily due to a $23 million lower contribution from M&T's pro-rata portion of the operating results of BLG. On the same basis, noninterest income in 2008's third quarter was $266 million, which was comparable to the $265 million earned on the same basis in 2008's fourth quarter.

Noninterest expense in 2008 totaled $1.73 billion, compared with $1.63 billion in 2007. Included in such amounts are expenses considered to be "nonoperating" in nature, consisting of amortization of core deposit and other intangible assets of $67 million in 2008 and $66 million in 2007 and merger-related expenses of $4 million in 2008 and $15 million in 2007. Exclusive of those nonoperating expenses, noninterest operating expenses were $1.66 billion in 2008 and $1.55 billion in 2007. The higher level of operating expenses in 2008 as compared with 2007 was due largely to increased expenses for salaries, occupancy, professional services, advertising and promotion, and foreclosed residential real estate properties. Also contributing to the rise in operating expenses was an addition to the valuation allowance for capitalized residential mortgage servicing rights of $16 million in 2008, as compared with a partial reversal of the allowance of $4 million in 2007. Partially offsetting those factors was a $23 million charge taken in the fourth quarter of 2007 related to M&T Bank's obligation as a member bank of Visa to share in losses stemming from certain litigation against Visa, compared with a partial reversal of that charge in 2008's initial quarter of $15 million.

Noninterest expense in the final quarter of 2008 totaled $447 million, compared with $445 million in the year-earlier quarter and $435 million in 2008's third quarter. Included in such amounts were amortization of core deposit and other intangible assets of $16 million in each of the quarters ended December 31, 2008, December 31, 2007 and September 30, 2008, and merger-related expenses of $15 million in 2007's fourth quarter. Exclusive of those nonoperating expenses, noninterest operating expenses were $431 million in the recent quarter, compared with $415 million in 2007's fourth quarter and $419 million in the third quarter of 2008.

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 54.4% in 2008, compared with 52.8% in 2007. During 2008's fourth quarter, M&T's efficiency ratio was 57.0%, compared with 54.3% in the year-earlier quarter and 55.2% in the third quarter of 2008.

Balance Sheet. M&T had total assets of $65.8 billion at December 31, 2008, up from $64.9 billion a year earlier. Loans and leases, net of unearned discount, totaled $49.0 billion at the 2008 year-end, up 2% from $48.0 billion at December 31, 2007. Deposits were $42.6 billion at December 31, 2008, 3% higher than $41.3 billion at the end of 2007. Total stockholders' equity was $6.8 billion at December 31, 2008, representing 10.31% of total assets, compared with $6.5 billion or 10.00% a year earlier. Common stockholders' equity was $6.2 billion, or $56.29 per share at December 31, 2008, compared with $6.5 billion, or $58.99 per share, a year earlier. Tangible equity per common share was $25.94 and $27.98 at December 31, 2008 and 2007, respectively. In the calculation of tangible equity per common share, common 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 at each of December 31, 2008 and 2007.

During December 2008, M&T chose to participate in the U.S. Treasury's ("Treasury") Capital Purchase Program and, as a result, issued $600 million of preferred stock and warrants to purchase M&T's common stock to the U.S. Government. M&T elected to participate at the minimum of the range outlined by the Treasury.

Conference Call. Investors will have an opportunity to listen to M&T's conference call to discuss fourth quarter and full year financial results today at 10:00 a.m. Eastern Time. Domestic callers 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 #80282811. 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 Saturday, January 24, 2009 by calling 800-642-1687, or 706-645-9291 for international participants, and by making reference to ID #80282811. 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, collateral securing loans, and other assets; 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.

Additional Information about the M&T/Provident Transaction:

The proposed transaction will be submitted to Provident's stockholders for their consideration. M&T will file a Registration Statement on Form S-4, which will include a preliminary version of a Proxy Statement of Provident and a preliminary Prospectus of M&T to be sent to Provident's stockholders, and each of Provident and M&T may file other relevant documents concerning the proposed transaction with the U.S. Securities and Exchange Commission (the "SEC"). STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

You will be able to obtain a free copy of the Proxy Statement/Prospectus, as well as other filings containing information about M&T and Provident at the SEC's Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, at http://www.mtb.com under the tab "About Us" and then under the heading "Investor Relations" and then under "SEC Filings." Copies of the Proxy Statement/Prospectus and the SEC filings that will be incorporated by reference in the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Investor Relations, One M&T Plaza, Buffalo, New York 14203, (716) 842-5138.

M&T and Provident and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Provident in connection with the proposed transaction. Information about the directors and executive officers of M&T is set forth in the proxy statement for M&T's 2008 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on March 6, 2008. Information about the directors and executive officers of Provident is set forth in the proxy statement for Provident's 2008 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on March 12, 2008. Additional information regarding the interests of those persons and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed transaction when it becomes available. You may obtain free copies of this document as described in the preceding paragraph.



    M&T BANK CORPORATION
    Financial Highlights
                        Three months ended              Year ended
                            December 31                December 31
                           -------------             ---------------
    Amounts in thousands,  2008     2007   Change    2008       2007   Change
     except per share      ----     ----   ------    ----       ----   ------

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

    Net income           $102,241   64,930   57% $  555,887    654,259  -15%

    Per common share:
      Basic earnings     $    .92      .60   53% $     5.04       6.05  -17%
      Diluted earnings        .92      .60   53        5.01       5.95  -16
      Cash dividends     $    .70      .70    -  $     2.80       2.60    8

    Common shares outstanding:
      Average -
       diluted (1)        110,620  109,034    1%    110,904    110,012    1%
      Period end (2)      110,444  109,935    -     110,444    109,935    -

    Return on (annualized):
      Average total assets    .63%     .42%             .85%      1.12%
      Average common
       stockholders' equity  6.41%    4.05%            8.64%     10.47%

    Taxable-equivalent
     net interest income $491,042  475,836    3% $1,961,657  1,871,070    5%

    Yield on average
     earning assets          5.35%    6.65%            5.69%      6.86%
    Cost of interest-
     bearing liabilities     2.32%    3.75%            2.68%      3.85%
    Net interest spread      3.03%    2.90%            3.01%      3.01%
    Contribution of
     interest-free funds      .34%     .55%             .37%       .59%
    Net interest margin      3.37%    3.45%            3.38%      3.60%

    Net charge-offs to
     average total net
     loans (annualized)      1.17%     .46%             .78%       .26%

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

    Net operating income $111,784   83,719   34% $  598,551    703,820  -15%
    Diluted net operating
     earnings per
     common share            1.00      .77   30        5.39       6.40  -16
    Return on (annualized):
      Average tangible
       assets                 .72%     .57%             .97%      1.27%
      Average tangible
       common equity        15.01%   10.49%           19.63%     22.58%
    Efficiency ratio        57.03%   54.30%           54.35%     52.77%

                            At December 31
                            -------------
    Loan quality            2008     2007   Change
    ------------            ----     ----   ------
    Nonaccrual loans     $755,397  431,282   75%
    Accruing loans
     past due 90 days
     or more              158,991   77,319  106%
    Renegotiated loans     91,575   15,884  477%
    Real estate and
     other foreclosed
     assets                99,617   40,175  148%

    Nonaccrual loans to
     total net loans         1.54%     .90%
    Allowance for
     credit losses to
     total net loans         1.61%    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.



    M&T BANK CORPORATION
    Condensed Consolidated Statement of Income

                        Three months ended            Year ended
                           December 31                December 31
                        -----------------         --------------------
    Dollars in thousands  2008     2007   Change    2008       2007    Change
                        -------- -------- ------  ---------  --------- ------
    Interest income    $ 774,501  912,574  -15%  $3,277,591  3,544,813    -8%
    Interest expense     288,426  442,364  -35    1,337,795  1,694,576   -21
                        -------- --------         ---------  ---------

    Net interest income  486,075  470,210    3    1,939,796  1,850,237     5

    Provision for credit
     losses              151,000  101,000   50      412,000    192,000   115
                        -------- --------         ---------  ---------

    Net interest income
     after provision for
     credit losses       335,075  369,210   -9    1,527,796  1,658,237    -8

    Other income
      Mortgage banking
       revenues           39,721   30,831   29      156,012    111,893    39
      Service charges on
       deposit accounts  106,367  105,847    -      430,532    409,462     5
      Trust income        36,630   39,945   -8      156,149    152,636     2
      Brokerage services
       income             15,284   12,689   20       64,186     59,533     8
      Trading account
       and foreign
       exchange gains      2,003    9,806  -80       17,630     30,271   -42
      Loss on bank
       investment
       securities        (23,504)(127,281)   -     (147,751)  (126,096)    -
      Equity in earnings
       of Bayview Lending
       Group, LLC         (8,687)  14,529    -      (37,453)     8,935     -
      Other revenues
       from operations    73,603   74,124   -1      299,674    286,355     5
                        -------- --------         ---------  ---------
        Total other
         income          241,417  160,490   50      938,979    932,989     1

    Other expense
      Salaries and
       employee
       benefits          232,410   226,111   3      957,086    908,315     5
      Equipment and
       net occupancy      47,795    43,014  11      188,845    169,050    12
      Printing, postage
       and supplies        8,401     9,879 -15       35,860     35,765     -
      Amortization of core
       deposit and other
       intangible assets  15,708    15,971  -2       66,646     66,486     -
      Other costs of
       operations        142,505   150,498  -5      478,559    448,073     7
                        -------- ---------        ---------  ---------
        Total other
         expense         446,819   445,473   -    1,726,996  1,627,689     6

    Income before income
     taxes               129,673    84,227  54      739,779    963,537   -23

    Applicable income
     taxes                27,432    19,297  42      183,892    309,278   -41
                        -------- ---------        ---------  ---------

    Net income         $ 102,241    64,930  57%  $  555,887    654,259   -15%
                        ======== =========        =========  =========



    M&T BANK CORPORATION
    Condensed Consolidated Balance Sheet

                                                 December 31
                                           ----------------------
    Dollars in thousands                       2008       2007      Change
                                           -----------  ---------   ------

    ASSETS

    Cash and due from banks               $  1,546,804  1,719,509    -10%

    Interest-bearing deposits at banks          10,284     18,431    -44

    Federal funds sold and agreements
     to resell securities                      111,347     48,038    132

    Trading account assets                     617,821    281,244    120

    Investment securities                    7,919,207  8,961,998    -12

    Loans and leases, net of unearned
     discount                               49,000,463 48,021,562      2
      Less: allowance for credit losses        787,904    759,439      4
                                               -------    -------

      Net loans and leases                  48,212,559 47,262,123      2

    Goodwill                                 3,192,128  3,196,433      -

    Core deposit and other intangible
     assets                                    183,496    248,556    -26

    Other assets                             4,022,111  3,139,307     28
                                             ---------  ---------

      Total assets                        $ 65,815,757 64,875,639      1%
                                           =========== ==========


    LIABILITIES AND STOCKHOLDERS' EQUITY

    Noninterest-bearing deposits at
     U.S. offices                         $  8,856,114  8,131,662      9%

    Other deposits at U.S. offices          29,677,163 27,278,099      9

    Deposits at foreign office               4,047,986  5,856,427    -31
                                             ---------  ---------

      Total deposits                        42,581,263 41,266,188      3

    Short-term borrowings                    3,009,735  5,821,897    -48

    Accrued interest and other liabilities   1,364,879    984,353     39

    Long-term borrowings                    12,075,149 10,317,945     17
                                            ---------- ----------

      Total liabilities                     59,031,026 58,390,383      1

    Stockholders' equity (1)                 6,784,731  6,485,256      5
                                             ---------  ---------

      Total liabilities and
       stockholders' equity               $ 65,815,757 64,875,639      1%
                                           =========== ==========

    -------------------------------------------------------------------------
    (1)  Reflects accumulated other comprehensive loss, net of applicable
         income tax effect, of $736.9 million at December 31, 2008 and
         $114.8 million at December 31, 2007.



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

                                        Three months ended
                                            December 31
                                  -------------------------------
    Dollars in millions                2008             2007
                                  --------------   --------------   Change in
                                  Balance   Rate   Balance   Rate    balance
                                  -------   ----   -------   ----    -------

    ASSETS

    Interest-bearing
     deposits at banks           $     13    .55%       12     3.48%      9%

    Federal funds sold
     and agreements
     to resell securities             103    .41       725     4.86     -86

    Trading account assets             99   3.16        68     1.48      45

    Investment securities           8,894   4.90     7,905     5.12      13

    Loans and leases, net of
     unearned discount
       Commercial, financial, etc. 14,213   4.74    12,551     6.90      13
       Real estate - commercial    18,666   5.55    16,459     7.12      13
       Real estate - consumer       4,904   5.85     6,327     6.13     -22
       Consumer                    11,027   6.08    10,718     7.35       3
                                  -------          -------
         Total loans and
          leases, net              48,810   5.45    46,055     6.95       6
                                  -------          -------

       Total earning assets        57,919   5.35    54,765     6.65       6

    Goodwill                        3,192            3,006                6

    Core deposit and other
     intangible assets                191              213              -10

    Other assets                    3,640            3,565                2
                                  -------          -------

       Total assets              $ 64,942           61,549                6%
                                  =======          =======

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Interest-bearing deposits
       NOW accounts              $    528    .45       491     1.18       8%
       Savings deposits            19,540   1.27    15,265     1.71      28
       Time deposits                9,388   3.06    10,353     4.55      -9
       Deposits at foreign office   2,985    .71     4,975     4.52     -40
                                  -------          -------
         Total interest-
          bearing deposits         32,441   1.72    31,084     3.09       4
                                  -------          -------

    Short-term borrowings           4,950    .82     5,899     4.62     -16
    Long-term borrowings           12,058   4.55     9,809     5.31      23
                                  -------          -------

    Total interest-bearing
     liabilities                   49,449   2.32    46,792     3.75       6

    Noninterest-bearing deposits    8,006            7,481                7

    Other liabilities               1,133              916               24
                                  -------          -------

       Total liabilities           58,588           55,189                6

    Stockholders' equity            6,354            6,360                -
                                  -------          -------

       Total liabilities and
        stockholders' equity     $ 64,942           61,549                6%
                                  =======          =======


    Net interest spread                     3.03               2.90
    Contribution of
     interest-free funds                     .34                .55
    Net interest margin                     3.37%              3.45%


                                            Year ended
                                            December 31
                                  -------------------------------
    Dollars in millions                2008             2007
                                  --------------   --------------   Change in
                                  Balance   Rate   Balance   Rate    balance
                                  -------   ----   -------   ----    -------

    ASSETS

    Interest-bearing
     deposits at banks           $     10   1.07%        9     3.36%     13%

    Federal funds sold
     and agreements
     to resell securities             109   1.91       432     5.52     -75

    Trading account assets             79   1.95        62     1.20      28

    Investment securities           8,973   5.05     7,318     5.05      23

    Loans and leases, net of
     unearned discount
       Commercial, financial, etc. 13,802   5.24    12,177     7.16      13
       Real estate - commercial    18,428   5.82    15,748     7.35      17
       Real estate - consumer       5,465   6.03     6,015     6.39      -9
       Consumer                    11,150   6.43    10,190     7.44       9
                                  -------          -------
         Total loans and
          leases, net              48,845   5.82    44,130     7.19      11
                                  -------          -------

       Total earning assets        58,016   5.69    51,951     6.86      12

    Goodwill                        3,193            2,933                9

    Core deposit and other
     intangible assets                214              221               -3

    Other assets                    3,709            3,440                8
                                  -------          -------

       Total assets              $ 65,132           58,545               11%
                                  =======          =======

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Interest-bearing deposits
       NOW accounts              $    502    .58       461     1.01       9%
       Savings deposits            18,170   1.37    14,985     1.67      21
       Time deposits                9,583   3.45    10,597     4.68     -10
       Deposits at foreign office   3,986   2.12     4,185     4.97      -5
                                  -------          -------
         Total interest-bearing
          deposits                 32,241   2.07    30,228     3.17       7
                                  -------          -------

    Short-term borrowings           6,086   2.34     5,386     5.09      13
    Long-term borrowings           11,605   4.56     8,428     5.47      38
                                  -------          -------

    Total interest-bearing
     liabilities                   49,932   2.68    44,042     3.85      13

    Noninterest-bearing deposits    7,674            7,400                4

    Other liabilities               1,089              856               27
                                  -------          -------

      Total liabilities            58,695           52,298               12

    Stockholders' equity            6,437            6,247                3
                                   ------          -------

      Total liabilities and
       stockholders' equity      $ 65,132           58,545               11%
                                  =======          =======

    Net interest spread                     3.01               3.01
    Contribution of
     interest-free funds                     .37                .59
    Net interest margin                     3.38%              3.60%



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

                                    Three months ended       Year ended
                                -------------------------  ----------------
                                   December 31 September 30  December 31
                                  2008     2007    2008     2008     2007
                                --------  ------  -------  -------  -------
    Income statement data
    ---------------------
    Amounts in thousands,
     except per share
    Net income
    Net income                 $ 102,241  64,930   91,185  555,887  654,259
    Amortization of core
     deposit and other
     intangible assets (1)         9,543   9,719    9,624   40,504   40,491
    Merger-related expenses (1)        -   9,070        -    2,160    9,070
                                --------  ------- -------  -------  -------
      Net operating income     $ 111,784  83,719  100,809  598,551  703,820
                                ========  ======= =======  =======  =======
    Earnings per common share
    Diluted earnings per
     common share              $     .92     .60      .82     5.01     5.95
    Amortization of core
     deposit and other
     intangible assets (1)           .08     .09      .09      .36      .37
    Merger-related expenses (1)        -     .08        -      .02      .08
                                --------  ------  -------  -------  -------
      Diluted net operating
       earnings per common
       share                   $    1.00     .77      .91     5.39     6.40
                                ========  ======  =======  =======  =======


    Balance sheet data
    ------------------
    Dollars in millions
    Average assets
    Average assets             $  64,942  61,549   64,997   65,132   58,545
    Goodwill                      (3,192) (3,006)  (3,192)  (3,193)  (2,933)
    Core deposit and other
     intangible assets              (191)   (213)    (206)    (214)    (221)
    Deferred taxes                    25      25       28       30       24
                                --------  ------  -------  -------  -------
      Average tangible assets  $  61,584  58,355   61,627   61,755   55,415
                                ========  ======  =======  =======  =======
    Average common equity
    Average common equity      $   6,299   6,360    6,415    6,423    6,247
    Goodwill                      (3,192) (3,006)  (3,192)  (3,193)  (2,933)
    Core deposit and other
     intangible assets              (191)   (213)    (206)    (214)    (221)
    Deferred taxes                    25      25       28       30       24
                                --------  ------  -------  -------  -------
      Average tangible common
       equity                  $   2,941   3,166    3,045    3,046    3,117
                                ========  ======  =======  =======  =======

    -------------------------------------------------------------------------
    (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://www.mandtbank.com

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