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M&T Bank Corporation Announces Second Quarter Profits

BUFFALO, N.Y., July 20, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- M&T Bank Corporation ("M&T")(NYSE: MTB) today reported its results of operations for the quarter ended June 30, 2009.

GAAP Results of Operations. In a quarter in which M&T closed and converted its third largest acquisition, it reported diluted earnings per common share measured in accordance with generally accepted accounting principles ("GAAP") of $.36. GAAP-basis net income in the recent quarter aggregated $51 million. GAAP-basis net income for the second quarter of 2009 expressed as an annualized rate of return on average assets and average common stockholders' equity was .31% and 2.53%, respectively.

M&T's recent quarter results reflect several notable events. Most significantly, M&T completed its acquisition of Provident Bankshares Corporation ("Provident"), effective May 23, 2009, including the related issuance by M&T of 5.8 million common shares. Results of the operations acquired from Provident are reflected in M&T's results since the acquisition date. In addition, expenses associated with systems conversions and other costs of integrating operations and introducing Provident's former customers to M&T's products and services aggregated $40 million, after applicable tax effect, or $.35 of diluted earnings per common share, during the three-month period ended June 30, 2009. During the recent quarter, the Federal Deposit Insurance Corporation ("FDIC") announced that it would levy a special assessment on insured financial institutions to rebuild the Deposit Insurance Fund. The charge recognized in 2009's second quarter for that special assessment amounted to $32.5 million ($20 million after tax effect, or $.17 of diluted earnings per common share). Also reflected in the recent quarter's results were $25 million (pre-tax) of other-than-temporary impairment charges on certain available-for-sale investment securities. Those charges reduced net income and diluted earnings per common share by $15 million and $.13, respectively. However, because the investment securities were previously reflected at fair value on the consolidated balance sheet, the impairment charges did not reduce stockholders' equity.

Reflecting on M&T's second quarter performance, Rene F. Jones, Executive Vice President and Chief Financial Officer, commented, "This past quarter was a time of significant accomplishment. On May 23 we completed the acquisition of Provident, including the conversion of customer accounts to M&T systems. We are pleased to welcome former Provident employees to M&T and look forward to serving our new customers by providing them with a wide range of products and exceptional customer service. Diluted net operating earnings per common share, which exclude the impact of merger-related expenses and intangible amortization, increased 34% from this year's first quarter to $.79, despite the FDIC special assessment which reduced that measure by $.17 per share. That improvement was driven by several positive developments. Net interest margin dramatically improved from 3.19% in the first quarter of 2009 to 3.43%. Core deposits continued their impressive growth, up an annualized 24% from the initial quarter of 2009 excluding Provident's impact. Residential mortgage banking revenues remained strong as compared with record revenues recorded in the first quarter of this year. Fee income was improved from the first quarter, reflecting higher credit-related fees, insurance income and seasonally higher deposit service charges. Finally, credit costs for the quarter remain in line with internal expectations and we believe that they continue to remain favorable as compared with the industry."

Diluted earnings per common share were $1.44 and $.49 during the second quarter of 2008 and the initial 2009 quarter, respectively. Net income for those respective quarters was $160 million and $64 million. Net income expressed as an annualized rate of return on average assets and average common stockholders' equity for the second 2008 quarter was .98% and 9.96%, respectively, compared with .40% and 3.61%, respectively, in the first 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, 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. Reconciliations of GAAP and non-GAAP measures are provided herein.

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 $.79 in the second quarter of 2009, including the slightly accretive impact of the Provident acquisition. Diluted net operating earnings per common share were $1.53 in the year-earlier quarter and $.59 in the initial quarter of 2009. Net operating income during the recent quarter was $101 million, compared with $170 million and $75 million in the second quarter of 2008 and the first quarter of 2009, respectively. Expressed as an annualized rate of return on average tangible assets and average tangible common stockholders' equity, net operating income was .64% and 12.08%, respectively, in the recently completed quarter, compared with 1.10% and 22.20% in the second quarter of 2008 and .50% and 9.36% in the initial 2009 quarter.

Taxable-equivalent Net Interest Income. Taxable-equivalent net interest income aggregated $507 million in the second quarter of 2009, up 3% from $492 million in the year-earlier period and 12% higher than $453 million in the first quarter of 2009. The significant growth in such income from the initial 2009 quarter to the second quarter was predominantly due to a widening of the net interest margin, which grew from 3.19% to 3.43%. That improvement was largely attributable to declines in the rates paid on deposits and long-term borrowings. Reflected in average earning assets in the second 2009 quarter was the impact of assets obtained in the Provident transaction, which were outstanding for nearly one-half of the quarter. The acquisition added approximately $1.7 billion to average loans and leases and $447 million to average investment securities during the quarter. The transaction had little impact on the recent quarter's net interest margin.

Provision for Credit Losses/Asset Quality. The provision for credit losses increased to $147 million in the recent quarter from $100 million in the second quarter of 2008. Net charge-offs of loans totaled $138 million during the second 2009 quarter, up from $99 million in the year-earlier quarter. That rise in net charge-offs was largely attributable to the partial charge-off of a commercial loan transferred to nonaccrual status in this year's first quarter. During the first quarter of 2009, the provision for credit losses was $158 million, while net charge-offs aggregated $100 million. Expressed as an annualized percentage of average loans outstanding, net charge-offs were 1.09% and .81% in the second quarter of 2009 and 2008, respectively, .83% in the first quarter of 2009 and .96% for the first six months of 2009.

Loans obtained in connection with the Provident acquisition have been accounted for in accordance with Statement of Financial Accounting Standards No. 141 (revised 2007), "Business Combinations" ("SFAS No. 141R"), and/or Statement of Position 03-3, "Accounting for Certain Loans or Debt Securities Acquired in a Transfer" ("SOP 03-3"), if the loan experienced deterioration of credit quality at the time of acquisition. Both SFAS No. 141R and SOP 03-3 require that acquired loans be recorded at fair value and prohibit the carry over of the related allowance for credit losses. Determining the fair value of the acquired loans required estimating cash flows expected to be collected on the loans. Because SOP 03-3 loans have been recorded at fair value, such loans are not classified as nonaccrual even though some payments may be contractually past due. Estimated credit losses on all acquired loans were considered in the determination of fair value as of the acquisition date.

Loans classified as nonaccrual increased to $1.1 billion, or 2.11% of total loans at June 30, 2009 from $568 million or 1.16% a year earlier and $1.0 billion or 2.05% at March 31, 2009. The recessionary state of the U.S. economy has resulted in generally higher levels of nonaccrual loans and net charge-offs of loans. Contributing to the rise in nonaccrual loans from June 30, 2008 to June 30, 2009 were increases in residential real estate loans, loans to builders and developers of residential real estate, and commercial loans.

Assets taken in foreclosure of defaulted loans were $90 million at June 30, 2009, compared with $53 million at June 30, 2008 and down from $100 million at March 31, 2009. The higher levels of such assets in 2009 resulted predominantly from additions of residential real estate development projects.

In an effort to assist borrowers, M&T has modified the terms of select residential real estate loans, consisting largely of loans in M&T's portfolio of Alt-A loans. At June 30, 2009, outstanding balances of those modified loans totaled $259 million, of which $107 million were classified as nonaccrual. The remaining modified loans have demonstrated payment capability consistent with the modified terms and, accordingly, were classified as renegotiated loans and were accruing interest at June 30, 2009.

Loans past due 90 days or more and accruing interest were $155 million at the end of the recent quarter, compared with $94 million at June 30, 2008. Included in these past due but accruing amounts were loans guaranteed by government-related entities of $144 million and $89 million at June 30, 2009 and 2008, respectively.

Impaired loans obtained in the Provident acquisition that are held for investment and have been accounted for in accordance with SOP 03-3 had outstanding customer balances at June 30, 2009 of $170 million. The carrying value of those loans at that date reflected in the Consolidated Balance Sheet totaled $98 million.

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 totaled $855 million, $774 million and $846 million at June 30, 2009, June 30, 2008 and March 31, 2009, respectively. Expressed as a percentage of total loans, the allowance was 1.62% at the recent quarter-end, compared with 1.58% at June 30, 2008 and 1.73% at March 31, 2009. The decline in that ratio from the end of 2009's first quarter to June 30, 2009 was driven by the already noted accounting guidance applied to the Provident acquisition, which prohibits any carryover of an allowance for credit losses. Excluding loans obtained in the Provident acquisition, the allowance-to-legacy loan ratio at June 30, 2009 increased 3 basis points from March 31, 2009 to 1.76%.

Noninterest Income and Expense. Excluding gains and losses from investment securities, noninterest income in the second quarter of 2009 aggregated $296 million, up from $277 million in the year-earlier quarter and $264 million in 2009's initial quarter. As compared with the second quarter of 2008, the higher noninterest income level in the recent quarter resulted largely from higher residential mortgage banking revenues, due to residential mortgage origination activities buoyed by a lower interest rate environment for much of the recent quarter. Significantly lower losses at Bayview Lending Group also contributed to the improvement. As compared with the first quarter of 2009, higher service charges on deposit accounts, trading account and foreign exchange gains, credit-related fees and insurance income were significant contributors to the higher level of noninterest income in the recent quarter.

Noninterest expense in the second quarter of 2009 totaled $564 million, compared with $420 million in the year-earlier quarter and $438 million in the first quarter of 2009. Included in such amounts are expenses considered to be nonoperating in nature consisting of amortization of core deposit and other intangible assets and merger-related expenses. Exclusive of these expenses, noninterest operating expenses were $482 million in the recent quarter, compared with $403 million in the second quarter of 2008 and $421 million in 2009's initial quarter. In addition to expenses related to the operations obtained in the Provident acquisition, increased expenses for FDIC deposit insurance and foreclosed residential real estate properties contributed to that rise. During the recent quarter, the allowance for impairment of capitalized residential mortgage servicing rights was reduced by $13 million, compared with similar reductions of $9 million in the second quarter of 2008 and $5 million in the initial 2009 quarter. Those reversals reduced noninterest operating expenses and resulted from higher mortgage interest rates at the end of the respective quarters as compared with the immediately preceding quarter-ends.

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 associated with bank investment securities), measures the relationship of operating expenses to revenues. M&T's efficiency ratio was 60.0% in 2009's second quarter, compared with 52.4% in the year-earlier period and 58.7% in the first quarter of 2009. If the recent quarter's special assessment by the FDIC was excluded from the computation, the efficiency ratio for the second quarter of 2009 would have been 56.0%.

Balance Sheet. M&T had total assets of $69.9 billion at June 30, 2009, up from $65.9 billion at June 30, 2008. Loans and leases, net of unearned discount, were $52.7 billion at the recent quarter-end, compared with $49.1 billion a year earlier. Total deposits rose to $46.8 billion at June 30, 2009, from $41.9 billion at June 30, 2008. Deposits at domestic offices jumped $9.5 billion, or 26%, to $45.7 billion at the most recent quarter-end from $36.2 billion at June 30, 2008. Total assets obtained in the Provident transaction were $6.3 billion, including loans and investment securities of $4.0 billion and $1.0 billion, respectively. The Provident acquisition also added $5.0 billion of deposits to M&T's total deposits on May 23, 2009. Total stockholders' equity was $7.4 billion at June 30, 2009, representing 10.58% of total assets, compared with $6.5 billion or 9.89% a year earlier. Common stockholders' equity was $6.7 billion, or $56.51 per share, at June 30, 2009, compared with $6.5 billion, or $59.12 per share, at June 30, 2008. Tangible equity per common share was $25.17 at the recent quarter-end, compared with $28.50 a year earlier. The year-over-year declines in the per share amounts for common stockholders' equity and tangible common equity were largely the result of higher net unrealized losses in the available-for-sale investment securities portfolio. 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 $3.7 billion and $3.4 billion at June 30, 2009 and 2008, respectively. M&T's tangible common equity to tangible assets ratio was 4.49% at June 30, 2009, compared with 5.03% and 4.86% at June 30, 2008 and March 31, 2009, respectively.

Conference Call. Investors will have an opportunity to listen to M&T's conference call to discuss second 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 the conference ID# 18863015. 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 Wednesday, July 22, 2009 by calling 800-642-1687, or 706-645-9291 for international participants, and by making reference to ID# 18863015. The event will also be archived and available by 5:00 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.

    M&T BANK CORPORATION
    Financial Highlights

                             Three months               Six months
    Amounts in                  ended                      ended
     thousands,                June 30                    June 30
     except per share    -----------------          -----------------
                            2009     2008   Change     2009     2008    Change
                         --------  -------  ------  --------  -------   ------
    Performance
    -----------

    Net income           $ 51,188  160,265    -68%  $115,409  362,461     -68%
    Net income available
     to common
     shareholders          40,516  160,265    -75     95,105  362,461     -74

    Per common share:
      Basic earnings     $    .36     1.45    -75%  $    .85     3.29     -74%
      Diluted earnings        .36     1.44    -75        .85     3.26     -74
      Cash dividends     $    .70      .70      -   $   1.40     1.40       -

    Common shares
     outstanding:
      Average-diluted (1) 113,521  111,227      2%   111,988  111,097       1%
      Period end (2)      118,012  110,268      7    118,012  110,268       7

    Return on (annualized):
      Average total
       assets                 .31%     .98%              .35%    1.12%
      Average common
       stockholders'
       equity                2.53%    9.96%             3.06%   11.23%

    Taxable-equivalent
     net interest
     income              $506,781  492,483      3%  $959,521  977,116      -2%

    Yield on average
     earning assets          4.62%    5.66%             4.63%    5.93%
    Cost of interest-
     bearing
     liabilities             1.47%    2.64%             1.61%    2.95%
    Net interest spread      3.15%    3.02%             3.02%    2.98%
    Contribution of
     interest-free funds      .28%     .37%              .29%     .40%
    Net interest margin      3.43%    3.39%             3.31%    3.38%

    Net charge-offs to
     average total
      net loans
      (annualized)           1.09%     .81%              .96%     .59%

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

    Net operating
     income              $100,805  170,361    -41%  $175,839  385,958     -54%
    Diluted net
     operating earnings
     per common share         .79     1.53    -48       1.39     3.47     -60
    Return on
     (annualized):
      Average tangible
       assets                 .64%    1.10%              .57%    1.25%
      Average tangible
       common equity        12.08%   22.20%            10.76%   25.04%
    Efficiency ratio        60.03%   52.41%            59.39%   52.63%



                                                   At June 30
                                             -------------------
    Loan quality                                 2009     2008     Change
    ------------                             ----------  -------   ------

    Nonaccrual loans                         $1,111,423  568,460      96%
    Real estate and other foreclosed assets      90,461   52,606      72%
                                             ----------  -------
      Total nonperforming assets             $1,201,884  621,066      94%
                                             ==========  =======

    Accruing loans past due 90 days or more     155,125   93,894      65%
    Renegotiated loans                          170,950   18,905       -

    Purchased impaired loans (4):
      Outstanding customer balance              170,400        -       -
      Carrying amount                            97,730        -       -

    Nonaccrual loans to total net loans            2.11%    1.16%

    Allowance for credit losses to:
      M&T legacy loans                             1.76%    1.58%
      Total loans                                  1.62%    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.
    (4)  Held for investment and accounted for in accordance with SOP 03-3.



    M&T BANK CORPORATION
    Condensed Consolidated Statement of Income

                            Three months               Six months
                               ended                      ended
                              June 30                    June 30
                         -----------------         --------------------
    Dollars in thousands   2009     2008   Change      2009      2008   Change
                         --------  ------- -----   ---------- --------- -----

    Interest income      $677,423  817,574  -17%   $1,331,935 1,701,736  -22%
    Interest expense      175,856  330,942  -47       382,561   736,254  -48
                         --------  -------         ---------- ---------

    Net interest income   501,567  486,632    3       949,374   965,482   -2

    Provision for
     credit losses        147,000  100,000   47       305,000   160,000   91
                         --------  -------         ---------- ---------

    Net interest income
     after provision
     for credit
     losses               354,567  386,632   -8       644,374   805,482  -20

    Other income
      Mortgage banking
       revenues            52,983   38,219   39       109,216    78,289   40
      Service charges on
       deposit accounts   112,479  110,340    2       213,508   213,794    -
      Trust income         32,442   40,426  -20        67,322    80,730  -17
      Brokerage services
       income              13,493   17,211  -22        28,886    32,684  -12
      Trading account
       and foreign
       exchange gains       7,543    6,636   14         8,978    11,349  -21
      Gain on bank
       investment
       securities             292      325    -           867    33,772    -
      Total other-than-
       temporary
       impairment
       ("OTTI")
       losses             (75,697)  (5,746)   -      (138,505)   (5,746)   -
         Portion of OTTI
          losses
          recognized
          in other
          comprehensive
          income (before
          taxes)           50,928        -    -        81,537         -    -
                           ------   -------        ----------  --------
         Net OTTI losses
          recognized in
          earnings        (24,769)  (5,746)   -       (56,968)   (5,746)   -
      Equity in earnings
       of Bayview
       Lending Group LLC     (207) (13,026)   -        (4,351)  (14,286)   -
      Other revenues from
       operations          77,393   76,797    1       136,532   153,259  -11
                          -------   ------         ----------  --------
         Total other
          income          271,649  271,182    -       503,990   583,845  -14

    Other expense
      Salaries and
       employee
       benefits           249,952  236,127    6       499,344   487,998    2
      Equipment and net
       occupancy           51,321   47,252    9        99,493    94,017    6
      Printing, postage
       and supplies        11,554    9,120   27        20,649    19,016    9
      Amortization of
       core deposit and
       other intangible
       assets              15,231   16,615   -8        30,601    35,098  -13
      Deposit insurance    49,637    1,534    -        55,493     3,073    -
      Other costs of
       operations         186,015  109,062   71       296,476   206,212   44
                         --------  -------         ----------  --------
        Total other
         expense          563,710  419,710   34     1,002,056   845,414   19

    Income before
     income taxes          62,506  238,104  -74       146,308   543,913  -73

    Applicable income
     taxes                 11,318   77,839  -85        30,899   181,452  -83
                         --------  -------         ----------  --------

    Net income           $ 51,188  160,265  -68%   $  115,409   362,461  -68%
                         ========  =======         ==========  ========



    M&T BANK CORPORATION
    Condensed Consolidated Balance Sheet

                                                      June 30
                                             -----------------------
    Dollars in thousands                         2009        2008      Change
                                             -----------  ----------   ------
    ASSETS
    Cash and due from banks                  $ 1,148,428   1,624,753    -29%
    Interest-bearing deposits at banks            59,950       5,654    960
    Federal funds sold and agreements
     to resell securities                          2,300     103,750    -98
    Trading account assets                       495,324     243,050    104
    Investment securities                      8,155,434   8,658,775     -6
    Loans and leases, net of unearned
     discount                                 52,714,644  49,114,616      7
       Less: allowance for credit losses         855,365     774,076     11
                                             -----------  ----------
       Net loans and leases                   51,859,279  48,340,540      7
    Goodwill                                   3,524,625   3,192,128     10
    Core deposit and other intangible
     assets                                      216,072     213,528      1
    Other assets                               4,451,805   3,511,250     27
                                             -----------  ----------
      Total assets                           $69,913,217  65,893,428      6%
                                             ===========  ==========


    LIABILITIES AND STOCKHOLDERS' EQUITY
    Noninterest-bearing deposits at
     U.S. offices                            $12,403,999   8,483,856     46%
    Other deposits at U.S. offices            33,265,704  27,684,858     20
    Deposits at foreign office                 1,085,004   5,756,976    -81
                                             -----------  ----------
      Total deposits                          46,754,707  41,925,690     12
    Short-term borrowings                      2,951,149   3,761,550    -22
    Accrued interest and other liabilities     1,238,959     917,022     35
    Long-term borrowings                      11,568,238  12,770,110     -9
                                             -----------  ----------
      Total liabilities                       62,513,053  59,374,372      5
    Stockholders' equity (1)                   7,400,164   6,519,056     14
                                             -----------  ----------
      Total liabilities and stockholders'
       equity                                $69,913,217  65,893,428      6%
                                             ===========  ==========

    ----------------------------------------
    (1)  Reflects accumulated other comprehensive loss, net of applicable
         income tax effect, of $580.8 million at June 30, 2009 and $332.9
         million at June 30, 2008.



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

                                            Three months ended
                                                 June 30
                                       ----------------------------
    Dollars in millions                     2009           2008
                                       -------------  -------------  Change in
                                       Balance  Rate  Balance  Rate   balance
                                       -------  ----  -------  ----  ---------
    ASSETS

    Interest-bearing deposits at
     banks                           $    42    .05%      8    1.14%    421%

    Federal funds sold and agreements
      to resell securities                73    .23     101    1.96     -27

    Trading account assets               120    .77      64     .90      88

    Investment securities              8,508   4.90   8,770    5.07      -3

    Loans and leases, net of
     unearned discount
      Commercial, financial, etc      14,067   3.76  13,800    5.14       2
      Real estate - commercial        19,719   4.46  18,491    5.76       7
      Real estate - consumer           5,262   5.40   6,026    6.04     -13
      Consumer                        11,506   5.42  11,205    6.41       3
                                     -------         ------
        Total loans and leases, net   50,554   4.59  49,522    5.79       2
                                     -------         ------

      Total earning assets            59,297   4.62  58,465    5.66       1

    Goodwill                           3,326          3,192               4

    Core deposit and other
     intangible assets                   188            222             -15

    Other assets                       4,173          3,705              13
                                     -------         ------

      Total assets                   $66,984         65,584               2%
                                     =======         ======


    LIABILITIES AND STOCKHOLDERS'
     EQUITY

    Interest-bearing deposits
      NOW accounts                   $   515    .19     512     .49       1%
      Savings deposits                22,480    .47  18,092    1.34      24
      Time deposits                    8,858   2.52   9,216    3.47      -4
      Deposits at foreign office       1,460    .16   4,314    2.06     -66
                                     -------         ------
        Total interest-bearing
         deposits                     33,313   1.00  32,134    2.03       4
                                     -------         ------

    Short-term borrowings              3,211    .25   6,869    2.49     -53
    Long-term borrowings              11,482   3.18  11,407    4.44       1
                                     -------         ------

    Total interest-bearing
     liabilities                      48,006   1.47  50,410    2.64      -5

    Noninterest-bearing deposits      10,533          7,577              39

    Other liabilities                  1,318          1,128              17
                                     -------         ------

      Total liabilities               59,857         59,115               1

    Stockholders' equity               7,127          6,469              10
                                     -------         ------

      Total liabilities and
       stockholders' equity          $66,984         65,584               2%
                                     =======         ======

    Net interest spread                        3.15            3.02
    Contribution of interest-free
     funds                                      .28             .37
    Net interest margin                        3.43%           3.39%




                                            Six months ended
                                                June 30
                                       ---------------------------
    Dollars in millions                     2009           2008
                                       -------------  ------------   Change in
                                       Balance  Rate  Balance Rate    balance
                                       -------  ----  ------- ----   ---------
    ASSETS

    Interest-bearing deposits        $    31    .08%      9    1.43%    233%
      at banks
    Federal funds sold and agreements
      to resell securities                87    .23     115    2.54     -23

    Trading account assets                97    .73      69    1.16      40

    Investment securities              8,499   4.86   8,847    5.15      -4

    Loans and leases, net of unearned
     discount
      Commercial, financial, etc      14,049   3.75  13,554    5.59       4
      Real estate - commercial        19,260   4.43  18,242    6.05       6
      Real estate - consumer           5,148   5.49   6,002    6.11     -14
      Consumer                        11,237   5.52  11,251    6.66       -
                                     -------        -------
         Total loans and leases, net  49,694   4.61  49,049    6.09       1
                                     -------        -------

      Total earning assets            58,408   4.63  58,089    5.93       1

    Goodwill                           3,259          3,194               2

    Core deposit and other intangible
     assets                              182            230             -21

    Other assets                       4,032          3,786               6
                                    --------        -------

      Total assets                   $65,881         65,299               1%
                                    ========        =======

    LIABILITIES AND STOCKHOLDERS'
     EQUITY

    Interest-bearing deposits
      NOW accounts                   $   525    .22     498     .67       6%
      Savings deposits                21,845    .63  17,468    1.46      25
      Time deposits                    8,789   2.66   9,816    3.81     -10
      Deposits at foreign office       1,964    .16   4,567    2.66     -57
                                     -------        -------
         Total interest-bearing
          deposits                    33,123   1.14  32,349    2.33       2
                                     -------        -------

    Short-term borrowings              3,344    .26   7,011    2.99     -52
    Long-term borrowings              11,562   3.34  10,838    4.77       7
                                     -------        -------

    Total interest-bearing
     liabilities                      48,029   1.61  50,198    2.95      -4

    Noninterest-bearing deposits       9,549          7,506              27

    Other liabilities                  1,349          1,104              22
                                     -------        -------

      Total liabilities               58,927         58,808               -

    Stockholders' equity               6,954          6,491               7
                                    --------        -------

      Total liabilities and
       stockholders' equity          $65,881         65,299               1%
                                    ========        =======


    Net interest spread                        3.02            2.98
    Contribution of interest-free
     funds                                      .29             .40
    Net interest margin                        3.31%           3.38%




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

                                 Three months ended        Six months ended
                          ----------------------------     ----------------
                                June 30       March 31         June 30
                             2009      2008      2009        2009     2008
                          --------   -------  --------     -------  -------
    Income statement data
    ---------------------
    In thousands, except
     per share
    Net income
    Net income            $ 51,188   160,265    64,221     115,409  362,461
    Amortization of core
     deposit and other
     intangible assets (1)   9,247    10,096     9,337      18,584   21,337
    Merger-related
     expenses (1)           40,370         -     1,476      41,846    2,160
                          --------   -------  --------     -------  -------
      Net operating
       income             $100,805   170,361    75,034     175,839  385,958
                          ========   =======  ========     =======  =======
    Earnings per common
     share
    Diluted earnings per
     common share         $    .36      1.44       .49         .85     3.26
    Amortization of core
     deposit and other
      intangible assets (1)    .08       .09       .09         .17      .19
    Merger-related
     expenses (1)              .35         -       .01         .37      .02
                          --------   -------  --------     -------  -------
       Diluted net
       operating earnings
        per common share  $    .79      1.53      0.59        1.39     3.47
                          ========  ========  ========     =======  =======


    Balance sheet data
    ------------------
    In millions
    Average assets
    Average assets        $ 66,984    65,584    64,766      65,881   65,299
    Goodwill                (3,326)   (3,192)   (3,192)     (3,259)  (3,194)
    Core deposit and
     other intangible
     assets                   (188)     (222)     (176)       (182)    (230)
    Deferred taxes              30        31        22          26       33
                          --------   -------  --------     -------  -------
       Average tangible
        assets            $ 63,500    62,201    61,420      62,466   61,908
                          ========   =======  ========     =======  =======
    Average common equity
    Average common equity $  6,491     6,469     6,212       6,352    6,491
    Goodwill                (3,326)   (3,192)   (3,192)     (3,259)  (3,194)
    Core deposit and
     other intangible
     assets                   (188)     (222)     (176)       (182)    (230)
    Deferred taxes              30        31        22          26       33
                          --------   -------  --------     -------  -------
      Average tangible
       common equity      $  3,007     3,086     2,866       2,937    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://www.mandtbank.com

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