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M&T Bank Corporation Announces First Quarter Earnings
PRNewswire-FirstCall
BUFFALO, N.Y.

M&T Bank Corporation ("M&T") today reported diluted earnings per share measured in accordance with generally accepted accounting principles ("GAAP") for the first quarter of 2003 of $1.23, up 4% from $1.18 in the year-earlier period. GAAP-basis net income for the recent quarter was $117 million, 3% higher than $114 million in the corresponding quarter of 2002. GAAP-basis net income for the initial 2003 quarter expressed as an annualized rate of return on average assets and average common stockholders' equity was 1.43% and 14.46%, respectively, compared with 1.47% and 15.56%, respectively, in the first quarter of 2002.

Effective January 1, 2003, M&T began expensing the fair value of stock-based compensation in accordance with the fair value method of accounting described in Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," as amended. As a result, salaries and employee benefits expense in the initial 2003 quarter included $10 million of stock-based compensation, resulting in a reduction of net income of $7 million, or $.08 per diluted share. Using the retroactive restatement method described in SFAS No. 148, which amended SFAS No. 123, salaries and employee benefits expense for the first quarter of 2002 was restated to include $10 million of stock-based compensation, resulting in a reduction of previously reported net income of $7 million, or $.07 per diluted share.

Diluted cash earnings per share for the first quarter of 2003 were $1.34, 6% higher than $1.27 in the year-earlier quarter. Cash net income for the recent quarter was $127 million, up 4% from $122 million in the corresponding 2002 quarter. Cash net income in 2003's initial quarter represented an annualized rate of return on average tangible assets and average tangible common equity of 1.62% and 24.68%, respectively, compared with 1.65% and 28.41%, respectively, in the first quarter of 2002. As has been M&T's consistent practice since 1998, reported cash earnings exclude the after-tax effect of amortization of core deposit and other intangible assets and expenses associated with merging acquired operations into M&T. Amortization of core deposit and other intangible assets, after related tax effect, was $7 million ($.07 per diluted share) in the recent quarter, compared with $9 million ($.09 per diluted share) in the similar quarter of 2002. Merger-related expenses incurred during the first quarter of 2003 associated with the April 1, 2003 acquisition of Allfirst Financial Inc. ("Allfirst") were, after related tax effect, $4 million or $.04 per diluted share. Such amount represents the after-tax effect of costs for professional services, travel and other expenses associated with planning for the acquisition and the related integration of data processing and other operating systems and functions. M&T will incur additional merger-related expenses in future quarters as Allfirst's operations are integrated into M&T. There were no merger-related expenses in the first quarter of 2002.

A reconciliation of net income and diluted earnings per share with cash net income and diluted cash earnings per share follows:

                                                  Three months ended
                                                       March 31
                                               2003                 2002
                                           --------             --------
                                                    (in thousands,
                                                   except per share)

  Net income                               $116,538              113,577
  Amortization of core deposit
   and other intangible assets(1)             7,094                8,793
  Merger-related expenses(1)                  3,599                   --
                                           --------             --------

  Cash net income                          $127,231              122,370
                                           ========             ========

  Diluted earnings per share               $   1.23                 1.18
   Amortization of core deposit
    and other intangible assets(1)              .07                  .09
  Merger-related expenses(1)                    .04                   --
                                           --------             --------

  Diluted cash earnings per share          $   1.34                 1.27
                                           ========             ========

  (1) After any related tax effect

Taxable-equivalent net interest income rose 5% to $320 million in the recently completed quarter from $305 million in 2002's first quarter. The improvement reflects a $1.7 billion, or 6%, increase in average earning assets. Average loans and leases outstanding during the initial 2003 quarter were $25.8 billion, up 3% from $25.1 billion in the corresponding 2002 quarter. Average investment securities totaled $3.6 billion during the first quarter of 2003, up 25% from $2.9 billion in the corresponding 2002 quarter, due largely to the impact of the securitization of $1.1 billion of residential real estate loans in November 2002. Approximately 88% of the mortgage-backed securities resulting from the securitization were retained in M&T's investment securities portfolio. Net interest margin declined 5 basis points (hundredths of one percent) to 4.32% in the first quarter of 2003 from 4.37% in the year-earlier quarter.

The provision for credit losses was $33 million in the recent quarter, up from $24 million in the initial 2002 quarter. Net charge-offs of loans totaled $25 million during the first quarter of 2003, compared with $16 million a year earlier. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .39% in the recent quarter and .26% in the corresponding quarter of 2002. Nonperforming loans totaled $230 million or .88% of total loans at March 31, 2003, up from $182 million or .73% a year earlier. Loans past due 90 days or more and accruing interest were $146 million at the recent quarter-end, compared with $148 million in 2002's initial quarter. Included in these loans at March 31, 2003 and 2002 were $120 million and $109 million, respectively, of one-to-four family residential mortgage loans serviced by M&T and repurchased from the Government National Mortgage Association. The outstanding principal balances of these loans, which were repurchased to reduce servicing costs, are fully guaranteed by government agencies. In general, the remaining portion of accruing loans past due 90 days or more are either also guaranteed by government agencies or well-secured by collateral.

M&T's allowance for credit losses totaled $445 million, or 1.70% of total loans at March 31, 2003, compared with $433 million, or 1.72% a year earlier. The ratio of the allowance for credit losses to nonperforming loans was 193% at the recent quarter-end, compared with 238% at March 31, 2002. Assets taken in foreclosure of defaulted loans were $17 million and $22 million at March 31, 2003 and 2002, respectively.

Noninterest income in the recent quarter totaled $133 million, up 7% from $124 million in the first quarter of 2002. Higher revenues from mortgage banking and deposit account services contributed to the year-over-year increase. Noninterest operating expenses, which exclude the previously mentioned merger-related expenses and amortization of core deposit and other intangible assets, but include expenses attributable to stock-based compensation, were $225 million in the first quarter of 2003 and $220 million in the corresponding 2002 period.

The efficiency ratio, or noninterest operating expenses divided by the sum of taxable-equivalent net interest income and noninterest income, measures the relationship of operating expenses to revenues. M&T's efficiency ratio, calculated using the noninterest operating expense totals noted above and excluding gains from sales of bank investment securities from noninterest income, was 49.8% in the first quarter of 2003, improved from 51.3% in 2002's first quarter.

Michael P. Pinto, Executive Vice President and Chief Financial Officer of M&T observed, "The weakened economy continued to present a challenging environment in which to operate. Nevertheless, we are encouraged by the operating results of our mortgage banking business and continued strong growth in our consumer loan portfolio, although those positive factors were offset by generally lackluster revenue growth in other business lines. Excluding the effects of Allfirst and assuming that the economy begins to rebound later this quarter, we remain comfortable with our previously stated belief that M&T's full-year results will be within the range of $5.25 to $5.35 of diluted earnings per share. Of course, this estimate is subject to the possible adverse impact of future economic and political conditions. Moreover, we are excited to welcome our colleagues from Allfirst to the M&T family, and we believe that our combined company will be one of the premier financial institutions in the country."

At March 31, 2003, M&T had total assets of $33.4 billion, compared with $31.3 billion a year earlier. Loans and leases, net of unearned discount, rose 4% to $26.2 billion from $25.1 billion at March 31, 2002. Deposits were $21.9 billion at the recent quarter-end, compared with $21.6 billion a year earlier. Total stockholders' equity was $3.3 billion at March 31, 2003, representing 9.91% of total assets, compared with $3.0 billion or 9.48% at March 31, 2002. Common stockholders' equity per share was $35.81 at the recent quarter-end, up from $31.89 at March 31, 2002. Tangible equity per common share was $23.13 and $18.90 at March 31, 2003 and 2002, respectively.

Investors will have an opportunity to listen to M&T's conference call to discuss first quarter financial results at 10:00 a.m. Eastern Time today, April 10, 2003. 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. 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 April 11, 2003 by calling 877-519-4471, code 3839690 and 973-341-3080 for international participants. The event will also be archived and available later this morning on M&T's website at http://ir.mandtbank.com/conference.cfm.

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. M&T undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Future Factors include changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; credit losses; sources of liquidity; common shares outstanding; common stock price volatility; fair value of and number of stock options to be issued in future periods; legislation affecting the financial services industry as a whole, and M&T and its subsidiaries individually or collectively; regulatory supervision and oversight, including required capital levels; 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, including environmental regulations; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of pending and future litigation and governmental proceedings; continued availability of financing; financial resources in the amounts, at the times and on the terms required to support M&T and its subsidiaries' future businesses; and material differences in the actual financial results of merger and acquisition activities compared with M&T's initial expectations, including the full realization of anticipated cost savings and revenue enhancements. These are representative of the Future Factors that could affect the outcome of the forward-looking statements. In addition, such statements could be affected by general industry and market conditions and growth rates, general economic conditions, including interest rate and currency exchange rate fluctuations, and other Future Factors.

  M&T BANK CORPORATION
  Financial Highlights
                                          Three months ended
  Amounts in thousands,                        March 31
   except per share                        2003         2002       Change
                                     ----------   ----------       ------
  Performance

  Net income                           $116,538      113,577           3 %

  Per common share:
    Basic earnings                     $   1.26         1.22           3 %
    Diluted earnings                       1.23         1.18           4
    Cash dividends                     $    .30          .25          20

  Common shares outstanding:
    Average - diluted (1)                95,062       96,300          -1 %
    Period end (2)                       92,503       93,071          -1

  Return on (annualized):
    Average total assets                   1.43 %       1.47 %
    Average common stockholders'
     equity                               14.46 %      15.56 %

  Taxable-equivalent net interest
   income                              $319,590      304,659           5 %

  Yield on average earning assets          5.94 %       6.67 %
  Cost of interest-bearing liabilities     1.89 %       2.65 %
  Net interest spread                      4.05 %       4.02 %
  Contribution of interest-free funds       .27 %        .35 %
  Net interest margin                      4.32 %       4.37 %

  Net charge-offs to average total
    net loans (annualized)                  .39 %        .26 %

  Cash operating results (3)

  Cash net income                      $123,632      122,370           1 %
  Cash net income, excluding
    acquisition-related expenses        127,231      122,370           4
  Diluted cash earnings per common
   share                                   1.30         1.27           2
  Diluted cash earnings per
   common share, excluding
   acquisition-related expenses            1.34         1.27           6
  Return on (annualized):
    Average tangible assets                1.57 %       1.65 %
    Average tangible assets, excluding
      acquisition-related expenses         1.62 %       1.65 %
    Average tangible common equity        23.99 %      28.41 %
    Average tangible common equity,
      excluding acquisition-related
       expenses                           24.68 %      28.41 %
  Efficiency ratio, excluding
   acquisition-related expenses           49.81 %      51.26 %


                                              At March 31
                                           2003         2002        Change
                                     ----------   ----------        ------
  Loan quality

  Nonaccrual loans                     $222,334      173,197           28 %
  Renegotiated loans                      7,630        9,057          -16
                                     ----------   ----------
    Total nonperforming loans          $229,964      182,254           26 %
                                     ==========   ==========

  Accruing loans past due 90 days
   or more                             $146,355      148,038           -1 %

  Nonperforming loans to total net
   loans                                    .88 %        .73 %
  Allowance for credit losses to
   total net loans                         1.70 %       1.72 %

  (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 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
                                               March 31
  Dollars in thousands                     2003         2002       Change
                                     ----------   ----------       ------

  Interest income                      $435,559      461,187           -6 %
  Interest expense                      119,592      160,127          -25
                                     ----------   ----------

  Net interest income                   315,967      301,060            5

  Provision for credit losses            33,000       24,000           38
                                     ----------   ----------

  Net interest income after
     provision for credit losses        282,967      277,060            2

  Other income
       Mortgage banking revenues         34,464       27,912           23
       Service charges on deposit
        accounts                         43,349       39,525           10
       Trust income                      14,199       15,805          -10
       Brokerage services income         10,048       10,919           -8
       Trading account and foreign
        exchange gains                      641        1,043          -39
       Gain on sales of bank
        investment securities               233          171           36
       Other revenues from operations    29,913       28,853            4
                                     ----------   ----------
            Total other income          132,847      124,228            7

  Other expense
       Salaries and employee benefits   124,074      123,454            1
       Equipment and net occupancy       27,151       27,204           --
       Printing, postage and supplies     7,013        6,033           16
       Amortization of core deposit
        and other intangible assets      11,598       13,543          -14
       Other costs of operations         72,442       63,050           15
                                     ----------   ----------
            Total other expense         242,278      233,284            4

  Income before income taxes            173,536      168,004            3

  Applicable income taxes                56,998       54,427            5
                                     ----------   ----------

  Net income                           $116,538      113,577            3 %
                                     ==========   ==========


  M&T BANK CORPORATION
  Condensed Consolidated Balance Sheet

                                                March 31
  Dollars in thousands                      2003         2002      Change
                                      ----------   ----------      ------

  ASSETS

  Cash and due from banks            $   841,827      695,999          21 %

  Money-market assets                     59,229      356,137         -83

  Investment securities                4,146,303    2,861,453          45

  Loans and leases, net of
   unearned discount                  26,224,113   25,137,849           4
    Less: Allowance for credit losses    444,680      433,029           3
                                      ----------   ----------

    Net loans and leases              25,779,433   24,704,820           4

  Goodwill                             1,097,553    1,097,553          --

  Core deposit and other intangible
   assets                                107,342      156,730         -32

  Other assets                         1,412,104    1,444,193          -2
                                      ----------   ----------

    Total assets                     $33,443,791   31,316,885           7 %
                                      ==========   ==========


  LIABILITIES AND STOCKHOLDERS' EQUITY

  Noninterest-bearing deposits
   at U.S. offices                   $ 3,901,172    3,549,650          10 %

  Other deposits at U.S. offices      16,111,791   17,391,961          -7

  Deposits at foreign office           1,911,259      682,484         180
                                      ----------   ----------

    Total deposits                    21,924,222   21,624,095           1

  Short-term borrowings                2,387,043    2,142,870          11

  Accrued interest and other
   liabilities                           424,887      472,494         -10

  Long-term borrowings                 5,394,920    4,109,158          31
                                      ----------   ----------

    Total liabilities                 30,131,072   28,348,617           6

  Stockholders' equity (1)             3,312,719    2,968,268          12
                                      ----------   ----------

    Total liabilities and
     stockholders' equity            $33,443,791   31,316,885           7 %
                                      ==========   ==========

  (1)  Reflects accumulated other comprehensive income, net of applicable
       income taxes, of $49.4 million at March 31, 2003 and $12.6 million at
       March 31, 2002.


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

                                        Three months ended
                                            March 31
  Dollars in millions                  2003            2002
                                       ----            ----        Change in
                                 Balance    Rate  Balance  Rate     balance
  ASSETS                         -------    ----  -------  ----     -------

  Money-market assets           $    577    1.28 %   262   1.80 %      120 %

  Investment securities            3,638    5.41   2,910   5.93         25

  Loans and leases, net of
   unearned discount
    Commercial, financial, etc     5,340    4.59   5,059   5.23          6
    Real estate - commercial       9,687    6.57   9,371   7.11          3
    Real estate - consumer         3,181    6.47   4,441   7.09        -28
    Consumer                       7,581    6.30   6,238   7.18         22
       Total loans and leases,    ------          ------
        net                       25,789    6.11  25,109   6.80          3
                                  ------          ------

    Total earning assets          30,004    5.94  28,281   6.67          6

  Goodwill                         1,098           1,098                --

  Core deposit and other
   intangible assets                 113             163               -31

  Other assets                     1,846           1,748                6
                                  ------          ------

    Total assets                 $33,061          31,290                6 %
                                  ======          ======

  LIABILITIES AND STOCKHOLDERS'
   EQUITY

  Interest-bearing deposits
    NOW accounts                 $   789     .36     738    .51         7 %
    Savings deposits               9,623     .96   8,459   1.29        14
    Time deposits                  5,877    2.63   8,141   3.63       -28
    Deposits at foreign office     1,052    1.20     479   1.52       120
       Total interest-bearing     ------          ------
        deposits                  17,341    1.51  17,817   2.33        -3
                                  ------          ------

  Short-term borrowings            3,490    1.30   2,963   1.76        18
  Long-term borrowings             4,838    3.67   3,725   4.86        30
                                  ------          ------
  Total interest-bearing
   liabilities                    25,669    1.89  24,505   2.65         5

  Noninterest-bearing deposits     3,737           3,455                8

  Other liabilities                  388             370                5
                                  ------          ------

    Total liabilities             29,794          28,330                5

  Stockholders' equity             3,267           2,960               10
                                  ------          ------

    Total liabilities and
     stockholders' equity        $33,061          31,290                6 %
                                  ======          ======

  Net interest spread                       4.05           4.02
  Contribution of
   interest-free funds                       .27            .35
  Net interest margin                       4.32 %         4.37 %

 

CONTACT:

Michael S. Piemonte

716-842-5138