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

M&T Bank Corporation ("M&T") today reported its results of operations for the quarter ended June 30, 2003.

GAAP Results of Operations. Diluted earnings per share measured in accordance with generally accepted accounting principles ("GAAP") for the second quarter of 2003 were $1.10, compared with $1.19 in the year-earlier period. On the same basis, the recent quarter's net income totaled $134 million, up 17% from $115 million in the second quarter of 2002.

The recent quarter's results reflect the impact of operations obtained in M&T's April 1, 2003 acquisition of Allfirst Financial Inc. ("Allfirst") and the related issuance by M&T of 26.7 million common shares. Merger-related expenses were $22 million, after applicable tax effect, or $.17 per diluted share in the second quarter of 2003, and represent costs for professional services, travel and other expenses associated with the acquisition and the related integration of data processing and other operating systems and functions. There were no similar expenses in the second quarter of 2002.

GAAP-basis net income for the second quarter of 2003 expressed as an annualized rate of return on average assets and average common stockholders' equity was 1.10% and 10.00%, respectively, compared with 1.47% and 15.43%, respectively, in the year-earlier quarter. A combined balance sheet for M&T on April 1, 2003, which includes a summary of assets acquired and liabilities assumed by M&T from Allfirst as of the acquisition date, is included herein.

Robert G. Wilmers, Chairman of the Board, President and Chief Executive Officer of M&T commented, "The last few months have proven to be both challenging and exciting, as we welcomed former Allfirst employees to M&T and integrated Allfirst's operations into those of M&T. We are pleased to report that through the efforts of many dedicated employees from throughout the expanded M&T the recently completed systems conversions went smoothly. We look forward to efficiently providing enhanced services to our customers now that all M&T customer accounts are housed on the same data processing systems."

For the six months ended June 30, 2003 and 2002, GAAP-basis diluted earnings per share were $2.30 and $2.37, respectively. GAAP-basis net income for the first six months of 2003 totaled $251 million, 10% higher than $228 million in the year-earlier period. Merger-related expenses incurred during 2003 associated with the acquisition of Allfirst were $25 million, after applicable tax effect, or $.23 per diluted share. M&T will incur additional merger-related expenses in the second half of 2003 as Allfirst's operations are fully integrated into M&T. There were no merger-related expenses in the first half of 2002. GAAP-basis net income for the first half of 2003 expressed as an annualized rate of return on average assets and average common stockholders' equity was 1.23% and 11.67%, respectively, compared with 1.47% and 15.49%, respectively, in the corresponding 2002 period.

Supplemental Reporting of Non-GAAP Results of Operations. Since 1998, M&T has consistently provided supplemental reporting of its results on a "net operating" or "tangible" basis, from which M&T excludes the after-tax effect of amortization of core deposit and other intangible assets and expenses associated with merging acquired operations into M&T. 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, was $14 million ($.11 per diluted share) in the recent quarter, compared with $9 million ($.09 per diluted share) in the year-earlier quarter. Similar amortization charges for the six months ended June 30, 2003 and 2002 were $21 million, after tax effect ($.20 per diluted share) and $17 million, after tax effect ($.18 per diluted share), respectively.

Diluted net operating earnings per share, which exclude the impact of amortization of core deposit and other intangible assets and merger-related expenses, were $1.38 for the quarter ended June 30, 2003, compared with $1.28 in the second quarter of 2002. Net operating income for the recent quarter was $169 million, up 38% from $123 million in the year-earlier quarter. Expressed as an annualized rate of return on average tangible assets and average tangible stockholders' equity, net operating income was 1.48% and 29.89%, respectively, in 2003's second quarter, compared with 1.64% and 27.75% in the second quarter of 2002. Average tangible assets and equity exclude goodwill, core deposit and other intangible assets, net of applicable deferred tax balances, of $3.1 billion during the recent quarter and $1.2 billion during the second quarter of 2002.

For the first six months of 2003, diluted net operating earnings per share were $2.73, compared with $2.55 in the corresponding 2002 period. Net operating income for the first half of 2003 rose to $297 million, up 21% from $245 million in the corresponding 2002 period. For the first six months of 2003, net operating income expressed as an annualized rate of return on average tangible assets and average tangible equity was 1.54% and 27.39%, respectively, compared with 1.64% and 28.03% in the similar 2002 period. Average tangible assets and equity exclude goodwill, core deposit and other intangible assets, net of applicable deferred tax balances, of $2.1 billion and $1.2 billion during the six months ended June 30, 2003 and 2002, respectively.

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

                                   Three months ended   Six months ended
                                         June 30             June 30
                                      2003     2002       2003     2002
                                      ----     ----       ----     ----
                                     (in thousands, except per share)

  Diluted earnings per share      $   1.10     1.19       2.30     2.37
  Amortization of core deposit
   and other intangible assets(1)      .11      .09        .20      .18
  Merger-related expenses(1)           .17        -        .23        -
                                       ---      ---        ---      ---
  Diluted net operating earnings
   per share                      $   1.38     1.28       2.73     2.55
                                      ====     ====       ====     ====


  Net income                      $134,040  114,507    250,578  228,084
  Amortization of core deposit
   and other intangible assets(1)   13,883    8,533     20,977   17,326
  Merger-related expenses(1)        21,513        -     25,112        -
                                    ------   ------     ------   ------

  Net operating income            $169,436  123,040    296,667  245,410
                                   =======  =======    =======  =======

  (1) After any related tax effect

Accounting for Stock-Based Compensation. Effective January 1, 2003, M&T began expensing 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 first and second quarters of 2003 included $10 million of stock-based compensation, resulting in a reduction of net income in each quarter of $7 million, or $.08 per diluted share in the initial 2003 quarter and $.06 per diluted share in the second quarter of 2003. Using the retroactive restatement method described in SFAS No. 148, which amended SFAS No. 123, salaries and employee benefits expense for the first and second quarters of 2002 were each 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, in each of the 2002 quarters. These expenses are included in both the GAAP and supplemental non-GAAP results of operations discussed above.

Taxable-equivalent Net Interest Income. Led by growth in average loans outstanding, taxable-equivalent net interest income increased 39% to $435 million in the second quarter of 2003 from $313 million in the year-earlier quarter. Reflecting the impact of $10.2 billion of loans obtained in the Allfirst acquisition, average loans outstanding increased 45% to $36.6 billion in 2003's second quarter from $25.2 billion in the comparable 2002 period. Net interest margin, or taxable-equivalent net interest income expressed as an annualized percentage of average earning assets, was 4.12% in the recent quarter and 4.43% in the year-earlier period. The decline in net interest margin was predominantly a consequence of the yields on earning assets and rates paid on interest-bearing liabilities obtained in the Allfirst acquisition.

Provision for Credit Losses/Asset Quality. The provision for credit losses totaled $36 million in the second quarter of 2003, up from $28 million a year earlier. Net charge-offs of loans during the recent quarter were $23 million, down from $25 million in the year-earlier period. Net charge-offs of loans acquired from Allfirst during the recent quarter were not significant. Expressed as an annualized percentage of average loans outstanding, net charge-offs were .26% in 2003's second quarter, compared with .39% in the corresponding 2002 period. Loans classified as nonperforming totaled $319 million, or .86% of total loans at June 30, 2003, compared with $168 million or .66% at June 30, 2002. Loans past due 90 days or more and accruing interest were $170 million at the recent quarter-end, compared with $128 million a year earlier. Included in these loans at June 30, 2003 and 2002 were $115 million and $104 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 are fully guaranteed by government agencies. The loans were repurchased to reduce the cost of servicing them. 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. Included in the June 30, 2003 totals of nonperforming loans and loans past due 90 days or more and accruing interest were loans obtained in the Allfirst transaction of $109 million and $33 million, respectively. Assets taken in foreclosure of defaulted loans were $23 million at June 30, 2003, compared with $22 million a year earlier.

Allowance for Credit Losses. The allowance for credit losses totaled $604 million, or 1.63% of total loans, at June 30, 2003, compared with $436 million, or 1.70%, a year earlier. On the April 1, 2003 acquisition date, Allfirst had an allowance for credit losses of $146 million, or 1.43% of Allfirst's loans then outstanding. Immediately following the merger on April 1, the combined balance sheet of M&T and Allfirst included an allowance for credit losses of $591 million that was equal to 1.62% of the $36.4 billion of outstanding loans. The ratio of M&T's allowance for credit losses to nonperforming loans was 189% and 260% at June 30, 2003 and 2002, respectively.

Noninterest Income and Expense. Noninterest income in the second quarter of 2003 totaled $233 million, 92% higher than $121 million in the year-earlier quarter. Approximately 80% of the increase was attributable to revenues related to operations in market areas associated with the former Allfirst franchise. In addition, higher mortgage banking revenues, largely the result of the low interest rate environment, and increased service charges on deposit accounts contributed to the improvement.

Noninterest expense in the recent quarter totaled $431 million, up 85% from $233 million in 2002's second quarter. Included in such amounts are expenses considered to be nonoperating in nature consisting of the previously noted amortization of core deposit and other intangible assets of $23 million in 2003 and $13 million in 2002, and merger-related expenses of $33 million in 2003. There were no merger-related expenses in 2002. Exclusive of these nonoperating expenses, noninterest operating expenses were $375 million in the recent quarter, compared with $220 million in the second quarter of 2002. Higher costs for salaries, including commissions, incentive compensation, and increased staffing levels resulting from the Allfirst acquisition, contributed to the increase in operating expenses. In addition, an $18 million provision for the impairment of capitalized mortgage servicing rights was recorded during the recently completed quarter, reflecting the impact on customer refinancings that the current low interest rate environment is expected to have on the rate of residential mortgage prepayments. A similar charge of $3 million was recognized during the second quarter of 2002.

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 sales of bank investment securities), measures the relationship of operating expenses to revenues. M&T's efficiency ratio was 56.2% in the second quarter of 2003, compared with 50.7% in the year-earlier period. The higher ratio in 2003 reflects the acquired Allfirst operations that will be integrated into M&T's operations during the second half of 2003.

Michael P. Pinto, M&T's Executive Vice President and Chief Financial Officer observed, "We are quite pleased with our results for the second quarter. Low interest rates continue to have a beneficial effect on our consumer lending businesses, including automobile lending and residential mortgage loan originations. With regard to Allfirst, virtually all aspects of the integration are proceeding according to plan and we remain confident that, exclusive of merger-related expenses and amortization of intangible assets, the acquisition will not be dilutive to operating earnings in 2003. Furthermore, we expect that earnings for the full year, after excluding Allfirst merger expenses, will be in line with current analysts' estimates."

Balance Sheet. M&T had total assets of $50.4 billion at June 30, 2003, up from $31.7 billion at June 30, 2002. Loans and leases, net of unearned discount, rose 45% to $37.0 billion at the recent quarter-end from $25.6 billion a year earlier. Deposits were $32.5 billion at June 30, 2003, up from $21.9 billion at June 30, 2002. Total assets, loans and deposits obtained in the Allfirst transaction were $16 billion, $10 billion and $11 billion, respectively. Total stockholders' equity was $5.4 billion at June 30, 2003, representing 10.78% of total assets, compared with $3.0 billion or 9.46% a year earlier. Common stockholders' equity per share was $45.46 and $32.54 at June 30, 2003 and 2002, respectively. Tangible equity per common share was $19.47 at June 30, 2003, compared with $19.58 at June 30, 2002. In the calculation of tangible equity per common share, stockholders' equity is reduced by the carrying values of goodwill and core deposit and other intangible assets, net of applicable deferred tax balances, which aggregated $3.1 billion in 2003 and $1.2 billion in 2002.

Conference Call. Investors will have an opportunity to listen to M&T's conference call to discuss second quarter financial results at 10:00 a.m. Eastern Time today, July 14, 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 July 15, 2003 by calling 877-519-4471, code 4020789 and 973-341-3080 for international participants. The event will also be archived and available by noon today on M&T's website at http://ir.mandtbank.com/conference.cfm.

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

   CONTACT:  Michael S. Piemonte
             (716) 842-5138


  M&T BANK CORPORATION
  Financial Highlights

  Amounts in thousands,
  except per share
                       Three months ended         Six months ended
                            June 30                   June 30
                        2003      2002   Change     2003     2002   Change
                        ----      ----   ------     ----     ----   ------
  Performance

  Net income          $134,040   114,507   17%   $250,578   228,084   10%

  Per common share:
    Basic earnings    $   1.12      1.23   -9%   $   2.36      2.45   -4%
    Diluted earnings      1.10      1.19   -8        2.30      2.37   -3
    Cash dividends    $    .30       .25   20    $    .60       .50   20

  Common shares outstanding:
    Average -
     diluted (1)       122,366    95,917   28%    108,789    96,107   13%
    Period end (2)     119,519    92,192   30     119,519    92,192   30

  Return on (annualized):
    Average total
     assets               1.10%     1.47%            1.23%     1.47%
    Average common
     stockholders'
     equity              10.00%    15.43%           11.67%    15.49%

  Taxable-equivalent
   net interest
   income             $435,198   313,097   39%   $754,788   617,756   22%

  Yield on average
   earning assets         5.50%     6.57%            5.68%     6.62%
  Cost of
   interest-bearing
   liabilities            1.65%     2.50%            1.75%     2.57%
  Net interest spread     3.85%     4.07%            3.93%     4.05%
  Contribution of
   interest-free
   funds                   .27%      .36%             .27%      .35%
  Net interest margin     4.12%     4.43%            4.20%     4.40%

  Net charge-offs to
   average total net
   loans (annualized)      .26%      .39%             .31%      .33%

  Net operating results (3)

  Net operating
   income             $169,436   123,040   38%   $296,667   245,410   21%
  Diluted net
   operating earnings
   per common share       1.38      1.28    8        2.73      2.55    7
  Return on (annualized):
    Average tangible
     assets               1.48%     1.64%            1.54%     1.64%
    Average tangible
     common equity       29.89%    27.75%           27.39%    28.03%
  Efficiency ratio       56.20%    50.67%           53.62%    50.96%


                          At June 30     Change
  Loan quality          2003      2002
                        ----      ----
  Nonaccrual loans    $311,881   159,468   96%
  Renegotiated loans     6,985     8,463  -17
                         -----     -----
  Total nonperforming
   loans              $318,866   167,931   90%
                      ========   =======

  Accruing loans
   past due 90 days
   or more            $169,753   128,127   32%

  Nonperforming loans
   to total net loans      .86%     .66%
  Allowance for credit
   losses to total
   net loans              1.63%    1.70%

  (1) Includes common stock equivalents.
  (2) Includes common stock issuable under deferred compensation plans.
  (3) Excludes merger-related expenses and 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. A reconciliation of net income and net
      operating income appears on page 4.


  M&T BANK CORPORATION
  Condensed Consolidated Statement of Income

                     Three months ended             Six months ended
  Dollars                  June 30                       June 30
  in thousands         2003      2002   Change       2003      2002   Change
                       ----      ----   ------       ----      ----   ------
  Interest income   $576,396   461,425    25%   $1,011,955   922,612    10%
  Interest expense   145,506   151,949    -4       265,098   312,076   -15
                     -------   -------             -------   -------
  Net interest
   income            430,890   309,476    39       746,857   610,536    22

  Provision for
   credit losses      36,000    28,000    29        69,000    52,000    33
                      ------    ------              ------    ------
  Net interest income
   after provision for
   credit losses     394,890   281,476    40       677,857   558,536    21

  Other income
    Mortgage banking
     revenues         43,915    23,281    89        78,379    51,193    53
    Service charges
     on deposit
     accounts         85,882    40,811   110       129,231    80,336    61
    Trust income      33,640    15,318   120        47,839    31,123    54
    Brokerage services
     income           14,361    12,078    19        24,409    22,997     6
    Trading account
     and foreign
     exchange gains    5,689       386  1374         6,330     1,429   343
    Gain (loss) on
     sales of bank
     investment
     securities          250      (170)    -           483         1     -
    Other revenues
     from operations  49,160    29,475    67        79,073    58,328    36
                      ------    ------              ------    ------
    Total other
     income          232,897   121,179    92       365,744   245,407    49

  Other expense
    Salaries and
     employee
     benefits        205,481   125,701    63       329,555   249,155    32
    Equipment and
     net occupancy    47,896    25,727    86        75,047    52,931    42
    Printing, postage
     and supplies     10,926     5,871    86        17,939    11,904    51
    Amortization of
     core deposit and
     other intangible
     assets           22,671    13,142    73        34,269    26,685    28
    Other costs of
     operations      144,173    62,826   129       216,615   125,876    72
                     -------    ------             -------   -------
      Total other
       expense       431,147   233,267    85       673,425   466,551    44

  Income before
   income taxes      196,640   169,388    16       370,176   337,392    10

  Applicable income
   taxes              62,600    54,881    14       119,598   109,308     9
                      ------    ------             -------   -------

  Net income        $134,040   114,507    17%     $250,578   228,084    10%
                    ========   =======             =======   =======

  Summary of merger-related expenses included above:
    Salaries and
     employee
     benefits       $  3,553         -            $  3,838         -
    Equipment and
     net occupancy       800         -                 896         -
    Printing, postage
     and supplies      2,319         -               2,361         -
    Other costs of
     operations       26,486         -              31,508         -
                      ------                        ------
      Total
       merger-related
       expenses     $ 33,158         -            $ 38,603         -
                     =======                        ======


  M&T BANK CORPORATION
  Condensed Opening Balance Sheet

                                            Opening Balances April 1, 2003
  Dollars in thousands                     M&T        Allfirst     Combined
                                           ---        --------     --------
  ASSETS

  Investment securities               $ 4,146,303    1,409,620    5,555,923

  Loans and leases, net of unearned
   discount                            26,224,113   10,221,790   36,445,903
    Less: allowance for credit losses     444,680      146,300      590,980
                                          -------      -------      -------
    Net loans and leases               25,779,433   10,075,490   35,854,923

  Goodwill                              1,097,553    1,806,529    2,904,082

  Core deposit and other intangible
   assets                                 107,342      199,265      306,607

  Other assets                          2,313,160    2,999,755    5,312,915
                                        ---------    ---------    ---------
    Total assets                      $33,443,791   16,490,659   49,934,450
                                       ==========   ==========   ==========

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Noninterest-bearing deposits        $ 3,901,172    3,671,025    7,572,197

  Interest-bearing deposits            18,023,050    7,264,496   25,287,546
                                       ----------    ---------   ----------
    Total deposits                     21,924,222   10,935,521   32,859,743

  Short-term borrowings                 2,387,043    1,610,782    3,997,825

  Accrued interest and other
   liabilities                            424,887      723,882    1,148,769

  Long-term borrowings                  5,394,920    1,226,518    6,621,438
                                        ---------    ---------    ---------
    Total liabilities                  30,131,072   14,496,703   44,627,775

  Stockholders' equity                  3,312,719    1,993,956    5,306,675
                                        ---------    ---------    ---------
    Total liabilities and
     stockholders' equity             $33,443,791   16,490,659   49,934,450
                                       ==========   ==========   ==========

  M&T BANK CORPORATION
  Condensed Consolidated Balance Sheet
                                                 June 30
  Dollars in thousands                      2003         2002     Change
                                            ----         ----     ------
  ASSETS

  Cash and due from banks             $ 2,565,621      864,158      197 %

  Money-market assets                     288,929       92,514      212

  Investment securities                 5,945,533    2,960,512      101

  Loans and leases, net of unearned
   discount                            37,001,556   25,603,569       45
    Less: allowance for credit losses     603,501      436,395       38
                                          -------      -------
    Net loans and leases               36,398,055   25,167,174       45

  Goodwill                              2,904,081    1,097,553      165

  Core deposit and other intangible
   assets                                 283,936      143,589       98

  Other assets                          2,012,973    1,382,861       46
                                        ---------    ---------
    Total assets                      $50,399,128   31,708,361       59 %
                                       ==========   ==========

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Noninterest-bearing deposits at
   U.S. offices                       $ 8,764,640    3,800,508      131 %

  Other deposits at U.S. offices       22,364,719   16,839,791       33

  Deposits at foreign offices           1,409,414    1,217,273       16
                                        ---------    ---------
    Total deposits                     32,538,773   21,857,572       49

  Short-term borrowings                 4,631,346    2,244,272      106

  Accrued interest and other
   liabilities                          1,036,791      394,882      163

  Long-term borrowings                  6,758,781    4,211,920       60
                                        ---------    ---------

    Total liabilities                  44,965,691   28,708,646       57

  Stockholders' equity (1)              5,433,437    2,999,715       81
                                        ---------    ---------
    Total liabilities and
     stockholders' equity             $50,399,128   31,708,361       59 %
                                       ==========   ==========
  (1) Reflects accumulated other comprehensive income, net of applicable
      income taxes, of $52.4 million at June 30, 2003 and $35.4 million at
      June 30, 2002.


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

                                     Three months ended
                                          June 30
  Dollars in millions             2003                2002        Change in
                                  ----                ----
                            Balance    Rate     Balance    Rate    balance
                            -------    ----     -------    ----    -------
  ASSETS

  Money-market assets     $    100     1.21%       273     1.76%     -63%

  Investment securities      5,654     4.41      2,888     5.90       96

  Loans and leases,
   net of unearned discount
    Commercial, financial,
     etc                     9,985     4.34      5,070     5.24       97
    Real estate
     - commercial           12,059     6.14      9,432     7.09       28
    Real estate
     - consumer              3,853     6.18      4,129     7.07       -7
    Consumer                10,735     6.19      6,583     7.00       63
                            ------               -----
      Total loans and
       leases, net          36,632     5.67     25,214     6.70       45
                            ------              ------
    Total earning assets    42,386     5.50     28,375     6.57       49

  Goodwill                   2,893               1,098               164

  Core deposit and other
   intangible assets           295                 150                97

  Other assets               3,436               1,726                99
                             -----               -----
  Total assets            $ 49,010              31,349                56%
                            ------              ------

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Interest-bearing deposits
    NOW accounts          $    903      .40        757      .56       19%
    Savings deposits        14,428      .79      8,822     1.23       64
    Time deposits            7,489     2.40      7,642     3.34       -2
    Deposits at foreign
     offices                   996     1.16        404     1.51      147
                               ---                 ---
      Total interest-bearing
       deposits             23,816     1.30     17,625     2.12       35
                            ------              ------
  Short-term borrowings      4,789     1.22      2,677     1.77       79
  Long-term borrowings       6,698     3.22      4,121     4.56       63
                             -----               -----
  Total interest-bearing
   liabilities              35,303     1.65     24,423     2.50       45

  Noninterest-bearing
   deposits                  7,373               3,585               106

  Other liabilities            957                 363               164
                               ---                 ---
    Total liabilities       43,633              28,371                54

  Stockholders' equity       5,377               2,978                81
                             -----               -----
    Total liabilities and
     stockholders'
     equity               $ 49,010              31,349                56%
                            ======              ======
  Net interest spread                  3.85                4.07
  Contribution of
   interest-free funds                  .27                 .36
  Net interest margin                  4.12%               4.43%


                                      Six months ended
                                          June 30
  Dollars in millions             2003                2002        Change in
                                  ----                ----
                            Balance    Rate     Balance    Rate    balance
                            -------    ----     -------    ----
  Money-market assets     $    337     1.27%       267     1.78%      26%

  Investment securities      4,652     4.80      2,899     5.91       60

  Loans and leases,
   net of unearned discount
    Commercial, financial,
     etc                     7,675     4.43      5,064     5.23       52
    Real estate
     - commercial           10,880     6.33      9,402     7.10       16
    Real estate
     - consumer              3,519     6.31      4,284     7.09      -18
    Consumer                 9,167     6.23      6,412     7.09       43
                             -----               -----
      Total loans and
       leases, net          31,241     5.86     25,162     6.75       24
                            ------              ------
    Total earning assets    36,230     5.68     28,328     6.62       28

  Goodwill                   2,000               1,098                82

  Core deposit and other
   intangible assets           204                 157                31

  Other assets               2,628               1,736                51
                             -----               -----
  Total assets            $ 41,062              31,319                31%
                            ======              ======

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Interest-bearing deposits
    NOW accounts               846      .38        748      .53       13%
    Savings deposits        12,039      .86      8,641     1.26       39
    Time deposits            6,687     2.50      7,890     3.49      -15
    Deposits at foreign
     offices                 1,024     1.18        441     1.51      132
                             -----                 ---
      Total interest-bearing
       deposits             20,596     1.39     17,720     2.23       16
                            ------              ------
  Short-term borrowings      4,143     1.25      2,820     1.77       47
  Long-term borrowings       5,774     3.41      3,924     4.70       47
                             -----               -----
  Total interest-bearing
   liabilities              30,513     1.75     24,464     2.57       25

  Noninterest-bearing
   deposits                  5,565               3,520                58

  Other liabilities            656                 366                79
                               ---                 ---
    Total liabilities       36,734              28,350                30

  Stockholders' equity       4,328               2,969                46
                             -----               -----
    Total liabilities and
     stockholders'
     equity               $ 41,062              31,319                31%
                            ======              ======
  Net interest spread                  3.93                4.05
  Contribution of
   interest-free funds                  .27                 .35
  Net interest margin                  4.20%               4.40%
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