Fitch Revises M&T Bank Corp's Outlook to Stable; IDR Affirmed at 'A-'

Fitch's affirmation of MTB's ratings reflects the company's consistently sound financial performance during a difficult operating environment. To date, the company has generally avoided most of the turmoil in the credit markets. MTB's asset quality and earnings have been moderately impacted by a $2.1 billion residential builder and developer loan portfolio and $1.1 billion in Alt-A residential mortgages. While credit losses and problem assets have increased to levels above the company's long-term average, levels remain quite manageable and relatively low by most industry comparisons. Fitch expects continued stress in the housing market and on the consumer that will likely translate into ongoing elevated credit costs in the near term, thereby making the likelihood of a ratings upgrade extremely low. Although MTB's home equity and auto loan books exhibit good credit quality characteristics, loss rates have ticked up recently and are likely to increase further given economic conditions. While MTB's sizeable commercial real estate portfolio has demonstrated good performance through credit cycles, this book could also undergo further stress.

MTB's ratings reflect its consistent earnings generation, good asset quality and liquidity, strong reserves, sound risk management, strong management team, yet leaner capital levels. Good core earnings are underpinned by a solid margin, good efficiency, and sufficient revenue diversification.

The company continues to manage capital to lower levels than most peers, which is concerning given the challenging operating environment. Nonetheless, Fitch views M&T's healthy loan loss reserve as a crucial compensating factor for a leaner capital position, and expects MTB to maintain strong reserves. The company is currently rebuilding capital following acquisitions in late 2007. Although capital ratios are expected to remain in line with recent performance, internal capital generation in the near term will be hampered by expected impairment charges on Fannie Mae and Freddie Mac preferred stock in the third quarter of 2008.

Fitch has affirmed the following ratings and the Rating Outlook is now Stable:

M&T Bank Corporation

--Long-term Issuer Default Rating (IDR) at 'A-';

--Long-term senior debt at 'A-';

--Subordinate debt at 'BBB+';

--Short-term IDR at 'F1';

--Individual at 'B';

--Support at '3'.

Manufacturers & Traders Trust Company

--Long-term IDR at 'A-';

--Long-term deposits at 'A';

--Long-term senior debt at 'A-';

--Subordinated debt at 'BBB+';

--Short-term IDR at 'F1';

--Short-term deposits at 'F1';

--Individual at 'B';

--Support at '3'.

M&T Bank, National Association

--Long-term IDR at 'A-';

--Long-term deposits at 'A';

--Short-term IDR at 'F1';

--Short-term deposits at 'F1';

--Individual at 'B';

--Support at '3'.

M&T Capital Trust I-VI

--Preferred stock at 'BBB+'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

SOURCE: Fitch Ratings

Fitch Ratings, New York Doris Hoffmann, +1-312-362-2057 (Chicago) Doriana Gamboa, +1-212-908-0865 Media Relations: David Weinfurter, +1-212-908-0336