DBRS Assigns BB (high) rating to M&T Bank Corp.’s Perpetual Preferred Stock; Trend Negative

DBRS Inc. (DBRS) has today assigned a rating of BB (high) to M&T Bank Corporation’s (M&T or the Company) $500 million issuance of perpetual, non-cumulative preferred stock. The ratings are positioned four notches below M&T’s Issuer & Senior Debt rating of A (low), which also carries a Negative trend. This notching is consistent with DBRS’s base notching policy for preferred shares issued by A (low) rated entities.

M&T expects to use $370 million of the net proceeds from the sale of the preferred stock to redeem a portion of its outstanding TARP preferred shares. Following the repurchase, the Company will have $381.5 million of TARP preferred shares still outstanding. In addition, the acquisition of Wilmington Trust will add an additional $330 million of TARP preferred stock. However, DBRS notes that the Company intends to redeem this amount at the closing of the merger, which is expected in 2Q11. All TARP-related warrants issued to the U.S. Treasury will remain outstanding.

Headquartered in Buffalo, New York, M&T Bank Corporation is a bank holding company operating two bank subsidiaries, M&T Bank and M&T Bank, N.A. M&T reported $68 billion in consolidated assets as of March 31, 2011. M&T’s tangible common equity and Tier 1 common ratios were 6.44% and 6.78%, respectively, at the end of 1Q11 and its Tier 1 ratio was 9.76%.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal applicable methodologies are Rating Bank Preferred Shares and Equivalent Hybrids, Global Methodology for Rating Banks and Banking Organizations and Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessments which can be found on our website under Methodologies.

The sources of information used for this rating include the issuer, the Federal Deposit Insurance Corporation and SNL Financial. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

Lead Analyst: Mark Nolan
Rating Committee Chair: Alan G. Reid
Initial Rating Date: 14 July 2005
Most Recent Rating Update: 2 November 2010

For additional information on this rating, please see the linking document below.