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On April 21, 2009, M&T Bank Corporation ( MTB) reported a 68.2% decline in its Q1 FY09 earnings, on lower interest and non-interest income coupled with higher provision for credit losses. Earnings decreased to $64.22 million, or $0.49 per share, from $202.20 million, or $1.82 per share, in Q1 FY08. Excluding one-time items, earnings fell 65.2% to $75.03 million, or $0.59 per share, which missed the consensus estimate of $0.71 per share.

Interest income fell 26.0% to $654.51 million from $884.16 million a year earlier, due to reduced yields on its earnings assets. The yield on average earnings assets dropped 155 basis points to 4.65%, and average total earnings assets dipped 0.4% to $57.51 million. Interest expense plunged 49.0% to $206.71 million from $405.31 million, as cost of interest-bearing liabilities decreased 152 basis points to 1.74%. Consequently, net interest income before provisions for credit losses declined 6.5% to $447.81 million from $478.85 million. Net interest margin decreased to 3.19% from 3.38%, and the net interest spread narrowed marginally to 2.91% from 2.94% in the prior year's quarter. Non-interest income totaled $232.34 million, a decrease of 25.7% year-over-year, hurt by losses on bank investment securities. Moreover, the efficiency ratio declined 583 basis points to 58.68%.

Provision for credit losses more than doubled to $158.00 million from $60.00 million in the year-ago quarter. Net charge-offs to average total net loans (annualized) increased to 0.83% from 0.38%, while total non-accrual loans surged 110.3% to $1.00 billion. Non-accrual loans to total net loans also increased to 2.05% from 0.97%. Moreover, the allowance for credit losses totaled $845.97 million, or 1.73% of total net loans, compared to $773.62 million, or 1.57%, a year earlier.

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