NEW YORK ( TheStreet) -- M&T Bank ( MTB) is trying a novel approach to delay repaying bailout funds until 2018, while avoiding a costly dividend increase on preferred shares. The Buffalo, N.Y. lender currently owes $230 million in bailout money provided through the Troubled Assets Relief Program, or TARP, in December 2008. That is in addition to another $151.5 million for TARP assistance provided to Provident Bancshares before that company was acquired by M&T in May 2009. M&T previously redeemed $370 million in TARP preferred shares, and also repaid $330 million in TARP money for Wilmington Trust, when it acquired that company in May 2011. The U.S. Treasury on Friday commenced a public offering of the $381.5 million in M&T TARP preferred shares held by the government. This alone changes nothing for investors, because the preferred shares will still be out there, with a 5.00% coupon, which is scheduled to rise to 9.00% in February 2014 for the remaining $230 of the bank's original TARP helping, with the coupon on the $151.5 million in bailout assistance originally provided to Provident Bancshares rising to 9.00% in November 2013. M&T announced on Thursday that it had no intention of redeeming the preferred shares until November 15, 2013, at the earliest. Before that date, M&T's board of directors "will approve certain amendments" to each preferred series, to set a different reset coupon rate for the TARP preferred shares in November 2013, presumably at a much lower rate than 9.00%. Under the amendments, the preferred shares won't be redeemed until November 15, 2018, at the earliest. This seems likely to be approved by the preferred shareholders, with long-term rates continuing to decline, and M&T having the unpalatable option to bite the bullet and raise funds through an offering of common shares to repay the TARP preferred and avoid the 9.00% coupon anyway. Preferred shares in M&T look like a pretty safe bet for investors, considering that the company has managed to achieve returns on average assets ranging from 0.75% and 1.17% over the past four quarters, according to data supplied by Thomson Reuters Bank Insight. BMO Capital Markets analyst Peter Winter on Friday said that the bank's amendment to the TARP preferred shares that will now be held by private investors "should allow MTB to secure a less expensive form of capital without any dilution to existing shareholders from a common equity raise, and it supports the Tier 1 Capital ratio by around 50 basis points ," which "is important as MTB's Tier 1 Capital ratio of 9.9% is well below the peer median of 11.9%."