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M&T Bank Corp. took another step toward becoming a multi-line financial services company Tuesday by agreeing to acquire Matthews, Bartlett & Dedecker Inc., one of Buffalo's premier corporate insurance agencies.

The deal gives M&T a growing fee-based service, making the bank's profits a little less dependent on interest rate margins.

When the deal closes in the first quarter of 2000, M&T can offer its commercial customers liability, worker's compensation, property and casualty and other insurance lines.

The bank also plans a gradual expansion into personal property and casualty lines, potentially cross-selling homeowners insurance and car insurance to customers with bank deposit accounts and loans.

Unlike most bank acquisitions, where M&T looked to buy a customer base and distribution network, this deal involves buying the industry experience of MB&D President Gerald C. Saxe and his 40 employees.

"We didn't have the expertise, so we sought it out. We knew that this was an expertise-driven business and we didn't have the expertise in house," said Mark Czarnecki, the executive vice president in charge of M&T's securities and insurance divisions. "We thought this was a natural evolution. This was the company and this was the guy we wanted to go with."

MB&D has been M&T Bank's insurance agency for 11 years and has several other large corporate clients.

Saxe, who has been with the agency for 42 years, is sole owner of the company. The price of the deal was not disclosed.

The agency on Delaware Avenue downtown will write about $36 million of insurance premiums this year, making it among the five largest local agencies, but well smaller than market leader Lawley Service.

"This is a business that currently generates $4 to $5 million in annual revenue. Given the size of the bank, it won't be dramatic to the bank's revenue right now, but we think it's a growing business that meets a customer need," said M&T Senior Vice President Gary S. Paul.

M&T has generated more than $700 million of net interest income this year and about $275 million of non-interest income.

The agency writes policies for about 12 insurance companies and has a brokerage relationship with a dozen other insurers.

Saxe said aligning with Upstate New York's largest bank gives his company the opportunity to grow in the rapidly changing financial services industry.

"The bank has committed to me that we will run as an independent operation. I have assured our employees today that there will be no job loss," Saxe said.

M&T officials said the agency's value-added customer service strategy aligns well with the bank's approach. Saxe and his associates help companies conduct risk management and loss prevention programs, to hold down their insurance costs.

The idea of cutting worker's compensations expenses is another service M&T can bring to the table when it sits down to pitch a commercial client. The "middle market" of small to mid-sized companies has traditionally been one of M&T's strongest markets.

M&T will focus its insurance business on Buffalo and then plans to expand into other New York regions by opening new offices or acquiring additional agencies.

"We clearly don't intent to keep this business solely in the Buffalo area, but just how we expand out of Buffalo will depend on how opportunities arise," Paul said.

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