As quarterly losses increased, Wilmington Trust Corp. announced Monday that it has agreed to be acquired by M&T Bank Corp. for about $351 million in stock.

The Delaware banking company also announced Monday that its third-quarter losses rose as loan losses increased, forcing the company to establish a "significant" tax-valuation allowance.

M&T, which is based in Buffalo, has $68.2 billion in assets and offices throughout the Mid-Atlantic region, where Wilmington Trust, which has $10.4 billion in assets, is well-established.

Donald Foley, Wilmington Trust’s chairman and chief executive officer, said his company has "two very strong fee-based businesses that continue to perform well. However, as our third-quarter earnings announcement shows, we continue to face difficult financial realities associated with the credit quality of the loan portfolio in our banking business."

After discussions with "several potential partners" the board decided that the M&T deal is the best option for its stockholders, clients and staff.

Foley said in a press release that "there is no significant economic or real estate recovery on the horizon in our markets. Therefore, we have little assurance that our loan portfolio will strengthen significantly in the near term, or that our capital position will not erode further. These risks increase the possibility of downgrades by the credit rating agencies or adverse regulatory actions which could compromise our businesses."

As a result of the acquisition, which is expected to close later this year, M&T would gain about $8.3 billion in deposits and $8.1 billion in loans.

Wilmington Trust reported a loss of $365.3 million, or $4.06 a share, compared with a prior-year loss of $5.9 million, or 15 cents a share, a year earlier. The latest period included $100.7 million in tax expense. Revenue rose 14% to $170.3 million. Loan-loss provisions increased $281.5 million from $38.7 million a year earlier and $205.2 million in the second quarter.