M&T’s Profit Rises on Lower Merger Costs, Higher CRE Lending

Mortgage

Commercial real estate loan growth and the Hudson City acquisition fueled fourth-quarter profit growth at MT Bank in Buffalo, N.Y.

Net income at the $123 billion-asset MT rose 24% to $308 million from the same period in 2015. The comparisons were affected by MT’s November 2015 acquisition of Hudson City Bancorp in Paramus, N.J.

MT sold its holdings of collateralized debt obligations during the fourth quarter as required by the Volcker Rule; MT recorded a $2 million pretax gain as a result of the sale. MT also donated $30 million to its charitable foundation in the quarter, reducing net income by $18 million, or 12 cents per share.

Net interest income rose 9% to $814 million on growth in earning assets. Net loans rose 4% to $89.9 billion as increases in commercial real estate and business loans offset a decline in residential mortgages. CRE lending, the biggest loan category at MT, rose 15% to $33.5 billion. MT’s investment-securities portfolio rose 4% to $16.3 billion.

Noninterest income rose 4% to $465 million. Higher trust income and mortgage banking offset a decline in trading account and foreign exchange gains.

Noninterest expense fell 2% to $769 million on lower personnel costs; additionally, MT benefited from a favorable comparison as it incurred no merger-related expenses in 2016, compared to a significant amount of those costs in 2015 due to the Hudson City deal.

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