M&T Bank's profit plunges on FDIC fee-related expense, costly deposits
(Reuters) — M&T Bank (NYSE:MTB)'s fourth-quarter profit plummeted 37% on Thursday, due to higher deposit costs and a special assessment fee the lender has to pay to refill a government deposit insurance fund
The Federal Deposit Insurance Corp's (FDIC) fund lost nearly $16 billion after the collapse of Silicon Valley Bank and Signature Bank (OTC:SBNY), and the banking regulator is charging the industry a fee to recoup the loss.
M&T booked an expense of $197 million tied to the special assessment fee. The FDIC fee has featured prominently in bank earnings this quarter, with JPMorgan Chase (NYSE:JPM), Wells Fargo and others also accounting for it.
Separately, M&T flagged a hit from higher deposit costs. Like several of its peers, the bank has had to pay higher interest rates to prevent depositors fleeing to other high-yielding alternatives.
The move eroded the Buffalo, New York-based bank's net interest income, which fell nearly 6%, to $1.72 billion.
Exposure to the troubled commercial real estate sector (CRE) also weighed on its earnings. With remote working now routine for many office-based firms and consumers routinely shopping online, investors who hold commercial property face the prospect of defaulting on their loans.
Partly because of its exposure to such investors, M&T more than doubled its provisions for potential bad loans.
Profit was $482 million, or $2.74 per share, for the three months ended Dec. 31, compared to $765 million, or $4.29 per share, a year earlier.
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