M&T 3Q earnings flat

October 17, 2013 Updated Oct 17, 2013 at 3:22 PM EDT

By Allissa Kline, Buffalo Business First

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M&T 3Q earnings flat

October 17, 2013 Updated Oct 17, 2013 at 3:22 PM EDT

Net income at M&T Bank rose less than 1 percent for the third quarter as the Buffalo bank spent more money on salaries and professional services related to its growing mortgage subservicing unit and the bolstering of its risk management division.

M&T on Thursday reported $275.4 million, or $2.13 per share, in net income attributable to common shareholders for the quarter ending Sept. 30. That's up 0.5 percent from the same quarter of 2012 when the bank's net income was $273.9 million, or $2.18 per share. the results topped analysts' expectations of $2.08 per share.

Noninterest expenses in the third quarter totaled $659 million compared to $616 million a year ago. The bank attributed the rise to specific noninterest operating costs:

• Higher salaries expenses incurred when M&T added approximately $35 million of residential real estate loans to its subservicing portfolio - and thus needed more employees to handle those loans, and

• Higher salaries and professional services related to risk management, capital planning and stress testing, anti-money laundering compliance and operational and technology initiative, most of which is tied to the bank's ongoing efforts to fix its anti-money laundering compliance program in order to get the Federal Reserve's approval to acquire Hudson City Bancorp Inc. in New Jersey.

M&T Bank CFO Rene Jones, in a release, said the third quarter "softened" compared to the results of the second quarter, when net income rose more than 50 percent.

"The higher interest rate environment resulted in a significant reduction in mortgage banking revenues, while operating expenses for the quarter were up as a result of investments we are making in several key areas," Jones said.

M&T, the largest bank in Western New York, has been on the path to improving its anti-money laundering compliance program for much of the year. It had planned to close the Hudson City deal mid-year, but the transaction is now pushed back, awaiting Fed approval.

At the same time, the bank took on several hundred former Bank of America workers when the latter shut down its mortgage operations site in Getzville. M&T took over Bank of America's lease at CrossPoint Business Park this summer.