Banker & Tradesman file photo

M&T Bank continued to see high interest rates weigh down its financials in the third quarter thanks to its higher cost of deposits borrowers made cautious by high lending rates.

M&T’s third-quarter net income was $690 million, higher than the $647 million it had in the same quarter last year but lower than the $867 million it recorded in the second quarter of 2023.

Quarter-on-quarter, net interest income declined to $1.79 billion from $1.81 billion the previous quarter, while M&T’s net interest margin was down to 3.79 percent from 3.91 percent.

The bank may have higher lending rates, but total loans dipped by 1 percent to $132.6 billion from $133.5 billion the previous quarter. This was due to the slight increase in C&I loans – a $94 million gain from dealer and specialty lending businesses – but was offset by the slight declines in commercial and residential real estate loans and commercial loans.

Deposits totaled $162.7 billion, higher than the $159.4 billion in the second quarter. More deposits were made in higher-yielding accounts, while the bank also sought funding from higher-rate brokered deposits.

The bank’s total asset size is now at $205.8 billion, up from $204.3 billion in the second quarter.

For the last quarter of 2023, M&T executives said they expect lower net interest income of between $1.71 billion and $1.74 million as the bank anticipates continued cost pressures from interest-bearing deposits.

Loans are expected to be flat in the fourth quarter as declines in commercial and residential real estate lending offset the growth prospects in C&I lending, executives said while consumer loans remain relatively flat.