M&T Bank's profit plunges on FDIC fee-related expense, costly deposits

(Reuters) - M&T Bank'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, 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, 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.

(Reporting by Niket Nishant in Bengaluru; Editing by Pooja Desai)