M&T Bank Corp. said profit edged up in its latest quarter, as cost reductions helped offset the effect of a slowdown in mortgage loan originations and a sharp increase in the lender's loss provision.

Results fell short of Wall Street projections.

The bank earned $280.4 million in the third quarter, up from $275.3 million a year earlier. Per-share earnings rose to $1.93 from $1.91. Revenue edged 1.2% higher to $1.14 billion. Analysts had predicted $2.01 in earnings per share and $1.15 billion in revenue, according to Thomson Reuters.

M&T, like many other lenders trying to cope with low interest rates, has turned to cost-cutting to lift profit. The Buffalo, N.Y.-based lender, which won approval earlier this month for its long-stalled acquisition of Hudson City Bancorp Inc., on Monday said it managed to bring noninterest expenses down by 1.7% from the year-ago quarter and by 6.2% from the second quarter.

M&T's efficiency ratio, a measure of costs against revenue, fell to 57.1% from 58.4% a year earlier and 58.2% in the prior quarter. That is as the bank's net interest margin—a key gauge of lending profitability—fell to 3.14% from 3.23% a year earlier and from 3.17% in the second quarter.

Meanwhile, fee-based revenue declined. Noninterest income fell 2.4% from a year earlier and 11% from the second quarter, thanks to a 10% drop in mortgage banking revenue, a 12% decline in trust income and because of a one-time gain from a sale that helped lift the previous quarter's result.

A higher provision for credit losses also bit into the bottom line. The bank set aside $44 million for potential loan losses, up about 50% from a year earlier.

Shares in the company, down about 6% this year, were inactive premarket.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

 

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(END) Dow Jones Newswires

October 19, 2015 08:05 ET (12:05 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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