Wider margins, higher trust income and a lower provision for loan losses helped to boost the bottom line for M&T Bank in Buffalo, N.Y., during the second quarter, even though overall loans declined year over year.

Net income for the $118.4 billion-asset M&T rose 40% to $493 million in the quarter. Earnings per share were $3.26, beating the mean estimate of $3.17 according to analysts polled by FactSet Research Systems.

Net interest income rose 3% to $1 billion, and the net interest margin expanded 12 basis points to 3.83%.

Loans and leases declined by 1.5% to $87.8 billion at June 30. M&T said that was the result of repayments on acquired residential mortgage loans, which were partly offset by growth in commercial real estate and consumer loans.

Total deposits fell 4.5% to $89.3 billion, mainly due to maturities of time deposits and lower commercial escrow deposits, the bank said.

Noninterest income declined slightly to $457.4 million. Trust income and mortgage banking revenue increased from the year ago quarter, but those gains were offset by declines in brokerage services income and other revenue.

Expenses increased 3.5% to $777 million.

The bank also saw improvements in credit quality. M&T’s provision for credit losses in the second quarter totaled $35 million, compared with $52 million a year earlier. Net charge-offs fell 13% to $35 million, and nonperforming assets fell 5% to $918 million.

"Credit quality continued to be very good with the net charge-off ratio well below our long-term average," Chief Financial Officer Darren King said in a press release Wednesday. "Expenses were in line with our expectations as we continued with our plan to invest savings realized from lower income tax rates in our employees, communities and customer-service-delivery capabilities."

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