M&T Bancorp said it plans to issue between $3 billion and $4 billion in senior debt this year in a bid to counter an expected decrease in deposits.
Banks across the country are dealing with an exodus of low-cost deposits, a marked change from the wave of cheap deposits that flowed into their coffers during the early years of the pandemic. Like other financial institutions, M&T said its deposit base increasingly consists of higher-cost deposits as interest rates rise and customers expect more return.
"We expect continued intense competition for deposits in the face of industrywide outflows," Chief Financial Officer Darren King said on a call with analysts Thursday after the Buffalo, New York, company reported fourth-quarter results.
Deposit balances for 2023 are expected to decline in the low single-digit range, King said.
Total deposits at M&T stood at $163.5 billion at the end of 2022, up from $131.5 billion in the fourth quarter of 2021 but down from $163.8 billion at Sept. 30.
M&T's management team laid out some expectations for the year, including:
- Between 8% and 9% of growth in outstanding loans this year
- A slowdown in consumer loan growth as interest rates rise
- Continuation of share repurchases, which restarted in the second quarter of 2022
In the fourth quarter, M&T reported profit of $765 million, a 67% increase from the year-ago period. A lower-than-expected reserve for credit losses of $90 million and better-than-expected noninterest income of $682 million boosted M&T's results.
