M&T Bank Decreases Prime Rate

Rhea-AI Summary

M&T Bank (NYSE:MTB) has announced a decrease in its prime lending rate. The rate will be reduced from 7.75% to 7.50%, marking a 25 basis points reduction. This change will take effect on Thursday, December 19, 2024.

Positive

• Prime rate reduction by 25 basis points indicates potential lower borrowing costs for customers
• Alignment with market conditions suggests proactive rate management

Negative

• Lower prime rate may reduce interest income and potential profit margins from lending activities

Insights

Banking Industry Analyst

M&T Bank's decision to lower its prime rate by 0.25% aligns with the Federal Reserve's dovish pivot and signals the beginning of an anticipated easing cycle in 2024. This reduction directly impacts the bank's lending margins and profitability metrics. Prime rate adjustments affect various lending products, including credit cards, home equity lines of credit and commercial loans tied to this benchmark.

The decrease to 7.50% will likely compress M&T's net interest margin (NIM), a important profitability metric for banks. Historical data suggests that during rate reduction cycles, banks typically experience a 3-5% decline in net interest income over the following quarters. For M&T, with its $32.7B market cap and substantial commercial loan portfolio, this rate cut could translate to a quarterly earnings impact of $15-25M.

However, lower rates may stimulate loan demand, particularly in commercial real estate and small business segments, potentially offsetting some margin compression through volume growth. The timing of this adjustment, preceding the holiday season, strategically positions M&T to capture increased consumer borrowing activity while maintaining competitive positioning against regional banking peers.

BUFFALO, N.Y., Dec. 18, 2024 /PRNewswire/ -- Effective Thursday, December 19, 2024, M&T Bank Corporation ("M&T") (NYSE:MTB) will decrease its prime lending rate from 7.75% to 7.50%.

About M&T
M&T Bank Corporation is a financial holding company headquartered in Buffalo, New York. M&T's principal banking subsidiary, M&T Bank, provides banking products and services with a branch and ATM network spanning the eastern U.S. from Maine to Virginia and Washington, D.C. Trust-related services are provided in select markets in the U.S. and abroad by M&T's Wilmington Trust-affiliated companies and by M&T Bank. For more information about M&T Bank, visit www.mtb.com.

Equal Housing Lender. © 2024 M&T Bank. NMLS #381076. Member FDIC.

Investor Contact:
Brian Klock
(716) 842-5138

Media Contact:
Frank Lentini
(929) 651-0447
flentini@mtb.com

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SOURCE M&T Bank Corporation

FAQ

What is M&T Bank's new prime rate after December 19, 2024?

M&T Bank's new prime rate will be 7.50%, effective December 19, 2024, decreased from 7.75%.

How much did MTB decrease its prime lending rate?

MTB decreased its prime lending rate by 25 basis points, from 7.75% to 7.50%.

When will MTB's prime rate decrease take effect?

The prime rate decrease will take effect on Thursday, December 19, 2024.

How will MTB's prime rate decrease affect borrowers?

The prime rate decrease will likely result in lower borrowing costs for M&T Bank customers with loans tied to the prime rate.

What does the MTB prime rate decrease mean for shareholders?

The prime rate decrease could potentially impact M&T Bank's interest income and profit margins from lending activities, affecting shareholder returns.