M&T Bank Corp.’s third-quarter profits fell by 7 percent, falling short of analyst forecasts as the Buffalo-based bank continued to spend more to strengthen its anti-money laundering program.

M&T’s profits fell to $275 million, or $1.91 per share, down from $294 million, or $2.11 per share a year earlier. Analysts had been expecting M&T to report flat profits, with earnings per share of $1.98.

Bank officials blamed the decline in earnings on its increased spending to bolster its anti-money laundering and Bank Secrecy Act program – an essential step for M&T to satisfy Federal Reserve concerns about its program, which have prevented it from gaining approval of its $3.7 billion deal to buy New Jersey-based Hudson City Bancorp.

The bank has said it expects to spend $150 million this year – on top of the $60 million it spent last year – to bolster its anti-money laundering program.

“We firmly believe that our decision to invest in these initiatives is money well-spent,” said Rene F. Jones, M&T’s vice president and chief financial officer, in a statement.

M&T’s earnings also were hurt by a narrowing spread between the interest it earns on the loans it makes and the interest it pays out on deposits. That spread narrowed by 38 basis points over the past year to 3.23 percent during the third quarter, as the bank faced downward pressure on the interest rates it can charge on loans, while more deposit money was held in low-yielding vehicles.

One bright spot was M&T’s growing loan portfolio, which improved by almost all measures during the third quarter. The bank set aside $29 million for loan losses during the third quarter, down from $49 million a year ago. The value of loans that the bank classified as non-accruing during the third quarter dropped to $848 million, or 1.29 percent of its total portfolio, down from $916 million, or 1.44 percent of its portfolio, a year ago.

The bank’s fee income fell by 6 percent to $451 million from $477 million a year ago, mainly because last year’s fee income was inflated by $56 million in pre-tax gains from loan securitization transactions. Excluding those gains, fee income rose by 7 percent.

The bank’s operating expenses rose by 4 percent to $672 million from $648 million a year ago, mainly because of the increased spending on the anti-money laundering program.