Bank of America Corp. (BAC) is laying off 1,320 employees in upstate New York as it will exit a mortgage-servicing facility there at the end of May, according to a filing with the New York State Department of Labor.

M&T Bank Corp. (MTB) is taking over Bank of America's Getzville, N.Y., mortgage-servicing facility and hiring about 600 Bank of America employees, a spokesman for the Buffalo, N.Y., bank said. He added M&T has about 400 openings in Buffalo and Bank of America employees can apply for those positions.

Bank of America, the nation's second-largest bank by assets behind J.P. Morgan Chase & Co. (JPM), has been shrinking and reducing costs. It said in late 2011 it aims to cut 30,000 jobs. It is now in the second phase of that cost-cutting program, called "New BAC."

It has sold mortgage-servicing rights, which are contracts to collect mortgage payments and conduct foreclosures of defaulting home owners.

A spokesman said compared with 2011 peak levels, the bank has less than half the number of customers who need help with specialized programs for delinquent mortgages

Bank of America's staff was down to 267,000 at year-end 2012, from roughly 282,000 when it started its "New BAC" cost-cutting program.

The Buffalo News previously reported Bank of America's plans to close the Getzville mortgage facility and the layoffs.

--Daniel Fitzpatrick contributed to this article.

Write to Matthias Rieker at matthias.rieker@dowjones.com

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04-02-13 1815ET