Q3 2023 M&T Bank Corp Earnings Call

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Speaker 1: So.

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Speaker 2: Welcome to the M&T Bank Third Quarter 2023 Earnings Conference call.

Welcome to the M and T Bank third quarter 2023 earnings conference call.

Speaker 2: All lines have been placed on listen-only mode, and the floor will be open for your questions following the presentation.

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Please be advised that today's conference is being recorded.

Speaker 2: Please be advised that today's conference is being recorded. I would now like to hand the conference over to Brian Clock, Head of Market and Investor Relations. Please go ahead.

I would now like to hand, the conference over to Brian Clark head of market and Investor Relations. Please go ahead.

Speaker 3: Thank you, Angela, and good morning. I'd like to thank everyone for participating in MST's third quarter 2023 earnings conference call, both by telephone and through the webcast.

Thank you Angela and good morning.

Thank you everyone for participating in <unk> third quarter 2023 earnings conference call.

Telephone and webcast.

If you have not Randy earnings release, we issued this morning.

Speaker 3: If you have not read the earnings release we issued this morning, you may access it, along with the financial tables and schedules by going to our website www.mtb.com.

May access it along with the financial tables and schedules by going to our website.

W. W Dot MTBE dot com.

One is there you can click on the Investor Relations link.

Speaker 3: Once there, you can click on the investor relations link, and then on the events and presentations link.

Then on the events and presentations link.

Speaker 3: Also, before we start, I'd like to mention that today's presentation may contain forward-looking information.

Also before we start I'd like to mention that today's presentation may contain forward looking information.

Speaker 3: Cautionary statements about this information are included in today's earnings release materials and in the investor presentation as well as our SEC filings and other investor...

Cautionary statements about this information are included in today's earnings release materials.

And in the Investor presentation.

As well as our SEC filings and other investor materials.

Presentation also includes non-GAAP financial measures as identified in the earnings release, and an investor and the Investor presentation.

Speaker 3: Presentation also includes non-GAAP financial measures as identified in the earnings release and in the investor presentation.

The appropriate reconciliations to GAAP are included in the appendix.

Speaker 3: The appropriate reconciliations to GAP are included in the appendix.

Speaker 3: Joining me on the call this morning is M&T's Senior Executive Vice President and CFO , Darryl Bible. I'd like to turn the call over to Darryl.

Joining me on the call. This morning is <unk> senior executive Vice President and CFO , Daryl Bible I'd like to turn the call over to Darryl.

Thank you, Brian and good morning, everyone, let's start with our purpose mission and operating principles.

Speaker 4: Thank you, Brian , and good morning, everyone. Let's start with our purpose mission in operating principles on slide three. I would like to thank our more than 22,000 M&T colleagues for all their hard work. Whether serving our customers or our communities, our employees continue to deliver on our purpose, making a difference in people's lives. This purpose drives...

Great.

I'd like to thank our more than 22000 MFC colleagues for all their hard work, serving our customers our communities. Our employees continued to deliver on our purpose, making a difference in people's lives.

This drives our operating principles, we believe in local scale that is combining local knowledge and hands on customer service of community bank with the resources of a large financial institution.

Speaker 4: We believe in local scale, that is combining local knowledge and hands-on customer service of community bank with the resources of a large financial institution.

Speaker 4: Our 28 communities are led by on the ground regional presidents. Their knowledge allows us to better understand and meet the needs of our customers and communities. And importantly, this approach continues to produce strong results for our shareholders.

Our 28 communities.

Led by on the ground regional presidents their knowledge allows us to better understand and meet the needs of our customers and communities and importantly, this approach continues to produce strong results for our shareholders.

Speaker 4: Our local scale has led to superior credit performance, top deposit share, and high operating and capital efficiency over the long term.

Our local scale has led to superior credit performance top deposit share and high operating and capital efficiency over the long term move.

Moving to slide four.

Speaker 4: Moving to slide four. Our season, talent and diverse four are keys to gaining in-depth understanding of our customers' needs and expectations.

Our seasoned talent and diverse board are keys to gaining in depth understanding of our customers' needs and expectations.

Speaker 4: We have sound technology solutions coupled with caring employees which provide a differentiated client experience.

We have sound technology solutions, coupled with carrying employees, which provide a differentiated client experience.

Speaker 4: Please turn to slide five. This slide showcases how we activate our purpose through our operating print.

Please turn to slide five.

Slide showcases how we activate our purpose through our operating principles.

Speaker 4: When our customers and community succeed, we all.

What our customers and communities succeed we all succeed.

Speaker 4: Our investments in enhancing the customer experience and delivering impactful products have fueled organic growth.

Our investments in enhancing the customer experience and delivering impactful products have fueled organic growth.

Speaker 4: We also believe in supporting small business owners who play a vital role in our community.

We also believe in supporting small business owners, who play a vital role in our communities.

Speaker 4: Despite operating in only 12 states, we are ranked as number six SBA lender in the country, the 15th consecutive year M&T has ranked in the nation's top 10 SBA lender.

Despite operating in only 12 states. We are ranked as number six SBA limber lender in the country. The 15th consecutive year MTT is ranked in the nation's top 10 SBA lenders.

Speaker 4: And for the first time, we have finished as the top SBA lender in Connecticut, an important milestone following our acquisitions of People's United.

And for the first time, we have finished as the top SBA lender in Connecticut and important milestone following our acquisitions of peoples United.

Speaker 4: Our commitment to supporting the communities we serve extends to affordable housing projects.

Our commitment to supporting the communities, we serve extends to affordable housing projects.

Speaker 4: with almost 2.3 billion in financing and over 2600 home loans for low and moderate income rates.

Almost $2 3 billion in financing at over 26 center home loans for low and moderate income residents.

Speaker 4: Additionally, M&T Bank and our charitable foundation granted over $47 million in support of our communities in 2022 and approximately $30 million so far in 2023.

Ali <unk> Bank, and our charitable foundation granted over $47 million in support of our communities in 2022, and approximately $30 million so far in 2023.

Speaker 4: Please turn to slide six. Here we highlight our ongoing commitment to the environment.

Please turn to slide six here, we highlight our ongoing commitment to the environment.

Last year, we invested over $230 million and renewable energy sector and have significantly reduced our scope, one and scope two emissions since 2019.

Speaker 4: Last year we invested over 230 million in renewable energy sector and have significantly reduced our scope 1 and scope 2 emissions since 2019. Our ESG report was published in the

Our ESG report was published in July .

Speaker 4: But I encourage you to review this slide for some of the highlights.

But I encourage you to review this slide for some of the highlights.

Speaker 4: M&T ESG ratings have improved at Moody's, MSCI, and Sustainalytics.

Empties ESG ratings have improved at Moody's MSCI and sustain our lettings.

Turning to slide eight.

Speaker 4: There are several successes to highlight this quarter. We continue to see growth in auto dealerships as well as specialty businesses. We continue to grow custom deposits despite increasing competition and building on the strong liquidity position.

There are several successes to highlight this quarter, we continue to see growth in auto dealerships as well as specialty businesses, we continue to grow customer deposits despite increasing competition.

And building on the strong liquidity position.

Speaker 4: and comparative strength of our financial position in the industry allows us to continue lending in support of communities and local businesses.

And comparative strength of our financial position in the industry.

Allows us to continue lending in support of communities and local businesses.

Speaker 4: We remain focused on diligently managing expenses.

We can remain focused on diligently managing expenses.

Okay.

Speaker 4: Our third quarter results continue to reflect the strength of our core earnings power.

Our third quarter results continue.

To reflect the strength of our core earnings power.

Third quarter revenues have grown 4% compared to last year's third quarter pre provision net revenues have increased 4% to $1 1 billion credit remained stable net charge offs decreased in the first quarter and year to date, we still remain below the historical long term average.

Speaker 4: Third quarter revenues have grown 4% compared to last year's third quarter. Pre-provision net revenues have increased 4% to $1.1 billion.

Speaker 4: Credit remains stable, net charge-offs decreased in the first quarter, and year to date, we still remain below the historical...

GAAP net income for the quarter was $690 million up 7% versus like quarter in 2022.

Speaker 4: Gap net income for the quarter was $690 million, up 7% versus light quarter in 2022.

Speaker 4: Deluted gap earnings for sheer was $3.98 for the third quarter, up 13% from last year's similar quarter.

Diluted GAAP earnings per share was $3 98 for the third quarter up 13% from last year similar quarter.

Speaker 4: Now let's review our net operating results for the quarter on slide 9.

Now, let's review our operating results for the quarter on slide nine.

<unk> net operating income for the third quarter, which excludes intangible amortization.

Speaker 4: MIT's net operating income for the third quarter, which excludes intangible amortization

Speaker 4: was 702 million and diluted net operating earnings per share was $4.05.

702 million and diluted net operating earnings per share was $4.05.

Speaker 4: Net operating return on tangible common equity was 17.41%, and tangible book value per share increased 3% compared to the end of June .

Net operating return on tangible common equity was $17 four 1% and tangible book value per share increased 3% compared to the end of June .

On Slide 10, you will see that diluted GAAP earnings per share was down 21% from linked quarter recall the results from the second quarter of last year last year indicated an after tax.

Speaker 4: On slide 10, you will see that diluted GAAP earnings per share was down 21% from linked quarter. Recall the results from the second quarter of last year indicated an aftertack of the GAAP earnings.

157 gain from the sale of the business in April .

Speaker 4: 157 gain from the sale of the CIT business in April .

Speaker 4: Excluding this gain, gap net income and the loaded earnings per year were down 3% compared to the link quarter. On a gap basis, METs third quarter results produced an ROA and ROA of 1.33% and 10.99% respect.

Excluding this gain GAAP net income.

And diluted earnings per share were down 3% compared to the linked quarter on a GAAP basis <unk> third quarter results produced an ROE and ROA of 133% and 10, 99% respectively.

Speaker 4: Next, we will look a little deeper into the underlying trend that generated the third quarter results. Please turn this slide 11.

Next we will look a little deeper into the underlying trends that generated the third quarter results.

Please turn to slide 11.

Speaker 4: Taxable equivalent net interest income was 1.79 billion in the third quarter, down 23 million from one quarter. This decline was driven largely by higher interest rates on consumer deposit funding. An unfavorable funding mix change partially offset by higher interest rates on earning assets.

Taxable equivalent net interest income was $1 79 billion in the third quarter down $23 million from the linked quarter. This decline was driven largely by higher interest rates on consumer deposit funding and unfavorable funding mix change, partially offset by higher interest rates on earning assets.

Speaker 4: and one additional day. The net interest margin for the past quarter was 3.79% down 12 basis points from late quarter. The primary drivers of the decrease to the margin were an unfavorable deposit makeshift which reduced margin by 7 basis points.

And one additional day.

The net interest margin for the past quarter was 737, 9% down 12 basis points from linked quarter. The primary drivers of the decrease to the margin water.

And on favorable deposit mix shift, which reduced margin by seven basis points.

Speaker 4: The net impact from higher interest rates on custodial deposits net benefits from higher rates on earning assets, which we estimate reduce the margin by six basis points.

The net impact from higher interest rates on customer deposits net benefit from higher rates on earning assets, which we estimate reduced the margin by six basis points.

Speaker 4: Remaining one basis point was due to higher non-accuro interest, net of the impact of one additional day.

The remaining one basis point was due to higher non accrual interest net of the impact of one additional day.

Turning to slide 12.

Average, earning assets increased $1 $5 billion from the linked quarter due largely.

Speaker 4: Average earning assets increased 1.5 billion from the link quarter. Do largely...

Speaker 4: two low strong deposit growth that drove the three billion growth at the Fed. Average loans declined $928 million, and average investment securities declined $630 million. Turn to slide 13.

Two the strong deposit growth that drove the $3 billion growth at the fed average loans declined $928 million in average investment securities declined $630 million.

Turning to slide 13 to talk about average loans.

Speaker 4: Total loans and leases average to 132.6 billion for the third quarter of 2023 down 1% compared to the link quarter. Looking at loans.

Total loans and leases averaged $132 6 billion for the third quarter of 2023 down 1% compared to the linked quarter.

At loans by category.

On average basis compared to the second quarter C&I loans increased slightly to $44 6 billion, we continue to see growth in dealer and specialty businesses.

Speaker 4: On average basis compared to the second quarter, C and I loans increased slightly to $44.6 billion. We continue to see growth in dealer and specialty business.

Speaker 4: During the third quarter average CRE loans decreased by 2% to 44.2 billion. This decline was driven largely by our continued strategy to reduce on-balance heat exposure to this effort class. We have chosen to modernize our suite of products and services to offer more alternatives to better serve customers and to do so in a more capital efficient manner possible.

During the third quarter average CRE loans decreased by 2% to $44 2 billion. This decline was driven largely by our continued strategy to reduce on balance sheet exposure.

To this asset class.

We have chosen to modernize our suite of products and services to offer more alternatives to better serve customers and to do so in a more capital efficient manner possible.

Average residential real estate was 23 six.

Speaker 4: Average residential real estate was $23.6 billion, down 1%, largely due to portfolio pay down.

6 billion down 1% largely due to portfolio paydowns.

Speaker 4: Average customer loans were down slightly to 20.2 billion. The decline was driven by lower auto loan and HELOC balances, partially offset by the growth in recreational finance and credit card loss.

Average customer loans were down slightly to $20 2 billion, a decline was driven by lower auto loan and HELOC balances, partially offset by the growth in recreational finance and credit card laws.

Turning to slide 14.

Speaker 4: Turning to slide 14, average investment securities decreased to 28 billion during the third quarter. The duration of the investment securities book at the end of September was 3.9 years, and the un-realized pre-tax available for sale portfolio was only...

Average investment securities decreased to 28 billion during the third quarter.

The duration of the investment Securities book at the end of September was three nine years and the unrealized pre tax of Eric available for sale portfolio.

Or is it only.

$447 million at the end of the third quarter cash held at the fed and investment Securities totaled $59 2 billion, representing 28% of total assets.

Speaker 4: 447 million. At the end of the third quarter cash held at the Fed and investment security is total 59.2 billion, representing 28% of total F.

Turning to slide 15, we continue to focus on growing deposits with our customers and we're pleased with the growth in both average at end of period customer deposits.

Speaker 4: Turning to slide 15, we continue to focus on growing deposits with our customers, and we're pleased with the growth in both average and end-of-period customer deposits.

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Speaker 4: average total deposits through 3.3 billion. However, consistent with our experience and prior rising rate environments, increased competition for deposits and customer behavior continues the makeshift within the deposit base to higher cost deposits.

Average total deposits grew $3 3 billion, however, consistent with our experience in prior rising rate environments increased competition for deposits and customer behavior continues.

Unknown Executive: Welcome to the M&T Bank 3rd quarter 2023 earnings conference call. All lines have been placed on listen only mode and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star than the number one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. When posing your question, we ask that you please pick up your handset to allow for optimal sound quality. Lastly, if you should require operator assistance, please press star zero.

The mix shift within the deposit base to higher cost deposits.

Speaker 4: Average customer deposits increased $1 billion. The customer...

Average customer deposits increased $1 billion, a customer deposit mix.

Speaker 4: to migrate to Airwish demand deposit to decline 2.3 billion in favor of commercial sweeps and customer money market savings and time deposit.

Who migrate to average demand.

Demand deposits declined $2 3 billion in favor of commercial sweeps and customer money market savings and time deposits.

Speaker 4: Average broker deposit increased 3.2 billion while federal home bank Home loan bank advances decreased 2.2 billion on average broker money market and now increased 800 million broker time increased one and a half billion

<unk> broker deposits increased $3 2 billion of our federal home Bank home loan Bank advances decreased $2 2 billion on average brokered money market and now increased 800 million brokered time increased $1 5 billion.

Please be advised that today's conference is being recorded.

Brian Clark: I would now like to hand the conference over to Brian Clark, head of market and investor relations. Please go ahead. Thank you, Angela and good morning. I'd like to thank everyone for participating in M&T's 3rd quarter 2023 earnings conference call, both by telephone and through the webcast. If you have not read the earnings release, we issue this morning. You may access it along with the financial tables and schedules by going to our website, www.mtb.com. Once there, you can click on the investor relations link and then on the events and presentations link.

Speaker 4: Broker deposits represent just one of the several funding vehicles that we can employ in our management of the balance.

Broker deposits represent just one of several funding vehicles that we can employ in our management of the balance sheet.

At September 30 of this year brokerage deposits represented 8% of our outstanding deposits and short term borrowings.

Speaker 4: At September 30th of this year, broker deposits represented 8% of our outstanding deposits in short term borrowing.

Speaker 4: The pace and reduction in demand deposits seem to have decreased during the quarter. Our determined focus on retaining and growing customer deposits yielded positive results during the quarter.

The pace and reduction in demand deposits seem to have decreased during the quarter, our determined focus on retaining and growing customer deposits you had positive results during the quarter.

Speaker 4: Next, let's discuss non-interest income. Please turn to slide 16.

Next let's discuss noninterest income please turn to slide 16.

Also, before we start, I'd like to mention that today's presentation may contain forward-looking information, cautionary statements about this information are included in today's earnings release materials, and in the investor presentation, as well as our FEC filings and other investor materials. Presentation also includes non-gap financial measures, as identified in the earnings release and in the investor presentation. The appropriate reconciliation to gap are included in the appendix.

Speaker 4: Now an interesting income totaled $560 million in the third quarter compared to $803 million in the length quarter. As noted earlier, the second quarter included $225 million from the sale of the CIT bus.

Noninterest income totaled $560 million in the third quarter compared to $803 million in the linked quarter as noted earlier, our second quarter included $225 million from the sale of the six vessels. Excluding this gain third quarter noninterest income decreased $18 million compared to the second.

Speaker 4: including this gain third quarter non-attressed income decreased 18 million compared to the second quarter driven predominantly by 15 million related to one month of the CIT trust revenues included in the previous quarter.

Quarter, driven predominantly by $15 million related to one month of the CA <unk> Trust revenues included in the previous quarter.

Daryl Bible: Joining me on the call this morning is M&T's senior executive vice president and CFO, Darryl Bible. I'd like to turn the call over to Darryl. Thank you, Brian, and good morning, everyone.

Speaker 4: Other revenues, categories through largely unchanged from the link quarter.

Other revenues categories were largely unchanged from the linked quarter.

Speaker 4: Turning to slide 17 for expenses. Non-interest expenses were 1.28 billion in the third quarter of this year, down 15 million from the link quarter. That decrease in expense was due to 11 million and lower compensation and benefit costs reflecting lower average headcount, lower expenses for contracted resources and overtime.

Turning to slide 17 for expenses noninterest expenses for 128 billion in the third quarter of this year down $15 million from the linked quarter that decrease in expense was due to $11 million and lower compensation and benefit costs, reflecting.

Daryl Bible: Let's start with our purpose mission in operating principles on slide three. I would like to thank our more than 22,000 M&T colleagues for all their hard work. Whether serving our customers or our communities, our employees continue to deliver on our purpose, making a difference in people's lives. This purpose drives our operating principles. We believe in local scale that is combining local knowledge and hand-on customer service of community bank with the resources of a large financial institution.

While our average head count lower expenses for contracted resources and overtime.

6 million lower in other cost of operations, largely reflecting lower sub advisory fees as a result of the sale of the CIT business.

Speaker 4: Tix million lower and other cost of operations, largely reflecting lower sub-advisory fees as the result of the sale of the CIT business. Lower legal related expenses partially offset by losses associated with certain retail banking and ???ük He means treatment.

Lower legal related expenses, partially offset by losses associated with certain retail banking activities.

Daryl Bible: Action. Our 28 communities are led by on-the-ground regional presidents. Their knowledge allows us to better understand and meet the needs of our customers and communities. And importantly, this approach continues to produce strong results for our shareholders. Our local scale has led to superior credit performance, top deposit share, and high operating and capital efficiency over the long term.

Speaker 4: The efficiency ratio, which excludes intangible amortization and merger related expenses from the numerator and security gains or losses from a denominator, was 53.7% in the recent quarter compared to 53.4%.

The efficiency ratio, which excludes intangible amortization and merger related expenses from the numerator and security gains or losses from the denominator was 53, 7% in the recent quarter compared to 53, 4%.

Speaker 4: in the link quarter after excluding the gain from the sale of the CIT business. Next, let's turn to

The linked quarter after excluding the gain from the sale of the CIT business.

Let's turn to slide 18 for credit.

Daryl Bible: Moving to slide 4. Our season talent and diverse for our keys to gaining in-depth understanding of our customers needs and expectations. We have found technology solutions coupled with caring employees who provide a differentiated client experience.

Speaker 4: The allowance for credit losses amounted to 2.1 billion at the end of the third quarter, up 54 million from the end of the late quarter.

The allowance for credit losses amounted to $2 1 billion at the end of the third quarter up $54 million from the end of the linked quarter.

Speaker 4: And the third quarter recorded 150 million provision in credit losses, which was equal to the second quarter. Ned charge drops for 96 million in the third quarter compared to 127 million in the length.

In the third quarter, we recorded a 150 million provision and credit losses, which was equal to the second quarter net charge offs for $96 million in the third quarter compared to $127 million in the linked quarter.

Daryl Bible: Please turn to slide 5. This slide showcases how we activate our purpose through our operating principles. When our customers and community succeed, we all succeed. Our investment in enhancing the customer experience and delivering impactful products have fueled organic growth. We also believe in supporting small business owners who play a vital role in our communities. Despite operating in only 12 states, we are ranked as number six SBA lender in the country. The 15th consecutive year M&T is ranked in the nation's top 10 SBA lenders.

Speaker 4: The reserve build was primarily reflective of softening CRE values and the variability in the timing and the amount of CRE charge-off.

<unk> build was primarily reflective of softening CRE values and the variability in the timing and the amount of CRE charge offs.

Speaker 4: At the end of the third quarter, non-accrual loans were 2.3 billion, a decrease of 94 million compared to the prior quarter and represent 1.77% of loans down six basis points sequentially.

At the end of the third quarter non accrual loans were $2 3 billion, a decrease of $94 million compared to the prior quarter and represented 177% of loans down six basis points sequentially.

Speaker 4: As noted, Ned Charjoss for the recent quarter amounted to 96 million. The significant charge-offs were tied in four large credits.

As noted net charge offs for the recent quarter amounted to 96 million.

I think in charge offs were tired and for large credits three.

Speaker 4: Three large office buildings in Washington, D.C., Boston, and Connecticut, and one large healthcare provider operating in multiple properties in Western New York and Pennsylvania.

Three large office buildings in Washington, D C, Boston, and Connecticut, and one large healthcare provider operating in multiple properties and Western New York and Pennsylvania.

Daryl Bible: And for the first time, we have finished as the top SBA lender in Connecticut, an important milestone following our acquisitions of people United. Our commitment to supporting the communities we serve extends to affordable housing projects with almost 2.3 billion in financing and over 2600 home loans for low and moderate income residents. Additionally, M&T Bank and our charitable foundation granted over 47 million in support of our communities in 2022 and approximately 30 million so far in 2023.

Speaker 4: Annualized net charge offs as a percentage of total loans for 29 basis points for the third quarter. Compared to 38 basis points in the second quarter.

Annualized net charge offs as a percentage of total loans were 29 basis points for the third quarter compared to 38 basis points in the second quarter.

Speaker 4: This brings our year-to-date net charge off rate to 30 basis points, which is below our long-term average of 33 basis.

This brings our year to date net charge off rate to 30 basis points, which is below our long term average of 33 basis points.

Speaker 4: We continue to assess the impact on future maturities in our investor real estate portfolio due to the level of interest rates, the impact of value declines, and emerging tenancy issues.

We continue to assess the impact on future maturities and our investor real estate portfolio due to the level of interest rates the impact of value declines any emerging tenancy issues.

Please turn this slide 6. Here we highlight our ongoing commitment to the environment. Last year, we invested over 230 million in renewable energy sector and have significantly reduced our scope one and scope two emissions since 2019. Our ESG report was published in July, but I encourage you to review this slide for some of the highlights. M&T's ESG ratings have improved at Moody's MSCI and Sustain Analytics.

Speaker 4: continued targeted deportfolio dies in office, healthcare and multifamily portfolios are being done to identify any new emerging issues.

Continued targeted deep portfolio dies in office healthcare and multifamily portfolios are being done to identify any new emerging issues.

Speaker 4: or the fire are upcoming for 10-Q in the few weeks.

If I, our upcoming Form 10-Q, and a few weeks.

Speaker 4: We will estimate the level of criticized loans will be up to mid to high single digit percent as compared to the end of June . Largely due to increases in investor real estate.

We will estimate the level of criticized loans will be up to mid to high single digit percent as compared to the end of June largely due to increases in investor real estate.

Speaker 4: Reflective of the financial strength and portfolio diversification of the CRE borrowers, almost 90% of the criticized loans are paying as a grieve.

Reflective of the financial strength and portfolio diversification of the CRE borrowers.

Daryl Bible: Turning this slide 8, there are several successes to highlight this quarter. We continue to see growth in auto dealerships as well as specialty businesses. We continue to grow customer deposits despite increasing competition and voting on the strong liquidity position and comparative strength of our financial position in the industry. It allows us to continue lending in support of communities and local businesses. We remain focused on diligently managing expenses. Our third quarter results continue to reflect the strength of our core earnings power.

Almost 90% of the criticized loans are paying as agreed.

Speaker 4: Well, 90 days past due on which we continue to accrue interest were $354 million at the end of this quarter compared to $308 million, $380 million sequentially. In total, 76% of these 90 days past due loans were guaranteed by government-related entities.

Loans 90 days past due on which we continue to accrue interest for $354 million at the end of this quarter compared to 308 million $380 million sequentially and totaled 76% of these 90 days past due loans were guaranteed by government related entities.

Speaker 4: Turning the slide 19 for capital, METCIT ratio at the end of September was an estimated 10.94 percent compared to 10.59 percent at the end of the second quarter. The increase was due in part to the continuation of the pause of repurchasing shares.

Turning to slide 19 for capital <unk> ratio at the end of September was an estimated 10, 94% compared to $10 five 9% at the end of the second quarter. The increase was due in part to the continuation of a pause of repurchasing shares.

Daryl Bible: Third quarter revenues have grown 4% compared to last year's third quarter. Pre-provision net revenues have increased 4% to 1.1 billion. Credit remains stable, net charge off decreased in the third quarter, and year today we still remain below historical long term average. Gap net income for the quarter was 690 million, up 7% versus like quarter in 2022. Deluted Gap earnings for share was $3.98 for the third quarter, up 13% from last year's similar quarter.

Speaker 4: At the end of September , based upon the proposed capital rules, the negative AOCI impact on the CIT-1 ratio from the variable for sale securities and pension-related components would be approximately 36 basis points.

At the end of September based upon the proposed capital rules the negative impact on the CET one ratio from available for sale securities and pension related components would be approximately 36 basis points.

Now turning to slide 20 for outlook with three quarters in the books, we will focus on the outlook for the fourth quarter.

Speaker 4: With three quarters in the books, we will focus on the outlook for the fourth quarter.

Speaker 4: First, let's talk about the economic outlook. The economic environment was supportive in the third quarter and we were cautiously optimistic heading into the last quarter of this year.

First let's talk about the economic outlook the economic.

Make environment was supportive in the third quarter, and we were cautiously optimistic heading into the last quarter of this year.

Daryl Bible: Now let's review our net operating results for the quarter on slide 9. M&T's net operating income for the third quarter, which excludes intangible amortization, was 702 million, and diluted net operating earnings for share was $4.05. Net operating return on tangible common equity was 17.41% and tangible book value per share increased 3% compared to the end of June. On slide 10 you will see that diluted gap earnings for share was down 21% from link quarter.

Speaker 4: In the third quarter, the overall economy continued to expand, thanks to the strong consumer spending and steady capital expenditures by business.

In the third quarter. The overall economy continued to expand thanks to the strong consumer spending and steady capital expenditures by businesses, though the housing market continues to struggle and a high rate environment.

Speaker 4: The housing market continues to struggle in the high rate environment.

Speaker 4: Incurrently, inflation continued to swell and label markets.

Encouragingly inflation continued to slow and label markets.

Speaker 4: while still tight, improve substantially with steady hiring, grow age pressures dissipated.

While still a tight improved substantially with steady hiring while H pressures dissipated.

Speaker 4: Looking ahead to the fourth quarter, we are cautiously optimistic that the economy will continue to grow, but at a slower rate.

Looking ahead to the fourth quarter, we are cautiously optimistic that the economy will continue to grow but at a slower rate, we expect that that slower growth will continue reducing inflation pressures.

Speaker 4: We expect that that slower growth will continue reducing inflation pressure.

Daryl Bible: Recall the results from the second quarter last year, indicated an after tax, 157 gain from the sale of the CIT business in April. Excluding this gain, Gap net income and diluted earnings for share were down 3% compared to the link quarter. On a Gap basis, M&T's third quarter results produced an ROA and ROA of 1.33% and 10.99% respectively.

Speaker 4: The Federal Reserve has probably reached the end of its hike cycle, given slower inflation and recent run-up in long-term rates.

The Federal Reserve has probably reached the end of its hype cycle, given slower inflation and recent run up in long term rates.

Speaker 4: With that economic backdrop, let's review our net interest income out.

With that economic backdrop, let's review, our net interest income outlook.

Speaker 4: We expect taxable equivalent net interest income to be in the 1.71 to 1.74 billion range. As we noted on the previous calls, the key driver to net interest income continues to be the ability to efficiently fund earning asset growth.

We expect taxable equivalent net interest income to be in the 1.71% to $1 $74 billion range. As we noted on the previous calls the key driver to net interest income continues to be the ability to efficiently fund, earning asset growth.

Daryl Bible: Next, we will look a little deeper into the underlying trend that generated the third quarter results. Please turn to slide 11. Taxable equivalent net interest income was 1.79 billion in the third quarter down 23 million from link quarter. This decline was driven largely by higher interest rates on consumer deposits funding. An unfavorable funding mixed change partially offset by higher interest rates on earning assets and one additional day. The net interest margin for the past quarter was 3.79% down 12 basis points from link quarter.

Speaker 4: We expect the continued intense competition for deposits in the face of industry-wide outflows. Remain focused on growing.

We expect the continued intense competition for deposits in the face of industry wide outflows, we remain focused on growing customer deposits.

For the fourth quarter, we expect average deposits to be about the same level with growth of interest bearing customer deposits, but continue to decline and demand deposit balances.

Speaker 4: For the fourth quarter, we expect every deposits to be about the same level with growth of interest-bearing customer deposits, but continue to decline in demand deposit balance.

This is expected to translate into a through the cycle interest bearing customer deposit beta through the fourth quarter of this year to be in the mid 40% range.

Speaker 4: This is expected to translate into a through the cycle intersparing customer deposit beta through the fourth quarter this year to be in the mid 40% range.

Speaker 4: This deposit beta excludes broker deposits, including broker deposits would add 6% to the beta.

This deposit base at beta excludes broker deposits, including brokered deposits were at 6% to the beta.

Daryl Bible: The primary drivers of the decrease to the margin were an unfavorable deposit makeshift which reduced margin by 7 basis points. The net impact from higher interest rates on customer deposits net benefit from higher rates on earning assets which we estimate reduced the margin by 6 basis points. The remaining one basis point was due to higher non accrual interest net of the impact of one additional day.

While the percent of the cumulative beta is slowing we anticipate it will continue rising into the first half of next year.

Speaker 4: Next, let's discuss the outlook for the average loan growth, which should be the main driver of earning asset growth. We expect...

Next let's discuss the outlook for the average loan growth, which should be the main driver earning asset growth.

We expect average loans and leases balances.

Speaker 4: to be slightly higher than the third quarter of 1.33 billion levels.

To be slightly higher than the third quarter of 1.3 dollars 3 billion level.

Daryl Bible: Starting to slide 12, average earning assets increased 1.5 billion from the link quarter due largely to the strong deposit growth that drove the 3 billion growth at the Fed. Average loans declined 928 million and average investment securities declined 30 million.

Speaker 4: We expect the growth in CNI, but anticipate declines in CRE and residential mortgages, while consumer loan balances should be relatively flat. Turning to fees.

We expect the growth in CRE and C&I.

C&I, but anticipate declines in CRE and residential mortgages, while consumer loan balances should be relatively flat.

To fees.

We expect noninterest income to be essentially flat compared to the third quarter.

Speaker 4: We expect non-interest income to be essentially flat compared to the third quarter.

Turning to expenses.

Daryl Bible: Turn to slide 13 to talk about average loans. Jones, Total loans and leases averaged $132.6 billion for the third quarter of 2023 down 1% compared to the link quarter. Looking at loans by category, on average basis compared to the second quarter, C and I loans increased slightly to $44.6 billion, we continue to see growth in dealer and specialty businesses. During the third quarter, average C or E loans decreased by two percent to $44.2 billion.

Speaker 4: weeks anticipate expenses excluding in tangible amortization and the FDIC special assessment to be in the 1.245 to the 1.265 billion range in the fourth quarter. Intangible amortization is expected to be in the 15 million range and the FDIC is special assessment is anticipated to be 183 million. Given the prospects of slowing revenue growth, we remain focused on diligently managing expense.

We anticipate expenses, excluding intangible amortization.

And the FDIC special assessment to be in the one to four or five to the 126 5 billion range in the fourth quarter intangible amortization is expected to be in the $15 million range and the FDIC a special assessment is anticipated to be 183 million given the prospects are.

Slowing revenue growth, we remain focused on diligently managing expenses.

Turning to credit we continue to expect loan losses for the full year to be near at Mit's long term average of 33 basis points, which implies fourth quarter charge offs could be higher than the third quarter.

Speaker 4: Turning to credit, we continue to expect low losses for the full year to be near MET's long-term average of 33 basis points, which implies fourth quarter of charge offs could be higher than the third quarter.

Daryl Bible: This decline was driven largely by our continued strategy to reduce on-balance heat exposure to this effort class. We have chosen to modernize our suite of products and services to offer more alternatives to better serve customers and to do so in a more capital efficient manner possible. Average residential real estate was $23.6 billion down 1% largely due to portfolio paydowns. Average customer loans were down slightly to $20.2 billion. The decline was driven by lower auto loan and heat lock balances partially offset by the growth in recreational finance and credit card loans.

For the fourth quarter, we expect taxable equivalent tax rate to be in the 25% range.

Speaker 4: For the fourth quarter, we expect taxable equivalent tax rate to be in the 25% range.

Speaker 4: Finally, as it relates to capital, our capital coupled with limited investment security marks have been a clear differentiator for M&T.

Finally, as it relates to capital our capital coupled with limited investment security marks.

Have been a clear differentiator for <unk>.

M. A T has proven to be a safe haven for clients and communities the strength of our balance sheet is extraordinary.

Speaker 4: MET is proven to be a safe haven for clients and communities. The strength of our balance sheet is extraordinary.

Speaker 4: We can't go responsibility to manage our Shear Heart is capital very seriously and we'll return in capital loan. It is appropriate to do that.

We take our responsibility to manage our shareholders capital very seriously and we'll return capital when it is appropriate to do that.

Speaker 4: Our businesses are performing very well and we are growing new relationships each and every day.

Our businesses are performing very well and we are growing new relationships each and every day.

Daryl Bible: Turning to slide 14, average investment securities decreased to $28 billion during the third quarter. The duration of the investment securities book at the end of September was 3.9 years and the unrealized pre-tax available for sale portfolio was only $447 million. At the end of the third quarter, cash held at the Fed and investment securities total $59.2 billion, representing 28% of total assets.

Speaker 4: We are still evaluating the proposed capital rules so that we believe that now is not the time to be purchasing shares. That said, we are positioned to use our capital for organic growth.

We are still evaluating the proposed capital rules. So that we believe that now is not the time to be purchasing shares that said, we're positioned to use our capital for organic growth buyback.

Speaker 4: Bye, Vax. I've always been part of our core capital distribution strategy, and we'll again in the future.

Buybacks have always been part of our core capital distribution strategy and will again in the future.

In the meantime, our strong balance sheet will continue to differentiate us from our clients communities regulators and investors and rating agencies.

Speaker 4: In the meantime, our strong balance sheet will continue to differentiate us from our clients, communities, regulators, investors, and rating needs.

Daryl Bible: Turning to slide 15, we continue to focus on growing deposits with our customers and we're pleased with the growth in both average and end of period customer deposits. Average total deposits grew $3.3 billion. However, consistent with our experience and prior rising rate environments, increased competition for deposits and customer behavior continues to make shift within the deposit base to higher cost deposits. Average customer deposits increased $1 billion. The customer deposit makes to migrate to Average demand deposits declined $2.3 billion in favor of commercial sweeps and customer money markets savings in time deposits.

Speaker 4: To conclude on slide 21, our results underscore an optimistic investment.

To conclude on slide 21, our results underscore an optimistic investment thesis.

Speaker 4: While economic uncertainty remains high, that is when MIT has historically performed its peers. MIT has always been a purpose driven organization with successful business model that benefits all stakeholders, including shareholders.

While economic uncertainty remains high that is why <unk> has historically outperformed its peers <unk> has always been a purpose driven organization with successful business model that benefits all stakeholders, including shareholders.

Speaker 4: We have a long track record of credit outperforming through all economic cycles with growth about two times that of peer.

We have a long track record of credit outperforming through all economic cycles with growth about two times that of peers.

Speaker 4: Our strong shear holder returns include 15 to 20% return on tangible common equity. And robust.

Our strong shareholder returns include 15% to 20% return on tangible common equity at.

I had a robust dividend growth.

Daryl Bible: Average broker deposits increased $3.2 billion while federal home bank advances decreased $2.2 billion. On Average, broker money market and now increased $800 million broker time increased $1.5 billion, broker deposits represent just one of the several funding vehicles that we can employ in our management of the balance sheet. At September 30th of this year, broker deposits represent an 8% of our outstanding deposits and short-term borrowings. The pace and reduction in demand deposits seem to have decreased during the quarter. Our determined focus on retaining and growing customer deposits yielded positive results during the quarter.

Speaker 4: Finally, our disciplined, acquire and prudent steward of capital, sheerholder capital, and are integrated.

Finally, our disciplined acquirer and prudent steward.

Of capital shareholder capital.

Our integrated.

Speaker 4: Our integration of people's merger is completed. We are confident in our ability to realize our potential post merger. Now with that, we're turning it back to our caller.

Our integration of peoples merger.

Completed we are confident in our ability to realize our potential post merger now with that I'll turn it back to.

Our caller I'll briefly review the instructions.

Yeah.

At this time, if you would like to ask a question. Please press star one on your telephone keypad.

Speaker 2: At this time, if you would like to ask a question, please press star one on your telephone keypad.

Speaker 2: You may remove yourself from the queue at any time by pressing star 2.

You may remove yourself from the queue at any time by pressing star cow.

Speaker 2: Once again, that is star 1 to ask a question. We will pause for a moment to allow questions to queue.

Once again that is star one to ask a question, we will pause for a moment to allow questions to queue.

Okay.

Daryl Bible: Next, let's discuss non-interest income. Please turn to slide 16. 13, Non-interest income totaled $560 million in the third quarter compared to $803 million in the length quarter. As noted earlier, the second quarter included $225 million from the sale of the CIT business, including this gain, third quarter non-interest income decreased $18 million compared to the second quarter driven predominantly by $15 million related to one month of the CIT trust revenues included in the previous quarter. Other revenues categories were largely unchanged from the length quarter.

Once again, if you would like to ask a question press star one.

Our first question comes from Manan <unk> with Morgan Stanley . Please go ahead.

Speaker 2: Our first question comes from Manan, Gisalya with Morgan Stanley . Please go ahead.

Hi, good morning.

Good morning Manav.

Speaker 5: You spoke about a mid-high single digit increase in criticized law in the squatter. I was wondering how is the mix changing between hotel health care and office?

You spoke about.

Mid to high single digit increase in criticized loans this quarter.

Wondering how is the mix changing between hotel health care and office.

Speaker 5: And it also looks like non-acruel loans take lower the squatter. So can you talk about what the drivers are there? You know, whether there's loan sales or any other online drivers? And if that had any benefit to net interest income the squatter?

And it also looks like non accrual loans ticked lower this quarter.

Daryl Bible: Turning to slide 17 for expenses, non-interest expenses were $1.28 billion in the third quarter of this year, down 15 million from the length quarter. That decrease in expense was due to $11 million in lower compensation and benefit costs reflecting lower average headcount lower expenses for contracted resources and overtime. Six million lower and other cost of operations, largely reflecting lower sub-advisory fees as the result of the sale of the CIT business, lower legal related expenses partially offset by losses associated with certain retail banking activities.

So can you talk about what the drivers are there.

Whether it is loan sales or any other underlying drivers and if that had any benefit to net interest income this quarter.

Speaker 4: Yeah, happy to do that. So on the criticized increase, it's really just more the same that we're seeing. It's more increases just in our IRE portfolio, primarily on the off its side for the most part. So nothing really different from trends that we're seeing. As far as not a crows, there was one large property that was sold in New York that was a primary driver for the not a crows.

Yeah happy to do that so on the criticized increase it's really just more of the same that we're seeing is floor increases just in our I O portfolio, primarily on the office side for the most part so nothing really different from trends that we're seeing as.

As far as non accruals.

There was one large property that was sold in New York that was a primary driver for the non accruals, we actually had a gain in that that helped margin probably by about $5 million in the quarter.

Speaker 4: We actually had a gain in that that helped margin, probably by about $5 million in the quarter.

Daryl Bible: The efficiency ratio, which excludes intangible amortization and merger-related expenses from the numerator and security gains or losses from the denominator was 53.7% in the recent quarter compared to 53.4% in the length quarter after excluding the gain from the sale of the CIT business.

Got it thank you.

Speaker 5: Got it, thank you. And then maybe just on the buybacks. What is the criteria to resume the buybacks from here? Because it seems like we have more clarity on regulation at this point. Is it a function of?

And then.

Maybe just on the buybacks.

What is the criteria to resume the buybacks from here because it seems like we have more clarity on.

Regulation at this point.

Daryl Bible: Next, let's turn to slide 18 for credit. The allowance for credit losses amounted to $2.1 billion at the end of the third quarter of $54 million from the end of the length quarter. In the third quarter, we recorded $150 million provision in credit losses, which was equal to the second quarter, net chargeoffs for $96 million in the third quarter compared to $127 million in the length quarter. The reserve bill was primarily reflective of softening CRE values and the variability in the timing and the amount of CRE chargeoffs.

Is it a function of.

Speaker 5: uh... m in t issuing you know more in the in the death markets and then starting by back visit uh... to do with the credit rating agencies you know any any color you can throw that would be uh... would be helpful uh... especially given you know how much access capital uh... m in t since i've at this point

Mmk issuing more in the debt markets and then starting buybacks is it to do with the credit rating agencies.

Any color you can throw at that would be would be helpful.

Actually given how much excess capital.

It seems to have at this point.

Yes, so I definitely agree with your banana that we do have excess excess capital, but right now the economy is still kind of unpredictable rates higher for longer we'll probably continue to have stress on clients over the next couple of quarters. If that actually comes to fruition. They were just trying to be conservative and cautious.

Speaker 4: Yeah, so I definitely grew a few. I'm not in that we do have excess capital, but right now, you know, the economy is still kind of unpredictable. You know, rates higher for longer will probably continue to have stress on clients.

Daryl Bible: At the end of the third quarter, non accrual loans were $2.3 billion a decrease of $94 million compared to the prior quarter and represent 1.77% of loans down six basis points sequentially. As noted, net chargeoffs for the recent quarter amounted to $96 million. Significant chargeoffs were tied in four large credits, three large office buildings in Washington DC, Boston and Connecticut, and one large healthcare provider operating in multiple properties in Western New York and Pennsylvania.

At the same time and it's also for us to actually have an opportunity to continue to grow organic growth in our commercial and consumer books.

Speaker 4: and trust books as well. So I think we're just trying to be cautious and we know when the economy gets a little bit more comfortable, we'll consider but repurchases there. It is true to our long-term.

Our trust folks as well so I think we're just trying to be cautious and we know when the economy gets a little bit more comfortable we will consider but repurchases. There. It is true to our long term.

Speaker 4: strategies of capital distribution back to the shareholders not going anywhere, but we just want to continue to make sure that we're strong and can grow and serve our customers right now.

The strategies of capital distribution back to the shareholders not going anywhere, but we just want to continue to make sure that we're strong and can grow and serve our customers right now.

Daryl Bible: Annualized net chargeoffs as a percentage of total loans were 29 basis points for the third quarter compared to 38 basis points in the second quarter. This brings our year-to-date net chargeoff rate to 30 basis points, which is below our long-term average of 33 basis points.

Great. Thank you.

Thank you.

Speaker 2: The next question comes from Ibrahim, Bunawala, with Think of America. Please go ahead.

The next question comes from Ebrahim <unk> with Bank of America. Please go ahead.

Hey, good morning.

Daryl Bible: We continue to assess the impact on future maturities and our investor real estate portfolio due to the level of interest rates, the impact of value declines and the emergent tendency issue. Productions, Continued Targeted Deep Portfolio Dives in Office, Healthcare, and Multifamily Portfolios are being done to identify any new emerging issues. When we fire our upcoming form 10Q in the few weeks, we will estimate the level of criticized loans will be up to mid to high single digit percent as compared to the end of June.

Speaker 5: I guess it's going to follow up, Daniel, in terms of, so your NII guide to fourth quarter is fairly clear, but we're hearing some of your peers around potential for the margin, NII, bottoming in the fourth quarter, especially if the Fed is done. Give a few thought process around.

I guess just wanted to follow up in terms of so your NII guide for fourth quarter is fairly clear but.

We are hearing from some of your peers around potential for the margin NII bottoming in the fourth quarter.

And if the fed is done.

Your thought process around.

Speaker 5: Is there something about your balance sheet? Why that? Why that might get pushed out because of just deposit having later to reprise? What is dynamic dynamics on your balance sheet or your markets? Any color there would be a fish.

Is there something about your balance sheet like that why that might get pushed out because of deposits have been related to the price.

The NIM dynamics on your balance sheet oil markets any color there would be appreciated.

Speaker 4: Yeah, you know, it's really the biggest driver for the Nettartress margin for us right now is really what happens to our non-interest bearing deposit.

Yes manav.

It's really the biggest driver for the net interest margin for US right now is really what happens to our noninterest bearing deposits.

Daryl Bible: Largely due to increases in investor real estate. Reflective of the financial strength and portfolio diversification of the CRE borrowers, almost 90% of the criticized loans are paying as agreed. Lones 90 days past due on which we continue the cruel interest were 354 million at the end of this quarter compared to 380 million sequentially. And total 76% of these 90 days past due loans were guaranteed by government related entities.

Speaker 4: You know, we were down $2.3 billion. That was better than what we thought it would be. You know, and we think that it's slowing down. We'll see how that plays out in the fourth quarter. But that is probably the biggest determining factor. When you look at our balance sheet, though, I'm actually pretty pleased with how the assets are repricing.

We were down $2 3 billion that was better than what we thought it would be.

We think that is slowing down we'll see how that plays out in the fourth quarter, but that is probably the biggest determining factor. When you look at our balance sheet, though I'm actually pretty pleased with how the assets are repricing. If you look at the reactivity rate on some of our fixed portfolios. If you look at this quarter like our consumer loan.

Speaker 4: If you look at the reactivity rate on some of our fixed portfolios, if you look at this quarter, like our consumer loan portfolio was up 22 basis points.

Portfolio was up 22 basis points, we have home equity in there that is prime related but that's a smaller percentage.

Speaker 4: You know, we have foe mackerelty in there that is primary related, but that's a smaller percentage.

Speaker 4: We had really good repricing and other consumer portfolios like auto was up approximately 300 basis points in what was rolling off versus what was rolling on. If you look at our RV and that was up approximately 250 basis points in what was rolling off rolling on.

We have really good repricing and other consumer portfolios like auto was up approximately 300 basis points in what was rolling off versus what was rolling on if you will.

Daryl Bible: Turning the slide 19 for capital, METCIT ratio at the end of September was an estimated 10.94% compared to 10.59% at the end of the second quarter. The increase was due in part to the continuation of the pause of repurchasing shares. At the end of September based upon the proposed capital rules, the negative AOC impact on the CIT one ratio from the variable for sale securities and pension related components would be approximately 36 basis points.

Look at our RV and boat portfolio that was up a practically 250 basis points of what was rolling off wrong.

Speaker 4: So I think once we get more stability in the disintermediation of the positive, I'm more favorable into margin stabilizing. I think the asset size actually is performing pretty well. Hello.

So I think once we get more stability in the disintermediation of deposits.

I'm more favorable into margin stabilizing I think the asset side is actually performing pretty well.

Noted.

Just moving maybe.

Give us a mark to market in terms of commercial real estate, what youre seeing around.

Speaker 5: Give us a mock to mock it in terms of commercial real estate what you're seeing around

Daryl Bible: Now turning to slide 20 for outlook with three quarters in the books, we will focus on the outlook for the fourth quarter. First, let's talk about the economic outlook. The economic environment was supportive in the third quarter and we were cautiously optimistic heading into the last quarter of this year. In the third quarter, the overall economy continued to expand thanks to the strong consumer spending and steady capital expenditures by businesses, though the housing market continues to struggle in the high rate environment.

Speaker 5: There's some concern whether if we go into next year, given what the yield comes down, we might see some more pressure. We flow beyond the theory of office into multi-family. One, give us a sense of on the theory of office, have the visibility improved around the level of marks that you might have to take as some of this works through the system, and whether or not you're seeing more pain beyond the office complex.

There's some concern whether if we go into next year, even though the yield goes down.

We might see some more pressure will be on CRE, you also seem to multifamily.

Daryl Bible: Encouragingly inflation continued to slow and label markets, while still tight, improved substantially with steady hiring while age pressures dissipated. Looking ahead to the fourth quarter, we were cautiously optimistic that the economy will continue to grow but at a slower rate. We expect that that slower growth will continue reducing inflation pressures. The Federal Reserve has probably reached the end of its hike cycle given slower inflation and recent run-up in long-term rates.

Give us a sense of like on CRE office has your visibility improved at all.

<unk> marks that you might have to take some of this looks to the system and whether or not youre seeing <unk> beyond the office complex.

Yeah. So on the office side I would tell you our credit team, we feel really on top of what's going on there I think we are actively looking at any credit that could be and have any issues whatsoever. We will look at it I'm trying to put the right valuation in there.

Speaker 4: Yeah, so on the office side, I would tell you our credit team, we feel really on top of what's going on there. I think we are actively looking at any credit that could be and have any issues whatsoever. We're looking at it. I'm trying to put the right valuation in there. We traditionally run with a higher level of criticized assets.

We traditionally run with a higher level of criticized assets because we have a lot of long term clients that have been with <unk> for a long time period. They have other sources of cash flow to help carry the loans and are willing to put in equity to help support the loans.

Speaker 4: because we have a lot of long term clients that have been with M&T for a long time period.

Speaker 4: They have other sources of cash flow to help carry the loans and are willing to put in equity to help support.

Speaker 4: When we do find loans that there is not support around, we'll probably move to exit those. As far as the valuations go, there's still not a whole lot of specifics out there. We did have that one sale for us that actually was a little bit better than what we had marked there, but that was one big loan.

When we do find loans that where there is not support around will probably move to exit those.

Daryl Bible: With that economic backdrop, let's review our net interest income outlook. We expect taxable equivalent net interest income to be in the 1.71 to 1.74 billion range. As we noted on the previous calls, the key driver to net interest income continues to be the ability to efficiently fund earning asset growth. We expect the continued intense competition for deposits in the face of industry-wide outflows. Remain focused on growing customer deposits. For the fourth quarter, we expect average deposits to be about the same level with growth of interest-bearing customer deposits, but continue to decline in demand deposit balances.

As far as the valuations go Theres still not a whole lot of specifics out there we did have that one sale.

For us that actually was a little bit better than what we had it marked there but that was one one big loan. So I wouldn't say, that's a trend by any stretch right now, but I think we feel pretty good on where we are as far as the other asset classes.

Speaker 4: say that's a trend by any stretch right now, but I think we feel pretty good on where we are. As far as the other asset classes, I think we just with rates higher for longer just puts more...

I think we just with rates higher for longer just puts more.

Speaker 4: It's just tougher for some of our customers. And multi-family is an area that we are looking at as well. Nothing really is popping out of anything very superior there yet, but we're just trying to stay ahead of what potentially could happen and kind of be preemptive if we see anything. So we're just preparing. Our credit team is very experienced. We've been very good with commercial real estate for a long time, and we are on top of where we are.

Tougher for some of our customers and multifamily is an area that we are looking at as well nothing really popping out of anything very superior there yet, but we're just trying to stay ahead of what potentially could happen and kind of be preemptive. If we see anything so we're just preparing.

Daryl Bible: This is expected to translate into a through-the-cycle interest-bearing customer deposit beta through the fourth quarter this year to be in the mid-40% range. This deposit beta excludes broker deposits, including broker deposits would add six percent to the beta. While the cumulative beta is slowing, we anticipate it will continue rising into the first half of next year.

Our credit team is very experienced and we've been very good with commercial real estate for a long time and we are on top of where we are.

Well thank you.

Uh huh.

The next question comes from Erika Najarian with UBS. Please go ahead.

Speaker 2: The next question comes from Erica Najarian with UBS. Please go ahead. Hi. Good morning. I just wanted to clarify the response.

Hi, good morning.

I just wanted to clarify.

Daryl Bible: Next, let's discuss the outlook for the average loan growth, which should be the main driver of earning asset growth. We expect average loans and leases balances to be slightly higher than the third quarter of 1.33 billion level. We expect the growth in CNI, but anticipate the clients in CRE and residential mortgages for a consumer loan balance that should be relatively flat.

Since two.

Ebrahim. This question Daryl I'm, just wondering as you think about.

Just following the forward curve as we see.

Got it.

At what point do you expect net interest income to trough based on.

No about the curve and what we know about the various puts and takes for growth in deposits.

Yeah from a framework perspective, it's really wouldn't industry intermediation slows down.

Speaker 4: Yeah, you know, from a framework perspective, it's really when the disintermediation slows down. And when the disintermediation slows down, I think the asset side is performing well and will continue to reprice higher, because I think we're gonna have a steeper curve, you know, for a longer period of time.

Daryl Bible: Turning to fees, we expect non-interest income to be essentially flat compared to the third quarter. Turning to expenses, we anticipate expenses excluding intangible amortization and the FDIC special assessment to be in the 1.245 to the 1.265 billion range in the fourth quarter. Intangible amortization is expected to be in the 15 million range and the FDIC special assessment is anticipated to be 183 million. Given the prospects of slowing revenue growth, we remain focused on diligently managing expenses.

Distribution slows down and I think the asset side is performing well and will continue to reprice higher because I think we're gonna have a steeper curve for a longer period of time.

Speaker 2: You know, and hopefully that will happen in the next couple quarters, but it's really hard to know right now. We think it's slowing, but I think we'll just see how that plays out. I'll give you guidance, you know, next earnings call on the fourth quarter on that, but, you know, conditions, you know, could be slowing down with what we're seeing right now, but, you know, one quarter is not a trend. I just want to get a couple quarters under our belt before we really say, Nantrasmargin's going to stabilize. And as a follow-up to that, your period...

Hopefully that will happen in the next couple of quarters, but it's really hard to know right now we think its slowing.

But I think we'll just see how that plays out I'll give you guidance next earnings call on the fourth quarter on that but you know conditions.

Could be slowing down with what we're seeing right now, but one quarter is not a trend I just wanted to get a couple of quarters under our belt before we really say net interest margin is going to stabilize.

Got it and as a follow up to that your period end cash balance was just 30 billion Daryl.

Daryl Bible: Turning to credit, we continue to expect loan losses for the full year to be near MNT's long-term average of 33 basis points, which implies fourth quarter charge-offs could be higher than the third quarter. For the fourth quarter, we expect tax-flow equivalent tax rate to be in the 25% range.

Awesome dry powder.

As we think about.

In the quarters ahead.

Speaker 6: head, you know, on one hand, potentially the fed is peaking, right? And you seem to be rather as attentive. You know, on the other, you have all

On one hand, and potentially doing the fed is peaking.

Seem to be rather asset sensitive.

Daryl Bible: Finally, as it relates to capital, our capital, coupled with limited investment security marks, have been a clear differentiator for MNT. MNT has proven to be a safe haven for clients and communities. The strength of our balance sheet is extraordinary. We take our responsibility to manage our shareholders capital very seriously, and we return in capital loan. It is appropriate to do that. Our businesses are performing very well and we are growing new relationships each and every day.

Other you have all these new rules on.

Liquidity is that we don't have yet.

As well as treatment of assai for regional banks.

Speaker 6: How should we think about an absence of stronger net loan growth?

Should we think about an absence.

Stronger net loan growth.

Hey, Kevin.

You're just going to continue to build cash would be a little bit more asset sensitive, even though we're peaking in regions and figure out what the final rules look like on both capital and liquidity.

Speaker 4: You know, I think, you know, we have the strong position at the Fed that's intentional for us right now. We want to be really conservative with our cash and liquidity position. Like I said earlier, it's, you know, the economy is.

You know I think we.

We have the strong position at the fed that's intentional for US right now and we want to be really conservative with our cash and liquidity position like I said earlier, it's the economy is.

Daryl Bible: We are still evaluating the proposed capital rules so that we believe that now is not the time to be purchasing shares. That said, we are positioned to use our capital for organic growth. BiBACs have always been part of our core capital distribution strategy, and we will get in the future. In the meantime, our strong balance sheet will continue to differentiate us from our clients, communities, regulators, investors, and rating agencies.

Doing okay, but slowing down and maybe hopefully not get into a recession, but we just want to be really careful and cautious from that perspective.

Speaker 4: Doing okay, but slowing down and you know, maybe hopefully not get into a recession, but we just want to be really careful and cautious from that perspective.

Speaker 4: So I think it's intentional we're restrained there. You know, will we invest some of that, obviously into loans? We would love to do that to support our customers, but we are not widening our credit box. Whatever we're going to grow with the market will give us. But we do think there's opportunities to grow relationships and to potentially grow balances in some of our loan categories. So we'll see how that plays out.

So I think it's intentional where we're saying there.

Invest some of that obviously into loans, we would love to do that support our customers, but we are not widening our credit box whatsoever, we're going to grow with the market will give us.

Daryl Bible: To conclude on slide 21, our results underscore an optimistic investment thesis. While economic uncertainty remains high, that is when MNT has historically outperformed its peers. MNT has always been a purpose driven organization with successful business model that benefits all stakeholders, including shareholders. Rivers. We have a long track record of credit outperforming through an all economic cycles with growth about two times that of peers. Our strong shearholder returns include 15 to 20% return on tangible common equity and robust dividend growth. Finally, our discipline, acquire and prudent steward of capital, shearholder capital, and our integration of people's merger is completed. We are confident in our ability to realize our potential post-merger.

But we do think there is opportunities to grow relationships and to potentially grow balances in some of our loan categories. So we'll see how that plays out as.

Now with that, we're turning it back to our caller and we'll briefly review the instructions.

Speaker 4: As far as deploying some of it, the cash in of the security's portfolio, I would just say that over the next year, you might see us move a little bit to the investment portfolio, but it'll be on a gradual basis.

As far as deploying some of it the cash into the securities portfolio I would just say that over the next year, you might see us move a little bit to the investment portfolio, but it will be on a gradual basis.

Thank you.

Your next question comes from Matt O'connor with Deutsche Bank. Please go ahead.

Speaker 2: The next question comes from Matt O'Connor with Deutsche Bank. Please go ahead.

Speaker 7: Good morning. First, sorry if I missed it, but did you comment on what your reserves are against your office books?

Good morning.

First sorry, if I missed it but did you comment on what your reserves are against your office book.

So we haven't made that.

Speaker 4: So we haven't made that suddenly, Matt, but it continues to increase where we are right now. So we had an increase in our allowance. We had little over $50 million. I'd say about half of it went to the CRE portfolio and half of it went to the CNI portfolio.

Like Matt, but it continues to increase you know where we are right now. So we had an increase in our allowance we had little little over $50 million I'd say about half of it went to the CRE portfolio.

Half of it went to the C&I portfolio.

Unknown Executive: At this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question. We will pause for a moment to allow questions to queue. Once again, if you would like to ask a question, press star 1.

So I think we were adding it where we think it's appropriate based upon our models and performance.

Speaker 4: So I think we were adding it wherever you think it's appropriate based upon our models and performance.

Okay.

Speaker 7: Yeah, that would be helpful to get over time. I know everybody's book is a little bit different, but many of your peers are disclosing, so that would be helpful. As you think about the scrogers, obviously, in the air.

Yeah, that'd be helpful to get over time, I know everybody's book is a little bit different but.

Many of your peers are disclosed since that'd be helpful.

You're talking about disclosure is obviously an area of focus.

Speaker 7: Maybe switching gears, as you think about all the capital that you have and liquidity and the balance sheet flexibility, what areas in lending are you leaning into? Not just kind of looking at one quarter, but the next few quarters, and is it kind of doing more business with existing customers or also trying to grow the customer footprint?

And then just switching gears like how do you think about all the capital that you have in liquidity in the balance sheet flexibility and what areas in London.

Manan Gosalia: Our first question comes from Manon Gassalia with Morgan Stanley. Please go ahead. Good morning. Good morning, Manon. You spoke about a mid-high single digit increase in criticized law and fiscal quarter. I was wondering how is the mix changing between hotel and health care and office? It also looks like non-acruel loans to lower this quarter. Can you talk about what the drivers are there? Whether there is loan sales or any other online drivers? If that had any benefit to net interest income this quarter?

Are you reading into.

Not just kind of looking at one quarter over the next few quarters.

And is it just kind of doing more business with existing customers or also trying to grow the customer footprint.

I mean that this past quarter, we had growth in our dealership businesses you know as the strike was starting to happen I think a lot of the dealers actually stocked up on used cars and that actually drove an increase in utilization in that one sector, a little bit earlier than normal there that will.

Speaker 4: I mean that this fast quarter we had growth in our dealership businesses.

Speaker 4: You know, as the strike was, you know, starting to happen, I think a lot of the dealers actually stocked up on used cars and that actually drove an increase in utilization in that one sector.

Speaker 4: or a little bit earlier than normal there, that will probably continue to play out, I think into the fourth quarter, while it would be one. Our large corporate banking, I think has some growth opportunities where we're positioned there.

We continue to play out I think into the fourth quarter, while would be one.

Our large corporate banking I think has some growth opportunities where we're positioned there.

Daryl Bible: Happy to do that. On the criticized increase, it's really just more the same that we're seeing. It's more increases just in our IRE portfolio, primarily on the office side for the most part. So nothing really different from trends that we're seeing. As far as non-acruel, there was one large property that was sold in New York that was a primary driver for the non-acruel. We actually had a gain in that that helped margin, probably by about $5 million in the quarter.

Speaker 4: Specifically on fund banking, I think we're growing there nicely. It's a very conservative portfolio, very short term oriented, lower risk areas.

Specifically on fund banking I think we're growing there nicely. It's a very conservative portfolio of very short term oriented lower risk areas. So I would say most of the growth that we're seeing is in the C&I space. Those are the highlights right now it is very competitive and middle market C&I.

Thank you.

Speaker 4: So I would say most of the growth that we're seeing is in the CNI space. Those are the highlights right now. It is very competitive in metal markets, CNI. We are trying to be competitive there. But right now the higher interest rates are just putting a lot of our commercial clients to be a little bit more cautious.

We are trying to be competitive there, but you know right now the higher interest rates are just putting in a lot of our commercial clients to be a little bit more cautious.

Speaker 4: but when they're willing to, to borrow, we're trying to help them when that's when we're able to do that.

But when they are willing to borrow we're trying to help them win.

Daryl Bible: Then maybe just on the buybacks. What is the criteria to resume the buybacks from here? It seems like we have more clarity on regulation at this point. Is it a function of M&T issuing more in the debt markets and then starting buybacks? Is it to do with credit rating agencies? Any color you can throw that would be helpful, especially given how much excess capital M&T seems to have at this point? I definitely agree with you, Manon, in that we do have excess capital.

When that's when we're able to do that so.

Okay. Thank you very much.

Okay.

The next question comes from Bill <unk> with Wolfe Research. Please go ahead.

Speaker 2: The next question comes from Bill Carcacci with Wolf Research. Please go ahead.

Speaker 8: Thank you. Good morning. Hey, Daryl. I wanted to follow up on your comments around the higher for longer rate environment being tougher for your customers. As you look across your portfolio, do you have a good handle on the degree to which some of your customers had put on swaps, maybe when we were still under CERP two to three years ago, so they haven't yet felt the pressure of higher rates? Curious about whether the rolling off of those swaps is something you worry about, not really just in CRE, but really across all loan categories?

Thank you good morning, Daryl I wanted to follow up on.

Your comments around the higher for longer rate environment being tougher for your customers as you look across your portfolio.

Do you have a good handle on the degree to which some of your customers put on swaps.

Maybe when we were still under served two to three years ago. So they haven't yet felt the pressure of higher rates curious about whether the rolling off of those swaps are something you worry about you know not really that just the CRE book, but really across all loan categories.

Daryl Bible: Right now, the economy is still unpredictable. Rates higher for longer will probably continue to have stress on clients over the next couple quarters if that actually comes to fruition. They were just trying to be conservative and cautious at the same time. And it's also for us to actually have an opportunity to continue to grow organic growth in our commercial consumer books and trust books as well. So I think we're just trying to be cautious and we know when the economy gets a little bit more comfortable, we'll consider but repurchases there.

Speaker 4: Yeah, I think obviously Bill, I mean people that did swaps, you know, three years ago are really fortunate that they did, but depends on the maturities when they roll off and when they do roll off.

Yeah, I think obviously bill I mean people that did swaps you know three years ago are really fortunate that they did but it depends on the maturities when they roll off and when they do roll off.

Speaker 4: You know, it does put pressure on some clients that basically, you know, just have higher interest payments there. So, that is impacting much broader than just office, broader than just CRE. It's impacting, I think, all of America right now, to be honest with you. I mean, just higher rates for longer. I think the Fed wants to slow the economy down, and we're definitely having that impact to do that, and they're accomplishing what they're achieving there.

It does put pressure on some clients that basically.

Just have higher interest payments there so that is impacting much broader than just office broader than just CRE. It's it's impacting I think all of the America right now to be honest with you.

Just higher rates for longer I think the fed wants to slow the economy. It out and we're definitely having that impact to do that and they are accomplishing what they are achieving there but.

Daryl Bible: It is true to our long-term strategies of capital distribution back to the shareholders. It's not going anywhere, but we just want to continue to make sure that we're strong and can grow and serve our customers right.

Great.

Speaker 4: But we, like I said earlier, we are on top of the portfolios where we see, you know, maturities coming up, you know, we're looking at, you know, what we have to do. If anything, do they have other support on it? So we're trying to stay ahead of, you know, what's coming down the pike. You know, most of the maturities.

But like I said earlier, we are on top of the portfolios, where we see no maturities coming up we're looking at.

Thank you.

What we have to do if anything do they have other support on it. So we're trying to stay ahead of what's coming down the Pike you know most of the maturities.

Ebrahim Poonawala: The next question comes from Ebrahim Poonawala with Think of America. Please go ahead. Good morning. I guess it's going to follow up, Daniel, in terms of, so your N.I.guide support quarters fairly clear, but we're hearing from some of your peers around potential for the margin N.I, bottoming in the fourth quarter, especially if the Fed is done, give a few thought process around, is there something about your balance sheet like that? Why that might get pushed out because of just deposits have been later to the price or the dynamics on your balance sheet or your markets?

Speaker 4: and SWAP are aligned together so that they're pretty much in balance, so when things come close to mature on loans is when we see if there's anything that needs to happen from a lending perspective. But I think the Fed's accomplishing what they're trying to do is slow the economy down, bring inflation down, and it's definitely having that impact.

Swap.

Line together, so that they are pretty much in balance that when things come close to mature on loans is when we see if there's anything that needs to happen from a lending perspective, but I think the fads accomplishing what they are trying to do is solve the economy down bringing inflation down and that's definitely having that impact.

Speaker 8: That's really helpful, Darryl. Thank you. If I can follow up, as you continue to take actions to shift more of your focus to FEMECOM as you reduce the credit risk associated with on balance sheet CRE, how are you thinking about your sort of longer term C-T1 target before, I guess all the developments of the last several quarters we were sort of thinking of.

That's really helpful. Daryl. Thank you if I can follow up.

You continue to take actions to shift more of your focus to fee income as you reduce the credit risk associated with on balance sheet CRE.

Ebrahim Poonawala: Any color there would be appreciated. Yeah, you know, Manan, it's really the biggest driver for the N.I.guide margin for us right now is really what happens to our non-interest bearing deposits. You know, we were down 2.3 billion. That was better than what we thought it would be, you know, and we think that it's slowing down. We'll see how that plays out in the fourth quarter, but that is probably the biggest determining factor.

How are you thinking about your sort of longer term CET one target.

Before.

Yes.

I guess.

The developments.

<unk>.

The last several quarters, we're sort of thinking of.

Speaker 8: M&T being able to get to that 9% CET1 target, but I guess the inclusion of OCI volatility and regulatory capital has led to some debate over whether Category 4 banks will now have to run with a little bit larger buffer versus history. Would appreciate any thoughts there.

<unk>.

Being able to get sort of that 9% CET one target I guess, the inclusion of OCI volatility and regulatory capital.

Ebrahim Poonawala: When you look at our balance sheet though, I'm actually pretty pleased with how the assets are repricing. If you look at the reactivity rate on some of our fixed portfolios, if you look at this quarter, like our consumer loan portfolio was up 22 basis points. You know, we have home equity in there that is primarily related, but that's a smaller percentage. We have really good repricing and other consumer portfolios like auto was up approximately 300 basis points in what was rolling off versus what was rolling on.

Led to some debate over whether you know category for banks will not have to run with a little bit larger buffer versus history.

I appreciate any thoughts there.

Yeah, I think as in her role as play out and as we get comfortable working within the Roes you, obviously start with a higher cushion at first and then as you get used to managing the book and everything I think you know we will tighten up over time, but my guess is that we probably have a higher buffer out of coming out of the blocks.

Speaker 4: Yeah, I think as the new roles play out, and as we get comfortable working within the roles, you obviously start with a higher cushion at first, and then as you get used to managing the book and everything, I think we will tighten it up over time, but my guess is that we probably have a higher buffer on the coming out of the block.

Ebrahim Poonawala: If you look at our RV and build portfolio, that was up a practically 250 basis points of what was rolling off rolling on. So I think once we get more stability in the disintermediation of the pauses, I'm more favorable into margin stabilizing. I think the asset side is actually performing pretty well.

You know you have to really adjust your investment portfolio since the <unk> is going to now go through.

Speaker 4: You know, you have to really adjust your investment portfolio no, since the AFS is gonna now go through the regulatory capital ratios, you know, to probably run with shorter durations, either outright or...

The regulatory capital ratios.

Ron with shorter durations either outright or.

Speaker 4: you know, invest longer with hedges that bring in the durations one way or the other just so you have less volatility there. So it's really just getting used to how we manage all that process, but our teams are working on that now and we are starting operating that way probably well before we get the roles that actually implemented up from that perspective.

Invest longer with hedges that bring in the durations, one way or the other just so you have less volatility there. So it's really just getting used to how we manage all of that process, but you know our teams are working on that now.

Daryl Bible: Noted. And I guess this moving maybe give us a mark to market in terms of commercial real estate, what you're seeing around. There's some concern whether if we go into next year, given what the yield comes down, we might see some more pressure. But we flow beyond theory office into multi family. So one given a sense of like on theory office has the visibility improved around the level of marks that you might have to take as some of this works through the system.

We are start operating that way, probably well before we get the rules actually implemented up from that perspective.

Understood. Thank you for taking my questions.

Speaker 9: Understood. Thank you for taking my questions. Thanks, Mel.

Thanks Bill.

Speaker 10: The next question comes from Brent Ernstel with Portalis Partners. Please go ahead. I was going to follow up on that stock 5-act question. Thank you.

The next question comes from Brent <unk> with Portales partners. Please go ahead.

Daryl Bible: And whether or not you're seeing more pain beyond the office complex. Yeah, so on the office side, I would tell you our credit team, we feel really on top of what's going on there. I think we are actively looking at any credit that could be and have any issues whatsoever. We're looking at it. I'm trying to put the right valuation in there. We traditionally run with a higher level of criticized assets because we have a lot of long term clients that have been with M&T for a long time period.

Yeah.

I was going to follow up on that stock buyback question. Thank you and good morning.

Good morning pressure.

Speaker 10: If you were to like incrementally invest the capital that you're generating at 7%, you would generate half the returns that you could by buying back stock. So you need double digit returns.

If you were to like incrementally invest the capital.

You're generating it.

At 7%.

Would you would generate half the returns you could like buying back stock. So you need double digit returns.

To constitute to equate that.

Speaker 10: to equate that. If that question makes sense. So the question I guess is when at what point

Daryl Bible: They have other sources of cash flow to help carry the loans and are willing to put in equity to help support the loans. You know, when we do find loans that there is not support around, you know, we'll probably move to exit those. As far as the valuations go, there's still not a whole lot of specifics out there. We did have that one sale for us that actually was a little bit better than what we had at Mark there, but that was one big loan.

Question makes sense. So the question I guess is when at what point.

Speaker 10: Will the corporate finance math drive you to resume by then?

Will the.

Corporate finance math drive you to resume buybacks.

Speaker 4: So the corporate finance map is screaming that it's a buy right now. It's really more of our cautious.

So the corporate finance, Matt is screaming that it's a five right now.

It's really more of our cautious.

Speaker 4: you know position conservative nature that we have that make sure that we have really strong capital strong liquidity to really weather what comes our way i mean if the fed stays higher rates let's say for three years or whatever you know that could really have a big impact on the economy we just want to be really cautious

Position Conservative nature that we have that make sure that we have really strong capital strong liquidity to really weather what comes our way I mean, if the fed stays higher rates, let's say for three years or whatever you know that could really have a big impact on the economy. We just want to be really cautious and all that so I think.

Daryl Bible: So I wouldn't say that's a trend by any stretch right now, but I think we feel pretty good on where we are. As far as the other asset classes, you know, I think we just with rates higher for longer just puts more... It's just tougher for some of our customers. And, you know, multi-family is an area that we are looking at as well. Nothing really is popping out of anything very superior there yet.

Speaker 4: and all that. So I think we're just trying to be prudent with it. Like I said earlier, the capital is not going anywhere. You know, we will, I promise you, we will deploy it in a really shareholder friendly manner from that. But right now we have strong capital, strong liquidity, you know, which has been really helpful for us, you know, since the March, April timeframe. And we will continue to operate and be a strong supporter of our customers and communities that we serve.

We're just trying to be prudent with it like I said earlier the capital has not gone anywhere we will I promise you, we will deploy it in a really shareholder friendly manner from that but right. Now we have strong capital strong liquidity, which has been really helpful for us since the March April timeframe, and we will.

Daryl Bible: But, you know, we're just trying to stay ahead of what potentially could happen and kind of be preemptive if we see anything. So, we're just preparing. Our credit team is very experienced. We've been very good with commercial real estate for a long time and we are on top of where we are.

At top right and be a strong supporter of our customers and.

Daryl Bible: Thank you.

And communities that we serve.

Is there a bell that's gonna go off when you guys are going to change your mind or how should we.

Speaker 10: Just, is there a bell that's gonna go off when you guys are gonna change your mind, or how should we...

Do you just wait and see.

Speaker 4: I will tell you once we make that decision to go, my guess is you will find out very quickly when that decision is made.

I will tell you once we make that decision to go my guess is you will find out very quickly and that decision's made.

Erika Najarian: The next question comes from Erika Najarian with UBS. Please go ahead. Hi. Good morning. I just wanted to clarify sort of the responses to Ebrahim's question. Daryl, I'm just wondering if you think about, you know, the forward curve as we see it. You know, at what point do you expect net interest? The next income to trust based on what we know about the curve and what we, you know, about the various puts and takes for growth and deposit action.

Thank you alright.

Alright.

The next question comes from Gerard Cassidy with RBC. Please go ahead.

Speaker 2: The next question comes from Gerard Cassidy with RBC. Please go ahead. My dear.

Hi, Darryl.

Hi, Gerard.

Daryl over the years.

Speaker 11: Carol, over the years, M&T has been very effective in making acquisitions. Obviously, the people deal with the more recent acquisition that is now completely integrated. And we understand, you know, in talking to your peers and others that, you know, the interest rate marks make it very difficult for M&A today. So, I got a two-part question for you. First, just what is your view on M&A for M&T over the next 12 to 24 months of traditional depositories? And then second, some of the P&C in particular was recently bought some assets from the FDIC, some loans. Are you guys looking at any assets that might be for sale from the FDIC, from the fail banks that we had earlier in this year?

T has been very effective in making acquisitions, obviously the peoples the dealers.

Our recent acquisition that is now completely integrated and we understand in talking to your peers and others.

Erika Najarian: Yeah, you know, from a framework perspective, it's really when the intermediation slows down. I think when the dissimation slows down, I think the asset side is a performing well and we'll continue to reprise higher because I think we're going to have a steeper curve for a longer period of time. You know, and hopefully that will happen in the next couple quarters, but it's really hard to know right now. We think it's slowing, but I think we'll just see how that plays out.

Interest remarks make it very difficult for M&A today, So I've got a two part question for you first just what is your view on M&A for <unk> over the next 12 to 24 months of traditional depositors and then second.

Some of the P&C in particular was recently bought some assets from the FDIC some loans.

Daryl Bible: I'll give you guidance, you know, next earnings call on the fourth quarter on that. But, you know, conditions, you know, could be slowing down with what we're seeing right now. But, you know, one quarter is not a trend. I just want to get a couple quarters under our belt before we really say net interest margin is going to stabilize.

Are you guys looking at any assets that might be for sale from the FDIC from the failed banks that we had earlier in this year.

Speaker 4: Yeah, so we didn't do a press release on it, but we did buy two loans from that same purchase PNC did. I think it was a total of about $300 million in commitments.

Yeah. So we didn't do a press release on it but we did buy two loans from that same purchase P&C did I think it was a total of about $300 million in and commitments.

Daryl Bible: Got it. And as a follow up to that, your period and cash balance rose to 30 billion Darryl, you know, which is awesome, dry powder. And, you know, as we think about, you know, the quarters ahead, you know, on one hand, potentially the Fed is peaking, right? And you seem to be rather as attentive. You know, on the other, you have all these, you know, new rules on, you know, liquidity that we don't have yet, as well as, you know, treatment of ASS for regional banks.

Speaker 4: It was at fund banking, so we did participate in there and we were able to get a couple of those loans as well, but we are constantly looking, you know, where we can grow our customer base that are good long-term customers that fit. We just don't want to do asset purchases. We want relationships is really what we're looking for to drive our organic growth from that.

It was it fund banking so we did participate in there and we're able to get a couple of those loans as well, but we are constantly looking.

Where we can grow our customer base that are good long term customers that fit we just don't want to do asset purchases. We want relationships is really what we're looking forward to drive organic growth from that.

Speaker 4: As it relates to acquisitions, you know, it's just, you know, you and I have been doing this for a long time. When I started, we had 18,000 banks, you know, in the early 80s. Now we're up to about 4,000 banks, and it's going to continue to shrink. I think M&T has a great track record of acquiring banks over time, and that strategy hasn't changed. You know, our strategy is really to control and have lots of density in the markets that we serve.

As it relates to acquisitions you know, it's just you and I have been doing this for a long time when I started we had 18000 banks you know in the early eighties now we're up to about 4000 banks and it's going to continue to shrink I think <unk> has a great track record of acquiring bank over time.

Daryl Bible: How should we think about an absence of stronger net loan growth? You know, the puts and takes of what you're, are you just going to continue to build cash and be a little bit more asset sensitive, even though we're peaking in rates as we figure out what the final rules look like on both capital and liquidity. You know, I think, you know, we have the strong position at the Fed that's intentional for us right now.

And that strategy Hasnt changed you know our strategy is really to control and have lots of desk density in the markets that we serve.

Daryl Bible: We want to be really conservative with our cash and liquidity position. Like I said earlier, it's an economy is doing okay. Let's slowing down and, you know, maybe hopefully not get into a recession, but we just want to be really careful and cautious from that perspective. So I think it's intentional where we're staying there. You know, will we invest some of that, obviously into loans. We would love to do that support our customers, but we are not widening our credit box.

Speaker 4: So I think if and when we do purchase acquisitions, it probably won't be a surprise in where we're going or what we're trying to do from that perspective. So the strategy is there and it will happen at some point down the road. The interest rates definitely make it a little bit more challenging now just because of the impact on capital, but like anything, things change over time and we will be there when we need to and do what we've been really good at before and we'll continue to do that.

So I think if and when we do purchase acquisitions, it probably won't be a surprise and where we're going and what we're trying to do from our perspective. So the strategy is there and that will happen at some point down the road the interest rates definitely make it a little bit more challenging now just because of the impact on capital, but like any.

Things change over time, and we will be there when we need to and do what we've been really good at before and we will continue to do that.

Speaker 11: Very good. And the second part of a different question is a follow up.

Very good and then the second part of.

Daryl Bible: What whatsoever we're going to grow with the market will give us. But we do think there's opportunities to grow relationships and to potentially grow balances and some of our loan categories. So we'll see how that plays out. As far as deploying some of the cash into the security portfolio, I would just say that over the next year you might see us move a little bit to the investment portfolio but it will be on a gradual basis.

Different question is a follow up.

Speaker 11: When, you know, M&T, of course, has developed a reputation as being a very strong underwriter, you get the numbers to prove it. And so we're not necessarily concerned about what you guys are doing specifically, but you always worry about the competitors doing foolish and stupid things that then end up having a second derivative effect on your sound underwriting decisions. Can you frame out for us?

When you know M. N to you of course has developed a reputation as being a very strong underwriter, you've got the numbers to prove it.

And so we're not necessarily concerned about what you guys are doing specifically, but you're always worried about the competitors doing foolish and stupid things that then end up having a second derivative effect on your sound underwriting decisions can you.

Frame out for us.

Speaker 11: Yeah, granted, I know it's been on 2005 and 2006 craziness out there, but are there any concerns that you see non-bank lenders or other bank lenders doing or have done things in the last 18 to 24 months on the lending side that make you a little nervous? Or are we just in a new playing field where everybody is very rational and we're not going to see anything really implode because of what some foolish lenders are doing?

Granted I know, it's not a 2005 and 2006 craziness out there but are there any concerns that you see nonbank lenders or other bank lenders doing or have done things in the last 18 to 24 months on the lending side.

Daryl Bible: Thank you. What are your reserves are against your office book? We haven't made that public map but it continues to increase where we are right now so we had an increase in our allowance. We had little over $50 million. I'd say about half of it went to the CRE portfolio and half of it went to the CNI portfolio. So I think we were adding it wherever you think it's appropriate based upon our models and performance.

You're a little nervous or are we just in a new playing field that everybody's very rational and we're not going to see anything really.

<unk> because of what some foolish lenders are doing.

Speaker 4: Yeah, we have a long history of, you know, working with our clients. Client selection is really huge.

Yeah. So yeah, we have a long history of working with our clients client selection is really huge for us and how we look and underwrite.

Speaker 4: for us and how we look and underwrite, so like in the CRE portfolio, we deal with people that have been in the business for a very long time. That aren't just looking at that real estate investment that they have as an investment for more as a long-term strategy to their company and their family from that perspective.

So like in the CRE portfolio, we deal with people that have been in the business for a very long time that arent just looking at that real estate investments that they have has an investment but more as a long term strategy to their company and their family are from that perspective.

Daryl Bible: Okay. Yeah, I'd be helpful to get over time. I know everybody's book is a little bit different but many of your peers are disclosing so I'd be helpful. As you think my disclosure is obviously an area of focus. You know, maybe such and gears like as you think about all the capital that you have and liquidity and the balance sheet flexibility, you know what areas and lending are you leaning into not just kind of looking out one quarter but the next few quarters.

So really don't look at I'm trying.

Speaker 4: So really don't look at, you know, trying to get out of the criticized loans, you know. You know, if somebody's not going to support it, you know, we will probably exit over time.

Trying to get out of the criticized loans.

If somebody is not going to support it we will probably exit over time, but I don't really view you know how we are approaching it I think it's a great way to develop and keep relationships over the long term, it's the right way and fair way to do it as long as they're willing to support their properties in loans with us.

Speaker 4: But I don't really view, you know, how we are approaching it. I think it's a great way to, you know, develop and keep relationships over the long term.

Daryl Bible: And is it kind of doing more business with existing customers or also trying to grow the customer footprint? I mean that this past quarter we had growth in our dealership businesses. You know as the strike was you know starting to happen I think a lot of the dealers actually stocked up on used cars and that actually drove an increase in utilization in that one sector or a little bit earlier than normal there.

Speaker 4: It's the right way and fair way to do it, as long as they're willing to support their properties and loans with us from that perspective.

From that perspective.

Speaker 4: I think overall though, I think the industry is what's safer than what it has been over the last couple decades. I think everybody's trying to do the right thing. We have the benefit that we have some really long-term.

I think overall, though I think the industry is what's safer than what it has been over the last couple of decades, I think everybody's trying to do the right thing we have the benefit that we have some really long term.

Speaker 4: customers that have been with M&T for a long period of time and we try to bank the people that are really top in market in all the markets that we serve.

Customers that have been with <unk> for a long period of time and we try to think that people that are really top end market in all the markets that we serve.

Daryl Bible: You know that will probably continue to play out I think into the fourth quarter well would be one. You know our large corporate banking I think has some growth opportunities where we're positioned there specifically on fund banking. I think we're growing there nicely. It's a very conservative portfolio very short term oriented lower risk areas. So I would say you know most of the growth that we're seeing is in the CNI space.

Very good I appreciate the color. Thank you.

Yeah.

Speaker 2: The next question comes from John Pancari with Evercore ISI. Please go ahead.

The next question comes from John <unk> with Evercore ISI. Please go ahead.

Good morning, Don good.

Speaker 12: Morning, Donald. Morning, John . Just to follow up around the volma's reserve, I know you had a... POP.

Good morning, John .

Just.

Follow up around the loan loss reserves I know you had.

Daryl Bible: Those are the highlights right now. It is very competitive in middle market CNI. We are trying to be competitive there. But you know right now the higher interest rates are just putting a lot of our commercial clients to be a little bit more cautious. But when they're willing to to borrow we're trying to help them when that's when we're able to do that so.

Okay thank you very much.

Talked about the.

Speaker 12: you know, that the Reserve Edition was 50% for CRE and about half going to CNI. And I'm just trying to.

The Reserve addition was 50% for CRE and C&I.

C&I.

And I'm just trying to.

Speaker 12: framed out, like what about the developments in the quarter drove the need for additional reserve additions beyond what would have already been baked into there under CECL? And then separately, can you maybe talk about the likelihood of further reserve build here, just as you continue to dig through the CRE portfolio, I know you said a couple of times that there's ongoing efforts to sift through the exposures

Like what about the developments in the quarter.

Drew the need for additional reserve additions beyond what would have already been baked into their under Cecil.

And then separately can you maybe talk about the likelihood of further reserve build here.

Bill Carcache: The next question comes from Bill Carcacci with Wolf Research. Please go ahead. Thank you.

Just as you continue to dig through the CRE portfolio I know you said a couple of times.

Daryl Bible: Good morning. Hey Darrell. I wanted to follow up on your comments around the higher for longer rate environment being tougher for your customers. You look across your portfolio. You have a good handle on the degree to which some of your customers had put on swaps. You know maybe when we were still under served two to three years ago so they haven't yet felt the pressure of higher rates curious about whether the rolling off of those swaps is something you worry about.

There is ongoing efforts to sift through the exposures in that book.

Yeah. So if you look at the macro factors.

Speaker 4: Yeah, so if you look at the macro factors, our macro factors when we run our allowance models, basically, we're pretty steady. Actually, the CREPI index actually improved a little bit, but the other economic statistics are pretty stable versus the prior period.

Or macro factors when we run our allowance models basically were pretty steady.

Actually that Crappy index actually improved a little bit, but the other economic statistics are pretty stable versus the prior period.

Daryl Bible: You know that really that's just in CRE but really across all alone care. Yeah, I think, obviously, Bill, I mean, people that did swaps, you know, three years ago are really fortunate that they did, but depends on the maturities when they roll off and when they do roll off, you know, it does put pressure on some clients that basically, you know, I'll just have higher interest payments there. So that is impacting much broader than just office broader than just CRE.

Speaker 4: And really what drove the increase was really softness in some of the asset values in the CRE portfolio is what we were seeing and thought it made sense to add some more reserves in those, you know, as we get more.

Really what drove the increase was really softness in some of the asset values in the CRE portfolio is what we were seeing and thought it made sense to add some more reserves and those you know as.

We get more.

Speaker 4: you know, examples of what valuations are that could help drive more or may actually, I think we feel really reserved where we are today, but we just want to continue to have a really robust allowance for the needs of our borrowers and make sure we comply with all the rules that we have there. But it was really just a little bit of softness and some valuation.

Examples of what valuations are that could help drive more or may actually I think we feel really reserved where we are today, but we just wanted to continue to have a really strict robust allowance for the needs of our.

Daryl Bible: So it's impacting, I think, all of America right now to be honest with you. I mean, it's just higher rates for longer. I think the Fed wants to slow the economy down and we're definitely having that impact to do that and they're accomplishing what they're achieving there. But we, like I said earlier, we are on top of the portfolios where we see, you know, maturities coming up, you know, we're looking at, you know, what, what we have to do, if anything, do they have other support on it?

Borrowers and make sure we comply with all the rules that we have there, but it was really just a little bit of softness in some valuations.

Speaker 12: And is that softness surprising you negatively? And is that why it's not already in the sea salt reserve?

And is that soft as surprising negatively.

It's not already in the seasonal reserve.

You know, it's there's just not a lot of activity going on in some of these markets right now so you're so you're basically there is a big market dislocation a lot of the marks were doing as conservative as they are with that.

Speaker 4: You know, it's there's just not a lot of activity going on.

Speaker 4: in some of these markets right now. So you're basically, there's a big market dislocation. A lot of the marks we're doing as conservative as they are with a net present value cashflow perspective. And I think I went through it last time, but if something is not leased today, we assume it's not leased for three years. If something is coming off lease within the next year, we assume that there's a one year gap before it gets released.

Daryl Bible: So we're trying to stay ahead of, you know, what's coming down the pike. You know, most of the maturities, and swap are aligned together so that they're pretty much in balance. So when things come close to mature on loans is when, you know, we see if there's anything that needs to happen from a lending perspective. But I think the Fed's accomplishing what they're trying to do is slow the economy down, bring inflation down and it's definitely having that impact.

Net present value cash flow perspective, and I think I went through it last time, but.

If something is not least today, we assume it's at least for three years, if something is coming off lease within the next year, we assume that there isn't any one year gap period before it gets released what type of cash flow adjustments or kind of what we're marking too, but we don't have anything to look at but when you get a certain example, I'd say.

Speaker 4: Those type of cash flow adjustments are kind of what we're marking to, but we don't have anything to look at.

Daryl Bible: That's really helpful, Darryl. Thank you. If I can follow up, as you continue to take actions to shift more of your focus to FEMCOM as you reduce the credit risk associated with on balance sheet CRE. How are you thinking about your sort of longer term C21 target, you know, before, you know, I guess all the developments, you know, of the last several quarters. You know, we were sort of thinking of M&T, you know, being able to get to sort of that 9% C21 target, but I guess the inclusion of OCI volatility and regulatory capital has led to some debate over whether, you know, category 4 banks will now have to run with a little bit larger buffer versus history would, you know, appreciate any thoughts there.

Speaker 4: But when you get a certain example, then we can make an adjustment. Our bet, though, right now is that...

And then we can make an adjustment.

Our bet, though right now is that.

Speaker 4: You know, there's a lot of money waiting on the sidelines, potentially that, you know, when the Fed does decide to keep rates more stable, you know, and maybe signal, you know, rates going down at some point, I think there'll be a lot of money that will jump back into the system. Right now, there's just not a lot of going on, and there's a very wide bid-ask spread.

There's a lot of money waiting on the sidelines potentially that when the fed does decide to keep rates for stable and maybe signal.

It's going down at some point I think there'll be a lot of money that will jump back into the system.

Right now, there's just not a lot of going on and there's a very wide bid ask spread.

Okay. That's helpful. Thanks for that one last follow up if I could also on credit your I know your charge off guidance for the fourth quarter, you expect it to be above the 29 basis point level for the third quarter and then.

Speaker 12: Okay, then that's helpful. Thanks for that. One last follow up, if I could also on credit. You're, I know your charge off guidance for the fourth quarter, expected to be above the 29 basis point level. So the third quarter and then a full year, 23, near the long term, 33 bit.

Daryl Bible: Yeah, I think as the new roles play out, and as we get comfortable, you know, working within the roles, you obviously start with a higher cushion at first. And then as you get used to managing the book and everything, I think, you know, we will tighten it up over time. But my guess is that we probably have a higher buffer out of coming out of the blocks. You know, you have to really adjust your investment portfolio, you know, since the AFS is going to now go through the regulatory capital ratios, you know, to probably run with shorter durations either outright or, you know, invest longer with hedges that bring in the durations one way or the other, just so you have less volatility there.

Full year 'twenty three near the long term 33 bips.

Speaker 12: Can you maybe help us think about what that would imply in terms of as you look into 2024? Maybe help us, I know you're not giving formal guidance yet on 24, but how should we think about where the loss trajectory could be versus that longer term 33? How much above that?

Can you maybe help us think about what that would imply in terms of as you look into 2024.

Maybe help us I know you're not giving formal.

Formal guidance, yet on 24, but how should we think about where the loss trajectory could be versus that longer term 33, how much of a bump and that could be.

And that's a good question.

Speaker 4: And that's a good question. For the fourth quarter, it's just our gut feel that it might be higher. It could actually be the same or lower, to be honest with you right now. But just doing what's going on right there, it might be higher, but we really aren't sure about that yet.

The fourth quarter you know.

Or is just that feel that it might be higher it could actually be the same or lower to be honest with you right now, but you know.

Daryl Bible: So it's really just getting used to how we manage all that process, but you know, our teams are working on that now, and, you know, we are starting operating that way probably well before, you know, we get the roles actually implemented from that perspective.

Just doing.

What's going on right there might be higher, but we really aren't sure about that yet.

Speaker 4: Next year we aren't really giving guidance, but from a framework perspective, our allowance will build when either market economic conditions allow for it or you see some deterioration in customer behavior.

Next year, we arent really given guidance bump from a framework perspective.

<unk> will build.

<unk> either market economic conditions allow for it or you see some deterioration in customer behavior.

Daryl Bible: Understood. Thank you for taking my questions. Thanks, Bill.

Speaker 4: from that perspective. But right now, I think we're really on top of what it is. Any areas that we potentially could have risk in, our credit teams are all over it, looking at the reviews and the analysis that we have. And right now what we feel that our reserve is adequate and we're in touch with where the risks are.

From that perspective, but right now I think we're really on top of what it is any areas that we potentially could have risk in our credit teams are all over it looking at the reviews and the analysis that we have in <unk>.

Brent Erensel: The next question comes from Brent urncell with Portalis partners. Please go ahead. I was going to follow up on that stock five act question.

Daryl Bible: Thank you and good morning. If you were to like incrementally invest the capital that you're generating at 7%, you would you would generate half the returns that you could buy buying back stock. So you need double digit returns to compute to equate that if that question makes sense. So the question I guess is when, at what point will the corporate finance math drive you to resume buy back. So the corporate finance math is screaming that it's a buy right now.

Right now we feel that our reserve is adequate and then.

We're in touch with where the risks are.

Got it alright, thanks, Tim I appreciate it.

Hi.

Speaker 2: It appears we have no further questions at this time. I will now turn the program back over to our presenters for any additional remarks.

It appears we have no further questions at this time I will now turn the program back over to our presenters for any additional remarks.

Again, thank you all for participating today and as always a clarification of any of the items on the call. Our news release is necessary. Please contact our Investor Relations Department at area Code 7168 to 138, Thank you and have a good day.

Speaker 3: Again, thank you all for participating today, and as always, if clarification of any of the items in the call or news release is necessary, please contact our Investor Relations Department at area code 716-842-5138. Thank you and have a good day.

Daryl Bible: It's really more of our cautious, you know, position conservative nature that we have to make sure that we have really strong capital strong liquidity to really whether what comes our way. I mean, if the Fed stays higher rates would say for three years or whatever, you know, that could really have a big impact. On the economy, we just want to be really cautious and all that. So I think we're just trying to be prudent with it.

This does conclude today's program. Thank you for your participation you may disconnect at any time.

Speaker 2: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

[music].

Daryl Bible: Like I said earlier, the capital is not going anywhere. You know, we will promise you we were deployed in a really shareholder friendly manner from that. But right now we have strong capital strong liquidity, you know, which has been really helpful for us, you know, since March April timeframe. And we will continue to operate and be a strong supporter of our customers and in communities that we serve.

Speaker 1: Fact.

Okay.

Yeah.

[music].

Is there a bell that's going to go off when you guys are going to change your mind or how should we do just wait and see. I will tell you once we make that decision to go, my guess is you will find out very quickly when that decisions may.

Yeah.

Okay.

[music].

Thank you.

Gerard Cassidy: The next question comes from Gerard Cassidy with RBC. Please go ahead. Hi, Gerald. Hi, Gerard. Gerald, over the years, MNT has been very effective in making acquisitions. Obviously the people deal with the more recent acquisition that is now completely integrated. And we understand, you know, and talking to your peers and others that, you know, the industry marks make it very difficult for MNA today.

Speaker 1: I.

Daryl Bible: So I got a two-part question for you. First, just what is your view on MNA for MNT over the next 12 to 24 months of traditional depositories. And then second, some of the PNC in particular was recently bought some assets from the FDIC, some loans. Are you guys looking at any assets that might be for sale from the FDIC, from the failed banks that we had earlier in this year? Yeah, so we didn't do a press release on it, but we did buy two loans from that same purchase PNC did.

Daryl Bible: I think it was a total of about 300 million in the commitments. It was a fun banking. So we did participate in there, and we were able to get a couple of those loans as well. But we are constantly looking, you know, where we can grow our customer base that are good long-term customers that fit. We just don't want to do asset purchases. We want relationships is really what we're looking for to drive organic growth from that.

Daryl Bible: As it relates to acquisitions, you know, it's just, you know, you and I have been in doing this for a long time. When I started, we had 18,000 banks, you know, in the early 80s. Now we're up to about 4,000 banks, and it's going to continue to shrink. I think M&T has a great track record of acquiring banks over time, and that strategy hasn't changed. You know, our strategy is related control and have lots of density in the markets that we serve.

Daryl Bible: So I think if and when we do purchase acquisitions, it probably won't be a surprise, and where we're going and what we're trying to do up from that perspective. So the strategy is there, and it will happen at some point down the road. The interest rate definitely make it a little bit more challenging now, just because the impact on capital. But like anything, things change every time, and you know, we will be there when we need to and do what we've been really good at before, and we'll continue to do that.

Very good. And the second part, a different question as a follow up, when, you know, M&T of course has developed a reputation as being a very strong underwriter, you get the numbers to prove it. And so we're not necessarily concerned about what you guys are doing specifically, but you know, we's worried about the competitors doing foolish and stupid things that then end up having a second derivative effect on your sound and underwriting decisions.

Daryl Bible: Can you frame out for us? I know it's not in 2005 and 2006 craziness out there, but are there any concerns that you see non-bank lenders or other bank lenders doing, or have done things in the last 18 to 24 months on the lending side that make you a little nervous? Or are we just in a new playing field? Everybody is very rational, and we're not going to see anything really, you know, implac it because of what some foolish lenders are doing?

Daryl Bible: Yeah, we have a long history of working with our client, client selection is really huge for us and how we look and underwrite, you know, so like in the CRE portfolio, you know, we deal with people that have been in the business for a very long time. That aren't just looking at that real estate investment that they have as an investment for more as a long-term strategy to their company and their family from that perspective.

Daryl Bible: So really don't look at trying to get out of the criticized loans, if somebody's not going to support it, we will probably exit over time, but I don't really view how we are approaching it. I think it's a great way to develop and keep relationships over a long term. It's the right way and fair way to do it as long as they're willing to support their properties and loans with us from that perspective.

Daryl Bible: Yeah, I think overall though, I think the industry is much safer than what it has been over the last couple of decades. I think everybody's trying to do the right thing. We have the benefit that we have some really long-term, you know, customers that have been with M&T for a long period of time, and we try to bank the people that are really top in market and all the markets that we serve.

Very good. I appreciate the color.

John Pancari: Thank you. The next question comes from John Pancari with Evercore ISI. Please go ahead.

Morning, John. Just to follow up around the loan loss reserve, I know you had talked about the, you know, that the reserve addition was 50% for CRE and about half going to CNI, and I'm just trying to frame out like what about the developments in the quarter? Drows the need for additional reserve additions beyond what would have already been baked into their under Cecil. And then separately, can you maybe talk about the likelihood of further reserve bill here, you know, just as you continue to dig through the CR report fully, and then you said you a couple times that there's ongoing efforts to sift through the exposures.

Yeah, so if you look at the macro factors, our macro factors when we run our allowance models, basically we're pretty steady. Actually that crappy index actually improved a little bit, but the other economic statistics are pretty stable versus the prior period. It really went through all the increase was really softness in some of the asset values and the CRE portfolio is what we were seeing and made sense to add some more reserves and those as we get more examples of what valuations are that could help drive more or may actually I think we feel really reserved where we are today, but we just want to continue to have a really robust allowance of the needs of our borrowers and make sure we comply with all the rules that we have there, but it was really just a little bit of softness and some valuations.

And is that softness surprising you negatively and is that life not already in the seasonal reserve? You know, there's just not a lot of activity going on in some of these markets right now, so you're basically there's a big market dislocation. A lot of the marks we're doing is conservative as they are with a net present value cash flow perspective and we think I went through it last time. But you know, if something is not least today, we assume it's not least for three years.

If something is coming off least within the next year, we assume that there's a one year gap before it gets released. Most type of cash flow adjustments are kind of what we're marking to, but we don't have anything to look at. But when you get a certain example, you know, we can make an adjustment our bet though right now is that, you know, there's a lot of money waiting on the sidelines potentially that, you know, when the Fed does decide to keep rates more stable, you know, and maybe signal rates going down at some point, I think there will be a lot of money that will jump back into the system right now. But just not a lot of going on and there's a very wide bid at spread.

Daryl Bible: Okay, then that's helpful. Thanks for that one last follow up if I could also on credit your, I know your charge off guidance for the fourth quarter expected to be below above the 29 basis point level. But the third quarter and then four year 23 near the long term, 33 bips. Can you maybe help us think about what that would imply in terms of as you look into 2024, maybe help us, I know you're not giving former formal guidance yet on 24, but how should we think about where the lost trajectory could be versus that long term 33, how much above that could it be?

Daryl Bible: And that's a good question, you know, for the fourth quarter, you know, you know, it's just our gut feel that it might be higher. It could actually be the same or lower to be honest with you right now, but you're just doing, you know, what's going on right there, it might be higher, but we really aren't sure about that yet. Next year, we aren't really given guidance, but from a framework perspective, you know, our allowance, you know, will build when either market economic conditions allow for it or you see some deterioration and customer behavior, from that perspective, but right now, I think we're really on top of what it is any areas that we potentially could have risk in, our credit teams are all over it looking at the reviews and the analysis that we have and right now what we feel that our reserve is adequate and we're in touch with where the risks are. Got it.

All right, thanks, Donald. Appreciate it.

It appears we have no further questions at this time. I will now turn the program back over to our presenters for any additional remarks. Again, thank you all for participating today and as always, it's clarification of any of the items in the call or news releases necessary. Please contact our investor relations department at area code 716-842-5138. Thank you and have a good day.

This does conclude today's program. Thank you for your participation. You may disconnect at any time. Thank you very much.