Q3 2024 M&T Bank Corp Earnings Call
Speaker Change: Welcome to the M&T Bank 3rd Quarter 2024 earnings conference call. All lines have been placed on listen only mode and the floor will be open for your questions following the presentation.
Operator: 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, then 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 two. 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.
Speaker Change: If you would like to ask a question at that time, please press star then 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.
Speaker Change: 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.
Operator: Please be advised that today's conference is being recorded.
Brian Klock: I would now like to hand the conference over to Brian Klock, head of Market and Investor Relations. Please go ahead.
Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand the conference over to Brian Klock, head of Market and Investor Relations. Please go ahead.
Brian Klock: Thank you, Todd, and good morning. I'd like to thank everyone for participating in M&T Third Quarter 2024 earnings conference call, both by telephone and through the webcast. 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. Once there, you can click on the Investor Relations link and then on the Events and Presentations link. Close captioning has also been provided for those following along on the webcast.
Brian Klock: Thank you Todd and good morning. I'd like to thank everyone for participating in M&T's third quarter 2020 floor earnings conference call both by telephone and through the webcast.
Brian Klock: 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.mtv.com
Brian Klock: Once there you can click on the Investor Relations link and then on the events and presentation link.
Brian Klock: Those captioning has also been provided for those following along on the webcasts.
Brian Klock: Also, before we started, 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 SEC filings and other investor materials. Presentation also includes non-GAAP financial measures as identified in the earnings release and investor presentation. The appropriate reconciliation to GAAP is included in the appendix.
Brian Klock: 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 SEC filings and other investor materials.
Brian Klock: Presentation also includes nine gap financial measures as identified in the earnings release and investor presentation.
Brian Klock: The appropriate reconciliation to get are included in the appendix.
Brian Klock: Joining me on the call this morning is M&T Senior Executive Vice President and COO Darryl Bible.
Brian Klock: Joining me on the call this morning is M.T. Senior Executive Place President in CFO, Daryl Bible. Daryl likes to turn the call over to Daryl.
Darryl Bible: I'd like to turn the call over to Darryl. Thank you, Brian, and good morning, everyone. As you will hear on today's call, the third quarter results represent M&T's continued strength through a dynamic economic environment. We continue to support our communities that we serve. For the 16th consecutive year, M&T Bank is among the nation's top 10 SBA lenders. We're ranking number one in Baltimore, Buffalo, Connecticut, Delaware, Syracuse, and Washington, D.C. We recently launched the third phase of our annual, which will provide 25 million to nonprofits focused on financial inclusion and economic growth across New England, Long Island, and New York's Westchester County.
Daryl Bible: Thank you, Brian, and good morning everyone. As you we hear on today's call, the third quarter results represent M&T's continued strength through a dynamic economic environment.
Daryl Bible: We continue to support our communities that we serve for the 16th consecutive year M&T Bank is among the nation's top 10 SBA Londoners.
Daryl Bible: Ranking number one in Baltimore, Buffalo, Connecticut, Delaware, Syracuse and Washington, DC.
Daryl Bible: We recently launched the third phase of our aim.
Daryl Bible: which will provide 25 million to non-profits focused on financial inclusion and economic growth across New England, Long Island and New York's Westchester County.
Darryl Bible: We also recently updated several environmental goals, including offsetting 100% of our electricity use with renewable energy by 2030 and establishing interim reduction targets for scope one and two emissions. Furniture 5.5 are employees and products continue to receive awards from consumer, business, and trade organizations. Furniture 5.7, which shows the results of the third quarter.
Daryl Bible: We also recently updated several environmental goals, including offsetting 100% of our electricity use with renewable energy by 2030 and establishing interim reduction targets for scope 1 and 2 emissions.
Daryl Bible: Pernet's 5-5 are employees and products continue to receive awards from consumer, business, and trade organizations.
Darryl Bible: As noted in this morning's press release, we released our third quarter results as we continue to make progress on the plans we laid out in January. There are several successes to highlight. Mike, Nanatrous Margin and Nanatrous Income grew sequentially as we continue to grow loans while reducing our CRE concentration. In fact, since the fourth quarter of 2023, we have grown average loans by nearly 2 billion while reducing CRE by over 4 billion and growing C&I and consumer loans. Funding costs was well managed in this quarter with a four basis point decline in the cost of interest-bearing liabilities.
Daryl Bible: We're on the 5-7 which shows the results of the third quarter.
Daryl Bible: As noted in this morning's press release, we released our third quarter results as we continue to make progress on the plans we laid out in January.
Daryl Bible: There are several successes to highlight.
Daryl Bible: Nineterus Margin and Nineterus income grew so quenchily as we continue to grow loans by reducing our CRE concentration.
Daryl Bible: In fact, since the 4th corner of 2023, we have grown average loans by nearly 2 billion while reducing CRE by over 4 billion and growing C&I and consumer loans.
Daryl Bible: Funding costs was well managed in this quarter with a four basis point decline in the cost of experience, viability.
Darryl Bible: We restarted our Shear Repurchase Program in the third quarter and executed 200 million Shear Repurchases and grew our CET-1 ratio to over 11 and a half percent. Nanatrous Income reached a high point in the third quarter if he excluded the prior gains on our two divestitures. This was achieved by even considering the foregone fee income from those two sold businesses, demonstrating a resiliency and strength of our diversified business model. As the quality continued to improve this quarter with reduction in both non-accrual balances and commercial criticize loans and net charge-offs below the full-year outlook.
Daryl Bible: Rerestated, we restarted our Sheery Purchase Program in the third quarter and executed 200 million in Sheery Purchases and grew our CET-1 ratio to over 11 and a half percent. Non-interest income reached a high point in the third quarter if you exclude the prior gains on our two divestitures.
Daryl Bible: This was achieved by even considering the foregone feet and come from those two sold businesses.
Daryl Bible: Demonstrating the resiliency and strength of our diversified business model. As a quality, continue to improve this quarter with reduction in both non-acruple balances and commercial criticize loans and net chargeoffs below the full year outlook.
Darryl Bible: Now let's look at the specifics for the third quarter. Deluted gap earnings for a year were $4.02 for the third quarter and improved from $3.73 in the second quarter. Net income for the quarter was $721 million compared to $655 million in the link quarter, an increase of 10 percent. M&T's third quarter results produced an ROA and ROCE of 1.37 percent and 10.26 percent, respectively. The CET-1 ratio remained strong, growing at 11.54 percent at the end of the third quarter, and tangible book value per year grew 5 percent. Of note, the third quarter included a discrete tax benefit of 14 million, or an 8 cent EPS benefit.
Daryl Bible: Now let's look at the specifics for the third quarter.
Daryl Bible: Deluded Gap, earnings for a share, were $4.02 for the third quarter, improved from $3.73 in the second quarter.
Daryl Bible: Net income for the quarter, with 721 million compared to 655 million in the
Daryl Bible: M&T's third quarter results produced in ROA and ROC-E of 1.37% and 10.26% respectively.
Daryl Bible: The CET-1 ratio remains strong, growing at 11.54% at the end of the third quarter, and tangible book value per year grew 5%. Of note, the third quarter included a street tax benefit of 14 million for an 8-cent EPS benefit.
Darryl Bible: So I eight includes supplemental reporting of M&T's results on a net operating and tangible basis. M&T's net operating income for the third quarter was $731 million compared with $665 million in the link quarter. Deluted net operating earnings for a year were $4.08 for the recent quarter, up from $3.79 in the second quarter. Net operating income viewed an ROTA and ROTCE of 1.45 percent and 15.47 percent for the recent quarter.
Daryl Bible: I8 includes supplemental reporting of M&T's results on a net operating and tangible basis.
Daryl Bible: Emitry's net operating income from the third quarter was 731 million, compared with 665 million in the link quarter. Deluded net operating earnings for share were $4.8 for the recent quarter, up from $3.79 in the second quarter.
Daryl Bible: Net operating and commuted an ROTA and ROTCE of 1.45% and 15.47% for the recent quarter.
Darryl Bible: Next, let's look a little deeper into the underlying trends that generated our third quarter results. Please turn to slide 9. Taxable equivalent net interest income was $1.74 billion, an increase of 8 million or 1 percent from the link quarter. The net interest margin was 3.62 percent, an increase of three basis points from the second quarter. The primary drivers of the increase to the margin were a positive three basis points from fixed asset repricing, mostly in the investment portfolio and consumer. Positive three basis points from Ernie and Fset Mix, positive two basis points from deposit and wholesale funding, mix and cost, partially offset by a negative four basis points from lower non accrual interest and a negative one basis point for all other items. Non accrual interest amounted to 12 million compared to 30 million in the second quarter.
Daryl Bible: Next, let's look a little deeper into the underlying trends that generate it our third quarter results. Please turn to slide not.
Daryl Bible: Taxfully prevalent, net interest income was 1.74 billion, an increase of 8 million per 1% from the lane quarter. The net interest marginal is 3.62%, an increase of 3 basis points from the second quarter.
Daryl Bible: The primary drivers of the increase to the margin were positive three basis points from fixed asset repricing, mostly in the investment portfolio and consumer loans.
Daryl Bible: Positive 3 bases points from earning F-set mix, positive 2 bases points from deposit and wholesale funding mix in costs.
Daryl Bible: Partially offset by a negative four basis points from lower and not a cruel interest and a negative one basis point for all other items.
Daryl Bible: Not a cruel interest amounted to 12 million compared to 30 million in the second quarter.
Darryl Bible: Turn to slide 11 to talk about what average loans, average loans and leases increased slightly to 134.8 billion. Well, similar to the trend that we saw last several quarters, C&I growth outpaces the client and CRE. C&I loans grew 3% to 59.8 billion, driven by increases in fund. Middle market utilization declined modestly, while dealer floor plan utilization increased from the second quarter as a result of slower auto sales and new model arrivals. CRE loans declined 8% to 29.1 billion, reflecting continued low originations and paynames as we continue to manage our CRE concentration. CRE as a percent of Tier One capital and allowance is estimated to be 148% at the end of the third quarter.
Daryl Bible: Turned to slide 11 to talk about love every 12s, every 12s and leases increased slightly to 134.8 billion.
Daryl Bible: Well, similar to the trend that we saw.
Daryl Bible: Last several quarters, C and I, growth outpace the client and C area.
Daryl Bible: C. and I loans grew 3% to 59.8 billion driven by increases in fund banking, dealer commercial services, mortgage warehouse, and franchise lending.
Daryl Bible: Metal Market Utilization defined modestly while a dealer for plan utilization increased from the second quarter as the result of slower auto sales and new model rivals.
Daryl Bible: CRE loans declined 8% to 29.1 billion reflecting continued low originations and pay loans as we continue to manage our CRE concentration.
Daryl Bible: C.E.R.E. as a percept to your one capital and allowances estimated to be 148% at the end of the third quarter. Residential mortgage loans for relatively unchanged at 23 billion.
Darryl Bible: Residential mortgage loans were relatively unchanged to 23 billion. Consumer loans grew 4% to 22.9 billion, reflecting growth in recreational finance and indirect auto loans. Loan yields were unchanged at 6.38% as lower non-accrual interest was larger offset by the benefit of 6th rate low in repricing and mixed shift.
Daryl Bible: Concealer loans grew 4%, the 22.9 billion reflecting growth and recreational finance and indirect auto loans.
Daryl Bible: Well Niels were unchanged at 6.38% as lower non-accrual interest was largely offset by the benefit of fixed.
Darryl Bible: Turning to slide 12, our liquidity remains strong at the end of the third quarter. Investment securities and cash, including cash held at the Fed, total 59 billion, representing 28% of total assets. The average investment securities increased 1.3 billion. The yield on securities increased 9 basis points at 3.7% as the yield on new purchases exceeded the yield on maturing securities. In the fourth quarter, we have 1 billion securities maturing in an average yield of 1.8% which we intend to invest. The duration of the investment portfolio at the end of the quarter was 3.6 years, and the annualized pre-tax gain on the available-for-sale portfolio was 68 million or 3 basis points CET-1 benefit if included in regulatory capital.
Daryl Bible: Great loan repricing and makeshift.
Daryl Bible: Turning to slide 12, our liquidity remains strong. At the end of the third quarter, investment securities in cash, including cash, how did the Fed total 59 billion, representing 28% of total half-sets.
Daryl Bible: The average investment securities increased 1.3 billion. The yield on securities increased 9 basis points at 3.7%. And the yield on new purchases exceeded the yield on maturity and securities.
Daryl Bible: In the fourth quarter, we have 1 billion insecurities maturing in an average year to 1.8% which we tend to combat free invest.
Daryl Bible: The duration of the investment portfolio at the end of the quarter was 3.6 years, and the I'd realized pre-tax gain on the available for sale portfolio was 68 million for 3 bases points, CET-1 benefit, if you've included in regulatory capital.
Darryl Bible: Turning to slide 13, remained focused on growing customer deposits and are pleased with the overall deposit performance. Average total loans declined 2 billion or 1% to 161.5 billion, reflecting a 1.1 billion decline in broker deposits and a 0.9 billion decline in non broker deposits. Commercial and business banking grew total average deposits from the second quarter, while consumer deposits declined sequentially as we continue to manage more rate-sensitive deposits. Average non-interest bearing deposits to $1.6 billion to $46.2 billion from an expected derelated decline in trust demand deposits and modest continued dissent remediation within commercial and consumer. Excluding broker deposits, average non-interest bearing deposit mix in the third quarter was 30.7%.
Daryl Bible: Turning to Psalm 13, remain focused on growing customer deposits and are pleased with the overall deposit performance.
Daryl Bible: Average total loans declined 2 billion a 1% to a 161.5 billion reflecting a 1.1 billion decline in broker deposits and a 0.9 billion decline in non broker deposits.
Daryl Bible: From our show in business banking, grew total average deposits from the second quarter while consumer deposits declines sequentially as we continue to manage more rate sensitive deposits.
Daryl Bible: Average non-interest bearing deposits to climb 1.6 billion to 46.2 billion from an expected dear related decline in trust to man deposits and modest continued this intermediation within commercial and consumer.
Daryl Bible: Exploding broker deposits, average non-interest bearing deposits at mix in the third quarter was 3.7%. Entrust bearing deposit costs decreased to basis points to 2.88%.
Darryl Bible: Interest bearing deposit costs decreased two basis points to 2.88%.
Darryl Bible: Continuing on slide 14, non-interest income was $606 million compared to $584 million in the link quarter. Trust income was $170 million, unchanged from the prior quarter, with second quarter seasonal tax prep fees of $4 million offset by strong equity market performance and sales performance at ICS. mortgage fees were $109 million compared to $106 million in the second quarter. Commercial mortgage fees increased $4 million from the link quarter to $34 million, reflecting an uptick in the origination activity. Service charges increased $5 million to $132 million from both consumer and commercial, mostly related to the number of processing days in the quarter.
Daryl Bible: Continuing on slide 14.
Daryl Bible: Not interest income with 606 million compared to 584 million in the length quarter.
Daryl Bible: Trust Incum was 170 million unchanged from the fire quarter with second quarter seasonal tax prep fees of 4 million offset by strong equity market performance and sales performance in ICS.
Daryl Bible: Mortgage fees were $109 million compared to $106 million in the second quarter.
Daryl Bible: Commercial mortgage fees increased 4 million from the link quarter to 34 million, reflecting in uptick in the origination activity.
Daryl Bible: Service charges increased 5 million to 132 million.
Daryl Bible: From both consumer and commercial, mostly related to the number of processing days in the quarter. Other revenues from operations were unchanged at 152 million.
Darryl Bible: Other revenues from operations were unchanged at $152 million.
Darryl Bible: Turning this slide 15, non-interest expenses were $1.3 billion, an increase of $6 million from the second quarter. salary and benefits increased $11 million to $775 million, reflecting one additional working day. Deposit insurance decreased $12 million, reflecting the prior quarter $5 million incremental special assessment. Other costs from operations increased $12 million to $128 million, driven mostly by M&T's obligation under various agreements to share in losses stemming from certain litigation of Visa. The efficiency ratio of 55% was largely unchanged from the second quarter.
Daryl Bible: Burning decide 15.
Daryl Bible: John Issues expenses were 1.3 billion, an increase of 6 million from the second quarter. Salary and benefits increased to 11 million to 775 million, reflecting one additional working day.
Daryl Bible: The Potted Insurance Decreased 12-Million Reflecting the Prior Quarter 5 Million in Criminal Special Assessment.
Daryl Bible: Other costs from operations increased 12-lane to 128 million driven mostly by M&T's obligation under various agreements to share and losses stemming from certain litigation of visa.
Darryl Bible: Let's turn this slide 16 for credit. Net charge-offs for the quarter were $120 million, or 35 basis points, down from 41 basis points in the link quarter. The three largest charge-offs in the quarter told us $37 million combined with and represented two C&I loans and one office CRE loan. Non-accrual loans decreased $98 million, or 5%, to $1.9 billion. The non-accrual ratio decreased 8 basis points to 1.42%, driven largely by a decrease in CRE non-accruals from upgrades out of non-accrual, as well as several large payoffs and paydowns. In the third quarter, recorded a provision of $120 million compared to a net charge-off of $120 million.
Daryl Bible: The efficiency ratio of 55% was largely unchanged from the second quarter.
Daryl Bible: Let's turn this light 16 for credit.
Daryl Bible: Net charge off for the quarter, we're a hundred and twenty million, a thirty five basis points. Down from forty one basis points in the lane quarter.
Daryl Bible: The three largest chargeoffs in the quarter total 37 million combined with and represented two sea and eye looms and one.
Daryl Bible: Office CREL, not a cruel loan decreased, 98 million or 5% to 1.9 billion, the not a cruel
Daryl Bible: Ratio decreased eight basis points to 1.42%. Driven largely by a decrease in CRE notacrules from upgrade out of nonacrules as well as several large payoffs and pay downs.
Daryl Bible: In the third quarter recorded a provision of 120 million.
Darryl Bible: The allowance to loan ratio decreased one basis point to 1.62% as a result of continued improvements in asset quality and improvements in the macroeconomic outlook, partially offset by growth in certain portfolios.
Daryl Bible: and Paira to a net charge off of a 120 million.
Daryl Bible: The allowance to law and ratio decreased one basis point to 1.62% as a result of continued improvements in asset quality and improvements in the macro economic outlook. Partly offset by growth in certain portfolios.
Darryl Bible: Please turn to slide 7. Team. When we file our form 10-Q in a few weeks, we estimate that the level of criticized loans will be a 10.9 billion compared to 12.1 billion at the end of June. The improvement from the link quarter was driven by a 315 billion decline in CNI and a count of 30 million decline in CRE-criticized balances. My 18 provide additional detail on the CNI-criticized balances. The largest CNI-criticized balance decreases were within the motor vehicle and recreational finance dealers and manufacturing segments. With smaller changes across most other industries, the decline within the motor vehicle and recreational finance dealers mostly reflects improvements in debt service coverage ratios and normalizing profit margins within the RV segment.
Speaker Change: Please turn this flight 17.
Speaker Change: When we file our Form 10Q in a few weeks, we estimate that the level of criticize loans will be at 10.9 billion compared to 12.1 billion at the end of June.
Speaker Change: The improvement from the length quarter was driven by a 315 billion decline in CNI and a count of 30 million decline in seary criticized balances.
Speaker Change: by 18 provides additional detail on the C&I criticise balances.
Speaker Change: The largest CNI criticised balanced decreases were within the motor vehicle and recreational for an anteelers and manufacturing segments.
Speaker Change: With smaller changes across most other industries.
Speaker Change: The decline within the motor vehicle and recreational finance dealers mostly reflect some improvements in debt service coverage ratios and normal lighting profit margins within the RV segment.
Darryl Bible: By 19 includes the detail on CRE-criticized balances. The largest CRE-criticized declines were within healthcare and construction, with continued but more modest declines in most other property types except for office. Within healthcare, we saw an uptick in repayment activity as improvements in occupancy and rent for both, combined with declining long-term rates, allowed for more viable takeouts. The decline in construction criticized was aided by improved project performance and low modifications and croutailments as borrowers continue to support these projects. The largest factor that drove it versus prior quarters was the amount of upgrades that occurred in the quarter.
Speaker Change: By 19 includes the detailed, unseary, criticized balances.
Speaker Change: The largest Ciri criticised.
Speaker Change: Declines were within healthcare and construction with continued, more modest declines in most other property types except for office.
Speaker Change: Within healthcare, we saw an uptake and repayment activity as improvements in occupancy and rent for those combined with declining long-term rates allows for more viable takeouts.
Speaker Change: The decline in construction criticized was aided by improved project performance and low modifications and contaminants as borrowers continue to support these projects.
Speaker Change: The largest factor that drove a Daryl Bible.
Speaker Change: Proverses prior quarters with the amount of upgrades that occurred in the quarter.
Darryl Bible: Turning to slide 20 for capital. M&T's CET-1 ratio at the end of the third quarter was an estimated 11.54% compared to 11.45% at the end of the second quarter. The increase was due to continued strong earnings and strong and a 200 million share repurchase in the third quarter. The end of the third quarter, the negative AOCI impact on the CET-1 ratio from available-for-sale securities and pension-related components combined would be approximately four basis points.
Speaker Change: Durning to slides 20 for capital.
Speaker Change: M&TCET1 ratio at the end of the third quarter with an estimated 11.54% at the end of the second quarter. The increase was due to continued strong earnings and strong and at 200 million year approaches in the third quarter.
Speaker Change: The end of the third quarter, the negative AOCI impact on the CEC-1 ratio from available for sale securities and pension-related components combined would be approximately four basis points.
Darryl Bible: Now turning to slide 21 for the outlook. Let's begin with the economic backdrop. The economy remains resilient in the third quarter, with GDP growth expected to come in stronger than we had projected. The labor market has slowed but remains healthy. Though we see a soft landing scenario as having the highest probability, the possibility remains for a mild recession brought on by lagged impact and rate hikes. The consumer spending has slowed, alleviating inflation pressure for many goods and services. Recently, inflation has nearly returned to the Fed's target of 2%. Now turning to the outlook. Our outlook for the full year NII is unchanged from our last update.
Speaker Change: Now turning aside 21 for the afflob.
Speaker Change: So let's begin with the economic backdrop.
Speaker Change: Economy remains resilient in the third quarter, but GDP growth expected to come in stronger than we had projected.
Speaker Change: The labor market has slowed the remaining healthy.
Speaker Change: So we see a soft landing scenario and having the highest probability.
Speaker Change: The possibility remains for a mild recession brought on by leg impact and rate hikes.
Speaker Change: The consumer's banding has slow alleviating inflation pressure for many goods and services.
Speaker Change: Recently, inflation has nearly returned to the Fed's target of 2%.
Speaker Change: Now turning to the outlook. Our outlook for the full year NII is unchanged from our last update.
Darryl Bible: While the outlook from the full year fees, expenses in net charge off is unchanged from the ranges we initially discussed in January and maintained through the year.
Speaker Change: are the outlook from the full year fees, expenses, and that charge-offs is unchanged from the ranges we initially discussed in January and maintain through the year.
Darryl Bible: That said, with three-quarters complaint, we will focus on the outlook for the fourth quarter. We expect tax flow equivalent NII to be at least 1.73 billion, implying a full-year NII near the top end of the range we provided previously. Nannisris margin is expected to be in the low 360s. Our outlook incorporates the latest forward curve that has an additional 50 basis points and rate cuts by the end of the year. We expect continued long growth and average total loans from approximately 136 billion, with growth in C&I and consumer and lower CRE balances. Total deposits are expected to be at least a 160 billion as we continue to focus on growing core customer deposits.
Speaker Change: That said, with three quarters complaint, we will focus on the outlook for the fourth quarter.
Speaker Change: We expect tax will equivalent NI to be at least 1.73 billion employee in a full year NI, you know the top end of the range we've provided previously.
Speaker Change: Neneresus Margin is expected to be in the low-free 60s. Our outlook and corporate delayed is for recurring that has an additional 50 basis points and rate cuts by the end of the year.
Speaker Change: We expect continued long growth and average total loans from approximately 136 billion with growth in CNI and consumer and lower CRE balances.
Speaker Change: Total deposits are expected to be at least 160 billion as we continue to focus on growing core customer deposits.
Darryl Bible: We expect interest bearing deposit beta of approximately 40 percent for the first couple of interest rate cuts. Security balances are expected to continue to grow in the fourth quarter. Our outlook for the fourth quarter of non-interest income is about $6 billion. Reflecting continued strength in mortgage and trust, partially offset by other fee categories. Fourth quarter expenses, including intangible amortization, are expected to be about 1.32 billion due to the timing of projects coming online. This reflects continued investment in our key priorities and initiatives, or are closely managing our expenses. We continue to expect net charge-offs for the full year to be near 40 basis points.
Speaker Change: We expect introsperying to positive data of approximately 40% for the first couple of this rate cuts.
Speaker Change: Security balances are expected to continue to grow in the fourth quarter.
Speaker Change: Our outlook for the fourth quarter of non-interest income is about 600 million reflecting continued strength and mortgage and trust, mostly offset by other feed categories.
Speaker Change: Horses quarter expenses, including intangible immunization, are expected to be about 1.32 billion due to the timing or projects coming online.
Speaker Change: This reflects continued investment in our key priorities and initiatives for our closely managing our expenses.
Speaker Change: We continue to expect net charge-offs for the full year to be near 40 basis points.
Darryl Bible: Our outlook for the tax rate for the fourth quarter is about 24.25 percent, and the preferred dividends are expected to be approximately 36 million. We plan to continue the 200 million share repurchase in the fourth quarter.
Speaker Change: Our outlook for the tax rate for the fourth quarter is about 24.25% and the preferred dividends are expected to be approximately 36 million.
Speaker Change: We plan to continue the 200 million sugar repurchase in the fourth quarter.
Darryl Bible: To conclude on slide 22, our results underscore an optimistic investment thesis. M&T has always been a purpose driven organization with a successful business model that benefits all stakeholders, including shareholders. We have a long track record of credit outperforming through all economic cycles while growing within the markets we serve. We remain focused on shareholder returns and consistent dividend growth. Finally, we are disciplined, acquired, and proved steward of shareholder capital.
Speaker Change: You conclude on slide 22, a results underscore an optimistic investment thesis.
Speaker Change: M&T has always been a purpose-driven organization with successful business model that benefits all stakeholders, including shareholders.
Speaker Change: We have a long track record of credit outperforming through all economic cycles while growing within the markets we serve.
Speaker Change: We remain focused on sheer horror returns and consistent dividend growth.
Speaker Change: Finally, we are disciplined to choir and prove Stuart of Shareholder Capital.
Brian Klock: Now let's open the quoted questions before which our operator will briefly review instructions. Thank you.
Speaker Change: Now let's open the quote of questions before which are operatable briefly review instructions.
Operator: The floor is now open for your questions. If you would like to ask a question, please press star one on your telephone keypad. If your question is answered, you may remove yourself by pressing star two.
Speaker Change: Thank you. The floor is now open for your questions. If you would like to ask a question, please press star one on your telephone keypad. If your question is answered, you may remove yourself by pressing star 2.
Operator: We do ask that you pick up your handset for optimal sound quality. Again, that's star one to ask a question.
Speaker Change: Now we do ask that you pick up your handset for optimal sound quality, again, that's star one to ask a question.
Gerard Cassidy: Our first question will come from Gerard Cassidy with RBC Capital Markets. Please go ahead.
Speaker Change: Our first question will come from Gerard Cassidy, with RBC Capital Markets. Please go ahead.
Darryl Bible: Hi, Darryl. How are you? Good. How are you doing, Gerard? Good. Thank you.
Gerard Cassidy: My Daryl, how are you?
Darryl Bible: Over the years, M&T has done a great job in managing their capital and returning excess capital. Shareholders, you pointed out today that your CET-1 ratio is a very strong 11.5 percent, and you have the buyback going on again in the form of a quarter. Can you share with us what you think the CET-1 ratio is at an optimal level, and to get there, could you increase the share repurchases as you go forward into 2025? And once we also get the final Basel 3N games, so you guys know what to expect. Yeah, thanks, Gerard. First, I just want to start with that, you know, we have a lot of flexibility when it comes to capital, with a CET1 ratio of 11.5%.
Gerard Cassidy: Good, how are you doing, Daryl? Good, thank you. Daryl, over the years M&T has done a great job in managing their capital and returning excess capital to shareholders. You pointed out today that your CET-1 ratio is a very strong 11.5% and you have the buyback going on again in the fourth quarter. Can you share with us what do you think the CET-1 ratio is at an optimal level? And to get there, could you increase the share repurchase as you go forward into 2025? And once we also get the final Basel 3 end game so you guys know what to expect.
Speaker Change: Yeah, thanks, Daryl. First, I just want to start with it. You know, we have a lot of flexibility when it comes to capital, but the CT1 ratio of 11 and 1.5%.
Darryl Bible: And we have really no negative impact on the AOCI, and we have strong capital generation. You know, that said, you know, as we continue to move forward into, you know, the end of the fourth quarter and into 2025, you know, we will continue to look at the economy. Economy continues to grow now.
Speaker Change: And we have really no negative impact on the AOCI and we have strong capital generation.
Speaker Change: You know, that said, you know, as we continue to move forward into, you know, the end of the fourth quarter and into 2025, you know, we will continue to look at the economy. Economy continues to grow now. But if we're signed to slow down, that could impact potential increases to show repurchase. You know, we've made great progress on our criticize loans. They've come down now to consecutive quarters. We expect fourth quarter to be also a really strong decrease in criticize. Thank you very much. Thank you very much. Thank you very much.
Darryl Bible: But if we're signed to slow down, that could impact potential increases to share repurchase. You know, we've made great progress on our criticized loans. They've come down now to consecutive quarters. We expect fourth quarter to be also a really strong decrease in criticize. And we believe we're at the point now that our CRE exposures where we want it to be. And we are now the pipeline is starting to build from that perspective.
Speaker Change: And we believe we're at the point now that our CRA exposures where we want it to be and we are now the pipeline is starting to build from that perspective. So I believe in 2025 we return more capital to shareholders.
Darryl Bible: So I believe in 2025, we return more capital to shareholders. And as long as it plays out, as mentioned, what I just talked about, you know, we probably switched a dollar amounts and target more of a CET1 ratio. So, for example, we might say we'll buy back, you know, in 2025, if we want to stay above 11% CET1 ratio and do repurchases, and that depends on how much loan growth and RWA growth that we have on the balance sheet.
Speaker Change: and as long as it plays out, as mentioned what I just talked about, you know we probably switched a dollar amounts and target more of a CET-1 ratio. So for example we might say we'll buy back in 2025 if we want to stay above 11% CET-1 ratio and do repurchases and that depends on how much loan growth and RWA growth that we have on the balance sheet.
Gerard Cassidy: I know 11% is higher than what you would need long term, but we're working on our long-term targets, and probably we'll have something to say about that in the next quarter or so. Very good, very helpful.
Speaker Change: I know 11% is higher than what you would need long-term, but we're working on our long-term targets. Probably we'll have something to say about that in the next quarter or so.
Gerard Cassidy: And then, as a follow-up, and I'm not asking for 25 guidance because I know that won't come until possibly January. But it looks like your net interest income has dropped. It looks like the first quarter, based upon slide nine, that net interest income bottomed in your gradually growing out net interest income. And the margins obviously expanding. If the forward curve is correct and if the Fed, and I know these are big ifs, but if the forward curve is correct and the Fed is correct and that it's going to lower the Fed funds rate possibly to 3 to 3.5% by the end of next year.
Speaker Change: Very good, very helpful, and then as a follow-up, and I'm not asking for 25 guidance because I know that won't come until possibly January , but it looks like your net interest income has dropped. It looks like the first quarter based upon slide 9, that net interest income bottomed in your gradually growing out net interest income in the margins, obviously expanding. If the forward curve is correct and if the Fed and I know these are big if. But if the forward curve is correct and the Fed is correct and that is going to lower the Fed funds rate possibly to 3 to 3.5% by the end of next year and we get a positive slope in the curve.
Darryl Bible: And we get a positive slope in the curve. Can you kind of frame out you should this growth that you're seeing continue and possibly accelerate in 2025 just based aside from growing your balance sheet, but just based on interest rates.
Speaker Change: Can you kind of frame out, you should just grow that you're seeing continue and possibly accelerate in 2025, just based, aside from growing your balance sheet, but just based on interest rates.
Darryl Bible: Yeah, you start off with a really rosy scenario. We just say that our team has worked really hard this past year and 24, and we are really neutral to net interest income and really happy that happened just as the Fed started lowering. So we're very fortunate for that. If you look at what's going on, we have really good roll-on and roll-off rates and a lot of our fixed asset portfolios. I know it's hard for you as analysts to really understand and you know, get those numbers into your models. But if you look at auto and RV, rising mortgage and our investment portfolio, all those continue to reprise positively this quarter.
Speaker Change: Maggie, you start off with a Rurie Rosie scenario. We just say that our team has worked really hard this past year and in 24 and we are really neutral and then interest income and really happy that happened just as the Fed started lowering right so we are very fortunate for that. [inaudible]
Speaker Change: You know, if you look at what's going on, we have really good roll-on and roll-off rates and a lot of our fixed asset portfolios. I know it's hard for you as analysts to really understand and get those numbers into your models. But if you look at Ardo and RV, Rezzy Mortgage and our investment portfolio, all those continue to reprise positively this quarter. We expect that they continue next quarter and into 2025. So that's a positive for us. For sloping curve, we would enhance that potentially.
Darryl Bible: We expect that they continue next quarter and into 2025. So that's a positive for us. For sloping curve, we would enhance that potential. Early. On the deposit side, I just see it's the strength of our company, Gerard. You know, it is our strong foundation that we have. We have really strong stable, core operating deposits. You know, we're seeing now an initial downward beta of 40%. That's at the higher end of the range that we talked about previously, so that's strong. And when you look at hedging, you know, we know we already have locked in hedges improvements in our swap book that we're going to base it.
Speaker Change: You know, on the deposit side, I just see it's the strength of our company jar. You know, it is our strong foundation that we have. We have really strong stable, more operating deposits.
Speaker Change: You know we're seeing now an initial downward beta of 40% that's at the higher end of the reigns that we talked about previously so that's strong and when you look at hedging you know we know we already have locked in hedges improvements in our swap book that we're going to basically reprise our hedges if you look at the cash flow hedges point to point they should go up about 55 basis points
Darryl Bible: We reprise our hedges. If you look at the cash flow hedges, point to point, they should go up about 55 basis points. And the fair value hedges should cope about 37 basis points, point to point 25. That's a phrase; don't even change. So that, that's probably very positive. So we have a lot of good things going on. Plus, you know, we're growing loans; you know, even when we were shrinking CRE, we were able to eke out loan growth. So our businesses are performing really well both. On the CRE and CNI side as well as our consumer businesses.
Speaker Change: and the fair value hedges should cope about 37 basis points, point to point in 25. That's if rates don't even change. So that's probably very positive from there. So we have a lot of good things going on. Plus, you know, we're growing well. You know, even when we were shrinking CRE, we were able to eat out long growth. So our businesses are performing really well both on the CRE and see an eyesight as well as our consumer businesses. And so that's the end of the video.
Darryl Bible: So I would say we have positive mixed benefit as we move forward as we continue to grow that. So that gives me a lot of confidence that NII, Anderson's margin should continue to improve.
Speaker Change: So I would say we have positive mixed benefit as we move forward as we continue to grow that. So that gives me a lot of confidence that NII, Anderson's margin should continue to improve.
Gerard Cassidy: Very good. Very helpful.
Darryl Bible: Thank you.
Speaker Change: Very good, very helpful. Thank you.
Ibrahim Poonawala: Our next question will come from Ibrahim Punalala with Bank of America. Please go ahead.
Speaker Change: Thank you.
Speaker Change: Thank you, our next question will come from Ibrahim Pune Walla with Bank of America. Please go ahead.
Darryl Bible: Good morning, Dar. This question on the you mentioned the criticize loans decline. Just wondering, do we need rates to go much lower for CRE? Criticize loans to come down over the coming quarters and could we see a big like stair step decline at some point early next year when you, I don't know. Get updated appraisals financial from these borrowers. And what are the implications? Does it really change your thought process as a result on the 11% C.T.1, or whether it's a ratio is today at 1.6. Yeah.
Speaker Change: Good morning, Dad. Good morning.
Speaker Change: This question on the, you mentioned the Criticized Loans decline. Just wondering, do we need rates to go much lower for CRE, Criticized Loans to come down over the coming quarters? And could we see a big like stair step decline at some point early next year when you, I don't know, get up, get in the praises, financial from these borrowers? And what are the implications? Does it really change your thought process? As a result on the 11% CT1 or whether it's a ratio is today at 1.6.0. So, if you have any questions, please let me know in the comments below.
Darryl Bible: Thanks for the question, Ibrahim. You know, what I would tell you is this quarter I pointed out and prepare remarks. You know, the biggest difference in the third quarter versus, you know, the past several quarters is that we actually had a lot of upgrades in our roles. You know, when rates fall, you know, we can have more takeouts and paydowns from that. And that's occurring, obviously, with rates coming down. But we're getting actually good upgrades now. If you look specifically in our healthcare sector that we have, the operations really started to improve their occupancy and rents were more positive, and they were cash flowing better.
Speaker Change: Yeah, thanks for that, the question, Abraham. You know what I would tell you is this quarter I pointed out in the prepared remarks, you know, the biggest difference in the third quarter versus.
Speaker Change: You know, the past several quarters is that we actually had a lot of upgrades.
Speaker Change: And our roles, you know, when rates fall, you know, we can have more takeouts and pay downs or from that and that's that's occurring obviously with rates coming down, but we're getting actually good upgrades now.
Speaker Change: If you look specifically in our healthcare sector that we had, the operations really started to improve their occupancy and rents were more positive and they were cash flowing better and that's really positive. You have to remember that in our criticised book that we have in total 91% is paying current.
Darryl Bible: And that's really positive. You have to remember that, you know, in our criticized book that we have in total 91% is paying current. So that's really, really good. If you look at our CRE construction book, that also dropped a fair amount. And that was really, you know, driven by, you know, interest rates and also just state stabilization that you're seeing in the marketplace, the projects that we have. You know, one of the strengths M&T has, you know, with our, you know, all of our lending is really the clients that we lend to. We really have really strong client selection and people are committed supporting their credits and believe that, you know, they're the right things they want to hold on to them.
Speaker Change: So that that's really, really good.
Speaker Change: Um, if you look at our theory construction book, I'd also drop to fair amount.
Speaker Change: And that was really driven by interest rates and also just stay stabilization that you're seeing in the marketplace, the projects that we have. One of the strengths M&T has with all of our lending is really the clients that we lend to. We really have really strong clients selection and people are committed supporting their credits.
Darryl Bible: And you're seeing that really come through, and you're seeing this now come through as we're starting to get upgrades. The other thing that we saw this quarter is our RV dealers, you know, three at three significant RV dealers; they were able to get rid of their excess inventory in 2022. and that really helped from an upgrade perspective. So we have a lot of momentum and criticize. I'm very optimistic. Fourth quarter will continue to be a very strong and continue into 25. So I think we have momentum there and, you know, probably won't be a direct climb down, Ebrahim, but I think we would check the definite down.
Speaker Change: and believe that they're the right things they want to hold on to and you're seeing that really come through and you're seeing this now come through as we're starting to get upgrades. The other thing that we saw this quarter is our V-dealers, you know, three at three significant R-V-dealers, they were able to get rid of their excess inventory in 2022.
Speaker Change: and that really helped from an upgrade perspective. So we have a lot of momentum and criticize a very optimistic fourth quarter will continue to be a very...
Speaker Change: Strong, and continue into 25. So I think we had momentum there and probably won't be a direct climb down either, but I think we'll have to check this out on a very positive about that.
Darryl Bible: I feel very positive about that. Understood. And this may be that, so you mentioned drivers of loan growth. You had pretty good low CNI growth. The last few quarters. Is this still coming through the partly given by the people's acquisition and kind of the footprint you acquired there. And are we done with the runoff in CRE? Could that kind of flat line from the arrow? Is that still going to be declining somewhat from third quarter levels?
Speaker Change: understood and just maybe that so you mentioned drivers of loan growth you had pretty good low CNI growth the last few quarters is this still coming through the partly given by the people's acquisition and kind of the footprint you acquired there and are we done with the runoff in CRE could that kind of flat line from here is that still going to be declining somewhat from third quarter levels
Darryl Bible: Yeah, so let me start with the CRE first. So our pipelines are building in CRE. You know, we haven't had, you know, large pipelines for a while there. So it's going to take us probably a couple quarters for those pipelines to fill up and start seeing it hit on the balance sheet. But you know, we are making really good progress in our CRE portfolio, and that gives me confidence as we get into 2025. You know, we won't be shrinking CRE, but we'll be growing CRE. So it's another or in the water that will give us more momentum from a revenue growth perspective from that.
Speaker Change: Yeah, so let me start with the CRE first.
Speaker Change: So, our pipelines are building in CRE. You know, we haven't had, you know, large pipelines for a while there. So it's going to take us probably a couple quarters for those pipelines to fill up and start seeing it hit on the balance sheet. But, you know, we are making really good progress in our CRE portfolio and that gives me confidence as we get into 2025. You know, we won't be shrinking CRE, but we'll be growing CRE, so it's another or in the water that will give us more more momentum from a revenue growth perspective from that. So I think that's very positive.
Darryl Bible: So I think that's very positive. As far as growth is quarter, you know, it was continued growth. I mean, our specialty businesses that we have, corporate and institutional fund banking, mortgage warehouse, franchise, all were really strong growers this quarter. When you saw the quarter play out, we were a little soft in the first part of the quarter, but we finished the quarter really strong. You can see it in end of period loan balances. And we have a lot of momentum going into the fourth quarter. So that's good. When you look at our regions that we have a rental market, you know, the areas that really to highlight there are Austin and Baltimore, New Jersey, York P.A., Richmond, Virginia; all those continue to progress and go really be positive.
Speaker Change: As far as growth as quarter, you know, was continued growth. I mean, our specialty businesses that we have, Corporate Institutional Fund Banking, Mortgage Warehouse, franchise.
Speaker Change: All were really strong growers this quarter. When you saw the quarter play out, we were a little soft in the first part of the quarter, but we finished the quarter.
Speaker Change: Really strong, you can see it in end-to-period loan balances and we have a lot of momentum going into the fourth quarter. So that's good. When you look at our regions that we have, a little market, you know, the areas that really were the highlight there are Austin and Baltimore, New Jersey, York P.A. Richmond, Virginia.
Darryl Bible: So I would say we have good momentum in the landing side and feel good about, you know, the revenue projections that we have.
Speaker Change: All those continue to progress and go really be positive. So I would say we have good momentum in the landing side and feel good about the revenues projections that we have.
Darryl Bible: But it can just one follow up on the previous response we gave to Gerard. If we don't get a rate cut in the fourth quarter in November, December, or at least one of those. Does that change your outlook on the N.I. NIM from here? You know, everything I said going through that list, Ibrahim was structural that's going on in our balance sheet that has no impact on interest rates. So I feel comfortable, you know, that we're going up if rates stay flat. Or if they actually go up or down, we're relatively neutral from interest rate risk percentage.
Speaker Change: Well, it can just one follow up on the previous response to get to your ad. If we don't get a rate cut in the fourth quarter in November, December or at least one of those, there's that change your outlook on the NINM from here.
Speaker Change: You know, everything I said going through that list, EberHame was structural that's going on in our balance sheet that has no impact on interest rates.
Speaker Change: So, I feel comfortable, you know, that we're going up a freight state flat, or if they actually go up or down, we're relatively neutral from an interest rate risk percentage.
Darryl Bible: And it's hard to be exact, but we're as neutral as you can be with a balance sheet and the complexities that you have. So I feel good that we have an upper trajectory in margin and then interest income. Thank you.
Speaker Change: It's hard to be exact, but when we're as neutral as you can be with the balance sheet and the complexities that you have. So I feel good that we have an upper trajectory of margin and then interest income.
Manan Gosalia: Our next question will come from Menon, Gosalya with Morgan Stanley. Please go ahead. Hey, good morning, Darryl.
Speaker Change: The Childful, thank you.
Speaker Change: Thank you, our next question. We'll come from Manan, Kassalia with Morgan Stanley. Please go ahead.
Darryl Bible: Good morning. So I wanted to ask on deposit betas. I think you noted that you're assuming a 40% deposit beta in 4Q. Now deposit betas in the way up were closer to the mid 50s, if I recall correctly. So do you expect that betas will accelerate from 4Q as you go into action as we see more rate cuts and get closer to the betas that you saw on the way up? Yeah, I think of it maybe as my simple mind or whatever, but I think that if our betas went up, I think we picked it about 55%.
Speaker Change: Hey, good morning, Daryl.
Daryl Bible: Good morning!
Speaker Change: So, I wanted to ask on deposit betas, I think you noted that you were assuming a 40% deposit betas in 4Q. Now deposit betas in the way up were closer to the mid 50s if I recall correctly. So, do you expect that betas will accelerate from 4Q as you go into action as we see more rate cuts and get closer to the betas that you saw on the way up?
Speaker Change: Yeah, you know, I think that maybe it's my simple mind or whatever, but I think that, you know, if our Vedas went up, I think we picked it about 55%.
Darryl Bible: On the way down, we'll probably end up at 55% at some point. It's really the pace and how quickly you get there. But I felt really good about what we've been able to do at the end of September and feel good that we'll have a good, at least a 40% deposit. We've been able to do a 40% beta repricing down in the fourth quarter. And that hopefully will continue to move forward as we get into 2025. But all things being equal, I don't think we're going back to where we were. But I feel very positive that our businesses are lowering rates.
Speaker Change: You know, on the way down, we'll probably end up at 55% at some point. It's really the pace and how quickly you get there.
Speaker Change: But I felt really good about what we've been able to do at the end of September and feel good that we'll have a good, you know, at least a 40% beta.
Speaker Change: Repricing Down.
Speaker Change: in the fourth quarter.
Speaker Change: You know, and that hopefully will continue to move forward as we get in the 2025 but
Speaker Change: You know, all things being equal, I don't think we're going back to where we were, but you know, I feel very positive that our businesses are, you know, lowering rates, you know, it was a lot of good planning that we had in the company, you know, our treasury team, with all the businesses worked really hard to come up with good strategies and...
Darryl Bible: It was a lot of good planning that we had in the company. Our treasury team, with all the businesses, worked really hard to come up with good strategies and really good implementation. And we've tested that for really good at where we're headed.
Darryl Bible: Got it. And then just in terms of the long growth you were just speaking about, as we get into next year, it sounds like long growth will accelerate as you start to build those CRE loans. In terms of funding that long growth, do you expect to grow deposits in line with long growth next year? Or is there room to bring down the cash balances? I noticed that they didn't go down that much this quarter. Is there some room to utilize cash balances and maybe grow deposits a little bit slower next year?
Speaker Change: Got it. And then, you know, just on in terms of the long growth you were just speaking about, as we get into next year, I mean, it sounds like long growth will accelerate as you start to build that the CRE loans. In terms of funding that loan growth, do you expect to grow deposits in line with loan growth next year? Or is there room to bring down the cash balances? You know, I noticed that they didn't go down that much this quarter. Is there some rules? There's room to utilize cash balances and maybe go to deposit a little bit slower next year.
Darryl Bible: Come on, I'm a big believer that we want to operate the company basically being always on. And I say always on what that means is we are always out there trying to get deposits from all of our customers. We won't pay the highest rates. We won't pay the lowest rates. But we're always we out there asking for deposits. We've had forward consecutive quarters of customer growth in deposits. We will continue to focus on growing customer deposits. I think it's important, if you think of a boat, if you're growing loans, you need to grow deposits so you don't go into circle and all that.
Speaker Change: I'm a big believer that we want to operate the company with BAC, who you've been always on. I say always on what that means is...
Speaker Change: We are always out there trying to get deposits from all of our customers.
Speaker Change: We won't pay the highest rates, we won't pay the lowest rates, but we're always beyond their asking for deposits.
Speaker Change: We've had four consecutive quarters of customer growth in deposits. We will continue to focus on growing customer deposits.
Speaker Change: I think it's important.
Speaker Change: If you think of a boat, if you're growing loans you need to grow deposits so you don't go in a circle and all that so you need to continue to move going forward. I would actually like to grow deposits faster than loans to be honest with you and continue to shrink some of our non-core funding if that's able to freely do that.
Darryl Bible: So you need to continue to move going forward. I would actually like to grow deposits faster than loans, to be honest with you, and continue to shrink some of our non-core funding if that's able to, forever do that.
Darryl Bible: Got it. It sounds like that core deposits continue to grow. You'll pay down some of the non-core funding, and what the securities balances grow as well as you move away from cash, or would you expect to stay at this level of cash? You know, if you look at where we are right now, we have about 59 billion between the two. We are putting more money into the investment portfolio. Again, we've been very methodical all year, and increasing our investment portfolio increases, and that's played out really well for us. We saw we had nice increases. We'll probably be in the 390s towards the end of the year, early first quarter, 4% sometime in 2025 from a yield perspective.
Speaker Change: God, it sounds like...
Speaker Change: That core deposits continue to grow. You'll pay down some of the non-core funding and with the securities balances grow as well as you move away from cash, or would you expect to stay at this level of cash?
Speaker Change: You know, if you look at where we are right now, we have about 59 billion between the two.
Speaker Change: You know, we are putting more money into the investment portfolio. Again, we've been very methodical all year and...
Speaker Change: You know, increasing our investment portfolio.
Speaker Change: increases and that's played out really well for us.
Speaker Change: He saw we had nice increases, we'll probably be in the 390s towards the end of the year, early 1st quarter and 4% sometime in 2020-25.
Darryl Bible: So we will continue to grow our investment portfolio. We have 1 billion in maturity, and the fourth quarter will probably invest 3 billion in the fourth quarter, and then we'll reevaluate and see how 25 plays out. From a cash at the Fed perspective, we probably will operate with cash at Fed, not at 20 billion. We won't probably go much lower than that. But yeah, I think we just have a lot of flexibility where we are right now. Right now, we're sitting on about 25 plus billion at the Fed, so we got a lot of flexibility.
Speaker Change: when we yield perspective.
Speaker Change: So we will continue to...
Speaker Change: to grow our investment portfolio. We have one billion in maturing in the fourth quarter we'll probably invest $3 billion.
Speaker Change: and the fourth quarter and then we'll re-evaluate and see how 25 plays out from a cash at the Fed perspective, we probably will operate with cash at Fed, no at 20 billion, we won't probably go much lower than that. But I think we just have a lot of flexibility where we are right now. Right now we're sitting on about 25 plus billion at the Fed, so we got a lot of flexibility.
Darryl Bible: Thank you.
Christopher Spahr: Our next question will come from Christopher Spahr with Wells Fargo. Please go ahead.
Speaker Change: God, thank you.
Speaker Change: Thank you, our next question will come from Christopher Spar with Will Fargo. Please go ahead.
Darryl Bible: Thank you. Good morning. So just a question on the loans period. It's just. Oh, apologies. Can you hear me better now? Or is this still bad? I can now. Yes. Okay. Sorry about that. Just for the loans in the fourth quarter relative to period end of 136 billion. Just is there upside to that?
Christopher Spar: Thank you, good morning. So just a question on the loans period.
Speaker Change: Alright, but, okay.
Speaker Change: that's just pressure rightak al extheperireic
Christopher Spar: Oh, apologies. Can you hear me better now? Or is this still bad? I can't now, yes.
Christopher Spar: Okay, sorry about that. Just for the loans in the fourth quarter relative to period end of 136 billion. Is there upside to that at CRE Stabilizes or do you see some more more runoff and pay downs in that quarter value and then Stabilizing the end to 2025?
Darryl Bible: It's CRE stabilizes or do you see some more out of some a little bit more runoff and paydowns in that portfolio and then stabilizing into 2025? Yeah, I think you're going to see runoff and CRE for at least a couple more quarters. You know, first quarter for sure. Fourth quarter, first quarter, maybe second quarter. It depends on how quickly our pipeline is going. And what type of loans that we're making, whether it's permanent or construction loans from that perspective, but you know, we're kind of going to operate with about 20% of our loan book being in CRE is kind of a mix that we're going to have moving forward from that projection.
Speaker Change: Yeah, I think you're going to see run off in CRE for at least a couple more quarters, you know, first quarter for sure, fourth quarter for a quarter, maybe second quarter, it depends to how quickly our pipelines go and what type of loans that we're making whether it's permanent or construction loans from that perspective, but we're kind of going to operate with about 20% of our loan book being in CRE is kind of the mix that we're going to have moving forward from that always it's
Darryl Bible: So it's, you know, pipelines are building, and Peter and his team will do a great job and try to, you know, meet the needs of our clients and communities as we move forward. So, but we'll do it the right way. But.
Speaker Change: You know, pipelines are building and, you know, Peter and his team, what would do a great job and, you know, try to, you know, meet the needs of our clients and communities as we move forward. So, but, we're doing it the right way, but I wouldn't expect CRE balances to grow until mid next year conservatory.
Christopher Spahr: I wouldn't expect CRE balances to grow until mid next year conservatively. Okay, and then during the quarter, you said that 200, 200 basis points lower in rates could actually effectively wipe out the criticized loans in the CRE. Do I have that correct? And if so, then just kind of getting back to the earlier questions, like the timing. Is it that last? Yeah, I didn't get the last part of the first part. Yeah, I got the first part. I didn't get the last part. Sure. Apologies about the connection. Just at what's the timing of that of the if you do get 200 basis points lower in the in the curves.
Speaker Change: Okay. And then during the quarter you said 200 basis point lower.
Speaker Change: Raids could actually, effectively, wipe out the criticize loans in the CRE, do I have that correct? And if so, then just kind of getting back to the earlier questions, like, the timing, is it that last time?
Speaker Change: I didn't get no idea where he found it is.
Speaker Change: Yeah, I got the first part, I didn't get the last part for sure.
Speaker Change: Apologies about the connection. What's the timing of that? If you do get 200 basis points lower in the curve, what's the timing for the benefits on the criticised CRA?
Darryl Bible: What's the timing for the benefits on the criticized CRE? Yeah, so we have a good downward trajectory and criticize. I don't like to use the word wipe out. I don't think that's appropriate. You know, we have a long-term history, Chris, of working with our clients and staying with them, you know, when things are stressful, and we will continue to do that as long as they support their loans that I will. So we're always going to have some criticized loans. That's just who we are in our DNA; also makes our clients very loyal to us. So that's going to continue from that perspective.
Speaker Change: Yeah, so we have a good downward trajectory and in criticized, I don't like to use the word wipe out, I don't think that's appropriate. You know, we have a long-term history, Chris, of working with our clients.
Speaker Change: and Staying with them, you know, when things are stressful and we will continue to do that. As long as they support their loans that I will. So, we're always going to have some criticized loans. That's just who we are. It's in our DNA. It also makes our clients very loyal to us. So that's going to continue from that perspective. But I do feel really good. Fourth quarter trajectory down. Do believe that we will continue with a good trajectory down in 2025 and all that. But we aren't going to quote wipe out and criticize balances. Thank you.
Darryl Bible: But I do feel really good. Fourth quarter trajectory down. Do believe that we will continue with a good trajectory down in 2025 and all that.
Darryl Bible: But we are going to quote wipe out the criticized balances. Thank you.
Dave Rochester: Our next question will come from Dave Rochester with Compass Point. Please go ahead.
Speaker Change: Okay, thank you.
Speaker Change: Now.
Speaker Change: Thank you our next question. We'll come from Dave Rochester with Compass Point. Please go ahead.
Darryl Bible: Good morning, guys. Nice quarter.
Darryl Bible: Thank you. I'm the deposit front. I appreciated the outlook on the beta that 40% you mentioned. I was curious on what your thoughts were on the non-intersparing deposit piece as a part of that deposit outlook. I know you're still running out broker deposits, so that's a part of that decline that you've been talking about for four to you. Are you factoring a little bit more runoff on the non-intersparing side? Within that, can you talk about how close we are to a drop in those deposits?
Dave Rochester: Hey, good morning guys, nice quarter.
Dave Rochester: Thank you. I'm the deposit front. I appreciated the outlook on the data that 40% you mentioned. I was curious on what your thoughts were on the non-intersparing deposit piece as a part of that deposit outlook. I know you're still running off broker deposits, so that's a part of that decline that you've been talking about for four to you. Are you factoring in a little bit more runoff on the non-intersparing side? Within that, can you talk about how close we are to a drop in those deposits?
Darryl Bible: So when you look at our non-intersparing, I would say that the commercial consumer side is really slowed down significantly. There might be a little bit of disintermediation that occurs, but I wouldn't say very much as we move forward. I think what you have, though, in our non-intersparing, is just a function of who we are, is that we have balances from our ICS business, and those balances tend to be volatile. Sometimes you see swings of that going back and forth. We will try to point those out and all that, but you're going to have some volatility with that.
Speaker Change: So, when you look at our non-interest bearing, I would say that the commercial consumer side.
Speaker Change: It's really slowed down significantly. There might be a little bit of disintermediation that occurs but I wouldn't say very much as we move forward. I think what you have though in our non-interest variant is just a function of who we are is that we have balances from our ICS business and those balances tend to be volatile. And sometimes you see swings of that going back and forth. We will try to point those out and all that. But you're going to have some volatility with that. But I think for the most part, what we said several quarters ago that we thought we'd average around 30% non-interest variant. I think that's playing out when you exclude our broker deposits.
Darryl Bible: But I think for the most part, what we said several quarters ago that we thought we'd average around 30% non-intersparing, I think that's playing out when you exclude our broker deposits from that perspective, so I feel really good from a non-intersparing perspective. I think the thing that, as you look forward, the value of free deposits, as rates come down, is less, so we have to work harder to keep our interest rate spreads and margins higher just because you aren't getting as much benefit from a non-intersparing. Where are that more? We're definitely going to key it into how that plays out.
Speaker Change: from that perspective. So I feel really good from a non-interest bearing perspective. I think the thing as you look forward that the value of free deposits, you know, as rates come down is less. So we have to work harder to keep our, you know, interest rate spreads and margins higher, just because your incontinence is much benefit from a non-interest bearing. We're aware of that more. We're definitely going to keep into how that plays out. Thank you very much.
Darryl Bible: Great, thanks.
Darryl Bible: I'm just switching to Longroof.
Darryl Bible: I appreciate all the color you gave on the drivers for 3Q. I think you mentioned those more specialty lines, and the middle market utilization was actually down a little bit.
Speaker Change: Great, great, thanks.
Speaker Change: I'm just switching to Longroof, I appreciate all the color you gave on the drivers with 3Q. I think you mentioned those were specialty lines and the middle market utilization was actually down a little bit. When you expect that utilization to start to move up more meaningfully, and then if you could just talk about the competitive landscape within CNI overall to be great. [inaudible]
Darryl Bible: When you expect that utilization to start to move up more meaningfully, and then if you could just talk about the competitive landscape within CNI overall, it'd be great. Yeah, well, within commercial, we did have the increase, like I said, in our dealer services. It seems like there's a lot more cars on the lots now, which is driving that utilization up, but net net is still down. Some of it could be post-election; that's what people seem to be defaulting to when you talk to clients in the marketplaces. In the markets, we serve, we have a lot of good things going on in the marketplaces, and I think there will be a lot of growth needs over time, which is a matter of when that will happen.
Speaker Change: Yeah, well then, and commercial, we did have the increase, like I said in our dealer services.
Speaker Change: and Dr. Zilmour, a lot more cars on the lots now, which is...
Speaker Change: You're driving that view where you're utilization up, but net net is still down.
Speaker Change: You know some of it could be you know post election.
Speaker Change: That's what people seem to be defaulting to when you talk to clients in the marketplaces. You know, in the markets, we serve, you know, we have a lot of good things going on in the marketplaces and I think there will be a lot of growth needs over time. It's just a matter of when that will happen. It's hard to actually pin that down to be honest with you today but we are working as hard as we can and we're there for our clients when they need us. If you look at lines, our lines can actually continue to grow so we're actually making more lines available for our clients.
Darryl Bible: It's hard to actually pin that down, to be honest with you today, but we are working as hard as we can, and we're there for our clients when they need us. If you look at lines, our lines can actually continue to grow, so we're actually making more lines available for our clients. So we are growing our customers and accounts from that perspective, and eventually they will start to draw on them.
Darryl Bible: Great, thank you.
Darryl Bible: Thank you.
Speaker Change: Great, thank you, thank you.
Frank Scoraldi: Our next question will come from Frank Scoraldi with Piper Sandler. Please go ahead.
Speaker Change: Thank you, our next question. We'll come from Frank Skoraldi with Piper Sandler. Please go ahead.
Darryl Bible: I'm Warren Darrell. You're right. I know there's, you know, I guess just one last one on long growth. I mean, I know there's a lot of moving parts here. You mentioned the 136 billion in average for a next quarter, which would be sort of 1% growth link quarter. Do you think that's a pretty good bogie, even going forward from there? As you talk about pipelines building, you know, maybe create as a couple more quarters to trough. Is that a decent bogie, or do you think you could see quarterly growth, maybe even accelerate from that sort of 1% link quarter unannualized number?
Speaker Change: Warren Darrell, I guess just one last one on long growth. I know there's a lot of moving parts here. You mentioned the 136 billion in average for a next quarter, which would be sort of 1% growth, link quarter. Do you think that's a pretty good bogey even going forward from there as you talk about pipelines building, maybe create as a couple more quarters to trough? Is that a decent bogey, or do you think you could see quarterly growth maybe even accelerate from that sort of 1% link quarter unannualized number?
Darryl Bible: You know, we're still in the midst of our planning season for 2025, Frank. I would love to tell you that answer right now. You know, I would say it's anywhere to maybe a little bit less than 1% continuously to maybe a little bit more than 1%. 1% might be an average, give or take. I, you know, we're going to do the right thing and support our customers and the communities. That's the most important thing we do from that. You know, we are very selective in the customers that we do business with from that. But that said, you know, we will get as much growth as we think is prudent, you know, out in the marketplace.
Speaker Change: You know what we're still in the midst of our planning season for 2020 25, right? I would love to tell you that answer right now.
Speaker Change: You know, I would say it's anywhere to maybe a little bit less than 1% continuously to maybe a little bit more than 1% 1%.
Speaker Change: Might be an average, give or take.
Speaker Change: Um...
Speaker Change: [inaudible]
Speaker Change: You know, we're going to do the right thing and support our customers and the communities that's the most important thing we do.
Speaker Change: From that, you know, we are very selective in that customers that we...
Speaker Change: Let's do business with from that, but that said, we will get as much growth as we think.
Darryl Bible: We aren't going to stretch or change our credit levels and all that. So we'll just see how it plays out.
Speaker Change: is prudent, you know, out in the marketplace we are going to stretch or change our credit bubbles and all of that. So we'll just see how it plays out, but I'll give you more color in that, you know, it's next earnings call.
Darryl Bible: But I'll give you more color in that, you know, at next earnings course. Okay, fair enough.
Darryl Bible: And then you also talked about the repricing of the back book. And I think you just mentioned, kind of on the security side, where you think yields could get to. If we, you know, just just for modeling purposes, we think about the loan book repricing you set aside rate movements for a minute for a minute. And just any sort of color you can give in terms of where we sit now, which rates where they are currently, what you're seeing, or what the sort of pick up is. On a quarterly basis on on on loan yields from the repricing of the back book.
Speaker Change: Okay. Fair enough. And then you also talked about the reprising of the back book. And I think you just mentioned kind of on the security side where you think yields could get to, if we, you know, just just for modeling purposes, we think about the loan book reprising, you set aside rate movements for a minute and just and any sort of color you can give in terms of where we sit now, which rates where they are currently, what you're seeing or what the sort of pick up is. On a quarterly basis on, on, on, on loan yields from the reprising of the back book.
Darryl Bible: Yeah, so I'll give you a high level of what we're seeing on this past quarter. So when you look at our C and I portfolio, and we'll look at these, these are all fixed-rate loan categories. The C and I fixed rate loan is averaging up about 1% on what's rolling off; rolling on, the CRE is averaging up about 1.3%. Mortgage is averaging about a little over 2%. Consumers at about 1.4%. Net net, if you blend that all together of all the fixed rate loans, rolling on, rolling off, it's around 150 basis point benefit. Great. Okay.
Speaker Change: Yeah, so I'll give you a high level of what we're seeing on this fast quarter.
Speaker Change: So when you look at our CNI portfolio and we'll look at this, these are all six straight loan categories.
Speaker Change: The CNI fixed rate loan is averaging up about 1% on what's rolling up rolling on.
Speaker Change: The CRE is averaging up about 1.3%.
Speaker Change: More ages average in about little over 2%.
Speaker Change: and Summers at about 1.4% net net if you blend that all together of all the fixed rate loans rolling on rolling off it's around 150 bases point benefit.
Darryl Bible: Thanks for the color. You're welcome. Thank you.
Speaker Change: Great, okay, thanks for the color. You're welcome.
John Payne Carey: Our next question will come from John Payne Carey with Evercore ISI. Please go ahead.
Speaker Change: Thank you, our next question will come from John Pankeri with Evercore ISI. Please go ahead.
Darryl Bible: Morning, John. In terms of expenses, I mean, you put up some pretty good operating leverage this quarter. Looks like your outlook implies some continued positive operating leverage near term.
Speaker Change: Born in Daryl, or ADrive.
John Pankeri: In terms of expenses, I mean, you put up some pretty good operating leverage this quarter, looks like your outlook implies some continued positive operating leverage in your term. It could you give us, you know, your thoughts as you look into 2025, what type of acceleration in that positive operating leverage is possible. I believe right now the streets looking at about 150 to 200 basis points positive operating leverage. For you guys that's looking to into the four year 25 curious in your thought on what you believe is achievable.
Darryl Bible: It could you give us your thoughts as you look into 2025, what type of acceleration in that positive operating leverage is possible. I believe right now the streets looking at about 150 to 200 basis points positive operating leverage for you guys that's looking to into the four year 25 curious in your thoughts on what you believe is achievable. Yeah. So, you know, we're still putting 2025 together. Do believe we will have positive operating leverage for 2025. You know, whether we're 150 or 200, I think you're in the neighborhood of where plan will end out, but we are 100% have it all kind of, you know, God.
Speaker Change: Yeah, so, you know, we're still putting 20, 25 together. Dubilee, we will have positive operating leverage for 20, 25. You know, whether we're 150 or 200, I think you're in the neighborhood of where we'll plan will land out, but we are in 100%.
Darryl Bible: You know, figured out, and you know, everybody's agreed to it, but we will get there. I feel very confident we will get there from that. You know, if you look at the expenses, you know, that we guided, they were up a little bit in the fourth quarter, and it's mainly due to projects that we have. We have a lot of fair amount of projects going on in the company, and we're making a lot of progress. We do have an increase there. The other thing that we're doing is we've had a pretty good year from a performance perspective, both financially. You know, we make good progress on our asset quality and good loan and deposit growth and just, you know, improving and getting good, some of our priorities accomplished.
Speaker Change: Have all kind of guidance.
Speaker Change: You know, figured out, you know, everybody's a great tool, but we will get there. I feel very confident we will get there from that.
Speaker Change: You know, if you look at the expenses, you know that we guided, they were up a little bit in the fourth quarter, and it's mainly due to projects that we have, we have a lot of fair amount of projects going on in the company.
Speaker Change: We're making a lot of progress. We do have an increase there. The other thing that we're doing is we've had a pretty good year from a performance perspective both financially. We made good progress on our asset quality and good loan and deposit growth.
Darryl Bible: So we actually are increasing our corporate-wide incentives in the fourth quarter for payout for everybody for a good year.
Speaker Change: and just, you know, improving and getting some of our priorities accomplished. So we actually are increasing our corporate widened centers in the fourth quarter for payout, for everybody for a good year. That said, I still feel that 20, 25 is going to be a better year than 20, 24 to be honest with you.
Darryl Bible: That said, I still feel that 2025 is going to be a better year than 2024, to be honest with you. We continue to have a lot more of work going on. Work to do and make progress, but we have a lot of positive momentum now and need to reward the people that are making it happen in the company and feel good about that.
Speaker Change: We continue to have a lot more work to do and make progress, but we have a lot of positive momentum now and need to reward the people that are making it happen in the company and feel good about that.
Darryl Bible: Great. All right. Thank you. That's helpful.
Darryl Bible: And then on the credit side, your loan loss reserve ratio as a percentage of loans tick down a bit or show this quarter, I guess, around 122 basis points where it's banned now. Well, where do you see that trending here? You cited the expected decline in criticize that you'll see in the quarter, and then pretty good trajectory there. Fair to assume continued modest decline here in that in that ratio is that fair to assume as you look out. Yeah, I think when you look at it, you know, this past quarter, you know, we had some good macro factor positives with crappy being much more positive, and that helped drive, and we've written our drop in criticize, which is good.
Speaker Change: Alright, thank you, that's helpful and then on.
Speaker Change: The credit side, your low-moss reserve ratio as a percentage of loans tick down a bit or show this quarter, I guess they're around 102 basis points where it's banned now. Where do you see that trending here? You cited the expected decline in criticized that you'll see in the quarter and then pretty good trajectory there. Fader assume continued modest decline. Find here in that in that ratio is that Fader assume as you look out. Fader assume that Fader assume that Fader assume that Fader assume as you look out.
Speaker Change: Yeah, I think when you look at it, you know, this fast quarter, you know, we had to good macro factor positive with crappy being in much more positive than that help to drive and the great downward drop and criticize, which is good.
Darryl Bible: I think as you look forward, though, you know, we are growing, you know, all of our lending categories, so you have a mix change as you're seeing occur in the balance sheet, and that mix change is more heavy on the consumer side. Consumers, you know, definitely have the most part higher overall spreads and yields, but they also come with higher net charge-offs. So you're seeing a mix change. So right now, you know, we're feeling really good. We're operating right now around 40. Could it be a little lower than that? Maybe could it be a little bit higher than that, possibly?
Speaker Change: I think as you look forward though, you know, we are growing, you know, all over a lending category so you have a mixed change that you're seeing occur in the balance sheet and that mixed change is more heavy on the consumer side.
Speaker Change: Consurers, you know, definitely have the most part higher overall spreads and yields, but they also come with higher net charge offs. So you're seeing a mixed change. So right now, you know, it's...
Speaker Change: We're feeling really good. We're operating right now around 40. Could it be a little lower in that maybe? Could it be a little bit higher in that possibly?
Darryl Bible: It really depends on how quick that mix change happens. You know, we look at it. You know, I have it obviously from a net overall spread and making sure we're getting a good return on the assets that we're putting on our balance sheet. So it's a good capital use for the shareholders. So we think we're doing the right thing from that perspective, but I think it's the mix shift that could potentially play out or the next couple of years of having just a little bit higher charge off company as we get a little bit more diversified.
Speaker Change: really depends on how quick that makes change happens.
Speaker Change: You know we look at it you know I have it obviously from a net overall spread and making sure we're getting the good returns on the assets
Speaker Change: and we're putting on our balance sheet so it's a good capital use for that. Our shareholders.
Speaker Change: So we think we're doing the right thing from that perspective, but I think it's the mixed shift that could potentially play out over the next couple years of having just a little bit higher charge off company as we get a little bit more diversified. John, we are really trying to be a much more diversified company.
Darryl Bible: You know, John, we are really trying to be a much more diversified company. Not so much 100% relying on CRE. We never were 100% but really try to have much more diversification. So we have strong consumer businesses, CNI businesses as well as CRE businesses and a lot of great fee businesses like ICS and wealth out in the marketplace.
Speaker Change: Not so much, 100% relying on CRA. We never were 100%, but really try to have much more diversification so we have strong consumer businesses, CNI businesses as well as CRA businesses and a lot of great fee businesses like ICS and wealth out in the marketplace. So really, if you look at all of the things that we present at the investors and all that, it's really happen more of a diversified company as we move forward.
Darryl Bible: So really, I mean, if you look at all the things that we present at the investors and all that, it's really talking more of a diversified company as we move forward.
Darryl Bible: Thanks, Carl, very helpful. Thank you.
Speaker Change: Thanks to our very helpful. Yeah.
Matt O'connor: Our next question will come from Matt O'Connor with Deutsche Bank. Please go ahead.
Speaker Change: Thank you, our next question will come from Matt O'Connor with Deutsche Bank. Please go ahead.
Darryl Bible: Hey all, this is Nathan Stein on behalf of Matt O'Connor. I wanted to ask about the NIMT trajectory given it's come, it came in strong at this quarter at 3.62%, and you expected to be low 360s next quarter. So this is above your prior guide.
Speaker Change: Hey all, this is Nathan Stein on behalf of Maddo Conner. I wanted to ask about the NIMT trajectory given it came in strong at this quarter at 3.62% and you expected to be low 360's next quarter. So this is above your prior guide to being the high 350's in the second half of the year. In September , I think you said a 360 range NIMT makes sense for next year. Have your thoughts changed regarding the NIMT trajectory given how strong it's been to date?
Darryl Bible: So what I would tell you is that, you know, I think we feel comfortable in the low 360s for fourth quarter margin, and we'll give you 25 guidance, you know, in January. We do our next earnings call. But for a really positive about the momentum of the NIMT, we're going to give you a little bit more time. We have good repricing and reactivity on the deposit sign. It is really going well and good roll on and roll off rates on our fixed rates on assets as well. So I think we have a lot of positive momentum.
Speaker Change: So, what I would tell you is that, you know, I think we feel comfortable in the low 360s for a fourth quarter margin and we'll give you 25 guidance, you know, in January and we'll do our next earnings call but for a really positive about the momentum we have, you know, good repricing and reactivity on the deposit side, it is really going well and good roll on and roll off rates on our fixed rates, low and assets as well. So, I think we have a lot of positive momentum. Thank you.
Darryl Bible: Okay, great.
Darryl Bible: And then kind of a nuanced question, but other revenue was in line with two Q levels. And I think he previously suggested it would come down a bit on lower syndication revenues and interchange fees.
Speaker Change: Okay, great. And then kind of a nuanced question, but other revenue was in line with two Q levels. And I think it previously suggested it would come down a bit on lower syndication revenues and interchange fees. Do those come in a bit better than you'd expect it or was it something else that kind of helped these? And then how do you expect this C line to try and go and forward?
Darryl Bible: Did those come in a bit better than you'd expected, or was it something else that kind of helps these?
Darryl Bible: And then how do you expect this feline to trend going forward? Yeah, you know, I would say that within the other, the two largest categories are both syndications and merchant and card fees. Those tend to be going very well, and that's really what drives that other category; are those two line items for the most part.
Darryl Bible: Thank you. All right, thank you.
Speaker Change: Thank you.
Zach Westerland: Thank you. Our next question will come from Zach Westerland with UBS. Please go ahead.
Speaker Change: All right, thank you.
Speaker Change: Thank you, our next question. We'll come from Zach Westernland with UBS. Please go ahead.
Darryl Bible: Good morning.
Darryl Bible: This is Zach on for Erica. I just had a quick follow-up on the expense question. And then you mentioned that there were some projects that are going to hit in the fourth quarter. Can you just clarify if those are kind of one-time type projects or is that expected to stay in the run rate? It's a mix, Zach. You know, some of the things that come online, like our new data centers that we're putting on, are coming online fourth quarter. That's going to be in run rate. We also have some project expenses that we have that are more being expense, you know, in the fourth quarter from that.
Zach Westernland: Good morning. This is Zach on for Erica. I just had a quick follow-up on the expense question. And then you mentioned that there were some projects that are going to hit in the fourth quarter. Can you just clarify if those are kind of one-time tight projects or is that expected to stay in the run rate?
Speaker Change: It's a mix, Zach. You know, some of the things that come online, like our new data centers that we're putting on are coming online fourth quarter. That's going to be in run rate. We also have some project expenses, you know, that we have that are more being expense, you know, in the fourth quarter from that. So it's really a mix that we have there. We'll give you 25 guidance in January and give you good projections. But like I said, I think we're going to have good strong positive operating leverage in 2025. So I feel good about that and we'll give you more specifics as we get in January .
Darryl Bible: So it's really a mix that we have there.
Darryl Bible: We'll give you 25 guidance in January and give you good projections. But like I said, I think we're going to have good, strong, positive operating leverage in 2025. So I feel good about that, and we'll give you more specifics as we get in January.
Darryl Bible: Helpful. Appreciate that. And then just on the credit front, clearly you guys have made much progress. You know, with better, you know, charge offs trending down, credit quality trends looking pretty good. Can you just remind us how you think about like a through-the-cycle charge-off number if you're able to kind of share your thoughts around that?
Speaker Change: Helpful appreciate that. And then just on the credit front, clearly you guys have made a bunch of progress, you know.
Speaker Change: with better net charge off trending down credit quality trends looking pretty good. Can you remind us how you think about like a through the cycle charge off number if you're able to kind of share your thoughts around that?
Darryl Bible: And then just on the other side. So if you look historically or through this cycle, charge off is 34 basis points. But what I said on an earlier question is that the mix of our loan portfolio is changing, and as that portfolio mix changes, having more consumer as a percentage of total loans, that will drive higher just allow its balances. It's still good; you know we look at it to make sure that we have a good net spread on those loans, good capital return on the loans that we're making there. So it's nothing to be concerned about; it's just that it's a mix change that you have as we continue to be a more diversified company moving forward.
Speaker Change: So if you look historically, or through the cycle charge office,
Speaker Change: 34 basis points. But what I said on an earlier question is that the mix of our loan portfolio is changing and as that portfolio mix changes having more consumer as a percentage of total loans, that will drive higher just allowance balances. It's still good. You know, we look at it to make sure that we have a good net spread on those loans. Good capital return. On the loans that we're making there. So it's nothing to be concerned about. It's just that it's a mix change that you have as we continue to be a more diversified company moving forward.
Darryl Bible: Got it.
Darryl Bible: Thank you for taking my questions.
Darryl Bible: Thank you.
Speaker Change: God, I'm so sorry.
Brian Klock: At this time, I would like to turn the call back over to Brian Klock for any additional or closing remarks. Again, thank you all for participating today, and as always, a clarification of any of the items in the call or news releases is necessary. Please contact our investor relations department at area code seven one six eight four two five one three eight. Thank you.
Speaker Change: Thank you. At this time, I would like to turn the call back over to Brian Klock for any additional or closing remarks.
Brian Klock: Again, thank you all for participating today and as always, a clarification of any of the items in the call or news release as necessary. Please contact our Investor Relations Department at Area Code 716-842-5138.
Brian Klock: This does conclude the M&T Bank third quarter 2024 earnings conference call.
Operator: You may disconnect your line at this time and have a great day. Thank you.
Speaker Change: Daryl Bible, Brian
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