M&T Bank (MTB) 20 Oct 212021 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the M&T Bank Third Quarter 2021 Earnings Conference Call. Currently, all phone participants have been placed in a listen-only mode.

Following management’s prepared remarks, we will open the call for your questions. [Operator Instructions]. today's being that advised be conference recorded. is Please Instructions]. [Operator hand over to I would MacLeod. call to like now Don the Please go ahead.

conference third Thank you, everyone XXXX and M&T's thank webcast. like I'd by earnings through quarter the Emma, and for good participating morning. call telephone both to in

a not earnings earnings SEC on are Also, our webpage, from as statements you before release materials may risk on as of mention date of as by to the Events issued encourage financial them Investor discussion undertakes on clicking you non-GAAP no information Investor release forward-looking participants as update filings link. only website, this Relations like Those materials speak schedules complete statements have obligation other them. may If and today's for and link as it tables start, statements of our and investor to all along materials. and we available and Presentations that we Relations These our contain we morning, then I'd M&T measures the access are with read to refer forward-looking the and about the in made, and financial well to presentation today's information. well the reconciliations included Cautionary www.mtb.com this factors.

Now, I'll Darren turn the call over to Officer, our Chief King. Financial

morning, Don, everyone. good Thanks, and

in level stable and trust in release, that the and favorable compensation improved environment. some our and including we Credit In as fee results about a challenging and banking, the press businesses our is reported incentive long-term quarter charge-offs, on morning's the We'll modest rising profitability strong the the this improving, reserve are net and little M&T's release of payments. nonaccrual average, the particularly diversity strength a details generating over in year, business trends highlight in moment. brokerage with strong trends alignment the noted by last well. loans. revenue the half change we model of mortgage to As Revenue was current for in offer illustrated

rise. capital Lastly, the await our ratio The merger. the a record CETX as levels continue is we closing of to People's high United near

the or on net amortization excluded reporting practice, assets and tangible of provides acquisition operating per proposed operating $X.XX on of merger-related Included X.XX% basis, SEC's and expenses rates quarter quarter. operating after-tax In quarter. $X the as annualized and the the the which included XXXX. per second quarter. in previous ever Now with let's have average quarter amortization in This share share. recent this amortization as quarter. common supplemental ago with the second Diluted earnings income respectively, comparable $X tax operating million assets amounted Diluted a income intangible linked third expenses, per of GAAP recent compares of excludes compared $X M&T of in in $X reconciliation last after-tax the year's the the amounting after million earnings Net tangible equity quarter long-term from our for the year's Consistent XXXX. the Financial. assets for results, and for gains share to Net prior quarter return included million rate charges $XXX third or for third of the improved we average tangible an year $XXX $X.XX million common charges assets common with Results per quarter amounting common including X.XX% and were results from On such XX.XX% recent $X second million $X.XX press from change million from and $X.XX results quarter income Also was in in XX.X%, million were quarter in in X.XX% associated contains the merger-related to the assets of annualized M&T's $X.XX for improved effect results mergers a of to rates for the XXXX. a quarter. and million People's of XXXX third quarter's of quarter, quarter GAAP of from in XX.XX% second non-GAAP an of linked intangible common any were $X.XX average quarter from only in share. in after-tax $X.XX return the return effect or morning's XXXX was tangible little which $XXX results $XXX United of quarter. net share, produced quarter, or of common on shareholders' to yielded third that the of XXXX, review equity. with results $X.XX equity well tabular its and with common the in on with third million guidelines, this intangible accordance the M&T's for the were and annualized acquisitions. related $X.XX per $XXX of This and of or quarter of M&T's GAAP expenses XX.XX%. quarter basis, and million in The returns our X.XX%, average million. $XXX and net the GAAP release of were quarter up and Compare

from cash for in with round PPP results. the of from at X.XX%, of balance the Administration. down in We was past the X.XX% some that quarter. of deposit $XXX with in that X with majority Average the lower amortization investment by loans cash and accrual day quarter. and of the offsetting Compared from placements, XX increased linked impact. the increase second quarter margin. Fed and contributed netted in an accounted for on market outstanding Largely XX% receive to quarter earning PPP of loans at Let's XX $XX margin. Taxable higher forgiveness third primarily million a deposit on from to basis $XXX compared income net The and previous scheduled take income the began our money the to Federal details loans net declined interest the quarter. income equivalent just million about income cost fees forgiven the All basis PPP was estimated factors, zero assets with Reserve XXXX, other an average reflecting XXXX from hedges, both basis of securities. pressure margin including in decline points the second interest quarter-over-quarter Business the about income of deposits added million interest of accelerated from increase drove to recognition net slightly interest in the loans estimate X%, a the that which higher look linked Higher the loans, points of Small was points compared X% additional a a the quarter X% lower

the loans Ginnie bigger led an finance of X% pools, basis, at were issues deposits, loans impact the loans. CDs core repooling $X.X customer loans of the from category, or changed well the compared quarter. in down by as -- with offset $X.X total quarter. declined real Looking across partially new offset linked billion loans including of that were and industrial the $XXX,XXX, average billion will over by to the in million, were X% industry. factor plan by On indirect parts prepayments X%, quarter. end-of-period an from ongoing the Balance from Overall, was loans primary under amortization, as be XX. or quarter. fourth All X%. by Consumer exclude by factors estate offset loans a recreational and production, the and principal at PPP $XXX decline with same figure decline Mae C&I decline growth $X.X basis C&I are prior inventory loans Dealer estate of be few loans lower That in moving decreases to that figure seen declined by driver of a noninterest-bearing loans auto little the those I essentially PPP XX% just Hudson purchased floor second a commercial up decrease were Residential also on a changed checking The the underlying production worth interest other September normal recent include XX%. a some with compared Commercial deposits, highlighting. of which loans. loans increased outstanding loans Average and real billion second billion previously consistent loan quarter. portfolio, and which just drove the by vehicle declined were There quarters continuing retention from $X.X billion reflecting are most servicing The the reflecting due City mentioned. in $X.X to includes little deposits.

Turning billion Noninterest million third Mortgage our in $XX down stock, million income prior linked valuation residential prior quarter. while loans million GSE insignificant compared in remaining Residential origination the for of were mortgage included securities, with quarter. preferred valuation quarter when to $XXX with included million The for second on gain holdings noninterest including were quarter the sale compared of an quarter. quarter income. million quarter and the the servicing $XXX X% the the $XXX equity in in banking activities, on totaled $XXX compared with largely with in million our quarter $X.X to Revenues recent in mortgage compared recent $XX the third revenues business, linked losses. $XXX about million quarter. were both the originated

second in compared originations the prepayment arising compared the quarter. fees higher the quarter's third million $XX with trust revenues the that income. However, linked results by M&T's retail, platform the conjunction about deposit with this related strong margins. to activity. in gain combined services results Recall $XXX Commercial seasonal in brokerage transfer work charges brokerage million a preparation Those $XXX which year, in quarter, as business the more tax million payments than with the accounts not on million managed sale $XX in we income, classified quarter, million million with was compared and customer did clients, banking included recur the mid-June quarter, previously million for third in driver of securitized. LPL Trust Also, from of in quarter. the the reflect in now recent volume accounts, offset included are million, previous income the Financial of on quarter. increase undertake Service $XX The lower investment of was second fees of advisory were revenue primary in with $X quarter. mortgage was loans previously associated were in $XX $XXX with on

were mentioned, $XXX the third expenses. intangible The the was prior of to for in quarter, assets Operating for million Salaries comparable amortization were expenses figure and million. the million quarter. to previously $XXX million quarter, Turning quarter. linked exclude and related the merger in $XXX benefits the $XXX which compared expenses

previous that quarters reflecting certain was accelerated notably are rights of our expectation case earlier. and with from mortgage reflects mortgage securitized commercial this As amortization they $X accruing that year, that will business compensation in at salaries incentive we the the and of the servicing the in recent the the year operations Also, in than incentive a profits commercial lines referenced were previously banking enterprise revenue, full corporate M&T's and mortgage of we generation higher a costs capitalized quarter and loans level, XXXX. rate prepayments be earnings revenue associated XXXX, higher benefits at included the trust. in in result of Other as higher million

included and million growth costs to subadvisors, costs the those year-over-year operations. us which trust of carried of with has XX.X% valuation increase Also Lastly, XXXX's management that assets fees recall, residential the amortization retirement the quarter. $X in and from other second losses are in for our addition servicing rights. the quarter numerator the included under in was other an to income in paid and from quarter operations the allowance our share the no valuation which for intangible costs denominator, business of an or to second allowance and There third with XX.X% ratio, gains the securities adjustments compared capitalized recent merger-related in in excludes mortgage quarter. the were efficiency The

Annualized and some let's with little the the others, Credit continue challenges turn reflecting stabilize, the credit. more costs, for supply such while, than but improving as [XX] to pressure on are loans been chain, quarter. June case has to as trends Next, for of a basis end second past the as rapidly the the cost $XX of industries of XX net allowance and losses as for million materials losses reflects provisions credit for of of CECL at outstanding credit unchanged points combined for quarter. third allowance quarter losses availability by of the the the end points total reflects third million of losses for XX labor. previous charge-offs losses, million credit XX, billion quarter, measurement credit the at stand $X.X percentage in $XX The macroeconomic X.XX%. the The were loans credit charge-offs to in $XX includes of loss At at the quarter. at methodology recapture in declined which was September under the This basis percent from allowance forecast. a portfolio net the assessment our our the

the macroeconomic drivers a previously being we've largest rate the forecast indicated, our As GDP. variables, economic of with unemployment and uses number

over over to Nonaccrual end improvement, by of rate XXXX billion June. continues by as at X.X% at compared percentage The with XX, mid-XXXX. during XXXX, were X.X% of annual to compared essentially Our forecast GDP the prepandemic X.X% averaging be at assumes X.X% X.X% reaching loans grows unemployment annual with X.XX% elevated and that a assumes rate but a loans levels, forecast XXXX. gradual rate of followed $X.X to compared loans June flat a increased the national also

third our due that few of were loans disclose to on second the quarter. file the quarter to accrue is continue recent we billion expect little also quarter which from weeks. a end interest, of our $X We past level the a Loans when in at we XX-Q criticized changed

ratio X continued organic to at capital. generation, with Tier quarter end combined strong lower quarter. XX.X% equity risk-weighted second estimated the an at XX.X% of common compared was end M&T's This Turning assets. with the reflects capital

is we any merger As to previously repurchase engage activity. People's plan in noted, the pending, don't while stock

let's outlook. Now turn to the

final change remainder little enter the need quarter of we the we to of year, outlook see As for the our a XXXX.

from on growth reflects flat loan in which the dealer to slightly, to decline loans. the We up be PPP reported down year-over-year excluding and expect impact to slightly basis a flat plan floor loans,

a quarters from expected expect in We noted income third to, net down be in full low continue July to single-digit that call and the conference to be million on with on we line We net fourth the interest income year interest the XXXX. $XXX percentage average, in pull our forgiveness We the the outlook of single-digit expect third that the of We've faster to true than income expected that second quarter. noninterest PPP loans be did for into from quarter. fourth still but exceeded growth low some the income. forward slightly quarter in

We the retain As growth most than on payments-related Momentum we that of assets criticized remain overall Expenses credit we Mae connected Ginnie near than downgrades peak, trust with residential and gains. more believe in repooling the risk segments we but accruing begin majority revenue the to The the there gains along to but to at criticized have some mortgage loans on strong. remains better-than-expected are income sheet, businesses residential to be of slowly forecast by of directly net in still better-than-expected others. recovering within balance loans are January, will some from their with and non-accruing. sale driven trend. environment or originate improve economy, but faster continues grown primarily

Our regulatory completion the approval. of United with we preparations while for merger the await continue People's

February. past impact announcement projections with the Our at in financial the line remain what this offered we time as of largely to

call. our Following usual our XXXX January on practice, for the thoughts we'll offer conference

political unfolds are differ a interest as other macroeconomic in uncertainties from events what regarding various subject future. factors, the in regional are and which you course, growth, Of may changes all national materially actually our economic and assumptions projections of and number to aware, rates,

Emma up to review will call instructions. the questions, before briefly which let's Now, the open

Instructions]. Cassidy first will from our take RBC. question And we [Operator with Gerard

couple book. obviously the Bank. into is Federal A the your positioning for Reserve your over you've stands And leads income you The questions of where the interest swap us at of XX you dramatically today X up next particularly conservative in Central it regarding and very Can or simultaneously, share that cash, year-over-year. with months? been net how

line duration about in out sheet? on start You've all do lengthen the to that you it been the item talking When year. balance

miss thing. I I your started Sure won't so questions down, them. Well, writing now

as along highest of cash bit about hedging, about the outstanding little the the be the over well. address quarter, or with swaps the be your course the -- impact will XXXX in in second be lot to XXXX, position XXXX. is the million the of second just points. that a notional $XX and book quarter the been round way rates to the the fixed net full and in following into will lowest $XX the to notional the what quarter just fixed as talked yield over start since was swap we've quarter size sorry, book, it's and terms The next end will bigger has on X and a answer fourth in added XXXX But roll And swap quarter margin higher quarter the of of we're come basis in quarters around and year. fourth roll in has that of amount So of slightly cash, And the question year. really XXXX. received then received income that the half. amount first off. declining steady for to fairly hedges XX year And it billion, the XXXX. and this The see will close everyone, than in right come by of or impact go about come down on decline getting been impacted at of been the less new course down hedges older last has We'll number to coupon down will the notional. the the And remind impact of on But to it and

look deposit in the the you quarter, it the If increase. demand been drove has lot that a trust growth in actually at latest of uptick quarter the largely

are end seeing some they up of we However, the balances PPP decline, cash. in as

And the $XXX the quarter as so this at securities you what they actually of if at think I up you balances look the end million. quarter, about were saw by

running replaced a or XX-year So we're that average, of securities replacing we're there $XXX the we mortgage-backed We've in And million. MBS on XX. are targeting thinking sometimes about kind been duration plus runoff generally buying off.

XX-year as big and a have the That quarter although were was in up. remarks, Sometimes as around. of of little loaded in other to some way thing, started which we're mix move a X-year where we're we And the retain in more spaces this then manufacturing XXs XX years. in not production. back-end bit, rates by starting moved a And some retail mortgage have prepared to I the mentioned rates

dollars if we of so or our right we now. is what's maybe the invest -- base, in and yield or better own about a we we as own mortgage do think on choice choice duration We choice And how retaining like between least have production. like the think MBS and our the the eyes production, the the about bad to best what our

where the And that's rate watching put we we'll off, securities Obviously, the so that hedges or as practice to we in cash be And account feel kind retained about into that but that the and we'll close through there what of fourth PPP interest to year unfolds quarter attention biggest are in early quarter declining on next rolling for about increasing something work. how are holding line duration from and you rates but had and is on. the mortgage either we plan first fact, line quarter part of year. the not into or, taking we we'll forward the as in net in that paying And $XXX all how to it at goes forecast I million that and see see September. income troughing be of and depending guess through production the that impact this started the continue look

the corner we've us And couple patience so I to storm when back on next cash the the in weathered see I the putting turning that look and at exhibited quarters. of work, we've

clarify X to just comments on the notional $XX amount, your And of good. Very billion.

net You to $XX net say you million but mentioned improvement that meant correct? income, income. to interest Is

Thanks, Gerard. interest net correct. That's Yes, income. Yes.

plan and floorplan wanted -- Okay. happened outside commercial us to And the share and just on were you with seeing floor loans. question, quarter what that. dollar this And you with Yes, check also the the Can good industrial of dollar a I giving the other amount very those details customers? us Darren, second, what you're areas, then PPP at then the loan portfolio? on follow-up with your what's portfolio, total

The all write so to total got -- down, these right, I Gerard.

So and other on industries, floor plan. going the what's then

dealers. at line around when call what's are much are have at those times, balances, that it, Gerard plan in you they floor typically commitment it’s utilization running about those plan utilizations if you think line floor where the look are look billion. XX%. $X.X lowest, balances part and a been about So where And you you about And really roughly, average And are those XX% and have normal when floor is year when the is on plan -- low. with of this but they're which never interesting,

would nice and When be in Difficulty] to of of new little have construction last trends folks ag the a originations And tend I But C&I than are they've C&I highest screaming the all seasonality areas C&I just up $X look a seven the case. billion that manufacturing, to You're in that little in interestingly for well bit [Technical the some quarter that's would were PPP so, new movement you normal, billion lower compared probably seeing some quarter look it’s C&I in ticked When loans, the business, at some balances $X what might expect and originations, up those of plan in I the case. where in us consider what this what year. to at areas. you're resources floor less outside normally be and every I when look bit in are, It you might originations they look are in holding this that and side, if holding in moving a it's as slow tax fairly quarter's of with constructive were years real as not well. are up was of done industry, up both in to margins fourth the another before in estate consistently deals up steady like, get the and improvement and quarter the and fourth quarter in solid commercial to a we aware and but it so quarters direction and they the other going the

encouraging a is obviously trend trends. faster, this here. friend but So, We've our welcomed is little the bit

Thank you so much.

add One the forth, for so clarification year LIBOR point fed the to up target I’d rates short-term that hedge the assumes of on is start or do or funds outlook rapidly. benefit ramp next not whether the

with We next will Bank. Matthew Deutsche go to O'Connor

us once can on the the industrial you update hoping on forma estimate and the capital was marks deal latest I closes done? pro are

Matt. Sure,

-- question capital will Just deal we is deal will the still the move be question the ratio? accretive? right, done, to specifically, CETX where the make sure Or the is question I've the how once is got down

The at the at had go so closing, right initial XX.X now, your estimate closed if you latest you deal, the if where XX.X does a now, right you're to? close deal thoughts,

interest improving, on I'm the helping to purchased other a pieces increases XX.X. the we'll XX depth have interest obviously, one classified number going basis the are It's points is to rate rates It's have capital of And as of non-PCD given double exact be payments we deteriorated amount not thing, you lowers marks, which Perfect. basis of credit an marks, the and marks the AX do when is the us of which accretive. are, that right credit probably that impact or loans increases of the loans, the be where there. big the reason why credit with final around and Okay. XX count. within points was And the

go on as the will or EPS And reduce that forward. perhaps you to recall, accretion the as will But so bring just capital impact close. capital at we increase down that

right be should around we XX spot. So that

of Just I belief my based today. see north on that be would what

a on aggressive Okay. that kind near- how And what are obviously, thoughts for to is getting will what be I'm CETX target then you medium-term is what And the get ratio? there? of at on buybacks or

Well, a of fair high. that Yes. an harboring And never we're M&T. we near say has think characteristic at XX.X, to capital mentioned, I it's been as all-time

it we'll that down. be see the be come customers. bring will both down because for growth balance continue build our But we'll so the support and looking and we'll slow. down And as sheet on trends, M&T to based the we'll CETX new have People's customers, bring asset that and Ideally, ratio we existing probably to the

bold And points so we'll XX look fairly obviously, a tough. would than basis points that of to And to to got buybacks basis When your in net quarter quarter, points capital pace to bring to XX bring much faster basis basis ratio be points down. you're be pretty that down. you've generating every to run a XX at where it down comes XX

might about will down the so as reasonable you be. a think, place I decrease rate look, you be, And glide a what use path think to that go to is And People's came probably Hudson if path, of how that might unfold City rate to decrease, of reasonable a that of post merger. it completion post was it how and CETX back of guide the

Okay. threw out of a lot there. numbers There's you

quarter. then maybe to summarize, the that. And points you points, basis summarize to bringing per XX, just by XX of XX you CETX Just to suggested capital XX generate down basis

Yes. right. That's

take question Evercore. from next Pancari with We'll John our

decline? growth -- -- the commercial I closer that of to there. you're real think know XX%. what the shrinking I for and loans and should the of you how you're all gave loan about seeing what and is there around you the of to appreciate I believe had outsized that target now, you're portfolio. term. see about long-term plans about your you're talk front, loans those loan in your peers the the as expressed color I if out of XX% bit a could Can the for at -- wanted estate the a And maybe little dynamics we On cadence interest percentage portfolio you book of are bit size talk longer you a that right

Yes. that. I'm happy to talk about

last for I notably plans in the the York as dramatized favorite think been while, reporter highly little future CRE City. M&T in have by New a

at suggested look impact capital test, in the the that test, XXXX in you industry. the stress CRE in more the it ways to If there friendly CRE might be of stress participate December

the and And that other so balance And with we as have we've broadly will in financial look historically, sheet. holding that we behalf capital is of approach loans by of to sources at advisors more our for customers. role future, market, fulfilled still clients. how we act on we And relationships intermediary clients think and the be but job our we'll on when include the and and intermediaries an those do the those

shift to of be will we process, a thought that As a shift. it gradual controlled kind very and

place lending, lines estate And on their we'll and and projects CRE real Capital you just of our those and Fannie clients a think those as that construction we you'll flat, mortgages, those you'll new are balances balances those a decline construction decrease balance going projects conclusion that obviously look continue Corp we permanent in but as look supporting in in happen think their in right? and you originations, come been how at a you at Freddie. if a unlike as still as to and the balance other form we similar balances. portfolio, so natural companies. sheet use we period. of building ongoing. look over CRE what some they've real outside. are drawing our was we'll some the with loans not relatively agency about forms to off the start through natural our number M&T insurance that CRE, we also those do our going over and there's mortgages see construction And But of that's It into permanent And And comes loans to Realty XXXX-XXXX sheet, years, see natural timeframe. And perspective. from that come about But turn cycle then and at that of balances and projects and And we'll saw so might some they for natural was about with look with there's time, change estate, use not think matter to what, no if

of those look well. it's we'll to some types But so non-agency And take time. relationships into broaden going as to

few crisis. trying as of in see We what a better we're target bit through from that next today little sit been might kind balances the we our but trying you hard And dollars get coming don't net to, provide dollars the way just a path actually service to where efficient, and will transition. into balanced be long get to is be years. make so And decrease the gradual access we those as have to work our I of the guess, necessarily be fee we'll income for income level story we the some capital on clients broader to that and see be of is become of will here to to have we're that a short we able interest we're

Got it.

Okay. separately, costs? about at either just that That's that the of expense then could impacts you wage any People's talk how the deal, all or business? helpful. on save could in impact seeing the impact the around maybe cost inflation observation -- side, that the expectations your And expectations you're And merger-related

are on now. right others, we're job still new, are to is by country. which exacerbated folks we be think folks the seems exiting than isn't people our on looking both strain really seeing at wages, the are necessarily market. customers that coveted I for of bank, I it pressures workforce but guess, those the the see and who And different seen And around much in not number being are putting the Yes. a the folks

acute particularly it, the seeing that's was growth competition really related of where the would have expense until of it's be been impacted full up think going again, comp, regular because world with salaries, parts place regular it's as our of at effect to lot I seen year. won't next given But spread been throughout describe the but in I IT what look you there's the been When technology the by and a year the we're happening business. the prevalence well. other salaries, which, bank as it to space, in what's a always

been profit-related run XXXX. revenue-related increase full rate has to year And the been so have what's until a driving get won't in meantime, our compensation. you increase or you in And

So of the for as pool. by do businesses, income earned commissions And fee net a of has some increase, that the that so employees. revenues up, percentage our those target so the we our for corporate then pool, income, net has gone accrual. fee And for

XXXX our XXXX, a if the expenses. a seeing print And went in actually is bit interesting. through outside going everyone the little And decreased X group, this return our because year which of expenses XXXX. time making in that a it's little higher think more year from to -- actually with that banks expenses our expense of with a against I of I about bit bunch were of team than X over pressure actually normal we what looked just we at we're And down. our growth world, of you the peer is else this because talked math. spent

course If years, not below. the growth is it's over much couple couple the basis our you the of of points peers, in line last right look expense a with of pretty

-- for is. thought that sorry, to it and change else are what The pressures by we ago, But Bank, that's cost would thought same expectations acronym are they're a United our relates synergies we as right are takeouts the any we capital mentioned there. minutes be. People’s accretion see everyone As don't line believe subject large, they they perspective, to in that be. revenue the PUB, Obviously, from we we few we And thought. for with what would where still we a the internal

rate versus deal alternative on And attractive still so the very return is capital. the of of uses

And so there, no sure. it's operating environment, that's but for change real challenging a

We'll Schiraldi Piper Sandler. go of to Frank next

comments. -- on floor Darren, on Just plan the utilization dealer on follow-up the --

XXXX back what year, mean that we'll and could your subside? I for expected As see see it year are growth older balances those expectations to what in is just Or about a -- we chain supply -- and rates you there? those terms XXXX in of plan utilization budget that think and for of out that sort issues are your in thoughts bounce

manufacturers believe that being those looking Well, you we the But utilization we balances what were thinking you're the rates of up. at in at how nature, increase we right away, From from be knowing conservative an risk the and come the to early in pre-pandemic. we industry, don't probably over that our to will an about but things, start what believe see back see the dealers, optimist, see to rates year-over-year. it's those we do XXXX, M&T can before back will we hear into think 'XX we utilization a back normal bounce

And that of that I over couple better so and without any -- think intelligence, given the straight kind lining would the years. course of next about of

we'll to production, As we some as haven't get obviously, yet back online, improvement of quickly, with we the we'll uptick see inventories a don't of and just material you. should course the seen quarters. therefore, think information, But steady next seeing you're how but X terms signs see share better of come watching X that bounce manufacturing over we we in the

moving the of a in Okay. the And there's of book, know in And the securities then you is what a yield share terms those X% kind follow-up securities in pickup I unknowns about moving on quarter. of the book? the a and into just on Could adding the But there? prefunding Or just interest just increase lot securities a parts. in more quarterly a is this that People’s balances? basis, expectation rates is purchases more maybe of

on the now putting pickup, guess lower the on yields securities that than the are I the and yield So we're book on roll-off yields.

things XX is, can it, [XXX, downside. putting basis the upside XXX] that's And out of get points. you we're call on, so The

pickup in in part runoff mortgage if is about exposure think thought production, is balance quarter and we're there the look this indication target that's want good. line right? to securities And replacing remind addition probably good $XXX pace so keep you When other saw the as it both that the it, that is in at the million, of of is the of think are us as at retail that's don't quarter at securities, a rate good to investing But heads Again, the flat. so I'll so a the we it kind today. realistically, and our think as portfolio I to process getting you million we, on in about that mortgage retaining well decrease the we'll portfolio, And in sheet. pretty increase securities a where $XXX minimum, work you look the what a we'll

doing deploying trying that And as into bit of of us would treasurer at so as cash lagging to kind and a we once. see describe you'll dollar coming solve into go me all to that than through the trade our the and cost rather quarters, averaging it

next go Usdin, Jeffries. Ken We'll to

the on follow-up Understanding pull just forward. one Darren, PPP NII.

it given pull would I'm do level of expecting? the said back wondering just to, that fourth the in Is what NII from of down that step you down third? are forward you PPP of type type what So quarter. we be remainder? most the Or

it's the accelerated thinking a of the bit it's just broad we're origination seek But those rate of might third. guess it little kind of quarter bit what capture customers forgiveness because was the timing is half in the a unknown. a versus our Well, strokes, when fees in of fourth of

of Just highest we're approaching terms through. the I of mean, When for through, way way of quarter the volume program, whole I XX% of perspective, at the that pulled we're we of origination the part from the the was XX% third the we in dollar where look better those fees forward. stand

there of come. then first it and the might be bulk and another I down. of those trickles say, from the there and million X/X that to origination should quarters We $XX fourth so off probably in think see we fees And falls of that,

from in think we XX-ish, $XX-odd of quarter continuing fees to and compared fourth this those the so And the quarter to range there. were the in then million drop past in

Yes.

when down the NII Or stable? that? And year what's Because Got it. fourth, about with more take kind if happening still and and kind Is to of surface what's low guide? given out third talked that that underneath Okay. you then we happening so of underlying your the full you talk of then? that single-digit just then

of yields posted we costs, got the the underneath the core, swaps for that about. we the down underneath the we the loans the document I and the balance been that mean Yes. got hedge careful the and because that talked But No, at also be sheet function word means look just you've this different that we to I quarters, a and different things outlined in that the the use right, relatively X to deposits I at and earlier Ken. it say, exactly when people. slide I and portfolio is had When that a quarter. look we had would last, the they've on when we stable look the loans, score

of has And so the priced been and loans fairly LIBOR. off most stable LIBOR are

for And yields while. those stable and so a you've seen been costs the the deposit little fairly while, stable have for fairly last

have constant. things And at so when book, you look that relatively been

yields, the well. of very as those And been reasonably PPP steady the has margin spread, so the and absence portfolio been has steady,

course. and hit to from first quarter on our talked the some as there, to the other go. interest some low that to to their caused and M&T acquisitions have direction. other think factors mentioned, sheet PPP, we their that. in and will in about I balance to and are normal, run left build just The rebuilding go But those And so especially the stream of trough I bit sheet to that income, strong start itself. the back starting these to run the holding start and a consistent we what M&T quarter. we lack more net course, little would we securities volatility portfolio mortgage to put starting And loans as right? so interest of had of of we balance of And its that quotes, And a that's in income down, volatility with some there's show is it's why and the back very running start There's more net take hedging a start typical we a inflect

Got it.

as you banking the follow-up. as of Ginnie of quick of stuff? one that some of XXX And but amount that the helped and Do mortgage Okay. you know resi, how in sold? the keeping line selling of out EPBO And much Maes far just

I be -- exact. won't but would I'll Ken, be close I

like out I million within quarter. And $X $XXX I went were $XXX think of million this that we the gain, think, to million. Ginnies about was

numbers of kind where we a are. decent of Ginnies just still round There's So balance books. the of on

time, the you the had months there be repool to all you where have could were is rules -- had which to they so our And rules X it. why of consistent books. still changed they're payments on The you before

little moved around that where balance the and start those bit a got repool Sometimes to point come sheet. should off

You'll see some fourth of that in the and quarter. first quarter into the

fee over overall comments a and we'll rest in pressure growth about on but is year. in And the show bit of so reflected our little those the the will again, up put balances, of income

Wolfe go Research. Carcahe to with We'll next Bill

given be to CREs about how line have? your what balance wanted less the sheet-intensive and revenue elaborate CRE. looks to lose on in to treatment regulators imposing the that impact how bit of effect? beneficial follow that on the expect reduce you'd Could have on Can which would credit class, top harsh we the exposure Just your exposure, asset curious pursuing think kind been that comments to in a you strategy up on but

is process. reason do good we the Yes. Realty what of steady it's net it's at capital I Sure, Bill. we a early for year produces see our fee of you what income today, terms and it the we're And in analog and pace us don't every have I still is When and income, look build guess is very the friendly. a for income a the in But you. at in margin, development. fee and answer a the business, which we our switch Capital obviously, short from the stream nascent nice interest do still you great answer

million today, $XX how income where Corp. an getting in in has income. a will a our be it might some are so Realty And interest their competitors at you fee big that income, to what of net if And at can that bullish income, business. Capital probably we're the if it line $XX we're good million of in impact it's look you source be of and look business on decline of range capital-friendly what that our of offset outside

statement so talk about get start I decrease for We a in and don't thinking of And that look way guess become. that fees big XXXX line terms when to a the I as work. will at at our that some our don't income the business. offset plans. have now, start what as of might And But this with you income, more it finalize come point, as I XXXX, banks of would fees then in see gain on that it hitting net as in about But little could we to peer there. plans more big have CRE about If I we'll look at doing a for in sale it we'll we detail our plan. by there's still you to might We're bit back on interest we think like do what -- be shift

get as take stress it. helpful, these thinking It really to that, it's in Darren. to capital thoughts And you're actions reflected Got be -- follow-up your some binding buffer? CCAR, like That's guess, before, going a as long constraint, on any about sounds how then I time.

could lower it back back would such range? X% it so down time to see towards some in from that migrate capital up that level of the standpoint, required SCB somewhere take And your show we the

about next we're exactly bank. -- a you're Category X Yes. way. time right the it thinking the Bill, Obviously,

And these that that's impact will test upcoming, M&T. couple way we means happen will And so made test stress a XXXX which be year. we changes test, its other you're year as the through won't this away X of at a will And have the stress is go least And through CCAR what a Category X work year for to bank, years be in that. then reflected in stress from the places. every

that that are is the But assumed in and PPNR, work as obviously the well. other of and the risk-weighted of see you it time, the see right? PPNR you'll it should better go in capital way stress place place under stress. And will losses which over assets stress. so a more be percentage to risk-weighted the you producing first it assets its that under the into the losses will income see test is as And So absorb right, up,

but scenario. was this scenario the SCB we reasons much up why think stress version. not our where you of because implied in we we'll XXXX I like efficiency, in And just ends customers. it come was would at will XXXX number start if reminder, brought we're level if is can see was it test expect scenario pretty that's but in see X.X%. XXXX year. the in. it's just it about the calculated SCB. And our the passed, December see service XXXX, a there's provide up said, The have a is the current And not we broadens actually severe I but in capital But December But we'll so which see But the that as the really of start not would version, see you'd from our to would it in to to when to of think one just the higher, this it meaning a would -- not thinking was run, as it's it like it that SCB an rate in actual

could not your is thought kind decision is, asset-light the there to to conclusion then CRE treating change process follow-up as it So that harshly? to the want -- a mind regulators quick is to Or harsher are that direction foregone regulators to be head foregone conclusion CRE? going that you of that in? It's anything that around perhaps unwinding or that all more a is

through And The each I and number of year. I a it many foregone and asset more classes each you process every is, is test, different there's banks different -- way guess test portfolios for leads a of that one stress other time, economic an look insight it's been different scenario think stressed. I time how scenarios. scenarios you a banks you if are those there's gives wouldn't to year and every under for stress Bill. say over outcome there's perform conclusion, goes a a into that And about

CRE. stress they Sometimes

they sometimes they address stress credit mortgage, card. Sometimes

in direct out. they stress Sometimes

loan we live, our there certain those but as so need of December through help are to capital it's CRE points got telling of loss you a was that And how thinking. want never got and said you it us carry data balance level we us on a exist to they classes series might that another And to we loans a data in what long different different and and sheet and thinking And certain are these of long assumption them. not that it's your point. to that types informing and a support as asset go each therefore, do of inform XXXX that your

streams has terms us path balance And but it the we importantly, what's so CRE gives And help optimize of our like still our our be described balance upsides and we'll efficiency about do to this clients. and in another have a and income interest number that down moving on thinking our always that we capital. most our that of how look on between at best out we net balancing think have outlet fees. we to assets returns shareholders' capital of We'll income support sheet, use and the of sheet mix

path. And move think this process. any reasons, back so down that those thought turning I for don't there's we'll from

which pace do, think, get and some we'll execute. how the to in the in question anything as we will, But and based talked that dictates answering we the extent, I what's we really at think on be just first And like clients there. market we thoughtful is about your pace talent. I measured question,

Wells last Christopher We'll Fargo. question Spahr from take our with

the is assuming my of the and integration to place contrast technology the and the People's And quarter United of related if in there? City the out this question with integration Hudson roll first can all the is that year? that takes deal Just you and next integration

and the first different think of don't conversions impact happened different them guess, start and technologies at my but bring if I complexity. mergers I'll one. of Chris with will in quarter, I technology, that the Okay. you on different change with answer levels look

X one People’s, to City contrast converting and deposits. And kind before and did. mergers, compare Hudson our I time system mean we're recent was the so of we mortgages most probably least basically of integrations complex

easiest of and treasury of was no those are light. no The are. cash there complexity and you when products, management to pretty There ones about think so trust There about commercial mobile management. the of, was usage And business. web no the business were really speak

a And less straightforward, very so conversion. that was complex

really and If spectrum, was the trust had the Trust, a you where end but commercial, weren't bank went all way. in, I products, to Now merger other there inherited the traditional we way in a of also new we Wilmington right? wealth a both big would number at look consumer and of that businesses we

for as that down it characterize with terms more much we complex setup in the of was lending much have. and that would that. so But People’s trust. looks and middle I the one wouldn't And outside planning in more less well the equipment like as warehouse some Trust, emphasis that Wilmington in as little some on mortgage businesses we a gained finance certainly

runs And looking core on to so run and is be up flip the able we'll is system them that FIS. But People's set be those maintain to side the banking and systems them.

before. platform. that's number onto FIS times of done deconversion before. a We've we've from And That's done something so X it our

that. of And the how so we know to game execute plan

be and we're path the need what I for is, that prepare know we're along. customers get minimize forward when to service done the preparing And need progressing to easy to to to things do what customers path integration, look for so to that it make We to is employees do we and we disruption to the those the at different able known. to

complex things, characterize would had of conversion the without scheme one this execute. of ends the I grand challenges, but X not the so in middle versus convert And to that most system down the we've of of spectrum, the its

should clear. it be guess I

conversion do quarter, that can begin first fourth you year, of get correct? approval the process you next in So in the assuming the quarter

Assuming X or a probably approval, going quarter fourth if I past, we approval as just December get would get guess, quarter it's I first challenge. on caveat we the to the make

when And depending might approval, conversions. timing so be we the some the system there actually of pushback on the on complete

and And so Because, that any it's we'll been practical approval it's see effective. obviously integration as to not systems conversion know cost once legal where you're that because But than well never the system and aware, we -- I risk just happens. have multiple and deposit focused close. to complete it we've loan maintain we systems and our multiple we quickly objective it's our to have complete Chris, creates longer as as

to those practical we ability approval conversion as complete a in we would as so reasons, when And and quick an the our once is our for know look system legal path find for certain to close.

I'll over And remarks. to for this does end closing answers. our Don questions call turn and for back MacLeod the allotted time

contact thank the (XXX) as necessary, news clarification any goodbye. code items And is please and Investor department of area today. participating release Relations always, for XXX-XXXX. if or call the on of all you, Again, at Thank our you

participation. your for you Thank call. conference today's concludes This

may now disconnect. You