M&T Bank (MTB) 20 Apr 222022 Q1 Earnings call transcript

Welcome to the M&T Bank First Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Brian Klock, Head of Markets and Investor Relations. Please go ahead.

Thank you, Gretchen. morning. good And thank XXXX to through participating M&T's in webcast. I'd Conference everyone Call, Quarter Earnings and both First like for by the telephone

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

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

you, and everyone. good morning, Thank Brian,

As on eventful an reflect we the past was quarter, one. it

forward course, conversion colleagues, quartile sight for welcome providing We're January the customer engaging new continued the supply in pushed raised rates early closed for third than the additional of quickly materially, interest our service, the restart define excess we since curve People's than for the our year. returns us anticipated the of family. plan rates the created our before shareholders. at Reserve colleagues, this exacerbated more funds opportunity changing of not quarter that our We anticipates top outlook to call systems January. we United to completing People's hedging turn we rate in focus our and situation April its changed and inflation the home, even on and outlined The have cash call, delivering March, coming has and hikes previously disruptions have offering not to acquisition securities Subsequent target rewarding of earnings pleased program. in successfully communities the Fed faster interest chain of complete into unemployment the an superior in rise careers to off, seen to to and Federal pace levels long-term deploy XXXXs. a to were M&T, Interest losing integrating to by investment tenets First we Financial in and on to began shareholders United, environment rate excited the X low to M&T late customers levels to Ukraine,

beginning interest origination tailwinds gain business, the prompted see our from rates same to banking rising While interest volumes impacting we're both have rates on sale income, to those headwinds mortgage for for higher and margins. our positively net

been persist. as about capital. United to excess opportunity integrate to We're growth quality the excess and the credit macro Despite headwinds People's these strong these as expense excited and and deploy well future expect We has challenges, franchise the positioned well cash our for remains well managed. to

to our in which GAAP only for respectively, recent with $XXX to Diluted annualized This million quarter a compared share, let's prior supplemental after-tax quarter's X% quarter assets common earnings common income million quarter. rates of People's was M&T excludes per the fourth comparable of effect $XXX intangible the quarter was a expenses, as mergers GAAP the of assets the were linked on non-GAAP contains quarter. The per as for related excluded Group. common distribution with quarter results with were $XX return This equity ever down and operating amortization on in $XXX common rate $X.XX recent share a first light fourth of and merger-related acquisitions. associated gains amortization XX.XX%, in basis, tangible of We of X.XX% reconciliation X.XX% $X.XX and the share. received of $X.XX this slightly equity. in net the of previous XXXX the Also expenses review from Included per of the the the per as just recent XXXX results Now on X.XX%. and Lending average to or quarter tangible quarter. assets the in assets common results the This press the intangible average from million a of XXXX. after-tax results fourth the to accordance to in in linked $XX guidelines, quarter. for quarter SEC's quarter. after distribution the effect $XXX in Consistent the operating Included this of $X.XX average for provides returns quarter $X.XX equity amounting annualized were which in net the $XX first M&T's $X.XX the of and compared $X net million release on including GAAP results, million well XX.XX% or of On shy quarter, acquisition. compared common of GAAP assets and quarter. share. tangible quarter tax In and were operating return results of $X.XX reporting we amortization million after-tax with XXXX. quarter’s an XXXX. per United as expenses basis, morning's of quarter GAAP million and amounted our share the X.XX% compares in million recent an amounted merger-related first in at from a have and tangible $XX common million its fourth fourth and with or annualized was Net from rates quarter. Bayview of for XXXX's net XX.XX% to intangible return practice, Net included shareholders' the with expenses Diluted well first X.XX% or operating income operating earnings and long-term the results produced any were compared income yielded for M&T's

impact driver X.XX%, was increase held reduced X earning deposit X-day reflecting decline the of lower money factors net loans. That margin partially Next, deposit Federal negligible XXXX, interest the points a million or and fees on net X was modest underlying a decreased from The resulting $X.X received loans. we basis well interest as PPP X or billion the factors, action deeper fourth in a was received target on was offset the market quarter Average a we'll point about Those shorter income a had from the these million in from by level which a decline nonaccrual past that on $XX trends interest $XXX the income little cash cash of linked X.XX% a Compared interest Reserve, the boosted count quarter. quarter. including equivalent drivers placements, margin the billion, nonaccrual the offset million funds calendar look assets, The rates partially estimate loans of by partially X% higher margin. interest compared interest $XX basis relatively by the for in up Fed as million income assets on decline previous day Fed, on the PPP from and were and with loans Taxable reflecting the X% the basis assets the primary of in by quarter. XX from on earning basis quarter. rates the a offset cash other reduction results. the of The loans first had benefit in XXXX, as the generated lower points. linked with $X.X Rising of X% to late were of margin interest by million securities. point outstanding interest-earning $XX margin to including at primary some interest quarter investment Fed the increase by the a decrease quarter. $XXX quarter into average the in on on accrued came decreased All with

loans Average checking. activity contributed reflects was customer evenly more by compared real were about with compared loans over floor declined in growth Mae assumed primary M&T million or billion that and indirect the an The demand at real on Realty fourth noninterest-bearing loans estate between the sale and Consumer fourth Real lenders. interest into million permanent decrease of estate loans estate all residential been which loans activity Ginnie lines compared with nonaccrual commercial million quarters more was the with in our driver, remained combined in by other by retained deposit offset includes where by which That balances originated On several often outpacing Elevated quarter, prior loans X% X%. basis, That profile remains PPP drove into of was downward, subsidiary. subdued compared construction finally, decline by than and end-of-period decline. approximately of an X%. new million. declined loans. as in change strong. levels decrease to Activity with just origination divided interest new deposits me, the facilitated $X quarter. some the a to declines CDs quarter. eligible the new Looking declined by and financing, activity they our also expectations. quarter. liquidity decline Corporation for auto decreased -- to figure was excuse category off-balance years. plan The fourth loans checking other with finance by Capital to home the average by buyouts converted compared the were runoff, X The $XXX,XXX, $XXX $XXX offset while X% recent saw $X.X amounted linked factors $XXX consistent increased Trust consistent loans quarter sheet deposits, for investment, repooling our our payoff And in and lower demand the growth PPP markets criticized with basis by reflects including nearly RMBS. C&I up equity loans, loans. recreational still X%, in Commercial has program than increase loans in dealer normal and and core loans. became figure following ongoing or manage roughly That pricing excludes about deposits capital loans with $XXX industrial billion

rates. higher cost higher Some pay escrow moved other balance our sheet willing off institutions were deposits to to

noninterest in income million to compared in the $XXX with Noninterest income. totaled quarter. first Turning million $XXX linked quarter the

Mae As from recent quarter Group our have million margins quarters. the a in gain which driver servicing $XXX on Revenues first noted, sale Ginnie million mortgage quarter on residential a $XX million the decline past eligible recent The pressured investment our million has sale quarter. purchased M&T received interest sheet. Lending in Mortgage the reflect $XX in in is million revenues the compared retain in each $XXX or quarter. higher distribution banking $XXX originated mortgage prior rate X banking Both from to quarter of and fourth primary $XX pools, decision Bayview with our linked were loans originations for business for the from the for balance the with were environment million with $XXX substantial in resale linked-quarter of compared Residential mortgage re-pooling. become compared the for loans the previously million were quarter. figures of majority revenue in

the a the was have typically $XX higher quarter. ago Residential Commercial has in in quarter, year prior totaled the the loans decline $XX the quarter gain narrowing. new figure million $XX revenues linked $XX in That million quarter. Banking from than in $XX that first in were compared million on originations, with quarter. reflecting recent these Although been sale difference rates million million

from also included charges the up Service a were commercial million revenues the from we swings. quarter the $XXX the quarter, to to which Trust the significant compared on The seasonal seasonal the expect fees. reminder, quarter a was Revenues program by year. an quarter. accounts $XX of in half have million million previously impact totaled elevated second ago but repricing reach consumer checking business compared with in mortgage from $XX year half, first in of million products of That fourth of rate quarter. quarter, recent changed the income $XXX deposit primarily level little with in factors. the show XXXX million As the but X% run not banking $XX half announced first tends decline on of foregone our million previous prepayment a the second per the $XXX did reflects

which Turning merger-related and quarter to first the $XXX expenses. comparable figures year exclude million. were the $XXX The the expenses, Operating ago in the million $XXX linked amortization quarter, intangible expenses assets for in of quarter. million were and

as contribution, first As is typical employees, like of for which accelerated payouts insurance. Also, HSA million an higher same reset the the Don year's annual impact first compensation in the increase incentive quarter recognition match quarter for quarter. and as included operating to certain to amounted benefits payments equity approximately of compensation of MacLeod. and unemployment for expense M&T's on approximately salaries FICA results, compensation million last and in it XXX(k) of retirement-eligible well items recent $XX the $XX FICA in Those annual expenses the costs relating reflects the seasonally payments

usual, decline significantly we expect seasonal the to factors second As quarter. enter as we those

quarters quarter the was flow and Xth Lower XXXX which numerator amortization pension-related the quarter. XXXX XX.X% operating compared decline. The the in and well the ratios salaries expenses. by or securities with compensation professional services benefits, costs intangible the through from gains expenses and quarter each Aside of $XX ratio as merger-related efficiency elevated XX.X% XXXX's seasonal factors XXXX. the and fourth these lower from that million and expenses from declined as drove the costs seasonally first excludes compared of XX.X% losses in denominator with Those reflect in first quarter in recent that

at million changed first quarter allowance of offset for the million inflation, turn of to credit the losses and of disruption, pandemic challenges The is to which amounted losses chain $X $X.X first for little $XX quarter, to persistent Despite a improving. end stable provision partially credit of end credit Next, the charge-offs. experience, XXXX. was billion of just the labor let's from We recorded the credit. the supply in net by shortage

But upward COVID-XX period. have forecasted continue Ukraine. of energy from Russia's the As show prior pandemic inflation indicators improvement with invasion constrained persistently chains, from which been to the eases, prices pressure remains by supply economic and high impacted

the criticized real consider GDP forecast the a in first and a have although those and impact quarter's for our The prior indicators developments, an values. these the difference considerations for results, The quarter credit there CECL allowance macroeconomic on growth significant that $X.X decline was baseline from file these result in consumer losses little Nonaccrual including a forecast of a estate from amounting last is modeling rate, is unemployment residential our March, of we with in to XX-Q billion loans. slightly, X.X% loans consistent end that expect at the increased at estimate. end slightly few first the modest up loans quarter that prior to report X.X% very we weeks, When of equaled year. of our

charge-offs quarter, believe recent just for points to X a Annualized $X quarter XX noted, basis is net low. basis we was loans net That total million. percentage these which government-related XX of figure were end as points accrue fourth amounted charge-offs an due Loans the the for As days total, first all-time entities. interest, quarter. guaranteed due, days were we at in XX% quarter. loans million which the recent $XXX In were the XX of to of continue on past by past the

the quarter. totaled billion, M&T's slight outlook This the of of very the $XX.X became reflects Tangible of net percentage common risk-weighted reduction XX.X% investments or into X Tangible was This estimated equity X.X% excess amounted common dividends, the share deploying just end reflects $XX.XX, in to clear. the at ratio end from combined Tier down with $X.XX per interest compared end of rate an prior the moderate from the X.X Turning patience common down assets. equity long-duration in a fourth to our point quarter. liquidity capital. until ratio quarter. XX.X% equity with decline fourth earnings

shares with to we $XXX program of starting announced, recently repurchase our previously million Board. common the As by the reauthorized M&T shortly, resume expect buyback

Now combined The United from impact with a April year People's combined for outlook had we the acquisition. forward our X, expectations operations material sheet, rapid more recent People's closed information outlook. that On have development, and XXXX. United. a turning the X/X change in interest to the full of on rate follows the reflects That balance includes curve

balance the outlook talk about our First, let's for sheet.

Reserve of $XX and impact about billion Federal billion, $X.X other billion billion, at at each, liabilities loans $XX totaled investment the acquisition $X $X approximately billion. purchase total assets of billion. accounting Excluding placed $X.X billion, The closing, other consideration totaled in $XX including totaling the of totaling borrowings acquired billion. Deposits $X equity cash $XX adjustments we securities assets, was and totaled billion and

is With deal the slightly expected tangible book share. per the now to increase to in rates, be value dilutive

However, will from additional acquisition this future benefit that accretion. accounting also means earnings

detail on sheet. into our little balance go Let's growth the more outlook for combined a in

First, the over the of totaled interest-earning the cash billion. just beginning second position quarter $XX at

We billion, $XX are quarter, the balances billion on We slow per billion, or our Investment start provide from loan loan growth for including to look the and of to X% wholesale through as of decline could as in just of loans and billion company by In expect of loan portfolio, due with billion totaled quarter. $XX to in in to for we CRE, conditions. beginning billion the the end PPP million first quarter $XX $XX $XXX let's portfolio at beginning or in over outlook this expected $XX the loans. loans, spot grow funding. on to the accelerate details cadence to growth $XX the This growth, the securities portfolios grow quarter. a order combined and the expect the end-of-period XXXX. C&I respectively. XXXX reduction depending by of at beginning a our consumer second Total mortgage to combined slightly these second more market well under the loan for end range from the of securities combination in second growth X% billion quarter are residential expectations $X

excluding dealer for expected Ginnie The same and PPP loans to balances, Excluding total that loan combined C&I are growth, in buyout range, the outlook is X% to loans, grow Mae plan in to over X% PPP balances. down expected X% with loan a solid range. in to of PPP loans on growth course to not floor impact year are the have X% material loan growth. continue pay and the

loan For heightened total rest payoffs loans their for combined strategy this X% the help in essentially XX% retention the to the expected expect of X% this to to be XX% Ginnie of expected loans, growth level buyouts, is And for the outlook thus, CRE the range. from of are in excluding mortgage largely Mae of is The year. And flat mortgage growth year. run we residential the to over course. CRE drive our tailwinds to course impact balances re-pooling of the

rates of course, growth. and that Of affect mortgage pace ultimately will supply home

balances combined when for to strong the portfolio. of for full Finally, On To combined X% we M&T growth year. and understand expect momentum outlook for to this to we expect with the loan XXXX stand-alone the anticipate full average franchise range when the our outlook growth remainder X% of the average in compared XX% into balances, end basis, XX% the period end-of-period and a average average to range help XXXX to sheet balance this consumer you stand-alone year year growth growth loan in be to to growth M&T of $XX the in or grow the range. the average in we portfolio to how are billion. loans XX% C&I expect in -- ties average compared pleased average XX% in We over growth the continue

residential range. loan average expect finally, CRE XX% and in average in range. expect growth the XX% mortgage consumer growth We to XX% XX% in XX% average to growth we range the XX% to the And

manage includes look we well are XXXX, compared we positioned this rates believe the the statement higher at This that income preliminary macro be through earlier the to for combined quarter. from marks finalized estimates challenges the impact the in As expected from M&T operations outlook and outlook we of are we call. to from to later on stand-alone acquisition noted benefit accounting

$X.X net growth interest billion income Our is for full compared year XX% combined for outlook XXXX. the for the franchise in to

be the yield reflects speed as hikes or deployment XX% the of of that growth. expect of the We beginning well month. the curve and Fed rate the liquidity growth plus depending pace by excess minus of the outlook on forward from interest X% as loan this This to

to Turning the businesses. fee

on and expect income margins, rates revenue pressure sooner fee to from are recapture money full to range should in market of XX% previously higher the in While noninterest XX% for originations the expected gain to trust year waivers anticipated.We mortgage XXXX. than billion benefit sale the compared growth to $X.X in grow

operating noninterest XXXX. for timing the subsequent in the system to of noninterest billion by expense XX% conversion our XXXX growth compared People's and of year realization synergies. XX% Next, operating $X.X expenses to anticipate We combined full expenses when is in United outlook impacted

$XX merger-related At of incurred announcement, expenditures. these These the merger at charges. operating were the of noninterest be than expected are do merger capitalized year. including time charges charges include materially charges quarters second pretax As initial estimated $XXX not these onetime and to of reminder, million, the in expect expenses majority a be estimates.We these merger to different merger third not million of this pretax the

to credit. Turning

credit losses to remain basis continue We XX well of average to points. M&T's legacy below expect long-term

for charge-offs XX point company the range. XXXX, estimate will be conservatively the basis combined in For net we that

the from the credit for this second credit related People's loans nonpurchase reminder, deteriorated quarter to losses United. provision include a year's in provision As will

at count. $XXX so-called the provision lower still improvement million finalizing We the the time estimated the acquisition economic will accounting year, but this provision likely are given the double conditions marks, the past announcement, than of the pretax in be over

what both to capital the XX%. to return turning shareholders communities. at is core the be the believe excess growth support We in of to firms, lending plan should ratio CETX capital safely at pace. Due delay company in over a combined capital. preliminary closing needed and level and We Finally, measured is than run capital combined this to to higher our to at

will participating this in an We year again XXXX. be X the a bank M&T. in DFAST and been year like off have would year Category for next Normally,

again requested solid position to material potential a However, the has and a Reserve of results operations Federal With don't capital plans. the that be we that next few year next capital generate United. of over can capital so buffer stress the our starting we sheet reasonably at our test participate the test causing and balance capital change and stress including anticipate significant distribution amounts People's best, years, to the

peer a Our lower as objective, that always, our end down Based high CETX in ratio the that group. range. is bring gradually of objective, with we to quartile on our XXXX CETX level anticipate near to the of XX.X% ratio a ending is the

program closed. earlier, that acquisition noted the repurchase restarting we now currently share the As $XXX common million is authorized anticipate

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

from take from question [Operator Betsy Morgan first Stanley. Instructions] our Graseck We'll

not with little Maybe just on there'll us a little a of Because coming how about the thinking in, shareholders comment growth to as I to to down competition but could obviously, loan bit your that returning pace. much. measured drill around that? excess a wanted give at be a capital bit sense you the you're

is So is in guess how -- the I your really, measured mind? question underlying measured

Yes.

impact we addition to deal of in think the through couple onetime it, we're buybacks. the to quarters next the an going with some go will of expenses as So the associated of about capital impact the Betsy, have on and

And it little of the so that in obviously, increase down in asset Fed also because XX a maybe will point. the is think bit it X and a the quarter bank's as these of if the a basis it, you couple range, combined might quarters, card, generation. next course the income be over but on a starting impact is moving XX good we think of have about per A of that's to of capital pace point wild about the bit the funds net meaningful probably sensitivity in rates lumpy

need to to XX be addition the of to that so point in that to XX pace And kind we'll monitoring target. basis hit

might about it we it. bounce around that's of So think and think we to kind tend about that, but how it when

a can And you just expense the Okay. you're then pace as anticipating? remind realization those savings, us that the the follow-up, just of of

Yes.

event. expenses the quarter probably of to in system is this -- expense first quarter base. we back the go United fourth you a reduction year if about So is to continue the diligence, bit the little look that due and to decrease will conversion of just in a into in we timing. People's when the were next really in, year when leak target XX% given really the come and to tied Most it of And the at starts

stabilize after to will days so that, plus you'll stay And who XX we XX just on plus typically, folks XX, expenses away. then go will the have and that those time start operation plus some as

we frame as of this that December into the rate be really we'll hit the time that and maybe year quarter will first get really it -- So to of XXXX. run

comes question Ebrahim next from from Our Poonawala America. of Bank

go I NII your was wondering could if guide. you back just to

you the mentioned all year-over-year think deal. up I in XX% with

around thought pace you the of expect cash process cash And maybe Just end to deployment, us talk what at where XXXX. of around do buying? to keep excess you're

Sure.

an looking X-year you and of pace deployment, of that things When focused $X there of portfolio a what's the net securities quarter typically it portfolio, the been in going the and in about runoff. and on of space. at a We late, guess some in I curve, incremental the couple growth cash the been where securities So end the billion of talked a will cash the it's on shorter we've just be securities. in to X- look in at into

I of think flattens years. if looks, get out that you you that to look you it see curve X once at how kind

the way of to see that we're duration mortgages through And the originating channels. of so our extra is retail the that we're part benefit But getting through don't we some of a retention duration.

then then that the we And the our we the are part mortgage is billion. sheet. think $XX bring levels combined balance cash cash obviously, And residential the balances around to of are so of things $XX And down those about. other in will into billion sit that the growth the that help place talked we from April on deployed loan

cash we merger. balances we think I other have. is wholesale The the can wholesale that didn't with is bring part our those funding there the position we was, liquidity down fund And through mention coming position, that as some that at and them look we

Understood. tied saw we And on side, to the deposit that, some runoff. funding just

You about terms of leave the deposits think index balances And type talked to balance other quarter. trend? are Remind kind you rate-sensitive in this where expect them more to of sheet do last there over deposit you about coming the quarters? expect that when us you

additional and loan-to-deposit due basis for the not first the likely we're industry, think, right deposits us in ratios I generally think, for Yes. won't runoff portfolio to and guess rates. anticipating the We'll we are in movement through, given XXX the deposit see sticky, to much I be go the the points I now. industry,

the to the or betas the through with business In consumer usually to tend going those cadence that well move into over municipal out longer start for that will there wealth little and to are bit starts takes time, all rate most drive of be movement it the on these see be -- rates. go and rates savings based you'll a as land, pace a the space, time to cycle, industry up little faster. see accounts accounts, move money as government we the but And at behavior. and which deposits As the market there's a we're happens to in in sensitive checking in some that bit

not past deposits on start -- be lines runoff on year, of then just it slightly growth been forward move a probably rates grow, late and would curves higher probably at Just deposits, part time a combined you And will they on. are. on has is will as M&T. basis, But portfolio as guess the bit and the there to move, based might at our Peoples where time little year in see early -- that but assuming there a in cross point, some see next and you'll experience time not deposit until this those anticipated, early is portfolio my stop that's the shrinking than

next Our from Bank. comes O'Connor question from Matt Deutsche

and above converting could the XX.X% deal think guess why targeting. like out blunt, if I CETX from Or of most want I XX.X% the X%, to the of see, you DFAST did flesh see kind but are at arrive you bring And so is peers? down high? peers appreciate was you'll that kind a you be target you're your we and closer that X.X% maybe your intermediate and to is the term how got target, that hoping time, long of you and over it's it how where I that?

stone stepping Yes. The Happy the way. is answer along the Matt. XX.X% to question, a

that look And it extent that capital manage that's into we markets. how franchise to always we've X/X a about about process to as earnings growth our there right support we as and the first element then dividend loan it thought our back sure that, we're the a the at changed not of around about to important deploy an to dividend looking return, and we reasonable to looking always customers haven't try we make within target, target. always payout of think and We talked shareholders. We to get before, as

sure it's to we good at flexibility buybacks of us cycles. using can it. at I through we're capital rest believe rising we maintain to starting we the pretty environment, to think look combined the favor we tend of where the think, XX.X, is look a then going what generation against the rate you and a the backdrop And economic organization, the be generation, compelling. payment as when gives franchise sensitive -- you of capital -- a becomes that that And that and with in make the

the And go with the how through deployment it's an against is pace when that ratio the history the that what treated has test be out, makes year first portfolios very as stress will of balance be us to intermediate you taught sheet. models. or bring you combined the And step it through next surprises there pointed the our in stress we the of Fed go down under can tough time first And pace capital so year test generation are quickly. that react

there those in can -- to need remediate. situations, you sometimes And be gaps data that

we have And place and side that be, we then think to have safer and look test our stress. Consider journey to along that level, how on we've balance we'll combined more getting down into want talked and towards as about. the a the so we into target we XX.X% to We'll at to the new more have information that as come -- test that we our they just new understand understand sheet run models to those when that own perform the at continue always bank account the a issues are through to path and other we portfolios, out target and challenges, some stop but typical is target. we're expect going obviously the because that under we them But stress take our

helpful. treasuries? market. That's tons banks move rule on this, you treasury And of can't and in seen just dump some why cash on have unusual probably sort that I'm liquidity it in then liquidity, other We've missing very short-term but of the Okay. the

about I Like, XX and CETX, So is take you could impact basically rate X-month any the accelerate is treasury all X.XX%, right? think. don't doesn't not that really X%, a leverage months risk,

rule, rules consider what So from that's preventing out doing And that? just remind if you why wouldn't not liquidity it’s there us, that? a like you

banks through about a When is coverage going high-quality There's liquid are you're rule, the an expectation of Matt. what Yes. ratio, for percentage subject that held assets. to liquidity their liquidity in there's not

one think treasuries of but the count, cash is I the preferreds.

And so LCR banks. are Category shorter X duration that instruments which affect cash-oriented banks are would banks,

a to moves going, without the that having lock yes, curve get a we maintain X-year think keep cash, in the lot versus we're of we that we forward just But to benefit it locking we see we're subject the with the treasury sheet. flexibility to marks rate But in. and of of the that. balance bank off the we not look now where a when like M&T, For at going

advantage the react and securities to once we within what's fund the important to a but see can us others, all the the assumption, a us, got for of between the about to we we years, and of outflows the of with cash, you've as a to How is And portfolio for those the in the speak that's dollar to securities, starting for we're rate. to is it? in, in that flexibility balance then in some are of what's mortgages. the of build cost to And duration focus protect over take the trying portfolio, buy duration Because got of trying is you've while you in And of out see you whole and mix in that next benefit what's course really, the the portfolio, we're rebuilding if you continue securities or focus so that And to deposit thing into far cash runoff with what about increase I much your have. little and sudden, thinking some bit right? position. that sheet other portfolio, into and in from that expect get And too can average go and we'll migration deposits, how couple of the talked rates. what's the does we really with still

you down. too upside can get too fast, far you If yourself go

of that at debating And we're the we want those provide so mentioned, where on, the over up internally kind thinking when X based catch which is higher think the cash But at yield. as there there's next we risk years, like lot a couple But course might, of about of might are moving, a less you that the of I looks the in that cash. always something quickly pretty and things into pace obviously, it quarters about Fed that. deploy to the

what target about of next kind the mortgages Like, squeeze about? in, to be to assets plus years, just call couple said you was you remix end it? state and the of, of or think is, And it, would the a residential way it as and think what maybe rebuild securities securities you longer-term

and Yes. peers Matt, portfolio about at of combination assets I to of the assets, and as peers lower us. plus those guess have for at a look our way on-balance mortgages of it, where the to and the of look who sit. that that at is And if look quartile kind sheet percentage as when think add then the the securities our percentage think you think mortgages percentage range to up you bottom of securities about of a the peers the

we're as talked we've taking into asset on liquidity our crazy sure is about lending always goal -- deploy while Our our before, to sensitivity. that making not

would to that And And so would the -- that which of we'll bring look that. sensitivity asset down. do primary we those close categories to look in be some

comes John next question from Evercore. line John, open. is from Pancari your Your

You might mute. be on

after we've Well, years the got still of mute. X pandemic,

next from our question Usdin take And we'll Ken from Jefferies.

a Darren, if to NII. just more wondering couple of just pieces down drill could you

the to growth? percentage much the that how understand ideally? dollar expecting terms, First that understand Can you understand us that, can adds either help accretion. of us Or help you're all, accretion you us mentioned can help you in

part would rate percentage and likely the because bigger Yes, sure. finalizing when either positive new move and mentioned, is When the to the like points NII, the in percentage, than we be driver marks more still we're it the what not NII guided of direction, driver. change really forecast coming impact the you obviously, year asset it's obviously, years, the are. that the we you the couple interest look I our the biggest is where when accretive we at sensitivity accretion of rate of the of of balance when for But the announced, curve, you composition just what the look at our will the look environment. compared growth thought be and in maybe it the in a to the be sheet at of of which could But

Okay.

to you're the not you in to it just -- in finalize be what there? in the you're So there, but marks, what amount is you're on accretion going not until have of there, but saying you the going more there is us than could update accretion

it's of change going all not finalize you guess I the to once what is it, saying way. in give information outcome I'm the but meaningful We'll we a

some hikes talked Okay. -- Got that you parts like can you betas, expecting might faster on what given for expected about And of second just that the how it. question a of about but from And you're the us Fed? pace the then we're have within changed talk betas? moving the just seeing deposit just now

deposits, is problem. we in range, guess we it's in disclosed of sensitivity XXX, probably of at you lot deposit the And the to we betas the rate see wealth look of and And government little XXX. probably reactivity. lot in when earlier at end balances. the think the I sensitive as the talked a tend we Yes, Q, what there and really, really first first we the each we And first we'll think mentioned XX XX% skews deposit that. relatively low on. the the about really look bit when they a subsequent It really, to before, at a I XX. bottom more the some the be no as to betas by But XXX, has XX% then look, XXX don't we'll look When there's municipal portfolio. towards

more would higher our are you our start you to little customers smaller of funds, beta betas consumer customers, the get those business attention. and up drive lower. so level Clearly, and And deposit a in the a bit absolute bit get Fed the for little as

be then sweep fees. on offset the interest been there's is either off would credit commercial pay on earnings for is us things to impact look all interest before. think just historically cycle on would there not the to of it us, and commercial checking and sheet. ability from hadn't for balance of perspective, And an typically an which you the from keep others, accounts in One now but accounts, And at mind was was or industry that this balances on the for different it I on

interest checking in against those decide happen Now between that have will income between commercial rate based on of to products. the credit earning earnings fees or those accounts much an where actual on clients will

like And those you looking picture, haven't products sit so us. something in one really haven't loan-to-deposit back it's front if ratios just been of be seen cycle reactive that's a we big will liquidity in probably the to but that's or specific the because what But have tightening on the sits meaningful through again, balance that at end sheet go that we how we unless and last tightening cycle. not you our change position just the of all loan betas on meaningful growth in a others, saw that there's lower deposit where are

Our next comes from question JP from Morgan. Alexopoulos Steven

you now there? asset the sensitivity, closed, you just level could what sensitivity asset you're On said give you -- on that hedging versus you you color restarted last of what give people guys the in color what's new program disclosed? And doing Can quarter. the

I'll level less it what go of in order. new is than So M&T The is sensitivity asset standalone. slightly reverse

maybe you last percentage that some the declines, been and two did sheets, were into in phenomenon And drops, We course cash. of sensitivity a range. at saw on asset asset the look both that off over and combined turned paid that sensitive. If we there loans has the point the basis, point, portfolio X year, in that People's similar the loan PPP certainly X.X balance

in at looking were a were. similar they so portfolio how And very we to managing fashion their

since wasn't when we is we've the we prior cycle really happen. much in starting that see been then can do to lock you the forecast, combined swaps use forward trying asset is hedging like increases change And And curve sensitivity. we so at some had a they look the there program, in before to the in big done those what

be level. you'd funds, X that have happy a you that that see So protect lock the of with to some or where fact given today, before you're case. you able that pace the isn't you we XX you in in if But pretty still Fed and in if the you'd see at sensitive, to was XX are thought that effect, asset position being can a And case increases in then decision. these forward-starting today, in bad was lock can

to really and with some cash build try little as forward. of into to very hedges, portfolio last we each built we it those we when it's similar time how it flow out leg go so And month bit a the

it. Got

That's want on helpful. And assuming $XXX are in back then to basis, my the million? to still I And number for XX% still is Okay. save question Betsy's the XXXX? response your go follow-up cost to question, you

That's now. you're it, trying number -- a the I'm I with I about. XX%. thinking that's not first I'm So think what year. you to know got about

the XXXX calendar as to because rate until just see Just not so happen, deals of it reality, the doing year? towards year year. start when of we'll the the we achieved conversion in the in the Is going given right? timing XX% actuality And to to end we'll see the the out run start in run the this third we're quarter, We're not rate get come of to year. XX% that

keep in the we're in range it so it's the thinking has in really XXXX. of the full And we're around think still -- about that cost XX% mind to really, And But kick that is base saves. people's it way then it's will year expense changed. -- in

same They're different. and expense with seen -- have we inflation. dollars wage will thing So be the they've slightly the growth

bit percentage terms, really dollar the savings are is save not because a the in And much. up, the reality good went is little so the the but has news changed -- higher probably cost

Okay.

So the quarter, at up be of fourth the a you'll and run in the quarter? fourth the end rate basically, by bit is dollar not

fourth quarter little past but always quarter. going in or part lot and doing quarter. really are bit the that we're XX early September, like there's come of conversion. out around the days that third the if a -- Yes, the of leaks it's fourth conversion a -- folks residual Not of XX mentioned, some some the And there's I to into

XXXX. the should time rate to this by year, get close so off jump we we And into pretty we of as run out be the

The XXX% run rate?

Yes.

RBC. Gerard from question next from comes Our Cassidy

to with do to to ask The of your sheet -- loans I your taken not has I who see I'm from the were names balance off going holding you for you able underwriting that that was criticized said competitor, better the and think this you to got made that and that of see they continuing -- terms if in And enticing but competitors. of wondering the go have can question some quarter conditions? standards do year? elaborate you these you this, could to I you were it another third them to customers did more or second elaborate assuming

we fairly in mentioned, quarter. And and of hotel, leisure this the Gerard, and seen substantial City in a it players, and of coming estate, we've fairly of many a industry aka, that was New around as bunch York Yes. in. A in cases, it's hotel. variety real payoff -- activity amount hospitality are

and the equity private sometimes it's it's Sometimes funds.

upgrade you've that by other We you it to mean on have and is the be not a you've you them. a seen got want over And And I your performance them, when credit company by and quarters of necessarily downgrade before a time couple what refinanced banks. se. few per been reperformance books their watching might you see

depending get potentially, classified Some one -- debt restructuring a what troubled as and they on happens.

they not want. we added. it's it's comes and And it's TDR them, some They then get someone cases, who in were new, the out can for a new us In a dollars refinanced loan. trouble saw a way -- it additional structure not

and else someone new a loan it's them. so is And

bit look an it bit history little not is longer before waiting And change wanting from change you and they're a different. maybe perspective might range. treatment it, They a prospectively regrade of of performance than capital before quarters the right? you're see sustained performance we even a and of So more accounting couple might typically little a for a they few to look the where months,

take at would we see us stuff. of credits strong. out. know thought previously previously was underwriting was of And where the and to reason so collateral what off. And they these X lot The think and you quarter, charged strong are the had turned I because know this a so they look recover it this recoveries times willing a values say where able basis that's of And that for of times, look out and why because to so had proves humbly When charge-offs would those because things were you the charged we history out our at that are people to reasons, that lot that much it tend that at our we be, as we points. off of I

something And that happen a others the not take love, us part And cycle. when of that it's necessarily so things there's out. we of but it's number

And next question John Evercore. from comes Pancari from

Just one for me.

lastly, and securitization for the that On the any that I here credit the front, you your the talk -- forward. those then the And particular paydowns play here? I paydowns commercial mean you expect abate? in of People estate be from that relatively come mentioned real could that the do you quarter should on you gives know were that what have confidence the maybe going balances Can flat of that that the know confidence of indicated unless the impacting about just book you I first into you they front? mentioned financing to is portfolio amount you

Yes.

in that been there I portfolio, And starting activity to there's that, think recently portfolio our -- things much until see with our change when couple we Over the at we market. John. tend of a there's as growth hands. properties in are to So hasn't look there's time, behind activity when

part of were hands. the starting talking what of And property to so change some aboutXXXX- paydowns we is

is And so a benefit us. for that typically

when many continue space upgrades mentioned and to that in look is and we we We've of a we in The that a were definite at of other the part or because portfolio. are portfolio. of come in nonaccrual expect our upgrades, we seen improvement and hotel some seeing more our thing payoffs, number criticized to the

see a In lot And where fixed loans rather some we the off. seeing is and so rate construction there. a cases, bit those trying a to mentioned variable I is to rate. paying bit and little activity a little the payoff folks construction than a for those of less in paydown could they you're reasons, line expect about lock what

rates, the And to certain of so trying lock which, along are way, some financing to meaning at rising loans in still it the can in the happen, of a other face is rate and but of course, lines to where have people of be utilization the have the stand. just guess won’t place it then permanent. construction be And it the enough they can that far some of into long part you those of I convert

As higher the since projects near of -- when certainly utilization I'm towards in our at, look where point looking from they'll we been December well, completion, but to XXXX. is And than XXX%. it's history that grow at low continue in it's today, the that

to move we're range. when forward, And up XXXX, you it, you in see lines those and the and from low bunch of of grow the now open construction XX% lines start a slowly percent build a call so projects to XX% and in maybe XX-odd

paid the go point, developer that to to at going to out. is the get so And for completion construction

And an be a so will those which grow, lines of will to continue offset. bit

employees have on think start we'll goes window customers -- a And natural see for certainty growth does folks be that are that, the deal that's and those in we that and bunch that growth And up. ramp and of is general why the certainty we that's around we to anxiety feel shouldn't activity and psyche. the the will the other some And credit so expected. a that when shouldn't for the offset discount reasons, that who thing enough that And that from -- understand forward, paydowns for there our as waiting. an think there's are that discount just we merger, away the to our I impact of loan look there's now which

And so part also that of that's forecast.

Okay. And the securitization of the anything potential on book financing of prime People's?

mean, and to for these X that it, great It's second And look talked as that merger through talked to still through announcement go and at. still integrate Give it's quarter at way be to is and our that. the promise clients, something early, more quarter. the something as us we'll see is I capital to banks sort come we and about we back. that provide you're opportunity. an about I too to We John, go second we a able a -- XXX% think right. we We of come third it we'll

Schiraldi from Our next question comes Frank from Piper Sandler.

going least Just a at any beginning of in a to cycle? sensitivity. simplify the recognize the and the People's I start hike But if had do asset point. on I things, quick at that to at just trend thoughts with you deposit what follow-up betas given wondered for bp tow, NIM, XX updated some are should higher lower

Yes. Early on about we before, on, we had just to stand-alone. update been where an talked give

in change basis, on -- bit a it to to XX annualized little XX that's X Obviously, $XXX equates think We the would range XX, to with a think we betas XX. of combined, be the year it's basis as NII. higher. the driver XX. the XX estimate from million are would before, $XXX that basis, combined about on million full points of XX portfolio, you a to I to of to kind points mentioned, basis incremental And XX deposit

Bill from Research. comes Wolfe question next from Carcache our And

So And run as sheet swaps view the more the aggressive from of here? of separately, a level off on you backdrop cycle? liquidity growing what excess right how you versus are putting this the securities about thinking should how about you now are portfolio just thinking balance

Yes. great that day It's a we question. spend and all obviously management It's a as of team treasurer our it. time something and spent a day has treasury thinking about talking lot about every team

before mentioned start in We combined $XX constrained. bank We liquidity have long the ways a go we're clearly we billion cash. with to

held and continue as equity and though, available the put the the changes is fixed equity to more hedging. through are do in last to And between that be What then think the position book, about with the recognize, the and if how try risk seen just when and of we the so much some you the on loan given -- but to we've securities you between you rate it's think changes obviously, move and what on in we with portfolio that extent kind rate solely about as to it's down, LIBOR that we whereas books capital hedging, reduce quarter, the -- the what but sale, that it like the the the rise, and -- through friendly, about product able asset the hedges, have to portfolio happening mix we nice of it if right? sensitivity SOFR offset, it cover to are that's so won't for securities we we rates it's loans how efficient. And about think a do we is solely hedges

some sticky yourself mortgage coming covered we that the that's what’s I look that can find our And trade-off think in -- the look for But then for now look and under so what's continue the sensitivity right longer the we'll at between book. based we provides where book. just the sheet. if retail trick, some deploy make liquidity if deposit the management think -- when deposit stress, happening we is part As bit shorter pace think curve decision a that's start hold that pretty short, But at and us look problem. we securities always the certain about we at what that part you opportunity of deploy versus focus balances, mortgage-backed some that really, And the And a now. thing the see to we you to we've down the got and that's on an eye can production, that think of other you those we'll to and hold kind because of just always flow look liquidity a mortgages of excess, liquidity. you've it. at when but with And rest out cash -- we little they on balance there and manage got of the asset of is want right? we'll just to in go for the we instruments of a of of at just we at happening amount coverage and today end on liquidity and When nice that a a in keep our our securities

way away. sheet, of we'd rather get the before, slowly take our the of of And kind the kind end securities as down in position that mortgage the mentioned of is percentage range top the of we that to balances of where a a balance to ultimately, So as bottom total plus work peers. quartile

And our comes from next question Erensel from Partners. Portales Brent

interest like quarters. to in dollars Am subsequent of looks clear. is I of missing by is net pretty go income up going But hundreds this something? think it millions I

see That's has how true. Fed But of the course, is the caveat, to it. actually come curve we

So XX far, but… we've points, got basis

share I Because final make the understand straight. need it to What's count? sure I

million, XXX the XXX million in it's deal, range. Post

XXX. nice. guess, you I Congratulations, actually very guys. That’s

Million shares.

Christopher Fargo. And our last from question from Wells comes Spahr

be most XXXX? rate will I'm in what specifically, organic the growth the portfolio, wondering just book for loan the think you

little supply about was that bit some a we again, little clearly that doing we're a and and expect Yes, lower been think you already general, it I pace to this at and quarter, work year go bit floorplan early high this to a to of might is some complete But takes, the seeing about that, we the pause rate outgrow because don't continue. and stay the year late at see we've still C&I, a it through believe X% GDP. started portfolio a while. strong while little to was be going and the expecting will it's quarter, reason to we've uncertainty. seen this talked runoff the of have and for lot is When puts bit to a recovery the below that repositioning business. we little or as in a there. we've of chain. we're there in the year. about growth, down. but year. mean, that any talked high, question the growth I that had X% going will come in think end we CRE expect the of talk really in slowdown And bit this production about much When look a I the of hard you about There's probably kind And the to that in GDP start

desire be up. to we geographies, biggest least whether thinking range when issue homes, We'll growth buy availability that mortgages, of I if our it could goes that in that at to now. for see be people think changing year to of the spills you homes the C&I. shift, seems has the rate how purchase happening gets will it, of just into around whole then robust. Without when X% rates see function, XX obviously, And And portfolio. mortgage look I as not I be so resolved, go X% a that as with higher in And the actually versus would a be -- over what's many mentioned, point obviously, starting high to a consumer. quite than right But might as activity indirect which been

turn appears Brian have questions more the to time. now It I this at Klock. back no we over will program

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

you participation. your This for Thank conclude does today's program.

a this great You day. may disconnect Have time. at