M&T Bank Corporation (MTB) Earnings Call Transcript & Summary

All right. May I have everyone's attention? Thank you. Next presentation is from M&T Bank, we have here today, Darren King and Brian, who we all know. The quick and dirty on Darren is Senior Executive VP, CFO at M&T and responsible for the overall financial management of the company prior to arriving -- or current role, Head of Retail Banking for the company overseeing a huge branch and ATM network, 800 branches 1,600 ATMs, New York, Maryland, New Jersey, PA, Delaware, Connecticut, Virginia, West Virginia and D.C. And you joined the bank 20-plus years ago? 22, almost 23, as VP of Network Planning and has had lots of management positions at the company. And has had a lot of years of experience in financials, Mercer and Oliver Wyman before, I guess, getting to M&T and hails from or gotten Honors Business Administration from the University of Western Ontario.

Yes.

Play hockey?

I do, still do, 2 days a week.

Fantastic -- let's go...

Some people banking is a contact sport, so I'm well equipped for it. It's all about checking.

You see here all week in case... I guess slide show starting on Tuesday, Thursday night... So a couple of questions. Can you well, first, key investment themes. You're pleased with the progress on the path you said at earlier this year. NIM has increased earnings, core earnings power, obviously, asset quality is strong, strong capital you'll try to push ROTC higher.

I will.

18%. I'd love to know what the peak could be for a large-scale bank like yours, protect TBV, keep TCE higher relative to peers and look for long-term advantage to build in new markets. So in René's annual letter to shareholders, he commented on why M&T was being patient investing excess cash and taking duration and maybe duration risk in the securities book. turns that you guys may have had a fairly small hit to TBV compared to others. And can we talk about how you resisted the pressure that impacted some of your peers to take risk?

Yes. It was an interesting time in the history of banking as we went through 2020 and 2021. If you go back to the start of the crisis, remember at the end of the first quarter of 2020, there was a lot of panic about liquidity in the industry because customers were drawing down lines and holding deposits on their balance sheet, and there's a question about liquidity. And we actually started building liquidity and adding some brokered deposits to bolster liquidity with watching what was happening. But then very quickly, as the stimulus programs came in, PPP being one of the more notable ones but some of the other things, you could see the tide turn and balances building and lines got paid back and liquidity just flooded into the system. And so as we're watching that happen -- the question for us was always, is this temporary? Or is this stuff going to be around for a while. And we always had a view that it was probably going to flow out as much as it came in, and the question was how long would it take for that to happen. And as we looked at the securities portfolio and we looked at the rates that we could get either for mortgage-backed securities, which is really the only place you could get any yield was taking duration risk or keeping the portfolio relatively short. I think at that point, when we looked at 2020 -- at the end of 2020 and early '21, we were looking at 2-year treasury yields of about 20 basis points, and we were getting 8 at the Fed. And so we'd be on the call, and we get lots of questions about deploying the cash. And as all of us are financially oriented folks, figures lie and lies figure, you can say that it's -- I would say it's only 12 extra basis points is not worth the risk. And so I want to say yes, but it's more than double what you're getting. It's 100% increase and so it just depends on which side of the trade you're on. But basically, the math that we kept doing was if we did take the money and invested it in the 2 year because we wanted to keep the portfolio short with the expectation that rates would go up. You'd earn an extra 12 basis points on whatever you invested. How long would you have to have that earn an extra 12 basis points? And how much equity would you need to generate to offset the first 25% increase in Fed funds that would impact you? And if you thought it could go up at that point, it was a wild dream that they might have 3 25 basis points increases in a year. And if it went up 3x in the year, what would you lose in equity? And how long would you have to wait for the increases to start happening for that to be at least a breakeven trade because we didn't want to take that risk in our equity? And every time we kept doing the math, we couldn't get our head around mortgage-backed securities at all. And we went back and forth a lot on the treasuries, but that was basically the math that we were doing is we wanted to have the equity ready to be able to continue to repurchase shares or to support lending growth as that liquidity came off the table. And that was the basic math that we were doing that we couldn't just get our heads around. And I won't like it got tough at the end because when you're standing out there by yourself, it gets a little lonely especially to the place that we ended up with the cash and the size of the balance sheet. But it's been -- it's proven to be a good decision.

All right. You've talked about long-term view. Can you discuss key profitability metrics that you guys focus on for medium to long term? And I'll add to the script, how you guys define medium and long-term?

Long term for us is 10 to 20 years and medium term is probably 5% to 10%. When we think about the bank and we think about how the banks run, we think of a much longer cycles than the average. Unless you tease me, I won't get into it, but I had the team put out a page of our key measurements that we watch and what that looks like at M&T since 2004, and the relative level of consistency. And so if we think about some of the performance measures that we look at, one of the most important ones for us is PPNR to risk-weighted assets, which is really a close cousin of ROA. It's basically ROA, but takes into account the riskiness of the assets that you're investing in. And so we look for what is our PPNR to risk-weighted assets, and we always try to be in the top quartile of performance. And so if you decompose PPNR to risk-weighted assets, it's really about what's your net interest margin. And where does that stand relative to peers? And what fee income are you generating and what's your efficiency ratio. And the way we've always tried to run the bank for the long term is have a net interest margin that's a little bit better than the peers, have an efficiency ratio that's a little bit better than the peers. And if you do that over long periods of time, you generate strong capital. And if you run a credit book, it takes a little bit less rest a little bit less risk than the peers. Then when you add all those things together, you generate a strong ROA and that should take volatility out of your balance sheet, which means you can run off a little bit less capital than the peers, and that's how you get top quartile return on tangible common. And so return PPN risk-weighted assets, charge-offs, ROA and ROTCE. Those are really the 4 measures that we look at. And obviously, the amended interest margin is a key element of PPNR to risk-weighted assets. And so when we look at the margin and our thoughts about that, it really starts on the liability side of the balance sheet, not the asset sides. And it's the mix of deposits that you have. And we've talked about this for a long time, our goal with our clients is to be their primary bank, whether that's a consumer, a small business or a commercial account, we want that operating account where do you have your direct deposit, where do you run your payroll out of if you're a small business. And if you have that operating account, you have the right of first and last refusal for the interest-bearing products as well as for the lending. But that low funding cost because of that mix gives you the -- a little bit more flexibility on the lending side. And so you don't have to chase riskier deals to earn the same spread as someone whose funding costs are higher, which allows us to keep charge-offs low, which goes back to our key measures of how you deliver that ROTC and do it on a consistent basis and run with a little bit lower capital. And so everything we do is really geared towards those 3 things and being just a little bit better than everyone else, you don't need to be outsized and then to take volatility out of the equation. And so one of the ways to take volatility out of the equation is to reduce asset sensitivity, which is one of the things that we've been focused on this year is allowing the balance sheet to start to go back to what might look like a more normal mix of assets and liabilities and to do things to take some of the asset sensitivity off the table so that maybe in the short term, you forgo a little bit of super profit, but you build a stream of net interest income, which should be very predictable over a 2- and 3-year cycle...

Sorry. Said you weren't going to go off script...

I'm going to try not.

Over the past couple of quarters, you've talked about work management has done to deploy dry powder and to build an optimal balance sheet. -- an update, please?

Yes. So you can see there's been a few things that have happened over the course of the year that have helped with that. First and foremost was closing the Peoples transaction. And when we talked about the cash that we had on our balance sheet and what we were doing to build our securities portfolio, one of the other reasons besides the economics that we saw with taking the cash and putting it into securities, was that we were expecting to close with peoples. And we were going to inherit a securities portfolio that came with the Peoples transaction that had a little bit different mix than what we might have built on our own. And so we were holding the cash to close that transaction to get the municipal bond portfolio that people had that brought a little bit more securities portfolio? And how big of our balance sheet do we want it to be? And so one of the things about M&T and our conservative nature is, we tend to be dollar-cost averagers, not moment-in-time bet takers. And so we've been legging into the securities portfolio. We've talked about adding $2 billion a quarter in there. So we've been dollar cost averaging into that. We do a similar thing when we repurchase shares that we do it through the year and through the quarter. And so we've been building the securities portfolio, which is bringing down the asset sensitivity. We've been reducing the cash. In some cases, where there's been situations where we have clients who we aren't their primary bank, and they're looking for rates and given the excess cash, we allow some of those balances to run off, where we have a broader relationship, we would typically pay. -- and then we start rebuilding the swap portfolio, the hedges that we had that we're running down through the pandemic, and we're starting to add new swaps, some spot but many forward starting to, again, between the adding fixed rate assets in the securities portfolio, portfolioing some of the mortgage originations for fixed-rate assets and then putting the swaps on, we're bringing down that asset sensitivity. We allowing the margin to grow, but starting to get to a point where the asset sensitivity takes over. And -- but gives us that predictability down the road. And so those are a bunch of the changes that we've been making over the course of the year is try and just rebalance the balance sheet, so to speak, and optimize it a little bit.

Great. You mentioned people is at the top of that segment. Could you update us on the integration cost synergies?

Yes, sure. So the integration continues. We're still relatively early innings. You talked a little bit about my background before and I used to be an operator and create value for the bank down overhead. And so the easier part of the transaction is really behind us in getting the deal done and getting the systems converted. Now it's all about stabilizing things and integrating the cultures. And when you go through a conversion like this, certainly the largest one that we've done, -- there's always some things that pop up, and this conversion was no different than others. And technically, everything worked by the -- so we converted over the Labor Day weekend, Tuesday, we opened up by Tuesday afternoon, all the systems were stable and technically, everything is working, where issues pop up is change. And as much as you spend time both preparing the teams on the ground as well as the clients. For so many people, it's very, very strange to me. Banking isn't the only thing they think about all day every day. And if they haven't paid attention all the way along, when things change, then they go through that process of relearning how your web banking works, how the mobile works, how your treasury app works. And that's where you hear some of the noise and the friction when things are different and don't work the same way. And so that's not a technical systems issue. That's more like a user interface and design and how am I used to do in my banking and working through that and getting people comfortable. And that's really been September and October. But where we stand now, things are really in much better shape than from that perspective. And so we spend our time working on getting the culture, particularly in the commercial space aligned. Really, the biggest question always is, what's the credit window? How do you think about lending versus how people thought about lending? And fortunately, that shouldn't be a big lift because our credit cultures were very similar. And then the cost saves that you talked about, usually, there's 2 moments in a conversion -- or in a bank acquisition where cost saves come out. So there's some of that always happen at the close. And so a bunch of that happened, probably about 1/3 of the third came out around the close. And then after the systems conversion, you can eliminate some of the contracts that you were paying and so those contract expenses come out after the systems are converted. And many of the folks that help get ready for the conversion, oftentimes in IT and finance functions, we'll have their agreement be the conversion date plus 30 days or 60 days or 90 days. And so those things are starting to happen. I think it's important to note that there's no additional job actions than what we had talked about all the way along, but there's no less either. It's basically what we had expected, and that stuff's continuing continue through the fourth quarter. a little bit into the first...

On the other side, from synergies, one of the themes of the conference is revenue growth. Can you talk about the revenue synergies associated with that acquisition?

Yes. There's a number of them. A couple of things that we're really excited about in the consumer and small business space, in the consumer book at Peoples, as I mentioned, they're very strong core deposit franchise, which is one of the reasons why we were so excited to partner with them. They -- like we were in the early part of the 2000s, they had outsourced their credit card. We brought it back in-house. And so we're excited to be able to bring our credit card product to that checking account base. their small business penetration is something that we think we can increase because of the model of how we go to market for small business. And I think one of the proof points that validates why we feel that way. If you look at Greenwich awards, we've been probably one of the top 4 banks in the country for Greenwich awards for small business banking, not just for 1 year, but for about 10 years running. And so we see a lot of upside there. And back in my history, that was one of the businesses that I ran. I probably talk all 40 minutes about that. But one of the reasons why we love that business is it's self-funding. In fact, usually, a good small business operation produces 2 or 3:1 deposits to loans, and that's typically all demand. And so it's a great business and it's a great segue to have both the personal relationship and the business relationship when you're in that position. We see opportunities just given the affluence of a lot of the geographies for our Wilmington Trust business, our Wealth Management businesses, that there's upside there. And clearly, some of the strengths that we have in commercial lending, particularly in middle market, but there's reverse synergies as well, which is nice in this merger. So a couple that stand out to us, one is their mortgage warehouse lending business. So if you think about how we have grown our servicing book and we like the returns and the capital efficiency of servicing, the mortgage warehouse lending provides another pipeline to the servicing business. And then they're although a little tough right now given where rates are, that in the short term, the mortgage warehouse lending business won't add a ton, but again, we think about things for the long term. And the other thing is the equipment finance business that people have built and is nationwide. And so it's something that we think we can continue to support and grow. And so we see things on that both parties bring to the table and opportunities for growth in those different areas. On the video more interesting than… My feelings aren't hurt...

If it's a hockey game…

My kids are the same way.

[ Because you're a bank ]. Some people think there's a recession out there. So, a, if you want to make a comment on that, but b, the real question is credit, credit trends. And if you have, let's say, a workout team since you're long-term, always available in case things do go south... Is there a recession out there?

Well, I'm not an economist. So I don't know that I'm qualified to say whether there's a recession or not, but what's really odd to me is, I think unemployment after the last job saying we went down again, it was like 3.3%. When I was a kid, and I did my economics class, 4% unemployment was considered full employment. And so we're better than full employment. Now maybe the world has changed, and now 4% is going to be a recession, at least that's what it seems like. That's the path we're on. But it's hard for me to say that we're in a recession when you see that level of unemployment. But it's tricky when you're watching what's going on in GDP, it looks like this quarter and the back half of the year, we should be up. But you see all these constraints in the supply chain. I don't feel it yet, but -- and we don't see it in the numbers yet. I would say we just closed the books on October. And the first sign, if there's a sign is that the delinquency rates in October didn't go down. So is that a turning point? Maybe I'll let you know after November and December, but those delinquency rates in the consumer portfolios, whether it's card, auto, refi, mortgage are still below pre-pandemic. And so maybe we've hit bottom from that perspective. When we look at the -- in the commercial book, things are moving and changing with the economy. What I mean by that. So the hotel portfolio was a challenge early on. I think this room is evidence that the hotel business is doing a lot better than it was 2 years ago, and we see those assets starting to perform better, and we'll see them come out of criticized -- similar story in retail. The retail has done really well in physical retail. And so because of that shift, rents are being paid and that's being paid and things are in good shape. Healthcare has been a little bit of a challenge, both in the hospital space as well as a senior and assisted living. The assisted in senior living is an interesting change in that it was a little bit of a struggle in the pandemic because as there was transitions, we'll call it that in that space and occupancy rates came down, there wasn't replenishment because people weren't going out in public. As the vaccinations went through and boosters went through, there was more appetite to go back into those kinds of situations and then we had the labor shortage. And so the challenge that those folks are facing right now is just staffing costs. And so they can't get enough staff to get occupancy back up to where it was pre-pandemic. And so cash flows are a little tight. So we got our eyes on that. We got our eyes on office just is watching how hybrid working arrangements are going on and when leases renew, when we might start to see something there. And then some of the construction portfolios are impacted by the supply chain. So we're just watching the completion dates. Some things that just create things you learn in these jobs. If you want to buy an elevator, it's tough to get an elevator right now. So that's slowing down completion of some of the projects and glass is a little tough to get it, especially if it's some specialized custom glass, which is causing some delays and then some delays in cash flow and uptake. But -- so there's little pockets and pieces, nothing that we've seen. It's really widespread. As I mentioned, in our criticized portfolio, we're seeing some things come out and some things go in as the portfolio transitions. But just work it through, and we have worked out professionals always ready to go. And if things go bad, many of RMs become workout professionals.

Understood. All right, you have a high CET1 ratio. According to the note here, 150 bps above your peers. Peers are stopping their share repurchase or at least slowing down. Can you talk about capital deployment plans? And is there a CET1 target?

Yes. So the CET1 ratio clearly is high for us. It got high as we were going through the waiting to get to the people's merger. So we had committed to the Fed when we announced the deal that we wouldn't repurchase shares until we closed and that we would maintain a certain level through the close period. And the extra 2 quarters it took to get approval, we're 2 quarters that not just us, but people didn't buy back stock. And so the capital that we had in the merged organization was higher than we thought it would be at close, which was a nice thing, I guess, although it was a little bit offset that we had some capital dilution as rates changed and we had to have marks that were negative on the portfolio that we thought would be positive when we made the announcement. But all in, we still ended up with a little bit higher capital ratio after we closed than we thought. And we're working to bring that down. As rates go up, and we've been asset sensitive, we're generating more earnings and so we're creating more capital as fast as we're deploying it. And we'll continue to work on returning capital in a shareholder-friendly way. We've got our $3 billion authorization. We've been operating at $600 million a quarter. Expect that to continue. And just we want to end the year in that range that we've talked about before of 10.5% CET1, which we think is high still for us, but this will be the first year that we do the stress test as a combined organization. And there's a few things that happened there. One is you're always worried a little bit about new models, so new portfolios like the leasing portfolio. How will that be treated? You heard a little bit about data quality because people wasn't a CCAR bank and so they have to go through the same rigors of data quality. And we know, so we're trying to fix as much of it as we can beforehand. But you're always a little bit nervous about that. And then the other piece is how one-time costs are treated in the Fed's PPNR models. And so for -- because of those uncertainties, we figure it's smarter to just hold the line a little bit as we get through the year, get the results on that. We're still continuing to be able to buy back stock. And in the meantime, we're ready to support loan growth if we need it. And so long term, do we think that the 10.5% is more than ample, Yes, if you look at our history of returns of PPNR to risk-weighted assets and of credit quality that we think we should be able to run the bank with less capital than we have today and certainly at the bottom end of the peer range.

All right. Open up for questions.

Sure.

All right. Front row.

So the market we actually got into the put means mid-teens. I'm surprised I'm here talking to you after that. As there was a bit of potential wrong way. So maybe the reaction was more about what we're talking about on margin, which didn't sound like a huge change. But like do you think the market misinterpreted what you were saying? Or do you think we just weren't listening what you were saying before currently?

That's like a loaded question. You guys aren't listening to what I was saying. You got it wrong. I guess I expected a reaction, not as severe as what we had. When I go down the categories and I look at where the pieces missed, provision, I think, is pretty straightforward. You guys know how to think about that and the impacts that create a movement in the provision either positive or negative. On the fee side, I don't think we were alone in the fees. I think pretty much every peer that I looked at, post earnings had a similar issue, where mortgage was tough, Trust was tough because of the equity markets. We had the waivers that we made with the acquired customers, which we did in September, we'll do again in October. We'll see whether we add one more month to it, but that's something that's temporary. And I think that was maybe overreacted to. And on the net interest income side, there was -- it was a little bit lower than we might have originally thought for the quarter, but not out of line with the trajectory that we're on for the -- through the year and then into 2023. And I think the thing that I've probably been a little bit unique. We've been a little bit unique compared to some of the peers. It's just talking about over the long run, remember what I said the long run is, what starts to happen with net interest margin. And we've been in a position, our uniqueness in terms of the cash that we had made us crazy asset sensitive. And in the short term, that's really driving the margin and moving it up. But it's not our goal to be in that a position because just as rates go up, we know they'll go down, and we don't want the net interest income to come off the table just as quickly as it came on. And so back to the things we talked about building the securities portfolio, putting on the hedges, putting on some fixed rate assets and the formal mortgages on the balance sheet is to bring down that asset sensitivity. And I think what's starting -- what's happening is you can see that asset sensitivity coming down and starting to kick in, which I think there was maybe a misinterpretation or in how well we communicated when that would start to kick in and what that looks like. And so you can see some growth in the fourth quarter, and you see the asset sensitivity coming down, which is by design. And so we're forgoing some short-term earnings and net interest income to protect the long term. And I think that was the reset that was really what was part of the downdraft. But I don't know you guys are better at this than me. We just tried to run a good bank, but it did seem like it was an overreaction compared to where we're going in the bank that we're building and given our history. If you go back through time and you just look at the bank over any of those cycles that we've talked about. There's a crazy degree of consistency in net interest margin, expense growth, efficiency ratio, capital ratios, charge-offs, which produces the returns and results that we've done over 5, 10 and 20-year periods. And that's the bank we are. That's the bank we're building, I just got a little bit out of whack in the pandemic.

Darren, so what is the long-term potential capital return if there is such a large gap between your worst-case losses in the global financial crisis and the Fed stress test area, which is almost 3x higher? And is there any way you guys can address that over time? And what is the potential impact besides leases from people?

Yes. So there's the actual losses and then there's what happens in the stress test. And there's 2 parts of the stress test to keep in mind, and we're working on both. So one is PPNR and then the other one obviously is credit. Over time, credit is the biggest one. In the short term, PPNR impacted us and it impacted the industry as the Fed looks at that as a percentage of assets. And that's where op risk shows up as well. And so as the cash comes down and the balance sheet shrinks, that will reduce some of the impact on PPNR as well as the margins for us and the industry go back up. That will also help with PPNR. And then the other one is credit. And so for the last couple of tests, the focus of the Fed has been on commercial real estate. And within commercial real estate, some specific categories, some hotels, some construction, retail and office. And so part of the work that we've been doing to change how we do CRE to reduce construction on the balance sheet, maybe offload a little bit more of our construction assets to the capital markets and turn that more into a fee business, those things help you in the stress test. And those help bring down that SCB back to something that we would feel more comfortable with, which is the 2.5% minimum. But there's a process to get down there. And so we're working on that. I think 2023 test so next year's test will be a little bit tricky just because of PPNR again and how merger accounting and merger expenses are treated. But as we go through the year and we see the margins stabilize and the PPNR stabilize at a higher level, we see the asset sensitivity come off. You see the securities portfolio build the stability of PPNR through the subsequent stress test should create enough capital generation to provide a bigger offset to the losses and the losses should come down because of the shifting nature of the balance sheet, which get us back into that space. But even with that, keep in mind, our current Fed minimum is 9.2% CET1. Where are we last quarter, 10, 7? So we've got 150 basis points to that, and we got 150 basis points on average to the peers. And so when you look at where we have the bank today, that's right off the top the excess that you can think about of loan growth we can support without having to raise capital or conversely distributions we can make.

Anybody else out there? You got Mike.

I think Mike has the mic.

Your deposit rates, consumer deposit rates are still really low, like the industry. I guess, Fidelity will pay you 2.75%. Markets will pay you 2.5%. Why are deposits as sticky as they are? And do you expect that to last?

Yes. So deposits -- the important thing on deposits is really the devil's in the detail and looking at the categories. So consumer and small business checking are pretty stable and pretty sticky. Commercial is, but it's more rate sensitive. So I think you start to see higher betas there. We're seeing movement from DDA into sweep. So you're starting to see that. We've seen some for a while now in municipal deposits. And so with our excess cash, we were allowing that to run. I think you start to see us able stabilize there, but the offset is betas start to move up more. The other place where you're seeing movement is money market. And so with -- or not checking, CD rates have started to move. You see CD rates. We've always believed, so again, back in my previous life, I was -- spent a lot of time worrying about deposits that from a consumer perspective, it seems like 3% is a real price point that breaks people up. And when you start to see 3%, you start to see movement. We're starting to see some shift from money market into time, and we expect that to continue. And so really, there's 2 forces, Mike, that are working. One is what's each individual institutions funding mix and how much rate are they willing to pay to protect it. And so we were in an extreme excess position, and we allowed some of that to run in the short term. I think you see and everyone is at a place where you're going to start to see more rate. And usually, the cycle is, it's muni deposits, wealth deposits and commercial deposits that are most elastic and move first. And then the consumer and the consumer usually goes into CDs first because that's usually what the industry wants because then you lock in the money for a set time period and then over time, it will migrate a little bit in the money market because people want liquid and they'll trade off a little bit lower rate for the ability to move the money around. And that's the cycle we're still in the stage that I would describe as commercial, Wealth munis run its course, I think, already, to be honest with you. And we're in the early stages of seeing remixing of consumer deposits and from money market into time. Net-net, though, the story is pretty clear about what's going to happen with the result that funding costs are going up.

[ Economic demographically basic market ] have been described as has been described as a melting ice cube. And yet...

Who would say something like that?

But you drive in those markets. Can you address that issue why you like these markets?

Yes. I mean I guess, despite its challenges, the Northeast is still represents a humongous chunk of population in the country by our math, just under 25% and a similar proportion of GDP. And so it's highly concentrated. It gives us the opportunity to run a franchise that's really dense, which means from a management team perspective, I get anywhere in the franchise in an hour or less which is really helpful. And especially when you're going through a conversion. When we look at volatility of asset values, particularly real estate, there's a lot less in the Northeast. So whether it's mortgage prices. So you think about mortgage -- consumer mortgage LTVs, what you originate is pretty solid. If you originate in some other states where prices move up and down, you could find yourself where you think you've got a 70% LTV today. It might go down to 50%. And then the next thing you know it's 90% or 100% because there's so much movement in collateral values. You don't tend to have that in the Northeast. And so we're -- the other part of our strategy is not just about the density of the geography, but also the types of markets. We're not what I would describe as a top 20 MSA-based bank. We have presence there. But most of our geographies are what I call Tier 2 and Tier 3 cities in the country, it's the Buffalos, it's the Burlington, Vermont, it's Portland, it's Syracuse, it's Harrisburg. And in those geographies, there's a little bit less competition. And so we can have a high share in those geographies, which creates low volatility, but we have a higher mix of those operating accounts that I talked about, which gives you that stable funding base, which we like. We think that's a long-term advantage for a financial institution is to have a stable low-cost funding base. So that's why we like it works for us.

And on that note, thank you very much, Darren.

My pleasure.

You too, Brian.