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

Great. We'll put up the next ARS question as everyone takes your seat for our final company presentation today. Very pleased to have Daryl Bible, representing M&T as their somewhat relatively new Chief Financial Officer. Daryl, thanks for taking the trip. Daryl had a drive down because of all the flights screws up yesterday, so we super appreciate that. I don't know if I would have caught me doing that on opening Sunday for football, but we appreciate you making the time.

For you, anything is possible, Jason.

Daryl, maybe on the best place to start, I think -- I mention the math exactly, but I think we're pretty close your 100-day marker at M&T. Maybe just talk to -- maybe give me your biggest positive surprise, biggest negative surprise?

Well, I feel very fortunate to be at M&T. And going in, I knew Rene over the years back and forth for 20 years and we had a relationship and really respected him. At my prior life at both companies, we always followed M&T and really respected from a performance perspective. So I know I was joining a really strong, well-run company. Having been there and having worked for Rene, now for approximately 100 days, I would tell you, working for him is really, really great. It reminds me of Kelly in a lot of ways, just from an ethics perspective. He really cares about our employees, our customers, really is driven by a community. I'll tell you, in fact, when I first joined and we were -- we're just coming off of the March, April when things got a little tough in the industry. We were going through if we want to ration out some of our portfolios, which portfolios to your ration out, and I've done this many times before from a capital liquidity perspective. You would go to portfolios like indirect auto, which isn't really a relationship business and sort of going down the list of all that and he stops me [indiscernible] track he goes, you missed the most important filter. I looked at him and I said, what did I miss, he goes, we support our communities first. And he really means that, and he really does that day in and day out. But the positives, I'm really, really pleasantly surprised at how well people are receptive to me being there. If you look at our ability to grow our deposits, I think our model was validated in this last downturn -- in the March, April downturn. But we are really good at generating operating accounts. We are in high-growth markets, but when we get customers to get our operating accounts, we have really low attrition rates and kind of booming away when I look at the consumer book, business banking, commercial, all really strong core funding from that perspective. And as I talk to people, people really live the mission, the culture, trying to make a difference in people's lives, is really present there. If there's any negative, I would say, it's having to fill the shoes of my boss, right? My boss used to be the CFO and all that. It's a big responsibility, but I'm just excited to be there.

Great. And I guess maybe I don't know if those tough, but they put a slide deck last night. I was hoping we can kind of maybe dig in deeper to some of those trends. But first off, you talked about deposit trends in the quarter, maybe tracking a little bit better than expected. Maybe -- just maybe extrapolate in terms of kind of what you're seeing this quarter and kind of expectations looking out?

Yes. I think as you look at this, we haven't been through a period like this where people really had to be cognizant of what happen to deposit levels in the past 15, 20 years. So when we were doing our modeling and our forecast out there, we were taking the trajectory that we saw in the second quarter, figuring out what it might be in the third quarter and fourth quarter. And what we're seeing is that the curve isn't just 1 directional. It's actually leveling off. So we're seeing our noninterest bearing down on a linked quarter basis, but down much less than what we originally thought, which is main driver of why we're raising the guidance up in NII to the mid-level range, about $7.1 billion for the year. So I think that's a positive there. If you look at our businesses, we're growing commercial deposits. Again, we're growing escrow deposits. Darren is now running the consumer bank, and we just launched some new deposit products in the last week or two. My expectation there is that will stabilize and maybe start to grow in the next quarter or so. So it's really just learning new muscles that we haven't had to use in a long time. I come from a philosophy, and I haven't been a treasurer before CFO, that we always want to be competitive as we are in the marketplace. So somebody if you're dealing with a customer, you always want to go get their whole relationship, both loans and deposits. And we always want to offer competitive deposit rates out there. So we're always on. We won't pay the highest rates in the marketplace, but we'll pay competitive rates, and we want our share over time. I think that's the right way to approach it. And I think that's what we're starting to implement now through all of our businesses, how we operate and we have a success.

And I guess the percentage of noninterest-bearing has gone from 35%. I think you said that 33% currently, kind of where do you kind of see that leveling off?

It really depends on how much rates stay high and for how long. It is leveling off now. When you look at the decline, we're down about $2 billion this quarter. Before, we have about $2 billion increase in the sweep. So we're holding on all the clients, which is the main important thing. My guess is that, that will probably continue for a couple more quarters, maybe at a much more modest pace over time with some seasonality factored into year-end, which tends to kind of build deposits up some from that perspective, but we're a different company than we were 20 years ago. We have a corporate trust business. We're sitting on right now of $12 billion, $13 billion of noninterest-bearing funds that would grow if activity -- actually increases in activity in the marketplace there. So I think we just have a lot of other products and services out there that I think we will continue to perform, I think, really well from a core funding perspective.

And then just maybe just talk about the role of broker deposits and how you think about those. They've obviously been a contributor in the first half of the year.

Yes. So if you look at going into the March, April down frame, our treasurer did what he should have done, and we basically borrowed at the Federal Home Loan Bank. Right now, we've been able to pay off most of those borrowings, were down to only about $3 billion left. Second quarter, we did start to access the broker market, and we got up to about $12 billion in brokered CDs. We've paid off a couple of billion of that. But what we've done with that, though, is we've actually started to grow money market broker. Money market broker -- if you look at our rate sensitivities, and we had a slide in our rate sensitivity presentation, it's gotten less and less rate sensitive over time. So for example, if rates change up 25 basis points, we benefit 1 to 2 basis points for a 25 basis point increase. Rates go down 25, we're off 3 to 4. So the more rate-sensitive liabilities we can put on the balance sheet, the more we can basically limit that downside risk that we have to make us more reactive and trying to reprice the deposit side. So my guess is we'll continue to try to grow money market as much as we can. If we continue to grow our core customer deposits, will just pay down the broker deposits as they mature from that perspective.

And still thinking about a mid-40 type beta.

Mid-40 beta, excluding the broker deposits, I think we're on path for that. I think we feel good about that.

And then maybe shifting gears to the loan side. It sounds like it's a bit more challenging for the loan book. You talked to C&I flat and then declines in mortgage consumer and CRE. Maybe just kind of get more granular on that in terms of is this a supply-driven phenomenon and demand-driven phenomenon and maybe kind of delineate within the consumer from corporate side?

Yes. I would say, if you really looked at what happened in March and April, we had a really large pipeline of loans that were coming through the system. And when the SVB crisis hit from that, we basically turned the pipelines off. So we basically were on hold, and we just started to now reengage with our troops in the field to actually start building those up. You don't -- it takes a while to build the pipeline, usually 90, 120 days. But we are in a softer marketplace, there is less demand, but I think we're able to grow some of our C&I book, especially in some of our specialty businesses, but probably won't see that until probably fourth quarter or into the first quarter next year, as that pipeline builds from that perspective. I think we've turned on some of our portfolios on the consumer side. You won't see much of that. Right now, it's down a little bit third quarter. But we look point-to-point, hopefully, we'll start growing some of our other consumer portfolios and you actually start to see some potential growth in the fourth quarter out of M&T from a loan perspective. CRE is still probably flat to down a little bit, and that's probably what we want and need to do from an on-balance sheet perspective. But we have our RCC business which we have, which gives competitive rates for our clients both through agencies, insurance companies and sponsors in the marketplace.

I guess maybe talk to that for a little bit at the conference a couple of years ago when you talked about trying to move more of the CRE business off balance sheet, maybe the environment, maybe how does it kind of change in the current environment today versus kind of where it was when M&T first made that declaration impacted your thought process?

So first and foremost, over the last 3 years, when we started to actually shrink the on-balance sheet CRE portfolio, we're down 5%. We were closer to 31% and IRE, now we're down to 26%. And we'll probably continue that downward trajectory some more. We've been able to build our RCC business up. It's much more of a fee business similar to a business that I'm used to from our prior life. It tends to be really good service through agencies, insurance companies and generated fees. The marketplace right now, because rates are higher, people are sitting more in the sidelines, but when you talk to clients -- I was actually in Albany and Schenectady talking to some of our clients this past month. In talking with them, they basically -- the money is on the sidelines, ready to invest if they think rates have kind of taken valuations have kind of bottomed out. I think they're willing to put money at some point in the future.

And I guess over the last few quarters, you've seen kind of M&T interest rate sensitivity, both from up and down, where it was kind of decline. Could you maybe just talk to in terms of just what you're thinking around the balance sheet from a positioning standpoint, hedging perspective and just how you think about managing the balance sheet in this dynamic rate backdrop?

So how do we start with -- we don't really want to take our position on interest rates so when we managed interest rate sensitivity, went to keep the band as tight as possible knowing that's a larger company, it's complex, so we have to do the best that we can. It's not going to be exact. But from that philosophy, we really try to grow customers and relationships. That's the way you grow repeatable earnings and revenue over time from that perspective. We use tools in our treasury area, not just derivatives, but we also use the investment portfolio and some of these funding changes that we're making. Our tools are available, but it's really all in the spirit of trying to keep our sensitivities in a narrow band as much as possible. It's kind of how we approach it day in and day out.

And I guess relative to peers, M&T has a relatively larger cash position. I guess, how do you think about deploying that cash? I get it to high yield now, but at some point, how do you think about extending duration of the balance sheet and maybe locking some of that in potentially a declining rate environment looking out at some point?

So I would say that right now, we feel very comfortable. We're in an enviable position, basically having really strong liquidity and also having really strong capital. We kind of standout versus our peers in the marketplace. We're using that liquidity and capital right now trying to go to market and actually gain share and gain -- what relationship business. We're going to try to do that as much as we can. I think over time, we start first with how much liquidity we want to have, and we want to factor in. Obviously, what we missed in the March, April time frame is the amount of uninsured deposits people have. Nobody really measure that in the industry or in the regulator space. So that's a new filter you have to have. So I think we'll always end up carrying a higher level of cash at the Fed. That said, we're probably higher than what we need to be. But I'd first try to deploy that in lending. If that can't be done, then we would probably go with the securities portfolio. But I think if you look at securities portfolio, seen the constraints of Basel III and everything AOCI coming through. I think you've got to live with a shorter duration investment portfolio. So I think going back to banking in the '80s and '90s, to be honest with you, shorter durations. You can still invest in longer durations and do hedges to shorten the duration or just invest in shorter cash flows upfront. I think that's probably the space that you would probably play in rather than doing 5-year type duration assets.

Makes sense. And then I guess since we last spoke in July, we did get final proposal for the long-term debt requirements. Maybe just help us size the impact of M&T.

Yes. So I feel we're in a very enviable position. Right now, when you look at our noncore funding, our broker deposits outstanding right now is approximately $12 billion. We have $3 billion of Federal Home Loan Bank advances so that's $15 billion of noncore funding. If you look at the requirement, it probably has us issue an incremental amount of $5 billion more from where we are today. I would say, though, when you look at how the proposal is written, where we issue at the parent and then we have to downstream it to the bank, I would operate the parent company with probably more cash up there to make sure it's a good source of strength from that perspective. So even though our requirement might be $5 billion, we might issue maybe $7-plus billion just to make sure that we have enough cash up there to be a good source of strength for the company day in and day out over time. But the reason I say that, though, is we can easily shrink our noncore funding in broker or Federal Home Bank advances and not have a huge incremental cost. It's really that marginal difference between that borrowing costs that we have on balance sheet today versus the unsecured cost. I view that as a pretty manageable cost, if it keeps our industry safe and people protect from a banking environment.

Got it. So I guess given you could put some of those proceeds to work, what do you kind of view the overall kind of earnings impact?

I don't view it as a huge impact. It's minimal. I mean it's basically a 30 to 50 basis point differential spread in the borrowing costs on anywhere up to maybe $7 billion. It's there, but it's not a huge impact overall.

And then you talked about guiding NII to the middle of the range for 2023. As you kind of get going for your 2024 budgeting process, it feels like the NIMs degrade further this quarter to 375 area. Just how do we think about how NII and NIM play out between now and the end of next year?

Yes. Obviously, we're coming from a high end from a net interest margin perspective this year, knowing that margin probably will continue to drop a little bit over the next couple of quarters. So on a year-over-year basis, we're going to have a lower net interest margin next year, but you will have the pressure of having lower net interest income. I think our ability to grow loans to some extent next year will help mitigate some of that expense. But so net-net, revenue will be negative next year versus what it was in 2023. When you look at that, I think you have that backdrop. And from an expense perspective, I think we're pretty good stewards from an expense perspective. We will continue to be good stewards next year, and we'll have probably modest growth, if any growth, on the expense side there. But we haven't really done our '24 planning yet. We're just starting that cycle right now and probably give you more of an update either late this year or early next year on our earnings call.

Got it. And then on the fee side, you kind of pointed it down sequentially, although a lot of that driven by just the full quarter's impact of the sale of the CIT business. Maybe just expand upon that in terms of kind of what you're seeing in terms of some of the maybe headwinds, tailwinds and how that plays out.

Our fee businesses have been pretty steady for the most part. If there's any change of what we would look at, maybe there's some potential upside in the mortgage space. Typically, your RCC business has a seasonal increase in the fourth quarter as people were trying to get deals done. Higher rates will mitigate some of that, but actually you could see higher revenue there. And you have to remember also that on the residential mortgage side that we started to originate -- conforming in the first quarter. So even though it's a higher mortgage volume, we'll probably get a little bit of volume maybe to some extent. But pretty much, for the most part, I think our fee businesses are pretty steady performers, maybe grow a little bit over time, a couple of percentage points.

There's been some debate whether your shift in expense guidance from the higher end of $5 billion to $5.1 billion versus $5.1 billion plus or minus was signaling anything. Is it -- and if so, kind of what were the drivers of that?

When you look at going from the middle part to the higher part, you're talking about really $20 million or $30 million, which is pretty small off of a $5 billion noninterest expense base. If there's any changes that happened versus our last forecast -- you have to remember, I'm getting new to the forecast. We're putting in more re-debit processes on how we forecast and all that. But maybe a little bit higher on fraud than what we originally thought. In our business lines, Peter and our commercial area has selectively continues to higher talent if you think it's the right talent for certain areas, to grow in certain spaces. We're going to let them do that. So I don't really sweat $20 million, $30 million, to be honest with you.

Brian does? I guess just getting back to something you said before and make sure I heard you right. But when you were thinking about -- I think, about 2024, you said modest, if any expense growth. Is that kind of what you're thinking?

Don't know yet until we finish the plan, then we'll see how that goes. This is my first plan in M&T so...

Make it a good one.

Yes, we're trying.

I guess maybe moving to credit quality. Maybe just talk about what you're seeing. You kind of last -- when your previous last quarter, you talked about lumpy charge-offs and they were lumpy. I think 22 to 38 bps, yet you're kind of sticking with kind of 33 bps-ish for the year. Maybe high level now, we can kind of dive in from there.

Yes, I would say right now, we aren't seeing anything different than what we saw last quarter from a credit, something coming in, no surprises. The guys that we were watching very closely are the same credits. So we aren't really seeing anything new come through. The pipe doesn't mean that's going to stay that way right now, but we feel very good with the guidance of staying with the long-term projection this year of the 33 basis points there. Whether we're higher or lower this quarter, it's hard to know. We have another month to go. But I think we are being anything different than what we originally thought there, which is a good sign. I mean the teams have worked really hard and looked down very granular on the credits. If you look at the office portfolio, 60%, so all the larger credits over $10 billion has been reviewed. When you really look at the type of clients that we have, client selection is really key. And we really have mainly long-term clients in the CRE space. If there's any issue, it tends to be more in the larger cities with more investment-oriented clients. That's going to -- what you saw come through in the second quarter. So that other 40% that is a lot smaller in size, we don't think is at risk of anything substitutive from that perspective. So we think very good about where we are today. So we'll see how it plays out [indiscernible] not going to be much different than what we originally projected.

Daryl, I cannot pick up the Wall Street Journal, the New York Times every day and read about how commercial real estate and office is coming -- is going to be the end of the world for regional banks. So -- is all that overblown? Or is this M&T just go about this so much differently than all the other banks that there's going to be significant issues out there, just not at M&T?

Client selection really matters. And we really bank people that are in the business for the long term. They tend to have really low tax basis in their properties. They want to own a building on as a certain corner of street and all that. So they want to own it and own it over their lifetime. So they're really putting in more equity or cash flows to support it. If you look at our credit-sized portfolio that we have right now, approximately 90% is still paying as agreed on our credit-sized book. If you look at our nonaccrual portfolio that we have right now, approximately 60% of that is still paying as agreed. So we have clients that are really committed to these properties and really is -- if they're going to work and help us work with these credits, we're going to keep them on and keep them on the books. We can -- we have the capital to have 150 basis point risk rating and still weather that. And it basically turns and keeps the losses lower long term and also keeps our clients very loyal to M&T because we're doing that.

So when we think about that 33 basis point number, kind of you feel good for '23. How do we think of that evolving for '24? Because that's your kind of long-term average, you would think you'd be above that in certain periods below that and others?

We haven't talked about that yet so more to come. I'll give you an update as soon as we get to that perspective. And I'll add that it shouldn't be anything of a surprise perspective from what we're seeing right now.

And then I guess anything away from commercial real estate you're focused on within the loan book?

Healthcare, we had 1 healthcare credit there this past quarter. Healthcare seems to be a little bit stressed, but seems to be managing okay. It's not getting any worse. So I think that's in a good shape there. And I think most of our other sectors are in CRE, seem to be performing pretty well overall. So I think we're feeling good about that. But in CRE, always kind of rotates to another sector and all that over time. So -- but I think we're feeling really good. And if there's anything I can tell you with and what I've learned in my first 100 days is we have a strong credit team, Bob, who's our Chief Credit Officer; and Mike Todaro, our Chief Risk Officer, a very experienced. They've been through this really many times. And if you look at M&T's model, we start with a really sound credit infrastructure and how to really deal with our clients from that perspective. That is a core strength of the M&T model that we operate in.

And then I guess maybe shifting gears to capital since we last spoke in July, you've had the Basel III proposal just maybe kind of your initial impressions, the impact of M&T. And while Daryl's answering that, we could put up the next ARS question, please.

So what I would tell you is, obviously, there's a lot of data we're pulling trying to analyze that. From a high-level perspective, we definitely see our risk-weighted assets, credit perspective coming down. We might actually see, because of our conservative underwriting, both resi mortgage and CRE, RWAs come down because of the LTVs that we have on origination are below that threshold, which is a positive for us. If you look at it from an operational risk perspective, where the increase of RWA is coming from, it's very fortuitous that we decided to sell our insurance business last year. We're able to exit that and doesn't make a lot of money 1 way or the other. So that was a great decision. If you look at what we [indiscernible] here again. I think that was another really sound decision. So our gut feel is, while it's the greater of standardized or Basel III, we might possibly be governed by standardized, maybe a little bit in Basel III, but we don't think it's a big difference.

So if you look at the buy side expectations, it looks like you'd be more in the -- you'd respond #1, if you had a quicker.

I would definitely. From what I know today and how we are analyzing it, I think it's closer to 1 than anything else we have on the page. .

And with that being said, you still pause a share buyback again in the third quarter. I know there's obviously numerator implications of AOC opt-out going away, but just how do you think about capital return with that coming?

So when you think of how we deploy capital and you look at it, first and foremost, we want to make sure we're there to grow for our clients. And we are trying to now grow in the marketplace. We have an advantage right now from a capital liquidity perspective, so we're trying to employ as much as we can to try to grow and get new clients to come in to M&T perspective. Secondly, dividends is our second capital use. Our capital use, we've been profitable for 42 years now. We didn't cut the dividend in the Great Recession. So we really have strong discipline and making sure we keep our dividend and keep it where it is and be able to support that. Third and foremost, core -- buyback is core to our capital strategy, and we will buy back shares, capital is ongoing anywhere. But right now, we have a huge advantage by our strong liquidity and strong capital position. We want to continue to exercise that until we're sure that we're through understanding the capital implications as well as any stress in the marketplace. They're still back to normal, not 100% there. Spreads is still wider than what they would typically be, but we're just trying to hold back a little bit. But rest assured, I'm sure we will buy back shares at some point in the future, and that will be strong in for to us.

And then if we look at this year's SCB results, I think M&T saw a 40 to 70 basis point improvement, which is good. On other hand, it's still 4%, which is much higher than your regional bank peers. Maybe -- talk to maybe are you looking to take other actions to maybe reduce that and what you need to do there?

It ties into what I said early on in this conversation. We are continuing to shrink on balance sheet CRE, so we can't continue to make progress from an SCB perspective. I think that makes a lot of sense. Potentially, we had some merger costs with PUB or the acquisition there. we might actually have benefit a little bit next year from a PPNR perspective. So no guarantee. Obviously, the Fed runs are various stress tests and all that stuff. But we're trying to see if we can continue to make progress and bring that 4% down some more potentially. But it's all tied to trying to shrink our CRE on balance sheet to some extent.

I mean you mentioned People's Bank. I guess as you kind of come in and maybe take a first set of eyes, whether it's expense synergies, revenue synergies kind of do you see additional opportunities with that franchise.

When I look at what we have with People's, we've done a good job of extracting the cost out of those markets. I was actually in Boston a month or so ago, and the teams there are really excited. We have a huge, I think, opportunity to bring the M&T model to these new 5 states we have in offer. It's something that's a little bit different how we're going to market with and how we should go up and we're involved in the and clients. So 1 of our priorities as we set various priorities for the company, will definitely be, to continue to grow out our PUB markets that we acquired and try to grow share in those spaces, both in our commercial space and business banking, retail wealth, are really core to our strategy as we move forward in the next year or two.

I guess, Daryl, I've obviously known you for a long time. So I think it was Star Banc and those organizations...

Star Banc, Firstar...

All acquisitive organizations. The People's kind of almost fully ingrained, what are the thought process, additional acquisitions? Is it even possible? When do you think it could be possible? And how do you think about that in this new organization?

So M&T is really good at acquiring banks and basically putting them in into the M&T model. And from that perspective, it really takes 3-plus years to get performance of these acquisitions to perform at the M&T type scale, and that's the real opportunity that we see in People's right now. That's why we're making it a priority for us to grow there. I'm sure that M&T will continue to acquire down the road right now. I think we have a lot on our plate just trying to build out our People's franchise and really focus on that. I think that's a huge opportunity. The rate environment is probably not real cohesive to transactions as well right now. So timing-wise, it probably doesn't make sense to try to stretch it and all that. We're really focused on tangible book accretion dilution from that perspective. So if you look at the metrics that we're looking at, it's basically return on tangible common equity and EPS growth for the 2 drivers, but you also have to look at tangible book accretion plus dividend, right? And that's also an important driver for how we're doing that. So my guess is, is when we do a transaction, it won't be a transaction that will surprise anybody in the marketplace. I mean, our model is to be really good and dense in the markets that we operate in. And that's -- we're going to continue to do that. So it could be an end market transaction or contiguous if and when it happens, but there's nothing even close to be in on the pipe doing anything right now.

Got it. I'd like to pull up there to see if there's any questions from the audience. Maybe give us a sense in terms of what you hope to accomplish as CFO when -- what metrics should we grade your performance on? Is it just keeping our growth in ROE and just how are you focused on driving on those?

Yes. So I have to do a presentation next week at the board on my 100-day learnings and all that. And you know me, it's more action and trying to get things done and have really broken it up into four categories. First is modernizing finance. We're working off a very old general ledger and profitability system. So we're in the midst of implementing new systems there, but when you do new systems, you really can't do that without changing processes. So it's much more of a people change perspective. We'll get the technology to work to get it all plugged in correctly, but it's really changing processes. So that's first and foremost. We're also -- in that same spirit, we had an investor presentation on the earnings side. You might see us maybe make a couple more changes on the disclosure side next 2 quarters. We got things planned out. We're continuing to [indiscernible] how you look at a financial perspective to help you guys look at M&T. Secondly, we're really focused at operating at scale and just helping the company operate from a risk frame work perspective and from a data perspective. As we grow, if you go back to my BB&T days, when we were making investments and doing investments per se, we built not just for the size company we have, but we built the foundation from which to grow upon. So when we go through and add like liquidity, it's going to be automated, and we can support. if we double, triple and size from that perspective, [indiscernible]. The other thing we're focused on is helping the company make better decisions from an investment perspective. I kind of look at that from a three-legged stool perspective. They're really focused on trying to what the priorities of the company are going to be. And when you look at the priorities of the company, we talk about growing out New England and all that. If we set priorities myself as the CFO can help implement where the investment dollars go, so having that discipline and the other poke would be making sure that those investments are going in the right places, and we'll get the retransporting accountability there. And then having like monthly financial meetings like, I used to have at U.S. Bank, basically monitoring how we're doing versus plan, what's working, what's not working to make real quick decisions real time rather than having to wait for certain meetings or all that perspective. So I think all that is longstanding up. And the last thing is kind of something that I really enjoy doing is actually helping build and develop the talent for the future of M&T. We're growing and developing people as I've [indiscernible] we have. It's really the legacies that you leave and that can help somebody replace me or be successful in other areas, it's all about growing and developing talent in the future. That's the most important thing we can do.

That's tough. Any question?

It's a long-term debt question. How do you get to the 30 to 50 basis points impact on the $7 billion that you issued? Because I don't really understand that because if you're a spread of like $200 million over $250 million over the 5-year holdco paper, are you saying you can reinvest that at sort of $220 million.

So when I gave you that spread, I'm looking at it on a more of a mass maturity basis perspective. Obviously, a lot of the borrowings we have are really short. And we actually looked at it right now would actually -- might be positive to actually switch to unsecured debt versus what we have today just because we have an inverted curve. But if you really look at the broker curve, the broker curve trades over the treasury curve, things will normalize over a 3-year time period. I don't think spreads are going to stay as wide as they are from that perspective. So if you look at more normalization of what our debt spreads would be over time, versus what a normal issuance would be from a Federal Home Loan Bank or from a broker deposit basis, that's the marginal spread that I'm really talking about there from that perspective. So your broker deposits are really short term. Our issuance debts will be a little bit longer term. But you can take a lot of that out with swaps if you decide to swap the debt from that perspective. Does that help?

Any last questions for -- we can put up -- we have another ARS question. The audience's view of '24 NIM, that I tried to get your perspective and you kind of hesitated...

So would the guidance for '24, Jason...

$391 million in Q2. They're going to $375 million, give or take in Q3. We got you to react to the last one so I want to press my luck here and think everybody this one. Wow. So there's a diversion of expectations, although evenly distributed around modestly level from 3Q's expected level.

Yes. A lot depends on how long the Fed stays where they are in all that. So we'll give you more color in the fourth quarter and early first quarter on guidance for next year, but I would say [indiscernible] in the range, I'm thinking of.

And then we'll go to the last ARS question because we're having some fun here. Same thing on charge-offs for next year, around 30 bps for the first half of this year and 33 bps, give or take guidance for the year?

Does anybody give you '24 guidance...

They got on expenses. People have been more open on expenses than credit or rate. 35 to 40 so -- but up only modestly [indiscernible] CRE from what I read.

Yes. I mean we have really great credit underwriting. So we'll see how that goes.

On that note, please join me in thanking Daryl for his time today.