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

All right. Up next, we have M&T, get the disclosures out of the way, which is for important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. The taking of photographs and use of recording devices is not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative. And with that out of the way, we're delighted and excited to have with us today, Daryl Bible, CFO of M&T. Daryl, thanks so much for joining us.

Thanks, Manan. Thanks for inviting us. Excited to be here again.

That's great. I remember, at our conference last year, you were just starting off in your new role at M&T. The past year has been a fairly interesting one for the whole industry to put it [indiscernible] and can you talk about over the past year, what it has been like for you? What have you learned? And what have you learned about M&T's positioning?

Yes. So when I was here before Darren was with me and he helped me get through the conference and he left a strong finance function behind when he moved on to run the consumer bank from that perspective. But the M&T is a really well-run bank. It's been very profitable for many years. And if you look at our long-term performance and you kind of look at it and say, is that true? But it's 5, 10, 20 years, we've had one of the best ROAs in the industry. If you look at tangible book value growth, we're one of the best in 5, 10, 20 years plus dividends. How does the bank really repeat that? And when you look at it, it wasn't as obvious when I first got there, but now that I've been there a little bit longer, I've gone out and met more people in the field and talked to some of the folks. We are really set up to have 28, basically, presidents in our company. We actually operate as 28 different entities. We have our 6 business lines that all interact within these communities, but the RPs really run those regions. And those regions are run differently, and they have different nuances because there's different needs that are needed to actually serve the clients and communities, which is really important. And you wouldn't notice that at first until you really look at how we dig in and do it. And some people like one of our RPs wants to invest in wealth, more wealth talent. So he's hiring more wealth in other areas, thinks there's more opportunity in business banking and they're trying to get more business banking. And they work with the leaders of the businesses together. So it makes it really hard for competitors to compete against us because we don't have consistent strategies in the region. We're really focused on doing what's best for those communities. And the other thing I would say is when you look at it, the culture at M&T is really good. It's a good culture. People want to do the right thing. People work hard and working for Rene is a blessing, to be honest. Like I love working for the guy. So it's great.

And you also have several big initiatives going on. You've talked about maintaining a relatively flat expense base, across your businesses in 2024, while still layering on several big projects across the financials, credit, IT, treasury management. Can you dig into the opportunities there?

Yes, absolutely. So we have an expense-based growth plan this year of plus 2%. And that 2% is really invested in 6 primary projects. We have 2 transformations going on. One is in the Credit and Commercial area, really transforming how we deliver lending to our customers and how we process the credit within our system that we have in the company. And we're making great progress there, but you have dozens of work streams working on and how that is working. The other transformation going on is actually in my world in finance. We're putting in new general ledgers, new subledgers, but we're also beefing up getting ready to be a larger company. So our treasury function is actively already working on requirements for liquidity and capital as if we're a larger institution. And we're building that out. And we're helping with the procurement and making that a stronger entity than the company. So it's just -- it's a good foundational thing. From an investment perspective, from a revenue, we are investing in treasury management as we shift out of CRE on balance sheet CRE, we are doing more C&I. And we want to make sure that we have really strong and sound treasury management products and services. We brought in a new leader. Now it's been there a little bit over here, Rich Wargo. And he's really doing a good job building out that function and really making us a really strong competitor in that space, which is really going to help our fee income as we do more C&I from that perspective. We're also actively trying to grow in our new people's markets, those 5 states, and we're growing there. We have a high ambition to be a top deposit gatherer in those states. In Connecticut, we're already #2. Massachusetts, I think, we're 17 right now, so we have a way to go, but we're coming up with strategies and how to grow there. So it's -- for us, we're just trying to hit our priorities and get things done and move on to more projects as they go forward.

So as you prepare to be a larger company, some of these areas require investments as well. So how do you balance growth versus returns? Is it one more important than the other? Or how do you think about it?

It's really how you prioritize your investments. I tell people this all the time, but our executive leadership team works really well together. And we agree on these are our priorities and what we're going to do. If you look at it, we have 4 priorities in the company. One of them is improving our risk function throughout the company. Another one is doing optimization, either you're saving money through automation or growing revenue in the areas that I talked about earlier. Another one is actually growing out New England and Long Island. And then the last one is resiliency. Resiliency is the one that's really getting the new general ledger upgrading our AFS vision and the commercial platform, just getting us to newer systems and structure. So those are our priorities, and those are how we allocate the dollars of investment pool. It's really important, though, that we don't get diluted. I've been through this before and that a lot of people try to tackle everything at once. And when you do that, you don't get anything done. So we're trying to be very targeted. We've got 6 projects we're trying to get through and get that done. We got another 2 or 3 ready to go right behind that. So the most you probably want to have is 10 or less. Other than that, it's really hard to manage it through. But I think everybody is all in on that, and we're making good progress.

All right. Very good. I think before we dig in, you had a slide deck out last night. You had a few updates in that slide deck. I'm sure we'll dig into some of the loan and deposit trends, but anything you want to address upfront?

From a guidance perspective, it's pretty much status quo. It's -- when we did Barclays, we -- conference a month ago, we basically raised our NII guidance to $6.850 billion there, and they wanted to know is that plus or minus or whatever. So we kind of just said we raised our guidance, that's the number and that's the best thing that we have right now. But we're really having good tailwinds right now in our NII. There's a lot of positives that are going on that we can delve down to in more detail. But it's a solid number, and I have no doubt we're going to hit it.

So you mentioned the $6.85 billion a couple of months ago, there's a plus/minus for the $6.85 billion, anything to read into that?

That's just to get you guys to say, keep pushing me higher. Basically, that's what we're going to get, and that's what we feel confident with. And if we're able to do better than that, we'll see if that happens. But right now, we've raised the guidance and feel comfortable with that.

All right. And does the rate environment matter? I know you moved from 2 cuts to 1 cut in the assumptions, the forward curve is changing around. Does that matter to this number?

We're really neutral for the most part. Rates going up really does not have a huge impact on us, at least in the next year on an NII perspective, rates go down, we get hurt just a little bit. What I'd say is once we are able to repurchase shares. Shares is equity. Equity is like DDA. It's a long-term thing that you model on your balance sheet. So as your equity goes down, that actually makes you more liability sensitive. So I think when we are able to repurchase shares, you actually see us perform maybe a little bit better. If rates start going down, we'll be a little bit more liability sensitive.

And so that's an interesting point. Can you dig into that a little bit? So as equity goes down, I guess, you're using some liquidity to buy back stock that makes you more liability sensitive? Is that how you think about it?

Yes, you have to fund it with an interest rate bearing and probably be more marginal. It would reprice. I don't think we'd go long term on that.

Got it. Yes. And we'll get into buybacks in just a few minutes. But maybe just staying on the NII front on deposits, I would say that some of the deposit trends we're hearing from different banks have been fairly different and mixed at this conference. Can you update us on some of the deposit trends that you're seeing so far in the second quarter? Are there any puts and takes across different business lines, migration in the high-cost segments? What exactly are you seeing?

So I'll start big picture wise. So if you look at first quarter actuals to what we think second quarter will be with 2 months under our belt or whatever, deposits will be flat. Now we are bringing down our broker deposits. They'll probably be down $1 billion, $1.5 billion, give or take. That means we're growing our customer deposits. So we'll be relatively flat from that perspective. If you look at our interest-bearing costs. Our interest-bearing costs were up 3 basis points from fourth to first. We think that it's going to be flat from first to second. So that's actually a good thing. It means that -- it continues to be more rational pricing in the deposit side. I always say that what happened last year when SVP happened and people were concerned about funding, deposit pricing got really irrational, that has settled down now. So things are much more normal from that perspective. And you're seeing rates come off on the margin down a little bit. And you're seeing that in our interest-bearing costs, the mix of that flowing through now that are actually benefiting us so that we don't have pressure and higher deposit costs, interest-bearing anymore. We're still seeing a little bit of deterioration in our DDA. Some of it is more lumpy from our corporate trust. We had a large corporate trust deposit that was in the second half of the first quarter and in the month of April. And that kind of overstated kind of the as of number for the end of March. That has come and gone. But we could get more of that and other business activity right now, but that was a really large sized deposit piece. And you've seen some seasonal outflows because of the tax payments and all that. But we're tracking really well on the deposit side and doing well. And Darren, who used to be the CFO was doing a great job on the consumer side and managing that in business banking. So it's -- our businesses are performing really well. I mean, for us to have a good NII and how we're performing, I mean if you look at it, I mean, we're shrinking CRE, we're growing C&I, we're growing consumer and that's all offsetting them, we're getting a little bit net growth in the lending side. We're growing our customer deposit back from a year ago every quarter now, and making progress. That doesn't happen easily. Our businesses are working really well together with our RPs in the regions and we're executing and doing a good job going to market and having growth, which is really positive.

And that's what gives you confidence in that $6.85 billion number. Perfect. So in terms of just the level of deposit competition, right, like that's kind of ebbed and flowed this year. We had a pretty good first quarter across the industry. What are you seeing -- where are you seeing the most upward pressure on deposit pricing? And how does that compare to what you were seeing in the first quarter and maybe even in the fourth quarter of last year?

We noticed early in the first quarter that the specials were coming down. And you still see specials being much more normalized in the marketplace. I don't see people aggressively going out trying to grow their deposit base. I think things are more settled and you're really going out and now winning accounts in business. It's not deposits, you're trying to win a client over and get that relationship. So it's much more rational pricing from our perspective. We have different strategies in different regions. There are some regions that we are #1 or #2 market share, and we use strategies there to basically be competitive in those marketplaces, but we don't want to push up rates there, and we don't force people to have the price up in there. There's other markets where we are -- don't have the density, and you might see us be a little bit more aggressive in those other markets. But here again, we have 28 regions, and we have -- I don't know, maybe 28 strategies, but we have at least a dozen different deposit pricing strategies in those 28 regions.

So it's rational pricing. It's more core deposits. It's more new customers. You're paying down some of the brokered deposits as well. So I think you mentioned in May that deposit costs could start to come down at some point in the second half of the year. Can you talk a little bit more about that? And is that even if the Fed keeps rates higher for longer?

Right now, we've -- if I'm right, we are flat in second quarter, that could be the top of deposit costs. We'll see if that's true. I'm not 100% sure. The disintermediation is really the impact. I feel pretty good about rates not being as competitive unless another risky event happens in the marketplace that scares people. I think deposit pricing is just normal and more competitive just because of the competition, but it's not as rate competitive as what it was before. I just see people are more rational right now.

And just to clarify on the deposit cost front, when you think about it, you're thinking about it on an interest-bearing deposit cost basis, including broker deposits?

We do.

All right. Perfect. That's great. And you spoke about the risks. And one of the things that I've been thinking about for a while is what happens with quantitative tightening, and that's bringing down RRP balances more right now, but that might not continue into the future. So how do you think about that risk for bank deposits in general?

We are impacted just because we're part of the system out in the marketplace. I wouldn't say we're impacted as much as maybe some others like some of the trust banks from that perspective. The way we go to business and do serve our clients, we're impacted by the flows. But net-net, we're still growing net operating accounts. That's really the mindset that we have in all of our key businesses is to earn the operating account. I think you guys had a piece on this in the last quarter or so, I don't know if it was Betsy or you that said it, but when you said -- it was said, you're really right, but it's your core deposit operating account is really what grows revenue. It is the source for everything else that we do in the company. It helps feed our commercial bank, our wealth businesses, our business bank. It's getting that operating core deposit, if we win that and earn that and we're going to keeping on that, the revenue will flow from that perspective. And that's really what -- how we focus on that, and so I mean you could have some impact on QE, like you said, but I don't see that as a significant impact on our balance sheet.

So you leave with the deposit relationship, you bring in the NII, you bring in the fees. Perfect. All right. Great. So maybe on the point of noninterest-bearing deposits, I think you were at 30% or so as a percentage of total deposits in 1Q. You spoke about a few puts and takes in the NIB side so far this quarter. How are you thinking about deposit migration in a higher for longer rate environment?

The DDA still has a little bit of migration into sweeps. It's still happening if those modest from that perspective. I think on the retail side, as long as the CD rates are over 3%, you're going to continue to have migration out into the CD book. Darren has aggressively moved our CD book to be a much shorter duration. So if you look at it, we're 5 or 6 months in on the duration. So we're much shorter -- that actually is costing us a little bit more than if we were longer right now, but we're taking a long-term view. We think eventually we'll have an upward sloping curve in the industry and that will benefit from that at some point down the road from that perspective.

Got it. And as we think about, I guess, CDs are higher cost, but you're also paying down some of the other higher cost sources of funding. I think you added some FHLB borrowing in the first quarter. You still have some broker deposits, you're paying that down as well. So can you talk about how much of a priority that is to pay some of that higher cost funding down?

So when you look at the balance sheet, we're growing net loans, maybe 1% or 2% on an annualized basis. So we have to fund that. We prefer funding that obviously with core deposits. We've been able to do that so far. The other way we look at it is we really want to shrink our Federal Home Loan Bank advances. We want to shrink our broker deposits. Not so much we don't want to -- you don't want to get used to using that as a long-term funding source. I actually like to have it more for dry powder. You're seeing us actually be more active in the securitization market. We did a securitization with auto. We did one with leasing, you'll see us do more of that. And that's another core way to maybe fund your balance sheet from that perspective. And depending on how this long-term debt rule comes out and what the requirements are, I think we're positioned well that we can get there in the next year or 2, if it's as proposed, but there may be some tweaks to that. But we'll issue some long-term debt if we have to, from that purpose. And we'll increase the balance sheet size because we're going to easily pay off broker and total home loan bank advances. But the name of the game is really trying to free those up having that liquidity available. You hear a lot about -- I know we've got questions coming up on potentially what the regulatory changes are, but they're talking maybe of a 5-day ratio and capacity on that 5-day ratio. The only way to have a 5-day ratio is we have a lot of money at the Fed, and you have a lot of availability at the discount window at that. So you need to make sure you have really ample cash on hand. So we're trying to really get ready if that does come into play ahead of that so that we have capacity to meet that sooner when that happens.

Got it. All right. Perfect. And then the other side of the coin on NII is asset yields. There's certainly tailwinds that you're seeing from fixed rate asset repricing. Can you talk about what those tailwinds are and especially on the security side, I mean, I know you noted that you've done some securities purchases last quarter. Can you talk about what you've done so far this quarter and talk about that securities yield expansion and loan yield expansion on the longer end of the curve?

Yes. So just to level set, at the start of January, we didn't really buy any securities last year once Silicon Valley hit. So starting in January, we started reinvesting maturities, and then we kind of shrunk $3-plus billion over that time frame. So we added that back over the last 6 months. So from January to June, we've added $3 billion back. So our portfolio now is about $30 billion. And we just kind of average in over the 6-month period, I think what you've seen with us. So what we added in the second quarter is about $2.5 billion, duration around 3% and yields a little bit over 5%. We're mainly buying treasuries, 1/3 of our $30 billion is in treasuries. I mean we're buying CMBS agency because it's positively convexed. And then we're doing more seasoned MBS is kind of where we're trying to mix the yields together, trying to really work on the positive convexity to offset negative convexity, so we don't have a drifting balance sheet from that and trying to keep our durations in closer to 3 years as much as possible.

Got it. So that gives you a more positive shift of the fixed rate asset repricing on the security side. And then on the loan side as well, you do see some benefit there as well?

Yes. So we talked about this in our April earnings call. But if you look at throughout this year, and if we don't invest to grow the balance sheet anymore, but just reinvest what we have in cash flows coming off, we could be 3.75-plus type yield in the fourth quarter of securities where we are now. I think right now, we're about 3.20%, give or take a little bit. So I think we got a nice upside there from that perspective.

All right. Perfect. And then you have a great update on the slides on the swaps that you're putting on for downside protection. So can you talk about that in -- especially in 2025?

Yes. So from a structural perspective, we have swaps in our books right now. We have about $20 billion of them. It has in the first quarter, a negative drag of 21 basis points on our net interest margin. So our net interest margin was 3.52%, it would have been 3.73% if we're unhedged, but then we would have been really exposed to downside rates. A lot of those receivers that we have are maturing in 2025, and we put forwards on in place right now in the slide that we have -- we loaded out last night for everybody to see. On average, it shows a 60 basis point increase in that received fixed rate in '25. So that's kind of already locked in. If rates don't stay -- don't move at all, we're going to benefit from that just because of the roll-off and roll-on and that goes on there. And that's really just a hedge to try to keep us relatively neutral out there. So I think we feel good about that structurally and that's feel good that's walked in and it's going to be a positive.

And that's part of what gets you to that normalized NIM, I think you've spoken about 3.60% to 3.90%, is that still the right range?

Yes. From a NIM perspective, I'd tell you we feel comfortable with net interest margin being the mid-3.50s this quarter. Second half of the year, we'll try to be in the high 3.50s, and then we'll give guidance when we get into 2025. But see what happens. But the biggest risk you have obviously is disintermediation. If all of a sudden, there's a lot of DDA leaving again, then it's all bets off but it seems to be slowing down so that I think there's less risk of that happening.

Got it. All right. Perfect. And then as we think about loan growth, I mean, I think the tone has been more muted across what most banks have suggested. You can see that in the AHA data. Can you talk about what you're seeing so far on the loan growth side and what the sentiment is amongst borrowers?

Yes. In the first quarter, we had good benefit. When you look at where our C&I growth is coming from, when we acquired People's, People's had a lot of, what I would say, commercial type businesses that we basically like from a credit perspective, it's a sound credit. They were good at it. We've now rightsized those portfolios and added them into M&T because we didn't have those type of businesses. So you see us growing corporate and institutional. You see us growing fund banking, mortgage warehouse, franchise, so all those businesses are benefiting and growing because of a larger balance sheet now that they have. And that's real. Also in the first quarter, we did see middle market growth. Not sure if we're going to see that in the second quarter. I think that kind of is flat line for the most part. But we'll see June is not over from that perspective. But we have good C&I growth. On the other side, on the consumer side, I think other banks rightly so made decisions to go and call it RWA diet or whatever you want, what it is, but they weren't exited or slowed down growing nonrelationship-type businesses. We stepped -- kept indirect auto and the marine and RV space and margins there are good and attractive, and we are in there and growing those. And we're not growing them widely, but we're growing them enough to have a positive impact on our balance sheet from that perspective. But we haven't changed our credit box one iota for any of this growth that we're getting today.

And you guys have been earlier in this move to focus more on C&I. I think some of the banks that are smaller have started to move away from CRE into C&I. Are you seeing any increased competition?

C&I is always competitive. I mean some of the specialty businesses might be a little bit less competitive. But it's always good, competitive. That's why it's important when I early on talked about treasury management, you have to be great in treasury management because the spreads that you get on CRE while our spread in C&I is actually going up, but that's a C&I to C&I space, we're up maybe 5 or 10 basis points on spread. When you look at it from a CRE spread to a C&I spread, it's narrower. So you need to get deposit relationships, you need to get treasury management, maybe some capital markets income as well to help augment that return to make it a high as profitable or more profitable than a CRE type client.

Got it. Maybe moving into credit quality. You've been doing a lot of deep dive reviews on commercial real estate and construction over the last 4 quarters. What are the top things you've learned? And what do you think stakeholders don't fully understand here?

It's -- we have a high criticized book. We always traditionally have had a high criticized book. It's just different. It's different than how other large banks perform. Having been at other large banks and people don't want to carry a credit that would be considered criticized from that perspective. And everybody has their right to make their certain decisions. We support our clients because of client selection, they support us. And as long as they support their loans, we're going to support them. We're going to carry that credit. So I think at the end of the day, we have lower loss in charge-offs and others in that space. We believe that's going to play out again in this cycle. But we have a higher criticized book than others. And some people just -- can have a hard time differentiating and understanding why would it be different. But long term, it keeps those clients core to us, and they are long-term clients to us. I mean they're putting in equity. They're giving us more recourse. We're actually seeing positive trends in our criticized book this quarter, which is good. So it's just the commitment that you're just seeing out in the marketplace.

Yes. That's the consistent piece of the pushback, I get, is the criticized loan level. And you noted your loss gone down on criticized loans has historically been -- has been much lower. Can you talk about what drives the vision to move alone into criticized?

That's really that debt service coverage ratio. Once you go under 1.2, it gets classified and then when it goes -- now if you go into 1.1, then it gets in the criticized level and goes through that. And when it comes up to mature and coming through for it to get upgraded, they basically have to put equity in or have another source of revenue to help cash flow to be positive from that. We have seen this quarter, I think, a little bit more liquidity in the system and that some of our clients have been able to go out and refinance some of their credits in the agency market. We have our RCC business. In April, we did a little -- do one transaction a little bit over $400 million. They aren't going out as far on the curve. Usually, they go out 10 years. They're only going out 5 years just because of the way the shape of the curve is and the level of interest rates. Insurance companies is also another placement that we do for our clients long term. So we're actively using these other sources of funding to help solve their needs long term.

All right. That's great. And then just to wrap up on the CRE side. The CRE concentration, you brought it down pretty significantly from 260% in 4Q '19 to about 176% in 1Q '24. I know you've noted a target of 140% to 160%. So can you talk about what the target is for the longer term beyond just 2024 and how you're thinking about concentration overall?

Yes. So we don't have, I would say, a firm target. We were just looking for a range. So we were 176% first quarter, we'll probably be in the low 160s end of the second quarter depending on the mix that we have on our balance sheet or whatever. There are a couple of things we're looking at. But my guess is we'll probably end up in the 150% range, plus or minus there as a percentage of how much our CRE loans on balance sheet versus our other loan portfolios, plus or minus 20%, maybe 2 type of measures. I think we're 23% today. So I think we're getting close. You guys remember, we started -- we were, I think, $12 billion bigger in CRE. So we've shrunk a fair amount of that.

And I'm going to come to the room in just a sec to see if there's any questions here. But the part of that CRE concentration ratio is obviously the capital levels. You've talked about reassessing the buyback after the second quarter results. And there's a wide range of factors that you're considering, the macro environment, asset quality, capital generation. So is the criteria for a resumption of buybacks about an improvement in these factors? Or is it more a lack of deterioration in these factors?

Yes. So I mean, from like an economy perspective and from an earnings power, it's probably we don't want it to deteriorate, right? I think when you look at asset quality and you look at our S-CAP, we really want those to get better, improve from that. So we'll get our results in a couple of weeks from the Fed on the stress testing. And we'll see where that comes in, we're hopeful that we go from 4% to something lower than that. I think we're having good progress this quarter on our criticized level assets coming down. Though I have a couple of weeks left to go, so no guarantees from that perspective. But teams are working really hard and trying to get that to come down and be better. So I think the trends are moving in our favor, but we'll see higher incomes together.

And then you've spoken about wanting to keep at least an 11% CET1 ratio. Should we think about that more as a near-term floor in CET1 until we get some more clarity on macro and regulation? And once that happens, can you move lower?

Yes. I think probably a better way to think about it. But when we are able to repurchase shares, I'm not sure when that will happen. We'll probably just repurchase our earnings that we're generating in that period. So right now, we're over 11%. That will probably stay that way at least for a little bit if we ever repurchase shares from that, but we're still generating a ton of capital every quarter that we can still make a significant amount of impact on our share count.

All right. Are there any questions in the room? So Daryl, maybe to wrap up. M&T...

There is one question.

There is. All right, perfect.

Maybe just any thoughts on this DFAST cycle upcoming. It looks like the scenarios are pretty similar. But I know for you all, that's been an area of hope for potential further optimization.

Yes. No, that's a great question. So we've been successful with shrinking our CRE. CRE does not stress test well. So that's a lower category again this year. So that should be a good guy. We have been growing C&I, so we'll see how that gets weighted from that perspective. I think from a PPNR perspective, we have less expenses in our base now because of the merger costs are now gone from the People's acquisition. So we think PPNR is better, CRE exposure is better, so we're hopeful that we could become lower than 4%, but [indiscernible] has a black box and how they calculate and we'll see what the results come out from that perspective. But our fingers are crossed from that perspective.

Right. And the other area on regulation where I wanted to dig in was on liquidity. M&T clearly leads peers in terms of on-balance sheet liquidity. I know you don't disclose it, but we calculate your LCR at somewhere around 140% on a GSIB level basis. Can you talk about why do you need to hold so much liquidity? And what is the right level of liquidity over time?

Yes. So we are trying to manage where we think we have to manage from a liquidity perspective. We went back and remodeled our deposits. Obviously, our uninsured deposits, we gave them higher haircuts. So our internal liquidity stress is more of a governing factor today. If you look at our LCR ratio, we don't publicly disclose it. We will eventually, but our ratio is probably 135% to 140%, give or take, right now. But it's really the governing factor is not LCR. Obviously, it's more of the liquidity stress scenario that we have. And right now, we think we need that. And we think that's right. We'll be interested to see what the Fed rules come out and what the regulations are there. But we're doing what we think is right, right now, and we're building out processes and systems to generate all this liquidity real-time basis with our transformation. So I think we'll be in really good standing as we move forward.

And that 135% to 140%, is that with or without a haircut?

That's without the haircut. Yes. That's the full GSIB number.

All right. Perfect. With that, we're out of time. Daryl, thanks so much for joining us.

Thank you.