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

We'll get started with day 2 of our Americas Select Franchise Conference. Returning this year, very pleased to have M&T Bank kicking us off this morning. From the company, we have Daryl Bible, as I think many of you know, Chief Financial Officer, joined M&T in mid-2023 and was CFO of Truist and BB&T prior and also was at this conference in those roles as well. So Daryl, welcome back.

Yes, thanks, Jason. Thanks for inviting us here. We love coming to this conference. I appreciate it.

Maybe we'll start big picture. I think of M&T, I think of community-focused banks, strong retail banking footprint in the Northeastern, New England, Mid-Atlantic portions of the U.S., several national businesses. Obviously, a lot of headlines at the moment, several uncertainties, tariffs, multiple path of the economy. Maybe you could just discuss what you're hearing, seeing from your customers as we sit here in early May.

Yes. So if you had a chance to read René's annual shareholder letter, he said that the only thing constant is change, and change it is for sure this year, and we are living and breathing it. I would tell you though, M&T is starting from a position of strength. We've had a good -- have high capital, a lot of liquidity. Our credit is getting better. So all that is going in our direction. We stick to the fundamentals of how we operate our company really on capital allocation, liquidity and transparency is really key. When you talk to our customers, there are a few customers that are being impacted directly. But for the most part, the consumers -- so I went through delinquencies this past April. Delinquencies still are really good on the consumer side. They haven't shown weakness yet in that space. Their spending patterns with our debit card seem to be pretty consistent for the season that they're in. You still have stress in the lower end of consumer, but you've had that for several years now. So that's not really a change. We did comment on the earnings call that we had a record volume in indirect lending and both in auto, RV and marine. I would think that auto was definitely more tariffs-related in that getting upfront ahead before car prices go up. When you look at the RV and marine, those are really made in the U.S. So there really isn't much impact from a tariffs perspective, so that people were spending on big-ticket items in the last couple of months there. So you just have a nice volume there. From a commercial perspective, what I would say is our commercial customers are cautious. When you look at and talk to them, I've been talking to them, going out on calls and all that, they will tell you that they want to make investments, but they are just a little bit -- they don't know all the rules of what the impacts are from that perspective. So I think they're just on hold. But there's a lot of people that want to put money to work. A lot of people want to do M&A. That activity is there if the U.S. economy settles down and people kind of understand tariffs. If you think what's going to happen, we're going to get new tax, probably positive tax legislation, we're going to get lower regulations through a lot of industries and all that. So I think people are still optimistic, but right now, very cautious.

Helpful. Maybe from here, kind of against that backdrop, let me just kind of run through some of the key income statement drivers. If you back up a bit on the April earnings call, you did modestly temper the outlook for NII loans and deposits, but did increase kind of net interest margin expectations. Maybe just discuss kind of what drove some of those changes.

Yes. So when we put the plan together in the fall of last year, we were optimistic that we could start the year and actually start to grow a little bit faster than what we have in the last couple of years. And we continue to grow C&I. C&I is growing. Our consumer book is growing from that perspective. We thought we would stop decreasing CRE and it would actually start to grow. And what's happened is the CRE portfolio has not grown. It's still shrinking. And that's just causing it to be a lower balance sheet. So we have lower just loans outstanding. We have less deposits because we weren't as aggressive because we didn't need the funding as much to kind of balance that out for the most part. But we're still trying to attract operating deposits, obviously, and all that, but deposits on the margin, we're just a little bit more price conscious, trying to fit the size of the balance sheet that we have now. Everything else is intact, though. I think we feel pretty good about net interest income and the balance sheet and feel good that we're going to continue to perform really strong.

I did notice in the slide deck you posted last night, you did kind of reiterate all the earnings drivers you kind of mentioned on the April call. Maybe just talk more a bit about loan growth. In C&I, M&T certainly outperformed. When we kind of think about Q1, maybe just talk through some of the areas of strengths, weaknesses on the C&I side, was that getting in front of tariffs and just what your expectations are?

Yes. So what I would tell you is on the commercial side, utilization has been relatively soft, especially in the floor planning. Now that the cars are being purchased, there's not as many new cars going on the lot, so you're definitely down in dealer commercial services. You can see those numbers pretty easily. But middle market seems to be growing a little bit, not huge, but a little bit of growth there. The core growth in C&I is really coming from our specialty businesses. Corporate and institutional fund banking and those type of businesses is really what's driving the C&I growth for the most part. If you look at other parts of the portfolio, CRE is -- we had a lot of runoff in CRE, and that runoff wasn't all bad. A lot of it was criticized loans. So that was actually a positive as we continue to lower our criticized numbers. But we're hoping that, that runoff will slow down some. Our originations are starting to build. If you look in March, we put new exposures on in the mid-300s; in April, a little mid-400s. We probably have to get to like 500 or 600 in actually what we're booking in a month for us to start to stabilize and grow. So we're building, and we plan to get there sometime in the second half of this year.

That's helpful. And then maybe just kind of shifting gears to net interest margin. You had a nice 8 basis point increase in the first quarter to 3.66%, which is kind of, I think, one of the highest in our coverage. Interest-bearing deposit costs fell 27 basis points, which was also on the upper end. Maybe talk to kind of your outlook for margin and deposits from here.

We're pretty optimistic on net interest margin. We have a lot of favorable things that we know are going to happen. Our swap book that we have, what's rolling off and rolling on, we know for the rest of '25 and into '26, we're going to be pricing higher in that book. Right now, it's probably going to go up 30-plus basis points and all that, and that's just going to happen over time, which is positive. We're still getting positive impacts on the fixed assets on our balance sheet. If you look at our loan portfolio, if you look at what we get in the consumer portfolio from the indirect channels, some of the residential mortgages, we are repricing up with what's rolling off anywhere from 100 to 150 basis points. And if you look at our investment portfolio, with the maturities we have left, $3 billion or $4 billion, the average rate of what's rolling off is around 3.5%, and our purchases of the mix of what we're buying now is around 5%. So that's also going to happen. So with all that in play, I feel optimistic that our margin should have positive pressure as the year plays out from that perspective. The wildcard and what we really don't know is how much loan growth you have and the shape of the curve. We're pretty neutral from a short end, but the shape of the curve will matter. If it flattens out, obviously, that will create more pressure, less net interest income. A steeper curve will provide more net interest income.

I guess historically, M&T has been, I think, viewed as a relatively more asset-sensitive bank. It sounds like that's kind of changed over the last few years and now you're more neutral. Maybe just talk -- so if the Fed cuts 2x or 4x, does it make that big of a difference?

So we ran our models and with 4 cuts, it really doesn't impact. It's really the shape of the curve is really the impact. It is the biggest driver. After that, it comes into the loan growth and the deposit growth, making sure you can keep both oars in the water and trying to grow that there. And then pricing, we had really good reactivity on our deposit beta this past quarter. We plan to be in the 50-plus-type percentages as we move forward. I think that's a good number for us. And on the credit side, lending side, the credit spreads and all that are somewhat aggressive, but we're still getting decent spreads and getting good returns on what we are booking from originations.

So I guess thinking about your guidance for the year, we have kind of up 2% to up 3.5%, I think, is what it implies. I guess when you think about low end versus high end, maybe what's one of the biggest drive variables?

I think it's pricing, growth and shape of the curve are the 3 variables that really drive that. And you really can't control any of those for the most part. We will go and what the market gives us from that perspective. But businesses are working hard. We're performing well. We're competing well against the competition in the marketplace. So I'm optimistic that we're going to have good net interest income this year and into next year.

And then maybe shifting gears to the fee side, actually looking -- calling for a decent fee income growth for this year if I look at your guidance. Q1 was a bit, I think, mixed for you and some others. A lot of banks actually kind of guided down on fee income for the year. You kind of talked to the upper end of your guidance. Just maybe talk about maybe some of the key drivers of that and kind of why you're different from some of your peers maybe.

Yes. We've invested a lot in our businesses, and it's starting to show through. I'd start first with our corporate trust and loan agency business, that continues to perform at record levels. We're continuing to gain share in that space. We're actually in -- now in Europe, we're actually going to go out and do marketing with the sales team here. We're rolling actually in Europe in this business as well. We followed some of our customers from the U.S. over here, and now we're just trying to grow in that space from that perspective. So that's a good guy. Wealth is doing well. Obviously, you have the asset -- the AUM issue with the volatility of what valuations are, and they go down and they go back up and all that. So that's -- it's a little bit up and down, but we are growing our wealth clients, which is good core growth that you have there. If you look at service charges, our Treasury Management business has done really well last year, starting off this year really strong, high single-digit, low double-digit type of growth year-over-year. So investments we've made in those businesses also performing well. But I think the one that's really positive is mortgage, both on the residential side as well as the commercial side. Residential, we have the production and origination theme, and that will fluctuate as rates move in the marketplace. But from a servicing perspective, we've added some good sub-servicing to our portfolio out of fee income. There's opportunities. Whenever you see big transactions in that space, what you saw with Mr. Cooper and Rocket, that creates a lot of dislocation in there. So we may have other opportunities there as well to actually capitalize on over time, which would actually be a positive for us. And then commercial mortgage or the RCC business continues to perform very well. It's really subject to what happens in the 5- and 10-year treasury, and that kind of moves up and down. But when it goes down, they lock in a lot of product and get a lot of fee income. So we're still optimistic we'll be mid- to high-single digits in fee growth.

And then I guess, guidance kind of talks to fairly modest expense growth, maybe around 2%, give or take. Just maybe how you kind of think about the outlook for expenses. I remember last year, you were kind of talking about a lot of initiatives that you're spending some money on.

We got them still.

Maybe you could provide an update on some of the stuff you're working on and maybe some of the bigger stuff and kind of where you see it.

We're getting at a point though, we have about 7 really key strategic projects going on in our company right now. I'd say out of the 7, 5 of them have 9-digit spend over the life of those projects. When you look at that 7, there's 3 that are getting pretty close to completion. One would be the general ledger. We're well past 50% of the way there. I'm sure we'll get that done, hopefully, in the first part of 2026, but that's a couple of hundred million dollars putting in a new financial system there. It's not just the general ledger, it's all the systems profitability. We're actually putting in liquidity stuff for Category III and all that. So all that is a part of that project. Another one would be how we rebuild our commercial delivery system for how we generate credits and put loans on the books and all that, that should be finished end of this year or earlier than that from that perspective. Another big project we're working on is we're putting in 3 new data centers. They went live a quarter ago. And we're now putting the applications out there, and we're putting the applications that are cloud-ready up into the cloud from that perspective. That will go for a couple more years, but making good progress. I call cyber and digital, just those are growing businesses for us. They're always going to be there. We're always going to be investing in them, and those are critical. But we're making really good progress and feel good about getting these -- a lot of these big ones done. And we've got some other big ones that we're starting up now that will kind of fill the boat, but maybe not quite as large as what we got going on right now.

And then I guess, hypothetically, if the economic environment is weaker than expected, maybe revenue is soft, do you have the ability to kind of manage expenses to kind of maintain positive operating leverage or maybe that doesn't matter so much? And just how do you think about that?

M&T has a really good mindset from like managing from a budget perspective. And if we need to tighten our belts or whatever, people will really buy into that and really would do that. For the projects that we have that are like within a year of completion, we probably wouldn't slow those down or pause those. The other ones, you could slow down. There's a lot of other things that we're starting up now and how we kind of do our automation and workforce planning and other things that will kind of play out for the next couple of years. But if you look at it, our efficiency ratio is really strong. We're in the mid-50s. We really don't want to go lower than that because we still need to make investments in this company. So the way I look at it, it's more of a balancing act. We want to make sure that we are good stewards to our shareholders and give good returns, capital generation, which we're doing, but we're also making the necessary investments in this company to protect us for the long run and really help grow the company future and all that. And right now, I think we're just in a really good space of that balance, and it seems to be playing out pretty well.

Got it. Maybe shift gears to credit quality. I mean nonperforming assets, charge-offs, criticized loans all improved in the first quarter, yet kind of all the economists out there are telling us things are going to deteriorate. Maybe just kind of talk to what's your outlook?

I can't say that we're agnostic to anything going on out there. I mean we have some upgraded or downgraded credits like in government contractors. We had some nonprofits we've downgraded. Our exposure in D.C. greater area is about a little around $300 million. So we don't have a large exposure there from a CRE perspective. So we're watching a lot of those areas and companies that could have issues, but aren't seeing too much of that to date. We're really good at last 5 quarters in a row, we've been able to shrink our criticized loans. We did have an increase in C&I, it was one large credit. It was basically a roll-up strategy on a heavy trucking company that just didn't quite hit their targets from that perspective. On the outlook, you could see a couple more C&I credits maybe go into criticized. But net-net, we still feel that our criticized balances should be coming down throughout the year, maybe not at the pace of what we did last year, but still in that same general direction.

And I guess within -- you mentioned a couple of criticized C&I credits potentially. Any industries of note? Or...

No, it's just -- yes, I mean, PE related could be some of that.

Got it. And then just with respect to commercial real estate gets a lot of headlines, yet M&T never seems to have any losses. So just maybe talk to...

Yes. The key to that, to be honest with you, starts with our client selection. We are really good at getting the clients that support their credits and really do that. I mean everybody thought we're going to have all these losses last several years, and that didn't happen.

No. I'm still waiting.

Yes. So our client selection is really, really strong. We're opened up for business. Obviously, we aren't looking to grow our office portfolio, but multifamily, industrial, good retail market, construction, we're putting the loans on. So we feel pretty good about where we are. I think our CRE criticized will continue to fall. We have a pretty good trajectory over the next year or so as those maturities come up.

Makes sense. And maybe talk to just what's going on with the allowance for credit losses. We saw from you and some others a slight build in the first quarter as the economic outlook softened during Q1. We got additional information on April 2. I know banks have kind of qualitative, quantitative reserves. But just how do you think about the reserves now we sit here in Q2 and forecasts have kind of been downgraded more, but what you're seeing, it sounds like at the onset, consumers, corporates are still holding in?

So if you look at the allowance with CECL, you have to start with the macro factors. If you look at our models that we have, there's really 4 macro factors that really make a difference for our allowance. One is GDP, the other one is unemployment. And then because of our CRE portfolios, HPI and [indiscernible] are the other 2. And if those start to turn negative, then we're going to probably have to add more allowance. It's just the math, how that goes. The other thing that you have to look out for is, right now, if you look at our book, there's more upgrades than downgrades. But if that would flip where all of a sudden, the book starts to get more downgrades than upgrades, that would be fed into the models and you would have a negative increase in your allowance type of impact. Right now, we aren't seeing a whole lot. It's still feeling relatively good. We're watching it very closely. But I talked about delinquencies, customers and all that. Our customers are strong. They're just really cautious right now because they don't really know what to invest in and what to do until they really know all the specifics coming out of D.C.

Got it. So I guess on the 2Q provision reserve, I guess it's one of those things that are too early in the quarter to make a call and you kind of revisit it at the end of the quarter and...

Well, we always do a mid-month one. So we'll know something next month, and then we kind of true it up into the last month of the quarter and all. But right now, we don't see a recession coming. We see a slowdown right now happening. We'll see if it actually turns into a recession or not. But if they get this tax policies passed, that will be a positive. It could help bounce back from that and all that. I know there are some customers that will get hurt with tariffs, but there's also other customers we talk to that actually benefit with the tariffs going on. So it's not all negative. It's just there's a change going on is really the impact.

Makes sense. And then on capital, you've talked to wanting to get to 11% CET1 ratio by the end of the year. I think you're 11.5% at the end of the first quarter, although you did step up the buyback, doing over $600 million in the first quarter after $200 million in Q3 and Q4 last year. How do we think about, I guess, the near-term buyback just given kind of the step-up in Q1?

We're going to be opportunistic. If we think that the stock is relatively inexpensive, we're going to jump in and purchase more stock. So right now, we think the stock is inexpensive. So we think it's a good time to buy our stock, obviously. But we're committed to the 11% ratio. We want to continue to get our criticized numbers down lower. I mean they've done a great job. We've shrunk our criticized book 27% on our nonaccrual book, 33% this past year. So they've come down a fair amount, but they still should come down a little bit more. The Board, in January, approved our long-term target of CET1 of 10%. And we're just -- we don't feel comfortable getting to that stage yet. But as we continue to maybe improve in our credit quality and still have strong earnings and we don't go into a recession, you could see something else potentially down the road.

My next question is, we think 11% seems too high. So it sounds like your Board agrees. So no good deed goes unpunished. Now we're taking 10%. When do you think that comes into play?

I think we'll just see how it goes. We opted in for stress testing, too. We opted in because we really think -- last year, we were 1 of the 3 banks that actually dropped a little bit in the stress capital buffer. But with a lower credit size, lower CRE and better earnings PPNR and all that right now, we feel that it should actually be better. We're still at the higher end of the stress capital buffer for our peers. We want to continue to move that down further, and we hope to make a lot of progress this year on doing that.

I guess with the improvements we've seen at M&T plus a scenario for the stress test for this year that looked a bit easier than the last 2 years, albeit still strenuous, any kind of guess in terms of where the SCB ends up?

My team has a guess, but it's off the record, and I couldn't tell you what it is. We'll see what happens.

I guess, was it last month, the Fed talked about potential changes to the stress test, either shifting to a 2-year average, changing some of the transparency, looking maybe deeper into expenses. Can you talk to kind of what your thoughts on the proposal they put out there and then other potential changes?

I don't view the averaging versus not averaging as a big deal, to be honest with you. I mean, directionally, I don't think we care one way or the other. Transparency, though, is really important. And having transparency in how they come up with their scenarios, how they run these models and all that, I think, is critical and that should come out from that perspective. We'll see if that happens or not. But I just -- it's what we run as an industry, and I think we just need to understand how they're coming up with figures, how they're come up with these loss rates and projections and all.

Got it. And then we last did a fireside chat at my New York conference in September. And I felt like you hinted like maybe more a focus on a dividend or we can get like a decent dividend increase at some point in 2025. Just maybe talk to how you're thinking about the dividend from here.

Yes, I think we're big believers. First and foremost, dividends are really important to us. We're 1 of 2 banks that didn't cut the dividend during the Great Recession. So we take that very, very seriously from that perspective. But dividends are really just a reflection of the earning power of the bank. And our earnings power continues to increase. And I think you will see at some point, probably this year, that we will probably have an increase to the dividend that represents the earning power that we're showing right now.

Got it. And then another use of capital is bank M&A. I guess M&T has historically been a good acquirer. It seems like we're a few years removed from the People's deal, which looked to be fairly additive. Maybe kind of just talk to the kind of current bank M&A environment and how you're thinking about it.

We really aren't spending much time on it. We're really focused on our 4 priorities we have in the company, building out New England, improving our risk framework, optimizing our revenue and expenses as well as simplifying the company through resiliency and improving that. I'm sure there will come a time when we actually do acquisitions because we have been acquisitive in the past. But M&T is not going to surprise the marketplace, whatever. I mean we're very consistent. We usually do in-market deals or we do market banks that maybe will be on the fringe of our market and maybe a newer market and all that. So we'll be very consistent from that. I don't see us leaping across the country. We don't want to be a national bank. We want to be a dominant bank in the markets that we serve and really do a great job there with our community banking model that we have that we offer to our customers.

I guess there hasn't really been -- or I guess there's been kind of a slowdown in the bank M&A just in general and whether it's regulatory uncertainty or purchase accounting marks. But it feels like now we have a new regulatory regime, purchase accounting marks have come in either because rate-driven or time-driven. Do you think...

And the double count...

That's what you said last week, right, the CECL double count will go away, but I think we have to wait a little bit more for that. Can we talk to just -- do you expect that to result in kind of a pickup in industry-wide M&A in the near term?

People are expecting that. For us, we're successful. At the type of bank that we operate, we really try to serve our customers and our communities, and we've been able to purchase banks in both administrations. People's’ was done in the Biden administration. So we think we can work with either party and all that just because we really do the right thing and serve our clients and do what we say we were going to do from that. But the people that are getting into the seats are definitely pro-growing the economy. They are definitely more like-minded. So like the acting Chair of the FDIC, Travis Hill, his changes that he made to living will, the reason I know this so well is we're submitting ours in another month, what he took out and what he put in and stressed is really just practical. I mean he's really trying to get the information and the data to resolve a bank in trouble over a weekend or create a bridge bank. All this other theoretical stuff was basically taken out. And I think a lot of the people getting in the seats will have much more realistic -- if Governor Bowman gets supervision, she talks about tailoring a lot, but she also talks about the core and key things that banks really have to worry about. You have your credit risk, you have cyber risk, interest rate risk, liquidity, capital. Those are the core things that can really hurt the company and all that. And I think that's the direction that these people are going to really focus on. And all these other things that are out there that were created in the roles has created a big cottage industry of consultants that are all making a lot of money basically fixing all these other issues out there. But I think if you stick to the core fundamentals and really focus on what banks could actually get in trouble with and actually hurt the company, I think that's how I would go. And I think they're more like-minded from that perspective.

Makes sense. Earlier, you mentioned getting kind of LCR compliance for Category III. I guess M&T is a Category IV bank. I guess, how do you think about that shift to Category III? Does it make sense to cross it a little bit? Do you want to cross it a lot? And just what -- is there a lot more work you have to do? And keep in mind, I know that all may change anyway.

We have no idea. But it's what I've learned over my career is that you always want to be prepared for opportunities that come your way from that perspective. And when -- my prior life, when the 2 banks in the Southeast came together, the bank that I worked for was already operating at a Category III level from a credit perspective, interest rate, liquidity, capital perspective, we didn't really have any questions from the regulators about that from that standpoint. So it's just the mindset that we know we're going to grow. We don't know when it's going to happen, but we want to be there and be able to do it if that opportunity comes our way. It's kind of a mindset where we have now at M&T.

Got it. And then you mentioned changes to the living will from the FDIC. I guess, what are the tweaks from the new administration from a regulatory standpoint do we expect to be beneficial? I know on the prior one, we're kind of not concerned, but thinking about maybe more long-term debt, more liquidity, but just maybe talk about some of the potential other changes that could occur.

So if you look at it, I think Basel III is out there. We'll see what, if Governor Bowman gets in there, what she wants to do with that. But it's probably going to be more focused on things that are more meaningful. And right now, you talk to the Fed, Chairman Powell or whatever, they say it will be neutral to whatever they impact. We don't have the details of what that really means from that. So the devil is in the details from that. But I think all these things that are out there may or may not happen. Or if they happen, it's going to be done to really focus on the key risk that you really should be focused on from running a bank and making sure you have strong fundamentals out there. And whatever it is, we'll work on it, and we'll get it done and fix it. But I think you have more rational people in the seats right now and coming.

Maybe I'll pull up and see if there's any questions from the audience. Maybe just wait for the mic.

You mentioned earlier the C&I -- well, not the C&I lending, but the C&I customers, maybe on the investment side, a bit more hesitant. Do you see that already in C&I lending and new business that is coming?

Yes. Well, we have this one customer in the Baltimore area, he wants to invest $60 million, $70 million in some hotels. But until he really knows how these tariffs play out or whatever, he's just on hold. He has all the projects scoped out. It's ready to go and all that. But you have that throughout the footprint. There are people that want to make these investments. They just -- the uncertainty, they need -- I mean a good businessperson needs to kind of know the rules and then they can comply and do what they need to do from that. And that was kind of the advantage the last time Trump was in the administration as you kind of knew where people stood and there was -- and that actually created a lot of economic activity. There weren't things changing. So hopefully, that things get settled down at some point, so there is more certainty and investments will continue to be made in the U.S.

Just a quick one on the potential tax cuts coming through. Do you think the market might react negatively if the tax cuts are totally unfunded because the tariff taxes are not going to come through?

It's early right now in the details, and there's a lot of puts and takes going on. And I'm not as close to it as some others out there. But my guess is they're really trying to -- we can sustain -- the U.S. can't sustain with the amount of borrowing that we have versus our GDP. I mean we're a very profitable country. We make a lot of money, but we're just -- we're spending too much money right now. And that really needs to get addressed one way or the other, in my opinion.

Yes. And then if you sort of -- is there a point at which -- you said a steepening yield curve is good for your bank. Is there a point where it sort of stops becoming good and becomes a negative for the economy in your view when you do your...

Yes, no, that's a great question. So if you look at our company, if we get a really steep yield curve, obviously, that puts stress, a lot of borrowers out in the marketplace. So you want to have a steepness of a curve, but maybe with the short end coming down and the longer end kind of staying where it is might be better. But you're right, if it gets really steep, that could basically create a lot of more issues for some borrowers from that perspective. But if rates -- the good news of a flatter curve is while NII might get hurt, our credit quality would improve, right? So it's not all bad, and our mortgage business would grow. We could argue the way we're diversified that rates falling might actually be a net better number for the bottom line. It just hurts NII more from that perspective.

You mentioned earlier the selection in the commercial real estate lending has been working out for you very well. How does it look like on the residential mortgages? Do you see there any changes in trend for asset quality?

No. Our mortgage book is really prime quality. I don't think we had any net charge-offs in '24 or early part of '25 in our whole mortgage book. I mean there's people charging off, but we've got recoveries on it. So net, we don't have any loss in that portfolio right now.

Time for one more? I guess maybe just to wrap it up, Daryl, M&T, very consistent results over time, consistent kind of high ROTCE type company. I guess maybe just to wrap it up, kind of what do you think kind of differentiates M&T and just what keeps that performance so consistent and high?

We start with we're a bank for our communities. And we really want to serve not just the regional community. If you think of it, we're operating in 13 states plus D.C., so from Buffalo down to Richmond up to Maine. And that's for our community banking model. We also have businesses outside that 13 states as well. That's important. But we also want to be communities for other communities in these markets and all that. We really want to focus on being inclusive. A good example of why we want to be so inclusive, we have a big business in Business Banking. Our team in Washington, D.C. is very diverse. It kind of reflects what the people in that market look like from that perspective. It's our highest-performing team that we have in Business Banking today. So kind of making sure that we emulate kind of what our markets are that we're serving, we think, is actually a huge advantage for us. So we have that mindset when we go to work all the time. From a financial perspective, if you look at the incentives like the executive management team has, our max payout like on the performance shares that we get is a 17% return on tangible common equity, 1.25% return on tangible assets. We have to do that continuously over 3 years. That's not the highest in the industry, but it's that consistency is what we're trying to do. And that's what the Board wants us to do is to be really good and run a really strong bank, but don't go for really high risk. You can get 20% maybe 1 year or 2 years, but you can't continuously stay at 20%. So it's really having a good foundational bank that is really successful continuously over time. It's so we can serve our customers in good times and bad times, and we can be consistent in the marketplace. That's what M&T is all about.

Perfect. Daryl, thank you for joining us today.