Good morning, everybody. Welcome. We are pleased to kick off this morning with M&T Bank. M&T is headquartered in Buffalo, home of the Bills, and they've been around since 1856. They are a little over a $200 billion asset bank, with a very attractive profitability profile with a 1.4% ROA and a 15.8% return on tangible common equity. With me from M&T, again, this year is Daryl Bible, CFO, a position he's held since 2023. Daryl is a seasoned veteran of the banking industry with three decades of experience. Previously, he was CFO at Truist and its predecessor, BB&T. Prior to that, he was treasurer at U.S. Bank. We were just talking about living in the Midwest and the cold, so, USB prior to that. So we'll kick it off.
Just going to, you know, we think about these questions that we put together before, and then this week happened.
Just go for it. You can ask me anything.
Okay. So we'll start sort of big picture. It seems like the economic and rate cycle has changed quite a bit, and banks have performed well and even better this week. You know, why the sentiment change? What do you think is driving this? And then, as M&T's stock has done quite well, both versus the S&P 500 and the BKX. You know, what do you think have been the biggest drivers of that?
Yeah, so I'll start with M&T, you know, and, you know, our purpose is to make a difference in people's lives, and we believe we're the best positioned bank to serve our communities and make them become successful. If you look at what we've been able to accomplish in 2024, you know, early in 2024 and throughout the year, we've continued to hedge our balance sheet. If you look at M&T unhedged, we are a very asset-sensitive bank. If you look at our liability structure, we have high percentage of non-interest-bearing deposits. We have a lot of operating accounts, so that gives us longer liabilities. And if you look on the asset side of the balance sheet, we're more commercial-oriented than consumer, so we have more repricing on the short end.
So we have to hedge, and we started hedging early in the year and kind of carried throughout to get us to be in a neutral position like we are today, you know, as the Fed started to drop rates in the last month or two. So we feel good about that. If you also look at the progress that we've made in the last couple of quarters, we run our company with a lot of criticized loans, and that we do that intentionally because we support our clients when they're under stress. If they support their credits with us, we support them keeping on the balance sheet. It's very rare that we would sell their assets. Ones that we sell are more financial-oriented customers or ones that have backed away from supporting their loans.
But given that, we've still made a lot of progress in dropping our criticized over $2 billion and our non-performing, non-accrual assets over $400 million, and believe that trajectory will continue into the next couple of quarters as well. So we feel good about credit quality. The other thing is we've been working four years on CRE. You know, our CRE ratio as a percent of capital and allowance four years ago was 260%. At the end of September, we were 148%. So we feel we're at a point now where we need to be, and we're basically starting to build back our pipeline and start to grow CRE assets in most categories with the exception of office. It's probably the one category that we aren't really gonna add much to. That still has to play out in the book that we have.
But if you look, put all that together and you look at, you know, just our profitability that we've had this year, you know, we are best in class from a non-interest margin, from a PP&R, return on tangible assets. And we also, we started our share repurchase in the third quarter. So we've had a lot of good things come together in 2024 and look for 2025 to actually continue to pick up in the pace and have even more momentum and more success there. You know, industry-wide, you know, I think people are looking for maybe a upward-sloping yield curve, maybe a little increasing, loan growth with the election results.
You know, that's definitely gonna be much more pro-growth, the Trump administration, which is, you know, putting more business people in offices, and they're gonna use, I think, our industry to help stimulate and help grow faster the economy, which I think will play very positively for our whole peer group as we kind of move forward.
Okay. If I just ask a couple of follow-ups to comments that you made, and I know you talked about this, I think, on your most recent call, that you run sort of higher criticized loan levels. Now, did the regulators give you a hard time about that at all? Do they have any sort of pushback? Is there?
I wouldn't say that they pushed back. I mean, they look at what we do and, you know, they agree that, you know, these are criticized loans, and criticized loans by any definition would have higher risk. If you look at M&T's history, we don't have a large history of having losses on these criticized loans. That said, you know, when we run our stress tests, you know, with the Fed, you know, we know that they penalize those assets more than non-criticized. You know, one of the things that we're probably gonna do next year is, it's the year since we're a Category IV bank. It's every other year we have to do the stress test. Next year is our off year.
But we believe with our progress that we've made on the quality assets, the shrinking criticized and non-accruals, coupled with our PP&R being really strong, we're actually gonna opt in. Even though we had, you know, a good stress capital buffer, we were one of three banks that actually shrunk last year in the stress capital buffer. We feel confident that we have a good chance of shrinking even further. And, you know, for us, it's getting closer to the peer group. You know, we're still at the higher end. We think we can get into the middle of the peer group maybe through that over time. But, you know, as we continue to have a more diversified balance sheet is really what we're trying to build out at M&T.
You know, if you look at it, we're gonna have less concentration of CRE on balance sheet and more growth in commercial as well as consumer, and if you look at our fee businesses that we're having, we're having really good growth in our trust business, our ICS businesses having a record year, coupled with our mortgage businesses and others, so we'll be really diversified, so I think we're set up hopefully to have a good stress test next year.
I know it's been an issue, and then just on commercial real estate, you said, and we'll talk about this a little bit, but you just made a comment about office in particular. Sorry, and if you wanted to, is the pricing very attractive right now on office because nobody's there? Like, at what point does it become maybe a little bit more attractive to add that because the pricing is such that, you know, you can get the favorable spreads?
I think when you look at our CRE portfolio, all sectors with the exception of office is really curing and getting better. Office still has what I would call a tenancy problem, so a business model problem. There is less people going into the offices. You have still leases that are leased out and there's nobody in the buildings. So there's still a net negative factor going into that sector. So to actually support an office credit, it would have to be something really unique that would really know that tenancy is gonna be there for that longer period of time, from that factor. The book that we have today, you know, continues to shrink. You know, for us, three quarters of our loans are in 2026 and beyond, and same with our leases.
So we have a longer time period to work through those credits. We feel we're reserved adequately for the losses potentially that could come out of that portfolio, so we feel good about that, but it's probably not a portfolio that I would add to at this moment.
Okay. All right. Thanks, and then just, staying sort of big picture, sorry. M&T has four main priorities and seven key strategic investments. So can you talk about the strategic investment, investments and then how they tie with your four priorities? We'll start there.
Yeah. So I'll just give you the our four priorities. And we've had these priorities, pre-me joining M&T, so they've been around for a bit. One is to capitalize on the acquisition we did with People's and grow New England and Long Island. There's five states that we wanna continue to increase our market share in. The example we use with that is if you look at Baltimore and where Baltimore is today, we entered Baltimore 20 years ago with the Allfirst acquisition. And over that time period, we continue to put more and more resources and focus of our six primary businesses that we have into those markets and have done a tremendous job that we are a dominant player in the Baltimore metropolitan area. So we wanna do that, you know, in this market here in Boston. We think we wanna be a dominant player here.
There's really not a bank like us here in this marketplace. We believe you have the larger players, which are good, more digital-focused, oriented. You have some smaller players which are involved in the community. I think M&T really brings both good, sound technology products and services to the table, a really strong belief and desire to be dominant in the community and visible, helping with nonprofits and elected officials to be successful in these markets and really kind of grow it out over time. So we're adding more and more resources to the Boston and, you know, hopefully it won't take 20 years, maybe in 10 years where we're as dominant as we are in Baltimore up here in Boston. So I think that's one priority. The other priorities are optimizing the resources that we have.
That's just getting more savings and using that as a flywheel to make more investments. The last two are really focused at improving our structure from a resiliency perspective. We have a lot of processes and systems that are aged that we're updating. We've done a good job in the fraud area call center, and other areas that we've already upgraded, but we're in the midst now of, you know, putting money into and finance. We have an older general ledger we're upgrading in our commercial area. We're upgrading our commercial servicing system. We'll probably continue. We're adding two, actually three new data centers. As you become a Category III bank, you need to have two data centers that are within 30 miles, so you have immediate redundancy, and then you have to have another data center off a power grid.
So we have. We've stood up two in Northern Virginia and our third one's outside of Chicago. That project will get done at the end of 2026, early 2027. We're investing in our digital area, trying to help with finance and risk data as well as our customer data. Then cyber. Cyber is something that you have to always put more resources and just money into it to continue to make that better. Our last priority is really improving the risk function of our organization and build out of risk. We're doing it in finance. We're increasing or better or improving our liquidity and our capital processes there. From an overall risk perspective, our risk appetite throughout the whole company is improving. It's also helping from a client experience perspective. Our last project that we have is treasury management.
Treasury management, as we become more diversified and larger in C&I, we need to have really sound treasury management products and services. We've made a lot of success there. It's now growing 11% year over year and believe that that will continue to be a fast grower for the next several years as we continue to invest more in treasury management. A lot of exciting stuff. We got a lot of stuff we're working on, but we're making great progress.
Okay. So like how on the Treasury Management, how close are you to when will that be done?
We believe right now our systems are really good. We're now trying to actually build and try to get more superior performance. There's a couple of projects that we'll probably invest in 2025 that will allow us to actually be more best in class from a treasury management perspective. We're really sound now and our people are confident to sell the products and we're very competitive against others in the marketplace today.
So you're just enhancing what you already have.
Yeah.
You don't need to upgrade from scratch.
Exactly.
Okay. All right. Sort of in that same theme, there's only so many dollars to go around. So how do you prioritize what's gets? I mean, you have a lot of in the pipeline right now, but how do you decide what gets to the finish line?
Yeah. So when I joined M&T, I wasn't quite sure, you know, how M&T would play out, having been at a couple other companies in the past. And what we decided to do, and we did in 2024 and we're doing again in 2025, is we're trying to redistribute the incremental expense dollars into the priorities that I just talked about. So what we have asked our businesses to do and our support functions is to come up with the flat budgets, and absorb their merit. So this year, merit's at 3%. And they've all been able to do that. You know, we're going to the board in another week and a half with our plans for 2025 and our three-year strategic plan. And what we do is we'll guide, you know, probably between 2.5%-3% of what expense increases.
Those expense dollars are being reallocated to those seven projects that I just talked about. So you can see that we're putting the bulk of that money in technology and risk enhancements and client experience are really the three areas that we're really putting the incremental dollars in. We're slowly just reallocating expense dollars into those priorities that we have in the company and still have a really sound discipline expense base that we still can deliver positive operating leverage for the company. So if I can grow expenses 2.5-3%, I think our revenues can grow more than that. So I believe we'll have positive operating. So it's a balancing act that we're trying to work through. And, you know, I give all the credit to René and my peers on the leadership team.
They're all in for what's the best for our company and what we're trying to achieve and what we have to get done. And we're all working together. And, you know, even with these flat budgets, you can see the success that we've had and they've been able to run really strong businesses. I mean, we're growing loan growth. I mean, I don't think in our history, M&T has actually outpaced loan growth in our peer group like we've done in the last year. Even with shrinking CRE, we've been growing C&I and our commercial, our consumer businesses, and we've actually outgrown most of our peers in this past year. So business is performing well. Our fee businesses in third quarter had a record performance. If you back out, we've made up all the difference from selling our insurance business and our CIT business as well.
Things are going really well in a positive momentum, and we just need to continue to execute and capitalize and continue to do better in 2025 and beyond.
Okay. Then just moving to rates and sort of how you're positioned. I think that you touched on this a little bit in earlier comments. You are perceived as being an asset-sensitive bank. You talked about some hedging that you've done. So with the 25 basis points, we get 50 and then 25 yesterday, and maybe fewer. It remains to be seen. But how are you positioned with a you know loosening of interest rates, lower interest rate environment?
Yeah. So from a hedging perspective, you know, we've been able to put on hedges throughout this year that basically help for 2025 and 2026, that basically get us relatively neutral. Those hedges go on at better rates than what we have today. So what's running off versus what's running on. We have about a 60 basis point on average benefit over 2025, which is a positive impact even if rates don't change. We have been moving money from the Fed. At the start of 2024, we had about $30 billion at the Fed. Now we probably have about $23 billion at the Fed, and we've redeployed those dollars into the investment portfolio. You know, our yield on the investment portfolio was in the 370s.
You know, we'll probably pierce through 4% on average in the early part of 2025 as we continue to average up with what's maturing in the investment portfolio and us continuing to add there. I wanna stress that what we are buying in the investment portfolio, we're keeping our duration about three and a half years. About half of what we are purchasing are positively convex securities. That means it's not going to get whipsawed with rates moving up and down. It's treasuries and agency CMBS. The other half we are putting into shorter tranched CMOs and more seasoned MBS. And the blend of those together while we're giving up yield will give us more certainty. As rates change, our cash flows will remain much more constant than what maybe other portfolios might have from that.
And then we spent a lot of time really working with our businesses on how to reprice our deposit franchise and the strategies that we have. And the execution on deposits is really important, especially as rates change. You know, one of the things that Rene talks about a lot, and I agree with him, is that, you know, we really need to focus on the fundamentals of banking. We're now in a period where rates are higher, interest rates are moving, and we have to get back to making sure people in the businesses price their loans as well as their deposits off of our funding curve so that we make, you know, net profit on each of those transactions. And then it's the role of the treasury function in our company that really manages the interest rate sensitivity.
The job of the businesses are to maximize the revenue with our clients. It's really treasury's aspect is to try to neutralize the risk that we're taking as we move forward. Those fundamentals need to continue to get reinforced throughout the company because there's always turnover and changeover. It's been a certain amount of time since we've had a lot of rate changes that we're having now, both on the yield curve as well as the direction of the Fed, and just making sure our business leaders know what to do and how to be successful moving forward.
I just wanted to go back to your comment from your $30 billion down to $23 billion in cash. You had held a lot more cash going into the cutting cycle, and that really was very helpful to you. Are you inclined to keep more cash than before? Maybe post the Silicon Valley episode, are you inclined to hold more cash in general? I know there's not a penalty associated with that really right now, but going forward, are you inclined to hold more cash?
Yeah. I think when you look at what we learned from this last crisis, and I think just good sound banking, you wanna make sure that you have a lot of liquid assets that can be used very quickly, in if you had also a really stressed event. So we've looked at the flow of funds, and you know, we move a lot of money through our bank each and every day. Our ICS business does trillions of dollars on a weekly basis. So it's a high volume of money moving through. And you know, we look at our funding sources, and we look at what funding sources might be higher risk than other funding sources. And we've come up with actual internal limits.
You know, there's no rules or regulations, but we believe that, you know, we need to have money at the Fed, you know, probably in the $15 billion-$20 billion range is what we're going to keep there, I think, on a long-term basis just because we wanna have really ample liquidity. You know, we're always a very conservative company. We wanna make sure we have strong liquidity and strong capital. You can't really do much if you go into a crisis right away and you don't have it already, from that perspective. So I think we're gonna operate with just more liquidity at the Fed, and you know, people, I think, will be, I think, okay with that 'cause it's the right thing to do long-term.
There's always gonna be a volatility in our industry, and we just wanna make sure that we not only survive, but we actually thrive in those times of stress and pick up clients and support our communities. Our job is to support the communities that we're in and make sure we can meet their financial needs, so I think that's really important.
All right. I'm gonna go to the audience, see if there are questions on it.
Hi, Daryl. My name's Manan Gosalia, Morgan Stanley. Since you spoke last on the earnings call, we've had a couple of rate cuts come out of the forward curve. Does that change how you think about the trajectory of criticized assets from here?
You know, I think we're gonna continue to have a good decrease this quarter. You know, and it's if you look at really what drove our decreases in the third quarter was there was more improvement. Rates help, but it was really our clients just got better. They're operating businesses. So one of the things we had a lot of criticized assets in our dealer financial services area. The RV business in that space specifically is cured. They've gotten through their more aged inventory, so their P&Ls are better. So we've been upgrading those credits. The other thing in the CRE space, when you look at like assisted living facilities, what we're seeing now when you go through the financial statements of our customers is that the occupancy rates are increasing, which has basically given them more dollars and more support. So that's a positive.
And if you look at our construction book, which also had some nice decreases and criticized as these projects are completing, you know, on time, and looks like they're getting permanent financing as needed as they move. So those are three sectors that we saw this past quarter that are getting better. And my guess is as we move into 2025 and the focus on the new administration, trying to grow the economy and, you know, try to be more, more pro-business and probably lighten regulations, not just in our industry, but throughout industries throughout the U.S., my guess is the P&Ls overall will, will get better. And I'm still really positive that criticized will continue to come down.
Hey, Daryl, Brent Erensel from Portales. So given the election and the change likely in the capital requirements and regulatory standards, when do you think you'll change your pace of buybacks? What do you think would be some guidelines in the future? And over what timeframe might you implement the changes, or what, when might we expect new guidelines to emerge from the administration?
Yeah, that's a great question. Thank you for that. What I can tell you is, you know, we're doing what we said we were in third quarter. We're doing it in fourth quarter. We're buying back $200 million. We'll give you guidance in January, what we plan to do in 2025. I think the things to look for is kind of what Manan just asked is continued improvement in our credit quality, by continuing to drop our criticized levels. That's playing out very positively. If you look at our capital position, we're in a great position today. Our CET1 ratio will probably be around 11.6% at the end of this year. When you include AOCI, it'll still be around 11.6% this year. So there's no real haircut that you have there. It's what you see is what you get, from that perspective.
So we are in a really strong capital position with a lot of financial flexibility. You know, anecdotally, one of the things I talk about, that we could do, and we haven't committed to this yet, but, you know, if you look at, you know, if we wanted to just keep our capital ratios above 11%, we could easily repurchase $2 billion a share of stock in 2025 and stay over 11% with our earnings from that. And if you look at, you know, going out, if we continue to get more improvement in credit quality, the economy's stronger and going, you know, maybe you don't need to have 11% capital, and you can kind of do the math on that. But, you know, next two to three years, we could have some really strong flexibility from a capital position. Yes.
Hey, Daryl, John Pancari, Evercore ISI. Similar to Manan's question, in terms of rates, if you do get this continued steepening of the curve and the 10-year moving higher, how much or how soon does that impact your cure rate in office, CRE, and just broader CRE, and how soon could it impact your risk ratings? You know, you gotta assume you've got a more challenging position if the 10-year continues to move up.
Yeah. The way I would look at it, John, is that the yield curve is important more for the placement of permanent financing. So for the loans that we have in the construction book, as they get close to completion, then they go out to market and get permanent financing. A higher yield curve just means that the less proceeds will be allowed for the borrowers to get. So it makes that a little bit more challenging. But if you still have the Fed dropping interest rates on the short end, what that does, we're very formulaic on what we put in criticized and non-accrual. So anything under a 1.2 debt service coverage ratio gets criticized. Anything under 0.9 debt service coverage ratio goes on non-accrual.
So what you could see, and I think we'll probably see, is that, you know, we'll end up with an upward-sloping curve. And as these our loans come up for renewal every year with lower rates on the short end from the Fed drop, you'll see a lot of loans cure and be better from a debt service coverage ratio, from that perspective. So that actually makes it easier for them. It'd be harder for them to do longer-term financing 'cause of higher rates. But on the short end of the curve, I think you still see a lot of loans getting cured from a debt service coverage ratio.
So it sounds just to follow up with that. So it sounds like on the commercial, and you've alluded to this before, in commercial real estate, rates ex-office rates will help. And office, it's a structural issue right now, and rates doesn't matter how low rates go. It's hopeless. Okay. And then, on the permanent financing as construction comes, does that give you an opportunity in the mini- perm side if it's a little bit more challenging for people to get long-term financing in the permanent market?
Yeah. I mean, for us, you know, we were still gonna stay in the CRE business. We're gonna have a limited amount of balance sheet capacity to serve our clients, and we'll use that balance sheet capacity for our best clients that have been with us for a long period of time. Then we will use other sources. It's not just placements and agencies. We have connections with life insurance companies and other insurance companies as well as non-banks. You saw publicly we announced a couple quarters ago our relationship with Blackstone, our relationship so they can have their flow through production go through to our agency DUS program that we have. So, you know, working with clients and our customers to meet the needs. You know, it's a very creative industry and innovative.
I'm sure we'll be able to to meet the needs of most of our customers one way or the other.
Okay. Mike, question.
Hey, Daryl, you highlighted some positives. Criticized assets down this quarter. Yield pickup from your hedging. Positive operating leverage, I think you're saying next year. But then all this insider selling all around the same time when JP Morgan had a lot of insider selling, at least you had the CEO talking about geopolitical risk and inflation and everything else and just all these sales and its significance, including René. Is there anything underlying that? Are you like, is there an underlying thought the stock market's too frothy or under? 'Cause it just seems too many people selling too much to just be a coincidence. Thanks.
Yeah, Mike. I mean, I think it's more personal, but the way I would look at it, I, I look at myself, from my perspective. I haven't been at M&T long enough, so I don't have a huge position there. But, you know, when you're with a company for a long period of time, like René and many of the others that have sold, and they I think René's never sold before at all when you really look at it. It was an opportunity for him to diversify his holdings that he had. And for him, to do that, he still has a significant portion of stock still in the company. So he just, used a smaller piece and, diversified, from that perspective. And, you know, I, I talked to him about it. I said, I, I make sense to me. I, I support it.
And I knew somebody like you might ask that question. And at the end, I mean, if you can talk to René one-on-one as well, but he is more committed than ever making sure that M&T is successful and continues to grow. But he's just trying to diversify his assets a little bit when you have, you think of it, 30-plus years in an organization that he just needs to diversify a little bit. So I wouldn't read too much into that. You know, a lot of our options have been out of the money for a while, and now our options are in the money. So people are executing, and you can kind of go through the valuation metrics on those options that you have and that, you know, as time, you know, gets closer to time, the option value actually starts to decrease from that.
So some of those exercises that you were on, you know, were on the option space as well. And, you know, I, I used to do that in my prior life too. I would exercise options when you don't wanna get too greedy, right? So when it's in the money, it's getting closer to maturity, you wanna probably exit and get out of it before it actually expires.
Excellent segue into the theme of the conference and do you really need scale? We had an interesting for those that were around yesterday afternoon. We had some interesting statistics from Zions Bank that sort of refuted that. So I don't know what your opinion is, whether you need to be larger if Goliath is winning.
So I'm maybe a little wiser. I don't know if I know the answer, to be honest with you, but I've seen a couple different sides of that. I think what I would say though is, you know, we are at a size now where we think we can survive and thrive, and you look at our efficiency ratio, we lead the industry, with the lowest efficiency ratio in large bank space today. So if we do a deal, I'm not sure that our efficiency ratio is gonna get any better than where we are today, just to be honest with you. Maybe we'll get the target to get closer to what we have today, but I am not 100% sure that we can drive it large. 'Cause you don't wanna starve the company. There's a lot of investments you need to continue to make.
And so you need balance there from that perspective. But I think when you look at it, you know, are the two organizations better apart or together is how I would look at it. And, you know, I, I'd start with culture. I would start with serving the community, you know, and more. When you look at the People's acquisition, they were very much a community-oriented company. They had a great credit culture, which fit really well with M&T. So when you have institutions like that you can partner up with, it makes it really easy and really successful when that all comes together and, and really, positive event. And I think that made a, a lot of sense in the world. You know, people talk about needing higher technology budgets and, and, and all that.
You know, there is some truth in that if you're larger, you do have more dollars you spend in technology. I would just preface that is that you really have to do that in combination of continuing to run a simplified organization. If all you do is put two things together and you don't simplify the company, it actually becomes much more complex and it makes it harder to run and operate and all that. So I think it's a combination of working to keep the company simple and having more dollars to deploy in our technology budget. You look at our technology budget today out of our expense space, it's over 20% of our expenses and is in technology. And that continues to grow as we disproportionately focus on the investments that we are making.
So I think the answer is kind of a no answer. It really matters on the target. And then if it's better for both and it's culturally a good alignment there, it is really critical and important.
You did make a comment that, if you have a very low efficiency ratio and if you did a transaction, you're not sure if you could improve it. So does that mean no more deals for M&T now? You can't?
I can't say there'd be no more deals for M&T, but I think, you know, it's really serving our communities. And, you know, we are good stewards of capital for all you and investors. And, you know, we protect our tangible common equity very well for you. And we have a great history if you'll go back five, 10, and 20 years. Our growth of tangible book is best in class, from that perspective. And we are really good stewards of that. If you look at, you know, correlations, you know, return on tangible common equity used to be a great measure until we had that OCI issue. But I think still that will be a good measure. And in tangible book growth coupled with dividend growth, I think is another good measure.
I think we are really good stewards to make sure we have strong returns to our shareholders.
Anything from the audience before we're a little short on time? But I guess I'll just have one last one with your AOCI comments. You know, rates are falling, steepening yield curve, time is all, is gonna heal all of that. Does that help with the M&A to see if it help spur that on, makes it a little more palatable?
Yeah. So I first wanna talk, say that we're focused on our four priorities and we are executing to the four priorities, and that's really what we're focused on. Obviously when you go through the math and you model other companies as potential acquisitions, lower rates, you know, cure the AOCI issue. So that is moving in that favor. Time also helps as you get closer to maturity. That also makes those numbers better, and I think that is an important factor. You also have to look at the loan book and see what the quality of that loan book is could also, you know, have an impact on the tangible common equity as well. So I think all that is more positive from that perspective. I'd still arc back to it's gotta be a really good cultural fit for us and good long-term investment for us.
It's gonna make not just us better, but also the target better. And the whole community has to benefit in the long run from that perspective.
All right. Mike has a question.
What kind of regions, type of banks? I mean, you know, you're saying you might buy at some point. You're free advertisement, you might wanna buy it. For the M&A, just who would you be potentially interested over the next five years? We know it's not imminent, but what regions, in market contiguous? It's a free advertisement for you to tell all the smaller banks that, hey, you'll partner with them.
So I appreciate that question, Mike. What I tell you is, you know, we have a history of doing bank acquisitions, successful history, and I'm sure that will continue over time. Our focus right now are on our four priorities. But if we were to do a transaction, we don't wanna really be a national bank. I call us a regional champion. You know, we are really good in the markets that we're in. We're in the Northeast, we're in New England, and the Mid-Atlantic. You know, those are our markets that we are really good in. So I think in market transactions, you know, are favorable, you know, if it's a good cultural fit for our organizations, both pieces. You could potentially look at contiguous type acquisitions or a combination thereof.
But, you know, it's really gonna be from the same playbook of what we've executed for the last, you know, 20, 30 years under Bob and Rene. It's not gonna be any different than what we've done, and we're gonna continue to do it for the right reasons and all. If you look at our board, you know, I think we have seven or eight board members that are former CEOs from acquisitions and all that, so we are a favored acquirer. People wanna partner with us when that time comes, and I think we'll do it for the right reasons when that happens, but you know, right now we're really internally focused and just trying to execute on what we have, and when we get done with that, you know, we'll peek our head up and then see what else is out there.
But right now we're focused on executing. And I think we've done a good job in 2024 and hope to do a better job in 2025 with getting our priorities across the finish line.
All right. Thank you very much.
Thank you, Susan. I really appreciate it.
Okay.