All right. Up next, we are pleased to have M&T Bank joining us once again. M&T Bank's had an excellent year, led by its strong capital position, improving credit, and strong balance sheet management. This has led to them being the best-performing stock in our coverage for the second straight year. So not to set the bar too high for you for next year, Daryl. Joining us once again is CFO Daryl Bible. Today's presentation is gonna be a fireside chat, although if anybody missed it, they did post slides last evening about 5:00 P.M. Brian Klock was running around trying to get them posted, so they were out there. So with that, Daryl, maybe to start off, 2024 was an encouraging year for the industry despite all the uncertainty. For M&T, as I highlighted, it was another outstanding year.
Credit, you know, credit showed signs of improving balance sheets in a better place from a risk perspective, and you began returning capital. So maybe just talk about some of the key things that led to such a strong outcome once again and how this positions you to succeed into 2025.
Yeah. Now, first, I just wanna thank you, Ryan, for inviting the company here to present.
Yeah.
And really appreciate that. That's something that we enjoy doing, closing out a year and all that. So we've had a lot of success this year. You know, it's been a huge team effort. René has kinda led the charge in the company, but we've had great execution throughout. You know, at M&T, we really live our purpose to make a difference in people's lives. We really think that we are the best bank positioned to serve our communities that we have out in the marketplace. You know, for us, it's really executing on fundamentals. We're really talking about fundamentals that we have. And if you look at what we've done in the credit risk management side, the interest rate risk side, capital management side, you know, we've had really strong execution.
You know, from a credit perspective this past year, when the year started, there were some doubts, a lot of questions around where we were with our large credit size book. We've seen that come down now three consecutive quarters. Our non-performing assets are also decreasing, which is very positive. Our charge-offs that we gave, at the beginning of the year this past year, we're right on track for achieving those, very solidly. I think if you look at our CRE, we've been shrinking CRE since 2019.
Yeah.
We were at 31% of our balance sheet in CRE. We'll probably be at 20% in the fourth quarter. You know, we're at a level now where we think and we have opened up and started to make CRE loans again. It will take some time before you see those balances start to grow on the balance sheet and stabilize. The key right now, though, is to get all of the balance sheet, you know, growing with what the market will give us. We don't wanna get the CRE portfolio to be oversized again, which still means we have to continue to grow our C&I book, our consumer book, maybe even our residential mortgage book as well as, as that kinda moves out, from that perspective. From an interest rate risk perspective, you know, I would say, you know, we've done a good job.
Treasury's done a good job neutralizing our balance sheet, you know, pretty consistently. We aren't, you know, big, where we make big decisions and throw it all in on the chips. We kinda dial our average in over time.
Yeah.
And we've done a good job with that, both with moving cash from the Fed balance into the securities portfolio. You know, we're probably at $34 billion at that now. You know, so we've added good $5-$6 billion to that over the year. We've added hedges, you know, that start in 2025 and 2026 that now will be averaging up throughout 2025, 60 basis points. You know, we have really good, strong repricing of our fixed-rate lending books. If you look at the investment securities book, you know, that's going to price. We have $5 billion maturing at 280. You know, what we're buying with our mix of securities now, that's gonna go up a couple hundred basis points. Our fixed-rate loans, both on the consumer side, Resi mortgage side, and even some fixed commercial assets are repricing positively up probably about 150 basis points.
We have a lot of trends, but I think the most important thing that we really wanna focus on is trying to stay as neutral as possible and really try to grow our businesses, grow our customer relationships. When you really look at it, you know, any bank can grow maybe one year really well and maybe position something really right. We wanna be consistent and be a continuous grower in good times and bad times throughout all economies. So it's really focusing on growing your businesses. We have six really great businesses at M&T. All of our businesses are really poised to have a great 2025, all growing more relationships, more accounts, growing both deposits and loans. Very, very strong commitment from that perspective.
Great. So, you know, Daryl, well, it's only been a few weeks. You know, I know you and the team are probably out talking to clients. You know, what are they saying about the environment that they think we're about to move into?
You know, I would say right now, people are, you know, I think more hopeful that things will be better as we move forward.
Mm-hmm.
But with the administration, obviously, they're gonna have, you know, flat to lower corporate tax rates, so that's a positive.
Mm-hmm.
For the economy. You know, I would say more reasonable, maybe smart regulations rather than piling on more and more.
Yeah.
Regulations. So that's a positive for the economy. So I think people are hopeful that will continue to go through. But, you know, if the government and it seems like they're going down this direction of really trying to be much more pro-business and grow the economy and if the economy grows, I'm a firm believer that our loan book will grow. If loans grow, then our deposits grow. It all kinda.
Yep.
Plays together. I really think this administration believes in our industry. Our industry can basically continue to have capital, to basically have the economy grow, and.
Yep.
They will help us to help that growth actually occur in the marketplace.
Maybe, switching a little bit.
Mm-hmm.
To the near to intermediate term. In the slides, you know, you gave an update on the fourth quarter. You know, where you highlighted loan growth as an example. The market's gotten excited that we're gonna see loan growth return at some point in 2025. You know, how are you just broadly thinking about growth? What are clients saying, and what do you see as you look into next year?
You know, I think we're optimistic that we will continue to grow. You know, if you look at the past year and a half, we've been shrinking CRE, growing C&I, and consumer. I think in 2025, it's gonna be a little bit different in that CRE is gonna start to level off probably mid-year and start to grow second half of the year. So you'll basically have all the portfolios growing on the balance sheet from that perspective.
Mm-hmm.
We, you know, right now, we project probably the economy growing at 2.5%-3% range.
Mm-hmm.
So that's probably consistent with what the market will give us to grow. We aren't gonna change our credit box. We're gonna grow what the market gives us, really serving our communities and customers to make them be financially successful.
Maybe just a two-part question. First, for the fourth quarter NII outlook, I think you're saying $1.73 billion± . I think in the prior, it had been plus. Maybe just talk through what are some of the moving pieces that have impacted the NII this quarter before we talk more broadly about it.
You know, we're I think we're pretty much on track. I think we feel good about fourth quarter, you know, being approximately $1.730 billion, from that perspective. You know, how we're getting this quarter is a little bit different than what what's planned. You know, we gave guidance that, you know, deposit betas would be around 40. You know, we actually had expectations that they'd actually outperform. We thought they'd be closer to 46. But what's really happened in October, November, and still hanging in December is that we've actually had really strong deposit growth. And even though our betas were higher since we're getting more growth, you know, in some of the higher-rated betas.
Yep.
We're coming in closer to 40, which is, you know, good from that perspective.
Yeah. 'Cause you're bringing on higher costs.
Yeah. But I think of it as a real big positive because it's coming in under our funding curve. We have a lot of maturities that are maturing in the first quarter. We have $4.5 billion Federal Home Loan Bank advances. We also have some debt maturing, so over $5 billion. So come January, early February, we will right-size our balance sheet and get our balance sheet to be much more efficient. I would expect second quarter margin, everything else being equal, to really bounce up really nicely as in the.
Yep.
As we go forward.
Gotcha, so maybe, just to build on that, I know we'll get formal NII guidance in January, but maybe could you just discuss some of the drivers of NII for, for you, and could 2025 be a record year like every bank seems to be out there highlighting?
You know, for us, it really comes down to fundamentals. We're working really hard, our treasury team and our senior leadership teams. It's really we have interest rates in the marketplace. Interest rates are moving, so it makes it fun and interesting, and then our treasury team's working their butt off trying to keep us relatively neutral from that, but it's really how you price your loans and deposits. We wanna make sure that we're pricing loans and deposits, you know, either over the funding curve on the lending side or under the funding curve on the deposit side so we capture revenue. The jobs of our business is to maximize the revenue while serving our clients. It's a job of treasury to neutralize that interest rate risk, and that's the role everybody plays in the company.
We believe that's really how we kinda grow consistently your NII over time is working and really executing on the fundamentals that we have.
Just to wrap up the views on the fourth quarter, you know, we talked about the NII, the outlook for loan growth. Anything else in particular you wanted to highlight, whether fee income, expense, credit, or, you know, it sounds like deposits coming in better? Anything else that you wanted to make sure that we were aware of?
You know, our fee guide actually was up.
Okay.
If you look at our core fees, they're up from the guide that we gave in October, so we're having good, strong fee income performance. We have some notable items on the fee side. We did sell some, I would call, non-core securities. We owned some trust preferred from other banks. We sold those. We owned some stock from the GSEs. We sold those.
Mm-hmm.
So you're gonna have a gain in there of about $16 million. We noted that in that guide look. So I don't count that. And if you don't count that, we're still beating fees on the guide basis. On the expense side, our expense guide didn't change for core expenses, but we do have two, I would say, notable items on the expenses. One is that we had preferred stock, you know, on our books. We called all six tranches. Three of the tranches had 8% coupons, which is really high interest rate, obviously, to carry. The other three had SOFR plus 500-type spreads. So we called all those. Because they were marked to market when they were acquired through bank acquisitions, there's a charge in there, a little over $20 million. It's about a three-year earnback, so that's gonna have part of the charge there.
I think it's $46 million total. The other charges were exiting out of two buildings, from a space perspective. One in Wilmington, Delaware, and the other one, we're shrinking some space in Baltimore. And that's another charge that we're taking. So I don't count that as core expenses, but those will improve run rate as we move forward there. We kinda call that out in the guide as well.
Gotcha, and maybe shifting gears a little bit. So, you know, this may have started a little before, but you arrived, but really accelerated in your time, just the transformation over the past few years of the balance sheet. You talked about right-sizing CRE, holding onto more cash, investing in more securities. You know, you had taken on some more wholesale funding, added hedges. Talked just before about right-sizing some things on the balance sheet. Are we now complete with the transformation, or is there more work to be done on the balance sheet? Recognizing there's always more work to be done.
You know, from a CRE perspective, we've really invested heavily in our off-balance sheet capabilities, and we think we are at the right point from a non-balance sheet perspective. So we believe we can really serve our customers, you know, the best way possible in a more capital-friendly way, from that perspective. You know, I would say from a cash and securities perspective, you will see us drift in 2025, probably average closer to $20 billion at the Fed, assuming the economy stays in good shape.
Mm-hmm.
Which we believe it will, and kinda drift up the securities portfolio into the mid-30s on the investment book. And that will just kinda play out, you know, over time. So in total, we'll have, you know, $55+ million in highly liquid securities, from that perspective. But, you know, things are always fluid and change, but for us, it's having really good, strong liquidity, really core. And I think we've done a good job cleaning all that up. So, you know, I think we've made a lot of progress this past year. We could continue to tweak things a little bit, but now it really comes down to our businesses and execution, from that perspective.
Just to add on to the point that you said, you know, cash coming down to 20 and securities in the mid-30s, you've obviously been adding to the securities portfolio, and it sounds like you're likely to continue. I guess, given the movement of rates, you guys are on a very short-duration portfolio. Has there been any consideration to extending at this point, just given, you know, the opportunities that the market's presented?
I think right now, we, you know, from an AOCI perspective, we believe that's gonna get in the regulations.
Yep.
We think that's probably the smart thing to do to protect tangible capital in the marketplace. Given that, you know, we think our AFS portfolio needs to operate with a duration, you know, in the three-year time frame.
Mm-hmm.
Plus or minus from that perspective. There's a couple ways to get there. You can buy longer-duration MBS if you want, and you can do layer of hedging. They're a little more complex. Those hedges aren't exactly appropriate right now, because of the shape of the yield curve and all that, we've been actually just buying shorter duration. We haven't really.
Yep.
You know, had to cost any revenue from doing that strategy. But we'll look at both. We'll, at net-net, we'll keep our portfolio relatively short in the three-plus area overall. But whether we actually just buy securities outright at shorter durations or buy longer and hedge, we'll let Treasury make those decisions and, you know, do what's best long-term for the company.
Daryl, the fourth quarter guide said NIM in the high 350s. You've sort of outlined a handful of different pieces across some of your remarks, you know, changes that are coming in the second quarter, neutral stance on rates, asset repricing, deposits, fixed-rate asset repricing. Maybe kinda bring these things together and what do you expect this means for the trajectory of the margin over the medium term, and where do you think it can inevitably operate?
You know, we are very positive for 2025. We think we have an upward trajectory on net interest margin for all the reasons we've noted earlier.
Mm-hmm.
You know, I think, you know, the year averages in the 360s. I feel pretty confident with that. We'll give you more specific.
Okay.
Guidance in January from that, but we have a good trajectory. You know, all of our businesses, you know, are planned to grow loans and deposits. They're all planned to grow more revenue than they had this past year. So we feel very optimistic for 2025, and that will come down to execution, from that perspective. I think if you look at, you know, the other pieces for 2025, you know, fee income, you know, fee income might actually be high single-digit growth.
Oh, wow.
We're having really strong growth in our fees, really driven by our trust businesses, both on the wealth side as well as ICS. Our mortgage platform, residential as well as commercial, are also very strong.
Yeah.
And we think those will actually help be the drivers on the fee side. On the expense side, you know, we've talked about our four priorities that we have: building out New England, building out our risk management framework, optimizing our resources through simplification, and then making our processes and applications more resilient and scalable. So those are our four priorities. You know, we are putting more money into those priorities. We think now is the time to get some of these finished off because of it gives us more flexibility to actually grow our company faster.
Mm-hmm.
Potentially. So our growth in the expense side will be in the 3-plus% range. I think our operating leverage will probably be 100 to 150 basis points positive operating leverage. But we're real this is a little bit different than we had in 2024. 2024, we had less expense growth. Here we have a little bit more expense growth to get these projects done, but we think we got the revenue both on the balance sheet side as well as the fee side to support the higher expense piece to still have positive operating leverage.
And could set you up well for exiting 2025 given.
Exactly.
All the things that you're gonna be doing. All right. No, that was great. Appreciate all the color on that, Daryl. Maybe to spend a minute on deposits. So you talked on the slide on your remarks about.
Yes.
Having faster than expected growth, which is obviously great to hear. You know, we've been watching, you know, non-interest-bearing deposits or disintermediation, as you refer to it, has been happening at a slower pace. You've been bringing down brokered. So as you think about the potential for loan growth coming back, you know, what are the strategies in place to, you know, replace wholesale funding, as you talked about, happening as you see in the late first quarter, second quarter, and also to grow core deposits?
Yeah. So I'm a big believer in having both oars in the water, you know, especially as 2025 rolls out. We wanna grow our loans. As we grow loans, that will grow deposits. It's just math.
Yep.
From that perspective in the economy. So both of those will grow out hopefully consistently throughout. We've had tremendous loan growth in the fourth quarter, basically driven by commercial, municipality, our corporate trust businesses, as well as our mortgage servicing businesses, all really strong positive.
Mm-hmm.
But when you look at our six businesses, they are all planned to grow, all planned to grow deposits, all planned to grow your lending platforms, from that perspective. So we feel good with that overall.
Daryl, you talked about the deposit repricing, think you're gonna be at 46, but obviously, you've had some solid growth that has brought that down a little bit. As you think about over the last two months how the rate cycle has evolved, so less cuts, steepness in the curve, how does that at all impact the way you think about the ability to reprice deposits, not just for the near term but over what could be a shallower easing cycle?
You know, for us, it's, you know, in the markets that we serve, we have different strategies. Some markets, you know, we have more market share than other markets. We try to be leaders in the markets that we have more share in, and we've been able to be successful with those strategies, and other markets where we aren't leaders, you know, we tend to be kinda the agitators in those markets.
Yep.
Kinda drive more growth and all that. Our business leaders and their strategy people have really good execution models, and we have a lot of growth. We're growing accounts. We're growing balances, and I think execution's really strong from that perspective.
So you mentioned earlier that, you know, there's gonna be a shift in CRE, which has been shrinking, you know, 31 down to 20. You got the, you know, the concentration level below 150, which I know was a goal of yours, and then I think you made comments that before that, you know, we should be down in the near term and then start to level off. Can you maybe just talk about, you know, the lessons learned from the past cycle and how that impacts, you know, the strategy of where you wanna grow in CRE? Obviously, office has been through lots of trouble, and, you know, there were some issues in parts of multifamily. How does this formulate where you wanna grow in commercial real estate moving forward?
You know, for us, it starts with customer selection. You know, we have generational customers at M&T, people that have banked with us for over 50 years from a family's perspective. Our customers are basically committed and supporting their credits, and if you look, even in our office portfolio, we have about $4.5 billion there. LTVs are under 60%, closer to 50%.
Mm-hmm.
So all that, it seems to be very positive, as we play out there. We aren't exiting the CRE space. We're gonna still be large players there.
Mm-hmm.
We're just going to try to blend in and use a lot of our off-balance sheet capabilities that we have with MTRCC with our agency placement basis. We actually have a partnership with Blackstone that's public now.
Mm-hmm.
Where we're helping execute some of their clients as well, through that channel. So that's a positive. But you know, we wanna basically grow and support everything. Well, we aren't actually looking to grow office right now. Everything else is actually fair game if it.
Mm-hmm.
Within our credit box, but we really wanna support our customers, you know, that have supported us over a long period of time and great relationships. We wanna be the bank that's really dependable, the bank that's really focused at supporting our communities and helping grow our communities. I believe that our bank is really a representation of what the community really looks like.
Mm-hmm.
If the communities are healthy and strong, the bank will be healthy and strong.
Daryn,
Not Daryn.
That's a Daryl.
Daryl.
So, you know, I think the markets have gotten excited, you know, post the election that we've seen some changes. You know, we could see some changes regulatory-wise, either the way the banks are supervised or, you know, the whatever rules are gonna come into play. I guess, what are your expectations? Obviously, we talked about AOCI, but obviously, there's a lot of other things lingering out there. I know we need to see what people get put in what seats, but I guess just broadly speaking, what are your expectations regulatory-wise?
I think at M&T, you know, we are actually in favor of smart regulations.
Mm-hmm.
What we've seen in the past several years is there's just been more and more regulations and no unwinding.
Yep.
Of all that. So I think, you know, if you have people in these seats that are much more balanced and actually understand where the risks really are and really focus on regulations that basically make sure that those risks, you know, are well contained and controlled, but really do the right thing that, you know, actually helps the economy grow as well as make the bank stay safe and sound from that perspective. We're gonna do what we think is right at the end of the day. You know, we have things that we do now that the regulations just don't make us do. Like.
Mm-hmm.
We're keeping all this money at the Fed, right?
Yep.
We're doing it because we think it's the right thing to do because of the volatility that we have with our business flows and all that. So that's something that we don't have to do that we do. We have limits now on how much AOCI we're willing to take for changes in our AFS portfolio. Nobody made us do that. We just think it was the right thing to do.
Okay.
So we're gonna run a good conservative bank long-term, and we want the regulations to also be smart to actually reflect that as well.
Daryl, you recently announced that you plan to participate in
CCAR 2025. That's like torturing yourself. You're one of the few banks, you know, who had a very successful 2024 with your SCB actually coming down. Most others went in the opposite direction. Maybe just talk about the decision to participate. I know you recently highlighted the hope is that it could bring it down further, but maybe dig in a little bit deeper where you think are the opportunities for the optimization. Inevitably, where would you like to see the SCB get to?
Yeah. I think we were very pleased. We were only three banks out of 31 that actually had drops.
Mm-hmm.
And we went down 20 basis points. But when you look at our SCB, we're still higher than most. And, you know, we really think that our balance sheet and our posture is better than what we have there. We've had good declines in our more troubled assets and the criticized non-accrual.
Mm-hmm.
We think that should play out positively. We think that the PP&R, you know, we're now a couple years away from the People's, where we had higher expense charges there. So we think that should be much more positive from that. So, you know, there's no guarantees. We know there's a risk there, but, you know, I think net-net we feel pretty good that opting in, you know, for this year, we will hopefully continue to bring down the SCB. One of the things that's important too, and we have a lot of other constituencies besides the regulators, and some of those constituencies, like the rating agencies.
Yep.
Really use the stress capital results to help them make some of their decisions.
Yeah.
'Cause it's one thing that is objective in the marketplace that everybody's treated the same way.
Yeah.
Right or wrong, and you know, having good relative performance in that, I think, will be beneficial to us.
That obviously impacts the level of capital that you run at and.
You got it.
You know, your ability to distribute. You know, you're one of the healthiest capital ratios in the industry, north of 11.5, highest adjusted ratio.
A real 11 and a half, too.
Yeah. Highest adjusted ratio in the industry. You know, two quarters ago, you began repurchasing shares. You highlighted on the fourth quarter that you repurchased $200 million. I think you recently said you could repurchase $2 billion and stay above 11%. So can you maybe just talk about what you need to see to start that journey towards 11%? And where would you ideally like to operate the capital ratios of the company?
Yeah. So, we have a lot of flexibility. You know, we have a lot of capital. You know, we don't really need this capital to run the company with the risk that we take, and from that perspective. You know, I would say that continuation of bringing down our criticized book and our non-accrual book, you know, will be positive for us to continue to lower our capital thresholds. We think we're gonna have a nice drop again in the fourth quarter. You know, we have submitted to our board, you know, our plan for next year and actually for the next three years and, you know, believe that our criticized numbers will continue to come down in 2025 and beyond. So we feel good about that. Obviously, you know, the economy still needs to stay in relatively good shape.
I know there are certain pockets that are stressed, but net-net overall, it's a pretty strong economy, and it could be even stronger, as 2025 actually starts to play out, from that perspective. We're optimistic that we will have a much larger share repurchase in 2025. We'll give you the exact pieces of that in January, but feel really good about what we can do now, and I get super excited for what we can do long-term, from a share repurchase perspective. I think our flexibility is maximum. I mean, we can repurchase a ton of shares and still grow our balance sheet really well.
Yep.
And really, you know, drive, you know, good core operating earnings for our company for many, many years to come.
So, you know, obviously, in addition to buying back stock, you know, M&A has been a core competency for the bank. You know, you sounded a little bit more upbeat on, you know, considering M&A. You know, so a couple of questions. You know, talk about maybe, like, what you would look for in a partner if you are interested. And, you know, how do you think about, you know, accelerating some of the investments that you talked about over the course of 2025, you know, across the four pillars and, you know, technology upgrades versus, you know, considering doing M&A? And what are the impediments for doing a transaction while you are accelerating those investments?
Yeah. So I touched on, you know, we are increasing expenses.
Yep.
We could actually get through some of these priorities faster.
Yep.
I mean, my goal, and I think our whole leadership team's goal, is to actually finish off some of these objectives. We have a huge project that we'll finish in 2025 around the commercial credit area.
Yep.
You know, my finance modernization will probably get done towards the end of this year, early next year. We have built out our new, colo data centers and put in systems up into cyber, making great progress on that space. So we got a lot of major projects that we're working on, but we're gonna finish off some of those this year and early next year, which will be positive. As far as acquisitions goes, M&T's had a great history for acquisitions. You know, I think, and I believe, and I think René believes, this starts with culture. You know, it's gotta be a good match from a culture perspective for our company. If the cultures don't really come together, ultimately, it takes a lot of time to really get it to be working, the right way from that perspective. So I'd start, from that perspective.
You know, having a good sound credit framework and all that, similar to the M&T culture, People's was very similar.
Yep.
Similar to that. So that was a great blend there. You know, I, as CFO, love looking at the other side of the balance sheet and having good, strong deposits.
Mm-hmm.
Knowing how to grow the operating accounts. You know, all of our businesses go to market to grow the operating account. If we get the operating account, that leads to more revenue long-term from our, our clients and customers from that perspective. So we're all really focused at getting that operating account first and foremost, and that, that is really important. You know, I think at the end of the day, you know, René and the board, you know, will have decisions to make, but it's probably gonna be an in-market type transaction if and when we, we do that once we get through some of these priorities. It could be contiguous or a combination thereof, from that perspective. But, you know, M&T is a favorable.
Mm-hmm.
Acquirer, and I think we'll have a lot of choices when we think the time's right to do something like that.
In the last, you know, regulatory regime, you know, if you did a deal, it had to be, you know, of size because there wasn't the opportunity to do multiple. Is there a certain size threshold you'd like to keep it below? Is there a willingness to look at multiple transactions? How would you think about that?
So it really depends on, you know, if you just compare, like, a $20 billion bank versus a $70 billion bank to just, you know, $7 billion, obviously, would have more impact on that. But if the location and the density, you know, our most success is when we have more density in our market share. So, you know, if we had, you know, a really good, favorable transaction in market in the places where we need to actually build out and get more could speed up our build-out that we have there, that could be an opportunity.
Mm-hmm.
From that perspective. You know, all these investments that we're making is making the bank Category III eligible.
Yep.
So we wanna be operating in Category III before we get to Category III, like we did in my prior life.
Yep.
And all that. So that, I think that that's really key from that perspective. And we're making great progress from that on all fronts throughout the company.
We made it 34 of the 35 minutes without asking a question on credit. Seems like things have really evolved over the last couple of quarters. You know, you did make a comment that criticized have come down. I think they were at $13 billion. You know, now they're below $11 billion. It sounds like you expect them to improve further. Maybe just talk broadly about how you were feeling on credit. How much more improvement could there be in the criticized, and how does that impact your thoughts on losses into 2025?
Yeah. I think, you know, we'll have a nice drop in criticized fourth quarter 2025. We have it going down a couple more points as well. So, we feel pretty good that we're on a good trajectory. It's not that people are refinancing away. Some of those are happening from that, but we're actually getting upgrades now. The healthcare sector is really strong. The reimbursement rates are coming back, which is positive. So we're actually having some nice upgrades in our book. So it's a combination thereof from that. I think if you look at a charge-off perspective, you know, we're on our projection of charge-offs for this year. Next year, we'll probably have similar charge-offs. I think we expect to have, you know, commercial and CRE to continue to come down. But our consumer book is still normalizing.
Mm-hmm.
So if you blend those two together, we kinda get back to the same place that we were today. More to come in January. We'll talk about that, but that's kinda.
Yep.
Expectations I would look for.
Great. Well, we are out of time, so please join me in thanking Daryl for his presentation.