Great. We'll put up the next ARS question, as everyone takes their seat for our final company presentation today. Very pleased to have Daryl Bible, representing M&T, as their somewhat relatively new Chief Financial Officer. Daryl, thanks for making the trip. Daryl had to drive down, because of all the flights screwed up yesterday, so we super appreciate that. I don't know if I would've caught me doing that on opening Sunday for football, but we appreciate you making the trip.
For you, anything's possible, James.
You know, Daryl, you know, maybe the best place to start, I think I haven't done the math exactly, but I think we're pretty close to your 100-day marker.
Got it.
At M&T. Maybe just talk to, you know, maybe give me your biggest positive surprise, biggest negative surprise.
I feel very fortunate to be at M&T, and you know, going in, you know, I knew René over the years, back and forth for 20 years, and we had a relationship and really respected him. You know, at my prior life at both companies, you know, we always followed M&T and really respected from a performance perspective, so I knew I was joining a really strong, well-run company. Having been there and having worked for René now for approximately 100 days, I would tell you, working for him is really, really great. He reminds me of Kelly in a lot of ways, just from an ethics perspective. He really cares about, you know, our employees, our customers. Really is driven by community. I'll tell you a fun fact.
So when I first joined and we were just coming off of the, you know, March, April, when things got, you know, a little tough in the industry. You know, we were going through if we want to ration out some of our portfolios, you know, which portfolios do you ration out? And said, "Well, I've done this many times before from a capital liquidity perspective." You know, you would go to portfolios like indirect auto, which isn't really a relationship business, and started going down the list of all that, and he stops me in my tracks. He goes, "You missed the most important filter." I looked at him, and I said: What did I miss? He goes, "We support our communities first." And, you know, he really means that, and he really does that day in and day out.
But, you know, the positives, you know, I'm really, really pleasantly surprised at how well people are receptive to me being there. If you look at our ability to grow our deposits, you know, I think our model was validated in this last downturn, in the March, April downturn. But we are really good at generating operating accounts. You know, we aren't in high growth markets, but when we get customers to get our operating accounts, we have really low attrition rates. It kind of blew me away when I look at the consumer book, business banking, commercial, all really strong core funding, from that perspective. And as I talk to people, people really live the mission, the culture. You know, trying to make a difference in people's lives is really present there.
You know, if there's any negative, I would say it's, you know, having to fill the shoes of my boss, right? My boss used to be the CFO and all that. It's a big responsibility, but I'm just excited to be there.
Great. And I guess, maybe, I don't know if those are slides, but they put a slide deck out last night, and I was hoping we can kind of maybe dig in deeper to some of those trends. You know, but first off, you talked about, you know, deposit trends in the quarter, maybe tracking a little bit, better than expected. Maybe just extrapolate in terms of kind of what you're seeing this quarter and kind of expectations looking out.
Yeah, I think as you look at this, you know, we haven't been through a period like this, where people really had to be cognizant of what happened to deposit levels, you know, in the past 15 years, 20 years. You know, so when we were doing our modeling and our forecasts out there, we were taking the trajectory that we saw in the second quarter, figuring out what it might be in the third quarter and fourth quarter. And, you know, what we're seeing is, is that the curve isn't just one directional. It's actually leveling off. So we're, we're seeing our non-interest bearing down on a linked quarter basis, but down much less than what we originally thought, which is the main driver of why we're raising the, the guidance up in NII to the mid-level range, about $7.1 billion for the year.
So I think that's a positive there. If you look at our businesses, you know, we're growing commercial deposits again. We're growing escrow deposits. Darren, you know, is now running the consumer bank, and, you know, we just launched some new deposit products in the last week or two. You know, my expectation there is that will stabilize and maybe start to grow in the next quarter or so. So it's really just learning new muscles that we haven't had to use in a long time. I come from a philosophy, and I haven't been a treasurer before, CFO, that we always want to be competitive as we are in the marketplace. So if somebody...
If you're dealing with a customer, you always want to go get their whole relationship, both loans and deposits, and we always want to offer, you know, competitive deposit rates out there, so we're always on. We won't pay the highest rates in the marketplace, but we'll pay competitive rates, and we'll win our share over time. I think that's the right way to approach it, and I think that's what we're starting to implement now through all of our businesses, how we operate and having success.
I guess the percentage of non-interest bearing has gone from 35%, I think you said, to 33% currently. You know, kind of where do you kind of see that leveling off?
You know, it really depends on, you know, how much, you know, rates stay high and for how long. It is leveling off now. When you look at the decline, we're down about $2 billion this quarter. We have about $2 billion increase in the sweep, so we're holding on all the clients, which is the main important thing. You know, my guess is that that will probably continue for a couple more quarters, maybe at a much more modest pace over time, with some seasonality factored into it year-end, which tends to kind of build deposits up some from that perspective. But, you know, we're a different company than we were 20 years ago. You know, we have a corporate trust business. You know, we're sitting on, right now, $12billion-$13 billion of non-interest-bearing funds.
You know, that could grow if activity actually increases in activity in the marketplace there. So I think we just have a lot of other products and services out there that I think we will continue to perform, I think, really well from a core funding perspective.
And then just maybe talk about the role of brokered deposits and how you think about those. They've obviously been a contributor in the first half of the year.
Yeah. So if you look at, you know, going into the March, April down frame, our treasurer, you know, did what he should have done, he and we basically borrowed at the Federal Home Loan Bank. You know, right now we've been able to pay off most of those borrowings. We're down to only about $3 billion left. Second quarter, we did start to access the broker market, and we got up to about $12 billion in brokered CDs. We've paid off a couple billion of that, but what we've done with that, though, is we've actually started to grow money market brokered. Money market brokered, if you look at our rate sensitivities, and we had a slide in our rate sensitivity presentation, it's gotten less and less rate sensitive over time.
So for example, if rates change up 25 basis points, you know, we benefit 1 basis point-2 basis points. If for a 25 basis point increase, rates go down 25 , we're off 3 basis points-4 basis points. So the more rate-sensitive liabilities we can put on the balance sheet, the more we can basically limit that downside risk that we have to make us more re-reactive in trying to reprice the deposit side. So my guess is we'll continue to try to grow money market as much as we can. You know, if we continue to grow our core customer deposits, we'll just pay down the broker deposits, you know, as they mature from that perspective.
still thinking about a, you know, mid-40 type beta?
Mid-40 beta, excluding the broker deposits, I think we're on path for that. I think we feel good about that.
And then, you know, maybe shifting gears, you know, to the loan side. Sounds like it's a bit more challenging to the loan book. You talked to C&I flat and then declines in mortgage consumer and CRE. Maybe just kind of get more granular on that in terms of, is this a supply-driven phenomenon, a demand-driven phenomenon, and maybe kind of delineate between the consumer corporate side?
Yeah, I would say if you really looked at what happened in March and April, we had a really large pipeline of loans that were coming through the system. And when, you know, the SVB crisis hit, from that, you know, we basically turned the pipelines off. So we basically were on hold, and we just started to now reengage with our troops in the field to actually start building those up. You know, it takes a while to build the pipeline, usually 90-120 days. But, you know, we are in a softer marketplace, so there is less demand, but I think we're being able to grow some of our C&I book, you know, especially in some of our specialty businesses.
But probably won't see that till probably fourth quarter or into the first quarter next year, as that pipeline builds from that perspective. I think we've turned on some of our portfolios. On the consumer side, you won't see much of that. Right now, it's down a little bit third quarter. But we'll look point to point, you know, hopefully we'll start growing some of our other, consumer portfolios, and you'll actually start to see some potential growth in the fourth quarter, you know, out of M&T from a loan perspective. CRE is still probably flat to down a little bit, and that's probably, you know, what we want and need to do from a on-balance sheet perspective. But we have our RCC business, which we have, which gives competitive rates for our clients, both through agencies, insurance companies, and sponsors in the marketplace.
I guess maybe, maybe talk to that for a little bit. You know, at the conference a couple of years ago, M&T talked about trying to move more of this CRE business off balance sheet. You know, maybe the environment, maybe how does it kind of change in the current environment today versus kind of where it was when kind of M&T first kind of made that declaration impacted your thought process?
So, first and foremost, over the last three years, you know, when we started to actually shrink the on-balance sheet CRE portfolio, we're down 5%. You know, we were closer to 31% in IRE, now we're down to 26%. You know, we'll probably continue that downward trajectory some more. We've been able to, you know, build our RCC business up. It's much more of a fee business, similar to a business that I'm used to from my prior life. You know, it tends to be really good service, you know, through agencies, insurance companies, generated fees. The marketplace right now, because rates are higher, you know, people are sitting more on the sidelines. But when you talk to clients, I was actually in Albany, in Schenectady, talking to some of our clients this past month.
You know, and talking with them, you know, they basically money is on the sidelines, ready to invest. If they think rates have kind of peaked, valuations have kind of bottomed out, I think they're willing to put money at some point, you know, in the future.
I guess, and I guess over the last few quarters, you've seen kind of M&T interest rate sensitivity, both from up and down rates, kind of decline. Could you maybe just talk to in terms of just what you're thinking around the balance sheet from a positioning standpoint, hedging perspective, and just, you know, how you think about managing the balance sheet in this dynamic rate backdrop?
So I always start with, you know, we don't really want to take a position on interest rates when we manage interest rate sensitivity. We want to keep the band as tight as possible. Knowing that it's a larger company, it's complex, so we have to, you know, do the best that we can. It's not going to be exact.... But from that philosophy, we really try to grow customers and relationships. That's the way you grow repeatable earnings and revenue over time, from that perspective. You know, we use tools in our treasury area, not just derivatives, you know, but we also use the investment portfolio and some of these funding changes that we're making. Our tools are available, but it's really all in the spirit of trying to keep our sensitivities in a narrow band as much as possible.
It's kind of how we approach it day in and day out.
I guess, relative to peers, M&T has a relatively larger cash position. I guess, how do you think about, you know, deploying that cash? I get it's a high yield now, but at some point, you know, how do you think about extending the duration of the balance sheet and maybe locking some of that in, potentially a declining rate environment, looking out at some point?
So I would say, you know, right now we feel very comfortable. We're in an enviable position, basically having really strong liquidity and also having really strong capital. You know, we kind of stand out versus our peers in the marketplace. You know, we're using that liquidity and capital right now, trying to go to market and actually gain share and gain. We want relationship business. You know, we're going to try to do that as much as we can. I think over time, you know, we start first with how much liquidity we want to have, and we want to factor in. You know, obviously, what we missed, you know, in the March, April time frame is the amount of uninsured deposits people have. Nobody really measured that in the industry or in the regulator space, so that's a new filter you have to have.
I think we're always end up carrying a higher level of cash at the Fed. You know, that said, we're probably higher than what we need to be, but I'd first try to deploy that in lending. If that can't be done, then we'd probably go with a securities portfolio. But I think if you look at securities portfolio, you know, given seeing the constraints of Basel III and everything, AOCI coming through, I think you're going to live with a shorter duration investment portfolio. I think going back to how banking were in the 1980s and 1990s, to be honest with you, shorter durations. You can still invest in longer durations and do hedges to shorten the duration or just invest in shorter cash flows upfront.
I think that's probably the space that you would probably play in, rather than doing, you know, five-year type duration assets.
Makes sense. And then, I guess since we last spoke in July, we did get the final proposal for the long-term debt requirements. Can you just help us size it, the impact of M&T?
Yeah. So, you know, I, I feel we're in a very enviable position. You know, right now, when you look at our non-core funding, our broker deposits outstanding right now is approximately $12 billion. We have $3 billion of Federal Home Loan Bank advances. That's $15 billion of non-core funding. If you look at the requirement, you know, it probably has us issue an incremental amount of $5 billion more from where we are today. I would say, though, when you look at how the proposal is written, where we issue at the parent, and then we have to downstream it to the bank, I would operate, you know, the, the parent company with probably more cash up there to make sure it's a good source of strength from that perspective.
So even though our requirement might be $5 billion, we might issue maybe $7+ billion dollars just to make sure that we have enough cash up there to, to be a good source of strength for the company day in and day out over time. But I—the reason I say that, though, is we can easily shrink our non-core funding in brokered or Federal Home Loan Bank advances and not have a huge incremental cost. It's really that marginal difference between that borrowing cost that we have on balance sheet today versus the unsecured cost. I view that as a pretty manageable cost if it keeps our industry safe and, you know, people, you know, protect from a banking environment.
Got it. So I guess given, you know, you could put some of those proceeds to work, what do you kind of view as the overall kind of earnings impact?
I don't view it as a huge impact. It's minimal. I mean, it's basically 30 basis point-50 basis point differential in spread in the borrowing costs on anywhere up to maybe $7 billion. So it's there, but it's not a huge impact overall.
Then, you know, you talked about guiding NII to the middle of the range for 2023. As you kind of get going for your 2024 budgeting process, it feels like the NIMs may decelerate further this quarter to the 3.75 area. Just how do we think about, you know, how, you know, NII and NIM play out, you know, between now and, you know, the end of next year?
Yeah, obviously, we're coming from a high end from a net interest margin perspective this year. You know, knowing that margin probably will continue to drop a little bit over the next couple of quarters. So on a year-over-year basis, you're going to have a lower net interest margin next year, so you will have the pressure of having lower net interest income. You know, I think our ability to grow loans to some extent next year will help mitigate some of that expense, but so net-net, you know, revenue will be negative next year versus what it was in 2023. When you look at that, you know, I think you have that backdrop, you know, and from an expense perspective, you know, I think we're pretty good stewards.
From an expense perspective, we will continue to be good stewards next year, and, you know, we'll have probably modest growth, if any growth, on the expense side there. But, you know, we haven't really done our, our 2024 planning yet. We're just starting that cycle right now and, probably give you more of an update either late this year or early next year in our earnings call.
Got it. And then on the fee side, you kind of pointed it down, sequentially, although a lot of that driven by just the full quarter's impact of the sale of the CIT business. Maybe just expand upon that in terms of kind of what you're seeing in terms of some of the maybe headwinds, tailwinds, and how that plays out.
You know, our fee businesses have been pretty steady for the most part. You know, if there's any, change in what we would look at, maybe there's some potential upside in the mortgage space... you know, typically, your RCC business has a seasonal increase in the fourth quarter as people are trying to get deals done. Higher rates will mitigate some of that, but potentially you could see higher, revenue there. And you have to remember also that on the, residential mortgage side, that we started, originate and sell all conforming in the first quarter. So even though rates are higher, mortgage volumes are lower, we'll probably get a little bit of volume there to some extent. But pretty much for the most part, I think our, our, our fee businesses are pretty steady performers.
You know, maybe grow a little bit over time, a couple of percentage points.
There's been some debate whether your shift in expense guidance from the higher end of $5 billion- $5.1 billion versus $5.1 billion plus or minus was signaling anything. Is it, and if so, kind of what were the drivers of that?
You know, when you look at, you know, going from, you know, the middle part to the higher part, you're talking about really $20 million or $30 million, which is pretty small off of a $5 billion noninterest expense base. You know, if there's any changes that happened versus our last forecast, and you have to remember, I'm, you know, getting new to the forecast. We're putting in, you know, more redemptive processes on, you know, how we forecast and all that, but maybe a little bit higher on fraud than what we originally thought. You know, our business lines, you know, Peter, in our commercial area, you know, has selectively continues to hire talent. If he thinks it's the right talent for certain areas to grow in certain spaces, we're going to let him do that.
I don't really sweat over $20 million-$30 million, to be honest with you. Brian does.
I guess just getting back to something you said before, and make sure I heard you right. But when you were thinking about, I think about 2024, you said modest, if any, expense growth. Is that kind of what you're thinking?
Don't know yet, until we finish the plan. We will see how it goes.
Got it.
This is my first plan at M&T, so.
Make it a good one.
Yeah, we're trying.
I guess maybe moving to credit quality. Maybe just talk about what you're seeing. You know, you kind of last quarter, when your previous last quarter, you took that lumpy charge-offs, and they were lumpy, I think 22-38 basis points. Yet you kind of sticking with kind of 33 basis points-ish for the year. Maybe-
Yeah.
Give a high level number, we can kind of dive in from there.
Yeah. I would say right now, we aren't seeing anything different than what we saw last quarter from a credit stuff coming in, no surprises. You know, the guys that we're watching very closely are the same credits, you know, so we aren't really seeing anything new come through the pipe. Doesn't mean that's going to stay that way right now, but we feel very good with the guidance of staying, you know, with the long-term projection this year of the 33 basis points there. Whether we're higher or lower this quarter, it's hard to know. We still have another month to go, but I think we aren't seeing anything different than what we originally thought there, which is a good sign. I mean, the teams have worked really hard and looked down very granular on the credits.
If you look at the office portfolio, 60%, so all the larger credits over $10 billion have been reviewed. When you really look at, you know, the type of clients that we have, client selection is really key, and we really have mainly long-term clients in the CRE space. You know, if there's any issue that tends to be more in the, the larger cities with more investment-oriented clients, that's kind of what you saw come through in the second quarter. So that other 40% that is a lot smaller in size, we don't think is at risk, you know, of anything substantive from that perspective. So we think very good about where we are today. So, you know, we'll see how it plays out, but I think we're feeling, you know, that it's not going to be much different than what we originally projected.
Daryl, I cannot pick up the Wall Street Journal or the New York Times every day and read about how commercial real estate and office is going to be the end of the world for regional banks. So is all that overblown, or does M&T just go about this so much differently than all the other banks that, you know, there's going to be significant issues out there, just not at M&T?
Client selection really matters. You know, when we really bank people that are in the business for the long term, they tend to have really low tax basis in their properties. They want to own that building on it, a certain, you know, corner of a, you know, street and all that, so they want to own it and, you know, will own it over their lifetime. So they're really putting in either more equity or cash flows to support it. If you look at our criticized portfolio that we have right now, approximately 90% is still paying as agreed on our criticized book. If you look at our non-accrual portfolio that we have right now, approximately 60% of that is still paying as agreed.
So we have clients that are really committed to these properties, and really, is if they're going to work and help us, you know, work with these credits, we're going to keep them on and keep them on the books. We have the capital to have a 150 basis point risk rating and still weather that, and it basically terms and keeps the losses lower long term, and also keeps our clients very loyal to M&T because we're doing that.
So when we think about that 33 basis point number, kind of you feel good about for 2023, how do we think of that evolving for 2024? Because that's your kind of long-term average. You would think you'd be above that in certain periods, below that in others.
We haven't talked about that yet, so more to come. I'll, you know, I'll give you an update as soon as we get to that perspective and all that. But, you know, it shouldn't be anything of a surprise perspective from what we're seeing right now.
And then, I guess anything away from commercial real estate you're focused on within the loan book?
... You know, healthcare, we had one healthcare credit there, you know, this past quarter. Healthcare seems to be, you know, a little bit stressed, but seems to be managing okay. It's not getting any worse. So I think that's in a good shape there. And I think most of our other sectors are in CRE seem to be performing, you know, pretty well overall. So I think we're feeling good about that. But, you know, in CRE, it always kind of rotates to another sector and all that over time. So, yeah, I think we're feeling really good, and if there's anything I can tell you with, and what I've learned in my first 100 days, is we have a strong credit team. Bob, who's our Chief Credit Officer, and Mike Todaro, our Chief Risk Officer, are very experienced.
They've been through this rodeo many times, and, you know, if you look at M&T's model, you know, we start with a really sound credit infrastructure and how to really deal with our clients from that perspective. That is a core strength of the M&T model that we operate.
And then, I guess, maybe shifting gears to capital, since we last spoke in July, you've had the Basel III endgame proposal. Just maybe kind of your initial impressions, the impact of M&T, and while Daryl's answering that, we could put up the next ARS question, please.
So what, what I would tell you is, obviously, there's a lot of data we're pulling, trying to, to analyze that. From a high-level perspective, you know, we definitely see our risk-weighted assets from a credit perspective coming down. We might actually see, because of our conservative underwriting, both resi mortgage and CRE, RWAs come down because of the LTVs that we have on origination are below that, that threshold, which is a positive for us. You know, if you, if you look at it from an operational risk perspective, where the increase of RWA is coming from, it's very fortuitous that, you know, we decided to sell our insurance business last year. You know, we were able to exit that and didn't make a lot of money one way or the other, so that was a great decision.
If you look at what we sold earlier this year, the CIT, here again, I think that was another really sound decision. So our gut feel is, while it's the greater of standardized or Basel III, you know, we might possibly be governed by standardized, maybe, maybe a little bit in Basel III, but we don't think it's a big difference.
So when if you looked at the buy side expectations, it looks like you'd be more in the... You'd respond, number one, if you had a clicker.
I would, definitely. You know, from what I know today and how we are analyzing it, I think it's closer to one than anything else we have on the page.
With that being said, you still pause the share buyback again in the third quarter. I know there's obviously numerator implications of AOCI opt-out going away. But just how do you think about capital return in with that coming?
So when you think of, you know, how we deploy capital, you know, and you look at it, first and foremost, we want to make sure we're there to grow for our clients. And, you know, we are trying to now grow in the marketplace. We have an advantage right now from a capital and equity perspective, so we're trying to deploy as much as we can to try to grow and get new cut clients to come in to M&T perspective. Secondly, dividends is our second capital use. You know, our capital use, we've been profitable for 42 years now. We didn't cut the dividend in the Great Recession, so we really have strong discipline to making sure we keep our dividend and keep it where it is and be able to support that.
Third and foremost, you know, core buyback is core to our capital strategy, and we will buy back shares. Capital is not going anywhere, but right now we have a huge advantage by our strong liquidity and strong capital position. We want to continue to exercise that until we are sure that we're through understanding the capital implications, as well as any stress in the marketplace. We're still not back to normal, not 100% there. Spreads are still wider than what they would typically be, but we're just trying to hold back a little bit. But rest assured, I'm sure we will buy back shares at some point in the future, and that will be strong and core to us.
If we look at this year's SCB results, I think M&T saw a 40 basis point-70 basis point improvement, which is good. On the other hand, it's still, you know, 4%, which is, you know, much higher than your regional bank peers. Maybe talk to maybe, you know, are you looking to take further actions to maybe reduce that and what you need to do there?
You know, it ties into what I said early on in this conversation. We are continuing to shrink on-balance sheet CRE, so we can continue to make progress from a SCB perspective. I think it makes a lot of sense. You know, potentially, you know, we had some merger costs with PUB, with the acquisition there. We might actually have benefit a little bit next year from a PPNR perspective. So, you know, no guarantee. You know, obviously, the Fed runs their various stress tests and all that stuff, but, you know, we're trying to see if we can continue to make progress and bring that 4% down some more, potentially. But that, it's all tied to, you know, trying to shrink our CRE on-balance sheet to some extent.
I mean, you mentioned People's Bank. I guess, as you kind of come in and maybe take a fresh set of eyes, whether it's expense synergies, revenue synergies, you know, kind of do you see additional opportunities with that franchise?
When, when I look at what we have, with, with People's, you know, we've done a good job extracting the cost out of those markets. I was actually in Boston a month or so ago, and, you know, the teams there are really excited. We have huge, I think, opportunity to bring the M&T model to these new five states we have on offer. It's something that's a little bit different, how we go to market with and how we show up.... that we're involved in the community and clients.
So, you know, one of our priorities as we set, you know, various priorities for the company will definitely be to continue to grow out our PUB markets that we acquired and try to grow share in those spaces, you know, both in our commercial space and business banking, retail, wealth, are really core to our strategy as we move forward in the next year or two.
Thanks, Daryl. Oh, I've obviously known you for a long time, so it's, you know, I think it was Star Bank and those organizations-
Star Bank, Firs tar, or U.S. Bank.
Then BB&T. Sure, it's been now. M&T, so all acquisitive organizations, with People's kind of, you know, almost fully ingrained, you know, what are the thought process on additional acquisitions? Is it even possible? When do you think it could be possible? And just your- you know, how do you think about that in this new organization?
Yeah. So M&T, you know, is really good at acquiring banks and basically putting them into the M&T model. And from that perspective, you know, it usually takes three-plus years to get performance of these acquisitions to perform at the M&T type scale, and that's the real opportunity that we see in People's right now. That's why we're, you know, making it a priority for us to grow there. You know, I'm sure that, you know, M&T will continue to acquire down the road. Right now, I think we have a lot on our plate, you know, just trying to build out our People's franchise and really focus on that. I think that's a huge opportunity. You know, the rate environment is probably not real cohesive to transactions as well right now.
So timing-wise, it probably doesn't make sense to try to stretch it and, all that. We're really focused on tangible book accretion, not dilution, from that perspective. So if you look at, you know, the metrics that we're looking at, it's basically return on tangible common equity and EPS growth are the two primary drivers. But you also have to look at the book accretion plus dividend, right? And that's also a core driver for how we're doing that. So my guess is when we do a transaction, it won't be a transaction that will surprise anybody in the marketplace. I mean, our model is to be really good and dense in the markets that we operate in, and that's. We're going to continue to do that.
So it could be an end market transaction or contiguous, if and when it happens, but there's nothing even close to being on the plate to doing anything right now.
Got it. I'd like to pull up there to see if there's any questions from the audience. I guess, as the audience thinks of some questions. You know, maybe, you know, maybe give us a sense in terms of what you hope to accomplish as CFO and, you know, you know, what metrics should we grade your performance on? Is it just, you know, keeping our growth in ROE, and just how are you focused on driving on those?
Yeah. So, I have to do a presentation next week at the board on my 100-day learnings and all that, and you know me, it's more about action and trying to get things done, and I've really broken it up into four categories. First is modernizing finance. You know, we're working off a very old general ledger and profitability system. So we're in the midst of implementing new systems there. But when you do new systems, you really can't do that without changing processes. So it's much more of a people change perspective. We'll get the technology to work to get it, you know, all plugged in correctly, but it's really changing processes. So that's first and foremost. But also, in that same spirit, you know, we had an investor presentation on the earnings side.
You might see us maybe make a couple more changes on the disclosure side. Next two quarters, we got things planned out, you know, so we're continuing to how you look at it from a financial perspective to help you guys look at M&T. Secondly, you know, we're really focused at operating at scale, you know, and just helping the company operate from a risk framework perspective and from a data perspective. You know, as we grow, you go back to my BB&T days when we were making investments and doing an investments per se. You know, we built not just for the size company we have, but we built the foundation from which to grow upon. So, you know, when we go through and add like liquidity, it's going to be automated, so we can support it.
If we double, triple in size, from that perspective, it's there and needed some additional. The other thing we're focused on is helping the company make better decisions from an investment perspective. You know, I kind of look at that from a three-legged stool perspective. They're really focused on trying to what the priorities of the company are going to be. When you look at the priorities of the company, talking about, you know, growing out New England and all that. If we set priorities, myself, as the CFO, can help implement where the investment dollars go. You know, so having that discipline, you know, and the other prong would be making sure that those investments are going in the right places, and we're getting returns, holding accountability there.
And then having, like, monthly financial meetings like I used to have at U.S. Bank, basically monitoring where—how we're doing versus plan, what's working, what's not working, to make real decisions real-time, rather than having to wait for certain meetings or all that perspective. So I think all that is standing up. And the last thing is kind of something that I really enjoy doing, is actually helping build and develop the talent for the future of M&T. They're growing and developing people, as I've been in bank for, for 40-plus years, not the depositories that we have. It's really the legacies that you leave. And if I can help somebody, you know, replace me or be successful in, in other areas, it, it's all about growing and developing talent for the future. That's the most important thing we can do.
Good stuff. See a question in the front?
Hi, it's a long-term debt question. How do you get to the 30 basis points-50 basis points impact on the $7 billion that you issue? Because I don't really understand that, 'cause if you had a spread of, say, 200 over, 250 over for five-year whole co paper, are you saying you can reinvest that at sort of 220?
So when I gave you that spread, I'm looking at it on a more of a match maturity basis perspective. Obviously, a lot of the borrowings we have are really short, and if we actually looked at it right now, it actually might be positive to actually switch to unsecured debt versus what we have today, just because we have an inverted curve. But if you really look at the broker curve, the broker curve trades over the treasury curve. Things will normalize over a three-year time period. I don't think spreads are going to stay as wide as they are from that perspective.
So if you, if you look at more normalization of what our debt spreads would be over time versus what a normal issuance would be from a Federal Home Loan Bank or from a, you know, brokered deposit basis, it's, that's the marginal spread that I'm really talking about there from that perspective. Yes, so your, your brokered deposits are really short term. Our issuance debts will be a little bit longer term, but you can take a lot of that out with swaps if you decide to swap the debt, from that perspective. Does that help?
Any last questions for Daryl? Well, we could put up, we have another ARS question. Well, ask the audience's view of 24 NIM. Daryl, I tried to get your perspective, and you kind of hesitated. So-
That would be guidance for 2024, Jay.
They did 391 in Q2. They're going to do 375, give or take, in Q3. Let's see what the answer is. We got you to react to the last one, so I want to press my luck here and think you're going to react to this one. Wow! So there's a diversion of expectations, although evenly distributed around, modestly lower from 3Q's expected level.
Yeah. Interesting.
Poker face.
You know, a lot depends on how long the Fed stays where they are and all that. So, you know, we'll give you more color in the fourth quarter and early first quarter on guidance for next year. But, you know, I would say something on that page is in the range I'm thinking of.
I would hope so. And then we'll go to the last ARS question because we're having some fun here. You know, same thing on charge-offs, all right. You know, for next year, around 30 basis points for the first half of this year and 33 basis points, give or take, guidance for the year.
Did anybody give you 2024 guidance? No.
They got on expenses. People, people have been more open on expenses than credit or rates. 35-40. So up, but up only modestly in the face of gloom and doom on CRE from what I read.
Yeah. I mean, we have really great credit underwriting, so we'll see how that plays out.
Good stuff. On that note, please join me in thanking Daryl for the time today.