Daryl Bible: Yes. I think obviously, Bill, I mean people that did swaps 3 years ago are really fortunate that they did, but it depends on the maturities when they roll off. And when they do roll off, it does put pressure on some clients that basically just have higher interest payments there. So, that is impacting much broader than just office, broader than just CRE. It’s impacting, I think all of America right now, to be honest with you. I mean just higher rates for longer. I think the Fed wants to slow the economy down and we are definitely having that impact to do that, and they are accomplishing what they are achieving there. But we – like I said earlier, we are on top of the portfolios where we see maturities coming up.
We are looking at what we have to do, if anything, do they have other support on it. So, we are trying to stay ahead of what’s coming down the pipe. Most of the maturities and swap are lined together so that they are pretty much in balance. So, when things come close to mature on loans is when we see if there is anything that needs to happen from a lending perspective. But I think the Fed is accomplishing what they are trying to do is slow the economy down, bring inflation down, and it’s definitely having that impact.
Bill Carcache: That’s really helpful, Daryl. Thank you. If I could follow-up, as you continue to take actions to shift more of your focus to fee income as you reduce the credit risk associated with on-balance sheet CRE. How are you thinking about your sort of longer term CET1 target before I guess all the developments of the last several quarters, we are sort of thinking of M&T being able to get to sort of that 9% CET1 target. But I guess the inclusion of OCI volatility and regulatory capital has led to some debate over whether category for banks will now have to run with a little bit larger buffer versus history, would appreciate any thoughts there.
Daryl Bible: Yes. I think as the new rules play out and as we get comfortable working within the rules, we obviously start with a higher cushion at first. And then as you get used to managing the book and everything, I think we will tighten it up over time. But my guess is that we probably have a higher buffer coming out of the blocks. You have to really adjust your investment portfolio since the AFS is going to now go through the regulatory capital ratios to probably run with shorter durations either outright or invest longer with hedges that bring in the durations one way or the other, just so you have less volatility there. So, it’s really just getting used to how we manage all that process. But our teams are working on that now and we will start operating that way probably well before we get the roles actually implement it from that perspective.
Bill Carcache: Understood. Thank you for taking my questions.
Daryl Bible: Thanks Bill.
Operator: The next question comes from Brent Erensel with Portales Partners. Please go ahead.
Brent Erensel: I was going to follow-up on that stock buyback question. Thank you and good morning.
Daryl Bible: Good morning.
Brent Erensel: If you were to like incrementally invest the capital that you are generating at 7% you would generate half the returns that you could by buying back stock. So, you need double-digit returns to equate that, if that question makes sense. So, the question I guess is when – at what point will the corporate finance math drive you to resume buybacks?
Daryl Bible: So, the corporate finance math is screaming that it’s a five right now. It’s really more of our cautious position, conservative nature that we have to make sure that we have really strong capital, strong liquidity to really weather what comes our way. I mean if the Fed stays higher rates, let’s say, for 3 years or whatever, that could really have a big impact on the economy. We just want to be really cautious and all that. So, I think we are just trying to be prudent with it. Like I said earlier, the capital has not gone anywhere. We won’t – I promise you we would deploy it in a really shareholder-friendly manner from that. But right now, we have strong capital, strong liquidity, which has been really helpful for us since the March-April timeframe, and we will continue to operate and be a strong supporter of our customers and communities that we serve.
Brent Erensel: Just is there a bell that’s going to go off when you guys are going to change your mind, or how should we – do we just wait and see?
Daryl Bible: I will tell you, once we make that decision to go, my guess is you will find out very quickly when that decision is made.
Brent Erensel: Thank you.
Operator: The next question comes from Gerard Cassidy with RBC. Please go ahead.
Gerard Cassidy: Hi Daryl.
Daryl Bible: Hi Gerard.
Gerard Cassidy: Daryl, over the years, M&T has been very effective in making acquisitions, obviously, the People’s dealers the more recent acquisition that is now completely integrated. And we understand in talking to your peers and others that the interest rate marks make it very difficult for M&A today. So, I got a two-part question for you. First, just what is your view on M&A for M&T over the next 12 months to 24 months of traditional depositories? And then second, some of the P&C, in particular, was recently bought some assets from the FDA, I see some loans. Are you guys looking at any assets that might be for sale from the FDIC from the failed banks that we had earlier in this year?
Daryl Bible: Yes. So, we didn’t do a press release on it, but we did buy two loans from that same purchase P&C did. I think it was a total of about $300 million in that commitments, it was at fund banking. So, we did participate in there and we are able to get a couple of those loans as well. But we are constantly looking at where we can grow our customer base that are good, long-term customers that fit. We just don’t want to do asset purchases. We want relationships is really what we are looking for to drive our organic growth from that. As it relates to acquisitions, it’s just – you and I have been doing this for a long time. When I started, we had 18,000 banks in the early ‘80s. Now, we are up to about 4,000 banks and it’s going to continue to shrink.
I think M&T has a great track record of acquiring bank over time. And that strategy hasn’t changed. Our strategy is really to control and have lots of density in the markets that we serve. So, I think if and when we do purchase acquisitions, it probably won’t be a surprise in where we are going and what we are trying to do from that perspective. So, the strategy is there and it will happen at some point down the road. The interest rates definitely make it a little bit more challenging now just because of the impact on capital. But like anything, things change over time, and we will be there when we need to and do what we have been really good at before, and we will continue to do that.
Gerard Cassidy: Very good. And then the second part, a different question as a follow-up. When M&T, of course has developed a reputation as being a very strong underwriter, you got the numbers to prove it. And so we are not necessarily concerned about what you guys are doing specifically, but we just worry about the competitors doing foolish and stupid things that then end up having a second derivative effect on your sound underwriting decisions. Can you frame out for us granted, I know it’s not in 2005 and 2006 craziness out there. But are there any concerns that you see non-bank lenders or other bank lenders doing or have done things in the last 18 months to 24 months on the lending side and make it a little nervous, or are we just in a new playing field. Everybody is very rational, and we are not going to see anything really implode because of what some foolish lenders are doing.
