Joseph Coletti
Welcome to innovators and ideas, an audio series from RBC Capital Markets where we explore bold thinking and impactful leadership shaping the future of the financial sector. We're on location here at RBC Global Financial Institutions Conference here in New York and joining us is Darryl Bible CFO of M&T Bank, a financial leader whose strategic approach to Capital Management is helping steer the bank through a dynamic and evolving macro landscape. Daryl, thanks for being here.
Daryl Bible
Thanks, Joe, thanks for having us.
Joseph Coletti
So you're talking about yourself a lot today, talking to investors, talking about the company. I thought we might start with just having you kind of walk through M&T's vision and purpose and kind of how you do business and explain that to our viewers,
Daryl Bible
M&T, our purpose is really to make a difference in people's lives. But M&T is really a community bank orientation where we are a much larger company with scale and really products and services, but our differentiator really is how we serve our communities. We operate with 27 regions within the company, and we have 27 regional presidents, and we allow those presidents to decide how we deliver products and services to those markets and how we're going to meet the needs of those communities and markets. So it's a good niche that we operate in. We don't think anybody you know really operates the way that we operate in these markets, which is how we can grow against the big players in our industry, as well as competing in some of the smaller players because of our scale that we have.
Joseph Coletti
Now, you became CFO in 2023 do I have that, right?
Daryl Bible
I did. So it was two years now.
Joseph Coletti
Oh, excellent. So let's talk a little bit about what your priorities have been since you've sort of taken the seat as CFO.
Daryl Bible
Yeah. So when I first got here, one of the things we put in place is we put in much more transparency and accountability. So as you get into a larger organization, you have to have more structure how things operate, and you have to have more transparency. So people are performing, are they making the objectives that they wanted to achieve? Me, specifically in how we're doing finance, we're doing a finance transformation. Means we're putting in a new general ledger system, new forecasting system, new profitability system, and will be, when we're completed with this in 2026, we will be the first large bank in the US that will have all of our financial systems up into the cloud. What that does for us is it gives us the ability to really scale, and you can scale as much as you want in the cloud, you know, and basically just keep you the same systems that you have.
Joseph Coletti
You guys have had very strong financial results in 2024 how do we keep that going? How do you sustain that? How are you thinking about that going into this year?
Daryl Bible
We are really good at operating a bank from a fundamentals perspective. We have a good allocation of capital. When we talk about allocating capital, we serve customers and communities first and foremost. Then we want to make sure we have good dividends to our shareholders, and then potentially we might do some acquisitions, and if we don't do acquisitions and we repurchase shares. But that prioritization is really how we operate. What we have going on right now is we're investing a lot in our systems. We're upgrading our platforms. So if you look at improving our risk systems, you know we're putting in new data centers throughout the footprint. The thing, as you get larger is you have to basically know what's going on in this larger entity organization, and you can put a lot of structure in. The real key, though, is putting that structure in, but still allowing the empowerment of these regional presidents and the people on the line to still serve the clients, to still be able to customize and do what they can to meet the needs of those clients, and yet we are aware of it and how it all works in interplays, and that's really the niche that we have to be really good at so we just don't turn into a large bank in the US.
Joseph Coletti
And you've talked a lot about investments in infrastructure and some of those investments that you guys are making. Can you talk about the challenge, or how you guys’ approach sort of balancing, sort of capital deployment and profitability as you go through this growth,
Daryl Bible
My executive leadership team that we have are very unselfish. We've, I've been here now two years, and we've all kind of rallied together, and we believe, you know, we need to make these investments in this company. Now we could do these investments and still do normal investing in all of our businesses, but that would kind of maybe towed us too much on the expense side, and really couldn't cover it on the revenue side. So that this balancing act that we're really working on is trying to keep our businesses as tight as possible and allow us to make these investments. We have seven major strategic initiatives going on in this company. Five of those initiatives are nine digit projects going on at the same time. There is nobody even close to us that is trying to do what we're doing. From a financial perspective, having always go at the same time, but also from a change perspective, and trying to manage, you know, everything from that perspective. We're making a lot of good progress, but it's a lot of hard work in order to get that accomplished.
Joseph Coletti
Can you, I want to get your perspective on, sort of buybacks versus other strategic use of capital? Can you kind of tell us how you guys approach that, how you're thinking about that?
Daryl Bible
Yeah, I would say, you know, we buy back a fair amount of shares. When you look at who M&T is, we're in 13 states, plus the District of Columbia. You know, the states that we operate in aren't, kind of the fastest growing states, you know, in the US, but our profitability is extremely strong, and that profitability allows us to generate a ton of capital. That capital needs to get deployed. You don't want our capital ratios to get too high, because then you can't get a good return on tangible common equity, which is one of the measures that we follow here. So it's important that we continue to generate that, but we usually have a fair amount of capital left over, even after deploying it to our customers and communities, because of our profitability, that it's always a good time to repurchase our shares. And we believe right now, specifically, you know, we have a really good value proposition in the marketplace.
Joseph Coletti
So I can't talk to a CFO without talking about risk management a little bit here. And so, you know, one of the things that we've been asking folks is as how you're how you're managing, how you're dealing with some of the evolving credit risk and market volatility that's out there. Now, I think in particular, you know, given your diversified loan and securities portfolio, could you maybe talk a little bit about that in your role?
Daryl Bible
Yeah, a couple of directions we can go there. I think from interest rate risk perspective, our treasury team has done a good job over the last year and a half, moving us from being an asset sensitive bank to being much more neutral. So we feel very good that if rates go up or go down, our net interest income will be relatively intact. I think that's good from a credit perspective I would tell you that M&T is a little bit unique versus other banks in the US, in that we still serve our clients when they're under stress, and we're very loyal to our clients. Most of our peers, when things are under stress, they usually exit the relationships. The customers that we have are really important to us, and by staying with them, basically make some really loyal customers to us. So we have great client selection. What that means is we have a higher amount of criticized loans on our books in times of stress. So what we've seen, though, in the past year and a half is that, you know, things are getting better. A lot of our customers are getting upgraded off criticized. A lot of our customers, because rates were falling, we were able to basically finance them out in permanent markets and all that. So our asset quality issues that we had have come down tremendously, which is really a good thing, and we still treated our customers really well through the stress period. So the balancing act again, and being loyal to our clients, but still achieving our risk perspectives, I think, is really positive now.
Joseph Coletti
It's a very important principle at RBC, as well being there in the good times and the bad for our clients.
Daryl Bible
You have to have consistency, no doubt.
Joseph Coletti
You know, we know that transformation is accelerating across the entire sector, and I think that you've talked about a lot of the investments that you're already making to prepare for that and get ahead. Could you maybe, if you take a step back and think about, sort of, all the innovations and the technology that you're investing in, could you maybe talk a little bit about how you see this preparing M&T sort of for the future?
Daryl Bible
I think the platforms that we're investing in these are generational type investments, we'll have the best platforms in the industry once we're completed with that. And help pay for that, we're going to probably acquire companies so we can scale them and get returns. The other thing I would say, and I think what's really unique to M&T, and it's really driven by our CIO Mike Whistler, is really how we operate in technology. So we don't have the largest budget versus the large guys and what we put in technology, but the way we approach it is very unique. So if you look, if you go to Buffalo, we have two major tech buildings, and we believe that by having them actually come in the office work with our business partners, these agile teams can collaborate and do things a lot faster and a lot better than doing it much more virtually in the spread out framework. And he has basically people doing that differently. It's also a big benefit for the City of Buffalo to have that many engineers in one place. So we're serving our community as well as, I think, making us a lot better and how we deliver technology.
Joseph Coletti
You mentioned Buffalo, and for some reason, it makes me think of New England a little bit. But I wanted to ask a question about expansion, just a broad opportunity. Can you talk a little bit about sort of where you guys see the biggest expansion opportunities for M&T?
Daryl Bible
Yeah if you look at our four priorities, one of those priorities is to grow out on New England and Long Island. We did an acquisition of Peoples United three years ago, and we got a lot of density in the state of Connecticut, but we got less density in the other states, like Massachusetts, Maine, Vermont, New Hampshire. So growing up those markets to give us more scale, to serve those communities, is really important to us, and we think it's a huge opportunity. We're doing it organically right now. We're putting more resources in, but over time, there could be opportunities where there might have inorganic expansion, if that happens, that would just speed up that process.
Joseph Coletti
So I want to close kind of thinking ahead at M&T. If you think about the strategic decisions, the qualities of what it's going to take to succeed moving forward, what would you cite as sort of, what you think is most important for success in the future?
Daryl Bible
You know, I would anchor on our fundamentals. At the end of the day, we are really good at running a good bank. Our fundamentals are really key to how we operate. The execution of that is really important. I think once you get through the fundamentals, I think continuing to invest in technology, you know, in our application systems, and be able to scale those systems, I think is really a differentiating product that we'll be able to have an offer, you know, and just being a favorite acquirer, you know, people that want to be part and come and join the M&T family. I think if we do those three things really, really well, I think we'll have a lot of success for many decades to come.
Joseph Coletti
Daryl, it's been really fascinating here about M&T's story and where you guys are headed, and all the investments that you are making serve your customers and really appreciative that you could spend time with us today.
Daryl Bible
Yeah, my pleasure. Thank you.