Daryl Bible: Yes. We have a long history of working with our clients. Client selection is really huge for us and how we look and underwrite, Silicon the CRE portfolio. We deal with people that have been in the business for a very long time that aren’t just looking at that real estate investment that they have as an investment for more as a long-term strategy to their company and their family from that perspective. So, I really don’t look at trying to get out of the criticized loans. If somebody is not going to support it, we will probably exit over time. But I don’t really view how we are approaching it. I think it’s a great way to develop and keep relationships over the long-term. It’s the right way and a fair way to do it, as long as they are willing to support their properties and loans with us from that perspective.
I think overall, though I think the industry is much safer than what it has been over the last couple of decades, I think everybody is trying to do the right thing. We have the benefit that we have some really long-term customers that have been with M&T for a long period of time, and we try to bank the people that are really top in market in all the markets that we serve.
Gerard Cassidy: Very good. I appreciate the color. Thank you.
Operator: The next question comes from John Pancari with Evercore ISI. Please go ahead.
John Pancari: Good morning Daryl.
Daryl Bible: Good morning John.
John Pancari: Just a follow-up around the loan loss reserves, I know you had talked about the – that the reserve addition was 50% for CRE and half going to C&I. And I am just trying to frame out like what about the developments in the quarter drove the need for additional reserve additions beyond what would have already been baked into there under CECL? And then separately, can you maybe talk about the likelihood of further reserve build here just as you continue to dig through the CRE portfolio, I know you said a couple of times that there is ongoing efforts to sift through the exposures in that book.
Daryl Bible: Yes. So, if you look at the macro factors, our macro factors when we run our allowance models, basically were pretty steady. Actually, the crepe [ph] and that’s actually improved a little bit. But the other economic statistics are pretty stable versus the prior period. And really what drove the increase was really softness in some of the asset values in the CRE portfolio is what we were seeing and thought it made sense to add some more reserves in those. As we get more examples of what valuations are that could help drive more or may actually – I think we feel really reserved where we are today, but we just want to continue to have a really robust allowance for the needs of our borrowers and make sure we comply with all the rules that we have there. But it was really just a little bit of softness in some valuations.
John Pancari: And is that soft is surprising you negatively? And is that life not already in the CECL reserve?
Daryl Bible: There is just not a lot of activity going on in some of these markets right now. So, you are basically, there is a big market dislocation. A lot of the markets we are doing as conservative as they are with a net present value cash flow perspective. And we – I think I went through it last time, but if some is not leased today, we assume it’s not least for 3 years. If something is coming off lease within the next year, we assume that there is a 1-year gap period before it gets released. Those type of cash flow adjustments are kind of what we are marking to, but we don’t have anything to look at. But when you get a certain example, I would say then we can make an adjustment. Our best though right now is that there is a lot of money waiting on the sidelines potentially that when the Fed does decide to keep rates more stable and maybe signal rates going down at some point, I think there will be a lot of money that will jump back into the system.
Right now, there is just not a lot of going on, and there is a very wide bid-ask spread.
John Pancari: Okay. That’s helpful. Thanks. And I have one last follow-up, if I could, also on credit. Your – I know your charge-off guidance for the fourth quarter, you expect it to be a low – above the 29 basis point level for the third quarter and then full year ‘23 near the long-term 33 bps. Can you maybe help us think about what that would imply in terms of as you look into 2024? Maybe help us, I know you are not giving formal guidance yet on ‘24, but how should we think about where the loss trajectory could be versus that longer term 33? How much above that could it be?
Daryl Bible: Yes, that’s a good question. For the fourth quarter, is just our gut feel that it might be higher. It could actually be the same or lower, to be honest with you right now. But just knowing what’s going on right there, it might be higher, but we really aren’t sure about that yet. Next year, we aren’t really giving guidance, but from a framework perspective, our allowance will build when either market economic conditions allow for it or you see some deterioration in customer behavior from that perspective. But right now, I think we are really on top of what it is, any areas that we potentially could have risk in our credit teams are all over it, looking at the reviews and the analysis that we have. And right now, what we feel that our reserve is adequate, and then we are in good touch with where the risks are.
John Pancari: Got it. Alright. Thanks. I appreciate it.
Operator: It appears we have no further questions at this time. I will now turn the program back over to our presenters for any additional remarks.
Brian Klock: Again, thank you all for participating today. And as always, the clarification of any of the items on the call or news release is necessary, please contact our Investor Relations department at area code 716-842-5138. Thank you and have a good day.
Operator: This does conclude today’s program. Thank you for your participation. You may disconnect at any time.
