The next fireside chat, many of you know, René Jones, who's the CEO of M&T Bank Corporation, which has about $214 billion in total assets. It's always one of the premium price stocks. I know you always want a higher premium, but about 1.8 x tangible when we did the pricing. I know things have changed in the last couple of days. Close to 1,000 branches, primarily in the northeastern part of the United States, but also at the same time has some national businesses as well. We were just chatting. René told me that he's going on his 34th year this year with M&T. M&T, again, is one of our premier banks. It has over 22,000 employees. I believe you took over in... Well, you became the CFO in 2005. Yeah. You're CEO, 10 years? Yeah, 8. Eight years. 8 last December, yeah. Okay, 8 last December. With that, maybe what we can do, René, is 2025 was a solid year for M&T and Yep. What were some of the main successes, and how does that position you more importantly for 2026 and beyond? When you look at the results that we put out in our annual letter, we had a great year. We had a record year in terms of profits, record year in terms of earnings per share. You know, I think the thing that was probably different, if you looked at our letter, we changed something in the letter a little bit. It was typically we review the income statement, the balance sheet, and what happens and so forth. When you read it was a little boring. Mm-hmm. What you realized is like, you asked the question like, why was the year so extraordinary? Our balance sheet didn't really grow that much. You know, it grew modestly. You know, expenses were fine. It was really the fee income year. Mm-hmm. where a lot of investment that we made over time actually, you know, came to bear. Right. The stuff that, you know, nobody really associates us with the capital markets, but a big chunk of our business is, you know, moves and services the capital markets. We had talked about the commercial real estate shift over years, right? Talked about taking things off balance sheet, but doing more for our customers. Last year was a year where I think it was the first year where we did more off-balance sheet commercial real estate than the $6 billion that we originated. Yeah. Wow. in the space. Yep. You saw a lot of these capabilities that we've been working on over time sort of come to bear in a way that I think is very subtle and probably surprised people. You know, Daryl's always talking about, you know, what's happening with loan growth, and people are asking us, "Why is the CRE loan growth not, you know, yet come back?" Well, the actual activity with the customers come back. Where you see it in our income statement is just in a different place, right? Right. Because of the services we're providing. Yep. That was probably what was unique about the year. Yep. Very good. When you look at your priorities and earnings, in January, the fourth quarter earnings, you had a slide that outlined two new priorities for M&T, you know, teaming for growth and operational excellence. Yeah. Can you walk through those priorities and what you're focused on, and why do those priorities matter so much to you and M&T? Yeah. Let me tell you about how the process works. We think of the calendar year. Typically, we allocate September and October and those particular board meetings and our management meetings all around performance. How have the individual business units performed? What worked that we tried? What isn't working and so forth. All of which is used to set up going into November, where we sort of talk about those successes and failures and then sort of carve out a path. That carving out of a path is November, December, and then we approve our operating plan in January. Right. That's the cycle that we go through. The executive leadership team, as they kinda went through that process, really felt that there were two areas of opportunity where we just were not necessarily hitting on all cylinders, or we had some success, but, like, if we could actually expand it to the whole institution from an organic perspective, we actually could really improve the profitability and strength of the firm. Yep. Those were the two areas. Operational excellence is the idea. Think about the work that we've done in two areas. For example, in our phone centers. Yep. After the acquisition, we found ourselves with 20 contact centers, all of which were serving different products, all of which had a different level of expertise, professionalism, performance, right? A lot of duplication. Couldn't train from one place to the other. We implemented this end-to-end re-engineering of that entire process and thinking about, like, what outcomes are we actually looking for our customers. We did that. We did a very similar thing in our customer complaints area. In our customer complaints area, we have to do these root cause analyses. Yes. Again, mapping out, using our engineers to actually re-envision the space, and then in that particular case, applying AI, allowed us to get to root cause in like, literally like 7 minutes, as opposed to, you know, the week-long process it would be to figure out what actually went wrong with that customer. Right. When they looked at that, those were great examples when you look at the statistics and the results, but we weren't applying them to the whole firm. Mm-hmm. The idea was, how do we take this to the whole firm? The second one is, teaming for growth. It's really simple. It's a very simple concept. We could be less siloed in as we approach a customer. Yes. We have every capability that a large institution has. I mean, we do airplane lending, we do yacht lending, we do all kinds of the suite of portfolio of products that you'd want. We hadn't really consciously said, "How do we bring that to bear all together for you? Yeah. Right? As opposed to showing up four different times. Right. That's the essence of what we're trying to do in those spaces. I should be coming for my loan from my plane then to you? You should. Yes. I'm not sure if you'd make it, but. We can figure that out, right? Paper plane. Anyway. Yeah ... if you- You could use it to fly down to the Red Sox games. There you go. That would be fine. There you go. When you look at how you measure, you gave us a couple of things. Mm-hmm in terms of timelines and solving problems, but, how do you measure the success of these priorities, and what are the implications for the longer term financial results, you know? Yeah for M&T? Well, you saw the reason that in our letter we wrote the technology section. Mm We weren't going back was because we had long had this belief that it was really about changing behaviors in our firm. Right. We thought we were kind of crappy. Yeah in the outcomes that we were getting from tech. Behaviors repeated over time become culture. Yes. We essentially wanted to go down a path of really changing the way we think about technology as an integral part of the business. We laid that whole process out, and the reason for that is we started thinking about, like, how are we gonna actually compete with these institutions that have vastly more money. Right than we do? Right. I think the answer that we've sort of come to is we're not gonna focus on everything. We're gonna focus on what I would call the fundamentals of banking. Right. With credit, what is your depositor's behavior, what's going on with fraud, you know, maybe 5-8 categories. If we do that, and we lean into the tech in that space, it has a bunch of benefits. One is, as you get further away from home. Mm your management systems are less effective, right, at going out there. How can we actually re-engineer all those particular processes in an effort to actually strengthen those management systems and get the results that we've gotten over the past 20 years? Yep. Right? It's always thinking about not just being better, but how can we be an enduring company? Right. Yep. Very good. Taking a step back for a moment, I know it's early in the year, but how is the economy? I know there's a lot of change, the geopolitical issues. Like what? What's going on? Oh, that little skirmish in the Middle East. What are the macroeconomic risks or bright spots that you guys are monitoring, you know, from 20,000 ft above? You know, we from time to time, we step back and think about these things. You know, I remember, I think it was probably 2019, we said we were worried about hospitals and nursing homes. Yeah. Yeah. We didn't know what was gonna happen in the coming year. We didn't know there was gonna be a pandemic. Right. We did know that the conditions were such that they were already having a difficult time, and if things got worse, right? Right that it might be some of the areas the first to go. I think always, but particularly today, you know, we're constantly looking at places for hidden leverage. Right. You know, where you think it's one thing, and it actually has evolved into something else that you can't quite see. Right. You know, we were just looking at the idea. We're gonna probably talk about capital, but about the risk transfer trades. Sure. Right? Yep. You look underneath, like what do you have there? It helps your risk-weighted assets, but risk-weighted assets aren't a real thing. Right. Right? It's a place where you can look at hidden leverage. We're basically looking anywhere we can see that there might be more leverage than we originally thought, and trying to make sure we're conservative enough as we move forward. Got it. The regulatory environment's changing. Yep has changed and is changing. Maybe your thoughts, when you think about, you know, as we get into 2026, the stress capital buffers, the stress test transparency, obviously the big one is the Basel III endgame. We're hearing maybe we hear something in the next two weeks, three weeks on that. Mm-hmm. Just supervision overall. Yeah. I mean, I'll start with overall. I think, I mean, I just couldn't agree more with the approach of trying to focus on the risks that matter, you know. I write about the fundamentals all the time, right? Yes. Yeah. trying to not divert resources to places that, you know, in the scheme of things don't matter. Documentation, you know. Right You didn't document your model exactly right. Right. That's been a really positive shift. I think, I'm not sure it results in us saving money. It results in us actually focusing on doubling down on places that matter most. Right. You know, this, the capital thing is fine. It's the transparency is a huge thing. We can all now sort of see the models. Yes. You think about M&T, go back to before the stress test, right? Right. We carried this very thin capital level, and we said, "Look, we have low volatility. We can understand the process, whatever." The stress test sort of took all that away. Yes. To the extent that you can not even change the process, but just see how we're getting to the models we're getting, you begin to either learn that they may not be correct, or you learn how to modify your business. Right Right, in order to mitigate the risks that they're looking at. That's a pretty big deal. Yes. That's a pretty big deal. I think, you know, from what I would expect, I would expect the Basel stuff to be very rational. Yeah Again, because of the more cooperation between all of us and the transparency that's out there. Yeah. Yes, we are expecting some big news when it comes out. We're all anxiously awaiting the Basel III endgame, and it's far different than the summer of 2023. Wow proposal. Yeah. Far different. Yeah. Yeah. Which had all kinds of negative consequences. Oh, yeah. for everybody. Every, yeah, correct. Yeah. Correct. Yeah. Correct. One of the outstanding characteristics of M&T is through the cycle, your credit underwriting has been better than all of your peers. When we ask you guys about credit, I think a lot of people really wanna, you know, sink their teeth into what you have to say, because you've been so good over the years. When you look at credit today, what are the places that you're focused on that, you know? You mentioned a moment ago, in 2019, you know, the healthcare and stuff. Mm-hmm. 2026, what are you guys looking at going forward? Well, I think the things have the. Aside from my airplane loan. Yeah, aside from that. We'll work on that. Where I would start is that we're trying to look at just the environment. Yeah. Right? We talked about this in the letter, is just asset prices are high. Yeah. They just are, and they've been high for a very long time. Yes, they have. Credit spreads are very low, right? We can't predict what would cause that to change. Mm. We can actually, as we make loans and do other financial decisions, we can actually take that into account. Right in a way that, you know, wouldn't be the case if asset prices were softer and. Yeah That's what we see, and then again, we do see the hidden leverage thing. We look at, you know, again, I love the risk transfer trade issue. Yes. I also love the NDFI. I think not in absolute sense, but if you take that whole thing where you're doing business with other financials. Right financial to financial. Like, is there a segment of that, right, that is less transparent? Yeah that you really need to think about. Right ask about? They change. That process changes over time. Right. If I said it really simply, it'd be like you just, I think our folks know you just can't be too ambitious. Right. Right? Because you're gonna end up sitting in a workout for a couple years, right? Which is no fun. Yeah. We just had, I don't know, it's been about a year. We have our third credit officer. Okay since 1984. Oh, wow. Right? He's new. He's in one year. Yep. Yeah, you know, he fits the mold. I think that's the same thing. He's very curious, he loves looking at deals. Yep ... he loves discussing deals, and he knows the clients. Yep. Circling back to something you just said about NDFI, again, because of M&T's reputation, we as outsiders don't really have a lot of transparency in those buckets. Mm-hmm that they use. Mm-hmm. If you wanted to steer us or guide us investors, you know, you have the mortgage warehouse loans, you've got the loans to BDCs, private equity, then you've got the consumer lenders, and then other- Mm-hmm ... which is insurance and REITs. Mm-hmm. Where do you think we should be really paying attention to in terms of where some of these hidden risks could be? Well, I think it's becoming more and more public now. Again, let me start by saying, look, I have no problem with private credit. Yep. When we grew up in the '90s, in banking, we couldn't securitize middle market loans, we couldn't securitize commercial real estate. The liquidity factor of this is just an extraordinary gift that has. Yeah Been a great innovation in space. When you start looking at some of the things you saw yesterday in The Wall Street Journal, there were two articles. One of them I thought was just funny. We've been talking about PIK and bad PIK. It just disclosed, you know, this write-down of loans, the sale of loans at $0.94 on the dollar, and said, "Well, it was actually a good thing, because those guys weren't paying us interest anyway." You know, so like, if you don't see those loans, like there's all kinds of delinquency out there that you're not factoring into your math, right? Right. That stuff builds up over time. Anywhere like that you don't see transparency or that they're labeling something like delinquency something else. Right Right? I think the big risk that we have today, no matter how you look at it, is there are too many of us looking at the U.S. as if there's more than one financial system. Right. There's just one. Right. Everything is interconnected. Right. You know, you can't have a bad day in private equity without having some impact on the banking system. Right. Yep. No, they're very, very fair. Shifting over to capital, obviously your CET1 ratio 10.8%. Mm a little bit higher, with the AOCI included in it. What are the priorities when you think about capital? Mm For you folks, and what are the trade-offs between, you know, using, you know, the capital for share repurchases or investing in businesses organically? How do you guys look at that? Yeah, it's pretty simple. I mean, we, you know, first and foremost is to make loans, to grow our business, to focus on our customers, right? Make sure we meet their needs. That's not a small thing. Right. Because you know, the ultimate test is when everything hits the fan, are you still making loans to those customers? Right. That is really important to think about, being there in the moments that matter. We, you know, we've generated, I think in our fourth quarter we had, like, our ROA was like 1.49%, right? It's just, it's very high. Yes. We're generating lots of capital, so we don't really have a big choice issue there. We've been net repurchasing shares or distributing shares. I think, you know, as you think about our numbers, over the last 20 years we've averaged, I think, 17.2% ROTCE. Okay. Okay? It's gone here and there and there, but if you average it over that time, it's pretty significant. We were 16 and change in the fourth quarter. Yep. Once we get to our target of 17%, like, it's sort of set up in the way we get compensated that as you go to 18% nothing happens. Right. You start saying to yourself, "Okay, maybe I better be plowing much more of this back into our business," right? Because, again, we're trying to build an enduring business. There's lots of change going on, lots of investment that's needed. If seven years ago I'd have sat on this stage and said, "Okay, what we're gonna do is we're gonna, you know, triple our investment in technology," you guys would have, like, tanked the stock. Mm. Seven years ago we spent $400 million, and this year we spent $1.2 billion. We're doing that by reallocating within the system and making sure that, you know, there was no need when we were at 17% to make it ROE 20%. Right. What's the point if you actually have a long-term goal? Yeah. No, very good point. When you think about what you said a moment ago and you had thinner levels of capital pre- Mm-hmm When you look out going forward, what's the appropriate level of CET1? Is it 10%, which you guys have kind of talked about? Could it come down a little less depending on maybe what we hear from Basel III endgame? What do you think about that? I can give you my own view. Daryl may have a different view. You know, if it was just about M&T. Yes Yeah, I think our capital levels could be meaningfully lower. Okay. You know, the volatility we have, you know. Correct. They're thinking about, you know, depending on how the advanced methods go. Yeah that could be valuable to us if our performance holds up, right? Because this idea that we've been lending in a certain way that's more conservative and less volatile doesn't get today credit. Right. We could come down on our own, I think, but then there's the world, and there are a lot of things moving out there that we, I guess, as we didn't have these private markets and other things, it, you know, as we, in our history, we, you know, the change amounts are really high, and then you look at the wars and stuff that's going on. You know, probably today, you know, you could see that you should be holding a little bit more than you otherwise would need. Yeah. We continue to say at, you know, in the 10s where we are is too high. Right. Again, the thing I would look at, nobody looks at it, but look at the tangible. Mm. You know, when you're a kid, like in the math class, you had to have the same apples-to-apples denominator. Yeah. Right? Right? Yeah. Everybody goes from ROTCE to what kind of regulatory capital do you have? Yeah. That's not real. Yep. You get in trouble if you say that. The tangible, and so for us, our tangible relative to everybody else is very high. Yeah. It's very high. Yes. That's a great protection. Sure It's also an opportunity. Yeah. Do you think, if we just digress on that for a second, one of the questions going forward is that the rating agencies may be the binding constraint for banks in general in this tangible. Do you think that could. Can we evolve into that as an industry or is that going down a path that may not happen? I wish the rating agencies were more pure. Okay. You know, they'll look at a lot of that same risk-weighted stuff in that space. If you'd grab a chart, you put it together and look at the risk transfer trades. Yeah Right? You get three banks at the bottom in our peers that have zero. We are less than half, one half of 1%. Yes. The average is 4%. One bank is 15%-16% of their loans are those risk transfer trades, right? Right. You gotta be looking at that. Like, you can't treat that all the same. Right. I worry a little bit. We focus on tangible. I think the rating agencies are a constraint, but if we wanted to get around them the way they think you could- Right You're taking a little bit more risk. Sure. Right? What's really fascinating is nobody would say anything about it. Right. Interesting. Yeah. Yeah. That is a very good point. Yeah. Obviously M&T has been built over the years on acquisitions. I think Daryl has reminded us you've done maybe 22 deals and More probably. Around there over the last 30 years. There's been some sizable deals in your footprint recently, and what's M&T's approach on M&A. You can remind us, you know, on M&A and what are your thoughts on some of these deals, and does it create opportunities for you to pick up business? Yeah. I mean, they do. Well, you know, you know, we love local density. Yep. Yes Yes local scale. We think it's a big deal. We're doubling down on it. I actually think one of the advantages of M&A is it helps with the scale thing. Yes. Like this idea that you're at a disadvantage if you're not really large. Not a lot of people are talking about that. The initial investment might be tough. Right The results. Yeah You know, could be really, really powerful. That's most important, and so if there are opportunities that come up that, you know, that somebody wants to do something like-minded when there's not a problem, we've done that. That's what we did in People's. Yeah. There was no real problem there. Yeah. It was just more of an opportunity for both firms. Obviously when things get crazy, you know, our models really tends to kick in that space. Right those are opportunities. I think I would imagine there'll be a fair amount of opportunities, but we don't spend a lot of time chasing them. Right. Yep. Right? What else can I tell you about. Yeah. Well, just any I can tell you a quick story. Yeah. I absolutely love it. I won't tell you the whole thing, but I was over in Europe. I was with Robert Wilmers and he was showing me something and he was showing me his second chateau or something. Or whatever, and it was a disaster. It was like a Roman ruin. I was like, "What?" I'm like, "You're 78 years old. What are you doing?" He's like, "I didn't wanna do this. I wanted to do this for the guys that run the winery needed something else to do. Yes. He stopped and sitting on the steps, and he looked at me and he goes, "I never wanted to do any of those acquisitions. You guys just needed something to do. That's good. It's like a talent first thing, and so if you're constantly producing talent, like we hire 80 tech undergrads every year. Yeah We hire 20 MBAs every year. We have to find something for them to do. Yes. Right? Yeah. Absolutely. Oh, that's good. Yeah. Maybe some more comments about you mentioned about the tech spend going up as much as it has. Mm-hmm. Just, walk us through, you know, the difference today on technology and how you're using it versus maybe five, seven, eight years ago when you first came on board as CEO. Oh, it's dramatically different. First of all, I always say this, we don't have a single person with the title of engineer in our shop. Yes. When we hired Michael Wisler to brought him on, that sort of changed, 'cause he's a master engineer. A series of folks that we actually brought on started changing things. We started creating groups of data scientists. Yep. We created, I remember the first group of 13 were user design engineers. Yep. The entire process is not tech as we used to think about it back then. Back then, it was like we do these large projects. Tech was sitting in a place on its own. Mm. If you wanted to make a change, you had to get an appointment. Right? We reshaped all of the behaviors. Yep. We changed. Like, if you're doing tech, a tech project now, you are sitting right alongside the technologist or the data scientist. Everybody's together. That's why we built the tech hub we did. We essentially changed the behavior patterns. We probably had 15% of our stuff as end of life. Today, it's 7%. The industry average is 12%. Mm. We're down 80% in our outages, right? Wow. Resiliency. Yeah ... redundancy is in that space. We had 50%, less than 50% of our workforce was in-house working for M&T in the tech space. Yep. It's over 80%. We have a 300% increase in our releases to our systems. Yep. Right? The way to think about that is if you were to walk into the tech hub, if you haven't been, you gotta come to Buffalo and come see it. Yep You can look at this wide open space, and you look over and you see there's the retail guys. You walk over and you say, "What are you doing?" They say, "Okay, René, on Fridays our release train." It's in plain English. Yeah. As a teller, I no longer have to pick up the phone and call someone to do this for the customer. Right. Number two, you know, as a lender, I no longer have to fill out all that paperwork when I first introduce myself to the client. Yeah. Right? In trying to put it in plain English so that we can come back and understand what we talk about when we talk about AI. Right. I don't know how these two letters seem to explain everything in the world. Right? Right. The plain English is like, what are you trying to do? Right. That has changed us. I mean, it's just remarkable the change. Right. The speed and the resiliency is really important, particularly in a world that's changing all the time. Correct. Speaking of change, the competitive landscape that you are in, some of your regional bank peers have decided to go more national and not just stay in their historical footprint. Can you talk about that and give us an idea of how you are going to compete against these banks that are, you know, spreading their wings into different areas? Yeah, it's just a fundamental belief that, you know, our mission and purpose is such that if we're an integral part of the community, if we're meaningful, if people listen to our voice. Yeah Right, that makes a difference. If you're spread too thin, it's hard to get that effect, and we know that, right? We know that we don't have number one, two, or three share in New Jersey, for example. Right. There are places where we don't. Yep. The performance is just very different. Right. I think that's one, and then I sort of repeat myself. It'd be like, you know, you have kids, whatever, and they say, "Hey," to your parents, "maybe you can, you know, buy a place next door and let us stay there." Like, "No, you're staying close to home." It matters, right? You're gonna spread your resources, in my mind, thinner. Yep in a time when their resources are really scarce. Right With the amount of infrastructure investment that's being made to change the world. Sure. Speaking of change, financial innovation with digital assets, non-bank lenders coming to the forefront, does this change the competitive landscape for you guys? How do you approach competing against this potential disruptive, you know, force that's out there? Yeah, I mean, well, first of all, I think it's a real threat. Yep. I think it's kind of on us. Yep as bankers because there's really nothing, you know, all that unique about what we're talking about here. Right. Again, I wrote about this, and we went from paper to digital. We were fine. Right. Right? We're now going from centralized ledgers to distributed ledgers. Right. That should be fine. We should have probably a long time ago thought about the tokenization. Right. Even if it's simply as, you know, if all of our information becomes available, do we have another way to secure ourselves? Right in that space? I think the banking industry is super healthy. Mm. It can attract a lot of talent. It's mobilizing, albeit a little bit late, but it's mobilizing. My sense is, yeah, innovation's gonna be great. It's actually gonna come back. Eventually, what's gonna happen is there's gonna be some event. Yeah. Yes. It's gonna force us to realize that there's only one financial system. Yes. We're gonna come back together and we're gonna be fine. Yeah. Yeah. No, very good point. Yeah. Maybe we're running out of time here, René, but maybe you could give us an update on the full year 2026 guidance. You've given it in the past, how the quarter is going, and how that reflects into that guidance as well. I don't know. Whatever Daryl says is what we're doing. You know, if you take 2025- Yes Right? I think that was a stellar year. I think we're running in. As we go to the fourth quarter, the momentum is there. Yeah for us. Things are kinda soft. Yep. You know what I mean? There's nothing gangbusters going on the loan portfolio either side of the balance sheet. Right. We'll have to watch. The work that we're doing is fantastic. As I said, we're able to invest in lots of things because of the capital generation that we have. Right. Right. I don't feel like we're short on investing in the future. You know, who knows what will happen next. Right if things stay the same, if credit spreads don't widen. Yep. Right? Oh, sure. It's probably we're on the trend that we've been on. Yep. With that, we've run out of time. Please join me in a round of applause thanking René. Thank you. Yeah, thank you.