M&T Bank Corporation (MTB) Q1 2012 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter 2012 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Mr. Don MacLeod, Director of Investor Relations. Sir, you may begin your conference.

Thank you, Paula, and good morning, everyone. This is Don MacLeod. I’d like to thank everyone for participating in M&T's First Quarter 2012 Earnings Conference Call both by telephone and through the webcast. If you have not read the earnings release we issued this morning, you may access it, along with the financial tables and schedules, from our website, www.mtb.com and by clicking on the Investor Relations link. Also, before we start, I'd like to mention that comments made during this call might contain forward-looking statements related to the banking industry and to M&T Bank Corporation. M&T encourages participants to refer to our SEC filings, including those found on Forms 8-K, 10-K and 10-Q, for a complete discussion of forward-looking statements. Now I'd like to introduce our Chief Financial Officer, René Jones. René F. Jones: Thank you, Don. Good morning, everyone. Thank you for joining us on the call today to discuss the first quarter results. Let me begin by reviewing the highlights, after which Don and I will take your questions. Turning to the specific numbers. Diluted GAAP earnings per common share were $1.50 in the first quarter of 2012 compared with $1.04 earned in the fourth quarter of 2011. Net interest income for the recent quarter was $206 million, up from $148 million in the linked quarter. Other than our normal seasonal uptick in compensation expense, there was very little in the way of unusual items in our first quarter results. However, there were a number of items from prior periods that I'd like to remind you of which impact the comparison to the linked quarter and the year ago quarter. Last year's fourth quarter included a write-down of our investment in Bayview Lending Group, settlement of a lawsuit and the contribution to The M&T Charitable Foundation, which…

[Operator Instructions] Your first question comes from the line of Marty Mosby of Guggenheim.

The deployment of liquidity was one of the big impacts on the balance sheet this quarter. You deployed about -- looks like $1.5 billion of those deposits into the Fed, moving them into the loan growth. So a lot of that's dictated by the mortgage banking and how much you've been able to see. With the increase in mortgage banking fee income as well as the opportunity probably to touch more mortgages and also the kind of increase in deposits that kind of rekindled the period and number back in the Fed balances, it looks like you got about another $1 billion left that you could redeploy going into this quarter. What's your thoughts about utilizing that? René F. Jones: Well, I mean, I think we -- obviously, we had a big end of fourth quarter loan growth, which carried over to this -- to the first quarter. But I think if I take it in parts, we definitely have -- we've not seen an abatement of growth in deposits, so that trend has continued longer than I guess I would have thought if I was sitting here a year ago. So that bodes pretty well. I noted in Upstate New York that we've got great deposit trends. There's a bit of disruption going on here from all the different conversions and so forth. So I think that's good. And then if you flip over to the other side, I think we had 5% end-of-period growth in C&I loans, right? So while not as robust as in the fourth quarter end of period, we're still seeing growth, and obviously, we've got a fair amount of residential mortgages that we've been putting on each quarter. So I think -- I would guess that we'll be able to utilize the core deposit growth that we see. Having said that, I think, as we mentioned, the -- our commercial client services business is such that we could get even larger swings of cash balances which, in some cases, I think might go unutilized as I kind of think out in the future, whether it be from our loan agency business or from assisting people with securitizations and those types of things, that the capital markets start to pick up.

But with additional kind of origination production going on, do you feel like you want to use the extra $1 billion with the stronger positive growth that you're already seeing? It's like you reloaded as you went to the first quarter, and you got a chance to go out and deploy another slug of mortgages in there that could really help balance the balance sheet as well as be able to generate some offset to that compression that you were talking about in net interest margin. René F. Jones: I mean, I think -- I guess I haven't thought about it that way. I continue to think and we continue to think that because we're light when you combine discretionary assets, which we would call mortgages and securities, we're just doing the tradeoff, right? So if you look on the other side, I don't have the amount, but we had a runoff on our securities book, right, as well, so that's kind of a substitute for the mortgage growth, and my sense is that trade-off will continue. I think that was down almost -- the investment securities were down almost $0.5 billion.

The last thing I was going to ask you, as the trustees increased a nice 3%, which is the first increase we've seen since the merger with Wilmington Trust, how much of that was market valuation lift versus -- when we were out there talking to management, you're all real excited about being able to see some of those customers, Wilmington Trust, come back on board and be able to see -- be able to cross-sell into that product as well. So how much is market related versus tactical or strategic traction that you're getting? René F. Jones: Thanks, Marty. Good questions. Yes. So I mean, if you look -- and let me sort of tee that back up. I would say that as I kind of -- now look, we have 3 quarters. We went from the third to the fourth, and our trust fees, Wilmington combined with M&T, were flat. And when you look at a lot of trust businesses out in hindsight, a lot of people were down. So we were actually pretty pleased with our results in the fourth quarter. And then we saw a nice growth into the first quarter, which was driven primarily by 2 things: our capital markets and agency business as well as an uptick in the retirement services. Retirement services, obviously, is a result of the S&P 500 being up 12%. So there, we saw fees grow maybe 4%, 5%, right? Because we don't have 100% equities there. We're a little less sensitive to equities, but we still have improvement. And then as we look at the various capital markets business, if you think of our default administration business, as you know, we've got -- we've been able to get a number of sort of headline appointments there. We're the trustee on GM, Eastman Kodak, American Airlines. We added MF Global. And those things combined and the work associated with those things have actually allowed us to sort of hold our ground there and in fact, actually get a little bit of an increase. So what I'm always impressed about is that I thought we had a pretty aggressive outlook on what we might be able to do in the first quarter for trust, and we're able to do that. What I'm most impressed about is sort of as we learn about it, the diversity of the Wilmington Trust business is a nice thing. There's always sort of something going on. There's a win in one place when you don't see it in another. So that's the best answer I have for you, but I -- we were pretty pleased with trust.

Your next question comes from the line of Craig Siegenthaler of Crédit Suisse.

We had several questions on the composition of consumer real estate originations, which I'm guessing there's almost all conforming resi mortgages. But what is the average maturity, yield and duration on these originations? René F. Jones: I'll give you some sense if you give me about 2 seconds here. So we've got -- if you look at what we did in the quarter, so I'd say about half of what we did are agency-related securities. And of that, about half of those, 50% of those are 15-year. Another 10% to 12% are 20-year, and then the remainder, maybe 30%, 40% of it would be 30 years. And then we're more on the 30-year side with the FHA production that we did, which was a sizable portion also of the total amount that we did, maybe 40% of what we did. And then we've got some smaller products, which are more in the 15, but it sort of weighted themselves down towards the 15- to 20-year. So I would guess it's probably like half 15-year, half 30 at this point and with the idea that we're graduating more towards 15-year as we put things on to deal with the duration issue.

And then, René, specially related to 30-year duration or the 30-year maturity paper, what are your thoughts on duration extension risk to the balance sheet given what could happen when government stimulus and then rates eventually go up? René F. Jones: I think that we're not concerned about it in the sense that if we were to keep putting mortgages on for a longer period of time, I guess we'd get to a point where we think we had too much duration risk. We're already relatively low, and again, we're light in that space, right? So think of it as when you think of the replacement of the securities book, which a lot of are MBS, right, and you look at the tradeoff, our duration is growing a bit, but it's still in the wheelhouse of where it's been in the past. So nothing concerning just yet.

Okay. Not even on the change on where that could go when rates go up? Because obviously, it would extend that. René F. Jones: Oh, yes. I mean, we would be -- no, that's what we're considering when we're putting it on, right? So we're thinking about extension risk and all of those types of things as we model it out. Right now, we're still comfortable with the mortgages. Although I do say that we do have more of an appetite for 15 years as we progress, because with the refi boom, we're probably ahead of where we thought we would be.

Next question comes from Ken Usdin of Jefferies.

A couple of quick things. So number one, just to ask the question, obviously, the CCAR came and went, and I think you guys made the comment that you had not put in for anything related to the eventual TARP payback and that you would just have to I guess resubmit that at that time. I was wondering if you could just kind of walk through then just how you have to think through that at whatever point it is in the future when you get to that point. Do you have to just -- do you have to wait till annual review? Or can you resubmit an interim if you had a thought process around becoming in a more immediate timeframe? René F. Jones: Well, I think what we said was that to the extent that we wanted to repay the TARP, we would have to resubmit, and I guess this process is to resubmit. But at this point in time, I don't really have any more information on our thinking. We've stated it a lot in the past, but I do think -- if you don't mind, I would like to just sort of kind of walk back through the points again, because I think it kind of matters. We've heard a lot of stories out there about our TARP. So you'll recall that we were kind of reluctant to participate in the program. And so we -- as a result, we were one of the -- we were the only one and the largest bank to take just 1% of $600 million. And the thought process back then was that we didn't want it. We didn't think we need it, but at the height of the crisis, there was a lot of pressure on banks to prove…

Great. And the other 2 piece of this is that -- is are you at the point at least where -- now where you can help us give a -- get a better understanding of what your Basel III would look like if you had to present it today? René F. Jones: We talked about that. I'm not -- I think we're just going to wait. Most of the banks that have done it, as you know, are speculating based on what the Basel III original rules are coming out of Europe. And our opinion is we'll just wait and see what happens when the final rules come out, and we'll publish something then.

Okay. My second question, René, is just, obviously, the mortgage strength across the board was very clear this quarter, both in terms of the amount you were able to put on the books and then your comments. Just seeing the mortgage banking fee strength and plus the fact you could have gotten if you had sold, I was wondering if you can kind of give us some -- a little bit deeper color in terms of just what was origination versus what was gain on sale on the fee side. And can you walk us also again through the -- your time lag in terms of apps that haven't closed or you gotten paid on yet? René F. Jones: Yes. I can try to do it in a simpler fashion. Maybe I'll just give you a couple of numbers, if you give me a minute. I mean, when you look at our -- so I'll start with application volume. We had total application volume of $2.4 billion, which was up 31% from the linked quarter, right? So huge, huge volume increase in total. And then if you kind of look at the components of that, most of it was from refi activity. About 12% of that volume was from the HARP program, right? So as you get back a couple of quarters, that didn't exist. So that kind of explains almost 1/3 of the increase is the way I would think about that, and I would guess that that'll continue for some time. On those -- we're selling all those, but we are keeping the servicing on some portion of those loans. And then as you look, I think we locked about $900 million for future sale to our treasury division. And in the fourth quarter, that might have been about $800 million, and you actually saw the $800 million flow into the balance sheet this quarter, right? So you should see some strong effect. It depends on where rates are with the regular -- the total volume coming next quarter, but in any case, we seem to -- we'll have some nice carryover into the second quarter on our balance sheet.

Your next question comes from the line of Steven Alexopoulos of JPMorgan.

Maybe I'll start, last quarter, you pointed to more cost saves than the original $80 million. I think you said $90 million to $100 million. Just wondering where do you think that's looking now. And what was actually in the run rate as of the first quarter? René F. Jones: If I were to guess where we are, we're probably getting pretty close already to about the -- to the 15% number. We're knocking on that door of cost saves and which suggests that we're sort of on track to be a little bit over, because again, we haven't completed our trust and investment systems conversions, right? So I think that's what we're saying. We kind of feel like a lot of the uncertainty there or the work is done, but obviously, as we go further, I think we're going to probably outperform that original number will be my guess.

Okay. And, René, once the cost saves are realized, how should we think about the growth of core expenses with Wilmington in the mix? Maybe historically, around 4% per year. Is that higher now with Wilmington? René F. Jones: It's interesting. When you look at the expenses, if you just take a detailed look at the expenses, it's pretty amazing. You can't discount -- and maybe even suggest go back and read again Bob Wilmers' message. The amount of expense that's been added because of the regulatory side, and not just the obvious ones but sort of all the added staff that you need for credit and compliance and those things, is pretty high. And I think I was looking at -- I don't have it exactly in front of me, but I think it's on the runs. We were probably -- FDIC insurance was probably up 52%, 53% from a year ago quarter. So all that said, to the extent that a lot of that is not going to continue at that pace, I think now, we're sort of settling in, trying to think in the new environment how do we operate things. And so our focus is going to be on sort of containing that growth as much as we can. Where you might see some growth would be on investment in things like technology, because as you look at your distribution network, which is -- which needs to be rationalized not just for us but everybody, you can only do that when you have pretty good technology that sort of offsets it in some consistency there. So -- but I think expenses will be pretty well managed. I think about the spread. I definitely think that we'll have an abnormal spread between the revenue growth and expense growth relative to the past couple of years.

And on the margin, just to follow it up -- follow up on your comments for slight pressure, would you consider restructuring some of the long-term debt, the way at least one other bank has, to take pressure off the margin? René F. Jones: No, because it's not economic, really. So I mean, this restructuring that we did against Wilmington Trust, I -- at least, it's the only one that I ever remember in the 20 years I've been here, and I would guess you could probably go back 30 and say the same. So I doubt it, because there's no economics in that whatsoever. We still have some -- which is one of the things you see in the margin, which is kind of subtle, but we still have some wholesale funding or longer-term wholesale funding from Provident and those transactions that will run off over the course of this year that will give us a little bit of relief.

Great. And maybe just to follow up on Ken's question on TARP. I know you were very clear with your answer. Just curious, could we see an update on this this year? Or is it most likely with next year's stress test and capital plan that we'd next see an update on that? René F. Jones: I can't tell you. When I know, I'll tell you.

Next question comes from Erika Penala from Bank of America Merrill Lynch.

This is Conor Fitzgerald for Erika. Just correct me if I'm wrong, but I think I heard you mention that auto loans were down. Was that a deliberate decision on your part, to pullback? Or did the overall pie shrink this quarter? René F. Jones: Yes. Auto loans were down. It's not any different than it's been trending. I think we said the total consumer loans were down about 4%. Auto loans were down I think about 3% unannualized, I would guess. Yes. So that portfolio has been running off, because quite frankly, as we said, we try to maintain a return at least at our cost of capital of 12% -- maybe 12%, 14% is where we've been running, and we've seen a lot of competitive pressure there. I recount one of our folks was out recounting a story where he went out and looked at some of the transactions going on. In one case, you had a 2009 sports car. The purchase price was $100,000. The loan-to-value was $98,000, and the credit score was 702. The yield for the customer was 1.34%. So with that kind of activity, we can't get anywhere near that. It doesn't make much sense to us. But in fact, it seems like it's a pretty good environment for the consumer, right, because money very, very cheap. So in our mind, we'll continue to generate $80 million to $100 million of that paper a month unless something changes in the competitive front, and that means that we're going to see slight downward trends in our balances there.

Got it. And then just on credit quality, how are you guys thinking about kind of normalized charge-offs as we move through the cycle and your reserve level? René F. Jones: A couple of -- I mean, I -- and this is a guess. I mean, if I think back over a long period of time, I would guess we've built a company that the average charge-off rate over long periods is probably 30 to 40 basis points, right? And that swings low, and we still have high nonperformers, so I would expect that as that tapers off, you'll -- over long periods, you could get some good credit performance. The other thing I would direct you to is that if you look, again, over long periods of time, our movement in charge-offs mirrors the industry. So while we've always been much lower on a relative basis, the sort of tracking of it is almost in lockstep, because we're in the same asset classes everybody. It's just that we try to get more security on loans. So I don't know if that helps you at all.

Next question comes from Ken Zerbe of Morgan Stanley.

Just to be clear -- hopefully, you have this number. The $21 million that you guys cited, if you had sold the resi mortgages, you would had $21 million of additional banking income. Presumably, that also means that you wouldn't have had the growth in resi that you did, which obviously provides -- or it grows your earnings assets, grows net interest income. Do you happen to have like a net number? Because it seems wrong to kind of just add in the $21 million, because you're already getting income from the loans that you kept. René F. Jones: Oh, yes. Yes. We probably should have done a better job of that. So think about it this way, Ken, is -- so when you -- the way the accounting works is when you're selling it, originating the loan for sale, at the time of the lock, you record the gain. So the loan hasn't been closed yet. So all the gain on sale revenue you see in the first quarter was from loans we locked but have not yet closed. The $21 million is related to those $900 million of loans we talked about, right, which have not yet closed. So they're not in our numbers at all. They'll -- they won't be in our balance sheet till about 45 days after the lock period, so that means on average in the second quarter. Is that clear?

Yes -- no, that does help. That's great. René F. Jones: And the other thing we did is -- that's we gave you the $11 million last quarter. So if you kind of use last quarter's, that's what boosted the -- that's what -- it was those loans that boosted the first quarter balance sheet.

Okay. And then just another quick question. In terms of how -- what percentage, I guess, of your portfolio are you comfortable with resi mortgage being? How large can that grow? René F. Jones: We're way below the industry average. I don't know, a couple of points as a percentage of assets. We're not looking to do anything dramatic. I would guess when we're done, we'll be below the industry average.

Okay, but you're comfortable going up close to the industry average. Okay. René F. Jones: Let me say that again.

I guess for you guys. That's what I was asking, you're tolerance for resi. René F. Jones: Yes. No, no, no. Let me say that again. Again, it's an offset for security, so it depends on where we are with our investment securities portfolio. So right now, we're really low. I forget the numbers, but we're probably half of what the industry average is for investment securities. So you kind of have to look at both of them together.

Next question comes from Matt O'Connor of Deutsche Bank.

This is actually Adam Chaim calling for Matt O'Connor. I just have 2 quick questions for you. Sorry if you've discussed this already, but was there any impact from MPAs [ph] -- on MPAs and reserves from the new regulatory guidance on second lien home equity? I think 2/3 of your home equity was second lien at year end. And the second is regarding salaries and benefits expense. Even excluding the seasonal increase, the $26 million you noted in your prepared remarks, we -- it still came in a bit higher than we expected. How much of that expense is generally driven by mortgage compensation? René F. Jones: I think -- well, let me go in reverse order. I think very little of it is really driven by mortgage compensation. If you think about it, because when you book the loans, you have to defer a portion of the expenses, it actually -- it works the other way. It dampens the salaries a little bit when you have high mortgage volume, because you're deferring. But having said that, the -- our business is growing as well. So for example, the size of our servicing portfolio is a little larger as well and a few things like that. We've added people in the servicing area, so that's kind of what you're seeing there. And I think the other thing that we'll continue to do from time to time is, particularly with the Wilmington business, we'll start adding teams of people where we think the revenue growth actually can help us out. So I would say that probably the biggest thing that you're seeing there that you can't quite see is probably a larger servicing portfolio and some more staffing there. And then if I go back to your other question on…

Your next question comes from John Pancari of Evercore Partners.

Can you talk about that trust deposit seasonality? Can you help size it up in terms of how much you expect it could be that it could impact the deposit balance? René F. Jones: I wish I could. It doesn't really work that way. So for example, recently, we were -- in early in the -- early in this second quarter, we were engaged to be trustee in a large securitization, right? So depending on the size of that securitization, we'll get a way above average -- we'll be holding that cash for that client for a short period of time, but it could be a significant amount of money. Sometimes it gets cut in half. So I mean, it can swing by several billions of dollars depending on the type of transaction that we're engaged in and how many we're engaged in.

Okay. All right. And then separately, can you give us a little bit more color on loan pricing through the quarter, particularly on the commercial side? And I know you gave some color around the resi book but just curious, in general, what you're seeing there. But more importantly, just competitive loan pricing, you also mentioned in direct auto. So clearly, we're seeing it there, but I'm curious what you're seeing elsewhere. René F. Jones: Yes. I mean, let me put it as a backdrop to that, in a number of places, we're seeing very positive things from our customers, whether that be because there's an uptick in the economy or activity or in some cases, just because the competition is down because a lot of their competitors have been sort of weeded out. But as you look at that as a backdrop, we have seen -- I'm going to use better language than one of our regional presidents. He -- I'll change his words. He told me that from a competitive standpoint, facility is back. And what he's talking about is that many of the community banks are pretty aggressive both on price and structure, and I'd say even relative to a year ago. And then when you get to some of the larger institutions, to the extent that they're healthy, because they're carrying -- we believe because they're carrying a fair amount of equity, they've been willing to do things that were probably a little lower than we would have expected. I think it makes sense from the context if you think -- if they think they're sitting there with excess equity, then that's kind of what you get. So it's pretty competitive. But having said that, as we kind of look into like Pennsylvania, for example, our business bankers and our branch managers seem to feel that there's good loan demand there and then not necessarily complaining about prices. And then, again, I would articulate that in Western New York, in Upstate New York, we've been, in terms of customer count on the business banking and loan side as well, we've seen good growth there at fairly reasonable margins. So that's what we know.

Okay. That's helpful. And then lastly, can you give us just some color on the fluctuations again in the other revenue line item and as well as in the other expense item? Just give us some color on the moves. René F. Jones: That's really one topic. I mean, so think about the idea that we had a big, big loan growth really in the fourth quarter leading into the first. What we actually had was probably an outsized amount of commercial loan fees, whether that be regular loan fees or syndication fees, what have you. And then as you went to the first quarter, we probably had an abnormal low amount, right, coming. So I think what will happen is that will sort of get back to a normal pattern. It's hard to really predict syndication-type fees and other credit fees on a quarter-to-quarter basis, so it jumps around a little bit. So I would say fourth was extreme. First is extreme the other way.

And that was same thing on the expenses? René F. Jones: That was on the other revenue. So on the other expenses, oh, yes, yes. You got to normalize for a couple of things, right? So you've got to -- you first got to take out the day that you right down on the charitable foundation. And once you do that, we were better by about, I don't know, $10 million, $11 million. And really, when you look into what's driving the better performances, it's a lot of seasonality. So you get professional services and those types of things that were higher at the end of the year, and some of that will come back. The first quarter is usually seasonally low than most of the other expenses, right? And then it kind of picks up a little bit going forward.

Next question comes from Bob Ramsey of FBR.

This is Tom Frick for Bob Ramsey. Just one quick question. As expected, your tax rate kind of ticked up looks like 6 points this quarter. Is 33% a good run rate for you going forward? Or how should we think about that? René F. Jones: Yes, I'm a random walk guy, so my answer is yes, I think so. It was low last quarter because of -- because the income was low, and we had -- typically, you get this fixed tax credit. So I think we're probably at a pretty good place right now.

Next question comes from Collyn Gilbert of Stifel, Nicolaus.

Just as we think about the loan growth, you had indicated perhaps single-digit loan growth. A lot of that's obviously being driven by the resi initiative at this point. As that starts to slow and that sort of strategy maybe plays itself out a bit, how do you think about the allocation of capital from there? And how does it change? And is -- maybe tie that into where -- what aspects of your business right now are you kind of most encouraged by? René F. Jones: Yes, okay. So take the resis out for a minute, we had, obviously, a nice quarter of loan growth, C&I and real estate this quarter. And then on an end-of-period basis, C&I was about 5%. CRE was about 1%. So things continue to grow, right? And over time, I would guess if the economy gets better and you can't continue to see all this liquidity coming into the system, then you're going to see growth. So I'm not too worried about that. The one sort of benefit I think is that there's so much uncertainty still around capital levels. Everybody's sort of guessing at where we're going to be in the future. And so the idea that we are sort of deferring the gains kind of works in our favor, because one, we're growing capital. Capital is growing, but if we were to accelerate that by selling all the loans, then we're not quite sure what our use for that capital would necessarily be, particularly as we get up past the range that we're comfortable on the sort of Tier 1 common ratio. So I mean, I think right now, it's sort of just a wait and see. But I mean, in terms of what we're pleased with, I think we're watching cautiously…

Okay. Okay, that's helpful. And then just finally, how does M&A factor into your strategy over the next 6 to 12 months given what's going on in the environment? René F. Jones: Well, you don't buy banks. They get sold. So hopefully, someone will call us up from time to time, and if they did, we'd probably be ready. But I think the one practical thing we're doing is -- why we're not really concerned, I mean, if you think about our dividend policy -- so before, obviously, 2007, if you looked at our dividends, our dividend payout ratio was probably between 25%, 27%. We used to keep it very, very low, and then we used share buyback. Now our total payout ratio is somewhere around 40%, and it's actually -- when you think of it in total terms, it's low. So we're accumulating capital. Even beyond sort of the idea of accumulating it for the new regs, the new Tier 1 common rules, there's not really a ton of cost to doing that today, because we think bank stocks are very, very low. I think we did a slide on that. We went back to 2000, and you can see that the pricing is still relatively low on bank stocks. And we think that with the regulatory environment, we'd be surprised that there's not more consolidation. So our strategy is really simple: just keep working on your own bank, and eventually, something will come up that makes sense for both parties and be ready to do it.

Our final question comes from the line of Craig Siegenthaler of Crédit Suisse.

Just wanted to kind of refine your commentary around kind of deposit trends. So it sounds like there's some positive lumpiness coming in the trust business, and we had some at the end of the first quarter. But also, the second quarter sometimes can be a more difficult seasonal quarter for deposit growth. So what is your expectations in terms of total deposit growth? And also, how do you feel about the loan-to-deposit ratio now that it's 100% versus your longer term kind of objective? René F. Jones: What we talk about here is, first of all, we have modest growth planned in our deposits for the year, particularly because we're more concerned about what happens when the rate environment turns around. And we've got a really significantly high levels of demand deposits relative to history. So we're kind of cautious on the idea that if things turned around and you do see loan growth, you're probably going to see a runoff in some commercial level deposits as those customers can go out and get better rates or return elsewhere, and they start actually using the cash. So I don't -- I can't tell you what it's going to be. I can just tell you that we're very cautious about it, so we tend not to assume large amounts of growth in the deposit portfolio. We worked really hard to get it, but...

Got it. And then just one follow-up. Most equity markets are up around kind of 10%, 11% in the first quarter, and your trust income was only up 3%. And that's also in the back of a strong kind of fourth quarter. I know it's a smaller mix of equities, but is that normal to see your trust income up around 3% when equity markets are up something significantly higher, like 10%? René F. Jones: Yes, I think it is normal, because even when you look at the assets that we have, and I'll give you the number in a minute, but a -- there's a smaller portion of it is the equity market. And then a lot of the business, particularly in the corporate client service business, is not really tied to the market. It's tied to -- actually, it's not tied to the equity market. It's more tied to the overall capital markets and who is issuing debt and what kind of transactions are going on, right? So if you look at our total assets under management, I think about 36% are equities. And so that kind of makes sense, 12% up, 3%, 4% up in our retirement services and those asset-intensive businesses.

This concludes the question-and-answer session of today's conference. I would now like to turn the floor back over to Mr. MacLeod for any closing remarks.

Again, thank you, all, for participating today. And as always, if 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. This concludes your conference. You may now disconnect.