Ladies and gentlemen, thank you for standing by. And welcome to the M&T Bank Second Quarter 2016 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the conference over to Mr. Don McLeod, Director of Investor Relations. Please go ahead, sir.

Thank you, Paula, and good morning. I'd like to thank everyone for participating in M&T's second quarter 2016 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 relating 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, Darren King.

Thank you, Don, and good morning, everyone. Since this is my first conference call as Chief Financial Officer, I'll ask you to bear with me. René Jones most recently and Mike Pinto before him, set a high bar for CFOs in general and for M&T Bank in particular. I certainly have big shoes to fill. Before I start, I'd like to take a moment and thank René for the advice and guidance that he's provided to the company and to me personally over the time that we worked together, particularly during the last 90 days. I'm looking forward to working with many of you as well over the coming months and years. Let's get started. In the second quarter, we generated $1.3 billion of revenue, net income of $336 million, and diluted earnings per share of $1.98. Return on assets were 1.09% and return on common equity was 8.38%. Looking at the second quarter results on a net operating basis, which excludes the after-tax effect of merger-related expenses and amortization of intangible assets, earnings per share equaled $2.07. Return on tangible assets was 1.18% and return on tangible common equity was 12.68%. Every measure noted above both on a GAAP and net operating basis improved from the first quarter. The efficiency ratio also improved to 55.1% in the second quarter, down from 57% in the first quarter, and 58.2% in the year ago quarter. We were able to deliver these results against the headwinds that we and our clients faced, including an uneven economic recovery in growth, persistent low interest rates and volatile financial markets. There are many highlights from the second quarter that characterize the state of the bank and before we review the details, I'd like to take a minute to review a few of the more noteworthy…

Your first question comes from Matt O'Connor of Deutsche Bank.

Good morning.

Good morning, Matt.

To follow up on the expense outlook of back half of the year similar to the first half, I guess first, just to clarify, is that on a reported basis or ex merger charges?

Ex merger charges because we think we're finished with those one times as of the second quarter. So if you take those out and look at what our total expenses were in the first half, probably close to where we'll be in the second half of the year.

Okay. That helps. But I guess still like if I think about the back half, normally you have seasonality working in your favor since 1Q's high and you should still have cost saves coming in, I think, from Hudson City. So, I guess why flat versus down?

Sure. I think there's a few factors going on there, Matt, which affect things. So, first of all, we've got the FDIC assessment going up $5 million a quarter right there. What you'll see is that when we look at our other cost of operations, which is really where we're focused, legal expenses are up in the second quarter and will likely continue at that pace in the third quarter and fourth quarter and possibly increase slightly as we go through our defense with some of the Wilmington Trust indictments that are out there. And we will be continuing to make the investments that we've been talking about in the franchise, especially continuing on path with technology. So, those are probably the big things that you'll see in there. Oh, and the other thing, of course, which I should mention, is we'll be right in the throes of some of the changes that will be happening in our marketplace in the third quarter and we'll probably spend a little more on advertising as we try to take advantage of the changes that are happening. So some of those things are kind of more permanent in nature, some of those – more permanent is probably a bad description. Some of those things will run their course over the rest of this year and some of them will probably take a little longer.

Okay. And how much was the litigation this quarter?

I think it was roughly an increase of $4 million from what it was in the first quarter of the year.

Okay. Sorry, do you have that number handy or is it in the 10-Q that I can look it up? The first quarter level?

Yes, I think it was about $14 million. That's what it was for the quarter.

Okay. So, that will probably stay elevated for maybe the near-term, medium-term, but obviously longer-term would hopefully come down then?

That's how we're thinking about it.

Yes, okay. Thank you very much.

Yes.

Your next question comes from Geoffrey Elliott of Autonomous Research.

Oh, hello, there. Thank you for taking the question. On the increase in deposit costs in the quarter coming, I think you said after Hudson City, could you remind us first of all the mechanics of why that's coming through now in 2Q when the deposits have been on the balance sheet for a couple of quarters?

Yes, sure. I think really what you're seeing there is kind of what I would describe as a timing mismatch, that the rate of decrease in the Hudson City mortgage portfolio is about $900 million a quarter, and the rate of decrease in the time deposits, it has been closer to $100 million in the quarter. And that's been a conscious decision on our part to maintain that pricing while we get the branch staff ready to have a different conversation with those customers than they've had in the past. So because the mortgages are running off a little faster or a lot faster in this case than the time deposits are, the impact of those deposits on the margin is exaggerated.

And when do you think you start having some of those discussions and figuring out whether the relationships with those deposit customers make sense and if they don't make sense, get to rid yourselves of some of the interest expense that comes through from them?

So that process is going to begin this quarter, and will play itself out over the course of the third quarter and fourth quarter of this year. If you look at the book, it's relatively short. I think 75% of it is 12 months or less. So that's kind of the timeframe over which these discussions will happen and it's something that we'll be focused on obviously over the course of the coming quarters.

Thank you.

Your next question comes from David Eads of UBS.

Hi, good morning.

Good morning.

So, you guys had really good growth on the CRE side this quarter. That's sort of been a hot topic recently with the concentration limits of smaller banks and OCC's outlook on risk in the markets. I'm just kind of curious, your view on the competitive environment there. Whether you're seeing other banks pull back? Whether you're seeing kind of irrational pricing or irrational terms in some market and just kind of where do you think we are there?

Sure. I guess I'll offer a couple of thoughts as it relates to CRE. First, when we look at where our growth has come from, it's been fairly broad-based across our geographies and across property types, so we're not seeing any concentrations or things that we would point to that we would get worried about. When we look at pricing, I wouldn't say that it's going up, but it seems to have stabilized somewhat. So we feel better about that and when we look at the amount of equity that's in the deals, it's still at or above where things were back in 2006/2007. So I think the market's learned its lesson as far as that goes. When we look in our markets and where we're winning business, it doesn't seem to be at the moment, coming from any particular competitor that might have reached concentration limits but I know that's an issue that's out there. I think when we do see things that look a little crazy to us, either in terms of pricing or structure, it tends to be the non-bank lenders that are in that space, and we would tend to shy away from that and keep our powder dry.

Great, that's helpful, and can you give any color on where the commercial pipelines are this quarter compared to last quarter? Or how things are shaping up for the rest of the year?

Yes, sure. When we look at the commercial pipeline and where it stands right now, it's pretty similar to where it was at the end of the first quarter. So when we look forward, I guess I don't have a reason to believe right now that we'll see a meaningful decrease in the production levels, but we're also not anticipating any crazy upticks either.

Great, thanks so much.

No problem, thank you.

Your next question comes from Ken Usdin of Jefferies.

Thanks, good morning. One more follow-up on the net interest income side. To your point earlier about not potentially having the rate hikes, the loan growth and the remixing into securities seems to be a support, but underlying it you mentioned the three basis points of the core pressure and is that on an ex-rates basis how we should expect things to go from here which is that you're able to fight off the NIM pressure with the balance sheet growth?

I think when we look at the NIM pressure and the ways that we fight it off, it's primarily with the deposit pricing and primarily with that CD book. Obviously, we'll use some of the proceeds, if you will, from the mortgage paydown to fund loan growth, but we'll need to supplement that on the deposit side. We think we've got ample funding between money that we have at the Fed as well as money that we have in savings account that we don't need to rely on that CD funding for growth. And as we can change that mix and bring the percentage of CDs on the balance sheet down somewhat, and/or bring down the average rate that we're paying, that's the biggest lever that we have to fight off that margin compression.

Right. So we might not see a lot of earning asset growth but you might be able to offset the core pressure with the remixing.

I think that's probably a true statement. I think the challenge will be at least in the near-term over the next couple of quarters just making sure we can outrun the net interest income impact of the runoff or the payoffs in the residential mortgage book from Hudson City.

Okay. And on the fee side, just one quick question, the wealth business had a good quarter. I know some of that is seasonal. Are we seeing a bit more stability in that business now and was there any help from fee waiver recovery in that line as well?

I guess the way I tend to think about that business is you got the seasonality part right. When you take that out, we still had a nice quarter. We had some good growth in the institutional part of the wealth business. We saw some customer balance acquisition. The financial markets, it looked like they were going to hurt us a little bit with Brexit but in the end have been okay. And then on the waiver recovery, there's always waiver recovery, but there's always offsets too, right, that there's some new business that you might do some pricing actions to get a customer to join the business. So, I think net, you could say that there was some waiver recovery but it would be modest. It wouldn't be a big driver of the increase.

Okay. Understood. Thank you.

Yes.

Your next question comes from John Pancari of Evercore.

Good morning.

Good morning.

Wanted to see if you could talk a little bit about your plans for reinvestment of liquidity on the balance sheet and how you look at the securities book now, particularly given what we're looking at here on the longer end of the curve. Thanks.

Yes, sure. I guess we're at an interesting point. Given where rates are and where the book sits today. I guess when we look at what some of the options are of where and how we can invest, the current yields on some of the investment options don't look particularly compelling. And I guess as the book pays down, we'll probably look to reinvest the paydowns back into the market, either in Ginnie Maes or Fannie Mae securities, but I don't think we're looking to really grow that book right now just given where interest rates are. We'd rather put the cash to work in loan business rather than in the securities book and try and keep that relatively flat unless we see a move in rates.

Okay. All right. No, that's helpful. Thanks. And then separately on the capital front, just wanted to get your updated thoughts in terms of where you stand on the regulatory obligations still tied to the Hudson City merger and then also how soon you could be out there with some potential interest in bank M&A again? Thanks.

Sure. I guess as it relates to bank M&A, we've obviously – we continue to do our work to build our risk infrastructure, particular note was AML/BSA, but we continue to make great progress on the aspects of the written agreement that we were obligated to and we're nearing completion of those activities. But we have to finish our work so that the Fed can come in and do their work and hopefully remove the written agreement from us. We don't have a timeline on when that might happen but we're always hopeful that it will be soon, but you can't really control that. Could you repeat the question on Hudson City?

Well, no, it was just the regulatory obligations around that. You kind of just answered that with that answer. But I guess my second question was really just once you clear those hurdles, could you be back out there looking at potential bank M&A, particularly given some of the headwinds some of the smaller banks in your markets could be facing?

Yes, if you've watched us through the years, you know that we've always been a bank that grows through acquisition, but we do complement it with organic growth. I think for all the reasons that we talked about when we did the Hudson City merger, we think that New Jersey is an attractive footprint for us in terms of customers that are there, both business customers as well as consumers. And it's a natural fit with our franchise. That said – and obviously with our capital levels, we're in a good capital position to do deals. All that said, we're not interested in doing a deal for a deal's sake. We're interested in doing things that are positive for our shareholders. And to us, that means accretive to earnings and capital and we'll be patient.

Great, thank you.

Yes, no problem.

Your next question comes from Bob Ramsey of FBR.

Hey, good morning.

Good morning.

Just wondering if you could talk about, with the CCAR authorization, I understand it's all sort of dependent on economic outlook, but is the idea that you sort of start off doing a quarter of the total authorization a quarter and then adjust as necessary as you go through the next 12 months? Or do you start off a little more cautious? Are the buybacks a little more front end loaded? How should we think about the pace of activity?

Probably the best way to think about it is split evenly over the course of the four quarters.

Great. Okay. And then I wonder now that Hudson City is done and closed and you've had a little bit of time with it under your belt, just curious if there have been any surprises, what kind of the biggest takeaways are and where you see the greatest opportunity from here?

I guess, there haven't really been a lot of surprises that we would note, at least anything that stands out. I think we feel that the spot we're at with Hudson City is about where we expected to be at this point, kind of 120 days post a system conversion. There's work to be done to get the branch teams up to speed, especially from a thrift, up to speed on the breadth of products that we offer as well as learning the systems and then getting used to a sales environment. So that's kind of proceeding as we would expect. And as we mentioned, that's why we feel comfortable that now we're kind of ready to start taking the step that we're ready to take on the deposit pricing. And then for the commercial and business parts of the bank, we've been there actually with M&T bankers pretty much since shortly after the announcement date, so really our focus there has been to keep that group of people engaged. And since we got the deal done, they've been excited and have the ability now to work with the branches and offer more confidently the deposit side of the relationship. And then we've been out recruiting and we're trying to grow that business through people additions. I think the thing that we pay a lot of attention to is just like we pay a lot of attention to credit and we want to grow in that footprint. We're going to grow under the kind of terms and structure that we know is good business, so we're not going to rush it. And the same thing kind of applies to people, that we know that finding and adding to our teams, people that fit our culture and understand how we do business and think about relationship and think about good structure, it's more important to us that we get the right people on the teams rather than fill the spots quickly. So, I feel really good about where we are. I think we're tracking to where we would expect to be. And we just got to manage the pace that we talked about a little bit earlier on, which is the pace at which those mortgages run off and the pace at which we grow the commercial balances to offset that. But overall we're very pleased with where things are.

Great, thank you.

No problem.

Your next question comes from Matt Burnell of Wells Fargo Securities.

Good morning. Thanks for taking my question. Just a question in terms of the commercial pipelines. You were saying that they were Iargely unchanged quarter-over-quarter. I guess I'm curious how much of the commercial growth, if you break it out this way, has come from legacy Hudson City markets and how much of that is coming from legacy M&T markets? Because it would seem to me that with the recent conversion you – one would have thought that you might have had a somewhat stronger pipeline in the second quarter. And we've also heard from a couple of other banks that commercial demand has slowed a little bit from the start of the year. So, maybe just a little more color on the commercial demand.

Sure. Well, as you would expect, when you look at the New Jersey markets, the growth rates there on commercial loans are actually slightly higher than what you would see in the rest of the footprint. We kind of averaged, just get the number here, 38% growth in C&I this quarter, annualized. That's an annualized number. And 18% in commercial real estate in the quarter, which those are higher than what you would see in the footprint, but it's off a small base, right? So I think when you look at the total loan growth, we're pleased with how things are going in New Jersey. We are building the pipeline there and we are getting growth rates that are faster than what you would see across the rest of the footprint. But it takes time for the dollars to build, right? So the percentage of dollars of growth that New Jersey represents is still small and growing compared to the size of the legacy balances and footprint.

Okay. Thanks very much.

No problem.

Your next question comes from Doug Doucette of KBW.

Hey, Darren. Hey, this is Brian Klock. I had some technical difficulty there. So, can you hear me okay?

Oh, they changed your name?

No, it's me. Thanks for taking my call. I just wanted to follow up on the margin side. It looks like the C&I loan yields after the fourth quarter, the December hike, you've seen a positive carry through into the first quarter, and then you had another eight basis points expansion in the second quarter. So is there still repricing going on or was there any sort of recovery that impacted the second quarter or what do you expect to see from the C&I loan yields going forward then?

There was a couple of big recoveries early in the second quarter, but I think when we look at pricing and loan yields, I guess I'd go back to what I mentioned before, that it feels like things are stabilizing and when we look at the yields of business – new business that have been originated, the yields bounce around a little bit but really have been pretty stable for about the last four months to six months. And obviously a lot of that's tied to LIBOR. So you've got to watch what's happening with LIBOR, which moves around a little bit, but overall pricing is pretty stable and I wouldn't expect to see big movements over the course of the coming quarters, either direction.

So is there a sort of core margin, or the core C&I loan yield? Is it closer to the 3.39% from the first quarter, if you adjust for those recoveries? Or is it still something that's...

It's probably in – yes, yes.

Okay. Okay. All right. Thanks. I'll get back in the queue. Thanks.

Yes. No problem.

Your next question comes from Gerard Cassidy of RBC.

Thank you. Good morning.

Good morning.

Can you guys share with us, you pointed out in your quarterly numbers that your return on average common shareholders' equity was 8.38%, which generally is believed to be below most banks' cost of capital of around 9% to 10%. This company, pre-financial crisis, used to deliver ROEs of around 15%. Can you share with us how you expect – I know we're not expecting it to go back to 15% because of the increased capital levels, but can you share with us what you think you can do to get that above your cost of capital?

I guess I'd offer a couple of thoughts. We spend a lot of time thinking about return on tangible common because that's one of the key binding constraints in CCAR and we focus a lot on that. When you look at the capital levels of where we were pre-crisis and where we are now, they're at least double.

Correct.

So two elements to managing or thinking about returns as we go forward. One obviously starts with the capital we carry to run the bank. So that was part of our CCAR announcement and our CCAR ask, and we'll be continuing to look at the volatility of our earnings and our charge-off levels and continue to work on our capital policies to make sure that we were adequately capitalized but not overly capitalized. And that will help. The other thing that I guess we think about when we look at our return versus our cost of capital, when you look at the volatility of our charge-offs and you look at the volatility of our earnings, we would kind of think that our cost of capital will be towards the bottom end of the industry because our beta's lower. So when you look at that, we think our cost of capital would be below the average in the industry and we think that over time as we continue to make the changes to the business to improve profitability as well as return capital, that those would be the factors that we would be thinking about as we move the needle on returns up in a positive direction.

Great. Following up on your comments on CCAR, I congratulate you for using the mulligan. We wish more banks would do that. I notice that, if I recall correctly, the amount of capital that was reduced because of the CCAR process was considerably higher this year than last year. I think it was over 600 basis points this year and last year it was just under 300 basis points, if I recall. What caused that to be so much greater this time? And second, if it was totally due to the Hudson City deal, should we expect as you integrate that further that that kind of reduction in capital should be reduced on a go-forward basis?

Yes, so, I guess a couple of thoughts on that. I'll be honest with you. I'm not as familiar with the 300 basis points and 600 basis points that you're mentioning, but I guess a couple of things that I think about. First off, if you think about the mulligan and how people use that, I guess I feel the need to kind of address that, that we didn't go into the process with the intention of using the mulligan. We followed our process and did our analysis of our PP&R and our capital levels under stress and we set our ask based on what we think is the target that we need to run the bank. I think what we saw is that there were some differences between our analysis and the Fed's and they built a process that gave people a chance to make an adjustment because they can see that they're looking at things differently than we are. They get to see the industry and we don't. And they built a process that I think is sound in allowing you to make that change. So we were fortunate that it was in place and we used it. I think when you think about our returns over the last three years, if you add in this year and the prior two years, we'd still be towards the bottom end of returns in the industry and we were cautious leading into the Hudson City acquisition because there's always uncertainty when you're doing a deal and we didn't want to have any issues. I think if you look on a going forward, we kind of see where our earnings are going, where our PP&R is going. We'll continue to make progress on our models and our loss rates and I think looking at the balance sheet and as the balance sheet changes, we feel like our capital levels, even with this buyback, will be pretty good and depending on what happens over the course of the next year, we'll be looking to continue to bring those levels down closer to, I guess, closer to what our targets are, and/or where we were when we passed CCAR over the prior couple of years.

Great, thank you.

Yes.

Your next question comes from Jill Shea of Credit Suisse. Jill Shea - Credit Suisse Securities (USA) LLC (Broker) Good morning. Thanks. Credit quality continues to be very strong and the provision run rate was down this quarter with the lower net charge-offs. Can you just touch on how you think about the total allowance percentage as you shift towards a more commercial loan mix over time and how we can think about the pace of reserve build as we look out?

Yes, sure. And I think if you look at the bank pre Hudson City, where the mix of earning assets was more commercially oriented, as the Hudson City mortgages run off, which tend to have a lower loss rate, and the portfolio shifts to be a little more commercially-oriented, both C&I and CRE, that over time will shift and the allowance for losses will likely shift as the mix shifts. I think if you look at the quarter, charge-offs were very low for the quarter because we had a big recovery. I think if you look at how we feel about things going forward, the first quarter was probably a little high and the second quarter was probably a little low and we would expect to be somewhere in the middle of that as we go through at least the next couple quarters. Jill Shea - Credit Suisse Securities (USA) LLC (Broker) Great, thanks.

Your next question comes from Erika Najarian of Bank of America.

Hi, good morning. I had a quick follow-up to Ken's line of questioning. Given your comments about modest earning asset growth and what you're doing on the liability side to defend the margin, can we see stability to maybe modest growth from that $863.8 million net interest income number ex any change in the yield curve? And also, maybe some more color on how you can manage the trust deposit volumes which is clearly bloating your cash. I think you alluded to that in your prepared remarks.

Yes, so I guess starting with the net interest income. Over the next couple quarters, it's probably going to be tough to see any growth there just because of the rate or the expected rate of decrease in the residential mortgage portfolio from Hudson City. So that's a big hill for us to climb to get back to flat or positive. I think when you look at the margin itself, we think we've got some opportunity there that's in our control from the Hudson City time deposit book to bring that down to reduce the cost of funding the assets on the balance sheet and obviously we're seeing and expecting to see some continued growth on the commercial loan side. As it relates to trust deposits, I guess we could do something to turn those deposits away but when we look at it, it's a good deal for us because it requires no equity and we park the money at the Fed. And I think René had mentioned on prior calls, but I'll just remind you that with some of our business in the trust side, we get paid either in fees or in deposits. And in the current environment, many people are choosing to pay us in deposits. So while it reduces the margin in the short-term, it's positive for net interest income and for earnings. So we don't get too fussed about where the margin prints because of what's going on with trust demand deposits.

Got it. Thank you.

No problem.

Your next question comes from Ken Zerbe of Morgan Stanley.

Thank you. Good morning.

Good morning.

A question on expenses. The guidance that you gave, the second half's going to be roughly equal to the first half ex the merger charges. I'm going to go out on a limb and say it's probably a fair bit higher than what I was building in, maybe consensus was building in for second half. But when we think about 2017, obviously you get some further cost savings related to Hudson City, but are we also looking at more of a parallel shift higher in expenses in 2017, or just trying to think of if there's any offsets to the increase. Thanks.

Yes, so here's how I think about it. When you look at the expense increases that are going on, I'll bucket them into a couple of categories. So if we start with savings from Hudson City, we've largely achieved that. There's maybe a little bit to come through the back half of the year, but it might take a little longer on some of those pieces as we work through ORE and expenses like that. When you look at the run rate for the rest of the year, there's change in the deposit charge, the FDIC charge, and that will go up in the third quarter. We think it will start to move a little bit down in time as we change the mix of assets and liabilities on the balance sheet. We've got some increases for events, I would call them, one of them being the change that we see happening in our marketplaces and what we'll spend on some advertising dollars to take advantage of that. And then we've got the other event that is going on and will through the end of the year which is the legal things that are happening. So, those will elevate expenses for the back half of this year. I wouldn't expect them to carry on all through 2017, right? So the advertising we know pretty certain what will happen with that because there's a time limit to that. With the legal stuff, we know we have a trial date in January but those dates can change, so I don't want to get too crazy on that. But that's part of what's driving some of that expense. When you look at the other places where we're investing, it continues to be in technology and that will move around a little bit quarter-to-quarter, but that's some of where the increase was in this quarter and some of that will be continuing on through 2016, 2017.

All right. Thank you. I appreciate it.

Your final question comes from Frank Schiraldi of Sandler O'Neill.

Hello. Thank you for taking the question. Just one quick one. Just trying to get a sense on the potential for repricing deposits from Hudson City customers. How do we think about – in terms of if it's a customer, you look at it, you want to retain, do you expect you are going to continue to sort of operate this two-tier payment or pricing model or do you think it's going to be a much tougher conversation in terms of if you remain an M&T customer, you accept sort of M&T CD pricing? And I'm wondering just how far over the next 12 months we could see that repricing and how front loaded that would be over the next two quarters versus the next 12 months?

Sure. So I guess if you think about the conversation with these customers, it probably goes and ends one of three ways. So one way is we say to someone who's a CD only customer, here's the rate we're offering to people that only have CDs with us. That rate will be lower than what they're earning today and would be more in line with what we're likely offering in our existing markets. The customer can choose that or they can choose another alternative, which would be to broaden their relationship, maybe bring a checking account relationship with them where they have their paycheck deposited. And if they bring that to us, then their rate would stay roughly where it is, but we would get the benefit, if we add the low cost deposit from the checking account and that really opens up some fee income opportunities through debit card interchange that goes with checking accounts or other maintenance fees that go with those accounts. And then the last option is if they don't like the rate that we're offering them standalone and they choose not to broaden their relationship with us, they may choose to leave and go elsewhere looking for a yield that suits their needs. And so what we'll see over time is we'll see probably a combination of two things. We'll see a decrease in the rate that we're paying and we'll also see a decrease in the balances that sit within those time accounts. And the combination of those two things is what will help reduce the interest expense and help manage some of that margin compression that we were talking about.

Okay.

Like I said before, I don't have the exact numbers in front of me, but when you look at the book, the vast majority of it, I think it's about a $12 billion book and three quarters of it we'll reprice over the course of the next 12 months. So there you're talking about $9 billion that we'll reprice over the course of the next 12 months. And I think there's a little bit of front loaded to the third quarter based on my recollection, but if you think about it, fairly evenly split across those quarters. That would be a good way to think about it.

Okay and is the majority of that money, that $12 million, is that CD only customers right now or is that not the case?

I guess it's a good chunk of it. When we look at that portfolio, it's probably 75% to 80% single service and would be CD oriented. So that's – I'm just trying to think about it in balances and reflect on some of the numbers I've seen, but I don't have that exact information off the top of my head so I don't want to misquote.

Okay. All right, great. Thank you.

Yes, no problem.

This concludes today's question-and-answer session. I will now turn the floor back over to Mr. Don MacLeod for any additional or 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 program. You may now disconnect.