Truist Financial Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Scott Siefers - Piper Sandler & Co. - Analyst : Mike, was hoping you could please maybe unpack the Q4 margin guidance a bit more for overall NII certainly understand the ongoing pressure on loans. But was hoping you might be able to walk through thoughts on how quickly deposit betas might be able to catch up to help support or ideally enhance the margin then? And then just make some top-level thoughts about the company's overall rate sensitivity at this point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 12:00PM, TFC.N - Q3 2024 Truist Financial Corp Earnings Call

Question: Scott Siefers - Piper Sandler & Co. - Analyst : And then I just wanted to ask separately. So you did the really large balance sheet group positioning earlier this year. I've got the impression that that was value you plan there, but you have so much capital flexibility relative to so many banks out there. Would any thoughts on further opportunities to do so, or is it stamp pat on that front?

Question: Betsy Graseck - Morgan Stanley &Co. LLC - Analyst : Bill, you mentioned with proper execution to deliver on the goals here in a target to have. Could you help us understand what do you mean by proper execution? Is that just hitting the goals are and is there a change in how you're operating that delivers proper execution?

Question: Betsy Graseck - Morgan Stanley &Co. LLC - Analyst : And then as we're thinking about the positive operating leverage into 2025, how much of that being driven by deposit beta lags catching up here with some Fed funds? I mean, is that the major driver of how we're thinking about operating leverage as we roll into '25?

Question: Erika Najarian - UBS Securities LLC - Analyst : My first question is a follow-up. Mike, you mentioned a little bit of guidance on the fourth quarter, as we think about the trajectory from here and fully appreciating we're not getting specific 25 color today. As we think about the structure of the asset side versus your liability side, should we assume that from that 3.05% 3.06% level that assets can start repricing faster than liabilities in 1Q, but then there's a day count impact on NII that's negative? Or will the assets repricing faster than liabilities go -- coming later? And to that you mentioned the swap. If you could give us a little more color on the swap with the notional active is with the weighted fixed -- receive fixed rate is. So we can factor that into our modeling. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 12:00PM, TFC.N - Q3 2024 Truist Financial Corp Earnings Call

Question: Erika Najarian - UBS Securities LLC - Analyst : And my follow up question and thanks for all the detail is for Bill based on what Mike just said you should have NII growth next year. If everything is supposed to come true that the market's thinking in terms of capital market strength in '25 you'll benefit from that as you did this quarter. If the market is good volatile as it could be after an election and a change in administration, that could be good for your wealth management business as well. So as we think about Truist on offense and fully appreciate that you're aiming for positive operating leverage, are you thinking about your expense base -- really just more around into that revenue potential revenue strength in '25? In other words, should we think about Truist on offense rather than -- because in advance and now they have to think about managing expenses because of all the issues with the merger integration. So wanted to get your thoughts there. And additionally, some longer-term, investors have asked me now why will Truist operate in the mid-teens in terms of [ROTCE], if there are two super regional peers are aiming to earn in the high-teens or the mid to high-teens, and I suspect that might be at a capital adjustment. I know that a compound question, but I wanted to get your thoughts on both. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 12:00PM, TFC.N - Q3 2024 Truist Financial Corp Earnings Call

Question: Ebrahim Poonawala - BofA Global Research - Analyst : I guess maybe just the first question and apologies if I missed it. I think you mentioned the pace of buybacks and then it gives us $0.5 billion this quarter. Should we is there room or are you thinking about increasing the pace of buybacks in the near term if loan growth is needed? Or should we assume that that $500 million is held to be locked in for the next several quarters?

Question: Ebrahim Poonawala - BofA Global Research - Analyst : Understood. And just on that anything you responded slightly to Betsy's question earlier, if you think from an outside standpoint, you mentioned Truist's now of like done with the overhang with the deal. Just remind us, Bill, when you think about the momentum and growth where across the businesses, do you expect to grow market share? And do you feel like you had a point when the bank the sub leading market share to smaller or out of market competitors who've been aggressive in terms of hiring across the Southeast. Thanks.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : Can we get more meat on the balance for the financial expectations in 2025 and beyond such as the definition of long term, when you talk about operating leverage in 2025, are you talking about more than a $1 and give some level term, medium term when you talk about returns, what year are you thinking? And the reason I ask is I'm trying to better understand the accountability of management to shareholders, and I have read about this but in the third quarter, you lowered the return targets from 2019 when it was low 20s to mid-teens. At the same time you granted a special extra leadership bonus award to some executive officers, and that was on top of awards. They already get PSUs, RSUs, LTIP, annual incentive awards and for what looks like picking a problem that Truist cause the asset liability management pre the current CFO? And then there's no question about morale for those of you and get the award. I mean two the five named executive officers, like I recognize you did not get that award, but there's others in the 24 member operating committees, who I assume did not get that. So aside from the morale and reconciling pay with performance, I'm just looking at today's slides, and I don't see the word shareholders when you say on this slide has mission on the slide that says why Truist? And you had taken some steps to restructure the Board, the balance sheet, you reorganize the company sold TIS TIH and expenses, but still shareholders. And the stocks underperformed for this bottom line. Stock has performed over most timeframe since you announced the merger. So again, that's my big key up. Can you give us more detail on financial expectations after the fourth quarter and the key metrics that you think should drive a higher stock price? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 12:00PM, TFC.N - Q3 2024 Truist Financial Corp Earnings Call

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : And then just a follow-up to the incentives for management. I think you changed, I the page 67 of the proxy last night, harnessing against your bank analyst for a long time. And I'm just time and I also saw the release that you had this quarter than third quarter, and it looks like it was like 12 financial metrics and 5 non-financial metrics. And there's so many different metrics that driving compensation. If you had to pick one or two key metrics that we on the outside can monitor and focus on that should drive shareholder value when should they be?

Question: Matt O'Connor - Deutsche Bank - Analyst : In the prepared remarks you guys mentioned about increasing in the fourth quarter investments related to risk infrastructure. I was just wondering if you could elaborate on what that is and the drivers of I guess, why now?

Question: Matt O'Connor - Deutsche Bank - Analyst : I know, you combined the two companies, you guys made a lot of investments in the called to the company kicking investment in creating some new platforms. Maybe just give us a quick snapshot of what is still to do is catching up funding because it just business as usual, staying up-to-date like all banks are doing.

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Can you guys share with us, Bill, in your prepared remarks and you talked about market share in response to your question, but you were talking about wallet share. How -- and some of your businesses you're gaining wallet share. Can you share with us how can we as outsiders measure that success growing now wallet share? And second, what are you doing to grow that wallet share that's showing up that maybe you didn't seem three or four years ago? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 12:00PM, TFC.N - Q3 2024 Truist Financial Corp Earnings Call

Question: Gerard Cassidy - RBC Capital Markets - Analyst : And following up on that primacy comment, Bill, how do you guys intersect or interlock your pursuit of the digital channel with primacy, it seems like the industry you guys included is the optimum mix is having a physical branches as well as the digital channel. Do most of the primacy relationship still come through the brick and mortar? Or are you seeing some success in building through the digital channel?