Truist Financial Corp Q4 2024 Earnings Call Transcript

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

Question: Scott Siefers - Piper Sandler & Co. - Analyst : Good morning, everyone. Thanks for taking the question. Mike, appreciate the disclosures on the swap book and the anticipated re pricing opportunities this year. It kind of sounds like after a little bit of a step back in the first quarter, there's just a lot of programmatic opportunities. So maybe just in sort of simple terms, maybe if you could discuss how much of the building momentum, simply sort of happens versus how much you see is dependent on the external rate environment, I guess, in particular in there and maybe how your thoughts would change if we got either more or fewer cuts than the two you've envisioned in the guidance.

Question: Scott Siefers - Piper Sandler & Co. - Analyst : Perfect. Thank you for that color. And then within the sort of the loan balance comment, so it sounds like fairly modest -- positive but modest loan growth expected. Maybe just sort of some additional broader thoughts on kind of where your customers are, how you might expect that loan demand to evolve as the year progresses.

Question: Scott Siefers - Piper Sandler & Co. - Analyst : Yeah, that's terrific. So thank you guys very much.

Question: Ebrahim Poonawala - BofA Securities, Inc. - Analyst : Good morning. I just wanted to follow up, Bill, I think I heard you a couple of times call out, in particular, in New Jersey, Pennsylvania, Texas. Just talk to us in terms of the growth opportunity that you see there. Should we expect new branch openings, hiring of teams? Or could these be markets that are attractive even from a bank M&A perspective? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 17, 2025 / 1:00PM, TFC.N - Q4 2024 Truist Financial Corp Earnings Call

Question: Ebrahim Poonawala - BofA Securities, Inc. - Analyst : That's helpful. And I guess just sticking with that theme across the Southeast, maybe remind us again in terms of you still hear concerns around talent attrition in your market from competitors. Just give us your sense of confidence level around that these two franchises have been meshed, you feel good about defending market share or potentially growing market share from here when we think about deposits in your sort of legacy, SunTrust, BB&T markets?

Question: Ebrahim Poonawala - BofA Securities, Inc. - Analyst : We too. Thanks, Bill.

Question: Matt O'Connor - Deutsche Bank Securities Inc. - Analyst : Good morning. Can you guys talk about how you're thinking about targeted capital levels over time? Obviously, there's still some potential changes coming on the regulatory side, including CCAR. But just without having all the details on that, just the thought process. And then also just related to that, are there other opportunities to tweak the preferred stock. You had some redemptions this quarter, and obviously, that impacts the business going forward. Thanks.

Question: Matt O'Connor - Deutsche Bank Securities Inc. - Analyst : Okay. That's helpful. And the 10%, I assume is including the AOCI.

Question: Matt O'Connor - Deutsche Bank Securities Inc. - Analyst : Okay. And then just squeezing in, what's the duration of the securities book? I know you had some ads this quarter or last two quarters, but what's the current duration? And then I'm done. Thanks.

Question: Matt O'Connor - Deutsche Bank Securities Inc. - Analyst : Okay. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 17, 2025 / 1:00PM, TFC.N - Q4 2024 Truist Financial Corp Earnings Call

Question: Erika Najarian - UBS Securities LLC - Analyst : Hi, good morning. I guess my first question is for Bill. I know clearly there's a macro aspect to the return of lending growth, and you have just modest assumptions in your net interest income outlook or revenue outlook. But maybe could you talk to us about how some of the growth might be impacted by some of the changes that you've made to leadership maybe and like incentive comp and the way you go to market because clearly there's a macro aspect to it, but there also seems to be a true specific aspect where you're sort of emerging from defense and offense. And to that end, you made some announcements in terms of leadership. I feel like that was received fairly well by investors. But perhaps some comments on you in terms of what message would you like us to take away from the changes in leadership that you announced this week?

Question: Erika Najarian - UBS Securities LLC - Analyst : And the second question is a lot more boring. On slide 11, on the $45 billion in active received fixed swaps by year end, how does that progress quarterly from 12/31/24 to 12/31/25 in terms of the (multiple speakers) changing, yeah? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 17, 2025 / 1:00PM, TFC.N - Q4 2024 Truist Financial Corp Earnings Call

Question: Erika Najarian - UBS Securities LLC - Analyst : Thank you. Got it.

Question: Betsy Graseck - Morgan Stanley & Co. LLC - Analyst : Hi, good morning. I did want to just drill down into the expense outlook a little bit here. Maybe you could help us understand what's the driver behind the expense declines in the first quarter Q2, down 3% and then on the outlook for the full year revenue growth, 3% to 3.5%, expense growth only 1.5%. So help us understand how you're anticipating managing to that type of outcome, especially in an environment where capital markets is pretty strong and there's a comp payout ratio there. Thank you.

Question: Betsy Graseck - Morgan Stanley & Co. LLC - Analyst : Yes. No, I totally get it, and it's a significant amount of operating leverage here, 1.5 percentage points at the low end of the range at 2 percentage points. So I was wondering if there's much in the way of recouping prior investment spend with tech getting turned off, et cetera, that's helping keep this expense outlook at 1.5% and keeping it from -- creeping up to 2% or 2.5%.

Question: Betsy Graseck - Morgan Stanley & Co. LLC - Analyst : Great. Thanks so much.

Question: John Pancari - Evercore Group L.L.C. - Analyst : On the -- just real quick back to the expense guide, I agree lower than we would have forecasted. Could you just remind us what are the most material areas of investment that you flagged. What are the most meaningful that are impacting your expense outlook right now? And then given where this guide is, which is notably reasonable, do you have flexibility if revenue was weaker given this guide where it stands now? Thanks.

Question: John Pancari - Evercore Group L.L.C. - Analyst : Great. All right. Thanks, Mike. And then just separately, back to the capital front. I hear you in terms of the 10% CET1 target, you've already guided to about another quarter of $500 million buybacks in the first quarter. Is that a reasonable pace as we look over the remainder of the year, just given your current capital position? Or could that slow a bit if loan growth picks up more meaningfully than your modest assumption at this point?

Question: John Pancari - Evercore Group L.L.C. - Analyst : Got it. Okay, great. Thanks Bill.

Question: Saul Martinez - HSBC Securities (USA) Inc. - Analyst : Good morning guys. First of all, I just wanted to clarify the revenue guidance of 3%, 3.5%. I think the non-interest income guide is low single digits, which I assume, is 1% to 3%, which would imply NII growth is a little bit above that range. Is that right? I might be stating the obvious, but I just wanted to clarify nonetheless.

Question: Saul Martinez - HSBC Securities (USA) Inc. - Analyst : Got it. So on a quarter basis, it's more mid-single digits. Okay. And I guess a follow-up question, fixed rate loans, $42 billion running off at a yield of $636 million, which is higher than the portfolio yield. It seems to imply some of the higher margin loans rolling off. But what is -- what's -- how do we think about the new money rates on that $42 billion? What kind of a incremental spread are we getting there?

Question: Saul Martinez - HSBC Securities (USA) Inc. - Analyst : Okay. Got it. So that's -- I mean, doing the math, it's like $400 million more or less on that $42 billion annualized. Okay. That's helpful.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : I guess, for a couple of years during the merger, you lost some market share in the Southeast. And now you're going -- you've been on more offense. And obviously, prior to here, you mentioned Pennsylvania and New Jersey when it looks like you have so much opportunity in the Southeast. So I'm just trying to figure out why you mentioned those markets specifically now, what's changed? And what are the mechanics in terms of turning the corner in terms of that core deposit market share, whether it's in the Southeast or Pennsylvania, New Jersey. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 17, 2025 / 1:00PM, TFC.N - Q4 2024 Truist Financial Corp Earnings Call And I get it, it's all included in your expense guide. So if you're doing a lot more marketing or branch builds or hiring, it's all in that expense number, which we got. But maybe if you could just unpack that a little bit, how you get from the investments to the execution of better deposit share in those markets? Thank you.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : I guess I'm just -- from your decades of experience, Bill, I mean, are the banking battles heating up? It just seems like everybody's going into everybody else's backyard to compete. On the other hand, the crazies are off the street from -- before the financial crisis. So what's the competitive dynamics right now? Is it intense? Is it good? Is it rational?

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : All right. Thank you.

Question: Gerard Cassidy - RBC Capital Markets, LLC - Analyst : Hi Bill. IHi, Mike. Can you guys share with us -- you've had real success in the investment banking business. And I think it represents now about 21% of your fee revenues in 2024, up from 15% in 2023. And as a percentage of total revenues, it's now about 9% versus about 4%. Can you share with us where you see that going. Are you comfortable at these levels relative to the total pie or can you grow it further where it could get to 15%, maybe of total revenues or --? I'm kind of curious on how you're looking for the growth opportunities.

Question: Gerard Cassidy - RBC Capital Markets, LLC - Analyst : Very good. And I forgot to mention, if Clarke is sitting in the room, congratulations on your retirement. Good luck. Thank you, Bill.