Q1 2024 Truist Financial Corporation Earnings Call

Greetings, ladies and gentlemen, and welcome to the Truest Financial Corporation first quarter 2024 earnings Conference call.

Operator: Greetings, ladies and gentlemen, and welcome to the Truist Financial Corporation first quarter 2024 earnings conference call. Currently, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, today's event is being recorded. It is now my pleasure to introduce your host, Mr. Brad Milsaps.

Currently all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

As a reminder, today's event is being recorded.

It's now my pleasure to introduce your host Mr. Brad Milsap.

Brad Milsaps: Thank you, Jamie. And good morning, everyone.

Brad Milsaps: Thank you Jamie and good morning, everyone. Welcome to <unk> first quarter 2024 earnings call with US today are our chairman and CEO Bill Rogers, Our CFO, Mike Mcguire, and our Vice chair and Chief Risk Officer, Clarke Starnes as well as other members of truth Senior management team.

Brad Milsaps: Welcome to Truist's first quarter 2024 earnings call. With us today are our Chairman and CEO, Bill Rogers, our CFO, Mike Maguire, and our Vice Chair and Chief Risk Officer, Clarke Starnes, as well as other members of Truist's senior management. During this morning's call, they will discuss Truist's first quarter results, share their perspective on current business conditions, and provide an updated outlook for 2024. The accompanying presentation, as well as our earnings release and supplemental financial information, is available on the Truist Investor Relations website, ir.truist.com.

Speaker Change: During this morning's call if they will discuss <unk> first quarter results share their perspective on current business conditions and provide an updated outlook for 2024.

Speaker Change: The accompanying presentation as well as our earnings release and supplemental financial information are available on the truest Investor Relations website, IR Dot truest dotcom.

Brad Milsaps: Our presentation today will include forward-looking statements and certain non-GAAP financial measures. Please review the disclosures on slides 2 and 3 of the presentation regarding these statements and measures, as well as the appendix for appropriate reconciliations to GAAP. With that, I will turn it over to Bill.

Speaker Change: Our presentation today will include forward looking statements and certain non-GAAP financial measures. Please review the disclosures on slides two and three of the presentation regarding these statements in measures as well as the appendix for appropriate reconciliations to GAAP with that I will turn it over to bill.

William Henry Rogers: Thanks and good morning everyone. Thank you for joining our call today. So before we discuss our first quarter results, let's begin, as always, with purpose. We say that on slide four.

William Henry Rogers: Thanks, and good morning, everyone. Thanks for joining our call today, so before we discuss our first quarter results, let's begin as always with purpose, we say that on the slide for.

William Henry Rogers: Truist is a purpose-driven company dedicated to inspiring and building better lives and communities, and I'd like to share some of the ways we brought purpose to life last quarter. Our focus on small business heroes is a great example of purpose driving performance. This strategy helps community heroes achieve their financial dreams and enhances their ability to support their neighbors and build strong communities. We're seeing great success with small businesses, evidenced by the addition of nearly 8,600 small business accounts during the quarter and $700 million worth of deposits.

William Henry Rogers: Truest as a purpose driven company dedicated to inspiring and building better lives and communities.

William Henry Rogers: I'd like to share some of the ways, we brought purpose to life last quarter.

William Henry Rogers: Our focus on small business heroes is a great example of purpose driving performance. This strategy helps community heroes achieved their financial dreams, and elevates their ability to support our neighbors and build strong communities. We're seeing great success with small business evidenced by the addition of nearly 600 small business accounts during the quarter.

William Henry Rogers: <unk> and $700 million worth of deposits are tourists community capital team committed more than $252 million to support over 1600 units of affordable housing over 3000, new jobs and projects that will help them power almost 400000 people in underserved communities over the next three years.

William Henry Rogers: Our Truist Community Capital team committed more than $252 million to support over 1,600 units of affordable housing, over 3,000 new jobs, and projects that will help empower almost 400,000 people in underserved communities over the next three years. Additionally, we announced the initial recipients of grants from the Truist Community Catalyst Initiative, which is a three-year Community Reinvestment Act program aimed at four key focus areas: affordable housing, small business access to capital, workforce development, and essential community services. There are 17 community organizations receiving grants that will be used to support efforts in 54 communities across 13 states and allow local nonprofit organizations to better respond to critical community needs within their states.

William Henry Rogers: Additionally, we announced the initial recipients of grants from the truth community.

William Henry Rogers: Catalyst initiative, which is a three year community Reinvestment Act program aimed at four key focus areas affordable housing small business access to capital workforce development in our Central community services. There's 17 community organizations, receiving grants that will be used to support efforts in 54 communities across 13 states.

William Henry Rogers: Local nonprofit organizations to better respond to critical community needs within their states.

William Henry Rogers: Lastly, we published our 2023 Corporate Responsibility and Sustainability Report this month, which I encourage you to read and learn more about our progress in building better lives and communities. In all of these examples, our core belief is evident. We're leaders in banking, and we're unwavering in care. All right, so let's turn to some of our key takeaways on slide six. First, I need to state or remind everyone that our first quarter and the previous periods have been restated to reflect the pending sale of Truist Insurance Holdings.

William Henry Rogers: Lastly, we published our 2023 corporate responsibility and sustainability report the spot, which I encourage you to read and learn more about our progress on building better lives and communities.

William Henry Rogers: All of these examples our core belief is evident we're leaders in banking and we're unwavering in care.

Speaker Change: Alright, so let's turn to some of our key takeaways on slide six.

Speaker Change: First I need to stay to remind everyone that our first quarter.

Speaker Change: So the previous periods have been restated to reflect the pending sale of truest insurance holdings.

William Henry Rogers: This change has no impact on our net income available to common shareholders. However, the restatement does remove TIH's revenue and expense from our financial statements as net income from TIH is now being reported as net income from discontinued operations. Mike's going to provide a lot more details around that later in the call. On an adjusted basis, we reported net income available to common shareholders of $1.2 billion, or 90 cents a share, which excludes a four cent per share impact from the industry-wide FDIC special assessment and a five cent per share impact from the acceleration of incentive compensation at TIH due to the pending sale. Pre-tax restructuring charges of $70 million negatively impacted adjusted EPS by $0.04 per share.

Speaker Change: Change has no impact on our net income available common shareholders, a restatement does remove T H as revenue and expense from our financial statements as net income from Tia is just now being reported as net income from discontinued operations.

Speaker Change: Microsoft provide a lot more details around that later on the call on an adjusted basis, We reported net income available to common shareholders of $1 $2 billion or 90 cents, a share which excludes a four cent per share impact from the industry wide FDIC special assessment and a five cents per share impact from the acceleration of.

Speaker Change: Incentive compensation at G I H due to the pending sale priests.

Speaker Change: Pretax pre tax restructuring charges of 17 million negatively impacted adjusted EPS by four cents per share.

William Henry Rogers: So, despite a few discrete items in the quarter, we're pleased with our underlying results. As you can see on the slide, our solid performance was defined by several key themes. First, we saw a significant increase in investment banking and trading revenue, driven by strong performance across much of our capital markets platform, with particular strength in M&A and equity capital markets. Loan demand continues to remain relatively muted, though we did see some improvement in our commercial lending pipelines during the quarter.

Speaker Change: So despite a few discrete items in the quarter. We're pleased with our underlying results as you can see on the slide our solid performance was defined by several key themes.

Speaker Change: First we saw a significant increase in investment banking and trading revenue driven by strong performance across much of our capital markets platform with particular strength in M&A and equity capital markets.

Speaker Change: Loan demand continues to remain relatively muted, but we did see some improvement in our commercial lending pipelines during the quarter on the consumer side, we recalibrated several of the capital of conserving strategies, we deployed last year prior to announcing the sale of T. I H. This resulted in an increase in loan applications and in March we saw the first.

William Henry Rogers: On the consumer side, we recalibrated several of the capital conserving strategies we deployed last year prior to announcing the sale of TIH. This resulted in an increase in loan applications, and in March, we saw the first increase in balances since October of 2022. Second, our results show our expense discipline and continued focus on managing costs. As a result of these efforts, adjusted expenses increased by less than 1% in the latest quarter and decreased by 4% on a year-over-year basis.

Speaker Change: Increase in balances since October of 2022.

Speaker Change: So that kind of our results show our expense discipline and continued focus on managing cost as a result of these efforts adjusted expenses increased by less than 1% linked quarter and decreased by 4% on a year over year basis.

Speaker Change: Although the linked quarter rate of expense growth will increase in the second quarter relative to the first we are fully committed to delivering our expense objectives in 2024, which excluding Ta age should now results in adjusted expenses remaining approx.

William Henry Rogers: Although the late-quarter rate of expense growth will increase in the second quarter relative to the first, we are fully committed to delivering our expense objectives in 2024, which, excluding TIH, should now result in adjusted expenses remaining approximately flat in 2024 versus 2023. Third, asset quality continues to normalize off historically low levels, but we're pleased that non-performing loans remain relatively stable, and the net charge-offs were within our expectations. During the quarter, we also announced that we will sell our remaining stake in Truist Insurance Holdings, which is on track to close in the second quarter.

Speaker Change: Approximately flat in 2024 versus 2023.

Speaker Change: Our asset quality continues to normalize off historically low levels, but we're pleased that nonperforming loans remained relatively stable net charge offs were within our expectations.

Speaker Change: During the quarter, we also announced that we will be sell we'll sell our remaining stake in truest insurance holdings, which is on track to close in the second quarter.

William Henry Rogers: The sale of TIH will significantly strengthen our relative capital position, which will create substantial capacity for growth in our core banking business. In addition, as we discussed in February, a stronger capital position affords us an opportunity to evaluate a variety of capital deployment opportunities post-closing, including a potential balance sheet repositioning designed to at least replace TIH earnings. The sale of TIH also positions us to resume share repurchases. The timing and size of repurchase activity will depend on our ongoing capital planning, market conditions, clarity around final capital rules, and other factors.

Speaker Change: The sale of G. I H will significantly strengthen our relative capital position, which will create substantial capacity for growth in our core banking businesses.

Speaker Change: In addition, as we discussed in February our stronger capital position affords us an opportunity to evaluate a variety of capital deployment opportunities post closing, including a potential balance sheet repositioning design to at least replace <unk> earnings.

Speaker Change: The sale of T. I H also positions us to resume share repurchases the timing and size of repurchase activity will be will depend on our ongoing capital planning market conditions clarity around final capital rules and other factors, but our goal is to resume a program that is both meaningful and durable.

William Henry Rogers: But our goal is to resume a program that's both meaningful and durable. Before I hand the call over to Mike to discuss our financial performance in more detail, I want to provide a quick update on the progress we're making in improving experiences for our clients, which we see on slide seven. We continue to show strong and steady growth in our digital capabilities. In the first quarter of 2024, mobile app users grew 8%, and digital transactions increased 13% compared to the first quarter of last year.

Speaker Change: Before I hand, the call over to Mike to discuss our financial performance in more detail I want to provide a quick update on the progress we're making in improving experiences for our clients, which we see on slide seven.

Speaker Change: We continue to show strong and steady growth in our digital capabilities and the first quarter of 2020 for mobile App users grew 8% and digital transactions increased 13% compared to the first quarter of last year.

William Henry Rogers: Through activating teammates to educate clients on our capabilities, transactions continue to shift towards self-service capabilities, with 77% of deposits occurring through these channels, primarily driven by strong growth and Zelle transactions. Recently, we rolled out the Zelle QR Code Widget, where users can quickly access their QR codes from their home screens to seamlessly assist with bank transfers.

Michael Baron Maguire: So actually activating teammates through activating teammates to educate clients on our capabilities transactions continue to shift towards self service capabilities with 77% of deposits occurring through these channels, primarily driven by strong growth in zelle transactions Reis.

Michael Baron Maguire: Recently, we rolled out Zelle QR code widget, where users can quickly access their QR codes from their homes Craig's just seamlessly assess with bank transfers.

Michael Baron Maguire: At Truist, we aim to make banking simple and easy for our clients through thoughtful enhancements to their experience. Enhanced offerings, coupled with strong growth in digital, have resulted in higher retail digital client satisfaction scores. These scores surpassed pre-merger highs as we continue to focus on accelerated adoption and efficiency using our T3 strategy. Overall, I'm proud of the continued momentum Truist is making in digital and optimistic about the opportunity to expand our digital user base and drive self-service transaction volume. So with that, Mike, let me turn it over to you to discuss our financial results in a little more detail.

Michael Baron Maguire: Truth, we aim to make banking simple and easy for our clients through thoughtful enhancements to their experience.

Enhanced offerings, coupled with strong growth in digital have resulted in higher retail digital client satisfaction scores. These scores surpassed pre merger highs as we continue to focus on accelerated adoption and efficiency using our tier three strategy overall I'm proud of the continued momentum truest is making in digital and are optimistic.

Michael Baron Maguire: About the opportunity to expand our digital user base and drive self service transaction volume, So if Mike and with that Mike Let me turn it over to you to discuss our financial results in a little more detail.

Michael Baron Maguire: Thank you, Bill, and good morning, everyone. As Bill mentioned, our financial statements for the first quarter and for previous periods have been restated due to the pending sale of Truist Insurance Holdings. This restatement has no impact on our net income or earnings per share for historical or current reporting periods. However, as you can see in our financial tables, revenue and expense associated with TIH are no longer shown on our financial statements.

Michael Baron Maguire: Thank you Bill and good morning, everyone.

Michael Baron Maguire: Bill mentioned, our financial statements for the first quarter and for previous periods have been restated due to the pending sale of insurers insurance holdings. This restatement has no impact on our net income or earnings per share for historical or current reporting periods. However, as you can see in our financial tables revenue and expense associated with T. I H is no longer.

Michael Baron Maguire: Shown on our financial statements.

Michael Baron Maguire: TIH's contribution to Truist Net Income and earnings per share is now captured in net income from discontinued operations. My comments today will focus on revenue and expense from continuing operations, although I will also provide some detail on revenue and expense for the quarter inclusive of TIH for comparative purposes. We reported net income available from continuing operations of $1 billion, or $0.76 per share, which includes a $75 million pre-tax or $0.04 per share after-tax expense related to the industry-wide FDIC Special Assessment.

CAH is contribution to tourists net income and earnings per share is now captured in net income from discontinued operations. My comments today will focus on revenue and expense from continuing operations. Although I will also provide some detail on revenue and expense for the quarter inclusive of T. A H for comparative purposes.

Michael Baron Maguire: We reported net income available from continuing operations of $1 billion or <unk> 76 per share, which includes a $75 million pre tax or four penny per share after tax expense related to the industry wide FDIC special assessment.

Michael Baron Maguire: We reported net income available from discontinued operations, which represents earnings from TIH of $64 million, or $0.05 per share, which includes an $89 million pre-tax, or $0.05 per share, negative impact from the acceleration of incentive compensation at TIH due to the pending sale. So, on an adjusted basis, we reported net income available to common shareholders of $1.2 billion, or $0.90 per share, which includes adjusted net income from continuing operations of $0.80 and adjusted net income from discontinued operations of $0.10.

Michael Baron Maguire: We reported net income available from discontinued operations, which represents earnings from T. I H of $64 million or five cents per share, which includes an $89 million pre tax or five cents per share negative impact from the acceleration of incentive compensation at T. I H due to the pending sale.

Michael Baron Maguire: So on an adjusted basis, we reported net income available to common shareholders of $1 $2 billion or 90 per share which includes adjusted net income from continuing operations of 80.

Michael Baron Maguire: And adjusted net income from discontinued operations of 10 cents and the Dutch in addition to the items I. Just noted we also had pretax restructuring charges totaling $70 million in the quarter, which negatively impacted adjusted EPS to common shareholders by four cents per share. The bulk of these charges were related to severance.

Michael Baron Maguire: In addition to the items I just noted, we also had pre-tax restructuring charges totaling $70 million in the quarter, which negatively impacted adjusted EPS to common shareholders by 4 cents per share. The bulk of these charges were related to severance and real estate rationalization.

Michael Baron Maguire: And real estate rationalization.

Michael Baron Maguire: Total revenue, which excludes revenue associated with TIH, decreased by 1.4% linked quarter due to a decline in net interest income partially offset by stronger non-interest income led by investment banking and trading. Revenue before the impact of discontinued operations accounting increased 0.2% on a linked quarter basis. Adjusted expenses, which excludes adjusted expenses associated with TIH, increased by 0.7%. Adjusted expenses before the impact of discontinued operations accounting increased 1% on a linked quarter basis. Next, I'll cover loans and leases on slide nine.

Michael Baron Maguire: Total revenue, which excludes revenue associated with T. I H decreased by 1.4% linked quarter due to a decline in net interest income partially offset by stronger noninterest income led by investment banking and trading.

Michael Baron Maguire: Revenue before the impact of discontinued operations accounting increased 0.2% on a linked quarter basis.

Adjusted expenses, which excludes adjusted expense associated with T. I H increased by 0.7%.

Adjusted expenses before the impact of discontinued operations accounting increased 1% on a linked quarter basis.

Michael Baron Maguire: Next I'll cover loans and leases on slide nine.

Michael Baron Maguire: Average loans decreased one 3% sequentially, reflecting overall weaker client demand and our decision to deemphasize certain lending activities during 2023, which impacted growth during the first quarter.

Michael Baron Maguire: Average loans decreased 1.3% sequentially, reflecting overall weaker client demand and our decision to de-emphasize certain lending activities during 2023, which impacted growth during the first quarter. Average commercial loans decreased to 0.9%, primarily due to a 1.2% decrease in C&I balances due mostly to lower client demand. In our consumer portfolio, average loans decreased 2% primarily due to further reductions in indirect auto and mortgage loans. However, during the quarter, we did increase our appetite for high-quality indirect auto loans, which, as Bill mentioned, resulted in consumer loan balances showing positive growth for the month of March.

Michael Baron Maguire: Average commercial loans decreased 0.9%, primarily due to a one 2% decrease in C&I balances due mostly to lower client demand.

Michael Baron Maguire: In our consumer portfolio average loans decreased 2%, primarily due to further reductions in indirect auto and mortgage.

Michael Baron Maguire: During the quarter, we did increase our appetite for high quality indirect auto loans, which as Bill mentioned resulted in consumer loan balances showing positive growth for the month of March.

Michael Baron Maguire: Overall, we expect average loan balances to decline modestly in the second quarter, albeit at a slower pace than the first quarter. Moving to deposit trends on slide 10. Average deposits decreased 1.6% sequentially as growth in client time deposits and interest checking was more than offset by declines in non-interest bearing, brokered, and money market balances. Approximately $1.9 billion of the $6.3 billion linked quarter decline in average deposits was due to lower brokered deposits.

Michael Baron Maguire: Overall, we expect average loan balances to decline modestly in the second quarter, albeit at a slower pace than the first quarter.

Michael Baron Maguire: Moving to deposit trends on slide 10.

Michael Baron Maguire: Average deposits decreased one 6% sequentially as growth in client time deposits and interest checking was more than offset by declines in noninterest bearing brokered and money market balances approximately $1 9 billion of the $6 3 billion dollar linked quarter decline in average deposits was due to lower broke.

Michael Baron Maguire: <unk> deposits adjusting for brokered deposits, our average deposits declined approximately 1%.

Michael Baron Maguire: Adjusting for broker deposits, our average deposits declined approximately 1%. Non-interest-bearing deposits decreased 4.9% and represented 28% of total deposits compared to 29% in the fourth quarter of 2023. During the quarter, consumers continued to seek higher rate alternatives, which drove an increase in deposit costs.

Michael Baron Maguire: Noninterest bearing deposits decreased four 9% and represented 28% of total deposits compared to 29% in the fourth quarter of 2023.

Michael Baron Maguire: During the quarter consumers continue to seek higher rate alternatives, which drove an increase in deposit costs, specifically total deposit costs increased 11 basis points sequentially to 2.0% to 3%, which resulted in a 2% increase in our cumulative total deposit beta to 38%.

Michael Baron Maguire: Specifically, total deposit costs increased 11 basis points sequentially to 2.03%, which resulted in a 2% increase in our cumulative total deposit beta to 38%. Similarly, interest-bearing deposit costs increased 11 basis points sequentially to 2.82%, which also resulted in a 2% increase in our cumulative total interest-bearing deposit beta to 53%. Looking at interest income and interest margin on slide 11, for the quarter, taxable equivalent net interest income decreased by 4.2% compared to the linked quarter, primarily due to a higher rate paid on deposits, lower day count in the quarter, and lower average earning assets.

Similarly interest bearing deposit costs increased 11 basis points sequentially to $2 eight 2%, which also resulted in a 2% increase in our accumulative total interest bearing deposit base.

Michael Baron Maguire: Faded a 53%.

Moving to net interest income and net interest margin on slide 11.

Michael Baron Maguire: For the quarter taxable equivalent net interest income decreased by four 2% linked quarter, primarily due to higher rate paid on deposits lower day count in the quarter and lower average earning assets.

Michael Baron Maguire: Reported net interest margin declined 7 basis points on a linked quarter basis, due primarily to a higher rate paid on deposits. Turning to non-interest income on slide 12, non-interest income increased $83 million, or 6.1%, relative to the fourth quarter.

Michael Baron Maguire: Ported net interest margin declined seven basis points on a linked quarter basis, due primarily to higher rate paid on deposits.

Michael Baron Maguire: Turning to noninterest income on slide 12.

Michael Baron Maguire: Noninterest income increased $83 million or six 1% relative to the fourth quarter. The linked quarter increase was primarily attributable to higher investment banking and trading income, which was up $158 million linked quarter due to strong results across much of our entire capital markets platform with specific strength in M&A and <unk>.

Michael Baron Maguire: The linked quarter increase was primarily attributable to higher investment banking and trading income, which was up $158 million linked quarter due to strong results across much of our entire capital markets platform, with specific strength in M&A and equity capital markets. Lending related fees decreased $57 million in the linked quarter due to lower leasing related fees. Non-interest income increased 1.8% on a light quarter basis as higher investment banking and trading, wealth, and other income were partially offset by lower service charges on deposit and mortgage banking.

Michael Baron Maguire: Equity capital markets.

Michael Baron Maguire: Lending related fees decreased $57 million linked quarter due to lower leasing related gains.

Michael Baron Maguire: Noninterest income increased one 8% on a light quarter basis, as higher investment banking and trading wealth and other income were partially offset by lower service charges on deposit and mortgage banking income.

Michael Baron Maguire: Next I'll cover noninterest expense on slide 13.

Michael Baron Maguire: Next, I'll cover non-interest expense on slide 13. GAAP expenses of $3 billion decreased $6.6 billion compared to the linked quarter as fourth quarter 2023 expenses were negatively impacted by a $6.1 billion goodwill impairment charge, a $507 million FDIC special assessment, and $155 million of restructuring charges primarily related to our cost savings initiative. Excluding these items and the impact of intangible amortization, adjusted non-interest expense increased 0.7% sequentially. The increase in adjusted expense was driven by higher personnel expense of $156 million due to normal seasonal factors and higher variable incentive compensation.

Michael Baron Maguire: GAAP expenses of $3 billion decreased $6 $6 billion linked quarter as fourth quarter 2023 expenses were negatively impacted by a $6 $1 billion goodwill impairment charge of $507 million FDIC special assessment in $155 million of restructuring charges primarily.

Michael Baron Maguire: Related to our cost savings initiatives.

Michael Baron Maguire: Excluding these items and the impact of intangible amortization adjusted noninterest expense increased 0.7% sequentially.

Michael Baron Maguire: The increase in adjusted expense was driven by higher personnel expense of $156 million due to normal seasonal factors and higher variable incentive compensation, partially offsetting the increase in personnel expense were lower other expenses, which declined $82 million, reflecting lower operating charge offs and lower pension expense.

Michael Baron Maguire: Partially offsetting the increase in personnel expenses were lower other expenses, which declined $82 million, reflecting lower operating charge-offs and lower pension expenses. Adjusted non-interest expenses before the impact of discontinued operations accounting increased one percent on a linked quarter basis. On a light quarter basis, adjusted expenses declined to $120 million, or 4.2%, reflecting lower headcount and continued expense deficit. Moving to asset quality on slide 14. Asset quality metrics continued to normalize in the first quarter but overall remained manageable.

Michael Baron Maguire: Adjusted noninterest expenses before the impact of discontinued operations accounting discontinued operations accounting increased 1% on a linked quarter basis on.

Michael Baron Maguire: On a like quarter basis, adjusted expenses declined $120 million or four 2%, reflecting lower head count and continued expense discipline.

Michael Baron Maguire: Moving to asset quality on slide 14.

Michael Baron Maguire: Asset quality metrics continued to normalize in the first quarter, but overall remain manageable nonperforming loans remained relatively stable linked quarter. While total delinquencies were down six basis points sequentially driven by a seven basis point decline in loans 30 to 89 days past due.

Clarke R. Starnes: Non-performing loans remained relatively stable linked quarter, while total delinquencies were down 6 basis points sequentially, driven by a 7 basis point decline in loans 30-89 days past due. Also included in our appendix is updated data on our office portfolio, which is virtually unchanged at 1.7% of total loans. However, we did increase our reserve on this portfolio from 8.5% to 9.3% during the quarter to reflect continued stress in the sector. We expect stress to remain in the office sector but believe that the size of our office portfolio is manageable and well-reserved.

Michael Baron Maguire: Included in our appendix is updated data on our office portfolio, which is virtually unchanged at one 7% of total loans. However, we did increase our reserve on this portfolio from eight 5% to nine 3% during the quarter to reflect continued stress in the sector. We expect stress to remain in the office sector, but believe that the size of our office portfolio.

Michael Baron Maguire: Folio is manageable and well reserved approximately five 5% of our office portfolio is currently classified as nonperforming, but 89% of these loan balances are paying in accordance with the original terms of lung.

Michael Baron Maguire: Approximately 5.5% of our office portfolio is currently classified as non-performing, but 89% of these loan balances are paid in accordance with the original terms of the loan. During the quarter, our net charge-offs increased seven basis points to 64 basis points. The increase in net charge-offs for the quarter reflects increases in our CRE and consumer portfolios offset by lower C&I and CRE construction. Our ALLL ratio increased to 1.56%, up 2 basis points sequentially and 19 basis points on a year-over-year basis due to ongoing credit normalization and stress in the office sector. Consistent with our commentary last quarter, we've tightened our risk appetite in select areas where we maintain our through-the-cycle supportive approach for high-quality, long-term clients. Turning now to Capital on slide 15.

Michael Baron Maguire: During the quarter, our net charge offs increased seven basis points to 64 basis points. The increase in net charge offs for the quarter reflects increases in our CRE and consumer portfolios offset by lower C&I and CRE construction losses.

Michael Baron Maguire: Our eight triple L ratio increased to 1.56% up two basis points sequentially and 19 basis points on a year over year basis due to ongoing credit normalization and stress in the office sector.

Michael Baron Maguire: Consistent with our commentary last quarter, we've tightened our risk appetite in select areas that we maintain our through the cycle supportive approach for high quality long term clients.

Michael Baron Maguire: Turning now to capital on Slide 15.

Tourist CET one ratio remained relatively stable on a linked quarter basis at 10, 1% as organic capital generation and the impact of lower risk weighted assets were mostly offset by the impact of the seasonal fe than that occurred during the quarter.

Michael Baron Maguire: Truist's CET1 ratio remained relatively stable on a linked quarter basis at 10.1% as organic capital generation and the impact of lower risk-weighted assets were mostly offset by the impact of the CECL phase-in that occurred during the quarter. We still anticipate the sale of TIH will generate approximately 230 basis points of CET1 under current rules and 255 basis points of CET1 capital under proposed Basel III endgame rules. It will also increase our tangible book value per share by 33% through a combination of a $4.8 billion after-tax gain and the deconsolidation of $4.7 billion of goodwill and intangibles from our balance sheet.

Michael Baron Maguire: We still anticipate the sale of T. I H will generate approximately 230 basis points a C. T. One under current roles in 255 basis points of CET, one capital under proposed Basel III end game rules. It will also increase our tangible book value per share by 33% through a combination of a $4 8 billion.

Michael Baron Maguire: After tax gain and the deconsolidation of $4 $7 billion of goodwill and intangibles from our balance sheet.

Michael Baron Maguire: The divestiture of TIH has a 255 basis point positive impact under the fully proposed phase in Basel III endgame rules, which is 25 basis points higher than under the current rules. The larger impact on our CT1 ratio under the proposed rules is due to the reduction in certain threshold deductions due to the overall higher level of capital from selling TIH. The sale of TIH accelerates our ability to meet increasing standards for capital and liquidity in the industry and, importantly, creates capacity for Truist to evaluate a wide variety of capital deployment alternatives, including growing our core banking franchise during a time when much of the industry is conserving capital, repositioning our balance sheet, and resuming share repurchases.

The divestiture of T. I H has a 255 basis point positive impact under fully proposed phased in Basel III and game Rolls, which is 25 basis points higher than under current rules the larger impact on our CET one ratio under the proposed rules is due to the reduction in certain threshold deductions due to the overall higher level of capital from <unk>.

Michael Baron Maguire: Selling T IH.

The sale of T. I H accelerates, our ability to meet increasing standards for capital and liquidity in the industry and importantly creates capacity for tourists to evaluate a wide variety of capital deployment alternatives, including growing our core banking franchise. During a time when much of the industry is conserving capital repositioning our balance sheet and resuming share repurchases.

Michael Baron Maguire: As it relates to a possible repositioning recognizing securities losses under proposed Basel III rules would have no impact on our fully phased in CET one ratio. Since current proposed rules include a OCI in the calculation. Moreover.

Michael Baron Maguire: As it relates to a possible repositioning, recognizing securities losses under proposed Basel III rules would have no impact on our fully phased-in C2-1 ratio since the current proposed rules include AOCI in the calculation. Moreover, any decision to sell market-value securities has no impact on our tangible book value per share.

Michael Baron Maguire: Moreover, any decision to sell market value Securities has no impact on our tangible book value per share.

Michael Baron Maguire: I will now review our updated guidance on slide 16. First, all of my comments today related to second quarter and full year 2024 guidance exclude any benefit from interest income that Truist will earn on the $10.1 billion of after-tax cash proceeds that we expect to receive from the pending sale of TIH. Our guidance also excludes any impact from a potential balance sheet repositioning that we plan to evaluate post-closing.

Michael Baron Maguire: I will now review our updated guidance on slide 16.

Michael Baron Maguire: First all of my comments today related to second quarter and full year 2024 guidance exclude any benefit from from an interest income that tourists will earn on the $10 $1 billion of after tax cash proceeds that we expect to receive from the pending sale of T. I H.

Michael Baron Maguire: Our guidance also excludes any impact from a potential balance sheet repositioning that we plan to evaluate post closing.

In addition revenue and expense guidance for the second quarter and full year 2024 is based on revenue and expense from continuing operations and does not include any contribution from T I H and previous or in future periods.

Michael Baron Maguire: In addition, revenue and expense guidance for the second quarter and full year 2024 is based on revenue and expense from continuing operations and does not include any contribution from TIH in previous or future periods. Looking into the second quarter of 2024, we expect revenue to decline about 2% from 1Q24 gap revenue of $4.9 billion. Net interest income is likely to be down 2-3% in the second quarter due to continued pressure on rates paid and a smaller balance sheet.

Michael Baron Maguire: Looking into the second quarter of 2024, we expect revenue to decline about 2% from <unk> 24, GAAP revenue of $4 $9 billion net.

Michael Baron Maguire: Net interest income is likely to be down 2% to 3% in the second quarter due to continued pressure on rate paid and a smaller balance sheet.

Michael Baron Maguire: We expect non-interest income to remain relatively stable on a linked quarter basis. However, adjusted expenses of $2.7 billion in the first quarter are expected to increase 4% in Q2 due to higher professional fees, some timing of projects delayed from Q1, higher marketing costs, and annual merit increases.

Michael Baron Maguire: We expect noninterest income to remain relatively stable on a linked quarter basis.

Michael Baron Maguire: Adjusted expenses of $2 7 billion in the first quarter are expected to increase 4% in Q2 due to higher professional fees some timing of projects delayed from Q1 higher marketing costs and annual merit increases.

Michael Baron Maguire: For the full year 2024, we previously expected revenues to be down 1% to 3%, which would have included revenue from tourists insurance holdings. If we had excluded revenue from tourist insurance holdings from our outlook, our expectation would have been closer to down 3%.

William Henry Rogers: For the full year 2024, we previously expected revenues to be down 1 to 3%, which would have included revenue from Truist Insurance Holdings. If we had excluded revenue from Truist Insurance Holdings from our outlook, our expectation would have been closer to -3% to -5% in 2024. Today, we are tightening our previous revenue guidance adjusted for TIH of down approximately 3% to down 5% to now down approximately 4% to 5% to reflect the latest interest rate outlook and continued pressure on deposit mix, partially offset by our improved outlook for non-interest income.

Michael Baron Maguire: To down 5% in 2024.

Michael Baron Maguire: Today, we are tightening our previous revenue guidance adjusted for T. I H of down approximately three to down 5% to now down approximately 4% to 5% to reflect the latest interest rate outlook and continued pressure on deposit mix, partially offset by our improved outlook for noninterest income.

Michael Baron Maguire: <unk>.

Michael Baron Maguire: Okay.

William Henry Rogers: Our outlook assumes three reductions in the Fed funds rate, with the first reduction coming in June 2024. Previously, we assumed five reductions in the Fed funds rate, with the first reduction occurring in May 2024. We still assume that net interest income will peak in the second quarter of 2024 and modestly improve in the second half of the year. However, fewer than three rate reductions would add pressure to our NII outlook and result in our annual revenue coming in at the lower end of our range for revenue to be down 4-5%.

Michael Baron Maguire: Our outlook assumes three reductions in the fed funds rate with the first reduction coming in June 2024, previously we assumed five reductions in the fed funds rate with the first reduction occurring in May 'twenty 'twenty four we still assume that net interest income will trough in the second quarter of 'twenty 'twenty, four and modestly improve in the second half of the.

A year.

Michael Baron Maguire: Fewer than three rate three rate reductions would add pressure to our NII outlook and result in our annual revenue coming in at the lower end of our range for revenue to be down 4% to 5%.

Michael Baron Maguire: As a reminder, our second quarter and full year revenue outlook excludes any benefit from interest income earned on the cash proceeds from the sale of T I H or the benefit of potential balance sheet repositioning.

William Henry Rogers: As a reminder, our second quarter and full year revenue outlook excludes any benefit from interest income earned on the cash proceeds from the sale of TIH or the benefit of potential balance sheet repositioning. As Bill mentioned, we still expect the sale of TIH to be completed during the second quarter. We previously expected our expenses to remain flat or to increase by 1% in 2024, which included expenses associated with Truist Insurance Holdings.

Michael Baron Maguire: As Bill mentioned, we still expect the sale T I H to be completed during the second quarter.

Michael Baron Maguire: We previously expected our expenses to remain flat or to increase by 1% in 'twenty 'twenty four which included expenses associated with tourists insurance holdings.

William Henry Rogers: If we had excluded expected expenses from tourist insurance holdings from our outlook, our expectation would equate to expenses remaining approximately flat in 2024. Consistent with our previous expense outlook adjusted for TIH, we expect full year 24 adjusted expenses to remain approximately flat over 2023 adjusted expenses of $11.4 billion. In terms of asset quality, we continue to expect net charge-offs of about 65 basis points in 2024. Finally, we expect our effective tax rate to approximate 16% or 19% on a taxable equivalent basis.

Michael Baron Maguire: If we had excluded expected expenses from tourists insurance holdings from our outlook, our expectation would equate to expenses remaining approximately flat in 2024.

Michael Baron Maguire: Consistent with our previous expense outlook adjusted for T. I H, we expect full year 24, adjusted expenses to remain approximately flat over 2023 adjusted expenses of $11 $4 billion.

Michael Baron Maguire: In terms of asset quality, we continue to expect net charge offs of about 65 basis points in 2024.

Michael Baron Maguire: Finally, we expect our effective tax rate.

Michael Baron Maguire: To approximate 16% or 19% on a taxable equivalent basis.

William Henry Rogers: Our estimated tax rate excludes any impact from the gain on the sale of TIH or potential balance sheet repositioning that we might consider following the sale. So now I'll turn it back to Bill for some final remarks. Thanks, Mike.

Michael Baron Maguire: Our estimated tax rate excludes any impact from the gain on the sale of T I H or potential balance sheet repositioning that we might consider following the sale.

Michael Baron Maguire: So now I'll turn it back to Bill for some final remarks, alright, Thanks, Mike.

William Henry Rogers: I am proud of the results our teammates delivered during the first quarter, which included solid underlying earnings, improved momentum, and the announced sale of Truist Insurance Holdings. As Mike mentioned, TIH will enter its partnership with its new investors with strong momentum, as evidenced by its first quarter results.

William Henry Rogers: I am proud of the results our teammates delivered during the first quarter, which included solid underlying earnings improved momentum and the announced sale of tourists insurance holdings as Mike mentioned T. I H will enter its partnership with its new investors with strong momentum as evidenced by its first quarter results.

William Henry Rogers: Providing risk advice to our clients is core to our purpose, and we look forward to maintaining a strong partnership with that team into the future. We have great confidence in our capability to grow our core banking business and help our clients achieve financial success by delivering our commercial, consumer, payments, investment banking, and wealth platform across our existing footprint and specialty areas. Our top priorities for 2024 are unchanged, and they include growing and deepening relationships with core clients, maintaining our expense discipline, evaluating various capital deployment options following the sale of TIH, and enhancing Truist's digital experience through T3, all while maintaining and strengthening strong risk controls and asset quality metrics.

William Henry Rogers: Riding our risk advisers to our clients is core to our purpose and we look forward to maintaining a strong partnership with that team into the future.

William Henry Rogers: We have great confidence in our capability to grow our core banking business and help our clients achieve financial success by delivering our commercial consumer payments investment banking or wealth platform throughout our existing footprint and specialty areas.

William Henry Rogers: Our top priorities for 2024 are unchanged and include growing and deepening relationships with core clients, maintaining our expense discipline.

William Henry Rogers: [noise] waiting various capital deployment options following the sale of T I, H and enhancing digital experience through T. Three all while maintaining and strengthening strong risk controls and asset quality metrics metrics. Our expense discipline is showing up in our results, which gives us confidence that we'll meet our expense objectives. This year.

William Henry Rogers: Our expense discipline is showing up in our results, which gives us confidence that we'll meet our expense objectives this year. I'm also encouraged by the improvement in our wholesale banking business, which includes investment banking and trading, as it was a key driver of our quarterly results. In investment banking, we've increased our market share across several capital market products due to significant investment in talent and industry verticals. These investments have resulted in a significant increase in the number of lead roles across several products, including equity capital markets, leveraged finance, asset securitization, and M&A.

William Henry Rogers: I'm also encouraged by the improvement in our wholesale banking business, which includes investment banking and trading as it was a key driver of our quarterly results in investment banking, we've increased our market share across several capital market products due to significant investment in Thailand and industry verticals.

William Henry Rogers: These investments have resulted in significant increase in the number of lead roles across several products, including equity capital markets leverage finance asset securitization and M&A.

William Henry Rogers: In addition, our mindshare with clients in our key industry verticals has never been stronger, and we continue to expand into new verticals that are primed for growth as capital markets activities recover. We're seeing solid year-over-year growth in referral revenue from commercial banking as we continue to deliver value-added advice and capabilities to our clients. Our commercial teammates have responded to new expectations, and we continue to add great talent to our comprehensive platform.

William Henry Rogers: In addition, our mind share with clients and our key industry verticals has never been stronger and we continue to expand into new verticals that are prime for growth as capital markets activities recover.

William Henry Rogers: We're seeing solid year over year growth in referral revenue from commercial banking as we continue to deliver value added advice and capabilities to our clients. Our commercial teammates have responded to new expectations and we continue to add great talent to our comprehensive platform.

William Henry Rogers: Finally, we've made new key leadership hires within our payments business during the quarter, as this is an area where we see significant opportunity for growth over time. In consumer, I'm encouraged that our internal consumer satisfaction scores have returned to pre-merger levels.

William Henry Rogers: Finally, we've made.

William Henry Rogers: Many key leadership hires within our payments business during the quarter. As this is an area, where we see significant opportunity for growth over time.

William Henry Rogers: In consumer I'm encouraged that our internal consumer satisfaction scores have returned to pre merger levels. In addition, net new checking account production was positive in the first quarter as we added 30000, new consumer and business accounts Importantly, we're also seeing year over year improvement in account attrition rates also during the <unk>.

William Henry Rogers: In addition, net new checking account production was positive in the first quarter as we added 30,000 new consumer and business accounts. Importantly, we're also seeing year-over-year improvement in account attrition rates. Also, during the first quarter, on our digital channel, we acquired 172,000 accounts, including 63,000 new to Truist, while also seeing a 14% increase in deposit balances over the fourth quarter of 2023. While the branch network represents an opportunity for further efficiency in certain markets, we continue to see improvements in productivity due to teammate execution and investments in technology.

William Henry Rogers: First quarter, our digital channel, we acquired 172000 accounts, including 63000, New to trust, while also seeing a 14% increase in deposit balances over the fourth quarter of 2023.

William Henry Rogers: While the branch network represents opportunity for further efficiency in certain markets. We continue to see improvements in productivity due to teammate execution and investments in technology. We're encouraged by this increase productivity, we'll look to make investments in branches on select key growth markets in 2025.

William Henry Rogers: We're encouraged by this increased productivity. We'll look to make investments in branches and select key growth markets in 2025. Overall, loan demand does remain muted, but I'm encouraged by the improvement in our commercial loan pipelines and the growth we witnessed in consumer balances late in the first quarter.

Overall loan demand does remain muted, but I'm encouraged by the improvement in our commercial loan pipelines and the growth, we witnessed and consumer balances late in the first quarter.

William Henry Rogers: By selling TH, we'll have capital capacity to play more offense in our consumer and wholesale businesses, which includes seeking ways to accelerate loan growth in our core franchise. In addition, our significantly stronger balance sheet will be positioned to weather an even wider range of economic environments, while also giving us the unique ability to evaluate a variety of capital deployment opportunities post-closing, including a potential balance sheet repositioning and resuming meaningful share repurchases later in the year.

William Henry Rogers: By selling T. H, we will have capital capacity to play more offense in our consumer and wholesale businesses, which includes seeking ways to accelerate loan growth in our core franchise.

William Henry Rogers: In addition, our significantly stronger balance sheet will be positioned to weather, an even wider range of economic environments. While also giving us the unique ability to evaluate a variety of capital deployment opportunities post closing, including a potential balance sheet repositioning are resuming meaningful share repurchases later in the year.

Although we have a plan to replace tier earnings in the near term, we recognize that our increased level of capital will result in near term dilution to our return on average tangible common equity ratio.

William Henry Rogers: Although we have a plan to replace TIH earnings in the near term, we recognize that our increased level of capital will result in near-term dilution to our return on average tangible common equity ratio. Therefore, our starting point for ROATCE following the sale of TH will be exactly that, a starting point. The strength of our markets, our core banking franchise, and the capital deployment options we can consider after the sale will result in improved returns over time.

William Henry Rogers: Our starting point for Aurora TCE following the sale of G. H will be exactly about a starting point.

William Henry Rogers: The strength of our markets our core banking franchise, our capital deployment options. We can consider after the sale will result in improved returns over time.

William Henry Rogers: We'll move with pace, but we won't be in a rush to deploy capital to meet short-term expectations that don't have a long-term positive impact on our company or clients or shareholders, especially since Basel III capital rules have not been firmly established for the industry. In conclusion, we're off to a solid start in 2024, but we acknowledge, as always, there's more work to do as we strive to produce better results in the future.

William Henry Rogers: We will move with pace, but will not be in a rush to deploy capital to meet short term expectations, but don't have a long term positive impact on our company our clients our shareholders, especially since Basel III capital rules have not been firmly established for the industry.

William Henry Rogers: So in conclusion, we're off to a solid start in 2024, what we acknowledge as always there's more work to do as we strive to produce better results in the future. We view our first quarter performance is another step forward in that direction.

William Henry Rogers: We view our first quarter performance as another step forward in that direction. I'm optimistic about our future. I look forward to operating our company from this increased position of financial strength and some of the best markets in the country. And finally, I'd like to thank all of our teammates and our leaders for their incredible purposeful focus and productivity, particularly over the last few months during this important time for both TIH and Truist. So with that, Brad, let me hand it back over to you for Q&A.

William Henry Rogers: I'm optimistic about our future I look forward to operating our company from this increased position of financial strength and some of the best markups on the country.

William Henry Rogers: And finally I'd like to thank all of our teammates and our leaders for their incredible purposeful focus on productivity, particularly over the last few months. During this important time for both <unk> and for trust so with that Brad Let me hand, it back over to you for Q&A.

Brad Milsaps: Thank you, Bill. Jamie, at this time, will you please explain how our listeners can participate in the Q&A session? As you do that, I'd like to ask the participants to please limit themselves to one primary question and one follow-up in order that we may accommodate as many of you as possible today on the call.

Brad: Thank you Bill Jamie at this time will you. Please explain how our listeners can participate in the Q&A session. As you do that I'd like to ask the participants to please limit yourselves to one primary question and one follow up in order that we may accommodate as many of you as part as possible today on the call.

Speaker Change: And ladies and gentlemen, we will now begin our question and answer session to ask a question you May Press Star and then one using a touchtone telephone if you are using a speaker phone. We do ask you. Please pickup your handset prior to pressing the keys to ensure the best sound quality.

Operator: Yeah, ladies and gentlemen, we will now begin that question and answer session. To ask a question, you may press star and then one on a touchtone telephone. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality.

Operator: To withdraw your questions, you may press star and two. Again, that is star and then one to join the question. We will pause momentarily to assemble the roster. And our first question today comes from John McDonald from Autonomous Research. Please go ahead with your question.

Speaker Change: To withdraw your question you May press Star and two.

Speaker Change: Again that is star and then one to join the question queue, we will pause momentarily to assemble the roster.

John Eamon McDonald: And our first question today comes from John Mcdonald from Autonomous Research. Please go ahead with your question.

John Eamon McDonald: Great. Thank you. Good morning.

John Eamon McDonald: Great. Thank you good morning.

John Eamon McDonald: How the rate environment changes.

John Eamon McDonald: I was wondering how the rate environment changes, at all, if at all, the ability and willingness to deploy through the restructuring of the securities book. Mike, maybe you could just comment that higher rates, presumably achieving that neutral impact gets a little bit easier. Does that affect how much you might do? And maybe Bill could just make some broader comments about the options you'll have to deploy organically and buybacks and other things. Thank you.

John Eamon McDonald: At all if at all the ability and our willingness to deploy.

John Eamon McDonald: Deploy through the restructuring of the Securities book, Mike Maybe you can just comment you know higher rates, presumably achieving that neutral impact it gets a little bit easier does that affect how much you might do and maybe bill could just make some broader comments.

John Eamon McDonald: About the options, you'll have to deploy organically and buybacks and other things. Thank you.

Yeah. Thanks, John for the question.

Michael Baron Maguire: Yeah, thanks, John, for the question. Look, I mean, we're certainly, you know, taking a look at the market rate environment. And I'd say just, you know, the framework that we shared back in February. We remain committed to, right? And so, you know, we laid out a set of objectives that spanned, you know, maintaining a relative capital position, and at least replacing the earnings from TIH. We also have ambitions around advancing our liquidity and ALM positions.

Michael Baron Maguire: Look I mean, we're certainly taking a look at the at the at the market rate environment and I'd say just the framework that we shared back in February we remain committed to your right and so we laid out a set of objectives that spanned maintaining a relative capital position at least replacing the earnings from T. I H. We also have.

Michael Baron Maguire: Ambitions around advancing our liquidity in a L. M position. So you know the rate environment, and we talked about that in February.

Michael Baron Maguire: And so, you know, the rate environment, we talked about that in February, is a touch different than what we're looking at today, but we think it is still, you know, actionable. And so our plans to evaluate a repositioning after we complete the sale are still intact. I mean, if you look at the short end of the curve, certainly, we see probably a little bit of benefit relative to what we talked about from a cash reinvestment perspective. And the same goes if you think about reinvestment rates on the bonds. But on the other hand, you do have, you know, the tradeoff of a slightly higher realized loss.

Michael Baron Maguire: <unk> is a touch different than what we're looking at today, but we think still.

Michael Baron Maguire: Actionable and so we our plans to evaluate a repositioning after we after we complete the sale or are still intact. I mean, if you look at the the.

Michael Baron Maguire: The the short end of the curve certainly, we see probably a little bit of benefit relative to what we talked about from a cash reinvestment perspective and.

Michael Baron Maguire: And the same goes if you think about reinvestment rates on the bonds, but on the other hand, you do have.

Michael Baron Maguire: The tradeoff of slightly higher realized loss in that instance.

William Henry Rogers: I'll go to the others and, you know. As you said, John, I mean, we're in different rate environments. We'll evaluate, you know, all the other alternatives that exist with that. And there are some things that have some shorter paybacks that I think should be evaluated in that context. And then also, we have some tax efficiency as it relates to this. So we have some unique components of doing this in line with the TIH sale. And then you mentioned sort of one of the other capital deployment options.

Speaker Change: I'll go to the others.

Michael Baron Maguire: <unk>.

Speaker Change: So as you said, John and me were in a different rate environments will evaluate all the other alternatives that exist for that and there are some things that have.

Speaker Change: Have some shorter paybacks on I think it should be evaluated in that alternative and then also we have some tax efficiency as it relates to that so we have some unique components.

Speaker Change: Components of doing this in line with the with the <unk> sale.

And then you mentioned sort of one of the other capital deployment options, obviously first and foremost profitable growth in our business. Some instead of investing in our business you saw this quarter. Some of the things we did on the consumer side, where we leaned in a little bit quite frankly, we think some of the margins are still strong in those businesses. So the.

William Henry Rogers: You know, obviously, the first and foremost thing is growth in our business. I mean, sort of investing in our business. You saw in this quarter some of the things we did on the consumer side, where we leaned in a little bit. Quite frankly, we think some of the margins are still strong in those businesses. So what we're adding is a little more accretive than it would have been in the past. The risk profile is strong.

Speaker Change: What we're adding is a little more accretive than it would've been in the past.

Speaker Change: The risk profile is strong.

William Henry Rogers: So we have the capacity to, you know, dial some of that up on the consumer side. And then on the wholesale side, you know, just our relevance is more important. So we don't want to give up all the discipline.

Speaker Change: So we have the capacity the Dol some of that up on the on the consumer side.

Speaker Change: Then on the wholesale side, just our relevance is more important so what we're we don't want to give up all the discipline, we corrected a lot of discipline around pricing and around structure and.

William Henry Rogers: We created a lot of discipline around pricing and around structure. And again, what we're adding today is much more accretive. So we'll continue to pursue opportunities in our markets and across our industry verticals, and we've got good momentum in that front. And then lastly, on the share repurchase side, you know, we're going to we'll be back in the share repurchase business. That'll be part of the portfolio. As I mentioned before, we're going to do all this with pace.

Speaker Change: And again, what we're adding today is is much more a much more accretive. So we will continue to pursue opportunities in our markets and through our industry verticals and we've got good momentum.

Speaker Change: In that front.

Speaker Change: And then lastly on the share repurchase side, you know, we're going to we'll be back in the share repurchase business that'll be part of the portfolio as I mentioned before we're going to do all this with pace.

William Henry Rogers: So I think it would be, you know, reasonable to assume we'll have some type of meaningful share repurchase, sort of short, medium, and then longer term, and just a more durable, consistent share repurchase plan. So it's a combination of all those things factored into the equation that gives us, as I said before, a lot of optimism about being able to, you know, improve those returns, short term, importantly, but most importantly, over the long term.

Speaker Change: So I think it would be.

Speaker Change: Reasonable to assume we will have some type of meaningful share repurchase you know sort of sort of short medium term and then longer term and do so more durable consistent share repurchase plan. So it's a combination of all those things are factored into the ER to the equation, which give us as I said before a lot of optimism about.

Speaker Change: Being able to work.

Speaker Change: Those returns short term importantly, but most importantly over the long term.

John Eamon McDonald: That's really helpful. Thanks.

Speaker Change: That's really helpful. Thanks, and maybe as a quick follow up we saw really strong investment banking results. This quarter, how much of that is good environment versus the payback on some of the investments you've made in that business and maybe just comment on what's packed into your outlook for the second quarter there Mike. Thanks.

John Eamon McDonald: And maybe as a quick follow-up, we saw really strong investment banking results this quarter. How much of that is a good environment versus payback on some of the investments you've made in that business? And maybe just comment on what's packed into your outlook for the second quarter there, Mike.

Michael Baron Maguire: Yeah, so I mean, a lot of it obviously is from, you know, market improvement. But as you noted, I mean, we've been investing in this business for quite some time, particularly over the last several years. You know, our existing team is really sort of rising to the challenge. They're working really great with the commercial team. So we're seeing all the pull through from our franchise; we've brought, you know, 30 plus new MDs into our, you know, our business.

Michael Baron Maguire: Yeah. So it made a lot of it obviously is problem.

Michael Baron Maguire: Market improvement, but as you noted I mean, we've been investing in this business for quite some time, particularly over the last several years.

Michael Baron Maguire: Our existing team is really sort of horizon to the challenge, they're working really great with the commercial team. So we're seeing all the pull through from our franchise we brought.

Michael Baron Maguire: 30, plus new Mds into our into our business. So these are teammates you know with great expertise and great access. So I think it's a combination of all those things and we're really confident I mean, we're confident headed into the second quarter and the rest of the year are about the momentum in this business.

Michael Baron Maguire: So these are teammates, you know, with great expertise and great access. So I think it's a combination of all those things. And we're really confident. I mean, we're confident headed into the second quarter and the rest of the year about the momentum in this business.

Michael Baron Maguire: Thanks.

Betsy Lynn Graseck: Our next question comes from Betty graphic from Morgan Stanley. Please go ahead with your question.

Operator: Our next question comes from Betsy Graseck from Morgan Stanley. Please go ahead with your question.

Betsy Lynn Graseck: Betsy, good morning and welcome back. Oh, hey, thanks so much.

Betsy Lynn Graseck: Hi, good morning.

Betsy Lynn Graseck: Good morning, I'm, sorry, good morning, and welcome back.

Betsy Lynn Graseck: Thanks, so much great great to hear your voice.

Betsy Lynn Graseck: Thanks so much, Bill; I really appreciate it. So I did just want to lean in on the loan side, make a couple of comments in the prepared remarks that you made. One was on commercial lending pipelines, and building, and I wanted to understand, is this a change? I mean, we often hear about pipelines on the investment banking side, not as much on the commercial lending side, and I wanted to understand your thoughts on that. What execution on that requires?

Betty: Thanks, so much really appreciate it.

Betty: I did just want to lean in on the loan side a couple of comments in the prepared remarks that you made one was on commercial lending pipelines building and I wanted to understand if.

Betty: Is this a change and.

Betty: I mean, we often hear about pipelines and the investment banking side not as much on the commercial lending side and I wanted to understand your thoughts around.

Betty: What execution on that requires us at lower rates is it customary that building more inventory or it's just some color on that would be really helpful. Thank you.

William Henry Rogers: Is it lower rates? Is it customers? Is it building more inventory? Just some color on that would be really helpful. Thank you.

Betty: Yeah.

William Henry Rogers: Yeah, and I did note it because it's a little bit different. So in the fourth quarter, we started seeing pipelines decrease a little bit. And here in the first quarter, we've seen pipelines improve, you know, particularly on the commercial side. But, you know, how they get to execution and how they get to finalization will depend on a lot of market conditions.

Betty: And I did note it because it's a little bit different so in the fourth quarter, we started seeing pipelines decrease a little bit.

Speaker Change: And here in the first quarter, we've seen pipelines pipelines improve particularly on the commercial side, you know how they get to execution and how they get to Finalization will depend a lot of market conditions, but the good news is clients are there having the discussions they're having the debate about the new warehouse or the new fleet of trucks of the things that.

William Henry Rogers: But the good news is clients are, you know, having discussions, they're having debates about the new warehouse or the new fleet of trucks or the things that, you know, they want to do to continue to expand their businesses. But most importantly, we're just more relevant. I mean, we're just more relevant in those discussions.

Speaker Change: They want to do to continue to expand their businesses, but most importantly, we're just more relevant I mean, we're just more relevant in those discussions I mean.

William Henry Rogers: I mean, the activity that we've been able to create in terms of new relationships, I mean, almost 60% of the activity that we added in the quarter were new relationships, you know, so new to Truist. So I think a lot of it's that pitch activities up, you know, all the things we're doing, new lift, and leads are up. So I think it's a combination of a little bit of the markets that we operate in, probably a little more optimistic than the rest of the country.

Speaker Change: The activity that we've been able to create in terms of new relationships I mean, almost 60% of the activity that we added in the quarter were new relationships, so new new new to truest. So.

Speaker Change: I think I think a lot of it sat pitch activity is up you know all the things we're doing new left leads are up so I think it's some combination of a little bit of the markets that we operate probably a little more optimistic than the rest of the country. Our investments that we've made products capabilities and our overall relevance with our club.

William Henry Rogers: Our investments that we've made, products, capabilities, and our overall relevance with our clients. So we're talking to them about things they want to listen to, you know, they want to talk about. And I think we're just better positioned than we were.

Speaker Change: So we're talking to them about things they want to listen to you know they want to talk about and I think we're just better positioned than we have than we've ever built.

Betsy Lynn Graseck: And is that, okay? So, on the auto side, you mentioned that you're leaning into indirect and high quality. So I just wanted to understand, you know, what high quality indirect autos mean to you. And then, you know, the relevance to corporate clients and increasing, is that a function of balance sheet size or product mix or maybe he just, I know I squeezed in two, but it was a follow-up plus a follow-up, thanks. Betsy, you get extra permission.

Speaker Change: And is that okay. So then the follow up is on the auto side, you mentioned that you're leaning into indirect and high quality. So I just wanted to understand.

Speaker Change: What is high quality indirect auto doesn't mean T O and then.

Speaker Change: Our relevance to corporate clients and increasing is that a function of balance sheet size or product mix or maybe you can just.

Speaker Change: I know I squeezed into but it was a follow up.

Thank you Victor you get a you get extra permission [laughter] okay. Thank you.

William Henry Rogers: Okay, thank you. For a few more, yeah, exactly. Yeah, so on the auto side, maybe to compare and contrast, it's not RAC for us; it's sort of our core prime auto business in terms of growth. And again, just being able to be a little more relevant to our dealers and creating a little more capacity. You see lots of changes from people in and out of the auto industry. We like the consistency of it.

Victor: Exactly yeah. So on the auto side, maybe to compare and contrast, and its not rack for us at sort of our core Prime auto business in terms of in terms of growth and again, just being able to be a little more relevant to our dealers and creating a little more capacity.

Victor: You see lots of changes from people in and out of the auto side, we like the consistency of it and again, we have a deep strong relationships with lots of dealers and this just adds to our ads to add to that portfolio and then on the on the corporate side same thing on the if the question was related to the risk profile.

William Henry Rogers: And again, we have deep, strong relationships with lots of dealers, and this just adds to that portfolio. And then on the corporate side, the same thing. If the question was related to the risk profile, a similar kind of risk profile. We created, as I said, a lot of discipline over the last year in terms of optimizing capital, and we want to continue to do that. So the same expectations that we have for full relationships, the same expectations we have for the risk profile. So I think everything we're adding is just more acquisitive than what we were adding before based on our capabilities.

Victor: All of our kind of risk profile.

Victor: We created as I said, a lot of discipline over the last year in terms as we were you know.

Victor: Optimizing capital and we want to continue to do that so the same expectations that we have for full relationships. The same expectations. We have for the risk profile. So I think everything we're adding is just more accretive than what we were adding before based on our based on our capabilities.

Betsy Lynn Graseck: Okay. Thank you so much, Bill. I appreciate it.

Speaker Change: Thank you so much appreciate it.

Speaker Change: Yes.

Speaker Change: Our next question comes from Scott <unk> from Piper Sandler. Please go ahead with your question.

Operator: Our next question comes from Scott Siefers from Piper Sandler. Please go ahead with your question.

Scott: Good morning, everyone and thanks for taking the question.

Scott Siefers: Morning, everyone. Thanks for taking the question. Let's see. Mike wanted to just ask a little about the guide and the nuance. So, if I understand it correctly, on an apples-to-apples basis, the full-year guide is the same for expenses but tightened up to the low end of a prior range as better fees are offset by slightly weaker NII outlook. So, hopefully, I got that right.

Scott: Let's see Mike wanted to just ask a little on the guidance and the nuance. So if I understood. It correctly on an apples to apples basis, the full year guidance the same for expenses.

Scott: Second up to the low end of our prior range is better fees are offset by slightly weaker NII outlook. So hopefully I got that right, but within there just curious for expanded thoughts on what has changed within the NII expectations I imagine the preponderance of it is just fewer rate cut expectations with the three versus six previously, but maybe you could speak.

Scott Siefers: But within there, just curious for expanded thoughts on what has changed within the NII expectations. I imagine the preponderance of it is just fewer rate cut expectations with the 3 versus 6 previously. But maybe you could speak to other factors such as deposit mix or pricing nuance that might have impacted as well.

Scott: The other factors such as deposit mix or pricing do onto that that might have impacted as well.

Michael Baron Maguire: Scott, you made it easy for me. Those are the answers.

Speaker Change: Yes, Scott you made it easy for me those are those are the answers. So for US we had five cuts back in January I think the market had six.

Michael Baron Maguire: So for us, we had five cuts back in January. I think the market had six. We're looking now at three. I think the market has two or fewer, frankly. And so I think maybe one nuance to our outlook is that we believe that sort of four to five manages three cuts or even fewer cuts than three. So perhaps worth noting there. And then beyond just the curve, we have just, and I think our expectation in January was that we were six months from the last hike.

Speaker Change: We're looking now at three I think the market has two or fewer frankly, and so I think maybe one nuance to our outlook is that you know we believe that sort of four to five manages three cuts or even you know fewer cuts than three so perhaps worth noting there and then.

Speaker Change: Beyond just the curve, we have just and I think our expectation in January we were six months from the last hike in here. We now sit at nine months and we probably had an expectation that there'd be a touch less churn and pressure on pricing and mix on our liabilities portfolio side. So so those are the two factors and then of course, you know we're seeing some.

Michael Baron Maguire: And here we now sit at nine months. And we probably had an expectation that there'd be a touch less churn and pressure on pricing and mix on the liabilities portfolio side. So those are the two factors. And then, of course, we're seeing some strength on the fee side.

Speaker Change: Strength from a fee side, so but that in the blender and you know four to five feels it feels right.

Scott Siefers: So put that in the blender and blend for four to five.

Scott Siefers: Mike, as you know, that does not include, you know, TIH repossession. Yeah, we still have to say all of this in the same Senate. Yeah, right. Yeah, totally understand. Thank you.

Speaker Change: Perfect Okay.

Speaker Change: That does not include.

Speaker Change: <unk> repositioning so yes.

Speaker Change: I have to say all of us in the same the same set of yeah.

Right.

Speaker Change: Yeah totally understand thank you and then Mike maybe just on on sort of the competitive environment for funding you know and on one hand.

Scott Siefers: And then, Mike, maybe just on sort of the competitive environment for funding, you know, on the one hand, it's a general question, but I'd also be curious to hear your thoughts insofar as there are, you know, a lot of out-of-market competitors encroaching on your, you know, pretty attractive demographic markets. And just curious to hear just your thoughts on the rationality of funding pricing. You know, are they having a visible impact, or is the market pretty rational as to what you would expect in a hire-for-longer environment? You know, how are those things all projecting?

Michael Baron Maguire: It's a general question, but also curious to hear your thoughts in so far as there are you know a lot of out of market competitors encroaching on your you know pretty attractive demographic markets I'm just curious to hear.

Michael Baron Maguire: Just your thoughts on sort of rationality of funding pricing you know are they having a visible impact or is the market pretty rationale as to what you would expect in a higher for longer environment. You know how are those things all trajectory.

Michael Baron Maguire: Yeah, I mean look we you know one of the benefits.

Michael Baron Maguire: Yeah, I mean, look, we, you know, one of the benefits of operating in such attractive, high-growth markets is that they're attractive to others as well. And so it's always been a competitive marketplace for us. But I don't think we're seeing, you know, what I would describe as irrational behavior in the market. I think, you know, we're at a little unusual moment in the cycle, being as high as we are for as long as we've been here.

Michael Baron Maguire: Of of of operating in such attractive high growth markets is as they're attractive to others as well and so it's always been a competitive marketplace for us, but I don't think were seeing you know I would what I would describe as irrational behavior in the market I think we're at a little unusual moment in the cycle being as high as we are for as long as we've been.

Michael Baron Maguire: And so you're seeing you know a variety of strategies, but but by and large I think I think people are all trying to solve the same problem. We are which is when would we perhaps see some relief on the on the right side. Meanwhile, we're really just focused on supporting our clients right and so we've got the right products, we think in the right client experiences and we're going to pay a competitive.

Michael Baron Maguire: And so you're seeing, you know, a variety of strategies. But, by and large, I think people are all, you know, trying to solve the same problem we are, which is, you know, when will we perhaps see some relief on the rate side? Meanwhile, we're really just focused on supporting our clients, right? And so we've got the right products, we think, and the right client experiences, and we're going to pay a competitive rate to defend the relationships that you would expect us to defend.

Michael Baron Maguire: Right to defend the relationships that you would that.

Michael Baron Maguire: That you would expect us to defend.

William Henry Rogers: Yeah, it's also why, Scott, we focus on net new. So, in addition to sort of the pricing within our existing portfolio, we want to make sure we're adding net new accounts. So, you know, our rate of acquisition has been really strong, and our rate of attrition has been improved. So those are important barometers for us to sort of look at the overall health of the franchise and our relative competitive positioning.

Michael Baron Maguire: It's also Scott, while we focus on net new so in addition to total pricing within our existing portfolio, we want to make sure we're adding net new accounts. So.

Michael Baron Maguire: Our our rate of acquisition has been really strong in our rate of attrition has been improved you know so those are important parameters for us to know what sort of look at the overall health of the franchise on a relative competitive positioning.

Scott Siefers: Perfect. Okay, good. Thank you all for the calls.

Speaker Change: Perfect. Okay. Good. Thank you all for the color.

Operator: Our next question comes from Ken Usdin from Jeffries. Please go ahead with your question.

Speaker Change: Our next question comes from Ken <unk> from Jefferies. Please go ahead with your question.

Kenneth Michael Usdin: Hey, thanks, guys. I'm just wondering, just in terms of sequencing and how we'll understand how the rest of the potential benefits look following the close of the transaction. I guess I was wondering, are you still anticipating a June 1 close? And then, do you anticipate, like, just next earning season, we'll kind of get the understanding of the full impacts of both cash reinvestment and whatever you may decide to do on restructuring?

Ken: Oh, Hey, Thanks, guys I'm, just wondering just in terms of sequencing and in how we'll understand how the rest of the potential benefits look like following the close the transaction I guess I was wondering are you still anticipating.

Ken: A June one close and then do you anticipating like just next next earnings season will kind of get the understanding of the full impacts of both cash reinvestment and whatever you may decide to do on restructuring.

Michael Baron Maguire: Good morning, Ken, Mike, you know, we don't have a date certain for closing, but we have increasing confidence that in Q2, we will be able to complete the transaction. I think once we complete the transaction, there'll be an opportunity for us to communicate, you know, during the quarter, sort of sort of what things look like from there.

Ken: Hey, good morning, Ken It's Mike we don't have a date certain on closing, but we have increasing confidence that Q2, we will be able to complete the transaction I think once we complete the transaction, we think there'll be an opportunity for us to communicate during the quarter.

Sort of sort of what things look like from from there.

Ken: Okay got it and then just.

Kenneth Michael Usdin: Okay, got it. And then just, um, underneath the surface, I guess it's hard because by 3Q, you'll probably have done some of these things. But you mentioned NII down a little bit in the second quarter. X the deal.

Ken: You know underneath the surface I guess its hard because by three Q youll probably have done some of these things, but you mentioned NII down a little bit in the second quarter. You know ex the deal do you have a view of kind of where that core NII would be heading as we look into the second half of the year and kind of when that gets to a stability point.

Kenneth Michael Usdin: Do you have a view of kind of where that core NII would be heading as we look into the second half of the year and kind of when that gets to a stability point?

Michael Baron Maguire: Yeah, that's right. And the guide we gave for Q2 is sort of X for any cash or X for any potential benefit from repositioning. So that down 2% to 3% is, I think, what you're asking for at least in the quarter. And we do believe that the second quarter will be a trough for us. So if you think about the third quarter, A, I think we'll get a touch of benefit just on the A; our baseline has us getting a cut in June.

Ken: Yeah.

Ken: That's right and in the guide we gave for Q2 is sort of ex any cash or ex any potential benefit from from a repositioning so that down 2% to 3%.

Ken: Is is I think what you're asking for at least in the quarter and.

Ken: And we do believe that the second quarter will be a trough for us. So if you think about the third quarter. A I think we will get a touch of benefit just on the way our baseline has us getting a cut in June and if you think about the third quarter may be a cut in half if you'd get September early September also now so you've got to cut in half you've got one extra day in the third quarter.

Michael Baron Maguire: And if you think about the third quarter, maybe a cut and a half if you get September, early September also. So you got a cut and a half, you've got one extra day in the third quarter, and maybe a touch of a larger balance sheet if we start to see a little bit of loan growth come through. So we see some modest improvement in Q3 and the same in Q4 sort of a baseline path. I think fewer cuts put a little bit of pressure on that. But I think we still expect Q2 to be a trough from an NII perspective, regardless.

Ken: And maybe a touch of a larger balance sheet, if we start to see a little bit of loan growth come through so we see some modest improvement in Q3 and the same in the same in Q4 sort of a baseline path I think fewer cuts puts a little bit of pressure on that but I think we still expect <unk> to be a trough from an NII perspective, regardless.

Kenneth Michael Usdin: Okay, great. Yeah, it was the second half point that I was looking for that incremental color.

Speaker Change: Okay, great that yeah. It was a second half point that I was looking for that incremental color.

Kenneth Michael Usdin: Yeah. Thank you for kind of how it improves. Okay.

Speaker Change: On kind of how it improves okay and then just one more follow up on I B I think you mentioned the investments you've been making at the quarter was outstandingly. Good are you kind of implying that to flat fees in the second quarter that this is a new run rate for IBM trading. Some other banks have talked about pull forward in DCM, but just wanted to kind of understand the color of where do you think the puts and takes are for fee income growth from here.

Michael Baron Maguire: And then just one more follow-up on IB. You mentioned the investments you've been making this quarter were outstandingly good. Are you kind of implying that to, you know, flat fees in the second quarter that this is a new run rate for IB in trading? Some other banks have talked about pull forward in DCM, but just want to kind of understand the color of where you think the puts and takes are for fee income growth from here. Thanks. Yeah, I don't think there's been any particular pull forward.

Speaker Change: Thanks.

Speaker Change: I don't think Theres been any particular pull forward. This was a particularly strong M&A quarter M&A is a little less predictable on a quarter on quarter basis, but.

Michael Baron Maguire: Yeah, I don't think there's been any particular pull forward, you know; this was a particularly strong M&A quarter. M&A is a little less predictable, you know, on a quarter-to-quarter basis, but I think as we look sort of, you know, if we're thinking short-term, you know, like next quarter, next couple of quarters, I mean, this seems to be a pace that we're operating at right now in terms of our momentum and pipeline.

Speaker Change: I think as we look sort of if we're taking a short term youre not like next quarter next couple of quarters. I mean, this seems to be a pace that we're that we're operating at right now in terms of our momentum and pipelines.

Speaker Change: Thanks, very much guys.

Speaker Change: Our next question comes from Mike Mayo from Wells Fargo Securities. Please go ahead with your question.

Operator: Our next question comes from Mike Mayo from Wells Fargo Securities. Please go ahead with your question.

Michael Lawrence Mayo: Hi, if I can just get one simple question and one more complex question. The simple question is, so you're guiding for a trough in NII in the second quarter, and that does not include any deployment of the $10 billion. So if you just put the $10 billion in, you get a 5% yield on that. You know, then you get $500 million. That would add 2% to your year-over-year revenue growth. And also, how much would the sale of insurance improve your tangible book value?

Michael Lawrence Mayo: Hi, if I can just get one simple question one more complex question. The simple question is so you're guiding for a trough in NII in second quarter and that does not include any deployment of the $10 billion. So can you just put the $10 billion.

Speaker Change: So you get a 5% yield on that.

Michael Lawrence Mayo: Yes.

Michael Lawrence Mayo: And then you get $500 million that would add 2% to year over year revenue growth and also how much would the self insurance improve your tangible book value.

Michael Lawrence Mayo: The first question.

Michael Baron Maguire: The first question, that's right, Mike, the guidance really for the year-end, specifically what you asked for the quarter, does not include the benefit of the cash. We do expect the cash proceeds after tax to be about $10.1 billion. You know, you can pick your forward curve deployment rate, but I think you're in the ballpark. And your second question was, what would be the tangible value per share improvement from the sale? I think that was the question. And That would be by roughly a third.

Michael Lawrence Mayo: Mike the.

Michael Lawrence Mayo: The guidance.

Michael Lawrence Mayo: Really for the year and specifically you asked for the quarter does not include the benefit of the cash we do expect the cash proceeds after tax to be about $10 $1 billion.

Michael Lawrence Mayo: You can do you can pick your for forward curve deployment.

Speaker Change: Right, but I think youre in the ballpark and then your second question was what would be the tangible book value per share improvement from the sale I think was the question that would be.

Speaker Change: By roughly roughly a third.

Speaker Change: Okay.

Michael Lawrence Mayo: Okay, and then, Bill, for you, I know I brought this up before, but we're after five years, the announcement of this merger, and at least five years ago, as of today. You know, your stock is down one-fourth, the BTX is flat, and the S&P is up two-thirds.

Speaker Change: I'm still for you and I brought this up before but we're.

After five years the announcement of this merger and at least five years ago as of today.

Speaker Change: You know your stock is down one fourth the P. T X is flat the S&P is up two thirds.

Michael Lawrence Mayo: And I'm looking, I guess your annual meeting is tomorrow and you talk about leaning into your purpose, inspiring people to build better lives. And I just don't see the word shareholder there or on that side. By the way, I love purpose-driven capitalism, and I love how you bring that up, but I think if you don't bring shareholders along on that slide, you say happiness. I don't think shareholders are too happy if they've been around for the last five years.

Speaker Change: And I'm looking I guess your annual meeting is tomorrow, and you talked about leaning into your purpose inspiring to build better lives.

Speaker Change: And I, just don't see the word of shareholder there or on that side I buy my love purpose driven.

Speaker Change: Capitalism, and I love, how you bring that up but I think if you don't bring shareholders along on that slide you say happiness I don't think the shareholders are too happy if they've been around for the last five years. So can you just pull the lens back a day before your annual shareholders' meeting and say why are you doing to help make shareholders happy.

Michael Lawrence Mayo: So can you just pull the lens back the day before your annual shareholders meeting and say what you're doing to help make shareholders happy, assuming that your clients, employees, and communities are happy? How do you bring the shareholders along a little bit more? Thanks. By. So, you know, just.

Speaker Change: Assuming that your clients employees and communities are happy how do you bring to shareholders along a little bit more thanks.

Speaker Change: Thanks, Mike.

You know just to be clear in our mission statement, our shareholders are a key component of our stakeholders. So they've never been excluded in terms of in terms of in terms of our purpose.

William Henry Rogers: Thanks, Mike. So, you know, just to be clear in our mission statement, our shareholders are a key component of our stakeholders. So they've never been excluded in terms of our purpose, and I just fundamentally believe that purpose and performance are inextricably linked. So there's just no doubt about that. But did we lean in a lot to clients and teammates and communities during the first part of our merger and during COVID? Absolutely. But are we leaning in equally now with shareholders as a component of all that? Absolutely not.

Speaker Change: And I just fundamentally believe that purpose and performance are inextricably linked so there's just no doubt about that did we lean in a lot to clients and teammates and communities. During the first part of our merger during Covid absolutely.

Speaker Change: Are we leaning and equally now with shareholders as component of all of that absolutely you'll see some of the actions we're taking some of the momentum that we're creating.

Operator: You see some of the actions we're taking, some of the momentum that we're creating. You know, I highlighted a sort of small business at the beginning of this call as an example of how purpose and performance are linked. So, you know, focus on our small business community heroes, which is great. That's very purposeful; help them build their businesses and help them build their communities. But it also meant we added 8,600 of them, and we created $700 million in deposits.

Speaker Change: I highlighted in the beginning of this call sort of small business as an example of how a purpose and performance are way. So you know focus on our small business community heroes, which is great. That's very purposeful help them build their businesses and help them build their communities, but also meant we added 8600 of them and.

Speaker Change: And we created $700 million of deposits so.

Operator: So I do think they're linked. I think if you sat in our company and listened, you would understand that people make the connection very, very clearly. And I'm not confused about that. And I think the actions that we've taken in the fall, the actions that we're taking now, and the momentum we've created are solid evidence of our focus on our shareholders as well.

Speaker Change: I do think they are linked I think if you sat in our company and listen to you would understand that people make the connection very very clearly.

Speaker Change: And I'm not confused about that and I think the actions that we've taken in the fall the actions that we're taking now the momentum. We've created are solid evidence of our focus on our shareholders as well.

Ebrahim Huseini Poonawala: And our next question comes from Ebrahim Poonawala from Bank of America. Please go ahead with your question.

Speaker Change: Alright, thank you.

Speaker Change: Yeah.

Speaker Change: And our next question comes from Abraham who in the Wall from Bank of America. Please go ahead with your question.

Abraham: Good morning.

Ebrahim Huseini Poonawala: I guess maybe just, Bill, following up from a shareholder focus, I think there's a lot of focus around what this company can earn on a go-forward basis as we think about the turn on tangible equity. Maybe you want to wait for a few months. I appreciate that until the deal closes, but give us a sense when you look at sort of consensus numbers, 12% return on tangible equity, I'm assuming that's not kind of what you're aspiring for.

Abraham: Just wondering.

Abraham: Maybe just following up on a from a shareholder focus I think there's a lot of focus around.

Abraham: What this company can earn on a go forward pieces of as you think about the return on tangible equity.

Abraham: Maybe you want to wait for a few months I appreciate that because it closes but give us a sense. When you look at sort of consensus numbers, 20% return on tangible equity I'm, assuming that's not kind of what youre fighting for so give us a framework wouldn't be too colloquial peer set.

Ebrahim Huseini Poonawala: So give us a framework when we think about your peer set, whether you think you can get there, and then just how quickly, given maybe there's still some more tech spend to be undertaken over the next few years. Yeah, if you could start there. Thank you.

Abraham: Do you think you can get there and then just how quickly given maybe yes.

Abraham: Some more spend to be undertaking over the next few years, yeah. He looks out there. Thank you.

Speaker Change: Yeah, Hey, Brian when I think I, hopefully said very clearly that that'd be a starting point so that would not be an acceptable return for us long term.

William Henry Rogers: Yeah, Ebrahim, I think I've hopefully said very clearly that that would be a starting point. So that would not be an acceptable return for us long term. It is a component of a reset. You know, if you think about it, there are, let me put it into a couple of buckets.

Speaker Change: It is it is a component of a reset.

Speaker Change: Think about it there are let me put it into a couple of buckets. So short and medium term, we have a chance to actually move that more demonstrably so think about the.

William Henry Rogers: So in the short and medium term, we have a chance to actually move that more demonstrably. So think about the share, you know, the securities repositioning sort of as a step one and share repurchase, you know, a little more meaningful to start with and more durable over time. So we have a unique capacity to increase that in the short and medium terms, you know. And then the long term has to come from the growth of our business, you know, and we're in the best markets.

Speaker Change: Sure.

Speaker Change: The securities repositioning and sort of as a step one and share repurchase.

Speaker Change: More meaningful to start with and more durable over time. So we have a short and medium term you know unique capacity to increase that and then long term has to come from the growth of our business you know we're in the best markets.

William Henry Rogers: We're creating momentum, and in all those segments of our market, we're creating a lot of efficiency. So every dollar of revenue is going to be more efficient in terms of how it produces income for our shareholders, our shareholders over time, and our ability to continue to invest. You mentioned technology, but all those will be components. So the expenses are also related to our capacity to save money and invest in our company long term.

We're creating momentum in all those segments of our market, we're creating a lot of efficiency. So the.

Speaker Change: Every dollar of revenue is going to be more efficient in terms of how it produces income for our shareholders shareholders over time.

Speaker Change: And our ability to continue to invest so you mentioned technology, but all of those will be components. So the <unk>.

Speaker Change: Expenses are related to also our capacity to save save money and invest in our company.

Speaker Change: Long term, so short and medium term, we get increase the slope a little bit.

William Henry Rogers: So short and medium term, you know, we get increased the slope a little bit. And then long term, we increase the slope over time. It's a little too early for a sort of specific target. You know, the target right now is to grow, and again, grow meaningfully. And as we understand the capital rules a little bit better, and get through some of the capital planning, you know, we'll be in a better position to talk about more long-term targets.

Speaker Change: And then long term increase the slope over time, it's a little too early for us sort of a specific target you know the target right now is to grow.

Speaker Change: And again grow meaningfully as.

Speaker Change: And as we understand the capital rules, a little bit better get through some of the capital planning.

Speaker Change: It will be in a better position to talk about more longer term targets.

Ebrahim Huseini Poonawala: Got it. And Mike, just a quick one for you. So it sounds like fewer rate cuts is negative, but at the same time, the cash will make the balance sheet assets sensitive to changes in interest rates. I'm just wondering if we have to assume there are no rate cuts this year, is that really negative or more of a neutral scenario, given the cash will be sort of earning higher for longer in that backdrop.

Speaker Change: And Mike just a quick one for you.

Mike: So it sounds like few rate cuts is negative but at the same time, the cash will make the balance sheet asset sensitive.

Speaker Change: With the cash.

Speaker Change: Wondering if we have to if you'd like to assume that annuity. It cuts this year is that.

Speaker Change: Really negative or more neutral scenario, given the cash will be.

Speaker Change: Sort of Uh huh.

Speaker Change: Higher for longer than that back up if you could clarify that thank you.

Michael Baron Maguire: Thank you.

Ebrahim Huseini Poonawala: Yeah, no. Well, Ebrahim, what I was talking about was sort of a continuing operations guide. So X is the incremental cash. So we feel like there'd be a downside, right? So our four to five contemplates three cuts at the baseline, but fewer cuts as well on the low side. I think if you added the cash, you're right, that would add asset sensitivity, and it would just sort of transform our NII trajectory broadly. Obviously, when that asset sensitivity comes onto the balance sheet, we'll manage that consistent with how we've managed rate risk in the past, which is to add some receivers to manage against lower rates longer.

Speaker Change: Ebrahim that what I was talking about was sort of a continuing ops guide so ex the extra incremental cash. So we feel like there would be downside right. So our four to five contemplates three cuts baseline, but newer cuts as well to the low side I think if you added the cash are right that would add asset sensitivity and I would just sort of transform our NII trajectory.

Speaker Change: Lee.

Speaker Change: Obviously when that asset sensitivity comes onto the balance sheet, we'll manage that.

Speaker Change: Consistent with how we've managed our rate risk in the past, which is we would probably add some receivers to manage against lower rates longer.

Ebrahim Huseini Poonawala: I think I answered your question, which is that the guide is continuing operations X cash. We think the four to five has that in the cash, and any repositioning benefit would be on top of that. That's clear. Thank you so much.

Speaker Change: I think I answered your question, which is that the guide is continuing ops ex cash we think the three the four to five has that in the cash and any repositioning benefit would be on top of that.

Speaker Change: That's great. Thank you so much.

Operator: Our next question comes from Matt O'Connor from Deutsche.

Matt O'connor: Our next question comes from Matt O'connor from Deutsche Bank. Please go ahead with your question.

Operator: Our next question comes from Matt O'Connor from Deutsche Bank. Please go ahead with your question. Good morning. What do you think is a good capital level to be running at or looking at?

Matt O'connor: Good morning, Oh, what do you think is a good capital level to move money out of kind of looking out medium term, including C. I.

Michael Baron Maguire: Hey, Matt, it's Mike. I'll take a swing at that one. This is one that's tough to get on the record about. As you know, I think, you know, others are probably in the same boat. You know, I think the good news for Truist is we find ourselves, you know, at least once we get our TIH transaction completed, in a really strong, I think, on a relative and absolute basis, capital position. You know, with the rules still in a proposal stage, I think it's really hard for us to determine exactly what a target, you know, might be.

Matt O'connor: Yeah, Hey, Matt, It's Mike I'll I'll I'll take a swing at that one is it's one of the tough to get on the record on as you as you know I think you know others are probably in the same boat.

Mike: I think the good news for truest as we find ourselves at least once we get our T. I H transaction completed.

Mike: A really strong I think on a relative and absolute basis capital position.

Mike: You know what.

Mike: With with the rule is still in our proposal.

Mike: Stage I think it's really hard for us to determine exactly what a what a target might be I think we do find ourselves in a position right now of.

Michael Baron Maguire: I think, you know, we do find ourselves in a position right now of, you know, some amount of excess capital. It's impossible to understand exactly what that level would be. But the good news, again, is that we do have confidence in our current level such that we can, you know, shift from sort of a phase where we've been conserving capital to a phase where we're deploying capital and optimizing that capital and putting it to work.

Mike: Some amount of excess capital, it's impossible to to understand exactly what that level would be but the good news again is we do have the confidence in our current level such that we can.

Mike: Shift from sort of a phase, where we've been conserving capital to a phase, where we're deploying capital and optimizing.

Mike: That capital and putting it to work and whether that's in the core balance sheet, which will be our first priority is to grow client relationships and balances and and make money the old fashioned way. We obviously you've been clear that we think there's we have the capacity to evaluate a repositioning of the balance sheet and of course bill has been pretty pretty.

Michael Baron Maguire: And whether that's in the core, you know, balance sheet, which would be our first priority, is to grow client relationships and balances and make money the old fashioned way. We've obviously been clear that we think there's, we have the capacity to evaluate a repositioning of the balance sheet. And of course, Bill's been pretty, pretty direct about our ambitions around buying back stock. So I don't have a target for you.

Mike: Pretty direct about our ambitions around buying back stock. So don't have a target for you, but you know our our sort of tone in mindset and planning is oriented around around growth.

Michael Baron Maguire: But, you know, our sort of tone and mindset and planning is oriented around growth. Okay, and then just, I didn't see in the disclosures, but I'm reminding you what the adjusted CEP one is right now. And again, obviously, you're picking up a lot of a deal.

Speaker Change: Okay, and then just I didn't see in the disclosures, but remind me what the adjustments. If you want is right now and again, obviously, you're putting up a lot of a deal, but what's the starting point right now.

Michael Baron Maguire: But what's the starting point right now? We're at 10.1 as of the end of the quarter, which is flat to last quarter. You know, we obviously saw the CECL phase-in impact the linked quarter advancement, and if you fully phased in the proposed rules, our AOCI would, I think, worsen that by a little over 3 percent. The threshold's a little less than 1 percent. And then RWA inflation, maybe a couple, I call it 20, 30 basis points. So I think we're, you know, around 5, 9, maybe 6 on a fully phased in basis today.

Speaker Change: We're 10, one as at the end of the quarter, which is flat to last quarter.

Speaker Change: We obviously, the seasonal phase and impacted the linked quarter advancement and if you've fully phased in the proposed rules are Aoc I would I think worse than that by a little over 3%. The thresholds are little less than 1% and then <unk> inflation, maybe a couple of call. It 20 <unk>.

Speaker Change: Basis points. So I think we're around five nine maybe six on a fully phased in basis today.

Operator: Our next question comes from Gerard Cassidy from RBC Capital Markets. Please go ahead with your question.

Speaker Change: Okay, and then obviously you're off that sex, we would add the 2.5% or two 2.6% you said so.

Speaker Change: That's right yes.

Speaker Change: Yeah, Okay, alright, thank you.

Speaker Change: Our next question comes from Gerard Cassidy from RBC capital markets. Please go ahead with your question.

Gerard Sean Cassidy: Good morning, Bill. Good morning, Mike. Good morning.

Gerard Sean Cassidy: Bill Good morning, Mike.

Gerard Sean Cassidy: Mike, to follow up on the bond potential restructuring, a technical question. Are you guys permitted to restructure the AFS available for sale portfolio, but can you touch the held to maturity portfolio as well? And second, if Basel III, as we know, appears to be delayed because of a big change coming, if Basel III doesn't get solidified and finalized until the first or second quarter of next year, how does that impact your guys' decision making on when to possibly do this restructuring?

Gerard Sean Cassidy: Mike to follow up on the bond potential restructuring and tactical question.

Gerard Sean Cassidy: Are you guys permitted I know you you can restructure the DFS available for sale portfolio, but can you touch the held to maturity portfolio as well and then second.

Speaker Change: If this Basel III as we know it appears to be.

Speaker Change: Delayed because of a big change coming if Basel III doesn't get solidified and finalize until first or second quarter of next year, how does that impact your guys' decision, making on when to possibly do this restructuring.

Michael Baron Maguire: Sure, Gerard. The first question: no, the HTM portfolio wouldn't be eligible for repositioning. We wouldn't be in a position to sell those securities or the consequences that we would have to mark the rest of the HTM securities. In terms of Basel, you know, obviously, we've been engaged in advocacy there as well. We've been monitoring the evolution of the rule. You know, it does seem at this point that the final rule is certainly delayed versus what we probably would have expected a year ago or even six months ago.

Speaker Change:

Speaker Change: Sure Gerard the first question no the HTM portfolio wouldn't be eligible for mm for repositioning we wouldn't be in a position to sell those securities or the the consequences that we would have to mark the rest of the HTM securities.

Speaker Change: In terms of Basel, you know obviously, we've been engaged in the advocacy there as well have been monitoring the evolution of the rule.

Speaker Change: You know it does seem at this point that a final rule certainly has delayed versus our what we would probably would've expected a year ago or even six months ago, but I don't think we have an expectation that the substance of the rule that is going to be most relevant to truest.

Michael Baron Maguire: But I don't think we have an expectation that the substance of the rule that's going to be most relevant to Truist is likely to change, which is the inclusion of or the deduction of AOCI from regulatory capital.

Speaker Change: Is it is likely to change, which is the inclusion of or the deduction of OCI from regulatory capital. So I think we feel good about about our path forward.

Michael Baron Maguire: So I think we feel good about our path forward. And, you know, look, I think we were pretty clear in February again around our objectives with a potential repositioning. And just to sort of state it again, I mean, one, whatever we do, we want to make sure that we still have ample capacity to grow the business and execute on the buyback that Bill has mentioned. But it's really important to us to at least replace the TIH earnings in whatever we would contemplate.

Speaker Change: And you know look I mean, I think we were pretty clear in February again around our objectives with a potential repositioning and I'm just sort of stated again I mean, one whatever we do we want to make sure that we still have ample capacity to to grow the business and execute on the buyback that bill has mentioned, but it's really important to us to at least replace the TIAA earnings.

Speaker Change: And whatever we would whatever we would contemplate.

Clarke R. Starnes: Very good. And then possibly a follow-up on the commercial real estate details you gave us in the appendix. It looked like the non-performing loan percentage declined a bit from the fourth quarter. Charge-offs, however, obviously went up. Your reserves also went up relative to total loans. Any color that you guys can provide us on what's happening to the mix of commercial real estate? Obviously, the office is the one that we're all focused on, but any other areas where you guys have some color would be great. Thank you.

Speaker Change: Very good and then possibly a follow up on the commercial real estate detail you gave us in the appendix I. It looked like the nonperforming loan percentage declined a bit from the fourth quarter our charge.

Charge offs. However, obviously went up your reserves also went up relative to total loans any color that you guys can provide us on what's happening to the mix of the commercial real estate. You know obviously office is the one that we're all focused on but any other areas that you guys have some color would be great. Thank you.

Clarke R. Starnes: Gerard, this is Clarke. We were very pleased in the quarter. To your point, we did see our total CRE MPLs go down, and that was driven by deliberate actions we took to continue to work through the stress exposure in the CRE office. We actually reduced CRE by $222 million, or four and a half percent for the quarter while addressing about $230 million worth of maturity. So, as we said before, we're not going to kick the can down the road.

Yeah. Gerard this is Clarke I'm, we were very pleased in the quarter to your point, we did see our total CRE Npls go down and that was driven by deliberate actions. We took to continue to work through.

Clarke R. Starnes: The stress exposure in the CRE office, we actually reduce CRE office $222 million of four 5% for the quarter, while addressing about $230 million worth of maturity. So as we said before we're not going to kick the can down the road. So we're trying to be very intentional about.

Clarke R. Starnes: So we're trying to be very intentional about recognizing where we have exposure and going ahead and dealing with that. And that's what created the higher losses for the quarter. But the trade-off was lower MPLs.

Clarke R. Starnes: And where we have exposure in going ahead and dealing with that and that's what.

Clarke R. Starnes: Created higher losses for the quarter, but the trade off was lower Npls to your point. We also feel very good about our reserves. Our office reserves were increased to 9.3 and also for the stress more institutional style, where nearly a worry about 11, 8%. So we're well reserved I would say the.

Clarke R. Starnes: To your point, we also feel very good about our reserves. Our office reserves have been increased to 9.3. And also for the stressed, more institutional style, we're about 11.8%. So we're well, well reserved. I would say the other CRE segments are holding up really well. I know there's a lot of talk about multifamily.

Clarke R. Starnes: Other CRE segments are holding up really well know theres a lot of talk about multifamily I'd say for us what we see there is mostly a migration to the watch list, but not to NPL, where losses, yet and we're working with those borrowers and were quite pleased that most sponsors are coming in and addressing.

Clarke R. Starnes: I'd say for us, what we see there is mostly a migration to the watch list, but not to MPL or losses yet. And we're working with those borrowers, and we're quite pleased that most sponsors are coming in and addressing, resizing, if necessary, interest reserves or other structural ways to keep those performing. So we feel good about the overall CRE book and our trajectory right now. Thank you.

Clarke R. Starnes: Re sizing if necessary interest reserves or other structural ways to keep those.

Clarke R. Starnes: Performing so we feel good about the overall CRE book and our trajectory right now.

Speaker Change: Thank you I appreciate it.

Speaker Change: Okay.

Speaker Change: And our final question today comes from Zach Gwen when they got from J P. Morgan. Please go ahead with your question Hi, Thanks, Hi, Bill Hi, Mike.

Gerard Sean Cassidy: Thank you; I appreciate it.

Operator: And our final question today comes from Vivek Guinega from J.P. Morgan. Please go ahead with your question.

Vivek Guinega: All right. Thanks. Hi, Bill. Hi, Mike.

Zach Gwen: Couple of quick questions. One is the balance sheet restructuring that you're talking about.

Vivek Guinega: Quick questions. One is the balance sheet restructuring that you're talking about. Any sense of timing in terms of how long it will take, do you expect you'd get done assuming you close on June 1? Do you think you'd get done by the end of this year? Or do you think it heads over into the next 25 years? Are there any sort of tax reasons why you have any time limitations?

Zach Gwen: Any sense of timing in terms of how long is it do you expect you could get done by assuming you close on June one do you think you'd get done by end of this year or you think it ends Haynesville winter 25 are there any sort of tax reasons why do you have any time limitations.

William Henry Rogers: Maybe let me hit that mic. I mean, the spirit would be simultaneous, you know, so that would be the spirit in terms of, you know, how we would potentially restructure.

Speaker Change: Maybe let me hit that one [laughter] amid the spirit would be simultaneous you know so that would be that'd be the spirit in terms of.

Speaker Change: We would how we would potentially restructure.

Speaker Change: Okay.

Speaker Change: And then.

Vivek Guinega: and then As you restructure, Bill, are you thinking you'll replace the securities with other securities, or you, you know, I know you're only going to get it to, you want to get earnings to neutral, where are you at this point in thinking? Are you willing to go more? What do you think in terms of the ongoing run rate of securities as a proportion of earning assets?

Speaker Change: As you restructure a bit like Youre thinking you would replace the securities.

Speaker Change: With the other.

Speaker Change: Other Securities are you you know I know, you're only going to get it to them.

Speaker Change: You want to get earnings to neutral.

Where are you at this point I'm thinking am I willing to go more I. What do you think in terms of ongoing run rate of securities as a proportion of earning assets.

Michael Baron Maguire: Yeah, Ava, back to Mike, I'll take it. You know, in February, what we laid out was sort of an even redeployment into cash and securities. Even that, I think, was hypothetical.

Speaker Change: Yeah, Hey, Vivek, it's Mike I'll take it.

Mike: You know in February what we laid out was sort of a even redeployment into cash and securities.

Mike: Even that I think it was hypothetical when as you can imagine you know we are keeping an eye on the market and thinking about the the tradeoffs.

Michael Baron Maguire: And as you can imagine, we are keeping an eye on the market and thinking about the tradeoffs around different, whether it be, you know, mortgages or treasuries and cash. So I think we'll get that mix right, and we'll be guided on, you know, not just earnings. Obviously, we have an objective of shortening the balance sheet and improving, you know, our readiness around what we think will be more rigorous liquidity requirements over time. And so one of the great benefits of this transaction or this collection of potential transactions is that it's not just about capital. This really does move us forward more broadly.

Mike: Round different whether it be mortgages or treasuries in cash. So I think we'll get that mix right and we'll be guided on you know not just earnings obviously, we have an objective of shortening the balance sheet and improving our you know our readiness around what we think will be a more rigorous liquidity.

Mike: Requirements over time, and so that's actually one of the great benefits of this transaction or this collection of potential transactions is it's not just about capital. This really does move us forward more broadly.

Vivek Guinega: All right. Thank you.

Mike: So.

Mike: Okay.

Speaker Change: Alright, thank you.

Operator: And ladies and gentlemen, with that, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to management for any closing remarks.

Speaker Change: And ladies and gentlemen, with that we'll be concluding today's question and answer session I'd like to turn the floor back over to management for any closing remarks.

Brad Milsaps: Okay, thank you, Jamie. That completes our earnings call. If you have any additional questions, please feel free to reach out to Investor Relations. Thank you for your interest in Truist, and we hope you have a great day. Jamie, you may now disconnect the call.

Speaker Change: Okay. Thank you Jamie that completes our earnings call. If you have any additional questions. Please feel free to reach out to Investor Relations team. Thank you for your interest interest and we hope you have a great day, Jamie you may now disconnect the call.

Operator: And ladies and gentlemen, that does conclude today's conference call. We thank you for attending. You may now disconnect your lines.

Speaker Change: And ladies and gentlemen that does conclude today's conference call. We thank you for attending you may now disconnect your lines.

Speaker Change: Yeah.