Q2 2025 Truist Financial Corp Earnings Call
Operator: Corporation, second quarter 2025 earnings conference call. Currently, all participants are in a listen-only mode.
Greetings, ladies and gentlemen, and welcome to the truist Financial Corporation, second quarter 2025 earnings conference call.
Operator: A brief question and answer session will follow the formal presentation. As a reminder, this event is being recorded.
Currently all participants are in a listen-only mode.
A brief question and answer session will follow the formal presentation.
Bradley Milsaps: It is now my pleasure to introduce your host, Mr. Brad Milsap. Thank you, Betsy. And good morning, everyone.
As a reminder, this event is being recorded.
Speaker Change: It is now my pleasure to introduce your host Mr. Brad milsoft.
Bradley Milsaps: Welcome to Truist's second quarter 2025 earnings call. With us today are our Chairman and CEO, Bill Rogers, our CFO, Mike Maguire, and Chief Risk Officer, Brad Bender, as well as other members of Truist's senior management. During this morning's call, they will discuss Truist's second quarter results, share their perspectives on current business conditions, and provide an outlook for 2025. The company presentation, as well as our earnings release and supplemental financial information are available on the Truist Investor Relations website, ir.truist.com. 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.
Speaker Change: Brad vendor as well as other members of truist senior management team. During this morning's call, they will discuss Drew's second quarter results, share their perspectives on current business conditions and provide an outlook for 2025.
Speaker Change: The company presentation as well as our earnings release and supplemental. Financial information are available in the truist. Investor relations, website, IR truest.com.
William Rogers: With that, I'll turn it over to Bill. Great. Thanks, Brad, and good morning, everyone, and thanks for joining our call this morning.
William Rogers: Before we discuss the second quarter results, let's begin like we always do at Truist with purpose on Slide 4. At Truist, our purpose to inspire and build better lives and communities is more than a statement. It's the foundation of our strategy. It's the lens through which we make decisions and the reasons teammates show up every day with conviction and care. In the second quarter, we continue to bring this purpose to life in meaningful ways. We welcome a dynamic slate of new leaders across our company, reinforcing our commitment to attracting top talent to our already highly experienced and very capable team.
Speaker Change: 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 Gap with that. I'll turn it over to bill, right? Thanks Brad, and good morning everyone. And thanks for joining our call this morning. Before we discuss the second quarter results, let's begin. Like we always do at Tris with purpose on slide 4.
At truist, our purpose, to inspire, and build better lives and communities. It's it's more than a statement. It's the foundation of our strategy, it's the lens through which we make decisions.
William Rogers: These leaders were attracted to our purpose driven culture and are already making meaningful impact, strengthening our presence in key growth markets and expanding our capabilities across high potential vertical. From sector specific coverage to commercial and middle market banking to small business, wealth, premier banking and payments, our teams are deepening client relationships, driving new business and positioning Truist for the long term sustainable growth, all which were evident in these second quarter results.
Speaker Change: And the reasons teammates show up every day with conviction and Care. In the second quarter, we continue to bring this purpose to life and meaningful ways. We welcome Dynamics slate of new leaders, across our company, reinforcing our commitment, to attracting top talent to our already highly experienced, and very capable teams.
Speaker Change: These leaders were attracted to our purpose-driven culture and are already making meaningful impact. Strengthening our presence and key growth markets and expanding our capabilities across high potential verticals.
Speaker Change: From sector specific coverage to Commercial and Middle Market banking to small, business wealth, Premier Banking and payments. Our teams are deepening client relationships, driving, new business and positioning truist for the long term. Sustainable growth all which were evident in these second quarter results.
William Rogers: So, on slide five, for the second quarter, we reported net income available to common shareholders of $1.2 billion, or $0.90 a share, which included $0.02 of restructuring charges related to severance and $0.01 of losses from the sale of certain investment securities. At a high level, our solid performance in the second quarter reflects the diversity of our business model and the execution of many of our strategic growth initiatives that we've been discussing now for several quarters. These initiatives include accelerating growth of the addition of new clients and deepening existing client relationships in areas like payments, wealth and Premier Bank.
Speaker Change: So on slide 5 for the second quarter, we reported net income available to Common shareholders of 1.2 billion. Dollars or 90 cents a share, which included 2 cents of restructuring, charges related to Severance and 1 cent of losses from the sale of certain, uh, investment Securities at a high level, our solid performance in the second quarter, reflects the diversity of our business model and the execution of many of our strategic growth initiatives that we've been discussing now for several quarters.
William Rogers: We're executing our plan while maintaining our expense and credit discipline and returning capital to shareholders. During the second quarter, average loan balances increased 2% and end of period loans increased 3.3%, week quarter. Growth was broad based across our consumer and wholesale segments, and driven by increased loan production and new client acquisition. Our lending pipelines remain strong and overall loan production is up significantly year over year. Growth should also benefit from our expansion efforts in markets where we have smaller but growing share, and for many of the new teammates that have joined our company. This quarter's loan growth helped offset the equity and debt market volatility that occurred early in the quarter.
Speaker Change: These initiatives include accelerating growth through the addition of new clients and deepening existing client relationships in areas like payments wealth. And Premier Banking
Speaker Change: We're executing our plan. While maintaining our expense and credit discipline and returning Capital to shareholders
Speaker Change: During the second quarter, average loan balances increased 2% and end of period loans. Increased 3.3%, leak quarter.
Speaker Change: Growth was broad-based across our consumer and wholesale segments, and driven by increased Loan Production and new client acquisition.
Speaker Change: our lending pipelines, remained strong and overall Loan Production is up significantly year-over-year
Speaker Change: growth should also benefit from our expansion efforts in markets where we have smaller but growing share and from many of the new teammates that have joined our company,
this quarter's loan growth, help offset the equity and debt.
William Rogers: This volatility impacted trading capital markets and M&A activity for the industry, resulting in lower revenue for investment banking and trading business. As you've heard me discuss previously, I'm confident that our advice driven business model is well suited to help our clients navigate current market conditions and continue to grow our share given the ongoing investments we're making in talent products and industry verticals. We believe that our investment banking and trading business is well positioned for a second half recovery, as we saw steady improvement overall investment banking revenue in each month during the quarter. Adjusted expenses did come in at the high end of the expected range, but remain confident in our ability to deliver our 1% expense growth target and positive operating leverage in this year.
Market volatility that occurred early in the quarter. This volatility impacted trading, Capital markets and m&a activity for the industry resulting in lower revenue for Investment Banking and trading businesses.
Speaker Change: As you've heard me discuss previously, I'm confident that our advice.
Speaker Change: Driven business model is well suited to help our clients navigate current market conditions and continue to grow our share given the ongoing Investments. We're making in Talent products and Industry verticals. We believe that our investment banking and trading business is, well, positioned for a second half recovery as we saw steady Improvement, overall, Investment Banking revenue, and each month during the quarter.
William Rogers: That includes the impact of ongoing investments in talent and technology. We also maintain strong asset quality metrics as both non-performing loans and net charge-offs were down nine basis points in the quarter. In addition, we also received favorable results from the Federal Reserve's annual stress test. We expect that our stress capital buffer will decline and be floored at 2.5% effective October 1st. Finally, we remain in a strong capital position, which allows us to support our balance sheet growth and return capital to shareholders.
Speaker Change: Adjusted expenses did come in at the high end of the expected range, but we remain confident in our ability to deliver our 1% expense growth, Target, and positive operating leverage in this year.
Speaker Change: That includes the impact of ongoing investments in talent and Technology.
Speaker Change: We also maintain strong asset quality metrics as both non-performing loans. And net charge offs were down 9 basis points. Link quarter in addition, we also received favorable results results. From the Federal Reserves annual stress tests. We expect that our stress Capital, buffer will Decline and be floored at 2 and a half percent effective October 1st,
William Rogers: During the quarter, we returned $1.4 billion of capital to shareholders through our common stock dividend and the repurchase of $750 million of our common stock. Our share repurchase activity in the second quarter included $250 million of repurchases above our recent $500 million quarterly target as we opportunistically took advantage of market volatility and weakness in our share price early in the quarter. We do plan to target approximately $500 million of share repurchases during the third quarter.
Speaker Change: Finally, we remain in a strong Capital position which allows us to support our balance, sheet growth and return Capital shareholders.
Speaker Change: During the quarter, we returned 1.4 billion dollars of capital to shareholders through a common stock dividend and the repurchase of 750 million of our common stock.
Speaker Change: our share repurchase activity in the second quarter included, 250 million of repurchases above our recent 500 million quarterly Target as we opportunistically took advantage of Market volatility and weakness in our share price, early in the quarter
Speaker Change: Of share repurchases. During the third quarter,
William Rogers: Before I hand the call over to Mike to discuss the quarterly results, I wanna spend some time discussing the progress we're already making on our strategic priorities and the positive momentum we're seeing within our business segments and with our digital initiatives on slides six and seven. In consumer and small business banking, I'm encouraged by another solid quarter of consumer loan and deposit growth, net new checking account growth and progress with our premier banking clients, as we deepened relationships and acquired key new clients and households through digital and traditional channels. Net new checking account growth, which is a key measure for the growth potential and health of our company, was once again positive in the second quarter as we added nearly 37,000 new customers new consumer and small business Importantly, we're attracting younger clients with higher average balances and greater median income, which aligns with our strategy to engage clients early and build enduring relationships over time.
Speaker Change: Before I hand the call over to Mike to discuss the quarterly results. I want to spend some time. Discussing the progress, we're already making on our strategic priorities and the positive momentum. We're seeing within our business segments, and with our digital initiatives on slides, 6 and 7
Speaker Change: In consumer and small business banking, I'm encouraged by another solid quarter of consumer loan and deposit, growth, net new, checking account growth, and progress with our Premier Banking clients. As we deepened relationships and inquired key new clients and households through digital and traditional channels.
Speaker Change: net new checking account growth, which is a key measure for the growth potential and health of our company was once again positive in the second quarter as we added nearly 37,000, new customers, new consumer, and small business accounts,
William Rogers: Average consumer and small business loan balance has increased 2.8% late quarter and end of period balance has increased 3.8% due to growth in residential mortgage, indirect auto and other consumer with production up significantly year over year. Over the last year, we've added significant numbers of new partners and dealers to our service finance and Sheffield platforms, which is helping drive the growth and other consumer loan balance. We also saw a significant increase in loan and deposit production per banker in our premier banking segment, which is a key area of strategic focus. We're growing while also maintaining our credit and pricing discipline.
Speaker Change: Importantly we're tracking younger clients with higher average, balances and greater median income which aligns with our strategy to engage clients early and building during relationships over time.
Average consumer and small business loan balance is increased 2.8%, link order and the end of period, balances increased 3.8%, due, to growth and Residential Mortgage, indirect Auto. And other consumer with production of significantly year-over-year,
Speaker Change: over the last year, we've added significant numbers of new partners and dealers to our service, finance and Sheffield platforms which is helping Drive the growth and other consumer loan balances,
Speaker Change: We also saw a significant increase in loan and deposit production per banker and our Premier Banking segment, which is a key area of strategic Focus.
William Rogers: Consumer net charge offs of 71 basis points reach their lowest level since the third quarter of 2023. And new production spreads remain accretive to the overall portfolio.
Speaker Change: We're growing while also maintaining our credit and pricing discipline consumer. Net charge offs of 71 basis points reached their lowest level since the third quarter of 2023 and new production spreads remained. Accretive to the overall portfolio.
William Rogers: In wholesale, I'm encouraged by this quarter's loan growth, improved production, and progress in key focus areas like payments and wealth. During the quarter, we saw 1.5% growth in average wholesale loans and 2.9% growth in end-of-period loans, driven by growth from new and existing clients and increased production. Average C&I growth was driven by all of our industry banking groups with particular strength in FIG and energy, middle market lending, and structured credit. As I've mentioned previously, we have a specific focus on capturing more of the middle market. We've seen these balances increasing in each quarter this year driven by new clients and a wide variety of industries and a targeted select geographies where we continue to expand.
Speaker Change: In wholesale, I'm encouraged by this quarter's loan growth, improved production, and progress, and key, Focus areas like payments and wealth.
Speaker Change: During the quarter, we saw 1 and a half percent growth in average wholesale, loans and 2.9% growth and end of period. Loans driven by growth from new and existing clients and increase production. Average, cni growth was driven by all of our industry, banking groups with particular, strengths, and fig, and energy, Middle Market, lending and structure credit.
William Rogers: Year-to-date, we've attracted twice as many new corporate and commercial clients to our platform compared with the same period a year ago, while we're also seeing a 40% increase in revenue per client.
Speaker Change: As I've mentioned previously, we have a specific focus on capturing more of the middle market. We've seen these balances increase in in each quarter. This year driven by new clients in a wide variety of Industries and a targeted, select geographies where we continue to expand.
William Rogers: In wealth, net asset flows were positive despite volatile equity and fixed income markets, as we saw a 27% increase in year-to-date AUM from wholesale and premier clients compared with the same period a year ago. Our payments team continues to launch new services that meet our clients needs for solutions that provide them with speed, simplicity and safety.
Year to date, we've attracted twice as many new corporate and Commercial clients to our platform compared with the same period. A year ago. While we're also seeing a 40% increase in Revenue per client,
Speaker Change: And wealth, net asset flows were positive despite volatile equity and fixed income markets. As we saw at 27% increase in year-to-date AUM from wholesale and Premier clients compared with the same period a year ago.
Speaker Change: Our payments team continues to launch new services, that meet our clients needs for solutions, that provide them with speed Simplicity and safety.
William Rogers: During the second quarter. We also experienced more digital innovation. Truist became the first financial institution to prove request for payment over the RTP network via an alias such as a cell phone or an email address. This innovation is designed to unlock meaningful value for both commercial and consumer clients, accelerating cashflow, improving reconciliation, and delivering real-time confirmation. These enhancements, along with continued investments in our team, have driven a meaningful increase in treasury management penetration rates with our existing clients and helped drive a 14% increase in treasury management revenue versus the second quarter of last year. Enhancing the client experience and growing our digital capabilities are also important parts of our strategy.
Speaker Change: During the second quarter.
Speaker Change: We also experience more digital Innovation truist became the first financial institution to probe requests for payment over the RTP network via an alias, such as a cell phone, or an email address.
Speaker Change: This Innovation is designed to unlock meaningful value for both commercial and consumer clients accelerating cash flow, improving reconciliation and delivering real-time confirmations.
William Rogers: Let me discuss that in detail on slide 7. We continue to see strong momentum in our digital strategy with meaningful progress, platform integration, engagement, and production. In the second quarter, digital account production rose 17% year over year, with 43% of new-to-bank clients joining us through digital channels, a 900 basis point increase versus the second quarter of last year. This momentum reflects investments we've made in our digital platform and improvements we've made to the digital onboarding experience.
Speaker Change: These enhancements along with continued investments in our team, have driven a meaningful increase in treasury management, penetration rates with our existing clients and helped drive a 14% increase in treasury management. Revenue versus the second quarter of last year, enhancing the client experience and growing our digital capabilities are also important parts of our strategy. Let me discuss that in detail on slide 7.
Speaker Change: We continue to see strong momentum in our digital strategy with meaningful progress platform, integration engagement and production. In the second quarter, digital account production Rose 17% year-over-year with 43% of new to bank clients joining us through digital channels uh 900 basis point in Grace versus the second quarter of last year.
William Rogers: A key milestone this quarter was fully integrating Lightstream lending products into our digital platform under the new Lightstream by Truist brand. This integration expands access to lending solutions for all Truist clients and further strengthens our digital offering. We're also seeing deeper engagement across our digital platform. More than 1.8 million clients are now using our digital financial management tools. And that's a 40% increase from last year.
Speaker Change: This momentum reflects Investments, we've made in our digital platform and improvements we've made to the digital onboarding experience.
Speaker Change: A key Milestone, this quarter was fully integrating live stream. Lending products into our digital platform under the new light stream by truist brand.
Speaker Change: This integration expands access to Lending Solutions for all truist clients and further strengthens our digital offering.
William Rogers: Together, these results highlight the strength of our digital foundation and our continued focus on delivering value, operating efficiently and deepening client relationships. We expect to continue growing our digital presence with clients as we further leverage our modern and scalable technology platform.
Speaker Change: Clients are now using our digital financial management tools, and that's a 40% increase from last year.
Michael Maguire: Now let me turn it over to Mike to discuss our financial results in more detail, Mike. Thank you, Bill, and good morning, everyone. I'll start with our financial performance highlights on slide 8. We reported second quarter 2025 gap net income available to common shareholders of $1.2 billion or $0.90 per share. As Bill mentioned, included in our results are $0.02 per share of restructuring charges, which are primarily related to severance. In addition, our results included an $18 million pre-tax loss or a penny-per-share after-tax related to the sale of $398 million of lower-yielding investment security. We invested the proceeds from the sale into higher-yielding investment securities and anticipate an earnback of approximately two years.
Speaker Change: Together, these results highlight the strengths of our digital foundation and our continued focus on delivering value, operating efficiently, and deepening client relationships, we expect to continue growing. Our digital presence with clients. As we further leverage, our modern and scalable technology platform.
Now, let me turn it over to Mike to discuss our financial results in more detail. Mike.
Mike: Thank you, Bill, and good morning everyone.
Mike: I'll start with our financial performance highlights on slide 8.
Mike: We reported second quarter 2025, gaap, net income available to Common shareholders of 1.2 billion dollars or 900 cents per share. As Bill mentioned included in our results are 2 cents per share of restructuring charges which are primarily related to Severance. In addition, our results included an 18 million pre-tax loss or a penny per share after tax related to to the sale of 398 million of lower yielding investment securities.
Michael Maguire: Moving now to 2Q25. Adjusted Revenue increased 2.1% in late quarter due to 2.3% growth in that interest income and 1.8% growth in non-interest. Adjusted expenses increased 3.1% linked quarter, primarily due to higher personnel expenses related to annual merit increases and strategic hiring efforts. As Bill mentioned, our asset quality metrics showed improvement in both non-performing loans and net charge-offs declined on a linked quarter basis and year-over-year basis.
We invested the proceeds in the sale and to higher yielding investment Securities and anticipate and earn back of approximately 2 years.
Mike: Moving out the 2q 25 results.
Adjusted Revenue, increased 2.1% link quarter due to 2.3% growth and that interest income and 1.8% growth in non-interest income.
Adjusted expenses, increased 3.1% linked quarter, primarily due to higher Personnel, expenses related, to annual Merit increases and strategic hiring efforts.
Michael Maguire: Next, I'll cover loans and leases on slide. Average loans held for investment increased 2% on a linked order basis due to growth in both average commercial and average consumer loans. End of period loans increased $10.2 billion or 3.3% split evenly between commercial and consumer loans. average commercial loans increased $3 billion or 1.6% due to $3.3 billion of growth in C&I loans, partially offset by modest declines in CRE and commercial construction loan balance.
Mike: As Bill mentioned, our asset quality metrics showed Improvement as with non-performing loans and net charge offs declined on a linked quarter basis and year-over-year basis.
Mike: Next, I'll cover loans and leases on slide 9.
Mike: Average loan held for investment increased 2% on a linked border basis due to growth in both average commercial and average Consumer loans.
Mike: End of period loans, increased 10.2 billion or 3.3%, split evenly between commercial and Consumer loans.
Average commercial loans, increased 3 billion or 1.6% due to 3.3 billion of growth in cni loans. Partially offset by Modest declines in CRA and commercial construction loan balances.
Michael Maguire: In our consumer portfolio, average loans increased 3.2 billion or 2.7% linked quarter due to growth in residential mortgage, indirect auto and other Other consumer loans, which primarily includes Sheffield and Service Finance, are typically seasonally strongest in the second and third quarters of the year, but are also benefiting from new partners and dealers added to the platforms throughout the For more information visit www.FEMA.gov Moving to deposit trends on slide 10. Average deposits increased $8.3 billion sequentially, or 2.1%, driven by growth in interest checking, time deposits, and non interest bearing demand. Average deposit balances were impacted by $10.9 billion of short term client deposits that we discussed on last quarter's earnings These deposits remained on our balance sheet for the entire quarter, but have since been withdrawn.
Mike: In our Consumer Portfolio, average loans, increased 3.2 billion or 2.7% linked quarter, due to growth in Residential Mortgage indirect Auto and other consumer.
Mike: Other Consumer loans which primarily include Sheffield and service finance are typically seasonally strongest in the second and third quarters of the year but are also benefiting from new partners and dealers added to the platforms throughout the course of the year.
Mike: Moving to deposit, Trends on slide 10.
Mike: Average deposits, increased 8.3 billion sequentially or 2.1% driven by growth in interest, checking time, deposits and non-interest bearing demand.
Mike: Average deposit balance is were impacted by 10.9 billion dollars of short-term client. Deposits that we discussed on last quarter's earnings call.
Michael Maguire: Excluding the impact of these deposits, average deposit balances would have been down slightly on a linked order basis. As shown in the chart on the bottom right-hand side of slide 10, our cumulative interest-bearing deposit beta declined from 43% to 37% on a linked quarter-based basis. If you were to exclude the impact of the two larger short-term deposits, the rate paid on interest-bearing deposits and our cumulative interest-bearing deposit beta would have been relatively stable.
Mike: these deposits remained on our balance sheet for the entire quarter but have since been withdrawn
Excluding the impact of these deposits average deposit. Balances would have been down slightly on a linked border basis.
Mike: As shown in the chart on the bottom right hand side of slide 10, our cumulative, interest bearing deposit beta declined from 43% to 37% on a linked quarter basis. If you were to exclude the impact of the 2, largest the rate paid on interest bearing, deposits, and our cumulative. Interest bearing deposit data would have been relatively stable.
Michael Maguire: Moving an interest income and interest margin on slide 11. Factible equivalent net interest income increased 2.3% linked quarter or $80 million, primarily due to the impact of loan growth, fixed asset, fixed rate asset repricing, and one additional day in the second quarter. Our net interest income or margin increased one basis point on a linked quarter basis to 3.02%.
Mike: Moving to net interest income and net interest, margin on slide 11.
Taxable equivalent net interest income, increased 2.3%, linked quarter or eighty million dollars, primarily due to the impact of lung growth. Fixed asset.
Mike: Uh, fixed rate, asset repricing and 1 additional day in the second quarter.
Michael Maguire: As you can see on the top right-hand side of the slide, we updated our outlook for fixed-rate asset repricing. We expect to reprice approximately $27 billion of fixed-rate loans and investment securities over the remainder of 2025. Depending on the level of loan and deposit growth in the second half of 2025, we may opt to use cash flow from the investment portfolio to fund a portion of our loan growth for the remainder of the year. Based on our current view of interest rates for the remainder of 2025, we anticipate that new fixed rate loans will have a run on rate of around 7% compared with a runoff rate of approximately 6.4%.
Mike: Our net interest income or margin increased 1 basis, point on a linked quarter basis to 3.02%.
Mike: As you can see, on the top right hand side of the slide, we updated our outlook for fixed rate, asset repricing.
Mike: We expect to reprice approximately 207 billion dollars of fixed rate loans and investment Securities over the remainder of 2025.
Mike: Depending on the level of loan and deposit growth in the second half of 2025, we may opt to use cash flow from the Investment Portfolio to fund a portion of our loan growth for the remainder of the year.
Mike: Based on our current view of interest rates. For the remainder of 2025, we anticipate that new fixed rate. Loans will have a run-on rate of around 7% compared with a runoff rate of approximately 6.4%.
Michael Maguire: We also updated our SWOT portfolio disclosure in the bottom right-hand corner of the slide.
Michael Maguire: This reflects a small increase in our Received Fixed SWOT Program from the prior Earned a non-interest income on slide 12. Adjusted non-interest income increased $25 million or 1.8% versus the first quarter of 2025, as growth in our other income was partially offset by lower investment banking and trading revenue. A late quarter increase in non-interest income was primarily attributable to an $83 million increase in other income related to higher NQDCP income, which is offset by personnel expense and income from certain equity investments and other investments that were lower in the first quarter of 2025.
Mike: We also updated our swap portfolio disclosure in the bottom right hand corner of the slide. This reflects a small increase in our received fixed swap program from the prior quarter.
Mike: During the non-interest income on, slide 12.
25 million or 1.8% versus the first quarter of 2025 as growth. In our other income was partially offset by lower Investment Banking and trading Revenue.
Michael Maguire: Investment banking and trading income declined $68 million, or 25% linked order, reflecting weaker trading results, lower capital markets activity, and lower M&A volumes during the first half of the second quarter. Early in the quarter, our trading business, which primarily supports our investment banking franchise, incurred losses driven by market volatility. The month of May was much improved, and June was more consistent with the performance we have historically experienced in this business and would expect to perform for the remainder of the year. As Bill mentioned, we also saw improvement in investment banking in the second half of the quarter, and we remain optimistic about investment banking and trading revenue improving in the second half of 2025, based on our current pipeline and an improvement in overall equity.
Mike: The link quarter increase in non-interest income was primarily attributable to an 83 million increase in other income related to higher nqdc income, which is offset by personal expense, and income from certain Equity, Investments, and other Investments that were lower in the first quarter of 2025,
Mike: Investment Banking and trading income to decline, 68 million or 25%, link order reflecting weaker trading results, lower, Capital, markets, activity and lower m&a volumes during the first half of the second quarter.
Mike: Early in the quarter, our trading business, which primarily supports our investment banking franchise incurred, losses driven by market volatility the month of May was much improved in June was more consistent with the performance. We have historically experienced in this business and would expect to perform for the remainder of the year.
Mike: As Bill mentioned, we also saw Improvement in Investment Banking in the second half of the quarter. And we remain optimistic about Investment Banking and trading Revenue, improving in the second half of 2025 based on our current Pipeline and an improvement in overall activity.
Michael Maguire: On a light quarter basis, adjusted non-interest income declined to $20 million or 1.4% compared to the second quarter of 2024, primarily due to lower investment banking and trading income and lower wealth management income due to the sale of Sterling Capital Management in July 2020.
Michael Maguire: Next, I'll cover non-interest expense on slide 13. Adjusted non-interest expense, which excludes the impact of restructuring charges, increased 3.1% linked border, due primarily to higher personnel expenses related to annual merit increases and strategic hiring efforts. On a year over year basis, expenses remain well controlled and we're up 2.1% due primarily to higher professional fees and outside processing expense related to ongoing investments in technology and in our risk .
Mike: On a light quarter basis, adjusted non-interest income declined, 20 million or 1.4%. Compared to the second quarter of 2024, primarily due to lower Investment Banking, and trading income, and lower wealth management income, due to the sale of Sterling Capital Management in July 2024,
Mike: Next I'll cover non-interest expense on slide 13.
Mike: adjusted non-interest expense, which excludes the impact of restructuring charges, increased 3.1% link border view primarily to higher Personnel, expenses related, to annual Merit increases and strategic hiring efforts
On a year-over-year basis expenses remained well controlled and we're up 2.1% due primarily to higher professional fees and outside processing expense related to ongoing investments in technology and in our risk infrastructure.
Michael Maguire: Moving now to asset quality on slide 14. Our asset quality metrics remain strong on both a like and linked order basis, reflecting our strong credit risk culture and proactive approach to quickly resolving problem loans. Net charge-offs decreased nine basis points to 51 basis points in the quarter, and we're down seven basis points versus the second quarter of 2024, as we benefited from lower consumer and CRE losses on both a linked and like quarter basis.
Mike: Moving now to asset quality on slide 14.
Mike: Our asset quality metrics remain strong on both a like and linked order basis reflecting our strong credit risk culture and proactive approach to quickly. Resolving problem loans.
Mike: Net charge offs decreased 9 basis points to 51 basis, points link quarter, and we're down 7 basis points versus the second quarter of 2024. As we benefited from lower consumer and CRA losses on both a linked and like quarter basis.
Michael Maguire: Our loan loss provision exceeded net charge-offs by $92 million, but improved outlook for loss rates in certain portfolios like CRE Office and Multifamily contributed to a four basis point decrease in our ALLL ratio to 1.54% of total loans. Our CRE office portfolio, which represents just above 1% of total loans, declined almost $500 million linked order on an end of period basis. Non-performing loans help for investment as a percentage of total loans decreased nine basis points in a quarter and seven basis points on a light quarter basis to 39 basis points of total loans. We saw a linked quarter improvement in several categories, including CRE and C&I non-performing loans, which helped drive our non-performing loan level to multi-quarter lows.
Mike: Our loan loss provision exceeded, net charge offs by 92 million but improved outlook for loss rates in certain portfolios like CRA office and multi family contributed to a 4L ratio to 1.54% a total loans.
Mike: Our CRA office portfolio which represents just above 1% of total. Loans declined almost 500 million linked border on an end of period basis.
Mike: Non-performing loans held for investment as a percentage of total loans decreased 9 basis points link order and 7 basis points on a light quarter basis. To 39 basis points of total loans,
Michael Maguire: Bernie DeCapito on slide 50. On a linked quarter basis, our CET1 ratio declined 30 basis points to 11% as balance sheet growth, $750 million of share repurchases, and the payment of our common dividend more than offset our period earnings. Our CT1 capital ratio, including the impact of AOCI, declined 30 basis points link quarter to 9.3%, reflecting the aforementioned factors.
Mike: We saw linked quarter Improvement in several categories, including CRA and cni non-performing Loans. Which helped Drive our non-performing loan level to multi-quarter loans.
Mike: According to Capital on slide 15.
Mike: On a linked quarter basis. Our cet1 ratio declined, 30 basis points to 11% as balance sheet growth, 750 million of share repurchases. And the payment of our common dividend more than offset, current period earnings.
Michael Maguire: we also received favorable CCAR results, resulting in a 50 basis point decrease in our total loss rate, and a 90 basis point decrease in our CT1 erosion rate. As a result, we anticipate our stress capital buffer to decline 30 basis points and to be floored at 2.5% effective October. At June 30, our CT1 ratio was 400 basis points higher than our new regulatory minimum of 7%, leaving us well-positioned to both grow our balance sheet and return capital to shareholders.
Mike: Our ct1 Capital ratio, including the impact of aoci declined. 30 basis points, linked quarter to 9.3% reflecting the aforementioned factors.
During the quarter, we also received favorable, car results. Resulting in a 50 basis, point decrease in our total loss rate.
Mike: And a 90 basis point, decrease in our ct1 erosion rate. As a result, we anticipate our stress Capital buffer, to decline, 30 basis points, and to be floored at 2.5% effective October 1st.
Mike: At June 30th was 400 basis points higher than our new regulatory minimum of 7% leaving us. Well, positioned to both grow, our balance sheet and return Capital to shareholders
Michael Maguire: Next, I'll provide additional color on our guidance for the third quarter of 2025 and for the whole year. That's on slide 16. For full year 2025, our outlook for revenue and expense growth is unchanged. We continue to expect revenue to increase 1.5% to 2.5% relative to 2024 adjusted revenue of $20.1 billion. That interest income remains on track to increase 3% in 2025 versus 2024. Our net interest income outlook assumes low single digit average loan growth and two 25 basis point reductions in the Fed funds rate in September and December, compared with three previously in June, September and We expect non-interest income to remain relatively flat in 2025 versus 2021.
Next I'll provide additional color on our guidance for the third quarter uh of 2025 and for the full year. That's on, slide 16.
Mike: For full year 2025, our outlook for revenue and expense growth is unchanged. We continue to expect Revenue to increase, 1.5% to 2.5%, relative to 2024, adjusted revenue of 20.1 billion,
Mike: then interest income remains on track to increase. 3% in 25 versus 2024.
Mike: And 2, 25 basis, point reductions in the FED funds rate in September and December compared with 3 previously in June September, and December.
Mike: We expect non-interest income to remain relatively flat in 25 versus 2024.
Michael Maguire: In terms of our outlook for adjusted expenses, we continue to expect full year 2025 adjusted expenses to increase by approximately 1% in 2025 versus 2024, which is also unchanged from our previous guidance and continues to imply a positive operating leverage of approximately 50 to 150 basis points. In terms of asset quality, we expect net charge-offs of 55 to 60 basis points in 2025 compared with 60 basis points previously. Finally, we expect our effective tax rate to approximate 17.5% or 20% on a taxable equivalent basis in 2025, compared with 17% and 20% previously due to a lower contribution from non-taxable income and certain tax law changes in states in which we operate.
Mike: In terms of our outlook, for adjusted expenses, we continue to expect full year 25. Adjusted expenses to increase by approximately 1% in 2025 versus 2024, which is also unchanged from our previous guidance and continues to imply a positive operating leverage of approximately 50 to 150 basis points.
Mike: in terms of asset quality, we expect net charge off of 55 to 60 basis points in 2025 compared with 60 basis points, previously
Mike: Finally, we expect our effective tax rate to approximately to approximate 17.5% or 20% on a taxable equivalent basis in 2025, compared with 17% and 20% previously. Due to a lower contribution from non-taxable income and certain tax law changes in States, in which we operate.
Michael Maguire: Looking into the third quarter of 2025, we expect revenue to increase approximately two and a half to three and a half percent relative to second quarter revenue of $5.1 billion. We expect net interest income to increase approximately 2% in the third quarter, primarily driven by loan growth, the benefit from fixed asset repricing, and an additional day in the third quarter relative to the second quarter. We expect non-interest income to increase by about 5%, driven primarily by higher investment banking and trading income, partially offset by lower other income. Adjusted expenses of $3 billion in the second quarter are expected to increase about 1% linked As it relates to buybacks, as Bill mentioned, we plan to target up to $500 million for the third quarter.
Looking into the third quarter of 2025, we expect Revenue to increase, approximately 2 and a half to 3, and a half percent relative, to second quarter revenue of 5.1 billion.
Mike: We expect that interest income to increase approximately 2% in the third quarter, primarily driven by loan growth. The benefit from fixed asset through pricing and an additional day in the third quarter, relative to the second quarter,
Mike: We expect non-interest income to increase by about 5% driven primarily by higher Investment Banking and trading income partially offset by lower other income.
Adjusted expenses of 3 billion. In the second quarter are expected to increase about 1% linked for order.
William Rogers: So with that, I'll hand it back to Bill for some final remarks. Great. Thanks, Mike.
Mike: As it relates to BuyBacks. As Bill mentioned, we plan to Target up to 500 million for the third quarter.
Mike: So with that, I'll hand it back to bill for some final remarks. Right? Thanks Mike.
William Rogers: Beginning of the year, we outlined several strategic priorities that would be key to driving our performance this year and beyond. These top priorities included a keen focus on executing our strategic growth initiatives, driving positive operating leverage, continuing to invest in talent and technology, maintaining our credit and risk discipline, and returning capital to shareholders. Although there's still a significant amount of opportunity that lies in front of us, I'm pleased with both the performance and the momentum at the midpoint of this year. We're seeing solid progress. and our key strategic focus areas including premier banking, wealth, payments and middle market as production deepening with our existing client base and banker productivity have increased in all areas of our business.
Mike: At the beginning of the year, we outline several strategic priorities that would be key to driving our performance this year and Beyond these top priorities included a keen focus on executing our strategic growth initiatives.
Driving positive operating leverage continuing to invest in talented technology. Maintaining our credit and risk discipline and returning Capital to shareholders.
Mike: Although there's still a significant amount of opportunity that lies in front of us. I'm pleased with both the performance and the momentum at the midpoint of this year.
Mike: We're seeing solid progress.
William Rogers: We also remain on track to deliver our goal of positive operating leverage in 2025, despite what's turned out to be a more challenging first six months in our investment banking and trading business. We continue to invest in important areas like talent, technology, and our risk infrastructure to improve the client experience. Our credit and risk discipline has remained strong as evidenced by favorable CCAR results and the improvement in asset quality metrics, which currently sit at multi-quarter lows. Finally, our strong capital position continues to afford us the ability to grow our balance sheet while also returning more than $2.6 billion worth of capital to our shareholders through the first half of the year.
Mike: In our key strategic Focus areas, including Premier Banking, well, payments, and Middle Market as production, deepening with our existing client base and Banker productivity have increased in all areas of our business.
Mike: We also remain on track to deliver our goal of positive operating leverage in 2025. Despite what's turned out to be a more challenging first 6 months in our investment banking and trading business
Mike: We continue to invest in important areas like Talent technology and our risk infrastructure to improve the client experience.
Mike: Our credit and risk discipline has remained strong as evidenced by a favorable ccar results and the Improvement in asset quality metrics which currently sit at multi quarter lows.
William Rogers: We will remain focused on these key strategic initiatives as we strive to generate better returns and greater shareholder value over time. I am optimistic as ever about our future, especially in light of the momentum that I see every day inside our company.
Finally, our strong Capital position continues to afford US, the ability to grow our balance sheet while also returning more than 2.6 billion dollars worth of capital to our shareholders, through the first half of the year.
Mike: We will remain focused on these key strategic initiatives as we strive to generate better returns and greater shareholder value over time.
William Rogers: I want to pause and thank all of our incredible teammates for their purposeful focus and productivity in moving our company forward. So thank you all for your interest in Truist.
Mike: I am optimistic as ever about our future, especially in light of the momentum that I see every day inside our company.
Mike: Want to pause and thank all of our incredible teammates for their purposeful focus and productivity. Uh, and moving our company forward.
Bradley Milsaps: And with that, let me turn it over, Brad, for Q&A. Thank you, Bill.
So thank you all for the your interest in truist and with that let me turn it over to Brad for Q&A.
Betsy Graseck: Betsy, 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 freely limit yourselves to one primary question and one follow-up in order to accommodate as many of you as possible today.
Speaker Change: Thank you, Bill Betsy 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 participants to please room yourselves to 1 primary question and 1 follow-up in order to accommodate as many of you as possible today.
Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: We will now begin the question.
Speaker Change: Session.
Speaker Change: to ask the question, you may press star then 1 on your touchtone phone,
Operator: If at any time your question has been addressed and you would like to withdraw your question please press star then 2. We ask that you limit yourself to one question and one follow up.
Speaker Change: If you are using a speaker-phone, please pick up your handset before pressing the keys.
Speaker Change: if at any time your question has been addressed and you would like to withdraw your question, please press star then 2
Speaker Change: We ask that you limit yourself to 1 question and 1, follow-up.
Operator: At this time, we will pause momentarily to assemble our roster.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Scott Siefers: The first question today comes from Scott Siefers with Piper Samar. Please go ahead. Morning, everyone. Thank you for taking the question. Bill, was really nice to see the strong loan growth.
Speaker Change: The first question today comes from Scott. Sifers with Piper Sanders, please go ahead.
William Rogers: I was hoping you could spend just a quick second sort of expanding upon your thoughts on sort of overall sentiment among your customer base, I guess, especially on the interested on the commercial side, but you know, maybe kind of across the portfolio given the stronger second quarter. Yeah, Scott, thanks for for recognizing that. You know, it's it's interesting.
Scott Sifers: Strong loan growth, um, was hoping to could spend just a, a quick second, sort of expanding, upon your thoughts, on sort of overall, um, sentiment among your customer base, I guess, especially on the, the interested on the commercial side. But, you know, maybe kind of across the the portfolio, given the, the stronger second quarter.
William Rogers: So on the on the let me start with the consumer side. First, you know, our consumer business continues to be really strong consumers are staying in the game. The quality of the consumer, particularly as it relates to our portfolio continues to be continues to be strong. So we've had really good credit quality. As part of this, as part of this production, that's been a lot of initiatives and things that things that we've put that we put forth. And it also a lot of product specific things. So things we're doing in service finance and doing in Sheffield and doing in Lightstream.
Yeah, Scott thanks for for recognizing that, you know? It's it's interesting. So on the on the what, maybe start with the consumer side first, you know our our consumer business continues to be really strong. Consumers are staying in the game. Uh the quality of the consumer, a particularly as it relates to our portfolio continues to be uh continues to be strong. So we've had really good credit quality uh as part of this uh as part of this production that's been a lot of the initiatives and things that things that we've put, uh, that we've put forth.
William Rogers: So we're relevant to how consumers want to borrow. And I think that's a really important component of our growth story on the consumer side in terms of loans.
William Rogers: As it relates to the wholesale, the wholesale side, you know, that's our clients also came into this with with a lot of strength, you know, so a lot of liquidity got through sort of the post COVID supply chain and all those issues. Still some wait and see in fairness. I mean, I think I think I'm really pleased with our results, given the fact that there's still some uncertainty out there. Some certainty was, you know, cleared in the last several weeks, think about the tax bill, think about some of the other things that have that have that have come in place.
Scott Sifers: Um, and it also is a lot of product specific things. So things we're doing in service finance and and doing in Sheffield and doing in light stream. So we're, uh, relevant to how consumers want to borrow. And I think that's a really important component of, uh, of our growth story on the consumer side, in terms of loans, as it relates to the wholesale, uh, the wholesale side
Scott Sifers: You know, it's our clients also came into this, with, with a lot of strength, you know? So a lot of liquidity, uh, got through sort of the postco supply chain and all those issues. Uh,
William Rogers: A lot of our activity, which I'm really happy about is with new clients. So these are new to Truist. So clients who, you know, are wanting to experience what we have to offer are impressed with our purpose driven focus, impressed with the products and capabilities. I talked a little bit about treasury management and whatever. So it's some of it's some of it's Unique to Truist, some of it's unique to our markets that are really healthy. And I think we have a reason to still feel confident about where both our consumers and our business and wholesale clients are going forward.
Scott Sifers: Still some wait and see, In fairness. I mean, I think, I think I'm, I'm really pleased with our results, given the fact that there's still some uncertainty out there. Some certainty was, you know, cleared in the last several weeks, think about the tax bill, think about some of the other things that have that have that have come in place. Uh, a lot of our activity, which I'm really happy about is with new clients. Uh, so these are new to truist. Uh, so clients who, you know, are, are, are wanting to experience the what we have to offer, or impress with our purpose-driven, uh, focus and press, with the products and capabilities. I talked to a little bit about treasure management or whatever. So it's some of its some of its
unknown: Terrific.
Scott Sifers: Unique to truist. I know that's unique to our markets that are that are really healthy. Uh, and I think we have a reason to still feel confident about where our both, our consumers and our business and wholesale clients are going forward.
unknown: Okay, thank you.
Michael Maguire: And then, Mike, I was hoping you could, apologies if you mentioned this in your prepared remarks, but just given the small step down in the anticipated pace of repurchase in the third quarter, and I understand, you know, April, in particular, might have presented kind of a unique opportunity on pricing, but, you know, maybe just sort of thoughts on why the step down in the anticipated pace of repurchase, and then just thoughts on sort of broader capital management ambitions, especially given the lower SCB results. Yeah, no problem, Scott. You know, for us, the 750 versus 500 really was opportunistic as we as we watch the price simply present itself at a more attractive level.
Speaker Change: Terrific. Okay, thank you. And and then Mike um I was hoping you could apologize. If if you mentioned this in your prepared remarks, but just given the um small step down in the the anticipated pace of repurchase in the third quarter. And I understand, you know, April uh in particular amount of presented, kind of a a unique opportunity um on pricing but you know, maybe just sort of thoughts on
Speaker Change: Um, why they stepped down in the anticipated pace of repurchase and then to thoughts on um sort of uh broader Capital Management. Ambitions especially given the uh, the lower uh, SCB results.
Michael Maguire: You know, at 500, coupled with our dividend, we're at around 100% of total payout. And we feel like that's appropriately elevated, you know, given our current capital position. You know, if you look at the quarter and sort of year to date, we are seeing the balance sheet growth that we've all been focused on. And so we still continue to prioritize, you know, our banking franchise first, and then capital return second. So I think a return to 500 is probably a reasonable place to expect us to stay for the for the for the medium term. You know, the SEB, we were pleased with the results there.
Michael Maguire: I mean, we, I would say that our outcome was consistent with our expectations. You know, we expected, you know, in a less severe scenario to see improved loss rates. We feel like the balance sheet was, you know, in a touch better condition, you know, we appreciated some of the transparency that we saw this year with the process, saw some improvements in, you know, PPNR modeling, etc. TIH was, we feel like appropriately dealt with. So all in all, felt good about those results. I don't think that has necessarily an impact on how we think about, you know, a target operating area per capital, we've been pretty consistent that we think sort of a 10% CET1 area is appropriate.
Mike: Yeah, no, no problem Scott. You know, for us the 750 versus 500 really was opportunistic as we as we watched the price uh, simply present itself in a more attractive level, you know, at 500 coupled with our our dividend. We're at around 100% of total of total payout, uh, and we feel like that's appropriately elevated, you know, given our current capital position, you know, you look at, if you look at the quarter and sort of year to date, we are seeing the balance sheet growth that we've all been focused on. And so we still continue to prioritize, you know, our our, our banking franchise first and and then Capital return second. So I think a return to 500 is, is probably a reasonable place to expect us to stay, uh, for the, for the, for the medium-term. Um, I, you know, the Seb, we were pleased with the results there. I mean, we um, I I would say that our outcome was consistent with our expectations. You know, we expected you know, in a less severe scenario to see improved loss rates. Um, we feel like the balance sheet was, uh,
Michael Maguire: You know, if you look at our result this quarter, we're at 11% stated. And 9.3 adjusted for AOCI and you sort of split, split the middle is sort of 10. And so I think you'll see us continue to glide towards towards that 10% area, you know, assuming by the way that we we see a rule finalized at some point here.
Mike: In a touch better, uh, condition. You know, we appreciated some of the transparency that we saw this year with the process also improvements in, you know, pp&r modeling Etc. Tih was we feel like appropriately, dealt with. So all in all felt good about those results. I don't think that has necessarily an impact on how we think about, you know, a Target operating area for Capital. We've been pretty consistent that we think uh, sort of a 10 percenter, we're at 11% stated and 93 adjusted for aoci and you sort of split. Split, the middle is sort of 10 and so I think you'll see us continue to Glide towards towards that 10% area. You know, assuming, by the way that we, we see a rule finalized at some point here.
unknown: Test.
unknown: Perfect. All right.
unknown: Thank you all very much.
Mike: Okay, perfect. All right, thank you all very much.
Ken Ustin: The next question comes from Ken Ustin with Autonomous Resources. Please go ahead. Hey, thanks. Good morning, everyone. I was wondering if we could start, you talked about the deposit costs and some of those higher costs coming off already in the second quarter. Just talk about underlying deposit competition. And you obviously are seeing good loan growth and you're funding that incrementally as well. And what do you expect to see in terms of deposit costs from here, you know, ahead of getting any incremental help from rate cuts? Thanks. Got it. Thank you.
Ken Austin: The next question comes from, Ken, Austin with. Please go ahead.
Ken Austin: Um, uh, I was wondering if we could start. Um, you talked about the the deposit cost and some of those higher costs. Uh, coming off already in the second quarter, just going to talk about underlying deposit competition. And um, and obviously you are seeing loan, good loan growth in your funding that incrementally as well. And what you expect to see in terms of deposit costs from here, you know ahead of getting any incremental, Health from rate Cuts. Thanks
Speaker Change: Sure yeah, good morning Ken. I'll start with that 1 and, you know, maybe bill, you can add but you know, I'd say, you know, first and foremost, we're we're pretty pleased by how the deposit franchise is performing. We've seen some real strength, especially on the consumer side of things. Um, it is competitive we think sort of, you know, rationally competitive. Um, but, um, but look, you know, we had a little bit of noise in the second quarter with the uh with the large sort of temporary m&a, related, deposits, uh X, those deposits, we would have been down a touch that would have been consistent with what we would have otherwise expected uh just given some seasonal tax outflows and the likes um you know, from a pricing perspective as we move into sort of the third quarter and the fourth quarter, I think just losing the 109 uh, that we footnoted in our, in our disclosure, we would expect to see balances probably a little bit lower uh in the third quarter, but we would expect to make up hopefully some ground on pricing. So maybe you see the betas move, you know, closer to a 40.
Speaker Change: Area, or so. Now, by the way, I think that that contemplates a cut even though it's late. Um, we think we might have some ability to, to get a touch ahead of that. And then the fourth quarter we would expect continued momentum. You know, if we get that second cut in the fourth quarter, um, you know, maybe, uh you start to see a little bit better rotation into some of the checking products continued momentum on the production side and consumer. Uh, and in in wholesale, by the way, we've been onboarding a number of bankers and our new uh, sort of uh, corporate and Commercial Banking, um, you know, hiring and so feel pretty good that we we might see a little bit of a bounce in the fourth quarter. We also have public funds coming online in the fourth quarter and you know look all things equal in our Outlook we assume getting back to sort of a mid-40 beta by the end of the year again. That's what 2 Cuts. Yeah. Maybe, maybe I'd add 10 on the, you know, competitive side. Uh, maybe sort of break it up a little bit on the consumer side. You know, we've sort of got 2 2 prongs going going really well right now, 1 is the net new story, which is really
Speaker Change: Really important. So we're, you know, we're adding adding relationships. Uh, and and as I mentioned, there are more profitable younger, uh, higher median income. So so really good, net new story, and then our deepening story with existing with existing relationships. So that's also a really strong part of our part of our component here and and growing not only the net new but also growing the overall balance. So you saw some pretty good growth on the consumer side. Um, you know, really good growth and
Some of our expansion markets which we've talked about and then maybe more importantly, we really, you know, we had some contraction In fairness and some of our key markets and those are reversing. So think about markets like Charlotte Tampa, Etc, where we're really pleased with what we're seeing in some of the, uh, some of the share early, share numbers and those markets. So our relative uh, competitiveness is is increased significantly. Mike talked a little bit about the wholesale side. Uh, you know, I, I'm, I feel like we're we're building momentum there, you know? So, if we think about the new relationships that we're bringing in, uh, much deeper penetration with those relationships. They're now coming with treasury relationships deposits, tend to follow that. So I think we have a good uh, you know, sort of some leading good leading indicators on the wholesale side as we uh as we think about uh think about the deposit franchise. So, I feel good about the momentum, it is competitive, but most importantly, I feel really good about our competitive positioning. I don't think we've actually been better positioned than we are right now.
Ken Ustin: And just a second question on the fee side. You mentioned the, you know, obviously we knew about the IB softness in April. You also mentioned the trading. Is there a way you can help us understand like what that bounce back looks like? You know, amidst your commentary about just, you know, stronger expectations and, and also just, do we know how big that DCP benefit was on the other side as well? Thank you.
Speaker Change: Got it. Thank you. And just a second question, on the B side you mentioned the, you know, obviously we knew about the IB softness in April. You also mentioned the trading is there a way you can help us understand like what that bounce back looks like, you know, amidst this your your commentary about just, you know, stronger expectations and and and and and also just um, do we know how big that DCP uh benefit was on the other side as well? Thank you.
Michael Maguire: Yeah, sure, Ken. On the trading and banking side, what I'd say is we saw weakness in both, especially in the month of April, and then May a little better, and then June almost fully recovered. And actually, if you look even into July, we're seeing more normalized results.
Michael Maguire: And so I think it's been that trend that gives us the confidence that in the third quarter, we'll be back to a normalized level, and again, also in the fourth. What's your second question on the on the non ball? Yeah. Yeah, so let's see, in the quarter, non-QAL was better, I think $25 million. And so where you'll see that from a geography perspective is an other income, you're higher, but from a PPR perspective, it's neutral because you also would see an increase in personnel expense. by a similar amount. Okay, perfect. Got it. Great.
Ken Austin: Uh, yeah, sure. Ken on the trading and banking side, what I'd say is, we saw weakness in both in the month of April, um, and then met a little better and then June almost almost fully recovered. And actually, if you look even into July, we're seeing, uh, more normalized results. And so, I think it's been that Trend that gives us, uh, that gives us the confidence that, you know, in the third quarter we'll be back to a normalized level and and and again also in the in the 4. What's your second question on the, on the naanalle?
Speaker Change: Yes, yes.
Speaker Change: Better, I think 25 million and so where you'll see that from a geography perspective is another income, you're higher, but from a ppnr perspective, it's neutral because you also would see an increase in, um, uh, in Personnel expense.
Ebrahim Poonawala: Thank you. The next question comes from Ebrahim Poonawala with Bank of America. Please go ahead. Good morning.
Speaker Change: By a similar amount. Okay, perfect. Yeah. Got it. Great. Thank you.
Speaker Change: Yep.
Aala: The next question comes from aala with Bank of America. Please go ahead.
Michael Maguire: I guess two questions, maybe Mike, for you, as we think about the trajectory of how we get to a 15% ROTC, or at some point, when I look at the operating leverage, and you spell it out very clearly on slide eight, just talk to us. There wasn't much this quarter, it was barely anything in the first quarter. As we think about the positive operating leverage kicking in. Is it back half loaded? Was that sort of the view or do we need a meaningful pickup in fee revenue growth to actually drive that in order to get sort of narrow that gap to the 15%?
Speaker Change: Good morning, I guess. Uh 2 questions maybe Mike for you as we think about the trajectory of how we get to a 15% rot CEO at some point when I look at the operating leverage and you spell it out very clearly on slide 8,
Just talk to us. There wasn't much this quarter, it was barely anything in the first quarter as we think about the positive operating leverage kicking in
Michael Maguire: Thanks. Yeah, I think, I think there's a variety of things that are going to contribute to improve profitability and returns. Ebrahim, you know, you hit on one, you know, we do have an expectation, you know, we've talked a lot about the initiatives that we've, you know, have undertaken the investments that we're making to improve just the our ability to drive more, I'll call it capital efficient revenue through our existing sort of asset base and client base. Some of that, you know, product, some of that deepening with existing clients, some of that's continued to invest in our businesses like wealth, like our wealth products, like investment banking.
Speaker Change: Is it back half loaded? Was that sort of the view or do we need a meaningful pickup in fee Revenue growth to actually drive that in order to get uh sort of narrow that Gap to the 15%? Thanks
Michael Maguire: So, so yes, you know, and then, of course, also, we expect to see some improvements in our in our margin, you know, we're seeing the fixed asset repricing phenomena that should continue for the rest of this year and next year. You know, we're going to continue to drive sort of smart growth. You know, funding is obviously a really important part of that. We're very, very focused on continuing to drive client deposit growth. That's not always perfectly matched. You're seeing that this quarter where loan growth is perhaps a touch ahead of deposit growth. That doesn't mean that we're not, you know, very, very focused on continuing to drive balances and operating accounts and, and so on and so forth.
Yeah, I think I think there's a a variety of things that are going to contribute to improved profitability, uh and returns Ibrahim, you know, you hit on 1, you know, we do have an expectation, you know, we've talked a lot about the, the initiatives that we've, you know, have undertaken the Investments that we're making to improve just the our ability to, to, to drive more. I'll call it capital efficient Revenue through our existing sort of asset base and client base. Uh, some of that, you know, products some of that deepening with existing clients, some of that continue to invest in our businesses like wealth, like our wealth products, like investment banking, so, so yes. Um, you know, and then of course also we expect to see some improvements in our in our margin. You know, we're seeing the fixed asset repricing phenomena that should continue, uh, for the rest of this year. And next year, um, you know, we're going to continue to drive sort of smart growth. Um, you know, funding is obviously a really important part of that. We're very, very focused on continuing to drive client deposit growth. That's not always perfectly m.
Michael Maguire: So it's not going to be an overnight story. But we should continue to see, you know, sort of continuous improvement in that in that ROTC. Got it.
Speaker Change: Matched. You're seeing that this quarter where lung growth is, perhaps a touch ahead of deposit growth. That doesn't mean that we're not, you know, very, very focused on continuing to drive balances, and operating accounts and, and so on and so forth. So it's not going to be an overnight story, um, but we should continue to see, you know, sort of continuous Improvement in that, in that Rosy.
William Rogers: And I guess, Bill, I think you mentioned in your prepared remarks around the RTP capability. I'm just wondering the significance of that in terms of getting more commercial deposits like is, is there a case to be made where you could see a much increased wallet share on the commercial clients where you've been making a big push? Just give us a sense of how we should think about that opportunity, particularly as it relates to fee revenue or deposit growth. Yeah, thanks. I mean, I highlighted one product, so it's not, you know, one product doesn't drive, but it's, but I think it's just evidence of our innovation, and evidence by our overall improvement.
William Rogers: So treasury management fees being up 14%, you know, much more deepening with the wholesale relationships, the new relationships come now, you know, with with treasury management penetration that more reflects what we think the back book can get to. So it's a combination of a lot of things, and our overall relevance to to clients, that specific product is sort of a unique product that allows, you know, clients to have, you know, faster, safer disbursements with with the consumer side. So it's a nice sort of meat of the consumer and the and the wholesale side in terms of terms how to have funds flow.
Speaker Change: Got it and I guess Bill I think you mentioned in your prepared remarks around the RTP capability. I'm just wondering the significance of that. In terms of getting more commercial deposits. Like is is, is there a case to be made where you could see a much increased wallet share on the commercial clients? Where you've been making a big push? Just give us a sense of how we should think about that opportunity, particularly as it relates to fee, revenue or deposit growth. Thanks, yeah, thanks. Uh, I mean, I highlighted 1 product so it's not, you know, 1 product doesn't drive, but it's but I think it's just evidence of our Innovation, uh, and evidenced by our overall Improvement. So treasury management fees being up 14%, you know, much more deepening with the wholesale relationships, the new relationships come now, you know, with with treasure management, penetration that more reflects, what we think the back book can get to. So it's a combination of a lot of things, uh, and our overall relevance to, uh, to clients that spec.
William Rogers: But I think it's I think it's a of things. It's a bunch of different investments that we've made. And again, evidenced by the growth that we've seen. And I think deposits, as I said, these are leading indicators of a deposits are a bit of a lagging indicators that come with more treasured business, more operating accounts that drive that.
Speaker Change: Specific product is sort of a unique product that allows, uh, uh, you know, clients to have, um, uh, you know, faster safer, uh, uh, uh, uh, disbursements with, uh, with the consumer side. So it's a nice sort of meat of the consumer and the and the wholesale side in terms of, in terms of how to how funds flow. But I think it's, I think it's a bunch of things. It's a bunch of different Investments that we've made and again, evidenced by the growth that we've seen, uh, and I think the deposits,
unknown: Thank you.
Speaker Change: As I said, these are leading indicators. I think deposits are a bit of a lagging indicators that come with more treasured business, more operating accounts, uh, that um, drive that
Speaker Change: thank you, right?
Betsy Graseck: The next question comes from Betsy Graseck with Morgan Stanley. Please go ahead. Hi, good morning.
Betsy Graphic: The next question comes from Betsy graphic with Morgan Stanley. Please go ahead.
Betsy: Hi, good morning morning.
Michael Maguire: I wanted to turn to expenses for a minute here and understand a little bit more about the restructuring piece of the expenses that you called out because I know you mentioned Severance and wanted to understand how much of that is severance and is that severance related to the merger from years ago or something else and then also just understand a little bit more about how you're thinking about the Investments needed to continue to build. I mean, you're already building, so I'm assuming it's in run rate, but maybe you could give us a sense as to where the incremental investments you're making today, are they at pace or is there an accelerator there?
Speaker Change: I wanted to turn to expenses for a minute here and understand a little bit more about the restructuring piece of the expenses that you called out because um, I know you mentioned
Speaker Change: Severance and wanted to understand how much of that is Severance and is that Severance related to
William Rogers: Thanks.
Michael Maguire: Mike, why don't you take the first part of that and I'll take the second part of that. Yeah, I mean, all but I think $2 million of the restructuring charges in the quarter were related to severance. It was not merger related. These were repositioning of different parts of the company. I won't go into any specifics, but that's the answer to your question. Yeah, and we're always trying to continue to drive that efficiency as we go through. So I think that's not merger related, but also just restructuring and getting aligned with our strategic priorities of our businesses.
William Rogers: And then, Tim, I think your bigger question is, can you maintain a 1% expense growth and continue to invest in the company? And the answer to that is yes, because we continue to have, I mean, if you think about sort of end of 23, we put a lot of cost-saving disciplines into our company. And they continue to accrue, meaning the discipline continues to accrue. Compliments to Mike. He's done a really great job of creating a process for us that we've got a lot of discipline. We sort of know what's next up on the expense side, and we know what's next up on the investment side.
Speaker Change: Investments needed to continue to build. I mean you're already building so I'm assuming it's in run rate but maybe you could, um, give us a sense as to where the incremental Investments you're making today. Are they at PACE or is there an accelerator there? Thanks. Mike. Why don't you take the first part of that? And then I'll take the second part of that's okay. Yeah. I mean all but I think 2 million dollars of the restructuring charges in the quarter were related to Severance. Um, it was not merger related. These were repositioning of of uh, different parts of the company. I won't go into any specifics. But, but that, that's the answer to your question. Yeah. And we're we're and we're always trying to continue to drive that efficiency as we go through. So I think that's a not not merger related but also just restructuring and getting the line with our strategic priorities of, of our businesses. And then, that team, I think your bigger question is, you know? Can you, can you maintain a 1% expense growth and then continue to invest in the company. Uh, the answer. That's yes, you know, because we we continue to have a
William Rogers: So we've got a good calibration of thinking through that. And then the top priorities for investing are, yeah, I think we talked about all those, and then hopefully some of the prepared remarks, enhancing our digital platform. You've seen the results of that. Payments and product capability. I mean, I was intentional in mentioning some of the product capability that we've been investing in and seeing the results of that. Hiring and retaining talent continue to be a big part of what we're doing. And you see all those in the results. And then the infrastructure part, it's a little harder to see, but investing in the risk platforms, the data platforms, cyber controls, all the things that we need to do to make sure that we're running a great company.
Speaker Change: I mean, if you think about, you know, sort of end of 23, uh, you know, we put a lot of cost-saving, um, disciplines into our company. Uh, and they continue to accrue meaning, the discipline continues to acrew, uh, compliments to Mike. He's done a really great job of creating a process for us that we've got a lot of discipline. We sort of know what's next up on the expense side and we know what's next up on the investment side. So we've got a good calibration of of thinking
William Rogers: So I think we've got the calibration of this right that we can continue to invest in the company. Our teams and our leaders sort of get the save a dollar, invest a dollar kind of mentality.
William Rogers: And I think we've got good calibration and good understanding of those levers that the company Yeah, and the call that you gave earlier, Bill, on the payments piece was what I got from that. Tell me what I missed is that corporate treasurers can now process Activity via their cell phones 24-7. Well, it's really disbursements, they can really, the disbursements can relate to sort of how consumers want to interact. So they can have disbursements related to aliases like cell phones, as an example. So that's a really pretty big advancement. So think about how disbursements are made, that this can be done the way the client wants to receive it, and it speeds up the interaction with the business and the consumer.
Speaker Change: Through that. And then the, the top priorities for investing are, yeah, I think we talked about all those and and hopefully, some of the prepared remarks enhancing our digital platform. You've seen the results of that payments and product capability. I mean, I was intentional in mentioning some of the product capability that we've been investing in and seeing the results of that, uh, hiring and retaining Talent, you know, continue to be a big part of what we're doing and then, and you see all those in the results and then the infrastructure part, you know, it's a little harder to see, but, you know, investing in the risk platforms, the data platforms cyber controls all the things that we need to do to make sure that we're running a great company. So I I think we've got the calibration of this, this right? Uh, that we can continue to invest in the company, our, uh, our teams and our leaders sort of get the, you know, save a dollar invest, a dollar kind of mentality. Uh, and I think we've got good calibration and good, uh, understanding of those, uh, those levers of the company.
Speaker Change: Yeah, and
Speaker Change: tell me what I missed is that corporate treasurers can now process,
Speaker Change: Activity via their cell phones, 24/7.
William Rogers: So it's sort of a twofer in the sense it's really good for the companies in terms of understanding their cash flow, and really helps their businesses. So you may be thinking about the best product is more helping a client achieve their objective. And this is 24-7 real-time, is that right? Yeah, yeah, yeah. Okay, thank you so much.
Speaker Change: Well, well, it's really disbursements. It's what they can really the disbursements can relate to sort of how consumers want to interact. So they can have disbursements were related to aliases, like cellphones as an example. So that's a really pretty big advancement. So think about the, you know, how how disbursements are made that these, this can be done the way the client wants to receive it or, and the way and it speeds up the, uh, uh, the interaction with the, with the, uh, with the business and the consumer. So it's sort of a sort of, a 2, fir in the sense. It's really good for the companies, in terms of understanding their cash flow and really helps their their, their businesses. So you mean you think about the best product is when we're helping a client achieve their objectives
And this is 24/7. Real time is that right? Yeah. Yeah, yeah, yeah.
Speaker Change: Okay, thank you so much.
John Pancari: The next question comes from John Pancari with Evercore. Please go ahead. Morning. Hey, John. Just on the expense front, I know you had indicated that numbers came in a little bit the higher end of your expectation, and part of that is your investments and your hiring. Can you just talk about the flexibility there? I mean, how can you manage that, or what are the areas of managing it if you do see revenue remain stubborn here? Do you have as much flexibility given that you're still hiring in select areas and investing in the businesses and select areas of technology?
Speaker Change: The next question comes from John pinary with evercore. Please go ahead.
Speaker Change: Morning.
Speaker Change: Um, just on the expense front. I know you had indicated that, you know, numbers came in a little bit, the higher end of your expectation is part and part of that is your Investments and your and your hiring. Um, can you just talk about the flexibility there? I mean, how can you manage that? Um, or, or what are the areas of managing it? If you do see, Revenue remaining stubborn here, do you have
Michael Maguire: So can you just talk about the ability to drive the positive operating leverage regardless of the uncertainty on the top line? Yeah, John, Mike, I'll respond to that one. I mean, certain of our businesses, you know, as an example, if you look at our outlook, and you might say, well, maybe there's risk in this business. a lot of cases, you know, if we're doing our jobs, our incentive designs are performance sensitive, right? So to the extent that revenue doesn't sort of, you know, present itself, then we'll, you know, obviously take, you know, appropriate, you know, actions related to incentives.
Speaker Change: As much flexibility given that you're you're you're still hiring and select areas and investing in the businesses and select areas of technology. So can you just talk about the ability to drive the positive operating leverage regardless of the uncertainty on the top line?
Speaker Change: Yeah, John's Mike, I'll I'll respond to that when I mean certain of our businesses you know as an example if you look at our Outlook and you might say well maybe there's risk in this.
Michael Maguire: That's a part of it. I'd say like the later you get into the year, you know, just to say it, it does get a little harder to stop and start things. But, but we've actually been pretty planful as it relates to that. And so we generally keep, you know, a number of, you know, levers handy and, you know, in the top drawer, whatever, such that, you know, to the extent that the environment does change, we can be flexible. I mean, we were, I think we're crystal clear on the importance of generating positive operating leverage this year and, and into the future.
Michael Maguire: And, and so that's a real focus of our planning. And, you know, I don't know how else to say it, but we just feel really confident in our ability to deliver, to deliver there. Got it. Okay, Mike. Thank you.
Speaker Change: Actions related to incentives. So that's a part of it, I'd say like, the later you get into the year, you know, just to say it it does get a little harder to stop and start things, but, um, but we've actually been pretty planful as it relates to that. And so we generally keep, you know, a number of, you know, uh, levers handy and, you know, in the top drawer, whatever, um, such that, you know, to the extent that the environment does change. We can be flexible. I mean, we, we're, uh, I think we're we're crystal clear on the importance of generating positive operating leverage this year and, and into the future. And uh, and so that's a real focus of our planning. And I, you know, I don't know how else to say it. But we, we just feel really confident in our ability to deliver to deliver their
unknown: Just separately on the loan. I just wanted to see if I can get a little bit more color on the low-sumo-digit outlook. I know, Billy, I mentioned a...
William Rogers: The on the commercial wholesale side is a bit of a wait and see still, but I guess if you give a little bit more color, where in the back half do you see commercial growth accelerating? And maybe what areas and what would be the drivers? Is it M&A financing, or do you see CapEx actually becoming a greater driver? And maybe just talk about the line utilization aspect.
Speaker Change: Got it. Okay. Mike, thank you for that just separately. Um, on the, on the loan front. Uh, I just wanted to see if I can get a little bit more color on the list. You know, digit Outlook. I know, Bill, you have mentioned a
William Rogers: Yeah, let me start with the back part too, because I didn't really talk about earlier. Yeah, line utilization is actually pretty flat. So, if we think about the components of loan growth, you know, the components are production paydowns and utilization. Paydowns have been pretty flat. Utilization has been pretty flat. Their pockets, the asset securitization, some of those others, they tend to have a little bit, which I think is probably maybe tariff related, but overall pretty flat. So, the story for us has been production. So, our confidence in sort of maintaining this is that we're producing at a pretty high level.
The on the commercial wholesale side is a bit of a wait and see still, but um, I guess if you give a little bit more color, where in the back half, do you see commercial growth accelerating, uh, and maybe what areas of what would be the drivers? Is it m&a financing or do you see capex actually becoming a greater driver and maybe just talk about the line utilization aspect? Thanks.
William Rogers: So, that has tail attached to it. The quality of what we're producing is really, really high. So, think about left leads, think about treasury penetration, and then a lot of net new. So, these are a lot of new clients that we continue to have an opportunity to expand with. I do think paydowns could increase on the backside, by the way. So, I think that's something to actually think about in terms of like, how do we maintain? And they could increase with capital markets opening back up, clients getting more active in that. And by the way, we'll benefit from that.
Speaker Change: Yeah, let me start with the back part too, because I didn't I didn't really talk about the earlier. Yeah, line utilization is actually pretty flat. So if we think about the components of lung growth, you know, the components are production, pay downs, and utilization pay Downs have been pretty flat. Uh um uh utilization has been pretty flat their pockets, the the asset securitization, some of those others they tend to they have a little bit which I think is probably maybe Terror related uh but overall pretty flat. So the so the story for us has been productive, you know. So our confidence in sort of maintaining this is that we're we're producing that a pretty high level so that has tail attached to it. Uh, the quality of what we're producing is really, really high. So so think about left leads, think about treasury penetration. Uh, and then a lot of net new, you know. So these are a lot of new clients that uh that we continue to have an opportunity to to expand with.
William Rogers: Our capture rate on clients who use capital markets is really high. We've sort of been through those cycles before. So, really, it's a production story. And we've had consistent now production story, and it's a new client story. It's a new market story. So, I think we feel confident. We've got good momentum. And I think just feel confident where we are in the second half. And what we have today is funding a lot of growth.
Speaker Change: I do think pay Downs, could increase on the back side by the way. So I think that's something to actually think about in terms of like how do how do we maintain and they could increase with the capital markets opening back up, clients getting more active and uh and that. And by the way, we'll benefit from that our our capture rate on on uh clients that use the use the tap Capital markets is really high. We've sort of been through those uh, those those Cycles before. So really? It's a production story and we've had consistent now, production story and it's a new client story. It's a new markets story. Uh,
So I think I think we feel confident we've got good momentum. Uh, I think just feel confident in where we are in the in the second half and and and what we have today is funding a lot of a lot of growth.
William Rogers: And then on the consumer side, we talked about the consumer, on the consumer side, you know, similarly, really, really great production stories and consistent production stories. We have a little seasonality. I think I mentioned that earlier, we have a little seasonality. If you think about our businesses like Sheffield and like Service Finance, you think about the markets we operate in and HVAC and, you know, lake related activities and mowers and those kind of things. There's a little bit of seasonality in that. But again, the overall production numbers are really strong and expansion. So I think a lot of new, a lot of new dealers I mentioned before to those businesses.
unknown: So some of its markets, some of its idiosyncratic to us and our initiatives and focus and relevance and importance with our clients and our market. Got it. All right.
And then, on the consumer side, we talk about the consumer. Yeah, the consumer side. You know, similarly really, really great production stories and consistent production stories. We have a little seasonality. I think I mentioned that earlier, we have a little seasonality, if you think about our businesses, like Sheffield and like service finance, you think about the markets we operate in and HVAC and, you know, Lake related activities and mowers and those kind of things. Uh, there's a little bit of seasonality in that. Uh, but again, the overall production numbers are, uh, are are really strong and, and, and, and expansions, I think a lot of new, a lot of new dealers I mentioned before, uh, to, to those businesses. So, some of its Market, some of its idiosyncratic to us and our initiatives and focus and relevance and importance with our uh, with our clients and our markets.
unknown: Thank you, Bill. Appreciate the call. Yep.
Speaker Change: Got it. All right. Thank you, Bill. Appreciate the caller. Yep.
Mike Mayo: The next question comes from Mike Mayo with Wells Fargo. Please go ahead. Hey, first a CFO question and a CEO question. But the CFO question is, what do you think about a normalized NIM? Or where should NIM be over time? And how long might it take to get there?
The next question comes from Mike Mayo with both Fargo. Please go ahead.
William Rogers: And then the CEO question is, how much of your time has been spent on the merger and regulation if you go back one to two years ago? And how much time should be freed up given this kind of new world now that you're fighting back and more on offense? Thanks.
Speaker Change: Uh Hey first day a CFO question that a CEO question but the the CFO question is what do you think about a normalized Nim or where should Nim be over time and how long might it take to get there? Uh and then uh, the CEO question is now how much of your time has been spent on the merger and regulation if you go back 1 to 2 years ago and how much time should be freed up given this kind of new world now that you're fighting back and more on offense? Thanks.
Michael Maguire: Hey, Michael. I'm up first, I guess. On the NIM, you saw a basis point better this quarter. We would expect that positive trend to continue into the third and fourth quarter. I think your question was more what's normalized. I'm not sure there's a normalized. I would expect us to continue to, if the operating environment is relatively normal, to continue to improve. I think last year, at some point, we said we thought maybe a three-teens area, maybe even a touch better is achievable. That contemplates the balance sheet continuing to evolve with rolling up the curve, so to speak.
Michael Maguire: Frankly, in our case, we think about the second half of this year and next year, getting some of the cuts and being able to drive beta as a touch. I think three-teens is a reasonable expectation. It could be a I mean it. We really do focus on NII growth. Of course, profitability is really important to us, too, but quarter to quarter and the size of the balance sheet can change. You know this, but over a longer period of time, I'd like to see us more in that neighborhood than where we are today.
Speaker Change: Environment is relatively normal, uh, to continue to improve. You know, I think last year at some point we said we thought maybe a, you know, 3 teams area, you know, maybe even a touch better is achievable that contemplates, you know, um, the balance sheet sort of continuing to evolve, um, with uh, you know, um, be kind of rolling up the curve so to speak. Um, and uh, so and and, you know, frankly in our faces, we think about the second half of this year and next year, getting some of the cuts and being able to drive beta as a touch. But I think, uh, 3 teams, is, is a reasonable expectation and it could be a little better, a little worse and just to say it because I think, you know, I mean it, you know, we really do focus on knee growth. Of course, profitability is a really important to us to but sort of quarter to quarter and, you know, the the size of the balance sheet can change, you know, this. But over a longer period of time, I'd like to see us, you know, more in that neighborhood than than where we are today.
William Rogers: Great. And then, Mike, I hope you think I can answer a CFO question, too, by the way. I think they don't have to be distinguished.
William Rogers: But to go into the, you know, sort of the time spent and merger and regulation, I'd say, like, focusing on the merger integration is behind us. And I think that's the real pivot that you feel. The regulatory stuff's sort of tectonic. I mean, that doesn't mean that really high rates of speed. Mike, you and I have talked about this, you know, a lot of times, the J curve, if you think about our merger was longer and deeper than we anticipated. So we sort of have to own that. But we're at the accelerant part of that J curve, you know, so we don't, we don't look back, we're not inhibited by integration issues.
Speaker Change: Right. And then Mike, I hope you think I can answer a CFO question too. By the way, I think they don't have to be distinguished, but but to go into the, you know, sort of the, the time span and merger and, and, and, and, and regulation. I'd say, like, focusing on the, the merger integration is behind us. And I think that's the real pivot that you feel the regulatory stuff sort of tonic. I mean, that doesn't make it really a high rates of speed. Uh, Mike, you and I have talked about this, you know, a lot of times the J curve, if you think about our merger was longer and deeper than we anticipated. So we sort of have to own that.
William Rogers: You know, all of that's behind us, all the things that we see in terms of growth initiative, client service, you know, teammates on the ground, those who want to be with us or with us, those have joined us or like fired up and ready to go. The investments we're making are starting to pay off and create momentum. So I think the large part of what you see here is integration, you know, being clearly behind us and everything that goes along with integration. And we're on that positive, you know, high part of the slope of the J curve in terms of moving forward.
William Rogers: You know, net news, probably like a really good example, net new in terms of consumer and new in terms of wholesale. So, you know, clients and markets are attractive, we're turning the corner on, you know, some of the deposit share, you know, opportunities in some of our large markets, which has been been really, really great. And again, on the regulatory stuff, I think that's more of a go forward thing. You know, things don't things don't shift quickly, you don't, they don't have stair step, like all of a sudden, you know, somebody's new in the office, and we spend a lot of less time, we want to create a really good risk infrastructure for our company.
Speaker Change: That but we're at the accelerant part of that J curve. You know, so we don't, we don't look back, we're not inhibited by integration issues, you know, all of that's behind us all the things that we see, in terms of growth initiative, Client Service, uh, you know, teammates on the ground. Those who want to be with us, or with us. And those who joined us, are like fired up and ready to go, uh, the Investments, we're making, are starting to pay off, and create momentum. So I, I think, I think the large part of what you see here is integration, you know, being clearly behind us and everything that goes along with integration, and we're on that positive, you know, High part of the slope of the of the J. Curve in terms of, in terms of moving forward, you know, Net News, probably like a really good example, net new in terms of consumer and new in terms of wholesale. So, you know, clients and markets are attractive, we're turning the corner on, you know, some of the deposit share, you know, opportunities and some of our large markets, which is
William Rogers: There are things that we're going to do, whether we're asked to do them by a regulator or not, because we want to be, you know, sustainable, long term, you know, great governance and great risk controls to, you know, think about what the future opportunities are in our business.
Speaker Change: Been been been really, really great. Um and again on the regulatory stuff, I think that's more of a go forward thing, you know, things don't things, don't shift quickly. You don't, they don't have stair step, like all of the sudden, you know, somebody's new in the office and we spend a lot of less time. We want to create a really good risk infrastructure for our company. There are things that we're going to do whether we're asked to do them by a regulator or not, because we want to be, you know, sustainable long term. Uh, you know, great governance and great risk controls to
William Rogers: But I think the big one for us, Mike, is the, you know, the integration is fully behind us, you know, we've taken it out back and like put it to bed. Reinvigorated to go at it really hard.
Speaker Change: You know, it's like about what the future opportunities are are in a business, but I think the big 1 for us Mike is the, you know, the the integration is is is fully behind us. You know, we've taken it out back and like, put it to bed.
Speaker Change: So I just a short follow-up bill. So I mean, I think a lot of your competitors for a few years there that truce was the gift that keeps on giving in terms of, you know, getting up share and you talked about the J curve being deeper longer than you than you expected but I my sense is it's a little bit more of a knife bite in the south east. I mean it's just really competitive. It seems like you're really reinvigorate
William Rogers: Can you just talk about the competitive dynamics in the fastest growing markets? But it also seems like some of the most competitive. And how do you adjust to that? You know, Mike, it's always been competitive. So I think that's maybe the important part of this. This isn't sort of new to a market. It's always been competitive. You know, some new entrants, but also like really sophisticated, large competitors who we've had for a long time. Maybe I won't get into the knife fight comparison, but I just don't think we've ever been better competitively positioned. You know, so our ability to sort of win every day, win every client, you know, compete with prowess and advice and capabilities, we've just never been stronger.
Speaker Change: Reinvigorated to uh to go at it really hard. Um, can you just talk about the competitive dynamics of the fastest growing markets, but it also seems like some of the most competitive and how do you adjust for that?
William Rogers: Our team, you know, they've got to bring it on attitude. They've got a champion mindset. I mean, their chin straps are buckled. And trust me, we're in the game and competing really, really hard. And you see that, start to see that now in our results in a couple of quarters worth that benefit. I think you're going to continue to see that.
You know, Mike, it's always been competitive. So I think that's maybe the important part of this this isn't sort of new to, to, to a market. That's always been competitive, you know, some new entrance but also like really sophisticated large competitors who we've had for, uh, We've we've had for a long time. Uh, maybe I won't get into the knife fight comparison, but but I just don't think we've ever been better. Competitively positioned, you know. So our ability to sort of win every day win every client. Uh you know compete uh with uh prowess and advice and capabilities. Just we've just never been stronger our our team uh, you know,
William Rogers: And just real short follow up just compared to before the global financial crisis, I guess maybe the crazies are off the street is it might be competitive, but is it rational? You know, we just have a lot of sophisticated competitors. I mean, so, you know, we compete a lot on product capability and advice. I mean, that's sort of how we want to lead is, you know, are we giving the best advice? Are we most relevant to our clients? Are we satisfying their needs? Are we introducing relevant opportunities to help them grow and help them achieve shareholder value for their companies and for their individuals to help them grow along their, you know, their platform?
Speaker Change: They've got to bring it on attitude, they've got a champion mindset. I mean they're they're the chin straps are buckled and and trust me we're in the game and competing, really? Really hard. Uh, and you see that start to see that now and our results in a couple of quarters worth worth that benefit, I think you're going to continue to see it.
Speaker Change: It might be competitive, but is it rational?
William Rogers: And, you know, increase their capabilities to satisfy their needs and grow and prosper. So I think it's a sophisticated competitive market, and we're a sophisticated competitive, you know, force.
Speaker Change: You know, we have a lot. We just have a lot of sophisticated competitors. I mean, so, you know, we compete a lot on product capability and advice. I mean, that's sort of how we want to lead is, you know, are we giving the best advice? Are we most relevant to our clients or are we? Are we satisfied? Their needs? Are we introducing relevant opportunities to help them grow and help them achieve shareholder value for their, uh, for their companies and for the individuals to help them grow along their, you know, their platform and, you know, increase their capabilities to satisfy their needs and, and, and, and, and grow and prosper. So, uh, I I think I
Speaker Change: Sophisticated competitive market uh, and we're a sophisticated competitive, you know, Force.
unknown: Thank you.
Speaker Change: Thank you. Yeah.
Chris McGrady: Ladies and gentlemen, we ask that you limit yourself to one question going forward to accommodate everyone. The next question comes from Chris McGrady with KBW. Please go ahead. Oh, great. Good morning. Thanks for the question. Um, Bill, just going back to to the expense comment, for a moment, the operating leverage, I think he talked about not only this year, but over the next several years generating positive operating leverage. I'm wondering if that narrative gets it all easier given with Progress on Deregulation. I guess that's the first point. And then two, I'm interested in whether that might be any savings might be used to to increase technology to compete more with the cat ones.
Speaker Change: Ladies and gentlemen, we ask that you limit yourself to 1 question. Going forward to accommodate, everyone.
Speaker Change: The next question comes from Chris, McGrady with KBW, please go ahead.
Oh great. Good morning. Thanks for the question. Um,
William Rogers: Thanks. Yeah, Chris, I think it's a lot of things. Again, I don't see the stair step on the on the regulatory expense side over time. Yes, but I think that's just a result of us having better infrastructure, better governance, better foundational elements that we can operate on. And we've had and we have invested a lot in those over the last few years. So that that that has been a significant part of our investment. Again, I would say that's more us versus sort of like, you know, you know, regular regulatory driven necessarily. But I think your other points exactly right.
Bill just going back to to the expense comment, uh, for a moment. The operating leverage, I think you talked about, uh, not only this year, but over the next several years, generating positive operating leverage. I'm wondering if that narrative gets it all easier given with the progress on deregulation. Uh, I guess that's the first point. And then 2, uh, I'm interested in whether that might be, um, any savings might be used to, to increase technology and to compete, you know, more with the, with the cat ones. Thanks.
Michael Maguire: And by the way, throw other technologies, throw AI into this, throw other developments and opportunities on the on the expense saving side. As long as we continue to see ways to invest and grow our markets, I think we do have those kind of trade offs. And, you know, the best way to drive operating leverage is to grow the top line, you know, so we want to use some of the expense saves and some of the opportunities to continue to drive revenue and get that mix right. So having positive operating leverage with no growth is not a good outcome.
Speaker Change: Yeah, Chris, I think it's a lot of things. Again, I I I don't see the stair step on the, on the regulatory expense side over time. Uh, yes, but I think that's just a result of us having better infrastructure, better governance, uh, better foundational elements that we can operate on and we've had and we have invested a lot in those over the last few years. So that that's, that has been a significant part of our investment again. I would say that's more US versus sort of like, you know, uh, you know, regular regulatory, uh, driven necessarily. Uh, but I think your other points. Exactly, right. And, and, and by the way, throw other Technologies throw AI into this, throw other developments and opportunities on the on the, uh, expense savings side. As long as we continue to see ways to invest and grow our markets. I think we do have those kind of trade-offs, uh, and you know, the best way to drive operating leverages to grow the Top Line, you know? So we want to use some of the expense saves and some of the opportunities to continue to to drive revenue and get that mixed, right? So
Michael Maguire: You know, so we want to have positive operating leverage and, you know, growth that reflects the markets and opportunities that exist for us. And some of the areas Bill's talking about are they sell fund, right? So there are investments we can make and things that create efficiency. And there are a number of those right now, given sort of sort of innovation that's happening. Those are those are that's also a phenomenon that's helping support that positive operating leverage expectation. Exactly.
Having positive operating levers with no growth is not a good outcome, you know. So we want to have positive operating leverage and you know growth that reflects the markets and opportunities that exist for us. And some of the areas bills talking about, are they sell fund, right? So if they're Investments, we can make and things that create efficiency and there are a number of those right now given sort of the sort of innovation that's happening. Uh, those are those are that's also a phenomena. That's helping support that positive operating leverage uh expectation. Exactly.
unknown: All right, thanks so much.
All right, thanks.
Stephen Alexopoulos: The next question comes from Stephen Alexopoulos with TD Kellyn. Please go ahead. Morning. Welcome.
The next question comes from Stephen alexopoulos. With TD Ken, please go ahead.
Speaker Change: Hey, good morning everybody.
Michael Maguire: I wanted to try to better understand the sensitivity of the guide to rate cuts and the question is if we don't see any rate cuts, do you guys think you could still get into that revenue range and the positive operating leverage range? Good morning, Steve. Good morning. Yeah, I think we could, right? I mean, I think the answer is probably it depends. I think the shape of the curve matters a lot. I think to the extent we didn't get the cuts, and we see, you know, a pretty stable, call it two-year, or maybe we even stay a touch higher and those forces would offset one another.
Speaker Change: Good morning. Welcome.
Speaker Change: Thank you. I wanted to try to better understand the sensitivity of the guy to rate cuts. And the question is if we don't see any rate Cuts, do you guys think you could still get into that Revenue range and the positive operating leverage range for the year?
Speaker Change: Hey, Steve. Good morning. Um,
Michael Maguire: I think if you saw no cuts and you saw the long end lower, as an example, that would maybe create some risk. But I think at the end of the year, we're going to feel super sensitive to sort of the rate path, second half of the year. On our revenue outlook, we're going to be working pretty hard to, you know, to manage our funding costs and to generate, you know, good core funding. You know, it's probably more of a watch item for next year, right? We, you know, we'd love to get more cuts, you know, sooner and keep it going.
Speaker Change: Yeah, I think we could write. I mean, I think it is. The answer is probably, it depends. Um, you know, I think the shape of the curve matters a lot. I think, to the extent, we didn't get the cuts, but we, um, and we see, you know, a pretty stable call it 2 year. Um, or maybe we even stay a touch higher. I think those those forces would offset 1 another. I think, if you, uh, if you saw no cuts and you saw the long end lower, um, as an example that would maybe create some risk.
Michael Maguire: But Yeah, I mean, most of it's embedded for this year. I mean, our rate cut forecast is towards the end of the year, you're going to have a pretty small impact. It really ends up being a lot more curve shape, I think. Yeah, curve shape. Got it. Okay.
Steve: But, um, I think the end of the day, we're I don't think we feel super sensitive to sort of the the, the, the the rate path second half of the year, um, on our, on our Revenue Outlook, we're going to be working pretty hard to, uh, you know, to manage our, our funding costs. And to generate, you know, good core funding. Um you know, it's probably more of a watch item for next year, right? We you know, we'd love to get more Cuts, you know, sooner and keep it going. But yeah, I mean most of its embedded for this year. I mean our rate got forecast is towards the end of the year. You're going to have pretty pretty small impact. It really ends up being a lot more curved shape, I think.
unknown: I'll leave it myself to the one question. Thanks. Thanks, Steve.
Steve: Thanks.
Matt O'connor: The next question comes from Matt O'Connor with Deutsche Bank. Please go ahead. Good morning. Just want to circle back again on the investment banking capital market fees. Look, I mean, I know versus like the big banks, it's hard to comp you guys versus regionals, and everybody's got a little bit of a different mix. But I guess I was surprised like how low the number was, and then your characterization of June as kind of being more normalized, as opposed to maybe kind of strong, as we're hearing elsewhere. So just trying to understand, is it a mixed difference?
Speaker Change: The next question comes from, Matt o'conor, with Deutsche Bank, please go ahead.
Michael Maguire: Is it timing? Is it, we're going to have this massive number in 3Q, and this question is pretty irrelevant. How should we think about that a little bit more?
William Rogers: Yeah, thanks, Matt. Remember, sort of distinguish between the large guys. I mean, we have a trading business that's driven by our client business, right? We don't have sort of a separate trading business. And in April, some of those markets were substantially disrupted. Think sort of the public finance market as the prime example. And we have a good business in public finance, by the way, it's a huge deposit driver for us. So it's an important part of our overall business structure. So that was a case where, that was probably as a weighted element, probably a little more idiosyncratic to us in terms of a little overweighting in our treasury, but not overweighted to our business.
Matt O'Conor: Uh, good morning. Just wanted to Circle back again on the uh, Investment Banking Capital Market fees. Um, look, I mean, I, I know versus like the big Banks. It's uh, it's hard to comp you guys versus regionals. It's everybody's got a little bit of a different mix. Um, but I guess, I was surprised like how low the number was and then your characterization of June is kind of being more normalized as opposed to maybe kind of strong as we're hearing elsewhere. So just trying to understand like, is it a mixed difference? Um, is it timing, is it? You know, we're going to have this massive number in 3 q and you know those questions pretty irrelevant how how how should we think about that a little bit more?
Yeah, thanks Madam. I mean, sort of remember, you know, some of the distinguished, you know, between the large guys, I mean we have a trading business is driven by our client business, see, right? We don't have sort of a separate, uh, trading business. And then, and in April, you know, some of those markets were substantially disrupted. I mean, thank thanks. Sort of the Public Finance Market as, as the prime example, uh, and we have a, you know, we have a good business in Public Finance. By the way, it's a huge deposit driver for us. So, it's an important part of our overall overall business structure. So that was a case where, you know, that was probably as a weighted element, probably a little more idiosyncratic to us, in terms of a little over weighting in our, in our, in our treasure. But
William Rogers: And I think that's sort of the way to think about it.
William Rogers: On the M&A front, it's a little bit like which deals are you in? So we had a lot of deals get deferred during the second quarter. By the way, none went away. Many are back in the market already. So there's a little bit of, there's reason to be optimistic that didn't really change the trajectory. And then as Mike mentioned, June's sort of back on track. I mean, growth and new clients and building our corporate banking business and all those elements, those are all regular way business that we've been doing for decades. And I think we have every reason to be confident that we'll continue to be on that trend.
Matt O'Conor: Not overweighted to our business, and I think that's sort of the way sort of the way to think about it.
Matt O'Conor: on the m&a front, you know,
William Rogers: So a little bit was the Client-oriented businesses that we're in, and the businesses that we support. But I think that diversity also really benefits us on the other side.
Matt O'Conor: a little bit of like, which deals are you in? You know, so we had a lot of deals, get deferred during the second quarter, uh, by the way, none went away. Uh, many are back in the market already. Uh so there's a little bit of, you know, there's reason to be optimistic. That didn't didn't really change the change the trajectory and then as Mike mentioned June sort of back on track, I mean sort of Mega better June's back on track. Uh you know, all the elements that you see in loan growth and new clients and building our corporate, you know, banking business. And all those elements, those are all regular way business that we've been doing for, you know, decades. And uh, you know I think we have every reason to be confident that we'll confident that we'll continue to be uh, continue to be on that Trend. So a little bit was, you know,
Matt O'Conor: the, the
Matt O'Conor: client oriented businesses that were in and the businesses that we support. Uh, but I think that diversity also really benefits us on the other side.
unknown: Okay, thank you.
Gerard Cassidy: Yeah, thanks, Matt. The last question today comes from Gerard Cassidy with RBC. Please go ahead. Hi, good morning.
Speaker Change: Okay, thank you. Yeah, thanks Matt.
Speaker Change: the last question today comes from,
Speaker Change: From Gerard Cassidy with RBC, please go ahead.
Thomas Letty: This is Thomas Letty standing in for Gerard. Just a quick high-level question on credit quality. So it was strong in the quarter, and many of your peers also saw pretty healthy metrics.
Brad Bender: Given all the noise and uncertainty in the macro and geopolitical environments, and I'm not asking you to comment on other banks' credit trends, but what in your view is driving the generally strong credit results this quarter?
Speaker Change: Hi, good morning. Uh, this is Thomas, Ley standing in for a Gerard, uh, just a quick high level question on credit quality, so it was strong in the quarter. Um, and many of your peers, also saw a pretty healthy metrics, uh, given all the noise and uncertainty in the macro and geopolitical environments. And I'm not asking you to comment on other banks, credit Trends, but what in your view is driving, the generally strong credit results this quarter
Brad Bender: We'll let Brad Bender do that, Brad. Yeah, thanks, Thomas. You know, as you mentioned, you know, we did see, you know, strong performance and continue to see signs of stabilization and resilience. I think in terms of the short run, it really is around we're starting to see some certainty that is helping. There are some macros out there that were watchful, and that's but that is also why you saw us revise the guide into the 55 to 60 range. CRE, we see that that sector now is largely behind us. You saw some adjustments there. And so the teams really continue to perform really strongly there.
unknown: We took the right actions several periods back. I'd say areas that we continue to just focus on and watch is, you know, around what is consumer confidence, where is spending? What are those cost pressures that are in the system? If all of those continue to hold, we see really strong positive trends to continue. Okay, great. Thank you for taking the question.
Speaker Change: Well what Brad Bender do Brad. Yeah, thanks Thomas. Um you know, so as you mentioned, you know, we did see, you know, strong performance and continue to see signs of stabilization and resilience. Um, I think in terms of the short run, it it really is around. We're starting to see some certainty that is helping. Um, there are some macros out there that that we're watchful and that's but that is also why you saw us revised the guide into the 55 to 60 range. Um, CRA. We, we see, uh, that, that sector now is largely behind us. You saw some adjustments there. And so the teams really continue to perform, uh, really strongly there. We took the right actions, um, several periods back, I'd say areas that we can continue to just focus on and watch is, you know, around what is consumer confidence? Where is spending? What are those cost pressures? Uh, that are in the system. If all of those continue to hold, we we see really strong positive Trends to continue.
Speaker Change: Okay, great. Thank you for taking the question.
Bradley Milsaps: This concludes our question and answer session.
Bradley Milsaps: I would like to turn the conference back over to Brad Milsaps for any closing remarks. Thank you Betsy.
Speaker Change: So that question and answer session, I would like to turn the conference back over to Brad millstreet for any closing remarks
unknown: That completes Ernie's call. If you have any additional questions, please feel free to reach out to the Investor Relations team. Thank you for your interest in Truist, and we hope you have a great day.
Brad millstreet: Thank you. Betsy that completes our news call. If you have any additional questions, please feel free to reach out to the investor relations team.
Operator: Betsy, you may now disconnect the call.
Speaker Change: Thank you for your interest in truist and we hope you have a great day Betsy. You may now disconnect the call.
Operator: The conference is now concluded.
Operator: Thank you for attending today's presentation.
Operator: You may now disconnect.
Speaker Change: Conference is now concluded. Thank you for attending today's presentation. You may now disconnect