Q2 2026 Truist Financial Corp Earnings Call

July 17, 2026

Speaker #1: Gentlemen, and welcome to the Truist Financial Corporation second quarter 2026 earnings conference call. Currently all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation.

Speaker #1: Greetings, ladies and gentlemen, and welcome to the Truist Financial Corporation second quarter 2026 earnings conference call. Currently, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation.

Speaker #1: As a reminder, this event is being recorded. It is now my pleasure to introduce your host, Mr. Brad Millsaps.

Speaker #1: As a reminder, this event is being recorded. It is now my pleasure to introduce your host, Mr. Brad Milsaps.

Speaker #2: Thank you, Rocket Own. Good morning, everyone. Welcome to Truist second quarter 2026 earnings call. With us today are our chairman and CEO, Bill Rogers; our CFO, Mike McGuire; our Chief Risk Officer, Brad Vinder; as well as other members of the Truist senior management team.

Speaker #2: Thank you, Rakel, and good morning, everyone. Welcome to Truist's second quarter 2026 earnings call. With us today are our Chairman and CEO, Bill Rogers; our CFO, Mike Maguire; our Chief Risk Officer, Brad Vinder; as well as other members of the Truist senior management team.

Speaker #2: During this morning's call, they will discuss Truist second quarter 2026 results, share their perspectives on current business conditions, and provide an update on our outlook for 2026.

Speaker #2: The accompanying 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.

Speaker #2: The accompanying presentation, as well as our earnings release and supplemental financial information, are available on the Truist Investor Relations website at ir.truist.com. Our presentation today will include forward-looking statements and certain non-GAAP financial measures.

Speaker #2: Please review the disclosures on slides 2 and 3 of the presentation regarding these statements and measures, as well as the appendix for required reconciliations to GAAP, with that I will turn it over to Bill.

Speaker #3: Great. Thanks, Brad, and good morning, everyone. And thank you for joining our call today. Before we discuss our second quarter 2026 results, let's begin, as we always do, with purpose on slide 4.

Speaker #3: Right. Thanks, Brad, and good morning, everyone. Thank you for joining our call today. Before we discuss our second quarter 2026 results, let's begin, as we always do, with purpose on slide 4.

Speaker #3: At Truist, our purpose is to inspire and build better lives in communities. And that purpose continues to guide how we serve our clients, support our teammates, and create value for our stakeholders.

Speaker #3: At Truist, our purpose is to inspire and build better lives in communities. That purpose continues to guide how we serve our clients, support our teammates, and create value for our stakeholders.

Speaker #3: We also want to recognize that purpose is fueled by performance and committed leadership. During the second quarter, we announced that Mike Lyons will become Truist's next president and chief executive officer on September 1.

Speaker #3: At that time, I'll transition to an executive chair role until my planned retirement in April of next year. As the founder of Truist, I am really excited about this important next chapter in our success journey.

Speaker #3: Mike's an accomplished and respected financial services leader with a proven ability to drive growth, improve performance, and create long-term shareholder value. Throughout the selection process, it was clear to our board that he's the right leader for Truist's future.

Speaker #3: He'll be leading a strong and experienced senior team that's helped build our momentum and position the company for continued success. Mike recognizes the strength of our franchise and the significant opportunities ahead.

Speaker #3: He shares our commitment to building a high-performing company by serving our clients and teammates, improving profitability and returns, and delivering superior outcomes for our shareholders.

Speaker #3: I look forward to supporting Mike in our leadership team over the coming months to ensure a smooth transition and build on our momentum. So, now, let's turn to the results on slide 5.

Speaker #3: I look forward to supporting Mike in our leadership team over the coming months to ensure a smooth transition and build on our momentum. So now, let's turn to the results on slide 5.

Speaker #3: First, I want to step back and highlight what these results say about the progress we're making across Truist. Over the last several quarters, we've been clear about the actions we're taking to drive stronger returns and prove efficiency and allocate capital to the highest value opportunities across the company.

Speaker #3: First, I want to step back and highlight what these results say about the progress we're making across Truist. Over the last several quarters, we've been clear about the actions we're taking to drive stronger returns, improve efficiency, and allocate capital to the highest-value opportunities across the company.

Speaker #3: We continue to make deliberate choices about where we grow, where we invest, and how we optimize our balance sheet. While some of these choices may create near-term trade-offs and individual growth metrics, they're producing the outcomes we intended and are driving stronger profitability and improved financial performance.

Speaker #3: We continue to make deliberate choices about where we grow, where we invest, and how we optimize our balance sheet. While some of these choices may create near-term trade-offs in individual growth metrics, they're producing the outcomes we intended and are driving stronger profitability and improved financial performance.

Speaker #3: Importantly, these results demonstrate that we're making meaningful progress in building a more earnings-efficient and more capital-efficient growth company. As you can see on slide 5, our results show significant improvement in our profitability and returns.

Speaker #3: For the second quarter, we delivered net income available to common shareholders of $1.5 billion or $1.23 per diluted share, representing a 37% increase over the second quarter 2025.

Speaker #3: For the second quarter, we delivered net income available to common shareholders of $1.5 billion, or $1.23 per diluted share. During the quarter, we added new clients, deepened existing relationships, and grew profitably in the businesses and products where we've chosen to focus.

Speaker #3: During the quarter, we added new clients, deepened existing relationships, and grew profitably in the businesses and products where we've chosen to focus. Along with our expense discipline, this contributed to more than $300 basis points of year-over-year positive operating leverage.

Speaker #3: Along with our expense discipline, this contributed to more than 300 basis points of year-over-year positive operating leverage. In addition, combined with disciplined capital deployment, our return on tangible common equity improved 310 basis points year-over-year to 15.4%.

Speaker #3: In addition, combined with discipline capital deployment, our return on tangible common equity improved 310 basis points year-over-year to 15.4%. These results reinforce that we remain on track to deliver our full-year profitability and return objectives and provide confidence in our ability to sustain this level of performance over time.

Speaker #3: These results reinforce that we remain on track to deliver our full-year profitability and return objectives, and provide confidence in our ability to sustain this level of performance over time.

Speaker #3: So, before I hand the call over to Mike, I'd like to highlight how our strategy has translated into tangible results across our business segments and our digital strategy, and we have that on slide 6 and 7.

Speaker #3: So, let me start with consumer and small business banking. CSBB delivered another solid quarter that was consistent with our expectations and strategy to drive profitability improvement across the enterprise.

Speaker #3: So, let me start with Consumer and Small Business Banking. CSBB delivered another solid quarter that was consistent with our expectations and our strategy to drive profitability improvement across the enterprise.

Speaker #3: Consumer behavior remained resilient during the quarter, with stable liquidity, spending, and credit trends that remain within our expectations. Average consumer and small business loans were up 2% versus the second quarter of 2025, as we slowed production in certain less strategic and less profitable consumer categories which Michael discussed in more detail later in the call.

Speaker #3: Consumer behavior remained resilient during the quarter, with stable liquidity, spending, and credit trends that remain within our expectations. Average consumer and small business loans were up 2% versus the second quarter of 2025, as we slowed production in certain less strategic and less profitable consumer categories, which Michael discussed in more detail later in the call.

Speaker #3: Average non-maturity consumer and small business deposits increased 2% versus the second quarter, driven by a 39% increase in new-to-bank deposit production. Average deposits per client were higher across all income segments, but we did see continued client demand for higher-yielding deposit categories.

Speaker #3: Premier banking, which serves clients with $100,000 to $1,000,000 in combined deposits and investments, and represents more than half of CSBB deposits, was again a source of strength.

Speaker #3: Premier banking, which serves clients with $100,000 to $1,000,000 in combined deposits and investments and represents more than half of CSBB deposits, was again a source of strength.

Speaker #3: This business delivered a 20% year-over-year increase in new deposit production balances, a 23% increase in advisor productivity, and a 9% increase in financial planning activity.

Speaker #3: Our investments in Premier are also creating meaningful opportunities across the company, with referrals from CSBB to wealth management increasing 15% over the first half of 2025.

Speaker #3: Our investments in Premier are also creating meaningful opportunities across the company, with referrals from CSBB to Wealth Management increasing 15% over the first half of 2025.

Speaker #3: As you can see on the slide, digital also continues to be a key growth engine. Active mobile users increased 4% year-over-year to 5.4 million, while digital transaction volume increased 7% to $93 million transactions.

Speaker #3: Approximately 85% of client logins now occur through mobile, underscoring the increasing central role our mobile capabilities play in serving clients. Increasing digital engagement is not only improving the client experience but also strengthening client economics.

Speaker #3: Digital active clients generate more revenue and higher profitability than non-digital clients, while greater self-service adoption continues to improve efficiency across the franchise. During the quarter, clients engaged with Truist Assist nearly $2 million times, up 60% year-over-year, reflecting growing adoption of self-service capabilities and our continued investment in the digital client experience.

Speaker #3: Digital active clients generate more revenue and higher profitability than non-digital clients, while greater self-service adoption continues to improve efficiency across the franchise. During the quarter, clients engaged with TRUIST ASSIST nearly 2 million times, up 60% year over year, reflecting growing adoption of self-service capabilities and our continued investment in the digital client experience.

Speaker #3: Taken together, these results demonstrate our strategy to improve profitability, strengthen returns, and allocate capital toward the highest value opportunities across consumer and small business banking.

Speaker #3: Taken together, these results demonstrate our strategy to improve profitability, strengthen returns, and allocate capital toward the highest-value opportunities across consumer and small business banking.

Speaker #3: Now, turning to wholesale on slide 7. In wholesale, we also delivered another strong quarter with continued momentum across loans, deposits, and fees, while maintaining a discipline focus on relationship returns and capital efficiency.

Speaker #3: Now, turning to Wholesale on slide 7. In Wholesale, we also delivered another strong quarter with continued momentum across loans, deposits, and fees, while maintaining a disciplined focus on relationship returns and capital efficiency.

Speaker #3: Over the past year, we've significantly expanded our client base and strengthened existing relationships across the wholesale franchise, driving broader adoption of our lending, deposit, payments, wealth management, and capital markets capabilities.

Speaker #3: This deeper engagement is translating into higher revenue per client, a more attractive revenue mix, and improved relationship profitability driven by an increasing share of revenue coming from non-credit sources.

Speaker #3: This deeper engagement is translating into higher revenue per client, a more attractive revenue mix, and improved relationship profitability, driven by an increasing share of revenue coming from non-credit sources.

Speaker #3: Average wholesale deposits increased 6%, excluding the impact of certain large M&A-related deposits in the second quarter of last year, driven by broad-based deposit growth across client segments heavily tied to our focus on driving payments and liquidity solutions.

Speaker #3: Middle-market deposits, an area where we're invested heavily, grew 12% year-over-year, driven by 9% growth in our legacy markets and 27% growth in expansion markets such as Texas, Pennsylvania, and Ohio.

Speaker #3: Average wholesale loans increased 8% compared with the second quarter of 2025, reflecting broad-based momentum across our industry banking, middle-market, and commercial real estate teams, as we continue to prioritize high-quality, relationship-driven growth.

Speaker #3: Average wholesale loans increased 8% compared with the second quarter of 2025, reflecting broad-based momentum across our industry banking, middle market, and commercial real estate teams, as we continue to prioritize high-quality, relationship-driven growth.

Speaker #3: Wholesale fee income continues to outpace balance sheet growth, led by investment banking and trading, and wealth management reflecting strong client activity and improved deal economics and continued momentum in our wealth franchise.

Speaker #3: Wholesale fee income continues to outpace balance sheet growth, led by investment banking, trading, and wealth management, reflecting strong client activity, improved deal economics, and continued momentum in our wealth franchise.

Speaker #3: Advisory revenue increased 27% year-to-date, including strong growth across equity capital markets, M&A advisory, and financial risk management. Overall, we remain encouraged by the breadth of growth across the franchise and the continued progress in building a more profitable and capital-efficient wholesale business.

Speaker #3: With that, let me turn it over to Mike to discuss our financial results in more detail.

Speaker #1: Thank you, Bill. And good morning, everyone. So, as Bill mentioned, we reported second quarter of 2026, gap net income available to common shareholders of $1.5 billion, or $1.23 per diluted share.

Speaker #3: With that, let me turn it over to Mike to discuss our financial results in more detail.

Speaker #2: Thank you, Bill, and good morning, everyone. As Bill mentioned, we reported second quarter 2026 GAAP net income available to common shareholders of $1.5 billion, or $1.23 per diluted share.

Speaker #1: Earnings per share increased 37% versus the second quarter of 2025, and 13% versus the first quarter of 2026. Revenue increased 2.2% linked quarter due primarily to higher non-interest income.

Speaker #2: Earnings per share increased 37% versus the second quarter of 2025, and 13% versus the first quarter of 2026. Revenue increased 2.2% linked quarter, due primarily to higher noninterest income.

Speaker #1: Revenue increased by 5.5% versus the second quarter of 2025 due primarily to higher non-interest income, led by growth in investment banking and trading, and wealth management income.

Speaker #2: Revenue increased by 5.5% versus the second quarter of 2025, due primarily to higher noninterest income, led by growth in investment banking, trading, and wealth management income.

Speaker #1: Gap non-interest expense increased 2.4% versus the first quarter of 2026, primarily due to higher personnel expense and professional and outside processing expenses. Non-interest expense increased 2.3% versus the second quarter of 2025, which helped drive $320 basis points of year-over-year positive operating leverage.

Speaker #2: GAAP non-interest expense increased 2.4% versus the first quarter of 2026, primarily due to higher personnel expense and professional and outside processing expenses. Non-interest expense increased 2.3% versus the second quarter of 2025, which helped drive 320 basis points of year-over-year positive operating leverage.

Speaker #1: Asset quality metrics remained strong, and our CT1 ratio increased by 10 basis points, linked quarter to 10.9%. Next, I'll cover loans and leases on slide 9.

Speaker #2: Asset quality metrics remained strong, and our CET1 ratio increased by 10 basis points, linked quarter, to 10.9%. Next, I'll cover loans and leases on slide 9.

Speaker #1: Average loans held for investment increased 2.1 billion dollars, or 0.7%, linked quarter to 329 billion dollars, driven by 1.3% growth in average commercial loans, partially offset by a decline in average consumer loans.

Speaker #2: Average loans held for investment increased $2.1 billion, or 0.7%, linked-quarter to $329 billion. This was driven by 1.3% growth in average commercial loans, partially offset by a decline in average consumer loans.

Speaker #1: End-of-period loans increased modestly, linked quarter, reflecting slight growth in both commercial and consumer. As a reminder, we expected 2026 loan growth to be driven primarily by commercial and other consumer categories, with slower loan growth in residential mortgage and indirect auto.

Speaker #2: End-of-period loans increased modestly, linked quarter, reflecting slight growth in both commercial and consumer. As a reminder, we expect 2026 loan growth to be driven primarily by commercial and other consumer categories, with slower loan growth in residential mortgage and indirect auto.

Speaker #1: Moving to deposit trends on slide 10. Average deposits increased 1.5% linked quarter, driven by growth in all deposit categories, while year-over-year growth was 1.1%, driven primarily by growth in interest checking.

Speaker #2: Moving to deposit trends on slide 10. Average deposits increased 1.5% linked quarter, driven by growth in all deposit categories. Year-over-year growth was 1.1%, driven primarily by growth in interest checking.

Speaker #1: We continue to see healthy client deposit activity; however, deposit mix tends to be trends are being pressured by elevated rate-seeking behavior and migration into higher-rate products.

Speaker #2: We continue to see healthy client deposit activity. However, deposit mix trends are being pressured by elevated rate-seeking behavior and migration into higher-rate products.

Speaker #1: Average interest-bearing deposit costs increased by 1 basis point linked quarter, to 2.10%, and average total deposit costs increased 1 basis point to 1.56%. As shown in the chart, on the bottom right-hand side of the slide, our cumulative interest-bearing deposit beta decreased from 46% to 45%, and our total deposit beta decreased from 31% to 30% on a linked quarter basis.

Speaker #2: Average interest-bearing deposit costs increased by 1 basis point linked quarter, to 2.10%, and average total deposit costs increased 1 basis point to 1.56%. As shown in the chart on the bottom right-hand side of the slide, our cumulative interest-bearing deposit beta decreased from 46% to 45%, and our total deposit beta decreased from 31% to 30% on a linked-quarter basis.

Speaker #1: Moving to net interest income and net interest margin on slide 11. Taxable equivalent net interest income increased 0.6% linked quarter, or 23 million dollars, primarily due to the impact of one additional day in the second quarter and higher earning assets, partially offset by lower loan spreads.

Speaker #2: Moving to net interest income and net interest margin on slide 11. Taxable equivalent net interest income increased 0.6% linked quarter, or $23 million, primarily due to the impact of one additional day in the second quarter and higher earning assets, partially offset by lower loan spreads.

Speaker #1: Our net interest margin decreased 4 basis points linked quarter to 2.98%, driven by slightly higher deposit costs, lower loan spreads, and a slightly larger balance sheet.

Speaker #2: Our net interest margin decreased 4 basis points linked quarter to 2.98%, driven by slightly higher deposit costs, lower loan spreads, and a slightly larger balance sheet.

Speaker #1: As shown on the right-hand side of the slide, we now expect net interest income to increase approximately 1 to 1.5%. Our updated outlook reflects actions we have taken to improve profitability, as well as certain market dynamics.

Speaker #2: As shown on the right-hand side of the slide, we now expect net interest income to increase approximately 1% to 1.5%. Our updated outlook reflects actions we have taken to improve profitability, as well as certain market dynamics.

Speaker #1: First, we are continuing to optimize less strategic and lower-return lending portfolios that offer limited relationship potential, which has the effect of reducing NII and net interest margin but improves ROTCE.

Speaker #2: First, we are continuing to optimize less strategic and lower-return lending portfolios that offer limited relationship potential. This has the effect of reducing NII and net interest margin, but improves ROTCE.

Speaker #1: Second, we now expect lower loan spreads than we anticipated, based on two factors: one, we are reallocating capital from higher-yielding consumer loans into higher-quality, but lower-yielding commercial loans, where we expect to drive attractive relationship returns over time; and two, we're seeing continued broad-based market-driven compression of loan spreads.

Speaker #2: Second, we now expect lower loan spreads than we anticipated, based on two factors. One, we are reallocating capital from higher-yielding consumer loans into higher-quality but lower-yielding commercial loans, where we expect to drive attractive relationship returns over time.

Speaker #1: The third headwind is our outlook for a less favorable deposit mix and, therefore, higher rate paid than we previously expected. These headwinds are partially offset by the benefits we expect to get from a higher medium and long-term interest rates.

Speaker #2: And two, we're seeing continued broad-based, market-driven compression of loan spreads. The third headwind is our outlook for a less favorable deposit mix and, therefore, higher rates paid than we previously expected.

Speaker #2: These headwinds are partially offset by the benefits we expect to get from higher medium- and long-term interest rates. As Bill discussed earlier, some of the actions that we are taking to improve profitability and returns involve trade-offs across individual metrics.

Speaker #1: As Bill discussed earlier, some of the actions that we are taking to improve profitability and returns involve trade-offs across individual metrics. For example, during the second quarter, we discontinued the origination of marine and recreational vehicle loans and we significantly reduced originations in several other less strategic and less profitable consumer lending units, such as prime and non-prime auto.

Speaker #2: For example, during the second quarter, we discontinued the origination of marine and recreational vehicle loans, and we significantly reduced originations in several other less strategic and less profitable consumer lending units, such as prime and non-prime auto.

Speaker #1: These actions are expected to reduce 2026 loan production across these portfolios by approximately 40% relative to 2025 production levels. Many of these portfolios are accretive to net interest income and net interest margin, but significantly dilutive to our long-term ROTC objectives and less strategic to our client-focused business model.

Speaker #2: These actions are expected to reduce 2026 loan production across these portfolios by approximately 40% relative to 2025 production levels. Many of these portfolios are accretive to net interest income and net interest margin, but significantly dilutive to our long-term ROTC objectives and less strategic to our client-focused business model.

Speaker #1: While these actions may reduce near-term net interest income growth, they improve the overall profitability and the capital efficiency of our balance sheet, which was evident in the second quarter.

Speaker #2: While these actions may reduce near-term net interest income growth, they improve the overall profitability and capital efficiency of our balance sheet, which was evident in the second quarter.

Speaker #1: We'll continue to evaluate similar actions that will enhance returns and improve capital efficiency, including further optimization of lower-return and less strategic portfolios. Finally, as you can see on the right-hand side of the slide, we did update our fixed asset repricing outlook and our swap disclosure.

Speaker #2: We'll continue to evaluate similar actions that will enhance returns and improve capital efficiency, including further optimization of lower-return and less-strategic portfolios. Finally, as you can see on the right-hand side of the slide, we did update our fixed asset repricing outlook and our swap disclosure.

Speaker #1: While expected runoff in our fixed-rate loan portfolio remains largely unchanged, we do expect lower replacement volume due to the actions I just described, which is reflected in our updated NII outlook.

Speaker #2: While expected runoff in our fixed-rate loan portfolio remains largely unchanged, we do expect lower replacement volume due to the actions I just described, which is reflected in our updated NII outlook.

Speaker #1: Turning now to non-interest income on slide 12. Non-interest income increased 5.9% compared with the first quarter, reflecting strong growth in other income, primarily driven by higher income from certain equity investments.

Speaker #2: Turning now to non-interest income on slide 12. Non-interest income increased 5.9% compared with the first quarter, reflecting strong growth in other income, primarily driven by higher income from certain equity investments.

Speaker #1: Compared with the second quarter of 2025, non-interest income increased 17%, driven by strong performance across several of our fee-based businesses. Investment banking and trading revenue increased 72%, benefiting from stronger client activity, improved deal economics, and continued momentum across our capital markets platform.

Speaker #2: Compared with the second quarter of 2025, non-interest income increased 17%, driven by strong performance across several of our fee-based businesses. Investment banking and trading revenue increased.

Speaker #1: Wealth management income increased 8%, supported by continued growth in client assets, advisor productivity, and financial planning activity. While card and treasury management fees grew only modestly, underlying business trends remained encouraging, as we see healthy client pipelines and we continue to make investments in both products and talent.

Speaker #1: Consistent with the trends, Bill discussed earlier, fee income growth continues to outpace balance sheet growth, reflecting deeper client relationships and a more capital-efficient revenue mix across our company.

Speaker #1: Next, I'll cover non-interest expense on slide 13. Expense discipline remained a key focus during the quarter, as we continued balancing investment in the business with our commitment to improving profitability.

Speaker #1: On a linked quarter basis, non-interest expense increased 2.4%, primarily reflecting higher incentive compensation associated with stronger business performance. Compared with the second quarter of 2025, non-interest expense increased 2.3%, driven largely by higher personnel expense, partially offset by lower professional fees and outside processing costs.

Speaker #1: Importantly, year-over-year expense growth remained well below revenue growth, contributing to our positive operating leverage. We continue to identify efficiencies across the company that can be redeployed in the growth initiatives, and the highest return opportunities, such as growth and revenue-producing teammates, new products, and capabilities that can improve the client experience.

Speaker #1: In addition, AI is becoming an increasingly important contributor, helping improve productivity and enhance client experience and create additional capacity that can be invested in high-value business opportunities across our franchise.

Speaker #1: Next, I'll discuss asset quality on slide 14. Asset quality remained a source of strength this quarter, with stable credit performance and continued improvement in several key portfolios.

Speaker #1: Net charge-offs declined 11 basis points linked quarter to 50 basis points, reflecting lower losses across most portfolios. Compared with the second quarter of 2025, net charge-offs were relatively stable.

Speaker #1: Our provision for credit losses totaled $395 million, modestly below net charge-offs of $414 million, resulting in a 2 basis point linked quarter decline and allowance for loan losses to 1.51% of total loans.

Speaker #1: The modest reduction in our ALLL was primarily driven by the resolution of several commercial and commercial real estate problems, credits during the quarter, and continued improvement in sectors like office and multifamily.

Speaker #1: Non-performing loans held for investment increased 1 basis point linked quarter to 51 basis points to total loans. As higher indirect auto problem loans were partially offset by improvement in the commercial portfolio.

Speaker #1: The increase in indirect auto non-performing loans was primarily due to a change to the non-accrual criteria in our regional acceptance non-prime auto business, as we discussed last quarter.

Speaker #1: This does not reflect deterioration in underlying credit trends, as lifetime cash flows are not expected to change. However, as these loans moved to non-accrual status, subsequent payments are applied to principal and no longer recognized as interest income.

Speaker #1: Turning to capital now on slide 15. Our CET-1 ratio increased 10 basis points linked quarter to 10.9%, despite returning more than 100% of earnings to shareholders through share repurchases and through our common dividend.

Speaker #1: The increase in our CET-1 ratio reflects strong capital generation and the benefits of balance sheet optimization efforts that are improving our RWA density. During the second quarter, we repurchased 1.2 billion dollars of common stock, compared with 1.1 billion in the prior quarter, and 750 million dollars in the second quarter of 2025.

Speaker #1: We continue to target approximately 5 billion dollars of share buybacks in 2026. I'll now review our guidance for the third quarter and for full year 2026 on the following page.

Speaker #1: Looking into the third quarter of 2026, we expect revenue to increase 1% relative to second quarter revenue of 5.3 billion dollars. We expect net interest income to increase by approximately 1.5% in the third quarter, primarily driven by an additional day and higher client deposit balances.

Speaker #1: We expect non-interest income to remain relatively stable on a linked quarter basis. Non-interest expense of 3.1 billion dollars in the second quarter is expected to increase by about 2% linked quarter in the third quarter.

Speaker #1: Turning to our outlook for 2026, we now expect revenue to increase 3.5 to 4%, compared with our previous outlook for 4% revenue growth. This change primarily reflects the factors discussed earlier, which reduced our expected net interest income growth to 1 to 1.5% from our previous outlook of 2 to 3%.

Speaker #1: However, we are increasing our outlook for non-interest income growth to approximately 10% versus our previous estimate of high single digits, reflecting continued momentum across our fee businesses.

Speaker #1: We continue to expect gap non-interest expense growth of 1.75%, net charge-offs of 55 basis points, and an effective tax rate of 14.5%, as well as share buybacks of $5 billion for the year.

Speaker #1: Although we modestly reduced our revenue guidance, we remain confident in the EPS trajectory that we expressed earlier this year, and our ability to drive ROTCE for 2026 above 14%.

Speaker #1: Now I'll hand it back to Bill for some final remarks.

Speaker #2: Thanks, Mike. As we close, I want to reiterate the message I shared at the beginning of today's call. Across our company, we're making strategic decisions about where we grow, where we invest, and how we allocate capital to improve performance and strengthen returns.

Mike Maguire: For revenue guidance, we remain confident in the EPS trajectory that we expressed earlier this year and our ability to drive ROTCE for 2026 above 14%. I'll hand it back to Bill for some final remarks.

Speaker #1: Revenue guidance: We remain confident in the EPS trajectory that we expressed earlier this year, and our ability to drive ROTCE for 2026 above 14%.

Speaker #2: The results reported today demonstrate that those decisions are producing the outcomes we intended. We're seeing stronger profitability and continued momentum across many of our key businesses.

Speaker #1: Now I'll hand it back to Bill for some final remarks.

Speaker #2: Thanks, Mike. As we close, I want to reiterate the message I shared at the beginning of today's call: Across our company, we're making strategic decisions about where we grow, where we invest, and how we allocate capital to improve performance and strengthen returns.

William H. Rogers Jr.: Thanks, Mike. As we close, I want to reiterate the message I shared at the beginning of today's call. Across our company, we're making strategic decisions about where we grow, where we invest, and how we allocate capital to improve performance and strengthen returns. The results reported today demonstrate that those decisions are producing the outcomes we intended. We're seeing stronger profitability and continued momentum across many of our key businesses. Just as importantly, the progress we're making reinforces our confidence in our ability to achieve and sustain the profitability trajectory outlined on slide 17. As Mike mentioned, reflecting on that progress and our confidence in the path ahead, we now expect to deliver ROTCE of greater than 14% in 2026. While we remain focused on delivering the commitments we've made, we believe those objectives represent milestones along a longer-term path of continuously improving our performance.

Speaker #2: Just as importantly, the progress we're making reinforces our confidence in our ability to achieve and sustain the profitability trajectory outlined on slide 17. As Mike mentioned, reflecting on that progress and our confidence in the path ahead, we now expect to deliver ROTCE of greater than 14% in the 2026.

Speaker #2: While we remain focused on delivering the commitments we've made, we believe those objectives represent milestones along a longer-term path of continuously improving our performance.

Speaker #2: One of the things that gives me confidence in that path is the strong alignment between our board and incoming CEO, Mike Lyons, about the opportunities ahead.

Speaker #2: Together, we share a common vision of building a company that consistently delivers stronger profitability, improved returns, and long-term value for our shareholders. I want to thank our teammates for their incredible purposeful commitment, focus, and dedication to serving our clients.

Speaker #2: While we remain focused on delivering the commitments we've made, we believe those objectives represent milestones along a longer-term path of continuously improving our performance.

Speaker #2: One of the things that gives me confidence in that path is the strong alignment between our board and incoming CEO, Mike Lyons, about the opportunities ahead.

William H. Rogers Jr.: One of the things that gives me confidence in that path is the strong alignment between our board and incoming CEO, Mike Lyons, about the opportunities ahead. Together, we share a common vision of building a company that consistently delivers stronger profitability, improved returns, and long-term value for our shareholders. I want to thank our teammates for their incredible purposeful commitment, focus, and dedication to serving our clients. I want to thank our shareholders for their continued trust and support. Given this will be my last call as CEO, I want to thank all of you who follow us for your focus and professionalism. With that, Brad, let me turn it back over to you for Q&A.

Speaker #2: I want to thank our shareholders for their continued trust and support. Given this will be my last call as CEO, I want to thank all of you who follow us for your focus and professionalism.

Speaker #2: Together, we share a common vision of building a company that consistently delivers stronger profitability, improved returns, and long-term value for our shareholders. I want to thank our teammates for their incredible, purposeful commitment, focus, and dedication to serving our clients.

Speaker #2: So with that, Brad, let me turn it back over to you for Q&A.

Speaker #1: Thank you, Bill. Rocco, at this time, we've explained how our listeners can participate in the Q&A session. As you do that, I'd like to ask the participants to please limit yourselves to one primary question and one short follow-up question in order to accommodate as many of you as possible on today's call.

Speaker #2: So, with that, Brad, let me turn it back over to you for Q&A.

Speaker #2: Thank you. To ask a question, please press star then 1 on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from queue, please press star then 2.

Speaker #1: Thank you, Bill. Rocco, at this time, will you please explain how our listeners can participate in the Q&A session? As you do that, I'd like to ask the participants to please limit yourselves to one primary question and one short follow-up question in order to accommodate as many of you as possible on today's call.

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

Speaker #2: And as a reminder, we do ask that you please limit yourself to one question and a single short follow-up. Our first question today comes from Ryan Nash at Goldman Sachs.

Speaker #2: Please go ahead.

Speaker #2: Thank you. To ask a question, please press * then 1 on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from the queue, please press * then 2.

Operator: Thank you. To ask a question, please press star then one on your telephone keypad. If your question has already been addressed and you would like to remove yourself from queue, please press star then two. As a reminder, we do ask you please limit yourself to one question and a single short follow-up. Our first question today comes from Ryan Nash at Goldman Sachs. Please go ahead.

Speaker #3: Good morning, everyone.

Speaker #4: Good morning.

Speaker #3: Bill just wanted to say congrats on your retirement. It's been great working with you and learned a ton from you over the years, particularly on our trip, so you will definitely be missed.

Speaker #2: And as a reminder, we do ask that you please limit yourself to one question and a single short follow-up. Our first question today comes from Ryan Nash at Goldman Sachs.

Speaker #3: Maybe to kick it off, Bill, you talked about some of the trade-offs that you're making right now to grow the business, and it's clear you could see commercial loan growth and the period balances are down.

Speaker #2: Please go ahead.

Speaker #1: Good morning, everyone.

Ryan Nash: Morning, everyone.

Speaker #3: Good morning.

Mike Maguire: Morning.

Ryan Nash: Bill, just wanted to say congrats on your retirement. It has been great working with you and learned a ton from you over the years, particularly on our trips. You will definitely be missed. Maybe to kick it off, Bill, you talked about some of the trade-offs that you are making right now to grow the business, and it is clear you could see commercial loan growth. End of period balances are down. On the flip side, you added a plus to the return target for the year. Can you maybe just expand on what is happening under the hood incrementally, maybe talk about each loan category, and how do you think about the focus on returns versus actually growing the company at this point?

Speaker #1: Bill, just wanted to say congrats on your retirement. It's been great, you know, working with you, and, you know, I learned a ton from you over the years, particularly on our trips. You will definitely be missed.

Speaker #3: But on the flip side, you added a plus to the return target for the year. So can you maybe just expand on what's happening under the hood incrementally, maybe talk about each loan category?

Speaker #1: Maybe to kick it off, you know, Bill, you talked about some of the trade-offs that you're making right now to grow the business, and, you know, it's clear you could see commercial loan growth at end-of-period balances are down.

Speaker #3: And how do you think about the focus of the returns versus actually growing the company at this point?

Speaker #2: Yeah. Ryan, thanks. Also miss working with you. If you think about let's start if we break down the loan categories, C and I, if you look sort of year on year on quarter, is up just under 8%.

Speaker #1: You know, but on the flip side, you added a plus to the return target for the year. So can you maybe just expand on what's happening under the hood incrementally? Maybe talk about each loan category?

Speaker #1: And how do you think about the focus of, you know, the returns versus actually growing the company at this point?

Speaker #2: So the places where we've continued to focus and have intentionality have good growth characteristics. And then if you break out consumer and you look at the areas like Heloc, and then you look at other consumer areas like Sheffield and service finance, those have also continued to grow.

Speaker #2: Yeah, Ryan, thanks. Also, I miss working with you. You know, if you think about it, let's start by breaking down the loan categories. You know, C&I—if you look sort of year-on-year on quarters—up just under 8%.

William H. Rogers Jr.: Yeah. Ryan, thanks. Also miss working with you. If we break down the loan categories, C&I, if you look year on year on quarter is up just under 8%. The places where we have continued to focus and have intentionality have good growth characteristics. Then if you break out consumer and you look at the areas like HELOC, then you look at other consumer areas like Sheffield and like Service Finance, those have also continued to grow. We have good production in those capabilities. The other places, like indirect auto we are down actually quite significantly, and down significantly in production. Our focus is on relationship-based things that also clear our profitability hurdles. Establishing these targets has really sort of come all the way through in the company.

Speaker #2: You know, so the places where we've continued to focus and, you know, have intentionality have good growth characteristics. And then if you break out Consumer and you look at the areas like HELOC, and then you look at other consumer areas like Sheffield and, like, Service Finance, those have also continued to grow.

Speaker #2: And we have good production in those capabilities. The other places, like indirect auto, we're down actually quite significantly and now down significantly in production.

Speaker #2: Our focus is on relationship-based things that also clear our profitability hurdles. So establishing these targets has really sort of come all the way through in the company.

Speaker #2: And we have good, good production in those capabilities. The other places, like indirect auto, you know, we're down actually quite significantly, and now down significantly in production.

Speaker #2: I mean, I'm really, really proud of the team that they've embraced where we want to go from a profitability standpoint, clarity around strategy, sort of full alignment in the things that are important to us.

Speaker #2: You know, our focus is on relationship-based things that also clear our profitability hurdles. So, establishing these targets has really sort of come all the way through in the company.

Speaker #2: And then within those categories, within the commercial book, highly diversified, really good focus, really good growth in the middle market area, for example, where we've had a focus good production, good pipelines in those areas.

Speaker #2: I mean, I'm really, really proud of the team. You know, that they've embraced where we want to go from a profitability standpoint—clarity around strategy, and sort of, you know, full alignment in the things that are important to us.

William H. Rogers Jr.: I'm really, really proud of the team that they've embraced where we want to go from a profitability standpoint, clarity around strategy, full alignment in the things that are important to us. Within those categories, within the commercial book, highly diversified. Really good focus, really good growth in the middle market area, for example, where we've had a focus. Good production, good pipelines in those areas. If we think about just as the loan component of that, I think our team's doing a good job staying focused on the things that accrete over time. To your other question, it's also setting the stage and setting the platform for growth. Every incremental $ that we add to the company on a growth platform, that just has a higher return and higher earnings efficiency and capital efficiency going forward.

Speaker #2: So if we think about just as the loan component of that, I think our team is doing a good job staying focused on the things that are accrued over time.

Speaker #2: And then within those categories, you know, within the commercial book—highly diversified, really good focus, really good growth in the middle market area, for example, where we've had a focus.

Speaker #2: And to your other question, I mean, it's also setting the stage and setting the platform for growth. So every incremental dollar that we add to the company on a growth platform, that just has a higher return and higher earnings efficiency and capital efficiency going forward.

Speaker #2: Good production, good pipelines in those areas. So, if we think about just as the loan component of that, I think our team is doing a good job staying focused on the things that are accrued over time.

Speaker #2: So I would say we're not conceding long-term growth in terms of repositioning, but I think we're setting the table for the efficient growth that comes forward.

Speaker #2: And, you know, to your other question, I mean, it's also setting the stage and setting the platform for growth. So, you know, every incremental dollar, you know, that we add to the company, on a growth platform, that just has a higher return and higher, you know, earnings efficiency and capital efficiency going forward.

Speaker #2: Does that help?

Speaker #3: Yeah, no, that's great. And maybe if I can ask a follow-up from Mike. So Mike, you took down full year NII expectations. Maybe just unpack a little bit what's including for loan growth, the exit margin, and what are the updated thoughts on deposit costs from here?

Speaker #2: So, I would say we're not conceding long-term growth in terms of repositioning, but I think we're setting the table for the efficient growth that comes forward.

William H. Rogers Jr.: I would say we're not conceding long-term growth in terms of repositioning, but I think we're setting the table for the efficient growth that comes forward. That help?

Speaker #3: Thank you.

Speaker #2: Does that help?

Speaker #1: Yeah, no, that's great. And maybe, if I can ask a follow-up from Mike. So Mike, you know, you took down full-year NII expectations.

Ryan Nash: Yeah, no, that's great. Maybe if I can ask a follow-up for Mike. Mike, you took down full year NII expectations. Maybe just unpack a little bit what's included for loan growth, the exit margin, and what are the updated thoughts on deposit costs from here? Thank you.

Speaker #4: Sure, yeah. Good morning, Ryan. Well, I mean, maybe just to reiterate, some of what we said already in our prepared remarks, the good news is while we do see some pressure on NII for the year, we do feel quite good about fees being in sort of the 10% area year over year, credit this quarter, looked great.

Speaker #1: You know, maybe just unpack a little bit what's included for loan growth, the exit margin, and what are the updated thoughts on deposit costs from here.

Speaker #1: Thank you.

Speaker #3: Sure, yeah. Good morning, Ryan. Well, I mean, maybe just to reiterate, some of what we said already in our prepared remarks, you know, the good news is while we do, you know, see some pressure on NII for the year, we do feel quite good about, you know, fees, you know, being in sort of the 10% area year over year, credit.

Mike Maguire: Sure. Yeah. Good morning, Ryan. Well, maybe just to reiterate some of what we said already in our prepared remarks is the good news is while we do see some pressure on NII for the year, we do feel quite good about fees being in sort of the 10% area year over year, credit this quarter looked great, and we feel good about from an expense perspective, feel good too. I think from a bottom-line perspective, feel like we've got really nice momentum. Obviously, Bill just talked about some of the progress that we're proud of in terms of the ROTCE. The NII piece, we mentioned there's sort of three main headwinds. Bill mentioned and I mentioned the marine and rec vehicle business we actually exited during the quarter. Prime Auto autos down.

Speaker #4: And we feel good about, from an expense perspective, feel good too. And so I think from a bottom-line perspective, I feel like we've got really nice momentum.

Speaker #4: And obviously, Bill just talked about some of the progress that we're proud of in terms of the ROTCE. The NII piece, we mentioned there's sort of three main headwinds.

Speaker #3: This quarter looked great, and we feel good about it. From an expense perspective, we feel good too. So, I think from a bottom-line perspective, I feel like we've got really nice momentum.

Speaker #4: Bill mentioned and I mentioned the marine and wrecked vehicle. Business, we actually exited during the quarter. Prime Autos down. We mentioned across those portfolios and a few others, we're down on a production basis.

Speaker #3: And obviously, Bill just talked about some of the progress that we're proud of in terms of the ROTCE. The NII piece—you know, we mentioned there's sort of three main headwinds.

Speaker #4: Call it 40% year over year. That's 7 to 8 billion dollars of annual production. That's come out of the business in 2026 versus 2025.

Speaker #3: You know, Bill mentioned, you know, and I mentioned the marine and wrecked vehicle. You know, business, we actually exited during the quarter. Prime Autos down.

Speaker #4: And so in our from our perspective, not regrettable, right? I mean, those are trade-offs we're making to improve profitability. As you think about the spreads piece, there's sort of two components there as well, right?

Speaker #3: We mentioned, you know, across those portfolios and a few others, we're down on a production basis—call it 40% year over year. That's $7 to $8 billion of annual production.

Mike Maguire: We mentioned across those portfolios and a few others, we are down on a production basis, call it 40% year over year. That is $7 to $8 billion of annual production that has come out of the business in 2026 versus 2025. From our perspective, not regrettable, right? Those are trade-offs we are making to improve profitability. You think about the spreads piece, there is sort of two components there as well, right? There is the piece that we are doing that is not necessarily happening to us. We have been remixing and reallocating capital from some of these less strategic, less profitable portfolios into C&I. That is going to result in a lower yield typically, but we believe a higher return longer term and be the right thing for the company over time. Even within wholesale, we are seeing some remixing into more high-grade sort of investment-grade type credits. That is also having an effect.

Speaker #4: There's the piece that we're doing, that's not necessarily happening to us. So we have been remixing and reallocating capital from some of these less strategic, lower less profitable portfolios into C and I.

Speaker #3: That's come out of the business in 2026 versus 2025. From our perspective, it's not regrettable, right? I mean, those are trade-offs we're making to improve profitability.

Speaker #3: As you think about the spreads piece, there are sort of two components there as well, right? There's the piece that we're doing, that's not necessarily happening to us.

Speaker #4: That's going to result in a lower yield typically, but we believe a higher return longer term. And be the right thing for the company over time.

Speaker #4: Even within wholesale, we're seeing some remixing from into more high-grade sort of investment-grade type credits. And so that's also having an effect. So loan spreads being pressured perhaps by some conscious choices we're making.

Speaker #3: So we have been remixing and reallocating capital from some of these less strategic, lower, less profitable portfolios into C&I. That's going to result in a lower yield, typically.

Speaker #4: And then we do see broad-based market compression. We came into the year with an expectation that we might see some kind of a bounce off the bottom on credit spreads, maybe to the tune of 10 to 15 basis points, which would have perhaps felt a little bit conservative relative to some of what was being discussed in the industry at the time.

Speaker #3: But we believe a higher return longer term, and it will be the right thing for the company over time. Even within wholesale, we're seeing some remixing into more high-grade, sort of investment-grade type credits.

Mike Maguire: Even within wholesale, we are seeing some remixing into more high-grade sort of investment-grade type credits. That is also having an effect.

Speaker #3: And so, that's also having an effect. So loan spreads are being pressured, perhaps by some conscious choices we're making. And then we do see broad-based market compression.

Mike Maguire: Loan spreads being pressured perhaps by some conscious choices we are making. We do see broad-based market compression. We came into the year with an expectation that we might see some kind of a bounce off the bottom on credit spreads, maybe to the tune of 10 to 15 basis points, which would have perhaps felt a little bit conservative relative to some of what was being discussed in the industry at the time. If we hold spreads just constant from here, that would result in spreads for us at least, year over year being down five to 10 versus the upside of 10 to 15. That has been a pretty important headwind for us, and we have incorporated that into our outlook. We do reprice quite a few loans, as you can imagine.

Speaker #4: If we hold spreads just constant from here, that would result in spreads for us at least year over year being down 5 to 10 versus the upside of 10 to 15.

Speaker #3: We came into the year with an expectation that we might see some kind of a bounce off the bottom on credit spreads, you know, maybe to the tune of 10 to 15 basis points, which, you know, would have perhaps felt a little bit conservative relative to some of what was being discussed in the industry at the time.

Speaker #4: So that's been a pretty important headwind for us. And we've incorporated that into our outlook. And we do reprice quite a few loans, as you can imagine.

Speaker #3: You know, if we hold spreads just constant from here, that would result in spreads for us, at least, year over year being down 5% to 10% versus, you know, the upside of 10% to 15%.

Speaker #4: It's beyond the fixed-rate loans, but we reprice a pretty sizable portion of our floaters every quarter as well. So that's been an important factor.

Speaker #4: And then, of course, deposits. We've been we learn a lot about deposits in the second quarter of every year. There's just seasonality around taxes and bonuses.

Speaker #3: So that's been a pretty important headwind for us, and we've incorporated that into our outlook. And we do reprice quite a few loans, as you can imagine.

Speaker #4: As we got deeper into the quarter and closed out June and looked forward, it just became clear to us that there is just much more client preference, inertia around higher-rate products.

Speaker #3: It's beyond the fixed-rate loans, but we reprice a pretty sizable portion of our floaters every quarter as well. So, that's been an important factor.

Mike Maguire: It is beyond the fixed-rate loans, we reprice a pretty sizable portion of our floaters every quarter as well. That has been an important factor. Of course, deposits. We learn a lot about deposits in Q2 of every year. There is just seasonality around taxes and bonuses. As we got deeper into the quarter and closed out June and looked forward, it just became clear to us that there is just much more client preference, inertia around higher rate products. We are seeing that remix. We have seen some of it year to date, and we have an expectation that that is going to continue. We have incorporated that into our outlook as well. Of course, all those three factors are offset in part by a higher belly of the curve, which does help us on the fixed-rate asset repricing side.

Speaker #3: And then, of course, deposits. You know, we learn a lot about deposits in the second quarter of every year. There's just seasonality around taxes and bonuses.

Speaker #4: And so we're seeing that remix. We've seen some of it year to date, and we have an expectation that that's going to continue. And so we've incorporated that into our outlook as well.

Speaker #3: You know, as we got deeper into the quarter and closed out June and looked forward, it just became clear to us that there is much more client preference—inertia, really—around higher-rate products.

Speaker #4: And of course, all those three factors are offset in part by a higher belly of the curve, which does help us on the fixed-rate asset repricing side.

Speaker #4: So that's the headwind on NII. Again, maybe just to finish where I started, the good news is while the components have moved around a touch, we still feel quite good about the bottom line.

Speaker #3: And so, we're seeing that remix. We've seen some of it year-to-date, and we have an expectation that that's going to continue. So we've incorporated that into our outlook as well.

Speaker #3: And, of course, all those three factors are offset in part by a higher belly of the curve, which does help us on the fixed-rate asset repricing side.

Speaker #4: I think you asked about margins. I'll touch that quickly. We did see a touch of pressure on net interest margin linked quarter about half of that was just the sort of composition of the earning asset growth.

Speaker #3: So that's the headwind on NII. Again, maybe just to finish where I started, the good news is, while the components have moved around a touch, we still feel quite good about the bottom line.

Mike Maguire: That is the headwind on NII. Again, maybe just to finish where I started, the good news is while the components have moved around a touch, we still feel quite good about the bottom line. I think you asked about margins. I will touch that quickly. We did see a touch of pressure on net interest margin linked quarter. About half of that was just a sort of composition of the earning asset growth. We saw bonds and cash maybe $3 billion higher. That is obviously dilutive to our net interest margin. On the loan and sort of deposit-funded growth, you saw 1 basis point higher on deposits and 3 basis points worse on loan yields. Some of that is the swaps coming on as well, impacting loan yields. That is what took us down the 4 basis points.

Speaker #4: We saw bonds and cash maybe 3 billion higher. That's obviously dilutive to our net interest margin. And then on the loan and sort of deposit-funded growth, you saw a basis point higher on deposits and three basis points worse on loan yields.

Speaker #3: I think you asked about margins. I'll touch on that quickly. You know, we did see a touch of pressure on net interest margin linked quarter; about half of that was just the sort of composition of the earning asset growth.

Speaker #4: Some of that's the swaps coming on as well impacting loan yields. But that's what took us down the four basis points. We would expect that to modestly improve throughout the course of the year, modestly improve.

Speaker #3: We saw bonds and cash maybe $3 billion higher. That's obviously dilutive to our net interest margin. And then, on the loan and sort of deposit-funded growth, you saw a basis point higher on deposits and 3 basis points worse on loan yields.

Speaker #4: As we get the benefit of fixed-rate asset repricing maybe again, we still actually feel quite good about deposit balances. Both in wholesale and consumer, we're seeing nice production.

Speaker #3: Some of that's the swaps coming on as well, impacting loan yields. But that's what took us down, you know, the 4 basis points. We would expect that to modestly improve throughout the course of the year—modestly improve.

Speaker #4: It's really just mixed. So we actually do think that NIM will improve in the third quarter in part based on higher client deposit balances but not the not to the same degree that we would have expected a quarter ago or certainly back in January.

Mike Maguire: We would expect that to modestly improve throughout the course of the year. Modestly improve as we get the benefit of fixed-rate asset repricing. Again, we still actually feel quite good about deposit balances both in wholesale and consumer. We're seeing nice production. It's really just mix. We actually do think that NIM will improve in Q3, in part based on higher client deposit balances, but not to the same degree that we would have expected a quarter ago or certainly back in January when we had a different rate environment. There's a lot of other factors that go into it. I think I got your questions there, Ron.

Speaker #3: You know, as we get the benefit of fixed-rate asset repricing, maybe, you know, again, we still actually feel quite good about deposit balances, you know, both in wholesale and consumer.

Speaker #4: When we had a different rate environment and there's a lot of other factors that go into it. So I think I got your questions there, Ryan.

Speaker #3: We're seeing nice production. It's really just mixed. So we actually do think that NIM will improve in the third quarter, in part based on, you know, higher client deposit balances.

Speaker #3: Yep, got them all. Thanks, Mike. Appreciate it. Thanks again, Bill.

Speaker #2: Thanks.

Speaker #1: And our next question today comes from John Pankari at Evercore. Please go ahead.

Speaker #3: But not to the same degree that we would have expected a quarter ago, or certainly back in January, when we had a different, you know, rate environment. And, you know, there are a lot of other factors that go into it.

Speaker #5: Good morning. And Bill, it's been a pleasure. And all the best in retirement. First, on the balance sheet optimization, and NII, in your lowered outlook around NII, how much of that loan book rationalization that you cited is reflected in the guidance in that guidance?

Speaker #3: So, I think I got your questions there, Ryan.

Speaker #1: Yep, got them all. Thanks, Mike. Appreciate it. Thanks again, Bill.

Ryan Nash: Yep, got them all. Thanks, Mike. Appreciate it.

Mike Maguire: Yeah.

Ryan Nash: Thanks again, Bill.

Speaker #2: Thanks.

[Company Representative] (Truist): Thanks.

Operator: Our next question today comes from John Pancari at Evercore. Please go ahead.

Speaker #4: And our next question today comes from John Pankari at Evercore. Please go ahead.

Operator: Our next question today comes from John Pancari at Evercore. Please go ahead.

Speaker #5: Good morning. And Bill, it's been a pleasure, and all the best in retirement. First, on the balance sheet optimization and NII—in your lowered outlook around NII, how much of that loan book rationalization that you cited is reflected in that guidance?

John Pancari: Morning. Bill, it's been a pleasure, and all the best in retirement. First, on the balance sheet optimization and NII. In your lowered outlook around NII, how much of that loan book rationalization that you cited is reflected in that guidance? Is there more that could impact next year's expectation as this continues to play out? Maybe also, what other rationalization is possible? I know you mentioned in your prepared remarks that you're continuing to evaluate the portfolio. Thanks.

Speaker #5: Is there more that could impact next year's expectation as this continues to play out? And maybe also, what other rationalization is possible? I know you mentioned in your prepared remarks that you're continuing to evaluate the portfolio.

Speaker #5: Thanks.

Speaker #4: Yeah, good morning, John. The changes, the re-trending that we've made around production balances that we mentioned, as well as the exit of marine and wreck, are in our outlook for this year.

Speaker #5: Is there more that could impact next year's expectations as this continues to play out? And maybe also, what other rationalization is possible? I know you mentioned in your prepared remarks that you're continuing to evaluate the portfolio.

Speaker #4: We haven't provided and don't plan to provide guidance for '27 at this point. But in terms of what else, I would just say it's a continuous it's a continuous search and opportunity to make sure that we're allocating capital in the absolute most efficient way.

Speaker #5: Thanks.

Speaker #2: Yeah, good morning, John.

Mike Maguire: Yeah. Good morning, John. The changes, the retrending that we've made around production balances that we mentioned, as well as the exit of marine and rec are in our outlook for this year. We haven't provided and don't plan to provide guidance for 2027 at this point. In terms of what else, I would just say it's a continuous search and opportunity to make sure that we're allocating capital in the absolute most efficient way. By the way, it's not entirely in consumer, right? There are things that we've done and will continue to do in wholesale around client selection, around pricing, around product design, rebalancing, that are all intended to create more profitability and efficiency. There's nothing else to say on that for now other than it's a really important initiative of ours to continue to deliver against this ROTCE improvement.

Speaker #3: The changes—the re-trending that we've made around production balances, that we mentioned—as well as the exit of Marine and REC, are in our outlook for this year.

Speaker #4: And by the way, it's not entirely in consumer, right? There are things that we've done and will continue to do in wholesale around client selection, around pricing, around product design.

Speaker #3: You know, we haven't provided, and don't plan to provide, guidance for '27 at this point. But in terms of what else, I would just say it's a continuous search and opportunity to make sure that we're allocating capital in the absolute most efficient way.

Speaker #4: Rebalancing that are all intended to create more profitability and efficiency. So there's nothing else to say on that for now other than it's a really important initiative of ours to continue to deliver against this ROTC improvement.

Speaker #3: And by the way, it's not entirely in consumer, right? There are things that we've done and will continue to do in wholesale around client selection, around pricing, around product design, you know, rebalancing, that are all intended to create more profitability and efficiency.

Speaker #4: And we're going to look, we're going to make smart choices. We're going to be guided by, hey, A, what fits our strategic eye and our business model?

Speaker #3: So I, you know, there's—you know, nothing else to say on that for now, other than it's a really important initiative of ours to continue to deliver against this ROTC improvement.

Speaker #4: And then two, profitability.

Speaker #5: Okay, thanks, Mike. Now, I know you talked about the ROTC improvement and you mentioned confidence and above the 14% level for '26. How do these actions and your updated thoughts and updated trends in general impact your 2027 15% expectation and the long-term 16 to 18?

Speaker #3: And we're going to look, we're going to make smart choices. We're going to be guided by, you know, hey, we—A, what fits our strategic eye and our business model?

Mike Maguire: We're going to make smart choices, and we're going to be guided by, A, what fits our strategic eye and our business model, and then two, profitability.

Speaker #3: And then two, profitability.

Speaker #5: Okay, thanks, Mike. Now, I know you talked about the ROTC improvement, and you mentioned confidence and being above the 14% level for '26. How do these actions and your updated thoughts and updated trends in general impact your 2027 15% expectation and the long-term 16% to 18%?

John Pancari: Okay. Thanks, Mike. I know you talked about the ROTCE improvement, and you mentioned confidence and above the 14% level for 2026. How do these actions and your updated thoughts and updated trends in general impact your 2027 15% expectation and the long-term 16% to 18%? Just one other thing, kind of back to Ryan's question. If you could just update us on your loan growth and deposit growth expectations, your balance sheet assumptions underneath the NII outlook for this year, that'd be helpful. Thanks.

Speaker #5: And then just one other thing kind of back to Ryan's question. If you could just update us on your loan growth and deposit growth expectations, your balance sheet assumptions underneath the NII outlook for this year, that'd be helpful.

Speaker #5: Thanks.

Speaker #2: Yep. Mike, I'll take the first part. John, so yeah, on the ROTC, expectations for the future, this quarter had some unique characteristics. And keep in mind, this tracks not linear, right?

Speaker #5: And then just one other thing, kind of back to Ryan's question. If you could just update us on your loan growth and deposit growth expectations, your balance sheet assumptions underneath the NII outlook for this year, that would be helpful.

Speaker #2: So quarter to quarter, it might change obviously, we have a lot more confidence in this year as we get to more than half a year through to say we'll be at 14 plus.

Speaker #5: Thanks.

Speaker #2: Yep. Mike, I'll take the first part. Yeah. John, so yeah, on the ROTC, you know, expectations for the future—this quarter had some unique characteristics.

William H. Rogers Jr.: Yeah. Mike, I'll take the first part. Yeah, John. Yeah, on the ROTCE expectations for the future. This quarter had some unique characteristics, and keep in mind, this track's not linear, right? Quarter to quarter it might change. Obviously, we have a lot more confidence in this year as we get to more than half the year through to say we'll be at 14 plus. I just don't think it's the time to change the established targets going forward. That being said, I think we certainly feel more confident in our path to a higher performing company. Today, change the guidance for where we are for this year, but stay on that path to higher performance and want to retain the right level of flexibility to achieve those numbers.

Speaker #2: I just don't think it's the time to change the established targets going forward. That being said, I think we certainly feel more confident in our path to a higher performing company.

Speaker #2: And keep in mind, you know, this track's not linear, right? So, you know, quarter to quarter, it might change. Obviously, we have a lot more confidence in this year as we, you know, as we get to more than half a year through, to say we'll be at 14-plus.

Speaker #2: So today, change the guidance for where we are for this year, but stay on that path to higher performance. And want to retain the right level of flexibility to achieve those numbers.

Speaker #2: I just don't think it's the time to change the established targets going forward. That being said, I think we certainly feel more confident in our path to a higher-performing company.

Speaker #4: And I'll just add to that a little, John. I mean, obviously, we were really pleased to be in the 15% area for the quarter.

Speaker #2: So, you know, today, change the guidance for where we are for this year, but stay on that path to higher performance. And want to retain the right level of flexibility to achieve those numbers.

Speaker #4: It's not a linear path. We do have some factors, some as an example, you guys know this, you model it well. We have some preferreds that are semi versus quarter payers.

Speaker #4: And so you do have heavier preferred in two of the quarters and lighter in two others. So that's not to say that we don't feel like we're going to be on an upward trajectory, but it's not going to be a linear path.

Speaker #3: And I'll just add to that a little, John. I mean, obviously, we were really pleased to be in the 15% area for the quarter.

Mike Maguire: I'll just add to that a little, John. Obviously, we are really pleased to be in the 15% area for the quarter. It's not a linear path. We do have some factors. As an example, you guys know this, you model it well. We have some preferreds that are semi versus quarter payers, you do have heavier preferred in two of the quarters and lighter in two others. That's not to say that we don't feel like we're going to be on an upward trajectory, but it's not going to be a linear path, and you guys know that. In terms of deposits and loans, we still expect to see loan growth this year. Obviously, we've delivered, or sorry, pardon me, deposit growth this year. What we're seeing is low single-digit deposit growth. Call it 3% area, and this is an annual view.

Speaker #3: You know, it's not a linear path. You know, we do have some factors, some, you know, as an example, you know, you guys know this, you model it well.

Speaker #4: And you guys know that. In terms of deposits and loans, we still expect to see loan growth this year. Obviously, we've delivered or sorry, pardon me, deposit growth this year what we're seeing is low single-digit deposit growth, call it 3% area.

Speaker #3: We have some preferreds that are semi-annual versus quarterly payers, so you do have heavier preferreds in two of the quarters and lighter in two others.

Speaker #3: So that's not to say that, you know, we don't feel like, you know, we're going to be on an upward trajectory. But it's not going to be a linear path.

Speaker #4: And this is an annual view. And just mix is what we're keeping a really close eye on. So you've seen DDA, for example, remixed down from maybe call it 27-ish percent at the beginning of the year, maybe that resembles something closer to 25% by the end of the year.

Speaker #3: And you guys know that. In terms of deposits and loans, you know, we still expect to see loan growth this year. Obviously, we've delivered, or sorry, pardon me, deposit growth this year.

Speaker #3: You know, what we're seeing is, you know, low single-digit deposit growth, you know, call it 3% area and this is an annual, you know, view.

Speaker #4: And hopefully stabilizing from there. From a loans perspective, I think we said 3 to 4% earlier this year. We're still on track for that.

Mike Maguire: Just mix is what we're keeping a really close eye on. You've seen DDA, for example, remix down from maybe call it 27-ish% at the beginning of the year. Maybe that resembles something closer to 25% by the end of the year, and hopefully stabilizing from there. From a loans perspective, I think we said 3% to 4% earlier this year. We're still on track for that, probably high side of that. The bulk of that, and Bill mentioned that, is going to be on the C&I side, whereas consumer will be closer to flat, maybe +1%. That's what's in our outlook, John.

Speaker #3: And just mix is what we're keeping a really close eye on. So, you know, you've seen DDA, for example, remixed down from maybe, call it, 27%-ish at the beginning of the year. You know, maybe that resembles something closer to 25% by the end of the year.

Speaker #4: Probably high side of that. But the bulk of that, and Bill mentioned that, is going to be on the CNI side whereas consumer will be closer to flat, maybe plus 1%.

Speaker #3: And hopefully stabilizing from there. You know, from a loans perspective, I think we said 3% to 4% earlier this year. We're still on track for that.

Speaker #4: So that's what's in our outlook at John.

Speaker #2: And I mean, Mike, I have that. I mean, like I mentioned this, the production engines are working. So the upfront side's working on the consumer side, our premier production, for advisors up 15% on the deposit side.

Speaker #3: Probably the high side of that, but the bulk of that—as Bill mentioned—is going to be on the CNI side, whereas consumer will be, you know, closer to flat, maybe plus 1%.

Speaker #2: I talked about the loan side on the service finance. The quality of the production is really, really high. So the quality of the wholesale deposit production is relationship-based.

Speaker #3: So that's what's in our outlook, John.

Speaker #2: And I mean, Mike, I mean, like I mentioned this, the production engines are working. You know, so the, you know, the upfront side's working on the consumer side, our premier production, for advisors up 15% on the deposit side.

William H. Rogers Jr.: Look, I mean, Mike, to add to that.

Mike Maguire: Sure

William H. Rogers Jr.: I mean, Mike mentioned this, the production engines are working.

Mike Maguire: Right.

William H. Rogers Jr.: The upfront side's working on the consumer side, our premier production for Advisors up 15% on the deposit side. I talked about the loan side on the Service Finance. The quality of the production's really, really high. The quality of the wholesale deposit production is relationship based. It's not sort of just rate based. These are clients in which we've expanded our relationship with. We have payments related discussions with those in terms of increasing for the future. We do have a mixed opportunity, but the good news is the productions engine's working, and we're adding high quality relationship oriented sort of operating type deposits.

Speaker #2: So it's not sort of just rate-based. So these are clients in which we've expanded our relationship with. We have payments related discussions with those in terms of increasing for the future.

Speaker #2: I talked about the loan side on the service finance. The quality of the production is really, really high. So, you know, the quality of the wholesale deposit production is relationship-based.

Speaker #2: So we do have a mixed opportunity. But the good news is the production's engines working and we're adding high-quality relationship-oriented sort of operating-type deposits.

Speaker #2: You know, so it's not sort of just rate-based. So these are clients in which we've expanded our relationship with. We have payments related discussions with those in terms of increasing for the future.

Speaker #5: Got it. Thanks so much, Bill.

Speaker #2: Yep, John.

Speaker #3: Thank you. And our next question today comes from Ken Osdin with Autonomous Research. Please go ahead.

Speaker #2: So you know, we do have a, you know, mixed opportunity. But the good news is the production engine is working, and we're adding high-quality, relationship-oriented, sort of operating-type deposits.

Speaker #5: Hi, good morning. And Bill, once again, best of luck to you in the future. I was wondering if you could touch a little bit more on the deposit competition and the rate chasing that you mentioned in your prepared remarks.

Speaker #5: Got it. Thanks so much, Bill.

John Pancari: Got it. Thanks so much, Bill.

Speaker #2: Yep, John.

William H. Rogers Jr.: Yep, John.

Speaker #1: Thank you. And our next question today comes from Ken Usdin with Autonomous Research. Please go ahead.

Operator: Thank you. Our next question today comes from Ken Ustin with Autonomous Research. Please go ahead.

Speaker #5: Just can you talk about just where that's coming from? Is it any different than what we've seen or is it just the burden of a little bit from the higher-for-longer environment?

Ken Usdin: Hi. Good morning. Bill, once again, best of luck to you in the future. I was wondering if you could touch a little bit more on the deposit competition and the rate chasing that you mentioned in your prepared remarks. Can you talk about where that's coming from? Is it any different than what we've seen? Is it just the burden of a little bit from the higher for longer environment? Thanks.

Speaker #5: Thanks.

Speaker #2: Yeah, I mean, I think what we've seen in the deposit migration to higher yielding is more client behavior than competitive pressure, in fairness. I mean, I think this is a trend that we've seen that's continued.

Speaker #5: Just can you talk about just, you know, where that's coming from? Is it any different than what we've seen or is it just the burden of a little bit from the higher-for-longer environment?

Speaker #2: We're in a rate cycle where I don't think that's particularly unusual. Competitive environment still is highly competitive. And we're the most competitive we've ever been.

Speaker #5: Thanks.

Speaker #2: Yeah, I mean, I think what we've seen in the deposit migration to higher yielding is more client behavior than competitive pressure, in fairness.

William H. Rogers Jr.: I mean, I think what we've seen in the deposit migration to higher yielding is more client behavior than competitive pressure, in fairness. I mean, I think this is a trend that we've seen that's continued. We're in a rate cycle where I don't think that's particularly unusual. Competitive environment still is highly competitive. We're the most competitive we've ever been in terms of product and capability, and that was my comment earlier, is the production engines are working well and the client expansion and the opportunities that we see are working well. I think this is just a function of client behavior.

Speaker #2: In terms of product and capability, and that was my comment earlier is the production engines are working well and the client expansion and the opportunities that we see are working well.

Speaker #2: I mean, I think this is a trend that we've seen and that's continued. You know, we're in a rate cycle where I don't think that's particularly unusual.

Speaker #2: I think this is just a function of client behavior.

Speaker #2: Competitive environment still is highly competitive. And we're the most competitive we've ever been. You know, in terms of product and capability. And that was my comment earlier is the production engines are working well and the client expansion and the opportunities that we see are working well.

Speaker #5: Okay. And maybe one for Mike. Mike, would you mind just walking us through just that lingering amount of swaps that has to come on in terms of the book that's not active and the timing of kind of when the rest of that should be in the run rate?

Speaker #2: I think this is just a function of client behavior.

Speaker #5: Thanks.

Speaker #4: Yeah, no problem, Ken. So maybe I'll take you back to the beginning of the year and just walk you through the year because, as you know, this can change.

Ken Usdin: Okay. Maybe one for Mike. Mike, would you mind walking us through that lingering amount of swaps that has to come on in terms of the book that's not active and the timing of kind of when the rest of that should be in the run rate? Thanks.

Speaker #4: In the first quarter, we had just I'll give you the receivers and maybe give you the payers too. For the offset, but we were 50 billion effective in Q1.

Speaker #5: Thanks.

Speaker #4: With 24 billion of payers, so call it net received, 26 billion. And this most recent quarter, we were 63 billion effective. So call it plus 13 from Q1 payers relatively constant.

Speaker #3: Yeah, no problem, Ken. So maybe I'll take you back to the beginning of the year and just walk you through the year, because, as you know, this can change.

Mike Maguire: Yeah. No problem, Ken. Maybe I'll take you back to the beginning of the year and just walk you through the year, because as you know, this can change. In Q1, we had I'll give you the receivers and maybe give you the payers too for the offset, but we were $50 billion effective in Q1 with $24 billion of payers. Call it net receive, $26 billion. In this most recent quarter, we were $63 billion effective, call it +13 from Q1. Payers, relatively constant. Net effective $40 billion or so. That steps up on an effective basis for Q3 to about $80 billion, up to $85 billion in Q4. The payers are pretty much call it $23 billion for the rest of the year.

Speaker #3: You know, in the first quarter, we had just—I'll give you the receivers, and maybe give you the payers too, for the offset. But we were $50 billion effective in Q1, with $24 billion of payers.

Speaker #4: So net effective 40 billion or so. That steps up on an effective basis for Q3 to about 80 billion. And then up to 85 billion in Q4.

Speaker #3: So we call it net receive, $26 billion. In this most recent quarter, we were $63 billion effective. So call it plus 13 from Q1, payers relatively constant.

Speaker #4: And the payers are pretty much call it 23 billion for the rest of the year. So as those come on, obviously, depending on where we are from a SOFR perspective, that will add some pressure.

Speaker #3: So, net effective, $40 billion or so. That steps up on an effective rate, effective basis for Q3 to about $80 billion, and then up to $85 billion in Q4.

Speaker #4: And that's incorporated. You'll see that in the loan yields. And the receive rate there, call it 340.

Speaker #3: And the payers are pretty much, call it $23 billion for the rest of the year. So as those come on, obviously depending on where we are from a SOFR perspective, you know, that will add, you know, some pressure.

Speaker #5: And by the end of the year, we're kind of there. I know you'll continue to work the portfolio just depending on where rates go.

Mike Maguire: As those come on, obviously depending on where we are from a SOFR perspective, that will add some pressure, and that's incorporated. You'll see that in the loan yields. That's the receive right there, call it 340.

Speaker #5: But.

Speaker #4: It wasn't a very active quarter for us in terms of any swap activity we did. Just like we did in the first quarter, we took a small handful and deferred the effective start dates.

Speaker #3: And that's incorporated. You'll see that in the loan yields. And the receive rate there, call it 3.40%.

Speaker #5: And by the end of the year, we're kind of there. I know you'll continue to work the portfolio, just depending on where rates go.

Ken Usdin: By the end of the year, are we kind of there? I know you'll continue to

Speaker #4: I think we peak in Q1 of '27, and that's call it high 90s. And then I think from there would begin to decline.

Mike Maguire: No

Mike Maguire: rework the portfolio just depending on where the rates go.

Speaker #5: But.

Speaker #3: It wasn't a very active quarter for us in terms of any, you know, swap activity we did. Just like we did in the first quarter, we took a small handful and deferred the effective start dates.

Mike Maguire: It wasn't a very active quarter for us in terms of any swap activity we did. Just like we did in Q1, we took a small handful and deferred the effective start dates. I think we peak in Q1 of 2027, and that's call it high 90s, and then I think from there would begin to decline.

Speaker #5: Okay, got it. Thanks, Mike.

Speaker #4: You got it.

Speaker #3: Thank you. And our next question today comes from Erica Durian with UBS. Please go ahead.

Speaker #3: I think we peak in Q1 of '27, and that's, you know, call it high 90s. And then I think from there, we would begin to decline.

Speaker #6: Hi. Good morning and congratulations, Bill. I hope you enjoy your retirement. I still remember meeting you at SunTrust, and you've been great. So I hope you enjoy your retirement.

Speaker #5: Okay, got it. Thanks, Mike.

Ken Usdin: Okay. Got it. Thanks, Mike.

Speaker #3: You got it.

Mike Maguire: You got it.

Speaker #2: Thanks, Erica.

Speaker #1: Thank you. And our next question today comes from Eric Darian with UBS. Please go ahead.

Speaker #6: You're welcome. You were our chairman of the board. When you decided to name Mike Lyons as your successor, obviously, he was inside of PNC for some time and then had a brief stint at Pfizer.

Operator: Thank you. Our next question today comes from Erika Najarian with UBS. Please go ahead.

Erika Najarian: Hi. Good morning. Congratulations, Bill. I hope you enjoy your retirement. I still remember meeting you at SunTrust, and you've been great. I hope you enjoy your retirement.

Speaker #6: Hi, good morning, and congratulations, Bill. I hope you enjoy your retirement. I still remember meeting you at SunTrust, and you've been great. So, I hope you enjoy your retirement.

Speaker #6: You mentioned what you found in him in terms of his focus on growth. But what other characteristics did you particularly you and the board like about Mike in terms of taking this company to the future that you see?

Speaker #2: Thanks, Eric.

William H. Rogers Jr.: Thanks, Erika.

Speaker #6: You're welcome. You know, you were our chairman of the board. When you decided to name Mike Lyon as your successor, you know, obviously, he was inside of PNC for some time and then had a brief stint at Pfizer.

Erika Najarian: You're welcome. You were our Chairman of the Board when you decided to name Mike Lyons as your successor. Obviously he was inside of PNC for some time and then had a brief stint at Fiserv. You mentioned what you found in him in terms of his focus on growth. What other characteristics did you particularly, you and the Board, like about Mike in terms of taking this company to this future that you see? Maybe speak a little bit about sort of how you think he's going to frame the technology investments and potential challenges at the firm. Does he believe that this is a 16% to 18% ROTCE company over the medium term?

Speaker #6: And maybe speak a little bit about sort of how he you think he's going to frame the technology investments and potential challenges at the firm.

Speaker #6: You know, you mentioned what you found in him in terms of, like, his focus on growth. But what other characteristics did you, particularly you and the board, like about Mike in terms of taking this company to the future that you see?

Speaker #6: And does he believe that this is a 16 to 18 percent ROTC company over the medium term?

Speaker #6: You know, and maybe speak a little bit about how you think he's going to frame the technology investments and potential challenges at the firm.

Speaker #2: Yeah, thanks, Erica. I mean, succession planning is the most important work that a board does. So put that in context. And we've been at this for well over a year.

Speaker #6: And does he believe that this is a 16% to 18% ROIC company over the medium term?

Speaker #2: Thinking about my timeline, but more importantly, thinking about what's the right time for the company? And are we hitting on cylinders and is this the right time for a transition?

Speaker #2: Yeah, thanks, Eric. You know, I mean, succession planning is the most important work that a board does. You know, so put that in context.

William H. Rogers Jr.: Yeah. Thanks, Erika. Succession planning is the most important work that a Board does. Put that in context. We've been at this for well over a year, thinking about my timeline, but more importantly, thinking about what's the right time for the company, and are we hitting on cylinders, and is this a right time for a transition? Then we spent a lot of time thinking about what is the future leader of this, not only company, but this industry look like.

Speaker #2: And then we spent a lot of time thinking about what is the future leader of this not only company, but this industry look like?

Speaker #2: And we've been at this, you know, for well over a year. You know, thinking about my timeline, but more importantly, thinking about, like, what's the right time for the company.

Speaker #2: And we did a lot of profile work against that. And I think that future leader not only has a lot of understanding about sort of the core businesses and business that we're in, but even as you noted, much more knowledge about technology and payment systems and where the proverbial puck is going.

Speaker #2: And are we firing on all cylinders, and is this the right time for a transition? And then we spent a lot of time thinking about, you know, what does the future leader of not only this company, but this industry look like?

Speaker #2: Or maybe where the ball's going now that we're in World Cup time. But so those were the criteria upon which we evaluated how we wanted to think about things.

William H. Rogers Jr.: We did a lot of profile work against that. I think that future leader not only has a lot of understanding about sort of the core businesses and business that we're in, but even as you noted, much more knowledge about technology and payment systems and where the proverbial puck is going, or maybe where the ball's going now that we're in World Cup time. Those were the criteria upon which we evaluated how we wanted to think about things. I think Mike fits that perfectly. Strong commitment to performance, great track record, really strong knowledge of the payments business. Probably a PhD course in the technology side at Fiserv as well. Having a chance to look across a lot of spectrum and see what others are doing. Experience as a CEO. Then being a purposeful leader.

Speaker #2: And we did a lot of profile work against that. And I think that future leader not only has a lot of understanding about, you know, sort of the core businesses and business that we're in, but, you know, even as you noted, much more knowledge about technology and payment systems and the—you know, where the proverbial puck is going.

Speaker #2: And I think Mike sits at perfectly. Strong, commitment to performance, great track record, really strong knowledge of the payments business, probably a PhD course in the technology side at Pfizer as well.

Speaker #2: And maybe where the ball's going now that we're in World Cup time. But, so those were the criteria upon which we evaluated how we wanted to think about things.

Speaker #2: So having a chance to look across a lot of spectrum and see what others are doing. Experience as a CEO. And then being a purposeful leader.

Speaker #2: And I think Mike sits at like perfectly. You know, strong commitment to performance, you know, great track record, really strong knowledge of the payments business, probably a PhD, you know, course in the technology side at Pfizer as well.

Speaker #2: I mean, so remember, that's an important part of our context as well as someone who really cares about the communities we serve and cares about the teammates and focuses on our purpose.

Speaker #2: So, having a chance to look across a lot of the spectrum and see what others are doing, experience as a CEO, and then being a purposeful leader.

Speaker #2: As it relates to the specific targets, I can speak for Mike and the board, I think, as I did in my prepared comments. Our goal is to be a high-performing company.

Speaker #2: I mean, so remember, that's an important part of our context as well, as someone who really cares about the communities we serve and cares about the teammates, and, you know, focuses on our purpose.

William H. Rogers Jr.: Remember, that's an important part of our context as well, as someone who really cares about the communities we serve and cares about the teammates and focuses on our purpose. As it relates to the specific targets, I can speak for Mike and the board, I think as I did in my prepared comments. Our goal is to be a high-performing company. I think 16% to 18% reflects that journey. Mike came in here to lead and run a high-performing company, I don't think there will be any doubt about that. Relative to the investments that need to be made and the journey and the place that we go, he will have the requisite flexibility to think about how to achieve efficiencies and how to invest. I think today we've got a really good platform of discovery.

Speaker #2: So I think 16 to 18 percent reflects that journey. So Mike came in here to go, to lead and run a high-performing company. And I don't think there'll be any doubt about that.

Speaker #2: As it relates to the specific targets, you know, I can speak for Mike and the board—I think, as I did in my prepared comments.

Speaker #2: Our goal is to be a high-performing company. You know, so and I think 16 to 18 percent, you know, reflects that journey. So Mike came in here to, you know, to lead and run a high-performing company.

Speaker #2: Relative to the investments that need to be made and the journey and the place that we go. He'll have the requisite flexibility to think about how to achieve efficiencies and how to invest.

Speaker #2: I think today we've got a really good platform of discovery, give a lot of credit to Mike McGuire of building the platform such that the dashboard will be very clear to Mike.

Speaker #2: And I don't think there'll be any doubt about that. Relative to the investments that need to be made and the journey and the place that we go, you know, he'll have the requisite flexibility to think about how to achieve efficiencies and how to invest.

Speaker #2: It won't be confusing in terms of where the opportunities are and where to invest for the long term. But look, he's got a lot of incredible strong qualities, but look, also, he's got a great team.

Speaker #2: I think today we've got a really good platform of discovery. I want to give a lot of credit to Mike Maguire for building the platform, such that the dashboard will be very clear to Mike.

William H. Rogers Jr.: Give a lot of credit to Mike Maguire of building a platform such that the dashboard will be very clear to Mike. It won't be confusing in terms of where the opportunities are and where to invest for the long term. Look, he's got a lot of incredible strong qualities. Look, also, he's got a great team. You can see the results, and a team that's deep. The succession planning is not only at the CEO level, but it runs all the way through the company. We've got a deep team sort of ready to go, fired up. Everyone's committed to running a high-performing company and achieving what we all see as not only the potential but the opportunity for Truist.

Speaker #2: You can see the results. And a team that's deep. So this succession planning is not only at the CEO level, but it runs all the way through the company.

Speaker #2: It won't be confusing in terms of, you know, where the opportunities are and, you know, where to invest for the long term. But look, he's got a lot of, you know, incredibly strong qualities.

Speaker #2: So we've got a deep team sort of ready to go fired up. And everyone's committed running a high-performing company in achieving what we all see as not only the potential, but the opportunity for truest.

Speaker #2: But look, also, he's got a great team. You know, you can see the results—and a team that's deep. So this succession planning is not only at the CEO level, but it runs all the way through the company.

Speaker #6: And just as a follow-up, I think the other investors would agree with you, Bill, that you do have a deep team. What have the conversations been like sort of underneath the surface in terms of top producers, the producers that we don't meet on the street?

Speaker #2: So we've got a deep team sort of ready to go, you know, fired up. And everyone's committed—running a high-performing company and achieving what we all see as not only the potential, but the opportunity for Truist.

Speaker #6: Obviously, having a CEO, an outsider CEO announcement can be a little bit jarring. But has there been sort of outreach, whether it is conversations like with a top talent in terms of reassuring them that they're going to be part of this deep team going forward?

Speaker #6: And just as a follow-up, I think the other investors would agree with you, Bill, that you do have a deep team. What have the conversations been like, sort of underneath the surface, in terms of, you know, top producers—the producers that we don't meet on the street? You know, obviously, having a CEO, an outsider CEO announcement, can be a little bit jarring.

Erika Najarian: Just as a follow-up, I think the other investors would agree with you, Bill, that you do have a deep team. What have the conversations been like sort of underneath the surface in terms of top producers, the producers that we don't meet on the street? Obviously, having an outsider CEO announcement can be a little bit jarring. Has there been sort of outreach? What are those conversations like with the top talent in terms of reassuring them that they're going to be part of this deep team going forward?

Speaker #2: Erica, my philosophy and our leadership team philosophy is we re-recruit everyone every day. So that's the mindset that we have in our company. And so we're on that journey.

Speaker #6: But, you know, has there been sort of outreach, whether it is conversations like with a top talent in terms of, you know, like reassuring them that they're going to be part of this deep team going forward?

Speaker #2: Look, I think they see what we see. They feel the opportunity. They see the future. They see what we're building that allows them to not only be successful in their jobs, but to be successful in their careers because we're building great opportunities.

Speaker #2: Like Eric, my philosophy—and our leadership team’s philosophy—is that we re-recruit everyone every day. You know, so that's the mindset that we have in our company.

William H. Rogers Jr.: Erika, my philosophy and our leadership team philosophy is we re-recruit everyone every day. That's the mindset that we have in our company. We're on that journey. Look, I think they see what we see. They feel the opportunity. They see the future. They see what we're building that allows them to not only be successful in their jobs but to be successful in their careers because we're building great opportunities. That's a key value for our teammates is build meaningful careers. Are we re-recruiting? Yes. Are we recruiting every day? Are people excited? Yes. They see the potential of where we're going in the future. I think also certainty helps. Probably a little uncertainty as to my timeline. Now we have a lot of certainty and people leaning in and leaning forward.

Speaker #2: And so he values for our teammates is build meaningful careers. So are we re-recruiting? Yes. But we recruit every day. Are people excited? Yes.

Speaker #2: And so we're on that journey. Look, I think they see what we see. They feel the opportunity. They see the future.

Speaker #2: They see what we're building. That allows them to not only be successful in their jobs, but to be successful in their careers, because we're building great opportunities.

Speaker #2: They see the potential of where we're going in the future. So I think also certainty helps. And so probably a little uncertainty as to my timeline and now we have a lot of certainty and people leaning in and leaning forward.

Speaker #2: That's a key value for our teammates—is building meaningful careers. So, are we re-recruiting? Yes. But we recruit every day. Are people excited? Yes.

Speaker #2: And I think the best thing for top performers is an incredible platform, career opportunity, and a lot of certainty. And I think that's what we're delivering.

Speaker #2: They see the potential of where we're going in the future. So I think also, certainty helps. And so there was probably a little uncertainty as to, you know, my timeline, and now we have a lot of certainty and people leaning in and leaning forward.

Speaker #6: Thank you for your answers. And also just congratulations again. And I just want to give you a shout-out, Bill, that not only you have a good reputation as a leader, but a great reputation for being a top-notch human being.

Speaker #2: And I think, you know, the best thing for, you know, top performers is an incredible platform, career opportunity, and a lot of certainty. And I think that's what we're delivering.

William H. Rogers Jr.: I think the best thing for top performers is an incredible platform, career opportunity, and a lot of certainty. I think that's what we're delivering.

Speaker #6: So you will be missed.

Speaker #2: Well, Erica, thanks for that.

Speaker #1: Thank you. And our next question today comes from Manon Ghazalia with Morgan Stanley. Please go ahead.

Speaker #6: Thank you for your answers, and also, just congratulations again. I just want to give you a shout-out, Bill, that not only do you have a good reputation as a leader, but also a great reputation for being a top-notch human being.

Erika Najarian: Thank you for your answers. Congratulations again. I just want to give you a shout-out, Bill, that not only you have a good reputation as a leader, but a great reputation for being a top-notch human being. You will be missed.

Speaker #3: Hey, good morning. And Bill, I'll echo the best wishes for your retirement. Congratulations. For my question, I apologize if this is a little repetitive, but you spoke about full-year loan spreads down 5 to 10 basis points year on year if you keep spreads where they are today.

Speaker #6: So you will be missed.

Speaker #2: Well, Eric, thanks for that.

William H. Rogers Jr.: Well, Erika, thank you for that.

Speaker #1: Thank you. And our next question today comes from Manon Ghazalia with Morgan Stanley. Please go ahead.

Operator: Thank you. Our next question today comes from Manan Gosalia with Morgan Stanley. Please go ahead.

Speaker #7: Hey, good morning. And Bill, I'll echo the best wishes for your retirement—congratulations. For my question, I apologize if this is a little repetitive, but you spoke about full-year loan spreads down 5 to 10 basis points year over year if you keep spreads where they are today.

Manan Gosalia: Hey, good morning. Bill, I'll echo the best wishes for your retirement. Congratulations. For my question, I apologize if this is a little repetitive, but you spoke about full-year loan spreads down 5 to 10 basis points year-on-year if you keep spreads where they are today. You spoke about the mix shift in loans, the mix shift in DDA balances, yield-seeking behavior from deposit holders. Can you put it all together for us and go through the assumptions baked into the new NII guide on the incremental changes to each of these components from here? I'm just trying to assess the comfort level on the new guide and what the risk will be.

Speaker #3: You spoke about the makeshift in loans, the makeshift in DDA balances, yield-seeking behavior from deposit holders, can you put it all together for us and go through the assumptions baked into the new NII guide on the incremental changes to each of these components from here?

Speaker #7: You spoke about the mix shift in loans, the mix shift in DDA balances, and yield-seeking behavior from deposit holders. Can you put it all together for us and walk through the assumptions baked into the new NII guide on the incremental changes to each of these components from here?

Speaker #3: I'm just trying to assess the comfort level on the new guide and what the risk would be.

Speaker #2: Yeah. Yeah. Hey, it's Mike. I'll take that one. I think I've given you some of it. I mean, I think on the I'd say maybe I'll give it to you in terms of relative proportion.

Speaker #2: I think the most impactful component of the three headwinds we discussed is the unfavorable deposit mix, right? So I think that as we, again, just to say it, still feel quite good about the fact that we're onboarding a lot of new clients, we're defending the right clients in the right opportunities, we're going to be growing client deposits this year, but the mix is going to be not as favorable as we expected at the beginning of the year or even last quarter.

Speaker #7: You know, I'm just trying to assess the comfort level on the new guide and what the risk would be.

Speaker #2: Yeah. Yeah, hey, it's Mike. I'll take that one. I think I've given you some of it. I mean, I think on the—I'd say maybe I'll give it to you in terms of relative proportion.

Mike Maguire: Yeah. Hey, Manan, it's Mike. I'll take that one. I think I've given you some of it. Maybe I'll give it to you in terms of relative proportions. I think the most impactful component of the three headwinds we discussed is the unfavorable deposit mix, right? I think that as we, again, just to say it, still feel quite good about the fact that we're onboarding a lot of new clients. We're defending the right clients and the right opportunities. We're going to be growing client deposits this year. The mix is going to be not as favorable as we expected at the beginning of the year or even last quarter. DDA is a good example. I think I mentioned we remixed closer to 25% by the end of the year.

Speaker #2: I think the most impactful component of the three headwinds we discussed is the unfavorable deposit mix, right? So I think that, you know, as we, again, just to say it, still feel, you know, quite good about, you know, the fact that we're, you know, onboarding a lot of new clients, we're defending the right clients and the right opportunities, we're going to be growing client deposits this year, but the mix is going to be not as favorable as we expected, you know, at the beginning of the year or even last quarter.

Speaker #2: And so DDA is a good example. I think I mentioned we remix closer to 25% by the end of the year. Loan spreads, again, I think coming into the year, and throughout a lot of the first half, we did have an expectation that we would see some widening.

Speaker #2: We did see it bounce around a little bit. But based on what we've seen so far and based on our new outlook, we do expect on a full-year basis to have spreads down, call it 5 to 10 basis points.

Speaker #2: And so, you know, DDA is a good example. I think I mentioned we remix closer to 25% by the end of the year. You know, loan spreads—again, you know, I think coming into the year and throughout a lot of the first half, we did have an expectation that we would see some widening.

Mike Maguire: Loan spreads, again I think coming into the year and throughout a lot of the H1, we did have an expectation that we would see some widening. We did see it bounce around a little bit. Based on what we've seen so far and based on our new outlook, we do expect on a full-year basis to have spreads down, call it 5 to 10 basis points. We reprice about $30 billion of loans a quarter. 10 of it's fixed, 20 floating. If that gives you some sense for magnitude. That's probably the second most important factor. The reducing volume on the consumer stuff is important too, but it's not as important as those other two factors.

Speaker #2: We reprice about $30 billion of loans a quarter, 10 of it's fixed, 20 floating. If that gives you some sense for magnitude, that's probably the second most important factor.

Speaker #2: The reducing volume on the consumer stuff, it's important too, but it's not as important as those other two factors.

Speaker #2: We reprice about $30 billion of loans a quarter. You know, $10 billion of it's fixed, $20 billion floating. If that gives you some sense for magnitude, that's probably the second most important factor.

Speaker #3: Got it. Thank you. And I guess on the capital side, just given some of the changes in loan mix, and moving some loan production away from less profitable loans, I guess, why not do more than $5 billion in buybacks in the year?

Speaker #2: The reducing volume on the consumer stuff is important too, but it's not as important as those other two factors.

Speaker #3: Clearly, you have a lot of excess capital right now.

Speaker #7: Got it, thank you. And, you know, I guess on the capital side, just given some of the changes in loan mix, and, you know, moving some loan production away from less profitable loans, I guess why not do more than $5 billion in buybacks in the year?

Speaker #2: Yeah. We've talked about this a little bit in the past because this has been a question look, if you look at our buyback at $5 billion, we're pretty elevated, right?

Manan Gosalia: Got it. Thank you. I guess on the capital side, just given some of the changes in loan mix and moving some loan production away from less profitable loans, I guess why not do more than $5 billion in buybacks in the year? Do you have a lot of excess capital right now?

Speaker #2: We've got a total net payout ratio above 100%. By the way, we think that's appropriate. Given our capital position, but we think it's I think a prudent approach to be somewhat thoughtful in our glide path.

Speaker #7: Clearly, you have a lot of excess capital right now.

Speaker #2: Yeah, we've talked about this a little bit in the past, because this has been a question. Look, if you look at our buyback, you know, at $5 billion, we're pretty elevated, right?

Mike Maguire: Yeah. We've talked about this a little bit in the past because this has been a question. Look, if you look at our buyback at $5 billion, we're pretty elevated, right? We've got a total net payout ratio above 100%. By the way, we think that's appropriate given our capital position. We think it's a prudent approach to be somewhat thoughtful in our glide path. We've said we want to be at 10% by the end of 2027. If you take that literally, that implies that we're going to continue to return a significant amount of capital to shareholders throughout the rest of this year and next year, and that gets us to that 10%. Look, we're conscious always of market factors. We're conscious including, by the way, opportunities to grow. If we see outsized profitable growth opportunities, that's our first priority when it comes to capital.

Speaker #2: So we've said we want to be at 10% by the end of '27. If you take that literally, that implies that we're going to continue to return a significant amount of capital to shareholders throughout the rest of this year and next year.

Speaker #2: We've got a total like net payout ratio above 100%. By the way, we think that's appropriate. You know, given our capital position. But we think it's I think a prudent approach to be somewhat thoughtful in our glide path.

Speaker #2: And that gets us to that 10%. And look, we're conscious always of market factors. We're conscious, including, by the way, opportunities to grow. If we see outsized profitable growth opportunities, that's our first priority when it comes to capital.

Speaker #2: So, we've said we want to be at 10% by the end of '27. You know, if you take that literally, that implies that we're going to continue to return a significant amount of capital to shareholders.

Speaker #2: So we feel good about the $5 billion this year. And really not ready to talk about next year at this point, but also do feel good about that 10% and that glide path.

Speaker #2: You know, throughout the rest of this year and next year, and that gets us to that 10%. And look, you know, we're always conscious of market factors.

Speaker #2: Yeah. I think to your point, Mike, there's just a lot to have a more durable capital plan. And I think that's the so having really good capital, which has been a lot of our RWA efforts and things that we've done, I think just gives us a more durable flight path with a lot of flexibility.

Speaker #2: We're conscious, including, by the way, opportunities to grow. If we see outsized, profitable growth opportunities, you know, that's our first priority when it comes to capital.

Speaker #2: So, you know, we feel good about the $5 billion this year, and, you know, really not ready to talk about next year at this point, but also do feel good about that 10% and that glide path.

Mike Maguire: We feel good about the $5 billion this year and really not ready to talk about next year at this point. Also do feel good about that 10% and that glide path.

Speaker #2: Yeah, I think, you know, to your point, Mike, there's just a lot to having a more durable capital plan. And I think that's the—you know, having really good capital, which has been a lot of our RWA efforts and things that we've done, I think just gives us a more durable flight path with a lot of flexibility.

Speaker #3: Great. Thank you.

William H. Rogers Jr.: Yeah, I think to your point, Mike, this just allows us to have a more durable capital plan. I think that's having really good capital, which has been a lot of our RWA efforts and things that we've done, I think just gives us a more durable flight path with a lot of flexibility.

Speaker #1: Thank you. And due to time constraints, we do ask that going forward, that you please limit yourself to one question. Thank you. Our next question comes from Mike Mayo with Wells Fargo Securities.

Speaker #1: Please go ahead.

Speaker #4: Hey, Bill. From another comment, I do think you're a great human being, but as you know, I've been extremely disappointed about the results this decade.

Speaker #7: Great. Thank you.

Manan Gosalia: Great. Thank you.

Speaker #1: Thank you. And due to time constraints, we do ask that, going forward, you please limit yourself to one question. Thank you. Our next question comes from Mike Mayo with Wells Fargo Securities.

Operator: Thank you. Due to time constraints, we do ask that going forward that you please limit yourself to one question. Thank you. Our next question comes from Mike Mayo with Wells Fargo Securities. Please go ahead.

Speaker #4: Where the stock has been kind of dead money when the stock bankrupt almost half and the S&P is almost double. So I've been very frustrated over time.

Speaker #1: Please go ahead.

Mike Mayo: Hey, Bill. From the other comments, I do think you're a great human being, as you know, I've been extremely disappointed about the results this decade, where the stock has been kind of dead money when the stock banks are up almost half and the S&P's almost double. I've been very frustrated over time. We're not here to relitigate what happened in the last decade. As you look going forward, what do you think can be done better? What's your advice? What have you learned about investing for better growth than you've seen, especially with population growth in your footprint, almost as you've said, 50% better than average? Thank you.

Speaker #8: Hey, Bill. From another comment, I do think you're a great human being, but as you know, I've been extremely disappointed about the results this decade.

Speaker #4: So we're not here to relitigate what happened in the last decade. But as you look going forward, what do you think can be done better?

Speaker #8: Where the stock has been kind of dead money when the stock bankrupt almost half in the S&P is almost double. So I've been very frustrated over time.

Speaker #4: What's your advice? What have you learned about investing for better growth than you've seen, especially with population growth in your footprint almost, as you've said, 50% better than average?

Speaker #8: So we're not here to relitigate what happened in the last decade, but as you look going forward, what do you think can be done better?

Speaker #4: Thank you.

Speaker #2: Yeah. Mike, look, we also want to have and are positioned to have a high-performing company. So we're aligned in terms of that objective. I think all the things that we've talked about here are the things that we're doing to position our company for growth.

Speaker #8: What's your advice? What have you learned about investing for better growth than you've seen, especially with population growth in your footprint, you know, almost, you know, as you've said, 50% better than average?

Speaker #8: Thank you.

Speaker #2: We've made a lot of significant investments in technology, a lot of significant investments in talent. But I think most importantly, we're strategically aligned. So people have clear goals about what it means to be a high-performing company.

Speaker #2: Yeah, Mike, look, we also, you know, want to have and are positioned to have a high-performing company. So we're aligned in terms of that objective.

William H. Rogers Jr.: Yeah, Mike, look, we also want to have and are positioned to have a high-performing company. We're aligned in terms of that objective. I think all the things that we've talked about here are the things that we're doing to position our company for growth. We've made a lot of significant investments in technology, a lot of significant investments in talent. I think most importantly, we're strategically aligned. People have clear goals about what it means to be a high-performing company. We've established those with a lot of clarity. Quarter by quarter, we're making progress against those objectives. What my advice would be is to stay on that track. I think what Mike will be able to do is to provide some acceleration, some assurance, some in fairness intensity against that long-term objective. I think we're just really extremely well-positioned.

Speaker #2: I think all the things that we've talked about here are the things that we're doing to position our company for growth. We've made a lot of significant investments in technology, and a lot of significant investments in talent.

Speaker #2: We've established those with a lot of clarity. And quarter by quarter, we're making progress against those objectives. So what my advice would be is to stay on that track.

Speaker #2: But I think most importantly, we're strategically aligned. People have clear goals about what it means to be a high-performing company, and we've established those with a lot of clarity.

Speaker #2: And I think what Michael will be able to do is to provide some acceleration some assurance, some fairness intensity against that long-term objective. And I think we're just really, really extremely well positioned.

Speaker #2: And quarter by quarter, we're making progress against those objectives. So, you know, what my advice would be is to stay on that track. And I think what Mike will be able to do is provide some acceleration, some assurance, some fairness, and intensity against that long-term objective.

Speaker #2: I feel really good about the baton passing, but also feel really good about if you think about the 400 four by 100 relay, when we're passing the baton with somebody can run the last lap in a lot of speed.

Speaker #2: Against a really common objective. So I think we're well positioned I think the decisions we've made are particularly over the last year providing a lot of clarity for shareholders about the direction is the exact path.

Speaker #2: And I think we're just really, really extremely well positioned. I feel really good about the baton passing, but also feel really good about if you think about the 400, you know, four by 100 relay when we're passing the baton with somebody can run the last lap in a lot of speed.

William H. Rogers Jr.: I feel really good about the baton passing, also feel really good about if you think about the 400, four by 100 relay. I mean, we're passing the baton where somebody can run the last lap at a lot of speed against a really common objective. I think we're well-positioned. I think the decisions we've made, particularly over the last year, providing a lot of clarity for shareholders about the direction is the exact path, now it's just more foot on the accelerator.

Speaker #2: And now it's just more foot on the accelerator.

Speaker #4: All right. Hopefully, no one drops the baton. Thank you.

Speaker #2: Against a really common objective. So I think we're well positioned. I think the decisions we've made, particularly over the last year, are providing a lot of clarity for shareholders about the direction and the exact path.

Speaker #1: Thank you. And our next question today comes from Ibrahim Punawala with Bank of America. Please go ahead.

Speaker #5: Hey, good morning. Bill, congratulations and all the best in retirement. Just as a follow-up to your response in terms of what my clients would do the acceleration part, just maybe spend a few minutes talking about that.

Speaker #2: And now it's, you know, just more foot on the accelerator.

Speaker #8: All right. Hopefully, no one drops the baton. Thank you.

Mike Mayo: All right. Hopefully no one drops the baton. Thank you.

Speaker #1: Thank you. And our next question today comes from Ibrahim Punawala with Bank of America. Please go ahead.

Operator: Thank you. Our next question today comes from Ebrahim Poonawala with Bank of America. Please go ahead.

Speaker #5: As shareholders, we all think about is Mike going to be a change agent? Do things differently? Should we expect him to lay out a plan, maybe tied to the acceleration you mentioned?

Speaker #9: Hey, good morning. Bill, congratulations and all the best. In terms of the entertainment, just as a follow-up to your response: what would my clients do regarding the acceleration part? Maybe just spend a few minutes talking about that.

Ebrahim Poonawala: Good morning, Bill. Congratulations and all the best in retirement. Just as a follow-up to your response in terms of what Mike Lyons could do, the acceleration part, just maybe spend a few minutes talking about that. As shareholders, we all think about is Mike going to be a change agent, do things differently? Should we expect him to lay out a plan maybe tied to the acceleration you mentioned? Just level set those expectations for us as you've gone about recruiting him and going through that process of what that acceleration means. What's not being done today that Mike will be able to do? Is thinking about Mike bringing in meaningful change misguided? Thanks.

Speaker #5: Just level set those expectations for us as you've gone about recruiting him and going through that process of what that acceleration means. What's not being done today that Mike will be able to do?

Speaker #9: As shareholders, we all wonder: Is Mike going to be a change agent? Will he do things differently? Should we expect him to lay out a plan—maybe tied to the acceleration you mentioned?

Speaker #5: Or is thinking about Mike bringing a meaningful change misguided? Thanks.

Speaker #2: Yeah. Look, I want to be careful about laying out Mike's plan in today's call. But if you think about the strengths that he brings to our organization, think about his operating performance, his knowledge of the payments business, places where we're investing and want to grow our business.

Speaker #9: Just level-set those expectations for us as you've gone about recruiting him and going through that process—what does that acceleration mean? What’s not being done today that Mike will be able to do?

Speaker #9: Or is thinking about Mike bringing a meaningful change misguided? Thanks.

Speaker #2: Yeah, look, I want to be careful about laying out Mike's plan, you know, in today's call. But if you think about the strengths that he brings to our organization, think about, you know, his operating performance, his knowledge of the payments business, you know, places where we're investing and want to grow our business.

William H. Rogers Jr.: Yeah, look, I want to be careful about laying out Mike's plan, in today's call. If you think about the strengths that he brings to our organization, think about his operating performance, his knowledge of the payments business, places where we're investing and want to grow our business, and a platform from which to operate. I mean, we want to set a fantastic table. I mean, back to the earlier comments with capital flexibility and capacity to invest and getting the platform at such a place that every incremental dollar has a more higher return profile from both an income and a capital standpoint. I think that's the setting the table component of this. I think let's let Mike come in and talk about what he wants to do. Back to my earlier comment. Mike came here to lead a high-performing company.

Speaker #2: And a platform from which to operate. I mean, we want to set up fantastic table. I mean, back to the earlier comments with capital flexibility and capacity to invest and getting the platform in such a place that every incremental dollar has a more higher return profile from both an income and a capital standpoint.

Speaker #2: And a platform from which to operate. I mean, we want to set a fantastic table. I mean, back to the earlier comments, with capital flexibility and, you know, capacity to invest, and, you know, getting the platform in such a place that every incremental dollar has a higher return profile from both an income and a capital standpoint.

Speaker #2: I think that's the setting the table component of this. But I think let's let Mike come in and talk about what he wants to do.

Speaker #2: Back to my earlier comment, Mike came here to lead a high-performing company. That was the direction from the board. And that's the clear mandate.

Speaker #2: I think that's the 'setting the table' component of this. But I think let's let Mike come in and talk about what he wants to do.

Speaker #2: And by the way, that's the mandate all the way through every teammate at Truist in terms of what we're trying to accomplish. So I don't think from a global where we're going perspective, we're going to have any misalignment.

Speaker #2: Going back to my earlier comment, Mike came here to lead a high-performing company. That was the direction from the board, and that's the clear mandate.

Speaker #2: How Mike wants to accomplish that at what speed and where he's going to place particular emphasis. I think let's wait for Mike.

William H. Rogers Jr.: That was the direction from the board. That's the clear mandate. By the way, that's the mandate all the way through every teammate at Truist in terms of what we're trying to accomplish. I don't think from a global where we're going perspective, we're going to have any misalignment. How Mike wants to accomplish that, at what speed, and where he's going to place a particular emphasis, I think let's wait for Mike.

Speaker #2: And by the way, that's the mandate, you know, all the way through. Every team made it truest in terms of what we're trying to accomplish.

Speaker #5: Got it. All the best again. Thank you, Bill.

Speaker #2: Yep. Thanks.

Speaker #1: And our next question today comes from Matt O'Connor at Deutsche Bank. Please go ahead.

Speaker #2: So I don't think, from a global where-we're-going perspective, we're going to have any misalignment. How Mike wants to accomplish that, at what speed, and where he's going to place particular emphasis.

Speaker #6: Good morning. I was hoping you could just aggregate how much loan runoff there is from what you mentioned, the RV, marine, book, and then the prime auto.

Speaker #2: I think let's wait for Mike.

Speaker #6: Is that going to zero? So I realize it'll be over the course of a couple or a few years, but how much loan runoff in aggregate from those areas you've already identified?

Speaker #9: Sure. All the best again. Thank you, Bill.

Ebrahim Poonawala: Good. All the best again. Thank you, Bill.

Speaker #2: Yep, thanks.

William H. Rogers Jr.: Yeah, thanks.

Speaker #1: And our next question today comes from Matt O'Connor at Deutsche Bank. Please go ahead.

Operator: Our next question today comes from Matt O'Connor at Deutsche Bank. Please go ahead.

Speaker #6: And then I guess why make the decision now to exit or run down those books? Thank you.

Speaker #10: Good morning. I was hoping you could just aggregate how much loan runoff there is from what you mentioned—the RV/Marine book, and then the prime auto, you know, that going to zero.

Matt O'Connor: Good morning. I was hoping you could just aggregate how much loan runoff there is from what you mentioned, the Marine RV book, and then the Prime Auto declining zero. I realize it'll be over the course of a couple or few years. How much more runoff in aggregate from those areas you've already identified? I guess why make the decision now to exit or run down those books? Thank you.

Speaker #2: Yeah. I'll start with the

Speaker #3: last question. Matt, good morning. It's not really a why now. I think what we've seen is we've been talking about de-emphasizing some of these portfolios for some time now, perhaps to a lesser extent.

Speaker #10: So, I realize it'll be over the course of a couple or a few years, but how much loan runoff in aggregate from those areas you've already identified?

Speaker #10: And then, I guess, why make the decision now to exit or run down those books? Thank you.

Speaker #3: And as we've seen success, as we've become more assertive in how we're sort of managing some of that growth, we've simply accelerated it. I gave you a sense for the year-over-year production change, call it seven, eight billion across those portfolios.

Speaker #2: Yeah, I'll start with the last question. Matt, good morning. You know, it's not really a 'why now.' I think it's what we've seen is, you know, we've been talking about de-emphasizing some of these portfolios for some time now.

Mike Maguire: Yeah, I'll start with the last question. Matt, good morning. It's not really a why now. I think what we've seen is, we've been talking about de-emphasizing some of these portfolios for some time now, perhaps to a lesser extent. As we've seen success, as we've become more assertive in how we're sort of managing some of that growth, we've simply accelerated it. I gave you a sense for the year-over-year production change, call it $7 billion, $8 billion across those portfolios. That's just on a few of those that we identified. Our indirect auto business Prime is around a $20 billion business. TRACs another four or five, so call it 25 of auto. Marine RV was a smaller portfolio, call it $4 billion.

Speaker #3: That's just on a few of those that we identified. Our indirect auto business prime is around a $20 billion business, racks another four or five, so call it 25 of auto.

Speaker #2: Perhaps to a lesser extent. And as we've seen success, as we've become more assertive in how we're managing some of that growth, we've simply accelerated it.

Speaker #2: You know, I gave you a sense for the year-over-year production change—call it $7 billion, $8 billion—across those portfolios. That's just on a few of those that we identified.

Speaker #3: Marine RV was a smaller portfolio, call it 4 billion. And so that stuff, A, will be producing less of it and B, it's generally pretty short weighted average life stuff, call it two and a half, three years.

Speaker #2: You know, our indirect auto business, prime, is around a $20 billion business. Racks, you know, another four or five, so call it $25 billion of auto.

Speaker #3: So I think you'll see us remix again, and Bill mentioned, by the way, there are parts of the consumer-linked portfolio that we are quite fond of.

Speaker #2: Marine RV was a smaller portfolio, call it four billion. And so that stuff, A, will be producing less of it and B, it's generally pretty short weighted average life stuff, you know, call it two and a half, three years.

Mike Maguire: That stuff, A, we'll be producing less of it, and B, it's generally pretty short weighted average life stuff, so we'll call it two and a half, three years. I think you'll see us remix. Again, Bill mentioned, by the way, there are parts of the consumer loan portfolio that we are quite fond of that are more profitable, and you'll see continued production and growth there. Again, relative to the headwinds that we articulated around our updated outlook, this is the smallest component in year, but an important one nonetheless. One that we, again, no regrets. It just doesn't fit our eyes strategically and doesn't chin the bar from a profitability perspective.

Speaker #3: That are more profitable and you'll see continued production and growth there. But again, relative to the headwinds that we articulated around our updated outlook, this is the smallest component in year but an important one nonetheless.

Speaker #2: So I think you'll see us remix again, and Bill mentioned, by the way, there are parts of the consumer-linked portfolio that we are quite fond of.

Speaker #3: And one that we again, no regrets. It just doesn't fit our eyes strategically and doesn't chin the bar from a profitability perspective.

Speaker #2: You know, that are more profitable and you'll see continued production and growth there. But, you know, again, relative to the headwinds that we articulated during our updated outlook, you know, this is the smallest component in year but an important one nonetheless.

Speaker #6: And then just to clarify, are you right-sizing auto or as of now, these plans to fully exit it? It sounds like you're exiting all the RV marine.

Speaker #3: I think it's right-sizing and this is a market this is a business that does sort of ebb and flow with depending on the competitiveness of the market and other factors.

Speaker #2: And one that we, you know, again, no regrets—you know, it just doesn't fit our eyes strategically and doesn't chin the bar from a profitability perspective.

Speaker #8: And then, just to clarify, are you right-sizing auto or, you know, as of now, at least plan to fully exit it? It sounds like you're exiting all the RV and Marine.

Matt O'Connor: Just to clarify, are you right-sizing auto? Or as of now, at least planning to fully exit it? It sounds like you're exiting all the RV and marine.

Speaker #3: Something else that we've done, we didn't talk about it, Bill mentioned it, and I mentioned it in prepared remarks, some of the work we're doing to improve our sort of the capital efficiency in some of these assets.

Mike Maguire: I think it's right-sizing, this is a business that does sort of ebb and flow.

Speaker #2: I think it's right-sizing, and this is a market—you know, this is a business that does sort of ebb and flow depending on the competitiveness of the market and other factors.

Speaker #3: We did complete two CLNs and those were both in the prime auto portfolio. So I think we have about an $11 billion reference pool.

Mike Maguire: Depending on the competitiveness of the market and other factors. Something else that we've done, we didn't talk about it. Bill mentioned it. I mentioned it in prepared remarks, some of the work we're doing to improve our sort of the capital efficiency in some of these assets. We did complete two CLNs, those were both in the Prime Auto portfolio. I think we have about an $11 billion reference pool. About half of those loans have been CLN. That significantly improves the ROTCE profile of those assets, right? Essentially selling some of the unexpected losses at a really low cost of capital. It's a long list of things we've been doing to try to improve, to get some of the drag off the wing, so to speak, and create capital flexibility for ideally, good profitable growth, but also to return capital to shareholders.

Speaker #3: So about half of those loans have been CLNed. That's significantly improved the ROTCE profile of those assets, right? Essentially selling some of the unexpected losses at a really low cost of capital.

Speaker #2: You know, something else that we've done—we didn't talk about it; Bill mentioned it, and I mentioned it in prepared remarks—is some of the work we're doing to improve our, you know, sort of the capital efficiency in some of these assets.

Speaker #2: We did complete two CLNs, and those were both in the prime auto portfolios. So, I think we have about an $11 billion reference pool.

Speaker #3: So we've been it's a long list of things we've been doing to try to improve the get some of the drag off the wings, so to speak, and create capital flexibility for ideally good profitable growth, but also to return capital to shareholders.

Speaker #2: So about half of those loans have been CLNed. That's significantly improved the ROTCE profile of those assets, right? Essentially selling some of the unexpected losses at a really low cost of capital.

Speaker #3: So it's a lot of ingredients to the recipe.

Speaker #6: Okay. That's helpful. Thank you.

Speaker #3: Yep.

Speaker #2: So we've been, you know—it's a long list of things we've been doing to try to improve the, to get some of the drag off the wing, so to speak, and create capital flexibility for ideally, you know, good profitable growth, but also to return capital to shareholders.

Speaker #1: Thank you. And our next question comes from Gerard Cassidy at RBC. Please go ahead.

Speaker #7: Good morning, Bill. Good morning, Mike.

Speaker #2: Morning, Bill.

Speaker #7: Can you give us obviously, you and I have been through a few cycles and we've remembered the dot-com boom and the SPACs that we saw during the pandemic.

Speaker #2: So, it's a lot of ingredients to the recipe.

Mike Maguire: It's a lot of ingredients to the recipe.

Speaker #8: Okay, helpful. Thank you.

Matt O'Connor: Okay. That's helpful. Thank you.

Speaker #2: Yep.

Mike Maguire: Yep.

Speaker #1: Thank you. And our next question comes from Gerard Cassidy at RBC. Please go ahead.

Operator: Thank you. Our next question comes from Gerard Cassidy at RBC. Please go ahead.

Speaker #7: Today with AI, and this is not directed specifically for investment banking, but AI is just so big in this economy today and it's hard to get our arms around the impact it's having other than its positive on the economy.

Speaker #11: Good morning, Bill. Good morning, Mike. Can you give us—obviously, you and I have been through a few cycles and we've remembered the dot-com boom and the SPACs that we saw during the pandemic.

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

William H. Rogers Jr.: Morning.

Gerard Cassidy: Bill, can you give us, obviously, you and I have been through a few cycles, and we remember the dot-com boom and the SPACs that we saw during the pandemic. Today with AI, and this is not directed specifically for investment banking, but AI is just so big in this economy today, and it's hard to get our arms around the impact it's having, other than it's positive on the economy. What are you guys looking at for the second derivatives that could impact Truist, where at some point AI will slow down in growth? Are you guys already starting to set in motion just protections about the second derivatives that could materialize over the next two, three, or four years?

Speaker #7: What are you guys looking at for the second derivatives that could impact Truist where at some point AI will lose slow down in growth?

Speaker #11: Today, with AI — and this is not directed specifically at investment banking — but AI is just so big in the economy today, and it's hard to get our arms around the impact it's having, other than it's positive on the economy.

Speaker #7: And are you guys already starting to set in motion just protections about the second derivatives that could materialize over the next two, three, or four years?

Speaker #11: What are you guys looking at for the second derivatives that could impact Truist, where at some point AI will lose or slow down in growth?

Speaker #2: Yeah. Gerard, great question. And we have been through a lot. Coming out of the last crisis, I coined an acronym which was DVD, which is diversity, velocity, and discipline.

Speaker #11: And are you guys already starting to set in motion just protections about the second derivatives that could materialize over the next two, three, or four years?

Speaker #2: And that's what we're employing. So we want to make sure that our portfolio has a ton of diversity. So don't over-concentrate in any one area that's where we've seen the challenges are.

Speaker #2: Yeah, Gerard, great question. And, you know, we have been through a lot. You know, coming out of the last crisis, I coined an acronym, which was D.V.D., which is Diversity, Velocity, and Discipline.

William H. Rogers Jr.: Yeah. Gerard, great question. We have been through a lot. Coming out of the last crisis, I coined an acronym, which was DVD, which is diversity, velocity, and discipline. That's what we're employing. We want to make sure that our portfolio has a ton of diversity. Don't over-concentrate in any one area. That's where we've seen the challenges are. Velocity, just make sure that we're trading loans and trading activity and know price discovery and know where things are because it can change fast and on a dime. The final is just have a lot of discipline. If you establish these targets and these limits, you have to live within them. Right now, there's a siren song of wanting to do more and being able to expand different places.

Speaker #2: And then velocity, just make sure that we're trading loans and trading activity and no price discovery and nowhere things are because it can change fast and on a dime.

Speaker #2: And that's what we're employing. You know, so we want to make sure that our portfolio has a ton of diversity. So don't over-concentrate in any one area.

Speaker #2: And then the final is just have a lot of discipline. So if you establish these targets and these limits, you have to live within them.

Speaker #2: That's where we've seen the, you know, challenges are. And then velocity—just making sure that we're trading loans, and trading activity, and know price discovery, and know where things are because, you know, it can change fast and on a dime.

Speaker #2: And right now, there's a siren song of wanting to do more and being able to expand different places. And you could certainly put on the accelerator and probably grow faster but we're very conscious of the discipline, discipline nature of this.

Speaker #2: And then the final thing is just to have a lot of discipline. You know, if you establish these targets and these limits, you have to live within them.

Speaker #2: And as you point, I mean, we look at secondary and tertiary impacts in any particular market, particularly related to the investments in AI. Today, that's been a lot of opportunity.

Speaker #2: And, you know, right now there's a siren song, you know, of wanting to do more and being able to expand to different places. And, you know, you could certainly put on the accelerator and probably grow faster, but we're very conscious of the, you know, the disciplined nature of this.

William H. Rogers Jr.: You could certainly put on the accelerator and probably grow faster. We're very conscious of the discipline, disciplined nature of this. As you point, I mean, we look at secondary and tertiary impacts in any particular market, particularly related to the investments in AI. Today, that's been a lot of opportunity. We want to make sure that that's back to the DVD is very diverse. I would say today, as you pointed, probably more in the category of opportunity. We're eyes wide open in terms of how we want to manage this and portfolio over time and think about the impacts that it can have on our business, and be very conscious of the risk as well.

Speaker #2: But we want to make sure that that's back to the DVD is very diverse. So I would say today, as you pointed, probably more in the category of opportunity.

Speaker #2: And as you point out, I mean, we look at, you know, secondary and tertiary impacts in any particular market, particularly related to the investments in AI. Today, there's been a lot of opportunity.

Speaker #2: But we're eyes wide open in terms of how we want to manage this and portfolio over time and think about the impacts that it can have on our business and be very, very conscious of the risk as well.

Speaker #2: But we want to make sure that, you know, back to the DDV, it is very diverse. So I would say, you know, today, as you pointed out, probably more in the category of opportunity.

Speaker #7: Very good. And like the others, good luck in your future endeavors. Thank you.

Speaker #2: Thanks so much.

Speaker #2: But we're eyes wide open. In terms of how we want to manage this and portfolio over time and think about the impacts that it can have on our business and be very, very conscious of the risk as well.

Speaker #1: Thank you. And that concludes the question and answer session. I'd like to turn the conference back over to Brad Millsaps for any closing remarks.

Speaker #5: Okay. Thank you, Rocco. That completes our earnings call. If you have any additional questions, please feel free to reach out to the investor relations team.

Speaker #5: Thank you for your interest in Truist and we hope you have a great day. Rocco, you may now disconnect the call.

Speaker #11: Very good. And like the others, good luck in your future endeavors. Thank you.

Gerard Cassidy: Very good. Like the others, good luck in your future endeavors. Thank you.

Speaker #2: Thanks so much.

William H. Rogers Jr.: Thanks so much. Thank you. That concludes the question and answer session. I'd like to turn the conference back over to Brad Milsaps for any closing remarks.

Speaker #1: Yes, sir. Thank you. And once again, that does conclude our conference call. We thank you all for attending. You may now disconnect your lines and have a wonderful rest of the day.

Speaker #1: Thank you. And that concludes the question-and-answer session. I'd like to turn the conference back over to Brad Milsaps for any closing remarks.

Speaker #3: Okay, thank you, Rocco. That completes our earnings call. If you have any additional questions, please feel free to reach out to the Investor Relations team.

Brad Milsaps: Okay. Thank you, Rocco. That completes our earnings 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. We hope you have a great day. Rocco, you may now disconnect the call.

Speaker #3: Thank you for your interest in TRUIST and we hope you have a great day. Rocco, you may now disconnect the call.

Speaker #1: Yes, sir. Thank you. And once again, that does conclude our conference call and we thank you all for attending. You may now disconnect your lines and have a wonderful rest of the day.

Operator: Yes, sir. Thank you. Once again, that does conclude our conference call. We thank you all for attending. You may now disconnect your lines. Have a wonderful rest of the day.

Q2 2026 Truist Financial Corp Earnings Call

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