Truist Financial Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
July 22, 2024

There are 14 speakers on the call.

Operator

Greetings, ladies and gentlemen, and welcome to the Truist Financial Corporation Second Quarter 2024 Earnings Conference Call. Currently, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this event is being recorded. It is now my pleasure to introduce your host, Mr.

Operator

Brad Milsaps.

Speaker 1

Thank you, Betsy, and good morning, everyone. Welcome to Truist's Q2 2024 Earnings Call. With us today are our Chairman and CEO, Bill Rogers our CFO, Mike McGuire our Vice Chair and Chief Risk Officer, Clark Starnes as well as other members of Truist's senior management team. During this morning's call, they will discuss Truist's 2nd quarter results, share their perspectives on current business conditions and provide an updated outlook for 2024. The accompanying presentation as well as our earnings release and supplemental financial information are available on the Truist Investor Relations website, ir.

Speaker 1

Truist.com. Our presentation today will include forward looking statements and certain non GAAP financial measures. Please review the disclosures on Slides 23 of the presentation regarding these statements and measures, as well as the appendix for appropriate reconciliations to GAAP. With that, I will now turn it over to Bill.

Speaker 2

Thanks, Brad, and good morning, everyone, and thank you for joining our call today. So before we discuss our Q2 results, let's begin with purpose on Slide 4. As you all know, Truist is purpose driven company dedicated to inspiring and building better lives and communities. Purpose is the foundation for things that we do. We believe purpose and performance are inextricably late.

Speaker 2

I'd like to share some of the ways we brought our purpose to life last quarter. During the quarter Truist Securities advised and served as an active joint book runner for Oglethorpe Power's inaugural $350,000,000 green bond, which will be used to support their investment in Plant Vogtle, the largest producer of clean energy in the United States. The company is committed to reducing GHG emissions while delivering cost effective and reliable clean energy with a diverse energy portfolio. This transaction represents only the 2nd green labeled bond in the U. S.

Speaker 2

Where the use of proceeds are allocated to nuclear energy. We also launched a new financial education program tailored specifically for high school and college students called Truist Life, Money and Choices. This initiative is aimed at empowering younger generations with financial lessons and essential skills to navigate their financial futures. This is just a couple of examples of how we brought our purpose to life during the quarter. I'm very proud of the meaningful work we're doing across our businesses to have a positive impact on the lives of our clients, our teammates, our communities and of course our shareholders as we work to realize our purpose.

Speaker 2

So let's turn to our key takeaways on Slide 6. On an adjusted basis, we reported net income available to common shareholders of $1,200,000,000 or $0.91 per share, which excludes the gain on the sale of Truist Insurance Holdings, the loss on the sale of certain available for sale investment securities, a charitable donation to the Truist Foundation and a few smaller items that Mike will discuss in further detail in the call. In addition, pre tax restructuring charges of 96,000,000 dollars which were primarily related to the sale of TIH and severance and also negatively impacted adjusted EPS by $0.05 per share. So looking through a few discrete items in the quarter, we're pleased with our underlying results. As you can see on the slide, our solid performance was defined by several key themes.

Speaker 2

1st, we grew adjusted revenue 3% on a linked quarter basis, which was driven by 4.5% growth in net interest income due primarily to the balance sheet reposition we completed during the quarter. 2nd, our results show our continued expense discipline and focus on managing costs. As a result of these efforts, adjusted expenses increased by 2.6% linked quarter and decreased by 3% on a year over year basis. We are fully committed to delivering our objective of keeping expenses flat in 2024 versus last year. We are also pleased that non performing loans remained relatively stable for the 5th consecutive quarter and the net charge offs were within our expectations.

Speaker 2

During the quarter, we also completed the sale of our remaining stake in Truist Insurance Holdings, which significantly strengthened our relative capital position and create substantial capacity for growth in our core banking businesses. In recognition of the incredibly long term positive impact of our insurance business, we utilize a portion of the gain to make $150,000,000 charitable contribution to the Truist Foundation to further our purpose driven work across our banking footprint for years to come. Simultaneously, with the closing of TIH, we repositioned a portion of our available for sale investment portfolio, which along with the proceeds received from the sale of TIH is expected to provide an offset to TIH earnings contribution. Mike will provide more details on these transactions later in the call. In late June, our Board authorized the repurchase of up to $5,000,000,000 of our common stock through the end of 2026.

Speaker 2

We plan to begin repurchasing our shares during the Q3 and will initially target share repurchase of approximately $500,000,000 per quarter for the remainder of the year. Finally, we continue to actively pursue growth opportunities in our core consumer and wholesale banking businesses. Although overall loan demand remained slow during the quarter, I'm encouraged by the underlying momentum in terms of increased wallet share within certain businesses and the talent we're attracting to our company, which I'm going to discuss a little later in the call. So before I hand the call over to Mike to discuss the financial performance in more detail, let me provide a quick update on the progress we're making in improving experiences for our clients on Slide 7. We continue to show strong and steady growth in our digital capabilities as client mobile app users grew 7% and the digital transactions increased 13% compared to the Q2 of last year.

Speaker 2

Transactions continue to shift towards self-service capabilities, primarily driven by strong growth in Zelle transactions, which are up 39% year over year. In addition, we added over 180,000 new accounts during the quarter, including nearly 70,000 new to bank clients through our digital channels, which represents a 17% increase over the Q2 of 2023. Importantly, digital checking account production among Gen Z and millennial clients is higher by 42% on a year over year basis. A new more modernized small business digital onboarding experience has also resulted in new high and application completion rates, while we're also seeing increased digital engagement with our small business clients. We've also made enhancements to enterprise platforms that have empowered teammates to deliver knowledge and care through 1,800,000 caring conversations, resulting in 1,400,000 accepted recommendations for great Truist products and services.

Speaker 2

These enhanced offerings coupled with strong growth in digital have resulted in higher consumer digital client satisfaction scores as we continue to focus on accelerated adoption and efficiency using our T3 strategy. Overall, I'm really proud of continued momentum Truist is making in digital engagement. So with that, let me turn over to Mike to discuss the financial results in more detail. Mike?

Speaker 3

Thank you, Bill, and good morning, everyone. Before I begin discussing our 2nd quarter results, I'd like to spend a few moments recapping the strategic actions that significantly impacted our Q2 results. 1st, on May 6, we completed the divestiture of our remaining ownership stake in Truist Insurance Holdings at an implied value of $15,500,000,000 At closing, we received after cash or after tax cash proceeds of approximately $10,100,000,000 and recorded an after tax gain of $4,800,000,000 The sale of TIH created $9,500,000,000 of capital which generated 2.30 basis points CET1 under current capital rules and 2.50 basis 54 basis points of capital under proposed fully phased in Basel III rules. Our tangible book value per share also increased by 33%. On the same day, we executed a strategic balance sheet repositioning of a portion of our available for sale investment securities portfolio.

Speaker 3

We sold approximately $27,700,000,000 of market value lower yielding investment securities which resulted in an after tax loss of $5,100,000,000 The investment securities that we sold had a book value of $34,400,000,000 and a weighted average book yield of 2.80% for the remainder of 2024 including the impact of hedges and based on the federal funds curve at that time. Including the tax benefit, the sale of investment securities generated $29,300,000,000 of proceeds available for reinvestment. When coupled with the proceeds from the sale of TIH, there were $39,400,000,000 of proceeds available for reinvestment. Of that, we invested approximately $18,700,000,000 in investment securities yielding 5 point 2 7 percent with the remaining $20,700,000,000 held in cash. At the time we invested the proceeds, the blended reinvestment rate on the new investment securities purchased and the cash was 5.22 percent for the remainder of 2024 including the impact of hedges.

Speaker 3

As Bill mentioned, the reinvestment of the proceeds from the sale of TIH and the balance sheet repositioning completed during the quarter are expected to replace TIH's earnings contributions. These actions completed during the Q2 significantly accelerate our ability to meet increasing standards for capital and liquidity in the industry and importantly create capacity for Truist to grow its core banking franchise and to return capital to shareholders via our strong dividend and share repurchases. Now turning to our Q2 key performance highlights on Slide 9. We reported 2nd quarter 20 24 GAAP net income available to common shareholders of $826,000,000 or $0.62 per share. This included a net loss of $4,000,000,000 from continuing operations or $2.98 per share and net income from discontinued operations of 4 point $8,000,000,000 or $3.60 per share.

Speaker 3

The net loss available to common shareholders from continuing operations of $4,000,000,000 or $2.98 per share was impacted by the following items: a $6,700,000,000 pre tax or $3.80 per share after tax loss on the sale of certain available for sale investment securities, $150,000,000 pre tax or $0.09 per share charitable contribution to the Truist Foundation, a $13,000,000 pre tax or $0.01 per share after tax expense related to FDIC special assessment adjustment. Net income available to common shareholders from discontinued operations of $4,800,000,000 or $3.60 per share was impacted by the following items, a $6,900,000,000 pre tax or $3.60 per share after tax gain on the sale of Truist Insurance Holdings, a $10,000,000 pre tax or $0.01 per share after tax expense due to the accelerated recognition of TIH equity based compensation. So on an adjusted basis, we reported net income available to common shareholders of $1,200,000,000 or $0.91 per share. In addition to the items I just noted, we also had pre tax restructuring charges totaling $96,000,000 in the quarter, which negatively impacted adjusted EPS to common shareholders by $0.05 per share. Approximately $33,000,000 of these pre tax charges or $0.02 per share after tax negatively impacted net income from continuing operations and were primarily related to severance and real estate rationalization.

Speaker 3

The remaining restructuring charges were recorded in discontinued operations and were related to legal and other expenses associated with closing the divestiture of TIH. Total revenue adjusted for the losses on the available for sale investment securities increased 3% linked quarter due to 4.5% increase in net interest income and relatively stable non interest income. Adjusted expenses increased 2.6% linked quarter, but were down approximately 3% on a like quarter basis. Our CET1 ratio increased by 150 basis points linked quarter to 11.6%, primarily reflecting the sale of TIH and the balance sheet repositioning I discussed earlier. In addition, net charge offs declined 6 basis points on a linked quarter basis and our non performing loans remained relatively stable both on a like and linked quarter basis.

Speaker 3

Moving to Slide 10, average loans decreased 0.7% on a sequential basis reflecting overall weaker client demand. Average commercial loans decreased $1,300,000,000 or 0.7% primarily due to a 0.8% decline in C and I balances driven at least in part by capital markets activity. In our consumer portfolio, average loans decreased $1,000,000,000 or 0.9 percent due to runoff in our residential mortgage portfolio and a decline in indirect auto. Other consumer balances, which include our specialty lending units, experienced modest growth and benefited from seasonal strength at Sheffield and increased demand at Service Finance. Overall, we expect client loan demand to remain relatively muted in the Q3.

Speaker 3

Moving to deposit trends on Slide 11. Average deposits decreased 0.3% sequentially as growth in money market and savings was offset by declines in non interest bearing time and brokered balances. Average non interest bearing deposits decreased 1.2% and represented 28% of total deposits, which is unchanged compared to 28% during the Q1 of 2024. During the quarter, we experienced an increase in deposit costs, albeit at a slower pace than the Q1. Specifically, total deposit costs increased 6 basis points sequentially, 2.09%, which resulted in a 1% increase in our cumulative total deposit beta to 39%.

Speaker 3

Interest bearing deposit costs increased 7 basis points sequentially to 2.89%, which also resulted in a 1% increase to our cumulative total interest bearing deposit beta cost of 54%. Moving to net interest income and net interest margin on Slide 12. For the quarter, taxable equivalent net interest income increased 4.5 percent linked quarter or $155,000,000 primarily due to the strategic balance sheet repositioning completed during the quarter. Excluding the impact of this repositioning, our net interest income would have been relatively stable on a linked quarter basis due primarily to our focus on average client deposits, which declined less than we expected. Reported net interest margin increased 14 basis points on a linked quarter basis to 3.03%.

Speaker 3

This was due primarily to the impact of the balance sheet repositioning. The partial quarter impact of the balance sheet repositioning helped drive a 31 basis point improvement in the average yield on our investment securities portfolio to 2.77%. We estimate that our balance sheet remains positioned as relatively neutral from an interest rate perspective comparable to Q1. Turning to non interest income on Slide 13. Adjusted non interest income, which excludes the losses associated with the balance sheet repositioning decreased $8,000,000 or 0.6% relative to the Q1.

Speaker 3

The linked quarter decrease was primarily attributable to lower investment banking and trading income which declined $37,000,000 from our strong Q1 performance due to lower M and A fees, equity originations and trading income partially offset by higher loan syndication fees. This decline was partially offset by higher mortgage banking and other income. Adjusted non interest income increased 4.2% on a light quarter basis as higher investment banking and trading and wealth management income were partially offset by lower service charge on deposit and other income. On a year to date basis, investment banking and trading income is up nearly 30% over the same period in 2023. Now I'll cover non interest expense on Slide 14.

Speaker 3

GAAP expenses of $3,100,000,000 increased $141,000,000 linked quarter primarily due to higher other expense related to $150,000,000 charitable donation, higher personnel costs reflecting merit increases and higher professional fees. These increases were offset by lower restructuring charges and a reduction in FDIC expense due to a larger special assessment recorded in the Q1. Excluding these items and the impact of intangible amortization, adjusted non interest expense increased 2.6% sequentially due to higher personal expense and professional fees. On a light quarter basis, adjusted expenses declined $86,000,000 or 3% reflecting lower headcount and our continued expense discipline. Moving to asset quality on Slide 15.

Speaker 3

Asset quality remained stable on both alike and linked quarter basis reflecting our strong credit risk culture and proactive approach to quickly resolving problem loans. During the quarter, our net charge off ratio decreased 6 basis points to 58 basis points. The decrease in net charge offs for the quarter reflects lower consumer losses due to normal second quarter seasonal declines and certain derisking initiatives put in place in the second half of twenty twenty two. Our loan loss provision declined $49,000,000 linked quarter reflecting our stable credit performance, but it still exceeded net charge offs for the quarter resulting in slight build to our overall loan loss allowance. Our ALLL ratio increased to 1.57 percent, up 1 basis point sequentially and 14 basis points year over year, which reflects ongoing credit normalization and stress in the office sector.

Speaker 3

Despite the normalization, non performing loans remained relatively stable for the 5th consecutive quarter, while total delinquencies increased just 2 basis points on a linked quarter basis. Wholesale criticized loans declined $1,000,000,000 linked quarter to $10,800,000,000 Included in our appendix is updated data on our office portfolio, which is virtually unchanged at 1.6% of total loans. However, we did increase our reserve on this portfolio from 9 0.3% to 9.7% during the quarter to reflect continued stress in the sector. Approximately 6.3% of our office portfolio is currently classified as non performing compared with 5.5 percent at March 31. Approximately 90% of these loan balances are paying with the original terms of the loan.

Speaker 3

Notably, approximately 22% of our office portfolio is housed within our community banking and wealth segments where loan sizes tend to be more granular, guarantor support more prevalent and overall losses lower. We expect stress to remain in the office sector and believe that the size our portfolio is manageable and well reserved, but our position is to be very proactive in identifying and resolving issues in this portfolio. Turning now to capital on Slide 16. Truist CET1 ratio increased from 10.1% at March 31st to 11.6% at June 30. The increase was driven by the gain on the sale of Truist Insurance Holdings and organic capital generation, which was partially offset by the loss on the sale of certain available for sale investment securities during the quarter, which I addressed earlier.

Speaker 3

Importantly, the sale of TIH creates capacity for Truist to pursue growth opportunities in our consumer and wholesale banking businesses and to return significant capital to shareholders as evidenced by our share buyback program. Truist is well positioned to weather a wide variety of economic scenarios which was evident in our most recent CCAR stress test results released in late June. Specifically, Truist had the 2nd lowest C and I loan loss rate and the 3rd lowest CET1 erosion rate versus our peers. Our stress capital buffer will improve by 10 basis points to 2.8% effective October 1st. At June 30, our CET1 ratio was 4.30 basis points higher than our new regulatory minimum of 7.3% leaving us well positioned to both grow our balance sheet and return capital to shareholders.

Speaker 3

Our increased level of capital accelerates our ability to meet increasing standards for capital and liquidity in the industry as our estimated CET1 capital ratio under proposed Basel III endgame rules improved 20 basis points to 9.1 percent at June 30, which is 180 basis points above our new regulatory minimum. And now I will review updated guidance or updated guidance on Slide 17. Looking into the Q3 of 2024, we expect revenue to increase 1% to 2% from Q2 2024 adjusted revenue of $5,000,000,000 We expect net interest income to increase 2% to 3% in the 3rd quarter, primarily driven by a full quarter impact of the balance sheet repositioning completed on May 6. We expect non interest income to remain relatively stable on a linked quarter basis. Adjusted expenses of $2,800,000,000 in the 2nd quarter are expected to increase by 3% in the 3rd quarter due to higher professional fees, software costs and higher marketing costs.

Speaker 3

For the full year 2024, we previously expected revenues to be down 0.5% to 1.5%. We now expect total revenues to decline by approximately 0.5% to 1% in 2024. Our updated outlook is based on slightly better client deposit balance performance, partially offset by lower client loan demand and our updated view of interest rates, which now assumes just one reduction in the federal funds rate in November of this year. Consistent with our previous expense outlook, we expect full year 2024 adjusted expenses to remain approximately flat over 23 adjusted expenses of $11,400,000,000 In terms of asset quality, we continue to expect net charge offs of about 65 basis points in 2024. As Bill previously mentioned, are targeting approximately $500,000,000 of share repurchases per quarter for the remainder of the year as part of our share repurchase authorization announced in late June.

Speaker 3

Finally, we expect our effective tax rate to approximate 16% or 19% on a taxable equivalent basis both the 3rd and 4th quarters of 2024. Now I'll hand it back to Bill for some final remarks.

Speaker 2

Great. Thanks Mike. So our top priorities for 2024 are unchanged. They include growing and deepening relationships with core clients, maintaining our expense discipline, returning capital to our shareholders via share buybacks and our common strong dividend and enhancing our digital experience through T3 all while maintaining and strengthening strong risk controls and asset quality metrics. We made demonstrable progress on these priorities during the quarter and I'm really proud of the results our teammates delivered, which included solid underlying earnings, improved momentum and sound asset quality.

Speaker 2

All this was accomplished while also completing the divestiture of Truist Insurance Holdings and repositioning our balance sheet during the quarter. These actions created significant capital capacity to grow our consumer and wholesale businesses and return capital to shareholders via our strong common dividend and our recently announced repurchase authorization of up to $5,000,000,000 of our common stock. In addition, our significantly stronger completed during the quarter is expected to replace TIH's earnings in the near term, we recognize that our increased level of starting point for ROATCE is starting point for ROATCE is exactly that. It's a starting point. We're going to move with pace to deploy our capital, improve our returns.

Speaker 2

But we're not going to be in a rush to leverage capital to meet short term expectations that do not have long term positive impact on our company clients and shareholders. We have a clear understanding of not only where we want to win, but where we want to win profitably. We'll look to share more of our plan with you as we progress through the remainder of this year. I can say that I'm encouraged that much of the profitability improvement potential we are working towards is centered on further deepening of existing client relationships and verticals and product lines that already exist at Truist. We have great confidence in our ability to further penetrate our existing client base, grow our core banking business and help new and existing clients achieve financial success by delivering our commercial, consumer, payments, investment banking and wealth platform given the ongoing investments through our existing footprint and specialty areas.

Speaker 2

In wholesale, we've invested in our investment banking and trading platform over the last several years. We've also hired experienced bankers in key industry verticals and products. These investments have resulted in greater mind share with our clients across many industry verticals and an increase in the number of lead roles across several product lines. Most recently, we've invested heavily in our payments business and have made key leadership additions as this is an area where we see significant opportunity for growth over time, not only with new clients, but also within our existing client base. We have a clear focus, high expectations and a compelling teammate value proposition.

Speaker 2

Many of our teammates have risen to this new challenge and we have very successfully hired additional strong talent in wholesale, primarily from larger institutions who have experienced and are thriving in our purpose driven high performance culture. We plan to continue adding talent in wholesale with a specific focus on further building out our middle market commercial lending segment, which represents one of the largest growth opportunities within our regional business. We will primarily focus on industries that support existing corporate investment banking coverage and expertise. We're making these investments while also adhering to our expense discipline, which is helping fund investments in technology to improve the client experience and also to improve risk management. In consumer, I'm really encouraged with our momentum.

Speaker 2

Our internal client satisfaction scores continue to improve as evidenced by increased net new checking account production, increased primacy and lower attrition rates. Net new checking account production was once again positive in the 2nd quarter as we added 38,000 new consumer and business accounts. Importantly, we're also seeing year over year improvement in account attrition rates and increased primacy and usage within new account openings. As I previously mentioned, we added 180,000 new accounts during the quarter, including nearly 70,000 new to bank clients through our digital channels, which represented a 17% increase. In addition to an increase in account openings, we're also seeing improvement in the funding of our digital account openings with balances up 60% over the Q2 of last year.

Speaker 2

In consumer and small business lending, we've been consistently adding new small business lenders across our footprint. In the Q2, small business applications increased 15% linked quarter, resulting in a 10% increase in our pipeline, giving us confidence that average consumer balance says excluding runoff and residential mortgages will stabilize in the 3rd quarter. In conclusion, I'm pleased with the progress we've made as a company at the midpoint of this year, but we acknowledge there's more work to do as we strive to produce better results in the future. We have tremendous momentum within our company. We have momentum with our clients and we've got great momentum with our teammates.

Speaker 2

We have an incredible franchise, energized purposeful teammates and specialized capabilities that our clients value. We think the ability to grow our core banking business, our profitability and return significant amounts of capital to our shareholders in the form of dividends and share repurchases over the next several years is a unique differentiating factor for Truist. I am optimistic about our future. I look forward to operating our company from our increased position of financial strength. And finally, I'd be remiss if I didn't thank all of our incredible teammates and our great leaders for their incredible purposeful focus on productivity and moving our company forward.

Speaker 2

So Brad, with that, let me hand it over back over to you for Q and A.

Speaker 1

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

Operator

We will now begin the question and answer session. The first question today comes from Ryan Nash with Goldman Sachs. Please go ahead.

Speaker 3

Hey, good morning, Bill. Good morning, Mike.

Speaker 4

Good morning.

Speaker 5

Maybe to start off with NII, it feels post the restructuring, we've bottomed now and you should get a step up next quarter. But can you maybe just talk about the drivers of sequential NII growth over the next few quarters? Do you expect margin improvement? And then how do you think about where the margin could be headed over the medium term? Thanks.

Speaker 5

And I have a follow-up.

Speaker 3

Hey, good morning, Ryan. We mentioned in our comments that we do expect the NII to improve next quarter by 2% to 3%. Really the bulk of that is driven by just the full quarter impact of the repositioning that we completed back in May. We continue to expect there to be some pressure on client deposit balances as well as loan balances. So maybe a touch conservative there.

Speaker 3

We did have some nice just to say it, just some nice outperformance in the Q2 on client deposit balances which really helped stabilize that core NII ex the bonds. But that's really sort of the story for Q2. And I think Q4 just looking out a little further, if you think about kind of rest of year trajectory, kind of more of the same, right? I mean, we mentioned we've got a November cut in. We think that helps a touch, but that is the first cut and it's pretty late.

Speaker 3

So we've got pretty modest expectations around the impact there. And I think for us really what will stimulate some improvement on the NII side will just be some of the core balances. So getting client loan demand increased, getting which hopefully will generate balances as well. And I'll just mention this, I mean we're very focused around the company, pick your segment or LOB, everybody in the company is very focused on realizing that growth opportunity once it presents itself. It's just and you've heard this from I think others this week and last week, there just has really not been a lot of client activity.

Speaker 6

Got it.

Speaker 5

Maybe this one for Mike or Bill as a follow-up to Mike's comments. So it looks like loan balances are getting closer to level off. But Mike, you highlighted 3Q, you're expecting it to be muted. And my interpretation was that it doesn't sound like you're expecting a lot of growth in the Q4. So maybe just flush those expectations a little further.

Speaker 5

Bill, when do you expect it to turn positive? What do you think the drivers are? And I guess given the strength of your footprint, do you actually expect Truist to begin to outperform peers on growth at some point? Thank you.

Speaker 2

Yes. Let me I'll start with the second part of that first and the answer to that is yes. But it has to have growth. We've got to sort of see that coming. You know, clients are on the sidelines.

Speaker 2

I mean, we can feel that in our conversations. Our conversations are increasingly a lot more strategic. So I feel like we actually even know more about what our clients are thinking. But they're a bit on the sidelines. Our production was up.

Speaker 2

So we saw production being up. It was really probably best in consumer where it was up a little more significantly. Utilization is just absolutely flat, but pay downs were also up. So, and our clients that aren't towards the larger side, they were accessing the capital markets. And the good news is, I mean, you see that in our investment banking, particularly in our DCM results.

Speaker 2

I mean, we're our capture rate on that is really, really high. So we sort of see the other part of that. Despite the pipelines being up, production being up, I just want to be careful, Ryan, about sort of like putting a stake in the ground and saying, okay, it's going to return on X. I mean, take this weekend. I mean, there's a lot of uncertainty out there in the world and in the market.

Speaker 2

So while clients have capacity, we're coiled spring ready to go position better than anybody. I think we just want to be realistic about when and if that well, not if, but when that's going to come back and when it's going to come back with some strength. And when it does, I think to your latter part of your question, we're in the best markets and I think we should disproportionately grow faster.

Speaker 5

Thanks for all the color, Bill.

Speaker 2

Yes.

Operator

The next question comes from Ken Usdin with Jefferies. Please go ahead.

Speaker 6

Thanks. I guess as a follow-up to that line of thought, Bill, you mentioned that you'd be methodical and kind of not getting ahead of yourself to just use near term. So I'm just wondering if you can kind of just remind us again, now that we've got the buyback out there, now that the restructuring is done, you just gave them a more color on the loan growth. Talk about prioritization, what would lead you to do kind of one more than the other in terms of moving the ball of all things excess capital related? And then how that kind of leads into your pacing choices on the buyback specifically?

Speaker 6

Thanks.

Speaker 2

Yes, Ken, great question. And obviously, something that's important and we're going to be calibrating. Priority 1, 2 and 3 is growing our business. I mean, we think we've got a great franchise, a great market. We're really well positioned.

Speaker 2

We've invested in talent. We've invested in capabilities. So I think we've got the capacity and the capability to grow in our core business. So that is absolutely going to be the primary focus. We raised capital in the most efficient way possible.

Speaker 2

You just couldn't have raised it more efficiently than how we raise capital. And we want to make sure that we deploy that also in the most efficient way possible long term benefit for our shareholders. So I think we've put together a compelling return perspective with what Mike outlined. We're going to do about $500,000,000 a quarter for the next couple of quarters. I would presume we'd enter next year and sort of the same kind of pace.

Speaker 2

But remember, that's also on top of we've got a really strong dividend. So in terms of total dollars returned to shareholders over the next 6 months, I mean, we have a really compelling value proposition. So we're going to calibrate that as we go along. We don't want to over index on 1 and lose this incredible capital advantage we have for

Speaker 6

growth. Got it. And then secondly, as you enjoy this incremental NII benefit, it does seem like in the second half, certainly in the third quarter expenses look to be increasing. Can you give us also a little bit of context in terms of how you're calibrating the new better revenue outlook to making those investments and the pacing just flattish, flat is a tough like overall guide to see through, but kind of at flat it implies that Q3 and in Q4 expenses are still are going higher. Just wondering if you could provide a little context underneath that about your pacing of your investment spending and to the areas you mentioned earlier?

Speaker 6

Thanks.

Speaker 3

Hey, Ken, it's Mike. Maybe take a swing at that one. No, you're right. I mean, look, we think we do see growth in the Q3 on the expense side. I think that's still on a like basis close to flat maybe even a touch better.

Speaker 3

And I think that implies if you think about flat maybe a touch of growth in the 4th as well. Look, I mean the first half of the year we were very focused on cost discipline and frankly following through on our commitment around flat. That's still important to us. But as we've sort of gotten to the midway mark, it's there have been certain projects, whether it be some marketing spend, sort of you name it, knits and gnats that perhaps were delayed and that drove some of the beat maybe even this quarter and even in last quarter. And so some of that stuff just makes a ton of sense.

Speaker 3

And as we really shift our mindset and you heard Bill talk a little bit about it in his prepared remarks around some of the hiring we're doing in middle market lending as an example around our payments business, some calibrating of marketing spend etcetera. These are all factors that are driving our outlook for the second half. And so look we feel and we've said this is really since last fall, we are very, very confident and committed to being sort of 0.0 or better on

Speaker 2

expenses this year. Yes. And Ken, just to add to that, I mean, when we undertook this approach in the fall of last year, I mean, we were always really clear this was going to include investments and the timing of those sort of as Mike pointed out come quarter to quarter. And we're seeing the benefit of that. I mean, the investments we made in payments, investment we made in talent.

Speaker 2

So the expense guidance was always coincident with that. I'll just say because I think it's really important, the discipline that we have in the company around both of those is significantly increased. So we sort of know the next dollar to invest with a lot of confidence. And we also have just incredibly strong discipline around the expense side and where the opportunities are. So I think we've we've got the right balance here.

Speaker 2

And as Mike said, wholly committed to a flat or better expense proposition for the remainder of this year.

Speaker 6

Great. Thank you, guys.

Operator

The next question comes from Scott Siefers with Piper Sandler. Please go ahead.

Speaker 7

Good morning, everyone. Thanks for taking the question. Mike, I know you suggested you all are relatively neutral to rate moves. I think still kind of for better or worse, a lot of investors consider just among the kind of closer to the liability sensitive side of the equation. In that vein, you anticipate just one rate cut in the remainder of the year.

Speaker 7

How would another 1 or 2 affect that NII guidance? Obviously timing would be a factor, but just curious on your overall thoughts.

Speaker 3

Yes. Good morning, Scott. Yes, so we do have the one cut in November. If we got one earlier call it, I think the curve today has a September cut and maybe December and maybe even a touch more than that. That would be a help for us.

Speaker 3

We look, our baseline path does show benefit from down rates. I think the question and I brought it up in sort of my earlier question that Ryan asked, that first cut given how high we are and late we expected, we're just trying to be reasonable in thinking about the benefit we'll get there. But I think you're right. I think if we got one earlier and then maybe perhaps a second that would be a good guy. I will say this, I think just given where we are in terms of how high we are and how long we've been here and some of the client behavior that we're able to observe.

Speaker 3

I think the more impactful catalyst will be again getting some of that loan demand and balance growth and client deposit growth as well. So, would take it all. Perfect. Okay, good. Thank you.

Speaker 7

And then maybe switching gears just a second, something you might be able to address the investment banking line, down a little in the quarter, but I'd say you're at least I'd say you're still well above recent run rate, so still a very strong number. Maybe if you could touch to or speak to sort of overall thoughts on the outlook and then maybe a thought on what you might consider sort of a sustainable base of revenues for you all?

Speaker 2

Yes, I mean, we're the Investment Banking business is always going to be a little quarter to quarter variation. In the Q1, we had one of the highest M and A fees in our company's history. So that sort of changed impact of that a bit. But most importantly, we feel really good about the momentum. So if you look at sort of our relevance, I mean, we're gaining share in virtually every category.

Speaker 2

The things that we're doing in terms of active book runner and left lead transactions and ECM, half of our fees were being from active book runner, dramatic change where we've been in the past, lots of left leads, transactions in there and again increased market share. And most importantly, just really good relevance. So back to sort of the comment about talent and comment about adding talent and upgrading our toolkits, our commercial bankers focus and understanding of our capabilities is just increasing exponentially. So our dialogue, as I mentioned with our clients is really strong. It's all strategic dialogue versus product dialogue, which is really good.

Speaker 2

And I think for the balance of the year, I mean, I think this is the kind of momentum we ought to be able to continue in Investment Banking. So I think we feel good about that.

Speaker 3

Perfect. All right, Bill

Speaker 7

and Mike. Thank you guys very much.

Operator

The next question comes from Erika Najarian with UBS. Please go ahead.

Speaker 8

Hi, good morning. Just putting everything that you said together, Mike, maybe I'll address this one to you. Your net interest income was better than consensus, both mostly on the net interest margin. You mentioned that the impact of the margin from balance sheet restructuring is core items. And consensus is at down 1, which is at the low end of your revenue range.

Speaker 8

I guess, like, what are we missing? And I heard your response to Ryan's question about you expect balances to continue to come down in both the loan on deposit side. But if your starting point on net interest margin is higher than consensus and then you have a little bit more pull through a month pull through in the Q3, and your neutral to rates in September will help. I guess, are you being very conservative on what you could accomplish in the second half of the year? Because I get the conservatism from a business standpoint, but from a rate standpoint, it feels like you guys are in good shape to maybe do a little bit better.

Speaker 3

Yes, Erica, I appreciate the question. I mean, I look, I think there was a beat on balances in the second quarter, especially if you look at it on an average basis. And so our rate paid was a touch better than we thought. And so you're right, starting position better than where we sort of would have expected to be in April. I think the pressures that we expected in the Q2, we still believe will persist in the 3rd especially in terms of balances and rate paid.

Speaker 3

Another piece of this is that while we did get some benefit on our net interest margin from the bonds like recouponing, Some of the benefit as well is just on a smaller balance sheet. So we did, for example, we paid down some wholesale liabilities late in the second that will come through in the third on an average basis. So you'll see more net interest margin improvement, but it will be on a more efficient smaller balance sheet. On rates, I don't want to call the ball on conservative, non conservative. I think we're cautious on what benefit we'll get on the first cut or 2.

Speaker 3

We've thought about it a lot, done a lot of work and analysis. You look at sort of historically over the last call it 30 years the down cycles and the betas have been slow, right? So I think that's in our thinking too for the rest of the year. And look I've said this a couple of times, I think for us the thing we're feel fine about the guidance we gave. I think what would really be upside for us would be a little bit of pull through on more client activity and the ability to generate more loan volume and with that will come deposits.

Speaker 3

You get that and maybe you get Scott's extra cut in early and that feels good. I mean the Hertz are obviously the cut we've got, no cuts perhaps, maybe that's not such a bad guy and then just the pressure that we've been seeing on balances both deposits and loans.

Operator

Got it. And my second question

Speaker 8

is for Bill on capital and returns. And maybe I'm just reading too much in the tea leaves because investors are very curious. The authorization for the $5,000,000,000 is through 2026. You said during your prepared remarks and tell me if I'm being too ticky tacky, but you said initially target $5,000,000,000 for the remainder of the year. And I guess investors are wondering about timing and I know someone had already asked, Ken had already asked about capital priorities.

Speaker 8

But is this what's the timing in terms of that fulfilling that $5,000,000,000 authority? And as I think about potential in the low 20s. With TIH, potential in the low 20s. With TIH out, could you still achieve like a high teens Roxy? And I'm sure you will get more details during fall conference season?

Speaker 2

Yes, Erika, just to correct one thing, we said some $1,000,000,000 through the remainder of this year and we'll sort of start the next year. The reason to put the authorization of up to and make it through 26 is just to give us that kind of flexibility in terms of how we think about that. So we're going to calibrate that against our growth opportunities and where we see an ability to invest in our franchise and we're going to be disciplined about it. So, and then as I mentioned earlier, remember this is with a really strong dividend as well. So I think you can't talk about one without talking about the other in terms of total return to shareholders.

Speaker 2

So I think our unique capability to have a really good return to shareholders over the certainly near term and medium term from the dividend buybacks actually quite significant. And then you put on top of that our ability to earn and earn profitably and grow our business. So I think that's we're trying to look at all of this in the big mix. As it relates to RoTCE specifically, yes, I mean the past numbers are the past numbers. We sort of have to start from the business model that we have now.

Speaker 2

Again, we're going to give a little more guidance on that with a little more specificity as we get towards the end of the year, as you mentioned. I think we'll have a little more knowledge as to sort of overall capital requirements. And while Basel may not be complete, I think we might have a better picture of where we might be and what the sort of CET1 base might be that we'd operate from and think about how to put all those mixes together as it relates to growth as well. So irrespective of the target itself, the growth to the target, I think is a really compelling proposition for Truist.

Operator

Okay. Thank you. The next question comes from Betsy Graseck with Morgan Stanley. Please go ahead.

Speaker 9

Hi, good morning.

Speaker 3

Good morning, Betsy.

Speaker 9

A bit of a follow-up on last question with Erica regarding Capital One. I put together the $500,000,000 that you're looking for in the buybacks and the dividend. It looks like you're for the most part, returning earnings, quarterly earnings to investors at least through the rest of this year. And RWA doesn't change, that means you've got to see T1 stable where it is today. I know you're probably not you didn't put a target CET1 out.

Speaker 9

I'm going to guess you're going to highlight that we need the capital rules to put that out there. But is that a fair conclusion that 11.6% is essentially what we should anticipate as we roll through the rest of this year?

Speaker 3

Yes, Betsy. I think that's roughed out. You could see us sort of sliding sideways for a while for the reasons you mentioned. You're right. I mean, you take the $500,000,000 buyback and call it $700,000,000 or so dividend, you're approximately at this is rough earnings, right?

Speaker 3

And, I'll just say this, I I'll just say this, I mean, and you mentioned sort of CET1 target Bill referred to it as well. I think a couple of things just to think about there. 1, we like operating with a higher level of capital in today's world. 1, affords us the right, we think, strength and resiliency and ability to sort of react to the world. Importantly, we've got a growth agenda.

Speaker 3

We're focused on prosecuting. That's company wide. You feel that with any especially frontline, but really across the whole company. And then Bill mentioned sort of the capability to return capital and that can come in various forms. But yes, I think modeling us somewhat flat short term, but again we our expectation is that we'll begin to grow RWAs next year and so that's how we're thinking about it.

Speaker 3

Right.

Speaker 9

And then on the pay downs that you experienced the C and I book, how much of that did you capture in the Capital Markets business? In other words, if folks are terming out and paying down C and I, is that are we seeing majority recaptured in the C line? Thanks.

Speaker 2

Yes. It's hard to do that calculation sort of perfectly and we spend a lot of time thinking about it. But if you sort of look at the overall line, this was one of our best DCM quarters in a really long time. So our capture rates are really high. It's hard to put an exact percentage on that because there are puts and takes that would have gotten it otherwise was it related to this, that or the other.

Speaker 2

But it's really high and it's reflected in our overall DCM growth.

Speaker 9

Got it. Thanks so much. Appreciate it.

Speaker 2

Yes.

Operator

The next question comes from John Pancari with Evercore. Please go ahead.

Speaker 4

Good morning. What it seems like I could just touch on credit a little bit. I know you added modestly to the loan loss reserve and it looks like much of that was on the office side. Wanted to get your thoughts there in terms of what you're seeing right now in terms of credit progression? What are the areas that you're seeing some weakening?

Speaker 4

You had some pressure on delinquencies and non accruals. And could that justify incremental modest additions to the reserve from here? Or could you, see it stable or even some releases from this point? Thanks.

Speaker 10

Hey, John, this is Clark. As Mike and Bill said, we were very pleased with the overall asset quality for the quarter and we generally had stable delinquencies. We had flat NPLs and our losses were a touch So we still see in the consumer side the normalization that's occurring due to higher rates, inflation and the stimulus burn down, particularly for the lower end consumer. So we've been a little careful there even in this quarter's reserve. We added a little bit for those lower income consumer finance areas.

Speaker 10

And then you're right on the CRE side and the office exposure, we still just want to make sure we're addressing the uncertainty there. On the wholesale C and I side, we actually had, as Bill said, lower watch list. And even though we're monitoring areas like the leverage book, consumer discretionary, senior care, transportation, some of those more rate sensitive areas, we've not had any big sector issues today that's been more episodic. So when we think about our reserves, we feel really good about the adequacy where we are today, and it reflects what we know today. So unless there's a substantial change in the economic outlook or that level of uncertainty in areas of stress like CRE office would emerge higher.

Speaker 10

We would expect our reserve levels for the remainder of 2024 to be relatively stable.

Speaker 4

Okay, great. Thanks for that, Clark. And then separately on the fee side, just I know you mentioned relatively stable in terms of the non interest income outlook for the Q3. Maybe can you talk about Q4 a little bit, how we should think about the progression into Q4 and into 2025? And then separately as part of that, on the Investment Banking side, you made some pretty solid talent acquisition and you've cited the intent that you're investing there and the progress you've made.

Speaker 4

Can you maybe just talk to us about is the build out ongoing? Is there a focused effort to upscale the Investment Banking business even more in terms of the reach and breadth of the business and maybe what the long term revenue contribution from that business that you anticipate?

Speaker 2

Yes, maybe I'll start with the latter, Mike, and then I'll turn it over to you for the long term, if that's okay. So the build out of the Investment Banking business has been decades plus. So this isn't sort of a new thing and so it has been consistent. I think the way you described it is exactly right. We'll continue to build where we have relevance, where we have opportunity.

Speaker 2

And so we can be competitive and win in our markets. I think the part that gets missed though is the investment we're making around the investment banking business. So this is the investment that we're making with our commercial teams and our middle market teams and expanding their knowledge and capability to talk to clients about the things that are available to them. And so think about the amount of clients in our commercial business that are now private equity owned and our capability to be relevant in those discussions and help them along that flight path. So investment is not just in the business itself, but it's in everything that surrounds the business and then support off.

Speaker 2

We like the pace that we're growing and we think we've had a really good CAGR. If you sort of go back over time and look at the CAGR of that business, you'd sort of say that's a really good growth pattern. Importantly, we're doing it profitably, which is also important. So we have a really good efficiency of that business certainly on a relative basis. And we want to keep all of those in check.

Speaker 2

I mean, we don't want to grow faster than the market. We want to grow coincident with the opportunity that we have within our markets. We want to do it profitably and we want to do it little less variability relative to that business. So it's tied to more of our core client capability than the vagaries of a particular market. And then Mike, there was a Yes, John,

Speaker 3

I think you asked just about trajectory for the second half for fees. I think some you don't know to put some puts and takes. Our outlook is relatively stable really for the second half. So call it stable, stable.

Speaker 2

And the upside to that is Thank you. Yes, I mean the upside is if business has been, we're trying to take an approach with what we know right now.

Speaker 4

Great. Thank you.

Operator

The next question comes from Mike Mayo with Wells Fargo. Please go ahead.

Speaker 11

Hey, Not a new question, but it goes back to your efficiency ratio and your expense guide and you mentioned higher in the 3rd quarter and maybe any preview for next year or how you're thinking about that. And that's partly in the context, there's a Bloomberg story out saying that 11 of the 20 2 large banks fall short on operational risk according to the OCC. Now that's not confirmed by the OCC. There's no specific companies given. I know you're not allowed to say what your regulatory ratings are.

Speaker 11

But if you or any other bank did have a deficient operational risk rating, what would that mean? Would it mean I don't know. What would that mean? Are you able to say if you had ever been in that position in the past 5 years? I know you had some operational issues that you worked through.

Speaker 11

And I also know, Bill, that your purpose is being open every day for your clients and employees and your community. So I know you put that as a very high priority. So what degree has that hurt the efficiency in the past few years? And to what degree could that still be a drag on efficiency going ahead? Thanks.

Speaker 2

Yes, Mike. You answered asked and answered part of your question as it relates to what we'll comment on and not comment on. But look, I've said very consistently actually since the day Truist was formed is the size and complexity of our organization. We're going to invest in our risk framework. We're going to invest in a durable risk framework, so we can stay competitive, we can stay appropriate with our regulators.

Speaker 2

And that's always been part of this expense profile. So I think even in today's prepared remarks, I mean, I'm always consistent with that and I think everybody's got to stay in that mode. Post of March of last year, irrespective of anybody's ratings, there was just an increased focus on creating a durable risk profile. So we're going to continue to be in that mode. I can't see that change in short term, medium term or long term.

Speaker 2

Are there peaks and valleys in that as you go up? Yes. Does it increase proportionately? Absolutely. I mean, I just think that's the price of being in our business and also the importance of creating a durable, sustainable risk framework for a company of our size and a company of our opportunity.

Speaker 11

Well, the $20,000,000,000 market cap question relates to the last part of your answer is for a company of our size. So I'm just wondering, and it's an ongoing wonder, to what degree does that investment in the risk framework hurt Truist disproportionately versus banks larger than your size? And how has that changed?

Speaker 2

Yes, I mean there are efficient frontiers is the way Mike and I like to talk about their efficient frontiers and where you are on the efficient frontier relative to that. Today, I feel like we're in a good place. So we're in a good place in terms of the investments that we need and should make relative to our company, our size and our ability to return and have an efficient company relative to that. So I think we're at a good place, but that Efficient Frontier moves. So you always have to be flexible and think about that in the context of where it moves and we're conscious of that.

Speaker 2

So today I feel like we're a good place. By the way, we merged our companies because we thought we were at a different place, and that that was going to be more complex and we needed to have a company of the size and scale sort of seeing, I mean, we didn't project March of last year in fairness, but understanding that the complexity and the durability and the investments needed to create that kind of risk platform was going to be needed. So that efficient frontier, I think we're at a good place on it, but it does move.

Speaker 11

And last short follow-up, the definition of good place as it relates to 2025, I know you usually don't give guidance for a few quarters from now, but other banks have mentioned record NII, positive operating leverage, lower expenses next year. Can you give us a sneak peek of Good Place as it relates to 2025 financials?

Speaker 2

Yes, I mean our sneak peek is the momentum we're creating right now. So that's the sneak peek and we want to continue to do that. Mike, you and I've talked about this. I mean, we have a strong focus on positive operating leverage. So all of our businesses have plans that are focused on positive operating leverage.

Speaker 2

That's what they try to build over time. The controllable more controllable factor over that is on the expense side right now. And I'm really pleased with the progress we're making and expect to continue to have that kind of discipline going forward. Those expenses will better reflect the revenue opportunity that we see in next year. So be assured that we've got to focus on creating that, but also be confident that we're building momentum.

Speaker 2

And I think this quarter is good evidence of that and our guidance for the rest of the year is good evidence of that.

Speaker 11

Okay. Thank you.

Operator

The next question comes from Ebrahim Koonawala with Bank of America. Please go ahead. Hey, good morning. Just a

Speaker 12

quick follow-up, Bill, on your response to Mike's question. As we think about I just want to make sure we understand this correctly. As we think about next year, ex any sort of revenue momentum taking sort of the top line higher, should we expect expenses like The Street is expecting about $2,900,000,000 to $3,000,000,000 per quarter in expense run rate continuing in 20 25. Is that fair to assume all else equal absent sort of revenue growth?

Speaker 2

Yes. I'm not going to give expense guidance for next year. Just to say confidence that we'll be focused on positive operating leverage, confidence that we've got great expense discipline and expenses will more parallel the revenue opportunity. So if we see the investments that we're making better growth opportunities in our markets, we're going to take advantage of that. And if that requires a requisite expense increase, then we'll do that.

Speaker 2

But that will all be in the appropriate context of focus on positive operating leverage and efficient company that has high returns.

Speaker 12

Noted. And just one quick follow-up, maybe if you could remind us post sort of the acquisition integration, where we stand in terms of any big tech upgrades coming on the deposit or lending platforms that we think about the next year or 2? Thanks.

Speaker 2

Yes. I mean, all that's been factored into the discussions that we have. I mean, our ability this year particularly to invest a lot in the payment side is all predicated on the existing platforms that we have. The advent of the use of APIs have been really, really great opportunities to continue to invest. We had huge investments in our lending portfolios as part of the merger.

Speaker 2

So there's no like one big stow step sequenced investment. These are continuous investments in our platform and capabilities over time.

Speaker 12

And is it safe to assume that from a tech platform standpoint, Truist is not at a disadvantage relative to peers who probably have not done deals and just been working on there's an impression out there that you have a lot more sort of heavy lifting to do there that's put you back. Sounds like that's not the case, but just wanted to confirm.

Speaker 2

Well, the momentum we've seen in the last several quarters, the impression from our clients is that we're we have a really good platform. So our acquisition of clients, our performance metrics, client satisfaction scores, all the things that we look in terms of how the clients think about us is real positive and continuing.

Speaker 12

Excellent. Very clear. Thank you, Bill.

Operator

We will take our last question today from Matt O'Connor with Deutsche Bank. Please go ahead. Good morning. Thanks for squeezing me in.

Speaker 13

You kind of implied the loans and deposit balances might be down a little bit again in 3Q, if I heard that correctly. And they were down a little bit in 2Q here. Just thoughts on where they bottomed. And I understand like when we're looking at industry data where there's less than 1% loan growth, like we're talking about really small numbers, but it seems like you're still kind of lagging the data a little bit. And it's understandable given how much has been going on in the company and you talked about spending more in marketing and hiring people.

Speaker 13

But just thoughts on where those level out and you start tracking the data a little bit more? Thanks.

Speaker 3

Hey, Matt, thanks for the question. Maybe just taking loans first. We were hopeful we'll see some relief. We were down a little less than 1% this quarter average in the Q3. I think again base case probably expected to be down maybe not quite as much.

Speaker 3

We'd love to see that be different. But that's sort of what we're thinking about. And then hopefully kind of stable from there. Same on deposits or actually deposits a little lower perhaps in the 3rd. We mentioned that we felt like we had some outperformance in the second quarter.

Speaker 3

We did late in the quarter just like a lot of others some of the just sort of seasonality and tax payments we saw balances a little lower at the end of the quarter. That's not unusual. So we'll probably expect a little bit of pressure in the Q3 as well. But again, even that's stabilizing in the 4th. So I think down a touch in the 3rd for both and then hopefully stable in the 4th ish.

Speaker 13

Okay. That's helpful. And then, just as you think about, call it, restarting kind of the loan deposit engine internally. You did allude to the marketing and hiring people. But what's like the process of just getting the message out to kind of existing employees?

Speaker 13

Like you got all those capital, you got all those liquidity, like you could be front footed. And I know it takes time to kind of flip the switch, again, especially in an environment where there's still little kind of growth out there, but just touch on a couple of things you're doing to drive that?

Speaker 2

Yes, sure. Rest assured that our teammates are highly focused. And there are places that we can dial more specifically and you sort of seen it, our consumer production was up 37% over a linked quarter, Premier Banking, lending numbers sort of similar per branch production, those type of things. So the places that we can dial in a little bit. And then on the wholesale side, it's just a lot about training, it's a lot about hiring, it's a lot about market opportunity, it's a lot about dialogue with clients.

Speaker 2

So we look at all the pitches kind of approach and we're seeing really good activity. But our teammates are on offense. I mean, let there be no confusion. I mean, our teammates are on offense. They are not in a defensive position.

Speaker 2

Trust me, the shift for them happened quite quickly. There was a you could hear it and feel it in terms of momentum. People are attracted to come work for our franchise for some of the same reasons as we have the capital and capability to invest in the future. So, rest assured that your point is right. I mean, the battleship, it's hard to turn, but in terms of its direction, clear direction, clear communication and clear focus from our teams.

Speaker 13

Thank you.

Speaker 6

Thanks, Matt.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Brad Milsaps for any closing remarks.

Speaker 1

Okay. Thank you. 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, and we hope you have a great day.

Speaker 1

Betsy, you may now disconnect the call.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Powered by Quartr
Earnings Conference Call
Truist Financial Q2 2024
00:00 / 00:00