Mike Maguire
Chief Financial Officer at Truist Financial
Thank you, Bill, and good morning, everyone. As a high-level summary, we reported third quarter 2024 GAAP net income available to common shareholders of $1.3 billion, or $0.99 per share. Our adjusted EPS was $0.97 per share, which included a $36 million pre-tax, or $0.01 per share after-tax increase to the gain on sale of Truist Insurance Holdings, and a $16 million pre-tax, or another $0.01 per share after tax reduction on the FDIC special assessment.
Total revenue, adjusted for the losses on the available for sale investment securities that were sold in the second quarter, increased by 2.4% linked quarter due to a 2.2% increase in net interest income and 3.1% growth in non-interest income, driven primarily by growth in investment banking and trading revenue. Adjusted expenses increased 0.9% linked quarter, but were down approximately 2.3% on a like-quarter basis, reflecting lower personnel costs.
Moving on to capital. Our CET1 ratio remained relatively stable linked quarter at 11.6%, as current period earnings and a smaller balance sheet were offset by the payment of our common dividend and share repurchases completed during the quarter. From a credit perspective, net charge-offs declined by 3 basis points on a linked-quarter basis, and our non-performing loans remained relatively stable, both on a like and linked quarter basis.
Next, getting into additional detail, I'll cover loans and leases on Slide 9. Average loans decreased $3 billion, or 1% on a sequential basis, reflecting overall weaker commercial client demand and line utilization partially offset by modest growth in consumer loans. Average commercial loans decreased by $3.2 billion, or 1.7% primarily due to a decline in C&I balances driven again by lower line utilization and at least in part by greater capital markets activity.
In our consumer portfolio, average loans remained relatively stable linked quarter as growth in indirect auto and service finance was offset with lower residential mortgage loans. As Bill mentioned, production improved in both consumer and wholesale lending, but paydowns and runoff in certain categories like commercial and residential real estate will likely result in continued pressure on an average balance basis in the fourth quarter likely similar to the rate of decline that we experienced in the third quarter.
Moving to deposit trends on Slide 10. Average deposits decreased 1% sequentially, or $3.7 billion with approximately $1.7 billion of the decline due to lower brokered deposits. Average non-interest bearing deposits decreased 1.4% and represented 28% of total deposits which is unchanged versus the second quarter of 2024. The $1.7 billion decline in average broker deposits reduced our total and interest-bearing deposit costs by 1 basis point sequentially to 2.08% and 2.88%, respectively. Overall, we expect deposit balances to remain relatively stable in the fourth quarter.
Moving to net interest income and net interest margin on Slide 12. Taxable equivalent net interest income increased 2.2% linked quarter, or $77 million, primarily due to the strategic balance sheet repositioning we completed during the second quarter a reduction in higher cost wholesale funding and the impact of one additional day in the third quarter. These tailwinds were partially offset by the impact of additional received fixed interest rate swaps that became effective during the quarter and by lower commercial loan balances. Reported net interest margin increased 10 basis points on a linked quarter basis to 3.12%, due primarily to the securities repositioning I just mentioned and a reduction in higher cost wholesale funding.
Turning to non-interest income on Slide 12. Adjusted non-interest income increased $45 million, or 3.1% relative to the second quarter. The linked quarter increase was primarily attributable to higher other income and higher investment banking and trading income, which improved $46 million due to higher M&A, equity capital markets and investment-grade fees. Adjusted non-interest income increased 11% on a like-quarter basis, due to higher investment banking and trading income and higher service charge on deposit income.
Next, I'll cover non-interest expense on Slide 13. GAAP expenses of $2.9 billion, decreased $167 million linked quarter, primarily due to lower other expenses as the second quarter included a $150 million charitable donation. Regulatory costs decreased by $34 million, partially due to a $16 million reduction on the FDIC special assessment, which was recognized in 3Q '24.
Adjusted non-interest expense increased 0.9% sequentially due to higher professional fees, other and marketing expense, partially offset by lower personnel expense. On a like quarter basis, adjusted expenses declined by $67 million, or 2.3%, reflecting lower personnel and other expenses.
Now moving to asset quality on Slide 14. Asset quality remained stable on both a like 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 3 basis points to 55 basis points, due primarily to lower losses in our CRE portfolio. Our loan loss provision remained relatively stable linked quarter and includes a $25 million provision related to Hurricane Helene. The provision exceeded net charge-offs for the fourth quarter, which along with lower loan balances resulted in a 3 basis point increase in our ALLL ratio to 1.60%.
Non-performing loans as a percentage of total loans remained relatively stable for the fourth consecutive quarter, while total delinquencies were also flat on a linked quarter basis. Included in our appendix is updated data on our office portfolio, which is down $232 million linked quarter to 1.5% of total loans. Our office reserve increased from 9.7% to 10.4%, driven by continued expected stress in the office sector. Approximately 5.1% of our office portfolio is currently classified as non-performing compared with 6.3% at June 30. Approximately 90% of these loan balances are paying in accordance with the original terms of the loan.
Notably, approximately 21% of our office portfolio is housed within our Commercial 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 of our portfolio is manageable and well reserved, but our position is to be very proactive in identifying and resolving issues in this portfolio.
Turning to capital on Slide 15. Truist CET1 ratio remained relatively stable linked quarter at 11.6%, as current period earnings were offset by the return of $1.2 billion in capital to shareholders via our common stock dividend and the repurchase of $500 million of our shares. Our CET1 capital ratio, including the impact of AOCI, increased from 9.6% to 9.9%, reflecting a $1.6 billion linked quarter improvement in AOCI, due to the decline in longer-term interest rates experienced during the quarter.
Although we await the final proposal for the Basel III endgame rules, we believe that our current strong capital position gives us the unique ability to utilize our future earnings and AOCI accretion to fund balance sheet growth and return a significant amount of capital to our shareholders.
I will now review our updated guidance on Slide 16. Looking into the fourth quarter of 2024, we expect revenue to decrease 1.5% from the third quarter 2024 adjusted revenue of $5.1 billion. We expect net interest income to decrease 1.5% in the fourth quarter, primarily driven by lower commercial loan balances and some pressure to our net interest margin due to the temporary lag in our deposit beta.
Our net interest income outlook assumes two 25 basis point reductions in the federal funds rate over the remainder of 2024, one cut in November and another cut in December. We expect non-interest income to decline by 2%, driven primarily by lower investment banking and trading revenue as the third quarter performance was helped by some pull forward of capital markets activity from the fourth quarter into the third quarter.
Adjusted expenses of $2.8 billion in the third quarter are expected to increase 4% in the third quarter, driven by investments in areas such as talent, our digital platforms, marketing and risk infrastructure. For the full year 2024, consistent with our previous guidance, we expect revenues to be down 0.5% to down 1%, which reflects our updated outlook for the fourth quarter. As Bill mentioned, we now expect full year 2024 adjusted expenses to be slightly lower than 2023 adjusted expenses versus our previous expectation for expenses to remain approximately flat.
In terms of asset quality, we previously expected net charge-offs of about 65 basis points for full year 2024, we would now expect net charge-offs to be closer to 60 basis points in 2024. As it relates to buybacks, similar to the third quarter, we are targeting approximately $500 million of share repurchases in the fourth quarter. Finally, we expect our effective tax rate to approximate 17.5%, or 20% on a taxable equivalent basis in the fourth quarter of 2024.
I will now hand it back to Bill for some final remarks.
