Truist Financial Corporation Aktie

All right. Up next, we have Truist, and we're delighted to have with us today, Mike Maguire, CFO of Truist Financial. Mike, thanks so much for joining us.

Yes. Thank you so much for having us.

All right. So let's start with the environment as we have in several sessions here. I think Bill recently noted that clients continue to invest and pursue strategic opportunities despite the uncertainty in the environment. So it looks like people are more immune to some of that uncertainty. Pipelines are holding up well. Where are you seeing the strongest signs of that resilience across either the consumer or the corporate side?

Yes. Look, I mean, I think Bill -- we're unchanged in that outlook since Bill, not that long ago, mentioned the sort of shrugging off of some of what seemed to be quite a few macro risks out there. We're seeing continued strength in terms of confidence across our commercial and corporate banking business. As you know, I mean, investment banking markets and deal activity continue to remain quite robust. I was actually just out in Philadelphia a week or so ago with a lot of our commercial banking and wealth banking teams. And they seem to say the same. I don't think people have their heads in the sand either. I think there's some degree of caution that people are sort of incorporating into their day-to-day. But in terms of seeing expansionary activity and borrowing and investing, we do still see pretty strong levels of confidence.

On the consumer side, I think that's broadly true, too. I mean I think if you dip a little deeper into the data, you do begin to see some small degrees of switching on the spending side, especially maybe in the lower income consumers, perhaps feeling a touch more pressure from things like gasoline prices and inflation and the like. But even there, that tends to be more around some of the spend data and choices versus anything that we're seeing show up in terms of credit quality or otherwise.

Okay. So I think that's been a consistent theme so far. People are looking out cautiously, but you're not seeing anything...

Yes, I think that's right.

All right. Perfect. So why don't we bring it a little bit more near term. As we think about the broader trends shaping this quarter relative to the first quarter, what are you seeing this quarter?

Yes. Look, I mean, we're off to a -- I guess, not a start at this point in the quarter, but our outlook is unchanged, just to get that out of the way for the quarter and for the year. But we continue to see nice strength in our fee businesses, as we mentioned. We continue to be focused on a lot of the same opportunities and risks out there in the market. We've said coming into this year that our balance sheet growth ambitions are a little bit more modest this year than last year with a little bit more focus on quality, and that's playing through. So yes, look, we feel like things are on track, and have been pretty vocal about our expectations for improving our ROTCE this year, next year to 14% and 15%, and see a really clear line of sight to both.

So unchanged outlook for the quarter, unchanged outlook for the year?

That's right.

All right. Perfect. And on the loan growth side, you just spoke about a more disciplined approach to balance sheet growth. Where are you seeing the most attractive opportunities today? And how is that mix evolving?

Yes. Look, we continue to lean in. Just to remind the audience, we said that we thought loans -- total loans this year would grow 3% to 4%. And I think we're on track to achieve that. But that doesn't mean we're growing all loan categories 3% to 4%. So to your point, we are seeing really attractive opportunities. We still think in our C&I business with a focus, obviously, on total relationship profitability, where we see great opportunities and good demand still. And so we will grow our C&I portfolio faster than the 3% to 4%, especially in industries where we feel like we have insights that our clients most appreciate. And that's become broader based in terms of our corporate, middle market and investment banking platforms.

On the consumer side, we're continuing to deemphasize some of the products that we've said have just a less attractive margin potential. So things like prime auto, mortgage, there's less demand in the first place, but still deemphasizing it a touch relative to some of the higher risk-adjusted margin portfolios like our Sheffield business, our Service Finance business, where we think we've got really good sort of defensibility, a good moat and really nice economics. And so we'll continue to grow Service Finance and Sheffield and aspects of our C&I portfolio and then hold constant or even in some cases, shrink some of the other consumer lending portfolios to get you to that aggregate sort of 3% to 4%. So again, just really a focus on profitability and quality. And the same thing goes on the funding side, which I'm sure we'll talk about as well.

Well, so let's dig right into the funding side then. As you're thinking about deposit growth and mix from here, where are you seeing the most strength across both consumer and wholesale businesses?

We're seeing good strength across both businesses in terms of overall production. I'd say, and we mentioned this a little bit in April, where we're probably spending the most of our time and putting more attention is just around mix. We've said that improving the overall quality of our funding portfolio is an important initiative, not just this year, but as we pursue our 16% to 18% ROTCE journey. And so there's just been a little bit more rotation out of DDA into more either interest checking or higher beta products. And that's okay. That's not necessarily surprising given the higher for longer rate environment that we're in or even some of the competitive dynamics in our marketplace, but it's certainly an area where we're focused.

But we're seeing good balances, just a touch of unfavorability around mix, at least relative to where we would have thought we would have been back in January. And we took that into consideration in April when we reported and provided our outlook for the year.

So that's a comment of changed since January to April, but not since April?

Yes, not since April.

Got it. All right. Perfect. And then as we talk about competition, just given your markets, right, they are the most attractive markets, they're the fastest-growing markets in the country, but also where you see the most competition. So what are you seeing in your geographies today in terms of deposit competition, loan competition?

I think it's -- do you say loan as well -- or just period? Yes, I'll hit it all. I mean you sort of set it up just right. I mean, we do think that there are a lot of new entrants to the market. That's not a new phenomenon, by the way, one that's perhaps been getting a little bit more attention. So it's not a new dynamic for us, but it's one that is true nonetheless.

And I think on the deposit side, maybe starting first for us. It's different to be the incumbent and one of the leaders in the market as you think about pricing strategy, and how you go to market. And so it's very important to us to be conscious of our back book and defending our overall franchise, but also to be sufficiently agile in terms of making sure that we protect relationships that are profitable, long-term clients that have great prospects. So we feel like we have the right process and rigor around that process to continue to compete effectively. But yes, there are a lot of folks that are coming in with no back book and only front book where you're seeing higher rates, but we're managing that.

And then I think on the loan side, we're very focused on where we want to win, and we feel like we have been and will continue to be very successful in winning those spots where we're choosing. So we'll see. Maybe we'll see a slightly different rate environment that will change the sort of overall rate awareness on the funding side. But for now, it's really not very different than even last year where you had higher rates, we've talked about this in one of our meetings earlier. You would expect, all things equal, with rates a little bit lower now versus, call it, a year ago, that you'd have a slower rotation or rate awareness, but we really haven't seen that abate. And so maybe some of that's competitive dynamics or maybe we just haven't quite hit that threshold to where we're starting to see a little bit of relief there.

And anything you're seeing on the -- in terms of spread compression anywhere?

Spreads have been sort of tight and bouncing along the bottom here. We saw -- it's tough, 1 month or 2 doesn't necessarily tell the story and you get some mix and issues that can change that. But if you look more macro and look at credit markets, spreads are extremely tight. So I think we did have an expectation coming into this year, given where we were in historic context that you'd see some spread widening. That hasn't necessarily played itself out yet, but perhaps could create some upside for us for this year and next year.

So let's dig in a little bit on net interest income and the rate environment has changed since April as well. You've had the belly of the curve move higher. Can you talk about, as you wrap up loan spreads, deposit competition, the rate environment, how you're thinking about NII and the potential for NII upside over time?

Sure. Yes. I mean I think if you think about sort of the components for us of some improvement to our margin and NII trajectory, in general, you've got a couple of factors. One, we do expect to continue to drive some, again, incrementally even higher quality, albeit modest growth on the balance sheet. So that should be a contributor to some NII improvement as well as margin. We do still have the benefits of fixed rate asset repricing. So our fixed rate loans, primarily on the consumer side as well as our securities portfolio continues to roll up the curve, which adds some assistance as well. And then again, the quality of the deposit portfolio and funding, I think, is also an important contributor for us, not just necessarily this year, but in '26 -- or pardon me, '27 and beyond, improving our overall funding mix.

So as it relates to the second half of this year, we're always a second half heavier chop, like we've got the same phenomenon that the rest of the industry has around just day count, but also we have some nice seasonality in the fourth quarter around public funds and funding mix that should help the margin and NII in the fourth. But we do expect to see sort of incremental margin expansion throughout the rest of the year and that NII trajectory that's consistent with the outlook that we expressed back in April.

And I think you've also noted the three-teens net interest margin over time. So as you think about the path to that, I think you outlined some of the factors that's going there already.

Same components, right? I mean again, and perhaps, aided -- the credit spreads component of that is sort of perhaps unknown, but we are seeing progress in terms of quality on the funding side. We know that the actions that we've taken around quality on the asset side are there, and of course, just the structural under-earning that's happening on the balance sheet that will come back into our results should get us there.

And maybe to wrap up the conversation around this longer-term trajectory of NII and NIM. There's been this growing discussion around AI-driven cash optimization for the industry overall. How are you thinking about that in terms of, I guess, risk to deposit costs, risk to deposit growth in the longer term?

Yes, it will be interesting. I mean, we're not seeing -- and obviously, this is very early days, and it's more of a sort of conceptual risk than it is an actual risk today. I think one consideration is if you think about the [indiscernible] of the deposits that you'd probably be thinking about as being most at risk, which would be the retail side, I'm not sure that the demand necessarily is there for sort of a transition into whether it be a stablecoin or whether it be sort of cash sorting sort of new technologies that might interrupt these clients.

And if you look at our consumer business, as an example, I think the median balance across our consumer deposit portfolio is like $1,500. So we're talking about operational sort of day-to-day primary banking accounts, not necessarily sort of rate-seeking, reward-seeking type stuff. I could be wrong, we'll see. But as we sit here today, we're not really seeing a lot of short-term risk on the horizon.

On the wholesale side, to the extent that, again, I think you asked really more along the lines of AI and sorting, but if you sort of move into some of the other threats like or that are being discussed, like a stablecoin, I think you've got already a portfolio of deposits that is pretty rate aware in high beta products. And so to the extent that, that moves into a coin, which just moves that cash to yet another, call it, wholesale client, I think we're probably less concerned about that risk. It's really the retail side that we think would be the area where we'd be focused and then also probably the area that just based on its characteristics are maybe less likely to be at risk.

Because your point is on the wholesale side, these deposits are already [indiscernible] fully optimized?

They're already rate seeking. Yes, high beta products. Yes.

Yes. Right. Got it. And then people talk about, I guess, noninterest-bearing deposits on the wholesale side as well and those being at risk, but those are also soft dollar payment...

Super operational, yes. Yes, absolutely right.

So operational, they're soft dollar payments as well for the services that they get. All right. Perfect.

So then let's pivot over to the fees. Investment banking has been a standout performer, a really strong first quarter as well. What do you see as the key drivers of that performance? And how sustainable is that over time?

It's been a pretty consistent performer for us. As you know, I mean, we've consistently invested in our, I'll call it, broadly corporate investment banking franchise, our trading capabilities as well. And so it's been a story of sort of continuous improvement. So whether that's the build-out of the product platform, the depth and the investment in the capabilities of the products, making -- there was a point in our history where we had gaps in products. We believe we've closed most of those gaps and really do present a full-service offering at this point. And so building out the industry teams, we're an industry-driven firm, like a lot of the more successful full-service investment banking firms. So just a continuous improvement and addition of talent has driven really strong results for us, whether it be -- which has translated to sort of high single, low double-digit growth year-over-year for -- on a pretty consistent basis, which we would expect to continue.

But it's things like doing each year, slightly larger transactions, each year gaining a more prominent role in syndicate structures and each year gaining slightly better economics on average, so a slightly larger fee per transaction. So all those, as you think about like kind of health indicators in a business like that have sort of been improving. And that's not something we take for granted. And so we'll continue to invest in that business to continue to drive it forward.

And you're right, in the first quarter, I think, for us was, if not our highest, it was one of our top 2 or 3 quarters ever in that business. And hopefully, that will continue to break records in the years ahead as we continue to grow it. And the backdrop right now is quite constructive, as you know.

And your point is as you've built up these industry teams, you're already seeing the benefits of some of those larger transactions, higher fee transactions come through and there's more room to go...

It's been a better quality game, and we've more fully serve these clients. A good example is we've more recently and continue to invest in our FX platform. A couple of years ago, we made some investments in our electronic trading platform. Every once in a while, like a lot of the successful firms, like we're not just looking at health care or financial services. We're really trying to create even more sort of depth and narrow focus in these practices. And as they sort of season and have good continuity, those practices just build momentum and are contributing to the results that we've enjoyed.

And another stat that you've mentioned before is where you have new commercial client acquisition, about 60% of the relationships come with the treasury management mandate, for instance. So as we look out into the other fee businesses and the integrated relationship-based model, where are you seeing the most opportunities there?

Well, certainly, treasury is one. I mean that's a place where we have sort of been pretty vocal that we feel like we've under-earned as a firm and even our two predecessor firms. There was a journey that we had to undertake in treasury. We had technical debt in terms of our platform. We've remediated that. We needed to place greater importance in the minds of our bankers from a sales culture perspective, on the treasury product as well. And we feel like we've done all the right things there, too. So we have a huge opportunity that we believe, in our back book, so our current installed base, where we are underpenetrated relative to the industry on these like really profitable, highly recurring deposit gathering aligned products.

And so that's a huge opportunity for us. That's a slower grind, right, because you've already got -- you've made the loan. You've been serving these clients in a certain way. And so that requires some work. We're seeing good progress there. A lot of the improvement in the pipelines we've seen are coming from the back book. But you said it, on the front book, that it's a little bit easier because that's where we're entering perhaps a new relationship, and we can be a little bit more clear around our expectations, that's another reason. It isn't that like the loans that we're making are necessarily higher quality, but the approach that we're taking in making the loans is a little bit higher quality.

And Kristin Lesher, who runs our wholesale business; and Carrie Jasani, who's got corporate and commercial banking, they were very active last year on the front book in terms of growing C&I loans. And so it's funny -- a question we've gotten a few times today is, hey, you're only expecting to grow loans 3% to 4% this year. That maybe doesn't feel as fast as it could be. The answer is we grew footings quite a bit last year, and we're growing again this year, but we're really working on making sure that we're following through on the profitability opportunity across that client set.

So treasury is a huge opportunity for us. And again, that's been an investment in product, investment in people, a change in incentives, a change in expectations kind of across the board. So you'll see outsized growth there, I believe. And wealth is another example, right? That's a business for us that has historically been lower single-digit growth. We've struggled through some of the aftermath of the conversion with some talent attrition. Our platform needed some work. We feel like we've made those investments in the platform. We feel like we've really sort of stabilized the workforce. We've got the advisers that we feel like we want to be here who want to run our offense, who want to work with our commercial and corporate investment banking teams to better serve some of those wholesale relationships. And we're of a mindset now that we're more growth oriented. So I think you're going to see us be more active in acquiring adviser teams that are a good fit for our platform.

So if you think about investment banking, about treasury and payments broadly and then wealth, we think we can grow all three of those businesses at a nice clip, which will be a real contributor to some of the profitability improvement that we expect, just given a lot of that stuff is either pretty low -- has low capital intensivity, like wealth, especially or in the case of investment banking or payments, there might be -- there's obviously a capital expectation, but a lot of those -- a lot of that capital is already working. So it's a matter of like more deeply serving those clients.

And you're looking at returns by customer, by client, right?

100%. Yes.

So the fees drive those high returns for each of those clients?

Correct.

All right. Perfect. So on the project finance side, I think you've highlighted the impact of project finance activity on your effective tax rate this year. Can you help clarify the client-driven nature of that business and how investors should think about that contribution over time?

Yes, sure. Yes. We changed our outlook in April around our effective tax rate for the quarter and for the year. And the driver of that was this project finance business. So I'd say in short strokes, we have a team of bankers who are deeply specialized when it comes to advising and creating financing solutions for high-quality developers of critical infrastructure projects. And some of those critical infrastructure projects are financed through traditional debt capital market structures. So in those cases, it's more plain vanilla kind of corporate banking style business where we earn an arranger fee or underwriting economics on bonds, whatever it may be.

But in a lot of instances as well, a better financing solution is -- requires sort of an investment in a partnership where we end up with the majority of the economics in tax equity structures. And the way that those economics work through our results is through a direct reduction in our tax liability. So in our case, that's been a business that's had a lot of momentum here in the last few months and the last couple of quarters. And so even really, you think back since January, we saw a few deals get larger, and then we've onboarded a few deals that were going to impact our tax rate. And so we felt like it was important to let investors know.

I think the takeaways there are like this is good business, right? This isn't like the typical discrete that you see around like, hey, this is a change from a former audit that sort of has been sort of finalized. This is a team of bankers out calling on clients, providing really strategic advice in a lot of cases, also driving deposits and treasury management, et cetera, that's highly accretive to our earnings and EPS and ROTCE and so on and so forth. So we probably went a little bit further in April to let people know that this is, in fact, high-quality business that's going to come through on the bottom line.

Got it. All right. Perfect. Let's pivot over to expenses. So I think you've spoken about an expense growth number of a little under 2% this year, and you just reiterated that. You're also investing in the business while you do that. So can you talk about what the right level of, I guess, operating leverage is for Truist over time as the businesses continue to scale?

Yes. Well, for this year, based on our outlook, we're expecting a little over 200 basis points of positive operating leverage. Last year, it was about 100 basis points, plus or minus. And look, I think that's generally pretty sustainable, right? I mean, as we think about our investment planning and OpEx and the revenue opportunity that we have, we're mindful of the responsibility that we have to shareholders, to work as efficiently as we can, but we also have an obligation to go realize the opportunity in front of us. And so our investment planning process, I think, finds the right tension there. We have a lot of -- the last 3 years, if you think about the expense management results that we put up, I think we were down a touch 3 years ago, up 1% last year. And this year, you said it will be higher by less than 2%, I think, 1.75% or so.

And to do that, to deliver those results, but also to make the investments that drive the right amount of business value and growth, it just requires trade-offs. And so I think the culture around our firm has been to really work hard and people know this is how we're going to plan, right? They say, okay, we're going to set a target for OpEx growth next year based on the revenue opportunity. We know there's a long list of things that we want to do to drive long-term and short-term growth. And so people continuously are saying like what are the activities that we're undertaking that are adding the least amount of business value, where is the waste? And that's a whole new day now with some of the new tools and technology that are available, which we can get to maybe in 1 minute or 2.

But that's the test. So each of our business leaders, not just at the segment, the line of business level, are constantly saying like, if I can only grow whatever, let's say, 2%, I can actually grow 4% to 5%, if I can reduce 3% up first. And that's how we think about it. So like take the 2% to 3% of things that are the least valuable, stop doing them. And then now let's gross that back up by 4% to 5%, and be very disciplined around what are the things that will truly add the most business value and be balanced around some of those need to be shorter term, investing in the FX platform, that's a faster investment that can drive a faster return on investment versus we need to build more branches and expand our retail physical distribution. That's a slower payback and -- but ultimately very profitable. So finding the right balance in that.

But we've been able to, I think, find that balance and still generate positive operating leverage. I think as I think about our journey to this year, 14%, next year, 15% and then to be in that 16% to 18% ROTCE level, generating positive operating leverage is one of the assumptions that we have in sort of driving that improvement.

And AI is going to be a driver of some of that operating leverage as well down the line. So talk about how you're leveraging some of these tools and what productivity benefits you're seeing there?

It's widespread. And I'm sure like a lot of firms who have been asked that question, it's not an easy thing to necessarily estimate or quantify at this point. But I'll tell you a little bit about how we're experiencing it and planning for and incorporating the benefits of AI. I think initially, it started as a little bit more of like creating awareness, right? And so we had a lot of focus on the firm of a bottoms-up application by application, line of business by line of business to the extent that people could lean in or we're seeing opportunities either vended or otherwise for how we could begin to sort of test and learn.

And that's been great, and that's created a great awareness. So simple things like giving -- providing licenses to copilot, to a lot of teammates or if the investment banking team showed up and said, hey, we found this really cool application that's AI-enabled that's allowing for deeper, faster research or analytics techniques or client prep work that would really change the game in terms of productivity, or the call centers, kind of saying, hey, here's a really cool tool that would not just summarize the call, but create next best actions and seek other similar examples and provide suggestions.

So all those things, not particularly scalable, but creating good awareness and energy around the potential of AI. And that continues, right? And so we've got sort of a fast lane from an investment planning perspective, when good or great ideas are surfaced, we can move really, really quickly and mobilize. But I think more importantly is the work that we're doing kind of from the center out. So our Chief Technology and Data Officer, Steve Hagerman, very much a forward-thinking guy on AI in general and its potential, very focused on investing and garnering the right investment in sort of the foundational kind of systems capabilities to not just sort of say, hey, here's a problem, here's a problem, let's find a solution that's AI-enabled. It's -- let's create the right data architecture, data hygiene systems and architecture to make sure that we're well positioned to at scale, engage with these models and solutions and software to go to solve bigger problems.

So to me, that's all the opportunity. I can't tell you exactly how that's going to manifest itself from a dollars and cents basis, no, but it is something that we take into consideration in our sort of medium- and long-term planning, which is there is going to be greater productivity on the front line, meaning like just sales enablement. There is going to be greater efficiency in the middle and the back office. And so that should hopefully unlock some capacity to grow -- invest even more heavily ideally in some of those higher business value investment projects, which we do have a backlog. We don't get to fund them all.

All right. Perfect. I'm going to turn to the room in just a second to see if there's any questions here. But as we spoke about the environment, you spoke about how you're not really seeing any major signs of stress. So as we think about credit overall, how are you thinking about the credit environment right now?

The credit environment for us has continued to be stable and relatively benign, right, at least in historic context. And so no updates today relative to our outlook for charge-offs this year. Perhaps more anecdotally, we do, as I mentioned, see a touch of stress, and we've seen the stress already in that sort of lower-income consumer, inflation, gas, you name it. It's not employment, but maybe those prior two factors driving that. We see a touch of that in our Regional Acceptance auto business, which is a non-prime business. But that's been operating there for some time. But especially on the C&I side, very resilient. And I know there's a lot of focus in the fall and into the spring around the NDFI portfolios and before that, CRE and multifamily, but we really just are not seeing any signal from our portfolios from a monitoring perspective, that give us concern at this point.

I do think people are mindful of the world events and rates, there's a lot of uncertainty in the world at the moment, but that today hasn't manifested itself and changes in delinquencies as an example, or payment patterns.

Got it. Are there any questions here in the room? So maybe to end, let's talk about capital and returns. As we think about capital and we think about the changes in the Basel endgame rules, I think you spoke about that being a 9% to 11% improvement in risk-weighted assets. So how are you thinking about the implications for your CET1 target and the capacity for continued share repurchases?

Yes. Well, so you're right. So as we -- our initial review of the proposal, at least, I know we don't have a final rule yet is that the ERBA approach would be, call it, 11%, the enhanced standardized approach would be closer to 9%. We do believe we'll be operationally ready to the extent that ultimately, we do decide to opt into ERBA as early as, call it, the beginning of 2028. But we'll need to see a final rule and obviously, do the math and get a sense for what makes sense.

I think the -- so what for us on the proposal at least is we will get that day 1 RWA credit benefit. And if you look at our capital policy over the last, call it, year and as we've expressed for the rest of this year, we've essentially said, hey, we're going to maintain an elevated payout ratio, in our case, above 100% until we get to our target operating level, call it, 10%. And I think what this does is potentially expands the horizon for that elevated payout level. At some point, we will normalize to something in the 30% to 40% dividend payout ratio, call it, 30% to 40%, call it, buyback ratio and then 20% to 40%, just reinvestment in the business. But as we sit here today, we feel like we're in an excess capital position, and we feel like that will, if anything, be extended for some period based on Basel being finalized as proposed.

Now of course, you have to incorporate the fact that AOCI will now be incorporated as well, but it's over a horizon. And our approach to that will be to always be mindful of the fact that, that's phasing in over time. But obviously, as it phases in, it will also diminish in terms of its overall impact to our capital planning. We're not here today to express a change in our outlook for 10%. It is something that we evaluate continuously. We set an operating target based on our own perspective as a firm of what an appropriate minimum amount of capital is to continue to operate as a financial intermediary. We take into consideration severe stress and how our portfolio, we believe, would perform. And then we take into consideration things like forecasting precision and other factors to sort of get us to, hey, here's sort of a reasonable limits framework that, in our case, our Board approves and then we set management level limits as well.

So that's what gets you to that 10%. And those factors change over time. So could you see us operating with a slightly more leverage? Possibly. But I think we want to see a final rule. I think we want to see what the overall economy has to offer over the next year or so. And get a sense for also how ratings agencies are thinking about RWAs as an example. It's not perfectly clear that they're going to adopt the same approach. So still some cards to turn before we revise that target if we revise it. And at this point, we're operating at a level that's so much in excess of that. Our focus will be to continue to follow through on the buyback.

Yes, I was just going to say, with the rating agencies as well, I guess it's a little bit more of a wait-and-watch approach on what they're doing. Would TC to TA factor into how you're thinking about things?

Absolutely. Yes. We operate today in sort of the high 7s percent area. We've had a lot of questions from investors about whether TCE, is there sort of a floor? We haven't expressed a public view on that. I'd be feel comfortable saying that a 7 handle for sure, would seems reasonable at this point. I mean, again, for a lot of the reasons or factors that I articulated a moment ago, things can change, but we could definitely see ourselves operating below where we are operating today, and I think that's incorporated into that even outlook. If you think about RWA density going forward, but there is some level at which that becomes a constraint.

All right. So to conclude, maybe round out the conversation for us in terms of returns. You have a 15% ROTCE target for '27, 16% to 18% longer-term opportunity. What are the building blocks that get us to that longer-term target?

Yes. I think at the highest level, I'd maybe hit three buckets, and I think we've hit on all three of those in terms of the path. And we believe, by the way, that our ROTCE improvement opportunity is as good as any firm out there in terms of the improvement that we think we can deliver. But the first is productivity. We talked about quality growth. We talked about quality funding, talked about the fee businesses, more discipline in pricing, you name it. Those are all factors that are going to drive the numerator and our ROA higher. We talked about efficiency and a commitment to cost management. We believe that we'll be a more efficient company over the next 2 to 3 to 4 years. You think about like our efficiency ratio as an example, aided by higher revenue lift also by good cost management, and then some of the balance sheet optimization that we've talked about, RWA density and improvement and then operating the company with a little bit more leverage.

Those three factors are going to be what drive us from where we are today to 14% to 15%, and they're going to continue to drive us into that 16% to 18% corridor over the medium term.

All right. Perfect. Very clear. Mike, thanks so much for joining us.

You got it. Thank you.

Okay. Good morning, everyone. My name is Ken Usdin. I'm the large-cap bank analyst at Autonomous. Thanks for being here this morning with us. I am really proud to have Bill Rogers, Chairman and CEO of Truist Financial Corporation, with us this morning. Bill has been the CEO of Truist since 2021. He's led the company's transformation into one of the largest regional banks in the U.S. with almost $550 billion of assets and a lot of growth and improvement coming along the way. Before we go, a quick reminder, if you have any questions, you can put them through the Pigeonhole app, and we'll see if we can get them into the discussion. Bill, with that, thanks for joining us today.

Thanks for having me.

Excellent. So Bill, maybe a big-picture starting point. It's been a long year in 5 months, a lot of things out there in the world. Maybe just your big picture take on client customer sentiment across your footprint and your -- what you're seeing just from a broad economic activity perspective.

Yes, sure. So I would say constructive. So client activity is active. I'd like to say, I think on the wholesale side, I think clients have capitulated to uncertainty in rates. So they're not waiting. So they're going ahead and making the strategic decisions and building the warehouse, buying the trucks, looking at the strategic partnerships, things they need to do, recap their company. So our activity is strong, and it's strong across all spectrums. So I think activity is positive on that side.

On the consumer side, probably on the lower-income side, a little more discretion. So I think -- I don't think it's a risk off as people continue to be, but it's a little more discretion. And on the upper-income side, continue to see the trends that we've seen. So consumers active, continue to be prospective and not changing their buying pattern significantly.

Yes. Just one thing on the commercial side, you mentioned that people are kind of just moving forward. Is this kind of uncertainty -- certainty and you just hear your customers saying we have to go forward with...

Yes. Again, I think capitulating the uncertainty. I mean I think that it is an uncertain environment in many ways, but it has been an uncertain environment as an introduction for a long-time. So I think they're looking at the needs to continue to grow their business, continue to invest in their business. They're looking at the strategic alternatives and going ahead and advancing on those activities. So again, pipelines and dialogue, particularly on strategic types of investment is actually still quite strong.

Yes. One of the changes we've seen since the beginning of the year is that the rates backdrop has stayed higher for longer. While Truist is a little bit of a thing, but you've maintained your overall earnings trajectory. So what gives you the confidence in that trajectory as we look forward furthering on the comments?

Yes. I mean, Ken, we've got -- so several things. We have a lot of levers. So NII under a little more stress. But in fairness in the last couple of weeks on the long end, you still see some opportunities. And we have fixed asset repricing and securities repricing, that probably has a little higher opportunity on the other side. But our core business, I think about our fee-based businesses, we actually see a lot of confidence in our fee-based businesses.

Think about investment banking and wealth and payments for us, much more relationship-driven, much more franchise-driven. We just have more confidence in the ability of those businesses, long-term investments in those businesses, organic investments in those businesses, highly relevant, highly competitive positioning. So while we see a little bit of offset or not, we see a little bit of offset on the positive side on the payment side.

And then just the capacity to create better RWA focus on our company, create better looking at Basel and looking ahead in terms of regulatory, more sustainability on things like the buyback. So as we see not only the short-term capability and our confidence, we also took the opportunity to say, let's set some longer-term targets out there because we see more confidence and more capability in our ability to improve our return, not only short term and sustain, but really long term and the things that we're building.

Yes, yes. And then as we start to talk about some of those building blocks, you talked about 3% to 4% loan growth for the year. And what are the main drivers of that growth? And as you focus on getting more higher-return incremental business to the company?

Yes. So I think on the loan growth side, we're being competitive, and discerning, and focused on return. So the quality of our loan growth is actually significantly higher. So think about on the commercial side, 60% of our relationships now have some type of payments business associated with them. That's significantly higher than our back book. So that says our product, our capability, our competitiveness is really strong. We have about 24% increase in new clients.

We're also winning new business and new relationships. You translate that on to the investment banking side of that, we're in more prominent positions related to that business. So the quality of the business and overall return is really high. So on the C&I side, we're competitive. We're focused. We see good growth on that side. On the consumer side, the traditional strong consumer businesses for us, think about like Sheffield and Service Finance, we're entering into the cycle for those businesses. So think about HVAC and pools and things that people are investing in back to the consumer still in the game, still see positive momentum on that side.

But things that -- and they're client-driven, higher-return businesses. Think about things like the indirect auto, we're actually just like diminishing and lowering our expectations in that business. The returns are really small. The relationship-driven part of that is really small. So I think what we're seeing is like growth is where we want to have growth and growth is accretive to return, and that's where we're going to be focused. And again, back to the earlier comments, that's what gives us more confidence in these return expectations.

Got it. And let's talk about the right side of the balance sheet. You've talked recently about making progress on the deposit side, making deposit momentum and what's also not an easy environment. How do we think about the pace of that improvement, which has been some time in coming along and the key drivers that can help support better deposit growth?

Yes. So quarter-to-quarter, continued improvement for us on the deposit side and deposit generation. On the wholesale side, more significant improvement. And again, back to quality operating deposits in fairness, more interest-bearing than we'd like. So -- but that's -- but they're quality relationships and they're 60% payments business. These are things that still haven't funded part of a growing operating component.

So we'd rather have more noninterest-bearing, but we'd rather have the relationship. So being able to sustain that and have 2% kind of growth in the wholesale part of the deposit growth. We feel good about because the quality of that deposit growth is good. On the consumer side, really good deposit generation. We're seeing that on our Premier side. We've been investing a lot in that. So the 20% kind of plus focus on deposit generation. Again, we'd like to have more noninterest-bearing, but again, good growth and good focus.

We'll have more focus on expanding those relationships of products, capabilities, rewards, insights, and things that we can do to expand those relationships with those clients to create, again, the equivalent of the consumers' operating account as well. So the quality of our deposit growth has been strong. And I think that's -- over time, that's been most important thing to have is the quality of the deposit rates. Rate cycles will change. And when rate cycles change, we'll get more advantage from our earnings capacity and funding capacity of those deposits than we have today.

When you mentioned that you're getting more of the interest-bearing and rather more of the noninterest-bearing, is that just because of the mix and just what's coming to you? And how do you evolve that over time?

Yes. A lot is, again, because it's funding operating accounts. And so you have that component into it. And then over time, you leverage that relationship. earnings credit rates is a big part of that component. Today, that's a highly competitive sitting at the top end of that spectrum. That changes over time. You have flexibility. Think about the equivalent of the back book on the consumer and the equivalent of the back book on the wholesale side that you're constantly challenging and looking at where those opportunities are.

But also in fairness, also helping clients manage their deposits more efficiently. I mean their clients are much more efficient on the wholesale side from everything from working capital to supply chain to liquidity, and we're helping them with those capabilities. We're providing them the tools. And ultimately, the most important thing is to have that strong fulfilled deep relationship with that client. And over time, that accrues a lot of benefit to you.

Yes. And speaking of that and furthering it, you talked about Premier. You talked about your Payments and getting deeper relationships there. Inside the branch network, things you're working on there as well. So talk about how that's all positioning to drive better growth? And how -- what are the building blocks that happen over time in terms of getting those pieces more connected?

Yes. So I mean, if you think about like overall in terms of our franchise focus and think about the building blocks on return is really significantly leveraging the assets that we already have. And we've got a fantastic franchise. We've got fantastic clients. We have great long-tenured relationships. Now we have much better product capability, competitiveness, teammates focus, so leveraging those existing franchises for a higher return, leveraging those existing relationships, deepening those relationships.

Investment banking, 40% increase in the relationships that come from the franchise. Same thing on wealth, 40-plus percent increase in the relationships that come from the franchise. So using the Premier, using tools, AI, increasing the referral network, building those stronger relationships. So those are things where we've already made investments and we're increasing the returns. Same thing on the payment side, 60% of relationships now with the payments business, which is significantly higher than the back book. So we're creating return on investments that we've already made, and that's a big part of the return profile.

Yes. And I'm not sure how easy or difficult it is to say, but you mentioned that there's a lot more of that. Are these all in early innings, middle innings in terms of that deepening? The growth shows it that there's an increment that's coming on. But how nascent are still some of those opportunities?

Well, I mean, the confidence that we set longer term, medium term would say that we have a lot more innings in front of us that we feel confident about the momentum and the exponential growth of that is in terms of an opportunity.

Yes. Okay. So consumer, you mentioned Sheffield, some of your other businesses, LightStream, Service Finance, some of the higher risk-adjusted return areas. Are there opportunities to lean in further there? Or to your initial points about the consumer, do you have any concerns there? Where is the bid-ask in terms of how much you want to step in further and the opportunity sets for those businesses to grow?

Yes. Remember, those businesses, particularly on the Sheffield and Service Finance side, I mean, these are high FICO score businesses, high return businesses, risk-adjusted return businesses. So we're going to continue to lean in this. And in both of those, like we're market leaders. So we have a capacity to lead in those markets.

We're entering into the cycle, again, summer months where those businesses become more important. So I think those are areas we continue to lean in. We feel good about the relationship aspect of those. We're building more relationships with the vendors and the other support system that creates all that. So that's -- that ecosystem overall is improving in terms of return.

Do those businesses drive other throughput opportunities to other areas? Or is it more just that you get such good returns, they're still additive?

We -- it's primarily a return focus, but there is overlap. Those Venn diagrams do come together. And the advent, we can talk later, but the advent of tools, AI capabilities in terms of like learning how to leverage those Venn diagrams better, when those overlap, when a client has a relationship with us with Service Finance and maybe they also have a relationship where they sit in another part of our geography, and we can leverage those.

By the way, that's like really early innings. So if you talk about innings, that is very nascent, that's the ultimate outcome. But -- so for now, they really drive really good high risk-adjusted returns. And that's the -- if they were icing, that would be the icing on the cake versus the cake itself.

Got it. So your biggest fee generator, the investment banking and trading franchise has been growing. You've been -- expressed confidence in continuing to. You mentioned earlier about customers moving forward. How much of the growth that you're seeing and expect to continue to see is driven by share gains? How much of it is that product build-out? And how much is just the environment?

Yes, it's several things. So remember, this is a business we've been building for decades and we build it organically, which we think is actually really important. We think the cultural aspect of this business and having it not as a separate business, but as a business that supports the franchise is actually a really key differentiator. So -- and that's the emphasis. I think that's what reduces the beta over time in terms of the volatility of that business because it's driven from the franchise.

It's driven from our existing clients and that focus. So that's been a key area for us. I mean we see low double-digit kind of CAGR kind of growth quarter-to-quarter. It will be up and down for any particular different reason, but predicated on the product and capabilities we've built, the talent we built, not only in the investment banking side, but also in the delivery side. So our middle market client base. I mean, our middle market teammate base, 20-plus percent of those are new to the franchise within the last year. They know how to leverage these tools. They know how to leverage these capabilities. They know how to leverage these client relationships. So that's part of that building of that momentum of that business.

And in terms of market share, where do you think you are? Where do you think you can go? And is it part also of continuing to build out the product set? Or is it more just better against...

Yes, yes. No, no. Clearly, on the market share standpoint, I mean, we're small single-digit market share. So we have lots of upside relative to market share. We think about more market share about like individual clients and individual businesses and specialties that we have and leveraging the existing franchise in terms of that growth. So not only do I think we've got organic growth, but we do have market share expansion. If you look at sort of us over the last 5 years, we've had consistent small market share advantage. But for us, on that base, that can actually be a significant contributor. And again, the return aspects of those is important because it's against capital that we've already committed.

Yes. An incremental part of your fee business coming from investment banking trading come from lending clients? Or are you seeing more of a pivot where you're just getting the advice now and it goes reverse inquiry on to?

It's both sides. I mean so the core business starts with industry specialization. So that comes from both sides. So we're important to a client in terms of our advice and our knowledge irrespective of whether they're a client or not. So that's one aspect of the business. The other aspect is we're important to the client because we're a client -- because they're a client, and they're making a decision in terms of the recapitalization of the company, the sale of the company, and we're able to come on top of that with our specialization. So it's the culmination of both and the leverage of both is what creates the momentum.

And then the other large or larger and growing fee area, wealth management, where you put a lot of focus there. Talk about like how is that -- in the same regard, like where does the growth come from there? Is that also adviser adds? Is it also connection to Premier? How do you walk us through that?

And the good news is it's the same thing. It's both, right? So it's one, it's slowing the attrition, which we've done significantly. So we have a really great team on the field. We provided a lot of tools and capabilities for them in terms of their efficiency and their ability to deliver great products and great capabilities to their clients. Their platform has been significantly enhanced and their efficiency and how to deliver that platform has been significantly advanced. So we've invested a lot in that capability.

And then on the other side of that, and you mentioned the Premier side, is then creating that platform from Premier. So the insights and the knowledge that we have about that client base creates more velocity for the Premier capability in terms of the referral side. We're using tools. We're using AI-generated tools to help the referral network. So we know we have a lot of knowledge. We have a lot of knowledge around when and how a client would want to be referred, what are the criteria, what are the top elements of success, how do we increase the batting average, so to speak, and then how do we create the add path.

So a combination of culture, talent, desire to work together, incentives and now advent of a little bit of technology to accelerate that is where that's coming from. And as I mentioned earlier, 40% plus of the growth in the wealth side is coming from the existing franchise. So this investment that we're making in Premier, the insights that we're providing and the leverage of the ecosystem is proving to be part of the growth dynamic.

And the last growing incremental piece is treasury management, which kind of in the middle of all of this, more maybe connected to the prior points on investment banking and the commercial balance sheet. But that's been a big part of a lot of regional banks growth. Could you talk just about how you're continuing to build that piece of the business out and how that's adding to both the deposit taking and the overall relationships?

Yes. I mean the last several years, a really significant part of our investment has been in our overall payments treasury management capabilities. This is an area for with Truist, where we had a significant opportunity for penetration. We were underpenetrated relative to our opportunity. The good news is the ability to invest in product and capability now is a real left lane opportunity. It used to be like mainframes and hard investments and took years to create.

Now it's APIs and other tools that you can be really relevant to clients in terms of integrated receivables, payments capabilities. Real-time payments, specifically related to their industry and their business and their working capital and what's relevant to them. So those are the investments that we've made, and that's where we're seeing the acceleration. As I mentioned earlier, 60% of the new relationships now have a payments component attached to. So that says that's a pretty good signal that, one, we're relevant.

So it matters. I mean the products and capabilities and the tools and the teammates and their prowess and their effectiveness is relevant, and our back-book is a lot less than that. So that says we have a lot of opportunity to continue to expand that business and grow with our clients and be relevant for them on that part of the side.

Yes. So as the business kind of bring that all together from a revenue perspective, the distribution between NII and fees is a little bit more NII than the longer-term path, 70-ish, 30. But with these fee opportunities, do you think that mix can change over time and become proportionately more fees? And how do you think about what the right balancing act is? I know rates are a big important.

Yes. I mean it will change over time. That moves slower as a percent over time, but it will change over time. And that's back to how we started this conversation. So we're seeing disproportionate growth in the fee income side. So, we have more confidence in that in the fee income side as NII has a little more pressure, but we're seeing single-digit growth in that side. It takes a long time to reverse the whole percent, but the return aspect of that accelerates pretty quickly.

So while the percent may not change as quickly, the return element because you've already committed the capital on the side actually accretes pretty quickly. And that's why we have the confidence in setting these medium -- confidence in achieving our medium-term goals, but setting longer-term goals because we see that acceleration of the return aspects of this. So while the geography of something in terms of a percent or where it sits on the balance sheet or where it sits on the income statement, we're not as focused on that as we are about are we achieving the return objectives? Are we achieving core EPS growth. And I think we've got really good flight paths on both of those.

Got it. And using that as a pivot to talk about return targets and operating leverage. So -- when you think about that path towards your higher return targets, how do you think about getting the top line to grow and then keeping the operating leverage band wide beneath it while continuing to support everything you just walked through, which is a lot of investment in the franchise.

Yes. So I mean I think about the return objective is think about it as the waterfall, one of the components that you're building on the waterfall. Obviously, the biggest component is the core franchise, the NII franchise, improving NIM, improving growth in NII, improving growth in balance sheet, deposit remix, that's your biggest element. Then you've got the fee-based business growth, which we talked about.

Those are significant enhancements to the return objective. Then going to your point, the efficiency side of that. So the efficiency side of that is a couple of hundred basis points of operating leverage. All that with creating efficiencies to reinvest in the business. So I think we've got now a really sophisticated system for sort of next dollar to save and next dollar to invest and creating the right formula for that. We're not going to miss on an investment opportunity because the investment returns can be faster. And quite frankly, the savings returns can be faster.

So the efficiencies that we can achieve with the tools that we can use and think about software development or care centers or core operating business can achieve more efficiencies faster, but we can also have things that we can invest in faster. So that combination is where you're talking about that, and we achieved that in the overall operating leverage. And then for us, we have some tailwinds. So we have some tailwinds in repricing. So just as the short end of the curve has been a little more challenged, the long end of the curve is a little bit better.

So we've got $40 billion worth of repricing in terms of our fixed asset repricing and what comes off the securities portfolio. So some advantages of that. And we have some AOCI burn off in terms of that. So we have some natural tailwinds in that regard. And then the last one is the capacity for capital utilization, right? So with Basel III regulatory reform, pick your number, 10% or so in risk-weighted asset improvement, the things that we're doing on our own density focus, that just creates more durability in that capital return category. So there are lots of elements of that waterfall to get there. Our confidence in setting these targets is that we don't have a dependency on one, and we have a lot more flexibility within all of those levers.

Okay. And we'll keep digging on some of those as well. On the efficiency side, you and every other bank now talking about AI as a really important enabler for the franchise, for the industry. As you look at it in terms of how Truist is putting it through the tech stack, what are the most important benefits you're seeing today? And how meaningful can that be towards the productivity and efficiency over time?

Yes. I think the first thing, and we don't think about it like the AI budget. We think about AI as the propellant. AI is the accelerant to an efficiency play or the accelerant equally important to the client enhancement and client experience and the revenue side. So that's sort of how we think about the budgeting in terms of how we think about the AI component. Lots of obvious investments. And as I mentioned before, the software development, care centers, general process improvement categories.

But every one of those efficiencies, we have an ability to reinvest in the business on the other side. So think about Truist Insights, think about the referral networks and things that we talked about that we use the technology to create more velocity and more effectiveness and more return against the revenue side of the business, all while creating an infrastructure that allows that to run it at sort of a higher speed.

And do you think about -- when you think about that creating efficiency for the investments, is it across the board again? Some goes back into people, front-office facing people, some goes into furthering the technology product. Does it get spread out? Is it more focused? Can you think about that?

Yes. A huge part of the initiatives to simplify our businesses so we can make those decisions. So we have a great framework for making those decisions and making those trade-offs. We announced we were going to invest in branches. Branches have a longer-term payback. So they're more in the 5- to 6-year payback. So we have to offset that with shorter-term investments and shorter-term efficiencies to achieve that. Put that all in one big bucket.

We can sit around the room literally in a small table, look at all those effective decisions and make those decisions relative to what's going to accrete the highest value for our clients, what's going to create the highest value for our shareholders and put that in a mix that allows us to make those decisions on short term, medium term, and the capacity to toggle all of those switches at the right time.

So that's why -- I mean, I'm always careful about saying it's going to achieve this level of efficiency or you're going to have this level of dollar savings or this -- because you get into apples-to-oranges comparisons in terms of like how to think about the cornucopia. And what we'd rather say are we using all of these investments to achieve the return and the growth that we can achieve, and this is the potential of our company.

What about AI as a potential competitive threat and how you defend the for, whether it's in any business really comes up most on the deposit side, but also comes up on other angles of payments and fees. How do you also get ready for that and prepare to just go up against how that evolution happens over time?

I think like any tool, it's offensive and defensive. So on the use of AI "defensively" against our franchise, the offensive side is we said to become more relevant to our clients. Are we providing them more insights? Are we giving them ubiquitous access to all of the tools and capabilities and products and avenues and places that they transact with them? Are we deepening the relationships that we talk about? Are we their primary account? Are we their operating account? Are we the primary place? And we've got the tools and capabilities to do that.

So we're -- while we see the threat, we're not immune to the threat. Also, those same tools make us highly competitive and create the individual moat with individual clients around our relevance. So clients are going to choose to be the most relevant and the most primary with who's giving them the best advice, who has their best interest at heart, who's giving them the most flexibility on their account. I think that's really, really critical. In our case, who's exhibiting the right level of care and purpose and understanding and helping them achieve their life goals and helping them build better lives.

Yes. Just one competition question that will lead us also into a credit discussion. Your sense of just the competitive landscape across not just because of AI, but just more broadly speaking, anything new or different or novel, whether it's in footprint or in some of your national businesses or any ways you're thinking about it differently from some of the angles you've already walked through?

It's a highly competitive environment. And I'd say most importantly, we've never been more competitively well positioned. So while it is highly competitive, there's just no doubt and the competitors are as broad and as wide as you can possibly describe. Truist has never been more competitive. So in terms of like the talent we have on the field, the product and capabilities, the ability to leverage those, the ability to respond to our clients' needs in ways that make us effective and important to them, the ability to offer advice to them in the ways that they want to receive advice, whether it's digitally, whether it's physically. I just think we've never been better positioned for a highly competitive market.

Yes. Understood. So talking about the broader credit environment today, kind of dovetails back to where we started. What are you most focused on as watch areas? And how do you feel just about the overall health of the -- across the portfolios?

Yes. I mean if you look at on a spot basis, credit quite good. And that really runs through the gamut. What we focus on is having a highly diversified franchise. I mean I think one of the significant benefits of Truist is the diversity of our franchise in virtually any way that you want to think about it. So when we think about areas that people might focus on, whether pick your category software, any category, for us, it's a small percentage of the overall portfolio because it's highly diversified. So we start with this framework that we have a lot of discipline around creating a diversified franchise.

So I think that's probably the most important component in terms of thinking about credit. As we look forward, we stress everything against that diversification. So we're going to stress against everything. We're going to stress against gas prices. We're going to stress against delinquencies. We're going to stress against consumer behavior. We're going to stress against virtually anything that we can think about, all ensuring that we've got enough diversity to not only weather that, but actually prosper in those environments and create disproportionate advantages.

The watch items that we're looking at, obviously, we're going to look at anything in the consumer discretionary side just to ensure and you can see sort of binary differences in different businesses, which is fascinating. We'll look at transportation and cost of gas and what's the influence of different things. We look at different consumers on the lower income side, particularly what is their different exposures and how are they thinking of what is their payment streams, looking at how they're spending money and decisions they're making. So we're constantly stressing all of those components. And again, the strength for us and looking forward is just the diversity of the overall business franchise.

Yes. And it seems like even your points about the things you're watching for, even whether it's on the lower income cohort, the delinquency trends don't -- you mentioned spot basis looks fine. But one look forward?

Yes. Delinquency trends, in some cases, slightly -- it's not manifesting itself in the losses. Remember also, this cohort has got about a 10% increase in tax refunds. So there's some sustainability in that. But those are areas that we're just watching really carefully and closely.

On the commercial side, you have to talk about the private credit ecosystem, both as a credit question, but also as a growth challenge and yet maybe an opportunity as well. How do you see this interplay, especially that you service it inside the investment bank as much as on the balance sheet as well, the interplay between banks and private credit? And how do you see that as potentially being an opportunity over time?

Yes, it's something you mentioned. I mean we've been in this business for a long time in terms of interplay with private credit and going back to my other comment, highly diversified in terms of total percentage of our total portfolio, highly diversified within private credit as a whole, highly diversified within the whole NDFI, highly diversified, long-term relationships, relationships that have a use of our capital markets capabilities.

And so these are higher return relationships for us. We underwrite down to the loan kind of focus. So these are clients that we've known for a long time. We have really strong relationships with. We think we're sitting at the right structures of those infrastructures. You and I were talking about is the convergence between private credit and bank. I made the comment, I think it's converging. I don't know if it's converged, but it's certainly converging where you're going to -- I think we'll see some more opportunities on the bank side.

I don't think that's going to be a groundswell of change. But you see some of that converging where clients who maybe had typically gone private credit now are also considering some of the other options, particularly as it relates to some of the funding differentials and the pricing differentials as those 2 things converge, as pricing converge and structures converge, those are probably closer today than they were a year ago.

Yes. seemingly, banks will still be willing to grow it. And I think coming out of the April quarter, there was a lot more disclosure and confidence in the quality of the underwriting in the portfolios. Coming back to the return side, talking about capital a little bit. Obviously, we've got the proposal for the Basel III rules, a positive outcome for Truist and for other regional banks. First of all, if it goes through as is, any issues with that? Do you anticipate any changes happening as we get through a final rule?

Yes. I mean, as you mentioned, I mean, a positive overall outcome for us. We have the capacity and capability to select so whether we want to go or whether -- so we have the optionality to select where we want to go. I think the general corpus of where this is, seems like this is going to get through, whether it's end of this year or first of next year, I don't know. So the timing is a little in flux. But back to our earlier comment, I mean, that's just for us is another level of flexibility and another level of capacity and another level of durability long term for us in terms of capital return.

The -- when you think -- you mentioned the 10% CET1 level is kind of in your baseline expectation. And so as you get this extra help down the line, it will take some years to get to it, as the AOCI continues to cure from the securities portfolio, how do you start to at least think about the possibility of like, well, maybe 10% is not the right level. You obviously have a much lower regulatory requirement. So that's a pretty healthy buffer to even keep today. Is that a potential thought process as you think further field?

Yes. I think that's a longer-term thing to think about. I mean we've been pretty clear to say within what we've outlined in terms of return expectations, we've assumed somewhere around a 10% CET1. I don't want to speculate whether that's conservative or -- but there may be future opportunities there. And again, back to our earlier comments, given the diverse nature of our franchise, I think, appropriate risk balance of our franchise, that could be an opportunity.

We just want to factor that in. So if there's sort of like another upside, if there's another opportunity that could be a way to do it. We'll have to look at where rating agencies fall. We have to look at sort of the competitive environment, quite frankly, where we are in an economic cycle, all those things, all those variables will exist. So we think for today, being able to say we can achieve these return objectives. So we're not assuming that we have to have an additional capital accelerate from a lower CET1 base should give us a lot of confidence in the ability to achieve those returns.

Yes. One of the points you mentioned earlier, you talked about RWA optimization. Can you talk about what that means at Truist and what's new or different about that from the past?

Yes. I mean if you think about when we came together, you had dozens and dozens of ways to think about like how to classify loans, where should they be, what are the categories. So we have a really -- and if you look at sort of us relative to others, we're a little more dense on the RWA than I think we should be relative to our portfolio relative to how our company looks from a risk-weighted asset standpoint. So we've brought in some help to help us think through this, help us be really sophisticated.

Sometimes this is as simple as these loans should be classified this way. We have a systematic way of doing that versus an individual making a choice. Others are things like our CLN portfolio, how do we leverage, how do we take things like some of the indirect auto portfolio and create more velocity around that.

Our Service Finance business, remember, we have it as a balance sheet business, but it grew up as a non-balance sheet business. So we have the capacity to think about that as well in terms of how we maximize those opportunities. So it's a combination of a lot of different things. And I think part of the return profile for us is if you look forward for us, our growth is going to come with a lot less RWA growth. And that's a significant element of this improved return profile for our company over time.

Yes. And to that point, so -- you talked about getting to a 15% ROTCE in '27 and then longer term getting to 16% to 18%. Maybe just kind of take us through that waterfall and talk about maybe your stack router of kind of what the biggest drivers are to get to that next leg.

Yes. The biggest drivers are the business drivers. So the improvement in the overall mix, the improvement in the funding -- wholesale funding, reducing the wholesale funding, increasing our deposit mix, improvement in growth in the loan side and the deposit side and having them be better matched. That's the big bulk. And then we go to the non-interest income components of the business and we go to the efficiency plays and we go to the capital plays of all the things we talked about and the tailwind that we talked about.

So those are the -- we've got several building blocks in that return profile. Again, don't have a 100% dependency on any of those. They all have levers and flexibility. And back to the Basel III, that just provides, I think, more sustainability and more durability on the capital actions that we can take.

Got it. One question that's come in. I think there's a good one. Can you talk a little bit about cybersecurity, which is a threat to all banks, especially given the Mythos threat? Is there a risk that you and other banks will have to ever increase your tech budgets to deal with this rising risk that the whole industry faces?

A significant part of the efficiency that we get is reinvested in our cyber resiliency. So yes, the answer is yes, that part of our budget is going up. It will continue to go up, but that is being offset by the efficiencies in the other plays and the operating leverage that we achieve. So even 100%, I think people understand that our industry is, I think, probably relative to other industries, the most cooperative. I mean we have a weakest link view in our industry.

So you think about the FS-ISAC and all these components. So we're all in this together. And if you think about the systems that we use outside of our core systems, these are common systems to all banks. So we all have a really strong vested interest in making sure that our second, third and fourth party relationships are really strong. The standards for them are going to go up exponentially in terms of their resiliency, their patching capabilities, the expectations for that.

And that will come not only from us, but come from the industry. So we're all, again, leaning in collectively to affect this. So I think it's an area that we have an extreme area of focus, continue to invest. The good news for us, if you think about the last 3 to 4 years, that's one of the areas that we've invested in significantly. So we thought about doubling the size of our company, we had to similarly create an infrastructure and a resiliency and a defense mechanism that reflected that. So we've been in a high cycle of investment on that, and that will -- maybe not at the same level, but that will continue.

Yes. And that reminds me of another question that's come up a bunch, which is that the industry has rallied at important moments like on cyber, creating Zelle as a competitive alternative to other mechanisms. The deposit -- this comes up a lot in terms of deposit discussion and the new tools that are coming up. And how do you think the bank and the industry will prepare against whatever the outcomes are as all these new digital token, stable agents come about and you prepare for just again, defending the forward, so to speak.

Yes, I think you highlighted. I mean, I think we would say as an industry, we were slower on Zelle as a response than we should have been. But you look at the response now in terms of the growth of Zelle and its influence and its importance like significant. And that was a total industry, everybody shoulder. I'm optimistic, and I think we'll be faster as an industry in responding. So I can see industry-wide tokenized deposit view.

I think we all have a view that the clients' assets and deposits belong to them. They don't belong to us. We have to create the platform that is a platform that has the safety components and the regulatory components and the confidence components that reflect not only our bank, but our industry. And we're fully invested as an industry, certainly Truist, fully invested as an industry to create a confidence-based ecosystem that has a bank infrastructure to it.

And I think ultimately, while I think the velocity of all that will increase, if you enter this with a concept of we're going to provide really great products, really great advice, really great capability, you should be the beneficiary of that velocity and not be defensive and not be fighting it, but be proactive and leaning in to make sure that you're going to be -- as the options increase, you should be the best option. And that's the approach we're taking as a company, and I think that's the approach we're trying to take as an industry.

Got it. So as we wrap up and just think about everything we talked about, talk more -- just kind of wrap us up on just your overall confidence here that you're laying out here in terms of both the potential for stronger growth, higher returns, improved profitability. How do you kind of take us forward and give us that confidence? You mentioned it's been kind of a journey since the original merger of the 2 companies and bring this all together to us in terms of where we should be looking forward and seeing that improved success for Truist.

Yes. And I think back to my earlier comments, if we think about the starting point where we are, we have some natural tailwinds. So like there -- we are where we are, we have some natural tailwinds. But then on top of that, we've never been more competitive than we are right now. So the investments that we've been making in product and capability and teammates and talent against an incredible franchise and an incredible opportunity, I think just we're sort of extremely well positioned.

And then back to our earlier comments, we also have a lot of levers. So we have a lot of -- we're not -- we don't have a one dependency. We have a lot of levers. And the environment today, I think, affords us an opportunity to navigate within those levers, which is why we have the confidence of establishing this longer-term goal. And while it won't be a straight line, it will be a line. I mean, we're going to see constant improvement quarter-to-quarter, half year-to-half year, year-to-year and building that momentum. So the geography, as I mentioned earlier, probably not as important is do we have really core good, strong EPS growth from where we are today. I think we feel really, really confident in that. And do we do that against a higher return expectation as we go along. So we have really good EPS growth, and we have that against a really higher return profile.

Got it. Great. Please join me in thanking Bill for his time in our session today. Thanks, Bill.

Thanks, Ken.

Greetings, ladies and gentlemen, and welcome to the Truist Financial Corporation's First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this event is being recorded. It is now my pleasure to introduce your host, Mr. Brad Milsaps.

Thank you, Betsy, and good morning, everyone. Welcome to Truist's First Quarter 2026 Earnings Call.

With us today are our Chairman and CEO, Bill Rogers; our CFO, Mike Maguire; and our Chief Risk Officer, Brad Bender, as well as other members of Truist's senior management team.

During this morning's call, they will discuss Truist's first quarter 2026 results, share their perspectives on current business conditions and provide an updated outlook for 2026.

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. Please review the disclosures on Slides 2 and 3 of the presentation regarding these statements and measures as well as the appendix for appropriate reconciliations to GAAP.

With that, I will turn it over to Bill.

Thanks, Brad, and good morning, everyone, and thanks for joining our call today. Before we discuss our first quarter 2026 results, let's begin, as we always do, with purpose on Slide 4.

At Truist, our purpose is to inspire and build better lives and communities. And one way we bring that to life is through the work we do every day for our clients. One example of this is our project finance business, which is a client-focused platform that provides financial advice and capital to help develop essential infrastructure that drives long-term economic growth, job creation and stronger and better communities throughout our footprint in the United States. Our relationships with these clients have led to broad-based franchise engagement, which includes deposits, payments and lead roles and capital market transactions.

From a financial perspective, there are aspects of this business that generate returns somewhat differently than our other businesses. A meaningful portion of this benefit is realized through reductions to our tax provision rather than reported revenue. Mike is going to walk you through the impact of that later in the call, but this dynamic contributed to our lower tax provision in the first quarter and is a factor in our expected lower tax rate for 2026 compared to 2025. This, though, is a great example of how serving our clients and communities is true to our purpose and also drives strong financial outcomes for our shareholders.

Now turning to our results on Slide 5. Before I get into the details of our first quarter, I want to spend a moment on the quality of what we're delivering across the company and how we're executing against our strategic priorities. What I'm most excited about this quarter is the underlying momentum we're seeing. New client pipelines are growing. Activity levels remain healthy, and we're continuing to add talent and execute in the areas that matter most to our strategy of driving improvement in our profitability.

During the quarter, we once again added new clients, deepened existing relationships and grew profitably in the business and products where we've chosen to focus with loan growth coming from priority segments, fee growth driven by core client activity and stronger referrals and connectivity across the company. I can clearly say that we're focused, we're aligned, and we're executing well, which is evident in our first quarter results.

As you can see on Slide 5, we delivered net income available to common shareholders of $1.4 billion or $1.09 per diluted share for the first quarter, which represents a 25% increase over the first quarter of last year earnings of $0.87 a share. Our performance was driven by continued execution against strategic priorities, including growth in both consumer and wholesale loans, along with strong noninterest income growth led by investment banking and wealth management businesses. Together, those factors along with our expense and credit discipline contributed to 250 basis points of year-over-year positive operating leverage in the quarter.

As a result of this execution in managing our capital through share repurchases, return on tangible common equity improved by 150 basis points to 13.8% compared to the first quarter of 2025, representing meaningful progress towards our full year 2027 ROTCE target of 15%. While we remain firmly on track to achieve this target, as I've said before, it's not a ceiling for our company. The progress we're seeing today across our company gives us confidence in our ability to drive profitability higher over time. With continued execution against our strategic priorities, continued capital return and the benefit of expected changes to the capital framework, we're establishing a long-term ROTCE target of 16% to 18%.

Before I hand the call over to Mike to discuss quarterly results, I want to spend some time discussing the positive momentum we're seeing within our business segments and with our digital strategy on Slides 6 and 7. First, 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. Average consumer and small business deposits and loans were up 1% and 4%, respectively, versus the first quarter of last year of 2025.

Average loans declined modestly for the fourth quarter which is consistent with normal seasonality and our goal of emphasizing growth in categories offering the most attractive risk-adjusted returns. As you can see on the slide, Premier Banking was again a source of strength with both deposit and lending production up significantly, driven by deeper client engagement, adviser productivity and continued momentum in financial planning activity. Digital continues to be a key growth engine for CSBB. Digital share of new-to-bank clients increased to 45% with Gen Z and millennials representing more than half of the growth.

Active digital users grew year-over-year and digital transaction volumes remained strong, reflecting sustained client engagement with our platforms. Building on that digital progress, we're increasingly focused on how AI can further enhance productivity, decision-making and client engagement across the company. We see AI as a real operating lever, one that improves the client experience while also creating productivity and operating leverage across our businesses, without compromising control, safety and reliability. Our focus is on using AI to strengthen relationships, giving clients faster, more personalized service and enabling our teammates to spend more time advising and problem solving not navigating processes.

We're already deploying AI across Consumer and Small Business Banking and practical client-facing ways. Truist Insights delivers personalized financial guidance at scale. Truist Assist handles most routine service requests digitally and around the clock, improving consistency in reducing call volumes. AI-enabled call summarization is live for care center agents, lowering after-call work and enhancing insight capture. Overall, our disciplined focus on capital allocation, pricing, productivity and digital execution is translating into strong underlying performance and positions consumer and small business banking well as we progress through the year.

Now turning to Wholesale on Page Slide 7. In Wholesale, we delivered a strong start to 2026 with continued momentum across loans, deposits and fees, while maintaining a disciplined focus on relationship returns and capital efficiency. Average wholesale loans and deposits increased 9% and 2%, respectively, versus the first quarter of 2025, reflecting diversified growth across our industry banking, middle market, and CRE teams as we continue to prioritize high-quality relationship-driven loan growth. Middle market deposits, in particular, an area where we've invested heavily grew 11% year-over-year, driven by 7% growth in our legacy markets and 30% growth in expansion markets such as Texas, Ohio and Pennsylvania.

Wholesale fee performance was also stand out this quarter with strong results in Wealth Management and Investment Banking and Trading. Investment Banking and Trading delivered its highest quarterly revenue since 2021, driven by strength across a broad set of product areas. Importantly, we're also seeing even stronger connectivity among our commercial, corporate and investment banking platforms. This is driving higher quality fee growth with an increase in the number of lead roles and meaningful contributions from existing commercial and wealth clients.

We're also leveraging AI across Wholesale to enhance productivity underwriting and client engagement using predictive analytics to improve adviser effectiveness, accelerate underwriting speed and precision, and scale lead generation and conversion among payments and wealth. These capabilities are helping us serve clients more efficiently while improving returns and speed to market. Overall, we see clear evidence that our strategy is working. We are pairing high-quality balance sheet growth with improving fee mix, stronger client engagement and enhanced operating efficiency, which gives us confidence Wholesale -- in Wholesale's outlook for the remainder of this year.

Now let me turn it over to Mike to discuss our financial results in a little more detail.

Thanks, Bill, and good morning, everybody. We reported first quarter 2026 GAAP net income available to common shareholders of $1.4 billion or $1.09 per diluted share. Earnings per share increased 25% versus the first quarter of 2025 and were up 9% versus the fourth quarter of 2025. Revenue decreased 1.9% linked quarter due to lower net interest income primarily related to day count. Revenue increased 5.1% versus the first quarter of 2025 due to higher net interest income driven by strong loan growth and higher noninterest income primarily due to growth in Investment Banking and Trading and Wealth Management income.

GAAP noninterest expense decreased 5.9% versus the fourth quarter of 2025, primarily due to other expense. Noninterest expense increased 2.6% versus the first quarter of 2025, which helped drive the 250 basis points of year-over-year positive operating leverage. Our effective tax rate in the first quarter was 12.4% versus 17.9% in the first quarter of 2025. Approximately half of the year-over-year decline was due to increased client transaction activity in our project finance business that Bill mentioned earlier in the call.

Next, I'll cover loans and leases on Slide 9. Average loans held for investment increased $2.3 billion or 0.7% on a linked quarter basis to $327 billion, driven by 1.8% growth in commercial loans, partially offset by a 0.9% decline in consumer loans. End-of-period loans increased modestly linked quarter as 1% growth in commercial loans was offset by a 1.1% decline in consumer loan balances. Both average and end-of-period loan trends are consistent with the expectations for loan growth and mix that we outlined in January.

As a reminder, our expectations for 2026 were that average loan growth would be driven primarily by commercial and other consumer categories with relatively slower growth in residential mortgage and indirect auto. This outlook reflected our focus on profitability and being selective in where we deploy capital. Within consumer, average other consumer loans, which include our specialty lending businesses like Sheffield, Service Finance and LightStream, were relatively stable on a linked quarter basis, consistent with normal seasonal patterns. We continue to expect these portfolios to grow at a mid- to high single-digit pace in 2026, given their attractive risk-adjusted returns.

Based on our current pipeline and economic outlook, we continue to expect average loan growth of approximately 3% to 4% in 2026.

Moving now to deposits on Slide 10. Driving client deposit growth is a key priority across many of our top businesses and growth initiatives, and I'm encouraged that we saw growth in client deposits in what is typically a seasonally weak quarter for client deposit growth. Average deposits increased 0.7% linked quarter, driven by growth in interest checking, partially offset by declines in all other deposit categories. Average interest-bearing deposit costs declined 14 basis points linked quarter to 2.09% and average total deposit costs declined 9 basis points to 1.55%.

As shown in the chart on the bottom right of the slide, our cumulative interest-bearing deposit beta increased from 45% to 46% and our total deposit beta increased from 30% to 31% on a linked-quarter basis.

Moving now to net interest income and net interest margin on Slide 11. Taxable equivalent net interest income decreased 2.8% linked quarter or $105 million, primarily due to 2 fewer days in the quarter compared with the fourth quarter and seasonal changes in our deposit mix. Our net interest margin decreased by 5 basis points linked quarter to 3.02%, driven primarily by that same seasonal change in deposit mix. For full year 2026, we now expect net interest income to increase 2% to 3% compared with our prior expectation of 3% to 4% growth. The change in our outlook is primarily driven by our expectation that the federal funds rate will remain unchanged throughout 2026 compared with our previous expectation for two 25 basis point reductions, one in April and one in July.

Our net interest income outlook still assumes 3% to 4% average loan growth and the continued benefit from fixed asset -- fixed rate asset repricing. Although we expect the net interest margin to remain relatively stable in the second quarter, we do anticipate the full year 2026 average net interest margin will exceed the '25 average of 3.03%. As you can see on the right-hand side of the slide, we also updated our fixed rate asset repricing outlook and our swap disclosure.

Turning now to noninterest income on Slide 12. Noninterest income increased $7 million or 0.5% versus the fourth quarter of 2025, reflecting strong growth in Investment Banking and Trading income and lending-related fees, largely offset by a decline in other income due to lower investment income. Investment Banking and Trading income increased $37 million or 11% linked quarter to $372 million, reflecting stronger trading income and capital markets activity, partially offset by lower M&A fees.

Noninterest income increased 11.6% versus the first quarter of 2025 due primarily to the 36% growth in Investment Banking and Trading and 7.6% growth in Wealth Management income.

Next, I'll cover noninterest expense on Slide 13. On a linked quarter basis, noninterest expense declined 5.9%, driven by lower other expense and lower personnel expense. Other expense in the fourth quarter of 2025 included an accrual related to a legal matter, while the decline in personnel expense was driven primarily by lower incentive compensation. These benefits were partially offset by higher regulatory costs as the fourth quarter of 2025 benefited from an FDIC special assessment credit. On a year-over-year basis, expense growth remains well controlled. Noninterest expense increased 2.6% versus the first quarter of 2025, reflecting higher personnel expense, partially offset by lower professional fees and outside processing costs.

Moving now to asset quality on Slide 14. Our asset quality metrics remain strong on both a linked and like-quarter basis. Net charge-offs increased 4 basis points linked quarter to 61 basis points and were up 1 basis point versus the first quarter of 2025. Nonperforming loans held for investment increased 2 basis points linked quarter to 50 basis points of total loans, driven by higher consumer and nonperforming loans, partially offset by improvement in C&I and CRE. The increase in consumer nonperforming loans was primarily due to a change in the nonaccrual criteria for certain indirect auto loans, which we disclosed in our 10-K rather than any deterioration in underlying credit trends.

While this enhancement will result in higher reported nonperforming indirect auto loans over time, there's no impact to the cash flows or loss expectations over the lifetime earnings of these loans.

Before I move on to discuss our capital position on Slide 16, I do want to spend a few moments on our nondepository financial institution or NDFI exposure and how we think about the risk profile of that portfolio. To support that discussion, we've included expanded detail our NDFI loan portfolio on Slide 15. As of March 31, loans classified as NDFI represented 12% of total loans. This is a well-diversified portfolio across 35 different asset classes, and it's structured with protections that have held up well historically in stressed environments. Our largest NDFI exposure is the diversified equity REITs.

This is a client-driven business that we've been active in for more than 20 years, and it's an area where we have deep experience. These loans are secured by income-producing real estate, underwritten with conservative leverage and supported by strong covenant packages which helps mitigate downside risk. With respect to private credit, our exposure is primarily through lending relationships with business development companies or BDCs and middle-market loan funds. In total, these exposures represent about 1% of our loan portfolio.

From a risk standpoint, these facilities are underwritten with advanced rate limits, borrowing base mechanics and meaningful equity positions beneath us, all of which are designed to provide significant loss protection in more stress scenarios.

Moving now to capital on Slide 16. Our 10.8% CET ratio was stable with the fourth quarter. During the first quarter, we repurchased $1.1 billion of common stock compared with $750 million in the fourth quarter. We are targeting repurchases of $1.2 billion in the second quarter and approximately $5 billion in 2026, compared with our previous expectation for $4 billion of repurchases for full year 2026.

Overall, our capital allocation priorities remain unchanged. These priorities include supporting the organic growth needs of our clients, paying our common stock dividend and returning excess capital to shareholders through share repurchases. M&A is not a priority for Truist as we remain focused on improving our own profitability and returning capital to our shareholders.

Finally, we are well positioned for the recently issued Basel III proposal. Under the newly proposed capital rules, we estimate that risk-weighted assets could decline by 9% under the revised standardized approach and by 11% under ERBA. We believe the proposed changes align well with our lending strategies and support continued elevated capital return to our shareholders.

And now I'll review our guidance for 2026 and the second quarter on Slide 17. As I previously mentioned, given the shift in market expectations for interest rates this year, we now expect 2026 net interest income growth of 2% to 3% compared with our prior expectation of 3% to 4%. On the other hand, we now expect stronger noninterest income growth this year, reflecting continued momentum across all of our fee-based businesses. We now expect high single-digit growth in noninterest income compared with our prior expectation of mid- to high single-digit growth.

In addition, we now expect full year GAAP noninterest expense to increase approximately 1.75% in 2026 versus our previous expectation of 1.25% to 2.25% growth. Taken together, although we are modestly refining our revenue outlook to the low end of the prior 4% to 5% range, our overall earnings expectations for 2026 remain unchanged. In terms of asset quality, there is no change in our expectations for net charge-offs to be about 55 basis points in 2026. As I mentioned earlier in the call, due to increased client-driven transaction activity in our project finance business, we now expect our effective tax rate to approximate 14.5% or 16.5% on a taxable equivalent basis in 2026 versus our previous expectation of 16.5% and 18.5%, respectively.

Finally, as it relates to buybacks, we're now targeting $5 billion of share repurchases in '26 versus our previous expectation of $4 billion. In other words, despite the pressure we see in net interest income, our stronger noninterest income, increased share repurchases and a lower tax rate from client-driven activity result in an overall earnings expectation for 2026 that remains unchanged. As a result, we remain confident in the EPS trajectory we expected in January and in our ability to achieve our 14% ROTCE target in '26 and our 15% ROTCE target in 2027.

Now looking into the second quarter of '26, we expect revenue to remain relatively stable relative to the first quarter revenue of $5.2 billion. We expect net interest income to increase approximately 1% in the second quarter primarily driven by an additional day and increased client deposit balances. We expect noninterest income to decline approximately 1% linked quarter due to lower Investment Banking and Trading income, partially offset by higher other income and card on treasury management fees.

Noninterest expense of $3 billion in the first quarter is expected to increase by 3% to 4% linked quarter due to higher personnel expense. Consistent with our full year outlook, we're targeting approximately $1.2 billion of share repurchases in the second quarter of 2026.

Now I'll hand it back to Bill for some final remarks.

Thanks, Mike. With close, I want to reinforce the confidence I have in Truist's direction and earnings trajectory we're building. As shown on Slide 18, we continue to have clear line of sight to a 14% return on tangible common equity in 2026 and 15% in 2027 driven by improving profitability, continued execution across the franchise and strong capital return. As I mentioned earlier, our 15% ROTCE target in 2027 remains a firm and achievable target. However, we view it as an important milestone, not the endpoint.

With continued execution and discipline, we have the ability and clear line of sight to drive returns to 16% to 18% over the next 3 to 5 years as earnings power continues to strengthen and capital is deployed. Achieving these returns will be driven by the same core factors we've discussed today and on previous calls. These factors include sustained growth in our key businesses, positive operating leverage, disciplined expense and risk management, and elevated capital return to shareholders.

Overall, we're encouraged by the progress we're making, and we remain focused on executing with discipline, delivering for our clients and creating long-term value for our shareholders. I want to thank our teammates for their commitment, focus and their purposeful work and thank our shareholders for your continued trust and support.

Brad, let me turn that back over to you.

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

[Operator Instructions] The first question today comes from Scott Siefers with Piper Sandler.

Mike, when you think about the rationalized NII outlook for the year, could you please provide just a little context regarding just more specifically, how the lack of likely Fed fund rate cuts impact things? Just hoping to understand, is that just what it means likely for deposit cost leverage? Or are there other factors involved? And maybe you could talk a little about the competitive environment, particularly on the deposit side, please.

Yes, sure. Scott, no, I think you said it. I mean, we had cuts in April and July. With both coming out of our outlook, we've, I think, been pretty consistent about the fact that we're positioned liability sensitive on the short end. And so saw a little bit of pressure there that came through. And frankly, the second part of your question is probably the other contributing factor, which is it is competitive. I think with rates where they are, we're seeing a little bit more rotation on product. We're seeing a little bit more yield seeking and rate awareness in the market across the businesses.

So probably not unexpected, given the expected path on rates but that's where the pressure is really coming from that drove our outlook a little lower. I think the good news, Scott, just to say it and we mentioned this in our prepared remarks, we are seeing great momentum on the fee side. And so I think when combined allowed us to hang on to the low end of the revenue guide and that coupled with the tax outlook and the buyback tweaked a little higher, we're seeing the bottom line, still in line with our January expectations.

Yes. Perfect. And then on that last point, it's great to see the pace of repurchase step up in the first quarter as well as the higher expectation for the year. Maybe if you could talk a little more about that decision? How much would you say is sort of confidence in your own outlook versus just sort of panning in the risk-weighted asset release that we get from the offense new proposals, for instance?

Yes. I wouldn't attribute the increase from $4 billion to $5 billion to the Basel III proposal. I think that will have an impact in terms of, we mentioned the durability of being able to stay at an elevated buyback into '28 and maybe beyond. We'll need to see where the rule finalizes. This was more of a follow-through on how we've been thinking about capital management in '26 and '27. We're targeting that 10% CET1 level in '27 as the various moving parts that you would expect to contribute to capital planning that just retrended the buyback a little bit higher this year. So hopefully, that answers your question.

The next question comes from Ken Usdin with Autonomous Research.

A follow-up to the longer-term 16% to 18% ROE. Just wondering, you just talked about the kind of capital part and what that might look like. How do you think the ROA trajects as you think about that new 16% to 18% and how much extra that might be on top of the -- once you get to 15%?

Ken, it's Michael. I'll start there. Look, I think as you think about the 16% to 18% over just that extended horizon, right, I think we've got a lot of confidence based on a lot of the areas that Bill mentioned in his remarks in terms of the areas where we expect to improve profitability, right, client deposits. We expect our margin to improve. Our fee businesses are all generating accelerating growth. Those same factors are going to contribute to that next horizon the 3- to 5-year outlook of 16% to 18%. I see our ROA profile moving closer to, call it, [ 1 20 ] in that sort of 2017 outlook, and I think it creeps a little higher from there.

Yes, Ken, I would just add, I think the 16% to 18% is a mixture. Mike talked about just accelerating our growth in fees, expanded NIM, margin, client deposit growth, optimizing the balance sheet, benefits, prudent capital allocation, more durability in our return on capital. Think about things like that, for us, the HTM pulled a par and then just efficiencies in our business. So not only is it an ROA story, but it's also an efficiency story. I mean I think that we're seeing some of the benefits of things like AI, but in fairness, just the process improvements that we're making that we can redeploy for growth and also harvest for profitability.

Got it. And second, just a question on Investment Banking, a really solid result this quarter. I know Mike, you talked about the second quarter a little bit. But just can you talk about the different sides of the business? What was the drivers IB versus Trading? And then just how you're seeing the environment and customer confidence in terms of transaction willingness?

We had broad-based strength this quarter, especially on a like-quarter basis, you saw outsized performance and trading. But I'd say we're seeing really good activities across the core banking business as well as trading. If you think about our outlook for the year, I think at one point, we were thinking about kind of mid-teens growth. I think it could be higher than that, high teens, maybe even 20% across that full line. A lot of that is trading year-over-year, but we expect double-digit growth in what I think of as like the traditional investment banking business. And it's broad-based. It's really across all the products.

And I mentioned in my comments, I think one of the things I'm probably most excited about is just this connectivity to our core franchise. I mean I think that's a set of our secret sauce in the investment banking business. The fees from our commercial and wealth businesses were up actually substantially, and the pipelines are up substantially as part of that. So it feels and the confidence that we talked about, it just feels more durable and feels more sustainable because it's tied in tightly to that to the franchise.

The next question comes from Erika Najarian with UBS.

Bill, this one is for you. I guess I'm wondering why unveil today a new long-term ROTCE target. I fully realize that you have the Basel III reform coming. But you also -- Mike also mentioned that wasn't a factor in the repurchase. So I guess, is there something in the ROA profile that you saw accelerating or improving that gave you the confidence to unveil a new ROTCE target today?

Yes. I mean, I think, Erika, you and others have asked us a lot is 15% sort of the endpoint or is it a point on the journey. And I think one, we feel confident where we're going. You can see this quarter's results, and we feel confident in the momentum that we're building. Quite frankly, the Basel III is a component. So we wanted to answer that question as well, sort of how does that fit into this piece. And as Mike highlighted, it's pretty beneficial to our balance sheet. It's beneficial to the -- how we do business. And so our ability to redeploy capital as it relates to that part of it.

So I think it's a variety of things. We felt it was important to start putting a stake in the ground for you, your constituency, for our shareholders. and for our teammates. We just feel really good about the momentum we're building.

Let me just to add to that, Erika. I mean, in fairness, we didn't really have a long-term target out there. The 14% and 15% ROTCE targets really are short term and I think Bill said it, I think it was appropriate for us to establish a long-term target. I think having clarity on the evolving capital framework contributed to that. But really, I think it's the confidence in the business that we're -- and the momentum that we're seeing in the businesses. So really, all 3 of those factors contributed to our decision to provide a new target.

And my second question, we have to ask because obviously, Truist was in the news a few weeks ago. There was a Bloomberg article essentially speculating that you could potentially be attractive to another partner. And I know you just put a stake in the ground. So clearly, you have a view of your future that's right. At the same time, your market cap to core deposits is quite low relative to your peers. And looking at your Board, you have some heavyweight financial institution veterans on your Board. Bill, I guess, like this is sort of a free-flowing question. What are your thoughts on that -- monetizing your business that way?

Yes. I mean, Erika, we've all been at this a long time and to ask me to speculate on some rumor and some article which by the way, has been repeated, I think, pretty solidly by the person identified in that. So let's just like put that aside. Now, how do we feel about our business? I think we feel great about our business. And we feel great about the trajectory that we're establishing. We've sort of -- we've set forth a plan that achieves mid-teens EPS growth over an extended period of time under a really good risk posture.

I think that provides an advantaged return to our shareholders, and that's always going to be the goal is let's make sure we have a plan that gives an advantage return to our shareholders. And that's -- that's the 100% focus of our Board, myself and our team.

The next question comes from Manan Gosalia with Morgan Stanley.

Bill, a question for you on the ROTCE target. I know you laid it out as a 3- to 5-year target. But as we think about that 15% number for next year, do you need to see the benefit from the lower capital requirements come through before you get to the lower end of that longer-term ROTCE target? Or can we continue to see some improvement post that 15% as we get into 2028 and beyond?

Yes. I mean, if the question is the 15% was established without any regard to Basel. So if that's the question, that's how we establish that goal. And then the 16% to 18% starts to take a first sort of nibble at that in terms of how we might deploy capital and confidence in how we would use capital to continue to grow our business. But as Mike highlighted, it's really about our just accelerated confidence in our business, our ability to improve margins, accelerate growth in fees and continue to stay on the trajectory that we've already established.

So the 15% was established under sort of, I would say, non-Basel and then 16% to 18% has some incorporation, but more in terms of how we would utilize the capital against our strategies. Does that make sense to your question?

Yes, it sounds like it's coming from both the numerator and the denominator as we go out beyond 2027.

Absolutely. And I would just add, the Basel impact while it's a contributing factor is not the majority of the benefit that I think we'll see over that period. It's going to be more capital-efficient revenue. It's going to be a more efficient balance sheet efficiency, productivity. So it's really -- we're focused on the numerator and the denominator and glad to have both, but have good line of sight to operating in that area.

Got it. And just as my follow-up, as we think about net interest margins, Mike, you noted yield-seeking behavior and more competition on the loan side. I guess, how are you thinking about that 3 teens level on NIM going forward?

Yes. I think -- so we still feel good about getting to a 3 teens net interest margin. I think without the cuts this year, we won't get there by the end of the fourth quarter, which is what we said we'd be able to do in January. And again, I attribute that to the rate path. I think current curve has a cut in '27. That, coupled with some of the other benefits like the cumulative fixed asset -- fixed rate asset repricing and other factors, I think, do get us there in '27. And who knows? We don't know what the rate path actually will be, so we can hold off some hope. But 3 teens this year is not likely to happen.

We will see, by the way, it just to clean it up. we will see our net interest margin continue to expand throughout the second half of the year. So we get a little bit of benefit in the second quarter from some seasonality on the CSBB side, on some deposits which show up in the third quarter, and then we have good seasonal patterns in the fourth quarter as well around public funds plus the other factors I mentioned. So you will see us after kind of a stable Q2, expand, and we do expect for the full year to have a net interest margin better than we had in 2025. We just won't get to that 3 teens exit rate as we see it right now.

The next question comes from Mike Mayo with Wells Fargo.

You mentioned an increase in yield-seeking behavior among customers for deposits. And I guess, everybody loves your markets, obviously. And they're moving there, they vacation there and all the banks are opening branches and hiring bankers. So I ask this question every quarter. It just seems like it's continues to pick up. I don't you say none of this is new, you're used to that, but just seems to be reach to the next level. I think you have like the Truist One checking sign-up bonus. So I guess my question is, what's the temperature on the degree of competition? How much are you using kind of marketing expenses, such as paying customers to move their accounts and what impact is it happening?

Yes. Mike, it is competitive as we've noted. And we're seeing that, that show up from people who've moved into our markets, and they're coming to our markets for the right reason. Our markets grew net migration by almost 300,000. And last year, and Charlotte, as an example, grows by 150 people a day. So we see and feel that in migration into our markets and the competitive nature of that. On the deposit side, we also grew net-new. So that's an important barometer that we look at.

So first quarter, again, grew net new, that's a critical barometer for us. It's sort of like in the are we winning category. Yes, we use marketing tools like everybody else does. Yes, we use incentives for clients to join us. But you also saw the really good production in the places that we're emphasizing. So think about our premier banking, production was up 20%. Premier is a bit of a place where we've just started leaning in the last couple of quarters. So we're starting to see the real benefit of very focused, very targeted deposit production.

And then we're seeing deposit production outside of our core franchise. So if you look at sort of our overall deposit production. We talked about this earlier. As you know, it's up pretty significantly outside of our franchise, our core franchise. So not only are we competing, we're also on the offensive side in lots of places. So -- but as Mike noted, if rates higher for longer is a tough operating environment for deposits. And what we look at is are we creating net new or we're growing our business with new clients, and we see that both in the wholesale and the consumer side.

So while the profitability of those clients is less today, the fact that we're adding them as a good harbinger for profitability in the future.

Okay. So planting seeds for the future. And just a follow-up to your answer to the other question, I wasn't sure on the exact answer of that. What is Truist -- under what conditions would Truist consider, say, another merger of equals? Under what conditions would Truist consider selling to another bank? Under what condition would Truist consider buying another bank? And this topic does come up, not just in the press but with investors, as you know.

And as you said, 16% to 18% ROTCE with a lower risk profile over 3 to 5 years, it seems like you have a game plan. Having said that, the question does come up. And also, Bill, you sound like you have a lot of energy as we hear you right now, but how -- what's your plan to stay on? How long -- is there a mandatory retirement? I forget the succession and that whole kind of big question.

So Mike, we're just going to go after all of them. Okay. All right. Well, let's go down it. So on the succession side, I've got a great job leading a great purpose-led company. We've got a great team, incredible teammates, strong leadership team, businesses hitting on more cylinders every day towards our performance and return objectives and just be confident that our Board has a strong succession process, and they can apply against this incredible framework. So just like put that 1 in that category.

We've been really clear on the M&A front, Mike. I mean I don't know how to be more clear that, that's just not a priority for us. So I mean, I'll just say it one more time. And to your part of your question is part of the answer is we've got a great plan. We've got a really strong plan. I think this quarter is one more evidence of the fact that we're executing against that plan.

We have an opportunity to deliver return to shareholders that I think are advantaged and they are advantaged given where we're coming from, given the growth that we see. And look, that's going to be the goal is how do we maximize this franchise? How do we create advantage shareholder value? And that's the focus every day. Again, from me, my team, the Board, and our incredible teammates.

All right. That's great. If I can squeeze 1 more. Your core investment banking business growing double digits even without trading. That seems to be much faster than peers your size. I'm not sure why you're growing so much faster than others there.

Well, a couple of things, Mike. I mean I think, one, we've been at this for a long time. So this is a multi-decade build of our business. And as I mentioned in the earlier answer is this tie into our franchise. So this isn't a separate business that's just solely market dependent. We really have incredible bankers on the field right now that really understand how to utilize the skills, the advice, the industry specialization, the products for all of our commercial, corporate and middle-market clients.

So I think the confidence that we have not only in the future, but a bit of the -- you noted the excess performance is really tied to this durability of our franchise. And this is a culture that we've built over decades. This is why teammates want to come, be part of this investment banking business and be part of our core corporate and middle market business. They want to come here and be part of it because they can see that opportunity, and it's manifesting itself in the results.

I mean the consistent pattern, Mike, for IB is that we're playing more meaningful roles in even larger transactions. So you've got some leverage there, too, just as we continue to bring great talent to the platform and again, our earning, again, more important roles. So hopefully, that will continue.

[Operator Instructions] The next question comes from Matt O'Connor with Deutsche Bank.

Was just hoping to dig into the loan growth a little bit. I guess, first, why don't we see a little bit more on the commercial side this quarter? And why not more optimistic on the year? And is there some kind of loans that are being fed through kind of the banking network instead as we just think about kind of the business holistically?

Yes, sure, Matt. So let me take a shot at that. So if you look at the commercial -- commercial corporate banking business, it's up a little over 8% year-over-year and a little under -- just under 2%. So we've got good momentum in the places that we're emphasizing. And what I really like about it is this is -- our team is really focused on the return side. So 22% more new relationship, 60% of payments and business associated with it. It's a higher quality. So as we enter into the risk profile, it's a higher quality. The revenue per client is higher. So I see this investment in the future.

And then we're seeing really good activity in other markets, Texas, Pennsylvania, Western PA, Ohio, so I think our model is actually resonating really well. I think our teams are focused on the right things on higher returning, more fulsome relationships where we can play a lead in more meaningful role. So maybe our at -- bats are a little smaller, but our batting average is really high. We're winning where we want to win.

And then on the consumer side, there was some intentionality on that side, so some of the places that have lower returns, I think indirect auto spreads have tightened pretty significantly there. That's an area that we throttled back a little bit. But our core consumer businesses, I think Sheffield, Lightstream, Service Finance, that's up 7.5-plus percent of like, average balances are up. And remember, that has a seasonality to it. So the production in those businesses, remember, if you think about power equipment and HVAC and all that, production will go up 30% to 50% here in the next couple of quarters.

So I think we're -- I think we're actually positioned in the right place to be focused on higher returning businesses that achieved really good return for us. So -- and pipelines are strong. And again, pipelines in the businesses and the places where we think are most important to win and achieve the best return long term for our shareholders.

The next question comes from Ebrahim Poonawala with Bank of America.

Just wanted to follow up, Bill, I guess, with all the questions and just from a stock standpoint, like I think you said like you've got a great plan, strong momentum just as you talked about the businesses. Correct me if I'm missing something. When we look at the revenue growth outlook for the full year, 4%, expenses, whatever up 2%, is that the algo? Or do you think this bank should be doing much better than 4% in nominal GDP world of 3% to 5%? Just how do you put sort of the medium-term growth outlook for the company? And is 4% the right way? Because I think part of it is, you've got the scale, you've got all these businesses, shouldn't you be doing better in an environment which seems generally constructive?

Yes. Ebrahim, I think what you're seeing is that building over time, right? So we're hitting on more cylinders. So that growth in revenue continues to increase. As it relates to this specific outlook, I mean, we took a posture that we've looked at the forward curve and took a view that that's going to have an impact on NII and wanted to reflect that. But if you look at the momentum in terms of new clients, the activity, the fee businesses, the things that are going on, I think we'll continue to sustainably build that business and sustainably build it with a more positive and continued operating leverage.

And you see it in this quarter, and you see it in our confidence in establishing that in a longer-term goal. And that was the purpose of doing that. We'll continue to improve, continue to hit on more cylinders. And I think every day, it better reflects the opportunity that's our franchise.

The next question comes from John Pancari with Evercore.

Just on the -- back to the deposit side of the equation, could you maybe just update us on your growth expectation there? And then the areas of what businesses that you're really focusing on? I know deposit generation on the core side has been an intensified focus for the bank this year. And if you could talk to us about that progress you're making in remixing the deposit base? And then just lastly, what is your updated rate sensitivity to moves along the curve?

I'll get the first and the third and maybe let Bill provide a little commentary on some of the deposit production stuff. I think we -- our outlook for deposits year-over-year average is low single digits, John. We feel fine about that, very focused on mix as well. Obviously, based on some of my comments about DDA and rotation, defending clients, it's -- obviously, it's a competitive environment out there. You asked about IRR sensitivities. Relatively unchanged relative to the new baseline, right? We've got no cuts in now. We've -- so we see a touch of risk in the up 50s and the down 50s. We're sitting at this strange place where you've got the clients along the option on both sides, right? So whether it's rotation or prepayment, but we're relatively neutral, maybe a better way to put it.

Yes. And then in terms of the focus area, John, so I mentioned before, the premier production, which is really strong, net new, which is good. And then overall, like in our middle market business and across wholesale, we've had a really significant increase in their activity in deposits. 60% of our new business has a mandated component to it. So while some of those are more interest-bearing at this point, I think it's indicative of the quality of the relationship and ability to improve the profitability on that going forward.

And so I feel good about the momentum that we've established in the wholesale side and the consumer side. I think today, getting new clients is actually really important. And I think our engine is firing on a lot of cylinders and the profitability of that, certainly from the deposit side will improve over time.

The next question comes from Gerard Cassidy with RBC.

Thank you for the added disclosures on the NDFI and everyone is obviously giving us better disclosures, which is great. So the question is there's really no concerns, I don't think today about credit losses. And the way the loans are structured as you described, and your disclosure suggests that even in the downturn, losses might be limited. But I guess -- and you guys have done credit well through the cycle. So from your perspective, can you share with us in a downturn, what are the real risks in this portfolio for you folks, again, in a normal recession, normal credit cycle where we know everybody is going to have higher credit issues?

Yes. Thanks, Gerard. I appreciate the question. So I think first for us, we start with really strong relationships. We have solid bankers covering these asset managers and the clients. And then as you noted, the structural protections that exist, particularly in the BDC or the private credit section that middle market, our advance rates are sort of in that 60% to 70% range. And so we have significant protection in there. So we've also modeled this in a stressed environment, and this overall actually performs better than our aggregate C&I portfolio. And so we're confident in where we sit today with how we've underwritten these credits and how we manage and monitor them.

As you know, they have regular collateral inspections, strong borrowing base. So we're confident in where we sit today with it. I think how it manifests in a downturn, you would watch what happens to the underlying companies and their performance within those structures.

The next question comes from Saul Martinez with HSBC.

I want to follow up on the investment banking outlook. Good quarter, high-teen growth expectations, which does -- which is off of maybe some easy comps in the first half of last year. But I wanted to ask just about your confidence in sustaining double-digit growth beyond 2026. What drives that? Which products? Is it ECM, advisory? And how are you thinking about the growth there? And just as a clarification, when you say double digits, are you talking about core investment banking or Investment Banking and Trading -- the trading line as it's presented in the consolidated income statement?

I'll take the easy one first. When I said double digits, I was talking about nontrading for the year. And as we think about the sustainability of double-digit growth, this business for us has been a high single digit, low double-digit grower. Obviously, transaction activity and marketing a lot, but it has been consistently performing in that range. So -- and I think for the foreseeable future, we're going to continue to invest in the business, continue to hire great talent. We feel like we've got the products that we need to win and to serve our clients all along the spectrum and the industries that we're focused in, but we're constantly finding new and other ways to serve those clients as well. So for us, it's a growth business, and I think an expectation for high single digit, low double-digit growth is appropriate.

Yes. And you've mentioned it. I mean, this is a broad-based, which is really good. I mean in the sense that we've got a strong equity capital markets business and FRM business, and we talked about project finance earlier in the call, our debt capital markets has been a strong contributor for a long time. I think M&A will be a bigger part of the growth going forward. We've invested a lot in that area. And again, back to this tie-in to the franchise.

The other part is we've got our corporate and middle market banking teams, about 23% of them are new to the platform. And so they came to this platform to leverage these capabilities and products. So what we're seeing is their productivity is really high, and that gives us more confidence in the future of where we're going. We've added good teams in the Investment Banking side, the specialty areas that we've chosen to specialize in, our strong pipelines are strong.

Now quarter-to-quarter, there will be volatility. So we just -- we all know that. I mean there'll be volatility quarter-to-quarter. But our overall confidence in the business is predicated again on a multi-decade organic strategy. Remember, I mean, we built this business organically sort of one step at a time, adding teammates and creating product and capability along the spectrum to build this momentum going forward.

The next question comes from Chris McGratty with KBW.

Mike or Bill, I'm interested in the operating leverage narrative over the 3 to 5 years that you lay out for your new targets. I'm interested in, does that get easier? Or does that get perhaps more challenging? And what role does AI and investing in the company play in that? Any kind of color would be great.

Chris, look, I do think that we're going to be able to continue to drive positive operating leverage over that horizon. There are -- I think it was maybe as Ebrahim's question a moment ago about revenue growth. There are natural accelerants, whether it be the under-earning in our NIM. Bill mentioned the bond portfolio, we've got sort of natural fixed asset -- fixed rate asset repricing it's happening. We've got more focus and rigor around capital allocation and portfolio construction. So I think we feel good about the top line.

And then to your point around tools like accelerants like AI, I think, will play a role in that. I think too soon to necessarily quantify that over a 3- to 5-year period. But certainly, we have an expectation in establishing that target that we're going to be able to continue to drive efficiency and productivity through the business.

Yes, I think as you noted, Chris, I mean, I think AI is going to play a really big role and give us a lot more flexibility and flexibility in terms of reinvesting in the business, as I mentioned earlier, a harvesting for profitability. So we've -- we're pretty -- we're far down the process. We consolidated our tech and ops units for a specific reason. So people can look at process or end to end, we're seeing significant improvements and opportunity. And as Mike noted, I mean, we're just starting. I mean, I think this is a significant opportunity for industry as a whole. And I think we've got a great team on this.

And looking at the ways that we can expand our client business, improve efficiency, make this a great teammate experience and benefit shareholders along this path.

The last question today comes from David Chiaverini with Jefferies.

So it sounds as if the pricing pressure is more on the deposit side versus the loan side, can you talk about the loan pricing environment and how spreads are holding up?

Yes, I'd say credit spreads have actually remained relatively tight despite all that's happening in the world. And so that's been a little bit of a head scratcher. As you look at our yields, you've got a lot going on, right? You've got some remixing. We're expanding our corporate and commercial banking business. So you might see a touch of mix in yield. You might see obviously, spreads across the board, still relatively tight as well. So that will be a welcome development if we see some expansion of margin on the credit side.

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

Okay. Thank you, Betsy. 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. Betsy. You may now disconnect the line.

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

I guess we'll go ahead and get started. So next up, we have with us Truist Financial. From Truist, we have Mike Maguire, Chief Financial Officer. So Mike, first of all, thank you very much for being here.

Yes. Thank you very much for having me.

And at the risk of going off script, maybe -- so you took over the CFO role post merger a few years ago. Just give us a sense of when we think about before we get into 2026 and what the outlook looks like, just in terms of the evolution of management focus of the Truist franchise over the last couple of years, even during the time you've been CFO, if you could start there.

Sure. Yes, happy to. I think the evolution is a good way to put it, right? Because I think out of the gates, the focus was necessarily insular, right? It was around ensuring that we had the right foundation. It was shoring up this, shoring up that. The environment that the company was operating in was turbulent. We were as a world dealing with the COVID crisis. And in our case, just within our own company, dealing with how do you put 2 companies together and get the right culture, get the right team on the field, have the right strategy, do no harm. And so in many respects, the first sort of phase of the evolution felt very defensive. I think it's a good way to put it.

And -- but I think slowly, but surely, throughout the course of -- and really, I had the fortune of -- I became our CFO in late '22, and that was right as we were beginning to make a pivot. We obviously had a little bit of an unexpected change in the macro environment in early '23. But even after sort of we weathered that storm as an industry and certainly as a company, we really did begin to shift to more of an offensive posture. And that's been great. So it's given us a lot more clarity of focus. I think we've -- we know there's no identity crisis at Truist.

We know who we want to be. We're -- we want to be the leading regional bank in our markets, which we think are some of the best markets in the country. We've got the products we need. We've got the talent we need. We're very focused on accelerating our earnings growth on improving our profitability. And I think the whole company has rallied around that agenda. So it feels quite good right now. It feels positive. The attitude is right. The momentum is good. And so I appreciate the question.

No, that's helpful. And I want to come back to Truist, but maybe just one big picture question. Like we've had -- we've been at this conference for many years, and the dialogue has always been about loan growth picking up, client sentiment sort of perking up and then something or the other would sort of unravel that. When you think about just client sentiment, what you're seeing, what you're hearing from your bankers, does it feel like things are actually taking shape and you're seeing realization of the pipelines and the conversations that have been happening?

Yes. No. I mean, look, sentiment is pretty good out there right now. If you think about -- we have sort of 2 sides of our business, our wholesale business and our consumer business. And in both instances, a lot of the signal we're hearing back and the data we look at remains pretty upbeat, pretty positive. When we have a chance to meet with our middle market clients or our corporate clients, even our small business clients, it's still lean expansion area.

I mean I think people feel generally pretty good. I mean we -- a lot of these businesses got better at managing volatility, I think, through the -- whether it was through COVID or through some of the tariff transitions and expectations. And so people are managing their supply chains well. They've got clarity of focus as well. We're -- all things equal, feel pretty good about sentiment.

On the consumer side, same thing. I mean, I think there's more headlines and pockets of this or that. But if you look at the actual data and what people are doing, people are -- continue to spend and they continue to save. And look, we're always a little bit mindful of pockets of softness. We have some exposure to some of the, I'll call it, lower-end consumer where we're starting to see a touch of a touch of signal, but even there, more resiliency probably than I think the headlines might otherwise suggest.

Got it. And you mentioned, Mike, that at this point, there's no question about the identity of Truist, what it wants to be very clear. I think I was with Bill at the end of last year, he talked about we are coming off the J curve. Just sort of maybe break it down for us like what that means when we think about it's coming off the J curve, like what should we -- like what does it mean in terms of the bankers as investors, what should we be looking for, be it revenue growth, operating leverage, et cetera.

Yes. Look, I think it's a little bit of a seasoning of the pivot to offense, right? I think initially, Bill would have seen it and we would have seen it earlier ourselves internally, putting the right people in the right seats. creating clarity of focus around our growth agenda. You saw it last year manifest itself in really nice loan growth. This year, you talked -- we've talked a little bit about like continuing that momentum, but also making sure that we're putting the right amount of emphasis on the deposit opportunity, which I think that environment will be, I think, more favorable this year than last year for a number of reasons.

And so I think you should see it really across the board, right? If you think about last year, we delivered positive operating leverage. We grew our business. This year, we'll grow at twice the rate plus. We'll deliver more operating leverage, right? We will grow earnings at a faster rate. We've got a lot more confidence around our ability to improve our ROTCE profile as well. Bill has been declarative about that appropriately given the many moves that we have in motion. So yes, so I think that's how you'll see it. You'll see it in our financial results.

So talking of that, so you're right, like 2x growth relative to last year. At the same time, I guess, just to be devil's advocate, the macro backdrop sounds very constructive. When I compare that to sort of your loan growth expectations for this year, feels a little bit more tempered. Like what are the puts and takes? Like what's kind of causing you to be maybe cautious, conservative or...

Yes. I don't know whether we're cautious or conservative. I maybe think about it like this. This time a year ago, probably here with you, we were talking about an outlook for low single-digit loan growth. We didn't really know what the market would give us. That certainly, we would have been interested in growing the company faster, growing the balance sheet faster. But the moment we were in, it was less certain as to whether or not the demand would sort of manifest itself. It did.

We ended up growing end-of-period loans closer to high single digits. A lot of that growth, really high-quality growth happened in the second half of last year. And so we want to maintain that momentum. I think what we're trying to do in '26, I think, appropriately, is to be even more focused on making sure that it's just really, really profitable growth. We've set the marker out there that we expect to achieve a 15% ROTCE in 2027. To do that, we've got to be ultra-focused on profitability, ultra-focused on efficiency as well and capital optimization.

And so I think what you'll see is we will still have the same momentum going into 2026, but we're going to be thinking about how we mix that growth. And so your Main Street C&I, other of our wholesale businesses, middle market, especially where we have great industry expertise, we're going to continue to grow those portfolios, I think, at a at a similar rate to what you saw sort of exiting last year.

On the other side of the balance sheet, you think about -- or pardon me, and some of our other businesses that maybe don't have quite as much profit potential short term, whether that's ultimately more diverse relationship opportunity or maybe it's just purely the ROE profile of the assets, we're going to deemphasize some of those businesses.

So you might see the C&I businesses grow 4%, 5% plus, and you might see some of the consumer businesses like an indirect auto or mortgage grow slower or grow not at all. Now there are other aspects of our consumer business that offer more profit potential. So some of our specialized businesses like Service Finance and Sheffield and otherwise. So we're really just thinking about the mix of growth with a focus on profitability.

That's helpful. And then when we think about the C&I growth, I think you talked about certain markets where you've added bankers and obviously, a big emphasis on just the wholesale business. Are there certain markets or are there certain industry verticals that's driving that growth or expectations for growth?

Sure. I mean in terms of markets, the bulk of our demographics are growth, right? And so especially relative to the country, we tend to have good sort of migration patterns and good employment, at least on a relative basis. And so it's a thriving world. So I wouldn't expect there to be one particular market versus another. I mean there are areas where we feel like we can better serve markets. We've talked about some of the expansion work that we're doing.

And when we talk about, for example, adding more distribution in branches in a market like Philadelphia, it's not just branches. We're typically expanding our wholesale teams, too. And so there are going to be some places where we feel like we have more of an opportunity to be even more impactful.

But from a like industry specialization perspective, absolutely, that's our -- we are an advice-driven model in wholesale. And so a lot of the hiring that we've been doing in our sort of our corporate banking and commercial banking businesses have been focused on certain industries where -- and there are going to be some geographic themes for that. So a market like Nashville, you might have more health care expertise and a hub like Atlanta that has fintech and payments expertise.

So there's going to be some of that, but we've picked our spots. And by and large, that's what we think our clients -- that's how they want to be served. They want bankers who understand their industry, who can also bring the full spectrum of capital markets and otherwise products.

Got it. And I think, Mike, you mentioned you also want to grow deposits to fund that loan growth. Just talk to us, I mean, I guess, the downside of operating in very attractive markets is just the competitive landscape is extremely intense. So talk to us around strategies for growing that deposit growth and what's the competitive backdrop look like?

Sure. Yes. Well, look, without a doubt, deposits is a top focus for us across the board, both segments. And we've got some really nice momentum in deposits, I'll say. You look at the second half of last year, especially the fourth quarter, I know there's some seasonal benefits that you'd always expect in the wholesale business in the fourth quarter with public funds, but we saw actually some favorability beyond that. And so we feel pretty good about the deposit franchise and its potential to grow this year.

There's a lot of things we're doing. On the -- I'll start maybe on the retail side. We've had a nice track record of net new households to the company. We're constantly sort of evaluating and recalibrating our marketing strategies and spend. Donta is doing a really good job sort of thinking through the potential of this premier segment, where a lot of these clients have assets off us, whether it's -- it could be liquidity, it could be investments, a lot of intensity of focus just from a sales culture perspective on more fully serving those existing clients, and we're seeing some of the benefits of that.

On the wholesale side, some of it is, frankly, just incentives and focus. Kristen and Kerry and the team have just -- have brought a different level of intensity to thinking about deposit production. And we're seeing the benefits of that. Some of that also is just product. We've invested heavily and we'll continue to invest in our treasury management suite of products. And so having a product that we're proud of, that clients have given us a lot of really good feedback about is really is helping us there as well.

So if you think about all those factors, coupled with what should be and all things equal, better backdrop for deposits this year, we feel quite good about our outlook. QT coming to an end here, the potential of lower rates, the benefit of the rate cuts we got in the second half of last year. So, so far, so good.

You mentioned the rate cuts at the back half of the last year, the behavior, I guess, as we flex the deposit beta on the downside, is that behaving more or less as expected?

Yes. I mean I think there's still -- in terms of like the history of time, like rate awareness is still high. Rates are still historically higher, but it's better. It's better than it was 3 months ago and 6 months ago and 9 months ago. So we're starting to see a little bit more flexibility in pricing. And we were pleased by how we ended last year with where the betas landed. We're going to grind a little higher here in the first quarter.

And I think I mentioned when we reported earnings, our expectation with 2 cuts in the second half of this year is we'll get to sort of that low 50s area. I think we got to the mid-50s in the last cycle up. So we should find our way back there over time.

And maybe, I guess, when you put that together, when we think about the trajectory of NII growth, just talk to us in terms of the factors that could lead to a better versus worse NII than what you expect today here.

Yes. Well, look, I mean, we're going to grow earning assets, right? And so foundationally, that's a good start. Again, mix matters, and we talked about that a little bit on the loan side. I mean, to the extent that good core client deposit funding, to the extent that we have favorability there, that would be a really important driver, maybe create some upside for us on NII for 2 reasons. One is it would improve our funding mix. And then two, it may, all things equal, come with some higher loan growth than we otherwise thought about.

The cuts are important to us. I would say we feel quite good about our ability to improve the funding costs on the existing portfolio. Shape of the curve will matter. If we saw more steepness, that would be a good guy. Credit spreads are still awfully tight. I mean, to the extent that you saw some normalization of credit spreads, that could be -- create some opportunity as well. All those factors, of course, present risks on the other side, but that's how we're thinking about things.

So when we think about that, it feels like it should be a decent backdrop for the margin to expand from the 3.03%. Just when we think about -- and you've talked about, Mike, I think, the teens, I guess, in the 3 mid-teens margin, like how quickly can we get there? And is that sort of what you would think is a normalized NIM for the balance sheet that you have?

Yes. Well, look, I mean, we did mention -- I know we live in a world of quarters. We do expect just based on deposit mix in the first quarter, we actually have an expectation that our net interest margin will be a touch lower than what we reported in the fourth quarter. But we should march higher from there throughout the course of the year. I think we'll be in that 3-teens level as we exit '26. So I think for the fourth quarter, that's a reasonable expectation. We see that.

Factors that will drive that, we do have the 2 cuts in that outlook. We do have good deposit production in that outlook. We've got the curve kind of at least where it is in terms of the fixed asset repricing benefit that we're that we're counting on. But yes, we're there. And I think it normalized, Sure. I mean does it -- the good news is that improves the '26 NIM will be higher than' '25 and obviously, '27 with the exit rate in the 3-teens should be more normalized.

And over time, I'd say we probably still have maybe even some upside, Ebrahim, if you think about the bond portfolio still, we're under earning on a pretty significant portion of our securities portfolio. We've got probably $50 billion of securities held to maturity that are at a sub-2% yield. And so that's a little slower, but it's there in the backdrop, and that should be contributing to some improvement over time as well.

Got it. And just within that context of rates, how do you think about just managing from an ALCO standpoint, either through the bond book or with the swaps portfolio? Just give us a mark-to-market on your thought on sort of your thinking around what this balance sheet needs to look like. Yes.

I think we've got it positioned about right. I think if you're talking about proportion, we -- if you remember kind of mid last year, when loans -- or I guess it was '24, when loan growth was a little more elusive, we actually increased the size of our securities portfolio from maybe the $115 billion area up to the $120 billion. I think we even got up to like $123 billion, $124 billion. And we sort of said at the time, hey, this is probably temporary to the extent that we start to see loan growth reveal itself, then we may fund some of that growth with some of the securities portfolio.

And that's what happened last year in part. Obviously, loan growth outstripped deposit growth, and we saw the securities portfolio, I think, end the year in that kind of $117 billion, $118 billion area. So that, coupled with the cash position, call it, like low 30s billions, gets you that $140 billion to $150 billion, which we've talked about with investors over time is, I think, an area given the overall sort of positioning the balance sheet is appropriate. I think that's what you would expect to see this year.

Importantly, I try to make this point when we reported, if you look at like the actual average balances year-over-year, that's where you did see a delta. So like I think we have securities and cash in the aggregate down 4% to 5% year-over-year. And so just that was an important, I think, input as people sort of thought about your NII question and trajectory.

Got it. Anything around just from a regulatory standpoint, like there's been a fair amount of chatter around changes. I mean, obviously, the Basel end game rule, we are all waiting for that, but maybe tweaks to liquidity rules. I'm not sure if it's going to be impactful at all for Truist or how you think about balance sheet management. But would love to -- like is there anything in particular you're paying attention to?

We're paying attention to all of it. It's patiently waiting like everyone else. I think we're -- we feel really well positioned for the evolution of the policies. Basel III, we've been sort of studying through its various potential iterations. And again, feel like from a capital and RWA perspective, we've got our hands around it. We're well positioned to sort of manage through a rule being finalized and implemented here. From a liquidity perspective, we've done a lot of work.

By the way, if you think back to our TIH transaction, it was with -- there were a lot of, I think, benefits to that transaction. But 2 of them were squarely significantly improving our capital position as well as our -- the quality of our liquidity position, if you think about the follow-on repositioning we did on the bonds. And so we feel really good about, I'll call it, the overall sort of financial condition of the company. We've modernized a lot of the analytics that we utilize internally to think about things like our internal liquidity stress testing and so on and so forth. And so we've gotten really good feedback from all the right stakeholders on that. So feel pretty good about how we're positioned.

I guess the other side from a revenue standpoint, fee income growth, I think the guidance is mid- to high single digits. Just talk to us in terms of top 2 or 3 areas that you expect to drive that growth? And what gets us to high single digits? Is it connected with loan growth playing out? Or is it independent of that?

I would -- short answer to your question, I'll go through some of the components is I'd say the upside in the fee businesses for us, just given the exposure to investment banking and trading and wealth is probably markets. So I think to the extent that you saw really good performance in markets, which drives new issuance activity and mergers and capital markets and helps drive confidence from an investor perspective and asset values increase, those are some of the real upside in those businesses.

On the treasury side in payments, we've been pretty consistently beating the drum around how important that is for us long term and short term. And so I think we've made a lot of the right investments in the products. We've made a lot of the investments in sort of the leadership and the sales talent and we're clear eyed on the strategy. So it's really about execution.

If you go through the components of our major fee businesses, maybe starting with treasury, we have a new line item we just -- we rolled out in January. We've combined our treasury and cards businesses into a single line on the income statement. We wanted to provide better access for investors to that line because we've said how important it is. One of the components of that line is treasury. We expect treasury to grow double digits. And so -- and I think -- and beyond, like that's just such an important area of focus for us. So that's a component of that mid- to high single-digit line.

Wealth, mid- to high single digits, I think I'd say, yes, it's -- we're seeing the right like KPIs, the net asset flows, adviser continuity, having the right number of like planning conversations. So all that feels good. We think that business can and should grow faster than it has historically.

And then on banking, we're off to a good start this year. We've got a little bit of turbulence around a couple of things, and I don't know what this sort of software volatility means for markets in general. But that's a business that we've consistently been growing kind of high single to mid- to low double digits. And in this year, that will actually grow faster just given you think back to last year, we all sort of came -- this time last year, we were talking about how excited we were about the investment banking and trading opportunity and not too long down the road, we found ourselves dealing with some volatility. And so for us this year, that will probably be a mid-teens grower as a line, just given the comp.

Understood. Just a couple of things. One, on the wealth side, is it -- every bank does it a little bit differently. Is it more about just mining your existing client base on the commercial side, a lot of them are going to go through liquidity events, I guess, what's the strategy to grow that sort of assets under management?

It's across the board. But yes, I mean, it's a really important opportunity for us is doing a better job finding business owners and their families and helping them in these transition events, whether it be succession or liquidity or whatever it might be, working as one firm to serve those clients. That's a really important partnership between those sublines of business. Kristen, of course, says grace over the wealth and the commercial business. So it's, I think, a very sort of natural relationship.

There are other places in our Consumer business, in our Premier business, we've got a lot of clients whose banking business we do, but whose investments we don't manage. And that's a huge opportunity. So Donta and Kristen spent quite a bit of time thinking about how do we execute on that at scale in a way that's sort of client-centric. So that's a big opportunity for us, too. And of course, our wealth advisers are constantly showing up in their communities and trying to find a way to bring a client like a wealth-first client to the firm. So it's multipronged and all 3 are important.

Got it. And maybe, Mike, I mean, you spent, what about 15, 16 years in investment banking as a banker. Just talk to us, again, you hear different things from different regional banks around the role of investment banking, capital markets within the franchise. When you think about your banking effort and capital markets effort, like where do you see Truist as positioning itself relative to be it the Wall Street majors or the middle market investment banks? How do you think about that?

Look, I think our identity is we are a full-service firm that has the sort of capabilities, not just from a product perspective, but from an industry specialization perspective to serve companies of a wide variety. I mean, we are -- have historically been middle market, upper middle market focused. We serve some large cap clients and we serve some -- a lot of founder-owned businesses. But for us, where our message and platform most resonates is when people value the industry-specific advice and the execution that we can deliver across really any product.

So our view is what we hear a lot from our happiest clients is, "hey, you guys know our industry better than anybody else, and you can execute as well as any Wall Street firm." Or on the other hand, if it's a smaller client, they might say, "Hey, we love you. There are other boutiques who also offer very good industry advice, but they just don't have the same capabilities you have to fully serve us." And so that doesn't mean we're the best fit for everybody, but we feel like we are differentiated in the market. And we align our business towards that goal.

So when we talk about our trading business, our trading business isn't designed to as sort of a pure trading business. When we invest in sales traders in high yield and energy. It's because we have a banking practice and we have a corporate banking practice, and we have a derivatives and FX practice that's focused on those same clients. And so we're -- we really want to be -- have the right depth in these places where we pick our spots. This has been really a consistently strong performer for us and will be into the future.

Got it. Maybe I think pivoting just for the time we have left around expense growth, expense outlook. I think you have a relatively narrow band. You put out like 1% to 2% of expense growth for the year. You've already done a lot of work in terms of franchise efficiencies over the last few years. So one, I think are there more opportunities in terms of cost saves? And then where are we investing those dollars to think about going forward?

Well, I would say this, in '23 and '24, especially, we, I thought, executed really well in terms of building some infrastructure around just doing a better job managing expenses, whether it was the routines, whether it was the mindset, planning processes, you name it. And we have not let that muscle atrophy. And so as we think about how we position ourselves to continue to support our growth, but also deliver good financial results and improve our profitability. We -- it's really important to us that we use those muscles that we, I think, really developed in '23 and '24 to create that capacity.

So just to give you a little insight into how we think about like '27, right? Our mindset is we know what the 5, 6, 7, 8, 10 things are that we think are going to be the most important to drive our success over the next 3 to 5 years, right? So it's examples we've talked about some of them. It's -- and continuing to invest in our treasury management platform. It's building out our -- maybe it's our FX capabilities to better serve our large corporate clients. It's hiring bankers. The front line has been fortified. If you think about in '25, we grew expenses less than 1% in '25, but we hired investment bankers, corporate bankers, commercial bankers, wealth bankers, retail bankers, like there is a ton of investment net that's happening in the company. The way that's being funded is we're constantly finding waste. If there's redundancy, if there's automation opportunity, you name it. And that's just become sort of the culture of our planning.

So in our case, we'll go to a Kristen or a Donta or to our risk organization, and we'll say, "Hey, here are the resources you have. We need to -- we're going to grow the company next year. We need to do the same work with the same or frankly, fewer resources, right? Let's be down in our BAU so that we can fund these 5, 6, 7, 8, 9, 10 things. And so that's worked for us. I'm not sure that's necessarily unique to Truist, but that's how we do it. And that's how we're -- and look, at the end of the day, I think positive operating leverage is -- it's an appropriate expectation for our investors to have. I think that we've proven that we can make the investments that we need to make to grow the company and still manage expenses in a disciplined way.

And I guess within that context, I think you're going to hit a 14% return on tangible equity, give or take, for this year, getting to 15% that Bill called out back in October for next year. Just the level of confidence that you can get there, like what are the risks to getting to that 15%? Sure. And the follow-up to that is, can we do better than 15% beyond 2027?

Well, I mean, so one thing I'd say is the whole company is focused on accelerating profit growth and profitability, which is important. And it's actually -- it's really important. It goes back to your very first question, which is like, hey, where are we in the evolution of Truist? Like last year, if you'd ask me like where are people focused, people are focused on growth and getting back on offense and let's go. And that's all important, and I want to continue to have that in the backdrop. But the first thing out of people's mouth needs to be how are we going to improve our profitability, drive returns higher, better understand what role you have in the company to make that happen.

In our case, we got to -- the numerator has got to go up, like we've got to improve ROA. Some of that's through doing a better job serving our existing clients with some of the fee businesses we talked about. Some of that's driving the net interest margin higher. By the way, some of that's mix. Some of that's discipline, some of that's deposit growth, right, funding mix. So these are all factors that are going to be important in driving that numerator higher.

And then from a capital optimization perspective, one way to think about it is TCE, we're going to hold relatively constant is a way to think about it, right? The buyback is happening in the background. We've said that operating at about a 10% CET1 ratio by the end of '27 is sort of the glide path for us. So the buyback is sort of constantly recalibrating to get us to that point. And so if we can deliver on the productivity piece -- and by the way, there's an efficiency piece of that, too, but the productivity and the efficiency and then get the capital piece right, we've got a great deal of confidence that we're going to deliver.

Understood. So CET on 10% when we think about just the overall capital deployment priorities, organic growth, buybacks, you mentioned. When we think about the dividend, I think Truist is a little bit of an outlier when we think about the payout ratio today. Just do you think about that? Is there a right level that you think that you want to be over time?

We're a touch higher. We're growing into it. We're very focused on growing earnings. That's how we're going to get the payout ratio lower, just to be clear. Yes, I don't think 50-plus percent payout ratio from a dividend payout ratio perspective is where we want to be. We've sort of said like maybe it's a 30% to 40% dividend payout ratio, maybe it's a 30% to 40% call it, buyback ratio, and then that leaves you with 20% to 40% to sort of just reinvest and grow. I think that's an appropriate framework. And so I think you see a sort of trend in that direction over time.

Meanwhile, yes, we're a touch out of whack, right? We're a little higher on the dividend payout ratio, and we're over 100% on the full payout ratio because the buyback, we believe, is elevated, but appropriately given our current capital position and our objectives.

Two questions. One, so you, I think, mentioned when you talk about investment banking, the risk around AI disruption has emerged recently, at least the market has been paying attention to that. Just talk to us when you look at your portfolio and sort of underwriting, like how much of AI disruption risk to the clients informs that view today?

Sure. Yes. So actually, we've had some good meetings this morning and talked to a few investors about this. Our Chief Credit Officer, Mark Huffstetler, is here with me today. Look, I mean, maybe this week or last week, it's been sort of a software-specific story, but it's broader than that, right? It's everywhere. But if you think about software specifically, I'll just give you an example, like when we look at any business, especially in like a levered scenario like -- which a lot of these software deals tend to be, we're very focused on disintermediation risk. It hasn't always been in the context of AI, but it's been, hey, like a lot of times, these businesses are quite defensible and they've got nice moats and they're very vertically specialized and they're multiyear deal contracts. So they're very nice businesses, which is why they can which is why they can be -- afford the structures that they often get.

But we do think about that on a deal-by-deal basis. We say, hey, what if something did change here, what if there was disruption. I'm not sure that we've specifically gone back -- we will learn from everything. It's a new world we're living in. But we absolutely do say, hey, like here's a business case, like we need to assume some like idiosyncratic stress or some sort of a disintermediation, and we sort of contemplate that in the various underwriting scenarios.

So -- but look, the team is -- it's a new world. And so we're going to be looking differently at all the businesses that we underwrite and try to think about these types of risks. But look, at the end of the day, these -- a lot of these software companies that this week and last week have seen a little bit less interest from investors. These are, generally speaking, very strong business models. We obviously are a consumer of a lot of software, and they're very important partners to us.

Got it. And I guess, maybe tied to that, but when you think more broadly about credit quality, anything on the commercial or the consumer side that feels like a red flag or maybe a yellow flag that you're watching closely?

Look, we've talked a lot about CRE office. We feel really good, at least about our own exposure and how that story is unfolding. So I'm not sure there's new ground to tread there. We were talking probably this time last year, we may have talked about like a yellow blinking light on multifamily. I'd say that probably has stopped blinking, at least in our markets. We're seeing the absorption that we would have otherwise sort of expected sort of play out, really strong sponsors, good projects. So I'd say feel okay there.

There are maybe like pockets of not concern, but focus, things like despite how we opened on like sentiment, like always a little concerned about some of the consumer discretionary stuff, like so if we've got restaurants in the portfolio, we're watching a little more carefully there. You're seeing some substitution in spending. So we're not seeing, by the way, negative signal there, but that's -- I'd say, if you're asking for a watch item, that would be a good example.

And then on the consumer side, I think it really probably is that lower-end consumer. Our biggest exposure in that is our regional acceptance business. We've sort of been consistently evolving our credit policy in regional acceptance to probably be a little more near prime than true lower end. And so we're not seeing a lot of -- there are no surprises in our portfolio there, but we're probably a touch cautious in that lower end.

There's other -- our Sheffield business, we buy a little deeper there. It's a small portion. to serve our OEMs to make sure that we're good partners there. But we're just not seeing a lot of that. We don't have a big credit card business. So we're not seeing that signal there either. So I mean, knock on wood or whatever that table is, we feel quite good about things.

And when we think about just the overall level of reserves, given the macro outlook that you have, is there room to release reserves from where they are today or...

Yes. I don't think so. I mean I think we feel well reserved. I think a more likely trend would be relatively consistent, at least for the sort of short to medium term.

We have a couple of minutes. Two questions. One, there's a constant debate about scale and the advantages of scale in the banking business. you did double your scale. So just talk to us in terms of as that happened, has that created opportunities that otherwise would not have happened because of that scale?

Sure. I mean we only have 2 minutes. I wish you asked this one first. But look, just even think about the marketing economies of scale. Again, I always joke when a lot of our investors are from different parts of the country. And when they have a chance to come to our region, I always -- sometimes I get the comment like I just didn't realize how important, how big Truist is in these markets. we're often we're the #1 or the #2 players. So whether it's in Orlando or Atlanta or Tampa or Richmond or Knoxville or do you name it, or Conyers, Georgia or Wilmington, any of these primary, secondary, tertiary markets where generally -- we're the big guys there.

And so that marketing economies of scale, that client referral, that's a really big deal for us, and I think in banking in general. And other ways that I think our size manifests itself as a strength is upmarket in our big corporate investment banking businesses, we can be even more meaningful partners when it makes sense for clients. And so it's -- there have been a lot of great benefits of scale, and we feel like we have the size and the products and the people that we need to win.

I guess one last one. Investors have digested a lot as the Truist story has evolved. What would be the 1 or 2 sort of key points that you would want investors to take away as they think about the franchise, evaluate the risk reward in the stock?

Yes. Well, I mean, I think a couple of things. Number one, going back to your first question, like where are you in the evolution of Truist, never better positioned to win, clear eyed on a narrow set of strategic imperatives that we think we can execute on. And I think maybe just the exclamation point would be a lot of confidence amongst our team, starts with Bill and the Board and our leadership team around our ability to go drive faster earnings growth and ROTCE to 14% to 15% in '26 and '27.

On that note, thank you very much, Mike.Thank you.

Yes. Thanks.

I guess, it's officially good afternoon, everybody. So I was just telling our next guest of honor that we are kicking off the consumer part of the day. We've heard a lot about cap markets and corporate and now we have with us from Truist, Donta Wilson, he is the Chief Consumer and Small Banking Officer at Truist. Welcome, Donta.

Thank you for having us, Erika.

Absolutely. So for those of you on the webcast and in the room that may not know your story, could you just share a bit about your leadership journey at Truist and how that led you to this leadership role?

Yes. Sure will. I have this storybook type of journey where 30 years ago, I started as an intern. It was really a directed study that I begged for because our company was so small. We didn't have such a program back then. And I didn't do what our interns do today, like I didn't do strategy, brand, portfolio optimization, M&A work or modeling, I was going to Dunkin' Donuts to get donuts.

You were doing what?

I go to Dunkin' Donuts to get some donuts for the team. I was going to grab lunch and taking their cars to get washed, and that's what I did starting off my sophomore year. But over time, begin to do more banking activity. And by the time I graduated senior, I was fully incorporated and adding real value. But I was at least in the room and was able to learn a lot from these executives that are really focused on values and focused on performance. So that really influenced me.

After graduating, I joined our retail banking team for a short period of time. And I managed branch and I managed multiple branches. And then I immediately went to the wholesale side of the bank where I spent most of my career. So I went over there as a commercial banker, did corporate banking, did commercial real estate lending. Ultimately became a regional president very early at the age of 29 in our Greater Washington market. And that was a phenomenal experience. It was back when everything reported to regional president, so corporate banking, CRE, wealth, underwriting, Senior Credit Officer. So we have loan authority to really grow our market appropriately. And I was focused on really integrations of acquisitions. So we would buy banks and then I would integrate it, run that particular business, grow it and then move on to the next one. So I left the greater D.C. market, went down to Alabama. You probably remember when Colonial Bank fell, integrated that, built it up, went over to Georgia because Georgia was our largest market in size.

And then in 2016, something very pivotally changing happened in my career. I got a call from the CEO at the time, and he called and he said, "Donta, come down and talk to me." and so I flew in and he invited me to join the executive leadership team. So I was really excited. But you can imagine, on my way there. I was dreaming up what I might do. So think, "Oh, maybe I'm going to run commercial banking, maybe I'm going to run corporate banking or maybe retail." And to my surprise, he said, "I have this wonderful job for you. It's called the Chief Client Experience Officer." So if you go back to 2016, banking didn't have such a title. So I took that title, took on that job and was able to lead marketing, CX. We ultimately added to call centers and added digital. I went on to lead ventures, also ran Corp Com and CRA. We ultimately added data and analytics and then enterprise operations, both from the consumer side and the wholesale side.

And then in 2022, I was giving a wonderful privilege to come lead consumer small business banking, which is our retail mass -- our retail client base, our mass affluent and in small business segment, also kept digital marketing for food enterprise, our digital food enterprise that kept marketing for enterprise, client experience and innovation. And then we have the products that are also in the business. So you think about deposit products and consumer lending, which includes LightStream, Sheffield, our mortgage portfolio.

I'm actually really glad we did that, by the way, because that gives investors a full picture of the experience that you're bringing into the table. So let's set the stage the consumer and small business banking division at Truist. At a high level, define that for us? And what is your scope and what's your edge other than awesome socks?

Yes. I can get you a pair of these, one of the Truist socks.

Yes, please do. For those of you on the webcast, they are purple, they are striped and they say 'Truist' and they're spectacular.

Listen, always on a brand and who is probably listening or all those in the room, if you want a pair bring us a deposit, I'll make sure to personally bring you a pair of Truist socks.

But the scope within CFPB, we mentioned you have the three segments, and you have the product groups, you have innovation, digital and marketing. But when you think about the business itself, we divide our company into two organizations. So you have wholesale, which bought fantastic talent teammate, Kristin [ Leads ] and then you have consumer and small business banking. And so within consumer small business banking, we serve 14 million clients within our digital banking mobile app and digital banking experience online. We serve them through our 1,900 branches in which we're in the, I think, fastest-growing markets in the country, and we have dominant market share in those particular markets.

From a business perspective, we make up 52% of the revenue. On the deposit side, we're $212 billion in deposits, and we make up 60% of the deposits. It's really great about that is we have these very tenured low-cost deposits, 42% of those deposits are checking accounts. So you're paying 1 bp or less for that deposit. And then on the lending side, we represent 43% of the balance sheet. So we have a great portfolio.

I think what makes us special is how we go to market. So when you're leading large sales teams at scale, so 20,000 teammates is very important for everybody within the business to see themselves in the business. So we lead with extreme clarity on what's important for us. And what's important for us is framed in the 3D framework that's deposits deepening and also being digital first, but not digital last. So if you were to go visit our Collins Avenue branch here in Miami, and you ask them, "What are you all focused on today?" They would say the 3 Ds. And they know we're going to have an excellent day if we did all 3. We have a good day if we did 2. And if we only do one, go out and generate a new deposit.

And that leads us to why clients choose us. They choose us for 3 specific reasons. They choose us because they are empowered. They choose us because they're supported and they're rewarded. So when you think about empowerment, clients would rather be empowered than helped these days. And what I mean by that is that they want to be able to handle their banking activity within the palm in their hand. So we're putting AI-powered mobile experience in the palm of their hand.

They want to be supported. We support them two ways. We support them in the mobile experience through our Truist insights. That's an AI-enabled advisory. So when clients sign in, we provide them financial advice. We provide them recommendations on kind of cash flow behavior. And then we also support them in our branches where we have very talented teammates. They are also leveraging data and analytics to be able to provide advice to clients.

And the third, they are rewarded. So we reward our clients, we're doing more business with us. So as they bring more deposits to us, then we reward them, for example, in our flagship account, which is Truist One, we're able to give them additional bonus points on their credit card spend. If they get a mortgage, and they bring us to our core deposits, their core deposits, we're able to discount their mortgage, so we will reward them.

Underneath that, Premier Banking is a big priority for you. How are you planning to scale this high-value business? And going back to your experience as the Chief Client Experience Officer, what do you think is sort of the secret sauce in terms of really growing a business that we heard Wells focus on this and other banks focus on sort of the premier set of consumer?

Yes. Premier Banking is our major growth engine within consumer and small business banking, so much value and the opportunity to really grow the business, deepen relationships and add significant profitability by optimizing and executing against our Premier strategy. When you think about our premier book, 60% of our current deposit balance sheet is made up of Premier and Premier potential clients. So a big opportunity. We make our client lifetime value at 6x more profitable on a premier client in mass retail and 4x more profitable than a small business client, so a huge opportunity to drive profitability.

But what's equally exciting is deposit opportunity. So these are clients that we have already won. We have a right to win, and they have with them $650 billion of deposits off us. And so we know that because we have financial plans and some analytics that allow us to see that. And they have $2.5 trillion of investable assets off of us. So just a real meaningful opportunity to grow the business. And it's much more efficient to do business and more business with existing clients than to pay for a new client. So we really are positioned well.

And how we're scaling to attack that opportunity are three ways. First is digital. I mentioned we're a digital first, but not digital only. So we're providing digital financial planning at their fingertips so they can do goal setting and they can start their process and they get on a trajectory to financial success.

Second is we're investing in our branches. So of course, you're putting branches in massive fluent markets and branches that are already in massive foreign markets, we're renovating them. But we've been upskilling teammates along the way to be prepared to better serve that clientele and we're investing in the right tools to help them identify which client to talk to for the premier opportunities and what the primary gaps and products are for that client when they come in.

And then third, we're expanding our Premier Banking team. So we're investing in increasing how many people we have covering that segment because it's a super important segment. And we're already having real success. So 2025 our production went up 20% in deposits for the Premier segment. Our lending went up 30%. Our financial planning went up 13% year-over-year. And what's important about financial planning is that it's the core to the relationship. When we have a financial plan with the client, we make 39% more revenue. So we have good momentum, and we feel excited about what '26 offers for us.

I'm guessing that the response to this question is going to tie back to what you've started to unpack. What are the two to three big priorities for you in 2026 in terms of deepening relationships and executing on profitable growth which are clearly cornerstones to achieving your 15% ROTCE target at the top of the house?

Yes. So the #1 priority is focused on performance management because we have this amazing opportunity in front of us. And as you know, that execution is critical. That vision without execution is ultimately hallucination. So we're focused on really executing. And so that means that we have clear accountability. We've elevated our performance standards. We're managing great routines. We're using dashboards in real time to make sure we understand the performance of our company, and that is continuing to improve on a daily basis. I'd like to say we manage by the watch, not the calendar and how well we're doing and performing for clients. So that's the first thing that we're focused and dialed in on performance management.

Second is around really deepening with our premier clients because it's a wonderful opportunity to grow that particular franchise. We already have a right to win. And we talked about the 3 Ds kind of execution model. So we know if we get that deposit first. And then if we have primacy, so not just any deposit, but around primacy, you make 20% more in revenue from that client, that gives you a chance to deepen with strategic credit, with payments and investments and then you ultimately try to get them into a digital experience that can serve them in the most cost-efficient manner. So delivering the [ 3D model ].

And then the third thing would be really around executing our national consumer lending businesses. If you really want to accelerate our ROTCE. Those businesses, Sheffield, Service Finance and LightStream give you your quickest way to doing that because those are high ROA business and we have a competitive advantage in those markets.

So I just wanted to ask a follow-up question on performance management. Are you happy have you realigned the incentives in terms of trying to motivate your teammates towards these targets, particularly given the wealth franchise that you have?

That's exactly right. We have done a really good job of not only making sure that our incentives are aligned, but our scorecards are aligned. So we manage both for those to be able to drive the performance. And as you can imagine, deposits is the most influential thing on their scorecard and their incentive.

And as you mentioned, this is really about creating a continuum of success. So if we do a really good job with our premier clients because we're serving the mass affluent then our job is to graduate them up to the wealth experience. And then Kristin and her talented team can take it from there and help them continue on their journey to financial success.

You talked about empowering the consumer at the palm of their hand. Clearly, digital channels continue to reshape the client acquisition and client experience process. So how are you leveraging technology and digital to enhance the banking experience and more importantly, drive that growth and that deepening across your base?

So digital is centered to our success. Again, we talk about digital first and not digital only. So it's critical to how we win in this particular space. 2.5 million clients sign in digitally every day. And so our goal is to make sure that we are developing experiences that are digitally empowering but also deeply relational. So we'd like to play at that intersection.

And some things that we're doing, first, on the engagement side, we're investing in Truist Assist. So Truist Assist is our AI-enabled mobile bot that has over 200 use cases that solve client experience items for clients. 80% of those transactions or queries are solved within their digital experience. So they don't have to go to a branch or they don't have to go to a car or call a call center. So that's one way. Truist Insights. Again, we're delivering over 500 insights a year to clients. We're investing in things that really improve the navigation. So UI and UX, we're investing in bill pay and Zelle. So all the things that would transactionally help deliver a very good experience for them. That has allowed us to now move 70% of our transaction experiences to the digital channel. And so when you do that, you obviously open up capacity for our teammates to do more financial planning to do more deposit gathering.

The other area we're investing in is digital commerce. So our largest branch is a digital branch. And so we're very focused on investing in the digital experience, think about search engine marketing, search engine optimization, digital display advertising. We're investing in things like ID verification so that when clients come and they try to open up account, we have APIs that go to DMV to verify that their uploaded driver's license is legit, so we can bring more clients to the front door. We've invested in direct deposit switching. So the clients used to have that friction and they never wanted to change banks, but now we allow that in our experience.

All those things are adding up to really meaningful results. So 40% of our new-to-bank clients now come through our digital channel. And if you think about the type of client that we're getting, the average age is 36 years old, and the average income is $80,000. So these are wonderful future premier segment clients, and we're showing just really, really good success driving the business in those channels.

So speaking of AI, I'm glad you brought that up. You mentioned Truist Assist as a real-time example in terms of how you're using AI today. What are the most compelling projects that you're working on within CFPB? And if you just take a step back and think about AI in 3 to 5 years in terms of the delivery of the retail model, how is it going to change?

All right. So you know you're about to really excite me being a former key digital officer and go on for two hours on this topic. The one thing I would share is that at Truist, the good news is that we're not starting from scratch, we're starting from experience. And so we have already been doing AI and implementing AI use cases for many years. But in fact, in CSPB, we have over 16 use cases that we're tracking that's already adding real value, real client engagement elevation. We're already saving millions of dollars. We're making millions of dollars, and we're underwriting billions of dollars of loans.

So we talked about Truist Assist, we talked about Truist Insights already. I gave you a couple of other examples. One is within our call center. We get millions of calls, as you can imagine, every single week. And with those calls, our agents a year ago would have to write down the next follow-up activity and also track what those complaints were. Well, today, we have AI that's able to do that in two to three seconds. So that agent can get on to the next call. And then we have the right -- the effective tracking mechanism to be able to document what happened on that particular call.

Another area that we're using it is LightStream. LightStream is one of our phenomenal platforms and in LightStream, we're underwriting billions of dollars because we have AI on top of our underwriting system and that allows for our auto decisioning to be more elevated than they were a couple of years ago. So we went from 55% to 75% auto decisioning using AI.

And of course, we use them in things like marketing and content where you can use generative AI to be able to do that more effectively and save costs versus investing in teammates. But it's all complementary because then we've taken those teammates and we're putting them on other assignments that they can add more value to the company.

But the real way to think about AI and how I think about it and what we're working on, is to make sure we're thinking about it in the context of a much more robust opportunity, much more transformational. And so I like to use a [ 4R ] framework when thinking about the opportunity. So most people are talking about risk management. When you're talking about AI, you're talking about resiliency, which is operational excellence and how to take out money. The conversation has to shift to how are we better engage in relationally, leveraging AI and ultimately, how are we generating more revenue leveraging AI. That's why some of those cases, I mentioned, were revenue cases.

And we need to take that [ 4R ] framework and apply it end-to-end to a segment. And then look at that segment and go through each sub-journey and say, "All right, how are we marketing? What are we doing that requires human behavior that ultimately we can replace with some dimension of AI? When we onboard them, what are the jobs need to be done by humans or can be done by AI? Will we service them or when we depart them?" And then you take all the AI solutions you have all the way from basic RPA to machine learning to Gen AI and a one-day agentic and then you do something transformational to drive revenue and have a different client engagement model.

One area to explore, for example, for us, is a small business. We are providing our small business delivery 100% virtually. So we're already super efficient. However, applying AI to elevate that in a way that we could be more efficient and drive additional revenue is something that we're exploring. So those are some things that we're doing as it relates to AI.

As you talk about the future, the future is unlimited and what's going to determine what we can do or not will be guided by the regulatory environment. But in the near future, obviously, people are trying to unlock agentic AI if we get the right regulatory environment and do that, you can see digital agentic commerce take place in your digital experience. So when you come down here to Miami, you'll say, "I want to go to this particular hotel. I want to dine at this particular experience. And this is how you want to travel as it relates to air travel.", and you'll just talk to your mobile bot and it'll take care of all the reservations and pay for it. So that's something that can easily happen. If you're trying to optimize your portfolio, you'll have your bot, as soon as the market changes, you can optimize your portfolio because your bot would react to that information. So you'll see that happen.

Beyond that, the next phase of it is really interesting, Erika, because we're going to start to see B2B experiences evolve. And when I say B2B, that's bot-to-bot. So as we're thinking about building our bot, remember, clients are getting more educated. They're going to build their bot. And so journeys are going to change because at each point in the journey, you would think or have to solve for how are clients thinking and then what's their emote around the purchase or that particular transaction. Well, bot-to-bot may remove some of the emote so you got to remember that, that exchange will now be different because it's bot-to-bot and how do you build a different experience as bot-to-bot, but also keep empathy at the center because innovation -- well empathy is empty.

And then long term, I think about things like when quantum computing is on top of agentic AI, the speed in which you're able to deliver services for clients. So a lot of people talk about hyper personalization, well you're going to go to hyper intuition because it's going to have all these data sets and it's going to feel like, "I already made that decision." because it's going to be so quickly available for you to make an action. Those are some things you'll see in the future.

So where does the branch fit into all this? So you did mention expansion plans, 100 new branches, refurbishing 300, but also retrofitting them, maybe not just physically, but just thinking about it differently and trying to future-proof that delivery mechanism. How does it -- what does the new branch look like? And how does it fit into everything that you just mentioned?

So our branches are insight-driven branches. So they're different on purpose and by design and we think about the 100 branches that we're going to build, they're going to be a mass affluent market. So consistent with our strategies to deliver for our premier client segment. and the branches that we're renovating on top of our normal renovation run rate are in mass affluent markets as well. These branches are focused on advisory, not transactional. So they have a smart design layout that leans into planning and making sure we have all the capabilities being staff trained and skilled but also the technology to help planning be delivered in a very robust and efficient way. And so those are the things that we're going to do to make sure our branches are fit for purpose and fit for Truist's future.

An example of inside-driven branch, if you went to our Collins Avenue branch here again at Miami, you would walk in, Erika, you'll be greeted by someone that has a very upbeat personality, a warm smile. They'll say, "Thank you for visiting us at Truist. How can I care for you?"

Someone like Brad.

Someone like Brad, exactly or like Melissa, "How can I care for you?", then they will walk you over to their office and they will pull up your profile. And as they're pulling up your profile, what we've done is we have now powered them with data and analytics that tell them more about you. so that they're more prepared to have a better conversation, they're more confident and their call conversion success increases.

So we have this thing called connection tiles. There's 5 things that pop up and say, these are the most important 5 things for Erika based on what we know about her. So there's any product gaps that you have or if you had a deposit come in and it's in your checking account and you don't have any money market solutions with us, the teammate will click on that connection tile. It gives them the script. So again, that gives them the confidence and they'll have a conversation about something that's more real time in your life, and that improves the overall experience. So that's what an insight-driven branch is.

And the way we think about branches, we are investing in such a way that accelerates our return. So it's very scientific. We use the S-curve type of model, looking at what's the branch density and we want to be at a minimum 5% and we don't want to be any more than 15%, above 15%, you have diminishing returns below 5%, you don't leverage the scale that's available. And so we're going to markets that have great population growth good employment and where we already have momentum. So Austin, Dallas, Philly, Atlanta, Charlotte, D.C., Orlando, and right here in Miami.

So let's put that all together in terms of core deposit growth, right? We've seen strong loan growth in 2025 and the company continues to emphasize core deposit growth, a strategic focus this year. So what's your approach in terms of growing these consumer deposits? You've talked about the different ways to capture and deepen and distribute. Are you leaning into new products? How do you think about pricing? And again, how much does experience matter as you attract and retain consumer deposits?

So we're coming off a year in which we have some really good momentum. So if you think about three years in a row, we've grown net new. Last year, we were able to grow net new as well. And then last year, we had better than peer performance and consumer deposit growth. despite the overall industry and consumer being a little modest in growth, we outperformed peers and growth. We also outperformed peers in managing rate pay. So we're growing in a very profitable way. We're going to take that same profitable framework into 2026 and have already begun to do so.

And the way to think about how we're very targeted and making sure we continue that and do even more is that we're focusing, first, on a premier opportunity because we already have the right to win. Those clients already enjoy their experience. We know who they are, and we're proactively calling them because this is a contact sport and sharing the value proposition in ways that perhaps we haven't shared before.

We're focused on small business. So small business. We have a million small business clients. We have good market share. However, we only have 20% of our small business clients that bank with us. That's a huge opportunity. we just didn't ask before. So now we're calling, we're asking and we're winning, and that's a significant way to grow our deposits. And it aligns our small business strategy to our premier strategy, which is an inclusive strategy.

And the third item is around retention. Like it's great to have a lot of production. But if we're not doing a great job with client experience and creating distinctive services and distinctive experiences, then you'll lose it on the back door. So we're very focused on retention. Again, we outperformed the market last year on retention, and that's with our talented teammates, but also how we build the connected channel experience where you can get the best of both service delivery. It doesn't matter if it's in the call center, in the branch or if you're talking to your banker.

So you touched upon earlier in our chat about some differentiated lending businesses at Truist, Sheffield, Service Finance, LightStream. Can you talk a little bit more about these businesses and why they're important to the company?

Yes. We have a very high-quality, diversified consumer lending portfolio. And what's really exciting, we have a couple of these national consumer lending platforms that give us the optionality to really accelerate our returns given that they generate high-yielding assets. They have return on asset. Our return on yields are around 7% to 8%. So they have good raise. We have good credit quality, and we know how to execute these businesses at scale. We have number one market share, for example, in the Service Finance business. We're top two market share in Sheffield and in LightStream, we're in the top 10. So we have the ability to dial those up when we need them to accelerate returns. And that's what we're going to be focused in on this year. So this year, we're going to dial those portfolios up, continue the growth trajectory they've been on over the last 1.5 years, and that will accelerate returns for us.

Those businesses just to describe what they are, LightStream is an end-to-end digital business that allows us to take an application digitally, allows us to close it same day is targeted towards super-prime clients. And again, it offers high risk-adjusted yields for the company. So that's a good platform. We have a good share. We've actually taken that product and we've integrated it into our core Truist mobile experience, and we've integrated it into our branch experience. So not only we're growing nationally, we're growing better within our core.

Our Service Finance business is a great business. That business is focused on providing contractors the opportunity to provide loans for their clients. when they are at the kitchen table, talking about home improvements. And so that's good, business, it continues to grow, again, good, attractive returns in that business.

And in Sheffield is a phenomenal business that business focusing on financing sports, power sports as well as outdoor power equipment and trailers. And we have good dominant share there, and we're really able to effectively grow that business.

I would think Service Finance could be particularly compelling given the amount of home equity in homes as well, right? And the desire for people to expand given the lack of movement, right, in new homes. Let's talk about auto for a second. You've had strong growth in auto last year. There have been some recent concerns on consumer sentiment and health. So how are you thinking about the growth in both dealer finance and regional acceptance? And are you seeing any signs of credit stress in these portfolios?

So we're not seeing any signs of credit stress that's more elevated than where it has basically normalized that currently back in 2022 and 2023, we derisked these portfolios. So we're ahead of the game to make sure our credit quality was good and stable and met our appetite. And as it relates to these portfolios in 2026, you'll see us dial consumer auto down because we're dialing up things in commercial, and we're dialing up Service Finance, we're dialing up Sheffield and LightStream. So we're focused on portfolios that could be a lot more accretive to our financial returns. So we're intentionally dialing it down.

But what's really good is when that portfolio is more accretive and have better financial returns. We know how to quickly dial it up. And that's that optionality I mentioned across the portfolio.

Switching gears to small business banking. And clearly, small businesses have faced significant challenges over the past 5 years. COVID, inflation, the like. You do have a new head of small business banking on board. How are you thinking about supporting your clients and driving growth in this business?

Yes. Really excited about our small business opportunity. 90% of our revenue in small business comes from deposits and from fees. So it was highly accretive to our return profile. And we brought in Claudia last year, and she's brought in a very upbeat focused, high-performance orientation. So we've elevated our performance returns. We have trained our teammates to continue to train them and upskill them. We've brought in new analytics to identify what our greatest opportunities are so we can have greater call velocity and improved call conversion. And we're looking at how you do that even more efficiently leveraging the technology tools. And so she's bringing some ideas as it relates to like, hey, not only be virtual, but let's be digital, so it can be more efficient in our attacking of the marketplace. And so we're excited about it.

One of the best things we did was align it with our Premier strategy. And so we're able to not only win in small business for a small business team makes now talk to their clients about bringing in their personal deposits. And so we're going to do the combination of those things to drive our small business performance.

So let's just pull back. I know I asked very specifically about auto. And I was just looking at your schedule for today, you did meet a lot of international clients. There's a whole sort of theme of the K-shaped consumer in the United States, the K-shaped economy. What are you seeing, right? You have a very good lens in terms of overall financial health for the consumer. Can you talk about any areas of concern and maybe areas of concern that you think are sort of overrated, right?

Yes. So I get the great privilege to be with thousands of clients every single month and studying millions of clients every single day and watching what's happening within the market. And I would tell you some very interesting things happening, Erika. So two observations. One, when you look at the K-curve, you have the upper income bands that continue to perform well. You go to any of the restaurants here in Miami, it's packed, shopping centers are packed. And so things are kind of business as usual. So their spend year-over-year is continue to improve.

When you look at the low income bands, you're seeing some liquidity drop and you're also seeing some deterioration in credit but not significant, and they're continuing to also spend. So it's interesting, the K-curve is lifting in the same trajectory as it relates to spin, although deposit liquidity has come down a little bit and some credit deterioration. So that's the first observation.

The second observation is even more meaningful that consumers' beliefs don't match their behaviors. And my dad, used to tell me a long time ago, "Watch what people do more so what they say and you'll learn a lot more." So they're giving surveys or taking surveys that sentiment may not be as high as we would hope that it would be. But what they're actually doing is totally different. They're spending, they're active. And so that's something that we're seeing.

And the driver behind that is really employment. So employment is still generally strong. Not only that, but you have wages that are increasing at a pace higher than inflation. So that means they have more purchasing power. So the thing that I look at is, "All right, what would need to change for that to go in a different direction?" Well, unemployment would need to go up higher. And if you look at a regression analysis, go back to 1995, we looked at the data and say, "Well, what number would that need to be?" Well, you're talking about 70 bps or more before you have significant deterioration. And if you look at what Moody's has projected for this year, it's only 40 bps. So that gives you a sense of a potential stable economic environment for this year.

But if unemployment did go up 100 bps, 150 bps, then what happens? The first thing you would see from a signal perspective is that your deposit liquidity would come down. You're not seeing that today. The class of liquidity is about the same per household. Second, you would see the request for minimum payments go up. So in our credit card portfolio, for example, we have 6.5% minimum payments every single month. That number is down from last year. So it's going the opposite direction. Then you would see utilization go up on their credit cards or on their Home Equity line of credits. And today, the utilization is about the same as it was last year. So you're not seeing that take place. And after you see that, you'll start to see FICOs come down, and then obviously, you have credit challenges. So we're not seeing that today.

Now that could change, another two months or three months, I could be back in front of you and talking to you about a different environment. But in near future, we feel optimistic but we're very alert and we watch it every day, and we have the optionality to dial up or down our appetite at any given moment, and we pay attention to those signals and make those determinations every day.

Did any of the spend trends in the consumer, do they get impacted by any sort of the policy noise the way corporates get impacted? Or was it a fairly straight observation as you think about like Liberation Day last year and all of that?

Spend was the same and only thing that really impacted spend, like take the lower income. They move more from -- more away from discretionary to nondiscretionary. So you have those type of patterns, but it got nothing to do with policy. It's just where they are on the income band and what's happening in their unique lives.

Got it. So we talked a lot about different topics today, and I think it was super helpful for investors to hear about what's going on in your business. As we look ahead, what excites you the most about your business? Is it growth, innovation, deepening client relationships? And what are the two to three things that investors should sort of watch out from Truist in 2026?

The same thing that excited me day one in doing this job is the same thing that excites me today, and that is helping our clients have better lives and get to financial success. And if we do that well, we win and if we win shareholders win. So I'm excited about driving that 15% ROTCE target by way of starting with the client. And what investors should watch for are what markers would be increasing client deposits, deepening with premier clients, making sure that we elevate our digital engagement. So we are serving clients in the most efficient way. Sustained credit discipline is super important. And then we need to make sure that we're doing a wonderful job of retaining clients because that's super important. So watching how we perform from a voice-to-client perspective. We're doing that today. So these are good markers that are already signaling that we're winning. And I'm excited about the future, Erika, the momentum is real.

Great. So that's another bullish presentation from the morning. And I don't see any questions in the iPad. So Donta, thank you so much.

All right. Thank you very much.

Thank you.

Greetings, ladies and gentlemen, and welcome to the Truist Financial Corporation Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this event is being recorded. It is now my pleasure to introduce your host, Mr. Brad Milsaps .

Thank you, Betsy, and good morning, everyone. Welcome to Truist's Fourth Quarter 2025 Earnings Call. With us today are our Chairman and CEO, Bill Rogers; our CFO, Mike McGuire, our Chief Risk Officer, Brad Bender; as well as other members of Truist senior management team. .

During this morning's call, they will discuss Truist fourth quarter and 2025 results, share their perspectives on current business conditions and provide an updated outlook for 2026. 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. Please review the disclosures on Slides 2 and 3 of the presentation regarding these statements and measures as well as the appendix for appropriate reconciliations to GAAP.

With that, I'll turn it over to Bill.

Good morning, and thank you for joining our call today. Before we discuss our fourth quarter and 2025 results, let's begin like we always do at Truist with purpose on Slide 4. At Truist, our purpose to inspire and build better lives and communities remains at the heart of everything we do. It drives our strategy and fuels our commitment to our clients and the communities we serve. Despite market volatility early in 2025, we stayed focused on supporting our clients and executing our growth and profitability agenda. This discipline drove higher earnings, stronger client relationships and attractive new business.

A key to delivering on our purpose and performance is the investment in our business, markets and teammates. Some of these significant investments include enhancing our tech and digital capabilities in areas like AI and improving the client experience. Recruiting and developing talented teammates to advise and serve clients with more complex and industry-specific financial needs, announcing plans to open 100 new insight-driven branches in high-growth markets as well as enhancements to more than 300 branch locations in all markets. These investments underscore our commitment to the communities we serve and position us to deliver more personalized advice and create opportunities for outsized growth.

As we enter 2026, our purpose continues to guide our focus on growth, profitability and deeper client relationships. We're expanding our presence and delivering more differentiated advice-driven experiences. I look forward to sharing more of these priorities during today's call.

Now let's turn to Slide 5. We closed 2025 with strong results and clear momentum heading into 2026. We delivered net income available to common shareholders of $1.3 billion or $1 per diluted share for the fourth quarter and $5 billion or $0.0382 per diluted share for the full year 2025. These results include certain charges such as severance and an accrual related to a specific legal matter that was settled in the first quarter of 2026, which totaled $0.12 a share for the quarter and $0.18 per share for the year.

At the start of last year, we outlined 5 strategic priorities aimed at accelerating our performance and improving our profitability in 2025 and beyond. While there's more to accomplish, I'm proud of the progress we made as a company in 2025 and excited about the momentum we have entering this year. First, we continue to generate strong broad-based loan growth in both wholesale banking and consumer and small business banking, driven by new loan production and increased client acquisition.

Second, strong loan growth, better second half results in investment banking, trading and wealth along with continued expense discipline, drove 100 basis points of positive adjusted operating leverage in 2025. Third, we made significant investments across our business in talent and technology, laying the foundation for future growth, which we expect to accelerate in 2026. Fourth, we maintained strong asset quality metrics as net charge-offs declined versus last -- versus 2024 and nonperforming loans remained relatively stable.

Finally, we returned $5.2 billion of capital to shareholders through our common stock dividend and the repurchase of $2.5 billion of our common stock. Our total capital return in 2025 reflects a 37% increase over 2024. Looking ahead, our strategic priorities remain unchanged and our focused clear. Accelerate revenue growth, drive greater positive operating leverage, continue to invest while maintaining our expense and risk discipline and return capital to shareholders at an accelerated rate.

Executing on these strategic priorities is central to improving profitability and achieving our long-term goals, including our commitment to deliver a 15% return on tangible common equity in 2027. So in summary, we closed 2025 on a strong note and entered 2026 with significant momentum and confidence in our ability to deliver revenue growth at least twice the pace of 2025, greater positive operating leverage, higher levels of capital return and improved profitability.

Before I hand the call over to Mike to discuss our quarterly results, we'll spend some time discussing the positive momentum we're seeing within our business segments and with our digital strategy on Slide 6 and 7. First, let me start with Consumer and Small Business Banking. CSPB delivered consistent strong performance throughout 2025. As shown on the slide, we generated 5% growth in average consumer and small business loans and 1% growth in average deposits.

This momentum was fueled by our market-leading consumer lending businesses, another year of net new checking account growth and deeper relationships with our premier banking clients. Loan growth was broad-based across the portfolio with especially strong contributions from indirect auto and our specialty niche lending platforms, Sheffield Service Finance and LightStream. These businesses continue to produce market-leading growth with attractive risk-adjusted returns.

As part of advancing our consumer lending strategy, we fully integrated our digital end-to-end lending platform, LightStream, into our Truist mobile app experience in our branch banking account opening experience. This expanded scale is improving efficiency, broadening distribution, accelerating growth and meaningfully enhancing the client lending experience. Beyond our national consumer lending platforms, Premier Banking also delivered strong results with 2025 production up 22% in deposits, 32% in lending and 12% in financial plans. This performance was driven by higher adviser productivity and strong branded mortgage and branch-led lending.

We continue to see strong outcomes from our strategic investments in digital, delivering year-over-year growth across all core metrics. In the fourth quarter of 2025, we added 77,000 digital new-to-bank clients, up 10% from the prior year quarter, capping a solid full year performance with digital production up 9%. We also took meaningful steps to deepen self-service adoption, expanding capabilities within our AI-powered Truist assist mobile experience. The launch of -- as Truist assist our universal search capability, now delivers client, quick intuitive access from any screen. This drove a 97% increase in digital chat engagement in 2025 and is helping us improve efficiency and strengthen client connectivity as more activity naturally shifts to digital.

Let's turn to wholesale on Page 7. In wholesale, we delivered a strong finish to 2025, driven by meaningful improvement in the second half of the year in both loan and deposit growth, investment banking and trading revenue and continued progress in strategic focus areas such as payment and wealth. We onboarded twice as many new corporate and commercial clients versus last year, spanning a diverse range of industries and markets. Building on these new client relationships and our focus on deepening existing ones, we saw our loan and deposit momentum strengthen as the year progressed.

Average wholesale loans increased 3% in 2025 with momentum accelerating in the second half. Fourth quarter average loans were up 8% compared to the fourth quarter of 2024, fueled by new client acquisition and supported by focused talent investments as our strategy continues to gain traction. End-of-period wholesale deposit balances rose 6% linked quarter. While seasonal public funds contributed to this growth, we saw growth from all of our industry banking teams and geographies.

Full year investment banking and trading income declined 6% versus 2024 due to first half market volatility. However, activity rebounded strongly in the second half with fourth quarter revenues up 28% versus fourth quarter of '24, driven by increased M&A, trading, equity and debt capital markets activity. In wealth, net asset flows remained positive, supported by 8.5% increase in new clients last year with almost 30% being generated by [indiscernible]. Wholesale payment fees, which include merchant services, commercial card and treasury management fees rose 8% in 2025. Treasury management fees, a key strategic focus grew 13% on the strength of new client acquisition and deeper relationships within our existing base.

Importantly, our payments pipeline are up significantly year-over-year, positioning us for continued growth in 2026. So now let me turn it over to Mike to discuss the financial results in a little more detail.

Thank you, Bill, and good morning, everyone. So before I start with our performance highlights on Slide 8, I do want to briefly mention certain changes to the presentation of our earnings materials today and on a go-forward basis. On January 12, we filed an 8-K detailing changes to the presentation of certain noninterest income and noninterest expense items effective December 31, 2025, we changed the reporting line labeled card and payment fees to a new reporting line called card and treasury management fees. This line includes debit card, retail card and commercial card fees merchant discount fees and treasury management fees.

Previously, treasury management fees were included in the service charges on deposits line, which we renamed other deposit revenue. Other deposit revenue includes NSF and overdraft fees and other service charges. We believe these changes more accurately reflect how we're managing our business, and we'll give investors more insights into how we're progressing with important fee income-generating initiatives. In terms of expenses, we will no longer disclose adjusted expense in our earnings materials. Instead, we will provide context on material items impacting results.

For today's discussion, I'll provide you with adjusted expense for comparison purposes. But going forward, other -- our expense commentary and guidance will be based on GAAP expense. As a result of this change, we moved to restructuring charges, which typically included expenses related to severance and facility charges back to their respective reporting lines such as personnel and occupancy expense. Okay. With that said, I'll now turn to the full year 2025 and fourth quarter results, which starts on Slide 8.

We reported 2025 GAAP net income available to common shareholders of $5 billion or $3.82 per diluted share and fourth quarter 2025 net income available to common shareholders of $1.3 billion or $1 per diluted share. Our fourth quarter 2025 results included a charge of $130 million or $0.08 per share after tax due to an incremental accrual related to Truist executing a settlement agreement on January 20, 2026 in the matter of Bickerstaff versus SunTrust Bank.

In addition, our fourth quarter results included $0.04 per share of charges primarily related to severance. Revenue increased 1.1% linked quarter due to 1.9% growth in net interest income, partially offset by a modest decrease in noninterest income. GAAP noninterest expense increased 5.2% linked quarter, primarily due to the legal accrual and higher personnel expense. Excluding the legal accrual and severance, noninterest expense declined approximately 0.3% on a linked-quarter basis.

Net charge-offs increased 9 basis points on a linked quarter basis, reflecting normal seasonality in our consumer portfolio. Nonperforming loans remained relatively stable on a linked quarter basis. Our CET1 capital ratio declined 20 basis points to 10.8%, and our CET1 ratio, including AOCI and increased 10 basis points linked quarter to 9.5%. During the quarter, we repurchased $750 million of common stock and announced a new share repurchase authorization of up to $10 billion with no expiration date.

Next, I'll cover loans and leases on Slide 9. Average loans held for investment increased $4.3 billion or 1.3% on a linked quarter basis to $325 million due to growth in both commercial and consumer loans. For the full year, average loans held for investment increased 3.6% to $316 billion due to 5.4% growth in average consumer and card loans and 2.4% growth in average commercial loans. Based on our current pipeline and economic outlook, we expect 3% to 4% average loan growth in 2026. However, average loan growth in 2026 will primarily be driven by growth in commercial loans and other consumer loans relatively slower growth in residential mortgage and direct auto compared with 2025.

Other consumer loans, which include our specialty lending businesses, Sheffield, Service Finance and LightStream are expected to grow at a similar pace as these businesses continue to offer attractive risk-adjusted returns.

Moving to deposit trends on Slide 10. Driving client deposit growth is a key priority for Truist, and we are seeing improved momentum with clients in both consumer and wholesale. Average deposits were relatively stable on a linked quarter basis as the decline in higher cost broker deposits was offset by growth in lower-cost client deposits. This improving mix, along with recent reductions in the federal funds rate, resulted in a 7 basis point decline in average interest-bearing deposit costs to 2.23% and a 20 basis point reduction in our total cost of deposits to 1.64%. As shown in the chart on the bottom right hand of the slide, our cumulative interest-bearing deposit beta improved from 38% to 45%, and our total deposit beta improved from 24% to 30% on a linked-quarter basis.

These improvements reflect stronger client deposit growth and disciplined efforts to reduce rate paid. Moving now to net interest income and net interest margin on Slide 11. Taxable equivalent net interest income increased 1.9% linked quarter or $69 million, primarily due to loan and client deposit growth in fixed rate asset repricing. Our net interest margin increased 6 basis points linked quarter to 3.07%. For full year 2026, we expect net interest income to increase by 3% to 4%. This outlook is based on 3% to 4% average loan growth which implies low single-digit end-of-period loan growth. We also expect low single-digit end-of-period deposit growth.

Average earning assets will grow at a slower rate in '26 than average loans as average investment securities and other earning assets are expected to decline by 4% to 5% on an annual basis. Lastly, we expect two 25 basis point reduction in the Fed funds rate, one in April and one in July, and we will continue to benefit from fixed rate asset repricing. Although we expect modest net interest margin compression in the first quarter, we anticipate full year 2026 average net interest margin will exceed the average of 303 due to the benefits of fixed rate asset repricing and improved earning asset mix and lower deposit costs.

As you can see on the right-hand side of the slide, we've also updated our fixed rate asset repricing outlook and our swap disclosure. Turning now to noninterest income on Slide 12. Noninterest income decreased $12 million or 0.8% versus the third quarter of 2025, reflecting modest declines across several fee income categories, partially offset by higher investment banking and trading income. Investment banking and trading increased $12 million or 3.7% linked quarter and $335 million, reflecting stronger M&A-related fees partially offset by lower trading activity.

Our new reporting line for card and treasury management fees was down slightly linked quarter due to seasonality, but grew 3.7% year-over-year as double-digit growth in treasury management fees was partially offset by lower merchant and corporate credit card fees. Next, I'll cover noninterest expense on Slide 13. On a linked-quarter basis, noninterest expense increased 5.2%, driven by higher other expense related to the legal accrual previously mentioned, higher personnel expenses due to increased incentives and severance.

These increases were partially offset by lower regulatory costs due to an FDIC special assessment credit. Excluding the impact of the legal accrual and severance costs, noninterest expense declined by 0.3% linked quarter. Adjusted noninterest expense increased 1% in 2025, reflecting our commitment to expense discipline and driving positive operating leverage during the year.

Moving to asset quality on Slide 14. Our asset quality metrics remain strong on both a linked and like-quarter basis, reflecting our strong credit risk culture and proactive approach to quickly resolving problem loans. Nonperforming loans held for investment remained stable at 48 basis points of total loans, while the ALLL declined 1 basis point to 1.53% of total loans. Net charge-offs increased 9 basis points linked quarter to 57 basis points and were down 2 basis points versus the fourth quarter of 2024.

The linked quarter increase in net charge-offs reflect higher C&I and seasonally higher consumer losses, partially offset by lower CRE losses. For the full year 2025, net charge-offs declined 5 basis points to 54 basis points. And now I'll turn to guidance on -- for 2026 on Slide 15.

For full year 2026, we expect revenue to increase 4% to 5% relative to 2025 revenue of $20.5 billion driven by 3% to 4% growth in net interest income and mid- to high single-digit growth in noninterest income. We expect full year 2026 GAAP noninterest expense to increase by 1.25% to 2.25% in '26 versus GAAP '25 noninterest expense of $12.1 billion. Our 26th GAAP revenue and expense outlook implies positive operating leverage of 275 basis points in 2026.

As I mentioned earlier, our noninterest expense guide will be based on GAAP noninterest expense as we will no longer provide guidance on adjusted noninterest expense going forward. For comparison purposes, 2026 noninterest expense growth would be approximately 2.35% to 3.35% and operating leverage would be approximately 165 basis points if you were to exclude the impact of the fourth quarter 2025 legal accrual that I discussed earlier in the call. In terms of asset quality, we expect net charge-offs of about 55 basis points in 2026, which is relatively stable compared with net charge-offs of 54 basis points in 2025.

Finally, we expect our effective tax rate to approximate 16.5% or 18.5% on a taxable equivalent basis in '26 versus 16.4% and 18.9% in 2025. As it relates to buybacks, we're targeting approximately $4 billion of share repurchases during the year. Looking into the first quarter of '26, we expect revenue to decrease approximately 2% to 3% relative to fourth quarter revenue of $5.3 billion. We expect net interest income to decrease approximately 2% to 3% in the first quarter, primarily driven by 2 fewer days in the first quarter relative to the fourth quarter and a seasonal decline in public fund deposits.

We expect noninterest income to decline 2% to 3% linked quarter due to lower other income. GAAP noninterest expense of $3.2 billion in the fourth quarter are expected to decrease by 4% to 5% linked quarter due to lower other expense and personnel costs, partially offset by higher regulatory costs. If you were to exclude the impact of the fourth quarter 2025 legal accrual, noninterest expense would be flat to down 1% linked quarter. Finally, we're targeting $1 billion of share repurchases in the first quarter of 2026.

So with that, I'll hand it back to Bill for some final remarks.

Great. Thanks, Mike. As we close, I want to emphasize the confidence I have in Truist's direction. We're seeing tangible results across key businesses with strong momentum in client engagement and revenue growth. As shown on Slide 16, our goal of achieving a 15% ROTCE in 2027 is locked up and reflects our confidence in Truist's long-term earnings power and strategic direction. We see and have invested in multiple paths to stronger revenue and profitability and with disciplined execution, we expect meaningful improvement over the next 2 years. .

Much of this progress will come from deepening client relationships in consumer and wholesale, especially in wealth, payments, premier banking, investment banking and trading, small business and corporate and commercial banking, where momentum is already strong. This is highly accretive to our ROTCE commitment. Our expectation is that our revenue growth will double in 2026 and when combined with our expense discipline should lead to even greater operating leverage and profitability improvement this year.

Like 2025, we entered 2026 in a strong capital position enabling us to support client growth and accelerate capital return through increased share repurchases. As Mike mentioned, we're targeting $4 billion of share repurchase this year, which represents a 60% increase versus last year. In summary, I am confident in our future. I'm encouraged by the results and momentum we're seeing across our company and remain focused on executing with discipline, delivering for our clients and creating value for our shareholders. Thank you to our teammates for their incredible focus, productivity and purpose-driven commitment to moving Truist forward. As always, we appreciate your continued interest and support and we look forward to updating you on our progress in the quarters ahead. With that, Brad, let me turn it back over to you.

Thank you, Bill. Betsy, at this time, we please explain how our listeners can participate in the Q&A session. As you do that I would like to ask the participants to 1 primary question and 1 follow-up in order to accommodate as many of you as possible today. .

The first question today comes from Ryan Nash with Goldman Sachs.

Bill, can you maybe talk a little bit more about loan growth where you ended the year at up 8% year-over-year and you're guiding to 3% to -- and it seems like if you think about the exit run rate, you're already running at about 3% average growth it implies, as you said, low single-digit growth. So maybe just unpack the loan growth a little bit further between commercial and consumer? And how are you thinking about growth across each of those areas.

Yes. Thanks, Ryan. Great to hear from you. Yes, as you noted, we're entering with some good momentum. And if you think about the mix, let me sort of talk about how I think this year will pan out. C&I is at its sort of strongest quarter. I mean production was up really, really significantly and just high-quality business. I mean, high-quality advice-driven business, tied with treasury management, 62% plus and some type of treasury management products. So really, really good momentum on the C&I side. .

I think overall, we're going to really sort of focus on places where we have great client demand, clients still healthy, we're going to rebalance a bit focus on higher client value and optimizing our return in our mix. And so I think the result of that is going to be a little more wholesale. The consumer businesses like Sheffield and LightStream and service finance continue to see great opportunities there, probably in areas like indirect auto and some of those, probably a little less in terms of exposure, margins being a little bit tighter a little bit lower client value. So I think about it in 2 ways. One, continuing the momentum and things that have high client value, long-term return characteristics and optimizing that return in mix over time. All of that, though, contributed to 3% to 4%, what I would consider sort of like really, really high quality, consistent growth. And again, building on momentum that we already have.

Got it. And if I can ask a follow-up, Mike. On the net interest margin, I think you noted it would exceed last year's 3.03%. Given that you're currently at 3.07%, can you maybe unpack what is included within the margin for deposit pricing? And do you expect the NIM to expand from current levels? And what is the cadence behind that?

Yes, sure. Ryan, Yes. So it was nice to see the uptick obviously in the fourth quarter, which was largely driven by some of the seasonal deposit mix and some of the benefit of the cuts, that will go the other way on seasonality in the first quarter. So while we sort of entered the year at 3.07%, we would expect to back up just a touch. But throughout the course of the rest of the year, we would expect to see margin expansion, especially in the second half, where we see the benefit of the cuts you asked around deposit pricing, our expectation coming into the year, we'll grind a touch higher on the betas in the first quarter, but we would expect to be in the kind of low 50s neighborhood by year-end. So you've got the lower cost of deposits. You've also got the fixed asset, the fixed rate asset repricing. -- engine happening in the background as well. And I think those are factors that are going to really help us make really, I think, significant progress on the margin relative -- I know previously, we've talked about sort of a 3 teens level in 2017. We're going to make significant progress towards towards that level in '26 and frankly, see ourselves exiting '26 in kind of that 3 teens area, which I think were really nice set up for 2027.

The next question comes from John Pancari with Evercore.

On your 2027 ROCE target of 15%, I appreciate your you reiterated your confidence in the attainability there. And -- could you possibly help kind of unpack the components that give you that confidence? You mentioned the 3 teens NIM and you might be able to get that by the end of '26. Just curious on maybe your efficiency expectations underneath that balance sheet growth, how we could think about the pace there as you approach that in 2027? And then also, I think, common equity Tier 1, you've alluded to the 10%, but how are you thinking about capital underneath that 15% ROCE.

Yes. Sure, John. So think about it maybe in its simplest term is the concept of holding the denominator of capital and dollars steady. And then improving momentum and return from the numerator. So sort of by that is sort of the basic mantra that we're operating from. I'll also say that this is going to be -- we see this as more of a straight line. So in addition to 15, we're locked in on 14 for this year. So we don't -- this isn't going to be an all at the end, parabolic curve that's going to be a straight line continued improvement. So again, think about that denominator and dollars holding steady.

And then the part on the numerator that really is accretive and not necessarily in order, but I'll go down a few of these payments is really significant. So I think about the growth in payments, we're seeing a 13% kind of growth. We expect that growth to continue in the double-digit kind of basis. So that's really accretive to not only deposits but also to NIM and the sort of the overall [indiscernible]. Our middle market expansion, we 2x the number of clients we're seeing in that business. So we see that as really, really positive to that growth.

Premier and our wealth production. Net asset flows of wealth really positive. Premier, I talked about the deposit production and loan production, sort those 20-plus percent kind of activity. And then think about all the things that are deepening client relationships in all of those categories, those are things that are really most accretive because if anybody we've already committed talent, we've already committed capital to those businesses and what we're doing is increasing the return against that.

Mike mentioned fixed asset repricing is a component of it. There's all sorts of RWA maximization efforts to ensure that we're running our RWA engine really, really effectively. We talked about the improving operating leverage. So that's also a component of that as we'll run this revenue increase off a more efficient platform. And then your point on CET1, we're building this model on a 10% CET1. I think that's probably sort of the right ZIP code. And then looking this year to $4 billion in buybacks to accelerate all that. So again, my high degree of confidence is everything I mentioned in there has got momentum against it, initiatives against it. We're starting nothing flat-footed everything on our toes, which is why I so to say, locked in for 15%.

Got it. That's helpful, Bill. And then staying along the same lines, I mean, no good deed goes unpunished. So you set out that $14 million. You gave us the $15 million last quarter on 2027, getting a lot of interest now on where you could ultimately go longer term. Your peers are flagging the the mid- to upper teens in terms of ROTC over time. Can you possibly talk about that? Help us frame is Truist positioned to operate in that range and -- and is that a reasonable range? And how do you think about that timing?

Yes. John, our business model, we sort of look at our business model, look at our level of capital -- and past 2027, I just -- I don't want to sort of speculate as to what all those things might be. We might be in a different capital position. The business model resulting from the momentum that we're generating. Quite frankly, the economic environment that we might or might not be operating at that particular time. And if you think about it, like for now, the ascension to 15%, I think about we started 13 going to 15% plus our dividend I think that's a really attractive path to that level. And as we get to the 15 and as we evaluate all the things I've just talked about, then we'll look and see where we are at that particular juncture.

I think it's sort of premature to sort of lay something out there that isn't as locked in as we think we are on the 15. We want to have confidence when we say a number. We don't want to sort of be caution to the wind. We want to really be focused just like we are today.

The next question comes from Scott Siefers with Piper Sandler.

Let's see, I think you've touched or at least alluded to this briefly a couple of times, but just on the capital markets, I think there's plenty of optimism about the industry's potential this year. That's, of course, an area where you all have invested really, really heavily. Maybe if you could just sort of expand on your thoughts about momentum and potential there for the coming year.

Yes, Scott, I think as you pointed out, I mean, this is a business we've been investing in for decades. And I think we're in a really good position. We have really good momentum coming out of the second half of the year. And quite frankly, on a lot of cylinders. So debt capital markets, leveraged finance, M&A, all of our FRM derivatives, FX, all of those things are hitting on really good cylinders. And we come into it with a good pipeline. So we come into it with a good pipeline and not only the pipeline from the investment banking, but really the pipeline that's generated from our middle market and commercial client base.

I mean, probably what I'm most excited about is this organic activity that we're building. We put talent on the field that really understands how to leverage all of our industry specialties, understands how to leverage our product and capabilities and position those and great advice for our clients with the appropriate team work that goes on and the technology that we built to support all that. So part of the double revenue story for us is we think we continue with a low double figure kind of compound growth in this business.

I mean, I have every reason to be confident. It's organically built. We've hired some really good talent. You'll continue to see that some really good talent. We've developed talent over a long time. We've got some senior leaders who've been in our business for quite a while. So this is a business I feel really confident in. I think we have a full capability and long-term continued high growth potential.

Perfect. And then, Mike, so on capital management, really robust repurchase plans and capacity. And I guess, as I think about sort of calls on capital uses of capital, the loan growth outlook seems very prudent. You've got some things accelerating while you sort of dial back others. So I would guess the overall repurchase plan is a very sturdy one. But just as you think about the coming year, any factors that would cause you to toggle down or up that pace of repurchase to get to the sort of net $4 billion?

Yes. Scott, the way we're thinking about this is we believe that, that 10% operating target or level is appropriate. We've sort of laid out a trajectory that gets us there by the end of '27. And so there are going to be moving parts as we go. If loans or the balance sheet grows a little faster 1 quarter versus another, we make a little more, a little less money, 1 quarter versus another. And of course, just the overall, I guess, economic backdrop, you wouldn't want to dismiss, but in a stable operating environment, we're going to trend to that 10% over the next 8 quarters.

So if you look at the math, that gets you to about $1 billion a quarter this year, frankly, perhaps maybe a touch higher. And so that's really how we're thinking about it's just kind of retrending to [indiscernible] during that period.

The next question comes from Ebrahim Sonawala with Bank of America.

Two questions. One, I think just on deposits. Talk about -- like do you expect both as you move towards this wholesale mix on the lending side, what does that mean for deposits and deposit growth as we look forward, both in terms of the mix or when we think about DDA noninterest-bearing balances. And just the pace of overall deposit growth, do you think that kind of shifts for growth? And how strong could it be?

Yes. [indiscernible], you're not talking about this. If you think about where we were a year ago with loans, can we build the momentum and sort of asset generating part of our franchise, and you see us deliver on that. And then we pull that into this year, and we pull that in the momentum and we optimize that. I think we're the exact same place on deposits. I mean we're sort of at the same place. We're building that momentum. Building that consistency. It's part of core to what we do. And then I look at the leading indicators on deposits and sort of think about, okay, what should give us confidence that we have deposit growth. .

First, I think the -- for the industry, so a little bit of a natural tailwind with QE and lower rates. So just put that on one side. But then idiosyncratic and specific to us. Think about the momentum. We saw wholesale deposits grow 400 basis points faster in the latter part of 2025 versus '24. I mentioned earlier, 62% of our new clients came with deposits, and we've had 2x the number of clients. So we have a lot more clients, a lot more clients with treasury management products, and some of those are still funding. So they're in the funding base. So deeper penetration in the middle market based. We still have some loan only clients that we're penetrating in that base. So in addition to the new, we look at the back book. End-of-period client deposits were up almost $7.5 billion. The other leading indicator is that treasury management fee is up 13%. And then you go to the consumer side, and we look at sort of the leading indicators there. The first is net new. So we're adding net new clients and the quality of those clients has increased year-over-year. So the amount of deposits that they're bringing to us increases year-over-year.

The focus on Premier, I talked about the deposit production being up significantly in premier the amount of off-us deposits from our premier client base is actually quite significant. So their capacity to use great tools to approach those clients has been really significant. Technology, digital account opening our branches, branch expansion, more marketing related to deposit generation, deposit generation in expansion markets for us like Texas and Pennsylvania.

So just my net summary is -- we have really good momentum in the deposit side and might sort of outline the deposit and loan correlation for this year. So we feel good about deposit growth. We feel good about that opportunity headed into this year.

That's good color, Bill. And I guess maybe just a separate question around the wholesale strategy. On paper, $0.5 trillion balance sheet. You've been in investment banking for a long time. Truist should be winning in terms of when we think about fee revenue growth financing. Just give us a sense, one, just do some of the changes by the OCC around leverage lending, does that create a slightly better opportunity to compete in terms of risk-adjusted returns. And remind us where you think the sweet spot for Truist is on the wholesale/capital market side? Is it against the Wall Street banks? Is it against middle market investment banks. Would love some color there.

Yes. Let me try to unpack that question. So on the leverage lending specifically, remember, that's been a core competency for us for a long time. So I don't see the the guidance significantly changing our approach. Maybe there's something around the edge or that not, but we've been good in that business for a long time. And as you note, it's a really strong driver of our investment banking business as well. So I think sort of steady as she goes, continue on that front.

And then in terms of our competitive position, the answer is to both it really relies on a couple of things. I mean I think what we want to be a sort of a couple of things. One is the premier middle market investment bank. So think about that as sort of like the high bar in terms of standard and then really focused on places where we have specialization and a really strong right to win. So think about those combinations. So core middle market, leveraging our franchise, I mentioned earlier, I've been really excited about the teamwork team that we have on the field, the training we put in place, the partnerships we have, the new talent we have that really know how to leverage the tools and capabilities for our sort of core commercial and middle market clients.

And then anywhere on a specialty business, we have the right to win against anybody along that spectrum. I hope that clarifies it.

The next question comes from Ken Usdin with Autonomous Research.

Mike, just coming back to a prior comment you made, Bill had mentioned getting to the 3 teens NIM by year-end '26. And you had mentioned kind of remixing average earning assets with loans growing in some of the other categories coming down as an offset. So just wondering how you expect average earning assets to traject off of the mid-40s exit? And also, like where is your landing spot in terms of securities and cash as a percentage of total assets as you do that remixing?

Yes. Sure, Ken. If you think back to '25, you'll remember, throughout the course of the year, we brought the securities portfolio down really in the second half of the year from, I think, maybe the $125-ish billion ballpark down to the $117 billion, $118 billion. And so we would actually, I think, expect that to be relatively consistent in 2016 at that $117 billion, $118 billion level. And so if you just do the sort of math on the year-over-year average, you've got essentially the securities and a few of the other earning assets categories down that 5% to 6%. So you couple that with the loan growth in the 3% to 4% area, you get to maybe, I don't know, ballpark half that growth rate for earning assets.

Now the good news is at half the earning asset growth rate of loans, coupled with net interest margin expansion, that's what sort of gets you to the 3% to 4% outlook on NII for the year. In terms of mix, we've, I think, relatively stable again is kind of how we exit '25. So we think about sort of the securities and cash combined in the $140 million to $150-ish million area. And so I think you'll see us there. That helps us sort of more than satisfy our sort of lab and ILS T requirements and we think it's sort of the right sort of place on the efficient frontier from an earnings perspective as well.

Okay. Got it. And then -- and just on that updated slide you gave us on the fixed rate repricing and the swaps book, you still obviously have a lot of forward starting swaps relative to the size of the portfolio. Can you just help us understand like how that layers in? And how much of a benefit will just the former drag be in terms of a year-over-year helper this year on the swaps.

Sure. In terms of the active receivers, Q3, Q4 was actually flat around $50 billion. And you see that sort of gradually phase in throughout the course of '26. So I think we go to like $57 billion, $58 billion in the first quarter, then to $80 million and $100 million. I think we end the fourth quarter a little over $100 billion. So you do have a much more significant proportion of the swaps effective. Now at the same time, at least based on forwards, you've got the policy rate lower at almost sort of similar rate. So what you start the year with less notional active out of the money. You end the year with more notional, active and even slightly in the money. So the answer to your question on like what's the impact year-over-year? Is it a helper top of my head, maybe it's $100 million. But obviously, that's just one component of the balance sheet. And so you're thinking about with the policy rate lower, 50 basis points at least as we see it, you've also got the floaters, the cash loans, et cetera, going the other way. So all that gets taken into consideration in our outlook and how we're positioned. .

The next question comes from Mike Mayo with Wells Fargo.

A lot of talk about NIMs and return, and I was more focused on growth, and I know you're not satisfied with the growth and that you expect growth to be 2x in 2026 and 2025. So directionally, I think you're moving where you want to be. But when you give your revenue guide of 4% to 5%. That seems kind of in line, maybe below a couple of peers for 2026, yet the population growth in your footprint is what, 2x. So I'm just wondering, and you're talking about the momentum you had in a lot of businesses for that growth. But do you need to increase your investments even more than you're already doing, just to keep up with the bigger banks that are increasing their investments. And in the 100 new de novo branches why now? Where are they going to be? It's just a contrast versus in the prior 5 years, the merger when you're closing a lot of branches.

Yes, Mike, I think your basic question is are we investing enough? And are we investing in the right places for growth. Let's sort of start with the concept of -- as you pointed out, we're doubling revenue. So we are building momentum, building capacity to [indiscernible] for. So the investments that we've made are reflected in that doubling of revenue. So let's sort of start as that premise as we are making investments that are mattering.

The things that are, I would consider to be significant accretive market share accretive kind of growth if you think about investment banking, treasury management, sort of in the low double-digit kind of kind of categories. I mean I think those are reflective of the fact that we're growing disproportionately and taking advantage of the opportunity that we have with our client base and with our markets.

And then when we unpack the expenses and unpack sort of where we're investing, it's a netting process. So remember, we're also continuing to create efficiencies in the company. So when we look at our overall expense level, that's a net number. We're creating efficiencies that not only came out of the merger, but it really came out of the work that we did in the end of 2023 when we -- as you duly noted, by the way, when we needed to really bend the expense curve we bent that significantly, but we're still harvesting some of those savings.

And then we look at the risk infrastructure that we've built in our company, that's been a really significant part of the expense growth base over the last several years. While that will continue to be high and appropriately so, the rate of increase will will lower. So again, creating efficiencies to redeploy and things that matter. And then you've seen the things that we're investing in, we go down the list, investment banking talent, corporate banking all the investments we're making in the wholesale payment, we're rolling out literally new products and capabilities every month. You've seen the investments we're making in digital, the growth we've seen in digital marketing, premier banking, deposit growth, tech investments to create efficiency and effectiveness.

And then on the branch side, this is a long-term game. So this isn't a quarter-by-quarter game. So for the past 6 years, we've effectively not invested or added net branches into our branch network. So as the population shifts in our markets as our focus gets really clear on things like Premier, we're going to open these branches in places that have the highest return for our franchise long term. So think about expansion markets, think about Texas in terms of examples. Think about market demographics that have changed in markets like South Florida and markets like Atlanta, where we'll continue to invest

And then overall, in all of our markets refurbishing. So I'm very confident that we're investing in the things that are delivering results and I think you see that in the momentum we're building. And then we're putting a stake in the ground for continued momentum, doubling net revenue and creating this 15% return, which obviously has those characteristics attached to it. So I'm satisfied and excited about the opportunities. And then put on top of that, AI, other efficiencies and other opportunities we're going to open up the aperture to continue to invest even more and with lots of clarity. We know the next place to invest, the next dollar to save, the next dollar to invest with a lot of clarity.

Yes. Sure. And just you mentioned the 15%. It seems like you're really hyper focused on the 15% return. Is that for the year 2027? Or is that reaching 15% at some time in '27.

For year.

For the year 2027.

Yes.

Okay. And that -- I guess that's not a final destination when you announced the merger 7 years ago, you're talking over 20%. So I imagine you want to go higher after that.

Yes. I mean, different business model in fairness, right? When we announced the merger, we had different businesses at a different return characteristics, -- so I think that, as I answered previously, I mean, 15% is not the final destination. But the path from here to 15% is actually quite attractive from a shareholder perspective. I think as we get closer to that 15%. As we understand, as I mentioned, for economic environment, business model, where we see momentum, where we see a chance to put our foot on the accelerator what we're seeing the return on the branch investment, just talking about that as an example, then we'll start to hold in a little bit better about where that next stage of the destination is.

I think I'm careful in saying final destination, I mean I don't think there's a finish line. I mean, I think we're sort of constantly want to be improving and moving forward. The 15% was just to declare from here to there and the slope is, I think, actually quite positive from a shareholder perspective.

Next question comes from Betsy Graseck with Morgan Stanley.

Just continuing along those lines. The question I have is just trying to understand how the efficiency ratio projects as you manage through this process of driving up ROCE. And specifically, also looking to understand the impact of the severance that we had this quarter when that flows through into the P&L from a head count perspective. And how do you see head count trajecting and the efficiency ratio trajecting as you move towards the 15%? .

Betsy, it's Mike. I'll get it started. So on the efficiency ratio, look, we do expect to see sort of incremental improvement over the course of the next couple of years. I think that kind of mid-50s area is probably a reasonable expectation. That's lined up to improving. Bill sort of talked about the numerator and sort of more throughput, more sort of, I'll call it, capital efficient revenue that's going to drive our ROA higher with sort of a similar level of capital over time. So it gets you to that kind of off that 1% ROA higher and more in line with what it's going to take to get to that 15% level. In terms of severance, the charges we took in the fourth quarter would have been related to actions in the fourth quarter.

FTEs, there's a little bit of noise in that, Betsy, because we've got contractor conversions happening. We've got head count coming in, coming out. So in fact, you might actually see head count higher throughout the course of the year as we move from contractor to full-time employees. Now cost per FTE would go down, assuming we do a good job executing that strategy. And we can, maybe throughout the course of this year, maybe give you a little bit more detail around how that's playing out.

Ladies and gentlemen, in the interest of time, we ask that you limit yourself to 1 question. The next question comes from Matt O'Connor with Deutsche Bank.

A little bit of a follow-up on the last question here. Just as you think about the restructuring and severance costs for '26, do you think there'll be anything meaningful? I think there was about [ 150 ] this year. And I appreciate the guidance on a reported basis, just trying to adjust for some of these items and see what the underlying operating leverage is.

Yes. Got it, Matt. Look, I mean, first of all, I appreciate the comment on sort of going to GAAP. This is something that we've gotten some good feedback on from investors. And I think it's going to be a more simple way to present our results. At the end of the day, the restructuring charges and sort of thinking about the -- originally, you recall, sort of the MRCs, they've just become sort of less significant relative to our overall story. That doesn't mean they'll go away. Obviously, we'll continue to have severance expense. We'll continue to have facilities-related charges and the like. But I do think that there is an opportunity and an expectation that they'll be lower over time. Difficult to necessarily forecast just given their nature. We do have an expectation that they'll be lower in '26 modestly. And again, it will be sort of up to us to do a great job trying to create more opportunity there and beyond. So hopefully, that helps.

The next question comes from Gerard Cassidy with RBC.

Can you share with us, Bill and Mike as well, I guess. Obviously, the outlook for yourselves and your peers this year looks really strong based upon the outlook for the economy, the yield curve, loan demand is picking up across the board. And if you have to look around corners, aside from the big geopolitical risks we all see, what are you guys keeping your eye on that could kind of surprise us later in the year because, again, the outlooks across the board look pretty darn good.

Yes, Mike, we can each talk about what keeps us up in terms of looking around quarters, I mean , I think this is what we get paid for. We look around a lot of corners. We stress for a lot of things within the business environment. I think to your point of your question, if you sort of said, number one would be a more macro concerns and issues. Does the economy hold up? Are we able to deploy all our strategies and our initiatives against the backdrop of an expanding and growing economy. So I sort of start with that because on the micro side, I feel really confident about the things that we're doing.

So in terms of looking around our own corners, again, we'll stress for everything, we will stress for credit, we will stress for idiosyncratic things, we will stress for geographies, specialties, all that kind of stuff. So we're always going to be looking at it. But given the diversity of our franchise, those aren't my #1 concern. So really are on the macro. Do we have the overall capacity to grow our business. And right now, the client sentiment is pretty good. And I would say in the macro, if you break it down, my probably #1 focus is employment. If I look at a number every day is employment the index of risk to financial services, I think we all learned in the financial crisis was related to employment. So that's what I say really focused on will businesses still be confident to continue to hire if consumers are confident that they have a job or can get a job or have a job in a gig job then that confidence will stay and elevate it. So most of mine or macro, Mike, you might have.

Yes. I mean this might err a touch too tactical, but I mean one thing that's on our minds here is credit spreads are still tight. And so that's, I think, sort of the longer that stays that way, that in some respects, is a risk that we're absorbing. We talked a little bit about just the competitive nature of things, right? It's a fierce marketplace. And so we should all be up at night worrying about that. But Bill, I think you covered it well. .

The next question comes from Saul Martinez with HSBC.

I just have a real quick one, follow-up to Matt's question, just to clarify, Mike. The guidance implies [indiscernible] billion of expenses. That does have some level of restructuring expenses embedded in it that are maybe slightly lower than this year. Is that right? Because obviously, if it doesn't, and it would imply it's something like 3.5% to 4.5% growth versus the adjusted number based on how you have been doing it. So I just wanted to clarify that.

Yes. No, that's right. The outlook, so the 1.25% to 2.25% of the GAAP base includes what previously would have been outlined as restructuring charges or severance and ex legal, that would be closer to 2, 3 and 3.3% year-over-year. .

Okay. All right. So it does include a similar number than this year.

Yes. Lower Lower Sorry, just to clarify,

Understood. SP1 A little bit lower Understood. .

The last question today comes from Chris McGratty with KBW.

If I look at the slide it looks like you grew net new checking accounts about $72,000 during the year. I guess 2 parts. Do you have that number for 2024? And then more broadly, consumer and small business checking accounts were modestly negative year-on-year. I'm interested in kind of the impact of the branch openings in reversing this and when you might starting to see kind of a tangible progress in those trends?

Yes, Chris, the net new in 2024 was about 100, if I'm going to sort of go from memory, so like right in that zone. But as I mentioned earlier, the quality of the of the 70 plus this year is much higher. So higher average deposit in those and what we're seeing also is our pull-through is really higher with that. So the quality is really, really strong. And the diversity of where it comes from, it comes from the digital channels I talked about the significant investment there and also the branch network. And that leads to the -- to your next question is sort of what are we going to see from the branch investment and reemployment. .

[indiscernible], we're just getting started. So like that day will come, we'll talk more about that, but the capabilities that we have now in our branches I think some of the models that we used to use, I think we can sort of bend some of those curves because our ability to open accounts digitally and branches do more in a branch that we could do before, I think allows us to have a little more confidence in the return characteristics of those investments. But that's too early to tell right now. So we're building the models, we're getting started great site selection, great markets, and we'll keep you updated on where we go there.

But overall, net new is -- continues to be strong and the quality is improving.

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

Okay. Thank you, Betsy. That completes our earnings call. If you have any additional questions, please feel free to reach out to Investor Relations team. Thank you for your interest in Truist, and we hope you have a great day. Betsy, you're now free to disconnect the call. .

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

All right. We're going to get started here. Up next, we're excited to have Truist joining us once again, had another solid year, posting best-in-class loan growth, maintained a tight hold on costs, which allowed it to generate strong operating leverage despite a challenging backdrop. Additionally, recently provided a detailed path to achieving a 15% return target by '27 through stronger revenue growth, higher operating leverage and increased buybacks. Here to tell us more about the details on the road ahead is Chairman and CEO, Bill Rogers. Welcome, Bill.

We're going to have a fireside chat today. So Bill, maybe to kick it off, it feels like '25 was a year where Truist pivoted back to playing offense. As you think about next year, what do you see as the key drivers behind that business momentum? And how is it shaping your outlook as you head into next year?

Yes. Thanks, Ryan. Thanks for having me. I think the concept of shifting to offense. We've always been in the offensive mode, but in terms of where we're able to devote our resources and time, clearly, much more on the offense, meaning client and acceptance and client activities. If you think about all of that was a setup for that. So we've simplified our business model. We created more capital. We took a lot of expenses out of the company, create a lot more discipline, clear strategic alignment, really good focus and an incredibly great team, not only from a leadership team, but a great leader team on the field. So I think the time we're spending now, as you know, we're looking at the windshield versus the rearview mirror. We're looking forward. Our clients are looking forward. The discussion about anything about merger sort of in the past, it's all about opportunity and where we're going forward.

And you mentioned the loan growth is one of the examples, but we have client acquisition growth, net new clients. We've onboarded more middle market clients at twice the level that we did last year. So we have this really good momentum headed into next year. Good support from our business lines. As I said before, really tight strategic alignment, incentive alignment, team alignment, teamwork. So I mean, I feel really good about where we are. I mean last year, we were talking about the things that we could do. And now we're talking about the things that we have done. So that feels very different.

And absolutely. So at third quarter earnings, you delivered more clarity around your mid-teens ROTCE, committing to 15% by '27. Maybe just walk us through how you're going to get to 15% and your degree of confidence? And then maybe just talk about what do you see as the major risks to getting there?

Sure. So first, high degree of confidence, really good engagement with shareholders of -- wanting to put more definition and more timing around the return expectations, which -- that was totally appropriate and strong response. I think about it this way, maybe like at its highest level, think about the capital in terms of dollars of the denominator, that's going to be pretty stable through this environment. And then our job is just to put more velocity over the numerator and particularly on things that have higher ROA as an opportunity. So I think about the growth in our investment banking business, I feel really good about the opportunities there. We've had a consistently low double-digit CAGR for a long time in that business, marginally gaining market share, but against a tremendous opportunity.

Our payments business, I feel like really over the last 18 to 24 months, now that engine is really firing really good leadership there, good talent on the field, but also really incredibly good strong product capability. So that's also growing at this low double-digit kind of basis. And then our wealth business has had a really good last couple of quarters. That engine is now starting to fire at a higher level. And so looking at businesses that have higher return characteristics are accretive to that ROTCE journey. I probably underestimated how powerful it was internally. I knew it was really important externally. But internally, our teams have really rallied around, okay, we have a growth agenda. We're playing offense, but we have it against a return profile. And so everybody's got the strategies and alignment around accomplishing that.

So I feel very confident, and I think we're on a great flight path. And the impediments to it are probably more macro. If the business environment doesn't give us the opportunity to exercise all these skills and opportunities that we have. I think there's a little less internal. I think it's more macro environmental type things.

I mean, tons of things for us to get into within those and which we will shortly. I guess maybe just bring it back to the near term a little bit. So Bill, you gave guidance on the fourth quarter. I think it was revenues up 1% to 2%, NII up 2%, driven by loan growth, lower deposits, stable fees. A handful of other things, stable expenses. Maybe just talk about how the quarter is progressing and share any updates to your -- what you're seeing in the fourth quarter.

Yes. I mean on track. This is as quick a summary as possible. But on track, but most importantly, with the comments that we started earlier, continuing that momentum going forward.

Got you. Okay. So maybe let's dig into loan growth a little bit. So '25 has been a year where you had very strong loan growth at Truist. Maybe just talk about what is driving this? And more importantly, how are you feeling about your ability to continue this momentum into next year?

Yes. So the loan growth engine started with really good strategic alignment. And sort of what do we want to accomplish? Where do we want to grow? How do we grow profitably? How do we grow, importantly, not just grow loans for growing loans? So are we on the commercial side or we lead? Are we at the front of the syndications versus the back? Are we providing the right advice on the consumer side? Are we creating net new accounts as part of that? So we're deepening those relationships as part of that. So it's been very strategic in terms of that growth and also very return-oriented and focused on a lot of net new clients to the franchise.

As we head into next year, this year, probably consumer was probably the early driver and then wholesale was sort of coming on in the last couple of quarters. I think that trend will continue in the sense that I think wholesale commercial side will probably take a little more of the front seat in terms of the loan growth. And then the commercial side, as we think about things like indirect auto, and we think about things like mortgage, they probably have a little less component of this. And again, that's back to that return orientation. So the overall engine firing and continuing sort of on the same kind of pace we were this year, but a little bit of a mix in terms of higher return, more accretive growth as we move forward.

Maybe just to dig into that a little further. So you talked about wholesale taking on the bigger piece. Maybe just talk about what gives you the confidence in that? What are you hearing from clients about overall sentiment? And what do you think that means for the wholesale lending environment into '26?

Yes. Clients are from the looking forward and looking back component, I'm not talking as much about tariffs. I mean, we started the year, obviously, lots of discussion, lots of uncertainty around tariffs. Companies were a little more reticent till they understood the landscape. That's not really in the dialogue so much now is either I've reoriented my supply chain to accommodate. I've priced some of that through. I've improved margins in my company. So tariff is a little bit in the backdrop in terms of looking forward. And now it's a little more about what are the strategic decisions in my business. And so the activity we've seen is more strategic. How do I invest to take advantage of a competitive situation? What is the -- do I need a warehouse? Do I need a trucks? Do I need a fleet? What are the things I need to do to grow our business? And we're starting to see some of that get unleashed, whereas in the beginning of the year, it was more planning and now that starting to get -- that's starting to get a little more unleashed.

Back to my earlier comment, that has a dependency on confidence, confidence in the economy and confidence in where we're going. And we'll see in the first quarter of the year, we'll see some of those tax incentives that comes in -- really we -- that hasn't really come in yet. So that's a potential for a little bit of tailwind. And then in fairness, just where we're positioned. So a lot of this is disproportionate to our investments and the things that we've done and the specialists that -- specialization that we've created in our company, the people that we've brought on, our existing team is like really strong and really great, but 25% of our commercial middle-market teammate base, they're new last year. So they're also just getting ramped up and learning the tools and the skills and expanding their portfolio. So we created a little bit of our own tailwind as it relates to that.

That makes a ton of sense. And you touched on the consumer was obviously a big driver this year. You obviously have some interesting specialty businesses, LightStream, Sheffield, Service Finance. And like I said, those have experienced strong growth. Obviously, there's been some concerns around the consumer. Maybe just talk about the health of the consumer across your portfolio. And what is your lending strategy in consumer as you look ahead? And where are the pockets of growth that you still feel good about into next year?

Yes, a couple of things. So you mentioned our specialty businesses. I mean, we made a conscious choice about where we want to invest on the consumer side. And we really want to invest where the consumer makes the decision. So we think being in these point-of-sale businesses and being in these digital businesses are -- position us really great where the consumer makes a decision. We want to be sort of right at that important fulcrum point. And then remember, as you know, I mean, those are higher FICO score businesses. So those consumers generally are doing fairly well and continue to engage in the activities that those businesses support. So think about home improvement, think about HVAC, think about power sports and the businesses that those support. So we have good confidence in those businesses.

On the lower income consumer, I mean, they're feeling more stress. I mean we see that. I think it goes back to sort of a little bit of pre-COVID or pre-stimulus. They sort of look more like that, that we made a lot of decisions in 2022 and '23 to sort of change some of the criteria in terms of how we think about that portfolio and how we thought about some of the inflated FICO scores and some of the things that came out of that environment from all that stimulus. So we -- and that overall portfolio is a pretty small part of our overall business. So I think there's certainly reasons to be focused on the consumer. But overall, the places that we're positioned, we feel good about. And the consumer is still in the game. Consumer is still buying, consumer is still spending.

So let's turn to talk about deposits. Obviously, it was a big focus at dinner last night. Obviously, things have been competitive in that market. Maybe just talk about your strategy to grow both consumer and commercial deposits into next year. And maybe just talk about the opportunities that you see in the Premier Banking segment. And then touch upon treasury management and how this is contributing to commercial balances. And obviously, a lot of things in there, but curious to see where you think we are in terms of the J curve relative to where we were on lending coming into this year.

Yes. And to your point, everything sort of has a J curve. And clearly, the lending J curve was sort of ahead of the deposit J curve for us, and you saw that in some of the wholesale funding. But that's catching up. In the last couple of quarters, that's catching up. We see that continuing. We see that continuing into next year. We see the products and capabilities we're doing on the deposit side. We see the focus, as you mentioned, on Premier, the deposit production, those numbers are up actually really quite significantly. So we see that engine being built on that side in terms of continued focus.

And then on the wholesale side, a lot of that's driven by the payments business. So we talked about earlier the growth in our payments business. We see this double-digit kind of growth. We see the new accounts have about a 60% penetration in the payments product. And in some cases, that hasn't even been funded yet. So that's a new piece of business that's going to be funded months and quarters from now. So good momentum and capability on that side. It is very competitive. So I don't actually just don't want to diminish that, but it's competitive in all markets. So that's not only competitive in our markets, but we've also seen disproportionate really good deposit growth in places where we have smaller market share, and we've had a lot of growth. So think about -- for us, think about Texas, for us, think about Philadelphia. We've seen really good deposit side on that. And on the wholesale side, I mean, we've now built out full middle market commercial teams in Ohio and Western Pennsylvania. So we'll see some of the benefit of those activities in terms of the wholesale deposit growth.

And then you obviously talked a couple of times about it being competitive. I think your repricing of deposits has been a little bit slower than peers. You've been in the high 30s. Peers have been in the mid- to high 40s. And I know that you are expecting it to improve over time. Can you maybe just talk about what has driven that? And more importantly, what are your expectations to drive repricing over the rest of the cycle? And what is going to change the underperformance to be back in line with peers?

Yes, part of that beta disproportionate thing that you noted is, is because we've had a little more wholesale funding. So part of it is decrease that wholesale funding, which we see. So why top line deposits might not grow at the same pace, client deposits will grow. And that will lessen that wholesale funding. And then that is the beta contributor. So that's the fuel that really changes the beta.

And then overall, I mean, the opportunity to reprice just comes from better client service, better advice deposits tied to payments products and those type of things. And then we've got to see a lower rate environment. So we have to see that opportunity. So hopefully, this week, we'll get a start, and then we see that opportunity to get on that curve. So I think over time, our beta will catch up for 2 different reasons. One is sort of get on the same curve in terms of repricing, but also reduce that level of wholesale funding.

So just to sort of rehash, you expect the beta is going to improve over time and client deposit growth should look more like loan growth that you've experienced this year, but yet we should then see overall deposit growth won't be as robust just because you'll be bringing down wholesale deposits.

Exactly.

But the mix will be improving in some of the...

And client deposit growth is what's laser focus for us.

Got it. No, that sounds great. Maybe just thinking about revenue growth into 2026. So I think on the call, you said more than double this year or which was 2%, so it should be greater than 4%. And I think you alluded to maybe fees growing a little bit faster. High level, can you maybe just talk about your confidence in this? And what are some of the key variables for achieving this over time?

Yes. It's back to how we started this conversation, momentum. So we've got the momentum that's been building every quarter and it's continuing. So that's the big driver. So NII growth, NIM expansion and then disproportionate fee growth as it relates to that. So that not only drives the overall top line but improves the return.

So Bill, maybe to dig into some of the pieces. I think expectations, as we said, were for NII to grow 2% in the fourth quarter, you talked about things being on track. I think you guys have alluded to NII being somewhat similar to the recent past. Maybe just talk a little bit about your expectations for NII. What are some of the key considerations that could affect the trajectory into next year? And how are you managing the sensitivity given the evolving rate environment?

Yes. So we manage the overall sensitivity to have a neutral type exposure. We have added a lot in the swap side to make sure that we're accommodating and understanding sort of what's going to happen from rate activity over the course of the rest of this year and into next year. And then just overall core growth is what has to drive it. So it's not only sort of the spread and components, but it's just overall growth in loans and then the funding component. I mean, the real driver on NII for us is to grow that deposit side, grow that cheap, less expensive funding source. And in the last quarter, our loan to deposit funding was more matched. So we sort of see that momentum continuing.

So maybe to dig into some of the components of revenue growth. Let's talk a little bit about your investment banking and trading business. Obviously, capital markets and M&A activity were slow in the first half. You had a strong third quarter. Maybe just talk about how you think about expectations for '26 and really where are you positioned to gain share? And then are there any products or verticals that you're most focused on that you think could be areas of strength for Truist?

Yes. I mean, as you know, this has been a traditionally strong business for us. And it's been a strong business because we tie it to the franchise. So we tie the specialty businesses all the way through the franchise. So not only investment banking, but our middle market business, our corporate banking business and down to our commercial business. So that's the key focus is to have that vertically go all the way through the company. That creates more sustainability in net income. It creates a better pipeline of net income.

The particular verticals that we've been strong in historically have done really well, things like the FIG business, things you've seen the investments we've made there, things like energy business. We've just announced a lot of additional researches. So the side on the health care has been really strong as part of our component. Tech will build as part of that. The subsectors of those will build as part of that. And just continuing to add talent to the platform. But more importantly, think about what I said earlier about the 25% that are new to our platform, they're just understanding the capabilities and the products and the opportunities that we have to clients. So I think we're like really well positioned, strong consistent leadership, great alignment with Kristin all the way through the pipelines to make sure that we're leveraging that capability across more than just a slim client base all the way deep.

And look, you mentioned it before, obviously, payments has been another big area in your fee income. That continues to be a focus. And I was intrigued by the stat that you said 60% penetration on new business. I think we were talking about it last night, you were saying that the back book is much lower, 20% or 25%. So clearly, that looks like it's going to present a huge opportunity. Maybe just expand a little bit on this progress that you're seeing and help us frame the remaining revenue growth opportunity and how this fits into the overall strategy.

Yes. The payments landscape, this is a really fun time to be investing and growing in this business. So if I think about like my past history, that used to be in the payments business, it was big infrastructure, mainframe infrastructure, third-party dependencies. You had to create all these big systems that took a long time to implement and deploy. And today, it's just much faster. So the ability to deploy APIs to do embedded finance, the ability to be in the client's ERP system and create systems and capabilities, you can just do that at a higher rate of speed. And we've got a really good technology team in our payments business.

We have a really good leadership team from the sales side in our payments business. And as you noted, so I look at the framework of are we -- the best way to tell we're relevant is are we relevant with new clients because they have -- it's a clean slate. So that 60% penetration with new clients, the payment side says to me, one, we have relevant products and capabilities. Our teams can do a really good job on the sales side. So they're understanding that clients' needs, understanding the unique cash flow opportunities for those clients, helping them invest and improve their working capital.

And then the opportunity to deploy that against the existing base, which has a lower penetration. That client base has been loyal, has stuck with us. And now we get to go back and say, wait, we've got all these new products capabilities. We have this team that really understands your business. We have an understanding not only of your business, but your specialty and unique nature of your ERP system and how do we connect to and how do we let you increase your capacity to generate more clients, create efficiency in your supply chain, that's the confidence in the building of that component.

And maybe just to round out the fee discussion, the third area that you highlighted that could be a high single-digit grower over time as well. Maybe just talk about where you are now in terms of the penetration. Obviously, Premier Banking and the like are all factoring in. What are you doing to grow it? And how are you feeling about your ability to take market share?

Yes. And on the wealth side, I mean, we've made a really conscious strategic decision that we really want our wealth business focused on our franchise. So we don't want to a separate and distinct wealth business. We want a wealth business that's unique and focused on Truist and focused on our clients. So the first thing we did was build a lot of capabilities for our advisers. So there's, I think, more than table stakes of providing like really good adviser networks and really good adviser tools and capabilities and then creating the systems to leverage the existing franchise. So having wealth be under a wholesale business was very intentional.

So Kristin now can sort of look at the total lineup of the third-generation client who's recapitalizing their company, bringing in private equity, selling their company. We're having that discussion with them. We've been at the forefront. We have a special -- specialization in their industry. Well, that's the opportunity to capture that wealth. And we've been covering them for a while. We're not covering them at the point of sale. We've been covering it for a while. We've been having that discussion. We've been helping with their family planning. We've been helping with their succession activity. And so the right to win that activity is we're at the pinnacle of that.

And then the other side of that, and you mentioned on the premier side, the investment in our Premier business in our consumer business, and this is where our consumer and wealth businesses partner really well, is that referral network from that premier business is quite significant. We want our advisers focused on that. So we've created tools and capability using technology, using AI to help rationalize and prioritize the prospecting and that capability that used to have a lot of one-to-one dependencies. Brian, I'm going to refer to you. You're going to -- now we have a system that works between us that says, here's the highest priorities. Here's what the portfolio looks like. These have the highest propensity for activity. Let's prioritize those. I come in, in the morning, I know exactly what I'm going to focus on, on the premier side. I know exactly what I'm going to focus on, on the adviser side. We're connected and aligned. And that creates the momentum and the flywheel for that business.

So to kind of bring that all together, when I think about your tenure as CEO at both the Truist and predecessor institutions, operating leverage has sort of been the hallmark of yours. You're on track to deliver positive operating leverage this year. You've talked about incrementally more next year. We just spent a lot of time talking about the pieces on the revenue side, more than double greater than 4% into next year with faster fees. So sort of a two-part question. One, how are you thinking about the investment of expenses growth into '26? How are you finding ways to invest in the business and find cost savings? And broadly speaking, how are you thinking about operating leverage into next year?

Yes. I mean, operating leverage is a key focus. I mean we have to run the business in a way that has a really positive contribution. That's part of that ROTCE return, right? So you've got to create that stable denominator. That's part of that numerator velocity on that top side. As you know, I mean, we took an opportunity to take a lot of expenses out of the company. We came out of the merger with a chassis that was too big relative to the opportunity that -- and so we took sort of a stair step down. But that also created the momentum, the muscle memory to actually rationalize that. Simplifying our business has really made this much more attainable, so we can look at businesses as they come across the system.

So we have a really, really clear view of sort of the next up in terms of investment and the next up in terms of expense save. And we're able to sort of look at that as a portfolio and say, okay, we want to achieve this kind of growth. We want to achieve this kind of client penetration. We want to achieve this kind of return. What is the perfect cocktail in terms of those investments to make that work? And our team has created a really good system and capability to make those decisions. So I think the discipline sits in there. And today, for every expense dollar we're saving, we see a really good opportunity to invest to increase the propensity to achieve the return on the other side.

Got you. So obviously, there's been a huge focus across the industry on AI, a lot of it focused on achieving efficiencies. How are you thinking about the role of AI at Truist in terms of either cost efficiencies, managing the expense base or things like Agentic AI to generate revenue growth? Maybe just talk a little bit about where you...

Yes, yes and yes, is the answer. I mean, I think, I view AI as the propellant to everything that we talked about. It's not a separate thing. It's not a different thing. We don't stop and say, hey, let's do some AI. AI is the propellant. It's the powered by in terms of the things that we're trying to accomplish. So we've got dozens and dozens of different AI activities going on at our company at any particular time, and they're focused on all those different areas. I think it's too easy to just say, oh, it's an efficiency play because I just gave an example, that's also a huge revenue play in terms of the opportunities. We've added a lot of talent in this area you've seen to -- into our company that's going to help us sort of take this to the next level. So I view it as, again, a propellant and an adjunct and a key component of everything we talk about from a strategic framework. All of our leaders have a strategy to deploy AI to help achieve their strategic objectives.

Got you. That's super helpful. Let's shift gears a little bit and talk about credit quality. Obviously, asset quality has been at the forefront of the industry following certain high-profile frauds and the associate bank balance sheet exposure. You guys have a small exposure to First Brands. Maybe just talk about what are some of the areas that you're most closely on your radar? And how are you expecting to see credit losses evolve in your portfolio over time?

Yes. I would say everything is on our radar. So sort of start with that framework. I mean, we have a great history of a really strong credit culture at our company. So everything is on our radar all the time from that standpoint. So there's not one thing that pops up idiosyncratic, we say, my gosh, let's all go gravitate to that. We've got to look at the entire portfolio. We've got to make sure that we're consistently underwriting really well and that we're sort of double checking our underwriting and then also making sure that we're monitoring credit really well. I mean that's also got to be a really, really key component of this. But as you noted, I mean, we're in a cyclical, very low loss rate on our wholesale portfolio. So we're going to have a credit cycle somewhere, and we're going to have things that pop up along the way as an industry, and we're going to see those. But it's not like one thing. It's really looking at the entire portfolio and making sure that we've got the right diligence side of that.

And then on the consumer side, I think we've talked a little bit about that already in terms of what we see on the consumer side, not high focus on the areas where we've already done some tweaking and some calibration to make sure that we're underwriting really well for the long run and making sure that we've got the right cycles and they reflect the risk profile of the of the company that we have.

So I thought maybe in the last couple of minutes, we'd shift gears and talk a little bit about capital. You referenced it earlier. I think as part of your 2027 ROTCE target, you're expecting CET1, I think, around 10% at the end of the year, which should result in elevated buybacks. I think you talked about $3 billion to $4 billion. So first, maybe just talk a little bit about the capital priorities and -- within the next few years? And how does that fit into the ROTCE framework? And do you think you can maintain this pace of buybacks even if we do see stronger loan growth over time?

Yes. So the first question is the last question is the #1 focus on the utilization of our capital is growing our business. I mean that's the -- any time we have a capital discussion with our Board, they said bring out the chart. We want to make sure that we have ample capital to support the growth in our business, not only what we anticipate today, but what if the economy really takes off. Are we going to be positioned? Are we going to be at the top of that wave and be able to ride that wave and be in the position to take advantage of our markets and our opportunities and the investments that we've made? So that's actually just like #1, 2 and 3 in fairness.

And then the second is our dividend. I mean, we've been a really good dividend, I think, proposition, we want to continue to support the dividend. And then the third is buybacks and where does that fit in the formula. So to answer your question, I mean, we're entering this with a lot of optimism. We're entering this with a lot of momentum. So I mean, I think we're going to start the year at the high end of that range because I think we can support -- I mean, we feel confident that we can support the loan growth and the RWA growth that we need in our business while optimizing RWA against the backdrop of returning capital to our shareholders. So I think we'll start at the top end of that range, and I am confident that we'll sort of stay on that track.

I think what was noticeable in your response to that last question was no discussion of M&A. And obviously, we've seen several high-profile bank deals in and around your markets. You've been pretty adamant that the only M&A that you've been doing and is Truist and you've obviously been buying back a lot of stock. Maybe just talk about how M&A, if at all, fits into your long-term strategy, why not? And what would cause you to change course in terms of wanting to engage in strategic activity?

Yes. I mean, I think you noted. I mean, one, we think Truist is the best opportunity. So the best place we can invest is Truist. I mean we're in the right markets. We've got great momentum. We've got a really good team on the field. We're clear-eyed about strategy and the best place to invest is in our company and our teams and our opportunities. And you've seen that. You see -- I mean, our branch expansion, the small M&A activity, but it's organic. It's within our company.

And as you also mentioned, we think our shares are undervalued relative to that opportunity. So we want to invest in the company. We want to create value for the Truist shareholder. We think that's actually the best place we can focus. We're going to spend like all our time and energy doing that. Once we've achieved that, maybe something happens after that point, which is -- but that's the focus. That's where we've got to stay focused right now. And so short term, medium term, our focus is on Truist. And we're not really thinking about any large-scale M&A outside of what's -- in fairness, what people are buying is what we have. And so I mean, that's what we want to make sure that we're continuing to invest in and create great opportunity for our existing shareholders.

So we're getting deep in the shot clock. So maybe I have time for one last question. You've obviously done a ton of things to improve the standing of the company. It seems like we have a really high sense of urgency around targets and growing the business and a lot of these strategic initiatives. So maybe just conclusion, as you look ahead to '26, what do you foresee as being the biggest things that have changed your positioning into next year relative to your positioning coming into this year?

I think, Ryan, it's the things that we've talked about. It's creating the platform for growth, creating the clarity. I mean we really have clear strategic intent. I mean, if you walk into our company and you ask somebody, are you focused on deposits? The answer is going to be yes. If you ask about ROTCE, they can probably spell that acronym all the way down into the company. So it's this clarity of intent and open field running. So the meetings that they're in are all about growth, the meetings they're in are all about return, the meetings that they're looking forward. And I think that's what gives me the confidence, and you can feel that momentum every day and that excitement in our company.

Awesome. Well, we're out of time, but please join me in thanking Bill.

Thank you.

A top 10 U.S. commercial bank headquartered in Charlotte, North Carolina with over $540 billion of assets. The company's footprint includes 7 of the top 10 fastest-growing markets in the country. Representing the company today is Kristin Lesher, Truist Chief Wholesale Banking Officer, where she leads teams across commercial and corporate banking, commercial real estate payments, investment banking as well as wealth management. She joined Truist back in February of 2024 after spending more than 2 decades with Wells Fargo. So we'll start with the presentation and then transition over to a Q&A.

All right. Awesome. Thank you, Terry, and good morning, everybody. I'm going to spend a little time going through a few slides here. So before I get started, I'd like to note that our presentation is going to include forward-looking statements and non-GAAP financial measures. There's a disclosure here. And with that, I will get into it.

So as you know, Truist is a purpose-driven company. We feel really strongly that our purpose is going to be fueled by our performance, and that involves delivering value by executing a very clear strategy to drive shareholder returns. And I'm going to spend some time this morning talking about how we're going to do that. So as Terry mentioned, I joined Truist in February of 2024. And in coming to the company, I saw a lot of things that you all know about Truist.

We have very strong bones, like an attractive franchise with a fantastic client base in fantastic markets. But most importantly, I joined because I saw a compelling growth opportunity that -- where we have a right to win and we had everything we needed like right within the 4 walls of Truist. So delivering growth against this opportunity. We've started to do that. You guys have seen us pick up significant momentum this year, but we know that we need to be delivering higher growth. Bill noted on our third quarter earnings call that we are going to achieve a 15% ROTCE by 2027.

Part of doing that requires us to double our revenue growth to deliver deposit growth that we need to see for this franchise. And we have an opportunity to enhance our returns across all of our businesses in Wholesale and in CSBB. So today, I'm going to give you a little bit of a run through wholesale, what we have in the business as well as how we're going to contribute to driving that higher return profile. So what is wholesale? Terry introduced it with all business lines. It's really a complete client coverage business. So we cover clients across the continuum from our local and regional teams, which are like have been the core of our franchise for a really long time as well as through national industry-focused teams. We've got a full suite of products, and we've got scale in all of our businesses and a really attractive installed base.

We've also got an ability because of our size to deliver nimbly and provide a differentiated level of service to our clients. So the challenge here is unlocking the growth opportunity that sits directly in this business. And in the unlock, we've got to deliver to you all higher ROE, fuller wallet share with our clients and a higher base of fee revenue that is diversified in the way that it's mixed. So I'm going to talk a little bit about what that growth opportunity looks like. And I'm going to do that in a way to say like where were we when I arrived in February 2024 and where are we now.

So when I arrived, wholesale and CSBB had been brought together as our 2 business lines in an important effort to be able to run our company in a more simple and efficient way. But in effect, what we had were a lot of lines of business underneath wholesale, but not yet a truly integrated wholesale franchise. And so the very first thing we needed to do was to make sure that we are delivering a clear strategy to every person on our team where they understood the benefit of us integrating the business and what we needed to do in order to drive growth for Truist.

And the good news is, is that looks like driving incremental share in every single business that we have as well as driving outsized growth in some important areas like payments, which I'll spend some time talking about where we are much smaller than peers and much less penetrated than our peers. So what did that mean? In addition to outlining the strategy, though, we needed to do some more things. So let me tell you what we have done.

First, we needed to find another gear in terms of execution just like get to an entirely different gear in terms of how we're executing. So what that looks like in our company today is literally top to bottom monthly business reviews based on data and indicators that talk about the financial outcomes that we're achieving, what we're changing in order to make sure that our coverage strategy is lined up against our objectives.

The underlying performance indicators, some of which I'm going to share with you this morning that tell us that we're driving towards the outcomes that we're going to deliver. It also included bringing a totally higher sense of urgency. And so I'll give you some examples of what that looks like today. So one good example is when we got -- and when I arrived, I said, okay, we need to go capture more of the market with an industry banking strategy. That meant we needed to bring on some additional talent, both in our industry teams and importantly, in our middle market and local and regional teams, and we did not want to wait to do that.

So over the past year, we've hired over 300 people across all of the businesses, whether it be the local teams, industry teams with capabilities around payments where we needed them, but we wanted to move fast, and we were able to attract the talent in a really quick way so that we can end this year in a place where we've got the foundation in a great spot to continue to build momentum next year. The other thing we needed to do was just act more urgently around client requests. So a couple of examples here, deliver a term sheet to a client in 24 hours, like get back to them in a day, and let's be really, really fast about how we're operating for our clients.

Or another example would be as Dante and I partner to drive the growth between our premier and wealth businesses, let's get in a room with the right people and figure out a way in a matter of weeks to automate referrals to our financial advisers and make that happen fast. So in addition to a sense of urgency, we also needed a mindset around we're going to invest and become more efficient, and we're going to do it at the same time. And so we have been very clear that we're going to deliver the operating leverage that is expected in 2025. We're going to continue to grow in 2026 and deliver operating leverage. That's a mindset that I'm used to operate in. It's kind of how I've been running businesses at predecessors. And here, I want to make sure that everybody understands that in addition to the growth opportunities that exist within our 4 walls, so do the efficiency opportunities.

We can see them, and we can continue to find the dollars to invest in the revenue-generating opportunities that we need, and I don't feel him in at all by our ability to do that. So let me run through a few of the facts on some of the businesses. And with each one, I'm going to try and give you my perspective on like, okay, here's what we have, here's where we were and here's where we're going. So commercial and corporate banking, this is really the engine of our wholesale business. So $100 billion of our loans and $100 billion of deposits almost reside in this business. It includes the local core of our franchise, which is the local and regional teams run by the region presidents in their communities. It also includes the national industry teams as part of our corporate banking effort.

So here's where we were. We were in a place where we really weren't growing. We were internally focused, and we didn't have all of our incentives and goals aligned directly to the kind of growth that we wanted to deliver. We also had a barbell situation with our clients where we have a fantastic client base in the commercial and middle market zone, and we had a great client base that we've been covering out of our investment bank. But in the middle, there was a lot of opportunity that is absolutely out there, and those clients believe that Truist is a compelling alternative to them.

So what have we done? We've changed the way that we require our leaders to drive their business, put a lot more accountability on how they're growing. An example would be every region president has recently delivered a plan on how they're going to double their business. It includes everything from how are they going to deepen with their existing clients, what new clients are they going after? What talent do they need, and we're reviewing that with them every single month to make sure that we're making progress against it.

It also includes changing our scorecards and incentives and making them integrated across the business. What I mean by that is instead of incenting people on just new business revenue growth in any way that you can find it, making sure that we're driving fulsome relationship wallets, including the things that are the most important, the treasury management, the fees that we need as well as the deposits and that we're doing that with both our existing clients and new while deepening across the areas of our franchise that we're trying to deepen. And we're getting results.

So right now, we see results in terms of the revenue per client is going up. We've doubled the number of new clients that we've acquired this year. We're getting a -- in those new clients, we're actually getting to levels that are akin to what you would expect in the industry in terms of those clients awarding us treasury management business and bringing their payments to us. The other thing that we've done, as I mentioned, has added a significant amount of talent here. And that talent has joined our already amazing talent and created a bit of a catalyst in terms of just excitement and a spree to core around our growth mission.

And the growth that we're seeing so far is on the back of our existing teammates. Those new teammates have arrived in the course of the last couple of quarters. and you'll start to see more productivity out of them as they get going next year. All right. Investment banking and capital markets. So this -- we have a full-service investment bank. This is a business that's been built organically over a number of years. we've been making all along the way, investments here in talent that has given us the good fortune of having 9 industry groups that are built on the back of complete teams across coverage and product and research. And we've also got a sales and trading platform that supports our origination businesses.

So this is a great story because this is a place where we already have strength. We already have scale. And the job here is to continue to feed it and tune it. But this is not a place where there's like big things that we have to go invest in. We need to keep letting it do what it's doing and continue to mature. So already as part of the growth profile, we've been seeing increases in our position on deals as evidenced by the bookrunner roles. We've seen increases in the economics that we're getting up 20% over the last few years. And we've been evolving as you would expect an investment banking business to grow, which is, first, you find a lot of success in the debt capital markets products and some of the -- those products, but you continue to build what you're doing in M&A and ECM.

And so our opportunity here is really what I view as a natural evolution of this business is that we're going to continue to add higher returning fee content to places where we've already got capital deployed and really strong client relationships. The other thing that we're going to be able to do is to grow some fee areas where we haven't had as much focus, things like FX and derivatives that's already growing 25% this year.

We've also intentionally added more corporate bankers in an effort to provide more dual coverage in the places we've already got capital deployed. So 40% of our investment banking clients that we already have are dual covered today, where we're going after the full wallet. So the opportunity here is for those corporate bankers to join up with the investment bankers and make sure we're getting deeper wallet share out of the clients that we're covering together.

Wealth business. We are fortunate to have a scaled well business. It's got 300,000 clients. We've got $300 billion in assets, client assets, and it's about $1.5 billion in revenue. It's got a complete set of services across products. It's got a differentiated center for family legacy that serves our highest GenSpring clients. And it's really got good things in place. So here's where it was, though. Last year, we were losing advisers. We were not investing as dramatically as we needed to be in -- or we were not investing enough in the platforms that the advisers and the clients wanted to see. We were not growing our net flows. And in all honesty, we weren't executing with the right amount of precision around the opportunity that exists within Truist, within our own client base. So what we've done is we've been tracking really high-quality advisers. We've hired great people in all of our markets that are coming to us from larger institutions. We've got our adviser attrition rate down in the low single digits, like very, very low. And so now we're building on that recruiting profile.

We've also been, in the last couple of quarters, growing our fees. And so we're seeing the momentum in terms of growing the wealth management income, and we're absolutely growing our net flows this year in a big way. So the opportunity here is -- the other thing that we've done is we've been really disciplined in setting up the systems that will help us capture more of the opportunity from Premier and more of the opportunity from wholesale. So with Premier as an example, Dante and I work together to say, all right, you know what, we don't have the right number of financial advisers decked against the right branches geared in the right way. We went out and hired the financial advisers that we needed. We pointed them in the right places. We installed systems of accountability between the premier leaders and wealth and the financial advisers, where we review them every single week. And we have in doing that, increased substantially the number of referrals that we're getting. But more importantly, the proof of the results we are seeing. So our wealth AUM that we're gathering from new premier clients is up 37%.

That's just the AUM, not all the assets. And so we're seeing significant momentum there that we expect to continue, and we're doing the same with our wholesale clients. This is a really big opportunity for us. So only 2.5% of Truist clients today are investment clients with us. So there's a big, big group of our own clients that are not yet wealth clients. The other opportunity that we have that's not on this page, but I'll highlight is we've got a big opportunity in our margin here, too. So only 20% of our wealth clients have a securities-based line with us, and we've thousands of investment-only clients that have not yet brought deposits to us.

So there is a big amount of opportunity in this business. Wholesale Payments is a key scaled growth area for us, one where we're undersized relative to our peers and one where we're underpenetrated with our own clients. where we were a year ago is that, in all honesty, I don't feel like we had the hearts and minds of our bankers that this was a place that they could go out and confidently market the product to their clients. So what have we done?

We've meaningfully improved our product set. We went -- this is another example of sense of urgency. We took it from a place where I would say we had some gaps to a place where we're getting pretty close to perish in a very short period of time. We've introduced new products every single month. And now the best validation for me is some of the new corporate bankers who are joining our platform from other places. I say to them, how do we feel about the product? They're like, I got what I need. I'm ready to roll. I'm out on the road talking to my clients.

We also had to do some work on our sales strategy. So in fairness, we didn't have enough treasury consultants and we didn't have them geared or segmented in the right way. We've made all those changes. We've added 35% more sales consultants. We've gotten lined up by the client sets that they're covering, whether it's industry or local. And we've gotten to a place where we absolutely have the hearts and minds of our bankers. If you got off on the elevator on any floor of the Truist Center and said, like, a, how important is treasury management to you? You would hear them say that it's front and center; and b, how confident do you feel and you would hear them say, "Man, we've really come a long way, and I feel good about where we are." And that's showing up in our results, 15% increase in treasury management fees. We're getting more revenue per client, and we're closing the gap in terms of penetration. So we've gone -- now we're much more penetrated with our existing base, but there's a long way left to go there. And I would think about that as if we get to a place that looks similar to where our peers were this business could be double the size.

All right. Wrapping it up. So hopefully, that helps you get a feel for, a, what wholesale is how we're operating very differently and getting a little confidence in just the absolute rigor around the execution every single day, but what I'd leave you with is everybody in our company is going to play a role in Truist achieving its ROTCE target. But from my vantage point, we've got what we need here. I talked to the team last week and said, like this 15% ROTCE is built on the back of the plan that we are already executing with the people that are already here, with the product set that we already have. And what we need to do now is to just execute, execute, execute.

We're building momentum. We recognize that we need to show you more momentum, especially in the places where we need to drive deposit growth in order to fuel that. But I feel like we are on pace and really, really happy to take your questions.

That's great. Thank you, Kristin. Maybe just to start off, taking a step back, how would you describe the health of your commercial customer base? Are clients focused on growth and investments in this environment? Or are they concerned with some of the potential risks on the horizon?

So I would say that the commercial customer base across the full continuum, right, like commercial to larger corporate has been really resilient this year, learned to operate in terms of what has been a changing landscape. And we have seen higher loan growth than I think even we expected to see at the beginning of this year. And that loan growth for us is coming on the back of clients pursuing new projects or deciding to enhance their operations in one way or another. It's not coming through increased utilization or things of that. It's like true new production and new projects. So it feels to me like the underlying health is pretty good and the confidence levels feel pretty good.

Great. And then maybe how are you thinking about...

Actually, you know what I'll say one more thing, which is from a credit risk perspective, which is -- there's kind of the confidence of the clients and then the risk that you're seeing in the portfolio. We're operating with very, very low net charge-offs, something in the 20 basis point range in wholesale. And so we're still seeing very strong credit quality within our book as well.

And within your presentation, you talked about the hires you've made. Can you maybe just expand on some of these key hires and some of the other changes you've made and kind of that shift to more urgency within wholesale?

Yes, happy to. I put the hires in a few different categories. So there are some places where we wanted to bring in some specific skill sets. And so I would highlight we brought in Kerry Jessani to lead the Commercial and Corporate Bank last February. [indiscernible] intentional in that we needed someone who had experience working in the investment bank and then driving the right connectivity between the investment bank and the commercial bank with a strategy that was highly oriented around industry coverage as well as a lot of expertise with treasury management, both product and sales. So there is an example of like I wanted a certain type of capability to lead that business. We've also needed to bring in industry group heads in our corporate banking teams because we did not have those before, so we needed to go get them. But importantly, there's also places where in the core commercial business, we know we can do more in our own footprint.

And so it's just adding more bankers in those areas and then surrounding them with the capabilities that they need to be successful. So making sure that when we hire, we also bring on the treasury consultant or the corporate finance expert or the person in credit delivery who can help them deliver. And then I think with respect to the sense of urgency, I think everybody is just managing in a way that is like let's make sure that we're looking at things all the time, every day, every week, et cetera. And I'll give you an example.

Some of the routines that just maybe weren't as instilled as we would like them are going through the loan-only book every single week and looking at where are there opportunities to add deposits or go out and make sure that we're pitching payments or derivatives opportunities to them. When we're extending credit, are we making sure that we're getting those things and doing that with a level of inspection and granularity that does look and feel different than it did.

And in terms of loan growth, which has been strong for Truist this year, where are you seeing pockets of strength and weakness? And then as you look out into 2026, what are the opportunities there?

Yes. So I spend a lot of time looking at the business drivers on a granular level, like each individual market, each individual industry team, C&I and CRE. And what I'd say is we're actually finding strength across most of those areas. We've had particular strength in middle market loan growth this year, which has been great. We've also had a lot of strength in our commercial real estate business, where we've been lending to companies that have been our clients for a really long time, whether it be multifamily investments and/or in the data center space. And so -- but it's been truly widespread loan growth across the book. And the thing that's really good about it is it's been a really nice combination of with our existing clients and then the pickup in new clients is obviously contributing to that as well.

And then do you see private credit or direct lenders posing a risk to your ability to support and drive that loan growth? Or do you see it as an opportunity for Truist?

Well, I'd say before I get to private credit, I'd highlight 2 important opportunities for Truist. One is we've got to generate the deposit momentum that continues to fund this loan growth. And we are super focused on that. It's -- we have -- we made an important pivot in the third quarter in terms of growing client deposits, which will continue. But we've got to make sure that we're generating the deposits to fuel the loan growth. And then secondly, I don't think about loan growth as what we need exactly to deliver on this ROTCE target. I think about we need profitable growth to deliver on the ROTCE target with a heavy complement of fees in it.

So back to private credit, we view them in 2 ways. One, they're really important clients to us. Just as Mike mentioned earlier, we do a lot of lending business to them, which we are able to do against middle market loan portfolios at very attractive attachment points for us. We also view them as places where they invest and with them, we can do more operating business with them as well, and they give us a significant amount of fee business in our capital markets franchise. So you guys have seen us grow our FIG practice this year, our financial institutions practice, and that's a place where, especially in the areas of specialty finance, we're able to generate incremental loans and fees.

As it relates to loan growth in the middle market, we compete with them. And I think that we have a very strong risk discipline around how and what we want to put on our balance sheet. And so there are lots of places where they're able to do things at higher leverage levels, and that's okay. There's plenty of other opportunity for us to grow, as you've seen by what we've been showing.

And since you brought up deposits, I'll shift over there. Could you just characterize the competitive landscape within the commercial space and how you're managing the rates you pay to your clients?

Yes, I will. So I think a couple of things that are really consistent about how we're managing our deposit strategy. First and foremost, it's inextricably linked to the fact that we've got a key strategy around driving wholesale payments. And so just doing that and driving more operating deposits with clients is a key element of how we're going to attract more deposits. The other thing that's consistent is everybody in the company knows how important this is for us, and they're focused on it. So then when you get down to the how and how you think about it within your markets, I think we have to look at it in a super granular way. So the deposit competition and our deposit strategy has to be different depending on each and every market. So as an example, we've got a lot of high market share markets with a high base of low-cost deposits in some of the Southeast cities. We cannot cannibalize that base and reprice our back book. So we're being super disciplined about not doing that while growing with new clients.

We've got other places like Texas or Pennsylvania, where we have less of a back book, and we're able to be a little bit more aggressive in terms of how we're going out to gather new deposits with new clients. But on balance, we've got to manage that portfolio of activities to make sure that we're generating more client deposits, but doing it at an attractive rate.

And then shifting to investment banking and trading. First half of the year, a little bit weak, third quarter, a very strong quarter. So what would you consider more of a normal growth rate within that business on an annual basis? And just talk about the connectivity between the capital markets and the lending platform.

Yes, sure. So that's been a business where over the last few years, we've been able to put up pretty consistent growth rates that I don't know if you want to say high single, low double digits, but somewhere in that ZIP code. I think that we did have a little bit of a tough second quarter. But in the third quarter, what I saw was tons of strength in all of our businesses and especially in our leveraged finance platform. In the fourth quarter, we're off to a strong start. In fact, I mentioned higher content of M&A and equity. We've closed some fantastic M&A transactions in the last couple of weeks. And we actually priced a left lead IPO this week. So like we're doing the things that we say we're going to do there.

And my expectation is that, that business can continue to grow at that kind of a clip with the right level of investment, but again, not the kind of place where we need to go out and do a lot of new things. We need to continue to mature it. The benefit I see between the capital markets and the rest of our lending platform is significant. So I think we have a huge opportunity to capture more, say, M&A business within just our commercial middle market industry-oriented banking clients. This year so far, we've generated 20% more fees off of those clients in our installed base in addition to providing the excellent coverage that we're going to provide to our corporate clients.

The other thing I'd say is important about us creating the commercial and corporate banking business and putting the corporate bankers into that group is that we've given our investment bankers more leverage to focus their energy around driving M&A and advisory solutions, which is what we're going to be building in.

Let's take a pause and see if there's some questions in the audience. How about Betsy right in front. Congratulations on 35 years, Betsy.

Congratulations.

Hold on one second. The mic is coming. If you don't mind repeating the question.

Okay. Kristin, thanks so much for a very fulsome presentation. I did just want to unpack a little bit about the payments sleeve. And what are these new products that you have come to market with? And could you help us understand how much payments -- how critical payments is for you to be building that deposit growth as you look forward?

Yes, sure. Thank you. So the question I'm going to repeat it for the audience was unpack the payments sleeve a little bit, talk more specifically about the products we've introduced and then how critical payments is in order to be able to capture deposits. So as it relates to products, we've rolled out products across a variety of elements. So we have integrated receivables. We've rolled out electronic bill pay presentment. Last week, we made an announcement about Truist Connect, which is our ability to work with any and all ERP systems in an embedded fashion. And so we've really gotten the platform to a place where we have all of the capabilities that clients should need. We also are in a place where we've got a foundation from which we can add capabilities and APIs now really, really rapidly going forward. So it's been across all kinds of things, Betsy, but I think the other area that I would highlight is we're really focused on where the world is going with real-time payments and making sure that as we're rolling out our products, we're really playing into what clients will want to do with real-time payments.

As it relates to payments as a driver of our deposit growth, I would say that I do think it's super critical. And in some ways, that's because it's like a mindset. It's -- you're talking to your clients all the time about how they're sending money inside and outside of their company, and you're helping them do it faster and better. So when we say we come to clients with an advisory approach, being great at payments is part of that. And that will bring the deposits. But I also think we've got levers to pull, understanding that that's a slower business to build. We've got a lot of levers to pull that we haven't pulled yet in terms of just attracting deposits now.

So example would be like many of the places where we've got capital already extended, whether it be in commercial real estate, whether it be in investment banking and capital markets, we've got capital out there. We're generating capital markets fees. We haven't asked for the deposits yet. And so we're going through all that in a really methodical way, and that will bring client deposits quickly. The other thing, I think, is just the natural pace of new client acquisition is really important.

And increasing from 2x what we're doing now versus last year to 3x, like that will bring deposits at a rapid pace. And hopefully, we'll get the payments within the next 8 to 12 months, but we should get the deposits right away.

There's a question back there from Mike.

Mike Mayo with Wells Fargo. Since so much CapEx is coming from AI, what is the Truist sales pitch when you go to try to get that business to help facilitate the CapEx from the biggest tech firms?

Thanks for the question, Mike. So the question was about so much CapEx coming from AI, how does Truist play in that sort of industry trend? I'll summarize it as. And I would say, broadly speaking, our loan growth is coming from CapEx in lots of different ways. So from just regular industrial and consumer companies all across our footprint that are doing things to improve and enhance their business operations, and we are helping them fund that. There is also an element of our growth that is coming from, I'll note, data centers as an example. So we've been in the data center business for probably 15-ish years. We've been covering a set of clients for a long time and growing along with them. Obviously, those commitments amounts -- commitment amounts are getting larger and the CapEx requirements are getting larger. But the great thing about that business is it plays squarely into our strategy and that we're able to help the clients with the lending. We're able to participate in the capital markets fees in the securitizations and able to work with them on the rest of their operating business. So it's a place that I feel good about how we show up there.

Question down here.

Steven Alexopoulos, TD Cowen. So every bank has a strategy to sell more products to their customers, every single one we're hearing from. BofA did a good job yesterday of talking about how they spent billions of organizing their data. Tied to that, they know where the opportunities are. They get the information to their bankers. They basically serve it up on a platter for them. Your approach sounds a little old school. Where are you with these tools? Can you be competitive with a company like that?

Yes. So I would actually say that we've moved a lot from old school to new school, and I'll give you a couple of examples. So we have embedded into our systems signals that we send our bankers every single day that tells them, okay, so and so is brought in some additional cash. So and so has been out looking for an opportunity or bought a big new piece of equipment or we see them doing X, Y and Z, you need to call them today. So our RMs have in their sales force dashboard every morning, like here are the things that are happening with the companies, and here's the next best call that I need to go make. That's one element of it. The other element of it is, is we've got a significant focus on -- we have a fantastic culture of people who want to work together. We can't rely on people who want to work together to get to the kind of scaled growth that we need. And so as an example, I'll go back to the premier to wealth referrals, basically using tools to say, what are all the referrals that we've generated that actually have resulted in us booking investment assets, apply that same logic across a broad base of our consumer clients and send them like this afternoon to the FAs for them to be able to go out and be working them. So we're doing this in a way that maybe combines the best of both worlds, like the culture of people who really want to work together, the scorecards and incentives that make that happen and the tools that enable us to do it faster without leaving to chance what any individual will do on a given Tuesday.

I guess to wrap things up here, wholesale, really important to hitting that mid-teens ROTCE by 2027. How do you think the investment community should be thinking about your ability to achieve this and continue to improve your profitability beyond just the medium term?

Well, right now, I'm really focused on delivering the medium term. And so I do not think that 15% is where we will end, but I do think that we need to make sure that just as we've been doing in the last few quarters that we're delivering what we say we're going to do and that you guys can see the execution that drives the return target in 2027, and then we'll go beyond it.

Great. Thank you very much.

Thanks.

Greetings, ladies and gentlemen, and welcome to the Truist Financial Corporation Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this event is being recorded. It is now my pleasure to introduce your host, Mr. Brad Milsaps.

Thank you, Betsy, and good morning, everyone. Welcome to Truist's Third Quarter 2025 Earnings Call. With us today are our Chairman and CEO, Bill Rogers; our CFO, Mike Maguire; our Chief Risk Officer, Brad Bender; as well as other members of Truist senior management team.

During this morning's call, they will discuss Truist's third quarter results, share their perspectives on current business conditions and provide an updated outlook for the remainder of 2025. 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. Please review the disclosures on Slides 2 and 3 of the presentation regarding these statements and measures as well as the appendix for appropriate reconciliations to GAAP.

With that, I'll turn it over to Bill.

Thanks, Brad, and good morning, everybody, and thank you for joining our call today. Before we discuss our third quarter results, let's begin, as we always do at Truist with purpose on Slide 4. At Truist, our purpose to inspire and build better lives and communities, guides every decision. It's the foundation of our strategy and the reason our fantastic teammate show up every day with conviction and care.

We believe purpose drives performance, which is why during the third quarter, we announced a strategic investment designed to accelerate our performance by building better lives, deepening relationships with existing clients and attracting new clients in some of the strongest markets in the country. We're investing in our communities by building 100 new insight-driven branches in high-growth markets, renovating more than 300 locations, enhancing digital capabilities, elevating marketing and hiring Premier advisers to serve clients with more complex financial needs.

These new branches are designed for smarter client engagement with advanced AI-driven technology and dedicated premier adviser spaces all aimed at helping clients achieve financial success and further strengthening our presence in these dynamic communities. These investments are part of our overall strategy to improve our profitability, accelerate growth by deepening relationships and delivering a more personalized technology-enabled experience to new and existing clients, which I'll discuss throughout today's call.

So now let's turn to our results on Slide 5. For the third quarter, we reported net income available to common shareholders of $1.3 billion or $1.04 a share which included $0.02 a share of restructuring charges primarily related to severance. At a high level, our strong performance in the third quarter reflects the diversity of our business model and the execution of many of our strategic growth and profitability initiatives that we've been discussing for the last several quarters. These initiatives include accelerating growth and the addition of new clients and deepening existing relationships in areas like payments, wealth and premier banking. We're executing our plan while maintaining our expense and credit discipline and returning capital to shareholders.

During the third quarter, average loan balances increased 2.5% as we saw broad-based growth across our wholesale and consumer segments, driven by increased loan production and new client acquisition. Average deposit balances did decline linked quarter due to 2 large M&A-related client deposits that were withdrawn in mid-July that we've discussed previously. Excluding the impact of these deposits, average client deposits increased during the quarter.

Adjusted noninterest income increased 9.9% linked quarter to more than $1.5 billion due to strong investment banking and trading income and strong wealth management income. The third quarter represented our best noninterest income quarter since the divestiture of TIH. Adjusted expenses remained well controlled and were up just 1% linked quarter, which, along with the strong revenue performance helped drive 270 basis points of linked quarter positive operating leverage. We also maintained strong asset quality metrics as net charge-offs declined both on a linked quarter and a year-over-year basis.

Finally, we remain in a strong capital position, which allowed us to support our balance sheet growth and return capital to shareholders. During the quarter, we returned $1.2 billion of capital to shareholders through our common stock dividend and the repurchase of 500 million shares -- $500 million of our common stock. We plan to target approximately $750 million of share repurchases during the fourth quarter.

In summary, our third quarter results were strong as the combination of improved revenue, disciplined expense and credit management, a robust capital return drove 130 basis points sequential improvement and our ROTCE to 13.6%. We do still have a lot of work to do. But our recent performance and the momentum I see across the company every day gives me confidence in our ability to reach a 15% ROTCE in 2027. I'll share more on how we plan to get there later in the call.

Before I hand the call over to Mike to discuss our quarterly results, I want to spend some time discussing the progress we're making on our strategic priorities and the positive momentum we're seeing within our business segments and with our digital strategy on Slide 6.

Let me first start with Consumer and Small Business Banking. I'm encouraged by another solid quarter of consumer loan and deposit growth, net new checking account growth and progress with our premier banking clients as we deepened relationships and acquire key new clients and households through digital and traditional channels. Net new checking account growth remained positive in the third quarter with over 20,000 new consumer and small business accounts added, a key metric that reflects both the strength of our brand and the long-term growth potential of our company.

We're attracting younger clients with greater median incomes, higher average balances, which aligns directly with our strategy to build enduring profitable relationships early in the client life cycle. Average consumer and small business deposit balances increased modestly linked quarter and 1.9% versus the third quarter of 2024. Average loan balances increased 2% linked quarter and 7% versus the third quarter of 2024, driven by a significant increase in production.

Premier Banking continues to be a strategic growth engine. We saw significant increases in loan and deposit production per banker, reflecting deeper client engagement and improved productivity. Our digital strategy is also delivering results. We continue to accelerate our performance with enhancements, increased production and accelerated client engagement positioning us to scale efficiently and meet evolving client expectations as seen with the success of our AI-enabled chat function Truist Assist.

Digital transactions rose 7% year-over-year and digital channels accounted for 40% of new to bank clients. Notably, Gen Z and Millennials represented 63% of this growth, a strong signal that our digital-first approach is resonating with the next generation of Truist clients.

In wholesale, I'm encouraged by this quarter's loan growth, improvement in investment banking and trading revenue and progress in key focus areas like payments and wealth. Average wholesale loans increased 2.8% linked quarter and 4.8% year-over-year, driven by growth from new and existing clients and increased production. C&I growth was broad-based across industry banking verticals as this strategy continues to gain traction.

We've seen consistent quarterly growth in balances fueled by new client acquisition across diverse sectors supported by strategic talent investments. Year-to-date, we've onboarded twice as many new corporate and commercial clients compared to the same period last year, we're seeing higher revenue per client, a clear sign of deepening relationships. In wealth, net asset flows remain positive and year-to-date AUM from wholesale and premier clients is up 27% versus the prior year, reflecting strong adviser productivity and overall client trust.

Our payments business continues to scale, launching new solutions that deliver speed, simplicity and security to our clients. These enhancements, along with targeted talent investments drove an 11% year-over-year increase in treasury management revenue.

Now let me turn it over to Mike to discuss our financial results in a little more detail. Mike?

Thank you, Bill, and good morning, everyone. I'm going to start with our performance highlights on Slide 7. We reported third quarter 2025 GAAP net income available to common shareholders of $1.3 billion or $1.04 per share. Included in our results are $0.02 per share of restructuring charges, which are primarily related to severance.

Now moving to third quarter results. Adjusted revenue increased 3.7% linked quarter due to 9.9% growth in noninterest income and 1.2% growth in net interest income. Adjusted expenses increased 1% linked quarter, primarily due to higher personnel expenses related to incentives and strategic hiring efforts. Our asset quality metrics remain solid as net charge-offs declined on a linked quarter basis and on a year-over-year basis. Our CET1 capital ratio remained stable at 11% and our CET1 ratio, including AOCI, improved by 10 basis points to 9.4%.

I'll now cover loans and leases on Slide 8. Average loans held for investment increased by 2.5% on a linked quarter basis to $320 billion due to growth in both commercial and consumer loans. Average commercial loans increased by $4.8 billion or 2.6% due to $3.7 billion of growth in C&I loans and $1.5 billion of growth in CRE loans, partially offset by lower commercial construction loan balances.

In our consumer portfolio, average loans increased $3 billion or 2.5% linked quarter due to growth in other consumer, residential mortgage and indirect auto. The average loan yield remained relatively stable on a linked quarter basis.

Moving now to deposit trends on Slide 9. Average deposits decreased $3.9 billion sequentially or 1% due to the mid-July withdrawal of $10.9 billion of short-term M&A-related client deposits that we've discussed previously. These deposits impacted the second quarter average balance by $10.9 billion and the third quarter average balance by $1.7 billion.

As Bill mentioned, many of our top business and growth initiatives are aimed at driving core client deposit growth. As a result, we're seeing accelerating momentum with clients and consumer and wholesale that will drive improved client deposit growth in the fourth quarter and in 2026. As shown in the chart on the bottom right-hand side of the slide, our cumulative interest-bearing deposit beta improved from 37% to 38% on a linked-quarter basis. Based on our outlook for stronger client deposit growth in the fourth quarter and our expectation for 2 additional 25 basis point reductions in the Fed funds rate in October and December, we remain on track and confident in our ability to drive our interest-bearing deposit beta to the mid-40% area in the fourth quarter.

Moving to net interest income and net interest margin on Slide 10. Taxable equivalent net interest income increased 1.2% linked quarter or $45 million, primarily due to one additional day in the third quarter, loan growth and fixed rate asset repricing. Our net interest margin declined 1 basis point linked quarter to 3.01%. We expect net interest income to grow approximately 2% on a linked-quarter basis in the fourth quarter due to continued loan growth, growth in client deposits and a reduction in deposit costs following the September reduction in the Fed funds rate and our expectation for the additional 2 cuts during the fourth quarter.

These positive factors should result in net interest margin expansion in the fourth quarter as well. As you can see on the top right-hand side of the slide, we updated our outlook for the fixed rate asset repricing. We expect to reprice approximately $11 billion of fixed rate loans and approximately $3 billion of investment securities during the fourth quarter. Based on our view of interest rates for the remainder of 2025, we anticipate that new fixed rate loans will have a run-on rate of around 7% compared with a runoff rate of closer to 6.4%. We may allocate a portion of the cash flows from the investment portfolio to support loan growth in the fourth quarter versus securities.

We also updated our swap portfolio disclosure on the bottom right-hand side of the slide. As of September 30, we had $105 billion of notional received fixed swaps and $28 billion of notional pay-fixed swaps compared with $90 billion and $29 billion, respectively, at June 30. During the quarter, we increased our notional received fixed swap position by adding additional forward starting received fixed swaps as part of our overall strategy to maintain a relatively neutral position to changes in rates relative to our baseline view.

Turning now to noninterest income on Slide 11. Adjusted noninterest income increased $140 million or 9.9% versus the second quarter of 2025 due to strong growth in investment banking and trading income and wealth management income, partially offset by lower other income. Investment banking and trading income increased $118 million or 58% linked quarter to $323 million. We saw improved performance across our platform with strength in debt capital markets and trading revenue. Based on our current pipeline and overall strong market activity, we remain optimistic about investment banking and trading income in the fourth quarter as well.

Wealth management income also experienced a strong quarter with fees up 7.5% linked quarter due to higher market values, positive net asset flows and new client acquisitions. On a like-quarter basis, adjusted noninterest income increased $75 million or 5.1% compared to the third quarter of 2024, primarily due to higher wealth management income and higher service charges on deposits due to greater treasury management revenue.

Next, I'll cover noninterest expense on Slide 12. Adjusted noninterest expense, which excludes the impact of restructuring charges, increased 1% linked quarter due primarily to higher personnel expenses related to higher incentives and strategic hiring efforts. On a year-over-year basis, adjusted expenses remained well controlled and were up 2.4% due primarily to higher personnel expense.

Moving now to asset quality on Slide 13. Our asset quality metrics remain strong on both the linked and like-quarter basis, reflecting our strong credit risk culture and the proactive approach we've taken to quickly resolve problem loans. Net charge-offs decreased 3 basis points linked quarter to 48 basis points and were down 7 basis points versus the third quarter of 2024 as we benefit from lower CRE losses on both a linked and like-quarter basis. Our loan loss provision exceeded net charge-offs by $51 million, and our ALLL ratio held steady at 1.54% of total loans.

Nonperforming loans held for investment increased 9 basis points linked quarter to 48 basis points of total loans. Second quarter nonperforming loans of 39 basis points benefited from the resolution of several problem loans resulting in NPLs declining to multi-quarter lows. As you can see on the slide, the third quarter of 2025 level remained stable compared to the third quarter of 2024, which reflects a return to a more recent level. The linked quarter increase was driven by higher nonperforming C&I and construction loans, partially offset by a decline in CRE nonperforming loans.

Over the last week, there have been a number of questions about exposures to certain borrowers, including Tricolor and [indiscernible] brands. Just to address it, Truist does not have any exposure to tricolor However, we do have exposure to [indiscernible] brands, but this exposure is fully reflected in our loan loss reserve and our updated and improved 2025 net charge-off guidance.

Now I'll provide additional color on our guidance for the fourth quarter of 2025 for the full year on Slide 14. Looking into the fourth quarter of 2025, we expect revenue to increase by approximately 1% to 2% relative to third quarter revenue of $5.2 billion. We expect net interest income to increase approximately 2% in the fourth quarter primarily driven by loan growth and lower deposit costs. We expect noninterest income to remain relatively stable linked quarter. Adjusted expenses of $3 billion in the third quarter are expected to remain relatively stable on a linked quarter basis.

As it relates to buybacks, as Bill mentioned, we plan to target $750 million for the fourth quarter. For full year 2025, our outlook for revenue and expense growth is unchanged. Based on our current outlook for net interest income and noninterest income in the fourth quarter, we would expect annual revenue to come in around the midpoint of our 1.5% to 2.5% range.

In terms of our outlook for adjusted expenses, we continue to expect full year '25 adjusted expenses to increase by approximately 1% in '25 versus '24. On asset quality, we expect net charge-offs of 55 basis points in 2025 compared with our previous guide of 55 to 60 basis points. Finally, we expect our effective tax rate to approximate 17.5% or 20% on a taxable equivalent basis in 2025.

I'll now hand it back to Bill for some final remarks.

Thanks, Mike. As I mentioned earlier in the call, our recent performance, coupled with the strong momentum I see every day inside our company reinforces my confidence in our ability to accelerate growth and profitability over the near term. As you can see on Slide 15, we expect to grow revenue in 2026 at a higher rate than we will grow revenue in 2025. Although it's a little too early to provide specifics on the 2026 outlook, I'll say at this point, we expect the rate of revenue growth in 2026 to more than double versus our growth rate this year. We also expect to generate more operating leverage in 2026 that we'll generate this year. In addition, we plan to increase our share repurchase program in 2026 to $3 billion or $4 billion which is above the 2025 level as will now target a 10% CET1 ratio by the end of 2027.

Finally, these drivers and others should also accelerate our EPS growth rate beyond what we'll achieve in 2025. As I've discussed today, we're seeing solid progress in many of our key strategic focus areas, all of which I expect to accelerate over the near term and help us achieve our previously stated goal of a mid-teens ROTCE which I'll discuss in more detail on Slide 16.

As shown on Slide 16, we're targeting a 15% ROTCE in 2027. We a goal that reflects our confidence in Truist's long-term earnings power and strategic direction. We see multiple paths to stronger revenue and profitability, with focused execution, we believe these initiatives will deliver meaningful improvement over the next 2 years. The key drivers outlined on the right side of the slide, include continuing to execute against our top business growth and profitability initiatives that I discussed on Slide 6, continuing to drive positive operating leverage realizing the ongoing benefit from fixed asset repricing and accelerating share buybacks.

Much of our profitability improvement and growth potential is rooted in deepening relationships with existing clients particularly in wealth payments, premier banking, investment banking and trading and corporate and commercial Banking where we're already experiencing strong momentum.

In summary, I'm as optimistic as ever about Truist's future. I'm encouraged by the momentum we're seeing across the businesses and remain focused on executing with discipline, delivering for our clients and creating value for our shareholders. I want to pause and thank all of our teammates for their incredible focus, their productivity and their purpose-driven commitment to move Truist forward. As always, we appreciate your continued interest and support and we look forward to updating you on progress in the quarters ahead.

With that, Brad, let me hand it back over to you for Q&A.

Thank you, Bill. Betsy, at this time, can 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 brief follow-up in order to accommodate as many of you as possible today.

[Operator Instructions] The first question today comes from John Pancari with Evercore.

Just on your color that you gave around 2026. I appreciate all the detail there, particularly around the revenue expectations and the ROE. On the revenue front for revenue growth to more than double, can you possibly help us break that out a little bit, how you're thinking about the spread revenue component versus the fee revenue side? And then maybe within the spread revenue side, how you would think about the pace of balance sheet growth as you look at 2026 that would underlie that?

Yes, John, I'll start with that. So I mean, clearly, it's a component of all of the cylinders hitting. So NII growth is a key part of our revenue. So we have continued loan growth. We've got really good momentum on that side. I think we'll continue that at a pace that's not too far off from where we are today. As it relates to the deposit side, I think we're in a different part of the J curve there. So that's accelerating. So you saw some of the activity on the client side and some of the momentum we see heading into the fourth quarter. There's some seasonality in that. So we'll have both loan and deposit growth, deposit growth better than this year and loan growth, probably a little more consistent. And then on the fee income side, I think also just continuing the fee income momentum that we've established in the last couple of quarters.

Okay. Great. And then the -- how you think about the breakout of that revenue growth when you look at overall spread revenue versus the pace of revenue growth you would see on the fee side, how are you thinking about that?

John, we're trying to avoid being -- we're shaping more than guiding, I think, for '26 at this point, obviously, still on the planning sort of cycle. I would say we wouldn't expect to remix spread versus the income next year. I think with that in mind, it's likely that fees are going to grow at a faster rate than NII will, but both have strong momentum going into next year.

Okay. Great. And then just lastly, I know you had talked about the degree of positive operating leverage, accelerating over this year. Any way to help us frame that as well? I know you don't want to be too specific, but just trying to gauge how much of efficiency improvement is baked in terms of thinking about the momentum that you could see as you head into '26?

I'm afraid I'm going to let you down again. We don't want to be too specific, John. But I think the intention of the slide that Bill referenced was that we feel great about, at least twice the revenue growth, operating leverage this year, we expect to be around 100 basis points. It should be higher than that next year based on what we see right now. Those factors combined should drive EPS growth higher as well and the buyback is obviously helping with the ROTCE journey. So I think that was the intent there. And sorry, not to be more specific at this point.

No. No, that's fine. We can go off the graphic, I guess, on Page 15 to make estimate based on that, but thank you, I appreciate the color.

Next question comes from Scott Siefers with Piper Sandler.

Let's see. So Mike was glad to see the interest-bearing deposit costs come down a couple of basis points. That was a nice sort of inflection, sound optimistic on the outlook into the fourth quarter. And then, Bill, your comments were all very constructive on to overall growth into next year. Just curious if you can expand upon -- so the options you see with deposit pricing now that the Fed is lowering rates again, and that's sort of what gives you confidence on that growth momentum into next year as well?

Mike, why don't you do the pricing, and I'll do the growth? How about that?

Yes. Yes, that's fine. Scott, I'd say on the pricing side, we feel pretty good about -- you mentioned, we saw a touch of momentum in the third quarter. We actually -- as you'll recall, back in the second quarter, we were actually hoping and maybe expected to be closer to 40% on the beta in the third quarter versus the 38% we got. So -- but the good news is we're off to a pretty good start in the fourth quarter as well. I mentioned we thought we could get to sort of the mid-40s and that takes into consideration some of the momentum that we are seeing now based on the September cut as well as the October cut, which is going to be more important, of course, for the year than December.

But that should drive some nice benefit for us in terms of both NII and our margin in the fourth quarter. And we would expect that to continue into 2026. And it's not just -- some of that's taking advantage of some of the psyche and getting some help on rates, but there's also some mix that we're focused on, and maybe that's a good segue to talk to Bill about some of the momentum we're seeing on the balances with core client deposits.

Yes. So Mike, you talk a little bit about the pricing side and increase in betas. And -- but on the momentum side, I mean, we saw some end-of-period growth in client deposits. We see existing momentum and some markets, think about Miami, D.C. and some other [indiscernible] and then really accelerated growth in markets like Pennsylvania and Texas, where we're growing it disproportionately faster rates.

And then we look at -- I look at sort of what are the leading indicators of deposit growth and if you think about for us, leading indicators of things like net new. So we're bringing in a lot of new clients that we have a chance to deepen relationships with. Those balances are higher than they've historically been. We look at the premier production. We talked about that. Premier production is up almost 30%. So they got the engine running there. And then look at treasury management pipelines. Their pipelines are up really significantly. Treasury management up double digits, new clients in wholesale 60% of our new clients have awarded us a payments product, and some of those haven't funded yet.

So I look at all these as sort of the leading indicators of deposits, enhanced marketing, onboarding. And then I talked about the branch commitment long term. So we're also building not only for the short term within this cycle, but ensuring that we've got really good market presence and capacity to grow over the long term in the deposit cycle. Hopefully, that's helpful.

Yes. No, that's great. I appreciate all that. Maybe separately, Bill, Mike, I think you both have been pretty clear that you all are focused organically. Just curious for any updated thoughts or your thoughts on M&A changed at all now that the ground is sort of shifting a bit in the large regional space given some of the transactions we've seen over the last 90 days or so.

Yes. I mean, we think the best place for us to focus is Truist. And if we think about the opportunity to increase shareholder value and provide really great returns for us to really stay focused and highlighted on Truist. That being said, I mean, we're just like ultra competitive right now. I mean, we've never been more competitive. And we've got great teammates on the field. We've got product and capability. We've outlined this growth pattern, where we are today to the return. So I am all Truist, all the time.

The next question comes from Erika Najarian with UBS.

In terms of the walk, Bill, to 15% ROTCE, what they think is the appropriate efficiency ratio underneath the surface? I'm sure we could all do the math, but just wanted to hear from you in terms of where you want this efficiency ratio to go from the 55.7% as you think about the medium term? You may mention that you're being [indiscernible] there could be deal making, if you're super focused on Truist could also lead to opportunities for you. So how do you balance optimizing efficiency with potentially being more aggressive at taking advantage of some of the consequences and fall out from the deal making in your footprint?

Yes, Erika, on the efficiency ratio side, I mean, that's not going to be the biggest driver of the walk. I mean the biggest driver -- we'll have some marginal improvement in the efficiency ratio. But quite frankly, we're not going to guide to that or manage to that because to your point, we have a lot of opportunity for growth. And that's where you're going to see us continuing to invest. We outlined those opportunities in CSPB in wholesale, and I think they're significant. And we're not investing in response to, we're investing relative to opportunity. So we've got a lot of opportunity. We want to be the most competitive player in our markets. And that's -- and so we're going to continue to invest in that regard.

And then we're going to be driven by growth. We're going to be driven by operating leverage, and we're going to be driven by return.

And just a follow-up question for Mike. As we think about more than doubling your revenue growth in '26, so that's clearly better than 3% to 5%, which is what -- the double of what the '25 revenue growth is. How should we think about the trajectory of the net interest margin in that context relative to the cuts in the curve?

Yes, Erika, just to clean it up a little. If you look at our outlook, we mentioned in our prepared remarks that we expect revenue to grow in the fourth quarter, 1% to 2%, which puts us at the midpoint of our range, which is 2%. As it relates to the net interest margin, we would expect progress in the fourth quarter with the cuts in October and December that I mentioned to Scott a moment ago, we would expect to see continued progress in '26 and in '27. Again, that's -- there's a lot of assumptions around the backdrop there.

But with the operating environment that we see today and with the curve as we see it today, we'll make progress in '26 towards that kind of 3 teens number that I've talked about a little bit. And I think we're there in '27. And that will be an important driver, as Bill mentioned, in terms of the business initiatives and the ROA profile that should continue to evolve and improve that net interest margin, which, again, is going to be driven by a number of things. Erika, it's going to be the sort of structural under-earning on the balance sheet around fixed rate asset repricing.

We expect a profitable loan and core client deposit growth to help improve and drive the margin. So we're hiring bankers, expanding businesses. So I think we've got a lot going for us as we think about NII and NIM trajectory over the next couple of years. And that's going to be a really important part of the ROA improvement story, which, coupled with a touch of improvement on efficiency, as Bill mentioned, plus the fee business momentum we have, plus a little bit of buyback, we think, is what gives us the confidence that 15% is going to be achievable in '27.

And just to clean up the message just because it's a very crowded earnings day, I want to make sure we're taking away the right thing. When Bill said the rate of revenue growth to more than double in '26 versus '25, are we looking at the full year '25 outlook on Slide 14? So it's more than double 1.5 to 2.5, not more than double 1 to 2. I know it sounds like teeny tiny, but it's important for investors to clarify.

Yes. I think, Erika, what -- and maybe take us directionally versus literally. I think Bill is looking at 2% for '25 and saying that literally, it will be more than twice that. So call it [indiscernible].

The next question comes from Ken Usdin with Autonomous Research.

I wanted to ask, you mentioned that you've got some fixed rate benefits into the medium term. And just wondering if you could kind of flesh that out a little bit. You can see that the loans are getting about 60 basis points in the fourth quarter. But what's the benefit you have as you look further out in terms of the magnitude that you see rolling over the next couple of years that will help that NIM trajectory?

Ken, yes, no, you've got it right. I mean, in the fourth quarter, we gave you sort of the 7% runoff versus the 640 and the bonds may be a little bit better than that in the third -- or pardon me, in the fourth quarter. On the loan side, especially, we would expect for that to begin to diminish. I mean that's going to be, I think, a nice tailwind for us in '26, but a diminishing tailwind with perhaps a long tail, but the overall magnitude of the improvement will diminish over time.

And that's really driven by 2 factors. One, a lot of the loans that are repricing for us are in that sort of consumer lending platform. Those are generally pretty short assets with lives in the 2.5 to 3-ish year's range. So you've got some churn that's been happening already over the last couple of years. And so to some extent, that's playing itself out.

And then on the other hand, you've also got -- most of our term exposure is in sort of the 2- to 3-year part of the curve, sort of the shorter end of the belly of the curve. And with that part lower, you're starting to see -- and we'll begin to see, at least we assume lower run on rates. So will it continue to be a benefit? It will. It's -- and if you think about it more in terms of like the yield on that portfolio, let's call it $135 million, ballpark $1 billion fixed rate loans that we think about. You're going to get a few -- a couple maybe basis points a quarter of improvement on the yield, and then that will diminish.

Same thing on the bonds. It -- and we've got some different vintages based on different maturities and speeds there. But we would expect that benefit to diminish a touch as well throughout the course of next year as you see the belly of the curve and maybe the longer end of the belly lower as well. The other thing to note, just on the bonds as you're looking at our yields, on the securities.

We do also have the phenomena that our payers, which received SOFR are going to feel some pressure as the funds rate gets lower. So you might see the gross yield, which is what we show you on that NII disclosure page. The growth yield should continue to march up, but the yield, including the hedge will actually show some pressure as those payers are less in the money.

Great. That's great color. And just one quick one. It's great to see the [indiscernible] trading kind of get back to that level where it had been previously. Just wondering if you could flush out like where the drivers were and just obviously, market dependent, what kind of trajectory could we think about going forward?

Yes. And I think the way you characterize it is right. I mean we're sort of back to that kind of level that we think is sustainable. And the good news it was on a lot of cylinders. So we hit on a lot of the cylinders of our business. Pipelines to your other comment, are actually quite strong. We have a lot of awarded business in the M&A side for the fourth quarter. So we're sort of overall confidence that this trend can continue. This has been a business that has historically grown at low double-digit kind of CAGR over time. And I think over time, that continues to be that opportunity.

We have a lot of new teammates that know how to leverage this capability. And that's what's fun to see. I mean, sort of what gives me more optimism for the future is just see how we're becoming more relevant to clients. In the early part of that, you see that in FX and derivatives. No longer term, you see it in more of our advisory business and M&A and equity capital markets and other components, debt capital markets or the other component set. So good quarter, all cylinders, good pipelines and really good leading indicators in terms of how our team is utilizing these resources that we have.

The next question comes from Ebrahim Poonawala with Bank of America.

I just had maybe, Bill, and I think we have, Brad, on the call as well. I would love to get sort of your views on -- from a credit quality perspective, where things stand, both given kind of your businesses in terms of direct consumer lending, even on the subprime side? Just give us a health check on where you see credit quality on the consumer side?

And then when we look at like nonaccrual C&I loans, NDFI or non-NDFI, do you see credit at the precipice of material deterioration because that's how the market has been trading these stocks over the last couple of days? So I would love your perspective on both those.

Yes. Let me go sort of like really high level. And I'm staring at Brad, I'll bring it down a little lower level of Brad and try to sort of go around the horn because you had a lot in your question. I can say, overall, [indiscernible] is strong. So let me sort of start with that as a premise. We have seen in the market I would say today, sort of idiosyncratic and uncorrelated events. But that being said, just like remember, I mean, the #1 risk for a bank is credit risk. And just like we're vigilant about that. We have been in the past. We're hypervigilant today and will be hypervigilant tomorrow. So these are important components.

You talked a little bit about NDFI and so maybe it's probably worth like diving in there just a little bit. Our largest exposure on the NDFI side is REITs and asset securitization. That's 50% of our NDFI portfolio. So we know that they're different by institution. And then everything else that's in those categories, capital calls, leasing, BDCs, mortgage warehousing, they're all sort of single-digit part of the overall portfolio. So highly, highly diversified 20-plus asset classes, low [indiscernible], which has sort of been the spirit of that portfolio and Truist overall. Maybe with that, let me turn to you, Brad, and then if there is anything I want to clean up, we can do that.

Yes. Thanks, Bill, and good morning, Ebrahim. So I'd say I'll hit your -- I'll build on the NDFI really quickly. So I think for us, we take a very client-centric approach. It is, to Bill's point, high-quality, diversified collateral with strong structural protections, and we take a dogmatic risk-adjusted return approach across the differentiation of those asset classes I think in your consumer questions, particularly around the subprime, as a reminder, the majority of our subprime sits only in our auto portfolio.

On the rest of the consumer portfolio, it's a very marginal amount. The majority of our consumer portfolios are high-quality super-prime borrowers. We derisked in '23 and '24 on the lower end of the consumer spectrum. And so that was an intentional decision that we made. It's also reflective in the results that you see this quarter. And that's really where we're going to continue to focus is how do we drive high-quality assets, both in the wholesale and the consumer space.

The next question comes from Matt O'Connor with Deutsche Bank.

Just wanted to come back to the capital levels and buyback commentary. Just kind of -- if there's flexibility to kind of lean on the buybacks, we're obviously seeing some falloff in the market here. And 2 days might not be enough to make you want to lean in, but if there's more pressure, broadly speaking, it seems like you've got the capital that you could do more if you wanted to.

Yes. I mean, I think, Matt, we want to be on a steady pattern. We don't sort of want to, I think to your point, reacted 2 days' worth of market volatility. But that being said, this is a great time. We've got ample capital. I think we've got a really good slight path. We do have the flexibility. I think about $750 million, sort of think about that as a floor, so to speak. And then we've got capacity to increase that as we go along all while keeping, we think, an appropriate and conservative capital structure, but we wanted just to define the speed and the slope to get to that 10% CET1.

Okay. That's helpful. And then just one question here. Just the loan growth. You had a lot in commercial real estate and you've heard about some refinancings away from the banks there, but just wondering what drove about, again, not huge, but $2 billion increase off of the $20 million in the quarter?

Yes. A lot of that is sort of we had a decrease [indiscernible] an increase, so some of that was just an inflection point. And then in that CRE, I think a lot of what we talked about earlier -- we think about a lot of the shorter duration, long-term relationships with a lot of capital markets business associated with them. So it's a little more of an inflection than an actual relative long-term increase.

Prepayment slow.

I'm sorry, yes, prepayments slow.

The next question comes from Chris McGratty with KBW.

Just a quick clarifying question on the nonaccrual loans in C&I, which one from $520 million to $800 million. In your prepared remarks, you talked about the first brand exposure. Is that contributing to that? I know you said you had reserved against it. I'm trying to see where this lies and it's been charged off?

Yes. Chris, it's Brad. So I'll hit that really quickly. So as a reminder, we had outsized resolutions in the second quarter. And so what you're seeing is a return to recent levels. Yes, First Brands is captured within that. It was an appreciable amount of it. It wasn't the whole of the increase. But that 48 sort of matches what you saw 4Q, 1Q in previous periods.

Okay. And then the message is that increase has been reserved for?

We've got it accounted for in the forward guide.

Perfect. And then just clarifying Slide 16, which is again the ROE target. I think it's great to see the formalization of 15. Is the message you're standing on '27 -- we're going to get there on the full year or at some point? I know it's a little bit of a nuance.

Yes. I think we're going to get there on a full year basis. So that's the message.

In any one quarter, you're going to have some fluctuation for the full year.

The next question comes from Betsy Graseck with Morgan Stanley.

Can you hear me okay?

Yes, Betsy.

Okay. So I just want to make sure I understand what we just said, which is the First Brands estimated credit impact is in the forward guide, meaning it's not embedded in this quarter that just reported?

Yes. So Betsy, it's Brad. It is accounted for in the quarter just reported and then the forward got from an NCO if there are implications there that play out. But we're early in that process. Yes. So accounting for an NPL and then forward guide on NCO.

Okay. Got it. And then I just also wanted to understand how you're thinking about the underwriting in this environment. Does it change at all? And I'm asking with context to C&I has been doing better, obviously accelerating a little bit? And can we expect to have that kind of acceleration continue here? Or is there a change in underwriting style path due diligence that would perhaps slow it down a bit as we move into '26?

Yes. I mean I'll start with that. I mean we're vigilant and diligent in our underwriting. And as I said earlier, we have been, are and will be -- maybe that doesn't change from that perspective. Brad highlighted on the consumer side, I mean, we made some adjustments, quite frankly, in the last 18 months as it relates to that portfolio, just ensuring that our portfolio on the unsecured side particularly stays super prime and allowing for that, and you see that in some of our results. So that was -- that was a marginal change on that point as it relates to the wholesale side.

The key for us is just to have a really diversified portfolio. So we have a lot of discipline around the diversity. So I don't think that changes, but it does accentuate the fact that we just want to have a really diversified portfolio and sort of every way that you can measure and define a diverse portfolio. We think that's inherently the strength of Truist.

If you look at sort of any category, Betsy, that you might say, gosh, this is something I'm worried about or thinking about and we index low on all of those. I mean that was the advantage of creating Truist is creating this highly diversified portfolio. So we're going to -- if we have anything that's going to be continued discipline around that diversity. And I don't think that lowers our growth opportunity. It actually increases the opportunity because we have so much diversity.

The next question comes from Steven Alexopoulos with TD Cowen.

Wanted to start -- I want to go back to Ebrahim's question on NDFI. So I know this has become the topic [indiscernible] in these banks' earnings calls. And journalists listening to this conversation are dumping out of regional banks on fears that, that portfolio is low to win cockroaches. When you guys look at the totality of your loan exposures, where do you rank the risk of the NDFI portfolio, below average or above average? And do you think the market is right at this point in time to be scrutinizing that portfolio?

Yes. Maybe I'll hit it really quickly for you. So today, we sit at about 11% of our total lending portfolio. That ranks us as of 6/30 on the published data that puts us ninth out of 11. So I think back to Bill's point, well diversified, granular and then underweight relative. And so on how we think about this from a long-term standpoint, I think these are long tenured relationships with global financial institutions across 20 asset classes for us. We have sublimits and top of the house limits in place to ensure we maintain credit discipline, and we will continue that on a forward basis.

Yes. Look, relative to where it fits. I mean this is -- if you think about the high percentage of ours being REITs and asset securitization, this is an investment-grade looking portfolio which we have really good returns against -- and really good risk-adjusted returns. So we have the capacity and capability with our tools and things that we can do from a capital markets perspective, that these are just long-tenured clients. We've -- we don't -- we don't think about this as an NBFI strategy. Maybe that's maybe the best framework to start. This is a client strategy that gets counted in an NDF category. And so these are businesses that we've been in for a long time and have a lot of confidence in going forward.

Okay. But it sounds like because you're pointing out that you have lower exposure versus peers that you do think this is a problematic portfolio for the industry, right? Otherwise, you wouldn't be pointing out it's well below peers in terms of your exposure.

No. I think we're pointing out well below peers, back to my diversity comment. So if you have a lot of diversity, you have a diversity of risk, but you also have diversity from opportunity. So we have an opportunity to grow things that have smaller percentages and it also mitigates our risk. So diversity is a two edged sword that I think we used wisely.

Got it. And finally, so if we go back to where we were 3 months ago, we've now had tricolor first brands in this Cantor loan called out by [indiscernible]. Do you guys -- I'm curious, the way you look at your loan portfolio, do these represent an inflection point in the credit outlook for the industry compared to where we were 3 months ago?

I think it's early to call it at that level, I would say this is certainly an opportunity, and we'll go back and look at all as we do with any external events, what occurred, what are the implications, but it would be early to call it an inflection point. Our performance to date isn't demonstrating that across our portfolios, and we're not seeing that on a broad base.

The next question comes from Gerard Cassidy with RBC.

Bill, can you -- I might go back to your comments when you opened up about the new branches being AI -- integrating AI into these branches. Can you share with us how are we going to be able to measure the success that this AI infiltration into the banking industry and you guys in particular as you tap the potential of these investments, how do you think it's going to manifest itself to us outsiders, where we can say, wow, Truist is way ahead of the curve compared to their peers?

Yes. It's a great question. And I think what -- today, we talk about AI like it's something separate. Like we used to talk about the internet, as something separate. I think AI is going to be the fuel. So we're not going to talk about it being separate. And the way you're going to see the successful companies implementing AI is -- doesn't reflect in their business. Does it reflect [indiscernible] more efficient as it [indiscernible] we're growing at a higher level. And I look at all the use cases that we have across the company and they're all in those categories. I mean, there are places that are going to make us incredibly more efficient. There are places that are going to make us really, really more client-centric, and you noted that as it relates to the branch, please. There are places that are going to help our overall revenue growth and sales productivity. So it's all in those categories.

So I think we're not going to say this AI contributed this amount to the efficiency ratio or this amount to revenue growth. I think that's actually sort of hard to do. But if you're getting disproportional growth and disproportional efficiency as a result of AI, I think that's where we're going to end up talking about this. So I'm really optimistic about what AI can do to help us accelerate everything that we talked about. So our ROTCE walk, I'd say, is fueled by is maybe a good way to think about it.

Very good. And then just as a follow-up, I apologize beating up on credit, but you guys have demonstrated that you're one of the better underwriters out there. So coming back to the First Brands, I'm curious, Brad, the size of that exposure, how big was it? But second, just how did you guys get involved? If you could just give us some color on your thinking of that relationship?

Yes, Gerard, happy to hit it. Look, it's early. As you know, we don't normally talk specifically about clients. So we are in it with a broader base. Overall, the exposure is less than $200 million for us, but it would be early for us to get into the details of that.

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

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. Betsy, you may now disconnect the call.

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

Moving right along, very pleased to have Truist with us. From the company, Mike Maguire, Chief Financial Officer. And we could just put the first ARS question that we've been asking for all the companies. And Mike, preparing for this conference, we went through transcripts of kind of other conferences. And so I just got to start with this question.

Update on the quarter.

Yes. Update on the quarter is no update. So operating environment feels pretty good right now, still seeing good momentum across our businesses. And so our outlook from July is still intact.

And that's, I guess, the -- Okay. So no change to revenue, fees, expenses...

Yes. Feel pretty good about how the quarter is going and the year as well.

Got it. All right. So the second most requested question to ask was -- you put out a press release last month about a plan to build 100 new branches, renovating 300 existing branches. Just maybe provide more color. It wasn't that long of a press release on that initiative.

No, no. It was a short and sweet, but I think important, if you think about the branch initiative that we released some information about -- I think just the way to interpret that is another artifact as we think about this transition to offense and focus on growth for the company. We've been talking about our -- really our focus on execution and that's been broad-based. Thinking about our funding strategy, which obviously, these new branches and the renovated branches will help facilitate, but also some of the hiring we're doing across our corporate banking business, commercial banking, investment banking, wealth, our payment advisers you name it. So I think this is not a new strategy, not something that I think the market would have thought was unexpected. So to speak, but very much in line with our ambition to execute and accelerate our growth and our profitability.

I mean any way to think about the financial impact? Like I guess you mentioned no change in expense guide. Is there any -- I assume there's an expense impact, but any expense impact kind of beyond what you were thinking? Or any kind of how do we think about the return on the investment or the like?

Yes, I think it would have been contemplated in our outlook. So as we've thought about this year, keeping expense growth to about 1% and our commitment to positive operating leverage this year and beyond, this initiative, again, would have been contemplated in that outlook. And the thing about the de novo branching strategy, in the broader context of Truist, you think about it, we've got over -- or just about 2,000 units. And so you go back in time when we completed the merger, we were closer to 3,000. So the first 4 or 5 years of the new company has been really focused at least from a retail distribution perspective, on optimization, consolidation and the like.

And so this new phase where we're once again investing in new de novo branches and in some cases, in markets where we simply want to fortify or expand presence or in other areas where maybe we don't have the right density quotient yet, so places like Austin or Philadelphia or New Jersey. These are -- it's nice to be able to sort of turn the tune into that mode.

Got it. And then I guess, loan growth has been pretty decent in the first 6 months of the year. Maybe just kind of talk to what you're hearing from clients and how is this overall client sentiment?

That's pretty good. I mean we really kind of say, late '24 began to see a little bit of momentum in terms of loan demand and the opportunity that was correlated, obviously, with our own interest and sort of prosecuting our growth agenda. And we've seen a pretty consistent and pretty positive backdrop around lending. It hasn't been outsized growth, but it's been pretty consistent. And so -- and that's been broad-based. So we talked about in the second quarter when we reported earnings that we saw good growth across our corporate and commercial businesses. We've welcomed a lot of new bankers to the platform in our corporate and commercial business. So really driving a lot of new to Truist clients through some of those new teammate acquisitions as well. And then, of course, our specialty lending and consumer businesses are performing well to historically in the second and third quarter are seasonally pretty productive just based on the businesses we're in there. But sentiment is good. I mean I think there's still some -- concerns maybe not the right word. There's still a lot of speculation about whether we're seeing the full impact of tariffs or other policy or the like. But by and large, on Main Street, it seems that business owners and consumers are -- have the confidence to make investment decisions and to expand and the like.

And I guess the outlook, you've talked about low single-digit average loan growth for the year. I'm assuming that still holds. But just maybe talk about how to think about that looking out and just kind of big sources of optimism that you're seeing?

Yes, I feel good about the low single-digit growth outlook for the year. I think, is your question, what particular areas may be. And again, I think relatively broad based, right? I mean I think there are certain areas. We're always -- as we think about sort of portfolio optimization. We're evaluating the profitability opportunities. And so you may see us lean in or lean away from certain businesses, given competitive dynamics. As an example, you recall back in '23 when capital was a little bit more scarce, we pulled back a little from some of the prime auto. We're probably a little more cautious there now as well. Mortgage, another area where we've perhaps slowed our appetite a touch. But generally speaking, across all of our businesses, we're prosecuting a growth agenda. So I would expect it to be pretty broad-based.

And maybe on the consumer side, you're not a big credit card player, but you do have some kind of specialty businesses that others don't. Maybe just kind of near and dear to your heart. Maybe just talk to kind of your lending strategy in consumer.

Yes. No, you're right. I mean our credit card business relative to our overall size is relatively small. And by design, we have invested in a number of specialty lending businesses, primarily focused on convenience as a defensive moat. And so we've talked about these businesses pretty consistently as strategies that we're quite fond of, and we sort of cover the landscape, at least where we believe there's pretty significant market opportunity. So we have our LightStream business, which is the direct-to-consumer; all digital personal loan product; super prime business, gets a lot of recognition for just the convenience and customer satisfaction. This is very, very quick, easy, same-day funding, 95% AutoPay, truly a financial sort of technology lending offering. And then we've got our convenience lending businesses that are focused on the point of sale. So we've got one focused on home improvement and then another on outdoor power equipment and outdoor power sports. So the home improvement business we acquired a few years ago, it's called Service Finance. That's the one that through relationships that we have with thousands of contractors. We're at the kitchen table providing really attractive financing solutions for homeowners that are replacing an air conditioning unit or a roof or a kitchen or you name it. And it's simply applying right then and there, getting approved for typically a really nice promotional rate and having that work be completed. The same thing for a dealership, if you're buying an outdoor power equipment, it could be a lawnmower or a zero-turn mower, it could be a snowmobile, it could be a small tractor side-by-side ATV, you name it. We're a leader in all those categories, and we partnered with the largest OEMs in the country to provide promotional financing in the dealership. So again, you pick up the piece of equipment, you're offered a promotional financing, they're at the point of sale, and it's done instantly. So clients really love those businesses. And the sort of combination of the relationships and the technology and the service, we believe, is a really -- it's a really nice franchise. And then, of course, we also have our auto finance businesses, prime and nonprime. But I think you were probably maybe most interested in some of the specialized businesses.

Yes. I guess something you said earlier, a little bit more cautious on the prime auto segment. I guess what we've heard others kind of leaning in, and it seems like you're leaning out.

It wasn't a credit comment. It was more around profitability. And it's just -- when it gets a little more crowded and where we see other opportunities to drive maybe better production margin, we will just reallocate. So just to be clear, we're not -- we're still turned on with our dealers. We're still doing a lot of volume in prime auto. But that really is a dial that we can calibrate based on sort of what we see day in and day out. And again, we're -- we were a little heavier in production a few months ago than we might be for the next few months.

Got it. And just on deposits, maybe just talk a little bit about the competitive environment, consumer, commercial deposit, what you're seeing in terms of mix, balances, rate?

Yes. Well, we mentioned in July when we reported that the overall deposit backdrop was competitive. And I still believe that to be true. We have seen nice loan growth through the first half of the year. We do expect that to continue. Deposit growth has lagged a little. And I think there are a couple of dynamics out there that are maybe shaping that. The first is in a moment where loan demand is perhaps a touch ahead of deposit growth, especially in great markets like we serve, I think that does and still perhaps a touch more all things equal competition. You do still have QT operating in the background. And so a factor as well. And then just the rate environment, right? We still have a funds rate, which does seem positioned to ease here sometime soon. We'll talk about that in a moment. But as it stands today, we're still at a pretty high historically funds rate. And so the degree of rotation around mix, you mentioned has been a little bit slower. The ability to think about pricing has been probably required a little bit more thought. So I think those are all factors. I'll say it's a -- there's not a more important focus in the company right now for us than good core deposit funding.

A lot of our frontline understands the mandate around growing earning assets and serving clients and driving capital-efficient revenue, et cetera. But we always are sure to incorporate the importance of funding our growth. And so those are the marching orders.

Got it. And then you kind of touched on the interest rate backdrop. But I guess you talked to NII up 2% in the third quarter, 3% for the year. Maybe just talk to how Truist is positioned from an asset liability perspective? What's the ideal interest rate environment? How that plays into your NII thoughts?

Yes. We've probably been a little bit of a broken record on this. I mean -- and I think you hear from others, too, we do really do try to target sort of a relatively neutral position relative to the expected rate path over some period, right? So you look today over the next 12 months, there may be 5 or 6 cuts. I don't know what's happening out there. I think some job numbers were revised. But nonetheless, our idea is that if there's 5 in the outlook, we want to manage the company such that whether it's 3 or whether it's 7. We feel pretty convicted around at least the rate impact we'll have on our net interest income. And so we pretty actively manage that position. That's unchanged since we reported in the second quarter. Obviously, we're doing a lot of planning around these expected cuts -- to the extent that we get at least 2, maybe 3 cuts this year, we're obviously going to be working really hard to take advantage of that from a pricing perspective, but also taking into consideration the importance of balances and funding growth and thinking about momentum into next year. But yes, look, rates -- I think you've asked like what's -- I think you asked, maybe this is a meeting before I stepped on to the stage about sort of ideal curve path. And again, very focused on that short end and how that could impact not just rate paid, but also a component of rate paid, just mix and some of the rotation. But we're also keeping our eye on sort of that belly of the curve. And we've talked a lot about that 2-, 3-, 4-, 5-year part of the curve. That really is where we do the bulk of our lending to think about all those consumer lending businesses that we just we just talked about. If you look at the 2-year today at [ 350 ], that's going to be where we're repricing. And so will we still have the benefit of the fixed asset repricing, whether that be the bonds or the fixed rate loans, we will, but that's going to be obviously dependent on where the 2s, 3s and 5s are.

Makes sense. And I put up the next ARS question while I ask Mike a follow-up. But I guess beyond the next couple of quarters, what are some of the key considerations that could affect the trajectory of NII as we begin to model 2026?

Yes. I mean I think it's a lot of the same culprits, right? I mean I think good loan supported by -- or sorry, strong loans supported by core deposit growth is, I think, one of the primary factors. I think the cumulative number of cuts we get between now and next year is going to be really important, not just in terms of sort of a linear function of beta, the betas will behave differently depending on when and how many cuts we get. The shape of the curve, obviously, be an important factor. At the end of the day, the broader economic outlook and how it shapes some of those balance sheet growth potential items, mix items is a factor as well. But those are probably the main components. I mean QT in the backdrop. There's an expectation that, that would wind down sometime here in the -- maybe in the second half depending on one of the objectives have been satisfied. But I'd say those are the main drivers.

And I guess maybe if we could see the results of what the audience thinks is -- so the audience view is a relatively stable NIM as we think through next year. If you have any perspective?

It's a -- we talked a little bit in July about this, too. We got asked a question about what's a normalized NIM. And we talked about sort of a low 3s, 3 teens type net interest margin, all things equal. I still believe we have an opportunity to expand our net interest margin. I mean you've got tailwinds like the -- to some structural under earning in the securities portfolio, some of the fixed rate loan repricing that we touched on a moment ago. But then there are going be other factors, too. I mean, at the end of the day, we're not really a NIM sort of driven shop. We're going to be focused on driving NII dollars, and there might be opportunities. There will be opportunities that are sensible that are NIM dilutive, but NII accretive and -- in fact, you saw a little bit of that in the second quarter. We served a couple of clients around some M&A situations where we had larger balances that all things equal.

Were they profitable? Yes. Were they significantly dilutive to our NIM and did they impact and distort the like our beta? They did, but they were good business choices. So we're going to lean into driving NII, and NIM is going to be more of an output. But yes, I think we do have an opportunity to continue to expand. Just based on the totality of the inputs, we'd expect the NIM to continue to improve a touch.

All right. Maybe turning to fee income. I was hoping we can kind of drive in -- dive into some of the kind of bigger line items that we look at. But investment banking and trading is a business you've invested in over the last several years. Maybe do these investments make you -- I guess how are these investments going? And just how does that think play into maybe second half of the year and looking out?

Yes, it's an important franchise for us. I mean we've have a long, I think, successful history in the corporate investment banking and trading space. We have consistently invested in that business. That's been a function of product and trading platforms, and it's been the team, the bankers. And we've sort of consistently thought about how do we continue to deliver a fully comprehensive product offering and to make sure that we're doing it in all the industry sectors that we believe are viable. And so that build out is sort of the journey is never complete. The results in that business have been consistently pretty good for us. We've grown that business historically at a high single-digit, low double-digit rate. We were disappointed, obviously, by the change in market conditions in the second quarter of this year. We came into the year pretty optimistic. I think the whole industry was pretty optimistic about the opportunity in investment banking and capital markets. So it was disappointing to have that set back in April and May. The good news was that June did really normalize and we're optimistic about the second half of the year. So things are going quite well in that business.

But if you look at all the various ways that you can measure success there, whether it be sort of influence in particular industries in terms of advising, whether it be market share in different products or even like syndicate dynamics, like what types of roles are we playing in number of left lead deals or active roles in capital markets deals really across the board, we continue to creep better and better each year. And we're still committed to that. I feel great about the leadership team there and the investments that we're going to continue to make.

I guess on the third quarter earnings call, you talked about 5% -- I'm sorry, in the second quarter earnings call, you talked about 5% fee income growth for the company overall. In the third quarter, driven by investment banking and trading, I guess, as we sit here today, is that how we still think about it?

Yes. Yes, banking coming off of a pretty easy comp in the second quarter. And so -- and performing well in the third quarter.

And I guess maybe shifting gears to payments. Maybe discuss the opportunity in that business and just kind of the progress you made with new kind of -- we talked about new products and initiatives.

Yes. I'll probably feel like a broken record on this, but we really have consistently been and feel really good about the product portfolio that we've been investing in wholesale payments broadly just sort of maybe, say, treasury management. And so I feel great about the product and have also more recently been expanding the sales team and really also just sort of recalibrating the sales culture. I think Kristin Lesher has done a really great job of prioritizing this opportunity for our company. Her hiring, Kerry Jessani, has been a really impactful hire as well. She's deeply expert in payments, works very collaboratively with Chris Ward, who many in the industry know to be a true subject matter expert in wholesale payments as well. So we think we have a lot of the ingredients there, right? And the opportunities is pretty -- it's pretty exciting because -- not for all the right reasons, right? I mean if you look at the success that we've had historically in penetrating some of these lending relationships with treasury management, it would show you that we've got quite an opportunity. So we would expect this business to grow at an outsized clip and will be a really important component, I think, of the progress that we make in terms of its capital efficiency towards our ROTCE target.

I guess wealth is another area that to us, looks like a significant opportunity for Truist. What are you doing there to grow it and take share? It's obviously a competitive space?

Yes, very competitive, obviously. And this has been a long time business for us as well, and it's been a pretty steady [ Eddie ] grower for us. We feel really good about our fleet of advisers. We feel good about our adviser platform. That's important not just for the clients that they serve in terms of the client experience, but also the adviser experience. So we think we have the table set there. The big opportunity for us in wealth, and you'll hear Kristin and Dante both talk about this because it's a collaboration is thinking about how we do a better job penetrating this premier consumer client opportunity that we have. There are so many of our clients who are deeply loyal and do a lot of sort of meat and potato banking with us, but that maybe have AUM off us. And so our ability to improve the trust that we have with those clients and better and more fully serve those clients with a wealth offering is a huge opportunity. That in and of itself would be -- if varying degrees of success could be quite impactful. So that's -- I think that's the primary focus in terms of growth and then, of course, just doing a great job for our existing clients and bringing new clients and advisers to the platform.

We could put up the next ARS question as maybe shifting gears to expenses. Two years ago at this event, Bill rolled out a new expense initiative. And since expenses have been fairly controlled. Anything for this year, you're targeting 1% growth for the year, 1% for the quarter. So maybe just maybe talk a bit more just on how you've been able to manage cost at such a low growth rate?

Well, I mean, it's a good reminder. I mean, I think this is where I would have gone, as I would have said a couple of years ago, we put quite a bit of energy and focus and developed quite a bit of routine and intensity around cost management. And I think through the course of that and executing on that program and thinking about continuous improvement and continuous maintenance of our cost profile, we just feel like we have a lot more confidence and control around managing expenses. The way we think about it, sort of year in and year out is we very systematically work with our leaders, both our businesses and our functions to identify activities, again, in every given year, that are the least valuable activities, right? And so if you start every year and you sort of say, okay, what are the 2% or 3% of my current cost base that frankly are wasted activity or it's redundant or it's no longer as productive or it can be done more efficiently, whatever it might be, we sort of subtract that from the equation. That's what gives us the capacity, plus some modest amount of growth that should be correlated to the revenue opportunity that we expect where we can take those same dollars and reallocate them now to the top of the house and say, what are the most valuable activities that we think we can invest in. So hey, Kristin; Hey, Dante; Hey, Steve Hagerman, who runs technology and operations for us. What are the activities that are going to drive the most value for shareholders. And so that swap set, so to speak, is sort of the magic. And so we believe that we're going to be able to continue to manage expenses in a disciplined way, and that also is being done in a way that creates the right amount of capacity to support the business initiatives that are going to drive the improvements in our results.

Helpful. And I guess when we think about -- you probably starting the 2026 budgeting process. I mean how should we think about the opportunity to drive or keep this low rate of growth, drive further improvement in the efficiency ratio, just how you're approaching that dynamic?

Yes. I mean maybe I've just answered that question a little bit. I'll expand. I mean I don't think that we necessarily target an efficiency ratio, so to speak, for next year. But I do think I have a high level of confidence that we're going to be able to continue to manage expenses in a way that's going to be consistent with the commitments we've made around continuing to generate positive operating leverage, and hopefully, more positive operating leverage over time, right? I think one of the opportunities we have, if you do think about like the efficiency ratio, again, I don't spend a lot of my time thinking about the efficiency ratio. But for Truist, over the next couple of years, I think one of the primary improvements to the efficiency ratio should be driven by revenue -- expanding the revenue base. So -- hopefully, that helps.

I guess on that point, I guess you pointed to 50 to 150 basis points of positive operating leverage for 2025. I guess as you look out, it sounds like maybe you could do better than that. I guess any particular kind of number in mind? Or...

I think we have a number in mind. And I think the market conditions will dictate what makes sense at any given point. And I don't want to be specific about plans for '26 because as you said, they're -- they are still coming together. We do feel confident in our ability to drive positive operating leverage next year. We do feel like it's going to be important for us to invest in growth in the business as well.

The buy-side consensus seems to be up 1% to 3% or so for next year as you think about your budget?

With that expenses?

Yes.

Okay.

I guess asset quality, -- maybe just talk to what areas of the portfolio you're watching more closely. Anything you're pulling back in due to credit? Cash?

Credit? Still quite benign, right? I mean we really aren't seeing any negative signal out of our portfolio through intra-quarter monitoring. You saw we took our charge-off guide for the year down a touch in the second quarter, down from 60 basis points to a range of 55 to 60. We're not seeing any -- even anecdotally, you don't see pressure in our C&I portfolios, for example, based on tariffs or other factors. So actually, it's quite good. I mean we've talked a lot about -- and I'm not sure you're asking for many more details about our CRE office portfolio. We feel like we -- we're off to a very quick and assertive start managing that portfolio and feel very good about how that's developing as well. A little bit of a watch item, broadly speaking, on maybe the lower tiers of consumer. We don't have a ton of exposure there. We've mentioned our card portfolio is quite small and our specialty lending businesses tend to be super prime. So 50, 60, 70 FICO type stuff, regional acceptance being the exception to that. But -- so no, in the places where we're making modifications to credit policy, it's small stuff on the consumer side. It's -- are we -- do we want to finance that age of collateral? Do we want to go up to 240 months in that product or 144. So it's nits and nats.

Got it. And put up the next ARS question as we shift the discussion to capital. But maybe Truist has obviously taken some actions to improve the balance sheet, the capital strength of the company. Maybe just remind us what your kind of top capital priorities are?

We've been consistent on this, especially since last year. First and foremost, growing the franchise, right? So we believe we are in a position of relative capital strength and flexibility and are very focused on driving just the balance sheet growth in support of our core clients. The dividend, obviously, would be our second priority, very important to our investors. Third, I'd say, the buyback. We remain committed to an elevated buyback and then, I'd say, lastly, acquisitions.

Got it. I guess on that, Truist opted not to raise its dividend at least so far kind of coming out of the stress test. Any kind of thoughts around that? And how should we just think about that going forward?

I think we have -- if you look at our dividend payout ratio, it's a touch elevated relative to where I think we'd like to see it where you might over a longer period, like to see it. I think in our minds -- and we've begun to talk a little bit more about this getting to a point where roughly half and this could remix of a total payout ratio might be a dividend and the rest, the buyback and then, of course, the residual being reinvested in the business, you could see a scenario where sort of a 30% to 40% dividend payout ratio and sort of an equivalent payout ratio related to buybacks and then the difference being investment in the business could be a nice operating philosophy. If you look at our dividend payout ratio today, we're closer to 50%. So I think we should very quickly with some earnings acceleration grow into that and perhaps have an opportunity to revisit that dividend. But in the immediate term, I think it's appropriate at $0.52 a quarter.

And then you used the phrase elevated share repurchase. It's like that $500 million a quarter number the right way to think about it?

That's where it's been. And I think what we've said is we're comfortable at that 100. Even in some quarters over 100% payout ratio over some period of time. We recognize that we have a little more flexibility, just given current capital position. And look, we believe that Truist where it trades is a very attractive investment.

Got it. So the room does like share repurchase, but interestingly, acquisitions don't appear off the table. So maybe just talk about, obviously, the company has done both predecessor organization, large acquisitions over the years, and did a big one to come together. Just your kind of thoughts on bank acquisitions as the environment appears a little bit easier and there's a couple of trillionaire banks out there that could probably use some more competition from some of these regionals getting together and then also maybe talk to nonbanks.

Yes. I mean, without a doubt, we've -- like you all have observed, there's obviously much more activity, and it seems all of a sudden. And so it does seem that the overall deal-making backdrop is improved and easier. I don't think short term, that changes our focus. And our focus really is on improving Truist's profitability and accelerating growth. We think we have an outsized organic opportunity and would be a little bit reluctant to distract ourselves in the short term. I think that goes for nonbank deals as well. They can be relatively expensive, can come with a lot of execution risk as well. It's very hard to find sort of A assets in that category that don't present a lot of execution risk. So we're mindful of the opportunity. We like -- we do believe we've got a scale advantage. It's funny, I think in an earlier conversation, someone sort of phrased a similar question. They were talking about all the much larger companies, that might be true. But in the grand scheme of things, looking up, you see 6 or 7 companies; looking down, you see thousands. And so we are still in rare air and do believe we're realizing economies of scale and -- that's my answer.

It's a good point. Good point. Last year at this conference, Bill announced a new medium-term mid-teens ROTCE target. Maybe just talk to the initiatives and strategies in place that should help you get there.

Yes. And we've touched on several of them, right? And at the end of the day, driving more capital-efficient revenue through our franchise is the answer. So the work that Kristin and Kerry are doing to expand and grow our corporate and commercial banking business with an emphasis on supporting the payments business is going to be a really important factor to drive not just sort of NII growth, but also fee income growth. And that's not just payments, by the way, as you can imagine, these corporate banking clients obviously have diverse wallets that span interest rate risk and currency risk and commodities and the likes. And our platform is well situated to be sort of deployed against those opportunities. So we're excited about that.

We talked about some of the fee businesses that continue to grow and that we continue to invest in. Investment Banking will have a role. Wealth will have a role. Our focus on the consumer side on the premier opportunity, again, just taking existing households and taking either liquidity or assets under management from off us to on us. So deepening is going to be a huge component of that. The focus on deposits. So it's not one thing. It's -- fortunately, it's a portfolio of items that we believe from a business initiative perspective are all viable, are all measurable and should be areas where we believe we have a high level of confidence that we can execute against, will each be sort of bricks that build the house. And of course, as well, there's some capital optimization work that we'll be doing in the background as well, whether it be RWA density management and capital management.

I guess since that time, the regulatory supervisory backdrop is -- feels to be getting easier. I guess in any noticeable changes or just kind of how you're thinking about the landscape over the next couple of years?

Just broadly, regulatory?

Yes.

Yes, look, I mean, you brought up one point already, which is there does seem to be a much more open-mindedness around consolidation. So that's obviously something that we can also see and taste and feel. I'd say also, broadly speaking, it will be interesting for us to get a -- we do still at some point, expect to see a new rule of Basel III endgame rule, what we hear, which is similar to I'm sure what you and others hear is a different tone than what we would have heard 12, 18 months ago. And so that's, I think, a positive. And then I think broadly speaking, we're very satisfied with the relationship we have with our supervisors. It's constructive. It's, I think, an appropriate tone. It helps us strengthen our business every day. And I'd just say, overall, that backdrop seems to have evolved in a positive and constructive way.

I guess when I think about our conversation today relative to the one maybe we had a few years ago, there's been a lot of work to be done to simplify the company. Capital is in a much better position. The marketer may or may not appreciate that. Just maybe just talk to in terms of kind of just how you feel about Truist's positioning in the marketplace and what you've been done, what needs to get done?

I mean I think the punch line on us, thanks for the opportunity, is the obstacles are removed, right? So there were moments in the recent past, and we've talked about an interruption related to the merger or maybe it was a macro interruption, the banking crisis or it was a retention issue. Many of the things that we've been asked about over the last 3 or 4 years are all gone. So there are no reasons why we can't and why we won't or shouldn't deliver great products to deeply loyal clients who want to work with us. The attitude of our firm is significantly better than it's ever been as Truist. So when I say attitude, I mean what is the mindset of the wealth adviser, the commercial banker, the corporate banker, the payments consultant, the technologists, the HR teammate, the overall attitude is optimistic. It's growth-oriented. We used to joke when we came to your conference a couple of years ago, I remember sort of telling investors who were challenging us and asking us questions about expenses. And we said, hey, if you sort of mystery shopped us and snuck into our building and rode in an elevator and got off on a random floor, and just grab somebody wearing a purple T-shirt, what they're focused on, they would have said expenses, capital management, very defensive. If you did the same thing today, people would, without a doubt, across the board, say, we're focused on growth. And I think that sort of says it all.

That's a perfect way to leave it. Please join me in thanking Mike for his time today.

Thank you.