Truist Financial (TFC) Morgan Stanley US Financials, Payments & CRE Conference 2024 summary

Strategic balance sheet repositioning and capital deployment

• Completed the sale of TIH and executed a $34B securities sale, reinvesting proceeds into higher-yielding, shorter-duration assets, improving yield and liquidity.

• Maintained a neutral NII sensitivity corridor through hedging strategies, expecting a benefit to NII if short-term rates decline.

• Preserved capital flexibility to support growth initiatives and potential share buybacks in the second half of the year.

• Repositioning aimed to offset lost TIH earnings, enhance liquidity, and maintain a capital advantage.

• Further balance sheet repositionings are possible if loan growth remains muted, but client growth and dividends remain top capital priorities.

Deposit and loan trends

• Deposit pressures are moderating, with some continued remixing from non-interest to interest-bearing accounts, but competition has eased slightly.

• Loan growth remains muted, with optimism for future C&I demand and a focus on deposit-rich industries and core client relationships.

• Consumer loan balances have started to grow after a period of contraction, aided by recalibrated production strategies.

• Commercial pipelines have improved since the end of Q1, indicating potential for future growth.

• Construction loan growth reflects funding of previously committed projects, while CRE exposure is managed cautiously, especially in office and multifamily segments.

Credit quality and reserve management

• Reserve ratio has been built up and is considered adequate, with only modest further builds expected; no plans for reserve releases.

• Criticized and classified loan migration is mainly in CRE, particularly office and some multifamily, but exposures are well-reserved and considered manageable.

• Multifamily stress is driven by increased supply and competition, especially in the Sunbelt, but remains distinct from office sector challenges.

• Net charge-offs have normalized in most consumer portfolios and are expected to remain stable; asset resolution teams are effectively managing CRE exposures.