Truist Financial Corporation (NYSE:TFC) Q4 2024 Earnings Conference Call January 17, 2025 8:00 AM ET Company Participants Brad Milsaps - IR Bill Rogers - Chairman and CEO Mike Maguire - CFO Conference Call Participants Scott Siefers - Piper Sandler Ebrahim Poonawala - Bank of America Matt O'Connor - Deutsche Bank Erika Najarian - UBS Betsy Graseck - Morgan Stanley John Pancari - Evercore Saul Martinez - HSBC Mike Mayo - Wells Fargo Gerard Cassidy - RBC Operator Greetings, ladies and gentlemen, and welcome t ...

Earnings Call Overview - Truist Financial Corporation held its Q4 2024 earnings conference call on January 17, 2025, at 8:00 AM ET [1] - The call included participation from Chairman and CEO Bill Rogers, CFO Mike Maguire, and Chief Risk Officer Brad Bender, along with other senior management members [4] - The discussion focused on Q4 2024 results, current business conditions, and the 2025 outlook [4] Presentation Details - The presentation included forward-looking statements and non-GAAP financial measures, with disclosures available on Slides 2 and 3 of the accompanying presentation [5] - Supplemental financial information and the earnings release were accessible on the Truist Investor Relations website [4] Participants - Key participants included Brad Milsaps (IR), Bill Rogers (Chairman and CEO), Mike Maguire (CFO), and Brad Bender (Chief Risk Officer) [4] - Analysts from major financial institutions such as Piper Sandler, Bank of America, Deutsche Bank, UBS, Morgan Stanley, Evercore, HSBC, Wells Fargo, and RBC were present [1]

Earnings Performance - Truist Financial's Q4 2024 adjusted earnings per share of $0.91 surpassed the Zacks Consensus Estimate of $0.87, marking a 12.3% YoY increase [1] - Adjusted earnings for 2024 were $3.69 per share, beating the Zacks Consensus Estimate by $0.01 [3] - Net income available to common shareholders (GAAP basis) was $1.22 billion in Q4 2024, compared to a loss of $5.17 billion in the prior-year quarter [3] - Full-year 2024 net income available to common shareholders (GAAP basis) was $4.47 billion, a significant improvement from a net loss of $1.45 billion in the previous year [3] Revenue and Expenses - Q4 2024 total revenues of $5.06 billion grew 3.6% YoY, beating the Zacks Consensus Estimate of $5 billion [4] - Full-year 2024 revenues were $13.28 billion, down 33.7% YoY and lagging the Zacks Consensus Estimate of $19.87 billion [4] - Tax-equivalent net interest income (NII) increased 1.8% to $3.64 billion in Q4 2024, driven by balance sheet repositioning [4] - Non-interest income rose 7.9% to $1.47 billion in Q4 2024, driven by higher investment banking, trading income, mortgage banking income, and service charges [5] - Non-interest expenses were $3.04 billion in Q4 2024, down 68.2% YoY, but adjusted non-interest expenses rose 7.6% to $3.03 billion [6] Credit Quality and Provisions - Net charge-offs were 0.59% of average loans and leases in Q4 2024, up 2 bps YoY [8] - The allowance for loan and lease losses was 1.59% of total loans and leases held for investment, increasing 5 bps YoY [8] - Provision for credit losses was $471 million in Q4 2024, down 17.7% from the prior-year quarter [8] - Total non-performing assets (NPAs) were $1.48 billion as of Dec 31, 2024, down marginally [9] Profitability and Capital Ratios - Return on average common equity improved to 8.4% in Q4 2024, compared to a negative 36.6% in Q4 2023 [10] - Tier 1 risk-based capital ratio was 12.9% as of Dec 31, 2024, up from 11.6% in the prior-year quarter [10] - Common equity Tier 1 ratio was 11.5% as of Dec 31, 2024, up from 10.1% as of Dec 31, 2023 [10] Share Repurchases - Truist Financial repurchased shares worth $500 million during Q4 2024 [11] Peer Performance - Wells Fargo reported Q4 2024 adjusted earnings per share of $1.42, surpassing the Zacks Consensus Estimate of $1.34 and up from $1.29 in the prior-year quarter [13] - JPMorgan's Q4 2024 earnings per share were $4.81, significantly surpassing the Zacks Consensus Estimate of $4.03 [14]

Earnings Performance and Strategic Initiatives - Truist Financial reported its Q4 and full-year 2024 earnings, highlighting efforts to address digital disruption and evolving consumer expectations in modern banking [1] - Adjusted noninterest expenses rose 4% quarter-over-quarter, driven by higher professional fees and technology-related costs, but achieved a 0.4% year-over-year reduction in adjusted expenses [2] - The bank exceeded analyst estimates for the quarter and issued Q1 2025 guidance, leading to a 5% stock price increase [3] Digital Transformation and Customer Engagement - Truist enhanced its digital offerings for wholesale banking clients, including electronic bill presentment, to align with evolving customer needs [4] - The bank integrated technology into consumer and wholesale banking operations, with tools like Truist One View simplifying user experiences and providing actionable insights [5] - By Q4 2024, Truist had over 5 million active mobile app users, a 1% increase from the prior quarter, with users averaging 18 log-ins per month [6] Growth in Digital Adoption and Demographic Shifts - Digital account production increased by 13% year-over-year, and new household acquisition grew by 31%, driven by younger clients [7] - Generation Z accounted for a 68% year-over-year increase in consumer checking accounts, reflecting the bank's strategy to cultivate long-term relationships with younger clients [7] - Consumer deposit balances for digitally opened accounts grew 80% year-over-year, with 40% of these balances held by Gen Z and millennial clients [8] Financial Performance and Future Outlook - Net interest income for Q4 decreased by 0.4% compared to Q3 2024, reflecting lower investment banking and trading income [9] - Truist aims to expand in high-growth markets, drive positive operating leverage, and maintain risk discipline and capital efficiency in 2025 [10] Competitive Landscape and Industry Challenges - The banking industry faces increased competition from FinTech disruptors and a shifting regulatory environment, but Truist delivered positive operating leverage and maintained financial stability [5] - Rising costs in professional fees and technology investments highlight the need to balance growth with cost efficiency [9]

Investment Strategy - The strategy focuses on a dividend-oriented value approach, emphasizing capital preservation and steadily growing income [1] - The portfolio consists of high-quality value stocks that offer meaningful growth and long-term safety [1] Portfolio Composition - The portfolio is diversified and includes stocks that the author holds, with a focus on dividend-paying value stocks [1] Author's Position - The author holds a beneficial long position in TFC and USB through stock ownership, options, or other derivatives [2]

For the quarter ended December 2024, Truist Financial Corporation (TFC) reported revenue of $5.06 billion, down 11.2% over the same period last year. EPS came in at $0.91, compared to $0.81 in the year-ago quarter.The reported revenue represents a surprise of +1.13% over the Zacks Consensus Estimate of $5 billion. With the consensus EPS estimate being $0.87, the EPS surprise was +4.60%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to ...

Earnings and Revenue Performance - Truist Financial's Q4 2024 adjusted diluted EPS of $0.91 beat analysts' estimate of $0.88, representing a 12.3% YoY increase [1][3] - Revenue for Q4 2024 reached $5.11 billion, exceeding the expected $5.04 billion and showing a 3.4% YoY growth [1][3] - Net interest income increased by 1.7% YoY to $3.64 billion, while noninterest income rose 7.9% YoY, driven by investment banking and trading revenue [3][6] Expense Management and Profitability - Noninterest expenses increased by 3.7% QoQ and 4% on an adjusted basis, reflecting higher technology and risk infrastructure investments [7] - The net interest margin (NIM) decreased by five basis points QoQ, indicating potential pressure from anticipated rate changes [7] - Management expects adjusted expenses to decrease by 3% in Q1 2025 compared to Q4 2024, with full-year 2025 adjusted expense growth projected at up to 1.5% [10][11] Lending and Asset Quality - Average loans and leases held for investment remained flat, with consumer loans growing 1.2% while commercial loans declined 0.8% [8] - Residential mortgages and auto loans showed growth, offsetting declines in commercial industrial and real estate portfolios [8] - The CET1 ratio improved to 11.5%, up 1.4 percentage points YoY, reflecting strong capitalization [3][8] Strategic Focus and Outlook - Truist Financial maintains a strong market position in high-growth regions like Florida and Georgia, with a focus on digital innovation and technological development [4] - The company plans $500 million in share repurchases for Q4 2024 and aims to enhance digital services to attract new clients [9][11] - Management projects 2025 adjusted revenue growth of 3% to 3.5% and a net charge-off ratio of 60 bps, with cautious optimism for profitability [10][11] Regulatory and Competitive Environment - As a Category III banking organization, Truist faces enhanced prudential standards and capital requirements, which are critical for sustaining operations and strategic expansions [5] - The company continues to navigate a complex regulatory environment while maintaining disciplined capital management and exploring potential mergers and acquisitions [5][12]

Earnings Performance - Truist Financial reported quarterly earnings of $0.91 per share, beating the Zacks Consensus Estimate of $0.87 per share, representing a 4.60% earnings surprise [1] - This compares to earnings of $0.81 per share a year ago [1] - In the previous quarter, the company posted earnings of $0.97 per share, surpassing the expected $0.89 per share, with an 8.99% surprise [1] - Over the last four quarters, the company has consistently surpassed consensus EPS estimates [2] Revenue Performance - Truist Financial reported revenues of $5.06 billion for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 1.13% [2] - This compares to year-ago revenues of $5.7 billion [2] - The company has topped consensus revenue estimates three times over the last four quarters [2] Stock Performance - Truist Financial shares have gained approximately 3.7% since the beginning of the year, outperforming the S&P 500's gain of 1% [3] - The stock's immediate price movement will depend on management's commentary during the earnings call [3] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.86 on $5 billion in revenues [7] - For the current fiscal year, the consensus EPS estimate is $3.87 on $20.53 billion in revenues [7] - The estimate revisions trend for Truist Financial is mixed, resulting in a Zacks Rank 3 (Hold) [6] Industry Context - Truist Financial belongs to the Zacks Banks - Major Regional industry, which is currently in the top 26% of the 250 plus Zacks industries [8] - The top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [8] Peer Comparison - BankUnited, Inc (BKU), another company in the same industry, is expected to report quarterly earnings of $0.71 per share, representing a year-over-year change of -1.4% [9] - BankUnited's revenues are expected to be $259.7 million, up 10.8% from the year-ago quarter [9] - The consensus EPS estimate for BankUnited has remained unchanged over the last 30 days [9]

From time to time we have made, and in the future will make, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as "believe," "expect," "anticipate," "intend," "pursue," "seek," "continue," "estimate," "project," "outlook," "forecast," "potential," "target," "objective," "trend," "plan," "goal," "in ...

Quarterly Performance Summary - Quarterly Performance Summary for Truist Financial Corporation in Q4 2024[1] - Net interest income for the quarter ended Dec. 31, 2024, was $3.59 billion, compared to $3.52 billion in the previous quarter[3] - Noninterest income for the quarter ended Dec. 31, 2024, was $1.47 billion, compared to $(5.21) billion in the previous quarter[3] - Net income available to common shareholders for the quarter ended Dec. 31, 2024, was $1.22 billion, compared to $826 million in the previous quarter[3] - Earnings per share-diluted for the quarter ended Dec. 31, 2024, was $0.91, compared to $0.62 in the previous quarter[3] - Return on average assets for the quarter ended Dec. 31, 2024, was 0.96%, compared to 0.70% in the previous quarter[3] - Nonperforming loans and leases as a percentage of LHFI for the quarter ended Dec. 31, 2024, was 0.47%, compared to 0.46% in the previous quarter[3] - Common equity tier 1 ratio for the quarter ended Dec. 31, 2024, was 11.5%, compared to 11.6% in the previous quarter[3] - Total shareholders' equity as of Dec. 31, 2024, was $63.68 billion, compared to $65.70 billion in the previous quarter[3] - Liquidity coverage ratio as of Dec. 31, 2024, was 109%, compared to 112% in the previous quarter[3] - Net interest income for the quarter ended Dec. 31, 2024, was $3.59 billion, compared to $3.52 billion in the previous quarter[7] - Noninterest income for the quarter ended Dec. 31, 2024, was $1.47 billion, a significant recovery from a loss of $5.21 billion in the previous quarter[7] - Net income (loss) available to common shareholders for the quarter ended Dec. 31, 2024, was $1.22 billion, compared to a loss of $5.17 billion in the previous quarter[7] - Earnings per common share (diluted) for the quarter ended Dec. 31, 2024, was $0.91, compared to a loss of $3.87 in the previous quarter[7] - Wealth management income for the quarter ended Dec. 31, 2024, was $345 million, a 1.4% decrease from $350 million in the previous quarter[7] - Investment banking and trading income for the quarter ended Dec. 31, 2024, was $262 million, a 21.1% decrease from $332 million in the previous quarter[7] - Total Truist Financial Corporation net income from continuing operations was $1,289 million in Q4 2024, a significant improvement from a loss of $5,191 million in Q4 2023[25] Financial Statements and Metrics - Consolidated Statements of Income and Ending Balance Sheets included in the report[2] - Average Balances and Rates for both Quarters and Year-to-Date provided[2] - Credit Quality and Segment Financial Performance detailed[2] - Capital Information and Selected Mortgage Banking Information included[2] - Additional Information and Selected Items covered in the report[2] - Total interest income for the year-to-date 2024 was $25.07 billion, a 2.5% increase from $24.45 billion in 2023[7] - Provision for credit losses for the quarter ended Dec. 31, 2024, was $471 million, a 17.7% decrease from $572 million in the previous quarter[7] - Total noninterest expense for the quarter ended Dec. 31, 2024, was $3.04 billion, a 3.7% increase from $2.93 billion in the previous quarter[7] - Total assets increased to $531.176 billion as of December 31, 2024, up from $523.434 billion in the previous quarter[9] - Total loans and leases held for investment decreased slightly to $306.383 billion in December 2024 from $307.224 billion in March 2024[9] - Total deposits remained stable at $390.524 billion in December 2024, compared to $387.778 billion in September 2024[9] - Securities available for sale at fair value increased to $67.464 billion in December 2024, up from $64.111 billion in September 2024[9] - Commercial and industrial loans decreased to $154.848 billion in December 2024 from $160.788 billion in December 2023[9] - Residential mortgage loans increased to $55.599 billion in December 2024, up from $53.963 billion in September 2024[9] - Total shareholders' equity decreased to $63.679 billion in December 2024 from $65.696 billion in September 2024[9] - Allowance for loan and lease losses increased slightly to $4.857 billion in December 2024 from $4.798 billion in December 2023[9] - Interest-bearing deposits with banks increased to $33.975 billion in December 2024 from $25.230 billion in December 2023[9] - Goodwill remained stable at $17.125 billion in December 2024, consistent with previous quarters[9] - Total interest-bearing deposits averaged $280,229 million with a yield of 2.80% for the year-to-date period ending December 31, 2024[14] - Net interest income for the year-to-date period was $14,303 million, with a net interest margin of 3.03%[14] - Total loans and leases held for investment averaged $305,233 million with a yield of 6.34%[14] - Commercial and industrial loans averaged $155,674 million with a yield of 6.36%[14] - Residential mortgage loans averaged $54,486 million with a yield of 3.88%[14] - Total securities averaged $123,858 million with a yield of 2.83%[14] - Noninterest-bearing deposits averaged $107,639 million[14] - Short-term borrowings averaged $24,499 million with a yield of 5.36%[14] - Long-term debt averaged $36,713 million with a yield of 4.94%[14] - Total deposits averaged $387,868 million with a yield of 2.02%[14] - Total assets increased to $531,176 million in Q4 2024, compared to $535,349 million in Q4 2023, with tangible assets at $512,902 million[27] - Tangible common equity per common share improved to $30.01 in Q4 2024, up from $21.83 in Q4 2023, reflecting stronger financial health[27] - The supplementary leverage ratio improved to 8.8% in Q4 2024, up from 7.9% in Q4 2023, indicating stronger capital adequacy[27] Credit Quality and Loan Performance - Nonperforming loans and leases as a percentage of loans and leases held for investment increased to 0.47% in Dec. 2024 from 0.44% in Dec. 2023[18] - Nonperforming assets decreased to $1,477 million as of Dec. 31, 2024, compared to $1,488 million in Dec. 2023[17] - Total nonaccrual loans and leases held for investment stood at $1,429 million as of Dec. 31, 2024, slightly down from $1,467 million in Sept. 2024[17] - Loans 90 days or more past due and still accruing increased to $587 million as of Dec. 31, 2024, up from $518 million in Sept. 2024[17] - Loans 30-89 days past due rose to $1,949 million as of Dec. 31, 2024, compared to $1,769 million in Sept. 2024[17] - Net charge-offs as a percentage of average loans and leases increased to 0.59% in 2024, up from 0.50% in 2023[20] - The allowance for credit losses ended at $5,161 million as of Dec. 31, 2024, compared to $5,093 million in Dec. 2023[22] - Total charge-offs for 2024 amounted to $2,216 million, higher than $1,920 million in 2023[22] - Recoveries for 2024 totaled $413 million, up from $325 million in 2023[22] - The ratio of allowance for loan and lease losses to net charge-offs decreased to 2.7X in 2024 from 3.0X in 2023[20] - Net charge-offs as a percentage of average loans and leases for commercial and industrial loans increased to 0.27% in Q4 2024, up from 0.23% in Q4 2023[23] - Indirect auto loan charge-offs rose to 2.33% in Q4 2024, compared to 2.19% in Q4 2023[23] - Credit card charge-offs reached 5.10% in Q4 2024, up from 4.38% in Q4 2023[23] - Total loans and leases charge-offs increased to 0.59% in Q4 2024, compared to 0.57% in Q4 2023[23] Segment Performance - Consumer and Small Business Banking segment net interest income grew to $2,591 million in Q4 2024, up from $2,630 million in Q4 2023[25] - Wholesale Banking segment net income improved to $1,001 million in Q4 2024, recovering from a loss of $2,165 million in Q4 2023[25] - Other, Treasury & Corporate segment reported a net loss of $504 million in Q4 2024, compared to a loss of $426 million in Q4 2023[25] Capital and Liquidity - Common equity tier 1 capital increased to $48,223 million in Q4 2024, up from $42,671 million in Q4 2023, with a ratio of 11.5% compared to 10.1% in Q4 2023[27] - Brokered deposits decreased to $28,085 million in Q4 2024 from $31,260 million in Q4 2023, indicating a shift in deposit strategy[29] - FTEs (full-time equivalents) for continuing operations decreased to 37,661 in Q4 2024 from 40,997 in Q4 2023, showing workforce optimization[29] Mortgage Banking and Real Estate - Total mortgage banking income rose to $117 million in Q4 2024, up from $94 million in Q4 2023, driven by growth in both residential and commercial mortgage income[29] - Residential mortgage loan originations surged to $4,745 million in Q4 2024, a significant increase from $3,027 million in Q4 2023[29] - Total servicing portfolio for residential mortgages stood at 273,412 loans in Q4 2024, slightly down from 269,068 loans in Q4 2023[29] Market and Stock Performance - The company's common stock price ended at $43.38 in Q4 2024, up from $36.92 in Q4 2023, reflecting improved market confidence[29] Special Items and Adjustments - Restructuring charges in Q4 2024 amounted to $11 million pre-tax, impacting diluted EPS by $(0.01)[32] - FDIC special assessment in Q4 2024 resulted in a pre-tax cost of $8 million, with no impact on diluted EPS[32] - Gain on sale of TIH in Q3 2024 contributed $36 million pre-tax, increasing diluted EPS by $0.01[32] - Loss on sale of securities in Q2 2024 was $6,650 million pre-tax, reducing diluted EPS by $(3.80)[32] - Goodwill impairment in Q4 2023 was $6,078 million pre-tax, significantly impacting diluted EPS by $(4.53)[32] - FDIC special assessment in Q4 2023 cost $507 million pre-tax, reducing diluted EPS by $(0.29)[32] - Restructuring charges in Q4 2023 totaled $183 million pre-tax, decreasing diluted EPS by $(0.10)[32] - Discrete tax benefit in Q4 2023 provided $204 million after-tax, positively impacting diluted EPS by $0.15[32] - Accelerated recognition of TIH equity compensation expense in Q1 2024 was $89 million pre-tax, reducing diluted EPS by $(0.05)[32] - Charitable contribution in Q2 2024 amounted to $150 million pre-tax, decreasing diluted EPS by $(0.09)[32] Asset and Liability Management - Average balances of U.S. Treasury securities increased to $14,387 million in Q4 2024, with a yield of 5.40%, up from $10,967 million and a yield of 1.37% in Q4 2023[11] - Mortgage-backed securities issued by GSE saw average balances rise to $109,644 million in Q4 2024, with a yield of 2.89%, compared to $118,548 million and a yield of 2.48% in Q4 2023[11] - Commercial and industrial loans averaged $153,209 million in Q4 2024, with a yield of 5.95%, slightly down from $160,278 million and a yield of 6.58% in Q4 2023[11] - Residential mortgage loans averaged $54,390 million in Q4 2024, with a yield of 3.94%, compared to $55,658 million and a yield of 3.83% in Q4 2023[11] - Credit card loans averaged $4,926 million in Q4 2024, with a yield of 11.54%, up from $4,996 million and a yield of 11.84% in Q4 2023[11] - Total loans and leases held for investment averaged $303,110 million in Q4 2024, with a yield of 6.12%, compared to $312,587 million and a yield of 6.36% in Q4 2023[11] - Interest-bearing deposits in checking accounts averaged $107,075 million in Q4 2024, with a yield of 2.52%, up from $101,722 million and a yield of 2.48% in Q4 2023[11] - Money market and savings deposits averaged $138,242 million in Q4 2024, with a yield of 2.41%, compared to $137,464 million and a yield of 2.43% in Q4 2023[11] - Time deposits averaged $36,757 million in Q4 2024, with a yield of 3.66%, down from $41,592 million and a yield of 4.19% in Q4 2023[11] - Total earning assets averaged $472,639 million in Q4 2024, with a yield of 5.25%, compared to $481,538 million and a yield of 5.22% in Q4 2023[11] Corporate Transactions - The company completed the sale of its remaining 80% stake in TIH, resulting in an after-tax gain of $4.8 billion[4] - The company completed the sale of its IH segment on May 6, 2024, resulting in an after-tax gain of $4.8 billion[7] - The company completed the sale of its remaining 80% stake in TIH on May 6, 2024, resulting in an after-tax gain of $4.8 billion[26] - Corporate expense allocation methodology was enhanced in Q3 2024 to more fully allocate certain overhead or functional expenses[26]