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Headquartered in Charlotte, North Carolina, the holding company is the result of the 2019 merger between BB&amp;T and SunTrust Banks. It is the sixth-largest bank in the U.S. by assets and provides services to around 10 million consumer households.

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With origins tracing back to 1872, Truist Financial provides customers in the southeastern and mid-Atlantic U.S. with banking and trust services. Formed from the 2019 merger of BB&amp;T and SunTrust Banks, Truist serves customers through such segments as consumer banking and wealth management, as well as corporate and commercial banking. Savings accounts, asset management, mortgage lending, small-business lending, and credit card lending are among the financial services Truist offers.

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Truist Financial (TFC): Company Profile, Stock Price, News, Rankings

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Truist Financial

truist financial

Greetings, ladies and gentlemen, and welcome to the Truist Financial Corporation First Quarter 2026 Earnings Conference Call. Currently, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this event is being recorded. It is now my pleasure to introduce your host, Mr. Brad Milsaps.

Thank you, Betsy, and good morning, everyone. Welcome to Truist First Quarter 2026 Earnings Call. With us today are Chairman and CEO, Bill Rogers, our CFO, Mike Maguire, and 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 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 two and three 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 of 2026 results, let's begin, as we always do, with purpose on slide four. 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 in 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's 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 five. 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're 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 five, 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 per share.

Our performance was driven by continued execution against strategic priorities, including growth in both consumer and wholesale loans, along with strong non-interest income growth led by our 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%-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 six and seven. 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, 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, advisor 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 in 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 and 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 slide seven. 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 a standout 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 advisor 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 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 $1.9 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 non-interest income, primarily due to growth in investment banking and trading and wealth management income. GAAP non-interest expense decreased 5.9% versus the fourth quarter of 2025, primarily due to lower other expense. Non-interest 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 nine. 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%-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. 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 nine 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%-46%, and our total deposit beta increased from 30%-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 two fewer days in the quarter compared with the fourth quarter and seasonal changes in our deposit mix.

Our net interest margin decreased by five 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%-3%, compared with our prior expectation of 3%-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%-4% average loan growth and the continued benefit from 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 2025 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 non-interest income on slide 12. Non-interest 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. Non-interest 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 non-interest expense on slide 13.

On a linked-quarter basis, non-interest 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. Non-interest 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 remained strong on both a linked-quarter and year-over-year basis. Net charge-offs increased four basis points linked quarter to 61 basis points and were up one basis point versus the first quarter of 2025.

Non-performing loans held for investment increased two basis points linked quarter to 50 basis points of total loans, driven by higher consumer non-performing loans, partially offset by improvement in C&I and CRE. The increase in consumer non-performing loans was primarily due to a change in the non-approval 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 non-performing 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 non-depository 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 on our NDFI loan portfolio on slide 15. As of March 31st, 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 stress environments. Our largest NDFI exposure is to 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 stressed scenarios. Moving now to capital on slide 16. Our 10.8% CET1 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 IRBA. We believe the proposed changes align well with our lending strategies and support continued elevated capital return to our shareholders. 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%-3% compared with our prior expectation of 3%-4%.

On the other hand, we now expect stronger non-interest income growth this year, reflecting continued momentum across all of our fee-based businesses. We now expect high single-digit growth in non-interest income compared with our prior expectation of mid- to high-single-digit growth. In addition, we now expect full year GAAP non-interest expense to increase approximately 1.75% in 2026 versus our previous expectation of 1.25%-2.25% growth. Taken together, although we are modestly refining our revenue outlook to the low end of the prior 4%-5% range, our overall earnings expectations for 2026 remain unchanged. In terms of asset quality, there's 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 2026 versus our previous expectation of $4 billion. In other words, despite the pressure we see in net interest income, our stronger non-interest 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 2026 and our 15% ROTCE target in 2027.

Now, looking into the second quarter of 2026, 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 non-interest income to decline approximately 1% linked-quarter due to lower investment banking and trading income, partially offset by higher other income and card and treasury management fees. Non-interest expense of $3 billion in the first quarter is expected to increase by 3%-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. As we 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%-18% over the next three to five 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. Well, 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.

We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. We ask that you please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question today comes from Scott Siefers with Piper Sandler. Please go ahead.

Morning, guys. Thank you for taking the question.

Hey. Let's see, 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 funds rate cuts impacts things? Just hoping to understand, is that just what it means likely for deposit cost leverage, or are there other factors involved? Then maybe you could talk a little about the competitive environment, particularly on the deposit side, please.

Yeah, sure. Good morning, Scott. No, I think you said it. 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. 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. Probably not unexpected given the expected path on rates. 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, and we mentioned this in our prepared remarks, we are seeing great momentum on the fee side. 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.

Yep. Perfect. On that last point, it was 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 banking on the risk-weighted asset release you'll get from the Fed's new proposals, for instance?

Yeah. I wouldn't attribute the increase from $4 billion-$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 2028 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 2026 and 2027. We're targeting that 10% CET1 level in 2027. As the various moving parts that you would expect contribute to capital planning, that just retrended the buybacks a little bit higher this year. Hopefully that answers your question.

Yeah. It does. That's perfect. Thank you guys very much.

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

Thanks. Good morning. On a follow-up to that longer term 16%-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 projects as you think about that new 16%-18% and how much extra that might be on top of the ones once you get to 15%? Thanks.

Good morning, Ken. It's Mike. I'll start there. Look, I think as you think about the 16%-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 three to five year outlook of 16%-18%. I see our ROA profile moving closer to call it 120 in that sort of 2027 outlook, and I think it creeps a little higher from there.

Yeah, Ken, I would just add, I think the 16%-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 pull to par, and then just efficiencies in our business. Not only is it a ROA story, but it's also an efficiency story. 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. Second, just a question on investment banking. 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? Thanks.

We had broad-based strength this quarter, and especially on a linked quarter basis, you saw outsized performance in trading. 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 the traditional investment banking business. It's broad-based. It's really across all the products.

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 think that's a bit 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. 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 the franchise.

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

Yes. Thank you for taking my question. Bill, this one is for you. I guess I'm wondering why unveil today a new long-term ROTCE target. Fully realize that you have the Basel III reform coming, but Mike also mentioned that wasn't a factor in the repurchase. 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?

Yeah. 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? I think, one, we feel confident in 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?

As Mike highlighted, it's pretty beneficial to our balance sheet. It's beneficial to how we do business. Our ability to redeploy capital as it relates to that is part of it. I think it's a variety of things. We thought it was important to start putting a stake in the ground for your constituency, for our shareholders, and for our teammates. We just feel really good about the momentum we're building.

Just to add to that, Erika, in fairness, we didn't really have a long-term target out there. The 14% and 15% ROTCE targets really are short-term. 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. Really, I think it's the confidence in the momentum that we're seeing in the businesses. Really all three of those factors contributed to our decision to provide a new target.

Thank you. 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. I know you just put a stake in the ground, so clearly you have a view of your future that's bright. At the same time, your market cap to core deposits is quite low relative to your peers. Looking at your board, you have some heavyweight financial institution veterans on your board. Bill, I guess this is sort of a free-flowing question. What are your thoughts on monetizing your business that way?

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 refuted, I think, pretty solidly by the person identified in that. So let's just 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 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 advantaged return to our shareholders. That's the 100% focus of our board, myself, and our team.

The next question comes from Manan Gosalia with Morgan Stanley. Please go ahead.

Bill, question for you on the ROTCE target. I know you laid it out as a three to five year target. 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 both at 15% as we get into 2028 and beyond?

If the question is the 15% was established without any regard to Basel. If that's the question, that's how we established that goal. Then the 16%-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. 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. The 15% was established under sort of, I would say, non-Basel, and then 16%-18% has some incorporation, but more in terms of how we would utilize the capital against our strategies. Does that make sense? Was that the question?

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

Absolutely. I would just add, the Basel impact, while it's a contributing factor, is not the majority of the benefit 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. 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. Just as my follow-up, as we think about net interest margins, Mike, you noted some yield-seeking behavior and more competition on the loan side. I guess, how are you thinking about that 3% level on NIM going forward?

Yeah. We still feel good about getting to a 3% 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. Again, I'd attribute that to the rate path. I think current curve has a cut in 2027. That, coupled with some of the other benefits like the cumulative fixed rate asset repricing and other factors, I think, do get us there in 2027. Who knows? We don't know what the rate path actually will be, so we can hold out some hope. The 3% this year is not likely to happen.

We will see, by the way, Manan, just to clean it up. We will see our net interest margin continue to expand throughout the second half of the year. 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. 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% exit rate as we see it right now.

Great. I appreciate the color. Thank you.

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

Hi. You mentioned an increase in yield-seeking behavior among customers for deposits. I guess everybody loves your markets, obviously. They're moving there, they vacation there, and all the banks are opening up branches and hiring bankers. I ask this question every quarter. It just seems like it continues to pick up. I know you'd say none of this is new. You're used to that, but just seems to be reaching the next level. I think you have the Truist One Checking sign-up bonus. 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 having? Thanks.

Yeah. Mike, it is competitive, as we've noted. We're seeing 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 in the last year. Charlotte, as an example, grows by 150 people a day. 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. That's an important barometer that we look at. First quarter, again, grew net new. That's a critical barometer for us as 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. You also saw the really good production in the places that we're emphasizing.

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. We're starting to see the real benefit of very focused, very targeted deposit production. Then we're seeing deposit production outside of our core franchise. 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 core franchise. Not only are we competing, we're also on the offensive side in lots of places. As Mike noted, rates higher for longer is a tough operating environment for deposits. What we look at is are we creating net new? Are we growing our business with new clients? We see that both in the wholesale and the consumer side.

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

Okay, planting seeds for the future. Just to follow up to your answer to the other question, I wasn't sure on the exact answer about under what conditions would Truist consider, say, another merger of equals? Under what conditions would Truist consider selling to another bank? Under what conditions would Truist consider buying another bank? This topic does come up not just in the press, but with investors, as you know. As you said, 16%-18% ROTCE with a lower risk profile over three to five years seems like you have a game plan. Having said that, the question does come up. Also, Bill, you sound like you have a lot of energy. As we hear you right now, but what's your plan to stay on? How long? Is there a mandatory retirement? I forget. Succession and that whole kind of big question. Thanks.

Mike, you're just going to go after all of them. Okay. All right. Well, let's go down it. 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 firing on more cylinders every day as toward our performance and return objectives. Just be confident that our board has a strong succession process and they can apply against this incredible framework. Just put that one in that category. We've been really clear on the M&A front, Mike. I don't know how to be more clear. That's just not a priority for us. I'll just say it one more time. To part of your question as 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're advantaged given where we're coming from, given the growth that we see. Look, that's going to be the goal is how do we maximize this franchise? How do we create advantage shareholder value? That's the focus every day, again, for me, my team, the board, and our incredible teammates.

All right. That's clear. If I can squeeze one more in? 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 think one, we've been at this for a long time. This is a multi-decade build of our business. As I mentioned in the earlier answers, this ties into our franchise. 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. 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. 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.

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

Ladies and gentlemen, to accommodate all questioners, we ask that you limit yourself to one question. The next question comes from Matt O'Connor with Deutsche Bank. Please go ahead.

Good morning. I was just hoping to dig into the loan growth a little bit, I guess first, why didn't we see a little bit more on the commercial side this quarter and why not more optimistic on the year? 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?

Yeah, sure Matt. Let me take a shot at that. If you look at the commercial corporate banking business, it's up a little over 8% year-over-year and a little just under 2%. We've got good momentum in the places that we're emphasizing. What I really like about it is our team is really focused on the return side. 22% more new relationships, 60% have payments and business associated with it. It's a higher quality. As we enter into the risk profile, it's a higher quality. The revenue per client is higher. I see this investment in the future. Then we're seeing really good activity in other markets, Texas, Pennsylvania, Western PA, Ohio. 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 and more meaningful role. Maybe our at bats are a little smaller, but our batting average is really high. We're winning where we want to win. Then on the consumer side, there was some intentionality on that side. Some of the places that have lower returns, think indirect auto, spreads have tightened pretty significantly there. That's an area that we throttled back a little bit. Our core consumer businesses, so think Sheffield, LightStream, Service Finance, that's up 7.5%+ over like. Average balances are up. Remember, that has a seasonality to it.

The production in those businesses, remember, if you think about power equipment and HVAC and all that, production will go up 30%-50% here in the next couple of quarters. I think we're actually positioned in the right place to be focused on higher returning businesses that achieve really good return for us. Pipelines are strong. Again, pipelines in the businesses, in 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. Please go ahead.

Good morning. Just wanted to follow up, Bill. I guess with all these questions and just from a stock standpoint, I think you said 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 a nominal GDP world of 3%-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? Thanks.

Yeah. Ebrahim, I think what you're seeing is that building over time, right? We're hitting on more cylinders. That growth and revenue continues to increase. As it relates to this specific outlook, 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.

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

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

Morning. Just back to the deposit side of the equation. Can 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. Just lastly, what is your updated rate sensitivity to moves along the curve? Thanks.

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 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 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 see a touch of risk in the up fifties and the down fifties. We're sitting at this strange place where you've got the clients along the option on both sides, right? Whether it's rotation or prepayment, but we're relatively neutral, maybe a better way to put it.

Yeah. In terms of the focus areas, John. I mentioned before the premier production, which is really strong, net new, which is good. Overall, like in our middle market business and across wholesale, we've had a really significant increase in their activity and deposits. 60% of our new business has a mandated component to it. 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. I feel good about the momentum that we've established on the wholesale side and the consumer side. I think today getting new clients is actually really important. 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. Please go ahead.

Good morning, gentlemen. Thank you for the added disclosures on the NDFI. Everyone is obviously giving us better disclosures, which is great. 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 in your disclosure suggests that even in a downturn, losses might be limited. I guess, and you guys have done credit well through the cycle. 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's going to have higher credit issues?

Thanks, Gerard. I appreciate the question. I think, first for us, we start with really strong relationships. We have solid bankers covering these asset managers and the clients. 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%-70% range. We have significant protection in there. We've also modeled this in a stressed environment, and this overall actually performs better than our aggregate C&I portfolio. 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. 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.

Truist Financial (TFC) Q1 2026 Earnings Call Transcript

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