Key Takeaways Truist Financial (TFC) on Monday posted second-quarter profit that fell by a third from last year, but its stock rose as adjusted earnings per share (EPS) beat analysts' expectations. The net income drop is partially attributable to the sale of a securities portfolio that resulted in $5.1 billion in after-tax losses, along with an after-tax donation of $115 million to the Truist Foundation. However, adjusted EPS came in at $0.91, topping analysts' expectation of $0.85. "While loan demand does ...

Financial Data and Key Metrics Changes - Adjusted revenue grew by 3% on a linked quarter basis, driven by a 4.5% increase in net interest income due to balance sheet repositioning [6][47] - Adjusted net income available to common shareholders was $1.2 billion or $0.91 per share, excluding certain gains and losses [11][16] - The CET1 ratio increased from 10.1% to 11.6% due to the sale of Truist Insurance Holdings and organic capital generation [22][47] Business Line Data and Key Metrics Changes - Average loans decreased by 0.7% sequentially, with commercial loans down by $1.3 billion or 0.7% and consumer loans down by $1 billion or 0.9% [17] - Adjusted non-interest income decreased by $8 million or 0.6% relative to the first quarter, primarily due to lower investment banking and trading income [19] - Digital checking account production among Gen Z and millennial clients increased by 42% year-over-year [7] Market Data and Key Metrics Changes - Average deposits decreased by 0.3% sequentially, with non-interest bearing deposits down by 1.2% [18] - Total deposit costs increased by 6 basis points sequentially to 2.09% [18] - The net charge-off ratio decreased by 6 basis points to 58 basis points, reflecting lower consumer losses [20] Company Strategy and Development Direction - The company is focused on growing its core consumer and wholesale banking businesses while maintaining expense discipline [12][26] - Investments in digital capabilities and enhancements to enterprise platforms are aimed at improving client engagement and satisfaction [7][28] - The company plans to return capital to shareholders through a $5 billion share repurchase program [12][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth opportunities despite current slow loan demand [12][29] - The company anticipates a 1% to 2% increase in revenue for Q3 2024 and expects net interest income to rise by 2% to 3% [23][24] - Management acknowledged the need for cautious optimism regarding client activity and loan demand [33][35] Other Important Information - The company completed the divestiture of Truist Insurance Holdings, generating significant capital for growth and shareholder returns [14][42] - The company made a $150 million charitable contribution to the Truist Foundation from the proceeds of the sale [42] - The company is committed to maintaining flat adjusted expenses in 2024 compared to 2023 [54] Q&A Session All Questions and Answers Question: What are the drivers of sequential NII growth over the next few quarters? - Management expects growth to be driven by increased client loan demand and core balances, but remains cautious about timing due to current market uncertainties [33][35] Question: When do you expect loan growth to turn positive? - Management indicated that while loan balances are stabilizing, they do not expect significant growth in the near term due to client caution [65][66] Question: How will another rate cut affect NII guidance? - Management noted that while one rate cut is expected in November, additional cuts could provide benefits, but they remain cautious about the timing and impact [98][99] Question: What is the outlook for investment banking revenues? - Management expressed confidence in the investment banking business, noting that they are gaining market share and expect continued momentum [75][102] Question: What is the expected CET1 ratio moving forward? - Management confirmed that the CET1 ratio is expected to remain stable at 11.6% unless growth opportunities arise that require additional capital [83][84]

For the quarter ended June 2024, Truist Financial Corporation (TFC) reported revenue of $4.97 billion, down 16.1% over the same period last year. EPS came in at $0.91, compared to $0.95 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $4.87 billion, representing a surprise of +1.89%. The company delivered an EPS surprise of +8.33%, with the consensus EPS estimate being $0.84. While investors scrutinize revenue and earnings changes year-over-year and how they compare ...

Adjusted Revenues Down, Adjusted Expenses Fall Non-interest expenses were $3.09 billion, up 1.6%. Excluding certain non-recurring items, adjusted non-interest expenses declined 3% to $2.81 billion. The decline was mainly attributable to lower personnel expenses. Our estimate for adjusted non-interest expenses was $2.85 billion. Provision for credit losses was $451 million in the second quarter, down 16.2% from the prior-year quarter. Our estimate for provisions was $525.5 million. Major Developments In aggr ...

Company Performance - Truist Financial reported quarterly earnings of $0.91 per share, exceeding the Zacks Consensus Estimate of $0.84 per share, but down from $0.95 per share a year ago [5] - The company posted revenues of $4.97 billion for the quarter, surpassing the Zacks Consensus Estimate by 1.89%, but down from $5.92 billion year-over-year [6] - The company has surpassed consensus EPS estimates three times over the last four quarters [11] Earnings Expectations - The current consensus EPS estimate for the upcoming quarter is $0.84 on revenues of $5 billion, and for the current fiscal year, it is $3.44 on revenues of $19.75 billion [14] - The sustainability of the stock's immediate price movement will depend on management's commentary during the earnings call [2] Industry Context - Truist Financial belongs to the Zacks Banks - Major Regional industry, which is currently ranked in the top 13% of over 250 Zacks industries [9] - The stock has added approximately 14.9% since the beginning of the year, compared to the S&P 500's gain of 15.4% [12]

Quarterly Performance Summary Truist Financial Corporation Second Quarter 2024 Ta b l e o f C o n t e n t s Q u a r t e rly P e rfo r m a n c e S u m m a r y T r uis t Fin a n cial C o r p o r a tio n | P | a | g | e | Fin | a | n | cial | Hig | hlig | h | t | s | 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | - ...

Core Insights - Truist Financial Corporation reported its second quarter 2024 results, with a live earnings call accessible to investors [1] - The company is a leading U.S. commercial bank with a strong market presence in high-growth areas [2] - As of June 30, 2024, Truist has total assets amounting to $520 billion [2] Company Overview - Truist is a purpose-driven financial services company focused on improving lives and communities [2] - The bank offers a diverse range of products and services, including consumer banking, commercial banking, corporate and investment banking, wealth management, payments, and specialized lending [2] - Truist is headquartered in Charlotte, North Carolina, and ranks among the top-10 commercial banks in the U.S. [2]

Core Viewpoint - Truist Financial Corporation (TFC) has shown mixed results in recent quarters, with a significant recovery in stock price since the banking crisis in 2023, but still faces challenges related to its merger and operational issues [1][21][22]. Financial Performance - Truist's quarterly earnings surprises have been inconsistent, with 2023 showing negative surprises of -5%, -10%, +2%, and -10%, while Q1 2024 saw a positive surprise of 12% above consensus [2][3]. - The current quarterly estimate for Truist is $0.83 per share with total revenues expected to be $4.8 billion [3]. Key Metrics - Truist's net interest margin (NIM) has been disappointing since the merger of BB&T and SunTrust, attributed to rising deposit costs and a competitive loan market [3][4]. - Average total deposits at Truist fell by 4.75% from Q1 2023 to Q1 2024, while U.S. Bancorp's deposits only decreased by 1.42%, indicating a weaker position for Truist [5][16]. - Charge-offs have remained in line with national trends, and current levels are comparable to those seen in the 1990s and early 2000s [19]. Market Position and Competitiveness - Truist is currently the 8th largest regional bank in the U.S. with consolidated assets of $527 billion, but continues to lag behind larger competitors like U.S. Bancorp in terms of loan and deposit growth [21]. - The bank's decision not to increase its dividend after the 2024 stress test results contrasts with U.S. Bancorp's plans to raise its payout, reflecting a more conservative approach by Truist management [22]. Future Outlook - The market is cautiously optimistic about Truist's potential for deposit growth, especially following U.S. Bancorp's positive results, but concerns remain about the bank's operational efficiency and management's ability to deliver on promises [21][23]. - The Federal Reserve's Bank Term Funding Program (BTFP) has provided some stability, but the potential mark-to-market losses in Truist's held-to-maturity portfolio remain a theoretical risk rather than a practical one [20].

Core Viewpoint - The financial outlook for Truist Financial Corporation (TFC) indicates a challenging environment with expected declines in net interest income and average loan balances, while certain segments like investment banking are projected to show growth. Group 1: Loan Demand and Interest Income - Demand for commercial and industrial loans was modest, accounting for roughly 50% of TFC's total loans and leases held for investment, while consumer loan demand was subdued, representing almost 40% of total loans [1] - The consensus estimate for net interest income (NII) is pegged at $3.5 billion, indicating a 4.7% year-over-year decline [3] - Management expects average loan balances to decline modestly, projecting average loans of $308.9 billion, which reflects a 5.9% fall from the prior-year quarter [18] Group 2: Non-Interest Income and Fees - The consensus estimate for total non-interest income is pegged at $1.43 billion, indicating a 3.7% growth from the prior-year quarter [6] - A rebound in the capital markets business is expected to support TFC's fee income, with an estimated investment banking and trading income of $296.5 million, suggesting a 40.5% jump [4] - The Zacks Consensus Estimate for card and payment-related fees is $216.9 million, indicating an 8.1% decline [5] Group 3: Expenses and Asset Quality - Management expects adjusted expenses to rise by 4% sequentially due to higher professional fees and marketing costs [8] - The consensus estimate for non-performing assets is pegged at $1.75 billion, indicating a rise of 26.1% [9] - The estimate for provision for credit losses is pegged at $525.5 million, reflecting concerns over potential bad loans [26] Group 4: Major Developments - Truist completed the sale of its remaining 80% stake in its insurance subsidiary, resulting in after-tax cash proceeds of approximately $10.1 billion and an after-tax gain of $4.7 billion [27] - Following the divestiture, TFC executed a balance sheet repositioning strategy, selling $27.7 billion worth of lower-yielding investment securities [11] - The balance sheet repositioning generated $29.3 billion available for reinvestment, despite resulting in an after-tax loss of $5.1 billion in the upcoming quarter [28] Group 5: Earnings Estimates - The Zacks Consensus Estimate for TFC's second-quarter earnings is 78 cents per share, indicating a decline of 17.9% from the year-ago reported number [30] - The consensus estimate for sales is pegged at $4.86 billion, suggesting a year-over-year fall of 17.8% [14] - Management expects total revenues (FTE) to increase by 1% sequentially, influenced by interest income from the sale proceeds and balance sheet repositioning [36]

Earnings Expectations for Truist Financial - Truist Financial is expected to report quarterly earnings of $0.78 per share, reflecting a year-over-year decline of 17.9% [2] - Revenues are anticipated to be $4.86 billion, down 17.8% from the same quarter last year [18] - The Most Accurate Estimate for Truist Financial is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -2.72%, indicating a bearish outlook from analysts [6] Estimate Revisions and Predictions - The consensus EPS estimate has been revised 1.64% higher over the last 30 days, suggesting a reassessment by covering analysts [3] - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [5] - Truist Financial currently holds a Zacks Rank of 3, making it difficult to predict a definitive earnings beat [22][28] Earnings Surprise History - Over the last four quarters, Truist Financial has beaten consensus EPS estimates two times [24] - The company's previous quarter saw an earnings surprise of +15.38%, with actual earnings of $0.90 per share against an expectation of $0.78 [13] Comparison with BankUnited - BankUnited is expected to report earnings of $0.65 per share for the same quarter, indicating a year-over-year change of -16.7% [27] - BankUnited's revenues are projected to be $243.8 million, up 1.9% from the previous year [27] - BankUnited has an Earnings ESP of 0.00% and a Zacks Rank of 3, making it similarly challenging to predict an earnings beat [15][28]