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 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]

Financial Performance - Net income available to common shareholders for 4Q24 was $1.2 billion, or $0.91 per share[18, 36] - The company returned $3.8 billion of capital to shareholders through dividends and share repurchases in 2024[18] - Adjusted revenue for 2024 was $20.1 billion[34] - Adjusted expenses for 2024 were $11.33 billion[34] - The net charge-off ratio for 2024 was 0.59%[18] Digital Growth - Active mobile app users increased to over 5 million, up 1% linked quarter[20] - Digital account production increased by 13% year-over-year[29] - New household acquisition increased by 31% year-over-year[29] Balance Sheet and Portfolio - Average deposits increased 3% vs 3Q24[20] - End-of-period commercial loans increased by 0.5% vs 3Q24[20] - The CET1 ratio increased 140 bps vs 12/31/23 to 11.5%[67]

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]

Earnings Report and Access - Truist Financial Corporation reported its fourth quarter 2024 results on January 17, 2025 [1] - The earnings call was scheduled for 8 a m ET on the same day, accessible via webcast or dial-in [1] - The earnings release, investor presentation, and detailed financial schedules are available on Truist's Investor Relations website [1] - A replay of the call will be available on the website for 30 days [1] Company Overview - Truist Financial Corporation is a purpose-driven financial services company focused on inspiring and building better lives and communities [2] - The company is a leading U S commercial bank with a strong market share in high-growth markets across the country [2] - Truist offers a wide range of products and services, including consumer and small business banking, commercial banking, corporate and investment banking, wealth management, payments, and specialized lending [2] - Headquartered in Charlotte, North Carolina, Truist is a top-10 commercial bank with total assets of $531 billion as of December 31, 2024 [2] Webcast and Dial-in Information - The webcast for the earnings call can be accessed at app webinar net/xOqjwYK80mY [3] - The dial-in number for the earnings call is 1-877-883-0383 with passcode 7041380 [3]