Truist Financial Corporation Price & Performance (TFC)

Thanks, Brad, and good morning, everyone, and thanks for joining our call today. So before we discuss our first quarter results, let's begin as we always do with purpose on Slide four. Truist is a purpose driven company dedicated to inspired in building better lives and communities. Is the foundation and guide for everything we do. In times like this, with a little more uncertainty, our purposeful approach delivered with care resonates more than ever. We're committed to being a steady, reliable and supportive partner helping our clients with financial planning and personalized experiences from dedicated industry specialists that focus on understanding their needs. We're here to support our clients and communities with our strong balance sheet, expert industry advice, digital capabilities and a comprehensive suite of products. Our capital position, our liquidity, our strong market share and our talented purposeful teammates delivering against clear strategy, have us well positioned for any environment. Going to provide some more examples of how our purposeful approach driving our results throughout the call today. So now turning to our results on Slide five. Market volatility and economic uncertainty have certainly increased. Which has resulted in a change in our view of the operating environment.

Investment banking and capital markets activity has slowed materially and the shape of the yield curve has shifted. As a result of these conditions, we're reducing our revenue outlook which now assumes a flat year over year investment banking and trading revenue and slightly lower net interest income due to lower medium term interest rates. Given this outlook, we've also reduced our expenses for the year and are opportunistically buying back additional shares in the second quarter. But what's not changing is our focus on our five key strategic priorities aimed at driving better growth improving profitability towards our medium term targets, achieving positive operating leverage. First, we're executing against our strategic growth initiatives, which include deepening and expanding existing client relationships in areas like Premier Banking, middle market banking, payments and wealth, all of which represents significant opportunities to capture additional share within our existing client base. Second, we're fully committed to maintaining our expense discipline which was once again evident in the first quarter. We continue to expect to achieve positive operating leverage in 2025 and believe that we can offset a portion of our lower revenue outlook by finding additional efficiencies in our company. Third, although the absolute rate of expense growth will be lower, we are continuing our investments in talent and our technology platform which is improving the client experience driving new account production and delivering efficiencies.

One example of these investments is a new patented artificial intelligence tool called Truist Client Pulse, that will give our teammates insights into friction points with clients. We'll be able to leverage real time actionable data to effectively listen to our clients' needs and enhance their Truist experience. Fourth, we'll never take for granted our strong track record of asset quality as we will continue to focus on maintaining strong risk discipline and controls. We have strengthened and de risked our balance sheet over the last several years and our credit and risk teams are fully engaged with our clients to better understand the impact of the changing economic landscape. Finally, our relative capital advantage allows us to accomplish our strategic growth goals and return capital to our shareholders in the form of dividends and share repurchases over the next several years. As you can see, we continue to feel good about our strong foundation and our positive momentum across our banking franchise, was evident in our first quarter results. For the first quarter, we reported net income available to common shareholders of $1,200,000,000 or $0.87 a share. At a high level, our solid performance in the first first quarter was defined by several key themes.

The positive loan and deposit growth momentum we experienced in the fourth quarter continued into the first quarter as both average loans and deposits increased linked quarter. Adjusted PPNR remained stable linked quarter as we were able to offset a linked quarter decline in revenue with lower adjusted non interest expenses reflecting our commitment to maintaining that discipline. From a credit and capital perspective, our metrics remain strong. Consistent with the fourth quarter of twenty twenty four, returned $1,200,000,000 of capital to shareholders through our common dividend, and repurchase of $500,000,000 of our common stock during the first quarter of twenty twenty five. We've already completed $5,000,000 of share repurchases in the second quarter of twenty twenty five given our strong capital position and current trading levels, we plan to target up to an additional $250,000,000 of stock this quarter. Before I hand the call over to Mike to discuss the quarterly results, I want to spend some time discussing the progress we're making on our strategic priorities and the positive momentum we're seeing within our business segments and with our digital initiatives on slide six and seven. In Consumer and Small Business Banking, I'm encouraged by another solid quarter consumer loan growth net new checking account growth and progress with our premier banking clients as we deepen relationships and acquired key new clients and households through digital and traditional channels.

Average consumer and small business loan balances increased 1.3% linked quarter due to growth in residential mortgage and direct auto and service finance, with production up 47% year over year and pipelines continuing to increase. Importantly, we're not sacrificing our credit standards or pricing discipline to drive growth. Consumer credit metrics remain stable, new consumer loan production spreads are accretive to the overall portfolio. Debit card spend for our consumer clients increased 4% on a year over year basis with growth coming across all income bands and driven by spending areas in areas like travel and entertainment. Net new checking account growth was once again positive in the first quarter as we added more than 39,000 new consumer and business accounts which reflects a 40% increase over the first quarter of last year. Importantly, we are seeing growth within our Premier Banking segment, which was one of our key focus areas as we've highlighted previously. During the fourth quarter, we generated nearly $1,800,000,000 of new deposit [indiscernible] which represents a 23% year over year increase over the first quarter of twenty twenty four driven by significant improvement in banker productivity and new hires. As an example, we increased the number of financial delivered per banker by 15% which helped drive $1,600,000,000 of new investment production during the quarter as those are highly correlated.

In wholesale, I'm encouraged by this quarter's loan growth, improved production and progress in key focus areas like payments and wealth. During the quarter, we saw 1% growth in average wholesale loans driven by growth from new and existing clients and increased production. As I've mentioned previously, we have a specific focus on capturing more of the middle market. I'm very pleased with the momentum we're already experiencing in production and results. Changing market conditions have made our outlook for investment banking and trading more challenging than we originally estimated to start this year. We did have our second best quarter ever in debt capital markets but lower overall M and A and equity capital markets activity resulted in growth coming in less than expected as many clients postponed planned transactions. However, I am confident that our advice driven business model is well suited to help our clients navigate current market conditions and continue to grow our share given the investments we continue to make in talent, products and industry verticals. In wealth, we launched a new digital client interface that significantly improved the client experience, increased new client and advisor acquisition, and helped drive higher net asset flows despite volatile equity and fixed income markets.

Our payments team continues to launch new services that meet our clients' needs for solutions provide them with speed, simplicity and safety. During the first quarter, we enhanced our real time payments capabilities including launching Zelle disbursements, which enables wholesale clients to more efficiently pay consumers. These enhancements along with continued investments in talent have driven a meaningful increase in overall satisfaction scores as well as ongoing increases in our payments penetration rate with existing clients. Enhancing the client experience and growing our digital capabilities are important parts of our overall strategy. Let me discuss that a little more detail on Slide seven. Truist continues to demonstrate strong performance in digital with year over year growth across all core digital metrics. In the first quarter of twenty twenty five, we opened 195,000 new digital accounts which reflects a 13% increase over the first quarter of last year and includes 77,000 new to bank clients. Over 60% of our new digital clients are millennials and Gen Z, aligning with our strategy to engage clients early and build enduring relationships over time. Truist Assist is our AI tool that supports client conversations and provides a seamless transition to a Truist teammate when an inquiry warrants further assistance.

Truist Assist supported over 1,000,000 conversations in the first quarter of twenty twenty five with more than 80% requiring no further teammate interaction which helps drive further efficiencies in our consumer business as client behavior shift to more self-service. We expect to continue to grow our digital presence with clients as we further leverage our modern and scalable technology platform. Now let me turn it over to Mike to discuss our financial results in a little more detail. Mike?

Thank you, Bill, and good morning, everyone. I will start with our performance highlights on Slide eight. We reported first quarter twenty twenty five GAAP net income available to common shareholders of $1,200,000,000 or $0.87 per share. Included on our results are $02 per share of restructuring charges primarily related to facilities optimization initiatives and severance. Total revenue decreased 3.2% linked quarter as both net interest income and non interest income declined. Adjusted expenses decreased 5.4% linked quarter which helped hold PPNR stable and drive a 130 basis point improvement in our efficiency ratio a linked quarter basis. Next, I'll cover loans and leases on Slide nine. Average loans held for investment increased by 1.1% on a linked quarter basis due to growth in both average commercial and average consumer loans. Average commercial loans increased $1,800,000,000 or 1% primarily due to $2,000,000,000 of growth in C and I loans partially offset by a decline in CRE loan balances. In our consumer portfolio, average loans increased $1,600,000,000 or 1.3% linked quarter to growth in residential mortgage and indirect auto. End of period loans increased $2,300,000,000 or 0.7%. Based on our current loan pipeline and a solid start to the year, continue to believe that we can generate low single digit end of period loan growth 2025.

Moving now to deposit trends on slide 10. Average deposits increased $2,200,000,000 sequentially or 0.6 driven by growth in time deposits and interest checking, was partially offset by declines in non interest bearing and money market and savings balances. End of period deposits increased $13,200,000,000 or 3.4%. Was impacted by two larger but short term client deposits that drove period end deposit balances higher on a linked quarter basis. Excluding the impact of these two deposits, average deposit balances would have been relatively stable on a linked quarter basis. During the quarter, we continued to actively manage rate paid, which resulted in a decrease in our deposit costs. Specifically, total deposit costs decreased by 10 basis points sequentially to 1.79% which implies a 30% cumulative total deposit beta. Interest bearing deposit costs decreased by 16 basis points sequentially 2.46% that represents a 43% cumulative total interest bearing deposit beta. Overall, we expect average deposit balances to remain relatively stable in the second quarter compared with the first quarter of twenty twenty five. Next, I'll move to net interest income and net interest margin on Slide 11. Taxable equivalent net interest income decreased 2.4% linked quarter or $86,000,000 primarily due to the impact of two fewer days in the first quarter.

Our net interest margin decreased six basis points on a linked quarter basis to 3.01%. For full year 2025, we expect net interest income to increase by approximately 3% versus 2024 driven primarily by low single digit loan growth, three twenty five basis point reductions in the Fed funds rate, and the benefit of fixed rate asset repricing. As you can see on the top right hand side of this slide, we updated our outlook for fixed rate asset repricing. We expect to reprice approximately $42,000,000,000 of fixed rate loans and securities over the remainder of 2025. We now expect that the benefit from repricing these assets will be approximately 40 to 50 basis points lower we previously expected in January due to lower medium term interest rates. We also updated our swap portfolio disclosure in the bottom right hand corner of the slide which is relatively unchanged from the prior quarter. Turning to non interest income now on slide 12. Non interest income decreased $78,000,000 or 5.3% versus the fourth quarter. The linked quarter decrease was primarily attributable to a $69,000,000 decline in other income related to certain equity investments and other gains that were higher in the fourth quarter of twenty twenty four.

On a like quarter basis, non interest income declined $54,000,000 or 3.7% compared to the first quarter of twenty twenty four, primarily due to lower investment banking and trading income, and lower wealth management income. Lower M and A fees were the primary driver of the year over year decline in investment banking and trading income, while wealth management income would have been slightly higher on a year over year basis, were it not for the impact of the sale of Sterling Capital Management in July 2024. Next, I will cover non expense on slide 13. Adjusted non interest expense which excludes the impact of restructuring charges, decreased 5.4% linked quarter due to lower other expense, professional fees and outside processing and equipment expense. Personnel expense remained relatively stable linked quarter as the normal seasonality associated with the first quarter personnel expenses were off-site offset by a reduction in incentives. Adjusted expenses increased 1.5% versus 1Q 'twenty four due to higher professional fees and outside processing expense partially offset by lower personnel expense. Moving to asset quality on slide 14. Our asset quality metrics remain stable on both alike and linked quarter basis reflecting our strong credit risk culture and proactive approach to quickly resolving problem loans.

Net charge offs increased one basis point to 60 basis points linked quarter but were down four basis points versus the first quarter of twenty twenty four. Our loan loss provision exceeded net charge offs, but growth in certain loan portfolios contributed to a one basis point decrease our ALLL ratio, to 1.58%. Non performing loans held for investment as a percentage of total loans increased one basis point linked quarter and three basis points on a like quarter basis to 48 basis points. NPLs have remained in a narrow band of 45 to 48 basis points over the last five quarters. We have been actively analyzing our exposure to consumer and wholesale clients that we believe will be most impacted by tariffs, potential reductions in government spending, and more severe economic scenarios. Although this analysis is ongoing and dynamic, we have a strong understanding of our exposure and we believe that we're adequately reserved at this time. As a reminder, Truist had the second lowest C and I loan loss rate versus our peer group in the most recent CCAR stress tests. Turning to capital on slide 15. On a linked quarter basis, our CET1 ratio declined 20 basis points to 11.3% as the payment of our common dividend our $500,000,000 share buyback growth in our balance sheet and the final CECL phase in more than offset current period earnings.

Our CET1 capital ratio, including the impact of AOCI, declined 10 basis points linked quarter to 9.6% reflecting the aforementioned factors partially offset by a $500,000,000 decrease in AOCI due to the increase in longer term interest rates experienced during the quarter. We continue to believe that our strong capital position gives us unique ability to utilize our future earnings and the accretion of AOCI to fund balance sheet growth and return a significant amount of capital to our shareholders. Next, I'll provide additional color on our guidance for the second quarter of twenty twenty five as well as for the full year. On slide 16. For full year 2025, we now expect revenue to increase 1.5% to 2.5% relative to 2024 adjusted revenue of $20,100,000,000 This compares with growth of 3% to 3.5% previously. Our new guidance reflects our updated outlook for lower investment banking activity, increased volatility impacting our sales and trading results, lower wealth management income, which in part relies on market values, and the shape of the yield curve. The majority of the reduction in our revenue outlook is due to our expectation for lower investment banking and trading activity, which we now expect to remain relatively flat on a year over year basis versus our previous expectation for low double digit growth.

In addition, lower market valuations will slightly pressure our wealth management income. The remainder of the change to our outlook is related to our latest forecast for the shape of the yield curve, which delays our ability to lower deposit costs and reduces the benefit of fixed rate asset repricing. Our net interest income outlook continues to assume a low single digit end of period loan growth and now assumes three twenty five basis point reductions in the Fed funds rate one in June, September and December compared with our previous view of reductions in just March and September. Based on these assumptions, we expect net interest income to increase 3% in 2025 versus 2024. In terms of our outlook for adjusted expenses, we now expect full year 2025 adjusted expenses to increase by approximately 1% in 2025 versus 2024, This compares with growth of 1.5% previously. Our improved expense outlook reflects a reduction in incentives due to lower expected revenue in 2025 and other ongoing cost savings initiatives. In terms of asset quality, we continue to expect net charge offs of about 60 basis points in 2025 which is unchanged from our previous guidance. Finally, we expect our effective tax rate to approximate 17% or 20% on a taxable equivalent basis in 2025.

Looking into the second quarter of twenty twenty five, we expect revenue to increase approximately 1.5% relative to first quarter revenue of $4,900,000,000 We expect net interest income to increase by approximately 1.5% in the second quarter primarily driven by an additional day in the second quarter relative to the first quarter some loan growth and the benefit from fixed asset repricing. We expect non interest income to increase 1% to 3% driven primarily by higher other income. Adjusted expenses of $2,900,000,000 in the first quarter are expected to increase to to 3% linked quarter due to higher personnel expenses related to annual merit increases. As it relates to buybacks, as Bill mentioned, we plan to target up to $750,000,000 during the second quarter. I'll now hand it back to Bill for some final remarks.

Great. Thanks, Mike. So in conclusion, we're seeing solid progress in many of our key strategic focus areas including Premier Banking, Wealth, payments and middle market banking. Despite the market volatility, our growth mindset and strategic focus remains steadfast. We're paying close attention to the changes in our markets the economy and client behavior as our credit risk teams are fully engaged and working with our clients to understand the impact of these changes. We'll continue to adhere to the credit and risk discipline that has served our company and shareholders well over multiple economic cycles. The good news is that our advice driven business model is well positioned to succeed in a wide variety of economic scenarios given our robust capital advantage, strong liquidity profile and demographic attractive markets where we have strong share. More importantly, our balance sheet remains open and ready to help our clients navigate the current environment. We're actively looking for opportunities to serve new and existing clients and capitalize on current and future market disruption. Truist is retaining, expanding and adding new talent motivated by our platform, markets and the opportunity. I'm as optimistic as ever about Truist future especially in light of the momentum I see every day inside this company.

I'd like to thank all of our teammates for their incredible purposeful focus and productivity in moving our company forward. So again, thank you for your interest and your investment in Truist. Brad, let me turn it back over to you. Thank you, Bill. Betsy, at this time, please explain how our listeners can participate in the Q and A session. As you do that, I'd like to ask the participants to please limit yourself to one primary question and one follow-up in order that we may accommodate as many of you as possible today.

We will now begin the To ask a question, you may press star, then one. 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 At this time, we will pause momentarily to assemble our roster. The first question today comes from Ken Usdin with Autonomous Research. Please go ahead.

Thanks. Hi, good morning, guys. Question. So it's nice to see the increased buyback in the second second quarter relative to the first. And I'm just wondering like how much of that is just real confidence in the cap a bit of an offset to what we're all seeing and you talked about potentially slower loan environment. Yes, Ken, our strong capital position really puts us in a position to do a couple of things. One is capitalize on growth. So the good news is we're seeing some of that. Be opportunistic, I'm talking a little bit about that. And then whether sort of any storm that might be in front of us. And this quarter was a good intersection of all three of those. We did have RWA growth that we're funding that we feel really good about that. We can support our current level of buyback and dividends. Obviously, feel really, really good about that. And we just want to be opportunistic. So we saw an opportunity with the price of our shares, utilizing this capital position, to invest in Truist. And we like investing in Truist. And doing all that, we still maintain that relative capital position.

So a little more opportunistic. Relative to current share price.

Got it. Thanks. It's a better answer to a not great worded question. Second question, just on the deposit side, just kind of same context with the potential for lower rates here, how do you see your ability to control deposit costs and change up your your mix of deposits as you look forward? Thanks guys. Hey, good morning Ken. It's Mike. Look, mean so far so good. I'd say on the rate paid story for us. We had a good early start when we saw the cuts last year, have taken a very client centric approach, but also a disciplined approach in how we're managing the environment we're in. So, obviously, didn't get the cut we thought we might get in May. Still are making some progress obviously on the funding portfolio. We expect that to benefit obviously some more in the second half as we see our cuts. But we're doing the things you would expect. We're looking at our on the consumer side, looking at our CD portfolio, managing our maturities well. We shortened our portfolio up there a touch sort of advanced in advance of some of the cuts. And as far as mix, it's relatively stable, right?

You saw DDA remix just a touch to 27% this quarter. I don't view that as a troubling trend at all. We had a little bit of movement the portfolio I mentioned in our our remarks that we had a couple of large deposits come in at the end of the quarter. That crossed over the quarter. As well that impacts mix, feel pretty good. Mike, the only thing I might add, as we we invested in a lot of tools last year, that allows us to be a lot more surgical in our deposit price So I think sort of the overall level of sophistication and intensity around deposit pricing continues to improve every quarter. Sure.

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

Good morning.

Hey, John. On the loan growth, side, just want to see if you can give us a more color around what you're seeing in terms of demand Maybe if you could talk about utilization, are you seeing any weakening of the of the pipelines and commitments and then also, any areas of of strength where you would think you have an opportunity given the uncertain backdrop? Thanks.

Yes, sure, John. So it's been interesting. I mean, [indiscernible] really good about the investments that we've made over the last several quarters. And you see that showing up in this quarter's results.

So let me sort of start with that as a premise. Commitments are up. So we feel good about that. Utilization, I would say, up slightly. So that really isn't part of the story. It's a lot more about production. And pretty universal. I mean, saw our consumer numbers were were very strong. And then within our wholesale units, I mean, it's in a lot of different areas. FIG, energy, healthcare, I mentioned middle market before, some of our core commercial markets doing well. Our C and I production is up every quarter over the last five quarters. So got good momentum on that standpoint. Our pipelines in consumer are the best they've ever been. I mean, they're really, really significant. On C and I, our pipelines are good. Pull through could be a little slower. I mean, we sort of have to look at that. But really good. So [indiscernible] despite all the uncertainty and volatility and all the things that we think about, sort of our core organic production capacity, our pipelines, and our markets, in fairness, probably contribute to this. The skill set of our teammates, the products and the things that we do actually have us feeling good about continued loan growth.

And John, would just add, a lot of the growth we're seeing is is sort of with new and existing clients versus necessarily an increase in utilization. So that's a good trend.

Great. Okay. Thank you for that. And then separately on the IB and cap market side, I know you had cited some pressures there. And I guess if you could just give us the similar type of color around what you're seeing in terms of the pipeline, if the pipeline continued to build and you're just getting a [indiscernible] pull through of the transactions. Are you seeing any erosion of that pipeline just given the wild uncertainty around the tariff debate and everything? And then one last question related to that. Why wouldn't your trading businesses be benefiting from the volatility versus being negatively impacted? Thanks.

Yes. So let me start with the last one first and just sort of remind you, remember what our trade investment banking business looks like. We're a pretty traditional investment banking business, syndication, deck capital markets, equity capital markets, M and A. But our trading business is really a client focused trading business. So we have sort of a low VAR kind of kind of business. So we're doing a lot of proprietary type trading. This is trading for our clients. So it just doesn't have the same kind of beta maybe attached to its results. The irony is, I feel better about investment banking than I have ever. I mean, I think I feel really good about the talent that we've got on the field. I feel good about the investments we've made. I don't think we've ever been better positioned The alignment with our overall corporate and commercial banking has never been better. The propensity to introduce our industry specialties create pipelines and opportunities. We had a really good sort of core investment grade debt capital markets quarter. Pipelines are just deferred is the way I would say it. So pipelines came in really strong to begin the quarter.

Pipeline tends to be a little more deferred, particularly on the M and A side. Although in fairness, we just we've had some new mandates this quarter. So it's not like the spigot shut off. It just seems to be a little bit deferred. We're not losing business to someone else. I think our clients are primarily pausing from that standpoint. So I think overall industry is sort of projected to be flat. We thought that seemed to be the best place to be positioned. If things recover, we're never better positioned. Positioned. I mean, we've gained incremental share every quarter for the last several quarters. So if the market returns, we're going to return with equal to better than the market. Just right now spot looking at investment banking, it seemed to us to be most prudent to say that that's a flat sort of forecast.

Got it. All right, Bill. Thank you for that. Appreciate it.

Yes.

Thanks.

The next question comes from Erika Najarian with UBS. Please go ahead. Hi, good morning. The first one, is for Mike. You noted that underneath the revenue guide, you're expecting NII to increase 3%. You could remind us, what was the is that unchanged or revised from the original January outlook? And if you could give us a sense of how much of the revision would have been curved versus size of the balance sheet.

Hey, good morning, Erica. I actually don't think we gave explicit guidance in January for the year for NII. I think it would have been implied closer to call it high 3s, maybe closer to 4%. We probably have a three quarters of a percent or so impact to NII relative to our outlook. And it's almost entirely driven by the change in the curve and as we talk about two year medium term rates, where we're really looking on the curve is the difference in where the two year is not just today, but where implied to have it throughout the course of the year. And so the impact on that on the loan repricing opportunity that we've that we've talked about as well as to a lesser extent the securities.

Got it.

And just I apologize if you said this in the prepared remarks and I didn't catch it. It's been an insane morning. But did you give the baseline unemployment rate for your reserve Mike, and what the weighted average is that's embedded in your first quarter reserve, please?

We didn't give you that, Erica. Brad, I'll let you maybe he's here in the room with us, if want to talk a little bit about our baseline unemployment outlook.

Yes, thanks Mike. And Erica, the way we think about the varying degrees of factors in our allowance, unemployment, obviously plays into that. We use it across baseline and then the two different stress scenarios. I'd say, where we are right now is sort of mid high single digits when you factor in the modeled output plus the qualitative overlays. Feel good about where it sits today. We feel like we can weather whatever is in front of us from credit standpoint. And then actual unemployment rate, what we're using, Mike? So it's got 5.1% in the model, but then you adjust off of that at a pool level based on asset mix. Yes. Thanks.

Thank you for that. The next question comes from Mike Mayo with Wells Fargo Securities. Please go ahead.

Hi. Can you hear me? Sorry.

Yes, we got you.

Okay, great.

I think you're doing what you can in terms of investing in talent, tech and transitioning from defense to offense as you you said. And you did get four loan growth. But I'm still just trying to reconcile the overall guidance and somewhat upbeat comments with kind of the uncertainty with the macro. On the one hand, it shows like it seems like you're showing more realism the curve impacts NII and capital markets impacts investment banking and a little lower guide there. On the other hand, like you're accelerating buybacks and your reserves are not so different. And so if the world is that much more difficult why wouldn't you be increasing reserves more? Why wouldn't you be slowing down buybacks? I'm not saying to do that. I'm just trying to reconcile those thoughts. Thanks.

Yes, Mike. No, it's a great question. So if you think about the guidance, it's really centered on two things. So a flat forecast on investment banking, again, I hope that's wrong. I hope markets recover quickly and as I said before, when they do, we're really, really well positioned and we've sort of gained marginal share in that business. Over time and we're well positioned. But realistically, sort of sitting with sort of a spot forecast and looking sort of overall industry that seemed prudent to us. And then the other was related to just sort of where we are on the curve. Everything else in terms of loan production and deposit production and payments penetration, all those things. We're not changing any of that. I mean, still feel really good about that. And as you evidenced in the first quarter, we actually have have strong momentum. So with a little more isolated to those things versus a statement around that we see some precipice in the market. And then I think as you take that a further step, all those things are considered when we set that reserve. So I mean, I think we look at volatility and uncertainty and tariffs and potential impacts and all those things related to the reserve.

And then on the share buyback, as I noted earlier, it's just an opportunistic time and we want to we like Truist. I mean, we want to invest in Truist. We've got a strong capital position. Taking a little marginal opportunistic, continues to keep us in a really strong capital position to not only weather any storm, but what I hope is more to invest more in our business and the growth of our business.

I guess just as a follow-up, when I think about what could happen, it seems like that loan production and the deposits and the payments could fall off a cliff if this trade war situation goes on for too long. I guess, do you have any frame of context in your career that gives us the lens or framework on how to view this? And also, how did the pandemic help prepare you and your clients for the impact on supply chains? Thanks.

Yes. The second part of your question, think, actually really, really insightful. I think that's happened. I think if we look at talking to a lot of clients, they learned a lot during the pandemic in terms of managing working capital. I mean, think it's one of these things. I believe it's one of these things when we sort of are perplexed as an industry, why utilization is lower than traditional. I think it's because clients learn how to manage working capital really well. And manage their supply chains really well. They created a lot more diversity, a lot more consistency. So I do think clients are better prepared understand their supply chains, at some multiple of what they did before created more flexibility and optionality and particularly on larger clients. I'll get back to smaller clients. But our larger clients, I think they just have more flexibility, better understanding of their supply chain. Then we're really helping them with that too. Mean, we've got a really good business that helps them manage and think about how to leverage supply chains. And then in terms of terms of a career, it's really sort of an unusual circumstance and that we sort of look at and you indicated some different data points.

Our underlying business is really solid. And our client business is really solid. Our consumers are in good shape. Our business clients are in good shape. So different maybe from other environments where you could sort of sort feel softness in the underlying portfolios. You still see that right now. So I think there's reasons to be optimistic that people sort of see themselves through this. And, but we just are unwilling to put sort of all that into a forecast and into our guidance. But I think we enter into this in a very different situation where consumers and businesses are more solid and they are did learn a lot in the supply chain. On the small side, think that's a little more challenging on the small business side, because their business may not have the kind of flexibility, so they could be impacted in one supply chain avenue from one tariff to one country kind of analysis. So we're looking closely at those idiosyncratic kind of things to make sure that we're keeping an eye on those clients. Helping them think through where they go. I think you're it is an interesting time in my career And then back to the sort of how the whole premise started, just don't think we've ever been better positioned to sort of be in the athletic position to respond Good momentum, as you mentioned, good talent.

And a capital position that allows us to weather, but also take advantage of opportunities.

All right. Thank you.

Thanks, Mike.

The next question comes from Betsy Graseck with Morgan Stanley. Please go ahead. Hi, good morning. [indiscernible] Mike, I just had one quick question for you.

You mentioned during prepared remarks that you've got I think it's $42,000,000,000 that's rolling. In 2Q through 4Q this year. And that it's rolling at a lower pickup than you had said before. Could you just tell us what the yield pickup is that you expect on this 42,000,000,000 Yes, sure Betsy. And it's it's I have to sort of speak in terms of averages obviously because across that $42,000,000,000 you've got a meaningful portion that's loans, some securities and then even within loans you've got a pretty wide variety of products in that bundle. But in January, mentioned that we felt like call it, 90 to 100 basis points of, I'll call it, incremental run on versus run off And we think that that's lower by 40 to 50 basis points.

So almost half. And again, our term exposure is really more in that sort of two year part of the curve. The whole curve is important to us, but especially I'd say two to five is probably as we think about that repricing opportunity, probably 75% of that opportunity is less than five years.

Okay. But on the average 42,000,000,000 going to roll at a on average 45 pickup.

No, higher than that, probably closer to like 50 to 60.

Plus a little. It actually changes over the over the year, Betsy. So our view on twos as an example is this is based on implied forwards is that the two year will probably decline a touch over the course of the year. And so maybe in this quarter and next quarter, we're picking up maybe it's closer to 60 to 70 and then maybe it's closer to 50 to 60 basis points later in the year.

Got it. Okay. Thank you. Super helpful. And then just on the question on loan growth, as you think through the puts and takes here on the outlook are you changing your lending standards?

Oh gosh, no. Betsy, we're just constantly consistent in lending standards and how we think about our portfolio and how we think about our opportunities. And everything you're seeing from us is just like just really strong execution within that framework.

Okay. So lending centers change, but as the environment unfolds, you'll see growth from just like, adding new customers, I suppose. That's really the message you want have for us?

Yes. I mean, adding new clients, expanding with existing clients, being more relevant expanding in markets where we weren't before, building our middle market business, consumer execution, premier production, all those things in those categories.

Okay. Thanks.

Yes.

The next question comes from Matt O'Connor with Deutsche Bank. Please go ahead.

Good morning.

Can you elaborate on some of the areas that you're targeting for cost saves and maybe weave in what the restructuring charges were for this quarter and how that helps going forward?

I'll start Mike and maybe turn it to you on the specific on the restructuring charges and whatnot. Matt, you remember in 2023, we started with significant expense initiative where we went and looked at everything in our company in terms of opportunities. And you saw a lot of that in the consolidation simplification of our business creating better pull through. So a lot of us is just realizing, continue to realize the benefits of those those activities. So this isn't a one time stop start kind of thing. This is a continuation of the learnings that we embedded in our system and the continuous improvement opportunity. So they're all those same kind of categories, continuing to get the benefits of being more efficient consolidations, spans of layers, all those traditional things that come in terms of expense saves. But all that's offset against the investments that we're making. So that's an important component here is what we're not stopping is the investments that we're making in our digital capabilities, which I talked about. Talent that continues to be wanting to be part of our of our platform, treasury management and payments. Risk and infrastructure So it's toggling all those things.

And allowing a little more of those expense savings to come through. To help offset some of the that we want to continue to make. So, and then Mike, I'll let you talk about the specifics on the on restructuring.

Yes, on the restructuring charges, Matt. This quarter, it was predominantly some corporate facilities rationalization and then also some severance So those were really the two notable items. I think you asked how big of a part of our story that will be throughout the course of the year. I We don't expect there to be significant restructuring charges throughout the course of the year. Mean, I think as I sit here today, I see 40,000,000 to $50,000,000 high side So hope that helps.

Okay. That's 40,000,000 to $50,000,000, for the rest of the year. Yes. Yes. Okay. Helpful. Thank you.

The next question comes from Ibrahim Koonawala with Bank of America. Please go ahead. Hey, good morning. I guess maybe, Mike, so you on capital and apologies if you already addressed this. But when we look at the CET1 with or without AOCI, just give us a sense of I appreciate the sensitivity to the stock price. But how much more aggressive can you be on the pace of buybacks And is there a CET1 target that we should keep in mind in the near term below which you don't want capital levels to go?

Yes. Good morning, Ebrahim. I think on the buyback, feel good about our the rhythm that we established the 500 a quarter I think again that with the dividend equating to approximately our earnings, we feel like is a pretty elevated and as we've said, with our sort of more medium term capital planning something that we believe can be more sustainable. I think the $250,000,000 incremental that we're looking at this quarter Bill framed it well, it's opportunistic. We saw a pretty significant sell off in the industry and the stock. And so Rasta. Necessarily continue to to exercise that flexibility. Terms of a target, we talked a little bit about this earlier in the year and some of last year. It will be important for us to actually see a final sort of rule on 10% area operating area. I think that's still sensible based on everything that we know now. I don't think it's a moment short term where we would be eager to to add a ton of leverage. So I think we sort of stay the course here with the 500 and we'll watch the market and we'll we'll adjust as it makes sense.

That's helpful. Thank you. That's all I had. The last question today comes from Gerard Cassidy with RBC. Please go ahead.

Hi, Bill. Hi, Mike.

Hi, Mike.

Can you guys share with us we we hear a lot of of your competitors looking to Southeast and your primary franchise as an area of expansion. And growth. Can you tell us has competition changed or intensified And then second is part of that, are you seeing any kind of aggressive lending going on from your competitors that that you're obviously not willing to compete against because it's too aggressive? Yes, Gerard, I'd say thing, having spent my entire career in these markets, they're always competitive. And they're competitive because they're great markets. So I wouldn't say anything particularly differentiated. We compete with a lot of smart competitors. So I don't think anything sort of out of the ordinary in terms of pricing or structure. And then as I've mentioned earlier, there other markets where we're also expanding. I talked about tech Texas and Philadelphia and Ohio and other places where we have big investments too and we're competing really, really well in those markets. So I think just it's an overall competitive market. You've seen the results of how we've we've fared in this competitive environment with our loan growth production capabilities continuing to improve the investments we've made.

So I think my answer would be we've never been more competitive in terms of our athletic position. So and these are highly competitive markets. I mean, I don't know any other way to describe it. Very good. And then as a follow-up on just loans in general. In the fourth quarter, you folks and your peers are required on a best efforts basis to put out the exposure to loans to non depository financial institutions and your numbers are not that excessive as some of your peers Can you share with us those categories, whether it's the the business credit intermediary category or private equity funds What are you guys seeing in those kinds of categories since that's been a growth area for the industry?

Yes. Brad, let me I'll let you talk about the NDFI. And I would say summary, it's pretty traditional for us but maybe Brad, you could go into a little more detail. Yes. Thanks, Gerard, for the question.

So I'd say, look, our India buyer exposure obviously was impacted by the definition definitional change. The portfolio in the aggregate is about 13 different subsectors across 20 different asset classes. They're long time corporate investment banking and CRE clients. With our largest concentration in REITs. But we approach it with sort of a full credit risk governance model. We've got really good limits in place. We manage contagion risk. And so this is regular way business for us to support our clients. And we feel really good about where our exposure sits even post the definitional change.

I see. And just as a follow-up here, are you seeing the competitors, the private credit guys or just the non bank lenders impacting the your customers in these categories as well? Or what are you seeing on that side of it?

Yes, Gerard, I think private credit certainly is been part of our ecosystem for a long time. I don't know whether it's unique to this portfolio, certainly a competitive force that we think through and and deal with. And obviously by our results, also very competitive against them as well.

Very good. Appreciate the color, gentlemen. Thank you.

Sure. Thanks.

This concludes our question and answer session. I would like to turn the conference back over to Brad Milsaps for any closing remarks.

Okay. Thank you, Betsy. That completes our earnings call. Have any additional questions, please feel free to reach to reach out to the Investor Relations team. Thank you for your interest in Truist, we hope you have a great day. Betsy, you may now disconnect the call.

The conference has now concluded. You for attending today's presentation. You may now disconnect.