BANCANALYSTS ASSOCIATION OF BOSTON'S ANNUAL BANK CONFERENCE - TRUIST FINANCIAL CORP

Financial Performance:

• Truist is the 10th largest U.S. bank with $544 billion in assets; currently targeting a Return on Tangible Common Equity (ROTCE) of 15% next year, with a medium-to-long-term goal of 16-18%.
• Wealth management business generated record revenue growth with client assets exceeding $300 billion; only 3% of existing client base utilizes investment services, indicating significant cross-sell potential.
• Treasury management product is generating high single-digit multiples of revenue; payments and treasury lines show strong pipeline momentum.
• Capital position remains robust with a CET1 ratio of 10.7% (low 9% with AOCI burdening, low-mid teens under Basel III), supporting an operating target of 10% CET1 +/- and elevated capital returns.
• Debt management focus includes reducing wholesale borrowings, shortening duration, and improving securities portfolio flexibility to strengthen the balance sheet.

Guidance and Future Outlook:

• Strategic review is underway to align all activities with the vision of becoming the "most important financial partner," utilizing a three-question framework: strategic alignment, return potential, and client protection.
• Management expects loan growth in the 4-6% range for the coming period, driven by steady client demand despite interest rate volatility.
• Investment banking is projected to grow in the high single-digit to low double-digit range organically this year, with a specific focus on accelerating growth in the advisory business.
• The company aims to grow into a high-performing entity, utilizing the "capacity" freed from divestitures (e.g., Regional Acceptance Corp, Lightstream) to fund strategic investments rather than shrinking the balance sheet.
• Full-year 2027 is not the target for strategic review completion; the framework is being applied now to reshape capital allocation and expense structure.

Business Segments and Product Lines:

• Wholesale Banking: Added ~500 bankers in the last two years; strategy focuses on adding frontline resources in middle market, commercial, corporate, and investment banking, with specific urgency on scaling payments, advisory, FX, rates, and Asset-Based Lending (ABL).
• Consumer Banking: Strategy narrowed to driving core checking (DDA) growth and funding engine expansion; plans to invest in physical network quality, ATM fleet expansion, and digital channel integration.
• Wealth Management: Focus on adding more advisors (hiring is active), investing in technology to improve client/advisor experience, and increasing cross-selling of loans and deposits to the 30% of wealth clients currently holding loans.
• Payments: Entering the "commercialization" phase; product capabilities and digital rails are being enhanced to serve larger corporate clients, with a focus on embedded products and tokenized deposit interoperability.
• Investment Banking: Leveraging unique positioning to combine regional strengths with Wall Street capabilities; significant opportunity identified in advisory services which are currently under-penetrated.

Market and Competitive Landscape:

• Truist positions itself as a "uniquely advantaged franchise" capable of competing with regional peers on service and Wall Street firms on capability.
• Management notes strong GDP growth and consumer spending underpinning steady loan demand; they feel confident in their ability to win market share without compromising risk standards.
• Market share opportunities exist within Truist's own base, particularly in wealth (3% penetration) and corporate banking relationships where they aim to deepen "full-service" engagement.
• Competition in treasury management and payments is intense; Truist is bringing in sales talent from larger banks to capture this market.

Risks and Challenges:

• Execution Risk: The transition to a more aggressive growth strategy requires precise execution in hiring, technology integration, and capital deployment; current team productivity is still ramping up.
• Macro Volatility: Interest rate changes and market volatility are monitored, though management asserts they do not significantly impact current loan demand.
• Capital Allocation: Ensuring capital is not deployed into "bad calorie" assets (historically marine, vehicle, subprime auto lending) remains a critical discipline to protect the balance sheet.
• Funding Constraints: Growth is dependent on successfully scaling the deposit funding engine across consumer and wholesale channels to match asset growth.

Management Commentary and Tone:

• Tone is highly confident, optimistic, and "galvanized," reflecting a clear shift under the new CEO (since September) to focus on growth, accountability, and value creation.
• Management emphasizes that the strategic "shuffle" involves reducing low-return businesses to build a stronger foundation for accelerated growth, rejecting the notion of simply becoming "smaller."
• There is a strong message of "assertive focus" on eliminating non-strategic expenses to fund high-value investments, with significant employee buy-in observed.
• Confidence in the 16-18% ROTCE target is explicit, attributing this potential to capital efficiency, improved funding mix, and structural under-earning corrections.

Analyst Questions and Answers:

• Q: Is the strategic review too early for conclusions?
  • A: It is ongoing; the framework is being applied to all activities now, with expected further announcements beginning early 2027.
• Q: What are the constraints to accelerated growth?
  • A: Not hiring (talent interest is at historic highs); primary constraints are sequencing/phase-in capacity and ensuring the deposit funding engine scales appropriately.
• Q: How will expenses be managed?
  • A: Every dollar is scrutinized against the three-question framework; the goal is to stop "yesterday's problem" solutions and reallocate funds to growth drivers.
• Q: What is the path to 16-18% ROTCE?
  • A: A combination of capital-efficient revenue growth (wealth, advisory), improved funding mix (deposits), disciplined capital allocation (divestitures), and yield improvements in the securities portfolio.

Other Key Points:

• Truist has successfully divested Regional Acceptance Corp and announced the sale of Lightstream to strengthen its balance sheet.
• New hires in wholesale and wealth management include talent from competitor banks and internal upskilling.
• The "funding engine" in consumer banking (DDA growth) is designed to harmonize with the asset generation in wholesale banking.
• Management reaffirms commitment to a 10% CET1 operating target and continued elevated stock buybacks.