Truist Financial Corporation Delivers Strong Third Quarter Results

Truist Financial Corporation, one of the largest financial services companies in the United States, has reported its financial results for the third quarter of 2024. The company’s performance demonstrates its ability to drive revenue growth, maintain strong expense discipline, and deliver solid returns to shareholders.

Financial Highlights

• Net income available to common shareholders for the third quarter of 2024 was $1.3 billion, up 25% compared to the third quarter of 2023.
• Diluted earnings per share were $0.99, an increase of 24% year-over-year.
• Truist’s results of operations for the third quarter produced an annualized return on average assets of 1.10% and an annualized return on average common shareholders’ equity of 9.1%, up from 0.86% and 7.5% respectively in the prior year period.
• Net interest income for the third quarter of 2024 was up 1.8% compared to the third quarter of 2023, primarily due to the company’s balance sheet repositioning.
• Noninterest income increased 11% year-over-year, driven by higher investment banking and trading income as well as service charges on deposits.
• Noninterest expense decreased 4.3% compared to the third quarter of 2023, reflecting lower personnel expense, restructuring charges, and FDIC special assessment costs.

Driving Revenue Growth Truist made considerable progress in the third quarter on driving revenue growth through its core banking business. The company added new clients, deepened relationships with existing clients, hired and developed talented teammates, and invested in technology and risk infrastructure while maintaining strong expense discipline.

The company’s net interest income growth was primarily driven by the balance sheet repositioning completed during the second quarter of 2024. Truist executed a strategic repositioning of its investment securities portfolio, selling $27.7 billion of lower-yielding securities and reinvesting the proceeds into shorter duration, higher-yielding securities. This action, combined with the higher rate environment, resulted in a 20 basis point increase in net interest margin to 3.12%.

Noninterest income also saw strong growth, up 11% year-over-year. This was led by a 79.5% increase in investment banking and trading income, as well as a 43.5% rise in service charges on deposits. The increase in service charges was partially offset by a 21.8% decline in other income, which was impacted by lower equity investment gains and a valuation decrease for derivatives related to Visa shares.

Expense Management and Efficiency Truist demonstrated strong expense discipline in the quarter, with noninterest expense decreasing 4.3% compared to the prior year period. This was driven by reductions in other expense, personnel expense, restructuring charges, and the FDIC special assessment. Adjusted noninterest expense, which excludes certain items, decreased 2.3% year-over-year.

The company’s focus on efficiency is evidenced by its adjusted noninterest expense to total revenue ratio of 59.1% for the third quarter of 2024, an improvement from 61.4% in the prior year period. Truist continues to make strategic investments in technology and risk infrastructure to drive long-term growth and enhance its risk management capabilities.

Asset Quality Remains Strong Truist’s asset quality metrics remained strong during the third quarter of 2024. Nonperforming loans and leases held for investment were 0.48% of total loans and leases, up two basis points from the prior quarter. Loans 90 days or more past due and still accruing were 0.17% of total loans and leases, up one basis point from the prior quarter.

The allowance for credit losses was $5.1 billion, or 1.60% of loans and leases held for investment, up three basis points from the prior quarter. The allowance covered nonperforming loans and leases 3.3 times, compared to 3.4 times in the prior quarter. Net charge-offs were 0.55% of average loans and leases, up four basis points year-over-year.

Truist’s commercial credit portfolios continue to be a focus area, with the company maintaining disciplined risk management practices. The commercial and industrial, commercial real estate (CRE), and commercial construction portfolios totaled $28.9 billion as of September 30, 2024. The CRE and commercial construction portfolios have been identified as having potential for heightened risk in the current environment, and Truist is closely monitoring these exposures.

Capital and Liquidity Remain Strong Truist’s capital ratios remained strong during the third quarter of 2024. The company’s Common Equity Tier 1 (CET1) ratio was 11.6% as of September 30, 2024, flat compared to the prior quarter. The company declared common dividends of $0.52 per share during the quarter and repurchased $500 million of common stock.

Truist’s average consolidated Liquidity Coverage Ratio (LCR) was 112% for the three months ended September 30, 2024, well above the regulatory minimum of 100%. In November 2024, the company announced the forthcoming redemption of all outstanding shares of its perpetual preferred stock series L and the corresponding depositary shares for $750 million.

Outlook and Strategic Initiatives Truist expects to continue making substantial investments in teammates, technology, and risk infrastructure while pursuing its strategic objectives, including revenue growth and expense discipline. The company’s new Chief Information Officer joined in October 2024, bringing over 25 years of experience in the financial services industry.

In July 2024, Truist successfully completed the sale of Sterling Capital Management LLC, an asset management business. The cash proceeds and initial gain recognized on the sale were not material.

Hurricanes Helene and Milton affected many communities that Truist serves, and the company is working closely with those impacted to help with the rebuilding efforts. Truist remains committed to delivering on its purpose and caring for its clients, which fuel the company’s momentum and growth.

Conclusion Truist’s strong third quarter results demonstrate the company’s ability to execute on its strategic priorities and deliver value to shareholders. The company’s focus on driving revenue growth, maintaining expense discipline, and upholding robust risk management practices has positioned Truist for continued success. As Truist navigates the evolving regulatory landscape and invests in its future, the company remains well-equipped to serve its clients and communities while generating sustainable long-term growth.