Truist Financial Q1 Earnings Call Highlights

Key Points

• $1.4 billion Q1 net income (‑ $1.09 diluted EPS) and ROTCE rose to 13.8%, with management raising its long‑term ROTCE target to 16–18% as it cites underlying momentum across loans, fees and digital growth.
• Truist lowered full‑year 2026 net interest income growth guidance to 2–3% (from 3–4%) after concluding the federal funds rate will likely remain unchanged, noting taxable‑equivalent NII fell 2.8% linked quarter and that a 3% NIM in 2026 is unlikely without rate cuts.
• The bank repurchased $1.1 billion in Q1 and boosted its 2026 buyback target to about $5 billion while CET1 stayed at 10.8%, and said proposed Basel changes could lower risk‑weighted assets roughly 9–11%, which may support sustained capital returns.

Truist Financial NYSE: TFC reported first-quarter 2026 net income available to common shareholders of $1.4 billion, or $1.09 per diluted share, as the company cited loan growth in priority segments, higher fee income led by investment banking and wealth management, and a lower effective tax rate tied partly to project finance activity.

Quarterly performance and strategic momentum

Chairman and CEO Bill Rogers said the company is seeing “underlying momentum” across the franchise, pointing to growing client pipelines, healthy activity levels, and continued hiring in areas tied to its profitability strategy. Rogers said loan growth came from priority segments and fee growth was driven by core client activity, alongside “stronger referrals and connectivity across the company.”

Rogers highlighted year-over-year positive operating leverage of 250 basis points in the quarter, attributing performance to growth in consumer and wholesale loans, strong non-interest income growth, and “expense and credit discipline.” Return on tangible common equity (ROTCE) improved 150 basis points to 13.8% compared to the first quarter of 2025, which Rogers said reflects progress toward Truist’s 15% ROTCE target for 2027.

Rogers also introduced a new long-term ROTCE target of 16% to 18%. He described the 15% goal as “an important milestone, not the endpoint,” and said the company believes it can drive returns higher over time with continued execution, capital return, and expected changes to the capital framework.

Consumer, wholesale, and digital initiatives

In Consumer and Small Business Banking, Rogers said average consumer and small business deposits and loans were up 1% and 4%, respectively, versus the first quarter of last year. Average loans declined modestly versus the fourth quarter, which Rogers said aligns with seasonality and the company’s emphasis on higher risk-adjusted return categories.

Rogers pointed to Premier Banking as a “source of strength,” with deposit and lending production “up significantly,” driven by deeper engagement and “continued momentum in financial planning activity.” He also said digital channels remain a growth engine: digital share of new-to-bank clients increased to 45%, with Gen Z and Millennials representing more than half of the growth. Active digital users rose year-over-year, and digital transaction volumes remained strong, he said.

Rogers discussed a growing focus on artificial intelligence, calling it an “operating lever” intended to improve service and productivity “without compromising control, safety, and reliability.” He said Truist is deploying AI tools including Truist Insights for personalized guidance, Truist Assist for routine service requests, and AI-enabled call summarization for care center agents.

In wholesale banking, Rogers said average wholesale loans and deposits increased 9% and 2%, respectively, versus the first quarter of 2025, with growth across industry banking, middle market, and commercial real estate. He said middle market deposits grew 11% year-over-year, including 30% growth in expansion markets such as Texas, Ohio, and Pennsylvania. Wholesale fee performance was “a standout,” Rogers added, with investment banking and trading posting its highest quarterly revenue since 2021, supported by broad product strength and increased connectivity across commercial, corporate, and investment banking.

Key financial drivers: NII, fees, expenses, and tax rate

CFO Mike Maguire reported revenue declined 1.9% from the fourth quarter, driven by lower net interest income primarily related to day count, but increased 5.1% year-over-year due to higher net interest income from loan growth and higher non-interest income led by investment banking and trading and wealth management.

On net interest income (NII), Maguire said taxable equivalent NII fell 2.8% linked quarter, or $105 million, due to two fewer days and seasonal deposit mix changes. Net interest margin (NIM) decreased five basis points to 3.02% for similar reasons. For full-year 2026, Truist lowered its NII growth outlook to 2% to 3% from 3% to 4%, primarily because the company now expects the federal funds rate to remain unchanged throughout 2026 rather than two 25-basis-point cuts previously assumed.

Responding to questions, Maguire said Truist is “positioned liability sensitive on the short end,” and that the lack of anticipated rate cuts creates pressure, compounded by a competitive deposit environment with “more rotation on product” and “more yield seeking and rate awareness.” He said Truist still expects the full-year 2026 average NIM to exceed the 2025 average of 3.03%, though he told analysts that reaching a 3% NIM during 2026 is “not likely to happen” without rate cuts, with the company instead seeing a path toward that level in 2027 under current assumptions.

Non-interest income rose 0.5% linked quarter, supported by investment banking and trading and lending-related fees, partially offset by lower other income tied to investment income. Investment banking and trading income increased 11% linked quarter to $372 million, reflecting stronger trading and capital markets activity, partially offset by lower M&A fees. Year-over-year, non-interest income rose 11.6%, driven primarily by 36% growth in investment banking and trading and 7.6% growth in wealth management income.

On expenses, Maguire said non-interest expense fell 5.9% linked quarter, largely due to lower “other expense” and personnel expense. He noted the fourth quarter included an accrual related to a legal matter, while personnel expense declined due to lower incentive compensation. Year-over-year, non-interest expense increased 2.6%, reflecting higher personnel expense partially offset by lower professional fees and outside processing costs.

Truist’s effective tax rate was 12.4% in the first quarter versus 17.9% a year earlier. Maguire said about half of the year-over-year decline was due to increased client transaction activity in the company’s project finance business, a dynamic Rogers said can benefit results through reductions to the tax provision rather than reported revenue. For 2026, Maguire said Truist now expects an effective tax rate of approximately 14.5% (16.5% on a taxable equivalent basis), down from prior expectations of 16.5% and 18.5%, respectively.

Balance sheet trends and credit

Average loans held for investment increased $2.3 billion, or 0.7%, linked quarter to $327 billion, driven by 1.8% growth in commercial loans and a 0.9% decline in consumer loans. Maguire said trends were consistent with the company’s earlier guidance, which emphasized commercial and “other consumer” categories and relatively slower growth in residential mortgage and indirect auto.

Deposits increased 0.7% on an average basis linked quarter. Maguire said average interest-bearing deposit costs declined 14 basis points to 2.09%, while average total deposit costs declined nine basis points to 1.55%. In the Q&A, Rogers said the deposit environment remains competitive and acknowledged the use of marketing tools and incentives, while emphasizing that Truist generated “net new” deposit growth in the quarter and pointed to 20% higher Premier Banking production.

On asset quality, Maguire said metrics “remained strong.” Net charge-offs rose four basis points linked quarter to 61 basis points, and non-performing loans held for investment increased two basis points to 50 basis points of total loans. He said higher consumer non-performing loans were primarily due to a change in non-approval criteria for certain indirect auto loans disclosed in the company’s 10-K, “rather than any deterioration in underlying credit trends,” adding that the change should not affect cash flows or lifetime loss expectations.

Maguire also discussed non-depository financial institution (NDFI) exposure. As of March 31, loans classified as NDFI were 12% of total loans, diversified across 35 asset classes. He said the largest exposure is to diversified equity REITs, described as secured by income-producing real estate and underwritten with conservative leverage and strong covenants. Private credit exposure, primarily via lending relationships with BDCs and middle market loan funds, totals about 1% of the loan portfolio, which Maguire said is structured with advance rate limits, borrowing base mechanics, and meaningful equity beneath Truist. In response to a question on downside risk, Maguire said stress modeling indicates the overall NDFI portfolio “performs better than our aggregate C&I portfolio.”

Capital return, Basel proposal, and updated 2026 guidance

Truist ended the quarter with a 10.8% CET1 ratio, stable from the fourth quarter. Maguire said the company repurchased $1.1 billion of common stock during the quarter and is targeting $1.2 billion in repurchases in the second quarter. Truist increased its full-year 2026 repurchase target to approximately $5 billion from $4 billion previously.

In response to questions, Maguire said the increase in the 2026 buyback target was not attributable to the Basel III proposal, though he said the proposal could support the “durability” of elevated buybacks into 2028 and beyond depending on final rules. On the proposed capital changes, Maguire said Truist estimates risk-weighted assets could decline by 9% under the revised standardized approach and by 11% under IRBA.

For 2026, Truist maintained its overall earnings expectations despite lowering NII growth guidance, citing stronger fee momentum, a lower tax rate, and higher share repurchases. Maguire reiterated expectations for average loan growth of approximately 3% to 4% and net charge-offs of about 55 basis points for the year. For the second quarter, Truist expects revenue to remain relatively stable versus first-quarter revenue of $5.2 billion, with NII up about 1% and non-interest income down about 1%, while non-interest expense is expected to rise 3% to 4% linked quarter due to higher personnel expense.

Rogers closed by reiterating confidence in achieving 14% ROTCE in 2026 and 15% in 2027, and said the company believes it has “clear line of sight” to 16% to 18% ROTCE over the next three to five years through growth in key businesses, positive operating leverage, disciplined expense and risk management, and continued capital return.

About Truist Financial NYSE: TFC

Truist Financial Corporation is an American bank holding company that provides a broad range of financial services through its primary subsidiary, Truist Bank, and other operating units. The company offers traditional retail banking products and services such as deposit accounts, consumer and residential mortgage lending, and credit and debit card services. Truist also serves commercial clients with middle-market and corporate lending, treasury and payment solutions, and specialty finance products.

Beyond core banking, Truist operates wealth management, asset management, insurance and capital markets businesses.

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