Truist Financial Corporation (TFC) Earnings Call Transcript & Summary

Actually, if we could put the ARS question up. Next up, we're very pleased to have Truist Financial with us. I don't know if you saw, they did put a slide deck out this morning with some new information. We're very pleased to have CEO, Bill Rogers, with us this morning. He's going to take us through some quick slides, before he comes here and joins me on the stage for some Q&A.

Great. Thanks, Jason. I just actually want to start with acknowledging the significance of today, of September 11. All of us in this room, on the webcast, were impacted in some way by this tragic event 22 years ago. Jason, with that said, it's actually great to be here at the conference, which looks like it's off to a great start. And I'd like to begin by -- we always begin us thanking our shareholders for your investment in Truist. As you know, Truist is the largest bank merger since the 2007-2008 financial crisis, and the strategic and financial opportunities are compelling. Over the past 3 years, we've made great progress to inspire and build better lives and communities. But as a shareholder, I'm highly aware that our financial performance has not met all of your expectations, not met mine either. I'm here today as a fellow shareholder to speak to you about our very intentional pivot to improve our financial performance and achieve the promise of Truist. This is very much a now event and not a later event moment for Truist. All right. So let's begin with Slide 3, how we always do, with our purpose. Our purpose, as I said, is to inspire and build better lives and communities, and it's the common thread that guides our decision-making at Truist. In living out our purpose every day, we've made a meaningful impact on the lives of our clients, our teammates and our communities. Our purpose also resonates because people just want to work for companies that stand for something, and people want to do business with companies that stand for something. I'm really proud of the successes we've had. I'm proud of what our teammates have achieved in this area, and it reinforces my conviction that grounding our company on purpose, making that a firm foundation was the right thing to do. Purpose is also foundational to our investment thesis, as you can see on Slide 4. Our investment thesis highlights the advantages we have at Truist and explains why we believe our company is such an attractive investment. The first element of our investment thesis is the purpose-driven culture, and that's what I previously discussed. That's what guides us. The second element is that we're an exceptional franchise. Through the merger of equals, we built a top 10 commercial bank that operates and has strong market share in many of the fastest-growing markets in the country, and our diverse business mix extends our reach well beyond our core banking markets. In addition, our strong deposit base, our liquidity position enabled us to withstand the industry volatility in March and April this year and demonstrate yet again the strength of this franchise. The third element of our investment thesis is the thoughtful investments that we're making today are going to position us well in the future. Although our best of both integration costs more and took longer than expected, it did provide Truist with a strong foundation for the future. Many of our investments have been made with a view towards the future and will result in improved client experience, digital sales enablement, stronger payments capabilities, people and client relationships and more efficient distribution. These will all benefit long-term revenue growth. At the same time, we're going to continue to invest in our risk management organization and capabilities to maintain our strong, sound asset client metrics, strengthen the internal controls to ensure a strong operating foundation for the future of Truist. Finally, we'll come to the culmination of our investment thesis, which is that by delivering our purpose, leveraging our capabilities and markets, and by investing in the future, we can realize our goal of generating strong growth and profitability with less volatility than our peers. This element of our investment thesis has not yet been fully realized. While this is largely attributable to funding costs associated with our best of both integration as well as the impact of low-yielding securities in our portfolio, we just simply can do better, and that's why our energy is focused on improving our results. So let's take a look at how we accomplish this on Slide 5. Our strategy to improve our financial performance is organized around 5 key initiatives that allow us to reposition Truist to achieve this objective while maintaining our strong risk management culture. Of course, we're going to simplify the business, simplify it by realigning certain aspects of our leadership structure within 3 current operating segments: our Consumer segment, our Wholesale segment and Insurance. This will help increase efficiency and drive revenue opportunities. But structure alone does not drive performance. We understand that, but it does create this platform to realize more significant cost savings. Secondly, we're also aggressively cutting costs. We expect to achieve at least $750 million of gross cost saves over the next 12 to 18 months, allowing us to reduce the rate of expense growth significantly in 2024, and maybe more importantly, beyond. While many of these cost saves will be achieved in near-term personnel-related reductions, they are also a manifestation of our organizational desire to achieve execution excellence and we consistently look for ways to improve our efficiency over the longer term, including the automation and other investments in technology. Third, we have made significant investments, like investment banking and payments, that we believe will accelerate our franchise momentum, while our focus on integrated relationship management will create opportunities for long-term revenue growth. Fourth, we're improving our capital position. In addition, our capital allocation will be more targeted and focused on our Consumer, Wholesale and Insurance segments with less emphasis on complementary businesses that produce lower returns. And finally, we've aligned our incentive programs to key performance indicators that are highly correlated to total shareholder return and collectively represent a balanced scorecard of growth, profitability and capital allocation. I think it's really important to explain why now is the right time to undertake these initiatives as opposed to earlier in the integration process. In the merger close, we very intentionally took a do-no-harm approach. That meant that our top priority was to bring our companies together in ways that minimize disruption to our clients and our teammates. We absolutely certain that client satisfaction had rebounded pre-integration levels before launching further organization change. This is an area that, quite frankly, I believe, where all the mergers have failed, and we just didn't want to make that same mistake. Having said that though, now is the time to pivot and pivot [indiscernible]. So turning to Slide 6. let me give a couple of more details about our first initiative to simplify the businesses. In the interest of minimizing client disruption during integration, most of our business is operated with a more siloed approach as reflected in the leadership structure you see on the left. Throughout the integration, we gained more perspective at our businesses' operations, their interactions, their dependencies and the relation to our long-term overall Truist strategy. Now that we've shifted from integrating to operating, we've leveraged those insights to simplify the organization and the leadership structure on the right, grounded, as I said, in Consumer, Wholesale and Insurance. Simplification around these 3 primary areas will drive executional excellence and center our resource is to be client focused in support of our long-term strategy, to help drive efficiencies, achieve a more optimal allocation of expertise and resources and drive results in differentiated products and services that better meet our clients' needs. Finally, it will improve visibility into our activities to enhance our own accountability. As mentioned, our simplified leadership structure is also in the basis, the foundation, in which we can realize significant sustainable cost cuts, which you see on Slide 7. As part of our strategy to improve our financial performance, we've identified $750 million of gross cost saves that will be achieved over the next 12 to 18 months. The overall cost saves will include $300 million from a reduction in force, $250 million from organizational alignment and simplification and $200 million from tech [ fixed mass ] production. As part of the cost save program, we'll experience significant reductions in force over the next 3 quarters due to spans and layers, consolidation of redundant functions, restructuring select businesses and geographic simplification. Other cost savings initiatives include aggressively managing third-party spend, further reducing our corporate real estate footprint and rationalizing tech spend, among others. Onetime costs associated with this cost save programs are expected to range somewhere in the 25% to 30% of gross cost savings. We've been hard at work developing this cost plan, and we're working with a leading consulting firm to help us execute and accelerate certain aspects of our work. The effort is well underway, and we're committed to a sense of urgency and accountability. So moving to Slide 8, where we'll quantify the impacts of these initiatives on our rate of expense growth. Although September is appreciably earlier than we would typically discuss expense guidance for the following year, our cost save program will help us manage adjusted expense growth of 0% to 1% in 2024, which is net of our natural expense growth driven by inflation and other investments that we've made. There's also a substantial improvement from the rate of expense growth expected for the full year, this year, in 2023. Many of the savings will occur relatively quickly due to lower FTE count, while other areas of our plan will be achieved throughout the course of next year and beyond. Going forward, our goal of the company is to offset natural expense growth and inflation in 2024 and beyond. Cost cutting is one of the several levers, we are having improved financial performance, but there's also a revenue component, and we have a number of fundamentally solid businesses in great markets that are continuing to gain momentum. So let's take a look at a few of those on Slide 9. Our Investment Banking business continues to be well positioned for growth once market conditions improve. Since 2019, we've increased our market share across multiple product categories. We've expanded into new focused verticals and also increased our relevancy and our presence in existing verticals, all of which will drive growth as market activity recovers. In Corporate and Commercial Banking, we're seeing solid year-over-year growth in CIB referral revenue from commercial banking as we continue to deliver value-added advice and capabilities to our clients. We're also very focused on this concept of business life cycle advisory for teammates in our Commercial Community Bank, Truist Securities, Truist Wealth all working in partnership to meet the needs of our clients throughout their entire financial journey. This is supported by our upcoming rollout of a fully end-to-end digital lending experience for all our CCB clients, which will further enhance their experience. I'm also pleased with the progress in the Payment space, where most of the significant opportunity is further penetrate of our existing client base. Over the past 18 months, we've increased our advisory specialized sales force by 10%, which has helped drive a 30% year-over-year improvement in our pipeline. We continue to make investments in payments to enhance our capabilities, reliability and enable a more integrated digital client experience. As you can also see Insurance continues to perform well, we expect to achieve high single-digit organic growth revenue for the full year 2023. Lastly, in Retail and Small Business Banking, we've seen steady improvement in our client satisfaction scores as well as strong net new checking account growth this year. We're also gaining momentum in Wealth, where net organic asset flows are positive 8 of the last 9 quarters. From momentum in these attractive businesses will enhance our profitability profile over the long term. And on Slide 10, we provide a closer look at our longer-term opportunities from Integrated Relationship Management. Integrating Relationship Management is the concept that will we help our clients achieve their financial goals by connecting them to partners across the enterprise, who can seamlessly deliver Truist resources for their benefit. To me, Integrated Relationship Management is actually the manifestation of our purpose, it's actually the way we build better lives. As reflected in the table, there is significant [indiscernible] to help our clients achieve financial success, [ by delivering our ] Payments, Insurance, Investment Banking and Wealth capabilities to all of them, and each of the checkmarks you see represent a 9-figure opportunity. We believe our largest opportunities exist within the commercial community banking space and include the business life cycle advisory initiatives that I previously discussed. Now that we've shifted from integrating to operating, we've added more structure to our Integrated Relationship Management program by establishing long-term growth targets to almost all of our strategic partnerships. During the first half of 2023, these partnerships have grown production by 29% year-over-year, which reflects what our teammates can do for our clients post integration. Now slipping to Slide 11. Truist is well capitalized and have significant momentum to generating capital to respond to the evolving economic and regulatory environment. We continue to build capital and expect to achieve a CET1 ratio of approximately 10% by year-end through a combination of organic capital generation and disciplined management of risk-weighted assets. The anticipated trajectory for our CET1 ratio through the end of the year [ operates ] headwinds on the pending FDIC business. At the same time that we're building capital, our balance sheet remains open to core clients that have broad and deep relationships with Truist. Going forward, our capital allocation practices are just going to be more targeted as we focus on our core clients, de-emphasize businesses with lower return profiles, and allow some of our recent acquisitions to mature. As an example, during the second quarter, we sold our $5 billion student loan portfolio at a net carring value. This business is non-core, was in [ runoff ] [indiscernible] and generated loan spreads that are less attractive than we can [indiscernible] in our core consumer, also banking businesses. We also made the decision to discontinue certain training and market making activities in our fixed income sales and trading businesses that had unattractive ROE and we did all that with a minimal impact to PPNR. We think there's some more opportunities like those to further simplify our organization and drive efficiencies that will improve results. As we look further into the future, based on our preliminary assessment of the proposed Basel III Endgame results, we feel confident about our ability to increase our capital. Lastly, Truist has more than 200 basis points of additional capital flexibility given the residual 80% ownership stake in Truist Insurance business, which is a business that continues to perform extraordinarily well evidenced by the 9% organic growth in the [ second quarter ]. We continue to evaluate all of our strategic options with respect to Truist Insurance holdings with the objective of creating long-term shareholder value for Truist. Moving to Slide 12, I'd like to discuss how we incentivize and reinforce our improved financial performance through our new KPIs and refined executive compensation model. Earlier this year, in March, we announced that [ going through ] we'll assess our long-term performance based on 5 key performance indicators, or KPIs, shown in the middle of Slide 12. We chose these metrics because they are the most highly correlated to total shareholder return and clearly represent a balanced scorecard of growth, profitability and capital allocation. Our goal as a company is to be above peer median and [ observe those ] KPIs except ROATCE, where we target to be in the top quartile given our business mix. Most importantly, we've incorporated these KPIs into our existing compensation plans in order to set a higher bar for all of us with regard to executive pay at Truist. Our revised plans are dynamic and more sensitive to performance, continue to account growth, profitability and shareholder returns. In sum, we believe these changes will reinforce this strategic shift from operating and incentivize actions that promote purposeful and profitable growth, prudent capital allocation, and ultimately, higher TSR over the long term. So before I finish on Slide 13, I'd like to provide a brief update on the quarter. Our revenue and adjusted expenses for the third quarter and for full year 2023 are tracking in line with the outlook that we provided [ in the long-term incentive plan ]. So in closing, I am highly confident that the initiatives we discussed today will significantly improve our financial performance. First, as I mentioned, we're simplifying Truist. That will help drive executional excellence, center our resources to be client-focused in support of our long-term strategy and create a platform for realizing more significant cost savings. Second, we've specifically identified $750 million of cost savings that will be achieved over the next 12 to 18 months and will reduce the rate of expense growth significantly in 2024 and beyond. And third, we've got short and medium-term revenue opportunities, and most importantly, we have momentum in our business. And fourth, building capital [ goal forward ] will be more targeted in our capital allocation, and our undervalued ownership stake in Truist Insurance Holdings gives us strategic flexibility. And lastly, our new KPIs and redesigned executive compensation plans are aligned with you as shareholders. So again, thank you for your interest and your investment in Truist. And Jason, I'll come over and join you.

Thank you, Bill. A lot in there. I want to delve into it. I just want to clarify things at the end. I think you said 3Q and 2023 revenue forecast, kind of unchanged?

Yes. Yes.

Expenses?

Yes, same. That guidance we've given at the -- in the quarter [indiscernible].

I just wanted to clarify that. And then I guess maybe pull up for a second. One of the things you said on the onset is on the merger, or maybe everything go according to plan. I guess if you can go back in time, what would you have done differently?

This is point of you is like a teenage view, what would you do...

[indiscernible].

Yes, I think -- a couple of things. So in terms of the things that we wanted to achieve in creating a great culture, creating a one team environment, creating -- everybody sort of rolling in the same direction, all those things, I'm really proud of the work that our teammates have done. I mean, I'm really proud of what they've done and what they've achieved. We also want to make sure that we got through the change with regard to our clients. Think about this. Our merger really is the only merger in the last 20 years in which every single teammate and every single client went through change. So as opposed to an acquisition where you -- one group [indiscernible], so every single person went through change. So it's really important for us to make sure that before we started this type of accelerator on it, we got back to the client experience, we got back to the teammate engagement. People are comfortable using the tools that we provided to them, client performance scores and all that. So all that was really good. If I had to do something differently, I think we thought about things too sequentially. And maybe it was the impact of COVID, maybe it was PPP, I don't know, but it was a little bit of let's do this, stop and then let's do this and let's do that. And if I had to do it differently, I would have done things more in parallel. So this year, for example, we had a lot of costs associated with -- some of the increases we've done in minimum wage. We had a lot more costs as a company and as an industry, and sort of the regulatory response, getting ourselves prepared, so the Basel Endgame, all the things that are going to come along with that, and that was a little too sequential. And I think what we ended up seeing is spikes and valleys and things like expenses versus a more smooth...

And then going from 7% expense growth this year to a 0% to 1% next year is a big shift. You also outlined kind of a lot of revenue opportunities. I mean how do you just balance that, really, kind of millions in expense growth? I know you had this $750 million program, how much of that falls way to the bottom line versus having to only invest these programs? And then sometimes when see companies come out with these programs, we got a great expense growth in '24 and at '25, there's kind of a catch-up, as kind of fall behind, that's other part. So how do you kind of approach all that?

Yes. I mean, so think about also is it's a net expense growth for next year, but we also have great momentum. So think about our Insurance business, for example, sort of growing single digit. That has a real, direct correlation to expense growth. That's a highly correlated, really efficient business, but has a direct sort of compensation components to all that. We're also anticipating a recovery in our Investment Banking business. Those have direct cost to that. So this is overcoming those costs, those costs that come with the other things that are related to inflation, they come with investments that we have to make to make sure that we're keeping up with a bank our size and the things that we have to do. So it is a net component. And Jason, that sort of goes to the other part. So what we're doing is taking the chassis, sort of rationalizing the chassis to the business that we have. I think because we had all this technology and [indiscernible] investment, that's the one bulk already. So I don't see the bounce back in 2025 that we look back and say, "Oh, my gosh, you sort of forgot all these things." This is part of creating that rationalization and infrastructure. And then these expenses very intentionally, we want to talk about, these are tangible. These are not increase in automation, improvement in machine [ learning ]. All that's coming. We're doing all that. We're making all that investments, but we want to be sort of just really clear and tangible about these type of cost saves that come into this year and next year.

And I guess you talked about a sizable reduction in force over the next few quarters. Maybe just help us size that? And then with the program, is there any sort of kind of restructuring charges we should expect near term? And kind of the capital impact of that?

Yes, I talked about unlike the merger, whether restructuring charge was quite significant, this will be what I would say would be more traditional. So I said it's probably in the sort of 25% to 30% kind of saves, depending on some of the decisions we make and how we make them in the time line that we make them, but more in line with those sentiments. And the reduction in force component is really important. This is what comes from the simplification. If we think about -- I'll give you a couple of examples. So we're consolidating our geography. So we had 21 separate geographies, we consolidate those to 14. In terms of like who's in front of clients and client relationships, all those things, no change in that. This is really sort of the infrastructure of how we run those businesses. So think about the marketing support, finance support, leadership support, that's where the reductions come on that. Similarly, we have CRE businesses in a lot of our different units. So we have an Investment Banking CRE business, we have a separate CRE company called Grandbridge. We have a commercial community bank, breaking all those together and no different in the relationships with other clients, but the infrastructure that goes along with those type of consolidation. So the simplification, I'm really quick to acknowledge that changing the structure doesn't achieve the cost saves. That's what you have to do with it, and the simplification and the alignment allows us to do that. So this is really more in a sense of leadership infrastructure, but not change to the people who are on the scene, handling our clients and getting the business that we done and continue that momentum, because that momentum has been critical.

And then you talked about Insurance for a bit, and you talked about desirable capital. Are you still planning to do acquisitions with that business? And kind of just what's your general take in terms of what -- how that fits into Truist going forward?

Yes. The decision, which started last year, to create strategic and financial flexibility with the Insurance business. So the premise was, let's do a couple of things. Let's do some price discovery, so we've always sort of talked about this differentiation price. Let's do some price discovery. Let's create a partner that could help us grow that business. If we wanted to make acquisitions if we want to grow significantly to be -- have another funding source for that. Let's create currency for the people in the business so we can retain and grow and have teammates on that business who can see the direct alignment with their compensation and the growth of the business. That just all became more important sort of post-March. We knew it would be an important thing to do, but now to have that financial flexibility and that strategic flexibility. So the answer is, yes, it's a business that's consolidating so we want to make sure that we find ways to participate in that in the best way for not only the Insurance business, but also to create financial flexibility and capital flexibility for Truist long term. So there are lots of variables that go into all of those decisions, but what I'm most pleased about is that we've got -- I would not call it the athletic position, that we're in the athletic position, and we can make a lot of decisions related to what's going on environmentally for both Insurance and both for Truist.

As I think you kind of came up with this plan, the gap between insurance brokers and banks, multiples are expanded in even further. At the same time, we were talking about kind of things kind of weighing your performance, you mentioned low yielding securities. Any notion of maybe restructuring the bond portfolio? We had a company earlier today who sold out $4 billion of securities, and maybe is using some of these insurance [ proceeds ] to help fund that.

Yes. I think the most important thing to think through is it's not one thing, it's a lot of the variables. So securities portfolio has many variables, a Basel III Endgame capital phase-in periods, are they really phase-in periods? Or does the investor community bring it? Or a consolidation in the insurance business? So what is its requirements? Are there big, dilutive capital needs that are there? So I never want to center it around one thing because sometimes, that decision can be maybe too easy or too hard. It's actually just a portfolio of all those considerations that come into that.

Wait and see.

Well, it's wait and see and being sensitive to what market conditions are and how people view time then. The good news is if we consider sort of phase-in period, we consider our organic growth of capital, if we look at all that, we're in good shape, but that's all an element of time. If time compresses or changes or if other elements come in, or we have an economic change or a global change in some perspective, then we've got the financial flexibility to move quickly and move appreciably.

Right. I guess you talked about the 0% to 1% expense growth target for next year. I guess some of that is just driven by the fact that the revenue environment this year has certainly turned out to be more challenging than you thought. As you kind of think about the revenue environment next year, obviously, they kind of go hand in hand. You're out there talking to customers all the time. I guess, kind of just what's your sense in terms of as you kind of enter the '24 budget process for the top line.

Yes. I mean we don't want to give all that specific guidance right now. But I mean, I think if you sort of look -- let's look at NIM and NII as part of that. There's obviously going to be the big driver of that equation. That starts to, I think, flatten out sort of the end of this year and probably is a little more stable as we think about next year, but that assumes that we don't see a big economic rebound. That assumes that things don't change dramatically with sort of status quo. And then back to the side, on the fee-based businesses, I mean I'm confident we'll see a rebound in the capital markets business, and we're sort of like a coiled spring in that business. I mean, we've made a lot of investments. Then you look at our insurance business or has continued the single-digit sort of organic growth and maybe some inorganic in that. So there are lots of puts and takes on that, but the NII is obviously, for any bank, sort of the big driver of that. And we have to see a pretty significant shift in terms of confidence in loan growth and RWA growth, we will know about that.

I guess just maybe on loan growth, just maybe talk about your [ final update ]? Talk about -- you sold some student loan portfolio. Is there any more stuff you're looking to do in terms of RWA management? And just how does that influence you in terms of growing the balance sheet?

Yes. And I like the way you asked it, because that's what we're doing, as a RWA management. So we're not on a diet, we're not on a -- we are managing our RWA for its maximum effectiveness and maximum return. And the student loan example, it was a really good example of that. I think around the edges, Jason, there'll be more of those. Probably not maybe the same magnitude and maybe the most obvious around student loan, but back to this concept of -- that I talk about [ podium ] of, investing in our core businesses and letting our complementary businesses be less strategic from an investment standpoint. So think about the corresponding mortgage business, think about indirect auto, things that don't really have these direct client experiences, that don't have the ability to generate full relationships, deposit relationships, long-term wealth relationships, those are going to be more optimized. They'll be more optimized for return, they'll be more optimized for around the edges of relationships versus an equal investment in the core businesses, which are -- if we think about this incredible thing that's Truist, we think about these markets that we have, we've got to make sure that we've got an ability to disproportionately invest and invest in the core parts of what we do. And then I think overall, loans will be moderately down. So I mean, I think that will be the result of all that. But I also just want to make sure our door is open, so for really good opportunities. And as clients consolidate, and quite frankly, as the competitive environment changes from an RWA standpoint, we're also really well positioned. We've got a great market share. We're in fantastic markets. Companies are moving into our markets, not out of our markets. People are moving into our markets, not out of our markets. So we also want to make sure that we're creating the financial RWA and flexibility to make sure that we take advantage of opportunities.

And I guess maybe on that, maybe just talk a little bit about deposits in terms of kind of what you're seeing this quarter? Any changes to your approach in kind of CD campaign, money market promotions and maybe just more color there?

Yes, I think if you put in a bunch of different categories, if you use deposit beta maybe as a proxy [indiscernible] an answer, deposit betas are cresting. I don't know if they crest in, but they're cresting, and that rate of growth in deposit betas has sort of appreciably slow. A lot of that has to do with the decisions that we're making as clients who we might have repriced 30 days again, we're not repricing again. Some of the CD and money market, some of those promotional activities were starting to diminish. We're looking more out of market versus end market. Our clients are telling us they've got really good relationships with us. They've got a really good digital experience, so we're focused on expanding those relationships. During this whole component, we saw net new growth in checking accounts. And that's ultimately that really good barometer of your overall health, are you growing net new, because deposits can come up and down and you can pay up to get them, but are you getting net new and whether you're retaining more, whether you're acquiring more in that process. That's been really consistent now with Truist over the last 8 to 9 months.

Got it. And then maybe shift gears to credit quality and all losses going to that normalization process. I think your ALLL ratio is up, 9 bps over the 2 quarters. So maybe just talk to how you're thinking about loan loss trends kind of back half of this year into next? And maybe just talk about the expectations for reserve ratio in the near term?

Yes. I mean things are normalizing. Probably there's certain components of our business where maybe it's more normalized, but they are normalizing. So I think you might see -- we'll do [indiscernible] all things, but you might see it all sort of creep up as it relates to that, just to make sure that we're seeing that [ sort of flip ]. Right now, we don't see sort of a flip. Now there are things that we're focused on and are worried about and spend a lot of attention on them, and maybe the obvious things like office and leverage lending, and sometime all those things get a lot of our attention. And the good news is they're a smaller part of our component, we've got a highly diversified business. With the overall portfolio, I believe we just want to see just the continued [ real flips ] with normalization. Any sort of [ flips ] have been more idiosyncratic. We've been a part of -- maybe a business model that didn't work as an industry or a market or a segmentation. And then as we said, overall in terms of as our overall market, we just continue to see a lot of relative strength in the overall markets that we serve.

Got it. Maybe with the next ARS. Actually, if you pull up, if we could skip the next ARS question and go to the third ARS question.

Did we do the first one? I don't -- didn't see the results of the first one.

We did. I'm going to publish them today.

Okay. All right.

What should Truist CET1 target could be? Probably 9.6%. And I guess, Bill, I guess, as I asked, you talked about wanting to get 10% by this year. Obviously, over time, that's going to AOCI that will not be a factor anymore. Where do you see kind of the normalized CET1 target once we kind of get through everything?

Yes. I think in fairness, we all need a couple more data points, and the view of everything you said is a time-dependent view. So I think if that's true, phase-in periods are right in terms of market perception. I think we're north of 10%, so maybe some of that as a starting point. And that's why we sort of said we've got this organic capacity to get to 10% by the end of the year. I consider that probably a little more of a starting point right now, and then we'll evaluate all the relative positions, all the relative impacts, market risk, credit, future looks and all those type things [ to proceed ]. But I think 10% is a starting point, and we build or manage from there.

And I guess once we kind of shift to the new regime, you mentioned earlier kind of the phase-in, do you think the market will allow for phasing? Or do you think if there's anymore then you think...

Well, I think that's the question. I mean that's the question that in a normal phase-in period, yes, we look great. I mean we've had the capacity, organic capacity. If that gets accelerated, we have a lot of flexibility, and we have a lot of strategic alternatives that we could determine. And I think that's -- if I think about the data points, that's another data point that we need to sort of internalize as a company and as a market. Is the phasing really real? Or is it really accelerated? And I think the combination is, there's probably some acceleration, and we just need to figure out where that is on the spectrum.

We got about 30 seconds on the clock. Any final, concluding remarks you want to leave us with? Or anything you forgot to add?

Well, no. Thank you for having us today. And look, I just want to make the last point of just continue to exude my confidence in Truist. I mean, every day I turn the page, I feel better about what we've built here, and I feel better about the opportunities. And this shift or pivot we're making to create a chassis that better reflects that and create a chassis that we build on from the future, I think it's the right time to do this. I think given where we are in our teammate adoption, our foundation and our client scores and client capability and then net new in the momentum, this is the time to make that shift and help improve our performance.

Right. With that, please join me in thanking Bill for his time today.